LARGE LAND INVESTMENTS LTD. v. CHEUNG SIU KWAI PANSY

HCA 434/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 434 OF 1998

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D E C I S I O N

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1. On 10 January this year I handed down a judgment and, as is usual where costs have not been argued, the order for costs was nisi at first instance. The parties in such circumstances have a right to have the matter referred back to the judge so that costs can be argued afresh and this is what has happened in this case.

2. The facts of the case before me were simple and the trial was relatively short. It was a dispute between a vendor and a purchaser and the issues that had to be resolved at trial were first, was the cockloft that was part and parcel of the premises the subject of the sale and purchase illegal? If so, were the parties aware of that illegality?

3. At the end of the trial, I found that the cockloft was illegal and that both parties were alive to this, so that, in effect, the transaction was conditional upon that knowledge. In the event therefore I found against the purchaser/plaintiff who was seeking to recover the deposit paid, and in favour of the defendant/vendor who sought to have the deposit forfeited.

4. However, I found that the vendor, having pleaded no knowledge of the illegality of the cockloft, had sought deliberately to influence the outcome by hiding that knowledge, and in my order for costs, whilst acknowledging that costs normally and should in this case follow the event, I penalised the vendor for the aforesaid conduct by allowing her only half those costs.

5. At this hearing it has been brought to my attention that the issue of the illegality of the cockloft was the subject of a notice to admit facts served by the plaintiff upon the defendant. Following that service she declined to admit the facts and in the event this was one of the issues that had to be determined at trial.

6. At this hearing, I have been invited to recognise the plaintiff's service of such notice and the defendant's decision not to admit the facts recorded therein by applying the order on costs relevant thereto which is O.62 r.3(5) and on the matter going to that issue, order costs against the defendant in favour of the plaintiff whilst otherwise leaving undisturbed the remainder of the costs order.

7. In opposition to that course, the defendant submits, through counsel, that this being a discretionary exercise, the order that has already been made reflects already the adverse features of the defendant's conduct and that the order nisi should be made absolute.

8. Now it is for me to decide whether that order should be disturbed or not and if so in what way. I accept it is a valid argument to put forward that where facts are not admitted in a notice and then it turns out those facts are established, it is the usual course for costs to reflect that situation. But there is the over-riding factor that costs are in the discretion of the court and I look at the matter in an overview to determine whether or not I should provide for costs in compliance with that subrule.

9. As I said at the outset of this judgment, the issues were relatively straightforward and the trial was not a long one. My concern, if I were to pay heed to counsel for the plaintiff's application to disturb the order in the manner that he would invite, is that it would in the event in mathematical terms, in accounting terms, pay little heed to the fact that the plaintiff lost the case on an issue of credibility, insofar as there would, in fact, at the end of the day be little or perhaps even no penalty on the issue of costs which would, in my view, be an improper and inappropriate result.

10. In the circumstances, having regard to the time taken, having regard to all issues that I must in considering how to exercise the discretion I have, it seems to me that the proper approach is to allow the order made nisi at first instance to remain undisturbed and that is the order I now make and that order now becomes absolute.

(After argument on costs of the day)

11. In the circumstances, it seems to me the appropriate order for today's event is that the costs of today should be in the cause and by that I mean should be in the same terms as the order now substantively made.