BISHWAKARMA BHAKTA BAHADUR v. PACIFIC CROWN SECURITY SERVICES LTD AND ANOTHER

HCPI 232/2015

[2019] HKCFI 331

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 232 OF 2015

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DECISION ON COSTS

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1.  After trial of this personal injury action, this court handed downjudgment on 30 August 2018 (“the Judgment”) with an order nisi as to costs. By summonses filed on 12 and 13 September 2018, the defendants and the plaintiff respectively apply to vary the costs order on the basis of their respective sanctioned offers made prior to the trial. The Director of Legal Aid, represented by the former assigned solicitors for the plaintiff, also appeared at the hearing of the summonses and made submissions in respect of his costs position.

Background

2.  The Judgment should be referred to for the background details.  Briefly, the plaintiff claimed against the defendants for damages in excess of HK$1,200,000.  Both liability and quantum were in dispute, until the defendants conceded liability when the trial began.  The plaintiff maintained his pleaded case on quantum, but adjusted that downward to slightly over HK$1,000,000 in his closing submission.  At the end, I assessed the quantum to be HK$464,815.  Since this fell short of the compensation in the employees’ compensation case (“EC Case”) in the sum of HK$483,875.50 received by the plaintiff, the plaintiff ended up with no award.

3.  Upon dismissal of the claim in the circumstances, I made an order nisi that the defendants shall have the costs of the action subject to the following qualifications:

(1)  To reflect that the defendants disputed liability but conceded only when the trial commenced, their costs recoverable from the plaintiff shall be reduced by 20%.

(2)  Costs shall be taxed, if not agreed; the plaintiff’s own costs up to the discharge of his legal aid certificate[1] shall be taxed in accordance with the Legal Aid Regulations.

The relevant pre-trial events and sanctioned offers

4.  The plaintiff was assisted by legal aid until the legal aid certificate was discharged at the end of March 2016.  He has since been represented by his present solicitors.

5.  On 14 November 2016, the plaintiff accepted the defendants’ sanctioned payment in the EC Case.  Hence the compensation mentioned above.  He therefore argued that it was not unreasonable for him to have commenced and maintained this action until then.  As to this, the parties are ad idem.

6.  The plaintiff should therefore be entitled to his costs of this action against the defendants up to 14 November 2016.  As will be discussed below, the effect of this costs position is material to the consideration of the parties’ applications.

7.  On 16 November 2016, the defendants put forward a sanctioned offer for the plaintiff to discontinue this action with the defendants agreeing to bear their own costs.  On 5 December 2016, the plaintiff challenged the validity of the offer.  Indeed, this offer had no effect, as it failed to provide for the plaintiff’s costs pursuant to Order 22, rule 20 of the Rules of the High Court (“RHC”).  For the present purpose, nothing further turns on the significance of this offer.

8.  Since then, the parties had attempted mediation.  The plaintiff had also made further discovery.

9.  By letter dated 22 March 2017 to the plaintiff, the defendants set out their assessment of the quantum in the sum of HK$466,064.  In other words, the plaintiff was said to expect no award in this action on top of the compensation in the EC Case.   The defendants therefore invited the plaintiff to discontinue the action and offered to bear the plaintiff’s costs up to the date of acceptance of the offer.  The offer was open to acceptance until 19 April 2017.

10.  On 4 May 2017, the plaintiff wrote to the defendants, stating that he would apply to the court for an order that should the court decides the issue of liability in his favour, he would be entitled to costs on liability to be taxed on an indemnity basis.  The plaintiff also put forward a sanctioned offer for the defendants to admit liability with costs on liability to the plaintiff to be taxed on the District Court scale.

11.  By letter dated 31 May 2017, the defendants rejected the plaintiff’s offer, and denied any basis for the plaintiff’s claim of entitlement to his costs on liability on an indemnity basis.  On the contrary, the defendants argued that if the plaintiff failed to beat their sanctioned offer, they would be asking for costs against him on an indemnity basis.

12.  Between the defendants’ sanctioned offer in late March and the end of 2017, the relatively significant steps taken in this action consisted of specific discovery in late 2017 and the plaintiff’s application for the setting down of the case for trial.

13.  The next letter came from the plaintiff in January 2018, after he has applied for setting down of the case for trial in the Running List.  By the letter, the plaintiff asked the defendants to consider a last ditch offer for avoiding a full blown trial.

14.  On 11 January 2018, the defendants replied by asking the plaintiff to consider discontinuing the action and offered to bear the plaintiff’s costs up to and including the day of mediation, ie, 3 March 2017.

