HUNG SAU FUNG v. LAI PING WAI AND ANOTHER

HCPI 204/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 204 OF 2009

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BETWEEN

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RULING ON COSTS

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1.  I gave judgment in this matter on 7 October 2011 and directed the parties to address me on costs by way of written submissions. This has been done and this is my ruling after considering those submissions.

2.  It is common ground that my award of damages under different heads of claim, when added together, amounts to the net sum of HK$824,319.40 after the deduction of employees’ compensation but before adding the interest that I had awarded.  The defendants have asked me to depart from the usual order as to costs, i.e. that costs should follow the event, on account of the fact that the plaintiff has failed to beat a sanctioned payment made by the defendants. The defendants had made a number of sanctioned payments in this case. Their fourth sanctioned payment made on 22 February 2011 resulted in a total payment into court of HK$900,000 that was available to be accepted by the plaintiff without leave on or before 22 March 2011.  Although the defendants made two more sanctioned payments, the last one being made on 17 May 2011 and resulting in a total payment into court of HK$1,500,000, the plaintiff failed to accept the payments on or before 14 June 2011, being the last day the plaintiff could have accepted the same without leave of court. According to the defendant's calculations, which I accept, the interest I had awarded to the plaintiff, if calculated up to 22 March 2011, the last day of acceptance of the fourth sanctioned payment, amounted to the sum of HK$71,203.28.  My gross award of damages, together with interest up to 22 March 2011, came to a total of HK$895,522.68.  This was less than the total amount in court available for the plaintiff's acceptance after the fourth sanctioned payment.   On that basis, the defendants have asked for an order for costs as follows:

(1)  The defendants do pay the plaintiff's costs of the action up to and including 22 March 2011 to be taxed on the High Court scale and on a party and party basis, if not agreed;

(2)  The plaintiff do pay the defendants’ costs of the action incurred after 22 March 2011, including any costs reserved and the costs incurred in respect of the written submissions on costs, to be taxed on the High Court scale and on an indemnity basis, if not agreed.

3.  The defendants have also sought an order for enhanced interest at 9% per annum from the respective dates of payment up to the date of judgment on three payments of disbursements made by the defendants’ insurers in the sums of HK$54,000 on 18 July 2011, HK$8,500 on 29 July 2011 and HK$290,000 on 7 October 2011.  The plaintiff did not oppose an order for enhanced interest at 9% per annum from the respective dates of payment of disbursements up to the date of judgment on 7 October 2011. However, the plaintiff submitted that enhanced interest ought not to be awarded in respect of the disbursement of HK$290,000, which had only been made on 7 October 2011, the very date on which my judgment had been handed down.  I agree.

4.  The plaintiff did not oppose, in principle, the costs order sought by the defendants but submitted that the plaintiff ought to be awarded costs of the action up to 14 June 2011, being the last day the plaintiff could have accepted the last sanctioned payment without leave of court, and that the defendants ought to have the costs of the action thereafter.  I disagree.  In Rai Rana Magar Pabitra & Anor. v. Pacific Construction (HK) Ltd & Ors. [2011] 3 HKLRD 469, I had observed that :

“26. . ... The fact that a second or third increased sanctioned offer is made in the course of the proceedings does not constitute a withdrawal of the earlier unaccepted offers which remain subsisting. The subsisting sanctioned offer which is not beaten by the offeree after trial can be relied upon by the offeror to invoke the court’s jurisdiction to award costs on an indemnity basis and interest at enhanced rates. So, for example, if the plaintiff offers to settle for $1 million in January and for $800,000 in April and for $500,000 in July and the defendant fails to accept any of these offers and, at trial, the plaintiff obtains judgment in December in excess of $1 million, the plaintiff may be able to enjoy indemnity costs and enhanced interest from the date of the first sanctioned offer made in January.”

These observations apply equally to sanctioned payments. 

5.  Pursuant to Ord. 22, r. 23(2) of the Rules of the High Court (“RHC”), I disallow any interest that would otherwise accrue on damages for PSLA and on pre-trial special damages from 23 March 2011 to 7 October 2011.  I also make an order in terms of §2(1) and (2) above, save and except that I make no order as to costs in respect of the time spent on the preparation of witness statements from the loss adjusters and the time spent in court receiving evidence from the loss adjusters.  As that evidence was obtained and adduced at my behest, it is not right that any one party be made liable for the entirety of the costs incurred in that connection; rather, each party ought to bear his own costs incurred in obtaining, adducing and receiving this evidence.  Further, I order that the plaintiff do pay enhanced interest at 9% per annum on the sum of HK$54,000 from 18 July 2011 to 7 October 2011 and on the sum of HK$8,500 from 29 July 2011 to 7 October 2011.  Save where the receiving party is legally aided, enhanced interest should only be awarded on paid costs and disbursements for the period from the date of payment up to the date of judgment and should not be awarded beyond that date (see Shih Pik Nog v. G2000 (Apparel) Ltd. [2011] 4 HKLRD 121 at §13).

6.  I also order that the plaintiff’s own costs be taxed pursuant to the Legal Aid Regulations, save in respect of the costs wasted by the wholesale and unnecessary repetitions of the medical reports in the Statement of Damages and the plaintiff’s witness statements. The plaintiff’s solicitors have informed me that they have no objection to such costs being disallowed.  Pursuant to Ord. 62, r. 8(2) and (4) of the RHC, I disallow, as between the plaintiff’s solicitors and the plaintiff, 40% of the costs incurred by the plaintiff’s solicitors in preparing the Statement of Damages and the plaintiff’s witness statements, as wasted costs, and I direct the taxing master to determine the amount of costs, representing 40% of the costs so incurred, that ought to be disallowed pursuant to this order. 

7.  The defendants also complained that the plaintiff’s solicitors unreasonably and unnecessarily incurred costs in the preparation of trial bundles, by including a substantial amount of irrelevant documents, and by unnecessarily engaging in lengthy, repetitive and argumentative correspondence with the defendants’ solicitors. These are matters that are best dealt with by the taxing master.  I do, however, accede to the defendants’ application to the extent of issuing a direction to the taxing master to critically examine the costs incurred by the plaintiff’s solicitors in the preparation of trial bundles and in the correspondence exchanged with the defendants’ solicitors.

8.  I grant liberty to apply for payment out and generally.