The Prudential Enterprise Limited and Another v. P.H. Shek Limited and Another
Read the full judgment text of HCA 4911/1986 on BabelCite. This High Court CFI judgment.
1. By a Tenancy Agreement, premises in the Prudential Centre were let by the 1st plaintiff to the defendants. The 1st plaintiff assigned the Prudential Centre to the 2nd plaintiff. The defendants allegedly assigned, sub-let or otherwise parted with possession of these premises in breach of the said Tenancy Agreement. The plaintiffs re-entered and commenced proceedings to recover possession. The action was tried by Rhind J. and judgment was given in favour of the 2nd plaintiff against both defend
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HCA004911/1986 1986, No. A4911 IN THE SUPREME COURT OF HONG KONG HIGH COURT --------------- BETWEEN
Coram: Hon. Liu J. in Chambers Date of hearing: 31st May and 1st June 1989 Date of delivery of judgment: 23rd June 1989 ------------------------ J U D G M E N T ------------------------ 1. By a Tenancy Agreement, premises in the Prudential Centre were let by the 1st plaintiff to the defendants. The 1st plaintiff assigned the Prudential Centre to the 2nd plaintiff. The defendants allegedly assigned, sub-let or otherwise parted with possession of these premises in breach of the said Tenancy Agreement. The plaintiffs re-entered and commenced proceedings to recover possession. The action was tried by Rhind J. and judgment was given in favour of the 2nd plaintiff against both defendants. Damages were thereupon ordered to be assessed by a judge. 2. The hearing before Rhind J. was fixed for the 18th July 1988. Some 16 days earlier, on the 2nd July, the defendants paid into court $3.75M and served a notice thereof on the plaintiffs. The hearing of this action commenced as scheduled on the 18th July and was concluded on the 19th August 1988 when judgment was given. Costs were argued before Rhind J. on the 22nd August 1988. Assessment of damages was proceeded with before me from the 21st January 1989. The award made came to be $5.762M, covering a period of 14 months less two days from the 14th August 1987 to the 12th October 1958. The period was agreed between the 2nd plaintiff and the defendants. It ran from forfeiture to the date of vacation by the defendants. At the time of the payment in on the 2nd July 1988, mesne profits were claimed by both plaintiffs from the 1st May 1987 to possession. The actual period of holding over after forfeiture was shorter, and assessment was made for the benefit of the 2nd plaintiff alone. 3. In this action, the plaintiffs claimed possession, damages, mesne profits, air-conditioning charges, management fees, water charges, rates, interests and costs. Except for mesne profits, no other special damage was pleaded. Mesne profits and "damages" were nevertheless claimed separately in the prayer. Damages were assessed exclusively on mesne profit. Charges, fees and rates were not within my terms of reference. This Court was only to assess damages. The award of $5.762M is in excess of the $3.75M paid in. 4. By two Orders made on the 11th September 1987 and 31st May l988 and 31st May 1988 respectively, money was ordered to be paid by the defendants to the plaintiffs by way of interim payments, representing the contractual rental, the recurring charges, fees and rates. These interim payments were ordered to be made "on account of [the defendants'] liability in respect of their use and occupation of the suit premises ...... until final judgment or until further order". Up to vacation but before the award, the plaintiffs had received interim payments in the sum of $2.919M. The difference between the award of $5.762M and the interim payments of $2.91914 is $2.843M. 5. It is the case of the defendants that the crucial comparison with the $3.75M paid in should be made of the balance of the $5.762M award after taking into account the $2.919M interim payments. In this way, the net sum of $2.843M to be recovered by the 2nd plaintiff from the defendants is less than the sum of $3.75M paid in. On the force of this computation, the defendants claim the costs of the assessment of damages. 6. Under Order 22, rule 1(2) of the Rules of Supreme Court, it is mandatory for a payment-in to be followed by a notice given in accordance with Form No. 23 in Appendix A. See p.B637 (LN 117/88). Form 23 provides three basic formats : the first caters for a payment-in to satisfy a plaintiff's entire claim i.e. the cause of action or all the causes of action in respect of which a plaintiff claims; the second is devised for a payment-in to satisfy any individual causes of action; and the third is for apportioning the sum paid in to individual causes of action. All the three formats allow a plaintiff to take into account the cause of action in respect of which a defendant counterclaims. See 0.22, r.2. 7. The notice of payment into court served by the defendants in this action adopted the first of the three formats. It is set out below :
