Chung Wah Hong (HK) Engineering Ltd v. Unistress Building Construction Ltd

DCCJ 1217/2023

[2026] HKDC 1799

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1217 OF 2023

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DECISION

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I.  INTRODUCTION

1.There are two summonses before me:

(1)  The Defendant’s Summons to vary the Cost Order Nisi made in my Judgment dated 8 June 2026 (with corrigendum) due to the existence of a sanctioned payment that was not accepted by the Plaintiff before the 17 April 2025;

(2)  The Plaintiff’s Summons for the Defendant to pay the Plaintiff’s Costs on this action up to and inclusive of 17 April 2025, being the expiry date (on which the Plaintiff could have accepted the Defendant’s sanction payment made on 20 March 2025 without leave of the Court).

II.  THE DEFENDANT’S SUMMONS

2.The Defendant seeks the following:

(1)  The costs order nisi made in the Judgment of Deputy District Judge Samuel Wong dated 8 June 2026 (my Judgment) be varied and that it be ordered that:

(i)  the Plaintiff do pay the Defendant’s costs of this action on party and party basis, to be taxed if not agreed, on the District Court scale up to and inclusive of 17 April 2025, being the last date on which the Plaintiff could have accepted the sanctioned payment made by the Defendant on 20 March 2025 without requiring leave of the Court; and

(ii)  the Plaintiff do pay the Defendant’s costs of this action incurred from 18 April 2025 onwards (including all costs reserved) on indemnity basis, to be taxed if not agreed, on the District Court scale with certificate for Counsel.

(2)  The Defendant be entitled to interest on their costs incurred from and inclusive of 18 April 2025 onwards at the enhanced rate of 3% above judgment rate or at such rate as the Court deems fit;

(3)  The sum of HK$400,000.00 being the sanctioned payment into Court by the Defendant on 20 March 2025, together with interest thereon (if any) be paid out from Court to the Defendant through their solicitors Messrs K B Chau & Co forthwith; and

(4)  The Plaintiff do pay the Defendant’s costs of this application on indemnity basis, to be taxed, if not agreed.

3.To the Defendant’s’ Summons is attached the Affirmation of Chung Yan Tung dated 16 June 2026 (“Chung Yan Tung”) in which:

(1)  It is exhibited the Notice of Sanction Payment made in the sum of HK$400,000.00 dated 20 March 2024 (“the Notice”), which was served on Messrs Wong & Lawyers, solicitors for the Plaintiff. The due date for accepting the Sanction Payment without leave was 18 April 2025. It was not accepted by the Plaintiff.

(2)  By the Judgment, the Defendant was ordered to pay HK$220,866.00 to the Plaintiff, in other words the Plaintiff has failed to obtain a judgment in a sum that exceeds the Sanctioned Payment. And the Defendant seeks costs incurred from 18 April 2025 from the Plaintiff on indemnity basis, with enhanced interest pursuant to Order 22 rule 23(4) of the Rules of District Court (Cap 336H).

(3)  The Defendant at para 12 of Chung Yan Tung exhibited disbursements made after 18 April 2025 which totaled HK$539,275.00.

(4)  At para 13 of Chung Yan Tung, the Defendant also claims for costs incurred before 18 April 2025 from the Plaintiff on party and party basis.

(5)  In response to the Plaintiff’s Submissions on Costs dated 14 August 2026, the Defendant filed its Submissions in Reply dated 7 September 2026 which I have considered.

III.  THE PLAINTIFF’S SUMMONS

4.The Plaintiff’s Summons on the other hand seeks for an Order that:

(1)  the Defendant do pay the Plaintiff’s costs of this action on party and party basis” up to and inclusive of 17 April 2025;

(2)  Costs of the Plaintiff’s application.

5.To the Plaintiff’s’ Summons is attached the Affirmation of Wong Kwong On dated 22 June 2026 (“Wong Kwong On”) in which the Plaintiff’s case:

(1)  At para 7 of Wong Kwong On is that I have erred in holding at para 108 of my Judgment that “D has been successful in defending P’s claim in the amount of HK$3 million”. The Plaintiff submits that it is the winning party and costs should be awarded to the Plaintiff on the principle of “costs to follow the event”.

