WONG TO YICK WOOD LOCK OINTMENT LTD v. YUE FUNG DISPENSARY CO LTD t/a YUE FUNG DISPENSARY

HCA 3382/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3382 OF 2016

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SUMMARY ASSESSMENT OF COSTS

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1.  By an order made on 17 May 2017, I allowed the plaintiff’s application by summons dated 6 April 2017 for judgment against the defendant in default of defence and further ordered the defendant to pay the plaintiff’s costs of the action including the costs of the application for default judgment and the hearing on 17 May 2017, to be summarily assessed.

2.  By its statement of costs dated 22 May 2017, the plaintiff claims $98,773.

3.  The defendant (which is purporting to act in person without leave of the court) has not raised any objection based on the necessity or reasonableness of the steps taken, or the costs incurred, by the plaintiff.  It merely appeals to the court:

(1)   to reduce the amount, making the point that the defendant is also a victim because it was misled by its supplier and had no idea that the goods that it was selling infringed the plaintiff’s intellectual property rights; and

(2)   to allow payment by 12 monthly instalments because the amount involved is relatively substantial and the defendant runs a small business.

4.  The court does not automatically allow the costs claimed by a plaintiff in the absence of specific objections by the defendant but would still assess such costs according to established principles.  In making summary assessment of costs, the court follows a two-stage approach.  The court will first take a global approach, which will indicate if the total sum claimed is or appears disproportionate.  If the costs as a whole are not disproportionate, then all that is required is each item of cost should be reasonably incurred.  Where the costs as a whole appear disproportionate, the court will need to be satisfied that each item was necessary, adopting a “sensible standard of necessity” which take into account the different judgments of those responsible for the litigation as to what is required.  See Hong Kong Civil Procedure 2017, volume 1, paragraph 62/9/10, citing Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.

5.  In light of the court’s experience of dealing with actions involving similar causes of action (i.e. passing off and trademark infringement) and resolved by default judgments, the amount of costs claimed by the plaintiff does appear to me to be disproportionate, having regard to the facts that the only documents required to be filed and served by the plaintiff were a generally indorsed writ of summons, a statement of claim, a summons for default judgment and two affirmations of service; that the plaintiff had to attend to the service of documents on the defendant only twice; and that the plaintiff had to attend one very short court hearing.

6.  I therefore turn to the individual items to see if they were necessarily incurred.

7.  As far as I can work out from the plaintiff’s statement of costs, about 60% of the costs claimed (i.e. $59,825) arose out of the retention of counsel to advise, settle papers and attend court as follows:

Item of Work	Amount
Attendance on counsel by solicitors: Partner – 5 minutes Assistant solicitor – 2 hours 5 minutes Trainee solicitor – 15 minutes	$333 $4,167 $325
Work done by counsel: Perusal of papers, advise by email and settling statement of claim Perusal of statement of claim and settling summons to enter judgment in default Attending hearing of summons for default judgment	$12,000 $3,000 $40,000
TOTAL	$59,825

8.  This is not the first time the plaintiff enforces its intellectual property rights.  It routinely does so. The plaintiff’s claims against this particular defendant, as pleaded in the indorsement of claim and statement of claim, do not involve any peculiar features.  Indeed, they seem standard.  The plaintiff knew or ought to have known that there would not be any or any effective opposition to its application for default judgment.  In these circumstances:

(1)   I am not satisfied that it was necessary for counsel to be instructed to attend the hearing of the summon for default judgment on 17 May 2017 so that counsel’s brief in the sum of $40,000 should be deducted.

(2)   As for the said other sums totalling $19,825, I am prepared to proceed on the basis that it was necessary to have some input from counsel to ensure that the papers were in order but not to the extent claimed.  I will allow a sum of $12,000 for necessary counsel’s advice and associated attendance on counsel by solicitors.

9.  I order the defendant to pay the plaintiff costs in the amount of $50,948 ($98,773 - $59,825 + $12,000) within 21 days from the date hereof.

10.  I am not prepared to entertain the defendant’s causal request by letter for instalment payments.  If the defendant wishes to pursue a formal application for stay of execution of the costs order, it should take out a summons supported by an affidavit.