Wong Yu Cho Rolly t/a The Hong Kong Museum of Stone Sculpture & Asian Art v. Lam Kwok Man

DCCJ5422/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5422 OF 2006

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Coram:        H H Judge Marlene Ng in Chambers (Open to the Public)

Date of Hearing: 4^th March, 2008

Date of Handing Down Ruling: 10^thMarch, 2008

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RULING ON COSTS

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I. Background

1. On 31^st January 2008, I handed down my decision in respect of the Defendant’s Amended Summons for striking out the whole or part of the Statement of Claim in the present action or alternatively staying the present action pending disposal of High Court Action no.2456 of 2005, and, where applicable, for extending time to file/serve the Defence (“Decision”). For the sake of convenience, I shall adopt the abbreviations in my Decision.

2. I dismissed the Defendant’s application to strike out the DC Statement of Claim or the DC Negligence Claim as pleaded therein on the ground of abuse. I further dismissed the Defendant’s application to stay the present action pending the disposal of the HC Action on the ground that the two actions are based on the same alleged facts and causes of action. Instead, I granted leave to the Defendant to file and serve his Defence within 14 days. Further, on my own motion, I transferred the present action to the Court of First Instance.

3. I granted a costs order nisi that the Defendant do pay the Plaintiff costs of the Amended Summons on District Court scale to be taxed if not agreed in any event, and that the costs of the present action in the District Court up to the date of the Decision be reserved to the Court of First Instance (“Costs Order Nisi”).

II. Application to vary the Costs Order Nisi

4. By a Summons dated 12^th February 2008 (“Costs Summons”), the Defendant applied to vary the Costs Order Nisi. Although the Costs Order Nisi also dealt with costs of the present action in the District Court up to the date of my Decision, the written submissions of Mr Baillie, solicitor for the Defendant, made clear the Costs Summons only sought to vary the costs nisi in relation to the Amended Summons.

5. Mr Baillie submitted it was arguable that the Plaintiff should be liable for the Defendant’s costs of the Amended Summons, but the Defendant was prepared to accept “costs in the cause of the action” which would be fair to both parties. The Defendant also required the Plaintiff to pay costs of the Costs Summons.

III. Defendant’s grounds for the Costs Summons

6. The Defendant’s solicitors wrote to the Plaintiff (with copy to the court) on 13^th February 2008 setting out the grounds for the reliefs sought in the Costs Summons. The Defendant claimed as follows :

Accordingly, we say that the appropriate and fair costs order is : costs in the cause. The effect of that order is that the winner of the action as a whole will be entitled to the costs of the application, assuming the trial judge makes the usual order that costs follow event.”

7. The Defendant’s grounds were further elaborated in Mr Baillie’s written submissions, namely, that the Costs Order Nisi should be varied because (a) the Plaintiff was not wholly successful, and (b) the Plaintiff’s conduct in commencing and maintaining the present action “when the same negligence facts alleged in [the HC Action], and embarrassing pleading/position as to exactly what case of action Plaintiff relies on ……” was calculated to occasion unnecessary litigation and expense.

8. At the hearing of the Costs Summons, the Plaintiff claimed he had not received Mr Baillie’s written submissions. Mr Baillie insisted his firm had served his written submissions on the Plaintiff. To overcome such contention between the parties, I requested Mr Baillie to make full oral submissions (including the legal principles drawn from the authorities he cited), which were translated to the Plaintiff by the court interpreter. I am satisfied the Plaintiff has not been prejudiced.

IV. Plaintiff’s affirmation

9. The Plaintiff all along acts in person. He filed an affirmation on 28^th February 2008 to oppose the Costs Summons. Since this is an application to vary the Costs Order Nisi in relation to the Amended Summons that has already been the subject of my Decision, it is inappropriate to receive further evidence on the costs issue. However, having read through the Plaintiff’s affirmation of 28^th February 2008, I find it is more in the nature of written submissions than fresh affirmation evidence. Indeed, the contents of the Plaintiff’s affirmation of 28^th February 2008 are similar to that of his written submissions of 3^rd March 2008. Mr Baillie did not object to the Plaintiff’s affirmation of 28^th February 2008, so I shall receive the same as part of the Plaintiff’s written submissions.

