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The Plaintiff applied to the Court to vary an order nisi on interest and costs, on the basis of a sanctioned offer made to the Defendant. The Plaintiff was successful in its action against the Defendant for repayment of funds in two bank accounts held with the Defendant.
The Defendant argued that the Plaintiff’s sanctioned offer had been withdrawn by subsequent “without prejudice” offers made by the Plaintiff which did not constitute sanctioned offer.
Deputy Judge Mr. Alfred Chan held that on the evidence, the sanctioned offer made by the Plaintiff was not withdrawn by the Plaintiff’s subsequent “without prejudice” offers. Moreover, he held that it was not unjust to make enhanced interest and costs orders in the circumstances of this case. Accordingly, Mr. Alfred Chan made an enhanced interest order (interest at the judgment rate plus 1%) and an enhanced costs order (costs on an indemnity basis plus interest on costs at the judgment rate plus 1%) against the Defendant.
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This article is available in [2010] 11 HKDRB.
In this case, the Plaintiff issued a Case Management Summons seeking various directions from the Court. Both parties did not file any Timetabling Questionnaires or Mediation Certificates, nor did they discuss with each other as to the progress of the case.
At the hearing of the Case Management Summons before Mr. Registrar Lung, the Plaintiff asked the Court to give directions as if it were a summons for directions under the pre-CJR regime. The Defendant did not object to the Plaintiff’s proposal.
Mr. Registrar Lung, however, refused to give any case management directions. He said that the Plaintiff’s proposal is tantamount to a “total disregard of the Civil Justice Reform and the Orders, the Rules and the Practice Directions made for the reform“. Mr. Registrar Lung adjourned the hearing of the Case Management Summons to a later date, and ordered that there be no order as to costs (given that both sides failed to comply with the new rules), and that the solicitors from both sides should not recover costs from their respective clients in respect of the hearing of the summons.
Hong Kong Dispute Resolution Bulletin: For full analysis of this case subscribe to the Sweet & Maxwell HKDRB, produced in association with Clifford Chance.
This article is available in [2010] 11 HKDRB.
This was a review of taxation.
The Plaintiffs commenced the present proceedings against the Defendants in February 2007 seeking injunctive relief and damages for the Defendants’ breach of Plaintiffs’ right of way towards a piece of land. After withdrawing the proceedings against the 2nd and 3rd Defendants, the Plaintiffs continued to pursue its case against the 1st Defendant and at trial the Plaintiffs applied to exclude a large portion of “irrelevant” expert evidence prepared by both parties. The Honourable Mr. Justice Chung agreed with the Plaintiffs and ruled that only certain parts of the parties’ expert evidence were admissible. The Plaintiffs were awarded with the costs of their application to exclude the evidence but the learned judge did not deal with the costs of the Plaintiffs to prepare their excluded expert evidence. The Plaintiffs later issued an application before the trial judge to amend the costs order, which was dismissed on 3 November 2009.
After trial the Court gave judgment in favour of the Plaintiffs. The Plaintiffs were granted injunctive relief against the 1st Defendant and an order nisi was made against the 1st Defendant to pay the costs of the action. The order nisi became absolute in the absence of an application for variation of the order nisi.
When the Plaintiffs filed its taxation bill in March 2009, the parties disputed whether the Plaintiffs should be allowed the costs expended in preparing the evidence having been ruled as “inadmissible” or “excluded“. Master Wong ruled against the Plaintiffs.
At the taxation review the Plaintiffs lodged three objections, namely that (i) the Defendant should not have been allowed to pay only 1/3 of the costs for the period where all 3 Defendants were still in the picture; (ii) the Plaintiffs should recover their costs to prepare their own inadmissible or excluded expert evidence; and (iii) the taxing master should not have ordered a 2% deduction upon the overall taxed costs in favour of the 1st Defendant to compensate the extra time taken by the Plaintiffs’ application to amend the costs order.
The Court dismissed all the matters raised by the Plaintiffs. Mindful of the fact that there was no fast and hard rule in doing appointment of costs between co-parties, Master Wong remained of the view that it was proper to require the 1st Defendant to pay only 1/3 of the costs, for the reason that during the period when all 3 defendants were involved, significant time and resources were spent on the 2nd and 3rd Defendants.
