LO YUEN CHONG v. IWS ENVIRONMENTAL TECHNOLOGIES LTD (formerly known as FOOK WOO ENVIRONMENTAL TECHNOLOGIES)

HCPI 1070/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 1070 OF 2014

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D E C I S I O N

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APPLICATION

1.  This is an application to vary interest awarded and costs order nisi.

BACKGROUND

2.  The plaintiff suffered a slip and fall injury during work when she was employed by the defendant.  The latter conceded liability in the present proceedings leaving quantum to be decided for the former by the court.  Parties appeared for 2 days before me in August 2016.  I handed down my decision on 28 October 2016.  I awarded about $359,319[1] to the plaintiff.  

		$
(a)	PSLA	300,000
(b)	Loss of past earnings and MPF	131,817
(c)	Loss of future earnings	Nil
(d)	Loss of earning capacity	52,680
(e)	Special damages	18,211
		502,708
	Less: Employee compensation received	143,389
		359,319
		======

3.  In my ruling, I also awarded the plaintiff usual interest.

(a)   For general damages, 2% per annum from date of writ to date of judgment.

(b)   For special damages, half judgment rate from date of accident[2] to date of judgment.

4.  On 10 November 2016, the defendant issued the present summons.  The defendant’s solicitor prepared the supporting affirmation.  In short, he sought to deduct the interests awarded by me to the plaintiff.  If it would be successful, the defendant failed to beat a sanctioned offer made by the plaintiff.  Hence, the costs order nisi made by me in favor of the defendant should also be reversed after the date the plaintiff should have accepted the sanctioned offer.

5.  The defendant divided the special damages[3] into 3 categories.

(a)   Advanced payments (sick leaves and medical expenses) in the total sums of $104,327 were made to the plaintiff in the employee compensation claim, no interest should be awarded to them.

(b)   As to the balance of $45,701[4] ($131,817 + $18,211 - $104,327), interest should only be awarded from date of the accident to 11 July 2014 because the plaintiff accepted the sanctioned offer of $39,062 in the employee compensation claim.

(c)   As to the remaining balance of $6,639[5] ($45,701 - $39,062), interest was to be calculated from 12 July 2014 to 17 December 2014.

6.  On the other hand, for general damages, interest should not run from date of writ (17 October 2014) but 29 December 2014 because the plaintiff failed to comply with PD 18.1 by commencing the present proceedings “pre-maturely”.

7.  If this court would accept all the defendant’s submissions on interest as above, the sum recovered by the plaintiff in my assessment was less than the sanctioned offer of the defendant made on 19 November 2014.

8.  The plaintiff opposed the application.

9.  The plaintiff’s solicitor prepared the affidavit in opposition.  Briefly, he argued that the plaintiff had not breached PD 18.1.  He further took the court through the correspondence and explained that the defendant’s solicitor did not make any constructive reply and there was nothing wrong for the plaintiff to commence the present proceedings on 17 October 2014.  In any event, he did not agree that the breach of PD (which was denied) should deprive the plaintiff of interest as alleged.  The plaintiff proposed that the court should even grant more interest to her by allowing interest to run from date of the letter before action on 28 August 2014.  Regarding the sanctioned offer made on 19 November 2014, the plaintiff was not in a position to consider if it was to be accepted at the material time because joint medical report and earning records of comparable employees of the Defendant had not been made available.

10.  As to special damages, the plaintiff did not seek to argue that no interest should be awarded to the advanced payments made under the employee compensation claim. However, she disagreed any deduction on the rest because they were largely 1/5 salary during sick leave, tonic food, travelling expenses and so forth.

11.  The defendant further suggested some other dates for the court to consider when interest regarding both general and special damages are to be calculated.

12.  Finally, as the defendant’s application was only premised on deduction of interests resulting in the plaintiff’s failure to bet the sanctioned offer by a small sum, the plaintiff further set out different scenarios for court’s consideration. 

