KRISTAN BOWERS PHILLIPS v. INITIAL ENVIRONMENTAL SERVICES LTD. and Others

1996 No. P. I. 580

IN THE HIGH COURT OF

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES

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R U L I N G

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1. In my judgment in this action I made an order nisi in relation to costs awarding the Plaintiff costs on a Common Fund basis. In so doing I referred to the fact that the Plaintiff was under a disability. That was not intended to be the sole basis for the decision, nor is it. I invited the parties who wished to argue on the question of costs to do so by way of written submissions in order to save costs and court time. All parties helpfully accepted the invitation and a timetable was set. In due course written submissions and replies to submissions were received. I have considered these and the law in relation to costs orders. My decision is perhaps somewhat more detailed than might otherwise appear to be necessary but a considerable amount of material was put before me and in any event I hope that it will be helpful on a broader front even though this case was unusual in its length, the extent of the material adduced and the issues at large.

2. Section 52A(1) of the Supreme Court Ordinance (Cap. 4) states:

"Subject to the provisions of rules of Court, the costs of and incidental to all proceedings ..... in the High Court ..... shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid."

Turning to order 62 r.28 which deals with the costs payable, sub-rule (2) sets out the basic provision:

"Subject to the following provisions of this rule, costs to which this rule applies shall be taxed on the party and party basis and ... there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing ..... the rights of the party whose costs are being taxed."

Sub-rule (3) then deals with the common fund basis:

"The Court in awarding costs to which this rule applies may in any case in which it thinks fit to do so order or direct that the costs shall be taxed on the common fund basis [or on the indemnity basis]"

And sub-rule (4) continues:

"On a taxation on the common fund basis, being a more generous basis than that provided for [by the party and party basis], there shall be allowed a reasonable amount in respect of all costs reasonably incurred, [and sub-rule (2) shall not apply.]

The term "fit to do so" means unarguably "in the proper exercise of the discretion."

3. It is important to set out the unusual features of this piece of litigation as the backcloth against which I have to determine whether it is right to exercise my discretion in granting the more generous (underlined advisedly) basis for the taxation of costs.

4. The litigation as a whole and the trial itself was concerned with events spread over the past decade, but additionally the Defendants contentions on causation led to an examination of the Plaintiffs medical history since he was born. We were thus having to view his 47 years of existence, some of them through a microscope it seemed.

5. The principal parties were also concerned with an argument over the toxicity or otherwise of the chemical - an aspect which was perhaps an astonishing exercise in all the circumstances - its development and use, the various forms of research and study conducted over 40 years or so, and the world-wide concern with pesticides, organo-phosplates and others, their effect upon different communities or sections of communities, and the validity of certain conclusions. The 4th Defendants in particular as the corporate successor to the developer of the chemical, and an internationally known chemical company, in exercising the diligence to be expected of it could be taken to have acquainted itself fully with the relevant literature - Some of it was generated by its own employees. This brings me to one particular aspect of the Plaintiff's long and arduous task of securing full discovery from the Defendants, some of which was achieved during the trial itself, as several defendants, through the persistence and fair endeavours of their Counsel, disgorged highly relevant documentation when they had neglected to do at the appropriate time.

6. In March 1996 the Plaintiff's solicitors made an application for specific discovery of documents and articles in publications of which the 4th Defendants had knowledge and control. When they initiated this step I do not doubt that they were "in the dark" to some extent as to the exact nature of these documents and their description. They were relying upon Dr. Samuel Epstein's recollection that in 1993 he had had sight of some documentation in an action in the United States of America in which he had given evidence as a expert. The Learned Judge, in considering the question of relevance, was misled as to the position between Ciba-Geigy and Nippon Kayaku. The trial proceeded on the admitted fact that Nippon Kayaku produced diazinon under licence from Ciba-Geigy. Mr. Justice Cheung had been wrongly but innocently informed to the contrary by Ciba-Geigy's Counsel. The documents relating to the formulation of diazinon were highly relevant in the light of the issues of this trial although in the event, by reason of eventual disclosure of documentation and availability of literature, Ciba-Geigy could hardly resist the arguments that they knew or ought to have known of its dangerous properties and the potential effect of those upon people exposed to it. Ciba-Geigy both in the application before Cheung, J. and that before me, sought to hide as much as possible concerning its knowledge in these regards.

7. A considerable body of evidence was marshalled to establish the chain of responsibility for the use of the diazinon but at the same time efforts were being conducted in order to advance the possibility that it was not diazinon that was used on the material occasion but some other chemical. This was, in the event, a not inconsiderable red herring. It was accompanied by a contention from the 5th Defendant that although it was the substantial supplier of diazinon to the 1st Defendant, it did not supply the diazinon actually used on this occasion.

