KUAN KAM YUNG v. TSE JACQUELINE KAR YUE

DCCJ 3702/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3702 OF 2011

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DECISION ON COSTS ISSUE

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1.  The Plaintiff had made two counts of claim in these proceedings. The Defendant defended both counts of claim and filed a counterclaim on one. At the conclusion of trial, I entered judgment for the Plaintiff on one count and at the same time dismissed the Defendant’s counterclaim. In my judgment dated 28 May 2013 I also made an order nisi that there be no order as to costs as between parties regarding the 2 counts of claim and the counterclaim. Now both parties ask for variation of the order nisi by way of summonses taken out on 11 June 2013 and 18 June 2013 respectively.

2.  On 27 June 2013, the parties made a joint application and asked for the costs issue to be disposed of by paper without hearing.  Application was granted on 28 June 2013 with directions.

3.  I shall deal with the applications in order of date the summons was taken out.

The Defendant’s Application

4.  The application for the Defendant was made on the basis that there had been a “without prejudice save as to costs” offer (“the W/P Offer”) which turned out to be better than the judgment sum awarded to the Plaintiff.  It is submitted that the W/P offer was made on 19 March 2013 for an amount of $250,000 in full and final settlement of the action.  The effect is the same as HK$250,000 with no order as to costs.  The judgment sum awarded after trial was $142,237.  It is submitted on behalf of the Defendant that had the Plaintiff sensibly accepted the W/P Offer, the parties could have settled the case amicably without wasting the Court’s resources and no further legal costs would be incurred after 19 March 2013.  The Defendant therefore asks that she should be getting costs incurred after 19 March 2013 (the date when the W/P Offer was made). 

The Plaintiff’s Application

5.  The Plaintiff says that the costs order nisi should be varied in the following manner:

	(i)	The plaintiff should be awarded costs or part thereof in respect of the Plaintiff’s claim and the Defendant’s counterclaim; or
	(ii)	The Defendant should pay costs of the Plaintiff in respect of the two issues “won” by the Plaintiff and Plaintiff to pay costs of Defendant in one issue “won” by the Defendant; or
	(iii)	The Defendant should pay costs of the Plaintiff in respect of the Sale Proceeds of the Property claim/counterclaim and the Plaintiff should pay the costs of the Defendant in respect of the Loan claim.

6.  The Plaintiff further argues that it is not unreasonable not to accept the W/P Offer because there was no reasonable offer made on costs.  It is said that however it was unreasonable for the Defendant to reject the Plaintiff’s sanctioned offer of $250,000 inclusive of interest but with costs up to notice of acceptance to be borne by the Defendant.

Discussion

The Defendant’s Application

7.  It is within the broad discretion of the judge as to what costs order is to be made.  The W/P Offer was not made under RDC Order 22 rule 2 nor was there any payment made into court.

8.  RDC Order 62 rule 5 sets out special matters to be taken into accountin exercising discretion on costs:

(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- (L.N. 153 of 2008)
	(aa)	the underlying objectives set out in Order 1A, rule 1; (L.N. 153 of 2008)
	(a)	any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;
	(b)	any payment of money into court and the amount of such payment;
	(c)	any written offer made under Order 33, rule 4A(2); (L.N. 153 of 2008)
	(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; (L.N. 153 of 2008)
	(e)	the conduct of all the parties; (L.N. 153 of 2008)
	(f)	whether a party has succeeded on part of his case, even if he has not been wholly successful; and (L.N. 153 of 2008)
	(g)	any admissible offer to settle made by a party, which is drawn to the Court's attention. (L.N. 153 of 2008)
(2)	For the purpose of paragraph (1)(e), the conduct of the parties includes-
	(a)	whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
	(b)	the manner in which a party has pursued or defended his case or a particular allegation or issue;
	(c)	whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and
	(d)	conduct before, as well as during, the proceedings. (L.N. 153 of 2008)

9.  I find RDC Order 62 rule 5 relevant.  In the present case, it is clear that the Defendant could have protected her position as to costs by means of a sanctioned payment but failed to do so (rule 5(1)(d)).  The Defendant did not put forward any explanation as to why an offer was made by W/P letter and not by sanctioned payment under Order 22.  A W/P offer is in any event one of the many factors to be considered and should not be the determining one in the present case (rule 5(1)(g)).  I also take into account that there was no payment into court (rule 5(1)(b)); there were findings adverse to her credibility even on the claim which she had successfully defended (rule 5(2)(b)); and further she failed in her counterclaim (rule 5(1)(f)).

