ALAN SOH v. THE OWNERS OF THE VESSEL "COLUMBUS CARAVELLE"

HCAJ282/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO.282 OF 2000

---------------------

Admiralty Action in rem against the ship or vessel M.V.
"COLUMBUS CARAVELLE"

----------------------

-------------------------

J U D G M E N T

-------------------------

1. The Writ in rem in this Admiralty Action in rem was issued on 14 November 2000 as result of this High Court, in High Court Miscellaneous Proceedings No.5887 of 2000, granting leave on 13 November 2000 for the plaintiff to register as judgment in Hong Kong, the Malaysian Judgment dated 8 November 1999 ("November 1999 Malay Judgment") in the Malaysian Action No.KG.27-10-1995-I ("Malay Action"). The plaintiff registered judgment in HCMP5887 of 2000 on 14 November 2000 ("HK Judgment"). The vessel was arrested on 14 November 2000 in this AJ Action No.282 of 2000 ("HK AJ Action") and upon security provided by the defendants, the vessel was released. The application by the defendants to set aside the registration in Hong Kong of the Malay Judgment was dismissed by my judgment dated 14 May 2002 ("May 2002 HK Dismissal Order"). Following the May 2002 HK Dismissal Order, the defendants issued in this HK AJ Action, the motion dated 29 May 2002 to set aside the service of the Writ and Warrant of Arrest ("HK AJ Set Aside Motion"). Under that HK AJ Set Aside Motion, the parties appeared before the court on 14 June 2002, 20 August 2002 and 10 December 2002.

2. In Malaysia, by summons dated 27 August 2002 (some three months after the May 2002 HK Dismissal Order and the HK AJ Set Aside Motion and some 33 months after the November 1999 Malay Judgment) the defendants sought to set aside the November 1999 Malay Judgment. By order dated 20 November 2002, the Malaysian Court set aside the November 1999 Malay Judgment ("November 2002 Malay Set Aside Order"). By order dated 27 February 2003, the Malaysian Court acceded to the defendants' application to strike out the claim in the Malay Action and entered Final Judgment against the plaintiff ("February 2003 Malay Final Judgment"). By summons dated 6 June 2003 ("June 2003 AJ Discontinue Summons"), the plaintiff applied for leave to discontinue this HK AJ Action and for the costs of this HK AJ Action including the HK AJ Set Aside Motion to be paid by the defendants to the plaintiff. The defendants resist this June 2003 AJ Discontinue Summons and ask for the costs of the HK AJ Action including the costs of the HK AJ Set Aside Motion to be paid by the plaintiff to the defendants.

3. Order 21 of the Rules of the High Court provides for discontinuance of action as follows :

"2(1) Subject to paragraph (2A), the plaintiff in an action begun by writ may, without the leave of the Court, discontinue the action, or withdraw any particular claim made by him therein, as against any or all of the defendants at any time not later than 14 days after service of the defence on him or .......

3(1) Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular claim made by him therein, without the leave of the Court, and the Court hearing an application for the grant of the such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just."

4. Order 62, rule 7 of the Rules of the High Court provides as follows :

"7(1) Where in any cause or matter any thing is done or omission is made improperly or unnecessarily by or on behalf of a party, the Court may direct that any costs to that party in respect of it shall not be allowed to him and that any costs occasioned by it to other parties shall be paid by him to them.

(2) Without prejudice to the generality of paragraph (1), the Court shall for the purpose of that paragraph have regard in particular to the following matters, that is to say

(a)	the omission to do any thing the doing of which would have been calculated to save costs;
(b)	the doing of any thing calculated to occasion, or in a manner or at a time calculated to occasion, unnecessary costs;
(c)	any unnecessary delay in the proceedings."

 

5. The plaintiff seeks leave to discontinue the HK AJ Action because he is relying on the wide power of costs given to the court under Order 21, rule 3(1). A discontinuance without leave under Order 21, rule 2(1) would entail by reason of Order 62, rule 10, the payment of costs in the HK AJ Action by the plaintiff to the defendants. The plaintiff however is seeking payment by the defendants to the plaintiff of costs of the HK AJ Action or at least of the AJ Set Aside Motion and this explains why the plaintiff is asking for leave of the court to discontinue the HK AJ Action under Order 21, rule 3(1) and seeks at the same time for the exercise of the court's power under that provision to order payment of the costs of the HK AJ Action by the defendants to the plaintiff. The plaintiff says that the defendants should pay these costs because the costs incurred by the plaintiff in the HK AJ Action had been wholly wasted and that the defendants could have and should have taken its steps in the Malay Action very much earlier.

6. The first question to consider in this present dispute (concerned exclusively with costs) is whether the defendants could have taken the steps much earlier in the Malay Action. The two essential steps taken by the defendants in the Malaysian Court which resulted in the plaintiff seeking in June 2003 to discontinue the HK AJ Action are firstly the November 2002 Malay Set Aside Order and secondly February 2003 Malay Final Judgment. It is to be observed that these two important Malay Order and Judgment were made 24 months and 27 months respectively after the issue of the HK AJ Action or some 36 months and 39 months respectively after the November 1999 Malay Judgment.

