YUI CHUNG YIN v. NG KIT SUM

HCA 1826/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1826 OF 2009

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D E C I S I O N  O N   C O S T S

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1.  On 11 January 2013, I handed down a judgment in this action dismissing the Plaintiff’s claims and allowing part of the Defendant’s counterclaim. I made a costs order nisi that the Plaintiff shall bear the Defendant’s costs.

2.  The Defendant seeks to vary the costs order nisi to “Plaintiff should pay the Defendant indemnity costs of this Action, and be awarded 10% interest on costs incurred after 14 December 2012.”  Three grounds were relied upon.  First, there was a sanctioned offer made by the Defendant on 16 November 2012 which was not accepted, or in fact not responded to by the Plaintiff.  Secondly, the Defendant said that the Plaintiff fabricated and unreasonably maintained its claim in fraudulent misrepresentation against the Defendant for more than 3 years which claim was ultimately rejected by this court.  Thirdly, Plaintiff’s evidence had been disbelieved in respect of each and every issue in this Action.

3.  The Plaintiff appears to accept that it has to bear and pay costs on an indemnity basis after 14 December 2012, 28 days from the date of the sanctioned offer dated 16 Nov 2012 (paragraph 13 of the Plaintiff’s Submissions).  It then contends that this court should consider all the circumstances of the case in deciding “whether it would be unjust to make the orders referred to in Order 22 rule 24(2) and (3)” [paragraph 14 of the Plaintiff’s submissions].  It seems to dispute that the Defendant should get costs on an indemnity basis for the whole of the Action.  It also asks that an appropriate costs order be made for the application.

SANCTIONED OFFER

4.  The sanctioned offer from the Defendant dated 16 November 2012 was made pursuant to Order 22 of the Rules of the High Court for full and final settlement of the Action.  The Plaintiff did not respond to the sanctioned offer. Both parties refer me to the decision of Central Management Ltd v Light Field Investment Ltd [2011] 2 HKLRD 34 paragraph 32, which states:

"However, in my view, the plaintiff is nevertheless entitled to indemnity costs because of the failure of the defendants to respond to the plaintiff’s sanctioned offer proposing to enter judgment by consent against the defendants with no order as to costs in full and final settlement of the parties’ claim and counterclaim.  The Judge, apart from entering judgment against the defendants, further penalized them with costs.  Accordingly the judgment against the defendants is more advantageous to the plaintiff than under its sanctioned offer.  In such a situation, under the terms of Order 22, rule 24(4), the Court shall order costs on an indemnity basis.  It has not been shown that it is unjust to make such an order in the present case."

5.  Order 22 rules 24 (2) to (5) provides:

"(2) The Court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court.

(3) The Court may also order that the plaintiff is entitled to-

(a) his costs on the indemnity basis after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court;  and

(b) interest on those costs at a rate not exceeding 10% above judgment rate.

(4) Where this rule applies, the Court shall make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so.

(5) In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3), the Court shall take into account all the circumstances of the case including-

(a) the terms of any sanctioned offer;

(b) the stage in the proceedings at which any sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated."

6.  There can be no dispute that the Plaintiff may be ordered to pay the Defendant’s costs on an indemnity basis after the latest date on which the Plaintiff could have accepted the offer without requiring the leave of the court, that is from 14 December 2012, including interests on those costs at a rate of up to 10% above the judgment debt rate, unless it is unjust to do.

7.  Nothing in the Plaintiff’s submissions renders an order that the Plaintiff should bear the Defendant’s costs from 14 December 2012 on an indemnity basis unjust.

a) The information available at the time of the sanctioned offer are not materially different from that at the trial.  If the Plaintiff wanted information from Mass Mutual, the Plaintiff could have issued a subpoena to Mass Mutual irrespective of whether the Defendant agreed to the Plaintiff seeking discovery from Mass Mutual.  It is a matter for the Plaintiff to decide to take such steps as he considers appropriate to discover facts in preparation for his case.

