Top One International (China) Property Group Co Ltd v Top One Property Group Ltd & Other — HCA 1244/2009 — Fok JA — 9th December 2010

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 1A - Objectives,Order 2 - Non-Compliance

Top One International (China) Property Group Co Ltd v Top One Property Group Ltd & Other — HCA 1244/2009 — Fok JA — 9th December  2010

32.  The relevant legal principles governing the circumstances in which the court will extend time to permit compliance with an unless order were thoroughly analysed and discussed by Ribeiro J (as he then was) in Chan Chun Lung Allen & Anor v Ryland Limited & Ors, unrep., HCA4904/1996, 26.8.99 at §§38 to 47.

33.  The test he applied was that laid down by Bokhary JA (as he then was) in PT Bank Pembangunan Indonesia (Persero) v Tan Eddy Tansil [1997] 1 HKLRD 57 at p.59E-G:

“The test to be applied here is, in my judgment, the one laid down by Sir Nicholas Browne-Wilkinson VC giving the leading judgment in the case of In re Jokai Tea Holdings Ltd [1992] 1 WLR 1196 when he said this at p.1203B:

‘In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an ‘unless’ order, the relevant question is whether such failure is intentional and contumelious.  The court should not be astute to find excuses for such failure since obedience to orders of the court is the foundation on which its authority is founded.  But if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed.’”

34.  Thus, the relevant principles applied by Ribeiro J in Chan v Ryland were set out in §§45 to 47 of his judgment and are summarised below:

(1) The court will ask whether a defendant’s failure to comply with an unless order was “intentional and contumelious” or whether, on the contrary, he has been able “clearly [to] demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances”, keeping in mind that the court should not be astute to find excuses for such non-compliance.

(2) As with any other case in which a party approaches the court for an indulgence, it is incumbent on an applicant to adduce evidence upon which an exercise of discretion in his favour may be founded.

(3) Non-compliance is contumelious where it is the result of the litigant’s conscious and deliberate decision to ignore or disobey the court’s order in the absence of any extraneous excuse.  Such deliberate conduct may be contrasted, for instance, with cases where the litigant has made a serious effort to comply in good faith but has been unsuccessful through bad luck or incompetence or with cases where the litigant has not complied because of circumstances outside his control (including cases where his solicitor has negligently or otherwise missed the deadline though no fault of the litigant).

35.  Ribeiro J declined to lower the threshold, a trend which he noted was detectable in some of the English authorities, in particular Hytec Information Systems Ltd v Coventry City Council [1997] 1 WLR 1666 where, at p.1677, Auld LJ said:

“In my judgment, there is no need to confine the test to that of an intentional disregard of a court’s peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise. Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction. But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise. It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out.”

He noted that PT Bank Pembangunan case was regarded as representing a binding precedent so far as the Court of First Instance was concerned (§40) and he did not consider that the Hytec approach “as yet to represent the law in this jurisdiction” (§44).

36.  Mr Douglas Lam, counsel for the plaintiffs, submitted that, in the light of the Civil Justice Reform (“CJR”), the time had come to adopt the English approach in Hytec.

37.  For his part, Mr William Wong, counsel for the 1st and 3rd defendants,[1] submitted to the contrary because, first, Hytec did not suggest that the threshold for refusing an extension of time had been lowered in the post-CJR era, and secondly because various authorities held that striking out a defence is a draconian sanction and, save where there has been contumelious disobedience with the court’s order, it is not part of the court’s function to punish the party who has failed to comply by making a striking out order.

38.  In my view, Mr Lam is right in his submission.  It is noteworthy that, in Chan v Ryland, Ribeiro J simply said that the Hytec approach did not “yet” represent the law in this jurisdiction.  Since his decision in that case, in August 1999, the CJR has since come into effect.  There is now a trend towards the greater use of orders to specify automatic consequences of non-compliance and for placing the onus on a party guilty of non-compliance to seek relief from those consequences.  The rules themselves reflect this trend: see, for example, RHC O.25 r.1C (failure to appear at case management conference or pre-trial review).

39.  To this end RHC O.2 r.4 now specifies that where a party has failed to comply with a rule or court order, any sanction for failure to comply imposed by the rule or order has effect unless the party in default applies to court for relief from the sanction within 14 days of the failure.  Relief is not automatic and RHC O.2 r.5 specifies the circumstances which the court shall consider on an application for such relief.

40.  The various cases cited by Mr Wong in his skeleton submissions were all decided before the coming into effect of the Woolf Reforms or the CJR respectively.  Furthermore, John Ho v Desmond Bloom, unrep., HCA1369/2005, 23.5.06 and Luigi Benetton srl v Face Time International, unrep., HCA4135/1993, 24.11.95 were both cases involving the question of whether an unless order should be made, rather than whether time for complying with it should be extended.  As for the decision in Aqua-Leisure Industries Inc & Anor v Aqua Splash Ltd (No.2) [1999] 3 HKC 343, despite his reluctance, Keith J (as he then was) did strike out the defendant’s defence for non-compliance with RHC O.25 r.6(1).

