Chan Shun Kei t/a Chan Shun Kei Construction Works v. Hong Kong Construction (Hong Kong) Ltd

CACV 192/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 192 OF 2014

(ON APPEAL FROM HCCT NO. 2 of 2011)

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BETWEEN

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.With leave granted on 10 September 2014, the Plaintiff in this action brought an appeal against the costs orders made by Deputy High Court Judge Burrell on 7 April 2014 in HCCT 2 of 2011 [“the Costs Order”]. The dispute between the parties was in respect of construction works undertaken by the Plaintiff (as a sub-contractor) for the Defendant (as a government contractor) in the widening of Tolo Highway. After a trial which was split into two parts, the judge gave judgment in favour of the Plaintiff in the sum of $1,182,933 with interest and dismissed the counterclaim by the Defendant. By the Costs Order, the judge ordered the Plaintiff to pay the Defendant 50% of its costs “for the Liability Trial” and ordered the Defendant to pay the Plaintiff 50% of its costs “for the Quantum Trial”.

2.Before we consider the arguments in respect of the appeal on costs, we should recite some background relating to the history of the action in order to understand what the judge meant by the Liability Trial and the Quantum Trial.

3.The construction works in question were done in 2001 to 2002 and rather unfortunately the contracts between the parties were not concluded in writing.  The plaintiff’s sub-contract was terminated in June 2002.  The action was commenced in June 2004 by the Plaintiff with legal aid. Initially, the Plaintiff claimed a sum of $10,928,055.22 plus a further unquantified damages claim for loss of profit. 

4.Based on the final account between the parties, the Defendant advanced a counterclaim for $3,075,738.21, arising largely from contra charges which the Defendant had paid on behalf of the Plaintiff.

5.By a re-amendment of the Statement of Claim on 28 September 2011, the Plaintiff reformulated the claim and increased the quantum to $40,873,216.52.  The reformulation came about by reference to a set of marked up drawings identified by the judge as the Blue and Yellow Drawings.  That figure was subsequently revised to $38,061,838.50 by a further amendment on 18 June 2013.

6.The Defendant had applied for direction for a split trial by a summons dated 20 June 2012.  It was opposed by the Plaintiff. On 12 September 2012, Au J dismissed the summons.

7.The action was set down for a 10-day trial before the judge, commencing on 13 January 2014.  The state of affairs as at the beginning of the trial was described by the judge at paragraph 2 of his judgment of 7 February 2014 [“the February judgment”] as follows:

“ Although the plaintiff has had the advantage of an unconditional legal aid certificate since 2002 the matter has proceeded at a disappointingly slow pace. Over that period the pleadings, written evidence and other paper exhibits have grown to 137 arch files. It was apparent at the outset of the trial, and agreed, that the 10 days (plus two extra reserved) would be insufficient to deal with all matters of liability and quantum. The quantum experts had been able to agree on very little and their combined reports ran to thousands of pages. A direction was therefore made, by consent, that the court time allotted would be spent on issues of liability only.”

8.The judge also directed an agreed list of issues to be prepared.  The agreed issues were set out at paragraph 4 of the February judgment:

“ (1) What were the terms of the oral agreement made in or around June/July 2001?

(i) Scope of the works to be completed by the plaintiff.

(ii) Applicable rates.

(iii) Other express terms.

(iv) Implied terms.

(v) How do the above affect quantum?

(2) What were the terms of the agreement made in around February 2002 (if any) (the “February Agreement”)?

(i) How does the February Agreement affect quantum?

(3) What were the terms of the Agreement made in March 2002 (if any) (the “March Agreement”)?

(i) How does the March Agreement affect quantum?

(4) What was the amount of work completed by the plaintiff? (Whether the “Blue & Yellow drawings” or the plaintiff’s 2003 final account shall form the basis of measuring the plaintiff’s work done?)

(i) How does this impact on quantum?

(5) What were the breaches of the agreement(s) (if any)?

