Pacific Long Distance Telephone v. New World Telecommunications Ltd
Read the full judgment text of HCA 1688/2006 on BabelCite. This High Court CFI judgment was delivered on 10 February 2012.
1. By the judgement dated 10 February 2012, the parties were directed to make written submissions, to the extent that matters could not be agreed, in regard to the calculation of the final account as between the parties, and as to matters of interest and costs. Written submissions were exchanged on 16 March 2012, following which the Plaintiff submitted a short supplemental submission. Leave was granted to the Defendant to serve a responsive submission which submission (running to 17 pages) was s
Cites 2 cases
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HCA 1688/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO. 1688 OF 2006 ------------------------
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----------------------- D E C I S I O N ----------------------- 1.By the judgement dated 10 February 2012, the parties were directed to make written submissions, to the extent that matters could not be agreed, in regard to the calculation of the final account as between the parties, and as to matters of interest and costs. Written submissions were exchanged on 16 March 2012, following which the Plaintiff submitted a short supplemental submission. Leave was granted to the Defendant to serve a responsive submission which submission (running to 17 pages) was served on 2 April 2012. Final Account 2.Based upon the findings made in the judgement, the Defendant tabulated the final account and this was agreed by the Plaintiff. The balance of accounts resulting is a payment due from the Plaintiff to the Defendant of $441,056.15. This is made up as follows:
This agreed balance is therefore the amount due and owing by the Plaintiff to the Defendant. Interest 3.An Order Nisi was made in the judgement that interest should run from the date of termination of the contract until the date of the judgement, at 1% above prime rate. The Defendant has applied to vary that Order and, in doing so, refers to and relies on clause 4.4 of its General Terms and Conditions of Service which provision set out a contractual rate of interest of “2% above the prime lending rate of the Hong Kong and Shanghai Banking Corporation Ltd” from the date on which payments were payable until the actual date of payment. Applying that to the balance found due to the Defendant from time to time results, according to the Defendant, in a calculation of an interest entitlement of $36,834.38 calculated up until the date of termination of the contract. Subsequent to that date the Defendant seeks interest at 1% above prime rate until the date of judgement, with interest subsequently to run at judgement rate. The Defendant calculated the interest accruing between contract termination and judgement to be $130,387.94. 4.For its part the Plaintiff also seeks a variation of the Order Nisi. The Plaintiff submits that no pre‑judgement interest should be awarded. There are three reasons for this. The first is that the balance between the parties could only be resolved after the judgement was given, and the Plaintiff submits that the judgement substantially reduced the amount claimed by the Defendant. The second point taken by the Plaintiff is that it had made a payment into court of $300,000 pursuant to the order of Mr Justice Yam. At the time that payment in was made the Defendant was holding $200,000 by way of a deposit from the Plaintiff. Those two sums taken together were understood, it is said, at the hearing before Mr Justice Yam to constitute the undisputed balance due between the parties. The Plaintiff submits that interest on the money paid into court will represent the Defendant’s loss of interest. 5.Thirdly, the Plaintiff submits that there was delay on the part of the Defendant in "prosecuting its claim". The Plaintiff points to the delay of 15 months on the part of the Defendant in the provision of its witness statements; a delay of 4 months in the provision of a draft Re‑Re‑Amended Defence and Counterclaim; and other delays of around 5 months. 6.In consequence the Plaintiff submits that a fair result would be for there to be no pre‑judgement interest. 7.So far as the pre‑termination interest is concerned the parties conducted their business on a rather flexible basis and this gave rise to some of the uncertainty that had to be resolved at the trial. I do not think it is appropriate to now impose the contractual interest mechanism on an accounting system adopted by the parties which, in relevant respects, departed from the contract. 8.Nor do I accept that the Plaintiff can excuse itself from a responsibility for interest accruing from the date of termination of the contract on the basis of the way in which the Defendant is said to have conducted the litigation. The Defendant similarly complains about delay on the part of the Plaintiff. I am not persuaded either party can be said to be more to blame than the other. Of equal importance it seems to me is that if the Plaintiff had itself been more proactive, then steps could have been taken to ensure that the matter came up for trial sooner than it did. Overall I am not persuaded by the submissions that any variation to the Order Nisi is warranted. Accordingly I affirm the earlier Order. The interest is to run from the date of termination of the contract at 1% above prime rate. I understand there to be no dispute to the Defendant’s calculation of this at HK$130,387.94. Costs 9.The Defendant submits that this should be approached on the basis that the Plaintiff's claim comprised three elements, namely the claim for a declaration that the services had been wrongfully suspended by the Defendant; the claim for damages arising from that allegedly wrongful suspension; and the final account. The damages claim was abandoned by the Plaintiff and the Plaintiff did not succeed in obtaining the declaration that it sought. The balance of account showed a balance in favour of the Defendant. 10.Accordingly the Defendant submits that it has been the successful party in the matters in dispute and is entitled to its costs accordingly. 