BRUCE PORTER BARON v. HARTFORD FIRE INSURANCE CO AND OTHERS

CACV 166/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 166 OF 1998

(On appeal from HCA No. A9031 of 1993)

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J U D G M E N T

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Rogers, J.A. :

1. The 2nd and 3rd Defendants appeal in respect of costs in this matter.

2. The argument starts on the basis that no objection is raised to the order made by the Judge below whereby he deprived the 2nd and 3rd Defendants of their costs. Complaint however is made that the Judge ordered the 2nd and 3rd Defendants to pay the costs of both the 1st and 4th Defendants and the Plaintiff's costs. The Judge in dealing with the question of costs had first dealt with the 2nd and 3rd Defendants' costs and he started at page 41 by saying that :-

"They were responsible for this action being brought and for the delays since 1973. It would not have been necessary had Mr. Fredricks done what was required of him. It is a great regret that I have had to make the findings I have, in respect of a 70 year old businessman, who is a qualified lawyer with considerable experience in the insurance world, and has spent nearly 30 years in business in Hong Kong. It has taken this expensive action to enable the Plaintiff to ascertain what he was entitled to know, and could so easily have been told within a few days, all that long time ago. It has brought him no tangible benefit but it is small wonder that over that period of time notions of fraud and conspiracy have loomed in his mind. That delay has deprived him of a contemporaneous judgment as to whether the estate was entitled to a return of premiums."

3. The Judge then concluded that under Order 62 rule 3(3), it was proper to make an order for costs depriving the 2nd and 3rd Defendants of their costs.

4. In dealing with the 1st and 4th Defendants, the Judge said :-

"It was the acts and omissions of the 2nd/3rd Defendants which effectively brought these Defendants into this action. They contended that they acted as agents for the 1st/4th Defendants. That also kept them in the action. Had the 2nd/3rd Defendants wished, they could have pleaded a case and/or come to an agreement which would have released the 1st/4th Defendants from the action. The proposal form was at the heart of the question of liability under the policy. Its existence would have the release the insurance company from any involvement. The 2nd/3rd Defendants unarguable breach of duty had prevented that from being the case. The 1st/4th Defendants are entitled to have their costs. They have succeeded in this action. Their involvement is entirely attributable to the failures of the 2nd/3rd Defendants and to the case pleaded by the 2nd/3rd Defendants. It would be unjust for the Plaintiff to have to bear their costs. It is just in my view that the 2nd/3rd Defendants should pay the costs of the 1st/4th Defendants."

5. Our attention, in this respect, is drawn to the case of Knight v Clifton and others reported, amongst other places, in 1971 2 All ER 378. At p.389 of the Report, Sachs, L.J. said :-

"It is inevitable that from time to time there must arise instances in which the justice of the case demands that a successful defendant should pay the costs, by which I refer to the full costs, of the proceedings despite his success. Obviously this will only rarely happen, but it would be a defect in our system if in those rare cases the courts could not do what was just."

Later on, on the following page, the Judge cited from a judgment of Evershed M.R. in Ottoway v. Jones, [1955] 1 W.L.R. 706, where he said at p. 713 :-

"..... to make the defendant, who, in the end, succeeds in the sense that no relief is ordered against him, pay the costs of the plaintiff, who fails in the sense that no relief is obtained at his suit, requires a strong and exception case."

Further down, Sachs, L.J. continued :-

"It is, of course, impossible as well as undesirable to attempt to define what constitutes a strong or exceptional case, but to my mind it can include occasional rare cases in which the conduct of the defendant has brought about the proceeding or in which his conduct causes its continuance or in which he escapes the normal consequences of his blameworthy conduct by reason of some unexpected matter which he knew but which the plaintiff could not know."

6. In my judgment, the Judge below fully appreciated that the order that he was making was an exceptional order. He appreciated the effect of his order but he took into account the exceptional circumstances of the case and appreciated the rareness of the situation which had arisen and having set out these facts made the order which he did. I also observe that it was a lengthy trial in which much no doubt took place which has not been aired in this Court.

