The Owners of and/or Other Persons Entitled To Sue in Respect of the Cargolately Laden on Board the Ship or Vessel "Hui Rong" (Lr No. 7525748) v. The Owners and/or Demise Charterers of the Ship or Vessel "Peng Yan" (Lr No. 8020563) and Others

HCAJ 12/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY JURISDICTION ACTION NO. 12 OF 2008

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BETWEEN

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Coram : Before Master J. Wong in Chambers

Date of Hearing: 28 and 29 January 2010

Date of Ruling: 29 January 2010

Date of Handing Down Ruling :  5 February 2010

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R U L I N G

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Introduction

1.This is a taxation based on a costs order made by the Court and various agreements reached by the parties themselves.

2.At the outset of the taxation, the parties had a preliminary argument on the interpretation of the agreements reached by them. Briefly, the Receiving Parties (“the RPs”) said that they were entitled to recover in principle all legal expenses incurred in and related to PRC proceedings. The Paying Parties (“the PPs”) argued otherwise.

Background

3.As a matter of background for the present purpose, I set out the followings. The RPs were various cargo owners. They suffered loss when the vessel of the PPs hit the one carrying their cargoes. On 21 January 2008, the present proceedings were commenced. Then, in March 2008, some other cargo owners also instituted proceedings in PRC against the PPs who then brought up a limitation action there. After thought, probably reluctantly, but for the purpose of protecting their interests, the RPs took part in the PRC proceedings and registered their claims in the limitation action.

4.In July 2008, the PPs asked to stay the present proceedings on the ground of forum non conveniens. It suffices to say that Reyes J. refused the application on 25 August 2008. The PPs took up the matter. However, the Court of Appeal dismissed their appeal on 17 October 2008 with written decision handed down on 1 December 2008. In both hearings, the PPs were ordered to pay costs.

5.While the parties were litigating in both Hong Kong and PRC Courts, they also negotiated for settlement.

6.On 20 October 2008, the RPs offered:

“…… We have taken instructions from our clients and in order to achieve a quick settlement, our clients are willing to accept 50% of the CIF invoice values plus costs to be taxed if not agreed in respect of their claims in the Hong Kong proceedings ……”

It was accepted by the PPs on 22 October 2008

“We refer to your settlement offers to our clients at 50% invoice value of the cargo plus legal costs of the Hong Kong Actions to be taxed, if not agreed ……”

That constituted the settlement in principle between the parties.  Subsequently, 3 further Agreements were reached.

7.For B/L F-25, parties further agreed that the PPs were still required to pay the RPs’ legal costs. As to B/L F-1 to F-10 and F-33, it stated, inter alia, that the PPs agreed to pay

“…… costs and disbursements of (the RPs) in the Hong Kong proceedings to be taxed if not agreed ……”

Ruling and Reasons

8.Thereafter, the RPs filed their bill and the PPs, their objections, leading to the preliminary argument before me. I had the benefit of Mr. Tibble of Counsel for the RPs and Ms. Wu of Messrs. Holman, Fenwick & Willan representing the PPs. Upon consideration of the evidence authorities and submissions from them, I have decided to rule in favour of the PPs. My reasons appear in below.

(a)  First, taxation starts from costs order or parties’ agreement.  With reference to the above quoted offer, acceptance and further agreements, they are clear enough, i.e. costs of HK proceedings to be taxed if not agreed.

(b)  Second, Mr. Tibble asked me to imply terms to cover costs of the PRC proceedings.  He diligently led me through the relevant correspondence between the parties at all material times, trying to demonstrate that it went without saying that the agreed costs should include all the costs incurred in the PRC proceedings.  I decline to do so.

(i)  As I understand, the total claim of costs in PRC amount to about $2 m.  It is a substantial amount of money and takes more than half of the bill before me.  It should have been stated expressly and clearly in the agreements if it was so intended.

(ii)  The HK Court governs matter within her jurisdiction.  Taxation herein should usually deal with the local proceedings only and let foreign courts handle their costs.  It should be the norm.  Without any express term contrary to such norm,  I take the view no bystander will disagree with my decision not to imply such a term.

(iii)  The correspondence between the parties does not give me any particular help as to the fact that they have agreed that the costs should indeed those of both HK and PRC proceedings.

(c)  Third, Mr. Tibble also tried to persuade me with reference to the term “disbursement”, section 52A(1) High Court Ordinance (Cap. 4) and Order 62 rule 28(2) Rule of the High Court (Cap. 4A) (“RHC”).  With respect, these matters do not advance the case of the RPs.  To start with, Order 62 rule 1 RHC clearly defines that costs include disbursement, etc.  So, there is no magic meaning of the expression “disbursement” at all.  As to the other provisions quoted, they only set out the general jurisdiction of High Court in respect of costs matter and the fact that only necessary or proper costs will be allowed at under party-and-party taxation, they are indeed irrelevant to resolve the parties’ present dispute.

(d)  Fourth and finally, I was also told that the PPs had entered into similar settlement agreements with other cargo owners.  They further agreed on all costs and disbursements.  Mr. Tibble said that the PPs indeed paid 75% and 100% of the respective costs and disbursements claimed therein, including all expenses relating to the PRC proceedings.  To these, I do not think much reliance can be placed thereof.  As pointed by Ms. Wu, it was largely a commercial decision among the parties therein.  There is no evidence before me pointing that the term “costs of the HK proceedings” will include “costs and disbursements of the PRC proceedings”.

9.Having said the above, I should mention that, as having discussed the same with Ms. Wu during her submission, some costs of and related to the PRC proceedings might still be recoverable under the present taxation by way of costs and/or disbursement if this Court will come to a conclusion that they were incurred properly or necessarily for the purpose of prosecuting the present proceedings and/or defending for the stay application by the PPs. Certainly, I will need justification and explanation from the RPs on an item-by-item basis. However, under the subject agreements between the parties, it will be wrong to claim each and every costs and disbursement spent in the PRC proceedings through the present taxation before the HK Court.

Costs

10.Costs of the preliminary argument are awarded to the PPs and borne by the RPs, summarily assessed at $12,500. The RPs are not required to pay the sum until the end of the taxation herein and can do so by way of set-off.

Mr. S. Frost of Law Costs Draftsman and Mr. R. Tibble of Counsel,both instructed by Messrs. Clyde & Co. for the Receiving Parties.

Mr. B. Leung of Law Costs Draftsman instructed by and Ms. S. Wu of Messrs. Holman, Fenwick & Willan for the Paying Parties.