10. Several peripheral matters raised by the Plaintiff can be disposed of quickly :

V. Principles

11. The starting point is that subject to section 53 of the District Court Ordinance Cap.336 and Order 62 rule 2(4) of the RDC, the court has a complete discretion on costs. The cardinal rule is that costs should follow event except when it appears to the court that in the circumstances of the case some other order should be made (see Order 63 rule 3(2) of the RDC). The rationale is obvious. If it transpires that the applicant’s claim/application is ill-founded, the respondent should in general be entitled to recover his costs in answering such claim/application. The underlying objective is to indemnify the successful respondent. It also helps to compel an applicant to carefully assess the strength of his claim/application before commencing/issuing the same.

12. I do not disagree with the proposition that in exercising discretion on costs, the court may in appropriate circumstances take into account the “successful” party’s own conduct. “In the case of a wholly successful defendant the judge must award him costs unless there is evidence: (1) That the defendant brought about the litigation; or (2) has done something connected with the institution or conduct of the suit calculated to occasion unnecessary litigation and expense; or (3) has done some wrongful act in the course of which the plaintiff complains. Per Atkin L.J. in Ritter v Godfrey [1920] 2 K.B. 47” (see Hong Kong Civil Procedure 2008 Vol.1 para.62/3/3 at p.960).

13. Mr Baillie also referred to Order 62 rule 7 of the RDC as follows :

14. Mr Baillie cited Scherer & anor v Counting Instruments Ltd & anor [1986] 1 WLR 615, which was referred to in the local judgments of Town Planning Board v Society for Protection of the Harbour Ltd (No.2) (2004) 7 HKCFAR 114 and SPC Credit Limited formerly known as Security Pacific Credit (Hong Kong) Limited v Wong Kam Biu CACV158/1999 (unreported, 21^st September 1999). In Scherer, Buckley LJ in giving the judgment of the English Court of Appeal summarised the principles as follows at pp.612-613:

“From the cases which we have cited and from Ottway v. Jones [1955] 1 W.L.R. 706; Baylis Baxter Ltd. v. Sabath [1958] 1 W.L.R. 529 and William C. Parker Ltd. v. F. J. Ham & Son Ltd. [1972] 1 WLR 1583, which were also referred to by counsel, we derive the following propositions.  (1) The normal rule is that costs follow the event.  That party who turns out to have unjustifiably either brought another party before the court, or given another party cause to have recourse to the court to obtain his rights is required to recompense that other party in costs; but (2) the judge has under section 50 of the Judicature Act 1925 an unlimited discretion to make what order as to costs he considers that the justice of the case requires.  (3) Consequently a successful party has a reasonable expectation of obtaining an order for his costs to be paid by the opposing party but has no right to such an order, for it depends on the exercise of the court's discretion.  (4) This discretion is not one to be exercised arbitrarily; it must be exercised judicially, that is to say, in accordance with established principles and in relation to the facts of the case.  (5) The discretion cannot be well exercised unless there are relevant grounds for its exercise, for its exercise without grounds cannot be a proper exercise of the judge's function.  (6) The grounds 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.  (7) If no such ground exists for departing from the normal rule, or if, although such grounds exist, the judge is known to have acted not on any such ground but on some extraneous ground, there has effectively been no exercise of the discretion.  (8) If a party invokes the jurisdiction of the court to grant him some discretionary relief and establishes the basic grounds therefor but the relief sought is denied in the exercise of discretion, as in Dutton v. Spink & Beeching (Sales) Ltd. [1977] 1 All E.R. 287 and Ottway v. Jones [1955] 1 W.L.R. 706, the opposing party may properly be ordered to pay his costs.  But where the party who invokes the court's jurisdiction wholly fails to establish one or more of the ingredients necessary to entitle him to the relief claimed, whether discretionary or not, it is difficult to envisage a ground on which the opposing party could properly be ordered to pay his costs.  Indeed, in Ottway v. Jones, Parker L.J. said, at p. 715, that such an order would be judicially impossible, and Sir Raymond Evershed M.R. said , at p. 708, that such an order would not be a proper judicial exercise of the discretion, although later, at p. 711, he expressed himself in more qualified language.  (9) If a judge, having relevant grounds on which to do so, has on those grounds, or some of them, made an order as to costs in the exercise of his discretion, his decision is final unless he gives leave to a dissatisfied party to appeal.  (10) If, however, he has made his order having no relevant grounds available or having in fact acted on extraneous grounds, this court can entertain an appeal without leave and can make what order it thinks fit.” (my emphasis)