0.29, r.16 provides that after making an interim payment, a notice of payment into court "must state that the defendant has taken into account the interim payment", "if it be the case". See also marginal reference 22/1/16 at p 380 Vol. 1, 1988 White Book, last paragraph. The notice of the defendants in this action contains no such statement. 8. I should first summarise the rival contentions. On both the format used and the lack of reference therein to interim payments, the 2nd plaintiff complains of defects in the notice of payment into court. It is submitted that in not taking advantage of 0.29, r. 16, the defendants deliberately ignored the interim payments. Had the defendants intended to take into account these interim payments, Mr Swaine's response to it is that such intention was never communicated and was unknown to the plaintiffs. Hence, non-compliance with 0.29, r.16 precludes the defendants from claiming in the $3.75M any allowance for these interim payments. The 2nd plaintiff further says that the selected format for "the cause of action" relates to the plaintiffs' entire cause of action in ejectment and that therefore the payment-in and its notice in respect of such a non-monetary claim fall outside the ambit of 0.22, r.1 and are both ineffective. It is trite law that 0.22, r.1 would only permit bringing into court a sum in respect of a cause of action for a debt or damages, i.e. for a monetary claim. Insofar as "the cause of action" in the notice could be "read in a broader sense as embracing an identifiable monetary claim" (see marginal reference 22/1/20, 2nd paragraph), the defendants were in clear breach of 0.22, r.1(1) & (4) by failing to specify which of the causes of action in respect of which payment was made. On behalf of the 2nd plaintiff counsel further submits that if "the cause of action" could be taken as meaning collectively "all the causes of action", the notice does not distinguish between the monetary claims and the non-monetary claim for possession.. Thus, the payment-in is technically out of order and invalid. Moreover, the lump sum payment-in without giving any break down figures provides no yardstick for comparing like with like in terms of mesne profits which this Court was to assess. Consequently, the plaintiffs could not be properly advised as to what part of the lump sum was to stand for mesne profits and how the offer was to be judged adequate. It is also impossible to say even now whether or not the award exceeds the amount in the lump sum said to have been intended for meeting the claim for mesne profits. Hence, so counsel argues, if regard could otherwise be had to the payment-in despite its bad notice, the ambiguities created by the neglect to exclude a claim for non-monetary relief, the failure to identify the relevant cause or causes of action and/or the omission to specify how much of the $3.75M was paid in for mesne profits would frustrate all attempts to give effect to it. Mr Swaine maintains that the notice is additionally obscured by the inclusion of the defendants' Counterclaim for relief against forfeiture, again a non-monetary claim, which cannot be taken into account under 0.22 r.2. Finally, the notice is silent on interim payments so that the payment-in of $3.75M could very well be said to have deliberately chosen to disregard them. But if the notice could in some way be interpreted as being capable of obliquely referring to these interim payments, counsel warns that it would then make the notice all the more uncertain. 9. For the defendants, it is submitted that Form 23 had been dutifully followed as required of them by 0.22, r.2. Mr Mills-Owens, counsel for the defendants, suggests that the supreme Court Rules Committed have overlooked amending form 23 for interim payments an that the defendants should not be prejudiced in their claim for costs. In any case, so counsel argues, the circumstances are indicative that the 2nd plaintiff must have been aware of the defendants' intention on the 2nd July to match the plaintiffs' net claim i.e. the entire claim less the interim payments as the plaintiffs had so confined themselves in their particulars under paragraph 10 of the Amended Statement of Claim. Mr Mills-Owens further submits that the notice has not affected the substance of the payment-in which should be linked to a claim envisaged by 0.22, r.1, a monetary claim in respect of which a payment into court could be made. For the purpose of this action, it is the net claim of the plaintiffs. In all, ignoring the prayer for damages, there are five monetary claims for (1) mesne profits, (2) air-conditioning charges, (3) management fees, (4) water charges and (5) rates. The claim for damages is unsupported by any pleaded special damage save for mesne profits. Fees, charges and rates have never been contentious items. Thus, it may arguably be said that the $3.75M paid in was and must have been understood as a sum for meeting the plaintiffs' net disputed monetary claim for mesne profits. Even if, so it is reasoned, the notice is bad not only in form but also in substance, the Court should not wholly isolate itself from the reality that a sum of $3.75M had indeed been paid into court before action with a view to meeting what the plaintiffs truly sought to recover from the defendants. 