BASAB INC. AND ANOTHER v. SUPERB GLORY HOLDINGS LTD AND OTHERS

CACV 256/2014

CIVIL APPEAL NO. 256 OF 2014

(ON APPEAL FROM HCA NO. 6 OF 2014)

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REASONS FOR JUDGMENT
AND DECISION ON COSTS
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Hon Kwan JA (giving the reasons for judgment and decision on costs of the court):

1.  At the hearing on 26 February 2016, we made an order that unless the plaintiffs lodge their appeal bundle for approval by 8 April 2016 with their skeleton submissions, this appeal shall be dismissed automatically without any further hearing. We also ordered the plaintiffs to pay all the costs of the 1^st and 2^nd defendants that have been incurred and thrown away as a result, which we will now assess summarily on a party and party basis.

2.  We will first give the reasons for our judgment.

3.  On 4 December 2014, Deputy High Court Judge Wilson Chan handed down his decision striking out the plaintiffs’ claim against the 1^st and 2^nd defendants on the ground that the claim was barred by the no reflective loss principle.  The plaintiffs filed a notice of appeal against this decision on 17 December 2014.

4.  On 20 May 2015, the plaintiffs were ordered to pay security for costs of the appeal in the sum of $580,000.  They have complied with the order according to a notice of payment into court on 2 July 2015.

5.  The appeal was due to be heard on 26 February 2016.

6.  A month before the scheduled date for the hearing of the appeal, a summons was issued by Henry Wai & Co for an order they should cease to act for the plaintiffs on appeal.  Henry Wai & Co also notified the court by letter that another firm of solicitors, Lam & Co, have filed a notice of change of solicitors for HCA 6/2014, but not for this appeal.  HCA 6/2014 is the action brought by the plaintiffs in which the judge ordered the claim to be struck out against the 1^st and 2^nd defendants.  We understand from the 1^st plaintiff this is to enable Lam & Co to deal with matters of taxation in the High Court action.

7.  An order in terms of this summons was made by Master J Wong on 15 February 2016, so the solicitors on record ceased to act for the plaintiffs in the appeal as from that date.  No notice to act by any alternative firm of solicitors has since been filed on behalf of the plaintiffs in the appeal proceedings.

8.  As of 15 February 2016, no appeal bundles and no skeleton submissions were lodged by the plaintiffs.  These documents should have been lodged by 12 February.  The solicitors for the 1^st and 2^nd defendants sought directions from the court as to the further conduct of the appeal.

9.  On 16 February 2016, the court gave directions by letter to the parties to vacate the hearing of the substantive appeal on 26 February 2016 and to fix a hearing on the same date and time to consider dismissing the appeal for want of prosecution.  The court further directed the plaintiffs to show cause why they should not pay the costs of the defendants thrown away in consequence.

10.  Nothing has been heard from the plaintiffs up to the time of the hearing.

11.  On 26 February, the 2^nd plaintiff turned up in court acting in person.  The 1^st plaintiff, which is unrepresented, has not appeared.  The 2^nd plaintiff produced an affirmation made by him that day which was obviously professionally prepared, and he told the court it was indeed prepared by a barrister and a solicitor, but the solicitors chose not to go on record as the plaintiffs’ solicitors. In his affirmation, he gave an account of his dispute with his former solicitors Henry Wai & Co about a substantial discount on fees allegedly promised to him.  He asserted that he did not pay the outstanding fees billed by the former solicitors or costs on account for the appeal because the former solicitors had not given him the discount as promised.  He claimed he was taken by surprise when the former solicitors told him on 11 February 2016 to attend court for a hearing the following day in an application for the solicitors to cease to act for the plaintiffs in the appeal, and by then it was too late for the plaintiffs to instruct other solicitors to conduct the appeal.

12.  The 2^nd plaintiff informed us it is the plaintiffs’ intention to pursue the appeal and asked for time to engage solicitors and counsel for the appeal.  He said he would need two to three months to lodge the appeal bundle and skeleton submissions as he would need to retrieve the whole set of papers from his former solicitors.

13.  As was pointed out by Mr Mok, SC for the defendants, nowhere in the 2^nd plaintiff’s affirmation did he say that the plaintiffs are unable to afford legal fees.  The 2^nd plaintiff’s complaint is that the amount of fees is in dispute because of the substantial discount allegedly promised to him and payment has not been made due to the dispute.

14.  It is entirely up to the plaintiffs to make such arrangements as they see fit with their former solicitors regarding the settlement of outstanding fees and the payment of costs on account for the appeal.  This cannot be used as an excuse not to make timely preparations for an appeal they claim they want to pursue.  It is apparent from the letters issued by the former solicitors to the plaintiffs that the letter dated 26 October 2015 was stated to be a “final notice” and “ultimatum” for them to make payment of outstanding fees and costs on account.  The plaintiffs could not have been unaware that by the first week of February 2016, no preparations had been undertaken for the appeal which was to be heard in two weeks’ time.  It is wholly reprehensible for them to take no action on this, causing time and costs to be wasted.

15.  We see no reason why the court should not exercise its inherent jurisdiction to strike out and dismiss the appeal for want of prosecution.  Instead of an immediate order for dismissal, we have decided to make an unless order, mainly because the plaintiffs have made payment into court of a substantial sum as security for costs on appeal.  So the plaintiffs would have one last opportunity to take the necessary steps to pursue the appeal, if they are still minded to do so.

16.  The 2^nd plaintiff asked for two to three months to comply with the unless order.  We did not think it appropriate to grant him that period of time.  We have borne in mind the nature of the appeal, that the necessary documents for the conduct of the appeal have all been filed in the strike out application and do not anticipate there would be undue difficulty for another firm of solicitors to prepare the appeal bundle and instruct counsel, even if the plaintiffs are unable to retrieve “the whole set of papers” from the former solicitors.  We therefore ordered that unless the plaintiffs lodge their appeal bundle for approval by 8 April 2016 with their skeleton submissions, this appeal shall be dismissed automatically without any further hearing.

17.  It is appropriate that the plaintiffs should bear all the costs of the 1^st and 2^nd defendants thrown away as a result.

18.  The 1^st and 2^nd defendants seek summary assessment of costs and an order that the sum of $580,000 paid into court as security for costs on appeal be paid out to them towards part of the costs assessed.

19.  They have lodged two skeleton bills, one for the application for security for costs (in the total sum $111,095), and another for the substantive appeal (in the total sum $620,850).

20.  For the application for security for costs on appeal, we reduce the costs to $75,245, made up of solicitors’ charges of $40,245 and counsel’s fees of $35,000.

21.  For the substantive appeal, we reduce the costs to $343,050, made up of solicitors’ charges of $93,050 and counsel’s fees of $250,000.  Counsel’s fees are assessed on the basis that the briefs for the appeal have been delivered to counsel before directions to vacate the hearing of the appeal were made on 16 February.

22.  The total fees assessed come up to $418,295.  We order this be paid out from the amount of $580,000 paid into court, and that the balance is to remain in court to abide by the outcome of the appeal.