LAI SIN YAN ELSIE v. TATA COMMUNICATIONS (HONG KONG) LTD

HCPI 1092/2015

[2020] HKCFI 2066

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 1092 OF 2015

________________________

________________________

________________________

D E C I S I O N

________________________

1.  This is an action for damages for personal injuries. On 15 November 2019,  I dismissed the plaintiff’s claims and I made a costs order nisi that the plaintiff pays the costs of the action to the defendant, to be taxed, if not agreed, and that the plaintiff’s own costs be taxed pursuant to the Legal Aid Regulations[1]. The defendant took out a summons on 29 November 2019 to vary my costs order nisi and for an order that the plaintiff pays the defendant’s costs of the action, including all costs reserved, on an indemnity basis with certificate for two counsel, to be taxed if not agreed. The parties are agreed that I deal with this matter by way of paper disposal.

2.  The plaintiff claimed that she was injured in a teambuilding event held in Singapore on 18 October 2012, when she was playing a game called “Mini-Legs” with her teammates[2]. She returned to Hong Kong on 19 October 2012 but never returned to work[3].  After receiving advance payments in excess of HK$1,000,000[4], the plaintiff claimed a further sum of HK$8,769,200, plus interest, in her Revised Statement of Damages.

Costs on Indemnity Basis - the legal principles

3.  These are not in dispute.

4.  O.62 r.5 of the Rules of the High Court (Cap. 4A) provides that:

“(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account—

...

(e) the conduct of all the parties;

...

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)  conduct before, as well as during, the proceedings.”

5.  It was held by the Court of Appeal in Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327 that a taxation of the successful party’s costs on an indemnity basis could properly be ordered where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner and that any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for the taxation of the successful party’s costs on the indemnity basis. However, the circumstances in which an indemnity award might properly be made were not restricted. The discretion was not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”.

6.  Dishonest conduct is frowned on by the courts. In Summers v Fairclough Homes Ltd [2012] 1 WLR 2004, Lord Clarke, handing down the judgment of the Supreme Court, stated:

“52. A party who fraudulently or dishonestly invents or exaggerates a claim will have considerable difficulties in persuading the trial judge that any of his evidence should be accepted. This may affect either liability or quantum. …

53. As to costs, in the ordinary way one would expect the judge to penalize the dishonest and fraudulent claimant in costs. It is entirely appropriate in a case of this kind to order the claimant to pay the costs of any part of the process which have been caused by his fraud or dishonesty and moreover to do so by making orders for costs on an indemnity basis. Such cost orders may often be in substantial sums perhaps leaving the claimant out of pocket. It seems to the court that the prospect of such orders is likely to be a real deterrent.”

7.  False claims undermine the proper administration of justice.  In South Wales Fires and Rescue Service v Smith [2011] EWHC 1749 (Admin) Moses LJ explained:

“2. For many years the courts have sought to underline how serious false and lying claims are to the administration of justice. False claims undermine a system whereby those who are injured as a result of the fault of their employer or a defendant can receive just compensation.

3. They undermine that system in a number of serious ways. They impose upon those liable for such claims the burden of analysis, the burden of searching out those claims which are justified and those claims which are unjustified. They impose a burden upon honest claimants and honest claims, when in response to those claims, understandably those who are liable are required to discern those which are deserving and those which are not.

4. Quite apart from that effect on those involved in such litigation is the effect upon the court. Our system of adversarial justice depends upon openness, upon transparency and above all upon honesty. The system is seriously damaged by lying claims. It is in those circumstances that the courts have on numerous occasions sought to emphasise how serious it is for someone to make a false claim, either in relation to liability or in relation to claims for compensation as a result of liability.

5. Those who make such false claims if caught should expect to go to prison. There is no other way to underline the gravity of the conduct. There is no other way to deter those who may be tempted to make such claims, and there is no other way to improve the administration of justice.

6. The public and advisors must be aware that, however easy it is to make false claims, either in relation to liability or in relation to compensation, if found out the consequences for those tempted to do so will be disastrous. They are almost inevitably in the future going to lead to sentences of imprisonment, which will have the knock-on effect that the lives of those tempted to behave in that way, of both themselves and their families, are likely to be ruined.

7. But the prevalence of such temptation and those who succumb to that temptation is such that nothing else but such severe condemnation is likely to suffice.”

