GOLDEN METRO CHINA LTD v. THE OWNERS OF THE SHIP OR VESSEL SKY LUCKY

HCAJ191 & 194/2006
(Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 191 OF 2006

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Admiralty Action in rem against the Ship or Vessel : SKY LUCKY

BETWEEN

AND

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J U D G M E N T

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1. I better give my reasons in relation to the cost matter that has been argued before me.  This matter has been very troublesome, involving the sale of a ship in which the plaintiff is claiming against the defendants.

2. I will not go into the details of the dispute except to say that in the course of the proceedings when the matter came before me on the first occasion on 19 April 2007, on the hearing of a Summons for Direction, a question was raised by Mr Yin, acting for the defendants, as to whether there was a conflict by Richards Butler so that Richards Butler might be forced to cease to act as solicitors for the defendants.

3. The involvement of Richards Butlercame about because a Mr Peter Lee of the firm was involved in the transaction and it is not in dispute today that on two days in August, Mr Lee was present when certain oral arrangement was alleged to have taken place.

4. The matter that came before me had to be adjourned on 19 April 2007 as a result of the strong stand taken by Mr Yin of Richards Butler raising this problem and the matter had to be adjourned for further argument to 3 May when the matter was again adjourned because Mr Yin informed the court that it was the wish of the defendants represented still at the time by Richards Butler to issue a summons for the resolution of the matter of the potential conflict of Richards Butler.

5. I reluctantly agreed to this suggestion and the matter then was therefore adjourned for a date to be fixed.  When the matter comes back before me today, the picture has completely changed, because Richards Butler has ceased to act as I think it is clearly recognised that there was a conflict because Mr Lee’s involvement was not only material but substantial and perhaps even critical.  The question now for me to resolve is on the insistence of solicitor for the plaintiff for an order to recover costs from the defendants on the basis that time has been wasted and costs has been incurred, at least as from the date of 24 April when the letter from Messrs Brenda Chark & Co. written to Richards Butler setting out clearly on pages 1 and 2 of the plaintiff’s position in relation to the materiality of Mr Lee.  I take the view that Richards Butler must realise or should have realised at least by that date both by combination of that letter dated 24 April as well as from any look at Richards Butler’s own internal documentation such as attendance note and so on and so forth, that there was a conflict and that the sensible, wise and professional step to take is to cease to act.  This the defendants did not do and therefore from that date onwards it could be said that all costs incurred should be borne by the defendants.

6. Unfortunately on 3 May hearing, the defendants took a strong contrary position and until very recently the point of conflict was not conceded.  I think that point was finally conceded as a result of some subsequent further pleadings and documentation.

7. I agree with Ms Chark that there should be a costs order against the defendants.  So the order I make is : the defendants do pay the plaintiff all costs incurred from 24 April 2007 in relation to the matter of what I would call the conflict of Richards Butler and I think it is fair, having heard the parties, that the order of costs should be borne on the basis of costs to be paid forthwith.

8. Ms Chark has informed me on the gross sum assessment basis that costs has been incurred for 8 hours at $3,000 per unit cost.  Mr Tsui has suggested that the figure is somewhat high on the basis that the actual hearing time is quite limited.  I agree, of course, hearing time is limited but there was quite a lot of correspondence.  I think in the circumstances 8 hours is not excessive.  I therefore allow the full sum of $24,000 and that therefore the order that I make is the defendants do pay to the plaintiff forthwith the sum of $24,000.  That is the order of costs I make.