SOUZA, REINALDO MARIA AUGUSTO DE v. CHEUNG TZE YEUNG

HCPI 240/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 240 OF 2001

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RULING AS TO COSTS

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1. The Plaintiff in these proceedings brought an action for damages for personal injuries against the Defendant arising out of a traffic accident on 26 July 2000. The Defendant took out Third Party proceedings against the Third Party in which he claimed to be indemnified by the Third Party not only in respect of damages awarded to the Plaintiff but also in respect of the Plaintiff's costs of pursuing the claim, his own costs of defending the claim and his costs of the Third Party proceedings.

2. The action was listed for trial to commence on 20 August 2002. On that day the action between the Plaintiff and the Defendant was settled between them. The terms of the settlement, which provided that there be judgment for the Plaintiff against the Defendant in the sum of HK$2,000,000.00 and that the Defendant pay the Plaintiff's costs, were approved by the Third Party.

3. There was a trial of the Third Party proceedings as to the relative responsibilities of the Third Party and the Defendant for the accident which resulted in the Plaintiff's injuries. It lasted 4 days. I assessed the liability of the Third Party for the accident at 30% and that of Defendant at 70%.

4. I made an order nisi as to costs that unless either party applied to be heard on the question of costs, the costs of the Defendant be taxed and paid by the Third Party.

5. The matter has been restored for argument as to costs.

6. There is no dispute as to the costs of the Third Party action. It is agreed that the Third Party should pay the Defendant's costs of the Third Party action to be taxed if not agreed.

7. The dispute lies as to the extent of the Third Parties' liability to pay the Plaintiff's costs of the main action and the Defendant's costs of defending that action.

8. The ultimate position of the Defendant is that the Third Party should pay 30% of the Plaintiff's costs and 30% of the Defendant's costs of defending the main action.

9. The Third Party agrees that it should pay 30% of the Plaintiff's costs in the main action up to 15 July 2002 but not thereafter. The 15 July 2002 was the date of a letter faxed to the Defendant's solicitors urging them to admit liability and make an offer of HK$2,681,000 plus costs to the Plaintiff.

10. The Third Party contends it should not pay any of the Defendant's own costs in defending the action. Its principal arguments are that these were costs which the Defendant would have had to pay in any event, the fact that the Third Party proceedings were not commenced until 21 January 2002 (almost a year after the issues of the writ) and that the costs were the result of the Defendant's decision to defend an indefensible claim.

11. I have borne in mind that the ordinary rule where a plaintiff succeeds against defendant who in turn succeeds against Third Party is that the plaintiff recovers his costs against the defendant and the defendant recovers against the Third Party:

(a) the costs which the defendant is liable to pay or has paid to the plaintiff;

(b) the defendant's own costs of defending the plaintiff's claim; and

(c) the costs of the third party proceedings (Atkin's Court Forms Vol. 37 (1995 issue) Third Party Procedure para. 21)

12. A significant feature of this case however is the fact that in my view the defendant chose to defend an indefensible claim by the plaintiff. My reasons to coming to this conclusion are apparent from the judgment. Despite this, the defendant never conceded liability to the plaintiff until the first day of trial.

13. There is no suggestion in the pleadings or in the correspondence that the Thirty Party was (to use the words of Deputy Judge Woolley in Keep Point Development Ltd v. Chan Chi Yim and Others (HCMP 6550/1998) "fighting the plaintiff on a similar basis to the defendant" or "actively cooperating" in the defendant's defence on the matter of liability. Indeed from the details of the correspondence to which I have been referred the Third Party was agreeing to the defendant admitting full liability to the plaintiff. In later correspondence he was urging the defendant to do so.

14. In such circumstances it seems to me inappropriate that the Third Party should pay any of the Defendant's costs of defending the main action in so far as they were incurred in relation to the issue of liability. In so far as the issue of quantum is concerned it is apparent that the parties could not agree. The Third Party should be liable for 30% of the Defendant's costs of defending the main action in so far as these costs relate to the issue of quantum. I so order.

15. As far as the costs which by the settlement the Defendant is liable to pay the plaintiff are concerned the parties have agreed that the Third Party should pay 30% of those costs up to 15 July 2002. I do not propose to disturb this agreement in this regard. In so far as the Plaintiff's costs thereafter are concerned the Third Party should not be obliged to pay to the Defendant any of the Plaintiff's taxed costs in so far as they were incurred for pursuing the issue of liability against the Defendant. The Third Party should however pay 30% of the costs which the Defendant is obliged to pay the Plaintiff in pursuing the issue of quantum. I so order.

16. In view of the fact that neither party has wholly succeeded in its submissions I make the following order nisi which is to take effect unless I receive written submissions (which are to be copied to the opposing party) within 14 days: that there be no order as to costs of this application.