WONG SHUI LAM v. HOSPITAL AUTHORITY

HCPI 151/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 151 OF 2009

_________________________

BETWEEN

_________________________

____________

R U L I N G

____________

1.  The Plaintiff was at the material times an employee of the Defendant. He suffered an injury at work. The Defendant was charged by Labour Department for failing to ensure the safety and health of its employee, the Plaintiff, contrary to section 6 of the Occupational Safety and Health Ordinance and was fined $8,000. The Plaintiff brings this action to recover his loss.

2.  Before today’s hearing, on 2 November 2009, the Defendant notified the Plaintiff that they would concede liability and I accordingly grant judgment in favour of the Plaintiff on liability against the Defendant with damages to be assessed.

3.  On concession of liability by Defendant, I would usually grant an order of cost in favour of the Plaintiff for “all costs of the action in respect of liability up to the date of interlocutory judgment”. The Plaintiff applies to seek further cost order.

4.  Firstly, the Plaintiff applies for costs of the action up to 2 November 2009, which is the date when liability is conceded, such costs to be paid forthwith. And secondly, the Plaintiff asks for costs of the statement of claim and today’s hearing to be taxed on indemnity basis.

5.  The basis for the Plaintiff to claim a more stringent costs order against the Defendant is based on the conduct of the Defendant, both before and after the writ has been served.

Chronology

6.  It is not disputed that before the Plaintiff started the proceedings, he had sent a pre-action letter of demand dated 9 October 2008 to the Defendant, as required by the old PD 18.1. In particular, Mr. Millar, solicitor for the Plaintiff invited the Defendant to concede liability. The matter was referred to Messrs. Deacons, solicitors for the Defendant upon instruction of the Defendant’s insurer.

7.  Messrs. Deacons, solicitors for the Defendant replied on or about 6 November 2008 stating, “we have commenced our investigation into the above matter.” Messrs. Deacons further requested Mr. Millar to inform them if there were any co-workers at the time of accident, and to provide them with any available medical evidence. As a usual protection for client, Messrs. Deacons stated that no admission of liability was made. The Defendant promised to make a response in 3 months’ time as required by the Practice Direction.

8.  Mr. Millar replied on 8 November 2008. He referred Messrs. Deacons to the said conviction and queried how the Defendant could dispute liability. The Defendant was invited to admit liability again. Mr. Millar also stated that there was investigation by the Labour Department and all information on liability was within the possession of the Defendant.

9.  On 11 November 2008, Messrs. Deacons responded by repeating their request for names of any co-workers and medical evidence.

10.  Mr. Millar wrote further in November and December 2008 on various matters. On each occasion he repeated the request for the Defendant to admit liability and complained that there was no response. I am confirmed at the hearing by Ms. Kang of Messrs. Deacons, that her firm did not reply to these letters.

11.  On or about 4 March 2009, Mr. Millar wrote again saying that in view of the impending limitation period, a writ had to be issued shortly. They brought up the request for admission of liability again and also suggested mediation. There is no response to the letter.

12.  The writ herein was issued in March 2009. The Plaintiff did not served the writ initially and Mr. Millar had applied to Master Kwan, the PI Master for adjournment of the checklist review originally fixed for July 2009. And there was no statement of claim or statement of damages filed at that stage.

13.  The checklist review in July was retained. At the hearing, on the basis that the writ would be served within 7 days, the checklist review was adjourned to today.

14.  On or about 17 July 2009, the Plaintiff served the writ directly on the Defendant with notice to Messrs. Deacons. And in the notice to Messrs. Deacons, Mr. Millar reserved the position of the Plaintiff on costs by reason of the failure of Messrs. Deacons to reply to their earlier letters.

15.  On or about 27 July 2009, Messrs. Deacons filed the acknowledgement of service for the Defendant contesting the Plaintiff’s claim. According to the Rules, the Plaintiff should file the Statement of Claim and Statement of Damages within 14 days thereafter.