41.  In my view, the passage quoted above from Hytec is entirely consistent with the more pro-active case-management approach encouraged by the CJR and, in my view, the CJR has had the effect that the Hytec approach now reflects the approach that should be applied in this jurisdiction.  That is to say, although intentional and contumelious disregard of a court’s peremptory order may be the most usual circumstance leading to the refusal of an extension of time to comply with a peremptory order, the exercise of the discretion to refuse an extension or to relieve a party from sanctions is not limited to cases of intentional and contumelious default.  As directed by RHC O.2 r.5, the court should consider all the individual circumstances including those listed in r.5(1) at sub-paragraphs (a) to (j).  Depending on the circumstances, failure to comply with one or a number of orders through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so that relief from a sanction for non-compliance specified in a peremptory order (including an order striking out a pleading) should not be granted.  Any other conclusion would, in my opinion, be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of CJR (RHC O.1A r.3) and on the court to do so by actively managing cases (RHC O.1A r.4(1)).

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Yeung Kit Ling v Ma Kwan Ho Lawrence – CACV 258/2010 – Stock VP and Wright J – 1st April 2011

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 1A - Objectives

Yeung Kit Ling v Ma Kwan Ho Lawrence – CACV 258/2010 – Stock VP and Wright J – 1st April 2011

29.  However, it was contended that in his approach to the exercise of his discretion, the judge erred in principle.  The way it was put in the grounds of appeal is that: “the Court erred in law in finding that since the implementation of the Civil Justice Reform the courts will readily infer that witnesses will suffer a loss or dimming of memories, even without evidence provided … the delay is substantial.”

30.  This contention relied upon three passages in the judgment:

“15. Since after the implementation of the Civil Justice Reform … the Courts have been consistent in their approach in dealing with complaints of loss of memories as a result of inordinate delay. If the delay is substantial, the Courts will readily infer that witnesses will suffer a loss or dimming of memories, even without evidence provided as such by the defendant.

16. Moreover, if oral evidence of witnesses will form an essential part for determination of issues at trial, loss of memories of witnesses will be a sufficient prejudice striking out of the claim. In this regard, it is not necessary to categorize the ground of striking out being impossibility to have a fair trial or serious prejudice suffered by the defendant, as in the situation of loss of memories of witnesses, they are really the same thing.

….

19. Suffice for me to say is that, since the implementation of the CJR, there is a higher duty on parties to conduct legal proceedings expeditiously, as it is expressly set out as an underlying objective in Order 1A.  I will not go so far as to suggest that, in an application to strike out for want of prosecution, the defendant has no longer a duty to convince the Court that he suffers serious prejudice or there is a substantial risk that a fair trial is impossible because of the inordinate delay.  However, given a sufficiently long delay and without any compelling reason to explain the same, the inference of prejudice can easily be drawn as mentioned in Paragraphs 15 and 16 above.  In the present case, even if the delay is counted only from the implementation of the CJR, it is still more than 14 months.”

31.  It may be that the learned judge was intending to say no more than that what constitutes inordinate delay is to be looked at in the light of the policy underlying the CJR.  If so, he is correct.  If, however, he was suggesting that the test for serious prejudice is altered by the CJR, or that the evidence required to establish serious prejudice is now less onerous than before, then I would not agree.

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Oriental Press Group Ltd & Other v Fevaworks Solutions Ltd — HCA 2140/2008 — Chung J — 25th March 2011

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Mediation

Oriental Press Group Ltd & Other v Fevaworks Solutions Ltd — HCA 2140/2008 — Chung J — 25th March 2011

8.  The special matters relied upon by the defendants under Ord. 62 r. 5 were:-

(1)   any payment of money into court (Ord. 62 r. 5(1)(b));

(2)   the parties’ conduct (Ord. 62 r. 5(1)(e) and (2)(d));

(3)   whether a party has succeeded on part of its case, even if it has not been wholly successful (Ord. 62 r. 5(1)(f)).

…

11.  In relation to para. 8(2) above, the defendants have not specified what the parties’ conduct was.  But because only the plaintiffs’ refusal to take part in mediation was mentioned in their skeleton submissions, it is reasonable to assume that to be the conduct in question.

12.  Again, the plaintiffs’ arguments in reply to this seem to have substance.  First, the legal position of the host of an internet discussion forum in relation to a libel is a point of law which can have implications beyond the actions.  Secondly, the amount awarded does not appear to be one which could have been acceptable to the defendants (resulting in a successful mediation) in view of the sanctioned payments they paid into court (see para. 13 below).  Thus, the plaintiffs’ refusal to mediate should not be given much weight

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Fins Development Ltd v Tang Yuen Ting – HCA 542/2009 – Lam J – 18th March 2011

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 1A - Objectives

Fins Development Ltd v Tang Yuen Ting – HCA 542/2009 – Lam J – 18th March 2011

35.  Whilst I accept that the court does have the jurisdiction to grant leave to re-open a case after the conclusion of trial, such leave should only be granted in exceptional circumstances (see Charlesworth v Relay Roads Ltd [2000] 1 WLR 230).  Like Sir Christopher Slade in Stewart v Engel [2000] 3 All ER 518, I do not think the Civil Justice Reform has abrogated this jurisdiction.  For present purposes, I am happy to adopt the following observations of Rix LJ in Noga v Abacha [2001] 3 All ER 513 at paras. 42 and 43 as regards the threshold which has to be satisfied,

