PRAKASH HIRANAND BHARWANI v. MIDDLE EAST PETROLEUM SERVICES LTD

CACV 175/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 175 OF 2014

(ON APPEAL FROM HCSD 29 OF 2013)

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DECISION ON COSTS

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Procedural background

1.  On 21 August 2014, the applicant commenced these appeal proceedings.

2.  By summons filed on 22 September 2014, the respondent applies for: (1) an order striking out the Notice of Appeal under the inherent jurisdiction of the court; and (2) alternatively, an order that the applicant provides security for the costs of the appeal.

3.  On 17 October 2014, the respondent issued another summons for leave to file a further affirmation exhibiting a revised skeleton bill of costs.

4.  The summonses were scheduled to be heard on 29 October 2014.  

5.  On 24 October 2014, the applicant through his solicitors wrote to the court requesting for the dismissal of his appeal with costs to the respondent.  Accordingly, the court ordered on 27 October 2014 that the appeal be dismissed with costs to the respondent, to be taxed if not agreed.

6.  Thereafter on the same day, the applicant through its solicitors wrote to request for the costs of the appeal and the two summonses to be assessed by way of gross sum assessment and on indemnity basis.  As the costs order had not been perfected, the court was in a position to revisit the costs order.  It therefore gave directions for the lodging of the statement of costs and submissions on the basis of assessment and the respondent’s entitlement to costs of the 17 October 2014 summons.

7.  The respondent had duly lodged the statement of costs and written submission. The applicant’s submission was however only lodged on 13 November 2014, which was two days late.  Since it is not a serious delay, I will accept the submission despite the delay.

Indemnity costs

8.  In Town Planning Board v. Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114, the Court of Final Appeal confirmed the long established principle that in order to obtain an order for costs on indemnity basis, the successful party has to demonstrate that the case has some special or unusual feature.  It also pointed out that indemnity costs is not confined to cases brought with ulterior motive, for an improper purpose or where there is deception or underhand conduct, emphasizing that the court’s discretion is not to be fettered beyond the requirement that indemnity costs must be appropriate.

9.  In the present case, the respondent seeks indemnity costs on the basis that the appeal is frivolous, vexatious or abuse of the court’s process and that the applicant was using the appeal process as delaying tactic which is oppressive and has forced the respondent to incur unnecessary costs. 

10.  It is submitted on behalf of the applicant that his appeal is not devoid of merits, that he is genuinely aggrieved and that he would have pursued the appeal but for “his embarrassing personal problem”.

11.  In his Notice of Appeal, the applicant advanced two grounds of appeal, which are bare, general grounds that have no substance.  It is deficient and is liable to be struck out as frivolous and an abuse of process.  Further, there is no material before the court, and no details have been provided in the submission, to justify the assertion of grievance and the applicant’s genuine intention to pursue the appeal.

12.  In my view, this is an appropriate case to order indemnity costs in respect of the costs of the appeal and of the striking out / security for costs summons.

Costs of the summons dated 17 October 2014

13.  The costs of the respondent’s 17 October 2014 summons for leave to file an affirmation to exhibit a revised skeleton bill of costs however falls to be considered differently. This application was not occasioned by any act of the applicant, and the respondent is essentially seeking the court’s indulgence.  Despite the direction of the court, the respondent’s written submission has advanced no argument on why it is entitled to the costs of this application.  In the circumstances, I make no order as to costs of this application, which will include the costs of the summons and of the affirmation covered by it.

Assessment of the respondent’s costs

14.  In assessing the amount of the respondent’s costs, I make four observations:  

(1) Although the costs are assessed on indemnity basis, which is more generous than the party-and-party basis, the court will still have to consider whether the costs are unreasonably incurred or of an unreasonable amount. 

(2) This is a short appeal that lasted for about two months, with very little activities. The respondent’s striking out / security for costs application is the only activity other than the service of the Notice of Appeal and the paper application to set down the appeal.

(3) It is not a complex appeal.  It is an appeal against the refusal to set aside a statutory demand. As noted above, the grounds of appeal in the Notice of Appeal are bare grounds without substance.  Similarly, the respondent’s application is fairly straightforward. 

(4) Not much papers are involved in the appeal or in the respondent’s application.  The applicant had not filed any evidence in connection with the respondent’s application.  

15.  The respondent’s statement of costs comes to $214,220.  Under item C4, the claim for general care and internal communication is not to be allowed in a summary assessment. Even if it were a full taxation, this would not have been allowed given the very short duration of the appeal and the substantial amount of time claimed on all items of work.

16.  As to items D1 (preparation of documents) and D3 (preparation for hearing), the amount of time spent by AS (11 hours and 10.5 hours respectively) is unreasonably long. This is particularly so having regard to the fact that an experienced partner was involved in each of these items, that a trainee solicitor was also involved in preparing for the hearing, and, importantly, counsel was involved in preparing the summons and affirmation and had rendered advice.  The fee paid to counsel for these work, excluding the brief for the vacated hearing, is $22,750, which is not insubstantial.

17.  Finally for item F1, the costs of drawing up the statement of costs is generally not allowed in gross sum assessment: Practice Direction 14.3 §13.

18.  Having regard to the matters mentioned in paragraphs 15 to 17 above, the respondent’s costs of the appeal and the striking out / security for costs application are assessed at $150,000.