WONG LAN AND ANOTHER v. HONG CHANG CONSTRUCTION TRANSPORTATION ENGINEERING CO LTD AND ANOTHER

HCPI 973/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 973 OF 2005

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D E C I S I O N

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1.  The plaintiffs sued on behalf of the estate and the dependants of the deceased for damages arising out of the fatal accident at work of the deceased.  The original claim was $1,179,556 (net of employees’ compensation of $864,600 paid).  The plaintiffs accepted the payment in of $600,000 (which is within the jurisdiction of the District Court), and the present argument is only on the scale of costs upon taxation. 

2.  The plaintiffs contended that they are entitled to taxed costs of the action on the High Court scale on the ground that:

(1)   the party accepting payment in satisfaction of the action under O.22, r.3(1), Rules of the High Court (“RHC”) is automatically entitled to taxed costs on the High Court scale under O.62, r.10(2), RHC;

(2)   alternatively, costs should be awarded on the High Court scale as there was reasonable prospect of recovering damages above the District Court jurisdiction when the writ was issued.

Costs upon acceptance of payment in

3.  O.62, r.10(2), RHC provides that:

“Where a plaintiff by notice in writing in accordance with Order 22, rule 3(1), accepts money paid into court in satisfaction of the cause of action or of all the causes of action in respect of which he claims, or accepts money paid in satisfaction of one or more specified causes of action and gives notice that he abandons the others, he shall be entitled to his costs of the action incurred up to the time of giving notice of acceptance.”

And O.62, r.9(1), RHC provides that:

“Subject to this order, where by or under these rules or any order or direction of the Court costs are to be paid to any person, that person shall be entitled to his taxed costs.”

And under O.62, r.1(1), RHC:

“‘taxed costs’ means costs taxed in accordance with this Order;”

4.  Mr. Li, for the plaintiffs, submitted that:

(1)     “costs” under O.62, r.10(2), RHC means “taxed costs” under O.62, r.9(1), RHC (see Cho Ho Kuen v. Yu Kowk Wah & ors [2001] 3 HKC 566 per Keith JA);

(2)     “taxed costs” means costs taxed in accordance with O.62, RHC;

(3)     costs taxed in accordance with O.62, RHC means costs in accordance with the High Court Scale and not the District Court Scale (see Wellegant Development Limited t/a Tak  Shing Manufactory v. Fine Telecom Limited t/a Remington Company HCA 2132/2001 per DHCJ L Chan (date of decision: 22 February 2007)).

5.  Mr. Sakhrani, for the defendants, submitted that:

(1)     there is no issue with (1) and (2) above;

(2)     “costs to be taxed” also means costs to be taxed upon the ordinary principles of taxation (see Lui Po Keung v. Tam  Kwok Hung [1985] 1 HKC 224 per Power J (as he then was));

(3)     the High Court has jurisdiction to order taxation in accordance with the District Court scale where the damages recovered is within the District Court jurisdiction (see Lai Ki v. B+B  Construction Co Ltd [2003] 3 HKC 322 per Seagroatt J);

(4)     taxation in accordance with O.62, RHC means taxation on either the High Court scale or the District scale;

(5)     there is no automatic entitlement to the High Court scale for the taxation of costs upon acceptance of payment in.

6.  It is common ground between the parties that there is otherwise no dispute that costs should be taxed on a common fund basis as there are infant dependants in this case.

7.  Mr. Li submitted that notwithstanding the discretion of the High Court to order costs to be taxed on the District Court scale, the discretion is removed in an acceptance of payment in situation.

8.  Mr. Li relied on Cho Ho Kuen v. Yu Kowk Wah & ors [2001] 3 HKC 566 in which Keith JA held that where in the District Court a plaintiff accepts payment in, he is entitled to taxed costs of the action on the District Court scale and the court has no discretion to direct the costs be assessed on some other basis. 