b) As to the Plaintiff’s own documentary evidence in relation to the Insurance Dispute, it was the Plaintiff’s misreading of that document that led to the dispute.  This mis-reading continued after commencement of this Action.  The documents from Mass Mutual do not differ materially from the documentary evidence held by the Plaintiff.  In any event it is a matter for the Plaintiff to discover such evidence.  There is nothing that could have affected Plaintiff’s evaluation of the sanctioned offer at the time.

c) As to documents relating to the Computer Dispute, the Plaintiff’s evidence was that he had information on his computer but they were not discovered in this Action.  There is nothing that could have affected the Plaintiff’s evaluation of the sanctioned offer.

d) Reporting to the police about the Insurance Dispute is not relevant to the assessment of costs.

e) Common Luck Investment Ltd v Director of Legal Aid FACV 1 of 2002 is a case on when the Director of the Legal Aid would be liable for costs awarded to a non-legally aided party against a legally aided party.  It has no bearing on how costs should be ordered at this stage. 

8.  As to the interests on the costs incurred after 14 December 2012, the appropriate interests, taking all the circumstances set out above into account, should be at judgment debt rate.

9.  I turn now to the next question, that is, whether the costs of the whole action should be assessed on an indemnity basis. I am not persuaded by the arguments of the Defendant that such a costs order is a proper order to be made.

10.  The Defendant’s argument is premised on paragraph 81 of my judgment finding that the Plaintiff's case of fraudulent misrepresentation in relation to the Insurance Dispute is "a complete fabrication based on a wrong reading of this document."  The fabrication was a result of the Plaintiff’s wrong reading of his own insurance documentation.  What was set out in the document and what was later produced by Mass Mutual and the evidence of Mr Cheng do not differ in any material way.  The fabrication was not a pure concoction made in bad faith but a fabrication based on a wrong reading of the documents.  In short, it is simply a bad claim as opposed to a claim which was oppressive or amounting to an abuse.

11.  As to the contentions regarding the plea of fraud, I do not accept that the Defendant has established conduct that justify indemnity costs.  The Plaintiff's evidence based on his misreading of the documents was not accepted by this court.  I have not found that the Plaintiff has intentionally lied to his barrister or fabricated evidence when making his allegation of fraudulent misrepresentation such that it amounted to an abuse of process.

12.  The Plaintiff has not therefore been found by me to have committed an act of perjury.  It is a bad claim which has failed. 

13.  In the premises, I do not accept that the conduct of bringing the insurance claim justifies an award of indemnity costs for the whole action against the Plaintiff.

14.  Furthermore, these conduct that were complained about related only to the Insurance Dispute.  The action is also concerned with the Computer Dispute which necessitates consideration of evidence, both viva voce as well as documentary, and occupies a good part of the time of the trial. 

15.  The Defendant's reliance on the case of Allan v. Ng & Co. is noted.  In that case, exemplary damages were awarded and the conduct of a solicitor was under scrutiny and criticised by the court.  The case of She Tsu Yi v. Tsui Ki Ting & Ors (HCA1684/2004, unreported, 13 December 2007) is also distinguishable.  The fabrication in relation to the Insurance Dispute was based on a misreading of the insurance documentation.  The proceedings have not been lengthened substantially.  The features in this case are therefore different from that in She Tsu Yi.

16.  I do not accept that the Defendant's contention that the Plaintiff’s "fabrication" of the fraudulent misrepresentation plea amounted to "misconduct" within the meaning of Order 62, r. 7.  I do not find that it has reached the hurdle of amounting to an abuse of process.  It is a bad claim and the Plaintiff lost and therefore it should be obliged to pay the costs of the Defendant on the standard basis subject to the variation that has to be made as a result of the sanctioned offer.

17.  I therefore conclude and direct that:

(a) The Plaintiff shall bear and pay the Defendant's costs of this Action up to 14 December 2012 on a party and party basis. 

(b) The Plaintiff shall bear and pay the Defendant’s costs incurred from 14 December 2012 on an indemnity basis and interest on such costs shall be payable at judgment debt rate from 14 December 2012 up to date of payment.