13.  No affidavit in reply was filed by the defendant.

DISCUSSION

14.  Parties appeared before me on 16 June 2017 for the substantive argument.  I had the same counsel as in the assessment.  Ms. Lau acted for the defendant and Mr. Lam, for the plaintiff.  Upon hearing from them, I reserved my decision to be handed down.  Here it is.

JURISDICTION?

15.  Mr. Lam argued that my assessment on 28 October 2016 was “final and absolute”.  The interest awarded could be varied, other than by way of a formal appeal.  The defendant did not raise any argument on interest in the assessment.  They could not do so later.

16.  Upon thought, while agreeing that the issues on interest were not raised in the assessment and should have been made therein, I note that the no order or judgment has been sealed herein.  It is trite law that the court will retain jurisdiction to deal with the matters until the order or judgment will be sealed.  To apply such principle here, I take the view that I still have the necessary jurisdiction to deal with the question of interest in the assessment.

AMENDMENT OF SUMMONS?

17.  Mr. Lam also argued that the defendant was bound by the terms of interest sought in the summons, notwithstanding it sought something different in the supporting affirmation.  There was no formal application to amend the summons.  The court should not allow Ms. Lau to do so on counsel table.

18.  Again, while noting the good practice as suggested by Mr. Lam, as a matter of exercising discretion, I respectfully agree to entertain different formulas of calculation of interest by the defendant (as well as those from the plaintiff).  It is also trite law that this court looks at the substance rather than form.  There is no argument that interest is a matter within the sole discretion of the court, to be exercised judicially in the circumstances of each case.  Once the jurisdiction of this court has been triggered, I see no reason to find a right formula for calculation of interests, having considered all the factors referred to me by the parties.  Indeed, both parties have put before me a number of different calculations.  After all, I see no real prejudice done to the plaintiff by looking into the case to decide on the appropriate interest to be awarded to her.

19.  I now move to the substantive argument between the parties, interest on special damages and then, general damages.

INTEREST ON SPECIAL DAMAGES

20.  Both counsel kindly agreed that the cardinal principle in awarding interest on damages is: interest should be awarded to the plaintiff, not as compensation for damage done, but for being kept out of the money which ought to have been paid to her.

21.  With this in mind, there is no argument that, in the employee compensation claim, the plaintiff was paid the said advance payment and accepted the sanctioned payment therein.  Hence, I agree with the suggestion by Ms. Lau as per paragraph 5 (a) and (b) above as the plaintiff was not kept out of those monies.

22.  As to the balance of $6,639 in paragraph 5 (c), I will stick to the usual rule of awarding interest at half judgment rate from the date of accident to the date of judgment.

INTEREST ON GENERAL DAMAGES

23.  Two questions arise out of parties’ argument regarding interest on general damages.

(a)   Was the defendant’s reply to the plaintiff’s letter before action a constructive one under PD 18.1 so that the plaintiff should not have commenced the present proceedings within one month from such letter?

(b)   If the answer to (a) is “yes”, should the court reduce interest to be earned by the plaintiff in general damages?

24.  Both counsel took me through the relevant correspondence.  Upon thought, I take the view that the defendant has not been “constructive” enough for the purpose of our PD 18.1.

25.  Paragraph 19 of PD 18.1 reads:

“ The letter of claim should be sent no later than 4 months prior to the commencement of proceedings, and the proposed defendant(s) or insurer(s) concerned should reply constructively thereto within one month. A simple acknowledgement is not a constructive reply. If there is no such reply, the claimant will be entitled to commence proceedings forthwith without risk as to costs arising out of non-compliance of this paragraph. If such reply is received within one month, the parties should over the next 3 months communicate constructively and provide mutual disclosure of information and documents with respect to issues of liability and quantum (including, without limitation, the information and documents identified in Schedules A and B of the specimen letter which have not already been served) as are reasonably required for attempting to settle the claim in whole or in part, instructing medical expert(s) and / or arranging expert medical examination (see paragraph 22 hereof).”

