SHAHID MUHAMMAD v. THE KOWLOON MOTOR BUS CO (1933) LTD

DCPI 527/2020

[2022] HKDC 1410

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO. 527 OF 2020

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DECISION

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INTRODUCTION

1.  This is a decision on the proposed wasted costs order which I made at the end of the first day of the hearing at the trial of this action on 15 August 2022 (“the Order”).

2.  I would refer to the Reasons of Decision which I had handed down on 14 October 2022 in relation to the matter (“Reasons for Decision”).  Under §§3 and 4 of the Order, I directed the plaintiff’s solicitor in charge of the case, namely, the principal of Messrs Mohnani & Associates (“P’s Solicitors”), Mr D Mohnani (“Mr Mohnani”), to, within 28 days from the Order to show cause, by way of filing an affirmation and lodging a written submission with the court, as to why he should not be made personally liable to bear the costs of the defendant in this action, and that such costs to be paid on an indemnity basis and forthwith with certificate for counsel.  I also directed the defendant’s solicitors to respond by way of filing an affirmation and lodging a written submission on the proposed wasted costs order and to have them served on the plaintiff within 21 days.  Thereafter, within 14 days, P’s Solicitors were given the opportunity to reply by way of filing an affirmation, if so advised.

3.  Resulting from the above directions, Mr Mohnani has filed an affirmation on 9 September 2022 where he has set out the purported reasons as to why he considers that, in the circumstances of this case, he should not be held responsible to bear the wasted costs personally and that the same should be borne by the plaintiff alone instead (“P’s Affirmation”). 

4.  In reply thereof, the defendant has filed an affirmation by one of the associate solicitors in the defendant’s firm. Mr Chung Chi Kit’s affirmation was filed on 30 September 2022 (“D’s Affirmation”).

5.  Further, the defendant has, in accordance with the directions given under the Order, lodged a written submission prepared by counsel in relation to the proposed wasted costs order dated 30 September 2022 (“D’s Submission”).

6.  I note that P’s Solicitors have failed to lodge any written submissions or file any affirmation in reply to D’s Affirmation.

BACKGROUND

7.  For the background and the reasons of making the proposed wasted costs order in this case, the parties are referred to the Reasons for Decision. 

8.  In this particular decision, the main issue for the court to determine is whether Mr Mohnani has managed to show cause as to why he should not be made personally liable to bear the wasted costs resulting from the aborted trial in this case.

9.  Let me start by saying that, with respect to Mr Mohnani, none of the purported reasons set out in P’s Affirmation has remotely convinced me to alter my original view as stated in the Reasons for Decision that he was one of the players, if not the main player, which had led to the abandonment of the action by the plaintiff on the first day of the trial.

10.  In this regard, I am indebted to Ms Ann Lui and Mr Raymond Tsang, counsel for the defendant, for the very succinct written submissions prepared by them in relation to the proposed wasted costs order.  I would, where appropriate, adopt the contents of their submissions with modifications of my own in my reasons and findings below. 

DISCUSSION

A.   Relevant Principles

11.  Under Order 62, rule 8 of the Rules of the District Court, Cap 336H (“the RDC”), a court is empowered to make, whether on its own motion or on application, a wasted costs order against a legal representative, if:-

“(a) the legal representative, whether personally or through his employee or agent, has caused a party to incur wasted costs as defined in section 53(5) of the [District Court] Ordinance; and

(b) it is just in all the circumstances to order the legal representative to compensate the party for the whole or part of those costs.”

12.  Order 62 rule 8B of the RDC provides that:-

“(l) The Court shall consider whether to make a wasted costs order in 2 stages—

(a) in the first stage, the Court must be satisfied that—

(i) it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and

(ii) the wasted costs proceedings are justified notwithstanding the likely costs involved; and

(b) in the second stage (even if the Court is satisfied under subparagraph (a)), the Court shall consider, after giving the legal representative an opportunity to give reasons why the Court should not make a wasted costs order, whether it is appropriate to make the order in accordance with rule 8.”

