NGEI CHEONG HONG INTERNATIONAL LTD v. TOPOCEAN CONSOLIDATION SERVICE LTD AND OTHERS

HCCL 24/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 24 OF 2003

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DECISION  ON  INTEREST  AND  COSTS

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Introduction

1. On 3 August 2005 this court handed down judgment in this action wherein the plaintiff company sued the 1^st defendant, another Hong Kong company, for damages in the sum of US$91,175.08 arising from the alleged breach of the obligations of the 1^st defendant under a contract of carriage evidenced by two bills of lading issued by the 1^st defendant.

2. That judgment speaks for itself.

3. The result of the action was that the plaintiff recovered judgment against the 1^st defendant in the sum of US$41,952.90, together with an order nisi that there be interest on this sum at the rate of 2% over US dollar prime from 1 December 2000 to the date of judgment, and thereafter at the judgment rate upon such principal sum until payment.

4. As to costs, the court made an order nisi that the costs of this action were to be to the plaintiff, to be taxed if not agreed.

This application

5. By summons taken out on 13 September 2005 the 1^st defendant sought a variation of the orders nisi as to interest and costs.

6. Miss Chan, who appeared on this application as she did at the trial of the action, submitted that the plaintiff had made offers to settle this matter after the commencement of the litigation, and that the parties had been unsuccessful in compromising this case because over the continuing dispute over three uncollected containers, as to which issue the court had held in her client’s favour at trial.

7. She further argued that in light of the sum involved in this case that the case should have been heard in the District Court, and that the 1^st defendant’s application to take the case to that venue had been successfully (and wrongly) resisted by the plaintiff, which had been warned by the court of the risk of an adverse costs finding.

8. Miss Chan also drew the attention of the court to the fact that on the first day of the trial the plaintiff had abandoned an element of its claim relating to one further container, thus reducing its claim to the amount ultimately in issue.

9. Miss Chan maintained that, looked at in the round, in a case in which the dispute effectively boiled down to the loss of five containers, the court had adjudged liability on the part of the 1^st defendant in terms of two containers only, namely those containers which the 1^st defendant had admitted had been wrongly delivered to the consignee absent production of the relevant bill of lading.

10. It was, said Miss Chan, argument over the three other containers, which effectively had been abandoned on the New York dockside, and also as to the container the claim for which now had been abandoned, which had prevented there being a settlement in this case.

11. She submitted that in the circumstances the 1^st defendant should not have to bear the costs of this entire action; indeed, in light of the court’s conclusions, and the rejection of liability of the 1^st defendant for the three containers, the 1^st defendant should be permitted to recover some of its costs.

12. As to interest, she said that the history of the action, and in particular the delays that had occurred therein, should not mean that the 1^st defendant should have to pay interest for entire the period stipulated by the court, nor indeed at the rate of 2% over US dollar prime.  Had the plaintiff not insisted on recompense for the three containers, as to which the claim had failed, Miss Chan repeated that the plaintiff would have been paid for the two misdelivered containers, and the matter clearly would have ended there.

13. For the plaintiff Mr Kerr, who likewise had appeared at the trial of this action, strongly resisted Miss Chan’s efforts to disturb the existing orders nisi.

14. He outlined the history of the claim, and pointed out that notwithstanding Miss Chan’s protestations as to the probability of settlement regarding the two misdelivered containers, the hard fact was that there had been no payment into court, and no admission on the pleadings; in fact, the 1^st defendant had counterclaimed for freight, upon which it had obtained summary judgment from a Master, and yet it had specifically resisted any set-off in relation to those two containers.  Moreover, noted Mr Kerr, after obtaining such summary judgment for freight, the 1^st defendant had rubbed salt into the wound and had gone so far as to issue a winding up petition against his client, which had been withdrawn only after payment of the summary judgment sum.

15. As to the contention regarding delay, Mr Kerr submitted that since 2003 the plaintiff had sought to set the matter down for trial, but that this had been opposed by the 1^st defendant on several occasions, and to complicate matters the 1^st defendant also had taken out an unmeritorious application for security for costs, after which it had applied for transfer to the District Court, an application dismissed by this court, which had immediately set trial dates.