7. In all those circumstances, I cannot see that it would be right to interfere with the exercise of the Judge's discretion as to costs.

8. Turning then to the Plaintiff's costs in the Court below, the Judge said :-

"Although the Plaintiff has not established any loss, his action was eventually necessitated by the breach of duty of the 2nd/3rd Defendants. The loss and/or destination of vital documents was not his fault. It was the fault of the 2nd/3rd Defendants in that they created the environment in which that occurred. He was deliberately misled in that the 2nd Defendant made a positive decision not to give correct information. He has had to pursue his action in order to ascertain whether the estate had a valid claim under the policy. He had a duty in that regard. He certainly was not able to achieve this without this litigation. Although it has not brought him a judgment for damages, it has called the 2nd and 3rd Defendants to account. Once again I have to state that had the 2nd and 3rd Defendants acted properly in 1973, no litigation would have been necessary. It is just and fair that the 2nd and 3rd Defendants should pay the Plaintiff's costs."

9. Finally, the Judge alludes to the unusual nature of the case and the discretion which is vested in the Court. Again, I can see no grounds on which to interfere with the exercise of the Judge's discretion in this regard.

10. I would accordingly dismiss the appeal.

Godfrey, J.A. :

11. I agree; but in deference to the excellent argument addressed to us by Mr. Egan on behalf of the 2nd and 3rd defendants, I will add a few words of my own.

12. Mr. Egan pointed out (correctly, as it seems to me) that the position in 1990, and thereafter while this action was being commenced and prosecuted, was very different from what it had been in 1973. By 1990, the plaintiff had much more information available to him than he had in 1973. He ought, therefore, to have taken another look, by 1990, as to the good sense or otherwise of this litigation.

13. That is a fair point; but nevertheless the judge came to the conclusion that the justice of the case required that the 2nd and 3rd defendants here, although successful, should pay the costs both of the 1st and 4th defendants and of the plaintiff. I would be prepared to support an order such as that only in a strong and exceptional case. But the judge felt that this was such a strong and exceptional case, and I can see no sufficient reason to disagree with him.

14. There is no judgment which cannot be criticised on some point, because not everybody attaches the same weight for all the reasons which may be given for the conclusion reached, as Du Parcq, L.J. pointed out in Collett v. National Fur Co. Ltd. (1945) 78 Lloyd's List Law Reports 1 at p.3. This is a case in which different minds might attach different weight to different factors, but the judge, at the end of it all, weighing up, as he was bound to do, the merits and demerits of the claims for costs advanced against the 2nd and 3rd defendants, came to the clear view that the justice of the case required the order which he made and I am not prepared to disagree with him.

15. For these reasons, I, too, would dismiss this appeal.

Mortimer, V.-P.:

16. It is most unusual for a judge to order a successful litigant to pay the costs of an unsuccessful litigant. It can only happen in the most exceptional case. Here the judge below fully appreciated that he was making such an unusual order. He came to the conclusion that the exercise of his discretion to make such an order was necessary in order that justice should be done. He set out his reasons which have been referred to by Rogers JA in his judgment. Those reasons were amply supported by his findings in his judgment. It is only in exceptional cases, also, that this Court will interfere with a judge's discretion. There are no grounds upon which we should interfere with the judge's discretion in this case.

17. In those circumstances I also would dismiss this appeal.

18. We see no exceptional grounds for making other than the usual orders in the two appeals that have been in front of us. In each case, the costs will follow the event. That means in each case the successful respondent will receive the costs of the appeal.

Representation:

Mr. Kevin Egan & Mr. James Chandler instructed by Messrs. Massie & Clement for 2nd and 3rd Respondents (1st & 2nd Defendants)

Mr. Geoffrey Ma, S.C. & Mr. Daniel Wan instructed by Messrs. Lovell White Durrant for 1st & 4th Respondents (2nd & 3rd Defendants)

Plaintiff (1st Respondent) in person

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No. 166
(Civil)

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J U D G M E N T

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Leong, J.A.:

