JIZHONG ENERGY GROUP INTERNATIONAL LOGISTICS (HONG KONG) CO LTD v. HONGKONG JIZAAK TRADING CO LTD

HCMP 1038/2019

[2019] HKCFI 2747

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1038 OF 2019

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R U L I N G

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1.  At the hearing on 11 October 2019, I said I would deal with the costs issues by way of summary assessment, and I gave directions for the plaintiff to provide a statement of such costs together with any submissions, and for the defendant to make any submissions or objections in response.

2.  I have been provided with the plaintiff’s statement and submissions dated 16 October 2019, and the defendant’s submissions dated 23 October 2019.  I have considered both documents carefully, though I do not intend to set out the detail of them.

3.  The plaintiff suggests that the defendant’s behaviour in respect of this litigation and the negotiation/discussion surrounding it constitute a special or unusual feature that would justify indemnity costs.  The criticism of the defendant’s conduct is specifically not aimed at any criticism of the defendant’s two teams of legal advisers.  Indeed, the plaintiff’s submissions recognise that the advisers were, or were probably, themselves in a difficult position because of the inadequacy or lateness of their instructions.

4.  But, the plaintiff draws attention to specific aspects of the defendant’s position in this litigation.  It does so, of course, by reference to the principles to be found in the rules and in previous authority which identify in what type of case an indemnity costs order might be appropriate within the broad discretion enjoyed by the court in making costs orders.  Amongst the matters to be taken into account might be the manner in which a party has defended his case or a particular allegation or issue, as well as conduct before (and so not just during) the proceedings.  Taking a groundless and unsubstantiated defence in an oppressive manner might give ground for an indemnity costs order.  Nevertheless, I also accept the defendant’s submissions that the relevant conduct would need to be unreasonable to a high degree, and must be more than merely wrong or misguided in hindsight.  Ultimately, the receiving party needs to demonstrate something in the conduct of the action or other circumstances of the case that take the case out of the norm, and so which warrants an order for indemnity costs.

5.  The plaintiff relies specifically on the defendant’s alleged failure properly to instruct the first legal team; its egregious conduct in actions relating to the various warehouses; its litigation conduct; and its knowledge of matters which was not significantly changed between the two relevant hearings on 26 July and 11 October 2019.

6.  The defendant’s submissions strenuously oppose any allegation that the defendant’s behaviour constitutes a special or unusual feature as might justify indemnity costs.  The submissions point out, correctly, that no ruling has yet been made on the ultimate merits of the case, and say that the defendant has tried to act sensibly, reasonably and in a cooperative manner, including by conceding to the plaintiff’s requests in order to save parties’ costs and the Court’s time.

7.  Ultimately, I am persuaded that there are aspects of the defendant’s conduct which are likely to have increased costs unnecessarily, and in a way which is unreasonable to the necessary degree.  But in the context of a summary assessment, I do not think I need specifically to identify that costs would be ordered on an indemnity basis.  Rather, I can factor in the weight that seems to me to be appropriate to the overall approach to assessing costs, in acknowledgement that some element of the plaintiff’s costs were incurred in circumstances where it should not be significantly out of pocket, at least in respect of that element.

8.  The overall sum sought by the plaintiff’s statement of costs is $584,250.  Of that, $230,000 relates to counsel’s fees for the 11 October 2019 hearing, divided as to $200,000 for the lead advocate, and $30,000 for his junior.  The plaintiff’s argument is that this is a case in which the incurring of the junior’s fees is likely to have been economical overall.  Whilst I see some force in the argument, it seems to me that the overall amount of counsel’s fees is somewhat high, and the way to deal with it is to allow only the fees for one counsel.  Doing so takes some account also of the defendant’s point that a less senior counsel might have been justified in the case, but taking some note too that more senior counsel sometimes work more quickly than less senior counsel because of their respective levels of experience.

9.  As to the solicitor’s costs, being approximately $350,000, the defendant’s submissions identify a number of criticisms beyond objecting to costs on an indemnity scale.  Criticism is made of too high an hourly rate for the fee earners and excessive time spent on items of work.  I accept some of the criticism as to excessive time in particular is warranted.

10.  Taking a relatively broad brush to all of the circumstances canvassed in the respective submissions, and those touched upon by me above, it seems to me that an appropriate assessment on a summary basis for the solicitors costs and disbursements would be in the sum of $250,000.

11.  This gives an overall summary assessment in the sum of $450,000, payable by the defendant to the plaintiff forthwith.