15.  The plaintiff did not accept that.  Instead, on 22 January 2018, he made a Calderbank offer, suggesting to accept in full and final settlement of this action a sum of HK$80,000, inclusive of interest, on top of the compensation in the EC Case and plus costs on the District Court scale.  The defendants did not respond to the offer, which could only be taken to be refusal.

16.  On 22 February 2018, the plaintiff also took out his summons for limiting the admissibility of the joint neurological expert report dated 22 July 2016 to the issue of liability, and to expunge the rest of it.  The Judge in charge of the Personal Injury List directed the summons to be dealt with by the trial judge.  The summons was eventually withdrawn during the trial, with the consequential costs to the defendants.  As explained in the Judgment[2], I would have dismissed the summons in any event.

Variations sought by the parties

17.  The defendants now seek variation of the costs order nisi as follows:

(1)  The costs of this action from 14 November 2016 up to the conclusion of the trial be to the defendants to be taxed on an indemnity basis;

(2)  The above should not be subject to any deduction; and

(3)  The costs of this application be to the defendants to be taxed on a party and party basis.

18.  The plaintiff seeks variation of the costs order nisi as follows:

(1)  Costs of this action prior to the settlement of the EC Case on 14 November 2016 be to the plaintiff;

(2)  Costs of this action thereafter be to the defendants, subject to deduction of 40%; and

(3)  No part of the costs of this action to the defendants shall be taxed on an indemnity basis.

19.  During the hearing, the defendants also accepted that it was not unreasonable for the plaintiff to have commenced and maintained this action until the compensation in the EC Case was ascertained.  This happened on 14 November 2016 when the plaintiff accepted the defendants’ sanctioned payment in the EC Case.  They also accepted that the plaintiff should not be made to bear their costs on the higher basis until after the expiry of the 28-dayperiod available to him to accept the defendants’ sanction offer dated22 March 2017.

20.  With the adjustment of position during the hearing mentioned above, the parties are ad idem that the plaintiff should have his costs of this action up to 14 November 2016, and the costs thereafter should be to the defendants on the basis that the plaintiff had no basis for maintaining this action that produced no award.  The parties differ when it comes to whether the defendants’ costs after 19 April 2017 should be taxed on an indemnity basis.

21.  The major differences between the parties therefore boil down to the following questions:

(1)  Whilst the defendants should have their costs of this action after 14 November 2016, whether they are entitled to their costs after 19 April 2017 to be taxed on an indemnity basis on the basis of the plaintiff’s refusal to accept their sanctioned offer dated 22 March 2017.

(2)  Whether any part of the defendants’ costs should be subject to deduction, and, if yes, by how much.

Question (1)

22.  The basis for the defendants’ claim of entitlement to seek indemnity costs after 19 April 2017 is their sanctioned offer dated 22 March 2017.  By not getting any award of damages, the plaintiff failed to beat the offer.  In principle, the defendants should be entitled to costs of this action from the latest date for accepting the offer, ie, 19 April 2017, to be taxed on an indemnity basis.  I do not think this can be disputed as a matter of principle.

23.  In arguing against that, and actually question (2) as well, the plaintiff kept on focusing on his discontent about the defendants’ position in respect of the dispute on liability and how they ran their defence on both liability and quantum, including specifically the obtaining and use of the neurological expert evidence.

24.  In my view, the plaintiff’s argument fell out of line with what happened.

25.  To begin with, it is important to note that all the essential steps and costs in connection with the preparation of pleadings and evidence (including the obtaining of expert evidence) had already been taken and incurred by the time the EC Case was settled on 14 November 2016.  As mentioned, the defendants accept that the plaintiff is entitled to his costs of this action, which would include his costs of and occasioned by such steps taken by 14 November 2016.  The defendants’ costs of this action from that date would not include such costs.  The sanctioned offer dated 22 March 2017 would not have changed that.  In fact, had the plaintiff accepted the offer, he would have become entitled to his costs of this action even further up to the date of acceptance of the offer.

26.  In other words, in terms of costs consequence, the plaintiff’s complaint about the steps taken by the defendants in respect of the dispute on liability and quantum, as well as the costs incidental to those, should not operate against the defendants’ entitlement to any part of their costs incurred after 14 November 2016 or the taxation of such costs on the higher basis.