10. It would be more convenient to begin with Form 23. "Interim payments" was introduced in England in 1970 in actions for personal injuries. The new procedure implemented the main recommendations, in modified form, made in Section IV of the Report of the Committee on Personal Injuries Litigation. See Cmmd. 3691, 1968. The machinery was extended to possession of land in England in 1977. In 1980, the English definition of "interim payments" was given its present connotation of "a payment on account of any damages, debt or other sum (excluding costs)". In Hong Kong, we followed the same three stages except a little later in time in 1976, 1979 and 1988. See LN 51/76, LN 312/79 and LN 117/88. Prior to the introduction of "interim payments" to possession cases, mesne profits and other usual fees and charges were secured with reasonable success under the notion of preservation of property pending suit as provided for by 0.29, r.2. Similarly, we now have in Hong Kong Part II of 0.29, from r.9 to r.18, regulating "interim payments". In the 1988 White Rook, notice of payment into court is also given as Form 23 in Appendix A. See Vo1.2 p.p. 14-15. On a par with our Form 23, that form is couched in identical terms. It has also not been amended. A concession of oversight has been made too readily for our Rules Committee. As a matter of fact, 0.1, r.9 offers to litigants the use of precedent forms "where applicable with such variations as the circumstances of the particular case require". A suggested form for a notice of payment into court with interim payments taken into account is given at p. 274, Form 373 of Chitty & Jacob's, Queen's Bench Forms, 21st edn.(1986). That modified form carries a footnote : "Note. - adapted from a prescribed form, see Appendix A, NO. 23 and see Ord. 29, r.16". If there had been any oversight, it could not have been the oversight of the Rules Committee. The 21st edn. of the Queen's Bench Forms should have been consulted. 11. Therefore, when the notice in this case does not state that the defendants have taken into account the interim payments, the amount of $3.75M paid in is conspicuously a sum from which no interim payments have been discounted. There is every justification for the plaintiffs to regard the sum so paid in as an amount not having taken into account the ordered interim payments. Indeed with the notice in this case, one is more likely to expect the defendants to apply for the ordered periodical sums to he paid out of the $3.75M as "it is usual to order that the interim payment should be made out of any money in court". See marginal reference 29/9-18/11 at p.497 Vol. 1, 1988 White Book. 12. I deal first with Form 23 so as to set out the background against which "interim payments" was introduced. The sheet anchor of the defendants' argument on this aspect of their case is that the payment-in, even without any mention of the interim payments in its notice as required by 0.29, r.16, was in fact made to meet what remained to be recovered by the plaintiffs, i.e. the net balance of the plaintiffs' claim for mesne profits. The defendants adopt a two-forked approach : the first is founded on the language of the particulars of loss and damage given under paragraph 10 of the Amended Statement of Claim. These particulars read : "The Plaintiffs will claim the mesne profit, fees and charges, as pleaded in the Prayer herein, less any interim payments made by the Defendants and accepted by the Plaintiffs." In essence, so counsel for the defendants submits, it is a claim for the net balance, i.e. for the excess of the claimed mesne profits, fees and charges over the interim payments. (For reasons best known to the defendants, unless also loosely included in the "charges", rates was not specifically mentioned). Since fees, charges and rates were not in dispute, the claimed net balance is the excess of mesne profits beyond the contractual rental. It is pressed upon me that as particularised in paragraph 10 of the Amended Statement of Claim, the plaintiffs' claim was effectively reduced to such a net balance. That is, so runs Mr Mills-Owens' argument, the only identifiable monetary claim sought to be advanced by the plaintiffs, and since money could only be brought in under 0.22, r.1 in respect of a monetary claim, the payment-in was or must be treated as one made to meet this net claim. 13. The sum ultimately recoverable shall have to be adjusted in the formal judgment after an assessment award. Much play is made of the obvious that the adjustment "that needs to be made is that the amount of interim payment should be deducted from the amount of the total award of damages". See marginal reference 29/9 - 18/16 at page 498, Vo1 1, 1988 Annual Practice. 14. On the force of the net balance said to have been so declared as claimable coupled with the necessity to adjust in the formal judgment, it is further urged on behalf of the defendants that the payment - in was or must have been fully appreciated by the plaintiffs as carrying with it a built-in allowance for interim payments. 