WONG YAT PING v. CARITAS – HONG KONG

DCEC 2123/2015

[2018] HKDC 1090

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 2123 OF 2015

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DECISION

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Introduction

1.  On 20 July 2018, this court handed down a judgment (“the judgment”) in which I assessed that the quantum of compensation payable by the respondent to the applicant under the ECO at HK$82,490.60 together with interest stipulated in the judgment.  For ease of reference, unless otherwise specified, I adopt the abbreviations used in the judgment herein.

2.  On 2 August 2018, the respondent filed a summons (“the summons”) for an order varying the order made in the judgment.  The basis of the application is a sanctioned payment of HK$96,225.90 made by the respondent (“the sanctioned payment”) on 4 November 2015.  Notice of the sanctioned payment (“the notice”) was given to the applicant on 4 November 2015.  The applicant did not accept the sanctioned payment.

3.  On 9 August 2018, the Director of Legal Aid (“the DLA”) wrote to this court (“the DLA’s letter”) and informed the court that the legal aid certificate granted to the applicant only covered all the steps up to the pre-trial review on 20 April 2018, and did not cover any step taken by the applicant thereafter.  Accordingly, the applicant’s own costs incurred after 20 April 2018 should not be covered by legal aid.

4.  After seeing the DLA’s letter, I immediately issued a direction to the parties requiring the order made in the judgment not to be sealed until after the determination of the summons.

No legal aid taxation

5.  The position stipulated in the DLA’s letter is not disputed by the applicant.  That being the case, it is clear that in respect of all the costs incurred after the pre-trial review on 20 April 2018, the applicant is not entitled to have her own costs being taxed in accordance with the Legal Aid Regulations.  The costs order nisi provided in the judgment must be varied in this respect.

6.  It is most unsatisfactory that during the trial, counsel for the applicant did not draw the court’s attention to the fact that the applicant ceased to have legal aid after the pre-trial review.

The sanctioned payment

7.  The sanctioned payment was made on 4 November 2015.  According to the Rules of the District Court, Order 22 rule 15(1), the applicant might accept the same without the leave of the court within 28 days after the payment was made.  That 28-day period ended on 2 December 2015. 

8.  The respondent submits that the sum awarded to the applicant in the judgment is HK$82,490.60.  Applying the interest rate provided in the judgment, ie half of the judgment rate, the interest from the date of the accident (ie 24 January 2014) to 2 December 2015 is HK$6,129.16.  The total due to the applicant therefore is HK$82,490.60 + HK$6,129.16 = HK$88,619.76, which is less than the sanctioned payment. Accordingly, the applicant has failed to obtain a judgment better than the sanctioned payment, and the consequences specified in Order 22 rule 23 should be given effect.

9.  The applicant submits that the interest from the date of the accident to the date of the judgment is HK$14,771.47.  Hence, the total payable to the applicant is HK$82,490.60 + HK$14,771.47 = HK$97,262.07.  Accordingly, the applicant has obtained a judgment better than the sanctioned payment. 

10.  The applicant’s objection is unsustainable. Order 22 rule 26(1) provides:-

“Unless—

(a) a plaintiff’s sanctioned offer which offers to accept a sum of money; or

(b) a sanctioned payment notice,

indicates to the contrary, any such offer or payment is to be treated as inclusive of all interest until the last date on which it could be accepted without requiring the leave of the Court.”

11.  In Novo Steel (HK) Limited v Peako Engineering Co. Limited [2015] 2 HKLRD 598, Bharwaney J said at [7]:-

“In my judgment, O.22, r.24 has to be applied by considering the position that would have obtained if judgment had been given on the last date on which the plaintiff’s sanctioned offer could have been accepted by the defendant without requiring the leave of the court. Such a construction naturally follows from the terms of O.22, r.26. Any other construction would not only be contrary to the express terms of O.22, r.26 but would also render the provisions of O.22 unworkable as parties, be they plaintiffs or defendants, can never predict when trials would take place, when judgments would be handed down, and when final judgments would be entered. It is illogical to require a defendant to pay interest up to a notional date of trial taking place or date of judgment to be handed down in the future. The aim of the Civil Justice Reform is to promote early settlement at reduced cost not to gift the receiving party who accepts a sanctioned payment with a windfall.”