“Of course, the reference to exceptional circumstances is not a statutory definition and the ultimate interests involved, whether before or after the introduction of the CPR, are the interests of justice. On the one hand the court is concerned with finality, and the very proper consideration that too wide a discretion would open the flood gates to attempts to ask the court to reconsider its decision in a large number and variety of cases, rather than to take the course of appealing to a higher court. On the other hand, there is a proper concern that courts should not be held by their own decisions in a straight-jacket pending the formality of the drawing up of an order …

Provided that the formula of ‘exceptional circumstances’ is not turned into a straight-jacket of its own, and the interests of justice and its constituents as laid down in the overriding principle are held closely to mind, I do not think that the proper balance will be lost.  Clearly, it cannot be in every case that a litigant should be entitled to ask the judge to think again.  Therefore, on one ground or another the case must raise considerations, in the interests of justice, which are out of the ordinary, extraordinary or exceptional.  An exceptional case does not have to be uniquely special.  ‘Strong reasons’ is perhaps an acceptable alternative to ‘exceptional circumstances’.  It will necessarily be in an exceptional case that strong reasons are shown for reconsideration.”

36.  That was said in the context of an application to invite the court to reconsider after judgment had been handed down on the basis that the judge had ignored binding authority and the decision was flawed as a result.  Thus, the application did not involve the amendment of pleadings and re-opening of the evidence.  On the other hand, in the present case, if I were to accede to the Plaintiffs’ application, the Defendant must be given the opportunity to respond to the amended Statement of Claim and the new evidence, if she so wishes.

37.  In Hong Kong, we do not have overriding objectives under our Civil Justice Reform.  Instead, under Order 1A, the court is required to give effect to the underlying objectives set out in Rule 1 when it exercises any of its powers (whether under its inherent jurisdiction or given to it by the rules or otherwise).  This must include the exercise of its discretion in hearing an application to re-open the case after trial.  Rule 2(2) further provides that in giving effect to the underlying objectives, the court shall always recognize that the primary aim is to secure the just resolution of the dispute in accordance with the substantive rights of the parties.

…

51.  To allow the Plaintiffs to re-open the case and to amend the Statement of Claim at this late stage will tantamount to a second bite of the cherry.  It would be inconsistent with the underlying objectives in Order 1A to permit such an exercise in the circumstances of this case, particularly in the light of the futility of it in terms of the lack of prospect of recovering the money from the Defendant in any event and the lack of utility of a judgment pronounced on the basis of the evidence from one side only.  As I said in the course of Mr Tse’s submissions, there is nothing to stop the management of Jingwei to seek a counsel opinion on the merits of a case of misappropriation based on the alternative claim and rely on that for the purpose of accounting to its shareholders.

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Chevalier (Construction) Co Ltd v Tak Cheong Engineering Development Ltd – HCA 153/2008 – Lam J – 23rd February 2011

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 38 - Evidence and Expert

Chevalier (Construction) Co Ltd v Tak Cheong Engineering Development Ltd – HCA 153/2008 – Lam J – 23rd February 2011

20.  Lastly, I would reiterate the duty of the parties and their legal representatives under Order 1A Rule 3 and the overriding duty of expert witnesses under Order 38 rule 35A.  In 1974, Megarry J made this observation in another context in Re Barbour’s Settlement [1974] 1 All ER 1188 at p. 1193b to c,

“… justice according to law is a co-operative process to which solicitors, counsel and judges all make their contributions. No judge can perform his duties adequately and efficiently without the great assistance from counsel and solicitors that is traditional. The gratitude for this assistance that is sometimes expressed from the Bench is genuine indeed; and correlative to that gratitude is the duty of the Bench to take whatever steps may be appropriate to see that the ancient standards are fully maintained.”

21.  With the implementation of the Civil Justice Reform and the increased use of expert in the trial process, Megarry J’s list of persons contributing to the judicial process should be extended to cover expert witnesses.  In cases where expert evidence is required, their assistance to the court is valuable in the administration of justice.  Unfortunately there are situations where expert evidence is not properly used or managed.  Such abuses add considerable costs and delay to civil litigation.  In order to ensure that proper and efficient use is made of expert evidence, the judge has a duty to take appropriate steps to foster the standards of the expert witness and the lawyers and the parties in the preparation of such evidence.  This is an important facet in modern case management.

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Winpo Development Ltd v Wong Kar Fu — HCA 3541/1993 — Fok JA — 8th Feburary 2011

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 1A - Objectives

Winpo Development Ltd v Wong Kar Fu — HCA 3541/1993 — Fok JA — 8th Feburary 2011

24.  The court has inherent jurisdiction to dismiss an action for want of prosecution if there has been default in complying with the rules or excessive delay in the prosecution of the action: see Hong Kong Civil Procedure 2011, Vol. 1, at Note 25/L/1 (p. 583).  The 4th and 5th defendants seek to invoke this inherent jurisdiction in the present case.