15. I shall deal with the second limb first. The defendants rely on various discussions with Mr Emerson, solicitor for the plaintiffs, a jocular remark of his and his representations made to Rhind J after judgment. It is not the defendants' case that the plaintiffs had been categorically told of the sum paid in as having these interim payments discounted. Put at its highest, the case of the defendants is that the plaintiffs and their solicitors seemed to have and must have fully appreciated or ought to have fully appreciated the situation. Mr Emerson has deposed on oath that from start to finish, he had no idea that the payment - in had taken into account these interim payments. He has also gone on record to say that if he had thought, at any material time, that the $3.75M paid into court represented the excess over and beyond the interim payments, he would have advised the plaintiffs to accept it. Cross-examination of Mr Emerson as a deponent has not been sought. Thus, it would be futile for the defendants to try to build a case on circumstantial evidence. It must be accepted that Mr Emerson was unaware of any reservation in the amount so paid-in. I do not accept that the plaintiffs ought to have known what the defendants had intended. It is not being suggested that the 2nd plaintiff should otherwise be estopped from disputing the undisclosed intention of the defendants. 16. Moreover, by a letter dated the 8th July 1988, Solicitors for the plaintiffs enquired form solicitors for the defendants of the true basis of the payment-in in these terms :
17. To this enquiry, there has been no response. The defendants were put on notice that the plaintiffs were perplexed. The matter could have been easily resolved, but the defendants were not prepared to clarify. Whatever the discussions, jocular remark or representations made to Rhind J. after his determination of liability, no step has ever been taken by the defendants to fix Mr Emerson with knowledge of the stance they now openly assume. 18. Coming back to the first limb of the defendants contention on 0.29, r.16, it need be remembered that paragraph 10 of the Amended Statement of Claim does not hale the effect of diminishing the 2nd plaintiff's claim for mesne profits, fees and charges. These, so paragraph 10 avers, "the Plaintiffs will claim..... as pleaded in the Prayer". The prayer sets out the full claim under each head. What the plaintiffs then noted in the particulars under paragraph 10 is no more than the eventual arithmetic that allowance would, in due course, be given for the interim payments made and accepted. The net balance explored in Mr Mills-Owens ' common sense analysis fails to differentiate the sum adjudged from the sum recovered. The interim payments ordered were paid on account of the defendants' liability in respect of their use and occupation of the suit premises, but the plaintiffs' claim was not there by satisfied, either wholly or in part. In the end, only the 2nd plaintiff succeeded and adjustment would have to be made in the formal judgment. The assessment before me was limited to the 2nd defendant's entitlement to damages. If these interim payments had had the effect of satisfying part of the claim of either of the plaintiffs, the 1st plaintiff's claim could not have been amenable to a total dismissal. A payment into court is simply an offer to dispose of the claim or some of the claims on terms. Per Devlin L.J. in A. Martin French v. Kingswood Hill Ltd., [1961]1 Q.B. 96, p. 103; marginal reference 22/1/4 at p.377, Vol. , 1988 White Book. Thesiger, L.J. described it as an offered "price for peace" "for the prevention of further litigation". Berdan v. Greenwood, 3 Ex.D.251, P.259; Coote v. Ford, [1899] 2 Ch. 98, p.100. Payment into court or interim payment forms part of a special procedural machinery in our Civil Code. A sum must be properly brought into court in accordance with the rules to achieve the desired result of removing judicial discretion as to costs. It would not be open to defendant to freely formulate his own terms for making a payment-in. For instance, under 0.22, r.1 a defendant could not offer to compromise what he would regard as the net claim of a plaintiff leaving a portion of it to be settled elsewhere; nor could he offer to do away with the plaintiff's claim on conditions. The "offer" under 0.22, r.1 must be made without reservation for the whole of an identifiable monetary claim so as to enable the plaintiffs to judge the amount so paid in with reasonable certainty. If a defendant seeks to effect a compromise under the rules which permit a payment into court, he has simply to make his offer according to the rules. In regulating the manner in which a payment into court may be made, the precedent form correspondingly suggests formats in the notice of payment in for adaptation. No consequence would enure to the defendants' benefit unless the procedural machinery is properly put to use. Unless permitted by other rules, a defendant may not invoke 0.22, r.1 in satisfaction of the balance or part of an identifiable monetary claim. There are rudest for taking in others claims. These other t rules must also be strictly followed. In this way, 0.29, r.16 introduces a mode of payment-in to tale "into account the interim payments". But if a defendant should desire to take into account the interim payments, he "must" say so in his notice of payment into, court 0.22, r.2 permits a defendant to make a payment-in in respect of his counterclaim for a debt or damages. Again, he "must state" that his payment-in is in respect of the cause or causes of action in his counterclaim. There is also no rule to allow a payment into court of such sum as the plaintiff may enforce in execution at the conclusion of the suit. The defendant has to pay in an amount to satisfy the plaintiff's claim as it then stands. He cannot strike a balance and simply pay in what is the realistic net claim. Matters such as ordered interim payments and his counterclaim may be taken into account only when they are so stated in the notice. If a defendant does not observe the rules, he cannot take advantage of his unexpressed intention of taking into account an interim payment. Unless he follows the rules, he cannot disrupt the usual incidence of costs. 