8. A complicating feature was the separate issue between the Plaintiff and the 2nd Defendant, his former employers, of the breach of contract dispute which was eventually disposed of, but at an early stage of the trial. This did not however remove the allegation on behalf of the 2nd Defendant, adopted and pursued by other Defendants, that the non-renewal of the Plaintiff's contract was wholly unrelated to the events of the 21st June. These matters and the broad range of issues canvassed throughout are in any event reflected in the judgment and it is not therefore necessary for me to re-iterate them. At the time of an application by the 1st, 2nd and 3rd Defendants to dismiss the action for want of prosecution, Findlay, J. said in his judgment "This action is relatively complex and difficult to prosecute." The course of the trial in my view confirmed this opinion. The Plaintiffs advisers had to research and present a case which involved a mass of documentary and research material in their need to cover every issue. This was compounded by the opening up of avenues such as a detailed review of the Plaintiff's pre-incident physical and psychiatric health and the very late allegation that he was malingering. The Defendants, as they were entitled to, put him to proof virtually of each and every issue. Even on the items of special damage claimed, there was very little agreement.

9. There were documents in the possession of the 3rd Defendant which unarguably showed that it had been negligent in allowing the rehearsal to take place and that it was aware of the risk of harm to persons on the premises when the pesticide operation took place.

10. There were documents and literature in the possession of the 1st Defendant which clearly showed the duty of care involved in the use of diazinon and evidence which demonstrated a consequential breach of that duty.

11. The 5th Defendant also possessed documents which clearly demonstrated the hazards in the use of diazinon and the need for care and warnings.

12. Similarly there were documents and other evidence in the possession of the 4th Defendants which made them aware of the lack of care in the use of diazinon, of the inadequacy of warnings in relation to the distribution and/or sale of it, of the 5th Defendants reliance upon it for proper and safe labelling, and it had access to literature and research in respect of the potential harm from use of the chemical including short-term and long-term potential adverse physical damage to human beings.

13. The position as far as the 2nd Defendant was concerned was somewhat different and certainly more limited. They had no effective management in operation at the venue on the occasion of the rehearsal. They knew that no operational but only security staff would be present at the Academy. There was no formulated policy for Mr. Kan to follow as the so-called representative of the management in the Orchestra. After the event the 2nd Defendant obtained a medical report which they withheld until a very late stage in the litigation, which clear supported the contention that the Plaintiff was genuine and that he had suffered some neurological damage from which he may or may not recover fully; and they knew that a number of orchestral players has suffered some, albeit transient, reaction to the noxious substance.

14. All these aspects covering all Defendants reflected the burdens devolving upon the Plaintiff in seeking to prove every stage in his case, and made more difficult by piecemeal and belated discovery of documents.

15. The Plaintiff had to move to America and there, apart from undergoing continuous rehabilitative treatment, and being involved in misconceived litigation the records of which in due course provided yet another area for diligent research even though its basis or ambit had very little relevance to this action, eventually was certified as being under a mental disability and a next friend was appointed. This was bound to cause extra work and difficulties. This position has been misunderstood. At the time of the Defendants' summonses before Findlay J., the Court was not aware that the Plaintiff was incapable of managing his own affairs and in any event the Learned Judge was dealing with the matter of difficulties in communication in the context of delay.

16. Quite apart from the detailed evidential investigations to which I have referred, a vast array of experts in a variety of fields was called to give evidence, either in Hong Kong or by video-link with the United States of America.

17. Some of this expert evidence emerged either very shortly before trial or during the course of the trial itself. This occasioned necessarily an evaluation of such by the experts on behalf of the Plaintiff. Some of the evidence for example that on distribution of and/or dispersal of contaminated air, turned out to be nothing more than a speculative exercise since it became clear that the conditions obtaining in 1987 could not be replicated.

18. Considerable work on the files of evidence in the Velsicol proceedings was brought about by the Defendants' requirements yet very little had any relevance to the issues in this trial.

19. A contention, principally by the Plaintiff's employers, the Second Defendants, that he was fully recovered by the start of the 1998/89 season and performing as well as ever, involved the consideration of tape-recordings, expert and anecdotal evidence and records of orchestral attendances as well as newspaper reviews. This was in conflict with the contents of a letter from the Second Defendants' solicitors in late 1988, and was but one of several areas in the action in which the time and effort spent was disproportionate to the issue involved and the attempt to undermine the realistic and the obvious was a wasteful one.

20. Belated attempts to amend pleadings indicated a shifting approach by the Defendants concerned. The application to add a plea of contributory negligence demonstrated an unreal approach on the part of the Defendants concerned - there was absolutely no basis for it and this attitude explained in part the unwillingness to agree even the most basic of facts in the Notice to Admit facts.

