THOMAS VINCENT v. SOUTH CHINA MORNING POST PUBLISHERS LTD

CACV 253/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 253 OF 2002

(ON APPEAL FROM HCA No. 6233 of 1999)

-----------------------------------------

-----------------------------------------

---------------------

D E C I S I O N

---------------------

Hon Yuen JA:

Plaintiff's Claims

1. In this action, the Plaintiff had originally instituted proceedings in the Labour Tribunal against the Defendant, his former employer, for

(a) wages, long-service payment and pension rights ("terminal payments") under the provisions of Part VIA of the Employment Ordinance, claiming a minimum of $75,000;

(b) an end of year payment, under the terms of his contract of employment, of $79,120; and

(c) damages to be assessed, under the implied obligation of good faith in employment contracts established in Malik v Bank of Credit and Commerce International SA [1998] AC 20.

2. The proceedings were transferred to the High Court.

Order below

3. After a 5-day trial, the trial judge found that the Plaintiff was entitled to (a) terminal payments of $92,306.70 and (b) the end of year payment of $79,120. The judge dismissed the claim to Malik damages, remarking that when he had allowed the Statement of Claim to be amended to include this claim, he had thought that the Plaintiff's claim was tenuous, and that after trial, in fact he could not see that there was anything in the claim at all.

4. The trial judge gave an order nisi that the Defendant pay the costs of the action. The Defendant did not seek to vary it even though the Plaintiff's Malik claim had been dismissed. This was not surprising since the evidence relating to the claim for terminal payments would have been similar to that for the Malik claim.

Order of this court

5. On appeal, this court allowed the Defendant's appeal against (a) the award of terminal payments of $92,306.70, but dismissed its appeal against (b) the end of year payment of $79,120. There had been no cross-appeal by the Plaintiff on the dismissal of his Malik claim.

6. In our judgment handed down on 13 October 2003, we made an order nisi that the Plaintiff bear two-thirds of the costs of the appeal and of the hearing below. The Plaintiff's own costs were also ordered to be taxed in accordance with Legal Aid Regulations.

Application to vary order nisi

7. The Plaintiff has asked this court to vary this order nisi, to the effect that he should have one-third of the costs on appeal and that the costs below should be left undisturbed. The Defendant opposes the application.

Variation of costs order nisi

8. Having heard the arguments advanced by Mr Coleman and Mr Wan, I consider that the order nisi should be varied as follows: the Plaintiff is to pay the Defendant two-thirds of the costs of the appeal and the Defendant is to pay the Plaintiff one-third of the costs of the appeal, liability under the costs orders to be set-off. As for the costs of the action, the Defendant is to pay the Plaintiff one-third of those costs. The Plaintiff's own costs are, as before, to be taxed in accordance with Legal Aid Regulations.

Costs of the appeal

9. I consider that it would be just for the Plaintiff to have one-third of the costs of the appeal. There was a claim on which the Plaintiff succeeded, and he should be entitled to costs. Although this was one of two claims before this court, the arguments on this claim took less time than the other claim, and the one-third apportionment is intended to reflect that.

Costs of the action

10. As for the costs of the action, I have taken into account Mr Coleman's submissions that normally costs "follow the event" and that the court should be slow to make "issue-based" costs orders reflecting a party's success or failure on individual issues. Mr Coleman submitted that since the Defendant had not made any payment into court, the Plaintiff had to come to court to obtain the end of year payment. Therefore, Mr Coleman submitted, his client should be entitled to the entire costs of the action.

11. One can easily understand the application of a single "follow the event"costs order in an action where a plaintiff is seeking a single remedy, even though in the pursuit of that remedy, he may have succeeded on some issues and failed on others (In re Elgindata Ltd No. 2 [1992] 1 WLR 1207). However, in my view, it is a different matter where a plaintiff is making a number of discrete claims for different sums. Where he fails on some of these claims, and where the court can isolate the time spent on these claims from that spent on the successful claims, I consider that the court should exercise its discretion in appropriate cases to make costs orders that reflect the time spent on the failed claims.