25.  Prior to the introduction of the Civil Justice Reform (“CJR”) with effect from 2 April 2009, the approach adopted in Hong Kong to applications to dismiss for want of prosecution was that laid down by the House of Lords in Birkett v James [1978] AC 297.  In that case, Lord Diplock held that the power to dismiss an action for want of prosecution should only be exercised where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court, or (2) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers and such delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause or to have caused serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party.

26.  A further principle laid down in Birkett v James was that a plaintiff whose action was dismissed for want of prosecution before the limitation period had expired was, save in an exceptional case, entitled to issue a fresh writ for the same cause of action and, accordingly, the power to dismiss an action for want of prosecution, other than in a case of contumelious conduct on the plaintiff’s part, should not normally be exercised within the currency of the limitation period, when it would only aggravate the prejudice to the defendant from delay and add to costs.

27.  The relevant principles, applicable before the introduction of the CJR, were comprehensively summarised by Neill LJ in Trill v Sacher [1993] 1 WLR 1379 at pp. 1398A-1400. These were adopted and applied by the Court of Appeal in Hongkong & Shanghai Banking Corp. Ltd v Luan Tao Sheng [1998] 1 HKC 438 per Mortimer VP at pp. 443E-445I.

28.  In Grovit v Doctor [1997] 1 WLR 640, the House of Lords held that for a plaintiff to commence and continue litigation which he had no intention to bring to a conclusion could amount to an abuse of process and that, accordingly, once the court was satisfied that the reason for delay was one which involved an abuse of process in maintaining proceedings when there was no intention of carrying the case to trial, it was entitled to dismiss the action.  In such a case, it was not strictly necessary to establish want of prosecution under either of the limbs identified by Lord Diplock in Birkett v James: see per Lord Woolf at pp. 647H-648A.

29.  Since the introduction of the CJR in this jurisdiction, with effect from 2 April 2009, the court has a duty to further the underlying objectives of the Rules of the High Court by actively managing cases (O.1A r.4(1)) and the parties to litigation and their legal representatives have a duty to assist the court to further the underlying objectives of the rules (O.1A r.3).  The underlying objectives are set out in O.1A r.1(1) and have been described as “probably one of the most, if not the most, important aspects of CJR”: Hong Kong Civil Procedure 2011, Vol. 1, at Note 1A/0/3 (p. 38).

30.  Relevantly, for present purposes, the underlying objectives include: (b) to ensure that a case is dealt with as expeditiously as is reasonably practicable, (c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings, and (f) to ensure that the resources of the court are distributed fairly.

31.  There can be little doubt that the introduction of the CJR has wrought changes to the court’s approach to applications to dismiss for want of prosecution.  In a Civil Justice Reform Special Release to the 2010 Edition of Hong Kong Civil Procedure, Professor Adrian Zuckerman states, at §35 (p.14):

“The crucial difference between Birkett v James and the new approach lies in the fact that procedural defaults are now assessed not just by reference to the prejudice they have caused to the possibility of holding a fair trial or to the opponent. They must also be assessed by reference to the underlying objectives, which require the court to ensure that the case is resolved expeditiously and with procedural economy.”

32.  This change of approach reflects the changes which were brought about by the Woolf Reforms in England.  As these were being introduced, Lord Woolf MR held, in Arbuthnot Latham Bank Ltd v Trafalgar Holdings [1998] 1 WLR 1426 at 1436:

“In Birkett v James [1978] A.C. 297 the consequence to other litigants and to the courts of inordinate delay was not a consideration which was in issue. From now on it is going to be a consideration of increasing significance. Litigants and their legal advisers, must therefore recognise that any delay which occurs from now on will be assessed not only from the point of view of the prejudice caused to the particular litigants whose case it is, but also in relation to the effect it can have on other litigants who are wishing to have their cases heard and the prejudice which is caused to the due administration of civil justice.”

33.  In a case such as the present, where the delay of which complaint is made occurred before as well as after the introduction of the CJR, the court must look at the matter of delay in the context in which it occurred: see Re Wing Fai Construction Co Ltd [2010] 3 HKC 593 per Rogers VP at §12.  A party is not to be blamed for not observing a rule that did not exist at the relevant time.  But where the period of delay or part of that delay has occurred since the introduction of the CJR, the court will have to take into consideration any non-observance of the new rules: see ibid. at §13

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Apple Daily Ltd v Oriental Press Group Ltd – HCA 1396/2009 – Chu J – 3rd January 2011

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 62 - Costs

Apple Daily Ltd v Oriental Press Group Ltd – HCA 1396/2009 – Chu J – 3rd January 2011

11.  I turn to the application to vary the costs order nisi on the striking out application. The 2nd to 4th defendants’ argument is that the striking out application was mounted on the basis of the claim as pleaded in the Statement of Claim and that the plaintiff had at the hearing effectively abandoned the original claim and raised a new claim of compilation.  Hence, applying Order 62 rule 5(1)(aa), (e) and (f) of Rules of the High Court, Cap.4A, the plaintiff should be ordered to bear their costs, but reduced by 10% to reflect the failure on the argument that the claim should be struck out for abuse of process.

