Top Bagage International v. Wistar Enterprises Ltd

HCCT 42/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 42 OF 2008

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BETWEEN

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Before: Hon Saunders J in Chambers

Date of Hearing: 28 October 2010

Date of Decision: 7 January 2011

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D E C I S I O N

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1.This is an application for costs arising from the efforts of Top Bagage to enforce in Hong Kong an arbitral award that was made in its favour against Wistar in France on 16 July 2008.

2.The award having been published by the Tribunal on 16 July 2008, Wistar lodged an application for review/appeal of the award in the Court of Appeal in Rennes, France, on 25 July 2008.  On about 11 August 2008, Wistar applied to the Court of Appeal seeking to stay Top Bagage from executing the award.  On 25 August 2008, the application for stay was dismissed by the Presiding Judge of the Court of Appeal.  By an ex parte application to this Court in Hong Kong, an order was made on 19 September 2008, giving Top Bagage leave to enforce the award in Hong Kong.

3.On 31 October 2008, Wistar by a summons on notice applied to set aside the order giving leave to enforce the award in Hong Kong.  Affidavits having been exchanged pursuant to directions, an order was made on 17 March 2009 for the exchange of expert opinions on French law.

4.Judgment was delivered by the Court of Appeal in Rennes on 12 May 2009. That judgment set aside the award and ordered Top Bagage to pay to Wistar €10,000 as compensation for unrecoverable costs and the costs of the appeal. The award having been set aside, Wistar’s solicitors sought the consent of Top Bagage to the setting aside of the order giving leave to enforce the award.

5.However, on 2 July 2009, the solicitors for Top Bagage informed the solicitors for Wistar that Top Bagage had appealed against the Court of Appeal judgment to the Cour de Cassation, and accordingly Top Bagage refused to consent to the order being set aside.  At that time it was anticipated that that appeal would be heard in late August or early September 2010.

6.Upon the refusal of Top Bagage to consent to the order permitting enforcement of the award being set aside, on 18 January 2010, Wistar filed a further summons, again seeking to set aside the order permitting enforcement, upon grounds indifferent to that relied upon in the earlier summons.  There were then two summonses seeking to set aside the order permitting enforcement before the court.

7.By a summons dated 3 February 2010, Top Bagage sought to adjourn sine die both of Wistar’s setting aside summonses until the Cour de Cassation had delivered its decision, or alternatively staying the Hong Kong enforcement proceedings until the Cour de Cassation had delivered its decision.

8.On 9 February 2010, after hearing from counsel, and upon Top Bagage undertaking to diligently proceed with the appeal to the Cour de Cassation, and keep Wistar’s solicitors fully informed of all steps taken and to provide copy of old documents filed, I made an order staying the present proceedings, and adjourning Wistar’s to setting aside summonses to 29 October 2010.

9.On 23 June 2010, the Cour de Cassation rejected Top Bagage’s appeal, and upheld the decision of the Court of Appeal setting aside the arbitration award.  Top Bagage was then obliged to accept that the orders permitting enforcement of the award in Hong Kong should be set aside.

10.The whole saga having finally been brought to a conclusion, Wistar, not surprisingly, now seeks costs from Top Bagage.  Mr. Yip says that Wistar has succeeded completely in setting aside the award, and is entitled to its costs in consequence.

11.Top Bagage resists those costs, arguing that a great deal of the effort expended was unnecessary, and seeks costs itself on its summons of 3 February 2010, to adjourn the proceedings until after the decision of the Cour de Cassation.

12.Mr Hew argues, first, that the finding in the arbitration that Wistar was in breach of its obligations has not been successfully challenged, as the award has been set aside upon technical procedural grounds.  That may be right, but it is not a basis upon which Wistar should be refused its costs, it having been successful in resisting the application to enforce the award.

13.I accept Mr Hew’s submission that Top Bagage having received an award in its favour, was entitled to commence proceedings in Hong Kong to enforce the award.  But that entitlement is not a basis upon which Wistar should be refused its costs.  If Top Bagage choose to exercise their entitlement, they do so knowing that they are at the risk of costs should they fail in securing a final order.

14.Mr Hew next asserted that Top Bagage should not have to pay costs in respect of an affidavit filed by Mr Tavernier as to French law. Mr Tavernier is an officer of Wistar, and not a lawyer, and was in no position to give expert evidence as to French law.  He endeavoured to circumvent that situation by exhibiting an opinion from a French lawyer.

15.Foreign law is a question of fact and must be proved in the usual way. The usual way is to have the foreign law experts file affidavits upon which they can, if necessary, be cross-examined in the event of any dispute as to the law in the foreign country.  Mr Hew was right to say that affidavit, in the form of the submitted was inadmissible, I accept that Wistar should not have its costs in respect of that affidavit. 

16.However, Wistar having succeeded in setting aside the ex parte order is entitled to its costs on the summons of 31 October 2008, save and except for the affidavit of Mr. Tavernier, and the exhibits was thereto.  The costs will be on the party and party basis.

17.Having already served a summons to set aside the ex parte order in reliance upon ss 44(2)(c) and (d) and s 44(3) of the Arbitration Ordinance on 31 October 2008, Wistar proceeded to serve a further summons on 18 January 2010, to set aside the ex parte order pursuant to s 44(2)(f) of the Arbitration Ordinance.  Mr Hew argues that that summons was unnecessary as it was a matter that could have been dealt with by consent.

18.The litigation in Hong Kong courts was proceeding completely at arm's length.  There was apparently no occasion in which the solicitors of each side sought to deal with matters simply, by consent.  Wistar, in those circumstances, reasonably could expect that any consent sought would be refused.  In the circumstances, having regard to the way in which the matter was proceeding I am satisfied that Wistar was entitled to file a formal summons.  While it would be better to have proceeded by consent, not doing so in the circumstances was not unreasonable. Wistar will have its costs on the summons of 18 January 2010, on a party and party basis.

19.On 3 February 2010, Top Bagage filed a summons seeking the adjournment of Wistar’s two summonses to set aside the ex parte order.  Again this was a matter which ought to have been dealt with by consent.  There was no consent and the matter was argued.  Top Bagage succeeded in obtaining the adjournment. The rules as to costs now permit the Court to award costs on an issue-based basis, or on a summons-based basis, having regard to the justice of the matter.

20.In the whole of the circumstances of this case, I am satisfied that Top Bagage, having succeeded in obtaining the adjournment, should be entitled its costs on that summons, on a party in party basis.  Those costs will be set off against the amount that Top Bagage must pay to Wistar pursuant to the orders made in paragraphs 16 and 18 above.

21.Each party has succeeded in part in respect of the argument on costs.  In my view justice is best served if I make no order as to costs in respect of the argument on costs.

Mr Yang-Wahn Hew, instructed by Messrs Boughton Peterson Yang Anderson, for the Applicant

Mr Francis K M Yip, instructed by Messrs Dominic Y K Lai & Co, for the Respondent