CHAN YUK PING v. LIEW SHUK FUI

DCCJ 1811/2022

[2025] HKDC 140

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1811 OF 2022

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BETWEEN

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DECISION ON COSTS

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A. INTRODUCTION

1.  By the Assessment of Damages handed down on 20 June 2024 (the “Assessment of Damages”), I assessed the amount of damages to the Plaintiff in the present action in the sum of HK$602,000.00 with interest. I also made a costs order nisi in favour of the Plaintiff for the costs of these proceedings (the “Costs Order Nisi”).

2.  By Summons dated 4 July 2024 (the “Summons”), the Defendant made an application for variation of the Costs Order Nisi that:

(1) Costs of these proceedings up to and including the date of 18 October 2023 be to the Plaintiff, to be taxed if not agreed; and

(2) All costs incurred by the Defendant in these proceedings from 19 October 2023, including the costs of the assessment of damages hearing and the costs of the Summons, be paid by the Plaintiff to the Defendant, on indemnity basis, to be taxed if not agreed, with certificate for one counsel.

3.  In essence, it is contended by the Defendant that:

(1) The Plaintiff could have done better by accepting any of the open offers made by the Defendant on 9 October 2023 (the “1^st Open Offer”), 20 October 2023 (the “2^nd Open Offer”) and 25 October 2023 (the “3^rd Open Offer”) (collectively, the “Open Offers”), yet the Plaintiff unreasonably rejected all of the Open Offers (the “Open Offers Ground”); and

(2) The Plaintiff should not be regarded as the true winner because she failed in most of her heading of claims and only succeeded in less than 35% of her claimed amount (the “True Winner Ground”).

B. UNDISPUTED FACTS

4.  I do not intend to repeat the background pertaining to these proceedings as already set out in the Assessment of Damages. In short, interlocutory judgment against the Defendant was entered in default on 16 August 2023. The assessment hearing was then fixed for one day on 27 October 2023. The Defendant did not appear in any of the Court hearings prior to the assessment hearing.

5.  On 29 September 2023, the Plaintiff filed her Opening Submissions for the assessment hearing.

6.  On 9 October 2023, the Defendant through Messrs Lo & Fung made the 1^st Open Offer, thereby offering a sum of HK$800,000.00 (inclusive of costs) in full and final settlement of the Plaintiff’s case. A Notice to Act was filed by Messrs Lo & Fung to act for and on behalf of the Defendant on 10 October 2023. The 1^st Open Offer was then repeated in another letter from Messrs. Lo & Fung dated 11 October 2023.

7.  On 13 October 2023, the Defendant filed his Opening Submissions for the assessment hearing.

8.  On 19 October 2023, the Plaintiff through her solicitors rejected the 1^st Open Offer on the ground that the sum offered “is at the lower end and is not acceptable to our client considering the duration and extent of nuisance our client has been facing for over the past 9 years”, and made a without prejudice counteroffer to accept a sum of HK$1,300,000.00 as full and final settlement of her case.

9.  On 20 October 2023, the Defendant made the 2^nd Open Offer on the same terms as those of the 1^st Open Offer but in an increased sum of HK$1,000,000.00 (inclusive of costs).

10.  On 24 October 2023, the Plaintiff through her solicitors rejected the 2^nd Open Offer on the same ground and made the same without prejudice counteroffer as set out in her letter dated 19 October 2023.

11.  On 25 October 2023, the Defendant made the 3^rd Open Offer on the same terms as those of the 1^st Open Offer and the 2^nd Open Offer but in an increased sum of HK$1,150,000.00 (inclusive of costs).

12.  On 26 October 2023, the Plaintiff through her solicitors rejected the 3^rd Open Offer on the same ground as set out in her letter dated 19 October 2023 but made a further without prejudice counteroffer to accept a sum of HK$1,250,000.00 as full and final settlement of her case.

13.  No agreement was reached by the parties. The assessment hearing commenced on 27 October 2023 as scheduled and took 2 days to conclude on 20 December 2023. After the handing down of the Assessment of Damages, on 27 June 2024, the Defendant made a full payment of the damages awarded together with interest thereon to the Plaintiff, which indisputably added up to a total sum of HK$686,512.97.

C. THE OPEN OFFERS GROUND

14.  There is no dispute that while the Open Offers were not a sanctioned offer or payment and do not have the statutory consequences as provided by Order 22 of the Rules of the District Court (Cap 336H), they may be taken into account as one of the relevant considerations for the Court’s exercise of its discretion on costs. There is also no dispute that in considering the same, the proper approach is to ask whether the Plaintiff ought reasonably to have accepted each of the Open Offers.