(2)  At para 8 that the dispute in essence was a dispute on the final account of a construction contract.

(3)  At para 9 that the Defendant’s primary defence (at para 35(e) of the Amended Defence) was that the Defendant had “assessed, certified and honored all the payments according to the Provisions of the Sub-Contract”.

(4)  At para 10 that since a positive sum in the amount of HK$220,866,00 was ordered to be payable by the Defendant, the Plaintiff therefore succeeded on the core issue of liability and at para 11 that the Plaintiff should be regarded as “the overall winning party of the entire Action”.

(5)  The Plaintiff case at para 12 is that the recovery of the sum of HK$220,866.00 is far from merely nominal; at para 14 that the Plaintiff claimed an amount of HK$3,689,486.00 (capped at HK$3 million because of the District Court’s monetary jurisdiction) does not mean the Defendant defended the HK$3 million claim successfully; at para 15 that the Court reduction of the quantum was not a wholesale rejection of the Plaintiff’s case on liability.

(6)  The Plaintiff also filed its Submissions on Costs dated 14 August 2026, the content of which I have considered.

IV.  THE DEFENDANT’S BRIEF SUBMISSIONS ON COSTS (“D’S SUBMISSIONS”)

6.In Defendant’s Submissions, it is argued that although the Plaintiff obtained some success on liability, the Plaintiff should nevertheless be deprived of costs by reason of (1) the Plaintiff’s excessive and inflated claim; and (2) the rejection of the Plaintiff’s evidence by the Court.

V.  THE PLAINTIFF’S PLEADED CASE

7.The Plaintiff’s Statement of Claim (“SOC”) dated 23 March 2023 was amended dated 9 April 2025 (“Amended SOC”) after the Defendant’s sanctioned offer of 20 March 2025.

8.In the Amended SOC, it is pleaded:

(1)  at para 12 that in the course of the Works, the Defendant instructed various additional works for removal of scratches that “were not within the original scope of the Works under the Sub-Contract;

(2)  at para 13 that at the requests of Mr Ho Yung Ngai, Quantity Surveyor of the Defendant (“Mr Ho”) and Mr Ching, the Plaintiff submitted further seven (7) quotations during the period between 19 August 2018 and 9 November 2018 respectively (the “Supplementary Quotations”) for the Variations;

(3)  at para 14 that on or about November 2018, in breach of the Payment Terms, the Defendant has failed and/or refused to assess, certify and pay the Plaintiff for the completed Works including the Variations Works in a timely manner in respect of its invoice Nos 3 and 4 which were submitted by the Plaintiff on 9 October 2018 and 20 October 2018 respectively;

(4)  at para 15 that In or about December 2018 to mid-January 2019, in breach of the Payment Terms, the Defendant even stopped the payment assessments and thus made no payment to the Plaintiff in respect of its invoice Nos 5, 6 and 7 which were submitted by the Plaintiff on 12 November 2018, 25 November 2018 and 8 December 2018 respectively;

(5)  at para 16 that in or about the third week of January 2019, Mr Ho verbally requested Mr Tang to consider offering certain percentage of discount on all the Plaintiff’s invoices from January 2019 onwards. In return, Mr Ho informed Mr Tang that the Defendant’s top management would facilitate the payment process and would settle the outstanding payment to the Plaintiff as soon as possible (“D’s Representation”);

(6)  at para 17 that in reliance upon D’s Representation, the Plaintiff has offered 8% discount on its invoices starting from invoice No 10 dated 26 January 2019 (Ref EPD0673-190126-SB-001 to 005) up to invoice No 18 dated 1 December 2019 (Ref EPD0763-191201-SB-001 to 002);

(7)  at para 18 that by reasons pleaded in paragraph 16 hereinbefore, the Plaintiff avers that its 8% discount was conditional upon D’s Representation being true. Alternatively, the statements made by Mr Ho were representations which induced the Plaintiff to offer 8% discount;

(8)  at para 22 that the Plaintiff has since discovered that and the fact is that D’s Representation was untrue in that the late and/or short payment issues remain unresolved despite the Plaintiff’s 8% discount offer. Based on the table above, it is evident not only that the Defendant has not speed up the process of payment assessments and settlement of payments as promised by the Defendant but also the Defendant has still failed and/or refused to assess, certify and honour payments according to the provisions of the Sub-Contract, which constituted a blatant breach of the D’s Representation and the Sub-Contract in particular the Payment Terms thereof.

