THRESHOLD CONSULTANTS LTD v. BOOST INVESTMENTS LTD

HCCT 58/2017

[2020] HKCFI 665

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 58 OF 2017

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DECISION ON
INTEREST & COSTS

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1.  In the judgment handed down on 11 March 2020,[1] I gave judgment in favour of Threshold on its action for the sum of $1,018,250, with interest at the prime rate plus 1% per annum from the date of writ to the date of judgment, dismissed Boost’s counterclaim in its entirety, and ordered that the costs of both the action and the counterclaim be paid by Boost, to be taxed if not agreed, with a certificate for two counsel.

2.  By summons dated 23 March 2020, Threshold and Ms Au have applied for variation of the orders, on the basis of a sanctioned offer previously made.  What they contend for is that: (i) interest on the judgment sum should run at the rate of 4% above judgment rate from the cut-off date for accepting the sanctioned offer to the date of judgment; (ii) costs after the cut-off date should be taxed on an indemnity basis; and (iii) interest on costs incurred after the cut-off date should also accrue at the rate of 4% above judgment rate.

3.  Solicitors for Threshold and Ms Au wrote to Boost’s solicitors on 23 October 2019 with a sanctioned offer, offering to accept from Boost a sum of $700,000 in full and final settlement of the action and counterclaim.  There is no dispute that the judgment was substantially more favourable to Threshold and Ms Au than the proposed outcome under the offer. 

4.  Order 22 rule 24(2) & (3) of the Rules of the High Court (Cap 4A) provide as follows:

“ (2)  The Court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court.

(3)  The Court may also order that the plaintiff is entitled to—

(a)  his costs on the indemnity basis after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court; and

(b)  interest on those costs at a rate not exceeding 10% above judgment rate.”

5.  By virtue of Order 22 rule 24(4), the court shall make the orders under rule 24(2) & (3) unless it considers it unjust to do so.  Boost does not contend that it would be unjust to make those orders.  The only point it has taken is that the enhanced interest rate on the judgment sum and on costs should not be 4% above judgment rate, but should be judgment rate instead.

6.  The offer was made in this case rather late, only 34 days before commencement of trial on 26 November 2019.  The last date for acceptance without leave of the court was 20 November 2019 (whether or not counsel’s briefs had been incurred by then is not relevant for present purposes, but a matter for taxation).  In reply, Threshold and Ms Au submit that witness statements were exchanged very late, on around 18 October 2019, and that the sanctioned offer was made only 5 days after exchange.  It seems to me, however, that both sides were late in producing their statements with reference to the original directions of the court, although Threshold eventually got ready sooner than Boost.  In any event it does not alter the objective fact that the offer was made at a late stage when much costs had already been incurred on both sides.  I consider that the timing was in similar region as the cases of Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd [2017] 2 HKLRD 477; Fung Wing Yee v Chen Jung Chien (unrep, HCPI 657/2007, 30 April 2010); and Power Color Scanning & Lithographics Ltd v Kam Kong Food Factory (a firm) (DCCJ 3902/2007, 9 November 2010), where the rate of 2% above judgment rate was ordered as the enhanced interest rate. 

7.  Here, even taking into account the misgivings I had on Boost’s counterclaim, it cannot be said to have been made in bad faith.  The fact that Boost failed to engage with the plaintiff on the sanctioned offer, which was not a trivial one, and failed in the end to beat it, should in all the circumstances result in an enhanced rate of 2% above judgment rate.  For simplicity, interest on costs would run at half that rate from 21 November 2019, following the approach in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273.

8.  Accordingly, there will be a varied order that:

(1)  There will be interest on the judgment sum of $1,018,250 at the prime rate plus 1% per annum from the date of writ to 20 November 2019 and thereafter at the rate of 2% above judgment rate to the date of judgment. 

(2)  From the date of judgment to the date of payment, interest on the entire judgment sum (including interest accrued up to the date of judgment) shall accrue at judgment rate.

(3)  Boost do pay Threshold’s costs of the action and Threshold’s and Ms Au’s costs of the counterclaim, to be taxed if not agreed, with a certificate for two counsel:

(a)  on a party and party basis for the period up to and including 20 November 2019;

(b)  thereafter on an indemnity basis.

(4)  For the period from 21 November 2019 to the date of judgment, interest on the costs payable to Threshold and Ms Au incurred after 20 November 2019 be at half of the rate of 2% above judgment rate.

9.  As for the costs relating to the present summons, since Threshold and Ms Au are partly successful in obtaining the variation sought, I would order that the Boost do pay half of their costs on the party and party basis.