15. Scherer is also useful in that it dealt with an interlocutory application (as distinct from Ritter which concerned a trial). In Scherer, the defendant applied to strike out two actions for want of prosecution. The application failed and the judge ordered the defendant to pay costs. On appeal to the English Court of Appeal, a distinction was drawn between costs of the action as a whole and costs of interlocutory applications in the course of the action. If a party succeeds on an interlocutory application, his conduct in relation to the action as a whole may be immaterial in determining where costs lie.  In this respect, Buckley LJ said at p.618 as follows :

“In considering whether the judge had any relevant material on which he could base his exercise of discretion, we must first decide in relation to what proceedings, and consequently what issues, he had to do so.  We have been referred to Donald Campbell & Co. v. Pollak and to Jones v. McKie as authority for the proposition that we must have regard to all circumstances relevant to the issues in the action and the history of the action hitherto and the matters leading to the action.  Those were both cases in which the orders for costs there under consideration were orders made at the trial of the actions.  In such cases no doubt the relevant field to be scanned is the whole battlefield of the action and the whole of the conduct of the parties in relation to the matter in dispute may be relevant.  But here we are concerned with the costs of an interlocutory application.  Conduct which might be relevant to how the costs of the action should ultimately be borne may be quite irrelevant to whether a party was justified in making a particular interlocutory application.  In such a context one naturally starts from a basis of considering whether the defendants were justified in launching their motions for dismissal of the actions for want of prosecution.  The relevant proceedings are not the actions in their full extent, but the motions for dismissal.” (my emphasis)

16. Ultimately, the question was whether there were any grounds established before the judge upon which he could properly hold in relation to the interlocutory application before him that he could properly exercise his discretion so as to deprive the successful party of such application his costs. The English Court of Appeal allowed the appeal on the basis that the defendant in Scherer failed to establish all of the essential ingredients in respect of the application for dismissal of the first action and he only established two out of three essential ingredients for the application to dismiss the second action. On this Buckley LJ had the following to say at p.619 :

“…… In our judgment, however, it cannot be right to penalise a successful party in costs because the unsuccessful applicant has nearly but not quite made out his case. Such a situation is quite different from that in Dutton v. Spink & Beeching (Sales) Ltd. [1977] 1 All E.R. 287, where the trial judge had held that the plaintiff had been guilty of inordinate delay which was inexcusable and that relevant prejudice to the defendant had been established.  He might, in the exercise of his discretion, have dismissed the plaintiff’s action for want of prosecution with costs, but he took a more merciful course of allowing the action to continue but ordering the plaintiff, notwithstanding that he was to that extent successful, to pay the costs of the motion.  It is quite another matter to order a plaintiff to pay the costs of a motion to dismiss his action for want of prosecution in which the defendant has failed to establish the necessary grounds for any exercise of the court's discretion in his favour.” (my emphasis)

VI. Should the Costs Order Nisi be varied?

17. Mr Baillie’s first contention was that the P was not “wholly successful” on the Amended Summons. To consider this argument, it is necessary to appreciate the nature of the applications by way of the Amended Summons before me and the basis of my decision.

18. As explained above, the Amended Summons was an application to strike out the DC Statement of Claim or part thereof and to stay the present action. 