11.The Plaintiff submits that there should be no order as to costs. I am invited to take into account three matters; the substantial reduction in the Defendant's counterclaim that resulted from the findings made in the judgement; the refusal of the Defendant to attend mediation; and, in more general terms, the conduct of the Defendant. The Plaintiff points also out that the final account issues were introduced into the dispute by the Defendant, not by the Plaintiff. So far as the first of these is concerned the point made is that the judgement awarded only approximately 15% of the sums counterclaimed to the Defendant. One significant area of the counterclaim on which the Defendant was unsuccessful was in relation to the adjusted rates which the Defendant sought to impose but to which it was not entitled. In the context of these disputes that was a major item by value. Moreover, the Plaintiff submits, the difference between the parties, once the money in court is factored in, was only about $140,000.00. 12.So far as the mediation point is concerned, the Plaintiff submits that there was an order made by the court on 25 May 2009 requiring the parties to "arrange for a mediation (if any)". The solicitors acting for the Plaintiff followed up on this and enquired of the Defendant whether it would agree to mediation. The Defendant’s response was to the effect that, because the parties had made previous unsuccessful attempts to settle the matter, it was thought unlikely that mediation would be of assistance. 13.In iRiver Hong Kong Ltd v Thakral Corp (HK) Ltd [2008] 4 HKLRD 1000 Yeung JA stated:
14.The Plaintiff submits that the Defendant's decision not to pursue mediation, which the Plaintiff categorises as unreasonable, is a relevant factor to be taken into account in the consideration of the appropriate order as to costs. I am reminded of the provisions of Practice Direction 31. 15.In its responsive submission the Defendant makes four points. The first is that Practice Direction 31 had not come into effect at the relevant time. As the Defendant acknowledges however the Practice Direction had been published. I do not think that this has much bearing on the exercise of my discretion as to costs. The encouragement given by the court to parties to settle disputes on an amicable basis where possible was well known, particularly within the legal profession at the relevant time. 16.The second point taken is that the Defendant's refusal in June 2009 to mediate was not unreasonable. The matters in issue at that time were confined to the allegedly wrongful suspension of service and the associated damages claim from the Plaintiff. The Defendant submits that it is simple common sense that an out‑of‑court settlement would have been taken as some sort of admission of liability. I wholly disagree. I am, for my own part, particularly unimpressed with the Defendant's submission that it decided against mediation, in part at least, on the basis that it was of the view that it was the innocent party, and wished to rebut the Plaintiff's complaints as to wrongful suspension of the service in open court. This was, in my view, no more and no less than a simple everyday commercial dispute. Reputation was not in issue. The Defendant's belief as to the strength of its position in regard to the matters that were in issue is however a relevant factor: see Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 (at 3010 A‑D). 17.Thirdly the Defendant submits that the Plaintiff never made any proposal for resolution of the final account dispute by mediation, that claim having only being introduced into the proceedings in December 2009. The Defendant submits therefore that the Plaintiff cannot itself have had any genuine desire to resolve the final account aspects outside litigation. This is expanded upon by the Defendant in its 4th point when it submits that the Plaintiff's conduct subsequent to the introduction of the final account aspects was inconsistent with any genuine desire to seek compromise. 18.It appears to me that the position in regard to the mediation is this. The parties both had continuing obligations to seek ways in which the disputes between them could be resolved without the necessity and cost of court litigation at trial. The introduction or amendment of matters in issue as the litigation proceeded increases, not reduces, the importance of considering, or if appropriate re‑considering, the appropriateness and availability of methods of alternative dispute resolution. Keeping in mind the fact that it is for the unsuccessful party, prima facie the Plaintiff in this case, to establish unreasonableness, I am not persuaded on the facts of this case that the Defendant was acting reasonably in its apparent decision to litigate for reputation purposes in 2009 when mediation was proposed by the court and by the Plaintiff. As matters transpired however the trial itself was largely focused on the final account aspects which were introduced later on. Neither party, erroneously in my view, made any moves towards settling those aspects through mediation. Accordingly, it appears to me, notwithstanding the fact that parties put themselves at risk on costs by turning their back on mediation it is inappropriate to give any significant weight to the refusal to mediate on the facts of this case. 19.The matters which are relevant it appears to me are that the Plaintiff’s claims in regard to the allegedly wrongful suspension of service, and associated damages, were unsuccessful or were not pursued. The final account issues were resolved in favour of the Defendant. Overall I can only conclude that the Defendant was the successful party and, having concluded that, on the facts it is not appropriate to give effect to the failure to mediate the disputes, the conclusion I reach is that the Defendant is to be entitled to its costs, on the usual party and party basis. 20.Given the relatively small balance of money which has resulted from the final account exercise, and which occupied much of the hearing time, it seems to me to be appropriate that these costs be taxed on the District Court scale.
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Cases cited in this judgment
Further hearings and rulings under HCA 1688/2006