A decade ago the English civil procedural rules were re-written with a fundamental aim in mind, being the reduction of the costs of litigation. This was to be achieved not only by specific changes in the costs rules, but also by way of significant changes to civil procedure itself, such as the introduction of active case management. The actual effect on costs overall has been mixed, with much cost 'front-loaded'. Hong Kong has had the benefit of reviewing the English experience, and choosing the reforms which have appeared most beneficial.

One of the key aims of Civil Justice Reform in Hong Kong is to provide a system which is more affordable and to make the costs of litigation more predictable to the users of the court system. Although the basic costs principles remain unchanged, several important reforms have been introduced. We outline below the five most important changes to the rules on costs, as well as commenting on some of the other reforms which are intended to reduce costs and the lessons that can be learnt from the experience of the Civil Procedure Reform introduced by Lord Woolf in England and Wales.

Summary Assessment of Costs

Under the new rules, when disposing of an interlocutory application, the court has discretion to (i) make a summary assessment of costs in lieu of taxation; (ii) make a provisional summary assessment of costs subject to the parties' right to have the costs taxed; or (iii) order a taxation at the end of the action: Order 62 rule 9A. Costs that are summarily assessed must generally be paid within 14 days: Order 62 rule 9B. Summary assessment will not be allowed in certain situations, for example where a paying party shows substantial grounds for disputing the sum of costs claimed: Order 62 rule 9C.
While summary assessment of costs is not novel in Hong Kong as procedures for the swift taxation of costs were set out in the gross sum assessment procedure under the old Order 62 rule 9(4)(b), this power was rarely used, and the introduction of a more systematic process for summary assessment aims to act as a general deterrent to unwarranted interlocutory applications. The 'pay as you go' principle is intended to result in parties making fewer ill-conceived applications, given that they will have to pay the other party's costs immediately rather than at some distant point in the future.

If the English experience is anything to go by, the use of summary assessment is likely to be one of the most effective aspects of the reforms. In spite of initial concerns that well-resourced parties would continue to make tactical applications to wear down the opposition regardless of cost, summary assessment has successfully curbed the number of interlocutory applications. Once parties realised that an unsuccessful tactical application leads to a significant cash payment within 14 days, the effect was radical. There was an outbreak of 'reasonableness' in seeking to avoid applications unless certain of success.

The downside in England has been the inconsistency between summary assessment orders made by different judges and masters. Judges often do not have a real feel for costs and how much time it is necessary to spend preparing for an interlocutory application. Assessment is inevitably rough and ready ?but then experience of assessment by taxing masters has always been variable. Further, in larger cases where there are a series of case management conferences (CMCs), the effect is lost because tactical applications are resurrected, safe in the knowledge that the costs of the CMC will be in the cause.

Entitlement to Costs

The 'costs to follow the event' principle will continue to apply to the costs of the action as a whole. However, in relation to interlocutory applications, it will now simply be an option rather than the prescribed 'usual order': Order 62 rule 3(2A). Greater flexibility to use immediate costs sanctions should deter unreasonable interlocutory behaviour, although in England it has been the summary assessment of costs which has done so, rather than the threat of costs sanctions for unreasonable behaviour. In addition, under a revised Order 62 rule 5 the court is given wider discretion to award and apportion costs taking into account, amongst other things, the underlying objectives in Order 1A and the conduct of the parties before as well as during the proceedings. Similar reforms in England have led to issue-based costs orders, with successful parties awarded only, say, 90% of their costs to reflect an unsuccessful issue. However, courts have largely not used costs at the end of trial to 'punish' particular conduct, save in relation to the unreasonable refusal to mediate.

