曾氏工程公司 v. 林慧嫻

DCCJ 3596/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3596 OF 2011

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DECISION

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1.  This is the plaintiff’s application to vary the costs order nisi made on 9 July 2015.  The plaintiff has withdrawn paragraph 1 of its summons leaving paragraph 2, namely the application for indemnity costs.

2.  The facts of the case are set out in the judgment handed down on 9 July 2015 which I shall not repeat.

3.  The plaintiff produced a letter dated 23 May 2014 and claims the offer made in the letter to be a sanctioned offer (“the Offer”). The Offer was not accepted by the defendant.

4.  The plaintiff argues that since the sum awarded in the judgment against the defendant is great than the sum set out in the Offer, it should be entitled to indemnity costs for the period commencing 28 days after the Offer was made.  Alternatively, the plaintiff asks this court to exercise its discretion to award indemnity costs against the defendant.  

5.  The form of the sanctioned offer must comply with Order 22 rule 5 Rules of District Court (Cap 336H) (“RDC”).  In particular, Order 22 rule 5(7) RDC states as follows:-

“A sanctioned offer made not less than 28 days before the commencement of the trial must provide that after the expiry of 28 days from the date the sanctioned offer is made, the offeree may only accept it if-

(a) the parties agree on the liability for costs; or

(b) the Court grants leave to accept it.”

6.  A sanctioned offer must be in prescribed form and must meet the requirements set out in Order 22 rule 5 RDC. An offer that fails to comply with the requirements set out in Order 22 rule 5 RDC will not qualify as a sanctioned offer and the plaintiff will be unable to invoke the provisions set out in Order 22 rule 24 RDC.

7.  The terms of the Offer are set out as follows:

“We are instructed to serve you hereby our client’s (the Plaintiff’s) Sanctioned Offer to your client (the Defendant) pursuant to O.22 of RDC, the terms of which are as follows:-

1. Our client will accept from your client a sum of $100,000 (inclusive of interest) in full and final settlement of the whole of his claims against your client.

2. Your client’s counterclaim in this action be dismissed with no order as to costs.

All our clients’ rights, including his rights on the issue of costs under O.22 of RDC are hereby expressly reserved.”

8.  It is evident the Offer does not meet the requirements of Order 22 rule 5(7) RDC as no provision is made for acceptance after 28 days.  Since the Offer fails to set out the required circumstances enabling acceptance after 28 days as per Order 22 rule 5(7) RDC, it is not a sanctioned offer for the purposes of Order 22 RDC: see paragraph 11, Kwok Chin Wing v 21 Holdings Ltd (previously known as inter alia Rockapetta Holdings Ltd) & anor [2011] 3 HKC 542.

9.  Hence the plaintiff is not entitled to seek indemnity costs pursuant to Order 22 rule 24 RDC.

10.  In respect of whether this court should order indemnity costs in view of the Offer in exercising discretion on costs, I have considered Counsel’s submissions and the circumstances of the case.

11.  Order 62 rule 5 RDC clearly provides the court may consider three offers when considering costs: an offer made under Order 33 rule 4A(2) RDC, a Calderbank offer, and any admissible offer. 

12.  It is clear that from the terms of the Offer this offer to settle did not include settlement on costs. The last paragraph purports to reserve the plaintiff’s rights “including his rights on the issue of costs under O 22 of RDC”.  However there has been no further elaboration as to what rights the plaintiff purports to reserve and whether the Offer is to be regarded as a Calderbank offer such that only the costs issue is outstanding. There has not been any correspondence or evidence placed before me to show whether the plaintiff did make clear to the defendant what other rights it sought to reserve. 

13.  Although it is not disputed the plaintiff has now obtained an award of a sum higher than its offer, I am of the view the defendant cannot be faulted for not accepting the Offer in the terms as proposed by the plaintiff.

14.  In such circumstances, I decline to exercise my discretion to award indemnity costs against the defendant.

15.  I therefore order that the costs order nisi made on 9 July 2015 be made absolute.  I further order the plaintiff to pay the defendant’s costs of the plaintiff’s application, summarily assessed at $2,600 to be paid forthwith.