KWAI TAK MING v. KS CAPITAL ONE LTD AND OTHERS

HCA 679/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 679 OF 2012

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DECISION ON COSTS

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THE APPLICATION

1. This is the plaintiff’s application for the costs of and occasioned by the defendants’ summons filed on 31 December 2014 seeking to introduce further expert evidence on the market value of the subject property and the defendants’ withdrawal of the said summons.  The plaintiff asks for a summary assessment of the costs under O.62, r.9A.

2. The defendants agreed that they had withdrawn the said summons and they offered to pay the plaintiff’s costs of and occasioned by the said summons in any event.

3. The dispute between the parties is therefore whether the costs of and occasioned by the withdrawal of the said summons should be assessed under O.62, r.9A and be paid within 14 days from the date hereof, or should be taxed and paid in any event.

4. The parties are legally represented.[1]

DISCUSSION

5. The defendants are complaining that the plaintiff was not cooperative by agreeing to have the costs to be taxed in any event, but instead insisting on summary assessment of the costs to be paid forthwith.  They ask this Court to impose costs on the plaintiff for so doing.

6. Since this issue of whether the costs for interlocutory applications should be assessed under O.62, r.9A and be paid forthwith (which means within 14 days from the date of the order) or be taxed and paid in any event is quite prevalent in the interlocutory hearings before this Court, it may be helpful to conduct a more comprehensive discussion on these issues here.

O.62, r.9A

7. The discussion should commence with O.62, r.9A, which gives the power to the court to make the assessment of costs.  The relevant provisions of O.62, r.9A are:

(1)  Where the Court has determined an interlocutory application at any stage of proceedings and orders a party to pay costs in respect of the interlocutory application to any other party, it may, if it considers it appropriate to do so but subject to rule 9C-

(a)  make a summary assessment of the costs by ordering payment of a sum of money to that other party in lieu of taxed costs;

(b)   make a summary assessment of the costs by ordering payment of a sum of money to that other party in lieu of taxed costs…

O.62, r.9C:

(1)  No direction or order may be made under rule 9(4)(b) or 9A(1)(a) or (b) for the payment of a sum of money if-

(a)   the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily;…

The Final Report of CJR

8. The reasons behind having summary assessment of the costs and immediate payment of such costs can be found in the Final Report, which was compiled by the Working Party after an extensive consultation with the relevant stakeholders.

9. At page 277 of the Final Report, it discussed the nature of a summary assessment of costs on the disposal of an interlocutory application.  It has two main features, viz. immediacy of payment and assessment in a summary and broad-brush way, rather than through a process of taxation whereby every item in the receiving party’s bill of costs is potentially subject to challenge.  The Final Report had also set out the reasons for summary assessment of costs.  At paragraph 530, it states:

“530. The first feature is important because experience in other jurisdictions indicates that it is an effective means of discouraging unnecessary and disproportionate interlocutory applications. As discussed in the Interim Report, the lack of immediacy of orders to pay costs “in the cause” or “in any event” weakens costs as a sanction against unwarranted applications or resistance. An order made in response to an interlocutory application which ought not to have been brought or resisted, requiring the losing party to pay at once the costs of that application summarily assessed, regardless of the eventual outcome of the case as a whole, gives the costs order a real impact.

531. The second feature is aimed at enabling prompt payment to be exacted and avoiding the costs of a detailed taxation.

532. Of course, not every case demands a summary assessment of costs. There will be interlocutory applications where the appropriate order would be for the costs to be “in the cause” or “in any event” or “reserved”. In other cases, the costs may be substantial and complex, making them unsuitable for final assessment summarily. ….”

10. The Working Party finally made recommendation 88:

“The court should, whenever appropriate (whether as a response to an unwarranted application or unwarranted resistance to an application, with a view to saving costs or otherwise), make a summary assessment of costs when disposing of interlocutory applications.”

