EAST EPOCH INTERNATIONAL LTD v. WONG POON TING

HCA2783/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2783 OF 2006

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DECISION ON COSTS

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Application

1.  In the judgment handed down on 24 June 2010, I held that the defendant was liable for the loss and damage suffered by the plaintiff arising from the delay in completing the sale and purchase of the property in suit.  I directed the damages to be assessed by a master.  Finally, I made an order nisi that the defendant do pay the plaintiff costs of the trial on liability including all costs reserved, to be taxed if not agreed.

2.  The defendant now applies to vary the costs order nisi thus :

(1)     the costs of the trial on liability be reserved until the outcome of the assessment of the damages; and

(2)     the plaintiff do pay the defendant’s costs of its summons dated 24 September 2009 (“the Summons”), alternatively there be no order as to costs of the Summons or further alternatively costs of the Summons be in the costs of the trial on liability.

The costs of the trial on liability

3.  The following principles are applicable. 

4.  After a split trial on liability, in exercising its jurisdiction on costs, the court may and will often make an immediate order that party who has lost the issues on liability should pay all or part of the costs of the liability trial.  If there are special circumstances in which it is proper to do so, the court may reserve or adjourn the question of costs pending assessment or account of profits.  See Weill v Mean Fiddler Holdings Limited [2003] EWCA Civ. 1058, at paras.31-33; Shepherds Investments Limited v Andrew Walters & Others [2007] EWCA Civ. 292, paras.17-19.

5.  It is well settled that if it is left uncertain until conclusion of the trial on quantum whether the plaintiff will recover more than nominal damages, it may be proper for the court to defer making any order for the costs of the trial on liability until the final outcome of the action is known.  See Weill v Mean Fiddler Holdings Limited, supra, para.33. 

6.  Mr Chain, for the defendant, submitted that in the present case, the court cannot be satisfied that on assessment, the plaintiff must be able to recover substantial damages.  So the costs of the trial on liability should be reserved pending the outcome of the assessment of damages.

7.  As the trial before me concerned liability only, the parties have not adduced any evidence pertaining to quantum.

8.  The plaintiff pleaded in the voluntary particulars filed on 28 April 2010 as follows :

“1. The Plaintiff suffered consequential loss and damage arising out of the delay in completion (the extent and quantum to be assessed) as a result of the breach of the Agreement:-

(1) Had the Plaintiff acquired al three properties on the Lot by the scheduled completion date of 23^rd March 2005, it would have proceeded either to redevelop the said Lot, or to sell the same to potential developers or investors.

(2) The estimated profit before tax the Plaintiff could have earned on redevelopment was around approximately HK$30,264,000.00.

(3) By reason of the delay in completion by the Defendant, the estimated profit from redevelopment the said Lot had decreased owing to a change in regulations governing the maximum allowable building height for the Lot. Following these changes, the estimated profit from redeveloping the said Lot was reduced to approximately HK$11,436,000.00.

(4) Acting in mitigating of its loss and damage, and after acquiring the Property through the Court’s decree of specific performance on 16^th April 2007, the Plaintiff sold all the properties on the Lot on 27^th September 2007 for a total price of HK$63,000,000.00, earning HK$13,000,000.00. This sum of HK$13,000,000.00 was substantially lower than the profit the Plaintiff could have earned had the proposed redevelopment and/or onward sale gone ahead in 2005.

(5) Further and/or in the alternative, by reason of the delay in completion, the Plaintiff lost the opportunity to rent out the said Property pending the redevelopment and/or onward sale of the Lot.

(6)     Yet further and/or in the alternative, in addition to the lost profit and/or rental income, the Plaintiff also suffered loss in that it was unable to earn interest on the HK$33,333,334.00 it expended on the purchase of the other two properties, as this sum was locked into the said properties pending the completion of the sale and purchase of the Vendor / Defendant’s Property.”

9.  As the pleadings now stand, I am unable to agree with Mr Chain that the plaintiff would not be able to recover more than nominal damages.  On the contrary, I think it is likely that the plaintiff would be able to recover some substantial damages.

The costs of the Summons

10.  The defendant took out the Summons to file his 3^rd affirmation to deal with matters that the plaintiff could not agree.  He was entitled to do so pursuant to the master’s order dated 24 June 2009.  So the costs of the Summons, which had been reserved, should form part of the costs of the trial on liability.  The plaintiff is entitled to such costs as part of the costs of the trial on liability.

11.  I can see no reason to vary that part of the costs order nisi.

Conclusion

12.  For the above reasons, I refuse to vary the costs order nisi.  I will formally make the order absolute now.  The final costs order will also include the costs of the present application which by consent form part of the costs of the trial on liability.