KADER INDUSTRIAL CO LTD v. NGAI HING HONG PLASTIC MATERIALS LTD

HCA 1534/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1534 OF 2003

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HCA 1709/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1709 OF 2003

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JUDGMENT ON COSTS

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1.  In my judgment dated 30 March 2007, I dismissed Kader Industrial Company Limited (“Kader”)’s claim against Ngai Hing Hong Plastic Materials Limited (“NHH”) in HCA 1534 of 2003, and gave judgment to NHH against Kader in HCA 1703 of 2003.  I did not deal with the question of costs in my judgment, but directed the parties to make written submissions as to the appropriate costs orders, as the parties had indicated that they wished to deal with that matter separately. 

2.  In the event, the parties were able to come to an agreement dealing with most of the costs involved in these proceedings.  In summary, Kader agreed to pay all non-reserved costs of NHH in both actions and of the third and fourth parties in HCA 1534 of 2003, to be taxed on the party and party basis.  However, it was not possible to reach agreement as to how certain costs which had been reserved should be dealt with, and Kader and NHH accordingly filed written submissions as to these.

3.  There were a total of six orders under which costs were reserved.  These were:-

(1)	an order dated 20 October 2003 by Master Ho (in HCA 1534 of 2003);
(2)	two orders of Master Woolley dated 3 November 2003 (one in each action);
(3)	two orders of Deputy High Court Judge Sauders (as he then was) dated 23 February 2004 (one in each action); and
(4)	an order of Registrar Chan dated 26 September 2005 (in HCA 1709 of 2003).

4.  The first and last of these reserved costs orders are no longer the subject of dispute, as the costs covered by them were dealt with by later orders.

5.  The only matters outstanding are therefore the orders of Master Woolley and of Deputy High Court Judge Saunders.  These related to an application by NHH for summary judgment in HCA 1709 of 2003, and an application by Kader seeking consolidation of the two actions.  Both of the applications were first heard by Master Woolley on 3 November 2003, when he adjourned them to be heard by a judge.  They were eventually heard by Deputy High Court Judge Saunders on 23 February 2004.

6.  The claims in the two actions related to various plastic resins supplied by NHH to Kader.  In HCA 1543 of 2003, Kader sought substantial damages from NHH for the supply of allegedly defective resins.  In HCA 1709 of 2003, NHH claimed payment of the price of other resins which it had supplied to Kader, Kader having withheld payment after the dispute which gave rise to HCA 1543 of 2003 had arisen.

7.  Kader now submit that there should be no order as to costs in respect of either of these applications.  NHH’s position is that it should be awarded the costs of both applications.

8.  So far as NHH’s application for summary judgment is concerned, NHH had claimed judgment for HK$639,000 in respect of resins which it had supplied to Kader under a number of different transactions, in which there was no complaint as to the resins supplied.  Kader resisted the application on the basis that it was entitled to set off the damages that it was claiming in HCA 1534 of 2003 against this claim.  In the event, Deputy High Court Judge Saunders was satisfied it would be unjust to allow NHH’s claims on the other transactions to be enforced without taking Kader’s claims in HCA 1534 of 2003 into account, save that in respect of four transactions, amounting in total to HK$20,850.50, all of which related to orders placed by Kader after the dispute which led to HCA 1543 of 2003 had arisen, Deputy High Court Judge Saunders considered as Kader had chosen to enter into the transactions after its own claim had arisen, there would be no injustice in requiring it to make payment to NHH.  Accordingly, he gave judgment to NHH in the amount of HK$20,850.50, but gave Kader unconditional leave to defend the balance of NHH’s claim.

9.  Kader submits that the main issue for consideration in the summary judgment application was whether or not it was entitled to set off its claim in HCA 1534 of 2003 against NHH’s claims against it in HCA 1709 of 2003, and that on this issue, it was substantially successful.  It therefore submits that the fair costs order (recognising that it was not wholly successful) would be that there should be no order as to costs.

10.  In general, where an application for summary judgment is unsuccessful, the court may grant unconditional leave to defend or it may dismiss the application (a course which is generally taken where the plaintiff was aware of facts giving rise to a defence before taking out his application for summary judgment).  Where unconditional leave to defend is given, the usual costs order is that costs should be in the cause.  However, where the application is dismissed, costs will generally be awarded to the defendant.

11.  In this case, although Deputy High Court Judge Saunders did refer in paragraph 13 of his judgment given on 23 February 2004 to dismissing the application for summary judgment save to the extent of HK$20,852.50, he also granted unconditional leave to defend (in paragraph 16 of his judgment).  More importantly, it does not seem to have been any part of his reasoning (or Kader’s submission) that NHH was aware of the basis of Kader’s defence to its claim in HCA 1709 of 2003 before it made its application for summary judgment.  Had he considered that the application was one which should not have been made, he would, I think have awarded the costs of the application to Kader, rather than reserving them for later consideration.

12.  In the circumstances, while NHH did not succeed in its application for summary judgment, save to a very limited extent, I do not think that there would have been any good reason to depart from the usual course of ordering that costs of the summary judgment application should have been in the cause.  As the matter has now been concluded in NHH’s favour, it seems to me that the appropriate order to make now would be to order that Kader should pay the reserved costs of the summary judgment application to NHH, to be taxed on the party and party basis if not agreed.

13.  So far as Kader’s application for consolidation is concerned, Deputy High Court Judge Saunders declined to order consolidation, as the parties to the two actions were different (the third and fourth parties in HCA 1543 of 2003 not being parties to HCA 1709 of 2003).  He did, however, order that the two actions be tried together.  It seems to me that in all the circumstances, the appropriate order for costs would have been for costs to have been in the cause, and on that basis, I think that the appropriate order to make now would be likewise to order that these costs should also be paid by Kader to NHH, to be taxed on the party and party basis if not agreed.

14.  So far as the costs of the written submissions are concerned, as NHH has been successful in obtaining costs orders in its favour on both matters that were still in dispute, I shall order that these costs too are to be paid by Kader to NHH, to be taxed on the party and party basis if not agreed.