Sanctioned Offers and Payments

A new procedure of sanctioned offers and sanctioned payments has been introduced. This effectively codifies the Calderbank letter procedure and, importantly, creates a mechanism to provide a similar cost benefit for such offers by plaintiffs. If the plaintiff fails to obtain judgment 'better' or 'more advantageous' than the defendant's sanctioned offer, the court may: (i) disallow the plaintiff any interest on whole or part of the monetary award; (ii) order that the plaintiff pay the defendant's costs from the latest date on which the offer or payment could have been accepted without leave; (iii) order that the plaintiff pay the defendant's costs on an indemnity basis from the latest date on which the offer or payment could have been accepted without leave; and (iv) order that the plaintiff pay enhanced interest on those costs. If the defendant is held liable for more than the plaintiff's sanctioned offer or if the judgment against the defendant is 'more advantageous' than the plaintiff's sanctioned offer, the court may order the defendant to pay: (i) enhanced interest on any sum awarded to the plaintiff from the latest date on which the offer could have been accepted without leave; (ii) costs on an indemnity basis from the latest date on which the offer could have been accepted without leave; and (iii) enhanced interest on those costs.

These costs sanctions in support of settlement offers are intended to prompt both parties to take settlement offers seriously and thus promote early settlement with consequent costs savings.

This has also been one of the most successful changes in England, with practitioners' views being overwhelmingly that it encourages settlement. This form of offer will almost always be made in any litigation. In particular, the introduction of the plaintiffs?offer has allowed plaintiffs to make such an offer at an early stage without appearing weak. Indeed, they can be very powerful at an early stage where the defendant may not have a clear idea of its defences and is concerned by the potential costs and interest consequences of refusing. Whilst there has been reluctance among judges in England to use the full indemnity costs and enhanced interest powers, their threat, as well as the general cost consequences, seem to focus minds on such an offer.

Costs Against Non-Parties

The court will be permitted to make a costs order against a non-party if it is in the 'interests of justice' to do so: High Court Ordinance (Cap 4) s 52A(2). The non-party must be joined as a party to the proceedings for the purposes of costs only and given a reasonable opportunity to attend the hearing: Order 62 rule 6A(1).

Until now the jurisdiction of the court to make costs orders against non-parties has been less than clear. Non-party costs applications are likely to target litigation 'funders' who were largely protected by the old legislation. In relation to third party litigation funding, the introduction of conditional fee arrangements (CFAs) in Hong Kong was rejected by the Law Reform Commission in 2007. 'After the event' costs insurance is also not available in the Hong Kong market.

While the ability to make costs orders against non-parties brings Hong Kong closer to the English position, third party litigation funding is becoming well-established in England and several different types of funding are available, including CFAs, after the event insurance, and agreements with specialist funding companies or hedge funds to pay the lawyers' fees on an interim basis in return for a contingency fee if a claim is successful. This is expected to develop further, and it will be interesting to see whether Hong Kong follows suit.

Costs of Taxation

A party entitled to payment of any costs taxed is also generally entitled to his costs of the taxation: Order 62 rule 32A. Whether the court should make some other order is guided by the underlying objective in Order 1A, as well as Order 62 rule 32A(2) which considers (i) the conduct of the parties in the taxation; (ii) the amount by which the bill of costs has been reduced; and (iii) whether it was reasonable for a party to claim or dispute a particular item.

It is interesting to note that the costs of taxation proceedings themselves will now also be subject to the underlying objective and with the same costs risks as in substantive litigation. This reflects the position introduced in England with the CPR, which has reduced the costs of taxation. If a winning party inflates his bill, or files a poorly prepared bill, he is likely to find that his level of recovery is such that he has 'lost' the taxation and has to pay the taxation costs. This can impact on the recovery of the litigation as a whole, so encourages realistic bills and early settlement of costs.

General Costs Impact of the Reforms

The impact on litigation costs from the reforms is obviously wider than the specific rules concerning costs. The Woolf reforms in England were intended to reduce costs, but the overall effect is controversial. While some reforms, such as the summary assessment procedure referred to above, have reduced the costs of unnecessary interlocutory applications, the focus on England on defining the issues at an early stage in order to promote early settlement has also caused costs to be 'front-loaded'. Meanwhile, the costs of litigation have continued to escalate, largely as a result of the seemingly unstoppable growth of electronic documentation and its impact on the discovery process. The fact that costs continue to be a major concern in England a decade after the CPR is reflected in the recent appointment of a Court of Appeal judge to carry out a root and branch review of the costs regime.