(6) Was the termination of the contract rightful or wrongful?

(i) Is the plaintiff entitled to claim loss of profit?

(ii) How does the termination affect the quantum?

(7) Was the plaintiff liable for the contra‑charges claimed against him?

(8)   Was the plaintiff entitled to its claim in relation to geotextile and armour rock?”

9.These were the issues covered by the first part of the trial.  We can make two observations at this stage.  First, the reference to Liability Trial should be understood as an abbreviation for describing this part of the trial and the issues involved.  For the purpose of this appeal it does not matter very much whether they are all issues on liability or involve some issues on quantum.  Second, it must be remembered that prior to the first day of trial, there was no direction for split trial (application for such direction having failed before Au J) and the parties had prepared the case up to that stage on the basis that there would be a trial of all the issues in the action in January 2014.  Costs had been incurred on the same basis.  Whilst it must still be within the judge’s power of case management to give the direction he did (and we have no doubt that the judge had good reasons to do so given the state of affairs he described), the history of the preparation of the case and the costs that would have been incurred up to that stage must not be overlooked when one deals with the question of costs.

10.As it happened, the first part of the trial lasted for 11 days until 28 January 2014.  6 factual witnesses gave evidence. The judge is a very experienced judge on construction matters (having been the judge in charge of the Construction List for some time).  With his usual masterly management of the case and diligence, he was able to grapple with the arguments on those 8 issues and handed down his February judgment on 7 February 2014.  In that judgment, the judge analysed each issue with admirable clarity and conciseness.  Of those 8 issues, he resolved 6 of them in favour of the Defendant.  In respect of the terms of the agreements, out of issues 1 to 3, he only found in favour of the Plaintiff on issue 3.  Of the other issues, apart from some minor and insignificant sub-issues, he only found in favour of the Plaintiff on issue 8.  In terms of overall impact on the case, the findings of the judge in the February judgment resolved against the Plaintiff in respect of the reformulation of the claim based on the Blue and Yellow drawings and the claim for loss of profit. 

11.As a result, the Plaintiff had to ask his quantum expert to re-do his report.  The net effect was that by the time the parties came back to court in March 2014 for the second part of the trial, the Plaintiff’s claim was reduced to $5,915,712 whilst the Defendant counterclaimed for $2,428,757.  The second part of the trial lasted for 3 days, between 24 and 26 March 2014.  The judge heard evidence from the two quantum experts.

12.On 7 April 2014, the judge handed down his judgment and awarded judgment in favour of the Plaintiff in the sum of $1,182,933 with interest and dismissed the counterclaim by the Defendant.  He also made the Costs Order.

13.In his judgment of 7 April 2014, the judge considered the question of costs from paragraph 83 onwards.  At paragraph 87, the judge observed that as the litigation had unfolded the liability and quantum issues had become separate and separable.  He therefore decided to make separate orders for the liability trial and quantum trial.  He noted that there was no overlap between the two parts of the trial in terms of evidence, witnesses or issues.

14.The judge was of the view that the Defendant was the more successful party in the liability trial.  The judge did not agree with the suggestion of counsel for the Defendant that there should be pro-rata percentage approach on costs.  Exercising a broad discretionary judgment, the judge gave the Defendant 50% of the costs of the first part of the trial.

15.In respect of the second part, which the judge called the quantum trial, he took account of the relative success of the parties on issues raised in that part of the trial and the fact that the Plaintiff had to come to court to obtain the award in its favour and the dismissal of the counterclaim.  Again on a very broad exercise of discretion, the judge ordered the Defendant to pay 50% of the costs of the Plaintiff on “the quantum trial and preparation”, see paragraph 94 of the judgment.

16.However, in the Costs Order as drawn up in the sealed judgment filed on 22 April 2014, there was just one order for the Liability Trial and another order for the Quantum Trial.  The words “and preparation” in paragraph 94 of the judgment were somehow omitted.

What orders were actually made by the judge on costs?

