SCHINDLER LIFTS (HONG KONG) LTD v. NIKKO SERVICES LTD

CACV 250/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 250 OF 2010

(ON APPEAL FROM DCCJ NO. 1569 OF 2008)

________________________

________________________

____________________

DECISION ON COSTS

____________________

Hon Lam VP (giving the Decision on Costs of the Court):

1.  In our judgment of 15 September 2014, we ordered costs in favour of the Plaintiff on indemnity basis. We gave directions for the lodging of skeleton bill by the Plaintiff and reply by the Defendant to facilitate gross sum assessment as follows:

(a) The Plaintiff shall lodge and serve its skeleton bill within 7 days from the handing down of this judgment;

(b) The Defendant shall lodge and serve its reply on the quantum as set out in the skeleton bill within 7 days after the service of the Plaintiff’s skeleton bill.

2.  The Plaintiff failed to lodge its skeleton bill within 7 days.  It was only lodged on 24 September.  It was also faxed to the Defendant on that date.  The Defendant disputed that it was not proper service.  In the covering letter, solicitors for the Plaintiff said it was not lodged on time due to a clerical error.  The amount claimed was $52,500.

3.  Mr Lau, a director of the Defendant, contended that the claim for costs by the Plaintiff should be rejected due to the non-compliance with our directions.  In a letter of 30 September 2014, the Defendant also contended that the hourly rate charged by the solicitor for the Plaintiff ($4,500 per hour) is excessive.  It also disputed that the matter was handled by Mr Shaw as claimed by the Plaintiff.  It alleged that the works were/could have been handled by a litigation clerk at an hourly rate of $150. It said that the total costs should only be $1,500 (based on 10 hours’ work).

4.  By an earlier letter of 24 September 2014, Mr Lau requested to undertake a search of the court file.  He also claimed for the costs for such exercise.  He asked for an hourly rate of $3,000 on the basis that he is an engineer by profession. 

5.  A search was then undertaken.  By a letter of 26 September 2014, Mr Lau reported to the court the result of his search.  He set out his objection to costs being awarded due to the expiration of the time limit for the lodging of skeleton bill by the Plaintiff.

6.  In respect of the objection of the Defendant based on the late lodging of skeleton bill by the Plaintiff, we respectfully adopt the approach set out in the judgment of another division of this court in HCMP 2034 of 2012:

“4. The non-compliance with the direction is a breach of the duty under Order 1A Rule 3 and it is a matter that the court can take into account under Order 62 Rule 5. However, we do not think it is appropriate in the present to bar the [defaulting party] entirely from asking the court to revise the quantum due to the non-compliance with that direction. That would not be a proportionate sanction to the default. As the English experience from Mitchell v New Group Newspapers [2014] 1 WLR 795 to Denton v TH White [2014] 4 Costs LR 752 illustrates, it would not be right to adopt a too mechanistic approach in case management.

5. But it does not mean that there should not be any consequence for such default. The direct consequence is that the court has to entertain further round of submissions which the direction is designed to avoid in light of the objective of efficient disposal of leave applications.  More costs are therefore incurred in the process and the [defaulting party] should be responsible for the same.  It would however be disproportionate and an invitation to unjustified satellite litigation if one were to inquire into the details as to how much has been incurred by way of additional costs.  This would wholly defeat the purpose of summary assessment.  In our judgment, a fair approach is that the court should do a global assessment of the situation taking this default into account.”

7.  We have considered the submissions of the Defendant on quantum.  Bearing in mind that we have awarded costs in favour of the Plaintiff on an indemnity basis, we are still of the view that the hourly rate of $4,500 charged by the solicitor for the Plaintiff is excessive.  We would only allow an hourly rate of $4,000.  We do not accept the criticism by Mr Lau that the works were/should have been undertaken by a litigation clerk.  But we also see room for reduction (even in the context of indemnity costs) of the time spent bearing in mind the complexity of the matter and its previous history.  We accept Mr Lau should be able to set off a notional sum representing costs against the claim of the Plaintiff due to the search on 24 September (necessitated by the Plaintiff’s default).  But we do not accept an hourly rate of $3,000 for Mr Lau.

8.  Taking all these matters into account, we assess the costs payable by the Defendant to the Plaintiff at $40,000.  It shall be payable forthwith.