KU, SUET YU AMY v. J.V. FITNESS LTD t/a CALIFORNIA FITNESS

HCPI 266/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT PERSONAL INJURIES NO 266 OF 2015

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R U L I N G

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1.  This case has been settled when the plaintiff accepted a sanctioned payment made by the defendant in the amount of HK$280,000, without leave of Court.  In normal circumstances, the plaintiff should be entitled to her costs of the action.  Order 22 rule 20(1) of the Rules of High Courtprovides –

“(1) Where a defendant's sanctioned offer or sanctioned payment to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date of serving notice of acceptance, unless the Court otherwise orders.[the words in bold is referred to hereinafter as “the otherwise proviso”]”

2.  It is not disputed that this Court has jurisdiction to give other costs order in appropriate cases.  By a summons dated 5 June 2015, the defendant applied for an order that the plaintiff do pay the defendant costs of these proceedings and the costs of and occasioned by the summons.  The summons was opposed by the plaintiff.  It is helpful to start with the factual background which is not in dispute.

Background facts

3.  The defendant operated the business of fitness centre at various places in Hong Kong, including a centre in Mongkok.  On 28 January 2014, the plaintiff was a customer and lawful visitor at the Mongkok centre.  When the plaintiff was walking towards the shower room area of the Mongkok centre, she slipped and fell (“the Accident”).

4.  The plaintiff was admitted to Kwong Wah Hospital after the Accident.  According to the medical report of Dr Wan Keith Hay-Man dated 16 May 2014, the plaintiff, a lady of 58, had tenderness and swelling over the left wrist.  X-ray showed that there was an un-displaced fracture over the left distal radius.  Closed reduction was performed under local anesthesia and a POP cast was given.  The plaintiff was discharged on the next day.  She was given sick leave for 86 days.

5.  According to the report from physiotherapy department of Kwong Wah Hospital dated 2 May 2014, the plaintiff had received 19 session of treatment and further treatment was arranged.

6.  On 28 February 2014, the plaintiff changed her plastic case to wrist brace.  There was decrease in her range of wrist motion and weakness in her hand grip power.  She received further treatment by the occupational therapy department of Kwong Wah Hospital.

Pre-action Letters and Offers

7.  On or about 11 July 2014, the plaintiff instructed Messrs Yu Sun Yau Mak & Lawyers (“YSYM”) to issue a demand letter to the defendant.  The plaintiff claimed that she suffered from significant reduction in left wrist active range and strength. Medical reports were attached, including the ones I referred to hereinbefore. It was disclosed in the said letter that the plaintiff was, prior to the Accident, a retired banker since 2003, but was committed in doing voluntary work after retirement.  There was no suggestion that she was looking for any gainful employment.  There was no quantification of the damages.  YSYM invited the defendant to enter into negotiation for settlement.

8.  There was no response from the defendant.  7 months later, on or about 2 February 2015, Falcon Insurance Company (Hong Kong) Limited (“Falcon”) wrote an open letter to YSYM.  They claimed to be the liability insurers of the defendant and openly admitted liability for damages to be assessed on behalf of the defendant. 

9.  Falcon by a separate letter marked “without prejudice save as to costs” put forward an offer of settlement (“the pre-action offer”).  They offered to pay $280,000 to the plaintiff plus costs at District Court scale to be taxed if not agreed in full and final settlement of the plaintiff’s common law claim.  It was also provided that the offer was opened for 14 days from receipt of the letter failing which it would only be available upon payment of costs incurred by Falcon.

10.  The pre-action offer was rejected by YSYM by letter dated 18 February 2015.  YSYM stated in their letter that the offer was unreasonable as it could not be sufficient to cover just the claim for PSLA.  And by letter dated 23 February 2015, Falcon requested YSYM to quantify the plaintiff’s claim.

11.  By a letter dated 5 March 2015 by YSYM to Falcon, the plaintiff through her solicitors gave a breakdown of her claim as follows –

A.	PSLA	$370,000
B.	Pre-trial loss of earnings	to be assessed
C.	Loss of Earning Capacity	$60,000
D.	Post-trial loss of earnings	to be assessed
E.	Pre-trial Expenses	$50,000
F.	Post-trial expenses	$20,000

12.  And the plaintiff further counter-offered HK$500,000 with costs to be taxed in full and final settlement of her claim.