Meanwhile, Hong Kong has had the benefit of reviewing the actual as opposed to intended effects of the CPR in England over ten years, and has chosen which reforms to adopt with the costs effects in mind. For that reason, for instance, Hong Kong is seeking to avoid the front-loading of costs by not adopting the range of pre-action protocols. In fact, front-loading of costs is inherent in many of the changes that are being introduced, so that the exclusion of the pre-action protocols may only serve to put pressure on defendants who have not had advance notice of the plaintiff's case. On the other hand, pre-action disclosure is being introduced, and costs awards may take into account pre-action behaviour, so it is to be hoped that sensible pre-action behaviour will be encouraged in Hong Kong.

Ultimately, the greatest driver of costs in major cases is usually discovery, and if the new rules intended to case manage the discovery process are as little used as their broad equivalents in England (the reforms not being quite the same as those adopted in England) then the costs of litigation overall will not be curbed. It is worth noting in this regard that the general feeling in Hong Kong has been that insufficient compliance rather than excessive disclosure represents the problem. Moreover, with the knowledge of the effects of the CPR in England, it is hoped that Hong Kong will utilise active judicial case management, in the case of excessive disclosure or otherwise, to address the existing problem of high litigation costs.




Gareth Thomas
Partner (Hong Kong)
Herbert Smith
gareth.thomas@herbertsmith.com


Julian Copeman
Partner (London)
Herbert Smith
julian.copeman@herbertsmith.com

變化中的訟費情況

十年前，英格蘭民事訴訟程序規則進行重訂，其中的一個基本目標便是降低訴訟費用。要做到這點，不僅須變更具體的訟費規則，還須對民事訴訟程序本身作出重大變更，例如引入積極的案件管理。修訂對訟費的整體實質影響表現不一，大量訟費被「前置」。香港有幸可以評估英格蘭的經驗，選擇認為是最有利的改革，並從中受益。

香港民事司法制度改革的關鍵目標之一，是提供更具負擔能力的制度，並使法院制度的使用者更能預計訴訟費用。雖然基本的訟費原則仍未改變，但已經制定了若干重要的改革。下面，我們簡述訟費規則的五項最重要變動，對旨在降低訟費的某些其他改革作出評論，並探討從伍爾夫勳爵引入之英格蘭和威爾士所進行的民事訴訟程序的改革經驗中所學習到的功課。

簡易程序評定訟費

根據新的規則，在處理非正審申請時，法院可行使酌情決定權： (i) 按簡易程序評定訟費，以替代正式評定； (ii) 根據各方開展訟費評定的權利，按簡易程序臨時評定訟費；或者 (iii) 在訴訟結束時命令進行訟費評定：Order 62 rule 9A。按簡易程序評定的訟費，一般必須在14日內支付：Order 62 rule 9B。在某些情形中不允許以簡易程序評定訟費，例如當付款方表明有充足理由對所申索的金額提出爭議：Order 62 rule 9C。

