WONG SZE MAN NICOLES AND ANOTHER v. CHAN KA HO AND ANOTHER

HCPI 190/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 190 OF 2010

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D E C I S I O N

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1.  This is an appeal brought by the plaintiffs in relation to a costs order made by the learned master at the time when she granted an order that the 1^st and 2^nd defendants’ summons filed on 30 December 2011 be withdrawn. She then went on to order that the 1^st plaintiff do pay to the 1^st and 2^nd defendants’ half of the costs of the summons dated 30 December 2011, including the costs of the hearing before her, to be taxed if not agreed.

2.  It is trite law and accepted by the parties that a judge in chambers will not allow an appeal from a master’s costs order unless it was unreasonable or the master erred in law. That well established principle was re-stated by Morland J in Hoddle v CCF Construction Limited [1992] 2 All ER 550 at 550H-551A in these terms:

“Thus, in my judgment, it would be highly undesirable as a matter of principle that a judge in the position that I am in today should intervene and make different orders as to costs from that made by a master, unless it can be shown by the appellant that the master demonstrably erred in the exercise of his discretion in the order that he made. If it can be shown that the master took into account matters that he should not have taken into account, or failed to take into account matters that he should have taken into account, in those circumstances the judge in chambers would be entitled to vary the order made by the master. But in my judgment, it would not be in the interests of justice if judges in chambers entered into detailed examination of all the matters that were before the master in order to decide whether they would have come to the same decision as the master.”

3.  I certainly take heed of that last observation and, likewise, I do not intend to make a detailed examination of all the matters that were, or might have been, canvassed below.

4.  The master gave reasons for her ruling and it is apparent from those reasons that she did not accept the submission of Miss Chan, who appeared before her for the 1^st plaintiff, that the summons which had been withdrawn was bound to fail.  Miss Chan has repeated that submission before me and so the first matter I need to deal with was whether the master was wrong in rejecting Miss Chan’s submission.  If Miss Chan is right that the summons was bound to fail, then, of course, it is quite wrong for the 1^st plaintiff to be ordered to pay any costs at all.

5.  To deal with that, I need to give a little history of these proceedings which arose as a result of a tragic road traffic accident that led to the loss of two lives and gave rise to a number of actions for damages.  The accident occurred on 26 June 2007 and resulted in the death of Mr Wong Pui Wah and Madam Li Fung Yee. 

6.  A number of actions were commenced in or about April 2010 as a result of that accident.  One, Miss Wong Sze Man, Nicoles, the second daughter of the two deceased persons, commenced the current action in the High Court against the defendants.  Some months thereafter, interlocutory judgment was entered against the defendants for damages to be assessed.

7.  At or about the same time, a number of District Court actions were commenced.  One was commenced by Miss Wong Ngar King, who was the first daughter of the two deceased persons and she claimed damages for nervous shock.  Two other District Court actions were also commenced, one by the second daughter, and one by Leung Hoi Lam, who was the granddaughter of the two deceased persons.  Her proceedings were brought by her mother and next friend, the first daughter.

8.  Not surprisingly, there was a consolidation order made in the District Court, shortly thereafter, in January 2011.  So this was the state of play and it was rather unsatisfactory, from my point of view, because there was clearly a risk here of inconsistent findings by the courts with different actions being brought in the High Court and in the District Court in which the courts had to make findings in relation to the financial situation of the claimants.  In this case, the first and second daughters were claiming damages for personal injuries, in their own right, in the District Court actions, but they were also claiming as dependants in the High Court action. 

9.  Whilst I do not know enough of the reasons why this course was taken, I should mention that, in future, solicitors who have the conduct of this type of proceedings would be well advised to consider bringing all the claims together in one action.  Even if the claims for damages for personal injuries may be within the jurisdiction of the District Court, the defendants, who would be the same defendants in the District Court and in the High Court proceedings, are very likely to agree to all the proceedings being brought in one court, and at one time, in order to avoid the risk of inconsistent findings, and to agree not to take the point that claims were brought in the High Court which ought to have been brought in the District Court.

10.  The reason why the defendants took out this summons, which was subsequently withdrawn, was because they said that there were inconsistent versions of claims, and inconsistent assertions, being made in the High Court case and in the District Court actions. The inconsistencies have been summarised in an appendix that was placed before the learned master and which is also before me.

11.  By way of example, I can highlight that there were statements made by the first daughter to the effect that Mr Wong Pui Wah had been solely responsible for the discharge of the management fees and mortgage payments in respect of a property that has been described as ‘the Lam Tin property’; but the first daughter had also disclosed tax returns in relation to periods, before the accident had occurred, in which statements appear to the effect that she had made payments of home loan interest in respect of the property.  There are a number of other documents, appearing in appendix 1, identifying other inconsistencies.