9.  In Cho Ho Kuen, the plaintiff commenced proceedings in the District Court for damages of $52,508.  The plaintiff accepted payment in for $25,000.  The defendant issued a summons for an order that the plaintiff’s costs of the action be assessed as if the claim had been brought in the Small Claim Tribunal.  At the material time, the current Rule of the District Court (“RDC”) were not yet in force, and O.62, RHC was applicable to the District Court.  The District Judge ruled that the plaintiff was entitled to have his costs taxed on the District Court scale.  The defendant  appealed to the Court of Appeal.  The defendant’s case was that the court had a discretion to direct that the costs be assessed on some other basis.  Counsel for the defendant relied on O.69, r.9(4), RHC, which provides that:

“The Court in awarding costs to any person may direct that, instead of taxed costs, that person shall be entitled-

(a)     to a proportion specified in the direction of the taxed costs or to the taxed costs from or up to a stage of the proceedings so specified; or

(b)     to a gross sum so specified in lieu of taxed costs, but where the person entitled to such a gross sum is a litigant in person, rule 28A shall apply with the necessary modifications to the assessment of the gross sum as it applies to the taxation of the costs of a litigant in person.”

10.  Keith JA held that O.62, r.10(2) should be read with O.62, r.9(1), RHC, and a party’s costs of the action meant taxed costs of the action.  His Lordship said at p.569 B-C:

“The words ‘[s]ubject to this order’ mean that where a party is entitled to its costs, it is entitled to taxed costs unless there is anything in O.62 which provides otherwise. Thus, O.62 r 9(2) is an example of O.62, r.9(1) being expressly disapplied in the particular circumstances to which O.62, r.9(2) relates.”

11.  It is noted that O.62, r.9(2), RHC provides that r.9(1) shall not apply to costs which by any order of the court are to be paid to a receiver appointed by the court or are to be assessed or settled by a taxing master.

12.  Keith JA further said at p.569 E to 570C:

“The argument is that if the court has the power to award a gross sum instead of taxed costs, it has the power to order that costs be assessed otherwise than on a taxation. I cannot go along with that argument. I rather doubt whether O.62, r.9(4) applies to the costs of the action to which O.62, r.10(2) relates because discretionary awards of costs made by the court are different from automatic awards of costs under the Rules. But even if O.62, r. 9(4) applies to the costs of the action to which O.62, r.10(2) relates, I do not see how O.62, r.9(4) can apply to the present case.  As for O.62, r.9(4)(a), it is not suggested that the plaintiff should only have a proportion of the costs incurred by him prior to his acceptance of the sum paid into court.  It is not disputed that he should have all those costs incurred by him up to that date.  The issue is whether those costs should be limited to the costs which the Small Claims Tribunal would have awarded to him.  As for O.62, r.9(4)(b), its purpose is to enable the court to award a gross sum as an alternative to taxed costs without requiring the parties to go to the expense of taxation: see Leary v. Leary [1987] 1 WLR 72 at 76A.  I do not believe that the court’s power to award a gross sum can be used to deny a party its costs for work which would have been compensated by an award of costs. 

For these reasons, I conclude that the words ‘his costs of the action’ in O.62, r.10(2), when read with O.62, r.9(1), refer to the party’s taxed costs of the action, and the court has no discretion to direct that costs be assessed on some other basis.  I am confirmed in that view by the legislative history of O.62, r.10(2).  Prior to its amendment in 1992, it read (so far as is material):

“If a plaintiff accepts money paid into court in satisfaction of the cause of action … in respect of which he claims, he may, after 4 days from payment out and unless the Court otherwise orders, tax his costs incurred to the time of receipt of the notice of payment into court … (Emphasis supplied)”

… What is significant about the differences in [O.62 r.10(2)] before and after its amendment is that the words ‘unless the Court otherwise orders’ were removed.  That can only have been done to remove the discretion which the court would otherwise have had to direct that the plaintiff’s costs should not be taxed.”

13.  Cho Ho Kuen has been applied by DHCJ L Chan in Wellegant  Development in holding that where in the High Court a plaintiff accepts payment in, he is automatically entitled to costs taxed in accordance with the High Court scale.  There, the plaintiff claimed loss of profits of $4,128,386, and accepted payment in for $150,000.  Since the amount obtained by the plaintiff was within the jurisdiction of the District Court, the Registrar in accordance with the direction in para. 22(1) of Lai  Ki v. B+B determined that the District Court scale should apply for the taxation of the plaintiff’s costs.