8.  Poon J (as he then was) stated in in Huge Dragon Corp Ltd v Lung Mun Oasis (IO) [2014] 3 HKLRD 286 §13 that:

“What constitute appropriate circumstances to award indemnity costs must be fact-sensitive. As demonstrated by numerous authorities and now enshrined in O.62 r.5(1)(e), Rules of the High Court, the conduct of the party against whom indemnity costs are sought is cogently relevant. Thus, where the proceedings in question should never have been brought or defended but the party nevertheless unreasonably and unjustifiably persisted, he may well be visited with indemnity costs….”

9.  In Li Ming Tak v Hong Kong Airport Services Limited HCPI 860/2009, 19 November 2014, Zervos J (as he then was stated):

“122. …Exaggerating a personal injury claim is a serious matter. It is in the public interest that genuine personal injury claimants are given just and reasonable compensation for the injuries suffered as a result of someone else’s negligence. A fraudulent or an exaggerated personal injury claim will not be tolerated and any attempt to deceive the court by falsely stating or overstating the suffering caused can have serious deleterious consequences to the claim and the claimant. A claimant is obliged to make a true and honest claim and where someone is found to have acted dishonestly or knowingly made a false statement or claim, the court may not make an award to the plaintiff; or if an award is made, refuse costs and/or reduce interest to the plaintiff; or require the plaintiff to show cause why he or she should not be dealt with for contempt of court. See Summers v Fairclough Homes Ltd [2012] 1 WLR 2004.”

10.  Deputy Judge Marlene Ng, as she then was, gave a further exposition of how this discretion is to be exercised in Heung Wing Yan v Hangway Housing Management Limited & Ors [HCPI 347/2012, 14 February 2017] as follows:

“19.  Although the discretion to award indemnity costs is unfettered and uncircumscribed, there must be some special or unusual feature in the case to justify an order for indemnity costs. I accept indemnity costs are no longer limited to cases where a party’s conduct lacks moral probity or deserves moral condemnation for which the court wishes to express disapproval. But such conduct must be “unreasonable to a high degree, unreasonable in this context certainly does not mean merely wrong or misguided in hindsight …”  Further, whilst pursuit of a weak claim will not usually on its own, justify an order for indemnity costs, the pursuit of a hopeless claim (or a claim which the party pursuing it should have realized was hopeless) may well lead to such an order.”

11.  To complete my review of the authorities, I refer to the succinct statement of Au-Yeung J in Pak Siu Hin Simon v JV Fitness Ltd [2017] 6 HKC 110 at §10 that “[a] plaintiff who made up a dishonest personal injuries claim should be penalized by costs on indemnity basis”.

The present case

12.  The plaintiff gave six different versions of how she fell down whilst playing “Mini-Legs”[5]. I found that she grossly exaggerated her evidence and deliberately wanted to give the wrong impression that she fell from a greater height than about 3 feet[6]. In §111 of my judgment, I stated:

“As I have stated above, during the course of the plaintiff’s evidence, I formed the impression that the plaintiff was intelligent and articulate. She was able to smile appropriately and did not look to me to be depressed when she agreed that the Teambuilding was meant to be fun. She also smiled when she denied the suggestion made to her that she was guilty of game playing. The suggestion was rightly put. I find that she was, indeed, game playing. I have already found that she grossly exaggerated the manner in which Verma’s Team played the game of Mini-Legs, when she suggested that Verma adopted a 3 tier human pyramid. I have also found that she grossly exaggerated the manner in which she fell, when she recounted the accident to the many doctors who had examined and treated her, and that she did so in order to give the wrong impression that she fell from a greater height than 3 feet. She also gave untruthful evidence when she adopted her witness statement as her evidence in chief in which she had stated that “[in] view of Dr Chow’s proposal, I had tried to contact Ho Sau Lan and see if I could be arranged to resume my original duties pursuant to Dr Chow’s recommendation. However, I did not receive any response nor was any arrangement made.” Dr Chow’s recommendation, made in October 2014, was that she return to work working only half a day in the mornings. During cross-examination, the plaintiff was taken to the exchange of emails between herself and Ho. These emails showed not only that Ho did respond to the plaintiff’s request and, indeed, chased her up, but also that a medical appointment was made, and not kept, and that when a further appointment was offered, it was the plaintiff who put that appointment off. The plaintiff was game playing. She had stopped work on 18 October 2012 and had no intention of returning to work.”

13.  I found that the plaintiff was a malingerer and had grossly exaggerated her injuries and symptoms[7].

14.  I have no doubt that the plaintiff was consciously lying to the treating doctors, orthopaedic and psychiatric experts, and to the court on the circumstances of the fall when playing Mini-Legs, and about her injuries and symptoms.