12.  It was submitted to the master that the reason why the summons was withdrawn was not because the defendants thought that they would fail, but because the actions had been settled and, therefore, it was no longer necessary to proceed with the summons.  There was no contest in relation to the order sought that the summons be withdrawn and the only contest before the master was as to the costs. 

13.  In dealing with costs, the master recognised that she was being asked to exercise her discretion to depart from the usual order that the respondent to a summons was entitled to the costs of the summons when the summons was withdrawn by the applicant.  So why did she depart from that usual order?

14.  She heard the submissions of the parties and summarised them in her decision, including the submission from Miss Chan, for the 1^st plaintiff, that the summons was bound to fail.  She also heard Miss Chan submit that, in fact, part of the summons asked for were orders which were unnecessary. 

15.  The summons sought leave to disclose, and use, in the District Court proceedings the documents identified in the High Court proceedings, and some of those documents were clearly not subject to the implied undertaking as to confidentiality, such as, for example, items 1 and 2 of sub-paragraph (1) of the summons, which related to the statement of damages of the 1^st plaintiff and the revised statement of damages of the 1^st plaintiff. 

16.  Nor was it necessary for an order to be made in respect of the witness statements of the first and second daughters that had been served in the High Court proceedings.  Nor was it necessary to obtain an order in respect of the orders made by Master Ng, of September and November 2011, in respect of the High Court proceedings.

17.  Miss Chan went on to submit to the master that, even if it was right that a summons must issue in respect of the other documents, particularly, the documents identified in sub-paragraph (3) of the summons, and there were about 20 or more items of documents sought under this head in respect of which the defendant sought to be released from the implied undertaking as to confidentiality, upon the application of the principles set out in various authorities on point, the summons was bound to fail.  She made similar submissions to me this morning. 

18.  The learned master disagreed with Miss Chan’s submission that, if the summons had been argued in full in respect of the documents which were subject to the implied undertaking as to confidentiality, the defendants would be unsuccessful.  In my judgment, the learned master did not err in law in reaching that conclusion.  She was fully alive to the concern caused by inconsistent statements being made by parties in different actions. 

19.  In my judgment, the present case is far removed from cases such as Bentley v Parry [1933] 1 HKC 298.  The principles governing release from the implied undertaking as to confidentiality can be found in the decision of the House of Lords in Crest Homes Plc v Marks & Ors [1987] 1 AC 829.  If I may just quote a few passages from the judgment of Lord Oliver, he said, at page 854B:

“But the implied undertaking is one which is given to the court ordering discovery and it is clear and is not disputed by the appellants that it can, in appropriate circumstances, be released or modified by the court.”

And at 860B-C:

“I do not for my part think that it would be helpful to review these authorities for they are no more than examples and they illustrate no general principle beyond this, that the court will not release or modify the implied undertaking given on discovery, save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery. As Nourse LJ observed in the course of his judgment in the same case, each case must turn on its own individual facts. In the instant case, the determinative point to my mind is that it is purely adventitious that there happened to be two actions.”

And he repeated the last point at the last sentence on page 860H, when he said:

“In substance, the 1984 action and the 1985 action are a single set of proceedings, a circumstance emphasised by the order that the two should be heard together.”

20.  The District Court judge or master had been clearly right to direct that the District Court actions should all be heard together and, if all the actions had been brought in the High Court, I cannot see any reason why a similar order would not have been made that all the actions, not only the fatal accident action but also the claims for nervous shock, should be heard together.  That is the special circumstance that applies in the present case and which clearly influenced the master and led her to conclude that the summons was not bound to fail.

21.  I entirely agree with her decision in that regard.  But, of course, the matter does not end here.  Mr Chan, who opposed the appeal, very rightly conceded that the principles governing the discontinuance of actions apply equally to a withdrawal of a summons.  I had occasion to rehearse and to summarise those principles in my decision in Li Kai Yin v Atta-Trans Limited, HCPI196/2009, 18 July 2011, where I said, in paragraph 15 of that judgment:

“The orthodox principles referred to by Mr Cheung may be stated simply as follows. The general rule is that a defendant is entitled to costs when an action is discontinued (see Inchroy Credit Corporation Limited v Cheung Man Cheung [1992] 1 HKLR 120, Trend Publishing (Hong Kong) Limited v Vivien Chan & Co (a firm) [1996] 2 HKLR 227 and Terkildsen v Barber Asia Limited, HCA1963/2003, 6 June 2007). That general rule will be applied where the discontinuance constitutes a recognition by the plaintiff of likely defeat. But there may well be cases where justice requires the defendant to recover its costs from the plaintiff, even when the plaintiff has discontinued the proceedings for reasons other than the certainty or likelihood of defeat. But that is not an absolute rule. The rules recognise that there may be circumstances in which a plaintiff should be permitted to discontinue an action without having to pay the defendant’s costs. An example of such a case is where the action has been discontinued because the issue has become academic, rather than by reason of an acknowledgement by the plaintiff of defeat or likely defeat.”

