ROGER PAUL GERMAIN YVES PRMENTIN v. KIM'S YACHT CO LTD AND ANOTHER

HCA1226/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1226 OF 2004

---------------------

---------------------

--------------------------------------------

DECISION  ON  COSTS

---------------------------------------------

1. The plaintiff applied to commit the 2^nd defendant for contempt of court on the ground that he was in breach of an order of this court.  That application was dismissed but the court made an order nisi that there should be no order as to costs.  In other words, the 2^nd defendant was deprived of his costs even though he was successful in resisting the contempt application of the plaintiff.

2. The plaintiff now applied for a variation of the said order to the effect that the costs of the contempt proceedings should be borne by the 2^nd defendant.  In this application, the plaintiff relied on the following matters and submitted that the court should take them into account in exercising his discretion for the order of costs, namely :

“(a)   from the completion of the Plaintiff's Yacht in April 2004, the Plaintiff requested that a valid shipbuilder's certificate be issued in his name and that the Yacht be delivered to him in Hong Kong, in accordance with the terms of the Agreement between the parties (letters to the Defendants of 9^th and 26^th April and 11^th June 2004)

(b)   the Defendants refused to take any action to comply with the Plaintiff's requests or rather made such compliance conditional upon the Plaintiff signing a “release agreement” exonerating the Defendants of any liability.

(c)   A Writ of Summons was issued on 20^th May 2004.  Yet, the Plaintiff made a last attempt at resolving the dispute between the parties and wrote to the Defendants on 11^th June 2004 (see exhibit “DW — 1”).  In reply, the 1^st Defendant claimed that the Yacht was ‘held by China Customs Department control' and that until the yacht was removed from the 1^st Defendant's shipyard, the Plaintiff would be charged RMB150,000 per month (see exhibit “DW — 1”).

(d)   Upon the Plaintiff's application on 29^th June 2004, this Court ordered that within 14 days a shipbuilder's certificate be issued and the yacht be delivered to the Plaintiff in Hong Kong.  The Defendants did not apply to the Court for a variation of the Order.  The Defendants also failed to comply with the Order within time.

(e)   They issued a document purported to amount to a shipbuilder's certificate but which was of no value to enable the Plaintiff to arrange for the export and delivery of the Yacht in Hong Kong.  This was done deliberately by the 2^nd Defendant in full knowledge that such document was not what was in the contemplation of the Plaintiff.  Further, no evidence was produced by the Defendants to show that they had taken any steps whatsoever to procure the delivery of the Yacht to Hong Kong.

(f)   The Plaintiff was left with no other alternative but to go back before the Court in order to seek further directions.  However, as the Defendants had not asked for any extension of time in order to comply with the terms of the 29^th June 2004 Order, there would be no added guarantee that the Defendants would comply with any further Order or direction from the Court unless failure to comply with such further Order or direction resulted in a sanction.  The only course of action available to the Plaintiff was therefore to force the 2^nd Defendant, through legal means, to abide by the Rule of Law and take all necessary steps to procure the 1^st Defendant to comply.

(g)   Leave was granted by the Court to the Plaintiff on 28^th July 2004 for him to issue committal proceedings against the 2^nd Defendant.  The proceedings took place on 22^nd to 24^th August, 21^st, 22^nd, 27^th and 30^th September 2004.  On 24^th August 2004, the 2^nd Defendant submitted in Court that he could not and would not issue a certificate that conferred ownership in the Plaintiff.

(h)   In order to have the Yacht brought to Hong Kong as a priority, Mr. Justice Yam made a further Order against the 2^nd Defendant on 24^th August 2004 requiring him to issue a shipbuilder's certificate by 3^rd September 2004 and deliver the yacht by 21^st September 2004.  The terms of the Order of 24th August 2004 differed from the 29^th June Court Order in that it brought both the Yacht and the Shipbuilder's Certificate into the custody of the Chief Bailiff of the High Court.  The 2^nd Defendant did not apply for a variation of this Order and again deliberately failed to comply with its terms.

