THANAKHARN KASIKORN THAI CHAMKAT (MAHACHON) (ALSO KNOWN AS KASIKORNBANK PUBLIC LTD CO) v. AKAI HOLDINGS LTD (IN LIQUIDATION)

FACV No. 16 of 2009

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 16 OF 2009 (CIVIL)

(ON APPEAL FROM CACV NO. 177 OF 2008)

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JUDGMENT ON COSTS

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Lord Neuberger of Abbotsbury NPJ :

1.  On 8 November 2010, the court dismissed the Bank’s appeal on liability (FACV 16 of 2009), dismissed Akai’s cross-appeal on quantum (FACV 9 of 2010), varied the Order of the Court of Appeal to the minor extent of adjusting the date from which interest on the damages awarded should begin to run, and ordered that costs should be dealt with by way of written submissions.

2.  The written submissions (and counter-submissions) on costs have now been received, and they reveal a relatively small degree of dispute between the parties.  They agree that (a) the Bank should pay at least a large proportion of Akai’s costs of the Bank’s unsuccessful appeal, and that (b) Akai should pay all the Bank’s costs of Akai’s unsuccessful cross-appeal, such costs in each case to be taxed if not agreed.

3.  The difference between the parties relates to the costs of the Bank’s unsuccessful appeal.  Akai contends that it should receive 100% of its costs of that appeal, whereas the Bank contends that Akai should receive only 70% of its costs.

4.  It is common ground that the prima facie position is that the Bank should pay 100% of Akai’s costs of the Bank’s appeal, on the simple ground that the Bank lost, and Akai won, the appeal.  However, the Bank argues that, given that Akai succeeded in having the appeal dismissed on the ground that Mr Ting did not have authority to bind it, the costs of the appeal were inflated because Akai ran an unnecessary additional argument based on knowing receipt.  Accordingly, argues the Bank, Akai should not have its costs in so far as they were attributable to that unnecessary argument.

5.  In this case, at least in the absence of Akai’s cross-appeal, the position is as follows.  Akai relied both on want of authority and on knowing receipt to make out its case for defeating the Bank’s appeal, and it succeeded on both arguments, although the outcome would have been the same if it had run, and succeeded, on only one of those arguments.  Where a party advances its case on two different grounds and it succeeds on both grounds, then, unless the court considers that it was unreasonable for that party to have relied on both grounds, or there is some other special reason, it would be wrong to deprive that party of its costs in connection with maintaining both grounds.

6.  That seems to be right as a matter of principle, and it is consistent with Order 62 rule 7(1) of RHC, which refers to things done “improperly or unnecessarily”: in this context, the word “unnecessarily” should not be construed as applying to anything done which was not, with wisdom of hindsight, strictly necessary.  Where a party has two alternative ways of putting his case, it is normally not unreasonable to run them both, especially in a case, such as this, where a reasonably substantial amount of money is at stake, and it is therefore hard to argue that it was disproportionate to raise two arguments.

7.  In this case, again at least if one ignores the cross-appeal for the moment, it was proper for Akai to have run its case on the Bank’s appeal by reference to knowing receipt as well as want of authority.  In the event, the two lines of argument involved the same considerations: if there had been no want of authority, there would have been no knowing receipt; and given that there was want of authority, there was also knowing receipt.  However, the fact that that was the outcome of a week’s argument cannot possibly of itself mean that it was unreasonable of Akai to have run both points.

8.  Further, as is rightly emphasised in Akai’s submissions, the Court of Appeal decided the issue raised on the Bank’s appeal in Akai’s favour on the basis of knowing receipt rather than want of authority.  That renders it particularly hard to criticise Akai for running the knowing receipt argument on the appeal in this court.

9.  That analysis suggests that Akai should have 100% of its costs of the Bank’s appeal.  The only point which gives one pause for thought is that, quite apart from running the knowing receipt argument to support its case on the Bank’s appeal, Akai had an additional reason for running the knowing receipt argument, namely in order to support its case on its unsuccessful cross-appeal: unless it succeeded on knowing receipt, Akai would have accepted that its case on the cross-appeal would have been bound to fail.

10.  On closer consideration, this argument does not assist the Bank.  As a matter of principle, if the knowing receipt argument was, in reality, part of Akai’s case on its cross-appeal, rather than part of its case on the Bank’s appeal, then the costs attributable to the argument would be borne by Akai as part of the costs of the cross-appeal, which it is common ground that it should bear.  However, it is noteworthy that the Bank does not put its case in that way – and rightly so.  Akai ran the knowing receipt argument in connection with both the Bank’s appeal and its own cross-appeal.

11.  It is ultimately a matter for the taxation process as to whether the costs incurred in connection with that argument are to be treated as (a) attributable only to the appeal (on the basis that the costs of the cross-appeal are only to be treated as incurred in so far as they would not have been incurred on the appeal in any event), or (b) apportioned (possibly but not necessarily equally) between appeal and cross-appeal.

12.  If option (a) is adopted on taxation, then, given that the costs of arguing the knowing receipt point were, for the reasons discussed above, reasonably incurred by Akai in connection with the appeal, such costs should, in principle, be recovered from the Bank, and, in so far as there were any extra costs incurred in relation to the argument on the cross-appeal, they would be borne by Akai.  If option (b) is adopted, the costs of the argument will be borne in part by each party.  On either approach, there would be no reason to depart from the prima facie view that the Bank should pay 100% of Akai’s costs of the appeal.

13.  Accordingly, the order as to costs we think it right to make is that the Bank pay 100% of Akai’s costs of the Bank’s appeal, and Akai pay 100% of the Bank’s costs of Akai’s cross-appeal.  As for the costs of the written argument on costs, they must be paid by the Bank, as Akai has succeeded in obtaining the order as to costs which it seeks, over the Bank’s arguments to the contrary.  

Mr Eugene Fung (instructed by Messrs Baker & McKenzie) made written submissions for the appellant in FACV 16/2009 and respondent in FACV 9/2010

Messrs Hogan Lovells made written submissions for the respondent in FACV 16/2009 and appellant in FACV 9/2010