19. Applying the above principles to this case, at first blush the plaintiffs' cause of action is their substantive claim in ejectment. In a broader sense, it may be said that it comprises the plaintiffs' claim for possession and their claim under all the separate heads for damages, mesne profits, fees, charges and rates. Whether or not it is susceptible of an extended meaning, the phrase "cause of action" in 0.22, r.1 simply could not refer to less than a plaintiff's full claim. There is a provision for taking into account interim payments, but that provision was not called in aid by the defendants here on making their payment into court. 20. I have been led through various forms of judgment and adjustment made on the final judgment, in which interim payments are acknowledged, but they do not seem to assist the defendants. In adjusting the amount recoverable for a formal judgment to be entered in favour of the 2nd plaintiff, "the form of judgment should recite the amount of the final judgment or the assessment of the damages and should further recite the order[s] for interim payment[s] and payment made thereunder.... and judgment should be entered for the balance". See mariginal reference 29/9 - 18/16 at page 498 Vol. 1, White Book 1988. In this case the amount awarded would obviously have to be different from the amount recoverable in the formal judgment. The rules for making a payment into court cannot be thereby affected. 21. Lastly, I turn to the suggested defects in the form of the notice of payment into court. Evidently, a notice is defective if it fails to relate to the relevant cause of action in the broader sense. The material "cause of action" in this case is the claim for damages. A sum paid in respect of this claim is to be compared with the assessment award. But it is not encumbent upon a defendant to explain how the amount brought in is arrived at. A small sum may be lodged for a significant claim and a very substantial sum for a trivial claim. It would invariably depend on the judgment of the party bringing a sum into court. No party can claim to be embarrassed "because it is not clear how the lump sum has been calculated". See mariginal reference 22/1/20 at p.381, 1988 White Book, Vol. l. 22. The monetary claims of the 2nd plaintiff were made under six separate heads, namely, damages, mesne profits, air-conditioning charges, management fees, water charges and rates. Diplock, L.J., as he then was, discussed the phrase "a cause of action" in Letang v. Cooper [1965] 1 Q.B. 232 at p.p. 242 - 243 thus : "A cause of. action is simply a factual situation, the existence of which entitles one person to obtain from the court a remedy against another person". Then the Lord Justice continued : "Historically, the means by which the remedy was obtained varied with the nature of the factual situation and causes of action were divided into categories according to the 'form of action' by which the remedy was obtained in the particular kind of factual situation which constituted the cause of action. But that is legal history, not current law." The same phrase connotes a wider meaning under 0.22. The passage for "cause of action" in the context of 0.22 given in mariginal reference 22/1/20 at p. 381 of Vol. 1 of the 1988 White Book seems to be accepted on all hands. It extends the meaning of the phrase "cause of action" for 0.22, r.1. That passage suggests that it "must be read in a broad sense as embracing an identifiable monetary claim which a plaintiff seeks to advance". Even in the late 19th century, under a comparable rule, no opposition was raised to counsel's description of a plaintiff's action for an injunction as well as damages as one being "grounded on two causes of action". Moon v. Dickinson, (1890)63 L.T. 371 at p.372. 23. It is inconceivable that the defendants Could gainfully rely on a notice of payment into court with the defects I am about to list. "The cause of action" in the first format in Form 23 is used in the defendants' notice of payment into court. Thus, it links the defendants' payment-in exclusively to the plaintiffs' substantive cause of action in ejectment. That is not permissible. Money could not be brought in for a non-monetary claim for possession. If the phrase "the cause of action" in the defendants' notice could be taken as referring to one of the monetary claims as opposed to "the" claim, the defendants failed to specify in their notice the particular cause of action in respect of which payment was made. Insofar as that phrase "the cause of action" is susceptible of the meaning of all the monetary claims under the six heads, the defendants then failed to apportion the sum paid in by specifying an amount for the cause of action relevant to my assessment of damages. 