19. The Defendant’s sole ground for the striking out application was the DC Statement of Claim and/or the DC Negligence Claim as pleaded therein amounted to an abuse of process of the court. In the Decision, I had no hesitation in concluding that the Defendant had failed to discharge the onus in showing that the Assault Claim pleaded in the DC Statement of Claim should have been brought in the HC Action and that litigating such claim in the present action was an abuse of process (see paragraph 66 of the Decision). As regards the DC Negligence Claim, the Defendant also failed to persuade me the Plaintiff did not have a cause of action against the Defendant separate from the HC Action that was directly enforceable against him (see paragraph 72 of the Decision). I also found that the institution of the DC Negligence Claim was not an abuse of process of the court (see paragraph 83 of the Decision).

20. It is perhaps useful to set out below paragraphs 66 and 83 of my Decision :

“66.   In my view, the Defendant has failed to discharge the onus in showing that the Assault Claim against the Defendant should have been brought in the HC Action and that litigating such claim in the present action is an abuse of process. There is also no unjust harassment or oppression against the Defendant as a result of being vexed twice in respect of the Assault Claim.

……

83.     Having considered all the circumstances, I am not persuaded the DC Negligence Claim was instituted without sufficient foundation with a view to harass the Defendant or wear him down, or that such claim should have been brought in the HC Action in the Yat Tung sense such that the way in which the Plaintiff now wishes to litigate constitutes an abuse of process of the court. There is no manifest injustice for the Defendant to defend the claim. Any need for efficient, economic and effective disposal of the ongoing proceedings can be dealt with through proper case management.”

21. I went further in my Decision to conclude that even if I were wrong and the DC Negligence Claim should have been litigated in the HC Action, there was a special circumstance that required the non-application of the rule in Henderson v Henderson (see paragraph 84 of the Decision). I was also not satisfied the suggestion that the Plaintiff being a vexatious litigant who issued abusive claims in other proceedings was sufficiently indicative of abuse in commencing the present action (see paragraph 94 of the Decision). I further held that it would be unjust to stay the DC Negligence and Assault Claims pending disposal of the HC Action (see paragraph 90 of the Decision).

22. It is evident from the above that the Defendant failed in his claim for (and the Plaintiff was wholly successful in resisting) all of the substantive reliefs sought in the Amended Summons. In the words of Buckley LJ in Scherer, the Defendant failed to establish any of the essential ingredients for sustaining the substantive reliefs in the Amended Summons. In such circumstances, in line with Scherer, it is difficult to envisage how it can arguable that the Plaintiff should be liable for the Defendant’s costs of the Amended Summons.

23. But despite the clear conclusions referred to above, it was suggested that because I considered maintaining the present action in the District Court was “inappropriate” the Plaintiff was not completely successful in resisting the Defendant’s applications to strike out the Plaintiff’s pleadings (which, as seen from above, was solely based on the ground of abuse of the court’s process). Mr Baillie argued that if the Plaintiff were wholly successful then I would have left the present action untouched and not transferred it to the Court of First Instance. He noted that the “[court] expressly referred to using its costs powers to balance any unfairness to Defendant due to Plaintiff’s decision to commence separate actions”.

24. I disagree with such arguments both on the legal principles and on the particular circumstances of the present action.

25. The legal principles discussed in my Decision made clear that mere re-litigation failing short of cause of action estoppel or issue estoppel or maintenance of a second claim which could have been part of or which conflicted with an earlier one should not of itself be regarded as abuse of process, and the onus of proof was on the party alleging abuse (see paragraphs 47 and 76 of my Decision). Where the party alleging abuse fails to discharge such onus, re-litigation as described above is not barred. It is useful to repeat what I said in paragraph 52 of my Decision :

“To start off, there is a general entitlement to re-litigate the same issues between different parties unless abuse of process can be shown by the party seeking to strike out the later claim. Great caution must be exercised before shutting out a party from putting forward his case on grounds of abuse of process.”

In the circumstances, unless abuse of process is established, there is no viable challenge to the propriety of commencing the later claim, but it is certainly within the realm of the court’s interlocutory powers to give directions in the present action (as for any litigation that comes before the court) for its efficient, economic and effective management and/or disposal.