16.  Mr. Millar wrote again in August 2009 complaining about the lack of response to his letters. He then took out a summons applying for leave to introduce expert evidence from a maxio facial expert. This summons was returnable before me on 5 September 2009.

17.  Parties appeared before me on 5 September 2009. Messrs. Deacons was of the view that they could have a more constructive response upon sight of the statement of claim and statement of damages. Accordingly, a time frame was given for the Plaintiff to file and serve the statement of claim and statement of damages.

18.  On 9 September 2009, Mr. Millar wrote a further letter and said he would withhold drafting of the Statement of Claim to the last minutes in the hope that the Defendant would admit liability. There was no admission. Mr. Millar filed the Statement of Claim and by letter dated 17 September 2009, Mr. Millar reserved the Plaintiff’s position to claim costs of the Statement of Claim on indemnity basis. There was no response to this letter.

19.  There is a few more correspondences between the parties on the arrangement of medical examination. I do not refer to them. And on 2 November, Messrs. Deacons concede liability on behalf of the Defendant.

Discussion

20.  There is a few matters which I noticed. First of all, I found it unusual for Messrs. Deacons to make no response to the Plaintiff’s request. They may disagree with Mr. Millar’s suggestion or they may dispute liability. All that they are required is to state their client’s position to save all these additional letters sent by Mr. Millar to the Defendant.

21.  Under the old Practice Direction 18.1, the Defendant, and/or its insurers is required to response constructively.

2.3 The said letters should be sent no later than 4 months prior to the commencement of proceedings, and the defendants or insurers should reply constructively thereto within one month. A simple acknowledgement is not a constructive reply. If there is no such reply the claimant will be entitled to commence proceedings forthwith without risk as to costs. If a reply is received within the said time, the defendant and/or the insurer should have a period of three months in which to investigate the claim, by the end of which it shall state whether liability is denied and if so, giving the reasons therefor.

22.  It is in breach of the practice direction when the Defendant has not responded after a period of 3 months from acknowledging receipt of the pre-action letter.

23.  Ms. Kang submitted that while the Defendant plead guilty to the criminal charge, it does not represent that they have no defence to the Plaintiff’s claim. To say the least, the Defendant could have claimed contributory negligence from the Plaintiff. If that is the Defendant position, it should have notified the Plaintiff.

24.  Ms. Kang for the Defendant tries to argue that the 6 November letter is a constructive response. I cannot agree. It is only a letter of acknowledgment and commitment to investigate the incident on the Defendant side. But they have not followed up the investigation as requested by the practice direction and has never responded if they admit liability, or if they dispute liability, state their ground of defence.

25.  And under the new Practice Direction, it is provided –

20. If the proposed defendant(s) fail to give a constructive reply or reasonably investigates into the merits of the claim and give a positive reaction, then they will not receive sympathy from the Court after the commencement of proceedings, and the Court may not allow time for them to make up for their omission.

26.  This must be read with the new Order 1A of the Rules of the High Court, in particular rule 1(b) and (e). The underlying objectives of the Rules of the High Court are to ensure that a case is dealt with as expeditiously as reasonably practicable and to facilitate the settlement of disputes. And Order 62 rule 5 provides that the Court in exercising its discretion on costs shall take into account the underlying objective as set out in Order 1A rule 1. Failure to comply with the new Practice Direction may result in stringent cost sanction.

27.  In my limited experience in handling Checklist Review, it is not uncommon to find Insurers giving no respond to pre-action letters. I have been told repeatedly by solicitors that they have no instruction or they have not been instructed at that stage. Insurers may wish to defer the expenses of any legal costs to the latest stage. But in light of the new Rules, such delay are in breach of the spirit of the Civil Justice Reform, and for cases in Personal Injuries List, in breach of PD 18.1. Solicitors are obliged to advise their client including insurers to comply with the new PD to save any cost sanction. If the Insurers are minded to save costs, an alternative is to engage in mediation. No action taken, as in this case, is clearly in breach of the spirit of the Civil Justice Reform and call for costs sanction.