7. The defendants as new owners of the vessel was well aware of the November 1999 Malay Judgment as early as April 2000 but took no step to set aside that November 1999 Malay Judgment. When the HK AJ Action was started in November 2000 with the arrest of the vessel based on the Hong Kong registration of the November 1999 Malay Judgment, still no step was taken to set aside that November 1999 Malay Judgment. Instead the defendants sought to set aside the Hong Kong registration of the November 1999 Malay Judgment and it was only after the long argument before me in April and November 2001, when it was apparent that the resistance by the defendants to registration in Hong Kong of the Malay Judgment was going to be lost that the defendants started looking for alternative step to take in the Malay Court. It is to be noted that it was some three months after my May 2002 HK Dismissal Order that the defendants issued the August 2002 summons in the Malay Action to set aside the November 1999 Malay Judgment. The November 2002 Malay Set Aside Order and the February 2003 Malay Final Judgment then followed very quickly. These two vital Malay Order and Judgment could have been and should have been obtained much earlier, before 2002 and certainly long before the incurring of heavy costs in the HK AJ Action. In my judgment and I hold as a fact, the incurring of substantial costs in the HK AJ Action now the subject of dispute was caused by the failure of the defendants to take the appropriate steps in Malay Court much earlier. If the appropriate steps were taken in the Malay Court much earlier, the HK AJ Action costs would not have been incurred.

8. The combination of the November 2002 Malay Set Aside Order and the February 2003 Malay Final Judgment render the HK AJ Action purely academic, because whatever so called free standing claim in rem for wages in the HK AJ Action cannot survive the February 2003 Malay Final Judgment against the plaintiff. I do not see how after the February 2003 Malay Final Judgment was entered against the plaintiff, the Hong Kong Legal Aid Department could possibly permit the spending of public fund on the continuation in Hong Kong of a hopeless cause under the HK AJ Action. The plaintiff had no alternative after February 2003 but to seek leave to discontinue the HK AJ Action and to terminate any wasting of further costs in that HK AJ Action. The question is what is the fair and just costs order to make in respect of this abortive HK AJ Action.

9. In my judgment the HK AJ Action was made abortive because of the inaction of the defendants in Malaysia. The costs incurred for this abortive HK AJ Action should therefore in my view be borne by the defendants and I do not accept the submission of Mr Smith for the defendants that there could be or should be no order as to costs of the HK AJ Action. I ask myself why the Hong Kong tax-payers should bear the costs of the defendants not taking proper steps in Malaysia earlier. I cannot possibly imagine if the defendants had taken the proper steps earlier and had by 2000 (or even 2001) set aside the 1999 Malay Judgment and obtained Final Judgment in Malay Action against the plaintiff that any substantial costs in the HK AJ Action would be incurred.

10. Mr Smith argued as a final resort that there is authority against my ordering costs against the defendants under Order 21, rule 3(1). In the case of RTZ Pension v. ARC [1999] 1 AER 532, the Court of Appeal in England held on facts very different from the facts of this case that the plaintiff who sought leave to discontinue the action which had reached the trial stage, should be ordered to pay the defendant the costs of the action as the plaintiff had conceded defeat in the action.

11. So far as jurisdiction of the court to award costs to the discontinuing plaintiff against the defendant is concerned, I agree with Lord Justice Potter's view (at 541c) that there is no question of the court not having jurisdiction having regard to the terms of Order 21, rule 3(1) ("on such terms as to costs ... as it thinks just").

12. What I find difficult is to accept the opening premise of Lord Justice Potter (at page 541e to g) of the defendant's entitlement to costs where there was discontinuance in circumstances amounting to defeat. It seems to me that the confinement of the power of the court to award costs against the defendant to where costs have been wasted or unnecessarily incurred as result of the defendant's conduct of the proceedings is too restrictive and may not be consistent with the very wide powers given to the court under Order 21, rule 3(1) ("on such terms as to costs ... as it thinks just").

13. Without in any way trying to analyse the correctness of the judgment from page 541g onwards, as a starting point it is relevant to bear in mind that a statutory discretion given to the court must not be too fettered by rules although of course a higher court can give guidance to the lower court of what considerations to take into account in the exercise of discretion and what considerations should be ignored as being irrelevant (see Ward v. James [1966] 1QB 295D-E).

14. To import into Order 21, rule 3(1), the restrictions and considerations set out in Order 62, rule 7 seems to me in effect to fetter the very wide statutory discretion given in Order 21, rule 3(1). Order 21, rule 3(1) is designed to govern the very restricted situation of seeking to discontinue an action with leave. Order 62, rule 7 is of much wider application generally. Some of the considerations set out in Order 62, rule 7 may of course in appropriate circumstances be taken into account in the exercise of the discretion under Order 21, rule 3(1). But the exercise of the discretion under Order 21, rule 3(1) must not however be confined to circumstances covered by Order 62, rule 7.

15. I therefore do not regard myself under Order 21, rule 3(1) as being confined to only the restricted situations of Order 62, rule 7 to order costs against the defendants. For reasons stated earlier, I regard it as being just in the circumstances to order the defendants to pay the plaintiff the costs of the HK AJ Action notwithstanding that the plaintiff is seeking leave to discontinue this HK AJ Action wholly.

16. In reality this is not a case of the plaintiff conceding defeat in the HK AJ Action. The plaintiff has been defeated already, not in Hong Kong but in Malaysia and in the presence of that defeat (Final Judgment) it is no longer any question of concession of defeat in Hong Kong. The reality is that the plaintiff has nothing to fight in Hong Kong. The HK AJ Action has therefore become abortive and the costs incurred for that abortive action could have been wholly avoided. It is to be noted that the HK AJ Action has become abortive not because of anything which had occurred in the Hong Kong Court but because of what had occurred in the Malay Court. Order 62, rule 7 does not normally envisage that action or inaction overseas might have a bearing on a Hong Kong action. Order 21, rule 3(1) gives the court the widest discretion including taking into consideration of what happened overseas which caused the present plaintiff to seek leave to discontinue. I have no doubt that in the proper exercise of the costs discretion given to me under Order 21, rule 3(1), the just order in this case on discontinuance is for the plaintiff to be paid by the defendants the costs of the HK AJ Action including the costs of the present June 2003 AJ Discontinue Summons.