WONG GILES v. DONOWHO SIMON CHRISTOPHER AND ANOTHER

HCPI 1046/2014

[2020] HKCFI 1053

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 1046 OF 2014

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DECISION ON COSTS

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Dismissal of P’s claim and the costs order nisi

1.  On 16 April 2020 (the “Date of the Judgment”), I handed down my Judgment (the “Judgment”) dismissing P’s claim against both D1 and D2.  I make a costs order nisi (the “Order Nisi”) that D1 and D2 shall have the costs of the action (but excluding at this stage the costs of and relating to D1’s Counterclaim, which costs I reserve, as the Counterclaim has been stayed), including the costs I reserved on 11 July 2019.  The costs are to be taxed if not agreed.  I also gave certain directions on any application for variation which parties may make.

Offer to settle, and the Sanctioned Payment

2.  A number of matters have now been revealed to me:

(a)  Offer to settle on 28 March 2018:

(i)  on 28 March 2018, Ds through D1’s solicitors (Messrs Tanner De Witt, (“TDW”) issued a letter to P’s legal advisers (the “29-3-2018 WP Letter”).  The letter was issued on a without prejudice basis save as to costs;

(ii)  therein, Ds said inter alia that P had failed to establish that he fell on the night of 9/10 January 2014.  But to avoid the expense and waste of management time that protracted litigation would entail, Ds offered to pay the amount of HK$600,000 in full and final settlement of both the High Court Action and the LT Proceedings;

(b)  the Sanctioned Payment:

(i)  Ds on 19 September 2019 made a sanctioned payment in the sum of HK$1,500,000 (the “Sanctioned Payment”) in settlement of P’s Claim and D1’s Counterclaim;

(ii)  The Notice of Sanctioned Payment was accompanied by another without prejudice letter (save as to costs) issued by TDW.  Ds referred therein to the 29-3-2018 WP Letter and repeated inter alia that P had not produced any evidence other than self-serving statements showing that that he had indeed fallen on the night of the incident.  Ds said again that the Sanctioned Payment was made to save time and costs;

(iii)  The last date for acceptance without leave was 17 October 2019 (the “Cut-off Date”);

(iv)  P did not accept the Sanctioned Payment.

Parties’ applications

3.  All parties have applied to vary the Order Nisi.  I have directed that the applications be dealt with on paper, and have further given directions on the filing of submissions. 

4.  P’s application (“P’s Summons”) was for an order that:

(a)  the costs of and occasioned by the late discovery of Noise Log Set C[1], including all costs thrown away as a result of the adjournment of the trial on 30 October 2019, be paid by D1 to P (§1); and

(b)  the costs of and occasioned by the filing of D2’s witness statement (“D2/WS”) be paid by D2 to P (§2).

5.  D1 by summons (“D1’s Summons”) seeks an order:

(a)  either that:

(i)  P shall pay on an indemnity basis all of D1’s costs (except those of the Counterclaim, but including the costs reserved on 11 July 2019), with certificate for counsel (as a matter of caution), to be taxed if not agreed (§1.(A)i.);

(ii)  P shall pay interest on the following costs at the enhanced interest of 10% above the judgment rate:

(1)  all of D1’s costs incurred up to and including the Cut-off Date, from the Date of the Judgment until payment (§1.(A)ii.);

(2)  D1’s costs incurred post Cut-off Date, from 18 October 2019 until payment (§1.(A)iii.);

(b)  or that:

(i)  P shall pay on a party and party basis all of D1’s costs incurred up to and including the Cut-off Date (except those of the Counterclaim, but including the costs reserved on 11 July 2019), with certificate for counsel (as a matter of caution), to be taxed if not agreed (§1.(B)i.);

(ii)  P shall pay on an indemnity basis D1’s costs incurred post Cut-off Date, to be taxed if not agreed (§1.(B)ii.);

(iii)  P shall pay interest on those costs (ii above) from 18 October 2019 until payment at the enhanced interest of 10% above the judgment rate (§1.(B)iii.);

(c)  and payment out of the Sanctioned Payment (§2.).

6.  D2 first took out a summons for variation on 29 April 2020 for certain variations.  He on 4 May 2020 took out another summons to amend that first summons.  I grant the application to amend.  No prejudice to P arises therefrom.  I make no order as to costs in that regard, as I see no costs consequence from that application to amend.

