Read the full judgment text of HCA 112/2009 on BabelCite. This Court of First Instance judgment was delivered on 23 April 2013 before Poon J.
Civil procedure – costs – sanctioned payment – acceptance of defendant's sanctioned payment of HK$100,000 in settlement of the whole claim under Order 22, rule 20(1) of the Rules of the High Court (Cap 4A) – 'Otherwise Proviso' entitling the court to order otherwise as to the plaintiff's prima facie entitlement to costs up to the date of serving notice of acceptance – plaintiff as supplier of electronic products entering into purchase orders with defendant for 126,972 units of printed circuit boards intended for installation in a lock assembly sold to Sargent & Greenleaf in the USA – alleged failure of printed circuit boards to meet the ESD Standard (withstanding up to 8,000V contact discharge and 15,000V air discharge) – plaintiff paying compensation to S&G growing from US$232,625 in January 2009 to US$448,321 in January 2012 – whether the court should exercise the costs discretion under the Otherwise Proviso – proper approach to the Otherwise Proviso – whether the prima facie rule that the plaintiff is entitled to costs up to the date of serving notice of acceptance can be displaced – whether exceptional circumstances must be shown – whether a prior warning by the defendant to the plaintiff of an intention to invoke the Otherwise Proviso is required – comparison with Part 36 of the English Civil Procedure Rules – whether the plaintiff's claim was grossly exaggerated – whether costs should be taxed on the High Court scale or the District Court scale – Order 62, rule 5(2)(c) RHC – defendant bears the burden of demonstrating exceptional circumstances and a prior warning – On a proper construction of Order 22, rule 20(1) introduced as a self-contained code by the Civil Justice Reforms in April 2009 to encourage settlements, the prima facie rule confers certainty as to costs consequences and can only be displaced in exceptional circumstances, and the defendant must have given the plaintiff a prior warning that he will apply to invoke the Otherwise Proviso upon acceptance – defendant having given a prior warning in its letter of 29 March 2012 but having failed to discharge the burden of showing exceptional circumstances – the mere fact that the plaintiff accepted HK$100,000 did not demonstrate exaggeration where compensation to S&G was well documented and the plaintiff had legitimate commercial reasons to settle after three years of litigation, escalating legal costs, the engagement of senior and junior counsel, 5 expert reports, a joint expert report, and over 7,000 pages of documentary evidence, and the defendant's sale of its Mainland factory in 2009 – disputed English authority Glenlion Construction Limited v Beqverfoam (Moreton) Limited concerning pre-CPR provisions is of limited assistance in the post-CJR era – scale of costs – given the complexity of the factual and legal issues and the substantial costs already incurred, the matter was plainly a High Court case that could not conceivably have been brought in the District Court, and the plaintiff's costs are to be taxed on the High Court scale – defendant's application under the Otherwise Proviso dismissed; plaintiff's application for High Court scale costs allowed – order nisi that the defendant do pay the plaintiff costs, including any costs reserved, to be taxed if not agreed, on the High Court scale.
Legal issues: Approach to exercising costs discretion under the Otherwise Proviso in O.22 r.20(1) RHC · Whether exceptional circumstances existed to displace the prima facie costs rule · Scale of costs – High Court or District Court
Outcome: Defendant's application under the Otherwise Proviso in Order 22, rule 20(1) is dismissed; plaintiff's application for High Court scale costs is allowed.
Cited by 2 cases