13.  In a reply letter dated 8 March 2015, Falcon referred to a judgment given in Chan Nga Yin formerly known as Chan Mei Yi Sicely v MTR Corporation Ltd DCPI 1675/2012 and argued that the award of PSLA to the plaintiff could not be more than $200,000.  On the pre- and post- trial loss of earnings as well as loss of earning capacity, Falcon argued that the plaintiff being a retired person, she would not be entitled to claim any damages under these heads.  And for the pre- and post- trial expenses, Falcon requested for documentary proof.

14.  The letter ended with the paragraph that “In view of the above, we are not able to consider your client’s offer stated in your said letter”.  Mr Yu, counsel for the plaintiff, submits that the dialog of negotiation was terminated by Falcon.  Mr Ho, counsel for the defendant, remarks that it was always opened for the plaintiff to make further offer, or to support her claim with documentary proof and legal authority.

Proceedings in this Action

15.  The plaintiff issued the writ in the High Court on 18 March 2015.  When filing the writ, the plaintiff had also filed the statement of claim with the statement of damages, and the medical reports required under Order 18 Rule 12(1A)(a).

16.  Mr Ho submits that it is not necessary for the plaintiff to file a statement of claim as the defendant had admitted liability.  Unnecessary costs had been generated.  He invites me to take this into consideration in exercising my discretion on costs.

17.  The issue would be taken into account in exercising my discretion under the otherwise proviso, if I have to.  It is true that in some cases when the defendant has at the pre-action stage or early stage admitted liability, no statement of claim is to be filed.  And as a comment and generally speaking, whether the filing of the statement of claim is necessary or proper is a matter for the taxing master.   

18.  It should be noted that in the Statement of Damages, the plaintiff had quantified her loss of future earnings.  She claimed that she retired in 2003.  Thereafter, and different from what she claimed in her demand letter, she claimed she was looking for a gainful employment.  On the assumption that she could return to work as a security guard earning around HK$10,000 per month, she claimed a loss under this head in the sum of HK$759,780.  With PSLA claimed at HK$400,000, the plaintiff’s claim exceeded $1,000,000. 

19.  Messrs. Deacons (“Deacons”) was instructed to act for the defendant and an acknowledgment of service was filed on 27 March 2015, admitting liability.  On or about 31 March 2015, the defendant made a sanctioned payment in the sum of $280,000.  It was stipulated in the Notice of Sanctioned Payment that the payment was part of the terms of a sanctioned offer set out in the letter of even date from Deacons to YSYM.

20.  By the letter dated 31 March 2015 from Deacons to YSYM marked without prejudice save as to costs, Deacons warned the plaintiff that the defendant would not agree to a costs order in favour of the plaintiff when the plaintiff accepted the sanctioned payment.  They would apply to the Court for an order that the plaintiff shall pay the defendant’s costs of this action by invoking the otherwise proviso.  Alternatively, the defendant would ask for any costs to be awarded to the plaintiff be taxed on District Court scale. 

21.  The stance of the defendant was reiterated in another letter from Deacons to YSYM dated 10 April 2015.

22.  The said Sanctioned Payment could be accepted without leave of Court within 28 days.  On 21 April 2015, YSYM served a letter marked without prejudice save as to costs on Deacons.  They repeated that the offer from the defendant is unreasonable as it would not be sufficient to cover just the PSLA.  The plaintiff made an offer of $380,000 inclusive of interest in full and final settlement of the action.

23.  With this letter, YSYM attached the uncompleted version of a draft witness statement of the plaintiff.  The disclosed draft set out the injuries of the plaintiff, how the plaintiff was affected by the residual pain and suffering, and her difficulty in daily life and social life, which I presume was to show the injuries of the plaintiff and hence to justify her claim.