12.  As a result of the amendment to Order 62 rule 3(2) and the new Order 62 rule 3(2A), the principle that costs follow event is no longer the usual rule, but is one of the options in the exercise of the court’s discretion as to costs: Hong Kong Civil Procedure 2011 vol. 1 paras.62/3/3A & 62/3/3B.  At the same time, the special matters set out in Order 62 rule 5, to the extent they are applicable, are relevant as to how the court will exercise the discretion in interlocutory applications.

13.  In the present case, the Statement of Claim has not properly pleaded the plaintiff’s claim.  The case on compilation is not apparent from the pleadings; it was only explained in counsel’s written submissions.  As such, it is understandable that the 2nd to 4th defendants made the striking out application on the basis that the plaintiff claims copyright in the news and information contained in the plaintiff’s Articles.  Further, the plaintiff could have clarified the basis of its claim in the affirmations in opposition, but did not do so.  The 2nd to 4th defendants were therefore justified in proceeding with the application.

14.  In the circumstances, the costs of the application should be borne by the plaintiff, subject to a one-third reduction, which is to reflect the failure on the abuse of process argument and also that, despite the clarification of the plaintiff’s claim in its counsel submissions, the 2nd to 4th defendants had proceeded with the striking out application in a full-fletch manner.  The costs order nisi is varied accordingly.

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Kam Hing Trading (Hong Kong) Ltd v The People’s Insurance Co of China (Hong Kong) Ltd – HCCL 27/2009 – Stone J – 15th December 2010

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 62 - Costs

Kam Hing Trading (Hong Kong) Ltd v The People’s Insurance Co of China (Hong Kong) Ltd – HCCL 27/2009 – Stone J – 15th December 2010

12.  The plaintiff makes this application to vary the order nisi as to costs thus awarded to the 1st defendant without prejudice to its right to appeal against the substantive judgment.

13.  The plaintiff naturally accepts that costs are in the discretion of the court, and for general guidelines relies on the well-known summary of the English law position in Re Elgindata (No 2), [1992] 1 WLR 1207.

14.  The essence of the plaintiff’s application to vary the costs’ order nisi as made against it in this action is that there has been “full blown argument” in this case upon three main issues, first, whether the plaintiff is entitled to claim for loss against the 1st defendant, second, the issue of insurable interest, and third, the issue surrounding construction of the marine insurance as was issued.

15.  The plaintiff says that the 1st defendant has failed on the first two issues, and has won this case solely upon the conclusion of the court relating to the third and last issue, namely that of construction.  The plaintiff maintains that it always had been its case that the issue of construction, namely whether the loss and damage as suffered by the plaintiff consequent upon loss of the logs was subject to coverage by the policy, and that despite repeated attempts which had been made on its behalf to “narrow down and clarify” the relevant issues, nevertheless the plaintiff had used the ‘non-relevant issues’ to launch extraneous interlocutory applications for specific discovery, which amounted to nothing more than ‘fishing expeditions’ in a bid to support its wide-ranging and irrelevant defences.

16.  The result of all this activity, the plaintiff maintains, is that the proceedings and trial unnecessarily had been prolonged, and unnecessary costs thereby incurred for which it should not now be made to pay.  The plaintiff contends that but for the conduct of the 1st defendant, the trial would have been considerably shorter, and that there would have been no need to have had the lengthy examination and cross-examination of witnesses such as took place.

17.  Accordingly, in the circumstances it is submitted that in view of the underlying objectives of the CJR and the fact that the conduct of the parties should be taken into account in making a costs’ order, the existing order nisi should be varied either so as to order that the plaintiff should be entitled to the costs of the unnecessary discovery applications as mounted against it, or alternatively that, looked at from a macro perspective, the 1st defendant should be entitled only to 40% of the costs of the action as mounted by the plaintiff against the 1st defendant.

18.  Perhaps unsurprisingly, the 1st defendant roundly rejects these contentions, and Mr Bartlett, counsel for the 1st defendant at trial, has filed a highly detailed skeleton submission; I hope I will be forgiven for referring to this extensive document in general terms only.

19.  On the part of the 1st defendant, it is accepted that the principles in Re Elgindata (No 2), op cit., apply in Hong Kong, and the point is made that it is trite law that under Order 62 r3 (2) RHC the court will order costs to follow the event except where it appears to the court that some other order should be made as to the whole or part of the costs.  In fact, the point has been emphasized at the highest level that, even in the post-CJR environment, the courts will depart from the normal rule only where there are exceptional circumstances: see Regent National Enterprises Ltd v Goldlion Properties Ltd., FACV 10 of 2008, judgment dated 14 September 2009.

20.  In his written submission, Mr Bartlett also draws attention to the observations of this Commercial Court as to costs in Akai Holdings Ltd (in liquidation) v Thanakharn Kasikorn Thai Chamkat (Mahachon) [2008] 6 HKC 82, wherein the suggestion emphatically was rejected that the Hong Kong courts have moved away from the Elgindata approach in favour of the interstitial approach described by Lord Woolf in AEI Rediffusion Music Ltd v Phonographic Performance Ltd, [1999] 1 WLR 1507, and declined to accept the proposition that henceforth the courts were more readily minded to make costs’ orders reflective of success or failure upon individual issues.

