LESSY S.A.R.L. AND ANOTHER v. PACIFIC STAR DEVELOPMENT LIMITED AND OTHERS

1993, No. A11705

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

___________

________________

D E C I S I O N

________________

1. This is an appeal by the Defendant from Master Betts concerning the order of costs he made on the Defendants' application to amend their defence and counterclaim. In allowing the application to amend, the learned master ordered that the cost of and occasioned by the amendment shall be to the other side (i.e. the Plaintiff).

2. It is accepted by both sides that in the usual order in an application to amend, when the application was resisted, there should be two sets of costs, namely : (a) costs of and occasioned by the amendment shall be to the other side, and in this case the Plaintiff, in any event, but (b) costs of the hearing before the tribunal shall be to the party who is successful in the argument, and in this case the Defendants, who were successful in obtaining leave to amend.

3. When Miss Cruden, counsel for the Defendants, asked for the second set of costs in favour of her client, the Defendants, the learned master made the remark by saying "you do not know how close it is". It is accepted by both sides, as in the affidavit of Miss Florrie Cheng, trainee solicitor for the Plaintiffs, as to what had happened before the learned master. In effect, the learned master did not see fit in such a case to accede to the Defendants' request for the order of costs of the argument (i.e. the hearing) to the Defendants in any event.

4. The rationale behind in differentiating these two sets of costs is not to encourage the other side who has decided to resist an application to amend to have a try-on. Otherwise the resisting party would be under an impression that, win or lose, they will get their costs any way. The resisting party should be deterred to adopt such an attitude. In deciding to resist the amendment, they should know that in the event they have lost the argument, they would be ordered to pay the cost of the argument and that is the costs of the hearing whilst the first set of costs, (i.e. the costs of and occasioned by the amendment), would be to them in any event.

5. In this appeal, both sides accepted the principle to be adopted by a judge in Chambers in hearing an appeal against an order for costs made by the master can be found in the case of Hoddle v. C.C.F. Construction Ltd. [1992]2 All E.R. 550. In the judgment of Morland, J. he said at p.550 that :

"In my judgment it would be highly undesirable as a matter of general principle that a judge in the position that I am in today should intervene and make different orders as to costs from that made by a master, unless it can be shown by the appellant that the master demonstrably erred in the exercise of his discretion in the order that he made. If it can be shown that the master took into account matters that he should not have taken into account or failed to take into account matters that he should have taken into account, in those circumstances the judge in chambers would be entitled to vary the order made by the master, but in my judgment it would not be in the interests of justice if judges in chambers entered into detailed examination of all the matters that were before the master in order to decide whether they would have come to the same decision as the master. Generally speaking, in my judgment, judges in chambers should not allow appeals against costs orders by masters, unless it can be shown that the order made was unreasonable or erred in law or, as I have indicated, either failed to take into account proper matters or took into account matters that should not have been taken into account."

6. The learned master has taken the view that the Plaintiff was close in persuading him not to allow the application to amend. However, in the end, it was not close enough to be successful and eventually he allowed the Defendants' application to amend. In other words, he on one hand had decided that the Defendants should be allowed to amend, he was also of the view that it was not unreasonable for the Plaintiff to resist the application. He exercised his discretion in this narrow margin for not following the usual order and that is ordering the second set of costs to the Defendants who had won the argument. In my view, the learned master has not done any of those four things, namely that : (i) he was unreasonable; (ii) he had made an error in law; (iii) he failed to take into account proper matters; or (iv) he took into account matters that should not have been taken into account. It is open to the learned master to depart from the usual order when he found that it was not unreasonable for the other party to resist the application. I cannot see why I should disturb the discretion he has exercised in the way he did. In the end, I find that I have to dismiss the appeal.