27.  It served no purpose of the plaintiff in this action unless he succeeded on both liability and quantum.  The plaintiff maintained that he had a good case on both. It is notable that the Calderbank offer made by the plaintiff in January 2018, after applying for setting down of the case for trial, sought a sum of HK$80,000, which was drastically lower than his pleaded claim.  The plaintiff was proved wrong.  The risk of not even managing to achieve that was what the plaintiff decided to take. He has no reason now not to face the consequence of his decision.  Yet notwithstanding that, the plaintiff in reality managed to recover his costs of this action up to 14 November 2016, which, as mentioned, already covered those incurred in connection with all the substantial steps taken in this action.

28.  In the circumstances, the plaintiff really cannot rely on his complaint about how the defence was run as the basis for further denying the defendants’ claim of entitlement to take advantage of their sanctioned offer to protect their costs position, when he manages to recover his costs incurred in all the substantial steps in meeting such defence.  It should also be noted that there is in these applications no question of whether such costs of the plaintiff payable by the defendants should be taxed on a higher basis on the ground of how the defence was run.

29.  As to the plaintiff’s complaint about the defendants’ approach in relation to the neurological expert report, I need say no more than what was explained in the Judgment[3].  That has no material bearing on the present question.

Question (2)

30.  The defendants argued that there should be no deduction whereas the plaintiff argued that there should be deduction of 40% of the defendants’ costs recoverable from the plaintiff.

31.  As stated in the Judgment, it is relevant to consider the defendants’ concession on liability only when the trial began, and whether that has occasioned costs unnecessarily.

32.  Notwithstanding the factual dispute raised by the defendants, they tendered no witness on liability.  Their key contention in respect of liability was the pre-existing condition of the plaintiff, which brought about the obtaining of the neurological expert evidence.  However, the joint report of the neurological experts dated 22 July 2016 did not substantiate that such condition caused or contributed to the accident.  It has become clear that the dispute on liability could not realistically be maintained.

33.  Again, the plaintiff complained about having to address the dispute on liability raised by the defendants.  However, as discussed above, the reality of the matter is that the plaintiff will recover his costs of all the essential steps taken by him in this action up to 14 November 2016, which would include the costs of preparing to address such dispute.  The defendants are not recovering any part of their such costs from the plaintiff.  Whilst the plaintiff still had to prepare to address the dispute on liability up to and including opening of this trial, the conduct of the case after 19 April 2017 and this trial on such basis has not brought about any material addition or waste of costs as a result of such dispute[4].

34.  In the circumstances, whether or not the defendants should not have disputed or should have conceded liability earlier, the costs occasioned by such position of the defendants to the plaintiff by 14 November 2016 are now effectively recovered from the defendants.  The same complaint should not operate to further deprive the defendants of their costs after that date up to the conclusion of the trial.

The Director of Legal Aid (“the Director”)

35.  As mentioned, the legal aid certificate in respect of the plaintiff was discharged in March 2016. The plaintiff has since been represented by his present solicitors.

36.  The originally assigned solicitors for the plaintiff now appeared to make submissions on behalf of the Director.  Apart from supporting the plaintiff’s application, the Director mainly made the point that any costs against the plaintiff after the discharge of legal aid should be borne by the plaintiff personally.  Any costs borne by the plaintiff personally mentioned above shall not be set off against his costs during the aided period which he now recovers from the defendants.  In other words, the Director gets to keep the plaintiffs’ costs during the aided period that are recovered from the defendants.

37.  The defendants’ position is that the above is a matter between the plaintiff and the Director.  I agree.

38.  During the hearing, the solicitor for the plaintiff confirmed his acceptance of the position of the Director as summarized above.  I do not find it necessary to make any order to such effect as a matter between the plaintiff and Director.

Conclusion and order

39.  For the above reasons, I vary the costs order nisi, and make an absolute order in the following terms:

(1)  The defendants do pay the plaintiff’s costs of this action up to and including 14 November 2016, to be taxed on a party and party basis.

(2)  The plaintiff do pay the defendants’ costs of this action from 15 November 2016 up to 19 April 2017, to be taxed on a party and party basis, and thereafter on an indemnity basis.

(3)  For the avoidance of doubt, I certify the engagement of counsel.

(4)  The plaintiff’s own costs of this action up to the discharge of the legal aid certificate remain to be taxed in accordance with the Legal Aid Regulations.

40.  As to the costs of these applications, the defendants’ side is as a whole the succeeding side.  I therefore order that the defendants shall have such costs, to be taxed on a party and party basis (as requested).  I make no order as to the costs of the Director’s appearance in the hearing.