24.  Mr Ho submits that the plaintiff should not prepare a witness statement as there was no direction for preparing the same, complaining that the plaintiff was creating unnecessary costs which submission is noted and to be considered if necessary. Again, as a comment, if any party prepared witness statement in advance without approval from this Court, or in accordance with the Rules of High Court, he/she would run the risk of wasting costs if the case was settled before reaching the stage of witness statement.  And this would be a matter for taxing master. 

25.  There was no response to the letter from YSYM.  On 28 April 2015, the last day to accept the sanctioned payment without leave of Court, the plaintiff filed the Notice of Acceptance.

Law on Sanctioned Payment & Others

26.  I am grateful to counsel in producing the relevant authority on the costs issue when sanctioned payment is accepted.  In short, the prima facie rule is that the plaintiff should be entitled to costs of the action up to the time when he may accept the sanctioned payment without leave of Court unless (1) the defendant discharges the burden of showing exceptional circumstances that justify a departure; and (2) he has given a prior warning to the plaintiff that he would invoke the otherwise proviso (per Poon J (as he then was) Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd [2013] 2 HKLRD 1184.)  For the purpose of this ruling, Mr Yu concedes that warning has been given to the plaintiff.

27.  In a judgement given in Wong Chim Hing v Discovery Bay Transit Services Ltd HCPI 254/2011, Bharwaney J, the PI Judge agrees with the above ruling of Poon J.  Wong Chim Hing case is a ruling on whether the plaintiff is entitled to High Court scale for taxation when the sanctioned payment accepted is below $1,000,000.  Bharwaney J ruled that the acceptance by the plaintiff of an amount less than $1,000,000 would constitute an exceptional circumstance for the exercise of the court’s discretion to make an otherwise order under Order 22 rule 20(1) or (2).  But the Court would take into account other factors before deciding if costs should be taxed at District Court scale.

28.  Reading from these 2 judgments, the burden rested first on the defendant to prove that there is exceptional circumstance that I should invoke the otherwise proviso and warning has been given.  And if the defendant proved that the otherwise proviso should be invoked, I had to take all material facts into consideration and decide what would be the proper costs order in the circumstances of this case, including if costs should be awarded against the plaintiff.

29.  This case is settled at $280,000.  In line with the ruling of Mr Justice Bharwaney, this fact itself would be an exceptional circumstance for invoking the otherwise proviso.  Mr Yu informs me that the plaintiff’s solicitors had informed the defendant’s solicitors before today that she would concede any costs award in her favour be taxed on the District Court scale.  This is noted. 

30.  As the key argument of the plaintiff, Mr Yu submits that there was no special circumstance which would justify this Court to invoke the otherwise proviso.  I presume he wishes to say that the only special circumstance is the amount of payment received which may justify taxation at District Court scale.  This would not justify further adverse cost order against the plaintiff.

31.  The grounds for invoking the otherwise proviso as set out in the submission of Mr Ho are –

(a) The plaintiff should have accepted the pre-action offer offered by Falcon (as mentioned above is $280,000 plus costs);

(b) The pre-action offer is generous;

(c) After rejecting the pre-action offer, the plaintiff accepted the sanctioned payment which is no better than the pre-action offer;

(d) There is no relevant change of circumstance between the 2 offers;

(e) The plaintiff has unreasonably refused the pre-action offer.

32.  In gist, the defendant is alleging that the sanctioned payment accepted by the plaintiff is no better than the pre-action offer.  The plaintiff has acted unreasonably in refusing the pre-action offer as there is no relevant change of circumstances. Mr Ho further seeks to rely on 2 judgments, namely Fung Yim Chun v. Fung Kui Wah HCA 115/2010 and Wong Ka Chi v Cheung Li Glass Engineering & Anor DCPI 2013/2014. 

33.  In Fung Yim Chun case, the defendant made a sanctioned offer.  The terms were agreeable to the plaintiff, but they disagreed on the issue of costs.  Parties exchanged further sanctioned offers and at the end, the action was settled by the defendant accepting the sanctioned offer of the plaintiff (which is in identical terms except on costs) on the express proviso that they would apply to the court to vary the costs order by invoking the otherwise proviso.  Burrell J ruled that there are unusual features and invoked the otherwise proviso to adjust the correct cost order.

