TUNG WING STEEL CO. LTD. v. BRASIMET COMERCIO E INDUSTRIA S.A. and Others

IN THE COURT OF APPEAL

1993, No 83
(Civil)

_________________

________________

J U D G M E N T

________________

Mortimer, J.A.:

1. This is an appeal by the 3rd defendant against an order of Mayo J. of 6 May 1993, the effect of which was that the 3rd defendant should be indemnified for its future costs occasioned in the Court of Appeal. The background of this matter is as follows.

2. On 26 February 1990 the plaintiff obtained an ex parte injunction against the 1st defendant. The party who later became the 3rd defendant was served with that injunction. It enjoined the 1st defendant not to part with goods on a bill of lading which had been issued by the 3rd defendant on 24 December 1989. The injunction recited no undertaking as to damages and did not provide for any costs which might be incurred by the 3rd defendant in complying with it.

3. On 3 March 1990 the 3rd defendant took out a summons, asking to intervene to be made a defendant, also for the payment of costs and expenses which had arisen or might arise consequent upon the making of the injunction.

4. On 7 March - the return day for the ex parte injunction - the learned judge reviewed his decision and discharged the injunction. There followed hearings relating to the 3rd defendant and others. Those are matters with which I will deal.

5. The original order concerned in this appeal was made by the judge on 15 March 1990. He made several other orders, either on that day or near it. The order was as follows as it affected the 3rd defendant. First, that leave be granted to the intended 3rd defendant to intervene and be joined in the action. Second, by virtue of the fact that the 2nd and the 3rd defendants are named in the injunction dated 26 February 1990, the second and the third defendants be indemnified by the plaintiff against any costs occasioned by the said injunction order; and finally, that the 3rd defendant's costs of its summons dated 3 March 1990 be paid by the plaintiff in any event. There were other orders dealing with the other parties.

6. The history of the matter continues. The plaintiff appealed against the discharge of the ex parte injunction. By the time the appeal was heard on 18 September 1990, events had overtaken the matter. The injunction was not pursued. The goods on the bill of lading had already been dealt with. However, the appeal was pursued on costs. An amendment to the Notice of Appeal related to the very order with which we are concerned today - the order on 15 March 1990 of Mayo J. granting the 3rd defendant indemnity for costs occasioned by the injunction. However, that part of the appeal was not pursued. In the result, after the decision, there was agreement about the costs and the order made - by the Court of Appeal - was that the 2nd and the 3rd defendants should have their costs of the appeal half against the plaintiffs and half against the 1st defendants.

7. It is to be noted that in the Court of Appeal there was no submission by the 3rd defendants that the costs of the appeal had already been provided for by that order of 15 March 1990.

8. However, later the matter was raised between the parties. The contention was that although the Court of Appeal had provided in its order for the costs, in fact Mayo J. had already provided on 15 March 1990 for the 3rd defendant to have its costs of the appeal on an indemnity basis. It was said that the order was clear that the 3rd defendant be indemnified by the plaintiff against any costs occasioned by the said injunction and that as the appeal concerned an application to restore the injunction these were costs occasioned by the injunction.

9. When the dispute arose on the lines I have indicated, a further application was made before Mayo J. about his order. He heard the matter on 6 May. Having heard arguments which were much the same as we have heard today, he decided these submissions did not satisfactorily address the problem. He said:

"My order of the 15th March was in clear terms and included an indemnity. The Amended Notice of Appeal included the 15th March Order.

It seems to me that for some reason this part of the Appeal was not proceeded with and as a consequence of this my order was not discharged. Therefore, it still exists. I am satisfied that the 3rd Defendant is entitled to prepare a Bill of costs pursuant to it and this will include the Court of Appeal costs notwithstanding their order to the contrary."

10. The judge decided that his order was clear, that it included an indemnity and that the order covered the proceedings before the Court of Appeal notwithstanding its order which he considered to be to the contrary.

11. The argument today is that the judge's order provides for the costs which were not provided for by the Court of Appeal's order and so it is supplementary to it rather than contrary.