14.  In Lai Ki v. B+B, Seagroatt J said at paras. 21 and 22 of the judgment that:

“21.   The position in relation to a claim in the High Court settled or adjudicated upon in a sum which is within the District Court jurisdiction is as follows:-

(1)     The usual order will mean that costs will be on the District Court scale unless the High Court is, in the exercise of its discretion, persuaded that there was a reasonable prospect of obtaining an award in excess of the District Court jurisdiction. To that end the valuation of the claim must be on the basis of full liability.

(2)     The order by consent, or upon adjudication, for the Plaintiff's costs to be taxed does not carry with it any inference or construction that it means costs on a High Court scale.

(3)     For the purposes of deciding the proper forum in which to commence proceedings the amount of the Employee's Compensation paid and received must be deducted.

22.  The proper course for the Plaintiff's solicitors to take in a High Court action is as follows:

(1)     Where a sum of money which is within the District Court jurisdiction is paid into court, and accepted by the Plaintiff (without agreement by the parties as to the scale of costs to be taxed), the Plaintiff must apply promptly by way of Summons to a Master for a determination as to the scale of costs.

(2)     Where the parties agree a settlement in a sum within the District Court jurisdiction and there is agreement as to the scale of costs, this must appear in the Consent Order or in a joint letter to the court. If there is no such agreement as to costs then the Plaintiff must promptly apply by way of Summons for the costs issue to be determined by a Master. If the settlement is achieved before trial commences or in the course of a trial then the Plaintiff's solicitors must ask the trial judge to decide the issue of the scale of costs.”

15.  In Wellegant Development, counsel for the defendant submitted that Cho Ho Kuen was a decision on the costs of a claim brought in the District Court when it should have been brought in the Small Claim Tribunal.  There was no taxation of costs in the Small Claim Tribunal and no Small Claims scale of costs for taxation.  Cho Ho Kuen merely decided that the District Court can only “tax” the costs of an action and cannot “assess” the costs as in the Small Claims Tribunal.

16.  Counsel for the defendant referred DHCJ L Chan to O.62, r.3(2), RHC:

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings, the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

and submitted that the court could order costs to be taxed as per the District Court scale in its discretion. 

17.  DHCJ L Chan rejected the argument of counsel for the defendant.  He held in paras. 46 to 49 as follows:

“46.   If we should take a careful look at O.62, r.10(2), r.9(1) and the definition of ‘taxed costs’ in Rule 1, the conclusion will be clear and inescapable.  Rule 10(2) provide that if a plaintiff should accept money paid into court, she shall be entitled to his costs of the action up to the time of giving notice of acceptance.  The entitlement to costs is thus conferred Rule 10(2) and not by any order of the court. 

47.    Rule 9(1) says that, subject to Order 62, where by or under the rules or any order or direction of the court costs are to be paid to any person, that person would be entitled to his taxed costs.  That means the plaintiff who is entitled to costs under Rule10(2) would be entitled to taxed costs.

48.    Finally, under Rule 1, taxed costs mean costs taxed in accordance with Order 62 of the Rules of the High Court and not any other order in these rules or in the Rules of the District Court. 

49.   If I should say that acceptance of payment in is a particular situation contemplated by Rule 3(2) and then proceed to order costs to be taxed in accordance with the District Court scale, I would be infringing the statutory scheme outlined above by making an order of costs when the entitlement to costs is automatically governed by Rule 10(2).  I would further infringe the scheme by requiring the costs to be taxed not in accordance with order 62 of the Rules of the High Court.  For these reason, I cannot agree with [counsel for the defendant].  I do not think that the direction in para. 22(1) of Lai Ki is workable.  I have to allow the plaintiff’s appeal though not without misgiving.  I do not think the end result produced by the statutory scheme in this case is fair.”

18.  Mr. Li highlighted that in Lai Ki v. B+B, the parties settled the action by consent order before trial for the sum of $510,000 (net of employees’ compensation paid) and it was not a case of acceptance of payment in ubder the rules.  Hence, Lai Ki v. B+B was not authority in the context of O.62, r.10(2), RHC.

