XU XINHONG v. CHEUNG CHU LAU

HCPI 554/2015

[2019] HKCFI 1691

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO 554 OF 2015

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DECISION

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1.  This is an application by the plaintiff for enhancement of interest and costs to be awarded on indemnity basis after the defendant failed to beat her sanctioned offer. 

2.  Briefly, parties appeared before me for 4 days for an assessment of damages.  On 13 February 2018, I handed down my decision on assessment.  I awarded to the plaintiff the total sum of $2,499,307.  

	$
PSLA	550,000
Pre-trial loss of earnings	664,552
Post-trial loss of earnings	1,161,155
Loss of earning capacity	93,600
Special damages	30,000
	2,499,307

3.  There was also interest of 2% per annum on PSLA from the date of writ to the date of assessment.  Regarding pre-trial loss of earnings and special damages, interest was to be calculated at half judgment rate per annum from the date of accident to the date of assessment. 

4.  I further made a costs order nisi that the defendant should pay the plaintiff costs of the assessment, including all costs reserved and certificate for counsel regarding the 4 days’ hearing before me, to be taxed if not agreed.  

5.  Ten days later, on 23 February 2018, the plaintiff issued the present summons.  Solicitors acting for the plaintiff prepared the supporting affirmation.  He said, inter alia, that the plaintiff made a second sanction offer of 2 million (inclusive of interest) on 27 July 2016.  The defendant did not accept it within 28 days, i.e. on or before 24 August 2016.  The plaintiff obtained a better result from my assessment and as such, it triggered the consequences under O.22 r.24 (2) and r.4 (3) (a) and (b) RHC.  Both enhanced interest and indemnity costs should be awarded to the plaintiff. 

6.  On 13 March 2018, the defendant filed a notice of appeal against my assessment.  

7.  Parties then agreed that the present summons be adjourned sine die with liberty to restore pending the outcome of the appeal.  

8.  The appeal was later dismissed[1] by consent on 7 May 2019 with costs.  The plaintiff further applied to restore the present summons. 

9.  Parties appeared before me on 17 June 2019. Although it was a 30 minutes’ hearing, the defendant had not prepared any affidavit in opposition, and there was only one skeleton prepared by Mr Simon Wong, counsel for the plaintiff, parties agreed that they were ready for substantive argument and no further directions or adjournment was needed.  

10.  Mr Wong stated in paragraph 2 of his skeleton that the plaintiff was asking for 4 matters.  

“2. In this hearing, P will ask for the following orders…

(1) The Defendant shall pay to the Plaintiff interest on the agreed damages in the sum of $2,069,307 at:

(a) 6% above judgement rate for the period from 24 August 2016 to 13 February 2019; and

(b) 10% above judgment rate for the period from 14 February 2018 to 9 March 2018.

(2) The Defendant shall pay the Plaintiff’s costs (with Certificate for Counsel) on party-and-party basis up to 24 August 2016, and thereafter on indemnity basis, to be taxed if not agreed.

(3) The Defendant shall pay interest on the Plaintiff’s costs at 2% above the judgment rate for the period from 24 August 2016 to 13 February 2018, and at judgment rate from 14 February 2018 until full payment.

(4) Costs of and incidental to this application be paid by the Defendant forthwith on indemnity basis and to be summarily assessed.”  

11.  Mr Leung, solicitors for the defendant, told me that his position was stated in his letter of 15 June 2019. 

“We refer to your Skeleton Submissions…

We have no objections to the reliefs as sought under paragraphs 2 (2) and (3) thereof.

With respect to the enhanced interest rate on the settlement sum of HK$2,069,307.00, we offer to pay the sum of HK$36,756.91 being 2 extra percent on the award of PSLA, the pre-trial loss of earnings and special damages from 24^th August 2016 to 13^th February 2018 [HK$550,000.00 + HK$664,552.00 + HK$30,000.00] x 2% x 539/365].

On costs, while we agree to pay on indemnity basis, we doubt the issue in question warrants appearance by Counsel.

…”

12.  Hence, parties left 2 matters to be decided by the court, the question of enhanced interest and counsel certificate for the hearing before me. 

13.  Mr Wong explained the rationale of awarding enhanced interest under O.22 r.24 RHC.  It targeted at encouraging settlement and discouraging unreasonable refusal to accept reasonable offers made by plaintiff.  Such provision was however not compensatory (per Au-Yeung J. in Chow How Yeen Margaret & Others v. Wex Pharmaceuticals Inc & Anor (unreported, HCA 537/2013, dated 5 September 2017).  He submitted that there was no reason to reduce enhanced interest herein and the defendant’s unreasonable conduct (not accepting plaintiff’s offer earlier and exposing her to prolonged and intense legal proceedings when she suffered both neck and psychiatric injury) should be condemned. 