28.  As for the Plaintiff, I also have reservation on the way of pressing on the request for admission of liability. In the situation where admission of liability is not forthcoming, under the Practice Direction, we expect parties to engage in some discussion to narrow down their issue. Letters after letters requesting the other side for admission of liability is not something constructive or moving toward the direction of a settlement or saving costs.

29.  I also note a special feature of this case, namely that the Plaintiff is in fact the employee of the Defendant. It cannot be disputed that the Defendant had been subject to investigation and prosecution from the Labour Department. Accordingly, there must be some materials for the Defendant to investigate into with or without the assistance from the Plaintiff. For a constructive response in such a circumstances, we expect the Defendant to come back with either admission of liability or their grounds of defence. I have to say that a lot of the effort of Mr. Millar is not necessary. But the non-responding attitude from Messrs. Deacons is inexcusable.

My Ruling

30.  With these considerations in mind, I came to consider each of the Plaintiff’s applications. On the first application for costs of the action up to 2^nd November 2009, that is conceptually wrong. Part of the cost incurred would be on assessment of quantum and is an open issue. I see no reason to depart from the usual order that the Plaintiff should be entitled to the cost of the action in respect of liability only but up to today.

31.  The Plaintiff asks for the costs to be taxed forthwith. The Defendant objects. The usual order is costs be to the Plaintiff and that is my order. When the cost order does not state that “costs be paid in any event”, according to existing Rules, that would means costs is payable forthwith.

32.  I believe in most cases when interlocutory judgment on liability has been given, when liability was admitted in earlier stage, the costs of the liability would be a small fraction of the overall costs. It is not cost effective to tax the cost at this stage. And in preparing the taxation bill, there would be difficulty in apportioning between costs relating to liability only and costs which related to damages. Practically speaking, taxing authority seldom has parties proceeding to tax the costs at this stage except for cases where spilt trial has been ordered.

33.  On the application for costs of the Statement of Claim, I note that the Plaintiff has withheld filing of the statement of claim initially. They have repeatedly request the Defendant to response to their request hoping to save the filing of the statement of claim. For cases at the Personal Injuries List, it is not unusual that after admission of liability, the Plaintiff would not file any statement of claim. The statement of damages is sufficient to set out the claim of the Defendant. The filing of the statement of claim is mainly on the issue of liability. In the circumstances, I found that the application by the Plaintiff for costs of the statement of claim is justified. The more difficult question is whether the costs should be taxed on indemnity basis.

34.  As I mentioned earlier, it cannot be disputed that the Defendant has knowledge about the case. Ms. Kang said they have prepared a draft defence. She tried to set out in her skeleton some grounds of contributory negligence that the Defendant could raise. But for the present purpose, in fact I have no sight of the draft defence. No affidavit is filed. I am not prepared to take that into consideration. And if the grounds of defence are so clear, the Defendant should have responded earlier.

35.  Ms. Kang submitted that costs on indemnity basis should only 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. (Choy Yee Chun v. Bond Star Development Ltd. [1997] HKLRD 1327.)

36.  But it is also stated by Mr. Justice Stock in Choy Yee Chun’s case that the discretion was not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”. And the Court may have regard to pre-action conduct.

37.  I conclude from the above analysis that the Defendant has not responded constructively to the Plaintiff’s pre-action letters. The conduct of the Defendant has clearly increased the cost of the action unnecessarily. I agree with Mr. Millar that the filing of the Statement of Claim could be avoided. Taking the case of the Defendant to the highest, they wish to see the Statement of Claim before they responded. This request is unreasonable in the special feature of this case, in that the Defendant is in possession of knowledge of the accident when the Plaintiff was injured. The conduct of the Plaintiff is considered to be oppressive. I consider that this is an appropriate case to order the Defendant to bear the costs of the Statement of Claim to be taxed on indemnity basis, and I so order.

38.  The Plaintiff also asks for costs of this application and on indemnity basis. From the above analysis, the Plaintiff has achieved a better terms on costs. But I am only prepared to allow costs of this application to the Plaintiff, be awarded on party and party basis.