15.  The Plaintiff contends that she acted reasonably in rejecting the Open Offers based on the following two reasons:

(1) The Open Offers were not genuine for acceptance; and

(2) The Open Offers had not factored in the amount of costs that the Plaintiff had incurred from the start of these proceedings until 19 October 2023, which had added up to a total sum of HK$462,000.00.

16.  On the first reason, the Plaintiff relies on the Defendant’s past behaviour and litigation conduct showing that the Defendant would not honour promises or comply with Court orders. Counsel for the Plaintiff also submitted that the Open Offers were not genuine as they were not sanctioned offers; they lacked the elements as an offer based on contract law; and they did not contain a period of acceptance and were lack of certainty of time. Upon careful consideration, I am unable to accept the Plaintiff’s contentions and submissions as such for the following reasons:

(1) The terms of the Open Offers were all clear and easy to understand. The Plaintiff was invited to accept the same before a particular date as stipulated in each of the Open Offers. I cannot see how they could be said to be lack of any elements as an offer or certainty of time;

(2) The mere fact that the Defendant did not make a sanctioned offer does not necessarily mean that the Open Offers were not genuine, particularly when the terms of the Open Offers (with a sum proposed to be inclusive of costs) could not have been similarly contained by way of a sanctioned offer or payment;

(3) In any event, in none of the Plaintiff’s letters in reply to the Open Offers had the Plaintiff ever purported to have rejected the Open Offers due to the above reasons or an alleged belief that the Defendant would not honour the Open Offers. She repeatedly rejected the Open Offers on the ground that they were at the lower end given the duration and extent of nuisance caused. She also made a without prejudice counteroffer in each of her letters in reply. Had she genuinely rejected the Open Offers due to a fear that the Defendant would not honour them, she would have no reason to make a counteroffer that might not be honoured either. Plainly, the only reason why no agreement was then reached was the parties’ difference on the acceptable sum for settlement only.

17.  On the second reason, it is indisputable that the sum awarded to the Plaintiff, even inclusive of interest up to the date of payment, ie, HK$686,512.97, was less than the sum offered in each of the Open Offers. However, the Open Offers were all made inclusive of costs. According to the Plaintiff’s affidavit evidence, she had incurred costs of HK$462,000.00 up to 19 October 2023. Despite the Defendant’s challenges to such alleged costs, I see no sufficient reason or contrary evidence for not accepting such costs confirmed by the Plaintiff’s affidavit evidence. With such costs taken into account, the Plaintiff’s awards inclusive of costs and interest exceeded the sums offered in each of the 1^st Open Offer and the 2^nd Open Offer by the time of her rejections of the same. Although her costs might reasonably be expected to be subject to the Court’s assessment or taxation, I am not satisfied that she ought reasonably to have accepted the 1^st Open Offer or the 2^nd Open Offer on the ground of such an expectation alone, particularly when costs are yet to be taxed and it is uncertain whether, and if so, to what extent the Plaintiff’s costs may be taxed off in the present case.

18.  In forming the above view, I bear in mind that the Defendant is the party seeking to displace the general rule that costs follow the event in the present application. The Defendant thus bears the burden of showing that the Open Offers justified such a departure. In making the Open Offers inclusive of costs without any alternative settlement proposal based on the amount of the awards alone (with costs to be assessed), the Defendant took on the risks of uncertainty over any assessment or taxation of the Plaintiff’s costs, as a result of which he may (and he did) fail to prove that the Plaintiff ought reasonably to have accepted the 1^st Open Offer or the 2^nd Open Offer.

19.  The same, however, may not be said for the 3^rd Open Offer. Even with the Plaintiff’s costs of HK$462,000.00 taken into account, the Plaintiff’s awards inclusive of costs and interest still would not exceed the sum offered in the 3^rd Open Offer. While the Summons seeks costs from 19 October 2023, it has all along been clear from the affirmation in support that the Defendant relies on all the Open Offers, and there is no reason why the Plaintiff did not adduce evidence on any costs incurred from 20 October 2023 up to the date of rejection of the 3^rd Open Offer on 26 October 2023, should there be any further costs incurred by her during that period. In fact, the Plaintiff did claim that she paid further costs after 19 October 2023, but there is no detail or breakdown, and it was not stated when such costs were incurred, particularly whether it was before or after 26 October 2023. With no sufficient evidence on any further costs incurred by her up to 26 October 2023 other than the said sum of HK$462,000.00, I find that the Plaintiff ought reasonably to have accepted the 3^rd Open Offer on 26 October 2023.

