LAW CHI CHING v. APPLE DAILY LTD AND OTHERS

HCA 2155/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2155 OF 2009

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DECISION ON INTEREST
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Introduction

1.  In a judgment handed down on 21 August 2015 (“the August judgment”), monetary judgment was entered in the plaintiff’s favour.  At para 70 of the August judgment, it was directed:

“The parties are to attempt to agree on the periods and rates for interest on the above, and, failing agreement, to lodge with court and exchange written submissions thereon not more than 21 days from today.”

2.  Despite subsequent correspondence, the parties have not been able to reach agreement; hence this decision on interest.

3.  The plaintiff seeks the following rate and period of interest:

(a) as regards general damages:

(1) 8% by way of “enhanced interest” pursuant to RHC Ord 22 r 24 from 18 July 2008 (letter before action);

(2) alternatively, 8% by way of judgment rate pursuant to s 48, High Court Ordinance (Cap 4) from 18 July 2008;

(b) as regards special damages, the same rate and period of interest.

4.  The defence, on the other hand, argues that only post-judgment interest should be payable for general damages (at judgment rate).  In relation to special damages, pre-judgment interest should run at 2% from the introduction of such claims by way of an amended statement of claim (26 April 2013); alternatively, at 2% from when the loss was incurred.

5.  Ord 22 r 24(2) stipulates:

“The Court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer … ”.

6.  The court’s power is engaged if, as against a plaintiff’s sanctioned offer:

(1) the defendant is held liable for more than what was proposed earlier; or

(2) the judgment against the defendant is more advantageous to the plaintiff than that proposed.

7.  The formalities of a sanctioned offer have been provided for by Ord 22 r 5.  In relation to interest, Ord 22 r 26 provides in essence that interest is treated as included in the sanctioned offer if the offer does not exclude interest.

8.  The two offers relied on by the plaintiff were in these terms:

“… the following sanctioned offer (‘the Sanctioned Offer’) in full and final settlement of [the plaintiff’s] whole claim in the Action … ”.

The offers were for the payment of lump sums: the offer dated 26 November 2014 sought $1,050,000 whereas the one dated 11 May 2015 sought $1,005,000.

9.  The total judgment sum was $741,240 (“the judgment sum”).  In gist, the plaintiff’s argument that she has done better than the two sanctioned offers is premised on her being awarded interest from 1 July 2008 onwards at 8% per annum or above (para 51 and 52, and Annex E and F, plaintiff’s skeleton submissions).

10.  The question of whether pre-judgment interest should be payable, and if so, since when and at what rate, therefore becomes important for present purpose.

General damages

11.  Heavy reliance has been placed by the defence on the English court of appeal’s decision in McPhilemy v Times Newspapers Ltd (No 2) [2002] 1 WLR 934.  The relevant passages in that decision are:

“The judge was satisfied that it would be unjust to make an order [for ‘enhanced interest’] on the general damages awarded by the jury. He explained why he took that view …

‘It is traditionally the case that the jury’s award in libel takes account of everything down to the moment of their verdict, including any aggravation caused by the defendant’s conduct of the trial. Accordingly, it has never been the case that damages for libel carry interest … Special damages might well be treated differently in this respect, but that does not arise today’”

(emphasis supplied) (p 937).

The court of appeal in effect echoed a similar view when it said:

“… the anxiety, inconvenience and distress of defamation proceedings have already been taken into account by the jury in reaching their award. To order the payment of interest on the amount of the award, in respect of any period prior to the date of the award, would be to risk introducing an element of double compensation. It would be to risk crossing the boundary which separates compensation from punishment” (emphasis supplied) (p 944).

12.  Naturally the plaintiff contends that the McPhilemy decision is distinguishable.  She argues that the award in this action was not made with the approach mentioned in the McPhilemy decision in mind.  The contention is unmeritorious.  For example, para 73 and 74 of the August judgment have taken into account the defendants’ conduct up to (and including) the time of trial.

13.  For the above reason I agree with the defence and disagree with the plaintiff.  No pre-judgment interest should thus be awarded.  There are two further matters which should also be mentioned even if such interest should be awarded.

14.  One, I also agree with the defence as regards the period of interest.  The plaintiff’s claim based on her psychiatric injury was only introduced on 26 April 2013 (by way of the amended statement of claim); the joint psychiatric expert report was dated 8 October 2013.

15.  It can be discerned from para 47 to 57 (especially para 47 and 49 to 51), the August judgment that the amount of general damages awarded has a lot to do with the plaintiff’s psychiatric injury.

16.  By reason of para 14 and 15 above, any pre-judgment interest should at most run from 26 April 2013.

17.  Two, when considering whether the court’s power is engaged (para 6 above), the interest rate to be adopted should be that prevalent for the kind of damages in question.  In relation to the plaintiff’s psychiatric injury, the interest rates usually awarded in personal injuries litigations ought to be the normal “comparables”.  These are far less than the 8% interest rate contended for by the plaintiff (William Allan v Messrs Ng & Co and Another CACV 13/2011 (6 March 2012), para 91).

18.  By reason of the above matters, the sanctioned offers have not “beaten” the actual monetary award.

Special damages

19.  In personal injuries litigations, interests payable for special damages have usually been fixed at half judgment rate, and run from the date of loss: the William Allan decision, para 91.

20.  Further, the interest rate in this action should be reduced to take account of the plaintiff’s delay in prosecuting this action.  The delay here was about 4 years:

(a) the case management summons was only taken out (April 2013) about 4 years after the issuance of writ (October 2009);

(b) the statement of claim was amended (April 2013) only about 4 years after October 2009 (see sub-para (a) above).

21.  For the above reasons, I agree with the defence pre-judgment interest for special damages (para 69, the August judgment) should run at 2% from the date of the amended statement of claim (26 April 2013).

22.  Post-judgment interest should run until payment at judgment rate: s 49(1), Cap 4.

Costs order nisi

23.  There is no apparent reason to depart from the usual rule that costs should follow the event.  The defence turns out to be the successful party regarding the dispute on interest.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this application should be paid by the plaintiff to the defendants to be taxed if not agreed.