廈門新景地集團有限公司 Formerly Known As 廈門市鑫新景地房地產有限公司 v. Eton Properties Ltd and Others

CACV 158/2012

[2018] HKCA 941

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 158 OF 2012

(ON APPEAL FROM HCCL 13 OF 2011)

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JUDGMENT ON COSTS AND
PAYMENT OUT

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Hon Yuen JA (giving the Judgment of the Court):

1.This is a Judgment on costs and payment out.  It is to be delivered simultaneously with two Judgments on leave to appeal to the Court of Final Appeal. 

2.On 15 April 2016, this court handed down Judgment (“the Main Judgment”) allowing part of the plaintiff’s appeal from the judgment of DHCJ Stone given on 14 June 2012 in which he dismissed all the plaintiff’s claims in HCCL13/2011. 

3.The claims pursued by the plaintiff[1] on appeal (“the Claims”) were:

(1)   a Common Law action on the award against the 1^st and 2^nd defendants (“D1/D2”)[2];

(2)   a claim for inducing breach of contract against the 3^rd, 4^th, and 5^th defendants[3] (“D3-D5”), the 6^th defendant[4] (“D6”) and the 10^th defendant[5] (“D10”);

(3)   a claim for unlawful means conspiracy against D1/D2, D3-D5, D6 and D10; and

(4)   a claim in constructive trust against D1/D2 and D3[6].

The appeal took 7 days.  Altogether, 17 counsel, including 9 leading counsel, were instructed. 

4.On appeal, Claims (2) - (4) were dismissed.  However for reasons set out in the Main Judgment, we considered that the plaintiff had a viable Claim (1) i.e. for damages for D1/D2’s failure to honour the arbitral award issued by CIETAC on 27 October 2006, but that it should be required to elect between (i) maintaining the judgment it obtained under the statutory process in HCCT54/2007 and (ii) entering a judgment in HCCL13/2011 for the damages mentioned above.

5.Since then, the plaintiff has elected (ii)[7]. Consequently, judgment has been entered in HCCL13/2011 for such damages, and the judgment in HCCT54/2007 has been set aside[8].

6.Directions were given in the Main Judgment for submissions on costs to be made in writing.  All the parties have sought costs orders in their favour to various extents. We have considered these submissions, and further submissions some of them provided subsequently, and this is our decision on costs.  We regret the time taken to deliver this decision.

7.By reason of the different parties, the different Claims against the defendants and the different results, it is necessary to have a more fine-tuned order for costs.  

Costs of the appeal

8.1First, we shall deal with the costs of the appeal as between the plaintiff and D1/D2. 

8.2The plaintiff submits that taking into account its success against D1/D2 on Claim (1) but failure on Claims (3) and (4), D1/D2 should pay 75% of its costs.  The plaintiff submits this reflects the fact that Claim (1) required more “elaborate” submissions, and the vast majority of time and costs were spent by the plaintiff and by D1/D2 on Claim (1). 

8.3D1/D2 submit that:

(a)   it was not until the plaintiff filed its Re-Re-Amended Notice of Appeal on 23 May 2014 (3½ weeks before the hearing of the appeal) that it amended its case to Claim (1), and on that ground, D1/D2 submit that the plaintiff should pay all their costs up to that date;

(b)   after 23 May 2014, by reason of D1/D2’s success in defending against Claims (3) and (4), the plaintiff should pay 2/3 of their costs, and by reason of their failure in respect of Claim (1), they should pay 1/3 of the plaintiff’s costs. 

9.1We shall first discuss the re-re-amendment of the notice of appeal.  Until the re-re-amendment on 23 May 2014, the material order sought in the notice of appeal read as follows:

“equitable compensation/damages to be assessed against each of D1 and D2 (in lieu of the existing order for the continued performance of their 4 July 2003 contract with the plaintiff (“the Agreement”) which was ordered in the 27 October 2006 final arbitral award (“the Award”) of the CIETAC Arbitrators (“the Arbitrators”) which, on 31 October 2007, was registered in HCCT54/2007 as a judgment (“the HCCT Judgment”) of the Court of First Instance (“the Court”) and in lieu of an enforcement order from the Court for the specific performance of the agreement or of the Award, following the default by D1 and D2 upon their express agreement to honour the Award and their disobedience of the HCCT Judgment”.

9.2With respect, the above passage has conflated a number of different concepts and is not easy to understand.  It was not until the Re-Re-Amended Notice of Appeal was filed on 23 May 2014 that the plaintiff’s colours were clearly pinned to its mast.  The above passage was deleted, and the following order was sought:

“damages for breach of para. 2 of the Order of the CIETAC Arbitrators (“the Arbitrators”) dated 27 October 2006 (“the Award”) for the continued performance of D1 and D2’s 4 July 2003 contract with the plaintiff (“the Agreement”) to be assessed against each of D1 and D2”.  

9.3We accept that D1/D2’s criticism of the plaintiff’s notice of appeal pre-re-re-amendment is justified.  Having said that, the plaintiff’s case of a Common Law action on the award was in fact explicitly foreshadowed at trial, although it did not enjoy as much prominence as it could have.  As D1/D2 accept, the plaintiff’s counsel at trial[9] had in closing, submitted that the action “was, is and always had been”[10] a Common Law action on the award in which the plaintiff was suing on the implied promise to honour the award[11].  Thus, although this did not feature (or did not feature clearly enough) in the notice of appeal pre-re-re-amendment, it cannot be said that D1/D2 had to face an entirely new case which they did not know or had not thought about previously.  Accordingly we do not accept D1/D2's submission that the plaintiff should pay their costs up to the re-re-amendment.  It would be up to the taxing master whether the plaintiff should be entitled to its costs of the notice of appeal prior to the re-re-amendment. 

