PCCW-HKT TELEPHONE LTD v. TELECOMMUNICATIONS AUTHORITY

CACV274/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 274 OF 2003

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DECISION ON COSTS

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Hon Ma CJHC :

1. On 8 July 2004, this Court handed down a judgment dealing with 2 questions raised in a Case Stated referred under section 32R of the Telecommunications Ordinance, Cap.106 ("the TO") by the Telecommunications (Competition Provisions) Appeal Board. The 2 questions related to 2 broad issues that had to be determined, namely : -

(1) The extent of the Appeal Board's jurisdiction to deal with opinions, determinations, directions or decisions of the TA relating to sections 7K and 7L.

(2) The existence of the jurisdiction of the Appeal Board to grant a stay pending an appeal before it.

2. The first issue was resolved in favour of PCCW-HKT Telephone Limited ("PCCW"), the Appellant in the proceedings; the second issue in favour of the Respondent, the Telecommunications Authority ("the TA").

3. As to costs, we said : -

"47. The answers to the 2 questions in the Case Stated being "Yes" and "No", each party has won on one point. However, given that much of the argument before us has dealt with the first question, I would make an order nisi that PCCW should have half of its costs in the Case Stated, such costs to be taxed if not agreed."

4. By a letter dated 15 July 2004, the Department of Justice on behalf of the TA submitted that the costs order nisi ought to be changed to one of no order as to costs. Leave was sought to make written submissions to support this.

5. This letter was treated by PCCW as an application made under RHC O.42, r.5B(6) to vary the costs order nisi. In view of this, we were content likewise to treat the letter dated 15 July 2004 as containing such an application, although, for reasons that will appear later in this judgment, I am of the view that this was a most unsatisfactory (and incorrect) way of making such an application to the Court.

6. Written submissions were provided to the Court on the issue of costs. Both sides were content that this issue be disposed of on paper. The TA's position was that although he had lost on the first of the 2 issues, the Court had accepted his arguments on law. The only reason why the TA failed on the first issue was that the Court of Appeal disagreed with his analysis on the facts. This was to be contrasted to PCCW's position where its legal arguments were rejected although its submissions on the facts found favour. It was said that most of the time spent on the issue was in arguing the legal point rather than the facts. On the second issue, the TA argued that although the time taken at the hearing was mostly spent on the first issue, nevertheless there was a certain amount of preparation time that went into this issue. Accordingly, it was submitted, since on analysis the TA had won on the main point in the first issue (the legal issue which was said to be a discrete one) and on the whole of the second issue, it was fair that there should be no order as to costs. Reliance was placed on the decision of this Court in Thomas Vincent v South China Morning Post Publishers Limited, unreported, CACV253/2002, 14 May 2004, Court of Appeal.

7. Alternatively, the TA's position was that if the 2 issues were to be treated separately, then the correct order of costs should be that the TA should pay PCCW two-third of the costs while PCCW pays the TA one-third of his costs.

8. PCCW's position can be summarized in the following way : -

(1) Quite simply, it had won on the first issue. While counsel's arguments on law may not have been accepted, his arguments on the facts succeeded. Moreover, not much time was spent by its counsel on the legal aspects; in other words, the proceedings were not unduly prolonged through PCCW's submissions on law. It was also to be noted that the Court did not accept all of the TA's arguments on law. In particular, the Court rejected the submissions that there had to be a breach of one or more of sections 7K, 7L, 7M and 7N of the TO before there existed the jurisdiction to appeal under section 32N.

(2) On the second issue, while this point was resolved against PCCW, so little time was spent on it compared to the first issue that the Court's order on costs was, if anything, too generous to the TA. Further, it was said that the Court had not found the legislative materials provided by the TA to be of any assistance so that if one had to look closely into this issue from the point of view of costs, this was a relevant consideration.

(3) The type of orders made in Thomas Vincent relating to discrete claims was inapplicable to the present appeal. Counsel also said in his written submissions :

"This is not a case where there is no clear victor. Each party is a victor on each question, but those questions were not of equal weight".

Thus, it was argued, the order nisi should now be made absolute. A certificate for 2 counsel was also requested.

