SUNG CHUNG KWUN AND ANOTHER v. ADDCHANCE HOLDINGS LTD AND OTHERS

HCA 2385/2017 and
HCMP 2556/2017
(Heard Together)
[2019] HKCFI 707

HCA 2385/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2385 OF 2017

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AND

HCMP 2556/2017

MISCELLANEOUS PROCEEDINGS NO 2556 OF 2017

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___________

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(Heard Together)

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DECISION ON COSTS
(To vary costs order nisi)

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The plaintiff’s application

1.  The parties have made the following applications to vary the costs order nisi made by this court in its judgment dated 29 November 2018 at §116, in relation to HCMP 2556/2017 (“the HCMP Action”):

   (1)   The defendant in the HCMP Action (“ADFL”) applies by summons dated 12 September 2018 for an order that the costs of and occasioned by the applications heard on 23 and 24 October 2018 be paid to the defendant forthwith and to be taxed in not agreed.

   (2)   The plaintiff in the HCMP Action (“CFGL”) applies by summons dated 13 December 2018 for an order that the costs of the HCMP Action be in the cause.

2.  I will deal with each of these in turn taking the plaintiff’s application first.

3.  The plaintiff applies to vary the costs order nisi pursuant to which it is ordered to pay the defendant’s costs and submits that the appropriate order should be for costs in the cause.

4.  It is the plaintiff’s case that the normal costs order is for costs to be in the cause and it cites a number of authorities in support of this proposition covering a number of different procedural applications which come before the court.  It relies in particular on the finding of DHCJ Sakhrani in DBS Bank (Hong Kong) Ltd v Hunter Socks & Apparel International Ltd HCMP 2241/2016 and HCA 1447/2016 (4 September 2017).

5.  It further submits that the plaintiff did not abuse any procedure which might justify a departure from the usual costs order.  Indeed it submits that since the court accepted it had a prima facie right to enforce the Second Mortgage, the subject of its application, the arguments raised on its behalf were perfectly properly advanced.

6.  The defendant on the other hand stresses the fact that the plaintiff was unsuccessful—totally, it says—and on that basis alone the starting point should be for the plaintiff to pay the defendant’s costs.

7.  It further submits that the costs of the HCMP Action could have been avoided had the plaintiff acted more reasonably in the conduct of the proceedings but that instead it adopted a strategy of trying to obtain judgment at all costs, and by any means possible.  In those circumstances,the defendant submits it is only fair that having lost and having put the defendant to significant costs in successfully resisting its stance that it should reimburse the defendant’s costs.

8.  There is no dispute that costs are in the discretion of the court and that the discretion should be exercised judicially pursuant to section 52A(1) of the High Court Ordinance (Cap 4) and Order 62, rule 2(4).  Following the CJR the costs of interlocutory proceedings are dealt with in Order 62, rule 3(2A) which provide that the court may order the costs to follow the event or make such order as it sees fit.

9.  I am entitled to take into account all of the circumstances of the case including the underlying objectives set out in Order 1A, rule 1, the conduct of the parties and the relative success of the parties’ arguments on the application.

10.  I am satisfied on the facts that the plaintiff had full knowledge of all of the evidence and the grounds relied on by the defendant to resist its application but nonetheless continued with the application which it subsequently lost.  There was, in my judgement, an unnecessary duplication of proceedings as a result.  In addition, I take note of the plaintiff’s late application for a speedy trial, which I ruled against.  In these circumstances it is appropriate in the exercise of the court’s discretion that costs should have been awarded against it and in favour of the defendant.

11.  I therefore dismiss the plaintiff’s application and order the plaintiff to pay the defendant’s costs of this application, to be taxed if not agreed.

The defendant’s application

12.  I turn then to the defendant’s application that the costs order nisi in its favour be amended so that costs be paid forthwith.

13.  The starting point for the court’s consideration of it is Order 62, rule 9D(1) and (2):

“ (1) Subject to paragraphs (2) and (4), the costs of any proceedings shall not be taxed until the conclusion of the action.

(2) If it appears to the Court when making a costs order that all or any part of the costs ought to be taxed at an earlier stage it may order accordingly"

14.  There is no dispute that this is the starting point.  It is the defendant’s submission that under the CJR the court is encouraged to order immediate payment of costs in interlocutory proceedings with a view to discouraging unnecessary and disproportionate interlocutory applications. This is because the lack of immediacy of orders to pay costs weakens costs as a sanction against unwarranted applications or resistance.

15.  On that basis, the defendant draws the court’s attention to thenon-exhaustive facts which are relevant to the court’s consideration, which include whether the interlocutory proceedings are from a taxation point of view severable and self-contained from the rest of the action, the justice of making an order forthwith having regard to effect on the cash flow of the respective parties, whether the amount at stake was sufficient to justify the expense of the separate taxation and finally the underlying objectives in Order 1A, rule 1, and the conduct of the parties.

16.  The defendant submits that all of these factors are satisfied in the present case.

17.  The plaintiff takes no issue with the applicable law or the factors that the court is required to take into account but submits that the circumstances do not warrant departure from the general rule for costs to be taxed and paid at the conclusion of the proceedings.

18.  There are clearly cogent arguments advanced on behalf of boththe parties but on balance I accept the plaintiff’s submission that severanceof the costs in this case is difficult and would require a further expenditure of time and costs and I therefore dismiss the defendant’s application for their costs to be paid forthwith and make an order that in respect of this application the defendant pay the plaintiff’s costs, to be taxed if not agreed.