12. The matter turns upon the meaning of the judge's order. Mr Geoffrey Ma Q.C., in his usual persuasive way, contends that the judge was right when he said that the order was clear and what is more, although it is an unusual order, he had jurisdiction to make it. He considered his own order. According to those instructing Mr Ma who were present and argued the case the judge had some memory of the matter and was able to say that was his intention. So, it is submitted by Mr Ma, that the matter is unusual but simple. The order stands until it is set aside and the judge was right.

13. For my part, I also think the matter is reasonably simple. I do not think that this order is ambiguous. The order must be construed against its background and in its context. If there are competing constructions it must be construed in a reasonable manner. Of course, if he had no jurisdiction to make the order, then that would be an end of the matter. But, for my part, I am not persuaded that he had no jurisdiction to make an order which binds the Court of Appeal though it is a point I would reserve for fuller argument. It is certain that it would be a most surprising order for a judge at first instance to make. For my part, I have never heard of a judge at first instance seeking to bind the Court of Appeal by an order for costs, never mind an order for indemnity costs which is itself an unusual one. Nor do I believe that if the matter had been raised by counsel at the time when this order was made and the judge had been asked "Does your order bind all future proceedings in court?" he would have answered "Of course, it binds the Court of Appeal and, if necessary, it binds the Privy Council because those proceedings will relate to costs occasioned by the injunction order." Such an unusual order could only be justified in the most exceptional circumstances. I may say circumstances which, for my part, I cannot envisage. That is a matter of some importance when considering the effect of the order.

14. However, when one looks at the whole background, it becomes clearer. The summons with which the judge was dealing - taken out by the 3rd defendant on 3 March - asked first that the 3rd defendant have leave to intervene in the action. Secondly, asked that there should be an undertaking as to damages - which would be usual in this type of ex parte injunction; and thirdly, for the costs which had been incurred by the 3rd defendant in complying with the injunction order. That is what the judge was dealing with. It included an application for the legal costs incurred but not limited to those costs. When the judge considered those matters he no doubt had in mind the expenses and costs incurred by the 2nd defendant and other innocent parties consequent upon a dispute which did not involve them.

15. The answer can be found in the other orders which were made at about this time. The order on 15 March was not limited to the costs occasioned by the injunction for, as I have already indicated, that order dealt with the 3rd defendant's costs of the summons and provided that the costs of the summons should be paid by the plaintiff in any event. That would be inconsistent with the earlier order if it were intended to cover future costs in the Court of Appeal. It is further to be noted that the costs of summons to be paid by the plaintiff in any event were on a party and party basis.

16. There were other orders which reinforce that conclusion. On 12 March an order was made on another summons for the costs of the application to be paid by the plaintiff to the defendant in any event and to the 3rd defendant if, in due course, it was joined in the action. Also, on 15 March there was an order on the plaintiff's application for an adjournment of the inter partes hearing and other matters in which the 3rd defendant received its costs in any event on a party to party basis.

17. Looking at the matter in the context and against the background in which the order was made it seems to me clear that it was never intended to cover the Court of Appeal but that is not determinative, the proper construction of the order is and it certainly does not cover future costs relating to the Court of Appeal. It does, of course, cover the expenses of complying with the injunction as asked for by the 3rd defendant itself.

18. It follows that when the judge made his decision on 6 May that the 3rd defendant should be indemnified in relation to the costs of the appeal, in my judgment, he was wrong.

19. I would allow this appeal.

Wong, J.:

20. It must be rare indeed for a single judge of the High Court to make provision for future costs occasioned in the Court of Appeal. If such an order is ever made it must be upon very special and unusual circumstances. I am not satisfied that this is such a case. I agree that this appeal should be allowed on the terms proposed by my Lord Mortimer J.A.

Penlington, J.A.:

21. I also agree that this appeal should be allowed. There are, of course, numerous instances where a court is asked to give leave for an appeal and an order is made as to the costs of the appeal as a condition upon which leave is granted. That was not, however, the case here. I am also considerably influenced by the fact that in the order of 15 March, in which Mayo J. made the order in respect of the 2nd and 3rd defendants being indemnified by the plaintiff against any costs occasioned by the said injunction order, he then goes on to give an order for costs of the summons to be paid in any event but on a party and party basis. It seems to me it is clear that the judge did not intend to make an order which would bind future proceedings as such would take in the Court of Appeal. I am satisfied that this appeal must be allowed and the decision of Mayo J. is quashed.