1. The plaintiff commenced an action on 7th October 1993 against the 1st and 4th defendants in contract and against the 2nd and 3rd defendants in tort. On 18th December 1997, after trial, Seagroatt J. dismissed the plaintiff's claim against all the defendants but on 6th March 1988 he made a costs order nisi that the 2nd and 3rd defendants pay the costs of the other parties. The judgment on liability was perfected on 21st January 1998 and the costs order nisi was made absolute on 11th March 1998. The time prescribed for lodging an appeal against judgment expired on 4th March 1998. The 2nd and 3rd defendants applied ex parte to a single judge of this court for leave to appeal against the costs order dated 6th March 1998 made absolute on 11th March 1998. I granted leave on 23rd June 1998. Notice of Appeal was accordingly filed as was the plaintiff's "Respondent's Notice and Cross-Appeal".

2. On 24th July 1998, the 1st and 4th defendants took out a summons to strike out the Notice of Appeal of the 2nd and 3rd defendants and the plaintiff's/Respondent's Notice and Cross Appeal. On 31st October 1998, 2nd and 3rd defendants amended their grounds of appeal by a Supplemental Notice of Appeal. On 10th November 1998, the 2nd and 3rd defendants again amended their Supplemental Notice of Appeal.

3. Subsequent to the leave granted on 23rd June 1998 to appeal against the costs order, it was discovered that the 3rd defendant had been struck off the company register on 29th March 1996 by the Registrar of Companies under s.290A of the Companies Ordinance. However, the 3rd defendant was restored to the Company Register on 11th September 1998. All parties agree that under s.290A(6) of the Ordinance the effect of the 3rd defendant's restoration is that the 3rd defendant "is deemed to have continued in existence as if its name has not be struck off." It was the consensus that validity of the leave to appeal granted to the 3rd defendant was no long a live issue, and the renewed application for leave to appeal made ex abundante cautela by Mr. Egan for the 3rd defendant was therefore withdrawn.

4. The 1st and 4th defendants indicate that in view of Supplemental Notice of Appeal and the Amended Supplementary Notice of Appeal, they would not proceed with their summons for striking out against the 2nd and 3rd defendants but they would seek costs against them. The outstanding matter in this appeal is therefore their application to strike out the plaintiff's Respondent's Notice and Cross Appeal.

5. The plaintiff in his Respondent's Notice and Cross Appeal seeks an order that the costs order under appeal be affirmed.

6. Mr. Wan submits that the plaintiff's prayer is formulated in two parts: to affirm or vary the costs order on additional grounds and to challenge the same by what would appear to be an effective appeal against the judgment on liability. This is a back door attempt to reopen the judgment on liability which is final and has been perfected for some time and the time for appealing against it has long expired. The mounting of, in effect, an appeal against the judgment on liability should not be permitted. On the other hand, Mr. Brown says that he is entitled to re-open and matters of evidence evaluation and factual issues in order to illustrate the errors in the costs order.

7. Turning to the summons to strike out the plaintiff's Respondent's Notice and Cross Appeal, insofar as the plaintiff seeks to affirm the costs order on additional grounds, each and every so-called additional ground is founded on an attack at and criticism of determinations of the judge and/or his evaluation of the evidence in the trial. It is only at the conclusion of a trial when matters are decided that the judge would proceed to consider, in the exercise of his judicial discretion, the question of costs. The matters decided cannot be challenged except in an appeal against the judgment. Without any appeal against the judgment of the judge in this case, the costs order could not be impugned on the basis of any error in the matters so decided. Costs are to be considered and granted in the overall circumstances of the case as decided by the judge in his judgment. In the consideration of costs after trial, a judge invariably guides himself by matters he has decided and those matters could not be reopened in a challenge solely against a costs order by a litigant. Time for appeal against the judgment has expired, and no party may appeal against the judgment without leave.

8. Insofar as the Respondent's Notice and Cross Appeal seek to challenge matters upon which the judge relied in giving judgment, the purported appeal against the judgment of the judge is out of time. No party may challenge findings of fact and rulings on law in an appeal exclusively against a costs order. Those matters could only be questioned in an appeal against the judgment itself. Time for lodging an appeal against the judgment has long elapsed, and that is another obstacle which the plaintiff is unable to overcome. Clearly, the plaintiff's Respondent's Notice and Cross Appeal must be struck out in its entirety for the absence of any conceivably arguable grounds of appeal.

