DIYIXIAN.COM LTD v. G'FIVE INTERNATIONAL LTD

HCA 229/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 229 OF 2013

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RULING ON COSTS AND INTEREST

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1.  Judgment in this action was handed down on 17 October 2016 dismissing the plaintiff’s claim and upholding the defendant’s counterclaim, inter alia, for the return of US$6900.00 paid on 12 August 2011.  The outstanding matters are what order for costs should be made and what interest, if any, should be ordered to be paid on the US$6900.00 down to the date of the judgment.

Costs

2.  There is no question but that the defendant should be awarded its costs of the action; however, in written submissions served on 28 October 2016, the defendant argued that the plaintiff should pay its costs of the proceedings to be taxed on the common fund or indemnity basis.  This submission was based on the alleged rejection by the plaintiff of an alleged verbal offer of settlement in the sum of RMB 100,000 made by the defendant that was recorded in open letters.  This is plainly not a case for awarding costs on a common fund basis — there is no common fund.  Nor, in my view, do the alleged facts concerning the alleged rejection of a settlement offer justify an order for indemnity costs.  Such an order should only be made where the paying party’s conduct is radically out of the ordinary and is of such a nature as to require it to be marked by the party having to pay costs on the more generous level.  Each case turns on its own facts and I am satisfied that here the alleged rejection of the defendant’s offer is not conduct that requires to be marked by the proposed exceptional costs order.  I accordingly order that the plaintiff should pay the defendant’s costs of the action on the ordinary party and party basis.

Interest

3.  In accordance with the usual practice of the courts of Hong Kong the defendant is plainly entitled to be paid interest on the US$6900.00 it is entitled to recover from the plaintiff.  Relying on two cases where the claim was for the return of deposits paid as advance part payments — LeungKaYung&AnorvTuoWeiWei HCA 39/1998 and PolysetLimitedvPanhandatLimited FACV 28/2000, the plaintiff argues that interest should only run from the date proceedings were issued and not from the date the US$6900.00 was paid.   ‌In my judgment, those decisions are distinguishable.  Here the plaintiff never had an entitlement to receive the US$6900.00 since that sum was paid as a consequence of the plaintiff’s misrepresentation that the proposed VPN system could be operated using the K3 computer system.  For this reason, I am quite satisfied that the defendant is entitled to interest from 12 August 2011 down to the date of the judgment.

4.  It is also the usual practice of the Hong Kong courts to award pre‑judgment interest at the annual rate of prime +1%.  For some years, certainly over the period 12 August 2011 to the date of the judgment, Hong Kong’s prime rate has been 5% per annum.  It follows that the defendant is entitled to interest on the US$6900.00 at 6% per annum over this period     .  

5.  Following the hand down of the judgment, pursuant to section 49 (1) of the High Court Ordinance (Cap 4)  the defendant will be entitled to interest on the total sum awarded under the judgment at the statutory rate of 8% per annum down to payment.