Kent Sing Trading Company Ltd v JNJ Holdings Ltd

The Court of Appeal dismissed the appeal from the judgment of Moore J, but allowed the cross-appeal in relation to the costs awarded by the Judge. Kent Sing Trading Company Limited, Quoc Thai, Le Quan Wu and General Goods Limited (the Appellants) appealed against the judgment of the High Court, and JNJ Holdings Limited (JNJ) cross-appealed the costs decision. The appeal related to a lease dispute between the parties. JNJ sued Kent Sing for breach of the lease and Kent Sing counterclaimed for damages. Moore J dismissed Kent Sing’s defences, set-off and counterclaim and awarded damages to JNJ in the sum of $215,048.42 plus interest. The Appellants appealed on the basis that the trial and judgment were unsafe, the Judge failed to draw adverse inferences against JNJ in respect of its discovery breaches, JNJ’s counsel failed to cross-examine witnesses fairly, the notice JNJ gave Kent Sing under ss 245 and 246 of the Property Law Act 2007 was invalid, and the Judge erred in his assessment of indemnity costs. JNJ cross-appealed the costs decision. The Court of Appeal dismissed the appeal in its entirety. The Judge’s approach to discovery was not a miscarriage of justice. The Judge’s findings were based primarily on his findings as to the credibility of the various witnesses. The Judge’s findings were supported by documentary evidence and there was no authority for the proposition that a fact finder could disregard evidence given at trial on the basis of a supposition that there might be other evidence that had not been called. There was no material failure to observe the cross-examination duties set out in s 92 of the Evidence Act 2006. The PLA notice was valid in respect of the unpaid rent. The failure to pay rent was separately identified as a breach and as to amount. The fact the PLA notice specified a second breach relating to outgoings, one of which was not in fact a breach, did not invalidate the PLA notice in respect of unpaid rent. The Judge’s approach to indemnity costs was not appropriate. The court has a discretion to control the level of indemnity costs it awards. This is usually done by assessing a reasonable allocation of costs based on time taken and the complexity and significance of the work. Given that the obligation to pay indemnity costs is contractual, the court’s discretion is more limited. The Judge’s approach was inconsistent with the approach of the courts on prior occasions. There was no basis to reduce disbursements by 70 per cent. A disbursement may only be disallowed or reduced if it is considered disproportionate in the circumstances of the proceeding. Counsel agreed a practical resolution to the costs appeal. Indemnity costs should be calculated on a scale 2B basis, with an uplift to accommodate the fact that 2B costs are assumed to represent two-thirds of the daily rate considered reasonable. This results in an agreed costs award to JNJ of $105,868.50 plus full disbursements, in total $132,770.38. The 70 per cent reduction should not have been made to JNJ’s costs award in respect of the counterclaim where costs were on a scale 2B basis.