POON HAU KEI v. HSIN CHEONG CONSTRUCTION CO. LTD. AND OTHERS

FACV No. 12 of 1999

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 12 OF 1999 (CIVIL)

(ON APPEAL FROM CACV No. 214 OF 1998)

_____________________

____________________________________

JUDGMENT ON COSTS

____________________________________

Mr Justice Litton PJ:

1. This is the judgment of the Court on costs.

2. In considering whether an order for costs should be made and, if so, to be paid by whom, it is important to bear in mind the nature of the proceedings.

3. Mr Poon the claimant applied to add HCTW as a second defendant in his claim for compensation. His Honour Judge To acceded to the application, but his order was discharged on appeal. By our judgment of 15 December 1999 the judge's order was restored.

4. Order 62 r.3(2) of the Rules of the High Court - made applicable to appeals in this Court by Rule 57(1) of the Hong Kong Court of Final Appeal Rules - provides that where the Court sees fit to make an order as to the costs of the proceedings the Court shall order the costs to follow the event, except where it appears that in the circumstances of the case some other order should be made.

5. Prima facie Mr Poon should have all the costs incurred in this Court and in the Court of Appeal. The question then is whether, having regard to the offers of settlement contained in the letters of 23rd and 29th November 1999, some other order should be made. On its face, the offers in the two letters, if accepted, would have satisfied Mr Poon's claim in toto, as if he had won all the way in these interlocutory proceedings and had final judgment made in full in respect of his claim. The conditions for acceptance imposed by Mr Poon's solicitors do not appear entirely reasonable. They asked HCTW to:

6. If the issue were simply the "reasonableness" of the attitudes of the two firms of solicitors as displayed in the exchange of correspondence, HCTW would win hands down. The problem facing us is this: Since the issue on the appeal was simply whether Judge To's interlocutory order was correct, this Court was not concerned with the quantum of the claim. Whilst the offer of $892,566.91 seems on its face to be complete, made in satisfaction of all heads of claim, this Court was never seized of this issue. The matter cannot therefore be approached as if the "Calderbank letters" were the equivalent of payment into Court under Order 22 of the Rules of the High Court. Counsel for HCTW, in his written submissions, concedes as much. It would also seem wrong in principle to resolve the question of costs upon an issue which was never before the Court and upon which the parties have not been heard. Mr Poon's counsel says that the appeal was rightly prosecuted because it involved a matter of great public importance: The Court of Appeal's erroneous construction of s.24 of the Employees Compensation Ordinance and of the effect of the Management Contract, if uncorrected, would have prejudiced many other similar claims for years to come: Until some other claimant takes the matter all the way to this Court. Whilst this may be said to be of no concern to the parties themselves, it does weigh in the scales when the Court considers the broad discretionary matter of costs.

7. Assuming Mr Poon's solicitors' response to the letter of 29 November (received 10 days before the date fixed for hearing the appeal) had been this: "We are concerned with only one matter at this stage, namely the Court of Appeal's judgment; if you are prepared to concede the appeal you can write a letter to the Registrar to this effect and save costs by not briefing counsel; we will deal with the question of liability and quantum once Judge To's order has been restored". It is difficult to see how the solicitors could have been faulted for such an approach. Is, then, Mr Poon to be penalized as to costs because of the terms of his solicitors' reply, when the effect of it is virtually the same? The fact of the matter is that HCTW did not concede the appeal; they appeared by counsel to contest the appeal; they lost on the only issue before the Court.

8. Now that HCTW has been restored as a party to the compensation claim nothing prevents them from tendering the sum of $892,566.91 to the claimant in satisfaction of his claims. As regards the costs which they had offered to pay, these would be Mr Poon's in any case by our order: The acceptance or rejection of the offer makes no difference either way. Is Mr Poon, then, so unreasonable in his refusal of the offer that he should (1) be deprived of his costs of the appeal and (2) be ordered to pay HCTW's costs of the appeal? As to (2) above, there is no precedent of a successful appellant being ordered to pay the costs of the other side. This then leaves question (1) as HCTW's remaining argument. As to this there are in our judgment insufficient grounds for depriving Mr Poon of his costs of the appeal. In prosecuting the appeal Mr Poon was doing what he was entitled to do. And being successful he should get his costs.

9. We would order that the costs of the appeal to this Court and those incurred in the Court of Appeal be paid by HCTW. Mr Poon's counsel has invited us to interfere with Judge To's order (which was that the costs before him be in the cause) by replacing it with an order against HCTW. We would reject that submission and leave Judge To's order undisturbed.