Costs – Interim payment – Whether Court has inherent jurisdiction to order interim payment of noninterlocutory costs – RHC O 62 r 9A, 21, 21A, 21B and 21C

RE HAWKINS DEVELOPMENT LTD [2010] 1 HKC 131 Court of First Instance Companies (Winding-up) No 215 of 2007
Kwan JA (Sitting as an additional judge of the Court of First Instance)
18 December 2009

Enzo WH Chow (Tam, Pun & Yipp) for the petitioner.
Elizabeth Cheung (CL Chow & Macksion Chan) for the respondent.

The petitioner paid a total of $700,000 into court in compliance with orders for security for costs of an application to wind up a company. The windingup petition was later dismissed and the petitioner was ordered to pay indemnity costs to the company with certificate for two counsel. The company filed a bill of costs claiming about $1.3 million, and the petitioner filed a list of objections which would reduce the recoverable amount to about $768,000. On 1 December 2009 the bill of costs was set down for provisional taxation before the taxing master in February 2010. Pending taxation, the company applied for an order that the $700,000 security for costs be paid out of court in part satisfaction of its costs. The application was opposed on the ground that following the repeal and substitution of O 62 r 9A RHC as part of the civil justice reforms, there was no longer any express power to order interim payment of costs of non-interlocutory matters. It was said that the petitioner should not have to make any payment towards costs until the taxation process was completed. The company, on the other hand, contended that the court had an inherent jurisdiction to make the order sought.

Held, ordering payment out to the company:

It was common ground that there was no provision in the Rules of the High Court giving power to the court to make an order for interim payment of costs in proceedings that were not interlocutory.

Leaving aside the question whether the court had power to make the order, the court could see no good reason to deprive the company of its costs until completion of the taxation process when it was clear that the undisputed amount would exceed the sums paid into court.

There was a procedural lacuna in that the power to make provisional summary assessments under O 62 r 9A applied only to interlocutory applications, and there was no power under rr 21–21C to order interim payment of an approximation of the costs that would be allowed on taxation.

The order sought by the company would not be contrary to the wording or spirit of O 62 rr 21–21C concerning taxation of costs. The criteria for the exercise of inherent jurisdiction were met. The total amount paid into court by the petitioner as security for costs, with all the accrued interest, should be paid out to the company in part satisfaction of its costs.

Obiter:

It should not be thought that this inherent power may be exercised without restriction to order interim payment of costs in a broad range of situations. The court should act with circumspection. The inherent jurisdiction should only be exercised to deal with cases that genuinely come within a procedural lacuna, and the circumstances were such that would merit intervention of the court to do justice between the parties or prevent abuse.