CHAN YUET LUI REBECCA v. THE RITZ-CARLTON LTD. AND OTHERS

HCPI 658/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 658 OF 2000

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J U D G M E N T

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1. This is a serious case of unnecessary satellite litigation involving an unreasonable amount of work and generating grossly disproportionate costs on the part of lawyers. On this topic alone I remind the lawyers concerned of pages 15 and 16 of my judgment of 31 October 2000 in respect of an interlocutory hearing in this same action. Amongst other comments I made was the following:

"In the context of the question of cost, about which I am to say a little more, I think these parties have wasted enough costs so far, that any Court would feel itself obliged to take steps to prevent further wastage."

2. The two Plaintiffs in the consolidated action obtained judgment against the second Defendant on 18 January 2001 after a trial before me. They were pedestrians who had been injured by a Mercedes car driven negligently by the second Defendant which went out of control and mounted the pavement. The only issue at the trial on liability was whether the second Defendant was acting within the scope of his employment and therefore as servant or agent of the first Defendant by whom he was actually employed. If he was so acting then the judgment would be against the first Defendant as well and its insurers would be obliged to meet the judgment under the policy of insurance. The involvement of the third Defendant was as insurer concerned (being the insurer of the Mercedes vehicle which was on hire to the first Defendant) and on behalf of the M.I.B. It was accepted that if the second Defendant was not driving in the course of his employment then the M.I.B. would satisfy the judgment under the domestic agreement in respect of uninsured motorists. To ensure that the M.I.B.'s interest was properly protected by evidence and argument in support of the case against the first Defendant, the third Defendant was joined in the action.

3. It is not without significance that at some earlier stage the Plaintiffs (or at least one of them) had commenced an action against the first Defendant and on advice had discontinued that. The first Defendant had been brought back into the scheme of things by the Plaintiff(s) at the specific request of the M.I.B. on an undertaking that the M.I.B. would give an indemnity in respect of the costs involved.

4. The position as far as the M.I.B. was concerned at the time the action came on for trial before me, was that the Plaintiff(s) had done what was requested of them by the M.I.B. so that it was in a position to protect its interest by trying to establish liability on the part of another insurer (i.e. that of Ritz-Carlton, the first Defendant). No other potential tortfeasor or insurer featured.

5. I held that the first Defendant was not liable and therefore the M.I.B. was liable to satisfy the Plaintiff(s)' judgment. The Court of Appeal upheld this decision on 23 November 2001.

6. The assessment of the first Plaintiff's damages was handed down by Jackson, J. on 7 January 2002. In accordance with the Rules, interest at judgment rate accrued on the full amount of the judgment until payment. The third Defendant had not asked for a stay of execution pending any appeal to the Court of Final Appeal.

7. It appeared that there was a number of errors in the figures in the judgment which caused the Defendant's solicitors to write seeking agreement to the amount of the judgment being amended. This was quickly agreed to and the sum of $139,465 was deducted leaving a net judgment of $19,243,576 damages.

8. On 21 February 2002, the judgment not having been satisfied, the Plaintiff's solicitors wrote to the second Defendant, the third Defendant's solicitors and to the solicitors for the M.I.B. requesting satisfaction of the judgment. Over one month had elapsed since the amount of the judgment had been amended.

9. Ip Kwan, solicitors for the third Defendant, then raised a technical point which should have been raised earlier. It made no difference to the M.I.B.'s liability to satisfy the judgment nor to the fact that interest would accrue at judgment rate on the amount of the judgment debt. They sought a further amendment to the judgment however.

10. At the same time Ip Kwan sent to the Plaintiff's solicitors a copy of an assignment for the Plaintiff to sign. This was an assignment of the Plaintiff's rights in respect of the judgment debt to the M.I.B. upon the M.I.B. satisfying the judgment and costs.

11. What occasions considerable surprise is this. The basis upon which the M.I.B. had agreed that it was liable to satisfy the judgment and costs if Ritz Carlton escaped liability, had been established even before I gave judgment on liability. It had been the reasoning behind the application of the third Defendant to be joined in the action. It was the reason for the Plaintiff agreeing to rejoin the first Defendant in the proceedings upon the M.I.B.'s undertaking as to costs. I do not understand why the assignment, appropriately drafted to reflect the state of play, could not have been drawn up and put to the Plaintiff before my judgment. If not then (for some reason which I cannot fathom), it could have been dealt with before the appeal against my judgment was heard by the Court of Appeal. As almost a last endeavour it could have been dealt with before Jackson, J. made the assessment of damages. At any of those stages it would have involved minimal work, documentation and skill. The assignment is standard. The Plaintiff wanted her damages. She was entitled to recourse against the M.I.B. She had complied with its requirement to pursue the first Defendant. It was inconceivable that she would not assign her rights of recourse against any defendant, existing or potential, in exchange for the satisfying of her judgment.

12. Somehow the lawyers for both parties contrived to turn an extremely simple, uncomplicated exercise into the inflated issue before me. This litigation had experienced a convoluted and complex earlier life.