14.  Although parties agreed to reduce the judgment sum to $2,069,307, there was no breakdown of such sum.  It was uncertain whether it was PSLA, pre-trial loss or post-trial loss having been reduced, the plaintiff therefore agreed to give such benefit to the defendant and agreed only to seek 6% above the judgment rate (i.e. deduction of 4 %) on the whole of the damages prior to judgment.  As to the interest after judgment, the plaintiff would insist on 10% above judgment until the date of payment. 

15.  On the other hand, Mr Leung’s offer premised that only PSLA, pre-trial loss of earnings and special damages (but not post-trial loss of earnings and loss of earning capacity) carried interests, he therefore suggested that 2 extra percent would be levied on these assessed figures by me (without taking into account of the lesser total sum accepted by the plaintiff). 

16.  Upon thought, I prefer the proposal made by Mr Wong.

17.  While interest remains a matter within the discretion of the court, O.22 r.24 (4) RHC states that the court shall grant enhanced interest unless he considers it unjust to do so.  

18.  In considering whether it would be unjust to grant enhanced interest, O. 22 r. 24 (5) RHC requires the court to take into account all the circumstances of the case including (a) terms of the offer, (b) when it was made, (c) information available to parties when it was made and (d) conduct of parties in giving or refusing information to consider the offer.  

19.  With the above in mind, there is no reason not to grant enhanced interest to the plaintiff because it is not unjust to do so.  The plaintiff is a victim in a traffic accident in June 2012.  She commenced the present proceedings some 3 years later in May 2015.  It took only about 1 week for the defendant to concede liability.  The plaintiff made 2 sanctioned offers in April and July 2016 for the respective sums of 2.9 million and 2 million.  The assessment took 4 days before me in 2017 with plaintiff and her husband attending it as witness.  

20.  I agree that the life of the plaintiff could have been much improved had there been an early settlement.  It is also true that defendant’s refusal to accept the subject sanctioned offer added pain and detriment to the plaintiff’s existing sufferings.  There is no evidence filed by the defendant to argue otherwise. Mr Leung did not mention that any of the factors under O.22 r.24 (5) RHC would assist his client.   

21.  Hence, in principle, enhanced interest of 10% above the interests having awarded by me should be given to the plaintiff after the latest date on which the defendant could have accepted the subject sanctioned offer.  

22.  However, when we come to calculations, because of the settlement of parties which has made the exact one impossible.  Hence, both parties indeed tried to put forward a broad brush approach for the court’s consideration.  The one proposed by Mr Wong is more appropriate to reflect that 10% enhanced interest is to be awarded to the plaintiff as a matter of principle.  

(a)   Parties agreed to settle at $2,069,307 (inclusive of interest) when I had awarded $2,499,307 (plus interest) to the plaintiff.  Hence, they settled to settle at about 80% of the court’s award.  

(b)   From my assessment of $2,499,307, I allowed interests to PSLA, pre-trial loss of earnings and special damages.  They represent about half of my award.  As to the remaining half, post-trial loss of earnings and loss of earning capacity, they only bear interest from the date of assessment until payment. 

23.  I find the assistance of Mr Wong useful to me and will therefore grant to the plaintiff a certificate for counsel for hearing before me, albeit a short one.  Without him, the call-over hearing might have to be adjourned to another day, incurring more time and effort of everyone.  

24.  I also find gross sum assessment under O.62 r.9A RHC appropriate in the circumstances.  Here is the assessment.  

Costs of the solicitor ($5,800 x 3)	17,400
Counsel fee ($4,000 x 6)	24,000
	41,400

25.  To conclude, I will make the following orders. 

(1)   The defendant shall pay to the plaintiff interest on the agreed damages in the sum of $2,069,307 at: 

(a)    6% above judgement rate for the period from 24 August 2016 to 13 February 2018; and

(b)   10% above judgment rate for the period from 14 February 2018 to 9 March 2018. 

(2)   The defendant shall pay the plaintiff’s costs (with certificate for counsel) on party-and-party basis up to 24 August 2016, and thereafter on indemnity basis, to be taxed if not agreed.  

(3)   The defendant shall pay interest on the plaintiff’s costs at 2% above the judgment rate for the period from 24 August 2016 to 13 February 2018, and at judgment rate from 14 February 2018 until full payment.

(4)   Costs of and incidental to this application be paid forthwith by the defendant to the plaintiff on indemnity basis and summarily assessed at $41,400.