MAXBASE INVESTMENTS LTD v. CHAN CHUI PING AND ANOTHER

DCCJ 808/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 808 OF 2010

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BETWEEN

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D E C I S I O N

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1.  I shall now deliver my decision on the Plaintiff’s application. On 28 April 2011, this Court handed down judgment in favour of the Plaintiff, whereby the 1st and 2nd Defendants were ordered to pay to the Plaintiff the respective sums of HK$200,000 and HK$100,000, together with interest at the judgment rate from the date of writ until full payment.

2.  By Summons dated 4 May 2011, the Plaintiff applies under Order 22, rule 24 of the Rules of the District Court for the Defendants’ payment of enhanced interest on the judgment sums at a rate not exceeding 10% above the judgment rate and costs of the action and counterclaim on an indemnity basis as from 28 August 2010, together with enhanced interest on such costs at a rate not exceeding 10% above judgment rate.

3.  The basis of the Plaintiff’s application is that on 30 July 2010, the Plaintiff made a sanctioned offer to the Defendants whereby the Plaintiff offered to accept a sum of HK$100,000 in settlement of its claim and the Defendants’ counterclaim, which sum was expressed to be inclusive of interest.  The Defendants could have accepted the sanctioned offer without leave of the court on or before 27 August 2010.

4.  The Defendants accept that the Plaintiff has done better at trial than it proposed in the sanctioned offer.  In the circumstances, the Defendants also accept that the Court should make the orders referred to in Order 22, rule 24(2) and (3) unless the Court considers it unjust to do so.

5.  In arguing that it would be unjust to make the orders in question, the Defendants put forward 3 points:

(1)   The Defendants had a reasonable belief in their own prospect of success.  It cannot be suggested that the Defendants’ case was bound to fail.

(2)   The Defendants had made “without prejudice save as to costs” offers to the Plaintiff of respectively HK$320,000 and HK$350,000 on respectively 29 March 2011 and 30 March 2011. 

(3)   The Defendants’ conduct in this action has been reasonable.  The Defendants had acted reasonably in withdrawing one of their defences as a result of the Court of Appeal’s decision in Westlands Garden (IO) v Oey Chiou Ling [2011] 2 HKLRD 421, handed down on 21 February 2011.

6.  As to the first point, any defendant is, of course, entitled to contest the plaintiff’s claim at trial.  However, a defendant has also to accept that in so doing, he has to bear the inherent risk of the plaintiff being able to successfully prove his case at trial, with the consequent risk of having to pay the costs of the action and, in the event of there being a sanctioned offer made by the plaintiff pursuant to Order 22, the risks of having to pay the enhanced interest, indemnity costs and interest on costs which are the consequences specified in Order 22, rule 24.   The same comments also apply to the third point raised by the Defendants.  In taking the matter to trial, the Defendants bear the risk that there may be a change in the law against their position.

7.  As to the second point, the court is enjoined by Order 62, rule 5 (1)(d) not to take a “without prejudice save as to costs” written offer into account in exercising its discretion as to costs if the party making it could have protected his position as to costs by means of a sanctioned payment.  A fortiori where the offer is made orally.

8.  In all, after considering all the circumstances of the case, I can see nothing which makes it unjust to grant the orders for enhanced interest, indemnity costs and interest on costs.

9.  As to the enhanced rate of interest on the judgment sums, both parties agree that it should be 2% above the judgment rate.

10.  As I have found nothing to make it unjust to grant the orders under Order 22, rule 24(2) and (3), I will order indemnity costs as from 28 August 2010. 

11.  As to the payment of interest on costs, I will adopt the simplified approach used by Lam J in Golden Eagle International (Group) Limited v GR Investment Holdings Limited[2010] 3 HKLRD 273, by ordering interest on these costs at half the rate I order for enhanced interest on the judgment sums, for the period from 28 August 2010 to 28 April 2011. 

12.  Accordingly, I make an order that my judgment handed down on 28 April 2011 be varied to the following extent:

(1)   The 1st and 2nd Defendants do pay the Plaintiff interest on the judgment sums of HK$200,000 and HK$100,000:

(a)   at the judgment rate from 6 March 2010 to 27 August 2010; and

(b)   at an enhanced rate of 10% per annum from 28 August 2010 until full payment.

(2)   The Plaintiff shall have the costs of the main action and of the counterclaim against the 1st and 2nd Defendants, including any costs reserved (if any):

(a)   the Plaintiff’s costs incurred prior to 28 August 2010 shall be taxed on the party and party basis, if not agreed; and

(b)   the Plaintiff’s costs incurred since 28 August 2010 shall be taxed on the indemnity basis, if not agreed, with certificate for counsel.

(3)   The Plaintiff is entitled to:

(a)   interest on those costs referred to in (2)(a) above at the judgment rate from 28 April 2011 until full payment; and

(b)   interest on those costs referred to in (2)(b) above at the rate of 5% per annum from 28 August 2010 until 28 April 2011, and thereafter at the judgment rate until full payment.

(Discussion re costs)

13.  After hearing the parties, I order that the Defendants do pay to the Plaintiff the costs of this application to be taxed if not agreed on an indemnity basis.