SIMBA-TOYS (HONG KONG) LTD v. FULLMORE CORPORATION LTD

HCA 1599/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1599 OF 2008

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DECISION ON COSTS

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1.  On 20 February 2009, I made a decision dismissing:-

(1)     the Plaintiff’s summons dated 13 October 2008 for inspection of the Moulds specified in Appendix A of the Statement of Claim under Order 29 Rule 2 of the Rules of the High Court; and

(2)     the Plaintiff’s summons dated 18 December 2008 for (a) summary judgment under Order 14 of the Rules of the High Court, or (b) judgment on admissions under Order 27 Rule 3 of the Rules of the High Court.

2.  I also made an order that the Defendant was to have the costs of the applications in any event.  The order as to costs was an order nisi.  The Plaintiff has made an application seeking a re-consideration of my decision to dismiss the summary judgment application.  The Plaintiff submits that the appropriate order should be to grant leave to the Defendant to defend, unconditionally or subject to conditions, and that the costs of the application should be costs in the cause, being the usual order where unconditional leave to defend is given.  The Plaintiff has also made an application to vary the costs order nisi in respect of the application for inspection of the Moulds such that the Defendant should pay the costs of the Plaintiff or, in the alternative, there should be no order as to costs.

3.  On the other hand, the Defendant has made an application to vary the costs order nisi such that the Plaintiff should pay the Defendant’s costs in respect of both summonses forthwith and that there should be a gross sum assessment of those costs.

The Plaintiff’s applications

4.  In respect of the costs of the Order 14 application, essentially, the Plaintiff’s application is based on the fact that the ground of my decision to dismiss the summary judgment application, namely, that the Plaintiff has no locus standi to sue, was not a contention relied on by the Defendant (either before the application was issued or at all).  It is also said that this case does not come within Order 14 Rule 7 of the Rules of the High Court.  That rule applies where the case is not within the order or where the plaintiff knew that the defendant relied on a contention which would entitle him to unconditional leave to defend.

5.  I accept that Order 14 Rule 7 of the Rules of the High Court does not apply to the present case.  However, I do not believe that the court has no power to dismiss an Order 14 application where it is plain that the plaintiff has no locus to sue (as I believe it to be the case here).  The fact of the matter is that the Plaintiff has no cause of action against the Defendant in this action.

6.  It is correct that the issue of locus standi was never raised by the Defendant.  However, I consider that, prima facie, the duty was on the Plaintiff to ensure that it had proper standing to sue before it made an application for summary judgment against the Defendant.  In all the circumstances, I am not persuaded that the costs order nisi should be varied as sought by the Plaintiff.

7.  For the same reasons, I do not accept that the Defendant should pay the costs of the Plaintiff or, in the alternative, there should be no order as to costs in respect of the application for inspection of the Moulds.  Irrespective of the point about locus standi, I consider that the Defendant has succeeded on the merits of the inspection application.  Although the Defendant’s defence and affirmations could have been better expressed, I believe that the substance of the Defendant’s position, namely, that it did not have possession of the Moulds at the time of the application, was clear enough.  I see no reason to depart from the usual rule that costs should follow the event.

The Defendant’s application

8.  In respect of the Plaintiff’s summons dated 18 December 2008, the Defendant submits that the Plaintiff should pay the Defendant’s costs forthwith and there should be a lump sum assessment (i) because its application has failed on a preliminary ground, i.e. lack of locus, and it is uncertain or doubtful whether the action would be further prosecuted and there may be delay to the Defendant’s recovery of the costs and (ii) in order to save costs and time on taxation and pre-empt delaying tactics.

9.  In respect of the Plaintiff’s summons dated 13 October 2008, the Defendant submits, in addition, that the application for inspection is inappropriate because the Plaintiff knows where the Moulds are at present, and it is pointless because it is neither party’s case that the Moulds have gone missing or been damaged.  The Defendant refers to paragraph 62/4/6 of Hong Kong Civil Procedure 2009, where the learned editors refer to Frogmore Estates plc v Berger (1089) 139 New L J 1560 and note that interlocutory applications which were inappropriate and required an investigation of the merits should be restricted and made subject, if necessary, to orders for taxation of the costs forthwith.

10.  Although I have dismissed the Plaintiff’s applications, the usual costs order in interlocutory applications, I believe, is still costs in any event (Allied Collection Agencies v Wood [1981] 3 All ER 176; ADS v Wheelock Marden & Co Ltd [1994] 1 HKC 607).  This is so notwithstanding the fact that the court is now more ready to make gross sum costs assessments in appropriate cases.  In simple and standardized applications such as an application for extension of time to file a pleading, it obviously makes good sense to order that the party seeking the court’s indulgence should pay the other side’s costs forthwith and to have those costs fixed at once.  On the other hand, where the application is more complicated, whether to order the losing party to pay costs forthwith and whether to make a gross sum assessment would depend on the circumstances, bearing in mind the rationale behind the usual costs order in interlocutory applications, whether there are reasons why such an order would not be appropriate, and the advantages of a gross sum assessment (namely, avoidance of further time and costs being incurred in a taxation, and the fact that the judge or master hearing the application would have a better feel of the issues and estimate of the work involved).  Ultimately, the matter is one for the exercise of a judicial discretion, and it is difficult to lay down hard and fast rules.

11.  In my view, the question of whether the winning party should have his costs paid forthwith and whether to order gross sum costs assessment are interrelated questions.

12.  In the present case, in respect of the major point about locus standi relied on by the Defendant, had the Defendant taken the point prior to the hearing, it is quite possible that the applications would not have been pursued, or at least not in the way that the proceedings are currently constituted.  As for the suggestion that there may be delay to the Defendant in the recovery of its costs, it is entirely a matter for the Defendant to decide on how to proceed with this action, and it is also up to the Plaintiff to take steps to see that the proper plaintiff is joined.  I should add that I express no view as to whether the current action can be salvaged, and if so how it should be done.  These are not matters before me.  Also, I do not consider the Plaintiff’s application for inspection to be so inappropriate as would justify an order for payment of the Defendant’s costs forthwith.

13.  In all the circumstances, I am not minded to accede to the Defendant’s application.

14.  It follows from the above that the costs order nisi is made absolute.  I make no order as to the costs of the various applications to vary the costs order nisi.