XCHRX GENERAL ACCIDENT INSURANCE ASIA LTD. v. HAMPTON WINTER & GLYNN (A FIRM) AND OTHERS and HILL TAYLOR DICKINSON (Third Party)

HCA5570/96

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H E A D N O T E

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1. The 1st/2nd Defendants and the 3rd Defendant were sued severally in the action herein and not jointly, or in the alternative.

2. The 1st and 2nd Defendants having made payment into Court and accepted by the Plaintiff within the stipulated time of 14 days thereafter, the Plaintiff is entitled to accept money paid into Court in satisfaction of all the causes of action in respect of which he claims against the paying-in 1st/2nd Defendants without leave of the Court by giving notice in writing in accordance with O.22, r.3(1) and under O.62, r.10(2). By the same order, he is also entitled to tax his costs of the action incurred up to the time of giving Notice of Acceptance which should only include his costs of action incurred against the 1st and 2nd Defendants.

3. If the Plaintiff herein wished, as he did, to discontinue his action against the other Co-Defendant, i.e. the 3rd Defendant herein, he could apply for leave to discontinue the action against him. As the parties agreed that the action against the 3rd Defendant should be discontinued, the Court has jurisdiction to consider what is the appropriate order of costs as between the Plaintiff and the 3rd Defendant, including whether the 1st and 2nd Defendants in this case should pay the Plaintiff's costs incurred in bringing the action against the 3rd Defendant and the 3rd Defendant's own costs in defending the action.

4. In exercising that discretion in this case, where the Plaintiff and the 1st/2nd Defendants both have already agreed not to ask for an order that the 3rd Defendant should pay its own costs, the Court considered that it is not unreasonable for the Plaintiff to pursue this action against the 3rd Defendant as well and to maintain the same until the 1st and 2nd Defendants made payment into Court. Accordingly, the Court exercises its discretion against the 1st and 2nd Defendants in favour of the Plaintiff and the 3rd Defendant and a Sanderson Order is made that the 1st and 2nd Defendants should pay the costs of the 3rd Defendant directly and the Plaintiff's costs of prosecuting the claim against the 3rd Defendant.

5. The 1st and 2nd Defendants should also pay the costs of the Plaintiff and the 3rd Defendant in the Amended Summons including the costs of the adjournment.

HCA5570/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.5570 OF 1996

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J U D G M E N T

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The Issue

1. This Judgment is handed down in open Court as it involves a point of law where there are conflicting English cases (which explains for the length of this Judgment and extensive citation of those cases). In this case the following issues are involved :-

I. Whether the action herein against the 1st and 2nd Defendants on the one hand and the 3rd Defendant on the other hand are joint or in the alternative on one hand or several on the other?

II. (a) If the action against them are several and when the 1st and 2nd Defendants have made payment into Court in satisfaction of all the Plaintiff's causes of action against them only, whether the Court has the discretion to order the 1st and 2nd Defendants to pay the costs of :-

(i) the Plaintiff in pursuing the action against the 3rd Defendant; and

(ii) the 3rd Defendant in defending the Plaintiff's action.

(b) If they are sued jointly or in the alternative, what costs order should be made in the aforesaid circumstances?

III. If the Court has the aforesaid discretion under 2(a), how that discretion should be exercised in the case herein?

2. Before I deal with each of the three main issues, I shall, first of all, set out the background to this action.

Background

3. The Plaintiff was the insurer of a cargo of ginseng valued at US$117,000 odd. It was lost in October 1990 in the premises of the Hong Kong Air Cargo Terminals. Having paid its assured in January 1991, it became entitled to bring a subrogated claim against the parties responsible or liable for the loss of the said cargo.

4. In December 1990, the Plaintiff's Singapore office had retained the 3rd Defendant to assist in investigating the Plaintiff's claim. Shortly afterwards, the 1st Defendant was appointed to advise and act on the Plaintiff's behalf in bringing the Plaintiff's claim against the parties responsible.

5. In January 1992, the 3rd Defendant re-instructed and retained the 2nd Defendant, a solicitor of a firm of solicitors, the 1st Defendant, to handle the aforesaid Plaintiff's claim.

6. In August 1992, the 1st and 2nd Defendants, commenced proceedings on the Plaintiff's claim against Singapore Airlines Limited and HACTL in Action No.CL88/1992.

7. On 1 May 1995, by an order concluding CL88 action, the Plaintiff's claim was lost and it became liable to pay the cost of HACTL and Singapore Airlines. Thereafter the Plaintiff settled Singapore Airlines' costs at $400,000 from its claim at $1.3 million odd therefor. HACTL's claim for cost at $800,000 odd is still pending.

8. The Plaintiff has also incurred fees and disbursements in CL88 in the sums of about $120,000 and ￡2,000 odd. The Plaintiff is also liable for the balance of costs incurred and charged to it by and due to the 1st and 2nd Defendants and the Third Party herein. The Third Party is another firm of solicitors when the 2nd Defendant in and after April 1995 changed his job from the 1st Defendant to the Third Party.

9. In the action before me, the Plaintiff claims against the three Defendants for breaches of contracts and negligence. However, the Plaintiff's respective contracts with the 1st Defendant (a firm of solicitors) and the 3rd Defendant (recovery agent) are different contracts. Each one is liable to the Plaintiff (if at all) for breaches of its own contract.

10. The Plaintiff's claim in negligence against the 1st and 2nd Defendants on one hand and the 3rd Defendant on the other are in respect of different duties of care. Different particulars of negligence have been pleaded against the 1st/2nd Defendants and the 3rd Defendant respectively. In short, whilst the Plaintiff claims against all three Defendants for breaches of contracts and negligence in handling CL88, the causes of action against each of them are different.

