HSBC PRIVATE TRUST (HONG KONG) LTD v. AU-YEUNG CHUNG

HCA1662/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1662 OF 2001

RULING  ON  COSTS

1.  There are two sets of costs, the first relating to the amendment itself.  It is accepted that costs of and occasioned by the amendment are to go to the defendant in any event but the real issue about which I have heard some sustained argument on both sides is what is to happen to the costs of these five days. Effectively, the argument has taken all of that and the starting point is this; that the defendant arrived at court expecting to have to contest the matter on the then state of the pleadings, which was a perfectly familiar one, as to whether she and her family had been in possession for the period that is suggested by her case but Mr Suen then, by his summons - really taken out very much at the eleventh hour - sought to put in - as has correctly been described - a counterclaim to a counterclaim predicated on a contingent basis, contingent on the plaintiff losing the main event, as it were, that is to say, if the issue of adverse possession was resolved against the plaintiff. 

2.  The argument has ranged to and fro.  The law is still very much in its infancy, if it has even got to the stage of being an infant, in Hong Kong; there are two decisions at first instance which suggest that what is raised in the counterclaim to the counterclaim may well be available, there is another part to it as to whether it is possible or right to disapply the terms of the Limitation Ordinance, so it really is a two-pronged matter. 

3.  The question of disapplying the Limitation Ordinance because of a lack of a compensation regime - which might then render the Ordinance inconsistent with Article 105 of the Basic Law - and then the other limb, which is whether, if one applies the Limitation Ordinance whether the losing title-holder of the land should then get compensation, and from whom.  So a very interesting argument.  This is what Mr Szeto was faced with on the first day.  Unsurprisingly, he asked for time to consider the matter and, unsurprisingly, he was afforded that time by the court after which I was treated, as I have indicated in the main ruling, to some very persuasive submissions on both sides.

4.  In addressing me on costs, Mr Suen says, “I’ve won the argument, albeit a late application.  The fact is that the burden on me was not a very rigorous one; the plaintiff only had to show that it had a reasonably arguable case, and given the weekend to look at the books, Mr Szeto should have realised that and given way”.  Well, I think that is probably a harsh way of expressing it, and it is always the case, is it not, that when one makes these applications late in the day one is inviting resistance, and I think it was entirely reasonable of Mr Szeto to have taken the stance that he did, and he clearly put up a very sensible argument in attempting, albeit unsuccessfully, to resist the matter. 

5.  So one starts from the position of a late application, but I do not think one can really attach any great fault for the lateness, although the authorities that perhaps have given rise to all of this in Hong Kong were decided on 8 and 20 September, and one is always trying keep up with the law, be it solicitors or counsel, and Mr Suen very frankly says that these only came to his notice very shortly before the start of the trial. 

6.  In a perfect world, of course, one should have - I suppose it might be said - spotted these authorities, and this particular line that might be available and taken out a summons perhaps two or three weeks before the start of the trial so everyone would know in good time.  Even then I wonder whether in fact the trial would perhaps have had to go over in any event because, as Mr Szeto has rightly said, the defendant would have wanted time to consider the implications of all of this, particulars would have been asked for on the case on compensation and the value of that compensation would be demanded of the plaintiff.  So all of these matters would have resulted, in any event, I suppose, in an adjournment.

7.  The other matter is that, as Mr Szeto has said, the fact is another choice was available to the plaintiff.  The plaintiff could have said “we put you on notice in correspondence, that if we lose this matter we will seek to raise the issue of compensation in a separate action”, although perhaps it would have been difficult then, if not impossible, to take and plead the point that the Limitation Ordinance as a defence ought to be disapplied because of its inconsistency with the Basic Law.  So perhaps that is a more difficult argument for Mr Szeto to run.  I think, in all the circumstances, it was reasonable for Mr Suen to have taken the matter as he has, which is to try and get his pleadings in order before the start of the trial.

8.  So having discussed this at some length, the position is that, on the one hand Mr Suen has succeeded, he has got his amendment, he says, well, let the usual rule apply; costs follow the event.  I think that argument is never going to succeed in these circumstances, he having come so late with this novel point which has taken so long to argue - I do not think that would be right.  Mr Szeto saying, “well, no, we should have the costs of these five days:” he who is late pays is a frequently used refrain.  “We’ve been reasonable, let’s have our costs”.

9.  I have decided to take a somewhat different course, which I hope - and this is why I am taking it - I consider meets the justice of the case, and the order that I am going to make is that the costs, which are, effectively, of the hearing of these days that we have had to throw away, as it were, should be the defendant’s costs in the cause.  That, therefore, means that even if the defendant were to lose the trial, she, legally aided as she is - but that does not matter - she would never have to pay the plaintiff’s costs of these five days.  So she is protected to that extent.  If she wins the action then she will get the costs anyway.  And I think that is the fairer and the correct order.  It also recognises, in my view, the fact that Mr Suen has won the argument and has got his amendment.  So, doing my best in what is so often a difficult situation, that is the order that I am going to make, with Legal Aid taxation of the defendant’s costs.