SANDHU JATINDER SINGH v. MA SHIU MING AND ANOTHER

DCPI 2647/2022

[2024] HKDC 2092

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 2647 OF 2022

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DECISION

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THIS APPLICATION

1.  By a judgment on assessment of damages dated 27 August 2024 (“Judgment”), this Court adjudged damages payable to the Plaintiff in the total sum of $433,765 (plus interest).

2.  In this decision, I shall adopt the same abbreviations in the Judgment, save otherwise indicated.

3.  In the Judgment, I granted a costs order nisi in favour of P against D1 and D2 who should pay P the costs of and occasioned by the assessment of damages, to be taxed if not agreed, with certificate for counsel. The costs order nisi shall become absolute after 14 days unless any party applies to vary it within 14 days.

4.  D2 took out a Summons on 6 September 2024 (“Summons”) seeking to vary the costs order nisi pursuant to O 22 rr 8 & 23 and O 23 rr 1 & 2 of the Rules of the District Court, Cap 336H (“RDC”) on the basis of 3 sanctioned payments it had made on 3 November 2022, 30 December 2022 and 31 January 2023 (“Sanctioned Payments”). D2 argues that P had failed to do better than the 3 Sanctioned Payments totalling $450,000, justifying costs sanctions against P under O 22 r 23.

5.  D2 the motor insurer joined in these proceedings pursuant to a joinder order dated 28 October 2022. There is no dispute that the last day for P to accept the Sanctioned Payments (upon the last payment made on 31 January 2023) without leave fell on 28 February 2023. By the Summons, D2 seeks the following varied costs orders, as between P and D2, as follows:-

(i)  D2 do pay P’s costs of the assessment from 28 October 2022 up to 28 February 2023;

(ii)  P do pay D2’s costs of the assessment or any part thereof which the court deems fit on an indemnity basis with enhanced interest; and

(iii)  The sanctioned payments totalling $450,000 paid by D2 be kept and remain in court until further order, as security for costs payable by D2, pending taxation of costs referred to in paragraph (ii) above.

6.  I have perused and considered D2’s Affidavit of Leung Fung Chi filed on 6 September 2024 (“D2’s Affidavit”) in support of the Summons, P’s Affidavit of Lau Kam Lun filed on 9 October 2024 (“P’s Affidavit”) in opposition, D2’s skeleton submissions dated 23 October 2024 and P’s skeleton submissions dated 30 October 2024. I have considered the submissions of Ms Veronica Lee of D2’s solicitors and counsel Mr Kamlesh A Sadhwani for P made at the substantive hearing, and the authorities relied on by the parties.

BACKGROUND

7.  P claims in this action damages for personal injuries arising out of a traffic accident on 7 September 2020 (“Accident”) met by him when riding a motorcycle.

8.  Interlocutory judgment in default of defence was entered on 21 September 2022 against D1 (who was then the only defendant in this action), the driver of the offending motorcycle, leaving damages to be assessed. D1 never entered an appearance in these proceedings.

9.  Soon after that, the motor insurer of the offending motorcycle took out a Summons for joinder on 30 September 2022 (“Joinder Application”), and was granted leave on 28 October 2022 to intervene and became D2 herein, and to defend the issue of quantum.

10.  In the Affidavit of Leung Fung Chi filed on 30 September 2022 in support of the Joinder Application, it is stated clearly (§§5-6) that the intention was to safeguard D2’s position as the motor insurer in respect of its potential liability to pay the judgment of damages obtained by P in respect of the bodily injury claim under the Motor Vehicles Insurance (Third Party Risks) Ordinance, Cap 272 (“Ordinance”) notwithstanding cancellation/repudiation of the relevant motor insurance policy.

11.  P’s claim as pleaded in the Revised Statement of Damages filed on 25 September 2023 (“RSOD”) is as follows:-

PSLA	$500,000
Pre-trial loss of earnings+MPF	$541,282.25
Loss of earning capacity	$120,000
Other special damages/misc expenses
(medical, travelling and tonic food)	$12,000
(property damage/motorcycle repair)	$9,000
Total:	$1,182,282.25 ==========

12.  The action (on quantum only) proceeded to assessment of damages which took place on 23 and 25 July 2024.

The Judgment Sum

13.  After assessment, the damages adjudged by this Court as set out in the Judgment are as follows:-

PSLA	$240,000
Pre-trial loss of earnings [agreed]	$127,400
Loss of earning capacity	$50,000
Other special damages/misc expenses
(medical, travelling and tonic food)	$7,365
(property damage/motorcycle repair) [agreed]	$9,000
Total:	$443,765 =======

The Sanctioned Payments

14.  D2 had shortly after its joinder in this action made 3 Sanctioned Payments under O 22 r 8(2) of the RDC as follows:-

(i)  1^st Sanctioned Payment of $330,000 on 3 November 2022;

(ii)  2^nd Sanctioned Payment of $70,000 on 30 December 2022; and

(iii)  3^rd Sanctioned Payment of $50,000 on 31 January 2023 (“3^rd Sanctioned Payment”), bringing the total amount offered in settlement to $450,000.

15.  In all the 3 Notices of Sanctioned Payment, it is expressly stated that the payment was made “in settlement of”, with a tick in the 1^st check-box “part of your claim”, followed by explanatory notes immediately below the 1^st check-box: “Being motor insurer, the 2^nd Defendant is not statutorily liable for the Plaintiff’s property damage claim.”

D2’S ARGUMENTS

16.  There should be no dispute that the total judgment sum ($443,765), when added with interest, would exceed the total sum of $450,000 on offer in the 3 Sanctioned Payments.

17.  D2’s arguments in support of variation of the costs order nisi is that the Sanctioned Payments were made expressly in respect of part of P’s claim only in accordance with O 22 r 8(2) of the RDC, ie in respect of the bodily injury claim only and exclusive of property damage (of the agreed sum of $9,000).

18.  On that basis and for the purposes of assessing sufficiency of the Sanctioned Payments totalling $450,000 as at the deadline date of 28 February 2023 for acceptance of the 3^rd Sanctioned Payment without leave, D2’s calculations of interest are as follows:-

(i)  Interest on PSLA (208 days from date of Writ on 5 August 2022 up to 28 February 2023): $240,000 x 2% x 208/365 = $2,735.34

(ii)  Interest on pre-trial special damages (from date of accident to 28 February 2023): ($127,400 + $7,365) x 4.4375% x 905/365 = $14,827.61

19.  The judgment sum, together with interest, but nett of the property damage of the agreed sum of $9,000, according to D2’s calculations, is therefore:

PSLA	$240,000
Pre-trial loss of earnings [agreed]	$127,400
Loss of earning capacity	$50,000
Expenses (medical, travelling and tonic food)	$7,365
Interest on PSLA	$2,735.34
Interest on pre-trial special damages	$14,827.61
Total:	$442,327.95 =========

20.  D2 therefore argues that P had failed to do better in the Judgment than the Sanctioned Payments made up to the 3^rd Sanctioned Payment which had brought the total settlement offer to $450,000 in respect of part of P’s claims, namely the bodily injury claim but nett of the property damage.

P’S ARGUMENTS

21.  P’s counsel makes no objection to the above calculations but argues that D2 had taken an erroneous view or interpretation of the Judgment.

22.  D2’s Summons seems to be premised on its argument that the property damage/motorcycle repair cost should not form part of the quantum assessed in the Judgment as D2 being the motor insurer is not statutorily liable to pay for property damage under the Ordinance. P argues that this is a wrong approach/interpretation of the Judgment, as stated in P’s Affidavit (§§4-5), that the property damage/motorcycle repair cost clearly forms part of the Judgment for which D2 is liable to pay irrespective of whether D2 is of the view that it is not under a statutory liability to do so.

23.  It is clear that this Court had ruled (in §98 of the Judgment) that the property damage, agreed in the sum of $9,000, arose out of one and the same tortious occurrence hence one cause of action of negligence of D1 in this personal injuries action, and should form part of the Judgment. There was no intention in the Judgment or of this Court to treat the property damage and bodily injury claims separately.

24.  Hence it is wrong for D2 to argue that the Judgment sum on the bodily injury claim only (nett of property damage) should form the basis for considering sufficiency of the Sanctioned Payments.

25.  P’s counsel also argues that the Notices of Sanctioned Payment have failed to specifically state that the monies were paid into court for the bodily injury claim only. By merely stating that D2 is not statutorily liable for P’s property claim, it is not clear to which part of the claim the monies paid in were related to specifically.

ANALYSIS

26.  Parties have no dispute on the trite legal principles governing O 22 r 23 of the RDC, and the consequences resulting from sanctioned payments.

27.  O 22 r 8 of the RDC provides:-

“(1) A sanctioned payment may relate to the whole claim or to part of it or to an issue arising from it.

(2) A defendant who makes a sanctioned payment shall file with the Court a notice in Form No. 23 in Appendix A, that—

(a) states the amount of the payment;

(b) states whether the payment relates to the whole claim or to part of it or to an issue arising from it and if so to which part or issue it relates;

(f) if a sum of money has been paid into court (other than as security for costs), states whether the sanctioned payment has taken into account that sum of money.”

[emphasis added]

28.  There is no dispute that all 3 Notices of Sanctioned Payments are valid and were issue in accordance with O 22 r 23 of the RDC.

29.  I do not accept the argument of P’s counsel that it is not clear from the 3 Notices of Sanctioned Payment to which part of the claim the monies paid in were related to specifically.

30.  It has been expressly made clear that the 3 Sanctioned Payments were made in respect of part of P’s claim in this action, as the Notices all had the check-box “part of your claim” ticked, with an explanation immediately following this check-box that D2 “Being the motor insurer… is not statutorily liable for the Plaintiff’s property damage claim”.

31.  Adopting the approach of Master Marlene Ng (as she then was) in interpreting the notice of sanctioned payment/prescribed Form 23 in the decision of Lin Yanjin v Smart Billion Engineering Ltd HCPI 739/2009 (10 August 2011) (§§155-160) and in accordance with usual principles of statutory interpretation, a natural and purposive meaning should be given, in that the property damage claim was excluded.

32.  This is also consistent with D2’s pleaded case all along, as stated in the Affidavit of Leung Fung Chi filed on 30 September 2022 (§§6-7) in support of the Joinder Application and D2’s Answer to RSOD filed on 24 October 2024 (§14).

33.  In light of this background and reading the Notices of Sanctioned Payment in context, I am driven to the construction that they cannot carry other meaning, but that all 3 Sanctioned Payments were made in respect of P’s claims herein but nett of the property damage claim. The argument of P’s counsel fails to give proper meaning to the plain terms of the notices, which was in my view also obvious given the background of the case.

34.  P’s claim in the present action comprises different types of claim, namely the bodily injury claim and the property damage to P’s motorcycle in the agreed sum of $9,000, both arising out of the same and one cause of action in tort of negligence as I have ruled in the Judgment (§98), which both parties acknowledge and accept. This ruling follows the Court of Appeal judgment of Chan Chiu Tung v Cheng Ka Fai Philip [2024] 1 HKLRD 82 (§56) that the different types of claims, namely the injury to the plaintiff’s person and the damage to his motorcycle, flow from one single act of negligence of the 1^st defendant’s negligent driving. Where one tortious occurrence results in two types of damage, it gives rise to one single cause of action (§59).

35.  A sanctioned payment can be made in respect of part of the claim or one type of the different claims, as clearly provided in the prescribed form and what exactly D2 has expressly stated in the Notices of Sanctioned Payment.

36.  The Summons is based on the Sanctioned Payments made in respect of part of the claim, namely P’s bodily injury claim and exclusive of the different type, ie property damage claim. It is not D2’s argument that the property claim should not be included in the judgment sum, which P has misinterpreted as argued in opposition of the Summons. In any event, the Judgment was given against D1 the tortfeasor and the assessment of damages must include all types of claims, irrespective of whether D2 would be statutorily liable, and for which part of the claims.

37.  It would be up to P to decide whether to accept the Sanctioned Payments made by D2 in settlement of the bodily injury claim only, whereby his costs of proving quantum up to the time of acceptance would be secured as against D2. Upon acceptance by P of the Sanctioned Payments, D2 would go out of the picture. P could then decide to proceed with the remaining claim for property damage against the (absent) tortfeasor D1 by carrying on this action as against D1 only. The costs of proving the straightforward property damage claim, supported by a receipt, would be minimal. Substantial costs of P proving quantum of the bodily injury claim at trial would be saved.

38.  This course of action follows that endorsed by the Court of Appeal in the judgment of Chan Chiu Tung (supra): In that case, the plaintiff, having settled his bodily injury claim (in the sum of $1.9 million) with the 3^rd defendant insurer, was held not barred but was entitled to pursue his motorcycle property damage claim (for the mere sum of $11,421) against the 1^st defendant tortfeasor and continue the action in the District Court (§§64-69).

39.  The Court of Appeal ruled further in that case that the 3^rd defendant insurer, despite repudiation of the insurance policy, is under a statutory duty to satisfy any judgment in favour of the plaintiff, but confined to the bodily injury claim, under the Ordinance (§63).

40.  Similarly in the cases of Lui Yat Ling Elaine v Tam Kwok Fai & Ors [2018] HKDC 1611 and Chea Hung Cheung v Lo Tak Yiu & Anor DCPI 691/2012 (unreported, 14 May 2013), the insurer defendants settled the bodily injury claims only of the plaintiffs and were ruled to be out of the picture, leaving the plaintiffs to pursue the remaining property damage claims against the tortfeasor defendants in the same action.

41.  For the above reasons, I conclude that D2 had made valid Sanctioned Payments up to a total sum of $450,000 as at 31 January 2023 in respect of part, namely the bodily injury claim only, of P’s claim herein. The judgment sum in respect of the bodily injury claim only should be referred to in considering sufficiency of the Sanctioned Payments made by D2.

42.  It follows that the adjudged damages for bodily injury claim only plus interest, totalling $442,327.95 as set out in §19 above, fall short of the sum of $450,000 on offer. P has failed to obtain a judgment better than the Sanctioned Payments, and is liable to face the sanctions on costs prescribed under O 22 r 23 of the RDC.

The Sanctions on Costs

43.  O 22 r 23 of the RDC states as follows:-

“(1) This rule applies where a plaintiff-

(a) Fails to obtain a judgment better than the sanctioned payment;

…

(2) The Court may by order disallow all or part of any interest otherwise payable under section 48 of the Ordinance on the whole or part of any sum of money awarded to the plaintiff for some or all of the period after the latest date on which the payment or offer could have been accepted without requiring the leave of the Court.

(3) The Court may order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment could have been accepted without requiring the leave of the Court.

(4) The Court may also order that the defendant is entitled to –

(a) his costs on the indemnity basis after the latest date on which the plaintiff could have accepted the payment without requiring the leave of the Court; and

(b) interest on the costs… at a rate not exceeding 10% above judgment rate.

(5) Where this rule applies, the Court shall make the orders referred to in paragraphs (2), (3) and (4) unless it considers it unjust to do so.

(6) In considering whether it would be unjust to make the orders referred to in paragraphs (2), (3) and (4), the Court shall take into account all the circumstances of the case including –

(a) the terms of any sanctioned payment…

(b) the stage in the proceedings at which any sanctioned payment or sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned payment … was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the payment or offer to be made or evaluated…”

[emphasis added]

44.  O 22 r 23(5) of the RDC stipulates that the costs sanctions provided under O 22 r 23(2), (3) and (4) are mandatory in that the court “shall make the orders… unless it considers it unjust to do so”.

45.  In accordance with O 22 r 23(3), and I consider it just, that P should be liable to pay D2 the costs of the assessment of damages after 28 February 2023, ie the 28-day deadline on which date P could accept the Sanctioned Payments without leave.

46.  P’s counsel has not made submissions on the costs sanctions nor argued why it would be unjust for this Court to make the costs sanctions sought by D2 in the event that D2 succeeds in arguing that P had failed to beat the Sanctioned Payments.

47.  The onus is on P to show that in view of all the circumstances of the case, including the factors set out in O 22 r 23(6) of the RDC, it is unjust to make the orders provided in O 22 r 23(2), (3) and (4). Further, it is a question of fact in each case whether a party who fails to beat the sanctioned payment is able to persuade the court that it is unjust to allow the statutory consequences.

48.  I have considered the circumstances in which the Sanctioned Payments were made but not accepted by P. D2 has acted promptly in making the 3 Sanctioned Payments soon after the Order for joinder was made on 28 October 2022. It showed every genuine intention of settling the case in a reasonable and efficient manner. This would help achieve the underlying objectives of time efficient and costs economical case management under the CJR under O 1A r 1 of the RDC and should be commended.

49.  On the other hand, P has inflated his claim by pleading in the RSOD filed on 25 September 2023 a total claim of $1,182,282.25, or $1,173,282.25 for bodily injury exclusive of the property damage claim. The pleaded sum of damages is more than 2.5 times the sum adjudged by this Court. The claim is shown to be highly inflated and wholly unreasonable for reasons stated in the Judgment. P’s evidence on the seriousness of the R wrist and L fingers injuries, and the longstanding incapacitating impact on his work capacity and even daily activities, was found unreasonable and wholly incredible, and was rejected by this Court.

50.  There are no circumstances justifying departure from or rendering it unjust for costs sanctions provided under O 22 r 23(2), (3) and (4) to be imposed. It has not been shown to be unjust to order indemnity costs against P, and I exercise my discretion to so order.

51.  Parties have not made submissions on the appropriate rate of the enhanced interest to be adopted.

52.  I have considered the “modified” approach (of half of the full rate of 4% above prime in Hong Kong) of Johnson Lam J (as he then was) and the “full rate” approach adopted by Bharwaney J in the respective landmark cases of Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273 (at pages 279-280) and Shih Pik Nog v G2000 (Apparel) Limited [2011] 4 HKLRD 121 (at pages 128, 129), and the thorough and helpful discussion on the topic in the recent decision of Marlene Ng J in Chan Wai Chung v China Travel Tours Transportation Development (HK) Ltd & Anor [2023] HKCFI 1442.

53.  The “modified” approach is usually adopted where there is no evidence on the amounts and actual dates when the receiving party had paid or put up funds on account of costs, and from which interest would run at half of the full enhanced rate of interest, eg 4.5% pa, being half of 9% pa, in Golden Eagle (supra) to the date of judgment.

54.  In Shih Pik Nog (supra) (page 130), Bharwaney J took the view that in personal injuries cases where the receiving party was the insurer for the defendant who did not pay the costs to the solicitors until conclusion of the case, the court should not award any interest on costs if the insurer had not made any advance on account of fees incurred under O 22 r 23(4)(b) of the Rules of the High Court because otherwise it would produce an unjust windfall for the insurer. In that case, where the defendant insurer was directed to and did provide evidence of payment of costs, the court ordered the plaintiff to pay interest at the full enhanced rate of 9% pa on the actual sums paid from the dates of payment to the date of judgment.

55.  Both the “modified” approach in Golden Eagle (supra) and the “full rate” approach in Shih Pik Nog (supra) have been widely accepted and followed in the court’s consideration of sanctions on enhanced interest under O 22 r 23 depending on the circumstances and evidence of the case.

56.  In the present case, it is stated in D2’s Affidavit (§16) that D2 had through the solicitors paid the following sums on costs:-

(i)  $27,500 paid on 11 September 2023 in respect of medical expert’s fee; and

(ii)  $7,000 paid on 7 May 2024 in respect of half of mediator’s fee.

57.  On such evidence, it is appropriate for this Court to adopt the “full rate” approach in considering enhanced interest to be imposed.

58.  Reference is made to the current judgment rate of 8.875% pa. The level of enhanced interest awarded must be proportionate to the circumstances of the case, and the maximum of 10% pa above judgment rate must be reserved for the worst kind of cases.

59.  In the circumstances of the present case, I consider that the appropriate full enhanced rate of interest should be 3% pa above judgment rate, ie 3% pa + 8.875% pa = 11.875% pa, following the approach and assessment of Marlene Ng J in Chan Wai Chung (supra).

60.  I therefore award enhanced interest at 11.875% pa on each actual payment of costs made by D2 from the date of payment up to the date of judgment.

Sanctioned Payments be Kept and Remain in Court?

61.  D2 by the Summons also seeks an order that the sanctioned payments totalling $450,000 paid by D2 be kept and remain in court until further order, as security for costs payable by P to D2, pending taxation of D2’s costs ordered herein.

62.  D2 has made no submissions on the grounds or reasons in support of such an order.

63.  The onus is on D2 to give good reason why the money should remain in court. See Powell v Vickers, Sons & Maxim, Limited [1906] 1 KB 71, at 77.

64.  In Darcy Grant Dmetrichuk v Tung Wah Group of Hospitals Wong Fut Nam College HCPI 416/2005 (unreported, 22 June 2006), DHCJ Wright entered judgment in favour of the plaintiff in a sum with interest that was less than the sum the defendant paid into court shortly before trial. The learned judge granted with the judgment a costs order nisi in favour of the plaintiff against the defendant. The defendant’s application for variation was granted for the plaintiff to pay the defendant’s costs after the payment into court, but the court refused to make a further order sought by the defendant that the monies it had paid into court be held as security for its costs.

65.  On the issue of whether the monies that the defendant had paid into court should be retained until such time as the costs due to it had been taxed so that such costs be paid from those monies, the learned judge recognised that an order to such effect was effectively a form of security for costs (§18). He cited Powell (supra) “in which it was made clear that an order of this nature is exceptional and should only be granted where a defendant is able to discharge an onus to give some good reason why the money should remain in court” (§20). It was held that there was no justification for granting the relief sought.

66.  The principles were cited and followed in the decision on costs of DHCJ Marlene Ng (as she then was) in Ng Chi Kwan, Danny Summer (alias夏韶聲) & Anor v Yeung Yiu Kwai & Anor HCPI 633/2011 (unreported, 28 November 2014) (§§31-34). In that case, the learned judge refused to accede to the defendants’ request for the monies paid into court by them to be retained in court pending taxation of the parties’ respective costs. It was ruled that the sanctioned payments were made by the defendants for the purpose of disposing of the plaintiffs’ claim. The plaintiffs should prima facie be entitled to the release of a sum equivalent to the judgment out of the sanctioned payments in their favour. The defendants’ request was a de facto stay of execution of the judgment, and a security for costs awarded to the defendants pending taxation. It was for the defendants to demonstrate good reasons and to justify why the court should grant such order to enable them to enjoy such security. Further, without any evidence on costs estimates of the parties, there was no sufficient basis for the court to consider or exercise the discretion in favour of the defendants to retain the monies paid into court.

67.  Likewise in the present case, there is no evidence before me on the costs estimates and no good reason having been advanced by D2 for keeping the sanctioned payments in court as security for the costs due to it, the burden has not been met. The relief sought is refused.

ORDER

68.  In the circumstances, the costs order nisi, insofar as it relates to D2, is varied as follows:-

(1)  D2 do pay P’s costs of the assessment of damages from 28 October 2022 (the date of joinder) up to 28 February 2023, with certificate for counsel, to be taxed if not agreed;

(2)  P do pay D2’s costs of the assessment of damages after 28 February 2023, with certificate for counsel, on the indemnity basis up to the date of judgment, to be taxed if not agreed;

(3)  P do pay D2 enhanced interest on costs at 11.875% pa:-

(i)  on the sum of $27,500 from the date of payment on 11 September 2023 up to the date of judgment; and

(ii)  on the sum of $7,000 from the date of payment on 7 May 2024 up to the date of judgment.

69.  Costs of the Summons for variation of costs order nisi be to D2, payable by P, to be taxed if not agreed. This is an order nisi which shall become absolute in the absence of application by any party to vary within 14 days.