I. Joint/in the Alternative Or Several Claims

11. The relevance of distinguishing a joint claim or a claim in the alternative on one hand and several claims on the other is this :-

1. Where the Plaintiff sues a number of Defendants whose liability are "joint" or "alternative" :-

(a) a payment into Court by some but not all the defendants cannot be paid out to the plaintiff without an order of the Court : see O.22, r.4(1)(a) which provided as follows :-

"4. Order for payment out of money accepted required in certain cases (O.22, r.4)

(1) Where a plaintiff accepts any sum paid into court and that sum was paid into court -

(a) by some but not all of the defendants sued jointly or in the alternative by him, or

....

the money in court shall not be paid out except under paragraph (2) or in pursuance of an order of the Court, and the order shall deal with the whole costs of the action or action to which the payment of the cause of relates, as the case may be.

(2) Where an order of the Court is required under paragraph (1) by reason only of paragraph (1)(a) then if, either before or after accepting the money paid into court by some only of the defendants sued jointly or in the alternative by him, the plaintiff discontinues the action against all the other defendants and those defendants consent in writing to the payment out of that sum, it may be paid out without an order of the Court."

(b) On the plaintiff accepting the money paid into Court, all further proceedings in the action against all the defendants are stayed : see O.22, r.3(4) which provided :-

" (4) On the plaintiff accepting any money paid into court all further proceedings in the action or in respect of the specified cause or causes of action, as the case may be, to which the acceptance relates, both against the defendant making the payment and against any other defendant sued jointly with or in the alternative to him, shall be stayed."

2. Where the plaintiff sues a number of defendants whose liabilities are "several" (i.e. neither joint nor alternative) :-

(a) a payment into Court by some but not all the defendants can be paid out to the plaintiff without an order of the Court : see O.22, r.3(6) which provided that :-

" (6) A plaintiff who has accepted any sum paid into court shall, subject to rules 4 and 10 and Order 80, rule 12, be entitled to receive payment of that sum in satisfaction of the cause or causes of action to which the acceptance relates."

(b) The stay of proceedings under O.22, r.3(4) only applies as regards to those claims against the paying-in defendants but not as regards those against the non-paying defendants. (See the case of Townsend v. Stone Toms [1981] 1 WLR 1153)

12. Accordingly it is important to distinguish between whether the causes of action are joint or in the alternative, or several. The question of joint and several torts has been considered in Clerk & Lindsell on Torts, 17th Ed. 1995. In paragraph 4-54, it has been said :-

"Joint and several torts. Where damage is caused as the result of torts committed by two or more tortfeasors, the tortfeasors may be (1) joint tortfeasors, (2) several tortfeasors causing the same damage or (3) several tortfeasors causing different damage. In one of a number of joint tortfeasors, or of several tortfeasors causing the same damage, is sued alone, he is liable for the whole damage, though he did but a small part of it. In the case of several tortfeasors causing different damage, on the other hand, each is liable only for the damage which he has caused."

Further at paragraph 4-56, in respect of joint tortfeasors, it has been said :-

"Definition of joint tortfeasors. Who, then, are joint tortfeasors? One way of answering the question is to see whether the cause of action against each tortfeasor is the same. If the same evidence would support an action against each, they are joint tortfeasors. They will be jointly liable for a tort which they both commit or for the commission of which they are both responsible, but not for a tort where each is responsible for a different injuria and the two injuriae happen to produce the same damnum."

13. However in the case before me the Plaintiff's claims against the 1st/2nd Defendants and the 3rd Defendant are for breaches of different contracts. The claim in negligence is also in respect of different duties of care. Different particulars of negligence have been pleaded against the 1st/2nd Defendants and the 3rd Defendant respectively. Thus, the contractual liabilities cannot possibly be regarded as "joint". The liabilities of the 1st/2nd Defendants and the 3rd Defendant in negligence cannot be joint either. At the trial, the Plaintiff might succeed against both, or one or neither.

14. Thus it is not the Plaintiff's case that if it succeeded against the 1st/2nd Defendants, it will necessarily fail in its claims against the 3rd Defendant or vice versa. Hence the Plaintiff's claim against the 1st/2nd Defendants on one hand and the 3rd Defendant on the other are not "alternative".

15. In the end, I find that the claims against the 1st/2nd Defendants and the 3rd Defendant are several rather than joint/alternative.

II. Any discretion when several claims

16. This second issue concerned with the following sets of cost, namely :-

a) The costs of the Plaintiff in pursuing its claim against the 3rd Defendant;

b) The 3rd Defendant's own costs in defending the action.

In this respect, the following chronology of events in the action herein is relevant :-

17. Ms Newell, Counsel for D1 and D2, who also adopted the written submissions of Mr A Chow, who appeared before me on 12 August 1998, submitted as follows :-

(i) Upon giving Notice of Abandonment of the claims against the non-paying Defendant, the Plaintiff is entitled to tax his costs on the action which it has incurred in pursuing against the paying-in Defendants under O.62, r.10(2). They relied on the case of Scania (G.B.) Ltd. v. Andrews [1992] 1 WLR 578 per C.A. Lord Donaldson MR, Balcombe and Stuard-Smith L.JJ.

(ii) The Plaintiff is, however, not entitled to recover from the paying-in Defendants the costs which it had incurred in pursuing against the non-paying Defendant. They relied on Q.B.E. Insurance (U.K.) Ltd. v. Mediterranean Insurance and Reinsurance Co. Ltd. [1992] 1 WLR 573, per Webster J.

(iii) The Court has no jurisdiction or discretion to order the paying-in Defendant to pay the Plaintiff's costs incurred by it in pursuing against the non-paying Defendant. They relied on the following two cases, namely :-

(aa) Fell v. Gould Grimwade Shirbon Partnership [1995] 36 Con L R 62, per His Honour Judge Fox-Andrews Q.C.; and

(bb) Carrs Bury St Edmunds Limited v. Whitworth Partnership and Barnes Group [1997] 13 Const LJ 198, per His Honour Judge Esyr Lewis, Q.C..