Turning to the Plaintiffs’ objection that they should be able to recover their costs to prepare their own inadmissible or excluded expert evidence, Master Wong ruled that the costs of the inadmissible evidence cannot be recovered unless otherwise ordered by the trial judge.
Master Wong considered it was appropriate to order the 2% deduction upon the overall taxed costs in favour of the 1st Defendant as there was no reason why the 1st Defendant should be “punished” to pay more interest to the Plaintiffs for the extra time taken by the Plaintiffs to seek an amendment of the costs order before the Trial Judge.
Finally, in addressing the Plaintiffs’ contention that their Counsel fee incurred was reasonable as it was necessary and proper for them to resort to Counsel of similar standing as those engaged by the 1st Defendant, Master Wong held that:
“Upon careful thought, I have declined to change any of my decision on Counsel’s fee. In doing so, I remind myself of the principles as stated under paragraphs 62/App/31 to 48 of HKCP 2010 at page 1154-1156, including that it is not a sound principle on party-and-party taxation to treat the fee paid by the other party as a yardstick.”
Accordingly, the Court dismissed the Plaintiffs’ Review of Taxation and followed the general rule that costs follow the event. An order nisi was made for the Plaintiffs to pay the costs of the review.
Hong Kong Dispute Resolution Bulletin: For full analysis of this case subscribe to the Sweet & Maxwell HKDRB, produced in association with Clifford Chance.
This article is available in [2010] 10 HKDRB.
The joint and several liquidator of Tsz Wan Shan Limited (the “Company”) rejected a proof of debt filed by Luk Ngai Ling (the “Creditor”). The Creditor was dissatisfied with the decision of the liquidator and applied to the Court in accordance with r.95 of Companies (Winding Up) Rules (Cap.32H Sub.Leg.) to reverse the decision. The Creditor was successful in its application, and the Court made an order nisi that the Creditor’s costs be paid out of the assets of the Company.
The liquidator, however, did not realise any assets out of which the Creditor’s costs could be paid. The Creditor therefore applied to the Court to vary the costs order nisi to the effect that the Creditor’s costs be paid by the liquidator and that the liquidator will recoup such costs from the assets of the Company. The Creditor argued that if there is a shortfall in the assets of the Company available to pay costs, it is the liquidator (rather than the Creditor) who should suffer.
The Honourable Mr. Justice Harris rejected the Creditor’s argument. He held that the correct costs order should be that both the Creditor’s costs and the liquidator’s costs be paid out of the assets of the Company and that the Creditor’s costs be paid in priority to those of the liquidator’s costs.
Hong Kong Dispute Resolution Bulletin: For full analysis of this case subscribe to the Sweet & Maxwell HKDRB, produced in association with Clifford Chance.
This article is available in [2010] 9 HKDRB.
In an action by the Plaintiff bank against the guarantor, the Court upheld the guarantee and found in favour of the Plaintiff, with an order nisi that the Plaintiff was to have the costs of the action, to be taxed if not agreed. The Plaintiff brought an application to vary the costs order nisi that declined the Plaintiff’s request that costs be awarded on an indemnity basis, in reliance of a contractual provision under the Guarantee which provided for indemnity costs to be paid to the Plaintiff bank in recovery of moneys due to it. The Plaintiff also argued that the Court should certify the case as being fit for two counsel.
The Honourable Mr. Justice Stone declined to follow the English decision in Gomba Holdings (UK) Ltd v Minories Finance Ltd (No. 2) [1993] Ch 171, which was cited for the principle that the discretion of the Court in making costs orders should normally be exercised to reflect a contractual right to costs, if any. The Court formed the view that the exercise of the court’s jurisdiction as to costs cannot be fettered by any contractual costs provision. In the absence of any frivolous, unarguable and wholly unsustainable points raised by the Defendant, the Court perceived no basis to depart from the usual order that the losing party is to pay the other party’s costs on the normal “party and party” basis and dismissed the Plaintiff’s application to vary the order nisi.