19.  On the other hand, Mr. Sakhrani submitted that it has been the practice in the High Court for parties to seek a determination from the court as to the scale of costs payable by the defendant where the case was settled by the plaintiff accepting payment in of a sum within the jurisdiction of the District Court (see e.g. Chak Wing Keung & ors v. BSC  Home Improvement Centres Limited HCPI 880/2002 per Suffiad J (date of ruling: 19 October 2005); Fung Cheuk Lau v. Chan Hon Chiu & ors 089/2005 per Master Lung (date of decision 23 April 2007; Lee  Lok  Koon v. Maxim Caterers Limited HCPI 1129/2005 per Master  Kwan (date of decision 26 April 2007) ).

20.  Mr. Sakhrani submitted that although O.62, rr.9(1) and 10(2), RHC were considered in Cho Ho Kuen, it was in the context of acceptance of payment in in the District Court, where the court only has statutory power to tax costs on one scale.  Mr. Sakhrani contrasted the position in the High Court and referred to an obiter dictum by Keith JA in Cho Ho Kuen at p.570H to 571B:

“… First, it should be remembered that what the Defendants ultimately want is an order that the Plaintiff's costs of the action be assessed as if the claim had been brought in the Small Claims Tribunal. In that connection, it is, I think, pertinent to observe that there is no provision in either the District Court Ordinance (Cap. 336) or the Small Claims Tribunal Ordinance (Cap. 338) restricting the entitlement to costs of a plaintiff who brings his claim in the District Court when the claim might more appropriately have been brought in the Small Claims Tribunal. That is to be contrasted with section 43(2) of the District Court Ordinance (as it then was prior to its recent replacement), which empowered the Court of First Instance to award costs only on the District Court scales when a claim brought in the Court of First Instance might have been more appropriately brought in the District Court.”

21.  For reference, the repealed section 43(2) of the District Court Ordinance was as follows:

“Where any proceedings in which the [District] Court has jurisdiction are brought in the Court of First Instance costs shall be recoverable on such scale and in such amount as would have been recoverable if the proceedings had been brought in the [District] Court, unless the proceedings were so brought by leave of the Court of First Instance or unless the Court of First Instance otherwise orders.”

22.  And section 43(2) was replaced by section 44A(6) of the District  Court Ordinance on 1 September 2000, which is as follows:

“Where proceedings in which the [District] Court has jurisdiction are brought in the Court of First Instance, the [District] Court shall order costs on the scale and in the amount as if the proceedings had been brought in the [District] Court, unless the proceedings were brought by leave of the Court of First Instance or unless the Court of First Instance otherwise orders.”

23.  Section 44A deals with costs in cases brought in the Court of First Instance but subsequently transferred to the District Court, and it only expressly provides for the award of the appropriate scale of costs by the District Court.  The provision as to the appropriate scale of costs in cases within the jurisdiction of the District Court but remaining in the Court of First Instance in section 43(2) has been removed. 

24.  Be that as it may, I am of the view that the High Court has inherent jurisdiction to award costs on the District Court scale in cases before it which are within the jurisdiction of the District Court, and it has been the practice to do so notwithstanding the repeal of section 43(2) of the District Court Ordinance.

25.  In a case not referred to in argument, OWT Asia Limited (formerly known as One World Telephone Asia Limited) v. CPCNET Hong  Kong Limited (formerly known as PSINET Hong Kong Limited) & anor HCA 6436/2000 (date of ruling: 13 February 2007), the plaintiff claimed damages for breach of contract, and Barma J awarded damages at trial within the jurisdiction of the District Court.  His Lordship made an order nisi that the defendant should pay the plaintiff’s costs, to be taxed on the party and party basis if not agreed.  Prior to commencement of taxation, the defendant contended that the appropriate scale of costs to be applied was the District Court scale.  The plaintiff took out an appointment to tax.  When the matter came before the taxing master, he indicated that the issue as to the relevant scale on which costs should be taxed as to the relevant scale was not something that should be argued on taxation, indicating that if either party wanted to make submissions on the scale of costs, the matter should be referred back to the judge.  The defendant sought clarification as to the scale on which the plaintiff’s costs were to be taxed.  In the ruling, Barma J referred to para. 21 of the judgment of Seagroattt in Lai Ki v. B+B and said at para. 11:

“11.   … In my view, it is appropriate that in general, where a plaintiff brings proceedings in the High Court, but succeeds only in obtaining an amount by way of damages or award that falls within the District Court jurisdiction, it will be for the plaintiff to justify having commenced proceedings in the High Court, rather than in the District Court where the matter could have been tried at less expense.  Thus, in the absence of a specific statement that the High Court scale should apply, an order for costs made in favour of a plaintiff where the amount recovered (not including interest, which the District Court is equally able to award) falls within the jurisdiction of the District Court, should be understood as requiring taxation of such costs on the District Court scale.”

26.  His Lordship observed that it was not strictly necessary for the defendant to have sought clarification.  If no steps were taken to seek such clarification, it would be for the master conducting the taxation to make a ruling as to the scale adopted in the light of Lai Ki v. B+B.

27.  Mr. Sakhrani also referred to Lui Po Keung v. Tam  Kwok  Hung op. cit.  There, the plaintiff brought a running down action in the High Court but the case was settled on terms that the defendant pay the plaintiff $50,000 plus costs to be taxed if not agreed.  The defendant argued that the then section 43(2) of the District Court Ordinance operated to disentitle the plaintiff from costs on the High Court Scale in the absence of any order from the High Court.  The master taxed the plaintiff’s costs on the District Court scale.  The plaintiff appealed to a judge in chambers.  Power J (as he then was) pointed out that the matter concerned the meaning to be given to the words “costs to be taxed”.  Counsel for the plaintiff argued that the provision for costs in an order by consent after a settlement was different from an order made after trial.  His Lordship said at p. 225 D-F:

“Mr Yen, who appears for the appellant plaintiff, has argued three grounds. The first was that an order by consent after a settlement was in some way different from an order made after trial and that the decision of the Court of Appeal in Lee  Wah  Man Weaving Factory v Hau Lap Co Ltd (CA 48/84, unreported), which dealt with an order made after trial and upon which the respondent/defendant relied, had no application. I am unable to see how in this regard an agreed order is any different from an order made after trial except perhaps that an agreed order cannot be attacked upon the ground that the judge has not made use of the proper exercise of his discretion. The words in an agreed order will be exactly the same as the words normally used by a judge at the conclusion of a trial. The words are clear and simple ones -- 'plus costs to be taxed'. I am satisfied that in both case, these words mean what they say -- costs to be taxed upon the ordinary principles of taxation.”

28.  His Lordship held that “plus costs to be taxed” means costs to be taxed upon the ordinary principles of taxation, which in the circumstances, means taxation on the District Court scale.

29.  Lui Po Keung was decided in 1985.  In the Rules of the Supreme Court (“RSC”), Hong Kong (1967, 1973 & 1981 Editions), the definition of “taxed costs” under Order 62 was the same as the current one.  It is also noted that in the 1967, 1973 & 1981 Editions of the RSC, the current O.62, r.2(3), RHC has not been enacted. The relevant rule appeared in the 1988 Edition of RSC.  Rule 2(3) provides that:

“(3) This Order shall have effect subject to the provisions of the District Court Ordinance (Cap 336) and to any rules made thereunder and to any other enactment.”

30.  Hence, it can be seen that Lui Po Keung held that taxation under O.62, RHC was subject to section 43(2) of the District  Court  Ordinance in the absence of the current O.62, r.2(3), RHC.

31.  I was referred to two Court of Appeal cases cited in Wellegant  Development.  There are both appeals from the District Court concerning the RDC.