7.  By the amended summons (“D2’s Amended Summons”), D2 seeks an order similar to that being sought by D1.

8.  In respect of the applications by D1 and D2:

(a)  Given his non-acceptance of the Sanctioned Payment and my dismissal of his claim, P agrees:

(i)  to pay Ds’ post Cut-off Date costs on an indemnity basis, to be taxed if not agreed;

(ii)  to pay interest at an enhanced rate on the costs incurred post Cut-off Date;

(b)  P resists the other aspects of Ds’ applications;

(c)  The issues between the parties are therefore:

(i)  whether P should pay Ds’ costs incurred up to and including the Cut-off Date on an indemnity basis (or just on the usual party and party basis);

(ii)  whether P should pay enhanced interest on Ds’ costs incurred up to and including the Cut-off Date, and if so, from when and at what rate;

(iii)  what is the enhanced interest rate on the costs incurred post Cut-off Date between the Cut-off Date and the Date of the Judgment;

(iv)  what is the enhanced interest rate from the Date of Judgment until payment; and

(v)  costs of these applications for variation.

P’s Summons

9.  In relation to Noise Log Set C:

(a)  Noise Log Set C is in my view clearly relevant.  D1 ought to have disclosed it at the discovery stage together with the other 2 sets;

(b)  D1 does not dispute the fact that as a result of the late disclosure of Noise Log Set C in the course of the trial, a short adjournment was occasioned. It is submitted on his behalf that the duration of the trial has not however been affected thereby, and P has not suffered any prejudice[2];

(c)  In my view, P’s legal advisers were justified in seeking time to consider the newly disclosed documents.  Whether there has been any costs consequence as a result of the adjournment of the hearing is not for me to speculate at this stage;

(d)  I have considered In re Elgindata Ltd (No.2) [1992] 1 WLR 1207 and Hung Fung Enterprises Holdings Ltd & Anor v Agricultural Bank of China [2012] 3 HKLRD 679 cited to me.  I am of the view that it was the failure on the part of D1 to disclose Noise Log Set C according to the Rules which led to the adjournment.  Despite his success in defending P’s claim, I grant §1 of P’s Summons.

10.  In relation to D2’s witness statement:

(a)  On the 9^th day of the trial when D2 was scheduled to give evidence, Mr Fong informed the Court and parties that D2 was not going to testify;

(b)  Ms Chao submits that “D2’s action in filing and serving D2’s W/S in 2015 and then suddenly abandoning it 4 years later in the middle of the trial wasted a considerable amount of time and effort”[3]. Details of certain suggested wasted time and efforts are provided;

(c)  I agree with Mr Fong’s submissions that D2 was entitled to put P to strict proof of his case.  I see no reason why a defendant in his position might not listen first to all the oral evidence called prior to the time scheduled for him to give evidence before making, in the light of the state of the evidence then against him, a final decision whether to testify.  No authority has been cited before me that D2 could not do that, or that if he does, he should not only be deprived of the related costs but also be ordered to bear those of P’s, despite his success in defending the claim;

(d)  I dismiss P’s application in this regard.

Ds’ applications

11.  I consider first of all whether indemnity costs should be awarded against P.

12.  Given the Sanctioned Payment and P’s non-acceptance thereof, and given further P’s agreement to pay the post Cut-off Date costs on an indemnity basis (which I would order in any event), the principal issue in this regard is whether P should pay Ds’ costs incurred up to and including the Cut-off Date also on an indemnity basis.

13.  I have considered the authorities cited to me on the principles relevant to the award of indemnity costs.  They include Order 62 rules 5 and 28(3), Libertarian Investments Ltd v Thomas Alexej Hall (unrep, FACV 14/2012, 11 March 2014, per Riberio PJ at §6) and KJ v KMLM (unrep, HCMC 4/2010, 21 May 2014, per To J at §21).  They are not in dispute, and I do not repeat them.

14.  In my view, there are some special and unusual features in the present case which justify this Court in ordering indemnity costs against P.

15.  I have in the Judgment set out in full my view on P’s unreliability and lack of credibility as a witness.  I have explained why I dismissed P’s claim. 

16.  I highlight specifically one aspect of the case.  I have found that P was untruthful about the reasons for his installation of what he described in P/WS#1 as “a stereo system”, which has turned out to be 14 speakers purposely installed to make life a misery for his neighbours.  Noises and vibrations were created for at least 16 hours per day every day for several years since April 2010 to punish and retaliate.  I have described P’s conduct in some details in the Judgment.  P clearly lied in P/WS#1 when he said that “my wife and I have been careful to ensure that the level of sound from the stereo system would be at a reasonable volume and that it would only be used within reasonable hours”.