21.  I take this opportunity to re-emphasise the view as earlier expressed, namely that the Commercial Court, in its present incarnation at least, has no intention of readily acceding to the “filleting” of costs according to the success or failure of any specific issue arising for decision arising for decision within the composite whole, noting once again that if and when such is to occur such occasions will be readily recognizable and are likely to be few and far between.

22.  In short, the party seeking to vary the order nisi – in this instance the unsuccessful plaintiff – in favour of such a costs’ “filleting” exercise has the burden of establishing that issues were improperly/unnecessarily raised and/or that exceptional circumstances justify departure from the normal rule such that, on discrete claims, it is clear that significant time and effort manifestly was wasted.

23.  I shall not here revisit the content of what is a detailed judgment, in which the various arguments are articulated and evaluated; as earlier observed, that judgment speaks for itself.

24.  However, having reconsidered the entire case as it evolved between the plaintiff and the 1st defendant, not only in terms of the trial but in terms of the various interlocutory applications, and having reflected upon the disparate written submissions regarding variation of the existing order nisi as to costs, I have concluded that ultimately no good basis has been established to justify alteration to the existing order, in terms either of the alternative suggestions made on behalf of the plaintiff that discovery costs be to the plaintiff or that the 1st defendant’s costs’ entitlement be reduced to 40%.

25.  To the contrary, I would go so far as to venture the opinion that in light of the ‘drip feed’ manner in which documents emanated from the plaintiff in this case, I regarded the plaintiff’s submission relating to allegedly unnecessary and ‘fishing’ discovery costs to be ambitious and ultimately misplaced, and in this regard I agree with Mr Bartlett’s careful analysis of the manner in which discovery purportedly had taken place.  I realize that in this context the plaintiff suggests that based on the pleadings and evidence as they existed at the material time, the relevance of the documents requested by the 1st defendant was not immediately apparent, but, with respect, I take this submission with a pinch of salt.  It became abundantly clear at trial precisely what the 1st defendant had been after, and why, and I decline to accede to the plaintiff’s submissions in this regard.

26.  As Mr Bartlett has pointed out, continuing discovery is an independent obligation, and the test for whether documents are discoverable is not to be dictated by whether subsequent argument on the basis of these documents is or is not successful; he also suggests with some force (although I make no specific finding in this regard), that the ‘drip feed’ of documents to which his client was subject verged on abuse of process, and that the evidence of the plaintiff’s own witnesses bore testimony to the prior ‘suppression’ of documents.  Accordingly, it strikes me that in asking for ‘discovery costs’ the plaintiff doth protest too much, and in the circumstances as they transpired I am unsympathetic to its overtures.

27.  As to whether any of the issues should not have been taken qua individual issues, even though ultimately the 1st defendant lost the argument on such issues, having reflected on the matter I am not satisfied that it is correct to say that, albeit unsuccessful, they should not have been pursued, notwithstanding that the court took the view that the arguments were unconvincing, and thus were rejected.  It strikes me that, with the benefit of hindsight (and knowledge of the judge’s reasoning) it is always open to a losing party to argue that issues upon which they have succeeded should attract costs in its favour, alternatively that the successful party’s costs’ entitlement should be reduced, but it will in my view be relatively infrequent that an issue which has been taken, and thus subject to evidence and argument, can be characterized as so ‘out of kilter’ as to attract an adverse costs’ sanction.

28.  I also venture the view that had discovery been more readily made by the plaintiff (as to which I repeat the views expressed above) there may have been more substance to the argument that certain lines should not have been proceeded with; however, given the manner in which discovery came out, I do not consider that the 1st defendant validly should be criticized for developing the issues/argument in the case in the manner that it did.

29.  This court has said on many occasions over the past 14 years that costs are not and cannot be a matter for precise calibration, and that necessarily there must be an element of ‘broad brush’ involved in their award.  It is not possible to define the instances when this will occur; if I may say so, the court knows the situation when it sees it, and in this case this court does not regard any particular argument as one which neither should have been contemplated nor taken, even though at the end of the day such argument did not have attract judicial agreement.

30.   Commercial cases generally are complex animals, and it is a far cry from an unsuccessful argument on a particular issue to an issue which clearly should not have been contemplated, pleaded nor even attempted to be run.  It is in this regard that, with the greatest respect, this court repeats that it disagrees profoundly with the approach adumbrated by Lord Woolf in AEI Rediffusion Music Ltd., op cit., which if followed would lead to precisely the complex costs’ arguments which the principles evinced in Elgindata (No. 2), op cit., no doubt carefully were designed to avoid.

31.  Accordingly, the plaintiff’s application to vary the costs’ order nisi for the reasons and upon the bases submitted is dismissed, and (it must therefore follow) that the costs of and occasioned by the application thus to vary must be to the 1st defendant, to be taxed if not agreed.