26.  Mr. Lam drew my attention to the ruling of Master Yu (the PI Master) in Wong Shui Lam v. Hospital Authority dated 31 December 2009 to understand more about the aforesaid PD.  The following extracts shed some lights in the present case.

“24. Ms Kang for the Defendant tries to argue that the 6 November letter is a constructive response. I cannot agree. It is only a letter of acknowledgment and commitment to investigate the incident on the Defendant side. But they have not followed up the investigation as requested by the practice direction and has never responded if they admit liability, or if they dispute liability, state their ground of defence.

25. And under the new Practice Direction, it is provided –

20. If the proposed defendant(s) fail to give a constructive reply or reasonably investigates into the merits of the claim and give a positive reaction, then they will not receive sympathy from the Court after the commencement of proceedings, and the Court may not allow time for them to make up for their omission.

26. This must be read with the new Order 1A of the Rules of the High Court, in particular rule 1(b) and (e). The underlying objectives of the Rules of the High Court are to ensure that a case is dealt with as expeditiously as reasonably practicable and to facilitate the settlement of disputes. And Order 62 rule 5 provides that the Court in exercising its discretion on costs shall take into account the underlying objective as set out in Order 1A rule 1. Failure to comply with the new Practice Direction may result in stringent cost sanction.

27. In my limited experience in handling Checklist Review, it is not uncommon to find Insurers giving no respond to pre‑action letters. I have been told repeatedly by solicitors that they have no instruction or they have not been instructed at that stage. Insurers may wish to defer the expenses of any legal costs to the latest stage. But in light of the new Rules, such delay are in breach of the spirit of the Civil Justice Reform, and for cases in Personal Injuries List, in breach of PD 18.1. Solicitors are obliged to advise their client including insurers to comply with the new PD to save any cost sanction. If the Insurers are minded to save costs, an alternative is to engage in mediation. No action taken, as in this case, is clearly in breach of the spirit of the Civil Justice Reform and call for costs sanction.

28. As for the Plaintiff, I also have reservation on the way of pressing on the request for admission of liability. In the situation where admission of liability is not forthcoming, under the Practice Direction, we expect parties to engage in some discussion to narrow down their issue. Letters after letters requesting the other side for admission of liability is not something constructive or moving toward the direction of a settlement or saving costs.

29. I also note a special feature of this case, namely that the Plaintiff is in fact the employee of the Defendant.  It cannot be disputed that the Defendant had been subject to investigation and prosecution from the Labour Department.  Accordingly, there must be some materials for the Defendant to investigate into with or without the assistance from the Plaintiff.  For a constructive response in such a circumstances, we expect the Defendant to come back with either admission of liability or their grounds of defence.  I have to say that a lot of the effort of Mr. Millar is not necessary.  But the non‑responding attitude from Messrs. Deacons is inexcusable.”

27.  With the above in mind, I note the following facts in the present case.

(a)   On 28 August 2014, the plaintiff’s solicitors issued the letter before action.  After setting out circumstances of the accident, he went on to say that:

“…

At this stage of our enquiries we would expect the following document to be relevant to our client’s claim and request that you provide copy to us within one month:-

1. Full particulars of your insurer;

2. Any investigation report(s) in relation to the captioned accident;

3. Any statements or records concerning the captioned accident, in particular, the statements made by you and any eye‑witnesses; and

4. Any photographs of the accident scene;

Pursuant to the Practice Direction 18.1 (paragraphs 14 and 25 to 29) and Practice Direction 31 (Mediation), we would advise our client to enter into negotiations for settlement at this stage by all suitable means whether by way of without prejudice negotiations and/or other mode(s) of ADR. Please let us have your responses to the following questions regarding mediation:

(1) Are you willing to attempt mediation with a view to settling these proceedings?