34.  Mr Ho submits that this case illustrates the point that when the defendant’s offer was rejected by the plaintiff for the first time, but was subsequently accepted in identical terms (save as to costs), the Court would exercise discretion under the otherwise proviso.

35.  Mr Yu submits that the trial judge has taken into account other factors in coming to the conclusion that the otherwise proviso shall apply.  I believe Mr Yu is referring to paragraph 15 of the judgment.  Burrell J found the terms of the defendant’s offer are the terms of the ultimate settlement.  The plaintiff rejected that offer solely on the grounds of costs.  And Burrell J explained why the plaintiff is not reasonable in reject the offer because of the costs issue.  Hence I believe the prime consideration by Burrell J to exercise the otherwise proviso is the terms of the ultimate settlement are the terms of early offer, AND the plaintiff is not reasonable in rejecting the offer.  While I note that this case involves exchange of sanctioned offers, the same consideration would be applicable to this case.  I accept that the defendant herein has to show that the pre-action offer is similar to or no worse than the final settlement (by sanctioned payment) and that the plaintiff was unreasonable in rejecting the offer.

36.  The point may be demonstrated in Wong Ka Chi case, which is a personal injury action taken out in the District Court.  The insurer of the defendant sent 2 pre-action letters to the plaintiff.  In the first letter, the insurer openly admitted liability on behalf of the defendant and agreed to appoint an orthopaedic expert, Dr Tio, to conduct a medical examination on the plaintiff to prepare a single joint report.  In a second letter, marked without prejudice save as to costs, the insurer offered to settle at $270,000 (inclusive of $100,000 employees’ compensation already paid) plus costs at District Court scale in full and final settlement of the case.  There was no response to the 2^nd letter.

37.  Examination had been conducted by Dr Tio.  After obtaining the medical report, the insurer sent a 3^rd letter repeating its offer of $270,000 with costs.  The plaintiff rejected the offer and issued the writ in the District Court.  The defendant made a payment into Court for $170,000 (on top of the employees’ compensation received by the plaintiff in the sum of $100,000).  In effect, the sanctioned payment is identical to the sum offered in pre-action offers.  And on the same date, the defendant notified the plaintiff that they would apply to the court for a costs order that the plaintiff shall pay the defendant’s costs in the event that the sanctioned payment was accepted.

38.  The sanctioned payment was accepted without leave of Court and the defendant took out an application before a master for costs, which was refused.  The defendant appeal to HH Judge Andrew Li.  HH Judge Andrew Li found there were exceptional circumstances that justify the court to exercise the otherwise proviso and order the plaintiff to pay the defendant’s costs of the action. Mr Ho submits that the case is similar to this action.  As Mr Ho relies extensively on the reasoning of HH Judge Andrew Li to support his argument that there are exceptional circumstances in this case, and which Mr Yu has responded in details, I shall discuss their argument in details hereinafter. 

39.  Mr Yu also seeks to rely on the judgment of Master J Chow given in Chan Cheuk Kwan v Ho Kam Wo & Anor DCPI 2103/2010.  The learned master ruled that “if [she] could find no unreasonableness on either party, [she] shall not exercise discretion under Order 22 rule 20(1) to order costs otherwise solely because the amount of the Pre Action Settlement Offer and the sanctioned payment appeared to be identical.”  I do not wish to go through the ruling save to record that the determination of reasonableness has to be based on the facts of each case.  The ruling of Master J Chow does not assist the plaintiff’s argument. 

Discussion and Ruling

40.  I would approach the dispute in this manner.  The pre-action offer is indeed a Calderbank Offer.  When sanction payment is accepted, it is trite law that Calderbank offers may be taken into account in deciding question of costs in light of Order 22 rule 2(4), provided that it does not fall into the exceptions of Order 62 rule 5(1)(d).  (Per Lam VP in Leung Lai Kwan v Lo Kai Wing and Anr HCMP 1554/2015 at paragraphs 7 & 8)

41.  Order 62 Rule 5(1)(d), (e) and (g) reads –

“(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

(d) any written offer which is expressed to be "without prejudice save as to costs" and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(g) any admissible offer to settle made by a party, which is drawn to the Court's attention.

