TAI DA TRADING (HK) CO LTD v. CHAN WAI KUEN

HCA 812/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 812 OF 2012

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BETWEEN

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DECISION ON COSTS

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Introduction

1.  On 3 May 2012, I handed down my Decision (“Decision”) dismissing the plaintiff’s appeal against the Order by Master de Souza dated 21 December 2012. For easy reference, I adopt herein the abbreviations in the Decision.

2.  By the Order, Master de Souza dismissed the Summons being the plaintiff’s summons for summary judgment, and ordered that costs of the application (including any costs reserved) be costs in the cause of the suit with certificate for counsel to be taxed if not agreed.

3.  On 2 January 2013, the plaintiff filed Notice of Appeal seeking to set aside the Order. By the Decision, I dismissed the appeal against the Order and granted a costs order nisi that the costs of the appeal be the defendant’s and HN’s costs in the cause in respect of the main action in these proceedings to be taxed if not agreed (“Costs Order Nisi”).

4.  The defendant and HN wished to vary the Costs Order Nisi. On 16 May 2013, the solicitors for the defendant and the solicitors for HN jointly wrote to the court seeking to vary the Costs Order Nisi so that the “costs of the appeal be to the defendant and HN and paid forthwith” (“Letter Application”).

5.  On 20 May 2013, I drew the attention of the solicitors for the defendant and the solicitors for HN to Schindler Lifts (Hong Kong) Limited v Ocean Joy Investments Limited HCCT81/2001, Ma JA (as he then was) (unreported, 11 February 2003) and PCCW-HKT Telephone Limited v Telecommunications Authority CACV274/2003 (unreported, 7 September 2004), and considered that it was inappropriate to seek variation of a costs order nisi by unilateral letter application (albeit on notice to the other party’s solicitors). I directed that without prejudice to any proper application that might be made by the defendant and HN and further without prejudice to any objection that might be raised by the plaintiff, no order would be made on the Letter Application.

6.  On 21 March 2013, the defendant and HN respectively issued a summons for leave to apply to vary the Costs Order Nisi notwithstanding that the time for doing so had expired (“Costs Summonses”). They asked for the costs of the appeal to be paid forthwith by the plaintiff to the defendant and HN. The Costs Summonses were returnable before me on 3 June 2013.

Late application

7.  The deadline for making application to vary the Costs Order Nisi expired on 20 March 2013. The Costs Summonses were 1 day late, but the plaintiff had been informed earlier of the defendant’s and HN’s intention to seek variation of the Costs Order Nisi by the Letter Application.

8.  Mr Wong, counsel for the defendant, and Mr Neo, solicitor for HN, submitted that the Letter Application was made within time. The defendant and HN initially made the Letter Application and not by way of formal summons in order to save costs. But when they were notified by the court that the Letter Application was procedurally incorrect, they immediately took steps to issue the Costs Summonses, which unfortunately was a day outside the prescribed deadline. Mr Wong and Mr Neo submitted that given the brief delay of only 1 day and the excusable reason put forward, the defendant and HN should be allowed to apply to vary the Costs Order Nisi out of time.

9.  Mr Hu, counsel for the plaintiff, opposed the grant of any indulgence to the defendant and HN to make applications for variation of the Costs Order Nisi out of time. He argued that the reason put forward was not persuasive, and there were no merits to the applications.

10.  In my view, given that (a) the delay is very short (ie only 1 day), (b) the defendant and HN have given timely alert to the plaintiff of their intention, and (c) the lack of any prejudice to the plaintiff if indulgence is granted, I am persuaded I should exercise my discretion to extend time for the defendant and HN to make application to vary the Costs Order Nisi.

Variation of the Costs Order Nisi

11.  In Mr Wong’s written submissions, he argued that the court had power to vary the costs order made by Master de Souza under the Order, ie costs of the application (including any costs reserved) be costs in the cause of the suit with certificate for counsel to be taxed if not agreed (see paragraph 2 above). At the hearing before me, Mr Wong acknowledged that any attempt to set aside the costs order under the Order would be part of the substantive appeal against the Order, but (a) neither the defendant nor HN had filed any cross-appeal and (b) in dealing with the Notice of Appeal filed on 2 January 2013 I have upheld the decision of the learned master and dismissed the appeal against the Order in its entirety (see paragraph 96 of the Decision). Mr Wong (and with him Mr Neo) therefore abandoned any attempt to “vary” the costs order made under the Order by Master de Souza.

12.  Mr Wong next argued that defendant should be entitled to costs of the appeal because the plaintiff’s primary relief for specific performance was bound to fail for the reasons set out in paragraphs 65-66 of the Decision, and the plaintiff should not have appealed against the Order.

13.  However, I dismissed the appeal against the Order on other grounds, and held that it was unnecessary for me to consider the arguments by the defendant and HN as to why specific performance would not be an appropriate remedy even if the plaintiff were able to establish breach of the FASP on the part of the defendant (see paragraph 95 of the Decision). Since I have not ruled on this argument in the Decision, should the defendant pursue the line of argument in the above paragraph for the purpose of the Costs Summonses, there is a real possibility that I may have to give my ruling on such line of argument in order to determine whether variation of the Costs Order Nisi is justified. But the present action is now to proceed to trial, so Mr Wong was reluctant to place the court in a position of possibly having to make further ruling on the substantive issues. In the circumstances, at the hearing before me, Mr Wong abandoned this line of argument. Likewise, Mr Neo also did not pursue this line of argument for the Costs Summonses.