由於原有之Order 62 rule 9(4)(b)中的總額評定程序規定了快速評定訟費的程序，所以簡易程序評定訟費在香港並不新奇，但這項權力卻很少運用。引入更加系統化的簡易程序訟費評定流程旨在作為普遍手段，阻止無理的非正審申請。「用則付費」的原則意在使得各方減少提出惡意申請，因為他們必須立即向對方支付訟費，而不是等到日後的某個遙遠時點。
如果英格蘭的經驗值得借鑒，運用簡易程序評定很可能是改革最有效的其中一方面。儘管最初擔心資源充足的各方仍會不惜費用地提出戰術性申請以拖垮對手，但簡易程序評定成功地遏制了非正審申請的數量。各方一旦意識到戰術性申請失敗便會造成要在14日內支付大額數目的現金，其效果非常顯著。人們紛紛「合理」尋求避免申請，除非是有把握勝訴。
英格蘭經驗的缺陷在於不同法官和聆案官所作出的簡易程序評定命令不一致。法官往往對訟費缺乏真正的感受，並且不瞭解必須花多長時間準備非正審慎申請。評定無疑是粗略的— 但是，訟費評定官的評估經驗總是參差不齊。而且，在舉行一系列案件管理會議的較大宗案件中，卻失去了這種作用，因為戰術性申請捲土重來，除了知悉案件管理會議的訟費將會歸入訟案中。
訟費享有權

「訟費須視乎訴訟結果而定」的原則仍將適用於整個訴訟的訟費。然而，就非正審申請而言，它現在僅是一個可選方案，而非固定的「常態」：Order 62 rule 3(2A)。運用即時訟費懲處的更大靈活度，應當會制止無理的非正審行為，雖然在英格蘭，發揮這項作用的是簡易程序評定訟費，而非聲稱對無理行為進行訟費懲處。此外，依照修訂後的Order 62 rule 5，法院被授予更廣泛的酌情決定權，可以在考慮Order 1A的基本目標以及各方在法律程序前和程序中的行為等要素後，判給並分配訟費。英格蘭的類似改革導致基於爭議事項的訟費命令。例如，勝訴方僅獲判90%的訟費，以體現某爭議事項不成功。然而，法院基本上沒有在審訊的最後階段利用訟費「懲罰」特定的行為，除非是涉及到無理拒絕調解的情況。

附帶條款的提議和付款

關於附帶條款的提議和附帶條款的付款安排的新程序已經制定。這實際上是Calderbank函件程序法規化，並且重要的是，它建立了給予提出此類提議之原告人類似訟費利益的機制。如果原告人未能取得比被告人附帶條款的提議「更好」或「更有利」的判決，法院可以： (i) 禁止原告人就全部或部分償金取得任何利息；(ii) 命令原告人從本可以不須許可而接受該提議或付款的最後日期起，支付被告人的訟費；(iii) 命令原告人從本可以不須許可而接受該提議或付款的最後日期起，按彌償基準支付被告人的訟費；(iv) 命令原告人按提高後的利率，支付上述訟費的利息。如果裁定被告人的負債超過原告人附帶條款的提議，又或者對被告人的判決比原告人附帶條款的提議「更有利」，法院可以命令被告人：(i) 就判給被告人的任何金額支付提高後的利息，從該提議本可以不須許可而接受的最後日期起算；(ii) 按彌償基準支付訟費，從該提議本可以不須許可而接受的最後日期起算；(iii) 就上述訟費支付提高後的利息。

上述支持和解提議的訟費懲處旨在促使雙方認真對待和解提議，從而推動及早和解以節省訟費。

這也是英格蘭最為成功的改革措施之一，法律執業者的觀點普遍認為，此舉鼓勵和解，而幾乎在任何訴訟中均可作出這種形式的提議。特別是，引入原告人的提議，使原告人可以在早期階段作出此類提議，而無須示弱。確實，在早期階段，被告人可能尚不清楚自己的抗辯情由，並擔憂拒絕帶來的潛在訟費和利息後果，故這提議非常有力。雖然英格蘭的法官曾不太願意運用完全彌償訟費及提高利息方面的權力，但威脅使用此類權力及其一般性的訟費後果，似乎足以讓人們重視該等提議。

針對非訴訟方的訟費

法院將被允許針對非訴訟方頒發訟費令，假如此舉是「合乎公正」的話：《高等法院條例》（第4章）第52A(2)條。非訴訟方必須僅出於訟費原因而加入成為法律程序的一方，並獲得合理機會出席聆訊：Order 62 rule 6A(1)。