13.  In So Kam v Guildford Ltd & Anor [2021] 2 HKLRD 319 at §§98-99, I have set out some guiding principles as to the circumstances under which it would be appropriate to award a wasted costs order, especially in the context of a personal injury (“PI”) action:

“98. From the above cases, I have elicited the following principles which I consider will apply in this case:

(1) In principle, it is not objectionable for a solicitor to pay for the disbursements, including counsel fees or medical expert’s charges, on behalf of his client in a case;

(2) It does not amount to the offence of champerty or maintenance when a solicitor does so;

(3) On the contrary, the Court considers that it is laudable and something to be praised for lawyers to take on bona fide cases on behalf of their clients;

(4) However, the burden is on the solicitor who takes on such cases to first make careful enquiry and satisfy himself that an honest case existed or that there is at least a reasonable cause of action or defence; and

(5) That he cannot bargain with his client for an interest in the subject-matter of litigation or for remuneration proportionate to the amount which may be recovered by his client in the proceedings.

99. In addition, I would like to make the following observations which I consider would apply in particular in a PI action:

(1) Such duty to make enquiry and satisfy himself that his client has a reasonable cause of action or defence must be a continuing one. It is incumbent upon the solicitor in charge to review the case from time to time, in particular at different important stages of the proceedings, like at the issue of the writ/serving of the statement of claim; close of pleadings; at the end of discovery; and after the exchange of witness statements, to ensure the cause of action pleaded is supported by objective and credible evidence and that it can still be maintained with a reasonable prospect of success;

(2) It is against both the letters and the spirit of the Civil Justice Reform to allow unmeritorious claims, no matter whether they are funded by a solicitor on behalf of his client or litigant who is acting in person, to proliferate;

(3) It is also against public policy to permit a solicitor to pursue a hopeless case on behalf of his client where he either does not believe that there is any reasonable cause of action or defence or reckless as to whether there is such reasonable cause of action or defence;

(4) To allow a solicitor or litigant to do so will often lead to the defendant or his insurer not able to recover any costs against the impecunious litigant at all as often the solicitor who funded the litigation will cease to act for his client after the trial and before the judgment is handed down, leaving the plaintiff to face the bills of the successful defendant;

(5) The defendant or his insurers often will not able to recover any costs against the impecunious plaintiff as in most cases he simply does not have the means to pay the successful party’s costs;

(6) At the end of the day, the successful party’s costs will likely be borne by the general public in the form of increased premiums for employers (in industrial accident cases) and for motorists (in traffic accident cases); and

(7) It will also lead to the wasting of the limited judicial resources when a court will have to hear a case that contains no or very little merits at all.”

14.  In my view, in determining whether a solicitor has acted unreasonably in advancing his client’s case, the following principles are also of relevance:-

(a) Whilst a solicitor is obligated and expected to act in the best interests of his client, as an officer of the court, he could not overstep this mark by undermining or in any way obstructing the administration of justice by the court or act in breach of his duties to the courts. A solicitor could not use his position to obtain an unfair advantage for his client; and

(b) The court’s jurisdiction to make a wasted costs order against a solicitor is founded on breach of the duty owed by the solicitor to the court to perform his duty as an officer of the court in promoting within his own sphere the cause of justice.  He must not do anything to mislead or deceive the court, and must not use his position to obtain an unfair advantage for his client.

See: Yau Chiu Wah v Gold Chief Investment Ltd & Anor [2003] 3 HKLRD 553, at §§30-32.  

15.  In cases where the solicitor is unable to give a full account of events because the client refused to waive privilege, the court should proceed carefully and give the solicitor the benefit of the doubt.  Having said that, the existence of privileged material does not by itself operate as an absolute bar to a wasted costs order under Order 62 rule 8.  Once the benefit of the doubt is given to the solicitor concerned, any element of unfairness is removed and should a wasted cost order still be made in the circumstances, the solicitor has no cause to complain: See Yau Chiu Wah, §§41-42.

16.  In Count Tolstoy-Miloslavsky v Lord Aldington [1996] 2 All ER 556, an order for wasted costs was made against a solicitor who acted on counsel’s advice, the solicitor appealed and also relied on legal professional privilege.  It was held by Ward J that:-

“I must make due allowances for the difficulties confronting the solicitors who cannot explain their conduct by revealing privileged information and I must give them the benefit of all doubts.  But I must not suspend my judgment absolutely.  I must still inquire whether there is a reasonable explanation for their conduct, judging what is reasonable by reference to what the reasonably well informed, competent member of the profession would have done had he been placed in the circumstances of these particular solicitors.” (see page 571c-e).