9. Moreover, the plaintiff subjects his Cross Appeal to the condition either that "the appeal being allowed ...... against (the costs order) in that judgment" or that "(the costs order) being affirmed on grounds other than those relied upon by the court below". These conditions are not very easy to follow but it is not suggested that either of these two conditions has been fulfilled.

10. This is not a technical objection as it is important for a party in an appeal to disclose reasons to his adversaries so as to enable them to, at least, understand what case they have to meet. In conclusion, the plaintiff's Respondent's Notice and Cross Appeal must be struck out with costs to D1 and D4.

11. For the above reasons, the plaintiff's Respondent's Notice and Cross Appeal should be struck out with costs to the 1st and 4th defendants.

12. On the question of costs, since the 1st and 4th defendants do not proceed against 2nd and 3rd defendants in their application to strike out, what is the justification for departing from the usual rule that costs are to follow the event? Mr. Wan says that the summons was taken out simply because of the Notice of Appeal filed on 6th July 1998. The Supplemental Notice of Appeal filed on 31st October 1998 was "in place of" the original grounds. Mr. Wan concedes that the 1st and 4th defendants would not seek to strike out the Supplemental Notice of Appeal.

13. D1 and D4 had notice of the Supplemental Grounds of Appeal "in place of" the original Grounds of Appeal at or about the end of October 1998, some 3 weeks before the hearing of this appeal. I do not accept D1 and D4's excuse of requiring time to take instructions. No satisfactory explanation was given for not withdrawing part of the summons of D1 and D4 seeking to strike out D2 & D3's Notice of Appeal as amended. D1 and D4 should have the costs of the issuance of their summons to strike out against D2 and D3 but they should not be given the costs of today. D1 and D4 did not withdraw their summons for striking out against D2 and D3. D3 came armed with its own summons for leave to appeal out of time against the costs order. D3's summons was in fact proceeded with and later withdrawn. In my view, D1 and D4 should have the costs of the issuance of the summons for striking out against D2 and D3. D2 should have costs of today's hearing against D1 and D4 as D2 had to attend in response to the application of D1 and D4 on their summons to strike out which had not been withdrawn. D3 is, in my view, in a different position. D3 came with its own summons and later withdrew it. As between D1 and D4 on one hand and D3 on the other, in my view, there should be no order as to costs for the hearing of this appeal.

Liu, J.A.:

14. I agree.

Nazareth, V.-P.:

15. I also agree.

16. I would add the following. The plaintiff did not agree with all that Seagroatt J. held and said in his judgment. But having had enough of the litigation and also having regard to the costs order nisi which subsequently became absolute, that D2 and D3 were to pay his costs (and also those of D1 and D4), he decided to call it a day on the basis of that order. He accordingly did not appeal.

17. Then out of time, and when time for him to appeal had also expired, D2 and D3 applied ex parte and obtained leave from Leong J.A. to appeal against the costs order. The relief they sought was that instead of the costs order made, the plaintiff should be ordered to pay D2 and D3 costs, and not only their costs but also D1 and D4's costs.

18. Not surprisingly, he decided to resist the appeal. I pause here to note that the plaintiff has represented himself for a substantial part of the protracted proceedings. In the process he has, for a layman, acquired considerable skill in putting forward his case. Indeed, this has led Mr. Wan to submit that he should be regarded as if he were a qualified legal practitioner. I unhesitatingly reject that submission, particularly in the context of the present applications. I cannot conceive of any legal practitioner getting his tackle as tangled up as the plaintiff has in his attempts to affirm the costs order.

19. The plaintiff's primary objective, as he explained it, was to ensure that the costs order was not upset. To that extent, he only wished to have that order affirmed. But if the appeal against the costs order was allowed, then he would want to appeal against the judgment order dismissing his claim. He sought to express these objectives in the following way in his respondent's notice and cross-appeal:

"FOR AN ORDER THAT the Judgement be affirmed or affirmed on grounds other than those replied upon by the Court below and that the 2nd Defendant does pay to the Plaintiff his costs of this appeal to be taxed if not agreed.