直至目前，法院向非訴訟方頒發訟費令的司法權力還不太清楚。非訴訟方的訟費申請很可能針對訴訟「資金提供者」，他們基本上受舊法例的保障。在第三方訴訟的資金提供方面，法律改革委員會於2007年拒絕在香港推行按訴訟結果收費安排(CFA)，而香港市場亦不提供「事後」訟費保險。

雖然能夠針對非訴訟方作出訟費命令使得香港接近於英格蘭的立場，但第三方訴訟的資金提供在英格蘭正日趨普及，並有若干不同類型的出資，包括CFA、事後保險，以及與專門的出資公司或對沖基金達成協議，在中途支付律師費以換取在申索成功的情況下付與其勝訴收費。預料這種做法將得到進一步發展，香港是否會加以仿效仍需拭目以待。

訟費評定的費用

可享受任何評定訟費款項的一方，一般亦享有評定訟費的費用：Order 62 rule 32A。法院是否應當作出其他某項命令，須聽從於Order 1A中的基本目標以及Order 62 rule 32A(2)，並考慮： (i) 各方在評定中的行為； (ii) 訟費清單減少的金額；(iii) 一方申索特定的項目或對其提出爭議是否合理。

值得一提的是，訟費評定程序本身的費用如今亦須遵循基本目標，並承擔與實質訴訟同樣的訟費風險。這體現了英格蘭推行《民事訴訟程訟規則》所持的立場，後者降低了評定的費用。如果勝訴方虛漲費用或者提交編製不當的訟費單，則很可能發現，自己的追討程度使得其在訟費評定中「敗訴」，並必須支付評定的訟費。這可能會影響整個訴訟費用的追討，因此會鼓勵人們提交務實的訟費單，並及早清付訟費。

改革對訟費的總體影響

改革對訴訟費用的影響顯然已經超出與訟費相關的具體規則之範圍。英格蘭的伍爾夫勳爵改革旨在降低訴訟費用，但其總體效果卻存在爭議。雖然有些改革（例如上面提到的簡易訟費評定程序）降低了不必要非正審申請的費用，但英格蘭著重在早期便確定爭議事項，以便推動及早和解，這種做法亦造成訟費被「前置」。同時，訴訟費用繼續上升，主要原因是電子文檔的增長似乎永無止境，這對披露流程產生影響。《民事訴訟程訟規則》實行10年之後，訟費依然是英格蘭的一個重大問題。最近英國任命了一位上訴法庭法官對訟費制度進行徹底的覆核，便反映出這個問題來。

同時，香港得到的裨益在於可以評估《民事訴訟程訟規則》在英國實行10年以來的實際（而非預想）效果，並根據成本效益選擇採納哪些改革措施。因此，例如香港力圖不採納訴訟前守則的範圍，以避免訟費前置。事實上，訟費前置是許多正在推行的變革措施中固有的問題，因此排除訴訟前守則或許只會給未事先得到原告人案由通知的被告人造成壓力。但另一方面，訟前透露正在推行，訟費之判給可能考慮到訟前行為，因此，有望在香港鼓勵明智的訟前行為。

說到底，重大案件中影響訟費的最大因素通常是文件透露。如果旨在按個案管理透露流程的新規則像英格蘭大體對應的規則那樣很少得到運用（本港之改革措施與英格蘭採取的改革不盡相同），那麼將無法在總體上抑制訴訟費用。在這方面值得指出的是，香港普遍認為：問題在於對規則遵守得不夠，而並非披露過度。而且，在瞭解到《民事訴訟程訟規則》在英格蘭收到的果效後，假如香港出現過度披露或其他情形，可望利用積極的司法案件管理，以應對目前訴訟費用高昂的問題。



Gareth Thomas
合夥人（香港）
史密夫律師事務所
gareth.thomas@herbertsmith.com


Julian Copeman
合夥人（倫敦）
史密夫律師事務所
julian.copeman@herbertsmith.com