9. In my view, the costs order nisi that PCCW should have half its costs in the Case Stated, ought not to be varied and should now be confirmed : -

(1) There is no justification for the usual order of costs to follow the event not to be made in relation to the first issue. As was said In Re Elgindata Ltd (No.2) [1992] 1 WLR 1207, at 1214 :

"(ii)

[costs] ... should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made."

This authority and the principles quoted above have been followed by this Court in numerous cases, among them Thomas Vincent. In La Chemise Lacoste SA v Crocodile Garments Ltd [2000] 4 HKC 317, at 327, Rogers VP said :

"The first point is that the costs should generally follow the event. That rule does not cease to apply simply because a successful party has raised issues or made allegations which failed. However, if he has caused a significant increase in the length of the trial and, thereby, increased the costs of the proceedings he may be deprived of some or all of his costs and indeed if he has acted improperly he may be compelled to compensate the other side in costs".

(2) It cannot be said that by raising the legal points he did under the first issue, counsel for PCCW had in any way either significantly increased the length of the hearing or the costs of it, or acted improperly or unreasonably in doing so.

(3) I accept that in certain circumstances, a court may make costs orders to reflect the success or failure of a party in relation to discrete issues arising in the course of a hearing. The costs orders made by the Court of Appeal in Thomas Vincent provide a good example of this. This sort of situation is, however, quite different to that in the present case where there exists not discrete issues but merely different arguments going to the same issue. In this latter situation, the Court should simply order costs to follow the event (that is, the decision made on the particular issue) unless circumstances exist to dictate a different result, for example, a significant increase in the length or costs of proceedings by running an unsuccessful argument or the raising of an argument that is improper or unreasonable.

(4) I would finally add as regards the first issue that not all of the TA's submissions on law were accepted by this Court. The primary argument of the TA was that in order for the appeal mechanism in section 32N of the TO to be activated, there had to be a breach of one or more of the provisions in sections 7K, 7L, 7M or 7N. In our judgment of the 8 July 2004, it was said that the word "breach" was not mentioned in any of those sections. Whether or not a breach was involved, the important requirement was that of an opinion of the TA going to the matters dealt with in the sections in question. Whether or not one used the term "breach" to mean an opinion on the TA's part that there was or may be a contravention was really a matter of semantics : what was crucial was an opinion to the effect required by those subsections. Insofar as the TA intended that the word "breach" meant something else, this was obviously rejected by the Court.

(5) As to the second issue, it has of course to be recognized that the TA has won on this issue. Normally, costs would follow the event. However, looking at the matter on an overall basis and taking into account the fact (which neither party disputed) that the first issue occupied more of the arguments before us than the second issue, I am of the view it is right to make an order for costs in the above terms. This reflects the justice of the matter and would also avoid a painstaking and unduly long taxation.

10. For the above reasons, the TA's application to vary is dismissed and the costs order nisi is confirmed. The costs of this application will be to PCCW, such costs to be taxed if not agreed. As for PCCW's application for a certificate for 2 counsel, this is not an order that is needed to be made in the Court of Appeal. It is for the taxing master to determine whether or not the costs of engaging 2 counsel should be allowed. It would, however, be surprising if the taxing master were to disallow the costs of 2 counsel.

11. Lastly, I would just like to make some observations on the way in which the TA has made the present application to vary the costs order nisi under O.42, r.5B(6). As mentioned above, this was done by way of letter. This was wrong. Applications to court should be made by way of a summons or motion, and not by the informal way that was chosen in the present case. The reason for this requirement is to enable the other side and the Court to understand exactly the nature and extent of what is being asked for. Otherwise, there is a danger that it becomes unclear just what is being sought from the Court, thereby allowing parties to ask for relief in a haphazard manner. The present case provides a good example. On the TA's part, an application that the costs order nisi be changed to one of no order as to costs developed into an application that while this was the primary order sought, the alternative relief was one of partial costs in favour of both sides. On PCCW's part, a late application was made in its written submissions for a certificate for 2 counsel (which, as it turned out, was unnecessary).

Hon Rogers VP :

12. I agree.

Hon Le Pichon JA :

13. I agree.