14.  This leaves Mr Wong’s argument that the usual costs order, ie costs follow event, should be adopted upon dismissal of the plaintiff’s appeal against the Order. He also drew my attention to Order 14 rule 7(1) of the RHC which provides that if the plaintiff makes an application under Order 14 rule 1 of the RHC where the case is not within the Order or if it appears to the court that the plaintiff knew that the defendant relied on a contention which would entitle him to unconditional leave to defend, then, without prejudice to Order 62 of the RHC, the court may dismiss the application with costs and may require the costs to be paid by him forthwith. And according to Hong Kong Civil Procedure 2013 Vol.1 para.14/7/4 at p.270, the above rule empowers the court, when dismissing an application under Order 14 of the RHC, to order the plaintiff to pay costs either in any event or forthwith (see Alviero Martini SPA v Bubble Retail Management Limited & anor HCA1937/2008, DHCJ L Chan (as he then was) (unreported, 2 October 2009)). Mr Wong submitted that since this court had dismissed the appeal and upheld the Order that dismissed the Summons, costs of the appeal should forthwith be paid by the plaintiff to the defendant.

15.  Mr Neo also adopted the same arguments on behalf of HN. He added that the plaintiff should have been aware that there were triable issues and a bona fide defence in this case as early as in August and September 2012 when the defendant and HN filed their affirmations in opposition. Such knowledge was re-affirmed by the Order dismissing the Summons. In choosing to appeal against the Order against such background, costs of the appeal should follow event.

16.  However, this court in coming to the conclusion that the defendant should be given unconditional leave to defend did not exactly endorse the submissions made on behalf of the defendant and HN. Contrary to the defendant’s and HN’s contentions, this court held that as at 3 May 2012 when HN delivered the Title Deeds to KBC, it is quite arguable on the Yeung Sau Chuen Sammy triology of cases that the plaintiff should (if they so wished) have 7 working days after 3 May 2012 (even if such period would extend beyond the agreed completion date on 8 May 2012) to raise requisitions (see paragraph 84 of the Decision).

17.  I came to the view that on the facts and documents disclosed in the affidavit evidence there is an arguable defence as to waiver, ie whether the plaintiff by their solicitors KBC in raising the sole requisition on 8 May 2012 with HN, accepting HN’s answer thereto without further query, and forwarding such answer as their own sufficient and/or satisfactory response to SWL’s requisition has  arguably waived any entitlement they might have under clause 16 of the FASP for an extended period of 7 working days after receipt of the Title Deeds to raise requisition (see paragraph 87 of the Decision). I then went on to conclude that if the above question is answered in favour of the defendant, it lays an arguable foundation for the defendant’s contention that completion should still have taken place on 8 May 2012 as agreed under the FASP (see paragraph 88 of the Decision).

18.  However, this is not a defence contention that was put forward by the defendant or HN in their submissions. Rather, it is a defence contention which the court perceives as arguable based on the affirmation evidence before the court.

19.  In the Decision, I also considered that the events on 10 May 2012 raised issues that ought properly to be explored and canvassed at trial (see paragraph 88 of the Decision). I came to such view because there seems to be real issue as to the significance and effect of KBC’s letter on 10 May 2012 that appears on its face to accept the plaintiff’s repudiation and to forfeit the Initial and Further Deposits, ie whether any approbation of the FASP after such letter was permissible or whether there was subsequent waiver of the apparent acceptance of repudiation (see paragraph 89 of the Decision). I also found that there are discrepancies in the solicitors’ correspondence after 8 May 2012 as to whether the alleged postponed completion date was on 10 or 11 May 2012, which may have significance since there is factual dispute over the precise time when the Balance Price was tendered by KBC to HN.

20.  Again although these contentions appear from the affirmation evidence before the court, they are not the basis upon which the defendant and HN made their submissions to oppose the appeal.

21.  In respect of the submissions by the defendant and HN, on the principles elicited from Yeung Sau Chuen Sammy’s trilogy of cases, I was not persuaded that I could decide at the hearing of the Summons (as the defendant and HN submitted) that the plaintiff had waived their right to raise requisitions within 7 working days after receipt of the Title Deeds by accepting delivery of the Title Deeds on 3 May 2012 (see paragraphs 75-78 of the Decision). I was also not persuaded that the principles in Chow Yim Woon give a complete answer to the plaintiff’s case (see paragraphs 79-80 of the Decision). Further, the arguments by the defendant and HN as to the plaintiff’s failure to press for the Title Deeds or there being no time limit for answering requisitions raised by KBC do not appear to be relevant (see paragraphs 81-83 of my Decision). I also found it unnecessary for me to consider the defendant’s and HN’s arguments as to why specific performance is not an appropriate remedy even if the plaintiff were able to establish breach of the FASP on the part of the defendant (see paragraph 95 of my Decision).

22.  On the above analysis, whilst the defendant and HN were successful in resisting the plaintiff’s appeal against the Order, their main arguments did not carry the day, and the court essentially found there were questions arising from the plaintiff’s case that required resolution at trial. In the circumstances, I consider the Costs Order Nisi to be a fair order as it allowed the defendant and HN to recover their costs of the appeal if the defendant succeeds in her defence in the main action.

Conclusion

23.  The Costs Order Nisi is now made absolute. As regards the Costs Summonses, Mr Hu, Mr Wong and Mr Neo all agreed that costs should follow event. I therefore order that the defendant and the HN do respectively pay the plaintiff’s costs of their respective Costs Summons in any event to be taxed if not agreed.