21. My approach to this aspect has not been a punitive one. I am concerned only with whether the state of affairs was such as to justify an order that the Plaintiff's costs be on a common fund basis. This trial could have been greatly simplified and shorter in duration. It was no fault of the Plaintiff that this did not happen. The Defendants, separately or collectively, did what they were entitled to do and that is to require the Plaintiff prove his case step by step. Having done so it would be inequitable if the Plaintiff could not recover reasonable costs reasonably incurred as a consequence of the Defendant's unreasonable policy.

22. Against this background I have looked at the authorities referred to in the submissions of Counsel. The principles to be derived are consistent and straightforward.

23. Preston v. Preston - 1982. Fam. p.17. confirms the Court's unfettered discretion to award costs on a common fund basis. In that case the order was made because the dilatory and uncooperative conduct of proceedings by the husband's former solicitors had increased costs. This was a special feature justifying such an order. In dealing with the discretion, Brandon L.J. (as he then was) stated, perhaps somewhat unnecessarily since the sub-rule clearly referred to the nature of the discretion, that "it was not intended to be exercised arbitrarily or whimsically". However, I bear his stricture in mind.

24. The Hong Kong Court of Appeal considered Preston v. Preston in Lakhan v. Wu Wing Tat & Anor 1987, Civil Appeal No. 104. and upheld the judge's decision not to award Common Fund Costs, because it was clear that he had considered all the features of the case.

25. In Kung Kwok Wai David v. Citibank NA the Court of Appeal considered and applied both the foregoing cases and held (Hunter, J.A.) that there were no special and unusual features in the case, and the judge had wrongly exercised his discretion.

26. Godfrey, J. (as he then was) reviewed the position and adopted the same principle in Wharf Properties v. Cumine 1983 No. 13431.

27. The Second and Fourth Defendants place some reliance upon Godfrey J's (as he then was) decision in Overseas First Bank Ltd v. Coopers & Lybrand 1991. H.K.L.R. p.177 and in particular upon his observation that the discretion to award other than party and party costs (i.e. on an indemnity basis) should be exercised when the Court "feels a proper sense of indignation at the unsuccessful party's conduct". If the comments were also intended to cover the position in which common fund costs were sought, I respectfully disagree. It is inconsistent with the criteria of special and unusual features which may not include such "sense of indignation". In my view it seeks to circumscribe the discretion too narrowly and restricts the ambit of consideration unjustifiably.

28. The contents of my judgment on liability and quantum, make it clear that this case had special and unusual features, such as to justify an order for common fund costs. In this decision I have set out in concentrated form those features. I have not dwelt on the detail although there is a mass of it. I have made it clear that the order was in no sense a punitive one even though in the judgment itself I was critical of the unrealistic attitude of some defendants which had undoubtedly extended the length of the trial and the cost of it. If I were to consider making a punitive assessment, it would take up much more time, involving necessarily a consideration of much correspondence and other documentation. In any event it is not necessary because the consequence of the Defendants' legitimate, if ill-conceived, stances are clear-cut. At times it was necessary to curtail lines of cross-examination. On other occasions the complex nature of some of the material was such that it was impossible to intervene to as to curtail matters. It became clear however on the termination of particular areas of evidence that either they were not relevant or the issue was so clear-cut as not to have necessitated detailed examination, but to have merited a composite agreement.

29. I accept that for the Defendants there was a lot at stake. Consequently it was in the interests of each defendant to establish prime responsibility on some other Defendant or Defendants, particularly perhaps the Fourth Defendant, and to avoid any responsibility if possible. With five Defendants at bay it was in the Plaintiff's interest to establish liability against as many Defendants as possible. In this area the Plaintiff had to have regard to his own case against the Defendants, as well as the case of one or more Defendants against others. This point seemed to have been lost on some of the Defendants and at one stage at least one Defendant did not understand that the Plaintiff was entitled to adopt the allegations made against it by another Defendant.

30. This internecine conflict required the Plaintiff to be alert to the implications and the consequent "fall-out" which might favour the Plaintiff's case. It may be that this also inhibited a concerted appreciation of the elements in the Plaintiff's case which should have produced an intelligent agreement on a wide variety of matters.

31. Some reliance has been placed upon Findlay J.'s findings in his judgment following the application by the 1st, 2nd and 3rd Defendant's application to dismiss the Plaintiff's action heard in November 1994. Although the learned judge found that there had been inexcusable delay he did not have to consider the complexities of the case advanced against the 4th and 5th Defendants. It was undoubtedly in the interest of the 1st, 2nd and 3rd Defendants that the case should be established against the other two. With the benefit of hindsight involving an evaluation of the case against the 4th and 5th Defendants, the conflicts between the two of them and the results of discovery by both, the delay pales into insignificance. In fact the 1st, 2nd and 3rd Defendants benefited by the Plaintiff's pursuit of the other two. Undoubtedly, however, the case became more complex.