16. Mr Kerr justified his client’s resistance to the transfer to the District Court on the basis that, whilst in the event ultimate recovery was admittedly at the median end of the District Court scale, this case may well have taken longer before a non-specialist tribunal.  At all times, he said, the plaintiff had had an unarguable claim in respect at least of the two misdelivered containers, and although Miss Chan was now minded to refer settlement in this regard, the fact was that there had been no admission on this issue; to the contrary, an entirely specious defence, in terms of the identity of the carrier, had been run in this context, a defence which this court had accorded no credence.

17. He further pointed out that when the case was about to be set down for trial, the without prejudice correspondence showed that the 1^st defendant had only been prepared to settle at US$30,000, inclusive of interest and costs, an amount which was considerably removed from that which ultimately the plaintiff was able successfully to recover.

18. Mr Kerr asked that the court confirm its order that costs be to the plaintiff in full, that they should be taxed on the High Court scale, and that the order as to interest should remain unchanged.

Decision

19. This has been a curious case, and in the circumstances it is not hard to conclude that the obvious sense of antipathy that the parties hold for the other has had the effect of getting in the way of a sensible commercial compromise of that which presented as a fairly standard commercial dispute.

20. I have some sympathy with the suggestion that the nature of the subject-matter and of the arguments raised rendered it more conveniently to be tried by a commercial court, although I do not overlook the fact that the amount in fact recovered is considerably below the face value of the claim, which at the outset was very much on the border line between the monetary limit of the jurisdiction of District Court and High Court.

21. I perceive little merit, also, in Miss Chan’s line of argument to the effect that there was a clear and untrammelled settlement offer on the earlier correspondence.  There was not.  Nor was there any payment into court.  Had there been so this costs’ argument would have possessed an entirely different dimension.  The mechanism afforded by a payment into court is designed precisely to avoid the type of argument that now has been placed before this court.  A payment into court permits of no ambiguity, nor the benefit of hindsight as to what a particular letter did, or did not, import.  Either such payment into court is beaten, or it is not, and as a procedural device it usefully permits a defendant to put its money where its mouth is, and thus to express its view as to the intrinsic merits of a case continued to be maintained against it.

22. Against this background, the only argument run by Miss Chan which has attracted any interest is that the claim was reduced at the outset, with the abandonment of the claim with regard to one container, and further, that the real substance of the claim, namely the dispute as to liability for the three containers which, in effect, were abandoned at the dockside, and ultimately were auctioned by the US Customs, was a dispute which clearly took up a significant part of the trial, and equally represented a dispute upon which the plaintiff’s witnesses were disbelieved; hence the conclusion reached that no liability for these three containers should be laid at the door of the 1^st defendant.

23. Accordingly, whilst on reflection I have come to the view that the costs of this action should not be taxed on a District Court scale, nor indeed that the 1^st defendant should be awarded any part of its costs, in all the circumstances it does seem to me to be appropriate not to award the plaintiff the entirety of its costs of this action, and to award but a percentage of such costs.

24. I recognize that this, perhaps, is not a usual order, but nevertheless it remains open to the court, when it considers it appropriate in any given fact situation, to approach costs in this manner.

25. Given the reaffirmation of my primary conclusion that the plaintiff should not be deprived of costs, which appeared to be Miss Chan’s primary case, and that such costs should not be diminished in taxation scale, I have spent a little time reflecting upon the appropriate percentage which the plaintiff should recover.

26. I have concluded that it would not be unjust in the circumstances for the existing costs’ order to be varied, and for the plaintiff to have 70% of its costs of this action, such costs to be taxed, if not agreed, on the High Court scale.  I so order.

27. As to interest, I am unmoved by Miss Chan’s arguments as to delay, and to the period for which interest is to run on the facts of this case, although on reflection I consider that it is more appropriate for the order to be varied so that interest on the principal sum recovered is to run at the rate of 1% over the US dollar prime rate, and not the 2% as originally ordered.

28. Accordingly, the order nisi as to interest is to remain unchanged, save that the interest rate stipulated therein is to be 1% over US dollar prime from time to time prevailing.  I so order.

Costs of this application

29. As to the costs of the 1^st defendant’s application to vary the orders nisi, I consider it appropriate that the costs of the preparation and issuance of the summons dated 13 September 2005 be to the 1^st defendant, to be taxed on the High Court scale if not agreed, but that as to the costs of the hearing necessitated by such summons that there be no order as to costs.

30. I so order.