12.  By the operation of Order 22 rule 26(1), the sanctioned payment is treated as inclusive of all interest until the last date on which it could be accepted without requiring the leave of the court, which is 2 December 2015.  Nothing in the notice indicates the contrary.  There is no dispute that applying the interest rate provided in the judgment, by 2 December 2015, the amount of interest is HK$6,129.16. Thus, under the judgment, by 2 December 2015, the total due to the applicant is the figure suggested by the respondent, ie HK$88,619.16, which is less than the sanctioned payment.

13.  The applicant argues that it would be unjust to allow the respondent to have the order sought in the summons:-

(1) The respondent has agreed to have the joint medical examination on 19 May 2016 and mediation on 13 September 2017, and have prepared a witness statement and filed the same on 17 November 2016.  All these have led to additional costs.  The respondent should bear responsibility of incurring these costs after 2 December 2015.

(2) The applicant did not have sufficient information to decide to accept the sanctioned payment or not by 2 December 2015.  At that time, the applicant only had the Form 7 and the Form 9 and the joint medical examination had not taken place.  In the Joint Report, Dr Lau assessed that the applicant had a permanent loss of earning capacity of 3%.

14.  In my view, there is no merit in these arguments.

(1) The respondent has to continue to incur costs in these proceedings because the applicant refused to accept the sanctioned payment on or before 2 December 2015.  The applicant’s unreasonable refusal has forced the respondent to continue to incur costs in these proceedings.  The applicant must pay a price for her own unreasonable act.

(2) The applicant chose to abandon the appeal against the Form 9 in the trial and to rely upon the figure specified in the Form 9 in relation to loss of earning capacity permanently, ie 2%.  There is no merit at all in the applicant’s argument that she had no sufficient information to decide to accept the sanctioned payment or not on or before 2 December 2015.

15.  The applicant has placed a letter written by the DLA on 10 September 2018 before the court, in which the DLA has made the following submissions:-

(1) The DLA should only be liable to pay costs in these proceedings up to and including the pre-trial review hearing on 20 April 2018.

(2) The applicant did not act unreasonably before 20 April 2018.  Before the expiry date for acceptance of the sanctioned payment, ie 2 December 2015, the applicant did not have the benefit of the joint medical examination and could not made an informed decision to accept the sanctioned payment or not.

(3) The purpose of making an order for indemnity costs and enhanced interest is to achieve a fairer result and not to impose a penalty.  Further, the purpose of making this order is not to create a windfall for the respondent or the respondent’s insurer.

(4) If the order sought by the respondent is made, the sum awarded to the applicant in the judgment may not be sufficient to cover all the costs due to the respondent even just calculating the costs up to 20 April 2018, and the DLA may have to meet the deficiency by public fund.  It is not appropriate to impose excessive sanctions against public fund.

16.  As said in the above, it is clear that the DLA would not be liable to any costs incurred in these proceedings after 20 April 2018.  For the reason stated in paragraph 14(2) above, I do not agree that the applicant was unable to make an informed decision to accept or not to accept the sanctioned payment on or before 2 December 2015.

17.  I have considered the DLA’s submission that there should be no windfall to the respondent or the respondent’s insurer.  In Shih Pik Nog v G2000 (Apparel) Ltd. [2011] 4 HKLRD 121, Bharwaney J said:-

“17. …… in writing these reasons for my decision it has occurred to me that the defendant’s insurer, who had the carriage of the case on behalf of the defendant, might not have advanced any funds to its solicitors on account of costs between 5 November 2010 and 25 May 2011. Depending on their relationship, solicitors may offer to work for insurers on the basis that they will only ask for payment of fees at the conclusion of the case. One motor insurer, now in liquidation, was notorious for late payment of solicitors’, and counsels’, fees. If the insurer has not made any advance on account of fees, the rationale for awarding interest on costs would not apply and an order for enhanced interest on costs incurred after the last date of acceptance would produce an unjust windfall for the insurer. In such a case, the court ought not to award any interest on costs.