(9)  at para 23 that by reference to the particulars as pleaded in paragraphs 16 to 22 hereinbefore, the Defendant’s Representation was false and the Plaintiff is entitled to revoke the 8% discount. The Plaintiff shall rely upon Section 3(1) of the Misrepresentation Ordinance, Cap. 284;

(10)  at para 24 that Further and alternatively, the Plaintiff submits in the absence of speedy assessment and payment by the Defendant, there was no consideration for the Plaintiff to make the 8% discount and such 8% discount was not ever agreed and accepted by the Defendant; and

(11)  at para 28 that Therefore, up to date, an outstanding payment due under the Sub-Contract is HK$3,689,486.00 (based on the Pro-Rata Rates Assessment without 8% discount offer by the Plaintiff’s quantum expert as stated in paragraph 5.36 of the Joint Expert Report dated 2 January 2025) (the “Outstanding Payment”). Wrongfully in breach of the Sub-Contract, the Defendant has failed and/or refused to settle the Outstanding Payment to the Plaintiff under the Sub-Contract. As a result, the Outstanding Payment of HK$3,689,486.00 remains outstanding and payable by the Defendant to the Plaintiff under the Sub-Contract. In light of the jurisdiction of District Court, the Plaintiff’s claim for the Outstanding Payment is limited / capped at HK$3,000,000.00.

9.These then are the material facts alleged by the Plaintiff in the Amended SOC.

VI.  AMENDED DEFENCE

10.In the Amended Defence, the material pleaded passages were:

(1)  Para 11A: On or about 19 August 2018, the Plaintiff submitted a supplementary quotation ref CWHE-SB-180819-001 (“Supplementary Quotation”) containing unit rates for glass repair work at the external face of the façade and glass railings. Upon the parties’ discussion, the unit rates in the Supplementary Quotation were amended. The Supplementary Quotation (as amended) was signed and agreed by the parties;

(2)  Para 11B: The unit rates agreed in the Quotations and the Supplementary Quotation (as amended) (“the Agreed Unit Rates”) covered all the Works performed by the Plaintiff. The Plaintiff’s entitlement under the Sub-Contract shall be calculated according to and/or with reference to the Agreed Unit Rates together with the additional 8% discount pleaded hereinbelow;

(3)  Para 11C: Thereafter, the Plaintiff purportedly submitted 6 additional quotations (“Unsigned Quotations”) between 21 September 2018 and 9 November 2018. The Unsigned Quotations and the unit rates therein were never signed and/or agreed by the Defendant;

(4)  Para 12(f): “The Defendant therefore avers that the Defendant had assessed, certified and honour all payments according to the provisions of the Sub-Contract and denies any breach of the Sub-Contract”;

(5)  Para 16 in which paras 21-22 of the ASOC were denied;

(6)  Para 17 in which paras 23-24 are denied. Further, it was pleaded that the 8% discount was mutually agreed between the Plaintiff and the Defendant. As there was no non-payment on the part of the Defendant and late payment through the fault of the Defendant and no breach of the Sub-Contract, the consensus on the discount should not be revoked.

VII.  THE PLAINTIFF’S CLOSING SUBMISSION IN WRITING

11.At para 12 of the Plaintiff’s Closing, the agreed issue the Court was asked to decide were:

“12.  As the quantities of the Original Sub-Contract Works and the Variation Works completed by P (termed as “the Completed Sub-Contract Works” by experts of P and D) are not in dispute; the Court only has to determine two issues:-

Issue 1

(1)  The unit rates to be adopted for the Sub-Contract Works:-

(a)  The unit rates in P’s Q3-Q9 [the Plaintiff’s case]; or

(b)  The hand-written unit rates in D’s Quotation no.3 (“DQ3”) [C1/24A/28-1] [the Defendant’s case];

Issue 2

(2)  Whether the 8% discount offer remained in force?”

