WEALTH METAL FACTORY LTD v. KINGSBRIGHT TECHNOLOGY (SHENZHEN) CO LTD

HCSA 6/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 6 OF 2013

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL
CLAIM NO 17707 OF 2012)

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RULING ON COSTS

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Introduction

1.  On 23 January 2014, I handed down a judgment allowing the appeal by the defendant Kingsbright Technology (Shenzhen) Co Limited明輝光源科技 (深圳) 有限公司 against an order of the Small Claims Tribunal, in respect of a claim by the plaintiff/claimant Wealth Metal Factory Ltd同發寶工業製品有限公司 for a sum HK$22,139.50 being the balance of the price for goods sold and delivered.  I further directed that the matter be remitted to the Tribunal for a new hearing before another adjudicator (“Judgment”).

2.  I shall use the same abbreviations in this ruling as in the Judgment.

3.  In the Judgment, I made an order nisi that costs be costs in the cause of the new hearing.

4.  On 12 February 2014, D issued a summons to vary the costs order nisi, seeking an order that P should bear the costs of the appeal.

Discussion

5.  Costs are generally in the discretion of the court.  Section 29 of the Small Claims Tribunal Ordinance, Cap 338, provides that on an appeal for which it has granted leave under section 28 of the Ordinance, the Court of First Instance may, among other things, make such order as to costs and expenses as it thinks fit.

6.  After the CJR, Order 62 rule 5(1) of RHC now provides:

“1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

(aa) the underlying objectives set out in Order 1A, rule 1;

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2);

(d) any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g) any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes-

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

7.  P’s Counsel Mr Lam also referred to the judgment of Saunders J in Chan Mei Yiu Paddy & Another v Secretary for Justice & Ors, unreported, HCAL 16 of 2007, 9/12/2010.  As accepted by Saunders J, the proper approach to costs having regard to the changes brought about by the CJR is that the proposition that costs follow the event is not a general rule, but only operates to shift to the unsuccessful party the burden of showing why some different approach should be adopted on the facts of a particular case.

8.  D’s Counsel Mr Lung submitted that in general where an appeal is allowed and a re-trial is ordered, the unsuccessful party should bear costs of the appeal, while costs of the original trial should be in the cause of the re-trial.  He had referred this court to the case of Welltus Ltd v Fornton Knitting Company Ltd, unreported, CACV 268/2011, 14/03/2013.  Although in that case, the Court of Appeal ordered the unsuccessful party should bear costs of the appeal, and ordered nisi that the costs of the original trial should be in the cause of the re-trial, I do not read it as laying down any general rule as submitted by Mr Lung.

9.  Mr Lung also referred this court to two decisions on appeals from the Small Claims Tribunal, Tse Tin Sang v Ng Kwok Cheung, unreported, HCSA 17/2012, 13/11/2012, and Brian Alfred Hall v Secretary for Justice, unreported, HCSA 24/2006, 19/02/2008. 

10.  In Tse Tin Sang, A Chan J allowed the appeal and remitted the case for retrial, and ordered nisi that costs of the appeal be to the successful defendant/appellant.  In Brian Alfred Hall, DHCJ L Chan, as he then was, allowed the appeal and remitted the matter for retrial, and ordered nisi that costs of the appeal be to the successful claimant/appellant.  It appeared that both of the orders were nisi orders.

11.  Mr Lung further relied on the Court of Appeal decision on costs in Sun Focus Investment Limited and Tang Shing Bor and Anor, CACV 82/2011, 18/01/2012 in which the Court of Appeal allowed the defendants’ appeal and set aside the judge’s grant of leave to the plaintiff’s application to amend the statement of claim, and remitted plaintiff’s amendment application to be reheard.  The plaintiff had applied for an order that costs of the appeal and the respondent’s notice be costs in the cause of the amendment application.  The Court of Appeal ordered, among other things, the plaintiff to pay the defendants the costs of the appeal, and the costs below be costs in cause of the amendment application.  Fok JA, as he then was, distinguished the case of Kee Shing Industrial Products Ltd v Wah Lai Metal Artificial Jewellery Factory (A Firm) CACV 224/2004, unrep, 28/04/05.  In Kee Shing the Court of Appeal had ordered a fresh trial as the trial judge did not make a necessary finding of fact whereas in Sun Focus, the Court of Appeal made a specific ruling in favour of the defendants on the issue of the operation of the relation back rule, which was the principal ground of appeal and which was resisted by the plaintiff.

12.  Mr Lam, on the other hand, submitted that D’s conduct should be one of the factors to be considered by this court in deciding whether to vary the costs order nisi, and referred to in particular what was said in paragraph 65 of the Judgment that, among other things, the confusion over whether the contracting party was D was caused mainly by D having exactly same names as the PRC Company, and continued to do so even after its claim that it had severed link with the PRC Company. 

13.  In this respect, Mr Lam relied on the decision in the consolidated cases of Fung Ho Nam v Witty Industrial Co Limited and Anor and Chu Wai Wum v Witty Industrial Co Limited and Anor, unrep, HCLA 6 & 7 of 2011, 29/11/11.  On appeals by the 1^st defendant from the decisions in the Small Claims Tribunal, HCDJ Au Yeung, as she then was, ordered the matters be remitted for a new trial.  She declined to vary her costs order nisi that the costs of the appeal be in the cause of the new trial, as she was of the view that the plaintiffs were clearly employees, and the question was whether the 1^st or the 2^nd defendant was the employer, and the employees should not suffer as a result of the confusing way in which they were transferred between the two defendant companies.  Mr Lung, however, distinguished that case from the present one, namely there were 2 defendants in that case and the question was which was liable, whereas in the present case D was the only defendant.

14.  In the above case, the 1^st defendant succeeded on 4 of the 5 grounds of appeal, and Mr Lam pointed out that in the present case, D had only succeeded in 4 of original 7 grounds of appeal, failing in 2 of those grounds, and abandoning one of the grounds.

15.  Mr Lam had referred this court to a number of cases. In the consolidated appeals in Chan Sik Pan v Wylam’s Services Limited and Anor; Yu Chi Kong v Chan Sik Pan and Wylam’s Services Limited and Anor, FACV 4 and 5 of 2001, the Court of Final Appeal set aside the Court of Appeal’s orders and ordered a new trial on the issue of who was Mr Chan’s employer.  The Court of Final Appeal made an order nisi that the costs before the Court of Final Appeal and in the courts below be in the cause of the new trial.  Wylam’s Services, the unsuccessful party, had tried to apply for a variation of the costs order nisi, but failed.

16.  In both Kee Shing, and another case Kwan Yim Kwan Peggy and Namkung Promotions (Worldwide) Limited, CACV 144/2006, 25/04/2007, the Court of Appeal ordered that the costs of the original trial be in the cause of the new trial, and the successful party’s costs of the appeal be to that successful party’s costs in the cause of the new trial.

17.  Having considered the above decisions, I am of the view that in the present case a fairer order should be that D’s costs of the appeal, including costs of this application, should be D’s costs in the cause of the new trial, and costs of the original trial should be in the cause of the new trial.  I will thus vary the costs order nisi accordingly.

Security

18.  Under a consent order filed on 26 June 2013, D had made payments, as security of the award and as security for P’s costs into court, pending the appeal.  As the appeal was allowed, D applied for the release of both payments.  Mr Lam said he had no instructions to object or to agree to the release.  I order the release of both payments to D.

19.  Lastly, I thank both Counsel for their helpful submissions.