GRACE CHIN AND ANOTHER v. KATE RICHDALE AND ANOTHER

HCPI 1187/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 1187 OF 2000

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R U L I N G

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Introduction

1.  Following an 11-day trial, I dismissed the Plaintiffs’ claim and entered judgment for the Defendants.  I awarded the Defendants their costs who now apply to have these costs taxed on an indemnity basis.

2.  The basis of the application is that the Plaintiffs have conducted themselves in an oppressive manner in the way that they have pressed this action, and whilst I am only concerned with this action, it should also be remembered that this was one of two substantial civil actions brought against them by the Plaintiffs, the other being for malicious prosecution which has been struck out under Order 18 rule 19 following two hearings before the Court of Appeal aside from the initial proceedings before the judge at first instance. As a result, the Defendants have had to expend something approaching $7 million in defending both of these actions, the costs of this one being in the order of $3.1 million.  I am told that on the usual party and party taxation, the Defendants will be out of pocket, in this case, in the order of $1 million successfully defending an action which should never have been brought.

The law

3.  The principles which apply to the award of costs on an indemnity basis have been summarised in the Note to Order 62 of the Rules of the High Court.  They are these:

“The Court of Appeal in Choy Yee Chun (The Representative of the estate of Chan Pui Yiu) v. Bond Star Development Ltd [1997] H.K.L.R.D. 1327, CA reviewed the cases and summarised the law as follows.  A taxation of the successful party’s costs on an indemnity basis could properly be ordered where the proceedings wee scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner.  Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for the taxation of the successful party’s cost on the indemnity basis.  However, the circumstances in which an indemnity award might properly be made were not restricted to circumstances such as those described.  The discretion was not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”.  The principle for the award of an order of costs on an indemnity basis applied equally to those who not only instituted proceedings but who defended them.  If a plaintiff had been forced to institute proceedings by a defendant whose conduct had been not only hostile in the normal litigious sense, but oppressive and with base ulterior motive, and if the pursuit of a defence constituted conduct which was part of an oppressive game plan then invocation of the power to award costs on an indemnity basis might well be justified.  The case of Hanwa Co. (H.K.) Ltd v. Everbright Shipping Co. Ltd, unreported, HCAJ No. 153 of 1988, December 9, 1988, [1989] H.K.L.Y. 750 where it was held that the court did not have jurisdiction to award costs inter partes on indemnity basis must now be regarded as having been overruled.”

Mr Duncan S.C. for the Defendants has also referred to some remarks of Godfrey J.A. in Sung Foo Kee Ltd v Pak Lik Co. (1996) 3 HKC 570, 574F to 576H where he referred to three English cases, Disney v Plummer (C.A. unreported 16 November 1987), Macmillan Inc. v Bishopgate Investment Trust Ltd (10 December 1993 unreported Millet J. (as he then was) Ch D.)and Munkenbeck & Marshall v McAlpine (1995) 44 Con LR 30, [Hollis J., Russell LJ agreed].