24. There is much to be said for Mr Swaine's criticisms of the ambiguities in the notice, including those created by the inclusion of the Counterclaim and any possible oblique reference to the interim payments. 25. Even assuming that the defendants are able to overcome all these obscurities, none of the decisions cited truly founds the proposition that the defective notice could be treated as one or a valid one referrable to a monetary claim, i.e. claim for mesne profit, let alone a net claim for mesne profits. 26. The underlying principle is that under 0.22, r.1, a payment into court could only be made in respect of debt or damages. The rule is clearly confined to the case of an action brought to recover a debt or damages. Coote v. Ford, supra. at p.99 per Stirling, J., at p.103 per Lindley M.R. and at p.105 per Rigby, L.J; Smiths Lid. v. Middleton (No. 2) [1986] 2 A.E.R. 539 at p.550 Letter a/b. This action involves more than a claim for a debt or damages. Possession is also claimed. Provided that the sum paid in is earmarked for any or all of the monetary claims an 0.22 payment-in would be permitted even In a action for mixed claims. To digress for a moment in these proceedings a sum must be allocated to mesne profits before it can be pitted against the award. Indeed, it is so stated in para. 86 at p.58, 31 Atkins Court Forms (1987 edn.) :
27. What then is the position of a payment into court either in an action for only non-monetary claims or in an action for mixed claims without specifying the cause of action in respect of which money was paid? Nichols v. Evens (1883)22 Ch. D. 611 is an example of the former. It was an action by a bond holder for execution of certain trusts by reason of alleged wilful default, claiming an account and consequential relief. The trustees/defendants brought into court a sum to satisfy the plaintiff's share in an alleged act of wilful default and her share of entitlements under the bonds. Fry, J. observed that not only was the sun deliberately paid into court not in satisfaction of the plaintiff's entire demand, the defendants could not have done so in an action for an account on the footing of wilful default. The judge so decided even though the plaintiff accepted the money "in satisfaction of her entire cause of action". At p.613 Fry, J. said :
Money in court was accepted in purported satisfaction of the entire cause of action for an account, and by her acceptance the plaintiff had even stopped the action. Nevertheless, Fry, J. held that it was not a valid payment-in under the rule to substitute the procedurally prescribed taxation of costs for the court's discretion as to costs. 28. In an action with a mixed claim for debt or damages and other non-monetary relief, a payment-in confined to the claim for debt or damages is permissible under 0.22, r.1. See para. 86, p.58, 31 Atkin's Court Forrts. Moon v. Dickinson supra. provides an illustration. In that case, the plaintiff claimed an injunction and damages for a nuisance. The defendants brought into court a sum of £25 in satisfaction of "the whole of the plaintiff's claim, if any, for damages in this action". Payment was thus expressly made in respect of the claim for damages, not for the injunction claim. It was held that the entire action was not wholly satisfied by the payment-in for damages so as to give rise to taxation of costs as prescribed by the rule. 29. Where either the nature of or the language describing a payment into court is less than certain, the courts are inclined to give effect to the payment-in by treating it as a sum validly brought in under 0.22, r.1 in respect of a monetary claim. In Knight & Knight, [1925]1 Ch. 835, the sum paid in was "in full satisfaction of all the plaintiff's claims in the action and as money advanced to [the defendant]". See p.837. The Plaintiff's claim was for a declaration of partnership together with consequential relief. The plaintiff raised an alternative claim for money lent, which was wholly inconsistent with his partnership claim. The payment brought into court was apparently not accepted by the plaintiff. The plaintiff failed in his partnership claim but recovered under his alternative claim for money lent. The defendant's costs in the failed partnership claim were ordered to be set off against the money remaining in court. Thereafter the plaintiff's own solicitor obtained a charging order. The plaintiff appealed against the dismissal of his partnership claim and his appeal was unsuccessful. The defendant applied for her appeal costs to be likewise set off against the sum paid into court. The matter at issue was the priority of recourse to the balance of money in court between the defendant and the plaintiff's solicitor. The English Court of Appeal was almost prepared to treat the payment-in as one effectively made in respect of the money lent. To Pollock M.R. the manner in which the payment was made was embarrassing at first sight, but he found it unnecessary to decide on the effect of the payment in. See p.837. Atkin L.J. commented that it was impossible to pay money into