CHAU KA HUNG v. CHUNG CHUN HON

DCPI 949/2021

[2024] HKDC 152

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO. 949 OF 2021

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DECISION

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1.  This is the defendant’s application for variation of the cost order nisi in the judgment of this court made on 14 September 2023 (“the Judgment”).

2.  In the Judgment, the court awarded the plaintiff damages of HK$100,778 (plus interest)  with a cost order nisi that the defendant pay the plaintiff’s costs of the action be taxed if not agreed (“the Cost Order Nisi”).

3.  The defendant had in fact paid a sum of HK$100,000 into court on 16 April 2021 as sanctioned payment (“the Sanctioned Payment”). This was not accepted and, of course, it was narrowly beaten by the judgment sum.

4.  On 28 September 2023, the defendant took out the current application to vary the order nisi to a “no order as to costs of this action” (“the Summons”).

The legal principles

5.  There is no dispute in the legal principles. I need not go into details but in summary:

a.  the award of costs are in the discretion of the court,

b.  the starting point is that costs are to follow the event, and

c.  for the court to deviate from this general rule, the court should take into account of the circumstances of the case including the underlying objectives of Order 1A, rule 1; payment into court; offers or contributions; the degree of “success” of a party etc. (Order 62 rule 5 of the Rules of the District Court (Cap. 336H))

6.  The burden is on the party seeking to displace this general rule to show the circumstances justified such exceptional course (Lam Po Yee and Another v Dr. Chan Yee Shing also known as Dr. Chan Yee Shing Alvin [2018] HKCFI 870).

The defendant’s case

7.  Ms. Tang, counsel for the defendant, submitted that it would not be fair for the defendant to pay the plaintiff’s costs of the action and advanced three grounds in support.

8.  Firstly, she submitted that the plaintiff could not be said to be the “real winner” because the court was not with the plaintiff in all the disputed issues regarding damages.

9.  For example, the plaintiff’s case was that there was no contributory negligence and the defendant’s case was that there should be 50%. The court found 20%. Ms. Tang submitted that “there was no winner on this issue”.

10.  Further, the eventual award was very close to the Sanctioned Payment and the difference was down to the court’s approach to one item (the vehicle repair cost).

11.  Ms. Tang also listed all the issues in dispute and then award each with a “win, lose or draw” to attempt to show that the plaintiff “could hardly be said to be the winning party”.

12.  Secondly, Ms. Tang also raised concern with the plaintiff’s conduct in particular regarding the court’s finding that the plaintiff was exaggerating his claim, i.e. exaggerated his injury and insisted that he sounded the horn (which was not accepted by the court).

13.  Ms. Tang also raised criticisms of the plaintiff increasing the PSLA claim from HK$100,000 to HK$350,000 in an Amended Revised Statement of Damages dated 13 April 2023, about 1 month before the trial. Ms. Tang contended that this was “improper and unreasonable” given that this was again based upon exaggeration of his right leg injury. The court found the evidence not credible.

14.  Ms. Tang also submitted that the defendant was willing to accept liability so the court’s time was saved.

15.  Thirdly, Ms. Tang submitted that the plaintiff was unwilling to engage in negotiation, though after perusing the bundle of correspondence produced by the plaintiff, Ms. Tang submitted that there was negotiation between the parties, but only of “minimal” extent.

The court’s consideration

16.  First of all, I disagree with Ms. Tang’s proposed “post-mortem” test by listing all the disputed issues and then counting the “wins” and “loses” to determine the “real winner”.

17.  This is not the right test. I think that the “real winner” argument might apply to cases where disproportionate amount of time and costs have been spent to obtain an insignificant benefit in the judgment. I can see the reason why the court may exercise its discretion when a minimal or even symbolic award was given in the judgment.

18.  However, this de minimus principle is not applicable in cases of sanctioned payments. It is trite that the court favours clear-cut certainty under such circumstances:

“If the plaintiff recovers more than was available to him, then he has succeeded on what became the lis or issue at the trial…However small the margin, if he does recover more he cannot be said to have failed…The advantage of a clear-cut rule outweigh, in my judgment, the consequence of introducing a discretionary element which could lead to uncertainty and give scope to prolonged post-judgment debate…”

(Charm Marine Incorporated v Elborne Mitchell, Transcript: Smith Bernal; 22 July 1997).

19.  There is sound reasoning for this view: the whole point of a sanctioned payment is putting a certainty to the proceedings: the parties are invited to assess their risks and take their positions. It is a (calculated)  gamble and, like a gambling game, after the croupier called “no more bets”, that is it. Introducing a “post-mortem” discretion will lead to uncertainty which completely defeats its original intention. And allowing a “second bite at the cherry” will also invite prolonged post-judgment costs arguments which runs counter to case management objectives.

20.  As for Ms. Tang’s second ground, the important consideration here is whether any conduct of the plaintiff might have unreasonably and significantly increased the length or costs of the proceedings.

21.  In any trial, the court would invariably find certain evidence not credible from certain witnesses, but the court should balance this with the reasonable right of the parties to have their case heard fully in court. There should not be a “post-mortem” analysis of credibility as a ground for cost dispute in every case.

22.  Instead, unless there were exceptional circumstances when the conduct was so unreasonable that this has impacted significantly on costs, the court should be careful not to deviate from the general rule.

23.  In this case, the trial only lasted one day and I found no such exceptionally unreasonable conduct on the part of the plaintiff at trial.

24.  Further, I cannot see how the plaintiff’s revision of the PSLA claim before the trial has any significant impact on the cost: the defendant could have argued to seek costs of that application at the time.

25.  Of course, I also accept the plaintiff’s counter-argument that the defendant himself did not admit liability in the action right up until the opening submission at the trial. This conduct may arguably have some impact on the cost of the action.

26.  Nevertheless, none of these can be considered “exceptional circumstances”.

27.  As for Ms. Tang’s third ground, having perused the bundle of “without prejudice” correspondence between the parties, I see no evidence that the plaintiff has been “unwilling” to engage in negotiation.

28.  Quite the contrary, the correspondence showed that the parties has been in some form of negotiation as early as 20 August 2020 (an offer of that date was mentioned the plaintiff’s solicitors’ letter dated 9 October 2020). Indeed, since the defendant’s Sanctioned Payment on 16 April 2021, the plaintiff had progressively lowered his Sanctioned Offers from HK$200,000 on 11 October 2021 to HK$150,000 by 27 January 2023.

29.  It is clear that the defendant has chosen to stand firm on his one and only Sanctioned Payment.

30.  A Sanctioned Payment is a risk management exercise. Given the general principles, the defendant must approach this assessment with some caution: he must be careful not to underestimate the plaintiff’s chance of success nor over-estimate his own, and then perhaps leave a wide enough margin to err on the side of caution given the inherent risk of litigation.  The defendant may tactically choose to stand firm on his own assessment, but this is a calculated gamble that he is willing to take, and he must also be willing to face the consequence.

Conclusion

31.  As discussed above, I am not persuaded that there are sufficient grounds to depart from the general rule regarding costs.

32.  I would therefore order the Cost Order Nisi be made absolute, and for the Summons to be dismissed with costs of the Summons be to the plaintiff.

33.  If there is no agreement on the costs of the Summons, the plaintiff should lodge and serve a summary bill of costs within 28 days of this decision, the defendant should lodge and serve a summary list of objections 14 days thereafter, and the court would assess costs summarily on paper.