Newmark Capital Corporation Ltd and Others v. Coffee Partners Ltd and Another

HCA 1271/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1271 OF 2006

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BETWEEN

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Before:  Mr Recorder Paul Shieh SC in Chambers

Date of Defendants’ Submissions:  14 March 2007

Date of Plaintiffs’ Submissions:  16 March 2007

Date of Ruling:  10 April 2007

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R U L I N G

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1.In this matter I handed down my Judgment on 8^th February 2007.  This is my Ruling on the Plaintiffs’ application for an order that there be an interim payment of costs under Order 62 rule 9A(b). 

2.The application was made by letter from the Plaintiffs’ solicitors dated 22^nd February 2007.  A number of procedural points were taken by the Defendants.  The Defendants’ solicitors, by letter dated 27^th February 2007, took the point that insofar as the application was intended to be an application to vary the costs order nisi contained in my Judgment dated 8^th February 2007, the Plaintiffs were out of time in making the application.  The point was also taken that an application to vary a costs order nisi should be made by summons (which would lead to the fixing of a date for a hearing).  By letter dated 7^th March 2007 the Defendants made the further point that insofar as the Plaintiffs were making a free-standing application for interim payment, such an application should not be made by letter.

3.I reject the Defendants’ procedural objections. 

(1)     An order for interim payment under Order 62 rule 9A is to be made by the court “when ordering costs against” a party.  It is contemplated by the rule that any such order should be part of the costs order made by the court.  An applicant for an order for interim payment (after an order nisi has been made) is in effect saying to the court “Judge, you have only ordered ‘costs against the other side to be taxed’ but we say that the proper costs order you should have made is that ‘costs against the other side to be taxed and in addition there be an interim costs to this effect […]”.  The effect of such an application is to vary the order nisi.  It is not a free-standing application. 

(2)     An application to vary a costs order nisi can be made by letter.  As a matter of practice such applications are, as my personal experience went, from time to time made by letter by a party to the Court setting out the effect of the variation sought.  If the matter is one which requires an oral hearing, a date can be fixed following receipt of the letter; if the matter is one which is to be dealt with “on paper” then the court can give directions for the filing of submissions.  I am not persuaded that such an application must be made by the filing of a summons. 

(3)     Insofar as there is any rule (to which I have not been referred) that an application for variation should be made by a summons, I regard that the making of an application by letter is at worst an irregularity.  I waive such irregularity under Order 2 rule 1.  I cannot see any prejudice caused by the fact that the application has been made by letter and not by the filing of a summons.  The Defendants’ solicitors made complaints about the lack of prior contact by the Plaintiffs’ solicitors with them about the making of such an application, and about the lack of proper basis for such an application.  These complaints, however, have nothing to do with the form in which the application was made.

(4)     The application to vary the order nisi was made within time.  The effect of the Defendants’ submissions is that a party will only have 13 days (as opposed to 14 days) to make an application, because (as I understand the argument) an application cannot be made on the day when the costs order became absolute (i.e. the 14^th day).  I can see no justification in Order 42 rule 5B to exclude the 14^th day from the period during which a party can make an application.  If I am wrong on this, I exercise my discretion to extend time.  I can detect no prejudice by the “delay” (which could only be a delay of one day).

4.I now turn to the merits of the application. 

5.The Plaintiffs rely on Order 62 rule 9A(b) (“for any other reason that the Court in the circumstances of the case considers just”).  No reliance is placed on limb (a).

6.The Plaintiffs made three points:

(1)     The Defendants had failed to make out a prima facie case and that the Defendants’ arguments were all dismissed.

(2)     Notwithstanding the Defendants’ reliance on the arbitration clause, they had not referred the dispute to arbitration.

(3)     Substantial costs and delay have been incurred at the very outset of proceedings. 

7.The Defendants had filed submissions in reply and the Plaintiffs had the last word on the substantive submissions.  I have considered the submissions of the parties with care, but I am not persuaded that the factors relied on by the Plaintiffs – whether individually or cumulatively – justify the making of an order under limb (b).  My brief reasons are as follows.

8.It is correct that I have held that the Defendants had failed to make out a prima facie case.  But that just means that I have rejected the Defendants’ arguments.  Many interlocutory applications are resolved on the basis that under the requisite test, the losing party has failed to meet a very low threshold (failing to show a triable issue, failing to plead an arguable case, etc).  In my view this does not, by itself, render it “just” that an interim order should be made.   

9.As to the point that the Defendants had not referred the matter to arbitration, the Defendants did not make any claim.  I do not think they can be criticized for not taking the initiative of commencing arbitration in the BVI. 

10.It is true that costs, effort and time had been incurred at the outset of these proceedings as a result of the Defendants’ application.  But that is also true of a lot of interlocutory applications which are necessarily made at the outset of proceedings (such as Order 12 rule 8 applications, forum non conveniens applications, striking out applications, etc).  Again this, by itself, does not render it “just” that an interim order should be made.

11.I have not simply looked at the above points in isolation.  I am aware that I should consider all the circumstances of the case.  I have done so, and have taken into account the above points in their totality (i.e. cumulatively).  There is, I am acutely aware, frequently a feeling or perception by the party on the “receiving end” of these applications that they were brought for the tactical purpose of delay or wearing down an opponent.  Of course an inevitable consequence of such applications (if unsuccessful) would be delay and waste of costs and effort.  That may sometimes be the objective of such an application; but equally such applications could well be made because of a genuine (but erroneously held) belief or perception that the application would succeed.  On the basis of the materials I have seen, do not think there is enough material for me to form any view adverse to the Defendants.  

12.The Plaintiffs also said that the Defendants had appealed my Judgment.  They contended that the Defendants chose to engage in further expensive satellite litigation instead of getting on with the resolution of the substantive dispute.  But the Defendants have a right to appeal my Judgment.  I will not hold it against them for having sought to appeal.

13.My observations in paragraphs 8 to 12 above are confined to the facts of this particular case and to the materials currently before me.  I am not laying down any rule or principle that a particular factor can never, as a matter of law, by itself justify the making of an interim order; nor am I laying down any rule or principle that a particular factor is, as a matter of law, always necessary before such an order can be made.  After all, the matter is one of discretion and the court’s assessment of what is “just”.  In such a context, absolute rules (to the effect that factor X is always insufficient, or factor Y is never sufficient) are rarely appropriate.

14.I therefore dismiss the application.  

15.As to costs, the Plaintiffs had failed in the result.  But the Defendants had also failed in part of their arguments relating to the mode of application as well as the “out of time” point.  These are distinct points.  I have reminded myself of the well-established principles governing my discretion as to costs as well as the principles in Re Elgindata (No. 2) [1992] 1 WLR 1207.  As a matter of discretion I deprive the Defendants of 10% of their costs as being referable to that aspect of the application, on which their arguments had failed.  Therefore my costs order on this application is that the Defendants are to have 90% of their costs to be taxed if not agreed. 

Mr John Scott, SC, instructed by Messrs Clifford Chance, for all Plaintiffs

Mr Jeremy Bartlett, instructed by Messrs Johnson, Stokes & Master, for both Defendants