XCHRX Studio East Limited v. Tam Wai Hung

DCCJ16277/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 16277 OF 2000

_______________________________

_______________________________

______________

R U L I N G

______________

1) In this matter, the plaintiff now seeks to discontinue the action. The reason for this is that, of course, there now is no debt owing and consequently the action against the defendant, who is the guarantor for the principal debtor, is academic and the only issue that I must decide is as to the costs of the action.

2) The plaintiff says that it should have the costs, that the basis of it is that the plaintiff was justified to have issued the proceedings and it was only well after the proceedings were issued, some weeks having elapsed, before the matter of the debt was acknowledged and therefore, in those circumstances, the plaintiff is entitled to costs.

3) As against that, the defendant through Mr Lam, submits that the matter was by no means clear. There is a trading relationship between the plaintiff and the principal debtor which is longstanding. There were debts owing and there was an account and the matter should have been looked at far more calmly than in fact was the case and therefore these proceedings were quite unnecessary and in the circumstances the appropriate order would be that I should give leave to discontinue the action but that the plaintiff should pay the defendant's costs.

4) An important stage was reached, I think, on 3 August, which was the day before the issue of the proceedings and that is demonstrated by a letter of that date which is at page B40 of the Bundle, and at that stage a payment of just over $149,000 had been made. There was clearly a dispute as to what was outstanding and that letter of 3 August from the defendant's solicitors, in fact, constitutes a warning that if the matter is not resolved there would be a writ issued against the plaintiff in the sum of just over $476,000 and what then happened was the very next day these proceedings were started by the plaintiff.

5) It is instructive to look at the whole of the correspondence but particularly the correspondence that follows because the parties continued to negotiate, to clarify their own positions, behaving in a responsible way and eventually this matter has been resolved.

6) It seems that the plaintiff can be criticised, I think with some justification, for having issued the proceedings sooner than perhaps they ought to have done but, on the other hand, faced with this letter of 3 August it is also clear that the defendants were taking a tough stance with them. But nevertheless, my feeling here is that these proceedings could and should have been delayed and it may well be that the proceedings would have been unnecessary.

7) I obviously have got a wide discretion in this matter to do what is right in all the circumstances and I have come to the conclusion that the just result here is to say that the costs should lie where they have fallen. And so I am going to give leave to discontinue the action but it seems to me the right order is that there should be no order as to costs. Both parties will have to bear their own costs.