Court as an answer to a partnership claim as "they [were] not on the same plane; you [could not] pay money into court in answer to a claim for such relief as that". Nevertheless, the learned Lord Justice took the view that the sum brought into court "must be taken to mean in satisfaction of the alternative claim which the plaintiff made". See p.839. The language of the payment-in plea, though ambiguous, placed some emphasis on money lent. The money lent claim itself posed as a claim alternative to and inconsistent with the partnership claim might also have influenced Pollock, M.R. and Atkin, L.J. 30. Another case of unclear language used for making a payment in can be found in Coote v. Ford, supra., where judicial interpretation played a part in treating an otherwise obscure payment-in as one effectively made in respect of damages only. It was an action in trespass for damages and an injunction. The defendant paid into Court "by way of satisfaction of his liability, if any, in respect of the matters complained of". The plaintiff accepted the money "in satisfaction of a claim in respect of which it is paid in". At p.99, the trial judge, Stirling J. was mindful of the vague language in the payment-in plea, but he reasoned in these terms : "Remembering that the payment can only be made in respect of damages, it seems to me that the matters referred to are those stated in paragraph 2 of the Statement of Claim". Paragraph 2 of the Statement of Claim dealt with damages. He also took into consideration "the other allegations of the defence". The language was ambiguous; the defendant could only pay into court in respect of damages under 0.22, r.1; he was taken as having acted properly particularly with his intention as reflected by the other allegations in the defence. Hence, the learned trial judge treated his payment-in as made in satisfaction of damages only. At p.p.103 and 106, Lindley M.R. and Rigby, L.J. simply acted on the basis that the defendant's payment-in was with respect to damages. The central question for the English Court of Appeal and the trial judge was whether the payment-in and acceptance created any admissions so as to preclude the plaintiff from continuing with his claim for an injunction and the defendant from prosecuting his counterclaim based on an alleged custom. The decision was that the payment-in and acceptance created none of these admissions. The case turned on the effect of 0.22, r.1 rather than validity of the payment-in, which was a peripheral issue. The trial judge was also of the opinion that the plaintiff was entitled to proceed with his injunction prayer and Lindley, M.R. also observed, without deciding, that the plaintiff would probably be able to pursue his injunction. See p.105. Reference is made here to this aspect for a point soon to follow. 31. Smiths Ltd. v. Middleton (No. 2), [1986] 2 A.E.R. 539 is again not too helpful. It was a case of three consolidated actions, one for an account and the other two for damages. The defendant made a payment into court "in satisfaction of all the causes of action in respect of which the plaintiffs claim". Later, a further payment was brought into court. The plaintiff recovered less than the amounts paid in after a 45 days' trial. The questions that fell to be decided were whether the payment-in was good under 0.22, r.1 and whether the payment-in, if defective, could be a factor material to the question of costs. At p.551, Letter b, the trial judge was quoted as concluding that the payment-in ailed to distinguish between the claims and it was technically out of order. But he nevertheless took it into account in considering the question of costs. At p.551, in delivering the judgment of the English Court of Appeal, O'Connor L.J. took the view that the trial judge's finding of the payment-in being technically out of order and invalid was not the operative reason for depriving the defendant of his costs. The learned Lord Justice held that the trial judge "decided to treat the payment-in as if it were valid and exercised his discretion" on some other justifiable grounds. In the circumstances, the English Court of Appeal did not find it necessary to consider whether or not the trial judge was right in holding the payment-in as being technically invalid. 32. Young v. Black Sluice Commissioners, (1909) 73 JP 265 is a case for a bad payment-in. The plaintiff claimed a declaration, an injunction and damages. Denying liability, the defendants paid £5 into Court in satisfaction of "the plaintiff's claim in respect of the matters pleaded". The plaintiff accepted the sum "in satisfaction of the claim in respect of which it is paid in". The plaintiff argued that judicial discretion as to costs was ousted by the rule prescribing for taxation of costs. On the conduct of the parties, both the payment-in and acceptance, the plaintiff raised an estoppel seeking to put in place the rule for taxation of costs. Evidently, a payment into Court could only be made in satisfaction of an action for debt or damages only. Parker, J. held that "as [the payment-in] was made in respect of all the claims", it was not a valid payment made under 0.22, r.7 so as to set in motion the prescribed procedure for taxation of costs, hence costs remained in the discretion of the court. Unlike Stirling, J. in Coote v. Ford, supra., Parker, J. did not find any obscurity in the very similar language. Granted that attention "was primarily focused on the effect of the payment-in and acceptance, the payment-in was nevertheless regarded as not fallng within 0.22, r.l. The decisions in Young v. Black Sluice Commissioners and of Stirling, J. in Coote v. Foid would appear to be irreconcilable unless the latter is sought to be distinguished on account of the defendant's intention as reflected by the other allegations in the defence. 