LEE PO CHU FEONA v. JOYCE CHAN & CO. (a firm)

HCA 2421/2016

[2023] HKCFI 1878

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2421 OF 2016

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DECISION ON COSTS

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1.  This court handed down judgment after trial in the present case on 31 January 2023 whereby the claim was dismissed and judgment was entered on the counterclaim for the defendant. Following such event, this court made a nisi order whereby the plaintiff should pay the defendant’s costs of this action to be taxed, if not agreed, with certificate for two counsel.

2.  By summons filed on 10 February 2023, which was amended on 27 February 2023, the defendant applies for variation of the nisi costs order.  Essentially the defendant relies on its written offer (Calderbank offer)  two months prior to the commencement of the trial to fully and finally settle the case. The Calderbank offer was dated 7 May 2021, which was open until 21 May 2021.  Obviously the offer was not accepted.

3.  The background of the case as well as the parties’ respective positions and claims were set out in the judgment, which needs no repetition here.

4.  By the Calderbank offer, the defendant offered to pay to the plaintiff a sum of HK$50,000 in full and final settlement of the entire action with no order as to costs.  Due to the inclusion of the term as to costs, the offer would not have been qualified for the form of a sanctioned payment pursuant to O22 of the Rules of the High Court, Cap 4A (“RHC”).  The plaintiff was nevertheless warned that failure to accept the offer might entail the defendant’s application for indemnity costs in the event that the plaintiff failed or did not obtain judgment better than the offer.

5.  The principles are trite.  The court has wide discretion as to costs: O62, r3, RHC.  In exercising the discretion, the court shall take into account all the appropriate circumstances: see O62, r5, RHC. Such circumstances include the making and terms of any sanctioned offer/payment, any Calderbank offer and conduct of the parties.  The court may make an order for costs to be taxed on an indemnity basis: see O62, r28, RHC.  As this is not a case of sanctioned payment as mentioned, the mechanism of costs consideration under O22 does not apply.  This court would still take into account the Calderbank offer in exercising the discretion: see Choi Tak Man v Chan Yuk Lan, Didi & Anor [2017] 5 HKLRD 619.

6.  The fact was the plaintiff failed to obtain any judgment against the defendant.  She also lost on the counterclaim.  That she should bear the costs of the action, both her own and those of the defendant, is indisputable.

7.  The plaintiff argues that the Calderbank offer was not genuine in view of its timing and terms.  The timing of the offer, albeit close to the commencement of the trial, was neutral insofar as the reasonable assessment of litigation risk was concerned.  Nor was it pretentious when the costs of a full blown trial that could have been saved could not be categorized as negligible.  Importantly, this is not a case of evaluating reasonableness of settlement offer by comparing what was offered and what the plaintiff has proved to be entitled to after trial.  It is comparing what was offered and the complete eventual failure of the plaintiff.

8.  The plaintiff argues that it was not unreasonable for her to persist in her claim.  She refers to the refusal of the court in Choi Tak Man to make an indemnity costs order.  However, whilst, as mentioned, the court in Choi Tak Man acknowledged that the Calderbank offer in that case was a relevant consideration, the decision of refusing to make an indemnity costs order was also, if not essentially, based on the consideration of the nature of the case being a claim for adverse possession, which as a matter of clear law puts the onerous burden of proof of the constituents of such claim on the party in possession, and hence the paper title owner’s entitlement to put that party to strict proof and test by the trial.  Such peculiarity did not feature in the present case.  The claim here was alleged professional negligence said to be accounting for the plaintiff’s loss arising out of the failed property deal while the counterclaim was unpaid professional remuneration for work done by the defendant in connection with the deal.

9.  The plaintiff also argues that settlement of the present action will compromise her right to defend the related HCA 2054/2016, which was the estate agent’s claim against her for unpaid commission as the defaulting party in the failed property deal.  Putting aside whether such concern could have been made known in response to the offer, the defendant submits, and this court agrees, that any settlement could have been reached on the basis without admission of liability.

10.  As to the conduct of proceedings, both sides refer to Leung Lai Kwan v Lo Kai Wing & Anor [2015] 3 HKLRD 152 and on application to the appellate court for leave to appeal HCMP 1554/2015 (20 August 2015).  That was also a case with its own facts.  Insofar as the consideration and circumstances discussed above, that case does not serve to demonstrate the contrary view.  Insofar as the issue of conduct in advancing false evidence at the trial is concerned, what happened in the present case was the plaintiff making such allegation against the defendant which she failed to substantiate.  If anything, the circumstances may well be viewed as unfavourable to the plaintiff in the consideration now.

11.  At the relevant time, it was but essentially consideration on the part of the plaintiff of whether or not to run the litigation risk mentioned above.  She consciously took the risk.  Further, the risk was taken to prove the alleged professional negligence, including some serious allegations of evidence fabrication, against the defendant.  She failed to substantiate the allegations on the balance of probabilities, and the defendant’s professional reputation was vindicated.  There is no circumstance stalling this court’s view that the stance of the plaintiff was not in line with the underlying objective of the civil justice reform manifested by the RHC that encourages reasonable settlement and saving costs.

12.  All the circumstances considered, this court considers that awarding costs of the action against the plaintiff on an indemnity basis since 21 May 2021 would be appropriate in the circumstances of the case.  So an order in terms of §1 of the amended summons of the defendant.  The defendant shall also have the costs of the present application to be taxed, if not agreed.