(i)   On 21^st September 2004, the shipbuilder's certificate that had been issued on 3^rd September 2004 was not valid because it did not bear the chop of the 1^st Defendant.  The Yacht was still in China and no practical steps had been taken to arrange for its export.  Rather, the 2^nd Defendant argued that the resolution of one alleged problem preventing the export revealed the existence of yet another ‘problem' allegedly preventing delivery of the Yacht.  In the course of the hearing, the 2^nd Defendant affixed the 1^st Defendant's chop on the shipbuilder's certificate.

(j)   On 22^nd September 2004, another Order was made by Mr. Justice Yam, requiring that the 2^nd Defendant arrange for the Yacht to be brought to Hong Kong before 27^th September 2004.  Mr. Justice Yam made it clear that if the Order was not complied with, the 2^nd Defendant would have to ‘face the consequences' and would probably be committed to custody for his continued failure.  Again the 2^nd Defendant did not apply for a variation of the Order.  Nor did he comply with its terms.

(k)   At the hearing of 27^th September 2004, the Yacht was still in China.  It was only through the actions of the Plaintiff and at his costs that the Yacht was eventually brought to Hong Kong on 29^th September 2004.  It took the 2^nd Defendant no less than 3 Court Orders dated 29^th June, 24^th August and 22^nd September 2004, three months and Mr. Justice Yam's clear indication on 22^nd September 2004 that the 2^nd Defendant would have to bear the consequences if the Yacht was not brought to Hong Kong by 27^th September 2004 for the 2^nd Defendant to eventually comply with the Plaintiff's requests embodied in the 29^th June 2004 Court Order.

(l)   At no time did the 2^nd Defendant seek directions that the Orders were ambiguous or that he needed more time to comply with their terms.

(m)   the 2^nd Defendant's excuses for failing to have the 1^st Defendant issue the Certificate by reason of the ownership issue suddenly disappeared.  The Certificate was provided on 23^rd November 2004.

(n)   As a direct consequence of the Defendants' refusal to satisfy the Plaintiff's demands, the Plaintiff also had to go to Court again to seek possession of his Yacht which, after further delays and at substantial costs to the Plaintiff, was granted by Mr. Justice Yam on 23^rd November 2004.”

3. However, this court has already taken the aforesaid matters into account and came to a conclusion that the 2^nd defendant should be deprived of his costs in spite of the fact that he was successful in resisting the application for contempt application of the plaintiff.  This is already a departure from a general rule that costs should follow the event. 

4. Further, I accept the submissions of Ms Catrina Lam, Counsel for the 2^nd defendant, that it is well established that order for costs against a successful party in contempt proceedings will only be made in very exceptional circumstances.  In Knight v. Clifton [1971] Ch 700 (CA) Russell LJ said at p.714 :

“Motions to commit a man should not be launched except on solid grounds, and it would, I think, be unfortunate if plaintiffs were encouraged to think that where a defendant has acted rashly and foolishly, their threat to his liberty may, with luck, be made at his expense when they fail to establish a case of contempt.”

5. Further, it has been said in Blackstone's Civil Practice (2000) at p.670 :

“… where the party who invokes the court's jurisdiction wholly fails to establish one or more of the ingredients necessary to entitle him to the relief claimed, whether discretionary or not, it is difficult to envisage a ground on which the opposing party could properly be ordered to pay his costs.  Indeed in Ottway v. Jones, Parker LJ said, at p 715, that such an order would be judicially impossible, and Sir Raymond Evershed MR said, at p 708, that such an order would not be a proper judicial exercise of the discretion …” [emphasis added]

6. It is also inappropriate to award indemnity costs without any express finding of contempt, even if the application is properly made and the applicant should be paid the costs : see Hong Kong Civil Procedure (2004) at para.52/1/11; AG v. South China Morning Post Publishers Ltd [1991] 2 HKC 603 per Mayo J (as he then was) at 603G & 606C-D.

7. In the end I cannot find any ground for ordering the 2^nd defendant to pay the costs of the plaintiff's application.  Accordingly, the plaintiff's application to vary the order nisi on costs is dismissed and the costs order is now made absolute.  The costs of the plaintiff's application herein shall be to the 2^nd defendant in any event.