YEUNG HO MAN v. SHUM KIN LEUNG AND ANOTHER

HCPI 547/2017

[2020] HKCFI 2781

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 547 OF 2017

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D E C I S I O N

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1.  This is a decision by way of paper disposal.

2.  On 28 September 2020 I handed down my judgment in this action, dismissing the plaintiff’s action and making a costs order nisi as follows:

“Dismissal of Action and Costs

78.  I dismiss the plaintiff’s action. I make a cost order nisi that the plaintiff pays the costs of the action to the 1^st and 2^nd defendants on an indemnity basis, to be taxed if not agreed. Such an order will become absolute unless a written application is made within 14 days by any party to vary it. I direct that such written application may be made by letter addressed to my clerk. Such letter should state the variation of my order that is sought and the reasons for seeking such variation. Upon application being made, I will dispose of the same on paper. I may or may not give directions to serve further written submissions before disposing of the same on paper.

79.  As the cost order nisi will impact upon the Director of Legal Aid, I grant him leave to apply, by letter, to vary the order within 14 days and/or to apply for wasted costs orders, in respect of which I had made certain observations in paragraph 26 of my recent decision in Lai Sin Yan Elsie v. Tata Communications (Hong Kong) Ltd. HCPI 1092/2015, 14 August 2020.  If application is made for wasted costs orders, I will give appropriate directions to enable affected parties to be heard and to deal with the same.”

Wasted Costs Orders

3.  On 9 October 2020, the Director of Legal Aid wrote to my clerk informing her that the Director of Legal Aid had decided not to make application for a wasted costs order.

4.  On 12 October 2020, M/s Deacons, on behalf of the 1^st and 2^nd defendants, wrote to my clerk applying, amongst other things, for a wasted costs order against M/s Lau & Chan, the former solicitors for the plaintiff who were assigned by the Director of Legal Aid to act for him.

5.  On 15 October 2020, I made the following direction:

“I refer to the application made by the 1st and 2^nd Defendants’ application by letter dated 12 October 2020 to vary my costs order nisi.

What is the legal basis upon which the 1st and 2^nd Defendants apply for a wasted costs order against Messrs. Lau and Chan, given that the Director of Legal Aid has expressly stated that he will not apply for a wasted costs order against them.

The 1st and 2^nd Defendants are directed to respond in writing within 2 days.”

6.  On 16 October 2020, M/s Deacons responded stating that the 1^st and 2^nd defendants sought to apply for a wasted costs order pursuant to Order 62, r.8(2)(b)(ii) of the Rules of the High Court which provides that a wasted costs order may direct the legal representative to indemnify other parties against costs incurred by them.

7.  On 19 October 2020, I made the following directions:

“1)  I did not grant leave to the 1^st and 2^nd Defendants to apply for a wasted costs order by letter. I direct the 1st and 2nd Defendants to apply for a wasted costs order in the usual way by summons served on all parties including the Plaintiff’s former solicitors;

2)  I direct the Plaintiff and the Director of Legal Aid to respond to the application of the 1^st and 2^nd Defendants for enhanced interest on or before 23 October 2020.  The Plaintiff may, if he so chooses, reply orally by telephone to my clerk, Miss Jessica To at Telephone no. 28254529.”

8.  On 23 October 2020, M/s Deacons wrote to my clerk stating that they were instructed to withdraw their application for a wasted costs order against the plaintiff’s former solicitors, M/s Lau & Chan.

Indemnity Costs

9.  The plaintiff had not, within 14 days of my costs order nisi, made application to vary my costs order nisi that he pays the costs of the action to the 1^st and 2^nd defendants on an indemnity basis, to be taxed if not agreed.  However, pursuant to my direction made on 19 October 2020 set out in §7 above, he spoke on the telephone to my clerk on 20 October 2020. The entire telephone conversation was recorded and has been transcribed and also translated into English.  The transcript and translation of the same are appended to this decision.  The plaintiff has not spoken to my clerk after that conversation on 20 October 2020. Nor has my clerk received any written communication from the plaintiff since 28 September 2020, the date my judgement was handed down.

10.  In the telephone conversation on 20 October 2020, the plaintiff said to my clerk that he “firmly objected to [make compensation to the other side].  I understand this statement to mean that the plaintiff objects to paying the costs of the action to the 1^st and 2^nd defendants on an indemnity basis, to be taxed if not agreed.  Although the objection is out of time, I grant leave to the plaintiff to vary my costs order nisi that he pays the costs of the action to the 1^st and 2^nd defendants on an indemnity basis, to be taxed if not agreed. He did not give any reasons for his objection.

