Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Cep Ltd v

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date08 January 2016
Year2016
Citation[2016] 1 HKLRD 960
Judgement NumberCACV165/2014
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV97C/2014 CEP LTD v. 無錫市佳誠太陽能科技有限公司

CACV 97/2014 AND CACV 165/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 97 AND 165 OF 2014

(ON APPEAL FROM HCCL NO. 12 OF 2012)

________________________

BETWEEN
CEP LIMITED Plaintiff
and
無錫市佳誠太陽能科技有限公司 Defendant
(known in English as WUXI JIACHENG SOLAR ENERGY TECHNOLOGY CO., LTD. and as WUXI JIACHENG SOLAR ENERGY TECHNOLOGY LIMITED COMPANY)

________________________

(Heard together)

Before: Hon Lam VP, Kwan JA and McWalters JA
Date of Hearing: 20 November 2015
Dates of Further Written Submissions: 23 and 24 November 2015
Date of Judgment: 8 January 2016

____________________

J U D G M E N T

____________________

Hon Lam VP:

1. I have read the judgment of Kwan JA in draft and I agree with it. In addition, I wish to highlight the unsatisfactory position regarding the latter part of Order 62 Rule 5(1)(d) which, in my view, unduly fetters the court’s discretion on costs. A similar provision in the English rules had been removed a long time age, see Choy Bing Wing v Hong Kong Shanghai Hotels (No 2) [1998] 4 HKC 555 and Wealthy Plus v Lai Man Hon [2001] 4 HKC 691. In my view, the regime in Order 22 should be permissive rather than mandatory. It would be most unfortunate if a Calderbank offer cannot be taken into account because those advising a litigant took a wrong view on the applicability of Order 22 (which as Kwan JA explained was not the case here). This would be against the spirit of the underlying objectives in Order 1A. The exclusionary rule also seems to be inconsistent with Order 22 Rule 2(4). The Rules Committees of the Rules of the High Court and the Rules of the District Court (which has a similar provision) should consider whether we should amend Order 62 Rule 5(1)(d) by deleting the exclusionary rule from it.

Hon Kwan JA:

2. There are several matters relating to costs before this court.

3. The first is an application of the defendant to vary the costs order nisi in our judgment of 12 March 2015 in which we dismissed the plaintiff’s appeal in CACV 97/2014 against the judgment of Recorder Jat, SC of 4 April 2014 (“the Trial Judgment”) and ordered the plaintiff to pay the defendant’s costs in the appeal. By a summons dated 26 March 2015, the defendant seeks an order that the defendant shall have its costs of the appeal on an indemnity basis, with enhanced interest on such costs at the rate of 2.5% above judgment rate until payment. The defendant also seeks costs of its summons to be paid by the plaintiff and on an indemnity basis.

4. The second and third matters relate to an appeal of the plaintiff and the cross-appeal of the defendant in CACV 165/2014 against the judgment on costs of the judge handed down on 18 June 2014 (“the Costs Judgment”; [2014] 4 HKLRD 44). By the Costs Judgment, the judge varied his order nisi (giving the defendant the costs of the action on dismissing the plaintiff’s claim) as follows: (1) the plaintiff shall pay 70% of the defendant’s costs of the action, to be taxed if not agreed, on a party and party basis up to 15 November 2012, and thereafter on an indemnity basis; and (2) interest on such costs at half of 5% above judgment rate from 16 November 2012 until 4 April 2014, and thereafter at judgment rate. The judge ordered that the amount of $1,015 (equivalent to €100) paid into court by the defendant in a sanctioned payment on 18 October 2012 be paid out to the defendant’s solicitors. He made no order as to costs of the plaintiff’s application to vary his order nisi and the defendant’s application to vary his order nisi.

5. In its appeal, the plaintiff seeks to set aside and vary the Costs Judgment to the extent that the costs to be paid by the plaintiff to the defendant, ordered to be 70% of the defendant’s costs, shall be taxed on a party and party basis throughout. It also seeks an order that the defendant shall pay the plaintiff the costs of both parties’ applications to vary the costs order nisi before the judge.

6. In its cross-appeal, the defendant seeks to set aside and vary the Costs Judgment to the extent that the plaintiff shall pay 100% of the defendant’s costs on a party and party basis and an indemnity basis for the periods as ordered by the judge. It also seeks the costs of the applications below from the plaintiff.