18. As aforesaid there shall be extensive citation of cases including detailed examination of the actual facts of each case leading to the decision. I shall start with the case of Fell v. Gould Grimwade Shirbon Partnership (supra). The headnote reads as follows :-

"With a trial fixed for 9 November 1992, on 12 October the first defendants gave notice to the plaintiffs of a payment into court which read:

'Take notice that Gould Grimwade Shirbon Partnership (the first defendants herein) has paid the sum of (110,000 into court. The said sum of (110,000 is in satisfaction of all the claims of action in respect of which the plaintiff claims.'

On 30 October, within the time allowed by the Rules of the Supreme Court, the plaintiff applied (a) that he be at liberty to accept the sum paid into court by the first defendants; (b) that the first defendant shall pay the plaintiff's costs of and occasioned by the proceedings against the first and second defendants; (c) that the first defendants shall pay the second defendant's costs of the proceedings or alternatively shall indemnify the plaintiffs against any costs orders which the second defendant might obtain against them; (d) upon such term that the plaintiff be at liberty to discontinue their proceedings against both defendants.

The summons are returnable on 4 November, ie, after the time permitted by the rules for taking the money out of court. In these proceedings, the plaintiff applied for and was given leave to amend the summons by substituting the words 'they have leave' for the words 'they be at liberty'.

HELD:

(i) Had the application been made within the period of 21 days prescribed by RSC Ord 22, r 3(1) for acceptance of the payment in, the court would have had no jurisdiction to make the order sought. In a case falling within Ord 62, r 5(4), to which because the causes of action against two or more defendants are several, Ord 62, r 4 does not apply, the words 'his costs of the action' in Ord 62, r 5(4) relate only to any costs the plaintiff has incurred in pursuing the claim against the paying-in defendant (see p 71).

QBE Insurance (UK) Ltd v Mediterranean Insurance and Reinsurance Co Ltd [1992] 1 All ER 12 followed.

Hodgson v Guardall Ltd [1991] 3 All ER 823 not followed.

Scania (Great Britain) Ltd v Andrews [1992] 3 All ER 143; Hudson v Elmbridge DC [1991] 4 All ER 55; Townsend v Stone Tom & Partners [1981] 2 All ER 690 considered.

(ii) However, because the application was made outside the 21-day period, the court had jurisdiction in its discretion under Ord 62, r 2. It would, however, be wrong as a matter of principle to put the plaintiff in a better position than he would have been in had the application been made within time. Accordingly, the plaintiff's time for accepting the payment in would be extended but no other order would be made."

19. First of all, I must say that I also find it odd that such a discretion and jurisdiction existed when the Plaintiff was outside time whereas the Court would have had no jurisdiction when he had been within time.

20. The parties in Fell agreed the two defendants were sued severally and not jointly or in the alternative. His Honour Judge Fox-Andrews Q.C. decided that in the case of two defendants being sued severally, the Court has no discretion to order the paying-in defendants to pay the costs of the non-paying defendants. In this respect he disagreed with Otton J. in the case of Hodgson v. Guardall Ltd and others [1991] 3 All ER 823. He said this at pp.70-71 of Fell :-

" It is against that background that it is necessary to consider the present application. With respect to Otton J in a case falling within Ord 62, r 5(4), to which because the causes of action against two or more defendants are several, Ord 62, r 4 does not apply, I hold that a court has no discretion. Either the words 'his costs of the action' relate in every case to the costs incurred by the plaintiffs against other defendants or in no case does it do so."

21. Judge Fox-Andrews Q.C. decided that the latter is the case, i.e. "his costs of their action" does not relate to the costs incurred by the plaintiffs against the other non-paying defendants. He continued on to say (at p.71) :-

" In such a case the giving of written notice does not automatically stay proceedings against another defendant. In the absence of agreement by another defendant, an application to discontinue or withdraw the claim against him must be made and it is then a matter of discretion whether to accede to the application and if so on what terms. These circumstances militate strongly against the words 'his costs of the action' relating to any costs other than the costs he incurred in pursuing the claim against the defendant who has made the payment in. I follow the decision in QBE Ltd v Mediterranean Insurance. Had the plaintiffs themselves given written notice of acceptance, then the only costs they could recover would be the costs that they had incurred in suing the first defendants."

In short, Judge Fox-Andrews said he followed Webster, J. in Q.B.E. rather than Otton J. in Hodgson.

22. Did Otton J. decide in Hodgson that the Court has no jurisdiction? The headnote said he did :-

"Held -

The court's discretion under RSC Order 62, rule 5(4) to order a paying-in defendant to pay the plaintiff's costs of the action was wide enough to include not only the costs to co-defendants but also the plaintiff's costs of proceeding against the co-defendants if the circumstances justified such an order."

23. The case of Hodgson has to be considered in more detail. This case involved a plaintiff who suffered personal injuries when she inhaled noxious fumes which had escaped from the premises adjourning the premises where she worked. The plaintiff had been evacuated from her work premises when the fumes were first noticed and inhaled the fumes when she returned to her work after being told by the local fire brigade and the police that it was safe to return. The action was brought by her for damages against :-

1. D1, her employer;

2. D2, the owner of the premises from where the fumes escaped;

3. D3, the local fire authority; and

4. D4, the police.

24. By their defences, D1, D3 and D4 denied liability and blamed each other.

25. D2, however, denied liability and alleged contributory negligence only on the part of the Plaintiff. Shortly before the trial, the 2nd defendant paid into Court in satisfaction of the plaintiff's claim against them. The plaintiff, who wished to accept the amount paid in and to discontinue the action against the other defendants on the basis that they paid their own costs, applied for her costs of the proceedings against all the defendants to be paid by the 2nd defendant.