32.  I so order.

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Re: NTK Technology (HK) Ltd — HCCW 528/2008 — Harris J — 27th October 2010

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Mediation

Re: NTK Technology (HK) Ltd — HCCW 528/2008 — Harris J — 27th October 2010

24. … The second ground is that despite an early offer to mediate and encouragement by the court to mediate at the pretrial review the defendant declined these offers; or at least did not respond to them.  Mr Ko points out that Practice Direction 3.3 provides that the court may take this into account when determining costs.  In the context of section 168A petitions any mediation is currently voluntary and although I find the defendant’s conduct unsatisfactory I do not think that it is a ground for making an indemnity costs order.

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Faith Bright Development Ltd v Ng Kwok Kuen – HCA 9058/1999 – Registrar Lung – 20th October 2010

by Ken To, Barrister-at-Law & Mediator on April 26, 2011

in Order 25 - Case Management Summons

Faith Bright Development Ltd v Ng Kwok Kuen – HCA 9058/1999 – Registrar Lung – 20th October 2010

The Court will decline to hear Case Management Summons without Timetabling Questionnaire

22.  In both cases referred to in paragraph 1 of this Decision, I have declined to entertain the solicitors’ request to deal with the Case Management Summons without the Timetabling Questionnaire despite submissions that the court should make such directions that the parties had no objection or the court thought fit. It is true that under the CJR spirit, the court should take such steps as it possibly can do to deal with the matter so as to save time and costs. But to make directions without the information as set out in the Timetabling Questionnaire, in my view, will not save time and costs for the parties. On the contrary, this may cause wastage of time and costs because the court is unassisted in the development and progress of the matter: whether the parties have properly pleaded their case and whether there will be application for leave to join another party, amend the pleadings or there will be interlocutory application for further and better particulars, expert evidence, discovery of documents, so on and so forth. Nor can the court rely upon the solicitors, who seem not to have considered their cases properly before the hearing. Otherwise they would have complied with the Practice Directions. To make directions for the future conduct of the matter under such circumstances is tantamount to shooting a target in the dark – total reliance on sheer luck. This cannot be proper case management under the CJR.[2] But rather, it is a great leap backward to the old era before the CJR. Any wrong directions at this stage will take quite a number of Case Management Conferences subsequently to remedy the situations, which will, no doubt, incur more time and costs for the parties and must therefore be avoided as far as possible.

The current practice for Case Management Summons hearings

23.  It should be borne in mind firmly that now the Court will tighten its grip of active case management at the stage of Case Management Summons. It will heavily rely upon the Timetabling Questionnaires filed by the parties in order to chart the proper course for the future conduct of the proceedings. I should also take this opportunity to set out the current approach of the Court in the Case Management Summons hearing in order to assist the profession to prepare for the hearing.

24.  The Court will generally follow the spirit of the CJR in its approach.

25.  The more economical means for the resolution of the parties’ disputes will be by way of mediation. If parties are agreeable to conduct mediation to resolve their disputes, the Court will consider whether a short stay of the proceedings should be ordered. At that stage, there will be other outstanding matters such as discovery, preparation of the witness statements, expert evidence etc. It will therefore be costs saving if settlement can be reached without those preparations. This is a good reason for staying the proceedings pending the outcome of mediation. However, the Court may refuse the application for a stay if the other party refuses and there is evidence that there have been delays on the part of the applicant. Much depends upon the circumstances of each case.

26.  Whether the proceedings are stayed for mediation or not, the Court will also, in the same Case Management Summons hearing, make directions for the future conduct of the matter if mediation fails to reach settlement for the parties. A Case Management Conference will be fixed for the parties. The Court will give sufficient time to the parties for the preparations so that when they return to the Court for the Case Management Conference, the matter should be ready to be set down for trial. In giving the liberal allowance of time for the parties’ preparations for the trial, the Court will usually make it clear to the parties that it will not entertain any further application for adjournment at the Case Management Conference without exceptional circumstances. The Court will also be more ready to impose draconian order by way of “unless orders” even if it entertains such application for adjournment.

27.  For obvious reasons, the Court will be rather vigilant about cases which require expert evidence, bearing in mind the substantial changes in the directions for expert evidence and also the serious consequences as stated in Lam J.’s judgment Chok Yick Interior Design & Engineering Co. Ltd. （作益裝飾工程有限公司）v Lau Chi Lun（劉志倫） trading as Chi Hung Construction Eng. Co.（志洪建築工程公司）HCA 1480/2008. See paragraph 10 supra. For such cases, the Court will usually call upon the parties for oral hearing so that the solicitors may assist it to identify the issues on which expert evidence is required and to work out the appropriate directions by reference to paragraph 20 of Practice Direction and joint meeting between the experts in order to compile a joint report for the trial as discussed in the above judgment. The parties should note that the Court has the jurisdiction to disallow the party, whose expert has failed or refused to comply with its direction of having a joint meeting with the other party’s expert, to adduce his expert evidence at the trial. At paragraph 11 of the judgment, Lam J. has the following to say:

“The utility of joint meeting and joint report in narrowing down expert issues should not be underestimated. I have explained the proper attitude of an expert in those regards at paras.488 to 493 of Chan Chun Chuen. The Court expects the experts to act responsibly and professionally in attending joint meeting and preparing joint report. An expert who cannot afford an appointment within a reasonable time to have joint meeting should not take up the role to act as an expert in legal proceedings. If an expert fails to meet or fails to confer with the other side’s expert in good faith to come up with a proper joint report, it would be a breach of para.12 of the Code of Conduct for Expert Witness on the part the defaulting expert. Further, failure to comply with expert directions may attract the consequence of barring expert evidence to be led from the defaulting party. When this happens, the case can still be set down but it will be set down on the basis that the defaulting party will not be calling any expert evidence unless he obtains relief under Order 2 Rule 5. Thus, it behoves a party, in choosing his expert, to make the necessary arrangement with the expert to ensure his availability and willingness to attend joint meeting and work conscientiously with his counterpart in the preparation of joint report. In a case where there are substantial disputes on compliance with direction to file joint report, the master can refer the matter to a judge (who can be assigned as the trial judge).”

Checklist for Case Management Summons

28.  In summary, I set out the considerations the handling solicitors should take as the checklist for the preparation of the Case Management Summons:

(1)   Mediation Certificate – advise clients on costs and to seek information from the Mediation Information Centre at the High Court Building, which is free of charge;

(2)   Discussion with the solicitor of the other party or parties on the issues of disputes and the best course to take for the resolution of clients’ disputes;

(3)   Timetable for parties to make arrangement for mediation;

(4)   Should there be a short stay of the proceedings, if so, for how long? If not, what are the reasons?

(5)   The further conduct of the proceedings and the best course to take in order to save time and costs if mediation fails;

(6)   Fill in the Timetabling Questionnaire with caution;

(7)   Where there is an application for leave to adduce expert evidence at the trial, beware that the Court will raise the following issues at the hearing:

(a)   the part of the pleadings on which expert evidence is required;

(b)   the names of the experts, the areas of expertise required with specific directions on the framing of the questions for the experts to answer for the resolution of the disputes;

(c)   Single joint expert to be appointed, if not, why not?

(d)   Timetable for joint meeting of the experts on a without prejudice basis to work out the single joint report, in which the experts set out the issues agreed and the issues in dispute, with their respective reasons to support their views in dispute;

(e)   The time for the compilation of the single joint report;

(f)   If parties consider it is not appropriate to have joint meeting between the experts and to compile a single joint report, the reasons for it.

29.  The hearing of the Case Management Summons may be shortened if the parties have considered the above and made the proposed directions for the Court’s approval at the hearing. If, on the other hand, the parties are totally unprepared for the hearing, the Court may refuse to make any directions and adjourn the Case Management Summons to another date with no order as to costs between the parties or from their respective clients. The Court cannot fix the Case Management Conference for the parties too.

Timetabling Questionnaire and Listing Questionnaire for subsequent hearings

30.  In passing, I will also like to express my own view on the Timetabling Questionnaire and Listing Questionnaire for the adjourned hearings subsequent to the first hearing. The Timetabling Questionnaire for the Case Management Summons should set out all the outstanding matters. If the Case Management Summons hearing is adjourned to another date, the parties may rely upon the first Timetabling Questionnaire unless there are drastic changes, for which, the first Timetabling Questionnaire is no longer applicable, then the parties should file and serve a fresh Timetabling Questionnaire, bringing the drastic changes to the Court’s attention. This applies the same to the Case Management Conference where Listing Questionnaires are prepared in accordance with paragraph 24 of Practice Direction 5.2. Under paragraph 32 (4) of the Practice Direction, the Court may adjourn the Case Management Conference to another date, which, in my view, is a continuation of the previous Case Management Conference though it is called the second or the third Case Management Conference.

31.  It can be seen that it requires substantial time for a solicitor to prepare the Timetabling Questionnaire or the Listing Questionnaire, with all the particulars to be verified. The Court can rely upon the information in the first questionnaire and make directions, with a view to reducing and limiting the scope of outstanding matters. As such, it will be a waste of time for the solicitors to prepare a fresh questionnaire each time, simply to repeat what they had told the Court in their previous questionnaire. The solicitors have the obligation to inform the Court at the adjourned hearing such minor changes that have occurred during the adjourned period that may affect the progress of the proceedings. However, the Court may, in appropriate cases, order that the parties should put in a fresh questionnaire for the adjourned hearing of either the Case Management Summons or the Case Management Conference.

Advice

32.  It is time for the parties in civil litigation to appreciate that the Court is determined to implement the CJR, which aims at changing the culture of the parties in civil litigation. For those who consider that the CJR is only the old wind in a new bottle, they should pause and re-consider. The Court appreciates that it will take time for the parties to adjust and change their mindset in civil litigation. The Court has already made allowance for them in the past 18 months. But there seems to be no option for them other than that either they change it on their own initiative, appreciating that it is for the public benefit or they will be made to change through errors and sanctions from the Court. The Court will expect cooperation from the professions in order to make the CJR a success.

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