TRUE RANK HOLDINGS LTD v. LAM KA CHUNG, WILLIAM AND OTHERS

HCMP4078/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.4078 OF 2003

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REASONS FOR RULING

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1. By a summons dated 1 November 2003 the 1st defendant applied to have the Originating Summons struck out. I heard and dismissed the 1st defendant's application and awarded costs (nisi) to the plaintiffs in any event, with certificate for two counsel. The plaintiff sought amendment of the order to provide for costs to be taxed if not agreed. On 11 February 2004 I dismissed the application and confirmed the order for costs in any event. In the meantime, on 4 February 2004 the 1st defendant had applied to a Master for extension of time to file his affidavit of 21 days and for an order that if an appeal was lodged by 12 February 2004 against my decision dismissing the application to strike out, the time for filing the affidavit be extended to 28 days from the disposal of the appeal. The Master allowed the extension of 21 days but adjourned the further application for hearing before me, along with the costs application. I dismissed the further application. I now give reasons for both decisions.

The Costs Application

2. The order for costs was made nisi because I handed down judgment, having heard no argument on costs at the substantive hearing. The normal order for interlocutory costs is that they be paid in any event although there is discretion to order them to be taxed and paid forthwith. See Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden & Co. Ltd & Ors [1994] 1 HKC607. That is why I made the order in the first place. Of course it is now common for orders to be made for interim payment of costs under Order 62, rule 9A of the Rules of the High Court but this is for the situation where costs can readily be estimated, rather than where a taxation will be necessary.

3. The plaintiff seeks to have its costs now, on the basis that the application to strike out was inappropriate and involved investigation of merit. Ms Eu SC relied on dicta in Frogmore Estates plc v. Berger & Ors (1989) 139 New L.J.1560 to the effect that where an inappropriate interlocutory application is made the court should order the costs to be taxed and paid forthwith, and also that the court should limit the growth of huge interlocutory applications involving investigation of the merits, and use the sanction of costs payable forthwith to enforce that policy.

4. Having heard the application I could not say that it was obviously inappropriate. It was certainly the case that there was no obvious trustee relationship between the plaintiffs and the 1st defendant because he had not directly received the funds. There was little investigation of the merits. This was not, as in the Frogmore case, a question of tying up a judge for four weeks on an interlocutory application.

5. Counsel also relied on a dictum in Cheung Kong (Holdings) Ltd v. Chan Wai Yip [2001] HKEC 894 at para. 21 that the fact that the application for striking out was merely a skirmish in an expected long legal battle between the parties would justify the judge's exercise of discretion to order costs to be taxed and paid forthwith. I can see that this case has some way to run, but I accepted that it would be speculative to say that this must be the first of many interlocutory skirmishes. The mere fact that the proceedings have some way to run would not be enough to justify ordering costs to be taxed and paid forthwith.

6. There is a punitive element in an order to tax and pay costs forthwith and so there should be good reason to depart from the normal practice. Overall I could not see any good reason do so.

The Time Summons

7. What was applied for was an extension of time for filing the defendant's affidavit evidence, if a notice of appeal against my decision were filed by the expiry of the appeal period on 12 February, until 28 days after the judgment on the appeal. Effectively this would mean a stay of proceedings pending the appeal, notice of which had not yet been filed at the time of the hearing of the application before me. There were no good reasons for a stay pending appeal. Obviously if the appeal were unsuccessful, the proceedings would have been delayed; and I was informed that the first available date for a one day appeal hearing would come in September 2004. Ms Eu SC argued that to allow the extension of time it would cause prejudice to the plaintiffs by reason of past delay caused by the application to strike out and further delay if the stay were granted. I accepted that for the reasons she gave, delay would indeed probably cause some prejudice. Accordingly, I refused the application.