12. As far as the argument based on payment into court is concerned, where a defendant has not made a payment in for a claim on which his defence fails, he is liable to bear the costs pertinent to that claim. However I do not see why it should automatically follow that he should also bear the costs of defending claims on which he succeeds. The Rules of Court clearly provide that where there are two or more causes of action, the notice of payment in must state whether the sum paid in is in satisfaction of all the causes of action, or in satisfaction of only some, and if so, which causes of action. This is reflected in the form specified under Order 22 rules 1 and 2 (Form No.23).

13. I derive some support for the varied order from recent English decisions on costs to which our attention was drawn by Mr Wan. These cases were decided prior to the introduction of the Civil Procedure Rules. In John Richardson Computers Ltd v Flanders [1994] FSR 144, Ferris J apportioned the costs in a case of infringement of copyright. Although the judge found that the defendant had infringed the plaintiff's copyright, the infringement was only to a minor extent and was not the wholesale infringement that the plaintiff had alleged. The judge ordered the defendant to pay 30% of the plaintiff's costs and the plaintiff to pay 60% of the defendant's costs of the action, liability under the two orders for costs to be set off.

14. In Phonographic Performance Ltd v AIE Rediffusion Music Ltd [1999] 2 All ER 299, Lord Woolf MR said:

"From 26 April 1999 the 'follow the event' principle will still play a significant role, but it will be a starting point from which a court can readily depart. This is also the position prior to the new rules coming into force. The most significant change of emphasis of the new rules is to require courts to be more ready to make separate orders which reflect the outcome of different issues. In doing this the new rules are reflecting a change of practice which has already started. It is now clear that a too robust application of the 'follow the event' principle encourages litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points they take. If you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your effort to do so" (emphasis added).

15. Lord Woolf MR went on to say that where the successful party raises issues on which he fails, he may not only be deprived of his costs but may also be ordered to pay the other party's costs, even though those issues may not have been raised improperly or unreasonably.

16. In circumstances where there were discrete claims for different sums and the time spent on the failed claims could be differentiated from that spent on the successful claims, I think the traditional practice of simply ordering costs to "follow the event", however much time may have been wasted on the failed claims, should give way to a fairer, more precise approach that would reflect the realities of litigation.

17. In the present case, there were three discrete claims. At the trial, the Malik claim failed. The trial judge gave an order nisi that the Defendant pay the entire costs of the action to the Plaintiff but, as I have said, that is not surprising as the evidence for the Malik claim would have been similar to that for the terminal payments claim.

18. However now that this court has found that the Plaintiff is not entitled to the terminal payments claim either, the only successful claim is the end of year payment claim, which involved only the construction of the Staff Regulations and Conditions of Service. It therefore falls to this court to exercise its discretion as to the costs order for the action.

19. Since it is possible in this action to differentiate between the time used for the successful claim and the failed claims, there is no reason why the fairer, more precise approach to costs orders in the case of discrete claims referred to above cannot be adopted.

20. Should the Plaintiff be required to bear the Defendant's costs of the action insofar as they relate to the failed claims, or should the court simply decline to award costs to the Plaintiff for the failed claims? In the present case, I do not consider that it would be appropriate to require the Plaintiff to bear the Defendant's costs of the action insofar as they relate to the failed claims. Part VIA of the Employment Ordinance was relatively new, having come into being only in June 1997, it was not a direct reproduction of the English legislation and there was no case law in Hong Kong at the time on this area of the law. I think it would be harsh on the Plaintiff to require him to bear the Defendant's costs relating to these failed claims, even though they would have taken most of the time used at the trial. This approach would also be consistent with principle (3) in Elgindata, i.e. that where the successful party raises issues or makes allegations on which he fails, where that has caused a significant increase in the length or costs of the proceedings, he may be deprived of part of his costs.

21. I would accordingly vary the order nisi in the manner set out in paragraph 8 above. The costs of this application to vary the costs order nisi will be part of the costs of the appeal.

Hon Gall J:

22. I agree.

Hon Sakhrani J:

23. I also agree.