XCHRX CHOI YAT YING v. UNITED AIR LINES, INC

HCPI 721/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES NO. 721 OF 1999

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J U D G M E N T

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1. This is an appeal by the defendant from the decision of the master whereby the master granted to the plaintiff the costs of the action pursuant to Order 62, rule 10. The contention of the defendant in the court below and before me is that the master was wrong and that the costs of the action should not have been awarded pursuant to Order 62, rule 10 because of the nature of the payment-in by the defendant.

2. This is an action where the plaintiff sues the defendant for breach of contract and tort in relation to a flight operated by the defendant, United Air Lines, where she suffered some personal injuries. The defendant made a payment into court. The payment into court stated the sum paid in and stated that it is in satisfaction of all causes of action inclusive of interest and costs. It is agreed on all sides that cost is not a cause of action and that it should not have been a subject matter of a payment-in, unlike interest which is specially dealt with under Order 22, rule 8. There is, therefore, no dispute that the payment-in was irregular in that it included, in the notice of the payment-in, a reference that the payment-in was inclusive of costs.

3. What the plaintiff's solicitors did, therefore, was to write to the defendant, by letter of 28 January, pointing out that the rule did not permit the defendant to include costs in the payment-in, asking it to rectify the error and say that if within three days they have not heard from the defendant, then they would regard the payment-in of that sum as being exclusive of costs and that the plaintiff would act accordingly.

4. Now at that stage, what the defendant could do was either to say "No, we still regard the payment-in as valid even though it included costs and we would insist upon it", or they could say "Yes, we agree it is totally invalid, please disregard this payment-in", or it can apply to the court to have the payment-in withdrawn because it included an element of costs and it may want to make a different payment-in to be exclusive of costs and to comply with Order 22, rule 1. It did none of these things. So four days later, the plaintiff pursuant to what her solicitors have written on 28 January, accepted the payment-in. As far as she was concerned, she regarded the acceptance as being exclusive of costs and that pursuant to Order 62, rule 10, she would be entitling to have, as a matter of right, the costs of the action up to the date of payment-in. The dispute between the parties is as to whether, in those circumstances, the plaintiff is entitled as of right to the exercise of the payment of her costs pursuant to Order 62, rule 10.

5. The five steps set out by Mr Fung in his submission are :

1. that the payment-in was irregular;

2. that by virtue of the letter of 28 January and the non action of the defendant after 3 days, that irregularity was rectified;

3. what effect the rectification would have in relation to the payment-in;

4. whether the acceptance of the payment-in was valid under Order 22, rule 3; and

5. whether because of the acceptance, therefore Order 62, rule 10 applies and the plaintiff is entitled to costs automatically.

I think at the end of the hearing, it is clear that only step 2 is in serious dispute, i.e. whether by virtue of the letter of 28 January, the irregularity of the payment-in was rectified.

6. As I understand the case put by Mr Fung, he says that although there was irregularity i.e. the payment-in included costs, by the terms of the letter of 28 January, they said to the defendant : "We will regard the irregularity as being rectified by the deletion of the word 'costs' unless we hear from you within three days". The defendant has not come back within three days and therefore the irregularity was rectified by its silence.

7. Mr Chung does not agree and says silence cannot confer any right on the parties. I disagree. I think this is a very unusual and special situation. This is a case which calls for the defendant to act because otherwise it is leading the plaintiff to believe that, pursuant to the terms of the letter of 28 January, there was a valid payment-in and that the valid payment-in was on terms of the amount exclusive of costs. The parties, that is the plaintiff as well as the defendant, would then act on the basis that there has been a valid payment-in of that amount exclusive of costs. Whether the plaintiff accepts the payment-in or not, the parties would then act on the basis that there was a valid payment-in which would have an effect on the course of action when the action continues if there is no acceptance, and would have another effect if there is acceptance. So it is extremely important that silence of the defendant in those circumstances is a representation to the plaintiff that the plaintiff can regard the payment-in as a valid payment-in exclusive of costs.

8. In my view, therefore, the irregularity of the payment-in was rectified and that therefore it is capable of being accepted - in fact it was accepted. Mr Fung puts the case on the basis of acquiescence. I think he is entitled to do so : see De Bussche v. Alt (1878) 8 ChD 286, at 314 in terms of acquiescence in the right being infringed. It can also be put in a different way, perhaps, in one or another form of estoppel. But in whatever way it is put, I think the justice of the case requires a view of the steps taken leading to the conclusion that there was a valid payment-in which was capable of being accepted. After all, it would have an extremely important effect - whether it was valid or not valid. Assuming for the moment that there was no acceptance of the payment-in, but the parties, by reasons of what had happened, both regard the payment-in as valid. The plaintiff obtains a judgment in the sum of say $5,000 short, inclusive of interest, of the amount paid in. I would have thought that any counsel would be able to stand up before the court and say that the payment-in had beaten the final judgment and therefore the costs consequence should be that costs after the payment-in should go to the defendant, that is on the basis on a valid payment-in. I think the defendant cannot have it both ways. If it did not regard the payment-in as valid and if it did not regard the payment-in after the letter of 28 January as exclusive of costs, then it must say so and act accordingly. It did not. It allowed that plaintiff to believe the payment-in was valid and exclusive of costs according to the letter of 28 January. The defendant cannot now allege that payment-in was invalid and not capable of being accepted by the plaintiff.

9. In these very special circumstances, I accept the submission of Mr Fung for the plaintiff and I find that there came into operation automatically the provisions of Order 62, rule 10. The plaintiff therefore succeeds on the application and the appeal should be dismissed with costs to be taxed it not agreed.