26. Otton J. eventually held, in all the circumstances of the case, that the plaintiff was entitled to have her costs of the proceeding against all the defendants to be paid by the 2nd defendant. (I shall come back to this point as to how he exercised his discretion.) At page 827 of his judgment, he relied on the old Supreme Court Practice 1988 Vol.1 paragraph 22/4/2 where it was stated that :-

"The term 'sued jointly' in this rule does not mean the same thing as 'joint liability', but only that other defendants have been joint together in this action."

At page 828, Otton J. said :-

" That leaves the question as to the construction of Ord 62, r 5(4), and in particular the phrase to which I have made reference. I reject the narrow construction urged by Mr Bennett. It seems to me that the expression 'his costs' permits the court to order the payment by the defendant making the payment in of costs over and above those directly incurred by the plaintiff in bringing the action against the paying-in party alone. In arriving at that conclusion I have considered the commentary on Ord 22, r 3 in The Supreme Court Practice 1988 vol I, pp 383-386, and in particular para 22/3/4 under the heading 'Effect of acceptance on claim'."

27. Insofar as the decision in Hodgson decided that O.62, r.5(4) in England [which is equivalent to our O.62, r.10(2)] was wide enough to include not only the costs of co-defendants but also the plaintiff's costs of proceeding against the co-defendants if the circumstances justify such an order, I agree with Judge Fox-Andrews that it was not wide enough and a court has no jurisdiction under O.62, r.5(4) in England [our O.62, r.10(2)].

28. However, Otton J. also decided the case on the concession of Counsel for the 2nd defendant and on the wider discretion given to the Court. At page 828, he said this :-

" As I understand it, Mr Bennett [Counsel for the 2nd Defendants] conceded that Ord 62 entitles the court to order the second defendants, who are the paying-in defendants, to pay the other defendants' costs. But he still maintains that it is not wide enough to cover the plaintiff's costs incurred against a co-defendant. I do not think that on a proper construction his contention is good law and if one takes the concession that he appears to have made I do not see why the matter should stop there. In my judgment the discretion given to this court and the power given to this court is very wide indeed and is certainly wide enough not only to order the paying-in defendant to pay the costs of the co-defendants but also to cover the plaintiff's costs incurred against co-defendants if the circumstances justify."

29. It is actually in line with the construction of Webster J. in the case of Q.B.E. (which was said to be followed by Judge Fox-Andrew in Fell). Webster J. in Q.B.E. actually did not decide that the Court has no jurisdiction at all. He just decided that the jurisdiction did not come under r.5(2) and the words "its costs of the action" can only be construed as meaning, "his costs of action as against that defendants" i.e. the paying-in defendant. However, he considered that the Court also has jurisdiction when the plaintiff applied to recover from a defendant, who had paid-in, the Plaintiff's costs against the other defendants. The facts of the case in Q.B.E. are somewhat different if examined more closely.

30. In that case the paying-in 2nd Defendant paid the taxed costs of the Plaintiff in bringing the action against them. The 1st Defendant who had agreed to pay the Plaintiff's costs in bringing the action against them did not eventually pay that set of costs as taxed. There was simply no order obtained by the Plaintiff that the 2nd Defendant should also pay that set of costs in respect of the 1st Defendant, i.e. the Plaintiff's costs in bringing the action against the 1st Defendant. It is not surprising that the writ of fi fa should not be obtained against the 2nd Defendant for the Plaintiff's costs against the 1st Defendant when there was simply no order of costs against them in that respect. Accordingly when O.62, r.5(4) is not wide enough to cover that set of costs, the writ of fi fa must be set aside.

31. However, Webster J. did say as I have said before, that the Court would have jurisdiction should the Plaintiff applied for such an order. At p.576 F-H Webster, J. said :-

" In order to avoid injustice, therefore, in the application of rule 5(3) and (4) the words 'his costs of the action' need to be construed as meaning, in paragraph (3) 'his costs of the action as against that party' and, in paragraph (4), 'his costs of the action against that defendant.' I do not see how this construction can do injustice to anyone. It is convenient to note that the provisions of rule 5 create an automatic right to costs without any order; in those circumstances the order should, in my view, be strictly construed so as to avoid any possible injustice, not in any particular case, but in any particular category of cases. I therefore construe the words 'his costs of the action' in paragraph (4) in the way I have just described. Construed in that way, the rule is much less likely to cause injustice than the wider and more literal construction and, if it can cause any injustice at all, it would be open to a plaintiff, who could reasonably claim to be entitled to recover from a defendant who had paid in his costs against the other defendants, to apply for such an order which the court would, in my view, have jurisdiction to make." (emphasis added)

32. In other words this case did not decide whether there was such a jurisdiction but by way of obiter, Webster J. said the Court did have jurisdiction.

33. The second case relied on by Counsel for the 1st and 2nd Defendants herein is Carrs Bury St Edmunds Limited v. Whitworth Partnership and Barnes Group [1997] 13 Const LJ 198. Here, there are two defendants, the contractor (Barnes) and the architect (Whitworth). Barnes made the payment into Court in March 1996. Carrs did not accept the payments-in made by only one Defendant. The next month in April 1996, Whitworth also made a payment into Court. Within 21 days of that payments-in, Carrs indicated that it wished to accept both payments-in and indicating that leave would be needed to accept, and that it thought that a special cost order would be needed in respect of the two sums of payments-in. Carrs, thereupon issued a Summons for the Court's order as to who should bear the costs incurred by Barnes after March 1996, i.e. 21 days after Barnes' payments-in. Judge Esyr Lewis Q.C. followed the case of Fell and decided that the Court has no jurisdiction or discretion to make any order other than that in RSC O.65, r.5(4). However, the Court also decided that, where a plaintiff is given leave to accept payments-in after 21 days, the Court should only exercise its discretion as to costs when there are exceptional and compelling reasons for so doing. In the present case, there were no such reasons and Carrs should therefore bear the costs incurred by Barnes after March 1996.

34. For the same reason given herein before and below, I, with respect, would not follow the decisions of Fell and Carrs.