The Plaintiff’s Application

10.  The first issue to be dealt with is whether the Plaintiff’s Summons was issued out of time.  The contention of Mr Chai for the Plaintiff is that since the Defendant had taken out an application for variation, the order nisi was thus not made absolute, in the circumstances, the Plaintiff is entitled to take out a summons for variation any time before that happens.  I am afraid I cannot agree with such contention.  The time prescribed for an application to vary is 14 days from date of order nisi, not anytime before the order nisi has become absolute.

11.  RDC Order 42 rule 5B(3) provides that:-

“Where a written judgment is handed down pursuant to this rule the Court may make therein an order nisi as to costs and, unless an application has been made to vary that order, that order shall become absolute 14 days after the decision is pronounced.”

12.  Mr Chai submitted that if the Court finds it necessary that an application for leave to apply out of time is to be made, the Plaintiff will apply for such leave.  I however agree with Mr Lam for the Defendant in this regard that the Plaintiff has offered no reason to explain the delay.  I dismiss the Plaintiff’s application for time extension.

13.  If I am wrong on this, I would still dismiss the Plaintiff’s Summons.  Having read the 2 written submissions of Mr Chai, I am not persuaded that the costs order nisi should be varied in the Plaintiff’s favour in any of those terms proposed in paragraph 5 above.  The Plaintiff had two counts of claim which were totally independent of each other.  The factual basis was different and unrelated.  One was made out on a debt allegedly owed by the Defendant and the other was a claim for split of sale proceeds out of a joint investment in property.  The Plaintiff only succeeded in sale proceeds claim only; it means that the Defendant was successful in defending the claim for the debt.

14.  I agree with Mr Chai that an alternative to set off the costs between the parties is to order the parties to pay the other’s costs.  I find this not in the interest of the parties in the circumstances of the case.  As I could see, the amount claimed, the time spent and the documents involved in the claim for sale proceeds were not disproportionately higher than the claim for the debt.  I agree there was a counterclaim which I have dismissed.  The sale proceeds claim was in fact an accounting exercise and thus the counterclaim did not incur substantial costs.  In the circumstances, to make an order that one party to pay the other’s costs would only end up with further costs to be incurred on taxation.  Taking into account that the award was only in the sum below $150,000, and there is nothing before me to suggest that the difference in the costs of the two heads of claim is substantial, to incur further costs on taxation would be disproportionate in the circumstances.  I also agree with the observation of Mr Lam that the proposal made by the Plaintiff is complicated and costly.

15.  Last but not the least, bearing in mind the W/P Offer made by the Defendant I see no point in the Plaintiff’s argument that he should be getting costs even on the sale proceeds claim or any part thereof.  Both parties retained counsel to run a 3-day trial with subsequent detail written closing submissions.  The costs incurred for the trial must have formed a good portion. The Plaintiff’s refusal to accept the W/P Offer in my judgment is an important factor this court should take into account when considering the Plaintiff’s claim for costs.  On the whole, the Plaintiff was only successful in one count and had declined the W/P Offer made by the Defendant which was apparently better than the judgment sum.  I am not satisfied that in these circumstances the Plaintiff should be awarded costs as proposed.

16.  To conclude, I dismiss parties’ applications to vary the costs order nisi after considering the whole of the circumstances and the submissions made on their behalf.  I maintain that an order for no order as to costs is the proper order to be made.  The order nisi shall thus become absolute.

17.  In respect of costs of these applications, as neither party is successful in their respective application, I again make an order that the parties should bear its own costs.