17.  What he was untruthful about do not just go to matters of background or credibility.  Whilst economical on the face of pleadings and his witness statement with details of the 14 speakers he set up and the true reasons therefor, he portrayed himself as a victim of Ds’ violence and abuses.  He claimed to have been scared, agitated, stressed or shaken by the knocking and kicking of his door by D1 and D2 on the night in question.  He described further how he said he was stressed and disorientated by the Subject Outage, and how he, whilst in that state, fell.  He proceeded to adduce not just evidence on alleged physical harm, but also psychiatric evidence in an attempt to establish a case for substantial damages based on “psychiatric sequalae”.  In fact, until the stage when closing submissions were made, his case remained that his subjective state of mind and perceptions were sufficient to support a case of him having suffered PTSD against Ds, even if this Court was to find that he had not fallen.

18.  For reasons which I have explained in the Judgment, I rejected P’s evidence and account that he was in any way scared, agitated, stressed or shaken by the knocking and kicking of his door by D1 and D2.  With his set-up of the 14 speakers and the noises and disturbances they had been causing to P’s neighbours, P would have known full well why Ds were outside his door and what they were demanding.  I have found that despite the knocking and kicking, P remained belligerent and vindictive.  I also do not accept his account that he was stressed or disorientated by the Subject Outage. 

19.  The important point here is however not just that I have rejected P’s claim in those regards.  Of equal significance, and perhaps more so on the question of costs, is P’s conduct in running his case whilst economical with details of the 14 speakers he set up and the true reasons therefor.  Such conduct is in my view disgraceful.  The way he prosecuted his claim constitutes an affront to the court.

20.  Ps’ conduct in his prosecution of the case should be deterred.

21.  Added to P’s conduct in the prosecution of the case is his non-acceptance of Ds’ offer to settle made via the 29-3-2018 WP Letter.

22.  Having considered all the circumstances, I order him to pay Ds their costs of the action (save at this stage D1’s Counterclaim for reasons previously stated and including the reserved costs on 11 July 2019) incurred both pre and post Cut-off Date on an indemnity basis.

23.  I proceed to consider the question of enhanced interest rate.

24.  I have considered the authorities cited to me, which include OMV Petrom SA v Glencore International AG [2017] 1 WLR 3465. 

25.  As held in OMV, the court has a discretion to include a non-compensatory element to the award, but the level of interest awarded must be proportionate to the circumstances of the case.

26.  In respect of the costs incurred up to and including the Cut-off Date, they are not within the scope of Order 22 rule 23.  I have for the reasons set out above decided to order P to pay those costs on an indemnity basis.  In my view, it is not proportionate to further award enhanced interest rate.  I refuse Ds’ applications in this regard.  Interest is to be paid on the costs incurred up to and including the Cut-off Date on the usual basis.

27.  In respect of the costs incurred post-Cut-off Date:

(a)  They are within the scope of Order 22 rule 23;

(b)  I have considered Order 22 rule 23(5) and 23(6).  I note that the rule does not make 10% the starting point, but makes it the maximum;

(c)  P chose not to accept the Sanctioned Payment;

(d)  I take into account also P’s conduct in prosecuting the case as set out above;

(e)  In all the circumstances, I do not consider it unjust to order enhanced rate;

(f)  I repeat my observations above in respect of P’s conduct.  Deterrence is called for;

(g)  In all the circumstances, I order that P should pay interest on Ds’ costs incurred post Cut-off Date at the enhanced rate of 10% above judgment rate, from 18 October 2019 to actual payment.

Disposition

28.  In respect of P’s Summons:

(a)  I allow §1;

(b)  I dismiss §2.

29.  In respect of D1’s Summons:

(a)  I allow §1(A)i.;

(b)  I dismiss §1(A)ii.;

(c)  I allow §1(A)iii.;

(d)  I make no order in respect of §1(B);

(e)  I allow §2 in relation to payment out of the Sanctioned Payment.

30.  In respect of D2’s Amended Summons:

(a)  I allow §1(i).  Though not expressly mentioned in §1(i), I clarify that the costs reserved on 11 July 2019 are included;

(b)  I make no order in respect of §1(ii);

(c)  I dismiss §2(i);

(d)  I order that P do pay enhanced interest at 10% above the judgment rate on D2’s costs incurred on or after 18 October 2019, from 18 October 2019 until the actual date of payment.  I otherwise make no order in respect §2(ii);

(e)  I allow §3 in relation to payment out of the Sanctioned Payment.

Costs

31.  None of the parties gets all they ask for.  Nor any of them loses all.  In the circumstances, I simply order that there be no order as to costs in respect of all the costs-related applications.