INDIAN CORRIDOR SDN BHD AND ANOTHER v. CHINA IDEA DEVELOPMENT LTD AND OTHERS

HCA 1/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1 OF 2008

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R U L I N G

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Introduction

1.  On 24 October 2008, I had before me a summons for directions, taken out by the 1^st Defendant, dated 3 September.  It sought standard directions in respect of the forthcoming enquiry as to damages which is to be heard over a number of days starting on 9 April next year.

2.  The Plaintiffs appeared by their newly instructed solicitors, who had come on the record the previous day.  The Defendants were represented by leading counsel and solicitors.  It is a feature of this case that at all of the previous contested hearings, the parties have fielded leaders to appear for them.  At the hearing on 24 October, I made an order which broadly reflected the terms of the summons and which only deviated from it in respect of the length of time that would be allowed for the various steps to be carried out.  My order was that the Plaintiffs would have to file and serve their witness statements within 35 days of the date of the order and that within 14 days after that the Plaintiffs are required to identify any issue or issues that are said to require the assistance of experts for agreement by the 1^st and 2^nd Defendants.   Failing agreement, the matter is to be listed before me for directions.  Finally, the Defendants are to file their witness statements in reply (if any) within 35 days thereafter.

3.  This order having been made, counsel for the Defendants asked for orders for costs in their favour to include the costs of instructing leading counsel and that these costs be taxed and paid forthwith by the Plaintiffs.  After some argument, I directed that written submissions should be lodged largely in order to give Mr Darton, who had only been instructed the previous day to appear for the Plaintiffs, to have more time to familiarise himself with the papers.  The final round of written submissions has been sent to the court on 14 November and I am now in a position to give my ruling on costs.

The Arguments

4.  Mr Darton submits that the usual order on such occasions is one of costs in the cause and that no doubt that is why the 1^st Defendant drafted its summons seeking such an order.  What the Plaintiffs’ case comes to is that the Defendants’ instruction of leaders has been an unnecessary extravagance for which the Plaintiffs should not bear any consequences as to the costs of that particular decision.

5.  The Defendants, given the pre-hearing correspondence with the Plaintiffs’ previous solicitors, had anticipated a substantial contest on the day in which they were fearful of the Plaintiffs seeking to extend the ambit of the enquiry at the trial which would had a substantial impact on how the enquiry would have to be conducted in terms of issues and the evidence to be called on those issues.

6.  In the event, what had been foreshadowed in that correspondence did not eventuate on the day and such argument as there was fell within a narrow compass and was easily resolved by me.  As to that Mr Darton, submits that just because there was far less of a contest on the day than may have been anticipated by the Defendants, does not justify a departure from the usual order of costs in the cause.  This after all is what not infrequently happens and nobody suggests that on such occasions that there should be an order for costs between the parties, let alone one for the payment of costs for the appearance of Senior Counsel when such hearings are more than adequately conducted by solicitors who are familiar with the case.

7.  The correspondence passing between the parties then solicitors and the Defendants’ solicitors has been referred to in some detail in the written submissions.  Mr Darton submits that when one looks at the position, there was no relevant correspondence after the issue of the summons on 3 September.  What one gets from that is that had there been an anticipated contest on the summons that must have been apparent before the issue of the summons and yet the summons itself only sought an order of costs in the cause.  The Defendants, having decided to instruct leaders, should not now be allowed to resile from the stance that they had chosen to adopt on costs in the summons.

8.  It seems to me that the matter needs to be tested against an appraisal of the relevant correspondence which the parties have attached to their submissions.

9.  As this is a question of whether the instruction of leading counsel was justified a convenient starting point is the letter dated 26 August from Robertsons, who were then representing the Plaintiffs.  By that stage, it had become clear on the correspondence that the parties were in disagreement as to the content and the order of compliance of the directions that were to be sought from the court.  On the 2^nd page of their letter, Robertsons said this:

“Perhaps you can let us know as to whether or not you want the matter to be restored for a hearing or if you consider there is any merit in trying to reach an agreement rather than trouble the judge, and if this is restored, whether you want the restored hearing to involve counsel (our view is that this not necessary but we would like to hear from you in this regard).” [My emphasis]

And so, whatever the disagreements as to the content of the directions and their scope, Robertsons were expressing the view that counsel was not necessary on the restored hearing if one was to take place.  By the following day, it appeared that the matter would need to come before the court because there were at that stage, rival sets of directions upon which I would have to rule on.  Robertsons wrote to the court on 27 August (copied to the Defendants’ solicitors) suggesting a brief directions hearing at which the rival approaches on directions could be explored with the court, pointing out that the Defendants’ solicitors had, as an alternative, suggested that the two differing orders be presented to the court for the court to consider and decide what order to make, without the necessity of a hearing.  Presented with these alternatives, I directed an oral hearing with an hour set aside to consider the various proposals.  This was done on 29 August.  On 3 September, the 1^st Defendant’s solicitors issued their summons. 

