SO WING LEUNG t/a TERRY ENGINEERING CO & CONTRACTOR v. CHUNG SHING COMMERCIAL CATERING EQUIPMENT LTD

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JUDGMENT

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Kempster, JA :

1. This is the judgment of the court.

2. On 9 June 1989 Mr So Wing Leung, who trades under the style of Terry Engineering Company and Contractor, (the plaintiff) commenced an action in the High Court claiming from Chung Shing Commercial Catering Equipment Limited (the defendants), among other things, the sum of HK$84,025 as monies due under agreements for the supply of materials and the execution of works in and about the provision of liquid petroleum gas installations at three schools being built at Tuen Mun in the New Territories. The defendants served a Defence which incorporated a Counterclaim for general damages arising from the plaintiff's failure to complete the works as agreed. Subsequently the damages were liquidated in the terms of a letter dated 11 November 1988.

3. On 7 June 1988 the proceedings were transferred to the District Court where they came on for hearing before HH Judge Scriven on 28 November. They concluded on 3 February 1989 having occupied 17 days of the court's time. In his reserved judgment, delivered on 27 February 1989, the judge dealt with the proceedings as a claim by the plaintiff for agreed or reasonable sums for work done and materials supplied with a set-off for the cost of making good work left incomplete as counterclaimed by the defendants. In the result he entered judgment for the plaintiff in the sum of HK$50,146.50 and made an order nisi for costs in his favour.

4. Being dissatisfied with the order for costs, as well, it may be mentioned, as the determination on liability, the defendants set the proceedings down for further argument. This took place on 3 April 1989. In a further reserved judgment, delivered on 25th of that month, the judge modified his provisional order by ordering the defendants to pay only 90 per cent of the plaintiff's costs.

5. The defendants thereafter sought leave to appeal against both judgments. As regards that on liability leave was refused by Power JA in chambers on 19 September but he granted leave to appeal against Judge Scriven's judgment on costs. Notice of Appeal was duly filed on 4 October. By that Notice the defendants ask us to substitute an order that the plaintiff pay their costs or, alternatively, that the order of 25 April 1989 may otherwise be varied.

6. The defendants' first ground of appeal is that the judge erred in finding that only one day might have been saved if certain issues, involving the investigation of two invoices falsely alleged by the plaintiff to have been submitted to the defendants, had not been raised. The defendants add a rider criticising the judge for failing to penalise the plaintiff more stringently for his mendacity. We shall return to this point.

7. The second ground is based on the judge's reference to the absence of an open letter from the defendants to the plaintiff in which context reference is made to RSC O62 r5 (d) which precludes reliance on such a letter in circumstances where a party could have avoided his liability for costs by payment into court. As there was no letter the point is academic as Mr Chiu, on behalf of the defendants, accepts.

8. Finally, a complaint is made that the judge failed to award the defendants their costs on the successful counterclaim. As to this the judge has a discretion at Common Law, Nicholson v Little [1956] 1WLR 829, which is expressly preserved and emphasised by the terms' of RSC O15 r2(4) which reads : -

9. The defendants had paid the totally inadequate sum of HK$25,000 into court and could only expect to be mulcted in some costs and we find no material which would entitle us to interfere with this exercise of the judge's discretion.

10. The plaintiff was deprived of the costs attributable to the time which the judge thought might have been saved had he not sought to base part of his claim on false documents. The judge adopted this course, which had not been the subject of argument, in a reserved judgment. He had therefore no help in determining what the saving would have been. We are satisfied, on an analysis made on behalf of the defendants, that the period of one day attributed was inaccurate. In the circumstances we think he erred in principle in attempting to assess the saving without recourse to counsel and that he should have referred the matter to a Master for proper investigation.

11. The judge also went on to compare the dishonesty of the plaintiff in the litigation with what he described as the defendants' disnonesty which operated, if at all, outside its parameters saying : -

This was because the defendants had secured and maintained the inclusion of their name on a list of authorised government sub-contractors for liquid petroleum gas installations albeit they had no staff qualified to carry out or to remedy defects in such work. It would seem that their status as authorised sub-contractors confers on them some special privileges. However, it is not appropriate, in our view, to make any separate variation in the judge's order for costs by reason of the plaintiff's moral turpitude whether or not it amounted to a crime in law and whether or not the judge was right in his approach to the "lack of candour between the parties". Accordingly this court will allow the appeal insofar as the Order dated 25 April 1989 should be varied to read : -