12.These then were the two issues as framed for the Court to decide. It is to be noted (1) that DQ3 in the Plaintiff’s Closing is Q3 as amended and signed off by the Plaintiff and the Defendant; and (2) the 8% discount was not pleaded in the same way as framed by the parties as Issue 2.

VIII.  ISSUE 1

13.Evidence of Mr Tang, the only fact witness of the Defendant, was rejected.

14.At para 18 of the Plaintiff’s Closing, the Plaintiff summarized the evidence of Tang.

“18. According to Mr Tang, the circumstances leading to P’s preparing and submitting Q3 to D were as follows:-

(1) In or about mid-August 2018, 波叔took him to have an on site walk during which a number of sample scratches at the external face of glass panels were shown to him;

(2) 波叔also requested him, basing on the sample scratches, to prepare and submit quotation to Mr Ho for carrying out scratches removal works to the external face of glass panels;

(3) Subsequently, on 19.08.2018, he arranged to prepare and submit Q3 to Mr Ho.”

15.In my judgment, Mr Tang’s version of events was disbelieved. The quotation and rates at Q3 prepared by the Plaintiff covered the pricing of different severity of scratches, in short, all necessary prices for valuation of workdone to remove scratches to the external face of glass panels. It did not cover only scratches to the alleged samples, and further, the locations of the alleged samples were not identified.

16.At para 27 of the Plaintiff’s Closing, its case is:

(1)  Before P’s preparing and submitting of Q3 to Q9, D had shown to P samples of works, then D instructed P to prepare updated quotations;

(2)  P, basing upon the nature, particularly the quantities of works (ie number of scratches on the glass panels) shown by D, prepared its updated quotations Q3 to Q9;

(3)  At different stages, P’s updated quotations were intended only to cover that particular stage and particular quantities of works (i.e. number of scratches on glass panels);

(4)  At the time of P’s submissions of its updated quotations, the parties did not know if there would be further works, or the quantities of further works (ie number of scratches on glass panels) might arise subsequently;

(5)  It turned out that, after P’s submissions of its updated quotations, further works surfaced which quantities (ie number of scratches on glass panels) far exceeded parties’ expectation and by agreement P submitted further quotations;

(6)  After P’s submissions of Q3 to Q9, D never signed back the quotations, and/or communicated its agreement/disagreement to the quotations, but instructed P to carry out the works as covered by the quotations;

17.In my judgment, the Plaintiff’s case upon Mr Tang’s evidence was not believed. The Plaintiff evidence that it had not received DQ3 (D3 as amended) was rejected. It was also not accepted that DQ3, as quoted and accepted, did not cover all situations of rectification of scratches to the external face of glass panels. It was rejected that D4 to D9 was quoted due to the Defendant’s requests and it was necessary to submit further quotations to cover situations not envisaged or covered by DQ3.

18.At para 39, the Plaintiff in the Closing submits that: “It would be recalled that Dr. Chan has provided his Pro-Rata Rates Assessment, in case when the Court finds there is no unit rates applicable to the valuation of the Variation Works: Joint Report, §§5.1 to 5.38 [B/20/16-33].” In my Judgment, I found that the pricing mechanism in DQ3 covered all situations of rectification of scratches to the external face of glass panels and the methodology adopted by the Plaintiff’s “Pro-rata Rates Assessments of Dr Ken Chan, as adopted by the Plaintiff to amend the Plaintiff’s SOC, was rejected.

IX.  ISSUE 2

19.At para 44 of the Plaintiff’s Closing, the Plaintiff’s Closing was that if “the unit rates agreed in the Quotations and Supplementary Quotation (as amended) covered all the Works performed by the Plaintiff” and “if the unit rates in Q1 to Q3 (or DQ3) were binding upon the parties upon all works performed or to be performed by the Plaintiff, the 8% discount as variation must be invalid for want of consideration”.

20.Basis for the Plaintiff’s lack of consideration argument for clawing back 8% is different from the Plaintiff’s pleaded case at paras 16-18 of the Amended SOC, which was based upon an alleged Representation of the Defendant to speed up payment as consideration for the discount. At para 47 of the Plaintiff’s Closing, it is written: “Mr Tang averred that he agreed to offer the 8% discount in reliance of Mr Ho’s representation that D’s top management would facilitate the payment process and would settle the outstanding payment to P as soon as possible”.

