GUANG ZHOU REAL ESTATE DEVELOPMENT (HONG KONG) CO. LTD. AND ANOTHER v. SUMMIT ELEGANCE LTD.

HCA 1531/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1531 OF 1998

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D E C I S I O N

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1. On 7 August 2000, I handed down the judgment in this action together with an order nisi that the Plaintiff pays the Defendant the costs of this action, to be taxed if not agreed. On 16 August 2000, the Plaintiffs issued a summons applying to vary the order nisi to the effect that the Plaintiff shall only bear part of the costs of the action. After hearing submissions from counsel, I dismissed the summons and made the order nisi absolute and gave oral reasons for doing so. I now reduce the reasons into writing.

2. The Plaintiffs' application is based on two grounds. Firstly, it was argued that although the action was commenced by Writ, it is in effect no different from a vendor and purchaser summons for which the general rule or practice of the Court is to make no order as to costs. Secondly, it was argued that this is an appropriate case for making an apportionment of the costs.

The Nature of this Action

3. As a starting point, it has to be recognised that the power to award costs is discretionary in nature. The general rule has always been for costs to follow event.

4. On the first argument that these proceedings are in effect akin to a vendor and purchaser summons, I have to observe that it is the Plaintiffs who had chosen to commence the proceedings by Writ. The fact that the trial had proceeded without calling any oral evidence is because the parties had no dispute on the fact, and this is essentially due to the good sense of counsel. The trial had therefore proceeded only on the basis of legal submissions. Other than this, the action had gone through all the procedure pertaining to an action commenced by Writ.

5. Mr Chan for the Plaintiffs referred me to a passage in the judgment of the Court of Appeal in Lion Will Investment Ltd v. Triple Will Ltd CACV No. 200/1992. The passage as delivered by Power VP reads as follows (at p. 10):

"Finally Miss Cruden suggested that in vendor and purchaser summonses costs generally are not awarded, the usual order being that there be no order of cost. That may be. However the trial judge here was facing an unusual situation ..... "

Mr Chan relied on the sentence "That may be" as confirming that the usual order in vendor and purchaser summons is for no order as to costs. I agree with Mr Lam for the Defendant that this is reading too much into the sentence. Mr Chan had not referred to any other authority for such a proposition. For my part, I am unaware of such rule or practice. One needs only to look at some of the authorities cited in the trial of this action, e.g. Yiu Ping Fong and Another v. Lam Lai Hing Lana [1998] 4 HKC 476 and Lee Chat and Another v. China Roll Industries Ltd [1998] 1 HKC 269, to see that the Courts had, on the contrary, been applying the general rule of "costs follow event" to vendor and purchaser summonses. I am therefore unable to agree with this argument advanced for the Plaintiff.

6. As to the second argument, I accept that as the power to award costs is discretionary in nature, it follows that the Court does have power and will exercise that power in appropriate cases to apportion costs so as to do justice between the parties.

7. In this case, the Plaintiffs relied on the fact that the Defendant succeeded on only two out of the ten requisitions raised and also on the issue of waiver as justifying a partial award of costs in favour of the Defendant. Mr Chan suggested that the Defendant should only be awarded 30% of the costs of this action.

8. In Blank v. Footman, Pretty, & Co. (1888) 39 Ch 678, it was held that where a defendant succeeds generally he may have the costs of some of his defences on which he has not succeeded; but where he has raised a distinct issue and has failed, he ought not to have the costs of that issue. In the judgment of Kekewich J (pp. 685-686), it was pointed out that:

"the defendant is entitled to put his back against the wall and to fight from every available point of advantage. It think that it would be extremely hard on defendants if as a rule they were told at the end of the trial, "You have beaten the plaintiff, but because you have raised some points on which you have not succeeded you shall not have all the costs of the action." And it is obvious that it might lead to lengthening trials if counsel understood that unless they fought out every point the clients would not be allowed their costs even in a successful case. On the other hand, it is a useful rule that where there is a distinct issue on which the generally successful party has failed and that issue has really no immediate connection with those upon which the party has succeeded, then he ought not to have the costs of that issue which presumptively ought never to have been raised."

9. Here the Plaintiffs' claim is that the Defendant had wrongfully repudiated the agreement by failing to complete the sale and purchase agreement. The Defendant's defence is that it is entitled not to complete because the Plaintiffs had failed to prove and give a good title to the properties in that the Plaintiffs had failed to answer the Defendant's requisitions satisfactorily. On the same basis, the Defendant counterclaims for a number of reliefs. The Defendant has succeeded in its defence, albeit not in relation to all the requisitions supporting the defence. These requisitions are part and parcel of the defence of lack of good title and cannot be regarded as so distinct as to bear no immediate connection with the ultimate issue or question that the Court has to decide and one that the Defendant has succeeded. On this approach, there is no justification for departing from the general rule and to award only a portion of the costs in favour of the Defendant.

10. In addition, it is to be noted that on some of the requisitions which the Defendant fails, for instance Requisitions No. 1, 3, 12 and 13, there were points and materials which the Plaintiffs only canvassed in these proceedings but not at the requisition stage. In this regard, the Defendant cannot be criticized for raising and pursuing the requisitions.

11. Having regard to the matters aforesaid, I am of the view that there are no unusual circumstances that warrant a departure from the general rule, and the Defendant ought to be allowed the full costs of the action. Accordingly, I dismiss the Plaintiffs' summons with costs to the Defendant. The costs order nisi will also be made absolute.