Liu Keith Che Ming and Another v. Poon Chi Sing t/a Good View Ornament

DCCJ 2421/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2421 OF 2010

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D E C I S I O N

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1.The defendant applies to vary the cost nisi order I made in my judgment of 8 February 2013 after a trial of 9 days.

2.The cost order nisi was as follows: costs of the claim to the plaintiffs and costs of the counterclaim to the defendant, to be taxed if not agreed, with certificate for counsel. 

3.The defendant is now seeking a variation order of costs in: (1) the defendant to pay one-third of the plaintiffs’ costs in the claim; or (2) the plaintiffs to pay two-thirds of the defendant’s costs in the claim and all of the defendant’s costs in the counterclaim. 

4.I shall not repeat the background of this action here because they are clearly set out in my judgment.  I would however say that the plaintiffs’ claim at the trial was $828,230 including the costs of the rectification work, alternative accommodations for 3 months during the rectification work, removal costs, loss of rental of their previous residence due to the defendant’s delay in completion in renovation, discomfort and inconvenience caused by the defendant’s defective work, etc.

5.The defendant’s counterclaim was for the balance of the renovation price at $140,130. 

6.In my judgment I allowed the sum of $82,151 to be set off against the defendant’s counterclaim, mainly on the costs of rectification of the defects.  I based my assessment of the value on the joint expert’s valuation of the costs of rectification.  Even though it was a joint valuation, the defendant refused to accept the report because he said he was not allowed to join the expert at the inspection of the plaintiff’s property.  In any event, that was the only expert report allowed by the court even though the plaintiff had long before the joint expert report and a couple of months after the completion of renovation obtained a valuation of the defects from another surveyor.

7.Looking at the award that I made and the claim of the plaintiff and the evidence, it was much lower than the plaintiff’s own estimate on the rectification work alone.  The plaintiffs’ claim was $390,000 odd and I had reduced the cost of a large number of these items. 

8.Miss Chan, counsel for the plaintiffs, submitted the defendant has to show strong support before he can succeed in asking the court to depart from the rule that costs should follow the event and she relied on the case of Re Elgindata (No 2).  Re Elgindata (No 2) is the authority that set out the principles on the award of costs by the court.  These principles included factors such as: if a party had raised allegations or issues that failed and that had caused a significant increase in the length of the proceedings and trial, etc.

9.The Elgindata (No 2) is an English Court of Appeal case decided in June 1992 followed by the Hong Kong courts and adopted in the Hong Kong Rules of Civil Procedure, Order 62 rule 5. 

10.Order 62 rule 5 in the Hong Kong Civil Procedure 2013 stated:

“Special matters to be taken in account in exercising discretion.

5(1) The court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account -

(aa) the underlying objectives set out in Order 1A rule 1;

(a) any such offer of contribution as is mentioned in Order 16 rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33 rule 4A(2);

(d) any written offer which is expressed to be ‘without prejudice save as to costs’ and which relates to any issue in the proceedings, but the court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful;

(g) any admissible offer to settle made by a party, which is drawn to the court’s attention.

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes -

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

11.Miss Lam, counsel for the defence, produced two offer letters on the settlement of the balance of the renovation price proposed of $100,000.  The first letter was dated 17 March 2010, before the writ of summons, from the plaintiff of the present action.  The second was dated 21 October 2010, 3 months after the writ was issued.

12.The plaintiff, on the other hand, had written a letter before the defendant’s first letter in March.  The plaintiff’s letter was dated 9 February 2010, suggesting the parties should each waive their respective claims. 

13.Had the matter been resolved at that stage, even after the writ of summons was issued, there would not have been a protracted 9-day trial.  Unfortunately, the plaintiff’s claim escalated from the recovery of only the rectification expenses into a large sum of $860,000 odd to include expensive alternative accommodations and inflated cost of rectification work.

14.Throughout the pre-trial period, the plaintiff refused to co-operate with the defendant and refused to allow the defendant to accompany the joint expert at the inspection visit of the property, to allow the defendant to see for himself the alleged defects.  If he was allowed to do so, it is possible that much time would have been saved at the trial. 

15.After full consideration of the issues raised by Miss Chan and Miss Lam, and looking at the conduct of the parties and the way the proceedings had taken and the length of the trial, applying Order 62 rule 5 sub-rule (1) and (2) and the principles of Elgindata, I am satisfied the plaintiffs did exaggerate their claim; they had wrongly pursued the claim of delay, for example.  As a result, a case which could have been resolved in the 4 days set down, took 8 days to try. 

16.Under the circumstances, I find the costs order nisi should be varied to reflect the waste of court’s time on issues that should not have been raised or raised in the protracted prolonged manner, and the efforts of the defendant in making a genuine effort to resolve the matter though he was not able to beat the amount awarded by the court at the end of the day, he did make an effort. 

17.I would allow therefore the defendant to bear half of the plaintiff’s costs in the claim, to be taxed if not agreed, with certificate for counsel, and the plaintiff to pay 100 per cent of the defendant’s costs in the counterclaim and, again, to be taxed if not agreed, with certificate for counsel.

18.The costs of today’s hearing be to the defendant, to be taxed if not agreed, with certificate for counsel.

Miss Sheena M Y Chan, instructed by Gary K W Tam & Co, for the 1st and 2nd plaintiffs

Miss Yanky Lam, instructed by Henry Fok & Co, for the defendant