X.  MY JUDGMENT

21.As to Issue 1, I found at para 80 of my Judgment that from the record of approved payment advices, there was no continuing undue refusal or delay to certify or make monthly payments to the Plaintiff.

22.At para 84, I found Q3 comprehensively covered all the situations envisaged necessary for the pricing of remedial work to the external face of glass panels. Hence there was no need for further quotations to be made.

23.At para 86 to 88 and para 90, I found Mr Tang’s allegation that he priced only upon the limited samples scratches to glass (external) shown to him and that he had not seen the amended version of Q3 at C/28-1 (that is DQ3) to be incredible and unbelievable.

24.At para 89 I rejected the allegation that the Plaintiff had never received any assessment of the Plaintiff’s invoices No 1-12.

25.At para 94 I found there is no evidence that Q4-Q9 dated 21 September 2018 to 9 November 2018 were issued at the requests of Mr Ho, site QS and Mr Ching, and at para 97 that there was no need nor reason for the Defendant to request for Q4-Q9.

26.At para 97, it was found that the Defendant had not agreed to quotations Q4-Q9 and further that the unit rates at Q3 as amended (DQ3) were agreed.

27.At para 78 of my Judgment, I rejected the Pro-Rata rate assessment method used by Dr. Chan, expert for the Plaintiff.

28.As to Issue 2, at paras 99 and 100 of my Judgment, I found that the Plaintiff’s offer to give a discount of 8% on future invoices by its WhatsApp message of 17 January 2019 to be unilateral, and evidence does not support the Plaintiff’s contention that the discount of 8% was given for the alleged consideration of facilitating the payment process.

29.It is notable that findings conclusively rejected all of the material facts the Plaintiff pleaded and relied upon in the Amended SOC for its allegations in relation to Issue 1 and Issue 2.

XI.  WHO WON

30.The Plaintiff had failed in respect of Issue 1 and as to Issue 2 as framed for the Court to decide in relation of the 8% discount, Issue 2 at A/25 is repeated here:

“REVISED JOINT STATEMENT OF ISSUES IN DISPUTE

Whether the 8% discount offered by the Plaintiff was valid: (i) Whether the Plaintiff is entitled to revoke the 8% discount offer due to the alleged misrepresentations on the part of the Defendant. (SOC §23) (ii) Whether the 8% discount offer was unenforceable for want of consideration. (SOC §24) (iii) Whether the Plaintiff was estopped from revoking the 8% discount offer. (AD §17)”

31.The Plaintiff in its Closing reframed Issue 2 differently: “(2) Whether the 8% discount offer remained in force”.

32.P did not succeed upon its pleadings at para 23 on the alleged misrepresentation nor para 24 in which P pleaded “in absence of speedy payment, there was no consideration for the Plaintiff to make the 8% discount …”. The no consideration argument was made in the context the alleged failure to make “speedy payment”.

33.However, in the Defendant’s Amended Defence at para 17 pleaded that:

“Paragraphs 23-24 are denied. The 8% discount was mutually agreed between the Plaintiff and the Defendant. As there was no non-payment on the part of the Defendant and late payment through the fault of the Defendant and no breach of the Sub-Contract, the consensus on the discount should not be revoked.”

34.In my Judgment, I found that the offer of 8% to have been made unilaterally and not consensually and as such the Plaintiff was not estopped from revoking the 8% discount. This was the basis for the sum of HK$220,866.00 to be allowed to be claw back. The claw back of the 8% discount did not arising from the Plaintiff’s pleaded material facts nor from the Plaintiff’s “breach”, “misrepresentation” and “no consideration” arguments at the Amended SOC: paras 17-18, paras 22-23 and para 24 respectively.

35.In view of the above, I found that P was not the winner in respect of both Issue 1 (which is not disputed) and Issue 2 as pleaded in the Amended SOC. Contrary the Plaintiff’s argument (para 11 of Wong Kong On) that the Plaintiff should be regarded as the “overall winning party of the entire Action”, the Plaintiff only succeed to claw back the 8% discount based on Issue 2 of the Agreed Issues as framed and not upon the Plaintiff’s pleaded material facts.