7. I will deal with the issues before us in the order as submitted by Mr Chain for the plaintiff:

(1) whether the judge was in error in ordering that the plaintiff should pay only 70% of the defendant’s costs;

(2) whether the defendant can rely on its sanctioned payment to justify indemnity costs and enhanced interest on costs for the trial; and

(3) whether the defendant should have enhanced costs for the appeal.

Awarding 70% of the costs to the defendant

8. The judge exercised his discretion to deprive the defendant, which was the successful party, of part of its costs, taking the view that its litigation conduct unnecessarily prolonged the case and the trial and had resulted in the increase of costs. In §22 of the Costs Judgment, the judge gave “a few (not exhaustive) examples of the defendant unreasonably contending the indisputable”:

(1) what had happened at the meeting between Mr Cicero and Mr Li at the Intersolar fair;

(2) what had happened at the 22 June meeting between Ms Hernandez and Mr Li, and the fact that Ms Hernandez was not even cross-examined added to the futility of requiring her to come to court to testify;

(3) the fact that the defendant (essentially Mr Li) repeatedly attempted to increase the contract price, which was clear from contemporaneous documents;

(4) the events surrounding the 25 June factory visit, including whether copies of the unamended letters of credit were provided to Mr Zhang;

(5) whether the 007 letter of credit was transferred to the defendant.

9. The judge expressed the view in §23 of the Costs Judgment that the defendant “ought to have taken a more realistic view on the facts, and should have focused on the interpretation of the Sales Contract and the legal consequences flowing from the objective facts”. Taking a broad view of the matter, he decided to award the defendant 70% of its costs of the action.

10. In the grounds set out in the respondent’s notice, the defendant took issue with the finding that its conduct had unnecessarily prolonged the case and contended it did not raise any unnecessary issues and was “merely responding to the issues raised by the plaintiff”. It was contended that the defendant was entitled to test the plaintiff’s evidence “in the usual way” and asserted that its cross-examination of the plaintiff’s witnesses on the 25 June factory visit (Mr Mingoli and Mr Cicero) was “moderate, restrained and effective”. It was said that the judge ought to have found that the defendant was not obliged to cross-examine Ms Hernandez about what happened at the 22 June meeting.

11. Prolix submissions were made by Mr Thomson in support of the above grounds.

12. Firstly, Mr Thomson drew attention to the fact that of the five issues at trial (three on liability and two on quantum), the defendant succeeded on four of them at trial and on the remaining issue on appeal. In view of the defendant’s complete or near complete success, it would be unjust to deprive the defendant of part of its costs.

13. This is just another way of saying that there should be no departure from the usual rule that costs should follow the event. The judge had taken this as a starting point, but decided it would be just and fair to deprive the defendant of part of its costs on account of the defendant “unreasonably contending the indisputable” in a number of instances and had thereby unnecessarily prolonged the trial. There is no error in principle.

14. Next, Mr Thomson contended the criticism that the defendant had unnecessarily disputed a number of factual issues was unfair. He complained that the judge did not specify the time by which each of the five examples mentioned of the defendant’s conduct had unnecessarily prolonged the trial, whether individually or together. He contended the trial was “relatively short” and made a bare assertion that the time taken by the five instances was “minimal”. He also asserted that the Costs Judgment (given on 18 June 2014) was made “well after the trial” (which took place in December 2013), so the Trial Judgment (given on 4 April 2014) was not fresh in the judge’s mind.

15. The fact that the judge did not specify the time by which each of the five examples had unnecessarily prolonged the trial is irrelevant. It is also pertinent to bear in mind the judge had said in §22 of the Costs Judgment that he gave only “a few (not exhaustive) examples of the defendant unreasonably contending the indisputable”. The trial had lasted five days. The judge was in the best position to assess whether and to what extent the instances of the defendant “unreasonably contending the indisputable” had unnecessarily prolonged the trial. Obviously, the judge did not regard the time spent in that regard as minimal. Nor do I accept counsel’s contention that having thoroughly reviewed the evidence and delivered the Trial Judgment in April 2014, the way the trial went would not have been fresh in the judge’s mind when he prepared and delivered the Costs Judgment two months later.

16. Mr Thomson took issue with Mr Chain’s submission (which the judge appeared to have accepted) that the defendant should be deprived of some of its costs as the plaintiff had succeeded on every single disputed primary fact but was unsuccessful because of the inferences drawn or the contractual interpretation from the primary facts. He submitted this is irrelevant, and...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT