DAH SING INSURANCE SERVICES LTD v. GILL GURBUX SINGH

CACV 255/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 255 OF 2012

(ON APPEAL FROM DCCJ NO. 1467 OF 2008)

________________________

________________________

________________________

JUDGMENT
________________________

Hon Cheung JA:

1.  I agree.

Hon Yuen JA:

2.  I agree with the judgment of Kwan JA.

Hon Kwan JA:

LEAVE TO APPEAL

Introduction

3.  On 23 December 2013, this court allowed the appeal of the plaintiff and set aside the award of damages being the subject of the counterclaim made by Deputy District Judge K H Hui.  The counterclaim for damages arose out of (1) the plaintiff’s failure to report to the Insurance Agents Registration Board of the termination of the defendant’s appointment as its technical representative within seven days of termination, contrary to the Code of Practice for the Administration of Insurance Agents (“the Code”); and (2) the plaintiff’s failure to report the defendant’s Continuing Professional Development (“CPD”) credits to the Hong Kong Federation of Insurers (“HKFI”) within time, contrary to the Guidance Note (“the Note”) issued by HKFI.

4.  In the judgment of this court (“the CA judgment”), it was held that (1) there is no cause of action for breach of statutory duty simpliciter founded on the breaches of the Code and the Note; (2) there is no cause of action based on a common law duty of care arising from the imposition of the statutory duty or from the performance of it, nor is there a viable claim in negligence; and (3) in respect of the claim for damages for loss of income for the plaintiff’s failure to report the termination of the defendant’s appointment, the defendant failed to establish that any loss of income was caused by the plaintiff’s breach.

5.  The defendant seeks discretionary leave to appeal to the Court of Final Appeal on the basis there are questions of law arising in the intended appeal of great general or public importance.  He also seeks leave to appeal on the “or otherwise” ground.  Three questions are formulated for this purpose in the amended notice of motion.

Question (1)

6.  This question reads:

“Whether the Court of Appeal should, on its own motion, make a finding (such finding being erroneously made) to overturn a fact which has been agreed by the parties, and which remained undisputed by the parties when the case was before the Court of Appeal”.

7.  Apart from contending that this raises a question of law of great general or public importance, the defendant also relied on this for the “or otherwise” ground, there being exceptional circumstances for leave to appeal to be granted.

8.  The relevant parts of the CA judgment are §§77 to 79.  The point made there was that the concession made by the plaintiff’s witness was incorrect in the light of two pieces of evidence, being clause 19 of the Code and a document entitled “Insurance Agents Registration History” relating to the defendant.

9.  Causation was an issue raised in the skeleton argument of the plaintiff’s counsel (at §§37 and 49.3) and was addressed in the skeleton argument filed by the defendant (at §4.15).  But the two pieces of evidence were not mentioned by either party and was raised by the court in the course of the arguments.

10.  The defendant’s complaint is that the court should not have relied on those two pieces of evidence to overturn the concession of the plaintiff’s witness without giving an opportunity to the defendant to explain (which explanation has now been provided by the defendant in two affirmations filed without leave, as well as in the body of the notice of motion), and the court should not have allowed a new point to be taken on appeal without giving the defendant an opportunity to rebut with additional evidence.

11.  According to §5 of the defendant’s affirmation filed on 16 January 2014, he attended the hearing of the appeal on 12 November 2013.  He heard the judges of the Court of Appeal refer to the document “Insurance Agents Registration History” and queried how he would have been restricted to register under one insurance company only.  He said he did not stand up and explain to the judges as he felt it was improper to interfere with the court proceedings.

12.  The defendant was represented in the appeal by junior counsel who was the trial counsel and by a Senior Counsel (not Ms Eu, SC who appeared for him in this application).  The defendant’s counsel did not ask for time to take instructions from him to deal with the two pieces of evidence raised by the court.  Nor did they place any reliance on the principle in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 to contend that the appeal court should not have allowed a point not taken at the trial to be raised, on the ground that not all of the relevant evidence was before the court.  The defendant’s legal team was well aware of the principle in Flywin because this was relied on by the plaintiff’s counsel (at §§54 and 55 of the plaintiff’s skeleton argument) to resist the defendant’s application to file a respondent’s notice out of time.  The hearing was concluded on the same day and judgment was handed down more than a month later on 23 December 2013.  In the interim, the defendant’s legal representatives did not seek leave to make any further submission on any instructions of the defendant regarding the explanation he now seeks to provide.

13.  I am not persuaded there are exceptional circumstances to warrant the granting of leave to appeal on the “or otherwise” ground.

14.  Besides, that part of the CA judgment the defendant seeks to impugn must be viewed in context.  It relates to causation of just one of the claims, i.e. arising out of the plaintiff’s failure to report the termination of the defendant’s appointment.  The issue of causation will only arise if the plaintiff owed a duty of care to the defendant.  If leave to appeal is not granted on question (2), causation is an academic issue.

15.  Question (1) is plainly fact sensitive.  It does not appear to raise any question of law of great general or public importance.

16.  Ms Eu made submissions to us that we were in error in holding that the concession of the plaintiff’s witness was incorrectly made.  She referred to the provisions in the Code (§§17 to 24, 26 to 35, 38 to 41) and the explanation given by the defendant in his affirmations filed without leave to contend that “essentially an agent or technical representative is tied to the insurer or the insurance agent with whom he is registered and he cannot work for another unless his registration was cancelled by his previous principal”.  For my part, I am not persuaded that could properly be inferred from the provisions of the Code referred to.  I do not think it appropriate to consider the explanation of the defendant regarding his employment history in his affirmations filed without leave.

17.  I should mention that the distinction between an “agent” and “technical representative” was not dwelt upon by any party whether at the trial or in the appeal.  As pointed out by Ms Eu, there is no difference in the qualification for an agent and technical representative irrespective of the line of business they do, see clause 67 of the Code.  Throughout, the provision the plaintiff was said to be in breach of was clause 17 of the Code, when it should have been clause 31 as he was appointed a technical representative of the defendant.  These provisions are identical in material respects and make no difference to the analysis and holdings in the CA judgment.

18.  I would refuse leave to appeal on question (1).

Question (2)

19.  This question as formulated by Ms Eu at the hearing now reads:

“Whether negligence or a breach of the statutory duty in failing to comply with a requirement in the Code of Practice to report the cessation of agency of the insurance agent or technical representative and a requirement in the Guidance Note to report continuing CPD requirement give rise to a claim for damages”.

20.  Ms Eu clarified in her reply submission in writing that the defendant intends to challenge the holding there is no cause of action for breach of statutory duty simpliciter apart from the holding there is no cause of action based on a common law duty of care.

21.  In respect of the first, she repeated essentially the submissions made by the defendant’s former counsel.  For the latter, she made the point that we failed to find that the pre-existing contractual relationship between the parties should give rise to a duty of care at common law, citing among other cases Lord Hoffmann in Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057 at §38, and Lord Steyn in the same case at §§3 to 5, and Ribeiro PJ in Leung Tsang Hung v Incorporated Owners of Kwok Wing House (2007) 10 HKCFAR 480 at §54.

22.  The arguments now advanced by Ms Eu in support of the contention that there was a common law duty of care to found a claim for damages in negligence and in breach of statutory duty were not raised by the defendant’s former counsel.  His arguments are as summarised in §72 of the CA judgment, namely, that the duty of care was alleged to arise from the manner of performance of the statutory duty.  Whereas Ms Eu contended that the pre-existing contractual relationship between the parties should give rise to a duty of care at common law unless the terms of the statute are sufficient to exclude it, it was argued on appeal on the defendant’s behalf that the common law duty of care should be superimposed on the statutory regime.

23.  I am not persuaded it is appropriate to grant leave to appeal in this instance which pertains to the application of established principles of law to the specific fact situation, and in respect of legal arguments not raised before us.  Nor is there any reason to grant leave on the “or otherwise” ground.

24.  I would refuse leave to appeal on this question.

Question (3)

25.  This question as re-formulated by Ms Eu reads:

“Whether compliance with the mandatory requirements in the Code of Practice and Guidance Note as aforesaid are implied terms of the contract of agency, breaches of which give rise to a contractual claim for damages”.

26.  Ms Eu submitted this court was in error in failing to find there was an implied term of the contract between the plaintiff and the defendant that the plaintiff would comply with the mandatory requirements in the Code and the Note and that non-performance of these requirements was a breach of contract giving rise to damages.  She said breach of contract was pleaded in the defendant’s defence and counterclaim at §§41 and 43 and at the trial his counsel had relied on a claim for breach of contract (see CA judgment at §25).  This is also a reason for granting leave on the “or otherwise” ground.

27.  Whether there was an implied term as contended was not properly argued by the defendant before the judge, who only found negligence and breach of statutory duty and awarded damages accordingly.  So on appeal, the plaintiff challenged the judge’s holding on the basis he was wrong in law to find viable causes of action in negligence and breach of statutory duty.  No respondent’s notice was put in by the defendant to seek to support the judgment below on the ground that the judge could and should have found a cause of action for breach of implied term.  I do not agree with Ms Eu no respondent’s notice was required.

28.  This court did not address the issue of breach of an implied term because it was not argued before us.  I do not think it appropriate to grant leave on question (3).  In any event, it is the practice of this court not to grant leave to appeal on a new point not argued before us, leaving it to the Appeal Committee to do so if it thinks fit (Kung Ming Tak Tong Co Ltd v Park Solid Enterprises Ltd & Anr, CACV 227/2005, 26 June 2007, at §4).

29.  For the above reasons, I would dismiss the defendant’s application for leave to appeal.  I will deal with the costs of this application together with the other two summonses we heard.

APPLICATION TO VARY COSTS ORDER NISI

Introduction

30.  In the CA judgment, two costs orders nisi were made.  For the costs of the appeal, we made an order that the defendant is to pay the plaintiff’s costs, with a certificate for two counsel.  For the costs below, we have set aside the judge’s order and made a global order for the costs of the claim and the counterclaim, ordering the defendant to pay two-thirds of the plaintiff’s costs.  There is a further order that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

31.  Ms Eu has brought it to our attention that our understanding of the judge’s costs order as stated in §82 of the CA judgment (that the defendant is to pay the plaintiff’s costs of the action up to and including the first day of the trial and the plaintiff is to pay the defendant’s costs of the counterclaim) is not quite correct.  What the judge in fact ordered was that the defendant do pay the plaintiff 50% costs of the plaintiff’s claim up to 23 April 2012 and 50% of the counsel’s brief and the plaintiff do pay costs of the defendant’s counterclaim.

32.  The plaintiff and the defendant each took out a summons to vary the costs orders nisi in the CA judgment.

33.  The defendant’s summons, which was the later in time, is the simpler one.  He asks for the trial judge’s costs order to be restored.  He does not seek to vary the costs order nisi regarding the costs of the appeal.  The reason for restoring the trial judge’s order is that the plaintiff succeeded on appeal on matters not argued before the judge.

34.  The plaintiff seeks to vary both costs orders nisi in the manner as set out in §§1(a) to (g) of his summons.  In essence, the reason for variation is a sanctioned offer made by the plaintiff in the court below.

The sanctioned offer

35.  On 2 April 2012, the plaintiff’s solicitors made a Calderbank offer by letter to the defendant’s solicitors on the terms that the plaintiff should discontinue the action, that the defendant should discontinue his counterclaim and each should bear his own costs.

36.  This was followed by a letter of the plaintiff’s solicitors to the defendant dated 5 April 2012 marked “without prejudice save as to costs” and “sanctioned offer”, offering the same terms as before.  It was stated that as the trial of the action was to be heard on 24 April 2012, pursuant to Order 22 rule 16 of the Rules of the District Court, the defendant might only accept the sanctioned offer if the parties agreed on the liability for costs, or the court granted leave to accept it.

37.  The sanctioned offer was made less than 28 days from the commencement of the trial.  The action was tried on 24, 25 and 26 April 2012.  Judgment was handed down on 18 May 2012.

38.  For present purpose, I am prepared to proceed on the basis that the latest date on which the defendant could have accepted the sanctioned offer with leave was 17 May, the day before the judge handed down his judgment, without expressing a view on the correctness of Tsoi Hak Kong Herbert v Kok Wai Chun [2009] 4 HKLRD 215 at §§34 to 38.  The defendant did not accept the sanctioned offer.

39.  The only sanctioned offer that was made was in the District Court proceedings.  Although the plaintiff did not make a sanctioned offer for the proceedings in the Court of Appeal, it seeks to rely on the sanctioned offer in the proceedings below as a matter that the Court of Appeal should take into account in the exercise of its discretion as to the costs of the appeal and below.

The position under the Civil Procedure Rules

40.  We have been referred by both parties to relevant provisions in the Civil Procedure Rules in England (“CPR”).  I think it is instructive to look at some of these provisions, in contrast to those in our own rules.

41.  The relevant provisions are CPR 36.2(3) and 36.4(1).

42.  The former provides:

“A Part 36 offer may be made in respect of the whole, or part of, or any issue that arises in –

(a) a claim, counterclaim or other additional claim; or

(b) an appeal or cross-appeal from a decision made at a trial.”

43.  The latter provides:

“Except where a Part 36 offer is made in appeal proceedings, it shall have the consequences set out in this Section only in relation to the costs of the proceedings in respect of which it is made, and not in relation to the costs of any appeal from a decision in those proceedings.”

44.  Provisions like the above would make it very clear to the parties where they stand on costs regarding a sanctioned offer made below but not on appeal.  The idea is to achieve what was stated by Waller LJ in KR v Bryn Alyn Community (Holdings) Ltd (in liquidation) [2003] PIQR P30 at §13:

“… First, it makes clear that unless a fresh Pt 36 offer was made during the appeal proceedings the machinery of Pt 36 is not available to the appeal court. Second, it makes clear that the Court of Appeal will be disinclined to use its discretion to achieve a similar result by reference to a pre-trial Pt 36 offer.”

The position in Hong Kong

45.  There is no provision in our rules equivalent to the CPR.  Poon J in giving the judgment of the court (Lam VP, Barma JA and Poon J) in Ryder Industries Limited v Chan Shui Woo and Ryder Industries Limited v Timely Electronics Co Ltd, CACV 164/2013 and CACV 165/2013, 13 March 2015, reviewed the position under our rules and authorities as summarised below:

(1) The provisions as worded in Order 22 on their face suggest that the scheme for sanctioned offers would apply to trials only.  This suggestion is bolstered by the absence from Order 22 of an express provision applying the statutory scheme to appeals before the Court of Appeal. Poon J declined to resolve the argument that the provisions of Order 22 might apply mutatis mutandis to a sanctioned offer made for the purpose of the appeal, as the party in that case made no sanctioned offer for the purpose of the appeal.  This point might well be considered by the High Court Rules Committee and clarified by amendment if necessary (at §30).

(2) There is a line of cases of the Court of Appeal in which the court ordered the costs of the appeal to be on an indemnity basis on the basis that the losing party failed to accept a sanctioned offer in the proceedings below, and if that offer had been accepted, there would have been no trial and no appeals (MGA Entertainment Inc v Toys & Trends (Hong Kong) Ltd & Ors [2012] 5 HKC 372 at §73; Montrio Ltd & Anr v Tse Ping Shun David, CACV 291/2011, 31 January 2013, at §4; Sino Trifone Ltd v Fond Express Logistics Ltd & Anr and Kai Min Fashion (HK) Ltd v Fond Express Logistics Ltd & Anr, HCMP 2366/2012 and HCMP 2367/2012, 22 May 2013, at §16) (at §§31 to 33).

(3) From the rules and the case law, the following general principles are derived:

(i) A sanctioned offer made below does not entitle the party making it to invoke the provisions in Order 22 for the purpose of the appeal.

(ii) In dealing with the costs below, by reason of the combined effect of Order 59 rule 10(1) and Order 22 rule 23, the Court of Appeal should take into account the sanctioned offer made below where appropriate, having regard to all the circumstances, including how the appeal is disposed of.

(iii) In dealing with the costs of the appeal, the Court may take into account the sanctioned offer made below where appropriate, having regard to all the circumstances, including the result of the appeal (at §34).

46.  Even though the court has clarified the law to some extent, there are still areas of uncertainty.  The party who makes a sanctioned offer in the court below does not know if he could make an improved sanctioned offer for the purpose of the appeal.  The party to whom a sanctioned offer is made below does not know if that offer is still on the table if judgment is given and the offeror appeals and makes no fresh offer.  Further, unlike the situation where the jurisdiction under Order 22 rule 24 is engaged and the court “shall” make orders on enhanced interest, indemnity costs, and interest on costs “unless it considers it unjust to do so”, a sanctioned offer made below does not entitle a party to invoke those powers of the court in dealing with the costs of the appeal and it is left to the discretion of the court to take into account the sanctioned offer below where it is appropriate to do so. Uncertain factors like these are not conducive to a regime to encourage the settlement of proceedings on appeal.

47.  I echo the view of the court in Ryder Industries that the High Court Rules Committee should consider sanctioned offers for the purpose of appeal proceedings and introduce such amendment to the rules as may be necessary.

48.  I turn to consider the variations sought in the summons of the plaintiff.

Paragraph (1)(a)

49.  The variation sought in the summons is: “The Defendant do pay the Plaintiff’s costs of the appeal on an indemnity basis to be taxed if not agreed with a certificate for two counsel at an enhanced interest rate of 5% above judgment rate until full payment.”

50.  Mr Ho, SC clarified in his written submission that the plaintiff is just seeking indemnity costs on account of the sanctioned offer made below, not enhanced interest on the costs of the appeal as sought in the summons.  No order was made for enhanced interest on the costs of the appeal in the past instances where the court took into account the sanctioned offer made below.  It is prudent not to ask for this as if the plaintiff were entitled to invoke the powers of the court under Order 22 rule 24.

51.  Mr Ho submitted that the discretion to award indemnity costs should be exercised in favour of the plaintiff as the appeal was wholly successful, unlike Ryder Industries where the court declined to order indemnity costs as the defendants there succeeded partially in their appeals. In the present case, if the defendant had accepted the sanctioned offer or the earlier Calderbank offer, there would have been no appeal.  So this case is similar to the past instances where indemnity costs for the appeal were awarded.

52.  Ms Eu submitted this case is unlike the past instances cited by Mr Ho.  Here, the defendant won his counterclaim for damages at the trial.  The judge found in his favour on the facts (from which there was no appeal) and the appeal was won only on legal arguments not advanced below and the appeal court holding that the concession of the plaintiff’s witness was wrongly made.  In the cases cited by Mr Ho, the parties to whom the sanctioned offer was made did worse than the offer at the trial, and, despite that, the offerees appealed and still did worse than the offer on appeal.  So the Court of Appeal took into account the sanctioned offer below and awarded costs of the appeal on an indemnity basis.  There is no decided case where the appeal was brought by the party making the sanctioned offer and the offeror then succeeded in reversing the judgment below.

53.  Ms Eu also made the point there is no authority to say that the sanctioned offer may still be accepted after judgment was given.  The trial and the appeal are separate proceedings. In any case, the defendant won on the counterclaim and was successful in resisting the plaintiff’s claim for the refund of monthly allowance and office allowance.  There was no reason for him to accept the sanctioned offer and it is unjust to penalise him for not accepting the drop hands offer in the circumstances here.

54.  I am inclined to agree with Ms Eu.  It would not be appropriate to take into account the sanctioned offer below for the purpose of the appeal in view of the fact that the defendant succeeded before the judge on the facts and on the case as argued below and the appeal was only won on legal arguments not pursued before the judge.

55.  I would refuse to grant §(1)(a) of the plaintiff’s summons.

Paragraph (1)(b)

56.  This reads: “The Defendant do pay the Plaintiff’s costs of and occasioned by the Defendant’s summons filed herein on 11 October 2013 on an indemnity basis to be taxed if not agreed at an enhanced interest rate of 5% above judgment rate until full payment.”

57.  The defendant’s summons filed on 11 October 2013 was to apply for leave to file and serve a respondent’s notice out of time and on 18 October it was adjourned to the hearing of the appeal on 12 November 2013 with costs reserved.  The defendant later indicated in the skeleton argument served for the appeal that he would not proceed with that summons.  So the plaintiff seeks costs incurred in dealing with that summons which turned out to be unnecessary.  Mr Ho clarified he would not be seeking enhanced interest on indemnity costs for that summons.

58.  I do not think indemnity costs should be awarded, for the same reasons given as regards §(1)(a) of the summons.  I would order the defendant to pay the plaintiff the costs of and occasioned by the defendant’s summons of 11 October 2013 on a party and party basis.

Paragraphs (1)(c) and (1)(d)

59.  These paragraphs read: “The Defendant do pay two-thirds of the Plaintiff’s costs below in DCCJ 1467/2008 regarding the claim and the counterclaim until and including 17 May 2012 on a party and party basis to be taxed if not agreed” and “The Defendant do pay the Plaintiff’s costs below in DCCJ 1467/2008 regarding the claim and the counterclaim from 18 May 2012 on an indemnity basis to be taxed if not agreed at an enhanced interest rate of 5% above judgment rate until full payment”.

60.  The idea behind §(1)(c) is that the costs order nisi made by this court for the costs below should stand but only up to 17 May 2012 as that was the latest date on which the defendant could have accepted the sanctioned offer.  So in §(1)(d), the plaintiff seeks indemnity costs on the costs order nisi made by this court as from 18 May with enhanced interest on costs from 18 May 2012 until the date of the CA judgment on 23 December 2013 (not up to the date of full payment as sought in the summons), if not at the rate of 5% above judgment rate as stated in the summons, at least at the rate of 4.5% per annum (equivalent to half of 4% above prime rate or 1% above judgment rate, see Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273 at §§18 and 19).

61.  These paragraphs in the plaintiff’s summons may be considered conveniently with the defendant’s summons to vary the costs order nisi by restoring the judge’s order on costs (that the defendant do pay the plaintiff 50% costs of the plaintiff’s claim up to 23 April 2012 and 50% of the counsel’s brief and the plaintiff do pay costs of the defendant’s counterclaim).

62.  The plaintiff seeks indemnity costs by virtue of Order 22 rule 24(3)(a) (the relevant provisions of the Rules of the High Court and the Rules of the District Court are identical), contending that it is a matter of entitlement by virtue of the sanctioned offer unless “it considers it unjust to do so” pursuant to rule 24(4).  As for enhanced interest on costs by virtue of rule 24(3)(b), Mr Ho submitted this is to redress the element of perceived unfairness which arises from the general rule that interest is not allowed on costs paid before judgment (McPhilemy v Times Newspapers Ltd (No 2) [2002] 1 WLR 934 at §23) and is intended to “compensate a litigant who is out of pocket having funded litigation which he should not have had to fund” (KR v Bryn Alyn Community (Holdings) Ltd at §21).  Mr Ho emphasised that although the plaintiff did not succeed in respect of part of its claims, it is plainly the successful party as the entire counterclaim is rejected by the appeal court, and this is a relevant factor to consider in the exercise of the powers under Order 22 rule 24 (Factortame Ltd & Ors v Secretary of State for the Environment, Transport and the Regions [2002] 1 WLR 2438 at §27).  The defendant’s summons seeking to restore the trial judge’s costs order does not reflect how the appeal has been disposed of by this court, which is a relevant factor to be taken into account in dealing with the costs below (Ryder Industries at §34(2)).

63.  Ms Eu again emphasised the trial judge was right in his judgment on the case as argued before him, and the appeal was won on new arguments not made at trial, so there is no reason to set aside his costs order.  She drew an analogy with costs in Order 14 proceedings; if an appeal is allowed on new material, the costs below are normally left disturbed (Hong Kong Civil Procedure 2015, vol 1, §14/7/18).  It is unjust to order the defendant to pay two-thirds of the costs below.  And there is no reason to penalise the defendant for resisting the appeal other than the usual order as to the costs of the appeal.

64.  I am not persuaded by Mr Ho it is appropriate to award costs on an indemnity basis with enhanced interest on costs on account of the sanctioned offer.  The court retains a discretion whether to exercise those powers under Order 22 rule 24(3)(a) and (b), even though it is provided in rule 24(4) that “the Court shall make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so”.  Rule 24(5) provides that in considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3), the court shall take into account “all the circumstances of the case including - … (b) the stage in the proceedings at which any sanctioned offer was made”.

65.  The plaintiff made a Calderbank offer on 2 April 2012, followed by a sanctioned offer on 5 April 2010.  The sanctioned offer was made less than 28 days before trial.  In view of Tsoi Hak Kong Herbert v Kok Wai Chun (the latest date on which the defendant could have accepted the offer was 17 May 2010, the day before the judgment), and the provision in rule 24(3)(a) (costs may be awarded on indemnity basis after the latest date the defendant could have accepted the offer without leave of the court), Mr Ho accepted that costs could only have been awarded on indemnity basis as from 18 May.

66.  The bulk of the costs below would have been incurred by the time the trial was concluded on 26 April 2012.  Although there would be some costs attributable to the proceedings below after judgment was handed down, these costs (for which indemnity basis and enhanced interest are sought) could not have amounted to very much.  Quite clearly, the sanctioned offer was made far too late for it to have any real impact on costs under the statutory regime.

67.  I am mindful of the fact that in Tsoi Hak Kong Herbert v Kok Wai Chun, Chung J nevertheless exercised his discretion to award indemnity costs and enhanced interest as from the date of judgment where the sanctioned offer was made 20 days before trial commenced, even though the practical benefit to the plaintiff was “minimal” (at §58).  But that case was very different in that the plaintiff made the first offer two years before trial commenced on even more favourable terms and the sanctioned offer was made on the very day the new Order 22 came into operation and permitted the plaintiff to do so.  Every case involving the exercise of the court’s discretion on costs would depend on the particular facts of the case.  It seems to me more so in Tsoi Hak Kong Herbert as the circumstances there were quite exceptional.

68.  It would not be just to order indemnity costs or enhanced interest on such costs.  And there is no basis to order interest on costs to run from the date of the judgment below up to the date of the CA judgment.

69.  I am also not persuaded by Ms Eu that the trial judge’s order on costs should be restored.  The fact that the plaintiff succeeded on new arguments on appeal does not mean the sanctioned offer made earlier should be disregarded.  Having regard to how the appeal was disposed of, and that the plaintiff is the overall successful party albeit the appeal was allowed on new arguments not advanced at trial, it seems to me justice would best be achieved by awarding costs to the plaintiff as in the costs order nisi but declining to give any further relief to the plaintiff under the powers in Order 22.

70.  For the above reasons, I would dismiss §§(1)(c) and (d) of the plaintiff’s summons and that part of the defendant’s summons seeking to restore the judge’s costs order.

Paragraph (1)(e)

71.  This paragraph reads: “The costs order made by Deputy District Judge K H Hui in DCCJ 1467/2008 on 13 August 2012 be set aside and replaced by an order that the Defendant do pay the costs of the Plaintiff’s Summonses dated 15 June 2012 and 20 July 2012 on an indemnity basis to be taxed if not agreed with a certificate for counsel at an enhanced interest rate of 5% above judgment rate until full payment”.

72.  The plaintiff’s summonses dated 15 June 2012 and 20 July 2012 were for leave to appeal to the Court of Appeal and stay of execution pending appeal.  They were dismissed by the judge on 13 August 2012 with costs to the defendant with certificate for counsel.

73.  Mr Ho submitted the judge’s order of 13 August 2012 should be set aside as he should have granted the plaintiff’s summonses.

74.  Ms Eu pointed out that the plaintiff relied on a number of misconceived grounds in seeking leave to appeal before the judge.  The draft notice of appeal before the judge was completely jettisoned and not used for the appeal.  She submitted that the judge rightly dismissed the plaintiff’s application as it was made on misconceived grounds, so the costs order of 13 August should not be disturbed.

75.  Although the draft notice of appeal placed before the judge contained some grounds of appeal that are misconceived, it did raise the contention that the judge ought to have held that no private right of action in tort could be inferred from the existence of the statutory duty on the plaintiff under section 67(4) of the Insurance Companies Ordinance, Cap 41 and as such no duty of care in negligence was owed by the plaintiff to the defendant (at §§8 and 10).  It cannot be said the judge was right in refusing leave to appeal.

76.  I would set aside the costs order on 13 August and replace it with an order that the costs of the plaintiff’s summonses dated 15 June 2012 and 20 July 2012 be in the cause of the appeal.

77.  For the reasons given in respect of §§(1)(a) to (d) of the plaintiff’s summons, I would decline to order indemnity costs and enhanced interest on costs.

Paragraph (1)(f)

78.  This paragraphs reads: “The Defendant do pay interest on the net judgment sum of HK$74,050 at an enhanced interest rate of 5% above judgment rate from 18 May 2012 until full payment”.

79.  Under Order 22 rule 24(2), the court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court.

80.  As mentioned earlier, the court shall make such an order unless it considers it unjust to do so, and in considering whether it would be unjust, the court shall take into account all the circumstances of the case including the stage in the proceedings at which the sanctioned offer was made.

81.  For the reasons given in respect of §§(1)(c) and (d), I do not think it just to order enhanced interest on the judgment sum in the circumstances here.  I would decline to make an order sought in §(1)(f).

Conclusion

82.  Save for the different orders I propose to make in respect §§(1)(b) and (e), and an order in terms of §(1)(g) (that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations), I would dismiss the rest of the plaintiff’s summons as well as that part of the defendant’s summons seeking to restore the judge’s costs order.

Costs of the present applications

83.  Costs of the application for leave to appeal should follow the event.  I would make an order nisi that the defendant should pay the plaintiff’s costs, with a certificate for two counsel.  I would decline to grant a certificate for three counsel to the plaintiff.  There would be an order that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

84.  For the applications of both sides to vary the costs order nisi, as neither party has been successful, I would make an order nisi there be no order as to costs on each of the summonses, save that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.