XCHRX XCHRX IBU INTERNATIONAL FINANCE LTD. AND ANOTHER v. FURNESS LOGISTICS (HK) LTD.

HCCL190/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.190 OF 1998

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JUDGMENT ON COSTS

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1. On 14th September 1999 this Court handed down judgment upon twin applications taken out by the Defendant in each of these actions for a stay of the actions in favour of the Court at Rotterdam. As a result of those applications, the Court acceded to the stay, and at the same time made an Order nisi (at page 23 of the judgment) that the costs of these applications were to follow the event in each case, and were to be paid by the Plaintiffs to the Defendant, to be taxed if not agreed.

2. What has since happened is that the successful Defendant has sought to restore this hearing on the costs issue alone, and at the same time the Plaintiffs in each case also appear by Counsel with their own submission that this Order nisi should be varied. It is this matter which has been the subject of argument this afternoon.

3. There are broadly three aspects of the costs issue involved today :

1. The ambit of the original costs order, and the time at which those costs should be taxed and paid;

2. The question of apportionment; and

3. Some housekeeping in terms of two earlier costs orders in these actions which were made by Cheung J on 15th July and 22nd July respectively.

Perhaps in the circumstances I can take these matters in reverse order.

Previous Orders

4. On 15th July, Cheung J heard an application on behalf of the Defendant to vacate the date originally fixed for the hearing of the stay applications in each case, namely, 22nd and 23rd July. This was opposed by the Plaintiffs. The Defendant's application was successful and the learned Judge reserved the costs. It is these costs with which I must now deal.

5. Both Mr Sussex and Mr Coleman, who appeared before me today, also had the advantage of appearing before Cheung J on that occasion. Mr Sussex has read to the Court his manuscript note of the judgment of Cheung J, the effect of which he said, and I tend to agree, was that the application to adjourn the forthcoming hearing was stimulated by the late filing of evidence on the part of the Plaintiffs. The temptation in cases like this is to throw up one's hands and to say no order as to costs. But I think that in the present circumstances that would be wrong. Counsel were there, and I have been informed of the tenor of the learned Judge's reasons. It seems to me, from what I have been told, that those costs should go to the Defendant, to be taxed if not agreed.

6. The second matter wherein Cheung J was involved was on 22nd July, which had been the original date for the hearing of the stay application. On this occasion, the Plaintiffs in each case applied for the hearing of this stay to be construed as vacation business, and for the matter to come on in the last week of August before this Court. This in fact is what happened, and has resulted in the judgment to which I have made reference. At that hearing, the learned Judge made an order which I am told reads as "costs in the cause". I do not think there is any real disagreement between Counsel, and putting a sensible interpretation upon that rubric, the 'cause' to which the learned Judge there referred must have been the forthcoming application which he then decided should be heard at the end of August. Accordingly, if that be right, as I think it is, then those costs, to be taxed if not agreed, must go to the Defendant as well, since in each case it is the Defendant who has been successful upon the substantive stay application.

Apportionment

7. I now move to the issue of apportionment. Mr Coleman, on behalf of the Plaintiffs, dealt with it very fairly. He said that there has been a large amount of material, much of it coming relatively late in this case, that the original application (or at least the application as originally constituted) was crisp, and that the matter has become increasingly diffuse with the filing and cross-filing of affidavits. He said it would be wrong in principle for the entirety of the costs of each action to be payable by the Plaintiffs to the Defendant. He naturally recognises the practical difficulties that this approach causes, because it is very difficult, if not impossible, for any Judge to review evidence that was before him and with his hand on his heart to say that a certain part of the evidence assisted, and that a certain part did not. That, perhaps, is why the Courts seldom get involved in this sort of exercise. Nevertheless, Mr Coleman does say, in the particular circumstances, that it would be right for the Court to essay some sort of proportion in favour of the Plaintiffs which then could be knocked off the costs bill.

8. Much of the criticism of the affidavit evidence which Mr Coleman has felt able to make - and I stress that he has been relatively guarded in his submissions - related to the filing of evidence regarding the Dutch proceedings. As far as that evidence is concerned, and I do have occasion to remember it, I am sure Mr Sussex is right when he said that evidence of the state of play in those Dutch proceedings was put in not least because those proceedings were in existence. Mr Sussex also pointed out, lest I forget, that in the contract between the parties there was a Dutch choice of law clause. So it is perhaps not entirely surprising that evidence from Dutch lawyers was put forward for this Court's delectation.

9. In all fairness I think I must decline Mr Coleman's persuasive invitation to apportion. I can find no solid basis for it, and I think it would be inappropriate to attempt that sort of exercise in this case.

Ambit of the Order Nisi

10. This then leaves the outstanding matter as to the precise form of order that these applications should have attracted, given that, as Mr Sussex argued, these actions in real terms are now over. To this contention Mr Coleman makes two broad points. First, that it is at least conceptually possible for these actions to remain alive for the purposes of enforcement of any judgment that may be obtained by the Plaintiffs in Rotterdam; and second, that if (as he said is eminently likely) the Plaintiffs succeed in Rotterdam - which is the Court to which the parties have now been sent by order of this Court - then it would be unfair in all the circumstances for the Plaintiffs, which in each case are financial institutions, to have to pay up the costs of these actions when ultimately they may well be in substantial credit, both in terms of a Rotterdam judgment and of costs orders collateral thereto.

11. On the first point, namely, the future utility of these proceedings, with respect I think that Mr Coleman is wrong. I thought so as a matter of instinct and in my view Mr Sussex is right when he submitted that under our system of jurisprudence a cause of action in personam merges in the judgment, and that there is no way in which these Plaintiffs can use these proceedings for the enforcement purposes they have in mind. Their option, since I am told that the Netherlands is not a scheduled country for the purpose of the legislation (Cap.319) concerning registration of foreign judgments, is to sue at common law on the debt so constituted by that foreign judgment. That course, said Mr Sussex (and I agree) constitutes a separate cause of action, and will require the issuance of separate proceedings.

12. Turning now to the 'credit balance' point made by Mr Coleman, Mr Sussex responded by making two points of his own : First, that there is no evidence whatever that the present Defendant, which is part of a large worldwide group, is likely to act as a recalcitrant judgment debtor, so that it should not be assumed that enforcement proceedings in Hong Kong will be necessary, and that any order of the type envisaged by Mr Coleman would be akin granting a Mareva type relief against his client absent evidence; and second, and in any event, there are two other Defendants in the Rotterdam proceedings, and it is certainly possible, if not probable, that should liability be established, execution may be able to be levied in Holland.

13. There is perhaps a temptation, when a Judge has had to exercise a discretion in terms of sending litigants to a foreign jurisdiction, to fudge the costs issue and to put off the evil day in terms of crystallising any costs liability. In this case, however, I feel unable to do that. I am not saying that it is never possible to make the sort of 'suspensory' order now sought by Mr Coleman, but I do not think that it is justified on the evidence in this case. It follows, therefore, that in my view Mr Sussex is right, and that the appropriate order as to costs in each action should be as follows :-

That the costs of these actions, including the costs of and occasioned by the application to stay (such costs to include the costs of the order nisi hearing today), be paid by the Plaintiffs to the Defendant, to be taxed if not agreed.

In truth, this is simply an enlargement of the Order originally made on the nisi basis.

14. That being all for this afternoon, I thank the parties for their assistance.