WAI KAM CHOI AND ANOTHER v. WAI, THOMAS KAM WING also known as WAI KAM WING THOMAS

HCA 856/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 856 OF 2009

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BETWEEN

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R U L I N G

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1.  On the first day of the trial of this case before me on 5 December 2011, I dismissed the Defendant’s application (“Amendment Application”) to amend the Defence and Counterclaim with costs to the Plaintiffs.  The case settled in the afternoon of that day, when I approved a Consent Order recording the parties’ agreed terms of settlement, including a term that there be “no order as to costs of the action.”

2.  Unfortunately that was not the end of the matter.  After the case had settled, the Plaintiffs sought to recover from the Defendant their costs of the Amendment Application.  The Defendant disagreed that the Plaintiffs were entitled to such costs. 

3.  Having consulted the parties, I directed that the matter be disposed of “on the papers.”

4.  This is my Ruling after considering the parties’ written submissions.

Construction of the Consent Order

5.  Counsel for the parties disagree on what had passed between them in reaching the final terms of the Consent Order.  Nor is there any suggestion to rectify the Consent Order.  In the circumstances, I must confine myself to the express terms of the Consent Order, construed objectively in light of the objective facts and circumstances known to the parties at the time.

6.  The Consent Order provided that there be “no order as to costs of the action”.  Ordinarily, those words would apply to costs of the action in respect of which no costs order had already been made by the Court.  For example, if at the end of an interlocutory application the Court orders that the successful party should have his costs of and occasion by the application – whether “forthwith” or “in any event” – the successful party is prima facie entitled to his costs and his entitlement would not be affected by the outcome of the trial.  

7.  Accordingly, if the party in whose favour a costs order has been made agrees not to enforce his entitlement to costs, it should normally be made clear by express wording to that effect in the settlement terms: see Walter v Bewicke Moreing & Co (1904) 90 LT 409 (very fairly drawn to my attention by the Defendant’s counsel).

8.  In the current case, I dismissed the Amendment Application with costs to the Plaintiffs.  Their entitlement to costs had already crystallised.  The terms of the Consent Order, providing that there be “no order as to costs of the action”, did not alter that position.

9.  The Defendant contends that I must construe the Consent Order commercially.  I agree with that approach.  But in my view the terms of the Consent Order do not displace the Plaintiffs’ right to costs of the Amendment Application.

Gross Sum Assessment of Costs of Amendment Application

10.  I also directed that in the event that I hold for the Plaintiffs, I would assess the Plaintiffs’ costs of the Amendment Application.

11.  The Plaintiffs claim $40,591 in respect of costs of the Amendment Application (see Annex 2 to the Plaintiffs’ Written Submissions).  That sum included $20,000 in respect of leading (junior) counsel’s brief and $8,000 for junior counsel’s brief for the Amendment Application.  The solicitors charged $18,000 in profits costs.

12.  The Defendant contends that such costs were grossly excessive, particularly bearing in mind that counsel were already briefed to attend trial on that day.  It is pointed out that counsel’s briefs for the whole trial (fixed for 8 days) were $140,000 and $20,000 respectively, and the briefs in respect of the Amendment Application were disproportionately high.

13.  It is unnecessary to decide whether counsel is entitled to two briefs on the same case on the same day.  The plain fact is that time must have been spent on dealing with the Defendant’s application.

14.  However, I agree that the sums claimed are excessive in the circumstances of this case.  The amendments were not extensive or complicated.  Although the amendments were undoubtedly important to the Plaintiffs, the time spent on extra preparation to deal with the application could not have been much more than a couple of hours.  Nor do I see any reason why the solicitors have to incur any substantial amount of time or costs on the matter.

15.  In my view, an appropriate amount of costs, on a party and party basis, would be $15,000.  I so order.

Costs of this application

16.  It is regrettable that further costs have to be incurred in dealing with this matter.  Although the Plaintiffs succeed on the issue of entitlement, I have substantially reduced the amount claimed.  In the circumstances, I think a fair order would be no order as to costs, and I order accordingly.