42.  Assuming this case come to trial and the judgment is awarded at $280,000 (inclusive of interest), I see no reason why this Court may not take into account the Calderbank offer before giving the final order of costs (Order 62 Rule 5(1)(d) &(g)).  When the case is disposed of by accepting sanctioned payment, I fail to see any reason why the defendant is not entitled to draw the Court’s attention to the pre-action offer which is no worse than the sanction payment accepted by the plaintiff, which is so provided by the otherwise proviso of Order 22. 

43.  The pre-action offer was made before the action commenced and the defendant could not issue any sanctioned offer or made any sanctioned payment.  It was proper for the defendant to make Calderbank offer.  When an offeree does not do better than the Calderbank Offer, the offeror is not entitled to the sanctions under Order 22.  But the Court may take the offer into consideration to determine what is just and fair in the circumstances to exercise the discretion on costs, when applicable.  And as I analysed above, and based on the judgement of Bharwaney J and Burrell J, the defendant would also have to prove that the plaintiff has acted unreasonably in refusing the Calderbank offer before I shall exercise the discretion under the otherwise proviso. 

44.  I should now move on to the main argument of the defendant.  First, Mr Ho submits that the pre-action offer is no worse than the sanctioned payment.  If the plaintiff accepted the pre-action offer, she would have pocketed the same amount of money in February 2015 and could save the legal costs of both parties in this action. Instead, the plaintiff incurred disproportionate costs in commencing this action in the High Court (referring also to the filing of Statement of Claim and preparation of witness statement).

45.  Mr Yu seeks to argue that the sanctioned payment and the pre-action offer are technically different.  I also refer to paragraph 28(7) of the plaintiff’s affirmation when she said there is a major difference between the 2 settlement proposals in that when she accepted the sanctioned payment, she would be entitled to costs on High Court scale.

46.  But the plaintiff could not read the sanctioned payment without reading the condition therein that the defendant would seek costs against her or costs on District scale, and set out again in the sanctioned offer served at the same time.  In light of the matter hereinbefore mentioned, the plaintiff could not presume that she must be entitled to taxation at High Court scale.  And the comment by Bharwaney J is clear that when a sanctioned payment below $1,000,000 is accepted, there is high possibility that costs at District Court scale would be awarded.  The undisputed fact is the actual payment is the same, being that the plaintiff only receive $280,000.  And indeed, Mr Yu now concedes for the plaintiff that costs should be taxed at District Court scale.  Hence it is clear that plaintiff has not done better than the pre-action offer.

47.  Mr Yu argues that the pre-action offer lapse after the 14 days period as specified in the letter.  But the offer was rejected by the plaintiff as aforesaid.  If Mr Yu suggests that I should not take the pre-action offer into consideration, I do not agree. 

48.  Has the plaintiff acted reasonably in refusing the pre-action offer?

49.  Mr Ho submits that the plaintiff and her legal advisors were in a fully informed position to evaluate the reasonableness of the pre-action offer.  As a retired person, the plaintiff could not possibly suffer any loss of earnings and loss of earning capacity.  Hence the claim of the plaintiff should be limited to PSLA and special damages supported by documentary proof.  Her claim could not exceed $280,000 and she was unreasonable in refusing to accept the pre-action offer but then accepted the sanctioned payment which is for same amount.

50.  Mr Yu submits that in Wong Ka Chi case, the plaintiff had received a medical report and would be in a better position to assess her claim.  In this case, Mr Yu submits that it was not appropriate and prudent for plaintiff’s solicitors to evaluate pre-action offer on the basis of these outdated reports, referring those reports disclosed with the demand letter. 

51.  If indeed updated reports or expert medical report would be necessary for the plaintiff to assess her loss, upon receiving the response from Falcon, and in accordance with PD18.1, she should invite the defendant for a joint medical examination.  No invitation had been given.  There is no other report disclosed before the plaintiff accepts the sanctioned payment. 

