陳北財經營健財工程公司 v. 李慧珊

HCSA 31/2023

[2023] HKCFI 2904

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 31 OF 2023

(ON APPEAL FROM SCTC NO 27225 OF 2021)

_______________________________

_______________________________

________________________

DECISION

________________________

1.  Introduction

1.1In August 2020, the defendant engaged the claimant to carry out certain renovation works at her family’s residence which predominantly involved the manufacture and installation of custom-made furniture. The parties’ agreement was evidenced by a quotation issued by the claimant on 22 August 2020. The quotation specifically made provisions for staged payments and the last tranche of payment was to be made after completion of installation.

1.2On or about 29 October 2020, the claimant issued an invoice (“Invoice”) to the defendant which, in addition to the items stated the quotation, also included a few items of variation works (“Works”). The total sum stated in the Invoice was HK$180,240. The Invoice also recorded that the defendant had previously made payments totaling HK$143,300, leaving HK$36,940 outstanding (“Outstanding Sum”).

1.3The claimant commenced proceedings in the Small Claims Tribunal to recover the Outstanding Sum, and what he considered to be contractual interest from the defendant, in the total sum of HK$52,150.

1.4The trial took place before a Deputy Adjudicator. In addition to factual witnesses, both parties adduced expert evidence. On 11 April 2023, the learned Deputy Adjudicator allowed the claimant’s claim in part and awarded to the claimant the sum of HK$18,194.30 (ie representing about 49% of the Outstanding Sum). The learned Deputy Adjudicator also declined to award interest at the rate or for the period sought by the claimant but assessed pre-judgment interest in the sum of HK$2,504.33. He also ordered the claimant to pay costs to the defendant assessed at HK$20,000 (“11/4/23 Award”).

1.5The claimant thereafter made an application to the learned Deputy Adjudicator to review the 11/4/23 Award. By his decision dated 21 August 2023 (“Review Decision”), the learned Deputy Adjudicator varied the sum awarded to the claimant to HK$18,612.02. Save the foregoing, he dismissed the claimant’s other review grounds, in particular that relating to the costs order made in the 11/4/23 Award (“Costs Order”).

1.6On 30 October 2023, the learned Deputy Adjudicator provided written reasons for the 11/4/23 Award and the Review Decision. References to the 11/4/23 Award and Review Decision here are references to their written reasons.

1.7On 11 September 2023, the claimant applied for leave to appeal against the Costs Order (“Leave Application”). Four grounds of appeal were initially advanced in the Leave Application.

(1)  The learned Deputy Adjudicator erred in law in wrongly identifying the event of the proceedings and consequently failed to appreciate that the claimant was substantially the winner of the proceedings. He therefore erred in law in failing to apply the principle of “costs to follow the event” (“Ground 1”).

(2)  The learned Deputy Adjudicator failed to apply the principle that costs should follow the event unless special circumstances justify the departure from such rule (“Ground 2”).

(3)  The learned Deputy Adjudicator erred in law in failing to consider that the majority of the defendant’s defence were exaggerated or not accepted and the expert evidence adduced by the defendant was largely irrelevant (“Ground 3”).

(4)  The learned Deputy Adjudicator failed to give proper weight to matters which affect how he exercises his discretion (“Ground 4”).

1.8At the hearing, the claimant was represented by Mr Ronald Pang of counsel and he confirmed that the claimant would not pursue Grounds 3 and 4.

2.  The learned Deputy Adjudicator’s reasons for the Costs Order

2.1In the 11/4/23 Award, the learned Deputy Adjudicator dealt with the issue of costs as follows:

“ [91] 關於訟費的問題，我在判決公平的訟費時擁有酌情權。在考慮案件的所有情況下，裁決是起點，但我如何達成裁決也極為重要。在小額錢債審裁處是不存在任何一方必然獲得訟費的原則，更不用說全數的訟費。

[92] 雖然申索方在某些問題上部份獲勝，但在很多責任的問題上是失敗的。被告方在這些方面的主張都被接受。總體而言，我認為對被告方頒發訟費是適當的。但是，被告方獲勝的程度不能被誇大，其中一個常見的主題是金額問題，即我認為被告方有不少的損失是以享受的損失基礎計算。且值得一提的是，被告方自己聘請的專家亦曾建議某些項目根本不需要進行修復工作。因此，在行使我的酌情權下，我只會對被告方的訟費申請頒發部份補償。最後，訟費命令由申索方支付給被告方，我裁定金額為20,000元。”

2.2In the Review Decision, the learned Deputy Adjudicator dealt with the Costs Order as follows:

“ [24] … 在審訊後裁決第91至92段中可以看到我對訟費命令的原因。 我需要強調的是，並沒有一個硬性的規例列明如果一個申索人勝訴 （尤其是部份勝訴），就必然可以獲得訟費。還需要考慮的是他勝數的基礎。 我沒有忽略到被告人賠償的基礎很大程度上是以少量生活享受的喪失 （amenity loss）為基礎的。 在這個覆核階段，申索人並未提出任何新的事項。 因此，我也看不到任何理由去改變我原先的訟費命令。第九個覆核理據也被撤銷。”

3.  The applicable principles

3.1Section 28(1) of the Small Claims Tribunal Ordinance Cap 338 provides that leave to appeal may be granted by the Court of First Instance as it thinks fit where the proposed ground of appeal involves a question of law alone or is on the ground that the claim was outside the jurisdiction of the Small Claims Tribunal. The onus on the applicant is to show that the intended appeal has arguable grounds of appeal: Tsui Koon Wah v Ip Mei Ho [2021] HKCFI 3437 at §65.

3.2As regards an appeal against a costs order made in the Small Claims Tribunal, it is stated at Yu Wing Kei v Chan Tak Kwong, HCSA 13/2011, 31 October 2011 §6 that:

“ Costs are matters of discretion though the discretion must be exercised judicially. An appellate court should intervene only where the judge had either erred in principle in his approach, or has left out of account, or taken into account, some feature that he should, or should not, have considered, or that the exercise of his discretion was wholly wrong because the court is forced to the conclusion that he has not balanced various factors fairly in the scale.”

3.3At Tsui Koon Wah §98, it is stated that the general principles on the incidence of costs are applicable to cases in the Small Claims Tribunal:

“ [98] I should start with the general principles on the incidence of liability for costs applicable to cases in the SCT. It has been held that the guidance in the Elgindata principles.… are applicable. In In re Elgindata Ltd (No 2), Nourse LJ set out 4 principles governing the award of costs:

(a) Costs are in the discretion of the court (“1^st Elgindata principle”).

(b) They should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made (“2^nd Elgindata principle”).

(c) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or costs of the proceedings he may be deprived of the whole or part of his costs (“3^rd Elgindata principle”).

(d) Where the successful party raises issues or makes allegations “improperly or unreasonably”, the court may order him to pay the whole or a part of the unsuccessful party’s costs (“4^th Elgindata principle”).”

3.4In ascertaining the successful party, the court looks at the whole circumstances of the case and decides this as a matter of common sense. In a money claim, the important thing is to identify the party who has to pay money to the other: Yu Wing Kei §9.

3.5It remains important to draw a distinction between depriving a successful party of his costs on the one hand and ordering him to pay the costs of the losing party on the other: Chen Ningning v King & Wood (a firm) [2020] HKCFI 602 §57. For the latter, impropriety or unreasonableness on the part of the successful party has to be demonstrated. As explained by the Court of Appeal in Chan Shun Kei v Hong Kong Construction (Hong Kong) Ltd, CACV 192/2014, 7 March 2016 at §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)…”

3.6Relying on the above principles, Mr Pang’s primary position is that the defendant should be ordered to pay costs of the claimant. Alternatively, he submitted that an appropriate costs order would be no order as to costs.

4.  Analysis

4.1I have considered the submissions made by Mr Pang. It seems to me that it is arguable that the learned Deputy Adjudicator was in error in ordering the claimant to pay costs to the defendant for one or more of the following reasons.

4.2First, where, as here, the claimant was awarded almost 50% of the principal sum claimed by him, it is arguable that the learned Deputy Adjudicator fell into error in failing to recognize that the claimant was substantially the successful party. Indeed, at 11/4/23 Award §92, he seemed to have treated the defendant as the “winner” but the “victory” should not be “exaggerated”: §2.1 above.

4.3Secondly, and consequently, it is arguable that the learned Deputy Adjudicator erred in not applying the “costs to follow the event” principle.

4.4Thirdly, and following the above two matters, in so far as the learned Deputy Adjudicator then wholly deprived the claimant’s costs and ordered costs in favour of the defendant, it has not been suggested in either the 11/4/23 Award or the Review Reasons that he took the view that the claimant had significantly increased the length or costs of the proceedings or that the claimant had raised issues improperly or unreasonably. Whilst it is true that the learned Deputy Adjudicator did state that the claimant failed on “many” liability issues, that, in and of itself, is insufficient to warrant a departure, or in this case a very significant departure, from the “costs to follow the event” principle. It seems to me that the learned Deputy Adjudicator’s exercise of his discretion is of the type which warrants intervention by an appellate court.

5.  Conclusion

5.1For the above reasons, I grant leave to the claimant to appeal against the Costs Order on Grounds 1 and 2.

5.2I also order that the claimant’s cost of this Leave Application be in the cause of the appeal.

5.3I thank Mr Pang for his assistance.

Mr Ronald Pang, instructed by Huen & Cheung, for the Claimant