22.  I pause here to note that Mr Chan submitted, and I agree, that the present case fell into that category, that is to say that the summons was withdrawn because the issue had become academic.  If I may continue my quotation of the judgment referred to:

“However, to award costs to a plaintiff would be a very substantial departure from the general rule. In Ta Tung China & Arts Limited v Fontana Restaurant Limited & Others [1999] 1 HKLRD 404, Mortimer VP was of the view that such an order would be most unusual. In the same case, Godfrey JA expressed the view that the only way for the plaintiff to get his costs was to bring the action to trial for the purpose of doing so. According to Deputy Judge Muttrie in Leung Yuet Ching v Leung Yuet Kuen, HCA9924/2000, 24 September 2000, this could only happen where the plaintiff’s case was certain of success in that any defence filed was liable to be struck out under Order 18 rule 19 and the discontinuance came about because the defendant accepted that.”

23.  As I understand Mr Chan’s submissions before me, he did not seek to argue, or, at least, he did not press that argument too strongly, that that the defendants were bound to succeed.

24.  Certainly, in making her decision, the learned master did not come to a finding that the defendants were bound to succeed.  She found, as I have already stated, that she was not satisfied that the defendants would be unsuccessful.  And, if I can just extract an expression she used in her reasons, I think, in effect, she found that the defendant had “a good chance of success”. 

25.  But a good chance of success certainly does not fall within the category, identified by Deputy Judge Muttrie, which allows the court to make the respondent to the summons pay costs.  Mr Chan, very fairly, accepted that the learned master did not have the benefit of my decision in Li Kai Yin.  Nor were the authorities I had referred to in that decision cited to her.  He appeared to be satisfied that, if I were to allow the appeal, I should make an order that there should be no order as to the costs of the summons that was withdrawn.

26.  The reason why the master accepted that the plaintiffs should only pay half of the costs of the summons was because the summons was wider than necessary and need not have covered the documents which were not subject to the implied undertaking as to confidentiality. 

27.  I come to the conclusion that the learned master erred in principle in making the plaintiffs pay part of the costs when this was not a case where the defendants were bound to succeed.  I, therefore, set aside her order and address the matter of costs below afresh.

28.  The only issue I have to face, in doing so, is whether or not I should make an order that there be no order as to costs below, which I am more than prepared to do because I have come very firmly to the view that the reason for the withdrawal of the summons was not because there was any recognition by the defendants of defeat or likely defeat, but because the issue had become academic by reason of the settlements of the District Court actions.

29.  But I am impressed, as indeed was the learned master, that costs were wasted by the summons seeking orders from the court in respect of documents for which such orders were unnecessary, and that the plaintiffs’ solicitors and legal advisers would have spent some time in looking up those documents before concluding that they were not subject to any implied undertaking as to confidentiality.

30.  However, looking at the matter on the whole, I am driven to the conclusion that a greater part of the time taken in dealing with the summons must have been taken in dealing with the documents referred to in sub-paragraph (3) of the summons, which far outnumber what I may describe as ‘the unnecessary documents’.

31.  Exercising my discretion afresh in the matter, I would not make an order that there be no order as to costs of that summons, but I would order that the defendants pay the plaintiffs 25 per cent of their costs of dealing with that summons. 

32.  That is my decision in relation to the appeal.  May I hear from the parties on the costs of this appeal.

[Submissions on Costs]

33.  I have heard further submissions from counsel on the question of costs.  The question of the costs before the master is a matter that has weighed on my mind but, after some reflection, I think it is right that I make this order, that the 1^st and 2^nd defendants pay 25 per cent of the costs of the summons dated 30 December 2011, including 25 per cent of the costs of the hearing before the master, to be taxed if not agreed.

34.  As far as the costs of this appeal are concerned, the 1^st plaintiff has succeeded on the appeal.  There is no reason to depart from the normal rule and I award the costs of the appeal to the plaintiff, to be taxed if not agreed.  I also direct that there be legal aid taxation of the plaintiffs’ own costs.