35. Consequently the next question is where does that wider discretion and jurisdiction come from?

36. I agree with Counsel for the Plaintiff herein that the Court's jurisdiction and discretion can come from O.21, r.3 and s.52A of the Supreme Court Ordinance, Cap.4.

37. Order 21, r.2 provided that leave to discontinue an action is not required within 14 days of the filing of the defence of a defendant.

38. Order 21, r.3 provided that such leave is necessary otherwise as follows :-

"3. Discontinuance of action, etc., with leave (O. 21, r. 3)

(1) Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular claim made by him therein, without the leave of the Court, and the Court hearing an application for the grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just."

Further, s.52A of Cap.4 provided as follows :-

"52A. Costs in High Court and Court of Appeal in its civil jurisdiction

(1) Subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of Appeal in its civil jurisdiction and in the High Court, including the administration of estates and trusts, shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid."

39. Whilst O.62, r.10(2) [equivalent to the English O.62, r.5(4)] is silent on the costs of the non-paying co-defendant who is sued severally by a plaintiff, and the plaintiff's costs in pursuing the action against him, s.52A provided the Courts with the necessary jurisdiction and discretion as there is no provisions in the rules of Court in this respect.

40. If there is any provision touching on such a situation, the nearest one is O.21, r.3 by which a plaintiff can apply for leave to discontinue an action against a defendant which included a non-paying co-defendant who has been sued severally, and therefore, not covered by O.22, r.4(1) which deals with defendants sued jointly or, in the alternative only. In such an application under O.21, r.3, the Court has jurisdiction to grant leave on such terms as to costs as it thinks just.

41. Two further decisions of the Court of Appeal in England are also helpful. First in the case of Goldsworthy v. Brickell and Another [1987] 1 Ch.378, the plaintiff, a widower aged 85, sued the 1st defendant tenant for rescission of the tenancy agreement on the ground of undue inference. Alternatively, he also sued his former solicitors for negligence in failing to advise him with regard to his right to have the tenancy agreement rescinded.

42. The trial Judge Goulding J. found that there was undue inference but the 1st defendant's defence of promissory estoppel succeeded and therefore the plaintiff's claim for rescission failed. He also dismissed the alternative claim against the solicitors.

43. On appeal, the Court of Appeal (Parker and Nourge L.JJ. and Sir John Megaw) reversed the decision on the issue of promissory estoppel and decided in favour of the plaintiff against the 1st defendant in that the plaintiff had not affirmed the agreement and the defence of promissory estoppel could not succeed. Accordingly, the tenancy agreement was set aside. In respect of costs, Parker L.J. said at page 417 :-

" PARKER L.J. So far as the question of costs is concerned, we are entirely satisfied not only that it was reasonable for the plaintiff to join the defendant solicitors as soon as the matter in paragraph 21 had been raised; but that it would have been extraordinarily ill-advised not to join the second defendants at that stage.

That being so, it is plain that we have a discretion with regard to the costs of all parties. We only mention this: that note 62/2/46 in The Supreme Court Practice 1985, p.874 which suggests that a Bullock order will not be made when there are different causes of action (which is said to be supported by Mulready v. J.H. & W. Bell Ltd. [1953] 2 All E.R. 215) is not sustained by that authority, which deals with a very special case.

The true position is that the authority of the court over costs is very wide, as is made clear in the recent decision of the House of Lords in Aiden Shipping Co. Ltd. v. Interbulk Ltd. [1986] A.C. 965.

The order will be as follows: the plaintiff recovers his costs, both here and below, against the first defendant including all such costs as were incurred as a result of the joinder of the second defendant firm.

The first defendant's suggestion that there should be any disallowance of full costs is rejected, as is also his suggestion that he should recover any costs against the plaintiff.

With regard to the second defendant solicitors, they will recover their costs here and below against the first defendant; that is to say there will be a Sanderson order rather than a Bullock order."

44. Secondly in the case of Scania (G.B.) Ltd. v. Andrews and Another [1992] 1 WLR 578, the headnote reads as follows :-

"... Shortly before trial the plaintiff accepted the sum of ￡87,250 paid into court by the first defendant in satisfaction of all causes of action against him. That sum was later paid out to the plaintiff without any order of the court.

On the hearing of the action the judge refused the plaintiff's application for leave to discontinue against the second and third defendants and entered judgment in their favour with costs against the plaintiff.

The plaintiff sought no order for costs against the first defendant on the understanding that it had an automatic right to taxation under R.S.C., Ord. 62, r. 5(4).

On taxation the plaintiff presented a bill of costs against the first defendant which included all the costs of the joint claims against the three defendants, and a proportion of the costs in respect of the several claims.

The first defendant claimed that R.S.C., Ord. 22, rr. 3(4) and 4 applied so that there was no jurisdiction to tax the plaintiff's bill in the absence of an order for costs. The taxing master declined to determine the jurisdictional issue and refused to proceed with the taxation.

On the plaintiff's application that the taxing master proceed to tax the bill in accordance with Ord. 62, r. 5(4) the judge held that Ord. 22, rr.3(4) and 4 applied only where defendants were sued jointly, or in the alternative to the paying-in defendant. He accordingly made the order sought.

......

Held, allowing the appeal,

(1) that where a claim included allegations of joint and several liability R.S.C., Ord. 22, rr.3(4) and 4 were apt to apply in respect of the joint claims; that Ord. 62, r. 5(4) was subject to the effect of Ord. 22, rr. 3(4) and 4 and in consequence on the plaintiff's acceptance of money paid into court by one of a number of defendants the action was stayed against the other defendants in so far as it related to the joint claims and an order was required for payment of the money out of court and for costs;

(2) that since Ord. 22, rr. 3(4) and 4 did not apply in respect of the several claims, the plaintiff might tax such costs under Ord. 62, r. 5(4); and

(3) accordingly, the court would make an order regularising the payment out of court to the plaintiff and directing the first defendant to pay the plaintiff's costs up to the time of the payment into court, such costs to include those in respective of the several claims and such costs as were attributable to the first defendant in respect of the joint claims." [paragraphing supplied]

45. Stuart-Smith L.J. summarized the procedure where there are two or more defendants sued in the same action and one makes a payment into Court which the plaintiff wishes to accept as follows :-

" It may be helpful to summarise the procedure where there are two or more defendants sued in the same action and one makes a payment into court which the plaintiff wishes to accept.