52.  According to Order 18 Rule 12(1A), the plaintiff has filed and served 3 medical reports with her Statement of Claim, which are the reports which Mr Yu claims to be outdated.  Order 18 rule 12(1C) provides that “for the purpose of this rule, medical report means a report substantiating all the personal injuries alleged in the statement of claim which the plaintiff propose to adduce in evidence as a part of his case at the trial.”  No other reports have been adduced.  It is sufficient to record that the plaintiff has not suggested any expert opinion she intended to obtain or had been advised to obtain.  It is ill founded for Mr Yu now to suggest that the plaintiff and her advisor did not have the necessary information to consider the pre-action offer. 

53.  And one must not lost sight of the injury of the plaintiff which is not a particularly serious one.  In some personal injury assessment, for minor injuries, the Court can determine the issue of loss based on the report of treating doctor and oral evidence of the plaintiff.  (An example is Ho Man Fong v Sime Darby Motor Services Limited HCPI 1096/2003).  Mr Yu has not given any further details as to why the legal advisors cannot advise the plaintiff on her claim based on the medical reports available.  I am not convinced that the plaintiff was not in a position to obtain an informed opinion from her legal advisor. 

54.  As set out above, the plaintiff in rejecting the pre-action offer only stated that it was not sufficient to compensation her loss under PSLA.  I am not here to rule on the claim.  But I am to consider on the possible claim of plaintiff by taking a board bush approach to look if she acted reasonably on the evidence before me. Mr Yu has not submitted any authority to support the claim of PSLA at $400,000.  With the medical evidence before me, I agree with Mr Ho that her claim for PSLA would be in the region of $200,000.

55.  The plaintiff has not elaborated in her affirmation when she had the intention to look for gainful employment.  In the draft witness statement served on the defendant (which Mr Yu confirms is an incomplete statement), the plaintiff has not mentioned about any intention to look for gainful employment.  She only mentioned her voluntary work, which is in line with her case in the first demand letter.  No earning from the voluntary work was disclosed.  And the special damages as set out in paragraph 17 is for $8,417.  I agree with Mr Yu that there is no reasonable prospect for a claim over $280,000.

56.  Mr Ho also submits that the plaintiff has not mentioned any special circumstances prior to rejecting the pre-action offer.  Some explanation for changing her mind to accept the sanctioned payment has only been given with her affirmation filed herein dated 27 July 2015.  I believe Mr Ho is relying on the comment by HH Judge Andrew Li saying the plaintiff in that case has failed to mention any special circumstances prior to rejecting the pre-action offer (see paragraph 39 (3) of the judgement).

57.  Mr Yu disagrees with the ruling of HH Judge Andrew Li.  Mr Yu submits that the plaintiff is not obliged to explain her “special circumstances” for changing her mind in accepting the sanctioned payment.

58.  The reason why a plaintiff rejected the pre-action offer, or changed her mind to accept the sanctioned payment would be a matter that this Court should take into account when assessing whether the plaintiff has acted reasonably in refusing the pre-action offer.  The question would also be relevant when considering the proper costs order to be award if I have to invoke the otherwise proviso.  I believe it is under such consideration when HH Judge Andrew Li came to comment that the failure of the plaintiff in stating any special circumstances for refusing the offer has to be taken into account.  And if we read on with the judgment, the Honourable Judge having analysed the special circumstance given by that plaintiff in the opposing affirmation, concluded at paragraph 47 that it fall far short of the threshold the court would exercise its discretion in his favour.  I should take into account the reason given by the plaintiff when she refused the pre-action offer and in her affirmation in considering whether the plaintiff had acted reasonably.

59.  As analysed above, it is not reasonable for the plaintiff to believe her claim would exceed the pre-action offer of $280,000.  In her said affirmation, at paragraph 28, the plaintiff further set out some reasons for accepting the sanctioned offer. While these are matter to be considered on whether I should exercise my discretion on costs against the plaintiff, in fairness to the plaintiff, I also take these into account at this stage to consider if I should invoke the otherwise proviso.