17.  Regarding how the judge below approached the issue of refusal to waive legal professional privilege, it was said that:-

“[...] [h]aving regard to the circumstances of this case [the Judge below] made undue allowance for the possibility of an exculpatory account if privilege had been waived. If, in the absence of further explanation, the circumstances clearly pointed, as in my view they did, to unreasonableness, such a conclusion could not be avoided by the solicitors asserting that they were acting properly. It is for the court, not the solicitors themselves. to judge this.”(see page 567j). [emphasis added]

18.  For reasons elaborated in D’s submission, Ms Lui submits the questions of (i) whether legal professional privilege had been properly waived by the plaintiff; or (ii) whether P’s Solicitors had acted adequately (or inadequately) in partially disclosing the advice rendered to the plaintiff in P’s Affirmation (despite the purported non-waiver by the plaintiff), are matters of relevance to the present discussions regarding the proposed wasted costs order, albeit not in the determinative sense.  In any event, whether P’s Solicitors should be allowed to hide behind the shield of legal professional privilege, given how Mr Mohnani did, in fact, divulge substantive aspects of his legal advice to the plaintiff in P’s Affirmation.  More pertinently, Ms Lui submits that the plaintiff’s case was bound to fail from the beginning on its objective merits, and regardless of the questions on legal professional privilege.  She says that the surrounding circumstances are more than sufficient for the court to grant the proposed wasted costs order against P’s Solicitors.

19.  I agree.

B.  No Reasonable Cause of Action

20.  I further agree with Ms Lui that, to begin with, the plaintiff’s case upon his own pleadings could not be made out at all:-

(a) It could be seen from the statement of claim (“SOC”) that the crux of the plaintiff’s claim was that the Accident was caused by the Driver’s abrupt braking of the Bus: SOC, §3 [A/6];

(b) On that basis, the plaintiff alleged that the Driver has failed to pay sufficient attention to (i) other road users on the road; and (ii) the road conditions, that ought reasonably to have been expected of a prudent driver: SOC§4(c)-(e) [A/7];

(c) However, the plaintiff simply failed to put forward any factual basis as to what caused the Driver to abruptly brake the Bus, much less speak of why it was unreasonable for the Driver to do so in the circumstances; and

(d) Even if the Driver did stop the Bus abruptly, short of any allegation that the Driver could have avoided doing so if he had paid sufficient and proper attention to the road conditions at the material time, the abrupt stop alone is not a sufficient basis for alleging negligence on the Driver’s part.

21.  Furthermore, the lack of criminal conviction for careless driving or other similar offences arising from this incident for care also tends to show the lack of merits of the plaintiff’s case: See So Kam at §84.

22.  In fact, Mr Mohnani himself was well aware that the lack of prosecution against the Driver was a material factor in considering whether there were any merits in the plaintiff’s claim: See P’s Affirmation, §7. At the time when the plaintiff commenced these proceedings, P’s Solicitors must already have been aware of how there were no criminal prosecution brought against the Driver: See [B/196].

23.  Furthermore, on or about 16 February 2020, P’s Solicitors were provided with the police statements relevant to the material incident from the Hong Kong Police Force (See Exhibit “DM-3” of P’s Affirmation), and the same were provided to KMB on or about 26 February 2020 (See Exhibit “CCK-1” of D’s Affirmation).  One of these police statements was made by a Mr Kwok Man Kit, a staff member of KMB, in which he mentioned that a DVD containing the relevant CCTV footages was submitted to the police.  This statement can be found in the trial bundle at [B/193].  I agree with Ms Lui that P’s Solicitors could easily have requested from the police a copy of these CCTV footages as well, once they were made aware of the existence of such footages on or about 16 February 2020, ie well before the commencement of these proceedings on 16 March 2020.

24.  As stated in the Reasons for Decision, the entire incident was clearly recorded by the Bus’s CCTV system, from multiple angles and locations within the Bus.  In particular, they showed that:-

(a) Contrary to the plaintiff’s claim that the Bus abruptly stopped at the time when he fell on the staircase: SOC, §3 [A/6], Channel 6 of the CCTV footages (the staircase) showed that the Bus was still in motion at the time the plaintiff fell. Channel 1 (the front view) also showed that the bus did not stop at all until it finally reached the bus stop;

(b) Channel 4 of the CCTV footage (the upper deck) also showed a woman who stood steadily and stably on the top of the staircase. There was also no bodily movement of the other passengers suggesting there was any abrupt stop;

(c) As such, it was clear from the above CCTV footages that there could not have been any abrupt stop as alleged by the plaintiff; and

(d) Further, contrary to the plaintiff’s claim that there were no other passengers going down the staircase in front of him: See reply, §4 [A/27], Channel 6 showed that there was a woman in front of the plaintiff, who stood steadily and stably on the staircase when the plaintiff fell.