15.  Ms Christina Lee[8],  acting for the plaintiff, rightly submitted to me that the plaintiff had no answer to the fact that her evidence and that of her witness, Mr Siu Chi Ho, was rejected by the court and that this was a finding of fact which the court was entirely entitled to make based on the evidence elicited at trial.  However, she submitted that:

“13. …there is a possibility that she was misguided in her belief of how the accident occurred due to the passage of time. She may also be misguided in her belief that she was seriously injured. That she appeared to her legal team to have a good case on liability could be seen from the order made by the Court during the Pre-trial Review stage [Fung §13]. As pointed out in the affirmation the evidence of malingering and gross exaggeration did not surface until the cross-examination of Mr. Siu and the Plaintiff [Fung §12].

14. Suen speculated on what the Plaintiff’s legal team could have done to assess whether the Plaintiff was malingering or grossly exaggerating even before the trial [Suen 3^rd §11]. This is wisdom with hindsight. Had the result of this trial been foreseen the Legal Aid fund would unlikely have allowed the action to go to trial.”

16.  The plaintiff was not misguided.  She deliberately exaggerated the circumstances of her fall to make it appear that she fell from a far greater height; and she also deliberately exaggerated her injuries and her symptoms. She did so to support her false multi-million dollar claims.  The fact that her legal team had not assessed that she was bringing a false claim does not exonerate her from paying indemnity costs.

17.  However, Ms Lee went on to submit that indemnity costs should not be awarded as the plaintiff had been legally aided for the entirety of the litigation, which meant that the legal aid fund would have to pay these indemnity costs.

Liability of legally aided parties to pay indemnity costs

18.  Ms Lee pointed out that the courts have adopted two different approaches in dealing with the legally aided litigant when it comes to an order for indemnity costs:

“17. In Tsang Chung Ming v Caritas-Hong Kong[2019] HKEC 1235, the Deputy Judge[9] held [§§60-62] that the Plaintiff’s case was doomed to fail both on liability and on quantum. Further he held that everyone is equal before the law and the fact that the Plaintiff was on legal aid would not lead to him being treated differently when it comes to awarding of costs to the successful party. As he found that the Plaintiff should not have pursued the case at all he ordered costs on indemnity basis, paying no special regard to the fact that he was legally aided throughout.

18. However, in Yu Hiu Kit Kathy v LSG Lufthansa Service Hong Kong Limited [HCPI 920/2013, 16 August 2016] Master Lai took a different approach. There the claimant was found to be blatantly dishonest in that she was undertaking long distance running with good results during the time that she claimed she was suffering serious debilitating orthopaedic and psychiatric injuries from an accident at work. The Defendant reported the case to the police and the Court found the dishonesty to be so extreme that it was in agreement with the Defendant’s move.

19. Costs on indemnity basis was awarded. However, the Court noted that the claimant was on Legal Aid up to a certain date in the litigation and the Master remarked at §195 that had he ordered costs on indemnity basis for the entirety of the litigation such higher costs will have to be borne by the general public prior to discharge of legal aid and there is no reason why tax payers shall be answerable to the plaintiff’s misconduct in such case. Indemnity costs were ordered for the period after discharge of legal aid.”

19.  Ms Lee submitted that the malingering and exaggeration in the present case pales into insignificance when compared with what transpired in the last cited case. It was thus not an appropriate case for the court to visit her with indemnity costs. Another reason which militated against indemnity costs was that the tax payer should not be answerable for the Plaintiff’s conduct and the legal aid fund should be preserved.

20.  In response to Ms Lee’s submissions, the defendant submitted that:

“(1) O.62 r.5 of the Rules of the High Court (Cap. 4A) provides for a number of factors that the Court should consider in the exercise of discretion as to costs. Whether a party is legally aided does not fall within any of the factors under the provisions.

(2) There can be no dispute that the Legal Aid Department shall pay the Defendant’s costs on at least party to party basis because the Plaintiff has lost. If the Plaintiff accepts that public funds will be paid to the Defendant in accordance with the rules of Court in the “ordinary” situation, it is difficult to identify any rational basis why legally aided parties should be immune from costs on indemnity basis.

(3) Pursuant to regulation 8(3) of the Legal Aid Regulations (Cap.91A):

“The Director shall discharge a certificate if he considers that the aided person no longer has reasonable grounds for taking, defending or being a party to the proceedings or, as the case may be, that it is unreasonable in the particular circumstances for him to continue to receive legal aid:

Provided that a certificate shall not be discharged under this paragraph until the aided person has been given an opportunity to show cause why the certificate should not be discharged.”

