CALTEX OIL HONG KONG LTD v. DIRECTOR OF BUILDINGS & LANDS

IN THE LANDS TRIBUNAL OF HONG KONG

MASS TRANSIT REFERENCE NO. 2 & 3 OF 1988

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RESERVED DECISION

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1. This summons was heard by me on 13^th January 1993 and relates to the question as to when interest becomes payable on taxed costs.  The Applicant claims interest is payable on the taxed costs from 11^th December 1989 when H H Judge Cruden gave his decision in the Lands Tribunal in the case, whereas, the Respondent, as the paying party, submits that interest on the taxed costs should only be payable from the date the allocatur was sealed on 5^th November 1992.  As the taxed costs in this case total $1,562,644.50 in terms of the allocatur, the amount of interest thereon is not inconsiderable, if it is to be allowed from the date of judgment in 11^th December 1989.

2. It was generally agreed and not disputed by the parties that the rate of interest applicable to the taxed costs under Section 49 of the Supreme Court Ordinance and Section 50 of the District Court Ordinance should be the rate fixed by the Chief Justice as the judgment rate of interest at that time.  I was satisfied that as a Deputy Registrar of the Supreme Court and Registrar of the District Court, I had jurisdiction to tax this bill of costs and to hear and determine this summons.

3. The real issue here was whether the persuasive authority of the House’s of Lords in Hunt v R M Douglas (Roofing) Ltd [1990] 1 AC 398 should be followed to allow interest on costs to run from the date of judgment or such interest should only run from the date of the allocatur.  This House of Lords authority is based on their interpretation of Sections 17 & 18 of United Kingdom Judgments Act 1838 and the Rules of the Supreme Court there as revised.  It was common ground that the United Kingdom statutory provision had never been enacted in Hong Kong.

4. Counsel for the Applicant, Mrs B Kaplan, argued that the jurisdiction of the High Court in Hong Kong is the same as that of the High Court in the United Kingdom unless limited by Hong Kong statues or rules.  Relying on the provisions of Section 12 of the Supreme Court Ordinance and Sections 32 & 37 of the District Court Ordinance, Counsel for the Applicant submitted that Sections 17 & 18 of the Judgments Act 1838 in United Kingdom applied in Hong Kong.  It was contended on this basis that Hunt’s case should be applied and followed in Hong Kong.  The three reasons set out by Lord Ackner in the conclusion to his judgment (Page 415 of the report) are certainly attractive and should be adopted if possible. These reasons may be paraphrased as follows :

(1) It is the unsuccessful party to the litigation who has cased the costs unnecessarily to be incurred.  Hence, the order made against that party.  Since interest is not awarded on costs incurred and paid by the successful party before judgment, why should that party suffer the added loss of interest on costs incurred and paid after judgment but before the taxing master gives his certificate?

(2) As payments of costs are likely nowadays to be made to lawyers prior to taxation, then the application of the allocatur rule would do greater injustice that for a rule that interest on costs runs from the date of judgment.  Moreover, such a rule provides a further necessary stimulus for payments to be made on account of costs and disbursements prior to taxation, for costs to be more readily agreed, and for taxation, when necessary, to be expedited.  If interest is not payable on costs between judgment and the completion of taxation, then there is an incentive to delay payments, delay disbursements and taxation.

(3) Any interest recovered on costs and disbursements after judgment but before the taxing master’s certificate is obtained, which costs and disbursements have not in fact been paid prior to taxation, shall as to interest on the costs belong to the solicitor, and as to the interest on disbursements be held by the solicitor for and on behalf of the person or persons to whom the disbursements are ultimately paid.

5. Counsel for the Applicant also referred to Order 42, Rule 3 of the Rules of the Supreme Court which provides that a judgment or order of the Court runs from the day of its date unless the Court orders it to take effect from some other earlier or later date.  Reliance was also placed on the statement at the foot of Page 709 of the White Book under Paragraph 42/1/3 that the statutory interest on a judgment or order for the payment of costs runs from the date of the judgment or order, not from the date of the certificate of taxation quantifying the same or such other date as may be ordered as the date on which payment is to be made.  The authority cited in the White Book is Hunt’s case.  Reference was also made to Order 62, Rule 22 of the Rules of the Supreme Court which provides that where the party entitled to payment of any costs to be taxed has neither agreed the amount of such costs with the person liable to pay same nor served a notice of appointment to tax within one month after the Court made the order to pay costs, then the person liable to pay the costs may apply to the taxing master for a date for taxation.

6. Counsel for the Respondent, Mr S H Kwok, relied on the usual rule applied in Hong Kong that interest on costs only runs from the date of the allocatur, that is, the date of the taxing master’s certificate.  Mr Kwok submitted that an order for costs had the status of a judgment debt, but that Sections 17 & 18 of the United Kingdom Judgments Act 1838 did not apply in Hong Kong. It was claimed that to impose interest on costs was a penal provision and as such liability for such should only be imposed from the date of the allocatur rather than the date of judgment.  Mr Kwok maintained that Hunt’s case did not apply in Hong Kong and could not be relied on by the Applicant for interest on the taxed costs to run from the date of judgment.  Various authorities relied on did not elucidate the issue that arises in this matter.

7. It is interesting that this same issue came before me when sitting as a taxing master in the Supreme Court Registry on 7^th December 1990.  At that time, I ruled in favour of the successful Respondents that the Applicants pay interest on the costs awarded from the date of the judgment in Hunt v R M Douglas (Roofing) Ltd to the date of payment.  It was pointed out to me that Mrs B Kaplan appeared as Counsel for the successful Respondents in that matter.  Surprisingly, little or no publicity was given to that decision as the allocatur rule has prevailed since to my knowledge.  In this case, the parties have agreed that my decision should be publicized.  As it is a matter of no little importance if adopted and followed, I agree to the proposal for appropriate publication of same.

8. My decision is that I accept the argument of Counsel for the Applicant, Mrs B Kaplan, that the provisions of Sections 17 & 18 of the United Kingdom Judgments Act 1838 do apply in Hong Kong despite there being no similar statutory authority here to that effect.  This means that the House of Lords decision in Hunt v R M Douglas (Roofing) Ltd [1990] 1 A C 398 is very persuasive authority on this issue and should be followed and adopted in Hong Kong.  Accordingly, an order for costs to be taxed was a judgment debt and that interest on costs runs from the date of judgment rather than the date of the allocatur setting out the taxing master’s certificate.  In determination of the summons before me, I find that interest on the taxed costs in favour of the Applicant runs from the date of H H Judge Cruden on 11^th December 1989 and that the rate of interest on the taxed costs certified by allocatur sealed on 5^th November 1992 should be at the judgment rates of interest prevailing from the judgment date to the date of payment of the certified taxed costs by the Respondents.  The costs of this summons should follow the event and I order that those costs be award in favour of the Applicant against the Respondent.