CHOW CHI CHIU v. SYNERGIS MANAGEMENT SERVICES LTD

DCPI1216/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO. 1216 OF 2004

D E C I S I O N

1.  This is an application by the plaintiff under Order 22 r.1(3) of the Rules of the District Court for the sum of money paid into court by the defendant on 13 October 2005 to be paid out to the defendant. 

2.  The plaintiff makes this application based on his submission that there is no provision for payment in, in respect of costs, under the Rules of the District Court and the Practice of the Court and the defendant could not, without provision or authority in the Rules of the District Court, make a payment into court. 

3.  The defendant’s argument is that, despite the fact that there is no provision, such payment in should not be disallowed as it is for the purpose of settlement of costs.  The defendant’s solicitor further submits that there is no provision for the present application under Order 22 r.1(3) for an application for payment out of moneys paid into court by the defendant.  I shall hereunder address the arguments of respective parties. 

4.  The defendant’s solicitor does not seem to challenge the plaintiff’s solicitor’s submission that there is no provision for the paying party to make a payment into court pending taxation of costs, and that Order 22 of the Rules of the District Court does not provide for payment into court in respect of costs of an action. 

5.  The plaintiff’s solicitor supports his contention with reference to the judgment of the late Jerome Chan J in Leung Cheung Hong v Golden Pond Restaurant Limited, HCA 5399 of 1989, handed down on 21 March 1997 and the judgment of Wong J in Choi Yat Ying v United Airlines, Inc. in HCPI 721 of 1999, date of judgment, 1 June 2000 and the judgment of Barnett J in Tso Wing Yu, Anita v Lau Siu Fan, Tam Tung Hoi A6928 of 1993.  From the three authorities it is clear that there could be no room for argument that there is no provision in the Rules of the District Court for payment into court in respect of costs of an action, and that Order 22 does not provide for that.

6.  In this case the plaintiff is a recipient of legal aid.  The judgment of the late Jerome Chan J addressed the special circumstances of the case where the recipient for costs is a legal aid recipient.  At page 8, line F of his judgment, the late Jerome Chan J categorically stated that,

“payment into court of money in respect of an aided person’s costs could not be a relevant consideration for the determination of costs of the taxation that ensued upon a failure to accept such payment in.”

7.  The plaintiff’s solicitor referred to the passage in the judgment of Jerome Chan J, which states as follows:

“In view of the ... features of the Legal Aid scheme, the Director and the aided person could not reasonably be placed under any obligation to consider the reasonableness of the amount paid into court in lieu of a taxation.  They are entitled, like the assigned solicitors and counsel, to have their liability for common fund costs determined by a taxation in accordance with the Ordinance.  It would be wholly inequitable to require them to come to a decision on the payment into court, and to be penalised for an inaccurate decision.  They have a statutory right to a taxation of the common funds costs, and such a right cannot be consistent with an obligation to consider a waiver of such right.”

8.  Barnett J, at page 8 of his judgment stated that he had some sympathy with this view and explained that at page 8 of his judgment at line A. 

“A lump sum payment into court in respect of party and party costs gives rise to real difficulties on the part of the legal aid team.  There would be no indication as to how this sum should be assigned to profits costs, counsel’s fees and other disbursements.  No doubt there would be questions of transferring certain party and party items either in whole or in part to the common fund.  With a very great deal of goodwill all round and much hard work, a resolution of these problems might be achieved.  Like Jerome Chan J, however, I am satisfied that the legal aid team should not be put to such trouble.”

9.  It would seem, therefore, that the authorities in Hong Kong state clearly that there is no provision for payment in in respect of costs in the Rules of the District Court.  In the case of a recipient for costs who is legally aided it would not be right to require the Director of Legal Aid and the aided person to form a view on the reasonableness of any payment into court in respect of costs. The payment in is not a matter for the taxing Master to take into consideration.  Jerome Chan J, at page 2 of his judgment, stated in view of the aforesaid:

 “The payment was therefore not a matter for the taxing master to take into consideration.” 