(2) If you are not willing to attempt mediation, please state the reason or, if thought desirable, such reasons or additional reasons should be set out in a statement signed by you or your solicitor.

We invite you or your insurer to jointly engage a medical expert to conduct medical examination and prepare expert medical report on our client. Alternatively, you may nominate your own expert to conduct joint medical examination with our expert. Kindly revert within one month.

A copy of this letter is attached for you to send to your insurers. Finally, we expect a constructive reply to this letter within one month by yourselves or your insurers, failing which we shall forthwith commence proceedings.

…”

(b) Eight days later, on 5 September 2014, the defendant’s solicitors replied.  They asked for documents.

“…

A copy of your letter dated 28^th August 2014 addressed to our client has been passed to us with instructions to respond thereto. We, however, are instructed that only the 4‑page pre‑action letter has been received by our client. Please therefore send to us the documents referred to in p.2 & 3 of the said letter, the Schedule A attached thereto as well as the documents referred to in the said Schedule A.

…”

(c)   The plaintiff’s solicitors answered six days later on 12 September 2014.  They asked for copying charges and pressed ahead the expert matters.

“…

Kindly let us have a cheque in the sum of 100.00 ($1 x 100 pages) being our photocopying charges,

We once again suggest to you that a joint expert be engaged to medically examine our client or alternatively, you may nominate an expert to conduct joint examination with our expert on our client for the purpose of assessing our client’s injury. Please let us know your decision within 7 days from date hereof failing which we shall take out the appropriate application without further notice. Kindly also let us know whether your client would admit liability within 7 days.

…”

(d)   (i)   On 15 September 2014, the defendant’s solicitors replied. They disagreed to pay the copying charges and said that, without the documents, they could not reply to the joint examination.

“…

Our instructions are that you have not sent to our client the requested documents, hence our request on 5^th September 2014. In the circumstances, we do not deem it appropriate to pay for the photocopying charges incurred by you for sending to us the missing documents.

Without the opportunity to consider the documents to be delivered to us, we are not in the position of responding to your proposal to conduct a joint examination on your client. Should you deem it appropriate to make an application (to the Court presumably), please proceed to do so.

As regards the issue of liability, we shall revert to you in due course.”

(ii)  Four days later, the defendant’s solicitors further wrote:

“…

Please be informed our client nominates Dr. Lam Kwong Chin as its expert to conduct a joint examination on your client with the expert she instructs.  Kindly ask the 2 experts to liaise direct for an appointment convenient to all and advise us the time and venue of the examination thereafter.”

(e)   The plaintiff commenced the present proceedings on 17 October 2017 and service was done on 20 October 2017.

(f)   On 24 October 2014, the defendant’s solicitors complained.

“…

Your pre‑action letter was sent to our client on 28^th August 2014. Subsequently, upon our request, you provided us with copies of the documents which had not been enclosed with the said pre‑action letter. On 19^th September 2014 we nominated Dr. Lam Kwong Chin to conduct a joint examination on your client.

To our surprise and in breach of P.D. 18.1, on 17^th October 2014 you issued a Writ in the High Court on your client’s behalf. Please let us have your justification for deviating from paragraph 19 of P.D. 18.1. In case such is not forthcoming or we do not find your explanation acceptable, our client will bring to the attention of the court of your said breach and invite the Court to disallow the whole or part of your client’s costs in preparing the Writ of Summons, Statement of Claim, Statement of Damages, etc. For that purpose, copies of this and other relevant letters will be produced.

…”

(g)   By letter of 6 November 2014, the plaintiff’s solicitors replied and disagreed.

“…

Neither the Defendant nor the insurer replied constructively within one month to our Letter before Action dated 28^th August 2014. Your 5^th & 15^th September 2014 letters addressed to us were only a simple acknowledgement of your Letter before Action.

