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Better Marine International Ltd v Zhong Shan Company Ltd

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date17 April 2020
Neutral Citation[2020] HKCFI 623
Year2020
Judgement NumberHCA958/2014
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA958B/2014 BETTER MARINE INTERNATIONAL LTD v. ZHONG SHAN COMPANY LTD

HCA 958/2014

[2020] HKCFI 623

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 958 OF 2014

________________________

BETWEEN
BETTER MARINE INTERNATIONAL LIMITED
(百泰國際船務有限公司)		 Plaintiff

and
ZHONG SHAN COMPANY LIMITED
（鍾山有限公司）		 Defendant

________________________

Before: Deputy High Court Judge MK Liu in Chambers

Date of Plaintiff’s Submissions: 3 April 2020

Date of Defendant’s Submissions: 30 March 2020 and 9 April 2020

Date of Decision: 17 April 2020

________________________

DECISION

________________________

1. This is an application (“the application”) made by the Defendant (“D”) for varying the costs order nisi (“the Costs Order Nisi”) made by Deputy High Court Judge Seagroatt (“the Judge”) in these proceedings on 6 December 2016. I would first set out the background.

Background

2. In these proceedings, the plaintiff (“P”) claims against D for commission in a ship brokerage contract. In essence, D disputes being a party to the relevant shipbuilding and commission agreements.

3. The trial took place before the Judge on 16-18 and 22-23 November 2016. On 30 November 2016, the Judge handed down a judgment (“the Judgment”), in which the Judge ruled in favour of P and awarded to P €683,850 (or its Hong Kong dollar equivalent at the option of P based on the rate of exchange at 10 March 2010) with interest thereon at the rate of 1% above prime rate from 10 March 2010 until judgment and thereafter at the judgment rate.

4. On 2 December 2016, P wrote to the Judge alerting his lordship of the P’s sanctioned offer dated 24 March 2015 (“the Sanctioned Offer”) made under Order 22 of the Rules of High Court. The gist of the Sanctioned Offer is that the proceedings could be settled by a payment of €827,810 (inclusive of interest) from D to P. D did not accept the Sanctioned Offer.

5. There is no dispute that the Sanctioned Offer was more favourable to D than the provision made in the Judgment. Under the Judgment, D is required to pay about €889,005 (inclusive of interest) to P. Had D accepted the Sanctioned Offer, D would have had been about €61,195, or about 6.88% better off.

6. Having read the Sanctioned Offer, on 6 December 2016, the Judge made the Costs Order Nisi, the terms of which are as follows:

(1) D shall pay interest upon the judgment sum of €683,850 (or its Hong Kong dollar equivalent at the rate of exchange on 10 March 2010) at the rate of 17.9% per annum for the period from 22 April 2015 (ie the deadline to accept the Sanctioned Offer) until 30 November 2016 (ie date of the Judgment);

(2) D shall will pay P’s costs to be taxed on an indemnity basis with effect from 22 April 2015; and

(3) D shall pay interest on those costs at the rate of 17.9% per annum.

7. The Judge directed that D should raise arguments or submissions concerning the Costs Order Nisi within 7 days, otherwise the Costs Order Nisi would become absolute. On 12 December 2016, D made the application and provided submissions to the court. On 16 December 2016, P provided their reply submissions to the court. The application has not yet been determined.

8. D lodged an appeal against the Judgment, which was heard by the Court of Appeal on 7 September 2017. On 11 March 2020, the appeal was dismissed by the Court of Appeal.

9. On 16 March 2020, D wrote to this court and said that as a result of the dismissal of D’s appeal, it would be necessary to have a determination on the application.

10. On 23 March 2020, I directed that the application would be determined by me on paper without an oral hearing. Both Mr Hau for P and Ms Lam for D have provided me detailed written submissions, and I am grateful for that.

The Issues

11. D does not dispute the validity of the Sanctioned Offer and the fact that D did not accept the same. D also does not dispute the indemnity costs provided in the Costs Order Nisi. According to Mr Hau, the matters at issue now are as follows:

(1) whether there should be interest at 17.9% per annum on the judgment sum;

(2) whether there should be interest at 17.9% per annum on costs; and

(3) whether enhanced interest on costs should carry beyond the date of Judgment.