10.  Barnett J, however, stated that a properly drafted Calderbank offer could be made even though, in the case of a litigant who is legally aided, the Calderbank offer is not as straightforward for the legal aid team as it is for a private litigant and his solicitors.  He stated that he did not see

“there are any unreasonable demands being made in asking the legal aid team, led by the Director, to consider such an offer.”

At page 11 of his judgment he stated:

“I come to the conclusion, therefore, that a proper Calderbank offer in respect of an aided person’s costs is a matter which a taxing master may properly take into account when considering an order for the costs of taxation.  To be effective, the offer must be divided at least into offers for: profit costs; counsel’s fees; and other disbursements.  It may well be that the particular circumstances of a case will call for further divisions.”

11.  The defendant’s solicitor sought to argue with reference to an English Court of Appeal decision of Mitchell & Ors v James & Ors [2003] 2 All.ER 1064, that consideration should be given to payment in for costs even though there is no provision for such in the rules and procedures of the court.  However, the authority is based on a Part 36 offer under the Civil Procedure of England and not under rules similar to the Rules of the District Court.  I do not think that such an authority is of any relevance to the consideration of the situation we are in, which specifically refers to the situation of the recipient of costs being a legal aid recipient, and also to our own Rules of the District Court.  Our authorities in Hong Kong are clear and hence, reference to UK authorities on a different set of civil procedures is not helpful. 

12.  Having considered the authorities aforesaid and their conclusions, I come to the finding that not only is there no provision in the Rules and Practice of the District Court for payment into court in respect of costs, in a case where the recipient, of course, is a recipient of legal aid, the payment in is not a matter for the taxing master to take into consideration.   

13.  I still have to consider whether there is provision for the application for payment out of the payment in by the defendant under the Rules of the District Court.  Order 22 r.1(3) provides that a notice of payment in by a defendant may not be withdrawn or mended without leave of the court.  In this case the plaintiff applied for the payment out of money paid into court.  The plaintiff’s solicitor sought to persuade me that under the provisions of Order 22 r.1(3) his application is authorised.  The plaintiff’s solicitor referred me to a judgment of the Honourable Sakhrani J handed down on 17 January 2002 in Tsang Kam Ming t/a Good Harbour Property Agency Co. v Artchamp Investment Ltd, HCA 256 of 1998.  That authority was a case where the defendant applied for payment out of money paid into court.  That authority supported the view that the court could order a payment out of money paid in by a defendant under the inherent authority of the court and not specifically under Order 22 r.1(3) of the Rules of the District Court.

14.  I have to find whether the application should be granted in this case.  There is specifically no provision under Order 22 r.1(3) for a situation such as this.  But the inherent jurisdiction of this court, as referred to in the authority last cited, does enable the court to make an order in the terms sought.  Whether I should make such an order is dependent on, firstly, whether the payment is able to serve any purpose.  Having found that the taxing master could not consider the payment in in his decision in relation to costs of taxation, it would seem that the amount paid into court does not serve any useful purpose.  The plaintiff’s solicitor has referred me to the part of the judgment of the late Jerome Chan J where he said:

“Apart from payment into court pursuant to an order of the court, litigant can only pay money into court if specifically authorised by the rules or practices of the court.  I was not referred to, nor am I aware of, any inherent right of a litigant to make payment of money into court.  The existence of such ‘right’ could not be consistent with legal principles nor common sense.  No person, let alone an officer of court, could be made an involuntary custodian or trustee of funds without some form of overriding authority or principle of law.  The consequences and implications of an unrestricted and uncontrolled right of litigants unilaterally placing funds in court thereby conferring liability and duties upon an officer of court as custodian or trustee of such fund, are wholly unacceptable.”

15.  With that view in mind that “the court should not be made an involuntary custodian or trustee of funds without some form of overriding authority or principle of law”, I am persuaded I should grant the application for the reasons stated aforesaid under the inherent jurisdiction of this court.  I order that the money in the sum of $210,000 paid into the court by the defendant on 13 October 2005 be paid out to the defendant.  Cost of the application be to the Plaintiff to be taxed if not agreed.