厦門新景地集團有限公司formerly Known As 厦門市鑫新景地房地產有限公司 V.Eton Properties Ltd and Others
Read the full judgment text of HCCL 13/2011 on BabelCite. This HCCL judgment was delivered on 2 December 2013.
1. This is an application by the plaintiff for a stay of execution of the taxation of costs pending its appeal to the Court of Appeal from the judgment of Deputy Judge Stone. I have been assisted greatly by the detailed and very helpful submissions that I have received from counsel appearing for the plaintiff as well as for the defendants.
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HCCL 13/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMMERCIAL ACTION NO 13 OF 2011 ------------------------ BETWEEN
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---------------------- D E C I S I O N ---------------------- 1.This is an application by the plaintiff for a stay of execution of the taxation of costs pending its appeal to the Court of Appeal from the judgment of Deputy Judge Stone. I have been assisted greatly by the detailed and very helpful submissions that I have received from counsel appearing for the plaintiff as well as for the defendants. 2.I have been reminded of the principles governing these applications and, of course, these principles are well established. The same principles apply to this application by the plaintiff for a stay of the taxation of the costs that it was ordered to pay to the defendants. More often than not, these applications for stay are made by losing defendants who seek a stay of execution of the judgment debt in favour of the plaintiff, but the same principles apply the other way around. 3.From my reading of the submissions and from the submissions I heard this afternoon, the parties, I think, are content that I approach this application on the footing that the plaintiff has established arguable grounds in support of its appeal to the Court of Appeal. To succeed in this application, it must, of course, go beyond that. In the absence of proving or satisfying me that it has very strong prospects of success on the appeal, it must go further and demonstrate a good reason why I should grant a stay. 4.I am satisfied that the plaintiff has done so. If the plaintiff succeeds in the appeal, the costs incurred on the taxation, which, as I can see from the papers, would be a very substantial exercise that will last a number of days, would be wasted. Moreover, the court’s resources deployed for the taxation of costs would also be wasted. 5.I have been referred to a number of authorities and I have found them to be of assistance to me on this application. Keith JA, in Re HY v HT Lee Brothers & Co CACV 307/1999, 29 November 2000, identified many cases that:
6.Recently, Deputy Judge To, as he then was, referred to this principle in Plus Lucky Ltd v Chin Yuk Lun and others [2003] 3 HKC 80 at page 87, paragraph 15 where he described the principle as one of:
7.I was also referred to the decision of Jacob J in a decision called Lubrizol Corporation v Esso Petroleum Co Ltd at 1997 FSR 844 where Jacob J said, at page 846:
8.It is primarily for this reason that I accede to the application for a stay of execution, a reason that applies very much to our case involving four sets of defendants each with very substantial bills of costs that have already been submitted and are ready to be submitted, and which will give rise to complex and expensive taxation proceedings that might be wasted if the appeal is successful. 9.However, I am also satisfied that should the appeal be dismissed, the grant of the stay that has been sought will delay the defendants from receiving the costs that they are entitled to. Even if I were to accept the submissions of the plaintiff that the defendants have not acted with diligence in getting their costs taxed, and I have to say, at this point, that I do not accept those submissions, but, even if I did, it cannot be doubted that the stay I grant today will cause further delay. 10.Even if the defendants act swiftly after the dismissal of the appeal, it will be many months before the defendants can obtain an appointment for the taxation of their costs. In my judgment, a proper balance between these competing needs can be achieved if I were to make a condition of the stay that I propose to grant that the plaintiff pays into court an amount which could counter balance the delay that is being faced by the defendants. In this way, the delay to the defendants is ameliorated by the certainty that there is a sum of money in court that they can look to, to satisfy the costs, or a substantial part thereof, that would be awarded to them on the subsequent taxation of those costs. 11.The quantum of the payment into court is of some concern to me. Let me first deal with the submission, or, I should say, the last minute submission raised by the plaintiff in relation to its potential tax liability if I were to make such an order. The defendants were content that I deal with the matter on the basis of the affidavits that have been filed very late, and I am prepared to do so. 12.I am, of course, not in a position to make a definitive assessment and finding as to the competing opinions of the experts that have been placed before me, but I am impressed by the opinion of Mr Zhang Jiaxing that the provisions of tax law that have been cited by the plaintiff’s expert are not applicable in the present proceedings because the legal costs payable by the plaintiff to the defendants constitute part of a judgment debt and are not legal services, and that, in any event, the legal costs were payable outside the territory of mainland China. 13.Even if I were wrong in my provisional view of the expert evidence, I would, nevertheless, say that the imposition of tax on an overseas party in its overseas place of residence is, at most, a peripheral factor to be considered by a court in Hong Kong exercising its discretion to make orders which produce procedural justice between the parties before it. If an overseas plaintiff wishes to invoke the processes of this court, then it must abide by the orders that this court makes. 14.There is then the other submission which I have to deal with in relation to the quantum of the payment into court. Mr Wong identified to me certain passages in the Lubrizol case and suggested that a very small part of the actual costs claimed was in fact ordered to be paid into court as a condition of the stay, and he pointed out to me passages in that decision where the learned judge had remarked that the costs claimed appeared to be very startling and, thereby, implying that they were excessively high and most unlikely to be allowed on taxation. 