B.S.C. INTERIOR CONTRACT AND ENGINEERING CO LTD v. SHINTA LTD

HCCT 97/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 97 OF 2003

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DECISION ON COSTS

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1.  In my judgment dated 24 September 2008, I found for the plaintiff in a sum to be agreed with a costs order nisi in favour of the plaintiff.

2.  Subsequently the parties agreed a figure of $4,429,477.60 as the judgment sum which was calculated in accordance with the various findings I had made in the written decision of 24 September 2008.

3.  The defendant then requested to be heard on the costs order nisi.  By agreement the parties have made their submissions in writing.  The final submission, namely the defendant’s submission in reply, is dated 8 December 2008.

4.  The key figures which are relevant to the issue of costs are as follows :

(i)Quantum of plaintiff’s original claim	$9,997,536
(ii)Amount abandoned pre-trial	$688,318
(iii)Quantum of plaintiff’s claim at commencement of trial	$9,309,218
(iv)Quantum of plaintiff’s claim after 1st day of trial	$5,150,430
(v)Value of plaintiff’s claim as assessed by plaintiff’s expert witness	$5,150,430
(vi)Value of plaintiff’s claim as assessed by defendant’s expert witness	$2,194,445
(vii)Amount of money paid into court	$NIL
(viii)Best offer made by defendant (made on 15August 2008 while the trial was “part heard” and was inclusive of interest and no order as to costs)	$2,200,000
(ix)Judgment sum	$4,429,477

5.  In the 31 pages of written submissions I have received, various alternative approaches to the proper exercise of discretion on costs have been canvassed.

6.  Authorities from UK in support of a more flexible approach to costs in recent years have been cited.  So too have authorities from Hong Kong suggesting that the “new” English approach has, as yet, not been followed here.  Of course, it is always open to a court not to apply the rigid principle that “costs follow the event” in every case.  If there are good reasons to make a different order they must be carefully considered.

7.  The one thing on which both parties agreed is that costs is a matter of discretion.

8.  The defendant’s main argument is that because the value of the claim was reduced from (approx.) $9 million to (approx.) $5 million after the first day of trial, the claim had been therefore exaggerated and this fact should be reflected in the costs order.

9.  It is important to keep the facts and issues at the forefront of one’s mind when considering the exercise of a discretion.  This I do but will not repeat them in this decision.  The parties know full well what the facts and issues were.

10.  Some of the questions I have addressed when considering the appropriate costs order in this case are as follows :

(a)  Was any money paid into court?

(b)  Was the reduction of the claim from $9 million to $5 million due to the abandonment of any particular discrete issue or issues?

(c)  Were the costs up to trial plainly increased because the defendant was facing a $9 million claim rather than a $5 million claim?

(d)  Might the trial have settled if the plaintiff had adopted the expert’s assessment of $5 million earlier?

(e)  Was the claim for $9 million “grossly exaggerated” (as opposed to ‘exaggerated’) in the sense that there was no factual basis for it?

(f)  Should the abandonment of the “Corian top” issue (item (ii) above) in August 2007 which then represented about 7% of the plaintiff’s claim have any impact on the final costs order?

(g)  Was the plaintiff unreasonable in rejecting the defendant’s late offer of $2.2 million inclusive of interest with no order as to costs?

(h)  Did the plaintiff have to go to court to get its money?

11.  It is clear to me that the answers to questions (a) to (g) inclusive are “no”; and the answer to (h) is “yes”.

12.  I make the nisi order absolute.  That order necessarily includes the costs arising out of this application.