26. Turning to the particular circumstances of the present case, it is plain from the discussion above that any exercise of case management powers by the court on own motion must have been outside the ambit of the Amended Summons, which wholly failed. In paragraphs 77, 78 and 81 of my Decision, which last paragraph was also relied by Mr Baillie, I made clear my view that (a) whilst the DC Negligence Claim was not wholly distinct from the HC Negligence Claim it was not an attempt to rake over the ashes for a rerun of the HC Action in the guise of a new action, and (b) the DC Negligence Claim against the Defendant should be resolved one way or another rather than be struck out or stayed. It was on such basis that I said in paragraph 81 of my Decision that I did not see why any fear of inconsistent decision could not be dealt with by way of the court’s case management powers and powers as to costs sanctions “if there is no abuse”. It is therefore plain that the court’s case management powers and powers as to costs sanctions become relevant only if there is no abuse. The rationale is obvious. If there is abuse of the court’s process, the court has a duty to dismiss the action (see paragraph 50(a) of my Decision).

27. In the circumstances, my exercise of the court’s case management powers to transfer the present action to the Court of First Instance on own motion does not mitigate the Defendant’s failure to maintain the substantive applications under the Amended Summons. It is also incorrect to say I have expressly endorsed use of the court’s powers as to costs sanctions to balance any unfairness to the Defendant due to the Plaintiff’s decision to commence separate actions. Whilst I have in my Decision acknowledged the court did have such powers, I have not drawn conclusions as to whether there has been any unfairness to the Defendant due to separate actions that will attract costs sanctions. Indeed, in paragraph 88 of my Decision, I said that “[if] costs have been incurred which could/should have been avoided, the trial judge will be able to consider what appropriate costs order is properly required by the circumstances”.

28. Mr Baillie’s second contention was a complaint against the Plaintiff’s conduct. Much was made of the fact that the court on own motion transferred the present action to the Court of First Instance which, it was argued, must have been due to the Plaintiff’s deliberate and “inappropriate choice” to initiate the present action in the District Court separate from the HC Action which “had resulted in unnecessary litigation and expense”.

29. In my view, it is necessary to have a clear focus of the nature of the application before the court by way of the Amended Summons. As explained in Scherer, in dealing with the costs of an interlocutory application (as in the present case), the court is not concerned with costs of the action as a whole. Thus, whether the present action as a whole has resulted in unnecessary litigation and expense is a matter for the trial judge (see paragraph 88 of my Decision and paragraph 27 above), and does not alter the fact that, notwithstanding the DC Negligence Claim is not wholly distinct from the HC Negligence Claim (see paragraph 77 of my Decision and paragraph 26 above), the Defendant failed to establish the essential ingredients of the substantive reliefs sought in the Amended Summons.

30. More importantly, interlocutory powers to transfer proceedings to the Court of First Instance and/or to consolidate two or more causes or matters are not necessarily premised on the relevant action, cause or matter being unreasonably or improperly instituted, so it does not follow from the exercise of such interlocutory powers that such action, cause or matter must have been “inappropriate” (which, I must say, is a singularly imprecise notion) at least in the sense that its commencement was an abuse of the court’s process or that it should attract any striking-out or stay application.

31. The above-described interlocutory powers to transfer and/or to consolidate proceedings can be exercised even if two or more actions, causes or matters have been legitimately commenced. For example, Order 4 rule 9 provides that where two or more causes or matters are pending, then, if it appears to the court that (a) some common question of law or fact arises in both or all of them, (b) the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transaction, or (c) for some other reason it is desirable to make an order under such rule, the court may order those causes or matters to be consolidated on such terms as it thinks just or may order them to be tried at the same time, or one immediately after another, or may order any of them to be stayed until after the determination of any of them. Generally, the exercise of such power whether on application or own motion is guided by the case management objectives of saving costs and time and avoidance of unnecessary delay, complexity, overloading of issues and inconvenience of having experts and witnesses repeating their evidence (see Hong Kong Civil Procedure 2008 Vol.1 para.4/9/2 at pp.48-49), and not by whether the commencement of one of the actions, causes or matters is improper or illegitimate.