32.  In M Beraha & Co Ltd v. Ng Wai Lun [2004] 3 HKC 535, the plaintiff brought a claim in the District Court for $52,000.  At trial, the parties agreed that the defendant should pay $47,130 and the District Judge gave judgment for that amount in favour of the plaintiff.  He ruled that the plaintiff might not recover costs to be taxed on the District Court scale, and awarded cost of $8,000.  Woo VP held at para. 32 of the judgment:

“32. It is true that there is no provision in the District Court Ordinance, the RDC or in the Small Claims Tribunal Ordinance similar to s 44A(6) or the repealed s 43(2) to give express power to the District Court to order costs to be taxed on the Small Claims Tribunal scale, it does not mean that the District Court has no power to award costs on a basis different from that for taxed costs on the District Court scale. O 62 r 3(2) combined with O 62 r 9(4)(b), in our judgment, are wide enough to entitle the District Court to order costs to be not more than a specified sum, or to be assessed on a basis, for want of a more certain term, similar to the scale applied in the Small Claims Tribunal.”

33.  Mr. Sakhrani submitted that O.62, r.3(2), RHC, and a fortiori section 52A of the High Court Ordinance gives the court a wide discretion in the matter of costs.  The combined effect of O.62, rr.3(2) and 10(2), RHC empower the taxation of costs on the District Court scale upon an acceptance of payment in.  On the other hand, Mr. Li pointed out that suggested approach has been rejected by DHCJ L Chan in Wellegant  Development.

34.  The other case was Cheung Yu Tin v. Ho Hon Ka [2006] 2 HKLRD 674, where the plaintiff commenced proceedings in the District  Court for personal injuries.  The defendant made 2 Calderbank offers increasing to $45,000 “all inclusive” which were rejected by the plaintiff.  The judge gave judgment for the plaintiff in the sum of $27,260.  The District Judge ordered costs to the plaintiff up to the trial on the District Court scale, to be taxed if not agreed, and there be no order as to costs for the trial itself.  The defendant appealed, seeking an order that the plaintiff be entitled to costs up to the date of the 1^st Calderbank letter on a scale similar to the Small Claims scale (as advised by the Court of Appeal in M Beraha & Co Ltd v. Ng Wai Lun) and costs thereafter be to the defendant on the District Court scale.  The plaintiff’s contention was that the defendant should have made a payment into court instead of making a Calderbank offer.  On the other hand, the defendant contends that he could not have made any payment into court because he took the stance that the plaintiff acted wrongly to have taken out a writ in the District Court instead of bringing a claim in the Small Claims Tribunal.  Woo VP framed the issue as follows:

“11.  The crucial issue before this Court is simply reduced into the following questions:

(1)     What should be the proper effect of the Calderbank offers on the costs order made by the Judge in the circumstances of this case?

(2)     If they have no effect, what should be the proper order for costs?”

35.  Woo VP held that the plaintiff was acting reasonably in rejecting the Calderbank offers as they did not allude to the reasonable disbursements of the expert witnesses, let alone costs that the plaintiff had already incurred.  His Lordship said at para. 24 of the judgment:

“24.  As the claim is one for a sum of money, the usual and normal course is for the defendant to make a payment into court, although with the consequence of his having to bear the costs up to the time of acceptance automatically on the District Court scale: see Cho Ho Kuen v Yu Kwok Wah & Others (unrep., CACV No 480 of 2000, [2001] HKEC 633). The only obstacle to a payment in was the defendant's insistence that the action should have been brought in the Tribunal. As I find that the plaintiff was acting reasonably to reject the Calderbank offer, this obstacle should not be considered as a reasonable excuse for the defendant's not making a payment into court. In the circumstances, I consider that the obstacle to a payment into court was unreasonably self-created and that the defendant "could have protected his position as to costs by means of a payment into court under O.22" which he failed to do. In my judgment, therefore, in the exercise of his discretion on costs, the Judge was acting contrary to the decision of this Court in Hong  Kong & Shanghai Hotels Ltd v Choi Bing Wing [1999] 1 HKLRD 472 and was wrong in taking into account the Calderbank letters, which he expressly stated in the first few sentences of para.3 of his ruling to have done. He should have acted in compliance with the proviso to O.22 r.14 and to O.62 r.5(b) of the RDC, paying no regard to the Calderbank offers when exercising his discretion on costs.”

