CHUN LOONG CIGARETTES & WINE LTD v. CHENG HOK HUNG AND ANOTHER

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JUDGMENT

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1. This is an appeal against the costs order made by the Master. On 5th of February 1996, the Plaintiff issued the Writ claiming loans amounting to $2,800,000 made by the Plaintiff to the 1st Defendant which was unpaid by the 1st Defendant. Some 3 weeks after the issue of the Writ, the Plaintiff took out its Order 14 application on 24th February 1996 and supported the Summary Judgment Summons by an Affirmation of Mr. Fok Shu Hung dated 22nd March 1996. The 1st Defendant, Cheng Hok Hung filed his Affirmation dated 13th April 1996 opposing the Order 14 Summons and showing in great detail, why the 1st Defendant was not liable on the loans alleged by the Plaintiff in its Writ of 5th February 1996. The Plaintiff however, notwithstanding the 1st Defendant's Affirmation of 13th April 1996, persisted with the Order 14 application and in fact sought to and did join the 2nd Defendant as additional party and despite many adjournments, the Plaintiff also sought summary judgment against the 2nd Defendant. Eventually on 18th November 1996, the Master on the full hearing of the Order 14 application granted unconditional leave to defend to both the 1st and 2nd Defendant. However he ordered that costs of the Order 14 application be costs in the cause with certificate for Counsel. The 1st Defendant is totally dissatisfied with the order of costs and hence this appeal to me.

2. Having read the papers and heard the parties, I have no doubt that the costs order made by the Master was wholly inappropriate in the circumstances. I agree with Mr. Whitehead that this may not be a case where it can be shown that the Order 14 Summons should be dismissed because the application is prima facie within the Order 14 rules and it is not case where it could be said that when the Order 14 Summons was issued on the 24th February 1996, the Plaintiff knew that the 1st Defendant was relying on an arguable defence. But the position must have been very clear to the Plaintiff when the Affidavit of the 1st Defendant dated 13th April 1996 was served on the Plaintiff. Thereafter there is really no excuse for the Plaintiff to still push ahead with its Order 14 Summons against the 1st Defendant. The correspondence shows that the 1st Defendant's Solicitors had been writing repeatedly to the Plaintiff's Solicitors pointing out that it was wholly inappropriate for the Plaintiff to continue with the Order 14 Summons. What the Plaintiff did however was not to write back and say it was not pursuing the Order 14 summons or that it was only pursuing part of the Order 14 Summons. Instead, the Plaintiff filed an Affirmation of Fok of 1st November 1996, seeking Summary Judgment and still pressing for the whole amount of $2.8 million.

3. Mr. Whitehead in a valiant attempt to justify the costs order of the Master, tried to persuade the Court that at least in relation to the claim for $600,000, made up of $500,000 repayment and $100,000 expenses for the Plaintiff, the Plaintiff was justified in pursuing the Order 14 application. I disagree. In my view, the factual matters raised by the 1st Defendant in his April 1996 Affirmation would prompt any reasonable Plaintiff either to immediately agree to unconditional leave for the whole claim or at least to amend its Summary Judgment Summons to seek the reduced amount of $600,00 or $100,000. This the Plaintiff did not do. It is therefore a case where the Master had erroneously imposed a standard costs order where the circumstances call for a different order of costs.

4. In my view the proper order of costs which should have been made by the Master is that the costs of the Order 14 Summons be costs in the cause up to the 13th April 1996 and that the costs of the Summons after the 13th April 1996 should be paid by the Plaintiff to the 1st Defendant to be taxed if not agreed with Certificate for counsel. The Plaintiff must also pay to the 1st Defendant the costs of this Appeal.