XCHRX CHAN YU v. LE WONG

1994, No. A8975

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. On 1 June 1995, I gave judgment in respect of an appeal by the plaintiff against a decision allowing the defendant conditional leave to defend against a claim by the plaintiff for possession of premises and payment of sums due under a lease agreement. At the conclusion of the written judgment, I said this -

"Accordingly, I allow the appeal to the extent indicated in the following orders -

1. the default judgment in respect of the electricity charges and other claims under this head is set aside; otherwise it is to stand;

2. the counterclaim is dismissed;

3. the amount of $598,000 paid into court in respect of the payments due under the agreement for the period 1 July 1993 to 31 May 1993 be paid to the plaintiff;

4. the defendant is to surrender possession to the plaintiff immediately after 30 September 1995, provided that the defendant pays to the plaintiff the sum of $26,000 a month, on the tenth day of each month, for the period from 1 June 1995 to 30 September 1995;

5. the defendant is to pay interest on the sum of $598,000 at the judgment rate, but only from 9 January 1995;

6. the plaintiff is given leave to withdraw the summons of 27 May 1995; and

7. the costs are reserved."

2. The reasoning that lead me to the conclusion regarding costs is as follows -

"The matter of the electricity and other charges is a comparatively minor issue in this case. I would be surprised if the parties are unable to settle this aspect, and elect to proceed to an expensive trial over a comparatively small sum of money. Nevertheless, because the matter is not yet resolved, I cannot deal with the aspect of costs. In the circumstances, however, because it might assist the parties in deciding their future course of action, I will say that, if the matter had been fully disposed of, I would have awarded the defendant his costs until 9 January 1995, and, to the plaintiff, the costs after that date. I say this because it seems to me that the defendant was placed in a very unenviable position by the plaintiff and the owner. The defendant was being pursued by both the owner and the plaintiff, each making conflicting claims, and doing so through the same solicitor. It is clear that the defendant was not trying to avoid his obligations; he paid a large sum into court in the proceedings by the owner. When the owner obtained leave to discontinue his action, this sum was paid out to the defendant. It seems to me that it was only on 9 January 1995, when he became aware that the owner had ratified the arrangement between him and the plaintiff, and the reason for the owner's notice of discontinuance became clear, that the defendant should have realised that he no longer had a sensible defence."

3. Not surprisingly, the parties have not been able to make any sense of my order that costs be reserved, and they have come to me to resolve the matter. In the passage recited above, I was, by some aberration of the mental process, thinking of the costs of action, which, of course, is still in chain. In effect, I did not deal with the costs of the appeal or the costs before the Master at all. I will now do so.

4. When the Master set aside the default judgment on conditions, the plaintiff was awarded his costs.

5. The defendant took out his summons to set aside the default judgment on 28 October 1994. It was returnable on 13 January 1995. On 9 January 1995, the plaintiff produced a document by which the owner of the premises ratified the lease by the plaintiff to the defendant. On 26 May 1995, a few days before the hearing before me, the plaintiff filed an affirmation from the owner confirming that he had agreed to the sub-lease.

6. The plaintiff was substantially successful in the appeal, but this was only so because of the documents produced on 9 January and 26 May 1995. In my view the defendant should have realised that he had no sensible defence to the main part of the plaintiff's claim immediately after 9 January 1995. Up to that stage, the plaintiff's case was in doubt. As I said in my judgment of 1 June 1995, the defendant had been a led a merry dance between the plaintiff and the owner. In the circumstances, I believe the just order as to costs in relation to the application before the Master is that the defendant is to have his costs up to 9 January 1995. The plaintiff is to have the costs thereafter, and the costs of the appeal.

7. As to the costs of the present application, it seems to me that neither party is at fault. The need to seek clarification arose from my omission to deal with the aspect of costs before the Master and on appeal. The fair order, I think, is that there should be no order as to these costs, and I make an order nisi accordingly.

(J.K. FINDLAY)

Judge of the High Court