17.After the sealing of the order, solicitors for the Plaintiff noted the omission.  An application was made by summons on 18 June 2014 seeking to amend the sealed order.  The summons was heard by M Chan J as by that time the judge’s term of office as a deputy judge had ended.  In that application, the then counsel for the Plaintiff sought to argue the judge distinguished the order he made for the liability trial from the order he made for the quantum trial in his written judgment.  Counsel contended that at paragraphs 88 to 91, the judge was only dealing with the costs relating to the actual hearing in January 2014 whilst the words “and preparation” at paragraph 94 were meant to cover all the preparation, actually all works done in the action other than those covered by the costs order on the Liability Trial. 

18.That submission did not find favour with M Chan J and she dismissed that application.  Leave to appeal was refused by M Chan J and the Court of Appeal.

19.M Chan J did not give a written judgment on that decision.  We have considered the transcript of the hearing.  It appeared that M Chan J was of the view (at least at some stage of that hearing) that the correct interpretation of the Costs Order was that the Defendant would have 50% of all the costs of the action incurred up to the January hearing and 50% of the costs incurred in that hearing.  The Plaintiff would have 50% of the costs incurred after that hearing and 50% of the costs incurred in the March hearing. 

20.Before us, counsel for both parties advocated a different construction on the Costs Order.  Mr Lee (counsel for the Plaintiff in this appeal but not below) as well as Mr Clayton SC (counsel for the Defendant, appearing together with Mr Lam who was also counsel at the court below) submitted the correct construction was that the Plaintiff had to pay 50% of the costs of the Defendant relating to the trial in January and 50% costs of the action incurred in respect of the 8 issues resolved in the February judgment.  However, they differed as to whether Plaintiff’s first quantum expert report should be regarded as costs of those 8 issues or costs of the second part of the trial in March. 

21.In light of our views below, we do not need to resolve the question of construction.  On any one of the three possible constructions (the construction of M Chan J or that of Mr Lee or that of Mr Clayton), we conclude that the Costs Order cannot stand.  We shall now explain our conclusion.    

Challenge to the Costs Order

22.It must be stated at the outset that this court should acknowledge that costs is very much a matter of discretion of the judge and we should be circumspect in interfering with the same.  The established approach is that this court will only interfere when it is satisfied that the decision of the judge is either wrong in principle or plainly wrong, see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419.  The rationale for this approach was explained by Woo JA (as he then was) in Ho Shu Kwong.  The trial judge is the best person to exercise the discretion on costs because he is most familiar with the conduct of the case at the trial and the impact of the success and failure on each issue canvassed before him.  In a way it is like an appeal against findings of fact.  As explained in numerous judgments (see e.g.  China Gold Finance Ltd v CIL Holdings Ltd CACV 11 of 2015, 27 November 2015), an appellate court is institutionally disadvantaged from re-assessing a decision of this nature as if it is hearing the matter in the first instance.  Thus, this court should examine whether a primary judge committed any palpable error in the exercise of the discretion on costs.  In the absence of such an error, the mere fact that the appellate judges might have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the decision of the primary judge. 

23.Mr Lee argued that the judge erred in principle in making order for costs against the Plaintiff in respect of the Liability Trial.  He also submitted that the judge was wrong in depriving the Plaintiff of 50% of its costs in the Quantum Trial. In his written submission, counsel took the position that as the case concerned a monetary claim and the Plaintiff succeeded in obtaining a judgment in his favour, he should be regarded as the successful party.  Since there was only one event in the whole action, he contended that the Plaintiff should get the whole of the costs of the action.  To be fair to Mr Lee, at the hearing he did not feel able to take this submission further than what he had already stated in his written submissions.