60.  The plaintiff now explains the reasons for accepting the sanctioned payment.  She claims that after the accident, she has spent extra to ensure that she could fully recover.  Her household expenses were increased by 25% to 50%.

61.  Her financial circumstances worsened in November 2014 following the diagnosis of cataract in both eyes.  She was supported by her brother who paid her medical fees.  But her brother who had been suffering from rheumatoid arthritis had his situation deteriorated in or around March 2015.  She wishes to repay her brother.

62.  The plaintiff is not legal aided.  According to her affirmation, she has incurred legal costs of no less than $180,000.  If she could afford the legal costs, why she had to rely on her brother for the medical expenses?  But more important, the pre-action offer was made in February 2015, when her alleged financial problem was in existence.  If she wished to repay her brother, I believe a reasonable man would accept the pre-action offer, and not wait until April to accept the sanctioned payment.  She cannot be acting reasonably in rejecting the pre-action offer.

63.  The plaintiff claimed that she was still suffering from pain and suffering.  And she was stressful by the litigation which she may not be able to handle.

64.  Stress is unfortunately a common element in any litigation.  I do not preclude there would be situation when a litigant after a prolonged litigation would wish to settle at a lower sum and such may be a relevant factor to be considered in the exercise of discretion of this Court.  I found the plaintiff has not shown such exceptional situation, when she settled the case 2 months after the writ was issued. 

65.  There is yet no explanation why the case has been brought in the High Court, which the defendant has to incur higher costs.  It is for the first time when the plaintiff claims she would return to the labour market in the Statement of Damages. And there is no explanation offered in her affirmation in reply.

66.  Having considered the submission of both Mr Yu and Mr Ho, and all the evidence adduced herein, I come to the conclusion that there are exceptional circumstances and I should exercise the otherwise provisio. 

67.  By invoking the otherwise proviso, I still have to be satisfied in all the circumstances of the case that it is just and equitable to award costs to the defendant, in whole or in part.  I should now proceed to consider the fair costs order in this case.

68.  From the above, the greatest complaint of the defendant is that the costs of this action incurred by both parties could be saved had the plaintiff accepted the pre-action offer. The defendant should not be put to bear the costs of such litigation.

69.  Mr Yu argues that Falcon had been un-cooperative in the negotiation for settlement.  Only 14 days were given for acceptance of the pre-action offer.  And Falcon did not repeat the pre-action offer after rejecting the plaintiff’s pre-action offer of $500,000.  He submits that the attitude of Falcon has contributed to the commencement of action on 18 March 2015.

70.  It is true that the pre-action offer was open for 14 days.  But that is not a reason relied upon by the plaintiff for refusing the re-action offer.  In fact, there was subsequent correspondence for settlement between the parties.  As for the offer of the plaintiff, Falcon has, as recorded above, explained the reason for refusing.  They also invited the plaintiff to supply additional document, which was not supplied.  Her solicitor could response to the legal authority relied on, which they did not.  The plaintiff proceeded to issue the writ in the High Court.

71.  I repeat the reasons given by the plaintiff for accepting the sanctioned payment as set out above, and my comments thereon.  I cannot see any feature that this Court should give an order in favour of the plaintiff.

72.  In summing up, I found that the plaintiff had acted unreasonably in rejecting the offer, and there is no other reason shown that I should not impose adverse cost order against the plaintiff.  I shall now consider the proper order of costs.

73.  There cannot be dispute that the plaintiff should have costs of and occasioned by this proceeding up to 16 February 2015 to be taxed at District Court scale.  While the cost is incurred before the proceeding commenced, from the available information, these include preparation for the proceedings such as collection of medical evidence and pre-action letter.  They are costs of and incidental to the action.  And in particular the service of the pre-action letter is in accordance with PD18.1.  These would, subject to taxation, be costs in the action.  I therefore order that the plaintiff do have costs of this action incurred on or before 16 February 2015.

74.  As for costs after 16 February 2015, I order that the plaintiff should bear the costs of the defendant of and incidental to this action after 16 February 2015 on High Court scale.

75.  As for the costs of this application, there be an order nisi that the plaintiff should pay the defendant’s costs with certificate for counsel.