東莞市枝記市場投資管理有限公司 AND ANOTHER v. YIP KWOK CHI

HCA 1072/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1072 OF 2014

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D E C I S I O N

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Introduction

1.  This court handed down a judgment on 3 June 2016 (“Judgment”) and ordered that :

(i) P1’s claim for the 1^st Debt in the sum of RMB 4m be dismissed;

(ii) D shall pay P2 the 2^nd Debt in the sum of HK$850,000 within 28 days hereof with interest from date of writ at 1% over prime rate until date of this judgment, and thereafter, at judgment rate until payment;

(iii) All D’s counterclaims against P2 be dismissed.

2.  This court ordered that there should be no order as to costs, including all costs reserved (“Order Nisi”).

3.  In this decision, I shall adopt the abbreviations in the Judgment, unless otherwise stated.

4.  Ps applied for variation of the Order Nisi and sought an order that Ps be awarded one third of the costs.

Ps’ case

5.  There is no dispute on general legal principles and Ps’ Counsel Mr Li had referred to In re Elgindata Ltd (No 2) [1992] 1 WLR 1207 which held, among other things, that costs are in the discretion of the court and normally should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made.

6.  Mr Li further submitted that a successful party should be prima facie entitled to the full costs of the action, and that the burden was on the losing party to show that there was good reason to depart from the general rule, as seen in Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 4), [2005] 4 HKC 162.

7.  Mr Li pointed out that although in the Judgment, this court had said that neither P1 nor D was wholly successful in their claim/counterclaim, however, this court did not mention P2, and as P2 was successful over his claim over the 2^nd Debt, no specific reference had been made as to P2’s success in the Judgment.

8.  Mr Li then referred this court to Akai Holdings Ltd (In Liq) v Thanakharn Kasikorn Thai Chamkat (Mahachon) [2008] 6 HKC 82 where it was held, among other things that Hong Kong courts had no predisposition requiring them to be more ready to make separate costs orders reflective of the outcome of different issues in the litigation.

9.  It was not Mr Li’s submission that separate costs orders should be made in relation to P1’s claim and P2’s claim.  He submitted that as the issues in this case could not be isolated, the facts were intertwined and in the absence of evidence indicating a wastage of time and costs, Ps costs should be considered as a whole, instead of considering the success or failure of the separate claims.

10.  Neither Mr Li, nor Mr Jim appearing for D, had referred the court to Order 62 rule 5 of the Rules of the High Court which states:

“(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

(aa) the underlying objectives set out in Order 1A, rule 1;

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2);

(d) any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g) any admissible offer to settle made by a party, which is drawn to the Court's attention.

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes-

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

Discussion

11.  The 2^nd Debt was evidenced by the 2^nd Debt Agreement and 3 Batches of Cheques.  In the D&C, D simply denied what was pleaded in the statement of claim in relation to the 2^nd Debt and the 3 Batches of Cheques.  P2 was not cross examined at all by D’s Counsel on the 2^nd Debt or the 3 Batches of Cheques and further the cross examination by Ps’ Counsel of D in relation the 2^nd Debt was not lengthy, bearing in mind the oral evidence of both P2 and D only lasted one day.  Although P2’s claim in relation to the 2^nd Debt was successful, the time spent on this claim was less than the time spent on the 2^nd Debt.

12.  Most of the time during the trial was in relation to the 1^st Debt. I accept that as the background leading to both claims was the same, it could not been said that P2 was being unreasonable in combining his claim with P1’s claim.    

13.  It would appear from P2’s son’s witness statement that P1 was established in 1999 by P2 and controlled by P2 and it was not until 28 April 2013 that P2’s son became the legal representative.  Further, the prosecution case during the criminal trial was that the 1^st Debt was owed to P2.  Notwithstanding that there were 2 claims, one brought by P1 and the other brought by P2, it was clear that, even over the 1^st Debt, the disputes were really between P2 and D.

14.  During the trial, it was really P2’s word against D.  I did not find either P2 or D an entirely credible witness.  I had preferred to rely on contemporaneous documents and/or previous statements made by P2 and D.  In any event, one of the main reasons why Ps were not successful in its claim over the 1^st Debt was their own failure to prove that P2’s own Counsel had put forward a different case during the Criminal Trial without P2’s instructions.  That P2 should be bound by his case at the Criminal Trial was D’s defence and had been pleaded in the D&C, and at one stage D had pleaded estoppel, and thus Ps should have been put on notice in relation to this issue as early as June 2014. Ps had had ample opportunity to call evidence/witness regarding this issue but had not done so.  D had successfully defended the claim over the 1^st Debt and arguably should be entitled to costs against P1 and such costs would in my view exceed any costs if such was awarded against D over the 2^nd Debt.  Thus, I am of the view that, if there were to be apportionment of costs on a broad basis, P1 would have ended up having to pay a portion of D’s costs.

15.  D had not sought any variation of the Order Nisi to reflect his successfully defending the claim made by P1 against him over the 1^st Debt although this appeared to be one of the grounds of appeal in his Notice of Appeal against the Judgment.  However, this court was told that D had not proceeded with his appeal.  In any event, notwithstanding that P1’s claims against D over the 1^st Debt was dismissed, in my view, D should be deprived of any costs as a result of any apportionment, and this was because of D’s own evidence during the trial.  As pointed out in the Judgment, D himself had changed his version of events several times and his evidence was not consistent with his previous statements.  In the end, the court did not find in favour of D’s case and in fact D’s counterclaim was dismissed.  What the court found probably took place or more plausible version of events was what was put to D during the criminal trial by P2’s then counsel even though this was not P1’s case at this trial.      

16.  It was after considering all the circumstances of the case and the parties’ conduct that in the end the Order Nisi was no order as to costs.  Costs are in the discretion of this court.  Having considered the parties’ submissions, I maintain my view that a fair order should be no order as to costs as between all the parties, and I am not persuaded that the Order Nisi should be varied.

Conclusion

17.  In the above circumstances, I dismiss Ps’ application to vary the Order Nisi.

18.  Costs of Ps’ variation application be to D’s in any event, such costs to be summarily assessed unless agreed between the parties.  D is to submit his statement of costs within 7 days, and Ps to submit their list of objections within 7 days.  The summary assessment will be on paper.