32. The Plaintiff's disability which was unarguable on the psychiatric evidence of Dr. Hsu alone, despite the 3rd Defendant's contention to the contrary, undoubtedly created difficulties particularly since the next friend, and his predecessor, were also in America. The Plaintiff had to leave Hong Kong for America as a consequence of the tort committed against him. Equally clearly his disability was a consequence of the tortious injury suffered by him. These factors are bound to have added to the costs.

33. In Overseas First Bank Ltd. v. Coopers & Lybrand. Godfrey J. was informed of the variation in the costs of that action according to which basis was allowed. Although I need not concern myself with the actual figures, the proportions were significant - a party and party taxation would cover about 50% of the actual costs of that case, and on a common fund basis, there would still be a difference of about 20% to 30%.

34. The First Defendant in its submission suggests that the difference between the two bases is between 10% and 20%.

35. The Plaintiff's submission refers to the Hong Kong Civil Court Practice Vol. 1 Division VII ”1170-1171 and cites the authors as stating that "The party and party basis is a minimal basis and will normally leave the successful party substantially out of pocket." Kaplan J. was quoted as saying that such a basis would leave a successful party between 30% and 40% out of pocket.

36. In other words where a Plaintiff had recovered damages they would be reduced to make up that shortfall in costs. Both a former Chief Justice in Lakhan v. Wu Wing Tat and Godfrey J. have commented on the unfairness of such a situation. The latter has in two cases pointed out that for nearly a decade, in the United Kingdom, the minimal basis for costs is the standard basis (equivalent to the old common fund basis) and the only other basis is indemnity. Hong Kong has not yet adopted that change, so as to remove an inequitable situation.

37. I am of course bound by the existing provisions and the approach of the Courts. However the criterion of "special or unusual feature" in the case must be intended to overcome a harsh or inequitable consequence. The length, extent and complexities of this case undoubtedly constitute "special or unusual features". The wide range of issues is another special or unusual feature as is the fact that the litigation had to be conducted in Hong Kong on behalf of a Plaintiff who was under a disability some 10,000 miles away. The policy of the Defendants in their conduct of their respective cases, with the consequences referred to, is yet another.

38. In the submission of the First Defendant is the sentence:

"Quite apart from the neurological aspect, the number of experts relied upon by the Plaintiff, in terms not only of quantity but also in breadth of disciplines, was phenomenal and unprecedented in these courts."

The same can of course be said of the Defendants, particularly the Fourth Defendants. Furthermore the submission of the Fourth Defendants, a substantial document in size, makes the same points:

"Causation, both in law and fact, was hotly contested and there were important and difficult issues for the court to determine in this area."

"It was a case with many highly technical aspects."

"Expertise was called for from every discipline .......... [it] lasted a total of 40 days ....."

Although a comparison was made with the Wharf Case, I do not consider it a valid one.

39. The Plaintiff's application for a certificate for a third (second junior) counsel is also resisted. If ever a case justified the instruction of a third counsel on behalf of a Plaintiff, this was it. Of course four defendants each originally instructed leading and junior counsel. The Fifth Defendant instructed junior counsel only. The vast amount of documentary material alone called for a third counsel on behalf of the Plaintiff, who was faced with the particular cases of each defendant, and the need to master all the documentation, including that which emerged at trial. All the parties benefited from the services of that third counsel, as did the Court. I have no hesitation in granting such a certificate.

40. In their submissions some Defendants have argued, that by reason of their prudence and good judgment in not taking part in certain contested matters, in not adducing evidence on certain topics or in adopting the stance of other Defendants, I should order that the costs they have to pay should be on a party and party basis. The course they adopted undoubtedly saved time and expense but I have had to have regard to the action and trial as it evolved. These Defendants will benefit from their actions in that their own costs will be far less as a result. My apportionment of responsibility will also, in the end and in certain events, provide a limited liability for the Plaintiff's costs. It would be impossible, invidious and inappropriate to make any further distinction.

41. There is also an argument between the 2nd and 3rd Defendants as to the costs implications of their contractual position and belated allegations. I do not propose to make any order in relation to that issue. In my view the apportionments I have made are sufficient, leaving them to bear their own costs.

42. Accordingly I confirm my decision that the Defendants pay the Plaintiff costs on a common fund basis, with the certificate for a third counsel.

(Conrad Seagroatt)

Judge of the High Court