32. As explained above, I have not in my Decision concluded that the Plaintiff’s commencement of the present action was “inappropriate”. In paragraphs 81 and 83 of my Decision, I made the point that any need for efficient, economic and effective disposal of the ongoing proceedings can be dealt with through proper case management. In paragraph 95 of my Decision, I also set out my view that procedurally speaking the present action will benefit from a transfer to the Court of First Instance for the opportunity, if so ordered by the Court of First Instance, to have all disputes ventilated in one set of proceedings. It is, of course, as yet unknown how the Court of First Instance will exercise its case management powers or powers as to costs sanctions upon transfer, and I have clearly reserved such matters for future determination by the Court of First Instance (see paragraphs 95 and 103 of my Decision).

33. As regards the mischief of multiplicity of proceedings, it is up to the trial judge to determine whether costs have been incurred which could/should have been avoided and/or whether the factors referred to in Order 62 rule 7 and/or Ritter are relevant. Indeed, I have in paragraph 88 of my Decision reserved such cost issue for the trial judge. But even if such mischief is eventually established, it does not follow that the Plaintiff’s claims in the present action should have been dismissed or that they must have amounted to abuse of the court’s process in the first place. More importantly, it does not detract from the fact that the Plaintiff failed to establish the essential ingredients of the applications in the Amended Summons.

34. Mr Baillie submitted that the DC Statement of Claim and subsequent submissions in relation to the Amended Summons and Costs Summons were misleading and embarrassing. If the present action were limited to the Assault Claim, which appeared to be the Plaintiff’s contention by way of submissions, he argued that the Defendant would not have made the striking-out application.  

35. I disagree that the Plaintiff’s pleadings are misleading in this respect. In any striking-out application, the court is concerned with an objective reading of the pleadings. The DC Statement of Claim was there for the Defendant to form his own judgment as to whether the pleas therein amounted to abuse of the court’s process.

36. I bear in mind that in the course of the First and/or Second Hearings, despite the Plaintiff’s emphasis on the Assault Claim, he still maintained that the Defendant caused him to suffer damages due to the Defendant’s “negligence, irresponsibility and misconduct …… misleading all the plaintiff’s cases ……” (see paragraph 23 of my Decision). In the course of his written and oral submissions, the Plaintiff was also at pains to explain that each of the Defendant and Mr Cheng owed his own professional duty as solicitor to him as client, and the nature and scope of such duty owed by Mr Cheng and the Firm as “boss” and by the Defendant as “employee” were necessarily different (see paragraphs 70-71 of the Decision). I do not see such submissions as abandonment of the DC Negligence Claim by the Plaintiff. I also bear in mind that the application to strike out the DC Negligence Claim was not made on the basis that the Plaintiff abandoned the DC Negligence Claim with the result of limiting the DC Statement of Claim to the Assault Claim, but on the basis that the Plaintiff’s claims (including the DC Negligence Claim) were an abuse of process in the Yat Tung sense. Further, notwithstanding the Plaintiff’s affirmation dated 28^th February 2008 (which was made only after the Decision was handed down), there is presently no application to amend the DC Statement of Claim or to strike-out the DC Negligence Claim on the basis that the pleading was restricted to the Assault Claim.

37. Mr Baillie’s next argument set out in paragraph 10 of his written submissions were premised on the possibility that the Costs Order Nisi was based on the proposition that the Defendant should have applied to transfer the present action to the Court of First Instance. However, this is not a relevant consideration for determining where costs of the Amended Summons should fall. The dismissal of the Amended Summons was not made on such basis but on the grounds set out in paragraphs 19-21 above. As discussed above, it was only when the court concluded there was no abuse of its process and the application for striking-out or stay could not be sustained that case management powers as to the further conduct of the present action became pertinent.