24.With respect, this submission must be rejected. Since the introduction of Order 62 Rule 5, in particular Rule 5(2), under the Civil Justice Reform, the courts are more ready to depart from the starting point of costs following the event: see Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2)[2012] 2 HKLRD 1128; Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679; Pfeiffer GmbH v Cheung Hay Kit CACV 245 of 2013, 29 October 2014.  Given the failure of the Plaintiff in respect of 6 issues out of the 8 issues addressed at the January trial and the impact of those issues in the substantial reduction of the Plaintiff’s claim and costs and time incurred on those issues, it is wholly unrealistic to suggest that the judge erred in principle in not giving the Plaintiff the whole of the costs of the action. 

25.We have no hesitation in rejecting Mr Lee’s submission that the issue based approach should not be applicable in the instant case because the so-called issues identified in the judgment constitute only one event.  Citing Seepersad v Persad (2004) 64 WIR 378, Mr Lee submitted that in the application of the issue based approach espoused by In re Elgindata (No 2) [1992] 1 WLR 1207, the court should only embark on that approach if an issue is something so distinct and separate in itself that the decision of it constitutes an event.  With respect, that is a too narrow interpretation of the issue based approach after the introduction of Civil Justice Reform.  Order 62 Rule 5(2)(a) and (b) particularly directs the court to consider the conduct of the parties including whether it was reasonable for him to raise, pursue or contest a particular allegation or issue and the manner in which a particular allegation or issue was pursued.  We do not think the “issue or allegation” in such context should be so narrowly confined.  Such narrow construction is not in line with Order 1A Rule 1. 

26.We are of the view that the judge was correct in taking the failure of the Plaintiff on those 6 issues into account in his overall assessment of costs.

27.Mr Lee then submitted that the judge erred in failing to have to regard to the fact that the Plaintiff was ultimately the successful party in this action, having an award made in his favour in a money action where there was no sanctioned payment.  Counsel submitted that the judge should not segregate part of the trial in assessing who was the overall winner.  Thus, in making the order for costs that he did in relation to the Liability Trial, the judge lost sight of the overall success of the Plaintiff and his need to come to court to obtain relief.

28.In this connection, we are of the view that Mr Lee is on firmer ground.  His contention is supported by the judgment of Longmore LJ in A L Barnes Ltd v Time Talk [2003] EWCA Civ 402 (subsequently endorsed by Pill LJ in ACT Construction v Mackie [2005] EWCA Civ 1336).  In that case, the learned judge held that it was an error of principle if a judge segregated a large element of costs before he decided who was the successful party in a monetary dispute. 

29.Though there had been a split trial in the present case, it came about in the rather exceptional circumstances as recited above.  We are of the view that the principle discussed by Longmore LJ should be equally applicable in the present context.  Bearing in mind how the split trial came about and the fact that prior to the first day of trial, parties proceeded on the basis that there would be a trial of all the issues, we do not think it is correct for the judge to ignore the ultimate success of the Plaintiff in considering the proper order for costs including the costs on the liability issues.  Actually, the liability issues are not determinative of the question of liability.  The claims of the Plaintiff were substantially reduced as a result of the determination on the 6 issues.  But the Plaintiff remains as the ultimate successful party in the action.

30.Mr Clayton defended the judge’s order by arguing that these different issues actually constituted individual claims by themselves and the Defendant was successful in such claims.  As such, the Defendant must be entitled to costs from the Plaintiff. 

31.With respect, we cannot agree.  It is clear to us that the claim by the Plaintiff remains as a claim arising from the construction works undertaken under the contract notwithstanding the different bases for quantification advanced by the Plaintiff.  Further, in essence, it is a matter of accounting between the two parties and ultimately the court is asked to determine which party owed money to the other party.  We do not think there is any special rule for construction cases.  The approach of testing who emerged as the successful party has been adopted in construction cases: see Chevalier (Construction) Co Ltd v Tak Cheong Engineering HCA 153 of 2008, 8 June 2011; ACT Construction v Mackie [2005] EWCA Civ 1336. 