Turning to the issue on whether there was a requirement for a judge to give a certificate for two counsel for their costs incurred in a High Court open trial to be allowed in taxation, the Court held that the post-Civil Justice Reform position was that no costs were to be allowed in respect of the appearance of two or more counsel before a High Court judge in open court unless the judge has certified such attendance as proper, pursuant to paragraph 2(3) of Part II of the First Schedule to O.62 under the Rules of the High Court of Hong Kong (Cap.4A, Sub.Leg.). In relation to costs of proceedings other than attendance in court, such costs, in the absence of a court order allowing two counsel on taxation, remain a matter of the taxing master’s discretion. In the present case the Court certified the trial to have been fit for two counsel.
Hong Kong Dispute Resolution Bulletin: For full analysis of this case subscribe to the Sweet & Maxwell HKDRB, produced in association with Clifford Chance.
This article is available in [2010] 7 HKDRB.
This is an application by the Respondent to vary a costs order nisi with respect to the Applicant’s unsuccessful application for leave to challenge the enforcement of an arbitral award pursuant to s.23(3)(b) of the Arbitration Ordinance. The Respondent argued that costs should not be taxed on a party to party basis. Instead, costs should be awarded in its favour on an indemnity basis.
It is clear that the introduction of the Civil Justice Reform reinforces the parties’ overriding duty to assist the Court in a just, cost-effectiveness and efficient manner. The Court applied the decision of the Honourable Mr. Justice Reyes in A v R [2009] 3 HKLRD 389 and ordered that costs be awarded on an indemnity basis.
The Honourable Mr. Justice Saunders gave effect to the underlying objectives under the O.1A, r.1 of the Rules of the High Court (Cap. 4A) as implemented by the Civil Justice Reform and held that the unsuccessful application to challenge an arbitrator’s award was unmeritorious and that an indemnity costs order should be made against the party who unsuccessfully challenged the enforcement of an arbitral award.
His Lordship allowed the Respondent’s application and ordered the Applicant to pay the Respondent’s costs on an indemnity basis and awarded a certificate for the two counsel instructed in the action.
Hong Kong Dispute Resolution Bulletin: For full analysis of this case subscribe to the Sweet & Maxwell HKDRB, produced in association with Clifford Chance.
This article is available in [2010] 5 HKDRB.
This case demonstrates the court’s approach to an application for variation of costs orders and provides helpful guidance on the application of the “issue-based approach” in awarding costs post-CJR.
In February 2010, Justice Lam made an order nisi that costs of the plaintiff in the action be borne by the 1st defendant on indemnity basis. The plaintiff applied to vary the costs order nisi.
The 1st defendant argued that he should not be required to bear all the costs of the plaintiff because the plaintiff had failed on several issues which justified either (i) ordering the plaintiff to pay the 1st defendant costs of such issues or (ii) depriving the plaintiff of the costs on such issues following the reasoning in In re Elgindata (No 2) [1992] 1 WLR 1207. The 1st defendant referred the court to some aspects of the plaintiffs conduct of the case and submitted that the plaintiff should be deprived of some of the costs. On a global basis, the 1st defendant submitted that the plaintiff should be deprived of 50% of its costs.
Justice Lam referred to O.62 r.5 of the Rules of the High Court which set out the matters the court should take into account in the exercise of its discretion to order costs, including the conduct of the parties. Justice Lam considered that the starting point was to consider the conduct of the 1st defendant. On the facts, Justice Lam found that the 1st defendant was aware that the 2006 will was a forged document when he sought to propound it before the court. Also, Justice Lam found that the 1st defendant told lies to support his claims. In light of the circumstances, Justice Lam held that the appropriate costs order was for the 1st defendant to pay the plaintiff’s costs on an indemnity basis, except for specific qualifications in relation to the costs spent on expert evidence on the issue of testamentary incapacity and in relation to costs of a failed application by the plaintiff to adduce further evidence.
In reaching his decision, Justice Lam also considered the application of the “issue-based approach” in awarding costs after the implementation of the CJR. By virtue of O.62 r.5(1) & (2), the Court is entitled to examine the conduct of the parties in considering whether to adopt an issue-based approach in awarding costs. When a losing party seeks costs on a particular issue, Justice Lam’s view is that by reason of O.62 r.7(1), the losing party has to show that the issue was raised improperly or unnecessarily.