25.  In light of the foregoing, in my judgment, P’s Solicitors ought to have had knowledge of the CCTV footages and their contents prior to the commencement of this action.  Had they bothered to watch those footages, there is no doubt in my mind that they ought to have been well aware that the plaintiff did not have any reasonable cause of action against the defendant even before the start of these proceedings, as the plaintiff’s pleaded case was clearly contradicted by objective contemporaneous evidence, namely, the relevant CCTV footages.  Given how, in light of the available evidence, the plaintiff’s pleaded case could not be made out at all, in my judgment, P’s Solicitors should not have commenced the proceedings against the defendant in the first place.

26.  In any event, after the commencement of this Action, the relevant CCTV footages were disclosed to P’s Solicitors on 28 September 2020 as item 2 of the defendant’s list of documents of the same date.  Copy of these footages were also provided to P’s Solicitors on 4 November 2020 (See Exhibit “CCK-2” of D’s Affirmation).  Therefore, in my view, even at an early stage of these proceedings, Mr Mohnani must have watched the relevant CCTV footages, leaving no doubt that his client could never have any remote chance of success in this action.

C.  Purported non-waiver of Legal Professional Privilege

27.  Despite Mr Mohnani’s claim as stated in P’s Affirmation that he was unable to obtain wavier of legal professional privilege from the plaintiff, I note with particular interest and agree with the defendant’s submission that Mr Mohnani did, in fact, disclose various parts of his advice to the plaintiff. For example[1]:-

(a) Mr Mohnani initially advised the plaintiff that the mere fact that the plaintiff had a fall inside a KMB bus would not amount to a valid claim: P’s Affirmation, §7;

(b) Mr Mohnani advised the plaintiff that “what transpired on the CCTV were not consistent with his version of events”: P’s Affirmation, §20;

(c) Mr Mohnani advised the plaintiff to enter into without prejudice negotiations with the defendant, but the plaintiff refused: P’s Affirmation, §23; and

(d) Mr Mohnani advised the plaintiff to reconsider the offer put forward during the mediation: P’s Affirmation, §29. (I agree with Ms Lui that this would prima facie be not just a breach of legal professional privilege, but the overarching principle of confidentiality paramount to the entirety of mediation processes, as well).

28.  It appears that Mr Mohnani sought to suggest in P’s Affirmation that, despite his legal advice, it was the plaintiff who insisted to proceed with the action to the stage of trial.

29.  However, even if that were the case, I entirely agree with Ms Lui’s submission that P’s Solicitors ought to have exercised their professional and independent judgement in deciding whether they could actually have followed their lay client’s instructions:

(a) A solicitor normally is entitled to proceed on the basis of his client’s instructions being correct.  The solicitor is entitled to rely and act on his client’s instructions, after allowing for imprecision due to human nature, failure of memory or lapse of time, unless those instructions are so inconsistent with incontrovertible evidence or documents: Pine Enterprises Ltd v Cyber Strategy Ltd & Anor HCA 1221/2006 (DHCJ To; 27 March 2009), §44; and

(b) As stated above, Mr Mohnani himself has admitted that he too considered that what transpired on the CCTV was not consistent with the plaintiff’s version of event.  In such a case, I find there must be no longer any reasonable evidential basis for P’s Solicitors to act on the plaintiff’s instructions as soon as Mr Mohnani learned about the contents of the CCTV.

30.  Worse still, despite the above, P’s Solicitors continued to act for the plaintiff in the unrealistic hope of reaching a settlement with the defendant.

31.  In my view, P’s Solicitors ought to have ceased acting for the plaintiff immediately upon knowing that his client’s instructions are clearly inconsistent with the incontrovertible evidence.  By failing to do so, I find that Mr Mohnani has breached his duty as an officer of the court.

32.  In light of the foregoing, there can be no doubt in my mind that Mr Mohnani has acted so unreasonably, if not improperly, in the conduct of the present action that a wasted costs order is warranted, including the defendant’s costs incidental to and arising from responding to P’s Affirmation for showing cause against the proposed wasted costs order.  I so make such an order for Mr Mohnani to do so.

E.  The Plaintiff’s financial ability to repay the defendant’s costs

33.  There is a question mark as to whether the plaintiff, himself, would be able to repay the defendant’s costs arising from these proceedings.