4.  The references to those judgments are at 575E-576E.  It is instructive to relate these here;

“	In Disney v Plummer, 16 November 1987, in the Court of Appeal (England and Wales), unreported, it was submitted that indemnity costs would only be appropriate where there had been deception or underhand conduct.  Kerr LT in his judgment said:
		I entirely reject that submission.  On the contrary, I wholeheartedly agree with the course which the judge took in relation to this ill-advised and ,if I may say so, stupidly conducted piece of litigation.  It is the sort of robust attitude which should be taken to pieces of litigation of this kind.  The defendants still suffer, even when they win.  But they should at any rate have been given such assistance as can be provided by the rules.  I do not accept, as counsel submitted, that indemnity costs are only appropriate if there is some deception or underhand conduct on thepart of the losing party, but not if the litigation is merely fought bitterly or even unreasonably.  In the latter type of cases judges can still exercise their discretion under O 62 r 3(4).
	Eastham J in his judgment said:
		The judge having listened to the various submissions which are summarised, clearly took the view that this was one of the cases in which he could, and should, make a robust order so as to discourage other plaintiffs from pursuing litigation in the way in which this litigation has been pursued on behalf of this particular plaintiff.  In my judgment he had ample material on which he could find that it was appropriate to order costs on the indemnity basis and indeed, after the defendants had been exposed to the very serious consequences of this bitterly conducted litigation, they would have felt a sense of considerable injustice if their costs had been whittled away down to the costs on a standard basis.
	In Macmillan Inc v Bishopgate Investment Trust Ltd, 10 December 1993, unreported, Millett J, in the Chancery Division, said:
		The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose.  Litigants who conduct their cases in bad faith, or as a personal vendetta, or in an improper or oppressive manner, or who cause costs to be incurred irrationally or out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win.  Nor are these necessarily the only situations where the jurisdiction may be exercised; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.
	In Munkenbeck & Marshall v McAlpine (1995) 44 Con LR 30, Hollis J (with whom Russell LJ agreed) said that he entirely agreed with that passage in the judgment of Millett J and said (at 33):
		In my view it is a pity that various courts have attempted to define in exactly what circumstances indemnity costs may be ordered.  It is a matter in each case of the judge exercising his discretion to order costs on an indemnity basis when appropriate to the facts before him.
	We endorse all these observations of Kerr LJ, Eastham J, Millett J and Hollis J.”

5.  It seems to me that it is these sentiments which should inform the way in which I should approach this application.

Is this an ‘appropriate’ case?

6.  Mr Duncan has referred to paragraphs 10, 16, 17, 59, 62 and 95 of the judgment where I had occasion to comment on the way that the Plaintiffs had chosen to conduct the litigation.  This, he says, serves to demonstrate my view, at all events, of the oppressive and unbalanced way in which the matter has been dealt with by the Plaintiffs.  The Defendants have had to endure all of this at great expense and it would be an affront to justice if having defeated the claims so comprehensively, they should be left to bear something like $1 million worth of irrecoverable costs.

7.  The Plaintiffs have put in a detailed written submission as to why only a party and party taxation should be ordered.  Most of it, I am bound to say, is taken up with criticisms of the judgment which cannot assist on this aspect.  This would only relate to the appeal which is being brought by them.

8.  That having been said, they do appear to have taken some pertinent points which merit serious consideration.  Firstly, they say that the action was brought following a favourable Opinion by leading counsel and his junior that they had good prospects of success. Secondly, that they have behaved perfectly reasonably in trying to settle and some of the correspondence has been shown to me by them and thirdly, that the case has no ‘special or unusual features’ which require the making of a higher costs order.

Counsel’s Opinion

9.  Whilst I have not seen that Opinion, it was no doubt predicated on the basis that the Plaintiffs’ evidence would be accepted.  In the event, it was rejected by me.  Counsel cannot be expected to provide any sort of guarantee for success and if the Opinion is found to have been unduly optimistic then that is something to be discussed between the Plaintiffs and their advisors.

Attempts to settle

10.  Whilst I accept that this may be a matter that I can properly have regard to, the fact remains that the parties could not come to terms and the Plaintiffs then chose to press the matter with an obsessive vigour, which the Defendants had to contend with, by either fighting the matter to judgment, which they did or, settling on terms which did not appeal to them by which time they had already been put to great expense when these offers of settlement had been proposed.

‘No special and unusual features’

11.  It seems to me that this is a case which does have special and unusual features.  The sad loss of the Plaintiffs’ pet dog has been allowed to escalate to quite extraordinary proportions by the Plaintiffs’ remorseless pursuit of the Defendants through the courts.  A mountain has grown out of a molehill.  This has been turned into nightmare for the Defendants who have been completely vindicated by the court.

Conclusion

12.  This is just the sort of case where indemnity costs would be ‘appropriate’.  It would offend any reasonable sense of justice if I were to order otherwise.  These costs will therefore be taxed on an indemnity basis.  The costs of this application must also be to the Plaintiffs but only on a party and party basis.  This latter part of the order will be an order nisi.