XCHRX SUPERSTRONG INDUSTRIES LTD. t/a M & T INTERNATIONAL v. FURNESS LOGISTICS (HK) LTD.

HCCL56/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.56 OF 1999

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JUDGMENT ON COSTS

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1. On 11th June 1999 this Court handed down judgment upon the Defendant's application to stay these proceedings in favour of the Court at Rotterdam, the Netherlands, on the ground that the contract the subject of this action contained an exclusive jurisdiction agreement.

2. That application was dismissed for the reasons adumbrated in that judgment. At the same time, the Court made an Order nisi that the costs of and occasioned by this application were to be paid by the Defendant to the Plaintiff in any event, to be taxed if not agreed. The Defendant now invites this Court to reconsider the issue of costs.

3. On behalf of the Defendant, Mr Sussex submitted that it would be "profoundly unfair" for the costs order to remain in its present form. He has reminded the Court of the history of this application, and the thrust of his submission is that the whole direction of the application "changed dramatically" as the result of the draft re-amendment of the Statement of Claim placed before the Court by Miss Cheng on the afternoon of the substantive hearing, a draft which he was shown only at 2:27 p.m. on the same day. Up to that stage, he said, all the costs had been incurred in relation to the application, and his client's application was ultimately lost on the basis of a free-standing claim in tort not hitherto put forward by the Plaintiff. Accordingly, whilst his client now has been adjudged (for these purposes it must be assumed, correctly) to have taken the wrong view on the issue of the stay, this was the result solely of the eleventh hour amendments to the claim purposed by the Plaintiff. On this basis he asks that the Order nisi be set aside, and that the Plaintiff should bear his client's costs.

4. In response, Miss Cheng for the Plaintiff submits that the Court reached its decision to dismiss the Defendant's stay application after considering the evidence in its entirety, that all the matters which have now been pleaded by way of re-amendment were culled by the Plaintiff from the affidavit evidence put in by Mr Dunlop, the Defendant's solicitor, and that the issue of amendment generally was foreshadowed in her skeleton argument, albeit she accepted that it was only at the insistence of the Bench that the specific amendments proposed were framed and thereafter put forward for the consideration of the Court. Miss Cheng emphasised that the rejection of the Defendant's stay application was a matter for the exercise of the Court's discretion based upon all the evidence, and whilst admittedly she was required to formulate her new amendments, all the primary material was there, on the face of the Defendant's evidence, and the Defendant must have been able to see "what was coming".

5. To this Mr Sussex replied that he didn't, and for that matter that couldn't reasonably have been expected to anticipate this turn of events. The evidence of Mr Dunlop now prayed in aid by the Plaintiff was filed on 19th March 1997 for the hearing in June, he said, and the free-standing case in tort now put up is and was demurrable on its face in that there was no causative link between the alleged misrepresentation and the damage suffered. It was entirely reasonable all along to have regarded this claim as a contract claim, he submitted, and it had been changed to a claim in tort solely in order to sidestep the contractual jurisdiction clause. Accordingly, whilst Miss Cheng ultimately may have pulled the stay application out of the fire, in the circumstances her client should bear the costs of that application.

6. After hearing full argument on the point, there is no doubt in my mind that the existing Order nisi is incorrect, and must be set aside; indeed, in the particular circumstances of this case, not least with reference to the timing of the introduction of the proposed re-amendments, better clearly would have been simply to have elected to hear the parties on costs. Which now, of course, is what the Court has had the chance to do.

7. Having had the assistance of argument on the issue, therefore, what should be the appropriate order? I have taken the opportunity to revisit various aspects of the case, and to review the progress of the evidence and the development of the arguments. I further note that in the judgment of 11th June 1999 I state in terms that the decision not to stay the action in favour of Rotterdam is made "in large part on the basis of the revised case in tort which the Plaintiff now seeks to pursue against the Defendant." (at page 10).

8. So that there is no doubt that a signal element within the exercise of the discretion was the revised case which Mr Sussex was accorded little time to consider until responding thereto 'on the hoof', as it were, although if I may say so such lack of time did not appear to affect his immediate and wide-ranging criticism of the pleading as so revised, criticisms which were repeated during this hearing when opposing the Plaintiff's formal application to amend. Nor, for that matter, do I think that notice of this differently-constituted claim would have resulted in the abandonment of the application, albeit I recognize the force in the point that the Defendant should have had a timely opportunity properly to consider the Plaintiff's case as finally put forward prior to making any decision to proceed with the application.

9. Be that as it may. In my judgment, having now heard Counsel and reflected at some length upon different costs formulations, I have concluded that the appropriate order in these circumstances is that the costs of and occasioned by the Defendant's application for a stay of proceedings pursuant to its summons dated 26th February 1999 (including the costs of today's hearing) are to be costs in the cause, to be taxed if not agreed. I so order.

10. As canvassed with Counsel, if and in so far as either party wishes to appeal upon the issue of costs only, I grant leave so to do.