She Tsu Yi v. Tsui Ki Ting and Others

HCA1684/2004
& HCMP3290/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1684 OF 2004

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BETWEEN

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AND

MISCELLANEOUS PROCEEDINGS NO. 3290 of 2004

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BETWEEN

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(HEARD TOGETHER)

Before : Hon Poon J in Chambers

Date of Hearing : 4 December 2007

Date of Decision on Costs : 13 December 2007

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DECISION ON COSTS

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A. Introduction

1.This Decision should be read together with the Judgment that I handed down on 5 November 2007.

2.By that Judgment, I allowed Mr She’s claims against the Tsui Brothers, Million Sense, Vast Land (collectively “the defendants” below) and Po Tek.  I also made an order nisi that Mr She shall have the costs of both HCA1684/2004 and HCMP3290/2004, including all costs reserved, to be taxed if not agreed.

3.Mr She now applies to vary the costs order nisi.  He wants to have his costs against the defendants taxed on either the indemnity or the common fund basis, both of which are more generous than the party and party basis.

B. The principles

4.Under Order 62, rule 28(3), the court in awarding costs may in any case in which it thinks fit to do so order or direct that costs shall be taxed on the common fund basis or on the indemnity basis.

5.Although the discretion conferred by Order 62, rule 28(3) is a board discretion, the successful party must show that the case has some special or unusual feature in order to obtain an order for costs on an indemnity basis : Town Planning Board v. Society for Protection of the Harbour Ltd (No.2) (2004) HKCFAR 114, per Li CJ at para.15.

6.The Chief Justice went on to say :

“	Grounds for making an order for indemnity costs
	16.	The courts have rejected the proposition that an award of indemnity costs will only be made where a case has been brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party.  (Macmillan Inc v Bishopsgate Investment Trust Plc (unrep., 10 December 1993) (Millett J); Disney v Plummer (unrep., English Court of Appeal, 16 November 1987).  These decisions and the reasoning on which they were based have been endorsed by the Hong Kong Court of Appeal (Sung Foo Ltd v Pak Lik Co (a firm) [1996] 3 HKC 570 at pp.575E-576F, per Godfrey JA; see also Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327 at pp.1334G-1335I, per Stock J.)
	17.	In these and other cases, courts have emphasized the undesirability of attempting to define the circumstances in which orders for indemnity costs are to be made.  It has been said that :
			… the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’.
		(Macmillan Inc v Bishopsgate Investment Trust Plc (unrep., 10 December 1993), per Millett J; Sung Foo Kee Ltd v Pak Lik Co (a firm) [1996] 3 HKC 570 at pp.575E-576F, per Godfrey JA; see also Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327 at pp.1334G-1335I, per Stock J).
	18.	Neither statements of principle nor authority provide any support for the Board’s proposition that the attributes of the parties and the character of the proceedings are irrelevant to the exercise of the discretion to award indemnity costs.  In relation to the aware of costs generally, it has been accepted, as Chu J pointed out, that while :
			… the grounds [upon which costs are awarded] must be connected with the case.  This may extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further.  (Emphasis added.)
		(Scherer v Counting Instruments Ltd [1986] 1 WLR 615 at p.621F, per Buckley LJ).  There is no reason why this statement does not apply with equal force to the exercise of the discretion to award indemnity costs.”

7.I will apply these principles to the present case.

C. Application of the principles

8.In my view, there are two main special features in the present case which make an award of indemnity costs appropriate.

9.First, how the defendants conducted the litigation is an affront to the court.  In order to defeat Mr She’s lawful claims, the defendants fabricated a bogus defence based on the Pre-Condition after the commencement of these proceedings, with full knowledge that the Pre-Condition simply did not exist at all.  And in order to make good the bogus defence, Mr Tsui resorted to making up evidence, both in his witness statements and in the box.  His evidence was self-inconsistent, self-contradictory, inherently improbable and flied in the face of contemporaneous documents.  The court should mark its strong disapproval of such conduct of litigation by awarding indemnity costs.

10.Second, how the defendants conducted their case based on the bogus defence had unnecessarily and unnecessarily lengthened the proceedings and the trial and escalated the costs.  They should be held responsible by an order of indemnity costs.

D. Orders

11.For the above reasons, I will vary the costs order nisi and order that Mr She shall have the costs of both HCA1684/2003 and HCMP3290/2004 against the defendants, including all costs reserved, to be taxed on an indemnity basis if not agreed.

12.As to the costs of this application, Mr She shall have them against the defendants, to be taxed on a party and party basis, if not agreed.

Ms Frances Lok, instructed by Messrs Siao, Wen & Leung, for the Plaintiff in HCA1684 and HCMP3290/2004

Sir John Swaine, SC leading Mr Alan Ng and Ms Jane Ho,instructed by Messrs Y.C. Lee, Pang & Kwok, for the 1^st to 4^th and 7^th Defendants in HCA1684/2004 and the Defendants in HCMP3290/2004