Further, most (if not all) of the documents sent to you under our 12 September 2014 covering letter had already been disclosed under the connected DCEC1195/2014 in which your esteem firm was representing the same Defendant and insurer and such DCEC case was settled between parties on 11 July 2014. You should be familiar with the subject accident and the outstanding of the said documents should not prevent you / your clients to reply to us constructively by 28^th September 2014, i.e., one month upon receipt of our Letter before Action.

In any event, the said 2 letters from you were NOT a constructive reply as prescribed in Paragraph 19 of the Practice Direction 18.1. Therefore, the Plaintiff is entitled to commence the present proceedings forthwith.

As to the joint exam, we have engaged Dr. Lau Chi Yuen Mike to conduct a joint exam, on the Plaintiff with your Dr. Lam Kwong Chin. We are given to understand that both doctors are still liaising with each other on the date and time of the intended joint exam. We shall keep you informed once the date of the joint exam has been mutually arranged by doctors.

We reserve our rights to produce copies of all the relevant correspondence exchanged between parties to the Court on question of costs if such an issue arises.

…”

28.  With respect, the defendant fails me because:

(a)   The plaintiff was the employee of the defendant. Their DCEC case had been settled in July 2014 before the issuance of the said letter before action in August 2014.  The defendant should be familiar with the accident and the injury. I have not heard any explanation as to how the request of documents would help the defendant to make a constructive reply.

(b)   Ms. Lau also argued that the defendant did respond promptly on the request for joint medical examination (once they received all the documents from the plaintiff).  However, in my view, it is still neither admission nor grounds of defence, albeit more positive to the progress of the case.

29.  Further or in the alternative, even assuming that I was not correct in the first question, the failure on the part of the plaintiff in complying with PD18.1 does not in any event justify a reduction of interest to be earned by her in general damages awarded by the court.  It is simply not the consequence stated in the said PD. Ms. Lau has been able to show any authorities to support her proposition.  Upon being questioned, she referred to me to O.22 r.23 RHC.  I do not think that the provision will help the defendant as we are not discussing the matter in the context of sanctioned payment. I am afraid that the defendant only insisted for such redress for the purpose of reducing the interest to be awarded to the plaintiff, and hence, she would not be able to beat the sanctioned offer.  It is not right to do so.

30.  Having said the above, I decline to vary the interest having awarded to the plaintiff regarding the general damages in the assessment. There is no need for me to consider other alternative dates as proposed by Mr. Lam on the said deliberate withholding of comparable workers’ earning record and joint orthopaedic expert report made available on 12 June 2015 only. In any event, I do not consider that the complaints by the plaintiff are justified.

RESULT OF VARIATION OF INTEREST APPLICATION

31.  To conclude, after the variation, I will award the following interest to the plaintiff.

(1) Regarding general damages, 2% per annum from date of writ to date of judgment.

(2)  Regarding special damages,

(a)   For the sum of $104,327, no interest is awarded.

(b)  For the sum of $45,701, half judgment rate per    annum from date of accident to 11 July 2014.

(c)  For the sum of $6,639, half interest rate per annum from date of accident to date of judgment.

HAS THE PLAINTIFF DONE BETTER THAN THE SANCTIONED OFFER?

32.  With the above, one might think that the plaintiff has beaten the sanctioned offer by a comfortable margin, as submitted by Mr. Lam because the interest to be earned by the plaintiff on general damages has exceeded the sum of $10,000. However, it is so when the interest will run until the date of judgment.

33.  For the purpose of answering the question if the plaintiff has done better than the sanctioned offer, one looks at the date on which it could have been accepted with leave, i.e. 17 December 2014. By reference to this particular date (not the date of Judgment), the interest that the plaintiff could earn would only be the sum of $4,406.

(a)  $1,000 ($300,000 x 2% p.a. x 17.10.2014 to 17.12.2014)

(b)  (i) $2,875 ($45,701 x 4% x 15.12.2012 to 11.7.2014)

(ii)  $531 ($6,639 x 4% x 15.12.2012 to 17.12.2014)  

34.  As such, the plaintiff fails to beat the sanctioned offer by $475 ($364,200 - $4,406 - $359,319).

VARIATION OF COSTS ORDER NISI?