36.It is in this context that the Plaintiff was labelled not to be the “winner” or “overall winner”.

XII.  LEGAL PRINCIPLES ON COSTS

37.It is trite that costs are in the discretion of the Court, and the Court should order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made to the whole or any part of the costs. (Order 62 r 3 (2) RHC and section 52A(1) of the High Court Ordinance Cap 4).

38.In the exercise of Court’s discretion as to costs, the Court shall take into the following factors at O 62 r 5 of the RHC:

“Special matters to be taken into account in exercising discretion

(1)  The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

(aa)  the underlying objectives set out in Order 1A, rule 1;

(a)  any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b)  any payment of money into court and the amount of such payment;

(c)  any written offer made under Order 33, rule 4A(2);

(d)  any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e)  the conduct of all the parties;

(f)  whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g)  any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2)  For the purpose of paragraph (1)(e), the conduct of the parties includes-

(a)  whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)  the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)  whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)  conduct before, as well as during, the proceedings.”

39.In the case of Designing Hong Kong Limited v The Town Planning Board, Secretary For Justice [2018] HKCFA 16; (2018) HKCFAR 237, at para 25, it was written: “As with all exercises of discretion in a procedural context, it is for the court to bear in mind the overall justice of the application of a PCO, …, it is fairness and justice that lie at the heart of this”.

XIII.  LEGAL PRINCIPLES ON CONSEQUENCES OF FAILURE TO DO BETTER THAN THE SANCTIONED PAYMENT

40.This is provided for at Order 22 r 23 (2):

“23. Costs consequences where plaintiff fails to do better than sanctioned offer or sanctioned payment (O. 22, r. 23)

(1) This rule applies where a plaintiff-

(a) fails to obtain a judgment better than the sanctioned payment; or

(b) fails to obtain a judgment that is more advantageous than a defendant’s sanctioned offer.

(2) The Court may by order disallow all or part of any interest otherwise payable under section 48 of the Ordinance on the whole or part of any sum of money awarded to the plaintiff for some or all of the period after the latest date on which the payment or offer could have been accepted without requiring the leave of the Court.

(3) The Court may order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without requiring the leave of the Court.

(4) The Court may also order that the defendant is entitled to-

(a) his costs on the indemnity basis after the latest date on which the plaintiff could have accepted the payment or offer without requiring the leave of the Court; and

(b) interest on the costs referred to in paragraph (3) or sub-paragraph (a) at a rate not exceeding 10% above judgment rate.

(5) Where this rule applies, the Court shall make the orders referred to in paragraphs (2), (3) and (4) unless it considers it unjust to do so.”

XIV.  DISCUSSION

41.In the exercise of the Court’s discretion, it is important to remember that fairness and justice should lie at the heart of the exercise of discretion.

42.The Court should correctly exercise its discretion following Tramountana Armadora SA v Atlantic Shipping SA [1978] 2 All ER 870, after taken into consideration the factors at Order 62 r5 of the RHC and the Court should not deprive a party of its costs because its witness had been guilty of exaggeration.

43.Further a successful plaintiff who has recovered more than nominal damages should in normal circumstances have an order for costs against the defendant. The general rule is for costs to follow the event, and a party who seeks to displace the general rule bears the burden of showing that the circumstances justify the exceptional course of such displacement: Mariner International Hotels Ltd v Atlas Ltd (No 2) (2007) 10 HKCFAR 246. Further, it is an error in principle for a judge to reflect disapproval of the way in which such a plaintiff has conducted the litigation by ordering him to pay the defendant’s costs (Gupta v Klito, The Times 23 November 1989) (HKCP 62/3/3).

44.Another matter is the making of separate costs order reflecting the outcome of different issues in the case AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, and in situations where “discreet and isolated points can be shown” to have led to wastage of time and costs.

45.As renumerated above, one of the special circumstances of this case is that evidence of the Plaintiff’s only witness Mr Tang, in relation to Issues 1 and 2 had been totally rejected. In this case there were two clear discreet and isolated issues: Issue 1 as whether and what rates were to be used for the purpose valuation of the costs of rectifying scratches to the external face of glass panels is to be based on Q3 or DQ3 or the method adopted by the Plaintiff’s expert, and Issue 2 only dealt with the 8% discount to certain invoices.