His Lordship went on at para. 26:

“26.  Even though I consider that the Judge should not take into account the Calderbank letters, it does not necessarily follow that he must award the costs of the proceedings to the plaintiff, on the District Court scale. One has to examine the circumstances when the action was commenced in order to decide on its reasonableness.”

And concluded at para. 33:

“33.  In my judgment, the proper scale of costs of the action including the hearing for assessing the quantum of damages should be that similar to that of the Tribunal, which will fairly reflect the amount of damages awarded and have the desirable effect of discouraging litigants from unreasonably selecting the District Court as the forum for a claim of damages that are well under the Tribunal's jurisdictional limit.”

36.  Mr. Sakhrani made a point that Woo VP was of the opinion that the defendant could have protected his position by a payment into court under O.22, RDC notwithstanding its contention of the award of costs should be akin to those in the Small Claim Tribunal, intimating that the decision in Cho Ho Kuen was not absolute. 

37.  I note that Woo VP have cited Cho Ho Kuen without questioning it.  As I read the judgment, His Lordship seemed merely to be suggesting that where the explanation of using the Calderbank offers instead of payment in was to avoid the obstacle of taxed costs on the District Court scale, and as the plaintiff found to be was acting reasonably to reject the Calderbank offer, that obstacle should not be considered as a reasonable excuse for the defendant’s not making a payment into court.  In any case, Cheung Yu Tin was not a case on accepting payment into court in a High Court action. 

38.  To recap, Mr. Li submitted that taxed costs under O.62, r.10(2), RHC means taxed costs under O.62 as provided for in O.62, r.1, RHC and not any other order in the RHC or the RDC, and the entitlement to taxed costs under O.62 r.10(2) is automatic without order, whereas the award of costs on the District Court scale requires an order from the court, and it is no part of the automatic regime under O.62, r.10(2).

39.  On the other hand, Mr. Sakhrani submitted that Cho Ho Kuen merely decided that a party accepting payment in is entitled to his/her taxed costs and not costs assessed on any other basis as alternative to taxed costs.  Taxed costs in the context of the District Court can only mean on the District Court scale, whereas in the context of the High Court, it may either be the High Court scale or the District Court scale.  He submitted that it is a quantum leap from automatic entitlement to taxed costs to taxed costs on the High Court scale.

40.  The problem seems to have stemmed from the repeal of s.43(2) of the District Court Ordinance.  Had s.43(2) still been in force, O.62, RHC would be subject to it.  Now, we must look at the situation bearing in mind s.43(2) has been repealed.   

41.  DHCJ L Chan has rendered a carefully considered judgment in Wellegant Development and I am fully aware that I should not lightly depart from a decision of co-ordinate jurisdiction in the interest of consistency especially in a matter of practical and procedural ramification unless there are strong reasons to the contrary.  However, Lui Po Keung was not referred to before DHCJ Chan.  With the utmost respect to DHCJ Chan, I cannot agree that an automatic order of taxed costs under O.62, RHC means taxation under the High  Court scale.  

42.  I agree with Mr. Sakhrani that a party accepting payment in is automatically entitled to his/her costs, which means taxed costs unless there is anything in O.62 which provides otherwise.  In the context of acceptance of payment in, there is no alternative to taxed costs.  Taxed costs mean costs taxed in accordance with O.62, RHC, and also upon the ordinary principles of taxation as held in Lui Po Keung.  Taxation under O.62, RHC has always been subject to the relevant common law principles, such as the indemnity principle of taxation.  The common law encompasses that costs in the High Court may be taxed either on the High  Court scale or the District Court scale.  The repeal of section 43(2) of the District Court Ordinance has not affected the High Court’s jurisdiction to tax costs on the District Court scale, and such a course is not contrary to any provision in O.62, RHC.

43.  I note that the approach in Wellgant Development may produce a certain result, yet an unfair one as lamented by DHCJ L Chan.  On the other hand, the approach in para. 22(1) of Lai Ki v. B+B is workable and has so worked for cases adjudicated or settled (whether upon acceptance of payment in) for sums within the jurisdiction of the District  Court.  The amount accepted will prima facie indicate the relevant scale of costs and there is no such uncertainly as amounting to unfairness.