33. I am inclined to the view that a payment-in on a notice with the defects discussed is invalid for the purpose of 0.22, r.1 and that consequently the $3.75M cannot be a proper matter for considering the question of costs. In the absence of any apparent ambiguity either in the language describing a payment-in or in the intention of the defendant, what was held by Parker, J. in Young v. Black Sluice Commissioners and the trial judge in Smiths v. Middleton lend support to the view I have expressed. 34. For the various obscurities in the notice I have endeavoured to enumerate, the 2nd plaintiff could not be reasonably expected to even seriously consider accepting the sum so paid in. It would be quite futile for the 2nd plaintiff to try to make a fair judgment as regards adequacy, having to speculate on the amount in the lump sum attributtable to the claim for mesne profits. A payment-in of the nature and in the form made in this case could not be, for these reasons, a material factor for considering the question of costs. 35. Therefore, I need express no concluded view on the validity of the payment brought into court in this case. 36. In my judgment, the defendants' notice of payment into court does not have and cannot, in all the circumstances, be given the effect of taking into account the interim payment's. Thus, the award clearly exceeds the amount brought into court. In any event, therefore, the notice cannot assist the defendants. 37. Similarly, I need not decide whether an acceptance of a sum paid in for the cause of action or all the causes of action would bar the 2nd plaintiff from proceeding with its claim for possession or from raising its resistance to the defendants claim for relief against forfeiture. It is Mr Swaine's contention that since the risk was real, the plaintiff's could not be safely advised to take the sum out of court. However, whatever risk there existed, the position of the parties would be quite different after judgment with injunction and relief against forfeiture behind them. There were then only damages left to be assessed. 38. In Young v. Black Sluice Commissioners, supra., at 0.266, Parker, J. observed that in taking out the sum paid in, "the action in substance came to an end". That seems to be in accord with the decision in Hargreaves Construction (Line-side) Ltd. v. Williams & Another, T.L.R., 3rd July 1982. The plaintiff there claimed an injunction and damages. The defendant paid in £110 "in satisfaction of the cause of action in respect to which the plaintiff claims". The plaintiff accepted the amount so paid into court but with an accompanying letter clarifying the extent of its acceptance. The letter specifically stated that the plaintiff's acceptance should not affect its claim for an injunction. It was held by Foster, J. that there could be no conditional acceptance of any sum paid into court and that the plaintiff was precluded from proceeding with its claim for an injunction. The payment-in was in satisfaction of "the" cause of action, but Foster, J. did not seem to have considered the effect of a sum paid into court in respect of a non-monetary relief. The language of the notice would also appear to be technically out of order and bad. Foster, J. made reference to "a single cause of action", but in a broader sense, there were two causes of action. The learned judge did not have cited for his benefit the case of Coote v. Ford, supra., where an opposite view was expressed by the trial judge and found favour with Lindley, M.R. If no payment-in could affect a claim for an injunction under 0.22, r.1, it would be very difficult to understand why the plaintiff could not keep alive its prayer for an injunction in Hargreaves case. Estoppel or other inequities was not relied on. Conditional acceptance was the central issue in Hargreaves, and it seemed to have been the concensus, without any determination, that once a payment-in was unconditionally accepted, the whole action together with the injunction claim could be stayed. 39. I deal with these authorities in deference to counsel's efforts. I am drawn to the proposition that acceptance on the notice in this case would not preclude the 2nd plaintiff from pursuing its injunction claim or its opposition to the defendants' prayer for relief against forfeiture. 40. There are no other material circumstances. Costs of the assessment should follow the event. The 2nd plaintiff shall also have costs of these further proceedings.
Representation: Mr J. Swaine, Q.C. and Mr G. Ma instructed by M/s. Tai, Ho & Chan for the 2nd Plaintiff. Mr Mills-Owens, Q.C. and Mr R. Wong instructed by M/s. Deacons for the 1st & 2nd Defendants. |