… when the Director of Legal Aid decided to extend the legal aid certificate to the Plaintiff [to cover the trial], the Director of Legal Aid must have taken the view that there is a reasonable chance that the court at trial would decide the issue in the Plaintiff’s favour, such that any litigation risk can be justified.  That being the case, the Director of Legal Aid should be ready to shoulder any adverse costs order arising from his decision to extend the legal aid certificate.

(4) If differential treatments in costs between legally aided parties and non-legally aided parties are justified on the basis that funds from the former come from public funds, by the same logic, differential treatments can be justified where the government is a party to the litigation.  As a matter of principle such differential treatment should not be allowed or encouraged.”

21.  The defendant also submitted that an order for costs on indemnity basis will send a loud and clear message to the industry and the Legal Aid Department that they should be more careful and critical in handling legally aided cases, and that this would save public funds in the long run, citing, in support, my decision in Shih Pik Nog v G2000 (Apparel) Ltd [2011] 4 HKLRD 121. In that case, in the context of an application to vary the original costs order nisi for an order that the legally aided plaintiff should pay costs on an indemnity basis as she had failed to beat the sanctioned payment, I held that:

“8. … where the plaintiff is legally aided, an award of indemnity costs in favour of the defendant may have to be satisfied by the Director of Legal Aid from public funds, if the award of damages, if any, is insufficient to satisfy it. However, these considerations, namely, … that the Director of Legal Aid may be at risk of having to satisfy the costs order from public funds, did not lead me to conclude that it was unjust to order indemnity costs in this case.”

22.  Relying on my decision in Shih Pik Nog v G2000 (Apparel) Ltd and the decision of DHCJ M K Liu in Tsang Chung Ming v Caritas-Hong Kong, the defendant submitted that I should declare, as matter of principle, that the reasoning in §195 of Yu Hiu Kit Kathy v LSG Lufthansa Service Hong Kong Limited was unsound.

23.  The same point also arose in Yau Wang Ngai v Win Elite International Limited DCEC 1536/2013, 8 May 2017 before DDJ Elaine Liu who stated:

“14. The applicant and his legal advisers have the medical reports and the surveillance video record before the trial. The applicant has deliberately exaggerated his disability and inflated his claim, costs sanction should be made against the applicant. Although the applicant was legally-aided and public fund is involved, this should not immune the applicant from an appropriate adverse costs order. (Shih Pik Nog v G2000 (Apparel) Ltd [2011] 4 HKLRD 121) Otherwise, it will serve as an encouragement to legally-aided party to pursue unrealistic and even exaggerated claims, which will in turn be an unnecessary and unjustified strain on the public funds.”

24.  Whilst the blatant dishonesty in Yu Hiu Kit Kathy v LSG Lufthansa Service Hong Kong Limited was of a higher magnitude than the plaintiff’s exaggeration and malingering in the present case, her dishonest conduct to support a false multi-million dollar claim was more than sufficient to move the court to exercise its discretion to order that she pays costs on an indemnity basis.

25.  The fact that the plaintiff is legally aided does not move me to decline the defendant’s application for its costs to be taxed on an indemnity basis.  I accept the defendant’s submissions.  Had I been the judge in Yu Hiu Kit Kathy v LSG Lufthansa Service Hong Kong Limited, I would not have exercised my discretion in the manner that the master did in that case.  I agree with DDJ Elaine Liu that failing to grant an adverse costs order will serve as an encouragement to legally aided parties to pursue unrealistic and exaggerated claims, which will in turn be an unnecessary and unjustified strain on the public funds.

26.  I would go further and state that assigned solicitors and counsel have a professional duty to ensure that the Director of Legal Aid is promptly informed when they come to the view that the plaintiff does not have reasonable grounds to pursue his or her claim and that it is unreasonable for him or her to continue to receive legal aid. They may be met with wasted costs orders should their failure to perform their professional duty put the Director of Legal Aid at risk of having to pay indemnity costs out of the public fund.

27.  For the reasons set out above, I grant the defendant’s application that their costs be taxed on an indemnity basis.

Certificate of 2 Counsel

28.  It is always a pleasure to have senior counsel appearing. However, the court’s pleasure is not a valid ground to support the grant of a certificate for two counsel.  I have carefully considered the submissions of the plaintiff and the defendant on this issue.  The present case is not an appropriate one in which to grant a certificate for two counsel and I decline to do.

Order

29.  I vary my costs order nisi and I order that the plaintiff pays the costs of the action to the defendant, including all costs reserved and the costs of the present application to vary the costs order nisi, to be taxed on an indemnity basis, if not agreed. The plaintiff’s own costs in respect of the present application to vary the costs order nisi be taxed pursuant to the Legal Aid Regulations.