32.Further, irrespective of the merits of giving costs of the 6 issues to the Defendant, we cannot see any justification for giving the Defendant all the costs incurred prior to the January trial.  Such costs must necessarily include costs on some issues which the Plaintiff succeeded at the end of the day.  Yet the effect of the Costs Order as construed by M Chan J would lead to such result.

33.The judge did not elaborate at length his reasoning for only giving the Plaintiff 50% of his costs in the Quantum Trial. It seems to us that he had adopted the suggestion of Mr Lam, counsel for the Defendant at the court below.  In his written submissions on costs, Mr Lam advocated such a reduction by reference to the decision in Chevalier (Construction) Co Ltd v Tak Cheong Engineering HCA 153 of 2008, 8 June 2011.  However, what actually happened in that case was that the court only deprived the successful plaintiff 50% of its costs though that plaintiff was unsuccessful over certain aspects of the case[1].  In contrast, in the present case, the combined effect of the Costs Order is that the successful plaintiff ended up with a net liability to pay the costs of the Defendant. 

34.This is the result of the judge wrongly segregating the costs of the first part of the trial from the overall position in the action. 

35.In our judgment, with great respect, the judge committed errors of principle in the Costs Order and this court should therefore intervene. 

36.We accept there are cases where over and above being deprived of his own costs, a successful Plaintiff could be ordered to pay a specific portion of the costs of the Defendant.  However, there is difference in principle between depriving a successful plaintiff some of his costs due to the outcome on some issues and ordering such plaintiff to pay the costs of the defendant on such issues.  As Longmore LJ observed, in cases of this nature, the most important thing is to identify the party who has to pay money to the other party.  It is only appropriate to order a successful plaintiff to pay the costs of the unsuccessful defendant where the plaintiff has to come to court to get the relief in a case where one can say the successful party has raised issues or made allegations improperly or unreasonably, viz a case falling within principle (iv) in the often cited judgment of Nourse LJ in In re Elgindata (No 2) [1992] 1 WLR 1207 at 1214. 

37.In this respect, at least in a case like the present one where it is essentially a monetary claim arising from cross-accounting in a commercial transaction, the introduction of Order 62 Rule 5(2) under the Civil Justice Reform does not modify this principle.  It is noteworthy that observation of Lord Woolf in AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1991] WLR 1507 at p.1523 on the relaxation of In re Elgindata (No 2) was related to the deprivation of a successful plaintiff of costs of an issue on which he had failed.  None of the Hong Kong post CJR cases cited to us suggests that Elgindata principle (iv) is no longer good law in Hong Kong.  There is at least one first instance authority supporting the proposition that principle (iv) has survived the CJR: see Chinachem Charitable Foundation v Chan Chun Chuen HCAP 8 of 2007, 16 April 2010 at paragraphs 44 to 47.   

38.Though the judge did resolve some major issues against the Plaintiff in both judgments, he did not find that the Plaintiff or his witnesses to be acting with bad faith or dishonesty.  At paragraph 59 of the February judgment, the judge found a witness of the Plaintiff to have misunderstood the position and maintained a misconceived stance.  At paragraph 67, the judge accepted that the Plaintiff advanced his case based on genuine belief though it was based on misinterpretation of what had happened.  At paragraph 71, the judge again referred to the Plaintiff’s belief based on what he perceived to be fair and reasonable.  At paragraph 94, the judge accepted that another witness’s evidence was based on perception held by him honestly though erroneous.

39.Mr Clayton made a forceful submission that the Plaintiff had acted unreasonably in pursuing various issues which was resolved against him in the February judgment.  In light of the judge’s findings, save and except the pursuit of quantification of claim by reference to the Blue and Yellow drawings (on which we shall elaborate below), we do not see any real basis for suggesting unreasonableness on the part of the Plaintiff in raising those allegations or issues.

