TAM HEUNG MAN v. THE INCORPORATED OWNERS OF LUNG POON COURT (BLOCKS A - F)

DCCJ 4380/2014

[2019] HKDC 822

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4380 OF 2014

-------------------------

-------------------------

------------------------------

DECISION ON COSTS

------------------------------

I.   Background

1.  In this Decision on Costs, unless otherwise stated, I will adopt the abbreviations used in my Judgment herein dated 26 March 2019 (“the Judgment”).

2.  By the Judgment, I found in favour of the plaintiff in her defamation claim against the defendant and awarded general damages of $200,000 and aggravated damages of $200,000 for each of the Notices published by the defendant. I also made a costs order nisi (with one exception which is not relevant for present purposes) that the defendant shall pay the plaintiff costs of the action, including any costs reserved, to be taxed if not agreed, with certificate for one counsel.

3.  By Summons dated 4 April 2019, the plaintiff sought an order that the defendant pay her costs of the action, including any costs reserved, on indemnity basis with certificate of one counsel or alternatively that the defendant pay her costs of the action, including any costs reserved, with certificate for one counsel up to 16 February 2015 on a party-and-party basis and thereafter on an indemnity basis.    

II.   Applicable Principles

4.  The principles governing the award of indemnity costs are well established. Whilst the discretion of the courts in awarding indemnity costs is not to be “fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’” (Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114 at para 17 per Li CJ), the courts in Hong Kong have repeatedly emphasised that in order to obtain an order for costs on an indemnity basis, the successful party should show that the case has some “special or unusual feature” (Town Planning Board, at para 15 per Li CJ).

5.  Where improper conduct of the unsuccessful party is relied upon, “such improper conduct generally relates to the conduct of the litigation rather than conduct which constituted the cause or matter giving rise to the litigation”.  See Libertarian Investments Limited v Thomas Alexej Hall (unreported, FACV Nos 14 & 16 of 2012, 11 March 2014), at para 6 per Ribeiro PJ. 

6.  Furthermore, as was held by the English Court of Appeal in Kiam v MGN Ltd (No 2) [2002] 1 WLR 2810 (at paras 12 and 13 per Simon Brown LJ), such conduct must be “unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight … it will be a rare case indeed where the refusal of a settlement offer will attract … not merely an adverse order for costs, but an order on an indemnity basis rather than standard basis.”  Kiam was followed in Hong Kong in Heung Wing Yan v Haghway Housing Management Limited & Others (unreported, HCPI 347/2012, 14 February 2017), at para 19 per DHCJ Marlene Ng (as she then was).

III.   The Present Case

7.  In the present case, the plaintiff primarily relies on an open offer contained in her solicitors’ letter dated 27 January 2015 in which the plaintiff offered the following terms in full and final settlement of the action:- (a) that the defendant shall forthwith withdraw the Notices; (b) that the defendant shall pay the plaintiff nominal damages in the sum of $1.00; and (c) that each party shall bear its own costs of the action.

8.  In my judgment, in refusing the settlement offer, the defendant’s conduct cannot be said to be “unreasonable to a high degree” or, indeed, unreasonable at all:-

(a)   The defendant relied on, inter alia, the defence of qualified privilege.  As was held in para 32 of the Judgment, the authorities show that there is a common interest among the owners of a building with regard to matters relating to the affairs of the building (Multi-Winner Investment Ltd v Lau Ming Yee [2017] 1 HKLRD 328 at para 69 per David Lok J).  At trial, the plaintiff accepted that the Notices were protected by common interest privilege.  Therefore, to defeat the defence of qualified privilege, the plaintiff has to prove malice.  As the defendant is a corporation, it is necessary for the plaintiff to identify a person or persons for whom the corporation is liable who participated in the publication of the words complained of and who did so with the necessary malicious motive.  See the authorities cited in para 160 of the Judgment.  However, the plaintiff’s Reply has failed to identify such a person or persons.  It was only during the course of trial (on 6 February 2018) that the plaintiff sought to file further and better particulars of the Reply, seeking to identify Mr. Cheung (chairman of the defendant) as the individual who was responsible for, participated in and/or approved and/or authorised the publication of the Notices and who had the state of mind required to constitute malice at law.  For the reasons stated in paragraph 160 of the Judgment, this Court allowed the plaintiff to do so to put her case in order.  This Court also granted leave to the defendant to file a further supplemental witness statement of Mr. Cheung to deal with the further and better particulars of the Reply, which the defendant did by filing the 2^nd supplemental witness statement of Mr. Cheung on 8 February 2019.  In these circumstances, the defendant’s refusal of the settlement offer cannot be said to be “unreasonable to a high degree” or, indeed, unreasonable at all.