13. Provided for my consideration was a bundle of 271 pages, the vast majority of its content being irrelevant. Many of its contents have been duplicated within the bundle. Its existence is proof of waste.

14. Any practitioner holding himself or herself out as experienced in personal injury cases is aware of the M.I.B. agreements. They include the form of assignment referred to. In the assignment supplied by Ip Kwan, the Plaintiff's solicitors objected to and struck out clause 7. I think that it was entirely reasonable to do so. There is no reason why the Plaintiff should have to pay the costs involved in checking through the document by her solicitor.

15. However I can see no justification for striking out clause 2 and rewriting it. It is a standard form of provision. It is of course clear that in this case, Ming An, on behalf of the M.I.B., wanted to protect the position in relation to any action to be pursued against the first Defendant. I do not think Miss Kwan's contention that there might be some other tortfeasor yet to be ascertained is realistic.

16. There then followed an extensive exchange of correspondence and telephone discussions. Ip Kwan wrote on 28 February 2002 saying that payment in satisfaction of the judgment was ready to be made but they required the signed assignment first. That exchange of correspondence was in my view entirely unreasonable on both sides.

17. I consider that it did not matter which version was signed, subject to the exclusion of the costs provision. The Plaintiff's solicitor is a very able and experienced practitioner yet for some reason which I have been quite unable to understand, instructed counsel to consider the assignment. He proposed draft amendments to no good purpose, but as I have indicated they were inconsequential.

18. Eventually after discussion about the interest on the judgment debt, and costs, a slightly amended form of assignment was signed by the Plaintiff. The dispute over interest and costs raged on. Ip Kwan contended that delay in payment of the judgment debt had been occasioned by the Plaintiff's (or her solicitors') obstinacy in delaying signing the assignment. Furthermore in respect of the provision for payment of costs, Miss Kwan contended that in her telephone discussion with Miss Pang the latter had more or less agreed that she would charge her costs against the interest paid. I prefer Miss Pang's version of this conversation. It is recorded contemporaneously and is consistent with a follow-up letter of confirmation. Knowing that this letter of confirmation in particular weakened her own version of events, Miss Kwan said that she had overlooked the material paragraph in her overall concern with the matter. Given the extent to which arguments over costs raise the adversarial stakes in this region, I find that explanation unconvincing.

19. This then is the somewhat extravagant series of events preceding the application before me for the interest and costs, the actual judgment debt having been paid on or about 3 June 2002.

20. The Plaintiff is entitled to interest on the damages at Judgment rate from 30 January 2002, being the date on which the Court revised the figure downwards. Miss Kwan had advanced in correspondence some odd formula as the basis of a substantially reduced amount for interest which she has not sought to sustain before me. The figure for interest will have to be calculated. I cannot conceive that there is any further basis for dispute. For the avoidance of debt it runs from 30 January 2002 to 4 June 2002 being the date on which the actual funds were likely to be credited. There is no claim for interest on interest. Had there been Miss Kwan would have been hard put to resist it. I allow the interest for the period specified in rejection of Miss Kwan's contention because she should have accepted the amended assignment. It in no way derogated from the M.I.B.'s entitlement. More importantly however, there had been the earlier opportunities for dealing with the mater which I have identified. Accordingly the matter seems to have been left almost as afterthought.

21. The costs aspect is a much more vexatious one. There was no justification for counsel to be instructed in this, let alone for him to re-draft provisions in the assignment. Had the matter arisen at any of the earlier stages I referred to, it would have occupied minimal time, effort and thought so that any costs would have been absorbed in the costs of the action itself, by lawyers acting reasonably.

22. I asked both parties to submit a written statement of the costs they would claim if either of them were to succeed. The Plaintiff's statement of costs totalled $75,000. That bald statement conveys nothing of the astonishment it caused to me. $75,000 for what, I asked myself? The sum is made up of $30,000 solicitors costs and $45,000 counsel's fees.

23. This was a simple matter calling for the simplest of approaches. It cannot have involved more than two hours work for any experienced solicitor including the necessary attendance upon the Plaintiff. In the distant but not so dim past I was not without experience of such matters involving claims for and against the M.I.B. I regret to have to assert that fact but the claim for costs at this level is extravagant.

24. In short the claim for solicitors costs and counsel's fees is insupportable. It is small wonder that interested bodies outside the profession are cynical of the claimed "market forces" justification for the level of lawyers' fees.

25. Miss Kwan put forward a figure of $16,750 which although commendably offering a stark contrast, is nonetheless a little on the high side.

26. I regard the Plaintiff's solicitors as entitled to some costs being the necessary and reasonable costs involved in dealing with this simple assignment and having to come to Court to obtain an order in relation to interest. I allow $12,000. Counsel's fees are not allowed. It was quite unnecessary to instruct counsel at all and the fees claimed are grossly excessive. If this Plaintiff were under a disability the Court would be in a position to protect her damages from any reduction to meet these costs claimed by her lawyers. Regrettably it is powerless to do so.