40.The allegations relating to the Blue and Yellow drawings are more problematic and we have given careful and anxious consideration to the manner and circumstances in which they were first raised in 2011, some 8 years after the submission of final account by the Plaintiff and 7 years after the commencement of the action.  Mr Lee invited us to read the closing submissions lodged at the court below in respect of these allegations.  We have done so and we have also read the closing submissions of the Defendant in this respect.  We do not find any satisfactory explanation as to how the Plaintiff and his legal advisors could deem it viable to put forward such allegations notwithstanding that the Blue and Yellow drawings were made available to the Plaintiff in October 2002 (stating that they did not represent works completed by the Plaintiff) and now his witness Mr Law  (who had not deemed it appropriate to use the same for preparing the final account in 2003) decided after such long lapse of time they could be relied upon to substantially revise the claims from $10,928,055.22 to $40,873,216.52. 

41.Though, as Mr Lee submitted, the judge did not find Mr Law to be dishonest, the judge also found that contemporaneous documents were more helpful.  He further commented on the evidence of Mr Law on the Blue and Yellow drawings at paragraph 77(iii) and (iv) as follows:

“ (iii) No weight can be safely attached to Mr Law’s testimony that he remembered that the plaintiff had carried out certain areas of work (work that was included in the Blue & Yellow drawings but not included in the 2003 final account) when there were no documents to support his memory, and his 168 page witness statement was silent on the matter, bearing in mind that his testimony was over 12 years after the event.

(iv)   Mr Law did not use the Blue & Yellow drawings when preparing the final account which was completed in mid 2003.  The drawings were not used either in the preparation of the case leading up to the 2004 Statement of Claim.  Mr Law’s explanation was that it would have been time consuming (he estimated a two to three month exercise) and that his prime objective was to reach a settlement.  It is surprising that in the two years between leaving the site and the 2004 Statement of Claim, at a time when the plaintiff was frustrated about HKC’s unwillingness to pay over significantly large sums of money, and at a time when the plaintiff had the advantage of being legally aided, the Blue & Yellow drawings remained on the shelf.”

42.We are driven to the conclusion that it is consistent with the judge’s findings to conclude that the allegations based on the Blue and Yellow drawings were raised unreasonably.  The Plaintiff, with the benefit of legal representation, should have appreciated that the evidence to support those allegations was woefully inadequate.  To put forward revised claims in these circumstances is unreasonable notwithstanding the absence of finding of dishonesty.

43.We have therefore seriously considered requiring the Plaintiff to pay the costs of the Defendant arising from the allegations on the Blue and Yellow drawings.  To facilitate our consideration of the various options, we have invited parties to give us some information on the costs incurred on the same.  The estimate from Plaintiff shows that out of the total costs of the action in the sum of $13 million odd, about $2 million was incurred on account of the allegations relating to the Blue and Yellow drawings.  On the Defendant’s side, its solicitors estimated costs in the sum of about $6.25 million was incurred on that account. 

44.In the end, after due consideration of the information supplied by the parties, we think it would be more straightforward for us to adopt a global approach and impose a greater percentage of discount in depriving the Plaintiff of his costs to be recovered from the Defendant to reflect his unreasonable stance on the Blue and Yellow drawings in addition to his failure on other issues.  This would avoid having 2 sets of costs being taxed and save costs on taxation. 

45.Taking a global view, we think the Plaintiff should be deprived of 75% of the costs of the action.  

46.We therefore allow the appeal and set aside the Costs Order.  We shall also order the Defendant to pay 25 % of the costs of the Plaintiff in the action, such costs are to be taxed if not agreed. 

47.We also order the Defendant to pay the Plaintiff’s costs of this appeal and the costs in the applications for leave to appeal before M Chan J and in HCMP 1745 of 2014, such costs are to be taxed if not agreed.  There shall also be legal aid taxation regarding the Plaintiff’s own costs.

48.Lastly, we cannot leave this case without commenting on the costs and time spent on this piece of litigation.  According to the estimates provided by the parties, the Plaintiff incurred $14,425,685.80 as costs below (revised downwards to $13,762,235.80 in the figures provided by the law costs draftsman attached to a letter of 2 March 2016) whilst the Defendant incurred $25,800,000.  All this ended up in a judgment awarded in favour of the Plaintiff in the sum of $1,182,933.