(b)   By asking the defendant to forthwith withdraw the Notices, the plaintiff was asking the defendant to acknowledge defeat, albeit on terms that the defendant would pay her nominal damages of $1 and no order as to costs.  In the circumstances described in sub-para (a) above, the defendant’s refusal to acknowledge defeat cannot be said to be “unreasonable to a high degree” or, indeed, unreasonable at all.

(c)   It is correct that the plaintiff repeated substantially the same offer in her solicitors’ “without prejudice save as to costs” letter dated 22 November 2017, which the defendant also refused to accept.  There is a dispute as to whether the “without prejudice save as to costs” offer is admissible.  Mr. Deng (counsel for the plaintiff) accepted that the “without prejudice save as to costs” offer was not a valid sanctioned offer.  As such, I am inclined to the view that the “without prejudice save as to costs” offer is inadmissible because of the exclusionary provision in O.62, r.5(d) of the Rules of District Court[1]. However, even if the “without prejudice save as to costs” offer is admissible, by reason of the matters stated in para 8(a) and 8(b) above, the defendant’s refusal of the settlement offer cannot be said to “unreasonable to a high degree” or, indeed, unreasonable at all.

9.  The plaintiff also relied on various paragraphs of the Judgment (paras 60 and 93, paras 93-98, para 138, para 174 and paras 176-177) in which various adverse findings were made by this Court against the defendant.  The findings were part and parcel of this Court’s finding on malice, which was the central issue in the present case (see para 34 of the Judgment) and based on which (and other factors identified in para 225 of the Judgment) this Court awarded aggravated damages of $200,000 for each of the Notices.  These findings do not relate to conduct of the litigation but relate to conduct which constituted the cause or matter giving rise to the litigation.  I cannot see how these findings are relevant to an award of indemnity costs. 

10.  As to the defendant’s conduct in the litigation relied upon by the plaintiff:-

(a)   The fact that I disbelieved parts of Mr. Cheung’s evidence and found that he had made up his evidence as he went along in the witness box (see para 177 of the Judgment) is not a valid or sufficient ground for awarding indemnity costs.  In a trial in which witnesses have testified, the Courts invariably made findings on the credibility of the witnesses and accepted or rejected the evidence of the witnesses.

(b)   The fact that the defendant had not disclosed the video recording of the 2013 EGM (see para 97 of the Judgment) is not a valid or sufficient ground for awarding indemnity costs.  No question was asked in cross-examination as to why the said video recording was not disclosed and therefore the reason for the non-disclosure is unknown.  In any event, the plaintiff had disclosed the said video recording which was played in Court during Mr. Cheung’s cross-examination (see para 96 of the Judgment).  The Court was not misled by the non-disclosure.

(c)   The defendant’s late discovery (in the 8^th day of trial) of an unsigned letter dated 21 March 2013 from the defendant to TWGH (see para 108 Judgment) is not a valid or sufficient ground for awarding indemnity costs.  It is not the plaintiff’s contention that the said letter was not genuine.  In fact, as this Court found at para 108 of the Judgment, it appears that the defendant had sent the letter to TWGH.

(d)   The fact that the defendant raised the defence of justification which ultimately failed is not a valid or sufficient ground for awarding indemnity costs.  I do not think To J intended, by his obiter remarks in Lu, Lu & Lu v Chan & Hui [2015] 6 HKC 149 at para 128 (that indemnity costs “were usually ordered where a plea of justification failed.  This is because pursuing such a course of defence usually aggravates the injury done to the victim”) to lay down a general rule that indemnity costs must be ordered when a defendant raised a defence of justification which ultimately failed.  Each case must depend on its own facts.  As was found by this Court (see para 34 of the Judgment), malice was the central issue in the present case. On the other hand, the issue of justification was disposed of in only three paragraphs (paras 28-30) of a judgment consisting of 230 paragraphs.  The particulars of the defence of justification, which were also particulars of the defences of qualified privilege and fair comment, are intrinsically linked to the factual disputes relating to the question of malice, which this Court dealt with in 118 paragraphs of the Judgment (paras 38 to 156).   The issue of justification pales into insignificance when considered in the context of the trial as a whole.           

IV.   Conclusion

11.  In conclusion, there is no “special or unusual feature” in the present case which merits an order for indemnity costs.  The defendant’s refusal of the settlement offers and conduct of the litigation were not “unreasonable to a high degree” or, indeed, unreasonable at all. 

12.  The plaintiff’s summons is dismissed with a costs order nisi that the plaintiff shall pay the defendant costs of summons to be taxed if not agreed, with certificate for counsel. 

13.  I thank counsel for their assistance.