38. To support the Defendant’s contention, Mr Baillie emphasised that the striking-out application was a reasonably arguable procedural remedy that the court did not find to be misconceived. In my view and as acknowledged by Mr Baillie, in awarding costs against the losing party (ie costs follow event) on a party and party basis, it is unnecessary for the court to come to any conclusion that the application was misconceived in addition to its failure.

39. Mr Baillie next pointed out that in view of the Plaintiff’s conduct, the Defendant considered it highly unlikely that the Plaintiff would consent to a transfer of the present action to the Court of First Instance, which stance was confirmed at the Second Hearing. But the Plaintiff’s refusal to consent to a transfer to the Court of First Instance does not mean the present action is necessarily an abuse of the court’s process that is liable to be struck out.

40. It is true that neither party raised the issue of transfer of the present action to the Court of First Instance. Indeed, I first raised it during the course of Mr Baillie’s submissions at the First and/or Second Hearings in the context of the Defendant’s striking-out application. But the Defendant declined to embrace the suggestion, and insisted that pursuit of the reliefs sought in the Amended Summons was the correct approach (see paragraph 74 of the Decision). Hence, I proceeded to adjudicate on the Amended Summons on the grounds offered by the Defendant, which grounds I ultimately rejected. In such circumstances, whether the Plaintiff was willing to transfer the present action to the Court of First Instance or not is neither here nor there.

41. More importantly, the court recognised that both parties opposed the transfer, but noted the court itself has power to effect the transfer on own motion (see paragraphs 97 and 101 of the Decision). In short, the Defendant having failed in the substantive reliefs claimed in the Amended Summons, the court considered the best way forward for securing case management benefits for the further conduct of the present action was to transfer the present action to the Court of First Instance. Such interlocutory power was exercised for doing compulsorily what both parties would not do voluntarily, but it is not pertinent to the issue of whether there was any abuse of the court’s process and/or whether it was just to stay the present action.

42. Viewed in such context, the issues of whether the Defendant should “make the running to correct Plaintiff’s procedural default(s)” or should “have had to apply to transfer” the present action to the Court of First Instance are not relevant for determination of costs of the Amended Summons. I cannot see how the court’s exercise of proactive case management on own motion will affect the matter of costs on failure of the Defendant’s failure to maintain the substantive reliefs under the Amended Summons.

43. In light of the above, I cannot accept the Defendant’s contention that it is arguable the Plaintiff should bear he Defendant’s costs of the Amended Summons.

44. I am also not with the Defendant in respect of his proposal for costs of the Amended Summons to be in the cause. Mr Baillie referred me to the judgment of Buckley LJ in Scherer at p.622 as follows :

“When these principles fall to be applied to an interlocutory step in an action, the circumstances may be such that it is not then possible to see on which side justice requires that the decision who should bear the costs of that step should ultimately fall. This may depend upon how the issues in the action are eventually decided. Consequently costs in interlocutory matters are often made costs in the cause or reserved.” (my emphasis)

45. The principles for awarding “costs in the cause” in respect of interlocutory costs are further discussed in Kickers International SA v Paul Kettle Agencies Limited & anor [1990] FSR 436, which authority was not cited by the parties. In that case, the plaintiff abandoned a motion for interlocutory injunction upon seeing the defendant’s affidavit on balance of convenience. The court decided to deal finally with costs at the interlocutory stage. Hoffmann J said at pp.438-439 as follows :

“An order for a party’s costs to be “in the cause” is made because the court has not investigated the merits and considers that it would not be fair for him to recover those costs unless he succeeded at trial. But the fact that the merits have not been investigated, or not fully investigated, does not necessarily mean that the court cannot dispose finally of interlocutory costs. The question cannot be settled simply by reference to practice: it must be answered on the facts of the individual case. Would it be unfair in this case for the defendants to have the costs of the motion even if they lost at the trial? On balance I do not think it would. Although I cannot decide the merits, I can form a view on whether the plaintiff, on the material it has produced and what it must have known about the defendants, was justified in launching the motion. I do not think it was. Therefore whatever the outcome of the trial, the motion which has now been abandoned has put the defendants to a great deal of unnecessary expense.

