VALLAT MAURICE HENRI ROLAND v. PHOENIX TELECOMMUNICATION LTD

CACV 237/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 237 OF 2004

(ON APPEAL FROM DCMP nO. 3403 OF 2003)

_______________________

BETWEEN

VALLAT MAURICE HENRI ROLAND Plaintiff
(Judgment Creditor)
and
PHOENIX TELECOMMUNICATION LIMITED Defendant
(Judgment Debtor)
and
DRAGON INVESTMENT COMPANY II LLC Garnishee
and
ANTARES LLC Intervening Party

______________________

Before : Hon Yeung JA, Burrell J & Sakhrani J in Court

Date of Hearing : 22 March 2005

Date of Judgment : 22 March 2005

Date of Handing Down Reasons for Judgment : 1 April 2005

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reasons for judgment

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Hon Yeung JA (giving Reasons for Judgment of the Court):

1. On 22 March 2005, we remitted the case back to the District Court and made certain costs orders. We indicated that we would giveour reasons in writing and this we now do.

2. The background of the case has been set out in our judgment dated 7 February 2005 and we do not propose to repeat it.

3. Judge Muttrie (the judge) dismissed Mr Vallat’s application to make the garnishee order absolute and Antares’s claim for a declarationthat the assignment was valid.

4. The judge awarded Dragon costs of the hearing, to be apportioned between Mr Vallat and Antares, and paid equally by them.

5. We dismissed Antares’ appeal against the judge’s rulings and made an order nisi that Antares was to pay 50% of Dragon’s costs of the appeal. We did not then deal with the costs order made by the judge.

6. Antares now seeks to re-open the judge’s costs order and also asks us to vary the costs order nisi that we made.

7. Mr Clifford Smith, SC suggests that as the disputes between the parties cannot be determined summarily and it will be necessaryto remit it back to the District Court, the costs of the hearing before the judge and the costs of the appeal should be in the cause.

8. Mr Smith further suggests that the matter could not properly progress following the ruling of the judge and it was necessary toappeal against his ruling. He therefore makes the alternative suggestion that as between Antares and Dragon, there should be no orderas to the costs of the appeal and of the hearing below.

9. In any event, Mr Smith contends that Mr Vallat should bear the costs of the appeal and the hearing below as Antares has succeededagainst Mr Vallat in setting aside the garnishee order.

10. Mr Manzoni, on behalf of Dragon points out that our decision coincides with Dragon’s position throughout the proceedings. On theother hand, Antares had unsuccessfully sought a declaration that the assignment was valid. Hence, Antares should be responsible forthe entire costs of the appeal and to that extent, he invites us to vary the costs order nisi.

11. As we have clearly stated in our earlier judgment that the ways in which Dragon and Antares chose to oppose Mr Vallat’s applicationto make the garnishee order absolute were highly unsatisfactory. We have also made clear at paragraph 61 of our judgment why we decidedto set aside the garnishee order nisi.

12. Quite apart from the absence of any application for an adverse order on the costs of the appeal against Mr Vallat, who was and remainsabsent before us, there is no valid basis, and it is certainly not a proper exercise of our discretion to order Mr Vallat to paythe costs of the appeal.

13. The hearing before the judge and the appeal before us concerned mainly Antares’s attempt to establish the validity and enforceabilityof the purported assignment of the Debt by Phoenix.

14. It started off by way of a summons seeking to discharge the garnishee order when there was no valid basis for doing so. It thenmetamorphosed to become an application for a declaration that the assignment was valid, again without any proper foundation. At somestage, Antares even sought an order for the payment of the Debt on the basis that the assignment was valid.

15. The application for payment of the Debt was only abandoned at a very late stage.

16. At the hearing before us, the setting aside of the garnishee order nisi did not feature significantly and the parties’ arguments were confined almost exclusively to the issue of whether the court shouldmake a declaration as to the validity of the assignment sought by Antares.

17. On the other hand, we accept that the judge’s ruling could lead to difficulties and clarification was needed. Such difficultieswere partly brought about by Dragon’s attempt to set aside the garnishee order nisi before it took any step to establish its counterclaim in the face of an adverse costs order of $650,000. To some extent Dragon alsohad condoned, if not encouraged, Antares in dealing with the issues as it did.

18. We see no reason to interfere with the discretion of the judge in making the costs order as he did. We are not persuaded that thecosts order nisi we made on 7 February 2005 should be varied either.

19. We therefore dismiss the appeal against the costs order of the judge and confirm the costs order nisi we made on 7 February 2005. We also order Antares to pay Dragon the costs of this hearing to be taxed if not agreed.

(Wally Yeung)
Justice of Appeal
(M.P. Burrell)
Judge of the Court of First Instance
(Arjan Sakhrani)
Judge of the Court of First Instance

Mr Clifford Smith, SC instructed by Messrs Barlow Lyde & Gilbert for the Intervening Party.

Mr. Charles Manzoni instructed by Messrs Boase, Cohen & Collins for the Garnishee.

Plaintiff (Judgment Creditor) : In person, absent.

Defendant(Judgment Debtor) : in person, absent.