LEE MAN KIT v. TAI WAI WAH

HCA1504/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1504 OF 2008

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DECISION

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1.  The parties have already settled the case by virtue of a settlement agreement dated 12 August 2009 through mediation.

2.  One particular issue, however, remains outstanding, which is this : whether Clause 7 of the settlement agreement is intended to cover all the plaintiff’s costs of these proceedings including the costs under the consent order dated 28 March 2009 whereby the defendant was given leave to discontinue the counterclaim with costs to the plaintiff.

3.  The answer to this issue depends on a proper construction of Clause 7.

4.  In construing a contractual provision, the court will ascertain the intention of the parties by reading the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties : see Marble Holding Limited v Yatin Development Limited, FACV21/2007, 28 April 2008, per Mortimer NPJ at para.19.

5.  Here, the mediation agreement did not contain any clause that defined the scope of mediation.  That can only be gathered from the settlement agreement itself.  And the Preamble read :

「李生與戴生就2007年7月至2009年8月12日期間產生的爭議，基於不再作進一步追究的原則下，雙方同意事項如下：」

The terms agreed by the parties were then set out.

6.  Two points became immediately apparent from the Preamble read in light of the surrounding circumstances :

(1) The subject matter covered by the settlement agreement includes not only the plaintiff’s claim but also other dispute pending as at 12 August 2009, if any; and

(2) As at 12 August 2009, the parties were still disputing the quantum of the plaintiff’s costs under the consent order.

So it appears that the settlement agreement did cover the outstanding dispute between the parties on the plaintiff’s costs under the consent order.

7.  Mr Ng, for the plaintiff, disagreed.  He referred me to the steps taken by the parties in processing the provisional taxation of the plaintiff’s costs and argued that had the parties intended to deal with the plaintiff’s costs by way of mediation, they would not have proceeded with the provisional taxation.  I am unable to accept this submission.  The steps taken by the parties on provisional taxation all took place before 12 August 2009.  The issue on quantum was still outstanding when the parties appeared before the mediator.  If they so wished, they could of course resolve that outstanding dispute on quantum by way of mediation.

8.  This brings me to Clause 7, which read :

「戴生承諾負責支付予李生就2007年7月至2009年8月12 日期間產生的爭議而引起的律師費共港幣拾伍萬元正(HK$150,000)，由2009年9月起分十(10)個月支付予李生。……」

On a proper construction, it covers all the plaintiff’s costs of the proceedings including his costs under the consent order.

9.  Mr Ng argued that if that were the parties’ intention, Clause 7 should have clearly stipulated that the plaintiff was to waive his costs under the consent order.  There is no doubt room for improvement insofar as drafting is concerned.  But I do not think a waiver is necessary.  Under the clear wording of Clause 7, the plaintiff’s costs under the consent order have already been included.

10.  I will now hear counsel on consequential directions to be made for the disposal of these proceedings and costs of the argument on Clause 7.