35.  By such failure, it triggers the court’s jurisdiction and discretion to see if the costs order nisi should or should not be varied, if so, to what extent?

36.  There is no argument that costs remain a matter within the sole discretion of the court to be exercised judicially in the circumstances of the case.

37.  Order 62 rule 5 (1) RHC states that the court, in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account, among others, the underlying objectives of Order 1A, rule 1 and conduct of parties[6]. For the purpose of considering conduct of parties, sub-rule (2) further states that it includes whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.

38.  In the present case, from my assessment, I found that the joint medical report did not support the claim by the plaintiff of her loss of earnings. The plaintiff resigned from the defendant on her own and there was no future loss of earnings awarded.

39.  Order 22 rule 23 Rules of the High Court also contains the relevant provisions governing the present situation. To state it briefly for our purpose:

(1)If the plaintiff fails to do better than the sanctioned payment, the court may:

(a)   disallow all or part of interest, and/or

(b)   order him to bear costs (on indemnity basis) of the defendant (with penalty interest at a rate not exceeding 10% above the judgment rate),

after the date he could have accepted the sanctioned offer without leave.   

(2)The court shall make the above orders unless it considers it unjust to do so. 

(3)In considering whether it is unjust to make the orders, the court shall take into account all the circumstances of the case including:

(a)   terms of the sanction payment,

(b)   stage in the proceedings at which any sanctioned payment was made,

(c)   information available to the parties at the time when the sanctioned payment was made, and

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

40.  In the present case, I note the followings.

(a)  The sanctioned payment is a sum of money at $362,400 (inclusive of interest).

(b)The sanctioned payment was made at early stage of the proceedings. To be precise, it was one month and 3 days after commencement of the proceedings.

(c)  By the time that sanctioned payment was made, the relating DCEC claim had been settled by the same parties after the plaintiff’s acceptance of $39,062 on 11 July 2014.

(i)   The joint orthopaedic expert report was not available and completed until 10 July 2015.

(ii)   On 8 August 2016, the plaintiff’s solicitors requested for comparable workers’ earnings record and the defendant’s solicitors answered it on 16 August 2016.  

(d)  Parties’ conduct with regard to the giving and refusing to give information for the purposes of enabling the payment to be made or evaluated is either irrelevant or neutral.

(e)   The plaintiff only failed by a sum of $475 out of an award of $502,708, i.e. about 0.1%.

(f)   Ms. Lau asked for variation by way of split of costs order^[7] but not redress on interest under the rules

41.   With the above, I take the view that the appropriate costs order (i.e. it is unjust to the plaintiff if she will be disallowed any interest and/or ordered to pay penalty interest on costs payable to the defendant, bearing in mind in particular the factor of paragraph 40 (e) above) in the present assessment ought to be:

(a)  The plaintiff is entitled to costs of the assessment, on District Court scale, including costs reserved, up to and including 17 December 2014, on party and party basis, to be taxed, if not agreed.

(b)The defendant is entitled to costs of the assessment, on High Court scale, including costs reserved and certificate of counsel for hearings on 29 and 30 August 2016, from 18 December 2014 to 28 October 2016, on indemnity basis, to be taxed if not agreed.

(c)  The plaintiff’s own costs are to be taxed in accordance with Legal Aid Regulations.

I so vary the costs order nisi accordingly.  

COSTS OF THE APPLICATION  

42.   Costs usually follow event.  There is no reason to depart from such general principle.  I therefore further make an order nisi that the plaintiff do pay costs of the defendant in the application, on High Court scale, including costs reserved and certificate for counsel for hearing before me on16 June 2017, to be taxed if not agreed.  The plaintiff’s own costs are to be taxed in accordance with Legal Aid Regulations.