GOLD ALLIANCE ENTERPRISES LTD. v. WISELINK MANAGEMENT LTD.

HCA 2979/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2979 OF 2002

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J U D G M E N T

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1. This is an appeal from a costs order made by a Master on 19 December 2002. At the hearing before the Master, the Applicant withdrew his application to be joined as a co-defendant in this action. Leave to do so was granted by the Master, who also accepted an undertaking by the Applicant to vacate the suit premises. The Master made no order as to costs in respect of the Applicant's application for joinder which was originally the subject matter of hearing before the Master.

2. The application for joinder was taken out in November 2002 after the Plaintiff had obtained default judgment against the Defendant in a tenancy dispute. The Applicant claimed to be the real tenant of the suit premises, in respect of which the Plaintiff as landlord sued the Defendant as tenant for arrears of rent and vacant possession. After the making of the application for joinder, various interlocutory steps that I need not detail here took place resulting in the incurring of costs, particularly on the side of the Plaintiff. The Master realized that substantial costs had, in fact, been incurred by both sides.

3. The Applicant gave as his reason for withdrawing his application, his lack of means to finance further the application and to make payment of rent or interim payment regarding his continued occupation of the premises. At the hearing before the Master, like the hearing before me, the Applicant does not concede the merits of his application.

4. The principles governing an appeal from a master's costs order are well settled. The judge hearing the appeal from the master should not lightly disturb the master's exercise of discretion. The relevant principles have been summarized in a recent decision of mine, Man Fong Hang v Man Ping Nam [2002] 4 HKC 538, 544C-E. That notwithstanding, I am of the view that in the present case, I am entitled to and should, in fact, disturb the exercise of discretion by the Master.

5. First, the Master, strictly speaking, gave no reason for the costs order that he made, i.e. that there be no order as to costs. Secondly, I am unable to discern any or any sufficiently valid reason for the exercise of discretion in the way the learned Master did. The Applicant made an application for joinder that caused the incurring of substantial costs. Eventually, he withdrew his application. The normal rule is that costs should follow the event. The event in question is that the Applicant withdrew his application, which should therefore be regarded as a failed application. Under the normal rule, the Applicant should be ordered to pay the costs of the Plaintiff in respect of the application, unless he can show good reasons why costs should not be so ordered against him.

6. In my judgment, his lack of means to finance the litigation further or his lack of means to pay rent or interim payment (that based on his own case he should be responsible to pay) cannot be good justification.

7. The Master, during the course of the hearing, seems to have been particularly taken by the fact that the Applicant made no concession on the merits of his application and there was no way he could tell which side was telling the truth in relation to the substance of the application.

8. In my judgment, that cannot be a relevant or sufficient justification for the costs order that he made. The fact that the Court in the present circumstances cannot tell who was telling the truth in relation to the application is, in my judgment, a neutral factor. Unless the Applicant could persuade the Court that his version was the true one, that fact did not even begin to be relevant or begin to help the Applicant displace the normal rule that as the failed applicant he should be responsible for the costs of his application. Otherwise, a plaintiff who discontinues his action half-way before trial can always say that he should not be ordered to pay costs because there is no trial on the merits. That cannot be correct.

9. The fact that the Applicant voluntarily decided to withdraw his application and gave an undertaking to vacate the premises cannot be good justification for departing from the normal rule as to costs either. His undertaking to vacate the premises followed logically from the withdrawal of his application for joinder; as regards the withdrawal of his application for joinder, that was his own decision and his withdrawal, in fact, denied the Plaintiff a chance to show that the application lacked merits. As I said, I do not think that the fact that the Court cannot determine the merits of the application, as a result of the withdrawal of the application, can be a good justification for departure from the normal rule on costs.

10. So in conclusion, I can discern no or no sufficient reason for departing from the normal rule that costs should follow the event. In those circumstances, with respect, I am of the view that the order below was plainly wrong. That entitles this Court to exercise the discretion afresh. Further, for the same reasons, I am of the view that, in the exercise of my discretion, I should order costs to follow the event. In other words, the costs of and occasioned by the withdrawn application for joinder by the Applicant should be paid by the Applicant to the Plaintiff to be taxed if not agreed; and I so order.

11. Further, in relation to the hearing before the learned Master, that was a 2-hour hearing. Previously the Applicant was represented by counsel. Judging from the circumstances of the hearing, the potential arguments involved in that hearing, and the fact that the Applicant only made known his position shortly before the hearing, I am further of the view that there should be a certificate for counsel in respect of the Plaintiff's appearance before the learned Master. I therefore also grant a certificate for counsel in respect of the hearing on 19 December 2002.

[Submission on costs]

12. In respect of the costs of this appeal, having heard the parties further, I order that the costs of this appeal be paid by the Applicant to the Plaintiff, such costs to be taxed if not agreed.