TSE LAI SING V. TUNG WAH GROUP OF HOSPITALS

DCEC 1754/2016

[2021] HKDC 1095

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO. 1754 OF 2016

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DECISION

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INTRODUCTION

1.  After a 3-day trial, this court handed down a Judgment on 31 May 2021 (“the Judgment”) and ordered that:

(1)  Employees’ compensation be assessed at $152,049.04. After deducting advance payment, the total amount of compensation payable was $40,005.81;

(2)  Interest be awarded at half of the judgment rate from the date of the accident (11 March 2016) to the date of the Judgment, and at judgment rate thereafter until full payment (“the Order on Interest”);

(3)  There be a costs order nisi that the applicant shall bear the costs of the respondent (including all costs reserved, if any), with certificate for counsel, to be taxed if not agreed (“the Costs Order Nisi”).

2.  Relying on:

(1)  a “without prejudice save as to costs” letter dated 15 August 2016 issued by the respondent’s insurer to the plaintiff’s solicitors, under which the respondent offered to pay a sum of $175,000 (inclusive of periodical payments and medical expenses that the applicant had already paid) plus taxed costs;

(2)  a sanctioned payment made on 19 September 2016 in the sum of $62,956.77[1] (“the Sanctioned Payment”);

(3)  the interim payment of $50,000 made to the applicant on 9 January 2017 (“the Interim Payment”), which was ordered to be paid out of the Sanctioned Payment,

the respondent now seeks to vary the Order on Interest and the Costs Order Nisi.

3.  The orders sought by the respondent are as follows:

(1)  To vary the Order on Interest and the Costs Order Nisi to the following extent:

(a)  the applicant do pay the respondent’s costs of the action, including all costs reserved, up to and including 17 October 2016 on party and party basis, to be taxed if not agreed;

(b)  the applicant do pay the respondent’s costs of the action, including all costs reserved, from 18 October 2016 on indemnity basis with certificate for counsel, to be taxed if not agreed;

(c)  the applicant do pay the respondent’s interest on the costs and disbursements (to be taxed on indemnity basis if not agreed) from 18 October 2016 to 31 May 2021 at 6.5% per annum, and thereafter at judgment rate until full payment of the same;

(d)  the interest on the compensation of $40,005.81 after 17 October 2016 be disallowed;

(2)  An order for repayment by the applicant of $9,027.93 previously paid to her as part of the Interim Payment; and

(3)  Leave to release the remaining balance of the Sanctioned Payment together with accrued interest to the respondent through its solicitors.

PROCEDURAL MATTERS

4.  The respondent’s applications to vary the Order on Interest and the Costs Order Nisi were made by letter dated 11 June 2021, pursuant to paragraph 88 of the Judgment under which this court directed, by consent of both parties, that any application to vary costs order nisi shall be made by letter and be disposed of on papers.

5.  On 17 June 2021, this court issued the following directions (“the Directions”):

“(1) The Respondent shall lodge and serve an agreed bundle and full written submissions in support (and authorities, if any) on or before 9 July 2021.

(2) The Applicant shall lodge and serve full written submissions in opposition (and authorities, if any) on or before 23 July 2021.

(3) The Respondent shall lodge and serve full written submissions in reply (and authorities, if any) on or before 6 August 2021.

(4) If the Court considers it necessary to do so, it will fix a short hearing thereafter (in consultation of the counsel’s respective diaries) for the purpose of clarification of the submissions. If no such hearing is deemed necessary, the Court shall hand down its Decision in due course.

(5)  Costs reserved.”

6.  The respondent lodged and served its written submission in support accordingly on 9 July 2021.

7.  However, the applicant had failed to lodge any written submissions pursuant to the Directions.  By a letter dated 16 June 2021, the applicant’s solicitors informed the court that they no longer had any instruction to act for the applicant and that they had issued a summons to apply for an order of “cease to act” which would be heard in due course.  Upon my clerk’s enquiry, the applicant’s solicitors further confirmed that no written submission would be lodged in relation to the respondent’s applications herein.

8.  Despite the fact that the applicant’s solicitors are in the course of obtaining a court order for the purpose of “coming off the court’s record” as the applicant’s solicitors, as they are currently still the applicant’s solicitors on record, it is assumed that they have informed the applicant about the respondent’s applications and the Directions.  Hence, now that the time for the applicant to lodge submission has expired, she is taken to have no submission to make, and this court would consider the respondent’s applications in the absence of the applicant’s submissions.

ORDER 22 RULE 23 OF THE RULES OF THE DISTRICT COURT

9.  The respondent’s applications are made pursuant to Order 22 rule 23 of the Rules of the District Court (Cap.336H) (“RDC”) which provides that:

“(1) This rule applies where a plaintiff –

(a) fails to obtain a judgment better than the sanctioned payment; or

(b) fails to obtain a judgment that is more advantageous than a defendant’s sanctioned offer.

(2) The Court may by order disallow all or part of any interest otherwise payable under section 49 of the Ordinance on the whole or part of any sum of money awarded to the plaintiff for some or all of the period after the latest date on which the payment or offer could have been accepted without requiring the leave of the Court.

(3) The Court may order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without requiring the leave of the Court.

(4) The Court may also order that the defendant is entitled to –

(a) his costs on the indemnity basis after the latest date on which the plaintiff could have accepted the payment or offer without requiring the leave of the Court; and

(b) interest on the costs referred to in paragraph (3) or subparagraph (a) at a rate not exceeding 10% above judgment rate.