44.  In the premises, I hold that the party accepting payment in under O.22, r.3(1), RHC is automatically entitled to taxed costs under O.62, r.10(2), RHC but not necessarily on the High Court scale, and the direction in para. 22(1) of Lai Ki v. B+B as understood in para. 11 of OWT Asia shall be applicable in a situation where the payment accepted is within the jurisdiction of the District Court.

Scale of costs in the court’s discretion

45.  Notwithstanding that the plaintiffs are not automatically entitled to taxation on the High Court scale, the court has a discretion to so order.

46.  In Lai Ki v. B+B, Seagroatt J adopted (in paras. 11 and 12 of the judgment) the principle considered by Glyn-Jones J in Hopkins v. Rees  & Kirby Ltd [1959] 2 All ER 352 of whether the Plaintiff, though gaining an award of damages well below the limit of the English County Court jurisdiction, had a reasonable prospect of recovering more than the jurisdictional limit of the County Court:

“Putting myself as far as I can, in the position of the Plaintiff at the time when he issued that Writ, am I satisfied that it was then obvious that this was a county court action, or was it an action which, when tried by one judge rather than another, might have resulted in an award exceeding [the jurisdictional limit] excluding any reduction for contributory negligence?”

47.  Seagroatt J also referred to Solomon v. Mulliner [1901] 1 QB  76 where AL Smith MR considered the words “which could have been commenced in a County Court”:

“I read them as meaning ‘which could properly have been commenced in the County Court’, both as regards the character of the action and the amount really involved. At what time is it to be ascertained whether the action is, as regards amount, properly within the jurisdiction of the County Court? Not, in my opinion, at the time when the Plaintiff is stating what amount he thinks fit to claim on the Writ or Statement of Claim, but at the time when the amount recoverable is adjudicated on by the proper tribunal or otherwise ascertained by the result. It cannot depend on the amount which the Plaintiff chooses to claim.”

48.  I bear in mind that the result of the present case is achieved by settlement rather than adjudication, and the assessment of the reasonable prospect of obtaining an award in excess of the District Court jurisdiction must be less exacting.

49.  Mr. Sakhrani submitted that the damages claimed in the Statement of Damages were unreasonably high:

(1)     the multiplier of 13 for a 44 years old construction site labourer was too high and 11 was more reasonable;

(2)     the household expenses were not net of the deceased’s own share;

(3)     the rate of savings of 5% for the accumulation of wealth failed to account for the deceased’s own use of the savings during retirement in the natural course of event (see Chan Sim Lan v. Sheen State International Ltd & ors [1994] 1 HKC 460).

50.  In answer, Mr Li submitted as follows:

(1)     without conceding that there is no reasonable prospect of achieving the multiplier of 13, 12 may be more reasonable;

(2)     the household expenses were computed by aggregating the expenses of the dependants without taking into account the expenses of the deceased;

(3)     the average rate of 5% net savings was not unrealistically high as the deceased managed to save up $25,000 from mid-1999 to the end of 2002, (i.e. about 4.3%), and the rate would likely be increasing when the deceased’s two children (aged 6 and 13 at the time of death) come of age before the deceased would have reached retirement.

51.  I have looked at the advice on settlement by Mr. Li upon approval of settlement involving infant dependants.  I noted that the multiplier of 12 instead of 13 was adopted, and the reduction from above the jurisdictional limit of the District Court to within it was by reason of concession on contributory negligence, identified after proof of defence evidence was filed.  I raised with Mr. Sakhrani any possible relevance of contributory negligence and Mr. Sakhrani accepted that reduction for contributory negligence is to be excluded.

52.  In the premises, I consider that the plaintiffs did have no reasonable prospect of obtaining an award in excess of the District Court jurisdiction at the time of the issue of the writ.  Hence, I order that costs are to be taxed on the High Court scale.

Costs

53.  As each party has win some and lose some, and it is understandable why Mr. Li had taken the stance as he did, I shall make an order nisi that each party bear their own costs on the argument on costs.  The plaintiffs’ own costs are to be taxed in accordance with the Legal Aid regulations.

54.  I wish to thank counsel for their helpful submissions.