This was the question facing Hong Kong's High Court recently in Chan Shun Kei, trading as Chan Shun Kei Construction Works v Hong Kong Construction (Hong Kong) Limited HKEC, 7 April 2014.
This was a construction dispute. The court had already made its judgment on liability issues in February 2014 and as the parties, contrary to original hopes and expectations, had been unable to agree quantum, this quantum trial was necessary. The Plaintiff claimed HK$5,915,721 and the Defendant was counterclaiming HK$2,428,757 i.e. there was HK$8,344,478 between the parties.
At the quantum trial, the experts for the respective parties gave evidence. However, there were many issues that could not be resolved because different approaches were taken by the experts, for example differences in methodology and principle. The court found the task more difficult than usual because the experts were equally impressive as witnesses and there were some instances where both approaches seemed reasonable and persuasive, and yet resulted in a significantly different figure. The court said that in this situation there were three possible outcomes, namely:-
Referring to the fact that the parties had themselves agreed to “split the difference” on a number of items, presumably because they considered that to be a fair compromise, the court said that if a fair decision could not be reached on the evidence, then a fair compromise was the only alternative.
The above approach of the court serves as a reminder to parties in construction disputes that splitting the difference may sometimes be a good compromise when it is not clear cut as to who is right or wrong.
The court also faced a difficult decision in relation to costs and had to consider what the appropriate costs order should be where, like here, there had been a split trial on liability and quantum and the Plaintiff only recovered a fraction of its original claim. The court said that as the litigation had unfolded, the liability and quantum issues had become both separate and separable and there was virtually no overlap between them on matters of evidence, witnesses or issues. Accordingly, the Court decided to make a costs order in relation to the liability trial and a separate costs order in relation to the quantum trial.
In relation to the liability trial, the court held that the Defendant was entitled to 50% of its costs from the Plaintiff, the rationale being that the costs order should reflect the fact that the Defendant was the more successful party. In relation to the quantum trial, the court held that the Plaintiff was entitled to 50% of its costs, the rationale being that in monetary terms, the Plaintiff's claim was further eroded but, on the other hand, the Defendant's counterclaim resulted in nothing at the end of the day and, of the two parties, the Plaintiff had been more ready to split the difference on quantum issues so as to save time.
The above ruling on the costs in relation to the liability trial may be controversial. One might have thought that the Plaintiff was still the overall winning party in the action, as far as liability was concerned and should have been entitled to its costs, although adjustments to the extent of entitlement might need to have been made for the fact that it only recovered a fraction of its original claim.
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