15.I would approach the question of costs in this way. I look at the objections raised by the plaintiff against the bill of costs prepared by the 3rd to 5th defendants and see that the objections, if entirely successful, would reduce those claimed costs by some 50 per cent. Of course, it is most unlikely that objections to bills of costs are entirely successful and, judging from, and tapping into, my past experience in these matters, I should think that the 3rd and 5th defendants, and, in the same way, the other defendants, would appear to have real prospects of at least obtaining an award of costs which is equivalent to some 60 per cent of their bill of costs. 16.Of course, what I say is not in any way to tie down the hands of the taxing master who must look in great detail at the substance of the objections. But, taking that amount as a starting point, I can see that there is also the further question of interest accruing on those costs which would accrue at the judgment rate at 8 per cent per annum from the date of judgment until those costs are paid. 17.Given the timetable that was put before me in relation to the appeal and the likely date of its resolution, it seems to me that there would be a time lapse of almost three years from the date of the judgment and the completion of the taxation proceedings, if I were to award the stay that is sought; assuming, of course, that the appeal is dismissed. A significant part of this substantial time lapse will result from the stay that I grant. 18.That factor leads me to increase the 60 per cent of claimed costs, which I have assessed as a realistic proportion of the claimed costs to pay into court, to 65 per cent, and it is, therefore, my order today that there be a stay of execution of the taxation of the costs awarded to the defendants on condition that the plaintiff pays into court an amount equivalent to 65 per cent of the costs claimed by the defendants, less the sum of HK$800,000 in respect of the costs of the 1st to 2nd defendants, this being an amount which is already in court as security for costs of the trial, and less the sum of HK$1 million in respect of the costs of the 3rd to 5th defendants, this, likewise, being an amount which is already in court as security for costs of the trial. 19.As regards the bills of costs that have not been served on behalf of the other defendants, I suggest that they do so immediately so that the proper amount to be paid into court can be readily ascertained. 20.Then there is the further question of how much time I should allow the plaintiff to fulfil this condition and, although I have heard submissions that the time it seeks is too long, I am prepared to grant the time sought, which is 10 weeks, given the fact that it is not an easy proposition to arrange for funds from the mainland and given that the funds in question would be very, very substantial, having regard to the substantial amounts of costs that have been claimed by the four sets of defendants in this case. 21.There were some observations, in the course of the submissions I received this afternoon, as to the impact, if any, on the entitlement to interest on costs at the judgment rate by the payment into court. Obviously anything I say at this point in time will be obiter, but I am of the firm view that the rationale behind imposing interest at such a high rate of 8 per cent per annum, given current regime of low interest rates, is that the plaintiff has been kept out of money that is rightly his and the defendant, who delays paying that judgment debt, should be made to pay this high rate of interest as a deterrent against delay. It is the same rationale that results in interest on costs accruing at the rate of 8 per cent per annum from the date of judgment. 22.But once the amount is paid into court, the rationale can no longer hold good and it is for that reason that I am of the, admittedly obiter, view, and I have to acknowledge that I have not heard full submissions on the point, that for that period of time when the amount remains in court, the interest on costs should not accrue at the judgment rate, but at some other rate. I would suggest that the proper rate should be 1% over HSBC prime from the date of payment into court until the date of payment out to the defendants, on the basis that the interest earned on the money paid into court is to be paid out to the plaintiff. 23.The defendants, in my view, have succeeded substantially in this matter and, unless I hear otherwise from Mr Wong, I propose to award the costs of this application to each set of defendants. [Submissions on costs] 24.I reiterate what I said earlier that the defendants have succeeded substantially in this matter. However, I am persuaded by Mr Wong and satisfied that the proper order I should make in this case, where the defendants have, by open correspondence, offered to agree to a stay subject to the condition of payment into court, and which very reasonable offer has been refused by the plaintiff, is that the costs of this application should be the defendants’ costs in the cause of the appeal. 25.It is my practice in the commercial court to assess costs summarily for hearings lasting about two hours in the sum of $40,000 and, unless I hear submissions otherwise, I propose to assess costs of today in the sum of $40,000 for each set of defendants. I am very happy to have senior counsel appear before me, but I do not think this is a proper case for a certificate for two counsel. [Further Submissions on costs] 26.I am not persuaded that I should depart from my standard summary assessment of 40,000. I am sorry, Mr Shieh, I am against you, whilst I am very happy to have you in my court and you are always welcome, I am not persuaded that I ought to certify this matter fit for two counsel and adjust the summary assessment accordingly. I will, however, summarily assess the costs of the 6th defendant in the sum of $48,000, on account of the additional costs incurred to engage the expert on tax liability in mainland China. [Further submissions on the order for a stay of execution] 27.I am prepared to vary my order accordingly. That, as far as the 1st and 2nd defendants are concerned, the amount to be paid into court should be 65 per cent of their estimated costs in the sum of $25 million less the sum of HK$800,000 already in court and that, insofar as the 6th defendant is concerned, the amount to be paid into court should be 65 per cent of his estimated costs in the sum of $10 million.
Mr Anson Wong, instructed by Clyde & Co, for the plaintiff Mr Richard Khaw, instructed by Mayer Brown JSM, for the 1st and 2nd defendants Mr Paul Shieh, SC & Ms Elizabeth Cheung, instructed by Wilkinson & Grist, for the 3rd to 5th defendants Ms Kate Poon, instructed by Baker & McKenzie, for the 6th defendant Mr M C Law, instructed by Woo, Kwan, Lee & Lo, for the 7th to 11th defendants |
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