(1) Where the only claims are joint or alternative the matter is governed by Ord. 22, rr. 3(4) and 4. The action is stayed against the other defendants. If the plaintiff wishes to proceed against them he must get leave to do so. He must also get an order for payment out of the money in court under rule 4(1) and the court must deal with the question of costs and make an order, since the case does not fall within rule 4(2). If on the other hand he is content with the payment in and does not wish to pursue any remedy against the other defendants, then he will discontinue against them and if they consent in writing, he is entitled to payment out of the money in court. Discontinuance is governed by Order 21; it may be without leave, provided it is done within the time limits fixed by Ord. 21, r. 2; or with leave if outside that limit. Where discontinuance is without leave, the defendant is entitled to tax his costs under Ord. 62, r. 5(3); and the plaintiff entitled to tax his costs under Ord. 62, r. 5(4) provided he has given notice that he has abandoned other causes of action not covered by the payment in. If the plaintiff has to get leave, or the defendants do not consent in writing as required by Ord. 22, r. 4(2), the court will have to make an order as to the costs, both of the plaintiff and the defendants against whom the action is discontinued.

(2) Where the claims against the defendants allege several liability only such a case is not within Ord. 22 rr. 3(4) or 4. The plaintiff does not need an order for payment out and he can tax his costs as against the paying in defendant under Ord. 62, r. 5(4). The action against the other defendants is not stayed and will proceed. If he wishes to discontinue against them, then he can do so, with or without leave as the case may be."

46. I wish to point out that in the case of Scania, which was relied on by Counsel for the 1st and 2nd Defendants herein, the plaintiff's application for leave to discontinue against the 2nd and 3rd Defendants therein was refused by the trial judge who instead entered judgment in their favour with costs against the Plaintiff. There was no appeal from this order to the Court of Appeal. It is my decision herein that if under the "Category (2)" of Stuart-Smith L.J., when a plaintiff wishes to discontinue against other defendants, then he can do so without leave within 14 days of the filing of their defence, or with leave of the Court thereafter. In that case the Court will have jurisdiction to make any order of costs as it thinks just as I have decided under O.21, r.3 and s.52A of the Supreme Court Ordinance.

47. In summary, I would decide as follow :-

(1) Where the plaintiff's claims against two co-defendants (or two sets of co-defendants) are several and not joint or in the alternative, payments-in made by one co-defendant would not stay the action against the other non-paying defendant. If the plaintiff wishes to accept the money paid-in by one defendant, he shall give a Notice of Acceptance therefor. Then he is entitled to tax his costs in pursuing his claim against that paying-in defendant only under O.65, r.10(2).

(2) Since the action against the other non-paying defendant continues, the plaintiff can proceed to the trial against that other defendant. However, if the plaintiff wishes to discontinue the other several claim against that non-paying defendant, he must apply for leave to discontinue the action against him pursuant to O.21, r.3 when it is outside the prescribed time of 14 days from the defence filed by that defendant. In any event he must make an application for an Order of costs in respect of the non-paying defendant and the Court is endowed with jurisdiction under this O.21, r.3 and s.53A of the SCO Cap.4.

III. The exercise of the discretion

48. The next question is what is the guiding principle for the exercise of this discretion? Order 21, r.3(1) said as the Court thinks just.

49. Otton J. in the case of Hodgson adopted the test of whether it was not unreasonable for the plaintiff to sue the other non-paying defendants as well. It was held in that case that :-

"The court's discretion under RSC Ord 62, r 5(4) to order a paying-in defendant to pay the plaintiff's costs of the action was wide enough to include not only the costs of co-defendants but also the plaintiff's costs of proceeding against the co-defendants if the circumstances justified such as order. On the facts, although the plaintiff had commenced proceedings against all possible defendants because it was not known, and no attempt had been made to ascertain, who was responsible for the accident it was not unreasonable for her to continue the action against all the defendants since apart from the second defendants they had each blamed everyone else in their defence thereby encouraging the plaintiff to carry on against all four defendants with reasonable prospect of being able to safeguard her costs in the event of the action going to trial or being settled. Furthermore, it was by no means certain that if the action had proceeded to trial the plaintiff would have succeeded against the second defendants, in which case she would have been left with her cause of action against the other defendants. Although there was one issue on which it was doubtful whether the plaintiff would have succeeded against the defendants, that issue could not be taken into account in reducing the costs payable by the second defendants because it would require the court to judge that issue purely on the papers. In all the circumstances, therefore, the plaintiff was entitled to have her costs of proceeding against all the defendants paid by the second defendants."

50. In the case of Leung Lai-ha and Another v. Hon Sau-ling and Another [1993] 1 HKLR 86, the Court of Appeal in Hong Kong (per Sir Derek Cons, V.-P., Kempster, J.A. and Bokhary, J. (as he then was)) also adopted a similar test, i.e. whether it was reasonable to join the other defendants. The headnote of the case reads as follows :-

" This was a claim for damages for personal injuries arising from a collision between two vehicles. The plaintiffs sued the drivers of both vehicles as the 1st and 2nd defendants respectively.

When the action came for trial, the 1st defendant conceded liability and judgment was entered against her with costs against the 1st defendant. Judgment was entered against the plaintiffs in favour of the 2nd defendant with costs.

The plaintiff's appeared the order for costs.