D. THE TRUE WINNER GROUND

20.  While I accept that in general, whoever may be described as the winner is entitled to costs, I do not accept the Defendant’s submissions that the Plaintiff is not the true winner just because she failed in some heading of claims or in obtaining the full sum of damages as claimed.

21.  First, while the Plaintiff did not succeed in obtaining the full sum of damages as claimed, the Defendant did not succeed in resisting the Plaintiff’s claim completely by contending that the Plaintiff should be awarded only with nominal damages either.

22.  Further, although the Plaintiff failed in some heading of claims, this is not a case in which she should be criticised for having raised such claims in the first place. In particular, as explained in my Assessment of Damages, I made no award of exemplary damages because the compensatory damages awarded are sufficient. This does not mean there was no factual basis for one to make a claim for exemplary damages at the outset, or that the Plaintiff had necessarily exaggerated her case.

23.  In any event, the majority part of the evidence and the parties’ arguments in the assessment hearing focused on the claims for aggravated and exemplary damages. The evidence on which the Plaintiff relied for her claims for aggravated and exemplary damages is also largely overlapping. The failed heading of claims did not add substantially to the length or costs of these proceedings. Therefore, I do not find it appropriate to deprive the Plaintiff of any part of her costs, which would have been incurred in any event, on the ground of her said failed heading of claims alone.

E. DECISION ON THE SUMMONS

24.  For the reasons stated above, I do not accept the Open Offers Ground insofar as the 1^st Open Offer and the 2^nd Open Offer are concerned. Nor do I accept the True Winner Ground.

25.  I, however, accept the Open Offers Ground insofar as the 3^rd Open Offer is concerned. I find that the Plaintiff ought reasonably to have accepted the 3^rd Open Offer inclusive of costs on 26 October 2023, when she substantively replied to and rejected the 3^rd Open Offer.

26.  The general rule is that a party failing to “beat” an offer should be made to pay all the costs of the offeror from the date of rejection of such an offer. However, this is not a rigid rule that must apply regardless of all other circumstances of the case, such as where the offeror caused costs to be incurred. In the present case, the only substantial costs incurred by the Defendant from 26 October 2023 were the costs of the assessment hearing, which was fixed for the next day after the 3^rd Open Offer was rejected. By reason of the late timing when the 3^rd Open Offer was made, most if not all of the Defendant’s preparation costs of the assessment hearing should have then already been incurred. There was likely insufficient time for vacating the hearing fixed for the next day either, although the hearing should have been shortened, and the second day of hearing should have been avoided, had the 3^rd Open Offer been accepted. In short, the Defendant caused part of his own costs by making the 3^rd Open Offer at a late stage.

27.  Taking all the above matters into account, on a broad-brush approach, for all costs of these proceedings from 26 October 2023 onwards (including the costs of the assessment hearing), I consider it appropriate to order the Plaintiff to pay 50% of the Defendant’s costs. While the Summons seeks costs from 19 October 2023, given my findings above, it is within my wide discretion on costs to order costs to be paid by the Plaintiff from a later date, i.e., 26 October 2023, as ordered.

28.  The Defendant seeks costs of these proceedings on indemnity basis. As explained above, the Open Offers being short of any sanctioned offer or payment do not have the statutory consequences. In seeking costs on indemnity basis, the Defendant relies on the Plaintiff’s failure in proving part of her claims, which arguments essentially overlap with those for the True Winner Ground. For the same reasons as explained in relation to the True Winner Ground above, I do not consider that to be a sufficient reason justifying costs on indemnity basis. Hence, I refuse to order costs as such.

F. DISPOSITIONS AND ORDERS

29.  Accordingly, I shall vary the Costs Order Nisi as follows:

(1) The Defendant shall pay the Plaintiff’s costs of these proceedings up to and including the date of 25 October 2023, including all reserved costs (if any), to be taxed on party and party basis if not agreed; and

(2) The Plaintiff shall pay 50% of the Defendant’s costs of these proceedings (including costs of the assessment hearing, with certificate for one Counsel) from 26 October 2023 onwards, to be taxed on party and party basis if not agreed.

30.  As to the costs of the Summons, the Plaintiff succeeded in resisting the True Winner Ground and part of the Open Offers Ground, while the Defendant succeeded partially on the Open Offers Ground and in seeking a variation of the Costs Order Nisi, but not in the exact terms as sought. In such circumstances, I consider each party to have succeeded partially in this application and the fair costs order to be made should be no order as to costs. I therefore make a costs order nisi that there be no order as to costs for the Summons.

31.  It remains for me to thank Counsel for the assistance rendered to the Court.