(5) Where this rule applies, the Court shall make the orders referred to in paragraphs (2), (3) and (4) unless it considers it unjust to do so.

(6) In considering whether it would be unjust to make the orders referred to in paragraphs (2), (3) and (4), the Court shall take into account all the circumstances of the case including –

(a) the terms of any sanctioned payment or sanctioned offer;

(b) the stage in the proceedings at which any sanctioned payment or sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned payment or sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the payment or offer to be made or evaluated.

(7) The power of the Court under this rule is in addition to any other power it may have to award or disallow interest.”

DISCUSSION

10.  It is undisputable that:

(1)  the Sanctioned Payment had been made and the last day on which the applicant could accept such payment without leave is 17 October 2016;

(2)  the Sanctioned Payment (considered together with the advance payment) was higher than the amount of compensation eventually awarded in the Judgment;

(3)  in other words, the applicant has failed to obtain a judgment better than the Sanctioned Payment.

11.  Order 22 rule 23(5) of the RDC provides that when the said rule 23 applies, the court shall make the orders referred to in paragraphs (2), (3) and (4) thereof unless the court considers it unjust to do so.  However, the applicant has not put forward any ground to suggest that making such orders would be unjust.  In these circumstances, in principle, I agree that the respondent’s applications on indemnity costs, enhanced interest and disallowance of interest should be allowed.

Indemnity costs

12.  I agree that the respondent should be entitled to indemnity costs from the date when the time to accept the Sanctioned Payment without leave has expired.

Enhanced interest – modified approach

13.  The respondent suggested that the modified approach instead of the full rate approach (see paragraph 22 of Yeung Ho Man v Shum Kin Leung & Another [2020] HKCFI 2781) should be adopted since expenses on disbursement had been incurred on 10 different occasions, and it would be tedious and time consuming to calculate interest on such costs one by one.  I accept this submission and will make an order accordingly.

Rate of enhanced interest

14.  The respondent submitted that an interest rate of 13% per annum would be appropriate. 

15.  In Yeung Ho Man (supra), Bharwaney J explained that he had adopted 9% as the enhanced interest rate in Shih Pik Nog v G2000 (Apparel) Ltd [2011] 4 HKLRD 121 because it was a run-of-the mill case where the only failure of the plaintiff therein was a failure to accept the successful sanctioned payment.  However, in a case like Yeung Ho Man, the court would have discretion to set the rate of interest that is greater than purely compensatory in order to mark the court’s disapproval of improper conduct.  In the Yeung Ho Man case, his Lordship adopted 18% as the enhanced interest rate.

16.  In a case (like the present one) where the court has found that the applicant has deliberately exaggerated her evidence so as to bolster her claim, the rate of enhanced interest must not be too low, otherwise the message of the court would not be strong enough. 

17.  The respondent has suggested that 5% above the judgment rate should be adopted.  I accept that this is an appropriate interest rate.

Period of enhanced interest

18.  The period of enhanced interest should start at the same time when the respondent’s costs are taxed on indemnity basis. 

Repayment of Interim Payment

19.  Order 29 rule 17 of the RDC provides that:

“Where a defendant has been ordered to make an interim payment or has in fact made an interim payment, whether voluntarily or pursuant to an order, the Court may, in giving or making a final judgment or order, or granting the plaintiff leave to discontinue his action or to withdraw the claim in respect of which the interim payment has been made, or at any other stage of the proceedings on the application of any party, make such order with respect to the interim payment as may be just, and in particular—

(a) an order for the repayment by the plaintiff of all or part of the interim payment; or

(b) […]; or

(c) […].”

20.  As aforesaid, the last day on which the applicant could accept the Sanctioned Payment without leave is 17 October 2016.  By that date, the interest accrued from the assessed net compensation of $40,005.81 was $966.26 ($40,005.81 x 4% x 221/366).  In other words, the total amount which the applicant is entitled to receive is $40,972.07 ($40,005.81 + $966.26).

21.  Since the applicant has received interim payment in the sum of $50,000, there is an overpayment of $9,027.93.

22.  I agree with the respondent that the applicant should be ordered to repay the said overpaid amount to the respondent.

ORDER

23.  I therefore order that:

(1)  The Order on Interest and the Costs Order Nisi be varied to the following extent:

(a)  the applicant do pay the respondent’s costs of the action, including all costs reserved, up to and including 17 October 2016 on party and party basis, to be taxed if not agreed;

(b)  the applicant do pay the respondent’s costs of the action, including all costs reserved, from 18 October 2016 on indemnity basis with certificate for counsel for the trial, to be taxed if not agreed;

(c)  the applicant do pay the respondent’s interest on the costs and disbursements (to be taxed on indemnity basis if not agreed) from 18 October 2016 to 31 May 2021 at 6.5% per annum, and thereafter at judgment rate until full payment of the same;

(d)  the interest on the compensation of $40,005.81 after 17 October 2016 be disallowed;

(2)  The applicant do repay the respondent the sum of $9,027.93 previously paid to her as Interim Payment; and

(3)  Leave to release the remaining balance of the Sanctioned Payment ($12,956.17) together with accrued interest if any, to the respondent through Messrs. Deacons.

COSTS

24.  I make a costs order nisi that the applicant shall bear the costs of the respondent (including any costs reserved) of the applications herein, with certificate for counsel, to be taxed on indemnity basis if not agreed.  The above costs order nisi shall become absolute in the absence of application to vary within 14 days hereof.