49.Whilst we appreciate that the difference between the parties was much greater at the time of trial (the Plaintiff’s claim was $38 million odd whilst the Defendant’s counterclaim was $2 million odd), there should have been scope for narrowing the difference if the parties acted sensibly.  By the time of the trial, it was almost 12 years after the termination of the contract.  Unfortunately, according to the information provided to us, there had not been much effort in reducing the gap between the parties throughout that period.  There was no sanctioned payment or offer from the Defendant apart from an offer for both parties to drop hands in 2009.  On the Plaintiff’s side, the only offer was one to accept $25 million as settlement on 15 November 2013.  None of the offers was close to the mark and there was no following up after they were made.  There had been mediation.  However, in the Plaintiff’s costs figures, mediation expenses incurred were only $16,250.  That is a very tiny portion of the overall costs and from the figures alone one can tell that the mediation could not have lasted for more than a few hours.  We do not know why mediation ended without achieving anything.  Yet, it does appear to us that parties probably had not made any meaningful use of mediation.  There should have been scope for more mediation attempts, perhaps by the engagement of a more experienced mediator and with proper advice from the solicitors on the participation in the process responsibly and in good faith. 

50.Further, after the judgments below, there were subsequent proceedings and appeal on costs.  In respect of costs of this appeal and the applications for leave, according to the estimates provided to us, the Plaintiff incurred $1,244,469.03 whilst the Defendant incurred $2,268,000.  In addition, there had been another set of proceedings related to the unsuccessful attempt by the Plaintiff to amend the sealed Costs Order before M Chan J and HCMP 2302 of 2014.

51.On an overall view, we doubt very much if the Plaintiff or the Defendant would find this piece of litigation to be satisfying.  In light of the amount of costs incurred, the orders we have made and the legal aid first charge, the Plaintiff would probably get nothing out of the judgment sum awarded in his favour.  The legal aid fund would also be out of pocket as the judgment sum plus the costs recovered from the Defendant would not be sufficient to cover costs actually incurred on behalf of the Plaintiff.  The Defendant incurred costs liability towards the Plaintiff (for costs here and below) and it has also incurred $28 million odd on account of its own costs. 

52.In addition, the parties also had to spend much time and efforts in the preparation for the case and the appeal.  Assuming the case ends here, the whole episode took 14 years to resolve. 

53.We are of course making these comments with the benefit of hindsight.  However, we cannot help but thinking that if, at some point in time, the parties and those advising them had taken a more realistic view of the case, there must have been means to resolve the dispute in a much more cost-effective and satisfactory manner.  We do not wish to appear to be critical of the parties or their lawyers and we are not in a position to undertake a post-mortem of the litigation.  The purpose of our observations is to highlight the stark consequences if litigation is pursued without any sense of proportionality and realism.  One of the lessons to be learnt from this case is that a litigant and those advising him should always be mindful of alternative means to resolve a dispute.  Sometimes, it is much better to adopt a broad and practical solution (whether through mediation, negotiation or otherwise) than to litigate up to the end.  We have not looked into the position of legal aid.  We direct that a copy of this judgment be provided to the Director for him to consider, in light of the experience relating to this case, whether there is any need for closer monitoring on how costs are being spent in legal aid cases in order to protect the legal aid fund.  As for the court, it may be that judges and masters should be more robust in directing parties to consider seriously resolving their disputes by alternative means. We hope this judgment will have some sobering effect on some parties (and advisors) who refuse to approach a case with a proper sense of realism and proportionality.

Mr Lee Tung Ming, instructed by Robin Bridge & John Liu, assigned by Director of Legal Aid, for the plaintiff

Mr Peter Clayton SC and Mr Osmond Lam, instructed by Mayer Brown JSM, for the defendant