……

Thus it seems to me that in making a costs order at the interlocutory stage, there are two risks of injustice which have to be balanced against each other. On the one hand, a final order might award a party costs which, upon fuller consideration at the trial, he would not have been given. On the other hand, failure to make a final order might have the practical effect of depriving a party of some or all of the costs which he should in fairness have recovered. I think it is possible that in the past the courts may have been more impressed by the first risk than by the second.” (my emphasis)

46. In Bushbury Land Rover Limited v Bushbury Limited [1997] FSR 709, where the plaintiff failed to obtain an interlocutory injunction against the defendant, Auld LJ said at pp.711-712 as follows :

“…… In his skeleton argument [counsel for the plaintiff] said, first, that in a passing off action if a plaintiff succeeds at trial a fortiori the court will have held that the defendant should not have been trading at the date of the issue of the writ and thus, with the benefit of hindsight, the court at trial would realise that the plaintiff had been entitled to an injunction at the interlocutory stage.

In my judgment, that argument …… ignores the clear distinction between entitlement to interlocutory relief and final judgment which underlies Lord Diplock’s identification in American Cyanamid Co. v. Ethicon Ltd [1975] A.C. 396 of the criteria on which the court should exercise its discretion whether to grant the former. The fact that a plaintiff may succeed ultimately does not demonstrate that he should have been granted interlocutory relief when the merits of the matter were still unresolved and the court was balancing convenience. Final judgment provides no hindsight, tipping the earlier balance one way or the other.

……

In my view, there is no difference of substance in the respective formulations of Hoffmann J and Knox J [in Silicon Graphics Inc & anor v Indigo Graphic Systems (UK) Ltd [1994] FSR 403]. They both express a simple enough (though imprecise) notion, namely that, where a judge on an interlocutory application considers, in applying the American Cyanamid test, that it falls so far short of satisfying the criteria for the grant of interlocutory relief that the plaintiff should never have sought it, he may, in his discretion, penalise him in costs”. (my emphasis)

47. The above authorities are cited not for their factual matrix since they deal with different interlocutory applications, but are referred to for their underlying principles in relation to interlocutory costs. Thus, whilst in some cases interlocutory costs cannot be determined until trial because it is not possible to ascertain at the interlocutory stage where liability for costs should justly fall, there are other situations where the ultimate merits provide no helpful hindsight.

48. In respect of the Amended Summons, the Defendant carried the burden of establishing abuse of the court’s process to justify striking out the Plaintiff’s claims and/or it was just in all the circumstances to stay the present action. As explained in paragraph 76 of my Decision, the burden was of some weight, and was made heavier by the fact that there was no previous litigation between the parties. The Defendant failed to establish the key criteria for the striking-out application (ie abuse of the court’s process) and for the stay application (ie that it was just to do so). In short, the evidence falls quite short of satisfying the reliefs sought in the Amended Summons. Further, even if the Plaintiff eventually fails in his present claims against the Defendant on the merits, it does not necessarily follow that he abused the court’s process in commencing the present action. Indeed, I have decided otherwise. Having considered all the circumstances and bearing in mind the guidance in the above authorities, I am of the view there is no sufficient justification for leaving costs of the Amended Summons to turn on the ultimate merits of the present action.

49. I do not see any sufficient reason to vary the Costs Order Nisi, which I now make absolute. The Costs Summons is therefore dismissed. There is no reason why costs should not follow event. Mr Baillie suggested that even if I dismissed the Costs Summons, costs of such application should be costs in the cause. He acknowledged that this is a bold stance. In my view, the application to vary the Costs Order Nisi is plainly self-contained and separately identifiable, and consequently detachable from the main action which is yet to proceed to trial. To put in another way, the canvassed arguments and consequent determination of the Costs Summons relate to a discrete matter which does not turn on the ultimate merits. I therefore grant a costs order nisi that costs of the Costs Summons be paid by the Defendant to the Plaintiff in any event, to be taxed if not agreed on District Court scale.

Representation:

The Plaintiff in person and present.

Mr Brian G Baillie of Messrs Fred Kan & Co for the Defendant.