Euro Search (Hong Kong) Ltd v. Snow Lake Capital (HK) Ltd

HCA 989/2015

[2018] HKCFI 2292

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 989 OF 2015

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Before:  Hon Chow J in Chambers (Open to Public)

Date of Hearing:  9 October 2018

Date of Decision:  9 October 2018

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D E C I S I O N

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APPLICATION

1.This is the Defendant’s application to vary a costs order nisi made by Deputy High Court Judge Sakhrani after a 3-day trial.  The Judge dismissed the Plaintiff’s claim against the Defendant, and ordered the Plaintiff to pay the Defendant’s costs of the action, to be taxed if not agreed.  The Defendant now seeks an order that its costs be taxed on an indemnity basis if not agreed.

BASIC FACTS

2.The Plaintiff carried on business as a head hunting and recruitment agency in Hong Kong.  As the Defendant’s request, the Plaintiff successfully introduced an employee, Mr Victor Li, who entered into an employment contract with the Defendant in September 2014.

3.The Plaintiff’s claim in this action is for the outstanding balance of its service fee which, according to it, was agreed at 25% of the first year’s “aggregate cash compensation of the successful candidate”, which was defined to mean “the annual basic salary accepted in writing by the candidate on joining [the Defendant], sign-on bonus, guaranteed bonus, if any, that are paid to the candidate for joining the employment with [the Defendant]”.

4.As mentioned in paragraph 11 of the Judgment dated 27 February 2018, the parties agreed that there were three issues to be tried:-

(1) Was there any binding agreement between the Plaintiff and the Defendant concerning the Plaintiff’s recruitment and headhunting services in respect of Mr Victor Li provided to the Defendant, and if so, what were the terms of the agreement?

(2) If there was no binding agreement between the Plaintiff and the Defendant, was the Defendant unjustly enriched at the Plaintiff’s expense?

(3) What, if any, was the sum due from the Defendant to the Plaintiff?

5.The first issue raised a question of fact, and the Judge found in favour of the Plaintiff that there was a binding contract between the Plaintiff and the Defendant concerning the services provided to the Defendant upon the “core terms” referred to in paragraphs 41 to 45 of the Judgment.

6.The second issue did not arise for consideration in view of the Judge’s finding on the first issue.

7.The third issue raised an issue of construction of the contract, and the Judge found in favour of the Defendant that the first year’s aggregate cash compensation of Mr Victor Li only applied to his annualized basic salary of US$300,000, but not the “Guaranteed Bonus” of US$700,000, which Mr Victor Li did not as a matter of fact receive.

8.Prior to the commencement of the action on 6 May 2015, the Defendant had already paid, and the Plaintiff had already received, the sum of US$76,590.40, being 25% of Mr Victor Li’s basic salary of US$300,000 plus interest thereon, and the action was concerned only with the outstanding balance of the service fee claimed by the Plaintiff, ie US$175,000, being 25% of the Guaranteed Bonus of US$700,000.

9.The basis of the Defendant’s present application is that the Plaintiff’s claim was totally unmeritorious and the Defendant’s had made a series of offers prior to the commencement of the proceedings:-

(1) On 28 November 2014, the Defendant, through its solicitors (Holman Fenwich Willan), made an offer, marked “without prejudice save as to costs”, in the sum of US$75,000 inclusive of costs and interest in full and final settlement of the Plaintiff’s claim in relation to the Defendant’s recruitment of Mr Victor Li.  That offer was said to be open for acceptance within 7 days.

(2) The Plaintiff, through its solicitors (Michael Pang & Co), rejected the offer on 7 January 2015.

(3) On 14 January 2015, Holman Fenwich Willan made an open offer to the Plaintiff in the sum of US$76,590.40, taking into account interest, in settlement of the entirety of the Plaintiff’s claim, and enclosed a cheque for that sum with their letter.

(4) On 12 February 2015, the Defendant, on the basis of no admission of liability, suggested that the Plaintiff could accept the cheque of US$76,590.40 as partial payment of its claim, and the Plaintiff could “pursue for the balance if they are confident with the claim”.

DISCUSSION

10.The Plaintiff relies on Order 62, Rule 5(1)(d) and (e) of the Rules of the High Court, Cap 4A, in support of the argument that the pre-action offers may be taken into account in the court’s exercise of its discretion on costs in the present case.  The Plaintiff also relies on the observation of Saunders J in Leung Lai Kwan v Lo Kai Wing, HCA 1158/2011 (18 May 2015), at paragraph 27 that “[a] party who is in receipt of an offer which is reasonable and who goes to trial having rejected that offer is always liable to a higher level of costs if they do not do better than the offer that has been rejected.”  As I understand the learned Judge, such party is “liable” means he is at risk of being made liable, not that he must necessarily be held liable, to a higher level of costs.

11.On behalf of the Plaintiff, Mr Ng has raised a few points in opposition to the application, including the argument that the Defendant’s offers were not for settlement of the Plaintiff’s entire claim, and that the Defendant’s offers were not unaccepted by the Plaintiff.  In consider these arguments to be untenable.  This having been said, I am not satisfied that the circumstances in the present case are such as would justify an order for indemnity costs.

12.In respect of the first matter relied upon by the Defendant, the Plaintiff’s claim is “unmeritorious” in that it has been rejected by the Judge at trial, but I do consider it to be so unmeritorious as would justify an order for indemnity costs.

13.In respect of the second matter relied upon by the Defendant, I accept that the offers are matters relevant to be taken into account in deciding whether to make an order for indemnity costs.  However, it is also a relevant fact that the Defendant did not succeed on all issues at the trial.  In particular, the Defendant failed on an issue of fact, ie whether there was a binding contract between the parties.  In my view, the Defendant’s denial of a binding contract was plainly unmeritorious, and unreasonable on the facts of the present case.  Without that defence, the whole case would boil down to a simple question of construction, and I do not believe that the trial would take 3 days to complete.

14.In all the circumstances, I am not minded to vary the costs order nisi made by the Judge.

DISPOSITION

15.Accordingly, the Defendant’s summons dated 5 March 2018 is dismissed.  I shall now hear the parties on the question of costs.

Mr Michael Ng, instructed by Michael Pang & Co, for the Plaintiff

Mr Anthony Chan, instructed by Holman Fenwick Willan, for the Defendant