11.  On 9 October 2020, the Director of Legal Aid wrote to my clerk stating that:

“The Director fully acknowledged His Lordship’s findings in the Judgment on which the costs nisi was made. However, we respectfully submit that for the following reasons, the plaintiff may not be held liable for costs of the 1^st and 2^nd defendants on indemnity basis throughout the whole period of the proceedings.

We are given to understand that parallel with the present action, there was a claim for employees’ compensation (DCEC503/2016) (“EC action”) with different opposite parties i.e. the respondent in the EC action is the employer of the plaintiff while the defendants in the present action are the bus driver and KMB being the employer of the driver. By the time the plaintiff commenced this action on 29 May 2017, he had received no periodical payment under the Employees’ Compensation Ordinance and had not been assessed by the Medical Assessment Board of Labour Department as well as private medical experts. The respondent made the 1^st sanctioned payment of $450,000 on 21 November 2018 and the EC action was settled on 12 February 2019 at $652,808.33 only. Under these circumstances, we consider that it was not unreasonable for the plaintiff to commence this action on 29 May 2017 and to continue with the same, at least up to 12 February 2019 when the sum of employees’ compensation was finally crystallized.

The medical expert evidence in this case is conflicting. The orthopaedic medical evidence, which we understand His Lordship did not accept, showed that the plaintiff did suffer from right upper limb and lower limb paralysis with 100% loss of earning capacity. The orthopaedic experts did not suggest any malingering or exaggeration on the part of the plaintiff in their joint medical report. It is understood that the orthopaedic experts confessed that they could not relate the plaintiff’s state to any orthopaedic injury with such a presentation and that they were unable to say “that the captioned accident and/or subsequent back injury is the sole cause”. In that case, it was not unreasonable for the plaintiff to pursue the action on the basis that at least the 1^st and/ or 2^nd accidents would be part of the cause of his medical condition and that the damages to be awarded in this action would be more than the employees’ compensation to be received would the trial judge accept the orthopaedic medical evidence and in light of the significant degree of loss of earning capacity as assessed by the orthopaedic experts.

The defendants made a sanctioned payment on 11 March 2019 only. The plaintiff would have up to 8 April 2019 i.e. 28 days from the date of the Notice of Sanctioned Payment to accept the sanctioned payment.

For the aforesaid reasons, we humbly apply to His Lordship to vary the cost order nisi to the effect that:

1.  The 1^st and 2^nd defendants shall pay the costs of this action to the plaintiff on party and party basis up to 12 February 2019, to be taxed if not agreed;

2.  The plaintiff shall pay the costs of this action to the 1^st and 2^nd defendants on party and party basis from 13 February 2019 up to 8 April 2019, to be taxed if not agreed;

3.  The plaintiff shall pay the costs of this action to the 1^st and 2^nd defendants on indemnity basis from 9 April 2019 up to the date of the Judgment, to be taxed if not agreed.”

12.  In their letter dated 12 October 2020, M/s Deacons opposed the application of the Director of Legal Aid, which I have set out above, and submitted that the plaintiff should be ordered to pay costs on an indemnity basis irrespective of the amount of damages awarded.  They relied on the submissions contained in §§37 to 42 of the opening submissions of the 1^st and 2^nd defendants dated 8 June 2020 in which it was submitted that it was an abuse of court process for a claimant to present a dishonest case as to his injuries and on quantum.  Had the plaintiff brought a genuine claim of damages for his soft tissue injury, this case would have been resolved much earlier with little expenses incurred.  Due to his dishonesty, this case was made unnecessarily complicated: experts for specialities were engaged, numerous medical reports and records were obtained and considered; and pleadings and witness statements were prolonged.  If there was a finding of dishonesty, it would only be fair to order the plaintiff to pay costs to the defendants on an indemnity basis irrespective of the amount of damages.