18. In my judgment, save for legally aided parties, it is incumbent on the party seeking interest on costs, be that party a plaintiff or a defendant, to state, in his supporting affidavit, the amount of disbursements, costs, and costs on account paid to his solicitors during the period commencing from the last date of acceptance up to the date of the supporting affidavit, and the date(s) of payment.  Upon sight of this information, the court can either refuse to or make an order for enhanced interest on the actual amounts of disbursements, costs, and costs on account paid during the relevant period, and the court can award interest either at the full rate from the actual dates of payment or adopt the modified approach of Lam J.  The former approach would be suitable for cases where there have only been a few payments and the latter approach for cases where there have been multiple payments spanning a long period of time.”

18.  The respondent has produced evidence to show the payments of the disbursements as set out in the schedule to the summons (“the disbursements”).  Following the approach of Lam J (as he then was) in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273, I would award interest on the disbursements at the rate of 4.5% per annum from 3 December 2015 to the date of the judgment.  For avoidance of doubt, the interest on the disbursements thereafter should be at the judgment rate until full payment of the same.

19.  The respondent is also entitled to have indemnity costs from 3 December 2015 until the conclusion of the assessment of compensation with a certificate for counsel.  I appreciate that if the respondent’s costs between 3 December 2015 and 20 April 2018 are taxed on an indemnity basis, the award obtained by the applicant in the judgment may not be sufficient to meet those costs, and the DLA may have to meet the deficiency by public fund.  However, the applicant has failed to obtain a judgment better than the sanctioned payment, and the court has to give recognition to this fact.  In my view, the aforesaid is a fair disposal of the matter and is not an excessive sanction against public fund.

20.  The parties have produced some “without prejudice save as to costs” correspondence in this hearing.  I have considered those letters.  In my view, nothing in those letters would change the analysis above.

Disposition

21.  I vary the costs order nisi and replace it by the following (which is a costs order absolute):-

(1) The respondent do pay the applicant’s costs of the action, including all costs reserved, up to 2 December 2015 on a party-and-party basis, to be taxed if not agreed;

(2) The applicant do pay the respondent’s costs of the action, including all costs reserved, from 3 December 2015 until the conclusion of the assessment of compensation on an indemnity basis with a certificate for counsel, to be taxed if not agreed;

(3) The applicant do pay the respondent interest on the disbursements (to be taxed on an indemnity basis if not agreed) from 3 December 2015 to 20 July 2018 at 4.5% per annum, and thereafter at the judgment rate until full payment of the same.

22.  The respondent does not seek an order in terms of paragraph 1(d) of the summons, ie there be interest on all costs and on interest on the disbursements at the judgment rate from 20 July 2018 until full payment.  Accordingly, I have no need to deal with this.

23.  The DLA shall not be liable for any costs incurred in these proceedings after 20 April 2018, and there shall be no legal taxation in respect of the applicant’s own costs incurred after 20 April 2018.

24.  I also vary the interest on the award made in paragraph 26 of the judgment.  There be interest on the award at half of the judgment rate from the date of the accident to 2 December 2015, and there be no more interest on the award after 2 December 2015.

25.  I further order that:-

(1) Subject to the first charge of the DLA, a sum of HK$88,619.76 be paid out of court to the applicant through the DLA forthwith from the sanctioned payment;

(2) The remaining balance of HK$7,606.14 of the sanctioned payment together with the interest accrued thereon (if any) be paid out of court to the respondent forthwith through its solicitors.

26.  The final order is the order made in the judgment with the aforesaid variations.

27.  As the respondent has substantially succeeded in this application, the respondent should have costs of the summons.  The applicant’s opposition to the summons is without merit.  I am of the view that costs of the summons should be to the respondent with a certificate for counsel, to be taxed on an indemnity basis if not agreed.  This is an order made after hearing submissions made by the parties, and is a costs order absolute.