10.  The only letter that I have been shown after the date of the summons is that dated 11 September from the 1^st Defendant’s solicitors asking for an early sight of the Plaintiffs’ anticipated amended-defence.  That letter received no response.

11.  Thereafter, there was silence.  Robertsons were permitted to come off the record on 20 October and on the 23^rd, the present solicitors came on the record and the summons was heard the following day.  Up to that point, the Plaintiffs stated position was that they wished to amend their defence and there was a question about whether those amendments would seek to venture into forbidden territory so far as the Defendants were concerned, including Robertsons stated intention to plead issues relating to the alleged invalidity of the Management Agreement upon the basis of the claim being pursued in related proceedings in Malaysia which had been embargoed by this court as being in breach of an anti-suit injunction that the Defendants had obtained from me in February 2008.

12.  The Defendants’ justification for appearing by leading counsel is that they feared that they were going to be taken by surprise at the hearing of the summons with a proposed amended-defence which sought to do precisely that.  This widening of the Plaintiff’s case was to be strenuously opposed and in any event it had added ramifications in terms of the evidence to be filed, including expert evidence.  In the context of the enquiry, this was very important and it required representations at this senior level.  In the event, at the hearing of the summons of 24 October, there was no application to amend the defence and the matter proceeded in a very straightforward way.

13.  So far as the Defendants are concerned this was all a waste of time.  Had the Plaintiffs made their position clear much earlier, only solicitors would have appeared on behalf of the Defendants.  The Plaintiffs had caused this to happen by not saying what they intended to do beforehand and in the circumstances of this hotly-contested case, it was reasonable to have leaders.  Costs have been wasted and these costs should now be borne and paid for forthwith by the Plaintiffs.

Conclusion

14.  Whilst this case has suffered from a paucity of communication, it strikes me that fault is to be found on both sides.  No doubt, by September and certainly by October, Robertsons were having little communication with their clients.  Robertsons’ summons to come off the record had been issued in early September which may account for the absence of a reply to the 1^st Defendant’s solicitors’ letter of 11 September.  Nevertheless, it strikes me that if a party is going to justify having an order for costs being made in its favour and for those costs to include the costs of leading counsel, they should have indicated their intention to appear by leading counsel at least a few days before the hearing.  This they did not do.  In this regard, it seems to me that Robertsons’ letter to them on 26 August telling them that they did not consider it necessary to appear by counsel at the directions hearing is something that I ought to have regard to.  This aspect of the letter had not been responded to by the Defendants.  Had the Plaintiffs appeared with a leader on 24 October, which is what the Defendants say they feared and expected, and the Defendants only by solicitors and not by counsel, it seems to me that this letter could have been referred to by those representing the Defendants.  In the event that the Plaintiffs were to ask me to make highly controversial orders which the Defendants wished to have argued by their own leading counsel it would have been reasonable to expect that in such circumstances, where contrary to the expectation, as expressed in the letter of 26 August, that only solicitors would appear for the Plaintiffs and they in fact came armed with a leader that the Defendants could have obtained an adjournment to instruct their own leading counsel to ague the issues on their behalf.

15.  As it happened, the Plaintiffs appeared by solicitors and the Defendants by their leading counsel for what turned out to be a very straightforward hearing.  In my judgment, if the Defendants are to succeed in getting an order for costs in respect of leading counsel, they will need to show firstly, that the matter was of sufficient importance and complexity to justify a leader and that it was reasonable in the circumstances to have done so.  For my part, without having indicated by letter to the plaintiffs’ solicitors that they were minded to take that course on the hearing of summons where they had said on the face of summons that they would ask for an order of costs in the cause and, against the background that Robertsons had said on 26 August that they did not believe that this was a case for counsel, let alone leading counsel, I consider that the Defendants must now bear the consequences of that decision.  This quite apart from the question of whether there should be an order for costs between the parties.  I accept Mr Darton’s submission that this is one of those summonses which one frequently comes across where what appears to be a highly contested matter substantially falls away at the door of the court and is largely settled save for some fine tuning by the court.  This was a summons that was always likely to require a hearing in court.  I had directed such a hearing which in the event went reasonably short.  The Defendants’ concerns about being taken by surprise on the day by a leader on the other side ready to argue for a substantial enlargement would have exposed the Plaintiffs to the very real risk of an adjournment with costs against them, in order that the Defendants should have an opportunity to be similarly represented.  In my judgment, the appropriate order for costs is one of costs of the cause.  If the Defendants succeed in the enquiry then they will get these costs but limited to a taxation for representation by junior counsel only to which they would have been entitled in the High Court.  Leaders on this occasion were simply not justified.  This costs order will of course also include the preparation of these written submissions.