34.  The defendant makes the observation that there is some evidence indicating that the plaintiff may be of limited means, for example:

(a) The plaintiff’s Hang Seng Bank (account number 329-x-064xxx) passbook [B/222-225] showing that he only had $7,141.23 as of 15 November 2018 [B/225]; and his China Citic Bank International Limited (account number 018-xxx-1-133xxxx) passbook [B/237-239] showing that he only had $81.69 as of 6 November 2019 [B/239].  By his affirmation dated 14 January 2021, in response to an order for specific discovery dated 24 December 2020 [A/74] requesting for “all documents pertaining to the plaintiff’s income from September 2017 up to date, including but not limited to: ... (iii) bank passbooks and bank account statements”, the plaintiff responded by deposing to the effect that these two bank accounts were his only bank accounts (which had by the time of his deposition been closed) [A/77/§7]; and

(b) The plaintiff was allegedly on sick leave from 7 September 2019 to at least 17 December 2020. There is no evidence at all as to whether the plaintiff returned to work thereafter.  The plaintiff simply stated in his witness statement that he would "try to seek alternative employment" [A/154/§13].  Similarly, in his revised statement of damages dated 20 November 2020, it was stated that “any future loss of earnings will be dependent on what the Plaintiff can earn in the future”.  As such, it is unclear whether the plaintiff has any income at all.

35.  In P’s Affirmation, Mr Mohnani has not provided any information as to who, or how, the costs of this litigation were provided for.

36.  Normally, in any hearing before the court, one expects that all available evidence within the powers of the parties to adduce, is in fact produced.  The consequence of this is that where a party does not produce evidence he is expected to adduce, this omission can give rise to adverse inferences being drawn against him: Yau Chiu Wah, §37.

37.  In my judgment, Mr Mohnani was in a position to depose as to whether the plaintiff has paid any of the legal fees and disbursements for these proceedings, but he chose not to do so:-

(a) Mr Mohnani ought to have been aware that whether a solicitor paid for the costs of his client, as well as the plaintiff’s financial ability to bear litigation costs, would be a factor to consider in deciding whether a wasted costs order would be granted against the solicitors personally (see: So Kam, supra); and

(b) In Pang Yiu Hung Robert v Commissioner of Po1ice [2002] 4 HKC 579 at 593, Hartmann J held that the fact of monies being paid to a solicitor was not privileged.  The crucial aspect was that such payments were not covered by legal professional privilege as they were “unconnected to advice given or sought”.

38.  Therefore, by failing to disclose the plaintiff’s financial ability, and information as to who paid for the disbursements thus far, I consider that I am entitled to and would draw an adverse inference that P’s Solicitors ought to have been aware that the plaintiff would not be able to pay the defendant’s costs in this action, had the plaintiff failed in proving his case at trial.

39.  In my judgment, the plaintiff’s financial situation would clearly be a relevant factor for the court to take into account when deciding whether to make a wasted costs order against his solicitors: (See So Kam, §108).

40.  More importantly, in my view, in circumstances where the plaintiff’s case is plainly hopeless (as was obvious in this case) and the handling solicitor either does not believe that there is any reasonable cause of action, or is reckless as to whether there is such a reasonable cause of action, then it would be against public policy to permit such a case to be pursued: (See So Kam, §99(3)).

CONCLUSION

41.  By reason of the matters stated above, and regardless of the plaintiff’s financial situation, I am of the view that P’s Solicitors, in particular its principal Mr Mohnani, who is the solicitor in charge of the case, ought to have been well aware that the plaintiff’s case was a completely hopeless one to begin with.

42.  I therefore will order the proposed wasted costs order be made absolute against P’s Solicitors and in favour of the defendant, with further directions for summary assessment of costs as set out below.

43.  I would direct the defendant’s solicitors to lodge with the court a statement of costs within 21 days with copy to P’s Solicitors for the purpose of summary assessment to be made by me.  I further direct P’s Solicitors to lodge with the court a list of objection, if any, within 14 days thereafter with copy to the defendant.  The court will make the summary assessment by way of paper disposal and will provide the parties the final assessed sum for which I would order Mr Mohnani of P’s Solicitors to pay them personally and forthwith, ie within 14 days from the date of the summary assessment.

44.  Lastly, I would like to thank Ms Lui and Mr Tsang for their very helpful submissions on the proposed wasted costs order issue in this case.