THE WORLD FOOD FAIR LTD AND ANOTHER v. HONG KONG ISLAND DEVELOPMENT LTD

HCA4602/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4602 OF 2000

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R U L I N G

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1. I have made an order nisi as to costs in this matter to the effect that the Defendants would have the costs of the claim and the Plaintiffs of the counterclaim which I had dismissed. In making that order I expressed myself in the judgment in this way:

"I would have thought that the Defendants must have their costs on the claim and the Plaintiffs theirs on the counterclaim which follows the usual rules of costs following the event. I appreciate that overall the Defendants have been the successful party, but they chose to bring a counterclaim which has failed. I also recognise that the Plaintiffs have had a partial success in that they had their deposit back, but this really is a tiny point in the action when it is measured against all the effort and time expended in bringing and defending the main aspect of the claim (see paragraph 56)."

2. This was my instinctive reaction to the overall justice and merits of the case, as reflected by the judgment, but without the benefit of argument on costs by the parties. I am now asked to vary that order by the Plaintiffs.

3. In a series of characteristically bold and trenchant submissions, Miss Lau seeks to persuade me to award the Plaintiffs at least half of their costs on the claim. The Defendants accept that as they failed on the counterclaim, they must bear those costs.

4. What are the principles? The starting point is to be found in Order 63, rule 3(2) of the Rules of the High Court, which states that:

"If the court, in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings, the court shall, subject to this order, order the costs to follow the event, except when it appears to the court that in the circumstances of the case, some other order should be made as to the whole or any part of the costs."

5. To this I must add further elaboration which is helpfully provided by the decision of the English Court of Appeal in Re Elgindata 2 [1993] 1 AER 232, where Nourse LJ at 237 G-H summarised the guiding principles in the following way:

"	(1)	Costs are in the discretion of the trial court.
	(2)	They should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made.
	(3)	The general rule does not cease to apply simply because a successful party raises issue make allegations on which he fails, but where that has caused a significant increase in the length of cost of the proceedings, he may be deprived of the whole or part of his costs.
	(4)	Where the successful party raises issue or makes allegations, improperly or unreasonably, the court may not only deprive him of his costs, but order him to pay the whole or part of the unsuccessful party's costs.
	This fourth principle implies that a successful party, who neither improperly or unreasonably raises issues or makes allegations on which he fails, ought not to be ordered any part of the unsuccessful party's costs."

6. From that it first becomes essential to decide what was the event in this case and who won it. As I say, my instinctive reaction to my judgment was that the Defendants had undoubtedly been victorious, if I can express it in this way. I will indicate why I say that in a moment. Nevertheless, Miss Lau says, "No, that is not right. When this judgment is translated into an order of the court, it will show that on the claim the Plaintiffs have obtained judgment in the amount of $200,000, being the return of its deposit." She concedes, of course, that under the terms of 'principle (3)', supra, which I should repeat here:

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(3)

The general rule does not cease to apply simply because a successful party raises issue make allegations on which he fails, but where that has caused a significant increase in the length of cost of the proceedings, he may be deprived of the whole or part of his costs."

Where her clients have failed on their claim that a binding lease had been entered into, the latter part of this principle bites, so that they ought properly to be deprived of a significant portion of their costs. But that is the extent of her concession.

7. I regret to say that Miss Lau's analysis of what has happened is not one that properly reflects the realities of this case. This was an action brought by the Plaintiffs on the basis that they had entered into a binding lease and they claimed the return of their wasted expenditure in an amount exceeding $4 million by virtue of the Defendants' breach of that agreement. In this they were resoundingly unsuccessful.

8. As I indicated in the course of the argument, the return of the deposit was no more than an incident or consequence of that failure. Whilst I appreciate that the Defendants could have paid the deposit into court or offered to repay it, this should not, in my judgment, deprive them of their costs. They are the successful party in this action and 'principle (4)', supra, in my view provides the true answer:

"	(4)	Where the successful party raises issue or makes allegations, improperly or unreasonably, the court may not only deprive him of his costs, but order him to pay the whole or part of the unsuccessful party's costs.
	This fourth principle implies that a successful party, who neither improperly or unreasonably raises issues or makes allegations on which he fails, ought not to be ordered any part of the unsuccessful party's costs."

9. The Defendants' stance on the return of the deposit was neither improper nor unreasonable in the overall scheme of the contest and under 'principle (3)' this stance has not caused a significant increase in the length or cost of the proceedings.

10. I am therefore satisfied that the just order is one that requires the Plaintiffs to pay the Defendants' costs of the claim.

11. There are also three miscellaneous matters which I need to deal with. On the counterclaim I propose to indicate for the Taxing Master's assistance that the time occupied by the counterclaim was, in reality, minimal. Doing my best, it would be no more than 2 hours. The evidence was already there and the counterclaim which came by amendment sought to rely on that evidence. There are also orders for costs to be made on amendments to pleadings by both parties during the course of the trial. These will be against the particular party making the amendment in any event. Lastly, on the application for security for costs, this will be in favour of the Defendants in any event.