11. With the historical background of O.62, r.9A, it becomes clear that it is a norm now for the court to make summary assessment of costs under O.62, r.9A for interlocutory applications on the broad-brush approach and the payment of the costs should be immediate, usually within 14 days of the order, unless there are special reasons not to so order.

The relevant authorities

12. The plaintiff relies upon the UK authority of Frogmore Estates plc v Berger and Others (1989) Times Law Report, 1 November 1989 per Sir Nicolas Brown-Wilkinson, Vice Chancellor that the proper administration of justice required that inappropriate interlocutory applications involving an investigation of the merits should be restricted, if necessary by immediate orders for costs to be taxed forthwith made against the party responsible.  This is a ruling on immediate taxation rather than on summary assessment of the costs.  The rationale of immediate taxation is to discourage inappropriate interlocutory applications.

13. The Court of Appeal has adopted this approach of summary assessment in Poon Shu Fan v Wong Tin Yan & Another [2012] 5 HKLRD 512.  See paragraph 37 of the Reasons for Judgment.  Summary assessment and immediate payment of the assessed costs are the norm of the masters in the hearings of the interlocutory applications now.

The defendants’ burden

14. Since this is an interlocutory application, it is incumbent upon the defendants to show why summary assessment of the costs under O.62, r.9A should not apply to their withdrawal of their summons.

15. The defendants blame the plaintiff for not agreeing to their proposal of having the cost taxed and paid in any event and that the plaintiff had not replied to their solicitors’ proposal. In my view, if the plaintiff has good reason not to accept the defendants’ proposal on costs, the defendants cannot blame the plaintiff for doing so.

16. The defendants are unable to show any of the factors as provided under O.62, r.9C or any other valid reason that summary assessment cannot or should not be conducted.  The defendants have only argued that since the summons was not argued, the UK authority is not applicable.  This is not a valid defence to the reasons above for the general practice here on summary assessment of costs as adopted by the Court of Appeal and more often by the masters nowadays.

Conclusion

17. The defendants’ argument fails.  The costs for their withdrawal of the summons should be assessed under O.62, r.9A, and also the costs of this hearing together with other costs reserved for this hearing, which I now do.  The costs should follow the event.

18. The plaintiff asks for the costs to be summarily assessed, with a schedule of costs submitted.  This schedule of costs is for the preparation for the defendants’ summons until 26 March 2015 when the defendants informed the plaintiff that they would withdraw the summons and also for the argument on the costs including the hearing today.  The defendants oppose the plaintiff’s bill saying that the charges are excessive for those works mentioned above.  This Court will follow the approach for summary assessment of the costs as set out in Poon Shu Fan case.  The bill is prima facie excessive.  Therefore the Court has to consider the items in dispute.  The plaintiff has not put in the bundle of documents for preparation and perusal. He refers me to the affirmations and the correspondence, most of which I find not useful because they were arguing on something which is not relevant.  The plaintiff also agrees that since receipt of the information that the defendants would withdraw their summons, the legal representatives would not deal with the expert evidence, but would only deal with the costs issues.

19. The defendants also oppose counsel’s attendance today. I consider that a competent solicitor should be able to assist this Court on the issues of summary assessment of costs today. I therefore disallow counsel’s certificate for today’s hearing.

20. Taking a broad-brush approach, I allow the solicitors to spend 5 hours on attendance on client and communication with the other side; 2 hours for the preparation for this hearing; 2 hours for perusal of the documents, including the draft expert report; one hour solicitor’s time for making research on the relevant law and one hour for today’s hearing. The solicitors’ charge should be $44,000, plus manual work of $3,750 and travelling and miscellaneous expenses, which the defendants do not dispute at $500, the total being $48,250, to be paid by the defendants to the plaintiff within 14 days from the date hereof.

CASE MANAGEMENT

21. By consent of the defendants, time for the plaintiff to set  down for trial by an Order dated 21 October 2014 be extended in the same terms for 7 days from the date hereof.