Hong Kong Dispute Resolution Bulletin: For full analysis of this case subscribe to the Sweet & Maxwell HKDRB, produced in association with Clifford Chance.
This article is available in [2010] 2 HKDRB.
In the present application, the defendants sought to vary a costs order nisi to the effect that costs of the action be taxed on an indemnity basis and interest on such costs at a rate not exceeding 10% above judgment rate.
The defendant applied for a variation of the costs order nisi on two alternative bases: (1) the court’s general discretion to order costs against the plaintiff on an indemnity basis under O.62 r.28(2) of the Rules of the District Court; and (2) the court’s specific discretion to order indemnity costs and enhanced interest under O.22 r.23 of the Rules of the District Court.
The plaintiff failed to establish liability in the action, and was beaten by the sanctioned payments made by the defendants before the trial.
Having considered all the circumstances, Judge Leung varied the costs order nisi to the effect that the defendants be awarded with costs of the action, with costs of and since the commencement of the trial be taxed on an indemnity basis and interest on such costs at 4% above the judgment rate until payment.
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This article is available in [2009] 26 CJRA.
This case illustrates the application of O.62A r.19 of the Rules of the High Court which provides for the costs consequences where upon taxation a party with a costs order in its favour fails to better a sanctioned payment made by the paying party.
The plaintiff’s action for breach of copyright was settled by way of a consent summons. Costs were to the plaintiff to be taxed. Upon taxation, while the plaintiff beat the defendants’ first sanctioned payment, the plaintiff failed to beat the defendants’ second sanctioned payment.
The court ruled that the plaintiff should not be penalised for not settling at an earlier stage or for failing to seek summary assessment of costs. However, on the issue as to whether the costs sanctions under O.62A r.19 apply, Madam Registrar Au-Yeung held that there was nothing in the present case to exempt the plaintiff from the costs consequences imposed by the rule and accordingly ordered the plaintiff to bear the defendants’ costs on indemnity basis from after the date the second sanctioned offer was made, with interest thereon at three per cent above judgment rate to the date of payment.
Furthermore, the court found that the plaintiff acted unreasonably by claiming disproportionate costs and disallowed the costs of taxation incurred even before the date the second sanctioned payment was made and some of the interest.
CJR Alerter: For full analysis of this case subscribe to the Sweet & Maxwell CJR Alerter, produced in association with Clifford Chance.
This article is available in [2009] 24 CJRA.
In the present case, the parties disposed of an injunction application with “costs to be paid by the Plaintiff to the Defendant on a party and party basis to be taxed if not agreed“. The defendant commenced taxation proceedings but the plaintiff applied for a stay on the ground that O.62 r.9D only permits the defendant to do so after the action is completed.
Before the Civil Justice Reform came into force, the position was that unless a costs order included the words “in any event“, it would be taken to mean “taxation and payment forthwith“. Such an interpretation was considered unsatisfactory as there was an apparent inconsistency between O.62 r.4(1) and O.14 r.7(1) which vest the court with the discretion to determine the incidence of costs and to require those costs to be paid and taxed forthwith, on the one hand, and O.62 r.11(1) which entitles a party to proceed to tax his costs without an order directing the taxation of those costs, on the other hand.
While the above rules are retained, r.9D has been added to O.62 since the implementation of the Civil Justice Reform on 2 April 2009. It was held that the effect of r.9D is to reverse the previous unsatisfactory position. Rules 9D (1) and (2) allows taxation after conclusion of an action unless the costs order specifies taxation to be “forthwith” or at some designated time. The adding of the words “to be taxed” without “forthwith” does not entail immediate taxation. By this construction, O.62 r.4(1) and O.14 r.7(1) will give the court discretion to determine the incidence of costs, as well as discretion to specify taxation forthwith but in the absence of its exercise, the taxation will be done at the end of the action.
Accordingly, as the costs order in the present case did not specify taxation to be “forthwith“, the taxation proceedings were stayed until the action had been completed.
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This article is available in [2009] 22 CJRA.