10.We take the view that as between the plaintiff and D1/D2, the bulk of counsel’s submissions and time spent were on Claim (1), and we would order that D1/D2 pay 75% of the plaintiff’s costs of the appeal to be taxed if not agreed.  The plaintiff has sought a certificate for 4 counsel.  As D1/D2 has also sought a certificate for 4 counsel for an award of costs in their favour, we would so certify. 

- Payment Out

11.1The plaintiff has also asked for payment out of the sum of $3.9 million which it had paid into court as security for the costs of D1/D2 pursuant to a Consent Summons filed on 14 February 2013.  D1/D2 has objected to payment out.   

11.2By a judgment to be delivered simultaneously with this Judgment, this court has refused D1/D2 leave to appeal to the Court of Final Appeal.  D1/D2 may of course apply to the CFA for leave.  As the time specified in the Hong Kong Court of Final Appeal Ordinance for an application to the CFA is 28 days from this court’s refusal of leave, we would make an order for payment out to the plaintiff of the sum paid into court (with interest) on the expiry of 35 days from the date of this Judgment, or until further order.

12.We now come to the costs as between the plaintiff and D3-5, D6 and D10.  The plaintiff accepts that it should pay these costs, but it submits that D1/D2 should be responsible for 30% of the costs because of the time spent by D1/D2 at the appeal in (unsuccessfully) arguing Claim (1).  We do not think such an approach is justified.  Insofar as the plaintiff thought that some or all of the legal representatives instructed for D3-5, D6 and D10 should have absented themselves from court when submissions on Claim (1) were being made in order to reduce costs payable by the plaintiff, it should have raised this point at the outset of the hearing of the appeal.  We would therefore simply make an order that the plaintiff pay the costs of D3-5, D6 and D10 to be taxed if not agreed with certificate for 2 counsel.

13.Finally, there are the costs as between the plaintiff and D7-9 and D11.  The judge had dismissed the plaintiff’s claims against these defendants and they had been included in the appeal until 23 May 2014 when their names were deleted from the Re-re-amended Notice of Appeal.  We would make an order that the plaintiff pay the costs of D7-9 and D11 up to that date to be taxed if not agreed with certificate for 2 counsel.

Costs of the first instance proceedings

14.After trial and an application to vary the costs order nisi, DHCJ Stone ordered[12] that the costs of the action be paid by the plaintiff to the defendants to be taxed if not agreed. 

15.1We would first deal with the costs of the proceedings at first instance as between the plaintiff and D1/D2.  Now that part of the appeal has been allowed, the plaintiff submits that there should be an order that D1/D2 should pay it 75% of the costs of the first instance proceedings to be taxed if not agreed with certificate for 4 counsel. 

15.2D1/D2 submit that

“P’s position regarding the precise basis of its claim for damages against D1 and D2 was fraught with confusion and kept shifting both before and over the course of the trial: see Trial Judgment §§126-135. It was only during closing submissions for the trial that Counsel for P confirmed that P’s claim was based on a ‘common law action on the Arbitral Award’. ... Given P’s failure to put its house in order, time was wasted on the parts of the Court and D1 and D2 to decipher and respond to P’s ever-changing arguments and positions. ... Further, as P had to acknowledge ... the bulk of the time of the trial was spent on hearing the evidence. The arguments on whether P was entitled to damages were legal arguments and, while the factual background was relevant, it was the same common factual background to P’s failed claims against D1, D2 and the remaining Ds, which the Court had to look into in any event”.

Accordingly, D1/D2 submit that the plaintiff should remain liable to pay their costs of the trial, subject to a deduction of 5% only. 

16.1From our reading of DHCJ Stone’s Judgment, it is clear that the case put forward by the plaintiff at trial, which took 22 days, suffered from a lack of clarity, possibly due to a profusion of claims.  However, it remains the fact that the plaintiff was not made aware of the transfer of shares in D4 (indeed, it had been misled into believing that the shares remained in the control of D1 and D2) until after it had entered judgment in HCCT54/2007, which added to the complication of the case, and it needed to institute these proceedings to obtain the remedy which it has now obtained.  Having said that, the nature of Claim (1) is very different to the other claims, and it is plain that most of the time used for oral evidence at trial related only to the other claims.  

16.2Adopting a broadbrush approach, and doing the best we can in view of the circumstances set out above, we would order that the judge’s costs order as between the plaintiff and D1/D2 be set aside but only to the extent that D1 and D2 are ordered to pay the plaintiff 30% of the costs of the proceedings at first instance to be taxed if not agreed, with certificate for 3 counsel[13].  The judge had awarded certificate for 3 counsel to D1/D2 for the trial, but only 2 counsel for the rest of the action.  We do not find it necessary to make such a differentiation between trial and the rest of the action.

17.As for the costs of the proceedings at first instance as between the plaintiff and the other defendants, we see no reason to disturb the judge’s order. 

Costs of this application

18.Finally, the costs of this application for costs and payment out should be included in the costs of the appeal.  

David Joseph QC, Bernard Man SC and Justin Ho, instructed by Anthony Siu & Co., for the Plaintiff

Steven Gee QC, Benjamin Yu SC, Richard Khaw SC, Chan Chi Hung SC and Bonnie Cheng, instructed by Mayer Brown JSM, for the 1^st & 2^nd Defendants

Paul Shieh SC and Elizabeth Cheung, instructed by Wilkinson & Grist, for the 3^rd to 5^th Defendants

Ronny Tong SC and Kate Poon, instructed by Baker & McKenzie, for the 6^th Defendant

Law Man Chung, instructed by Woo Kwan Lee & Lo, for the 7^th to 11^th Defendants