AND FURTHER TAKE NOTICE THAT in the event of the appeal being allowed, in whole or in part against that Order in that Judgement, or if that Order be affirmed on grounds other than those relied upon by the Court below, Plaintiff Respondent Cross Appeals against the 1st Order in that Judgement, whereby it was ordered that Judgement be entered against the Plaintiff in favor of all Defendants;

AND FOR AN ORDER THAT the decision be varied in whole or in part, and a Judgement be entered in favor of the Plaintiff against the 2nd Defendant and that 2nd Defendant does pay to the Plaintiff and the 1st & 4h Defendants the cost of this action, to be taxed if not agreed"

20. Immediately following that he listed twenty grounds with numerous sub-paragraphs, all of which, so far as I can see, are directed against the judgment, and not against the costs order. In effect, these are only grounds in support of a cross-appeal against the judgment. Most of these appear to claim that findings in favour of the 2nd and 3rd defendants or against the plaintiff are inconsistent with other specific findings also made by the judge or inconsistent with the evidence. In this welter of grounds, there are some incidental matters mentioned, i.e. findings and bits of evidence, that would go to the affirmation of the costs order.

21. The respondent's notice and cross-appeal consist in substance of what is a cross-appeal. This, it is submitted by the 1st and 4th defendants, he cannot bring out of time through the back door without leave.

22. However, O59 r6 of the Rules of the High Court provides in effect that there are three kinds of respondent's notice:

"(a) to contend on the appeal that the decision of the court below should be varied, either in any event or in the event of the appeal being allowed in whole or in part, or

(b) to contend that the decision of the court below should be affirmed on grounds other than those relied upon by that court, or

(c) to contend by way of cross-appeal that the decision of the court below was wrong in whole or in part"

23. Having regard to (a), it would seem that the plaintiff may well be entitled to seek his second relief upon the contingent basis that he places it, i.e. "in the event of the appeal being allowed in whole or in part" to the order, that judgment be entered against the plaintiff in favour of all defendants be varied.

24. The net result of all of the foregoing may be that the plaintiff is entitled to proceed upon some or all of the grounds upon which he seeks to rely by means of his respondent's notice, with the reference to "cross appeal" deleted or disregarded. This aspect of the matter was not addressed before us. It was for the applicants before us, i.e. the 1st and 4th defendants, to address it.

25. It may be that with only some textual deletions or amendments the respondent's notice and cross appeal should be permitted to stand and not be struck out. In that matter it seems to me that this Court should not overlook the fact that the plaintiff is acting in person.

26. In the result it seems to me that the 1st and 4th defendants have not made out a case for the whole of the respondent's notice and cross-appeal to be struck out. The 1st and 4th defendants, it prima facie seems to me, have taken too extreme a stand in seeking the striking out of the respondent's notice and cross-appeal in its entirety. They did not require this to protect their position on the dismissal of the plaintiff's original claim, which he made clear at the hearing he was not concerned to pursue, except upon a contingent basis which would not arise.

27. In any case, the appropriate and just order would be to adjourn the application for further argument to a date to be fixed. This would enable the 1st and 4th defendants to make further submissions if they wished; the plaintiff to apply to amend his notice appropriately or take other steps he thought fit; or the parties to reach some acceptable arrangement. If no such steps were taken to dispose of the application within 4 weeks, I would have the application re-listed and dismiss it.

28. However all of that may be, given the views of Liu and Leong JJ.A., by a majority the plaintiff/respondent's 'Notice and Cross Appeal' is struck out with costs orders nisi to the effect favoured by my Lords.

Representation:

Bruce Porter Baron, Plaintiff/1st Respondent in person

Mr. Daniel Wan, instructed by M/S Lovell White & Durrant for 1st Defendant/2nd Respondent and 4th Defendant /3rd Respondent

Mr. Kevin Egan, instructed by M/S Massie & Clement for 2nd Defendant/1st Appellant and 3rd Defendant/2nd Appellant