ANGBUHANG NETRA JANG v. LAING O’ROURKE CONSTRUCTION HONG KONG LTD AND ANOTHER

HCPI 69/2015

[2023] HKCFI 2528

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 69 OF 2015

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DECISION ON
ENHANCED INTEREST ON COSTS

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1.  By a judgment dated 20 November 2020 ([2020] HKCFI 2928), I dismissed the plaintiff’s claim after trial and made an order nisi that he should pay the defendants’ costs of this action, to be taxed on a party and party basis if not agreed, and that the plaintiff’s own costs prior to the discharge of his legal aid certificate should be taxed in accordance with the Legal Aid Regulations (Cap 91A)  (“Costs Order Nisi”).

2.  The plaintiff issued the writ of summons herein on 23 January 2015.  Before that, he had been granted legal aid on 3 July 2014.  His legal aid certificate was discharged on 29 February 2016.

3.  It subsequently transpired that the defendants had made a total of 4 sanctioned payments adding up to $800,000 on 29 January 2015, 9 December 2015, 22 January 2016 and 24 March 2016.  The last day on which the plaintiff could have accepted the first of the defendants’ sanctioned payments (in the amount of $200,000)  without leave of the court was 26 February 2015.

4.  On 26 January 2021, upon the defendants’ application by summons dated 4 December 2020 (“Summons”)  pursuant to Order 22 rule 23 of the Rules of the High Court (Cap 4A)  (“RHC”), I varied the Costs Order Nisi as follows (“Varied Costs Order”)  on the grounds set out in the reasons for decision on costs handed down herein on 27 January 2021:

(1)  that the plaintiff shall pay the defendants costs up to and including 26 February 2015 to be taxed on a party and party basis if not agreed and thereafter on an indemnity basis, to be taxed if not agreed;

(2)  that the plaintiff shall pay enhanced interest at 10% above the judgment rate on each payment of costs incurred by the defendants after 26 February 2015 from the date of payment by the defendants’ insurers up to the date of judgment;

(3)  that the sanctioned payments, together with any interest accrued thereon, shall be paid out to the defendants’ solicitors forthwith; and

(4)  that the costs of the defendants’ application to vary the Costs Order Nisi should be paid by the plaintiff to the defendants, to be taxed on an indemnity basis if not agreed.

5.  It is common ground that the DLA is liable to pay the defendants’ costs only for the period during which the plaintiff was legally aided so that such liability ceased on 29 February 2016 (i.e. the date of discharge of the plaintiff’s legal aid certificate).  Such costs has been agreed at $170,192 (excluding interest). 

6.  As for the enhanced interest on costs, the DLA has also accepted liability up to 29 February 2016 (i.e. the date of discharge of the plaintiff’s legal aid certificate). 

7.  Dispute has, however, arisen because the defendants insist that the DLA should further bear the enhanced interest on their costs incurred after 29 February 2016 up to the date of judgment (i.e. 20 November 2020), notwithstanding the discharge of the plaintiff’s legal aid certificate on 29 February 2016.

8.  By their solicitors’ letter dated 3 August 2022 to the court (enclosing their correspondence with the DLA from 14 April 2022 to 19 July 2022), the defendants apply for further “variation” of the Varied Costs Order by adding this paragraph: “To the extent that the [DLA] is liable to pay the Defendants costs during the legally aided period from 26 February 2015 to 29 February 2016, DLA shall pay the said enhanced interest on such costs from the date of each such payment by the Defendants’ insurers up to the date of Judgment.” (“Application”). 

9.  I can see no basis to accede to the Application.

10.  First, the DLA’s liability to bear the costs ordered against an aided person is governed by s 16C of the Legal Aid Ordinance (Cap 91)  (“LAO”).  In none of the situations provided for in s 16C is the DLA liable for costs incurred outside of the legally aid period, over which he has no control over the aided person’s conduct of the proceedings.

11.  Second, the defendants accept that the DLA’s liability for the defendants’ costs ceased upon the discharge of the plaintiff’s legal aid certificate on 29 February 2016.  It is, to my mind, illogical and absurd for the defendants to then contend that the DLA should pay the enhanced interest ordered over any part of the costs which the DLA does not have to pay as a matter of law.

12.  Third, I most certainly disagree with the defendants’ purported reading of the Varied Costs Order which plainly does not whether expressly or impliedly require the DLA to bear the enhanced interest that accrued after 29 February 2016 or even deal with the DLA’s liability to pay the defendants’ costs or the interest thereon ordered against the plaintiff.

13.  As is normal practice, I had no intention whatsoever to affect the extent to which the DLA is liable to pay the costs and the enhanced interest on costs ordered against the plaintiff which matter is, as stated in [10] above, regulated by s 16C of the LAO.  As for the defendants, they had not, whether in the Summons or the supporting affirmation or submission relating to the Summons, raised the issue of the DLA’s liability for enhanced interest. 

14.  Fourth, the citation of Thapa Hari Bahadur v Paramount Engineering & Manpower [2022] HKCFI 1305 is misleading.  Madam Justice Au-Yeung was there ordering the plaintiff, not the DLA, to pay the defendants’ costs up to the date of judgment.  The DLA did not feature at all in the order made by Au-Yeung J.

15.  Last, the courts’ encouragement of procedural economy does not excuse litigants from observing the rules of the court.  In this instance, the defendants make the application purportedly pursuant to Order 20 rule 8 of the RHC.  However, rule 8(3)  expressly stipulate that rule 8 shall not have effect in relation to a judgment or order.  It is also suggested that the omission of the proposed addition to the Varied Costs Order was “an accidental slip or omission”, which is the language used in Order 20, rule 11. It should have been obvious from the above discussion that there was no slip or omission on the part of the court.  In any event, an application like the present one should have been made formally by summons and not casually by a letter to the court. 

16.  For the above reasons, I dismiss the Application.  I also order the defendants to pay the DLA’s costs of dealing with the issue of enhanced interest, including the costs of the pre-Application correspondence, which I will summarily assess. For this purpose, the DLA should file and serve his statement of costs within 7 days from the date of this decision and the defendants should file and serve their statement of objections (if any)  within 7 days thereafter.  In preparing their said respective statement, the parties should know that I propose to assess the DLA’s costs on the basis that I would have ordered indemnity costs in favour of the DLA had I directed taxation.  In my view, the Application is so bad, substantively and procedurally, as amounting to an abuse of process, which the court should disapprove of by awarding costs on the most generous basis to the opposite party.