Both the defendants had blamed one another in the Magistrates Court when the 1st defendant was prosecuted for 'careless driving' and they went on to do so in their defences, with the 1st defendant going so far as to issue a notice claiming indemnity from the 2nd defendant.

The judge found that the 1st defendant was wholly liable for the accident and that in the absence of any evidence to indicate a degree of responsibility on the part of the 2nd defendant it was unreasonable to join him as a party.

Held:

1. The plaintiffs were entitled to assume that the 1st defendant would give evidence in support of the case pleaded by the plaintiff's and by her against the 2nd defendant's exoneration from blame at the conclusion of the trial as assured.

2. If proceedings are reasonably maintainable then it is reasonable to join both defendants to the action, whatever their relative responsibility for the plaintiff's injuries.

3. Whilst the judge properly held that the onus was on the plaintiffs to show that in all the circumstances it was reasonable to join the 2nd defendant as a party to the action, he erred in failing to appreciate that the plaintiffs could reasonably have felt doubts and uncertainties as to what would transpire at the hearing and commenced and maintained the proceedings against both defendants accordingly.

Appeal allowed and a Sanderson order for costs substituted. "

Kempster, J.A. said at page 91 :-

" In the circumstances the plaintiffs were throughout entitled to assume that the first defendant would give evidence in support of the case pleaded by the plaintiffs and by her against the second defendant and, in my opinion, would have been foolhardy to regard the second defendant's exoneration from blame at the conclusion of the trial assured. What the effect to the evidence would have been if called and adduced no one will now ever know. Indeed, it is difficult to think that any competent counsel or experienced solicitor, aware of the vicissitudes of litigation, would have advised the plaintiffs to sue only the first defendant. If proceedings are reasonably maintainable it is usually wise to seek judgment against two defendants, whatever their relative responsibility for the plaintiff's injuries as between themselves, rather than one. The judge, who properly held that the onus was on the plaintiffs to show that, in all the circumstances, it was reasonable to join the second defendant as a party to the action, erred in failing to appreciate that they could reasonably have felt doubts and uncertainties as to what would transpire at the hearing and have commenced and maintained the proceedings against both defendants accordingly."

51. It should be noted that since the 1st Defendant had conceded liabilities and dropped out from the case, the effect of the evidence of the 1st Defendant on the trial, if he were called and adduced, "no one will now ever know". I am not unconscious of the fact that in the case of Leung Lai-ha, the 1st defendant had conceded liability whereas the 1st and 2nd Defendants in the case before me has only made payment into Court which is not equivalent to any admission of liability. Further, there was a trial of the action in Leung Lai-ha against the other defendants and the trial judge decided in favour of the 2nd defendant against the plaintiff whereas the 3rd Defendant in the case before me succeeded in agreeing with the Plaintiff that the action against it should be discontinued. I therefore in exercising my discretion attach no liability whatsoever on the 3rd Defendant herein, no matter what the pleadings and the allegations of the other parties said.

52. Similarly, in the case of Parkes v. Knowles and Another [1957] 1 WLR 1040, the plaintiff suffered personal injuries whilst travelling in a motor-car driven by the 1st defendant when it collided with an omnibus owned by the 2nd defendant. Lynskey J. said at page 1043 that :-

"I think I ought to exercise my discretion here in exactly the same way as I would have exercised it if this action had been fought to conclusion and the conclusion come to was that the first defendant was alone to blame and that the proper amount to be paid was ￡100. That being so, it seems to me that if the plaintiff was reasonable in joining both defendants in the action he is entitled to recover his costs. Having regard, first of all, to the letter that was written and, secondly, to the allegations, and lack of allegations, of negligence in the two defendants' pleadings, it seems to me that the plaintiff was not only reasonable in joining both defendants but would have been extremely foolish if he had not done so.

Under those circumstances it seems to me that the plaintiff is entitled to recover from the first defendant the costs he is to pay to the second defendant. If I make what is known as a Bullock order it involves double taxation, which I do not like - it only adds to the costs and does not help anybody, so what I propose here to make is a direct order.

So far as the second defendant is concerned he is not affected by the plaintiff's choosing the High Court. He has been brought here; he has had to fight here. In those circumstances it seems to me that the proper order to make here is that the first defendant pay the plaintiff's costs on scale 3 of the County Court scales, and the first defendant pay the second defendant's costs on the High Court scale."

53. In exercising my discretion, I consider the following facts as admitted either in the statements or letters of the Defendants as relevant. It does not involve a resolution of any disputed facts. They are separated into different stages of the events leading to the action herein, namely:-

1. In relation to the handling of the recovery action, i.e. CL88 :-

(1) Admittedly, little progress has been made during 1992 and at the end of which Plaintiff was just told by the 3rd Defendant that Defences have been filed and further steps would be taken.

(2) The Plaintiff was informed by the 3rd Defendant of payments-in and on 16 July of costs consequences. The Plaintiff had not been advised that the claim was a "loser" and "speculative from the start which would have accepted payments-in and cut losses".

(3) Instead, it was advised in July 1993 to proceed to the completion of discovery and then review the case which the Plaintiff had accepted.

(4) The 3rd Defendant said on 15 April 1994 that the 1st Defendant had made substantial amendments for the delay.

(5) The Plaintiff was told in December 1994 that Counsel considered the claim to be a good one subject to further enquiries. Admittedly, the Plaintiff did not know that Counsel had made a mistake by relying on the unamended version of the Warsaw Convention.

(6) However, in April 1995, the 3rd Defendant informed the Plaintiff that the 2nd Defendant had advised shortly before that "we do not have the evidence to succeed at trial", which was due to start in May 1995.

(7) Shortly before the conclusion of the recovery action in May 1995, 2nd Defendant's letter dated 20 April 1995 was suggesting that the Plaintiff was embarking on speculative litigation and that the 3rd Defendant's approach to the merits was over optimistic and that the 3rd Defendant knew the litigation was speculative and that there were delays in the 3rd Defendant's giving instructions about the expert evidence.

