China Brilliant Ltd v. Kable Engineering Ltd and Others

HCA 2373/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2373 OF 2008

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BETWEEN

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Before: Hon Chung J in Chambers

Date of Last Written Submission: 7 April 2011

Date of Handing Down Decision on Costs: 15 April 2011

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DECISION ON COSTS

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Introduction

1.This decision on costs concerns the costs of the action between the plaintiff and the 2^nd defendant (“D2”) (the costs between the plaintiff and the other 2 defendants have been dealt with earlier).

2.In a judgment handed down on 8 March 2011, the plaintiff’s claim and D2’s counterclaim were dismissed with a costs order nisi that there be no order as to costs between them.

3.The plaintiff seeks to vary the said order nisi so that D2 should be ordered to pay the costs after 20 January 2011 (or such part of the costs as the court may think just) to be taxed on indemnity basis (or such basis as the court may think just) if not agreed.

4.D2 also seeks to vary the said order nisi so that the plaintiff should be ordered to pay to D2 the costs of the plaintiff’s claim on an indemnity basis whereas D2 should be ordered to pay to the plaintiff the costs of D2’s counterclaim to be taxed if not agreed.  Alternatively, the said order nisi should be varied so that D2 should be awarded 95% of the costs of the action to be paid by the plaintiff on an indemnity basis if not agreed.

Summary of the Plaintiff’s Case

5.The plaintiff’s application for variation is based principally on a without prejudice offer made in its letter dated 20 January 2011 (about 3 weeks before the trial commenced).  The offer was in short that all 3 defendants were to settle the action on terms contained therein; in relation to D2, the plaintiff offered to pay D2 $25,000 in full and final settlement and each party was to pay its own costs.  The offer was revised in a letter dated 26 January 2011 (about 2 weeks before the trial commenced) where, in relation to D2, the plaintiff offered to pay D2 the same sum in full and final settlement together with 50% of D2’s costs (but the total amount should not exceed $250,000).

6.The plaintiff argues that, while it is true the said offer was not one falling within the provisions of RHC Ord. 22, the terms of the said offer were more favourable to D2 than the actual court decision.

Summary of D2’s Case

7.In relation to its primary case, D2 argues in gist that there is insufficient ground for departing from the usual rule that costs should follow the event.

8.If anything, there was a special feature in this action which justifies the variation sought by D2: the amount of time and resources spent in dealing with the plaintiff’s claim significantly exceeded that spent in dealing with D2’s counterclaim:-

(a)   the issues raised by the plaintiff included allegations that D2’s design was not structurally safe, and D2 failed to discharge its professional duties as a structural engineer;

(b)   on the other hand, D2’s counterclaim turned on a relatively simple point of interpretation of contract; namely, whether its contract with the plaintiff was an entire contract;

(c)   D2’s claim was for a sum ($25,000) which could have been disposed of in the District Court (in fact, perhaps even the Small Claims Tribunal).

9.In relation to its alternative case, D2 argues in gist that, because of the matters set out in para. 8(a) to 8(c) above, if the court should consider an overall apportionment of the costs of the action to be the more appropriate approach, D2 should be awarded 95% of those costs.

10.In relation to taxation on an indemnity basis, D2 argues in gist that the plaintiff’s attitude and conduct in the proceeding was demonstrated by the following:-

(1)   the alleged structurally unsafe design was an opportunistic “try-on”.  When this action was originally commenced in the District Court, the claim contained no plea that the design was structurally unsafe; the allegation was first made by an amendment made in December 2008;

(2)   the plaintiff’s expert on structural safety was not accepted by the court;

(3)   when D2’s expert was cross-examined, remarkably the plaintiff chose not to question him on the matters earlier raised by the plaintiff’s expert.

The above matters show that the plaintiff raised a litany of extremely serious allegations against a professional person, all of which were found to be unsubstantiated and baseless.

11.Further, the quantum of loss was inflated to drag the defendants to the High Court, blowing the litigation out of proportion.  This must have been intended to pressurize the defendants to meet the plaintiff’s unreasonable demands.

12.Finally, there was unchallenged evidence that the 3^rd defendant (“D3”) was sued for purely tactical reasons.  The plaintiff tried to use D3 as a witness to prove its case against the other defendants, which it failed to do so at the end.

Conclusion

13.I am persuaded by D2 the said order nisi should be varied to the extent set out below.

14.D2’s argument that the time and resources required to deal with the plaintiff’s claim far exceeded those required to deal with its counterclaim is reflected (among other things) by the parties’ written final submissions.  The plaintiff’s submissions consisted of 14 pages and 38 paragraphs.  The part related to the “entire contract” issue was set out in one paragraph.  That issue was not deal with in writing in D2’s submissions (54 pages and 183 paragraphs).  The verbal submissions of D2 on that issue lasted for about 10 minutes.

15.A perusal of the plaintiff’s without prejudice offers shows that the offers have to be accepted by all 3 defendants.  As a fact, none of the defendants did so.  I therefore agree with D2 that its refusal to accept those offers was not the cause for the trial because the offers also mandated the acceptance of the other 2 defendants.

16.However, I do not agree with D2 that the plaintiff’s conduct of the proceedings, though it leaves much to be desired, should warrant the costs to be taxed on an indemnity basis.  Merely because parts of the plaintiff’s testimony and evidence have been rejected is not a sufficient justification.

17.For the above reasons, there will be an order that the plaintiff is to pay to D2 95% of the costs of the action (including any reserved costs).  To avoid doubt, the said costs include the costs of the mediation between the plaintiff and D2.

Mr B K Ho, instructed by Messrs Li, Wong, Lam & W.I. Cheung, for the Plaintiff

Mr Russell Coleman SC leading Ms Elizabeth Cheung, instructed by Messrs Szeto Virginia & Co., for the 2^nd Defendant