46.After due consideration I find in the exceptional circumstances of this case, costs should be approached by distinguishing costs incurred in respect of Issue 1 and Issue 2. As the Plaintiff wholly failed in respect of Issue 1, the Plaintiff should be liable for the Defendant’s costs.

47.It is correct that the sum of HK$220,866.00 clawed back by the Plaintiff was not nominal. However, it did not arise from the material facts as pleaded in the Amended SOC and as such, P was not the winner of the issue as pleaded. I also note that the Defendant’s pleaded case on this issued was also rejected by me.

48.Another observation of the Court is that the core issue in this case was Issue 1 and Issue 2 was more peripheral. It is noted that bulk of the time spent related to Issue 1 and not Issue 2.

49.Further there is the issue of the Defendant’s sanctioned payment into Court of HK$400,000.00 that the Plaintiff did not accept.

50.In the Plaintiff’s Submissions dated 14 August 2026 at para 25, the Plaintiff does not object to the Defendant’s entitlement to indemnity costs from 18 April 2025 and to interest at the enhanced rate as claimed.

51.In the Defendant’s Submissions dated 17 August 2026, the Defendant relies on the case of AEI Rediffusion (also cited at para 44 above) to say that the principle of costs to follow the event has become “a starting point from which a court can readily depart” and that “[t]he most significant change of emphasis of the new Rules is to require courts to be more ready to male separate cost orders which reflect the outcome of different issues”. The Court is also referred to Wong Kam Tong v Incorporated Owners of Yuen Long Tin Shing Court [2012] 2 HKLRD 1128 at paras 10-13.

52.The Defendant submits the two Agreed Issues can be divided into 5 sub-issues, in which four issues were improperly raised and the Plaintiff only succeeded on the “No Consideration Issue”, which, in fact, was not as pleaded by the Plaintiff. As a result, the Defendant sought to argue for the Plaintiff to pay 80% of its costs of the action and for the Plaintiff’s Summons to be dismissed.

53.By a broad brush, with due consideration of fairness and justice, I apportion 20% of the costs of the proceedings as incurred in respect of Issue 2 and 80% as in respect of Issue 1.

54.As both the Plaintiff and the Defendant did not succeed on their respective pleaded cases on Issue 2, I find neither of them is entitled to the 20% of costs incurred in respect of Issue 2. Further I find that the Defendant is entitled to 80% of the Defendant’s costs of the proceedings the Issue 1 costs, and (i) if such costs if incurred before 18 April 2025 to be taxed on party and party basis, and (ii) in respect of the Defendant’s costs of Issue 1 incurred after 18 April 2025 to be taxed on indemnity basis.

XV.  DISPOSITION

55.In respect of the Plaintiff’s Summons

(1)  The Plaintiff’s Summons in the terms as pleaded is dismissed;

(2)  No order as to costs of issue 2, as both the Plaintiff and the Defendant failed in respect of their respective pleaded cases on Issue 2.

56.In respect of the Defendant’s Summons

(1)  The Defendant do pay the Plaintiff’s costs of Issue 1:

(i)  for Issue 1 costs incurred up to and inclusive of 17 April 2025, to be taxed on party and on party basis on District Court scale if not agreed with Certificate for Counsel; and

(ii)  for Issue 1 for Issue 1 costs incurred after 17 April 2025, to be taxed on District Court scale if not agreed on indemnity basis with Certificate for Counsel;

(2)  The Defendant be entitled to interest on costs incurred from and inclusive of 18 April 2025 onwards at the enhanced rate of 3% uplift of the judgment rate;

(3)  The sum of HK$400,000.00 being the sanctioned payment into Court by the Defendant on 20 March 2025, together with interest thereon (if any) be paid out from Court to the Defendant through their solicitors Messrs. K.B. Chau & Co. forthwith; and

(4)  The Plaintiff do pay the Defendant’s costs of the Defendant’s Summons on party and party basis, to be taxed, if not agreed.

57.It remains for me to thank the parties’ legal team for their submissions.

Mr Chung Ming Shing Jerry, instructed by Herman H M Hui & Co, for the plaintiff

Mr Alex Lai, instructed by K B Chau & Co, for the defendant