(8) Thereafter in the 2nd Defendant's letter dated 17 January 1996, the 2nd Defendant said that the Plaintiff and the 3rd Defendant had decided this was a speculative litigation and strenuously denied liability and insisted that the 1st Defendant and the third party had performed the instructions of the 3rd Defendant.

(9) However, in his letter dated 20 April 1995, the 2nd Defendant actually admitted that the case had not been properly prepared for trial and that was his responsibility. He also admitted that certain specified steps were not taken describing this failure as "inexcusable". He conceded also that at least the performance of the omitted steps "may have facilitated the prospect of settlement upon more favourable terms that presently possible without the necessity to incur the costs associated with final preparations for trial".

(10) In the pre-action letters, the 2nd Defendant on 17 January 1996 under the letterhead of the third party, alleged that the 1st Defendant had acted on the instructions of the 3rd Defendant and that the allegations against the 1st Defendant were misconceived. He would "strenuously deny the allegations" put forward against him.

2. The Defence of the 1st and 2nd Defendants put the blame on the 3rd Defendant as stated under the chronology of events at the beginning of this judgment. It was only then the Writ was served on the 3rd Defendant.

3. The Contribution Notices of the 3rd Defendant against the 1st and 2nd Defendants on 10 April 1997 and of the 1st and 2nd Defendants against the 3rd Defendant on 6 May 1997 must be construed as the parties putting the blame on each other. This is the case in spite of the bold submission of Ms Newell, for the 1st and 2nd Defendants, that they were not so.

54. By reason of the aforesaid matter, it was not unreasonable for the Plaintiff to join the 3rd Defendant as well and to serve the Writ of Summons on them and to continue on with the action against the 3rd Defendant. Accordingly, in exercising my discretion, I am of the view that the 1st and 2nd Defendants are liable to pay the aforesaid two sets of costs, namely :-

1. The Plaintiff's costs of prosecuting the claim against the 3rd Defendant; and

2. The 3rd Defendant's costs of defending the Plaintiff's claim.

55. In fact, even if I adopt the test of "most compelling reason" to order costs against the 1st and 2nd Defendants as suggested in the cases of Fell and Carrs, I would also come to the same view that it is most compelling in this case that the aforesaid two sets of costs should be borne by the 1st and 2nd Defendants.

56. However I must add here that whilst I have adopted the test of "not unreasonable to sue" in the case before me, I am not saying it is the only test the Court should employ in arriving at a just solution. The only test provided by the Rule & Statute is "as the Court thinks just". Due to myriad numbers of circumstances producing different matrixes of facts, it is dangerous to lay down a hard and fast rule to suit all situations. Further the case before me could be decided on the merits in relation to costs without trial on the merits of the case itself. I consider it is a just result.

Costs of the Amended Summons and the adjournment

57. The cost of the Amended Summons would obviously follow the event and that is the 1st and 2nd Defendants should also pay the costs of the Plaintiff and the 3rd Defendant for this Amended Summons.

58. Parties are also in dispute as to the costs of adjournment of the hearing of the Amended Summons on 12 August 1998. The then Counsel for the 1st and 2nd Defendants put in, which I must say, clear and well written submissions. However, it was submitted there and then that :-

"The Plaintiff has not filed any affidavit, but only refers to certain selective correspondence. If this application is to be pursued by P, the Court should give directions for the filing of affidavit evidence by the parties, so that the full picture would be placed before the Court."

59. It was for this reason that the hearing was adjourned and directions were given for the filing of the affidavit. In the end, the affidavit did not assist the Court. The opinion and suggestions or submissions in the affidavit were not considered by the Court. (They should not be included in an affidavit any way.) The Court only referred to those correspondences as were already put before the Court there and then. For the same reason, the 1st and 2nd Defendants should bear the costs of the adjournment as well.

Conclusions

(1) The 1st/2nd Defendants and the 3rd Defendant were sued severally in the action herein and not jointly, or in the alternative.

(2) The 1st and 2nd Defendants having made payment into Court and accepted by the Plaintiff within the stipulated time of 14 days thereafter, the Plaintiff is entitled to accept money paid into Court in satisfaction of all the causes of action in respect of which he claims against the paying-in 1st/2nd Defendants without leave of the Court by giving notice in writing in accordance with O.22, r.3(1) and under O.62, r.10(2). By the same order, he is also entitled to tax his costs of the action incurred up to the time of giving Notice of Acceptance which should only include his costs of action incurred against the 1st and 2nd Defendants.

(3) If the Plaintiff herein wished, as he did, to discontinue his action against the other Co-Defendant, i.e. the 3rd Defendant herein, he could apply for leave to discontinue the action against him. As the parties agreed that the action against the 3rd Defendant should be discontinued, the Court has jurisdiction to consider what is the appropriate order of costs as between the Plaintiff and the 3rd Defendant, including whether the 1st and 2nd Defendants in this case should pay the Plaintiff's costs incurred in bringing the action against the 3rd Defendant and the 3rd Defendant's own costs in defending the action.

(4) In exercising that discretion in this case, where the Plaintiff and the 1st/2nd Defendants both have already agreed not to ask for an order that the 3rd Defendant should pay its own costs, the Court considered that it is not unreasonable for the Plaintiff to pursue this action against the 3rd Defendant as well and to maintain the same until the 1st and 2nd Defendants made payment into Court. Accordingly, the Court exercises its discretion against the 1st and 2nd Defendants in favour of the Plaintiff and the 3rd Defendant and a Sanderson Order is made that the 1st and 2nd Defendants should pay the costs of the 3rd Defendant directly and the Plaintiff's costs of prosecuting the claim against the 3rd Defendant.

(5) The 1st and 2nd Defendants should also pay the costs of the Plaintiff and the 3rd Defendant in the Amended Summons including the costs of the adjournment.