The Proper Approach

12. Before turning to the issues, I would first examine the proper approach in considering the application. Ms Lam submits that the Costs Order Nisi is an order made by the Judge as a result of the exercise of his discretion, and that discretionary decision should not be lightly interfered with. Mr Hau submits that the Costs Order Nisi is only a provisional decision made by the Judge, and the court is prepared to hear further submissions and to vary that provisional order if and when necessary.

13. Ms Lam argues that the Costs Orders Nisi was made by the trial judge over 3 years ago. The Judge has carefully considered the Sanctioned Offer and the parties’ submissions made in the letters provided to the Court in December 2016. In the usual scenario, an application to vary a costs order nisi would be referred back to and determined by the trial judge, who is obviously in the best position to consider all the circumstances of the case, including the conduct of the unsuccessful party, having had first-hand knowledge of the trial, as well as the advantage of observing the witnesses in their oral testimonies and going through the documentary evidence. Regrettably, due to the unsuccessful appeal brought by D to the Court of Appeal, this action dragged on unnecessarily for another 3 years. Consequently, the present application is now unable to be heard before the trial judge. Ms Lam submits that in the circumstances, the Judge’s exercise of his discretion in making the Costs Order Nisi should not be lightly interfered with.

14. Mr Hau submits that the Costs Order Nisi is only a provisional decision made by the court. D is making the application pursuant to the direction given by the Judge. D is not seeking to interfere with the Judge’s discretion. D’s case is that the court could and indeed should come to a different conclusion had the court have the benefit of detailed submissions from the parties.

15. In my view, in considering the application, I am not hearing an appeal against a decision made by the Judge as a result of the exercise of his discretion. I agree with Mr Hau that the Costs Order Nisi is only a provisional decision made by the court, and the court is prepared to hear further submissions and to vary that provisional order if and when necessary. In these circumstances, the rule that a discretionary decision cannot be interfered with unless it can be shown that the discretion was exercised under an error of law or under a misapprehension of facts, or the conclusion reached was outside the generous ambit within which a reasonable disagreement is possible, is irrelevant.

16. However, in considering the application, everything must be based upon the findings and the comments made by the Judge in the Judgment and in the course of the trial. The application is not an opportunity for D to reargue the matters which have already been determined by the Judge. I am not allowed to and would not revisit those matters[1].

Issue 1 – Enhanced interest on the judgment sum

17. Under Order 22 rule 24(2), if the judgment against a defendant is more advantageous to the plaintiff than the proposal contained in a plaintiff’s sanctioned offer, “the Court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court.”

18. The principles governing the court’s exercise of discretion in awarding enhanced interest have been succinctly summarized by Au-Yeung J in Grupo Pacifica Incorporada v Worldwide Marine Product Ltd And Others[2], in which the learned judge said:

“7. Order 22, rule 24 of the Rules of the High Court provides that where a plaintiff does better than its proposed sanctioned offer, the court may grant it costs on indemnity basis and enhanced interest rate on the judgment sum after the latest date on which the sanctioned offer could have been accepted without leave of the court. The court will make such orders unless it is unjust to do so.

8. In considering whether it is unjust to do so, the court is required to take into account all the circumstances of the case, including the terms of the sanctioned offer, the stage in the proceedings in which the sanctioned offer was made, the information available to the parties at the time the sanctioned offer was made and the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated: Order 24, r 24(5).

9. The court should also consider the factors set out in Order 62, rule 5(1) when exercising its discretion as to costs, including the underlying objectives and the conduct of the parties.”

19. Order 22 rule 24(5) provides that:

“In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3), the Court shall take into account all the circumstances of the case including—

(a) the terms of any sanctioned offer;

(b) the stage in the proceedings at which any sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.”

20. Order 62 rule 5 provides that:

“(1) The Court in exercising its discretion as to costs shall, to...

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