13.  I had occasion to review the principles governing the award of costs on an indemnity basis in §§3-11 of my decision in Lai Sin Yan Elsie v Tata Communications (Hong Kong) Limited HCPI 1092/2015 [2020] HKCFI 2066 14 August 2020.  I found in that case that the plaintiff was a malingerer and had grossly exaggerated her injuries and symptoms; and that she deliberately exaggerated the circumstances of the accident to make it appear that she suffered from a more serious accident.  I ordered that the plaintiff should pay the costs of the action to be taxed on an indemnity basis, if not agreed.  The present case is a far worse case.  I found in my judgment dated 28 September 2020 that:

“71.  The plaintiff has told me a multitude of lies. He is a consummate, flagrant and egregious liar and I disbelieve his evidence. I find that he is a malingerer. I find that he suffered a contusion of the face and a mild neck soft tissue injury without any complications in the accident on 27 June 2014. I entirely reject his evidence and his claims that he suffered a multitude of disabilities, including his claims that he suffered frequent headaches and dizziness and severe headaches at night; severe pain on the back of his neck and persistent pain on his back; weakness of right hand, numbness and loss of sensation of his thumb and fingers; impaired hearing in his right ear; urinary incontinence; mentally slow in response and reduce concentration; depression, auditory hallucinations and suicidal ideas; being wheelchair-bound because of paralysis and loss of sensation of right leg.”

14.  I accept the submissions of the 1^st and 2^nd defendants.  Even though I assessed damages in the sum of $112,000, and even though the 1^st sanctioned payment in the employees’ compensation proceedings in the sum of $450,000 was only made on 21 November 2018, applying the principles I have referred to above and having regard to the egregious character of the plaintiff’s conduct, I exercise my discretion and order the plaintiff to pay the costs of the action, from the commencement of the action on 29 May 2017,  to the 1^st and 2^nd defendants on an indemnity basis, to be taxed if not agreed.

15.  The reliance by the Director of Legal Aid on the opinion of the orthopaedic experts does not move me to exercise my discretion in any other way, particularly given the other medical expert evidence adduced at trial and my findings in §70 of my judgment dated 28 September 2020 which I reproduce below:

“70.  The orthopaedic experts arrived at their conclusion that the plaintiff’s right lower limb paralysis and paraparesis of the right upper limb was genuine without expressly addressing the possibility that the plaintiff might have been malingering. They expressly stated that there was not a single orthopaedic condition that fitted his condition and that they could not relate his present state to any orthopaedic injury with such a presentation. Yet they did not expressly consider and rule out the possibility that he was malingering. Given the other evidence that has been adduced before me, both factual, which I have found to be truthful, and expert opinion evidence that I have preferred, I do not place any reliance on the orthopaedic experts’ opinion that the plaintiff’s right lower limb paralysis and paraparesis of the right upper limb was genuine.”

Enhanced Interest

16.  By their letter dated 12 October 2020, M/s Deacons applied to vary the costs order nisi and for payment out of a sanctioned payment as follows:

“1.  The sanctioned payment made by the Defendants on 11^th March 2019 in the sum of HK$100,000 together with any interest accrued thereon be paid out to the Defendants through their solicitors Messrs. Deacons forthwith;

2.  …

(b)  the Plaintiff do pay the Defendants enhanced interest at 10% above judgment rate on each payment of costs incurred after 8^th April 2019 from the date of payment by the Defendants up to the date of Judgment; or alternatively at half of 10% above judgment rate on all costs incurred after 8^th April 2019 up to the date of Judgment; and

(c)  costs of the application be paid by the Plaintiff on an indemnity basis.

…”

17.  In the written submissions of counsel for the 1^st and 2^nd defendant stated 12 October 2020, it was submitted that the enhanced interest rate should be 10% above the judgment rate. Given the overwhelming evidence in favour of the defence, the plaintiff’s failure to accept the generous sanctioned payment was clearly unreasonable. Further the plaintiff was a blatant and unmitigated liar in prosecuting his claim.  He also engaged in various exaggerated theatrics to mislead the court and the experts and even fabricated evidence of receiving a threatening letter. It was submitted that the court should mark its disapproval of his improper conduct by awarding interest at 10% above the judgment rate.  Counsel cited and relied on the observations of Sir Geoffrey Vos, Chancellor of the High Court in OMV Petrom SA v. Glencore International AG [2017] EWCA Civ 195:

“38. … As Lord Woolf MR said in the Petrotrade case, and Chadwick LJ repeated in the McPhilemy case, this power is one intended to achieve a fairer result for the claimant. That does not, however, imply that the rate of interest can only be compensatory. In some cases, a proportionate rate will have to be greater than purely compensatory to provide the appropriate incentive to defendants to engage in reasonable settlement discussions and mediation aimed at achieving a compromise, to settle litigation at a reasonable level and at a reasonable time, and to mark the court’s disapproval of any unreasonable or improper conduct…”

18.  Counsel for the 1^st and 2^nd defendants also submitted that, to determine the quantum of the interest, the traditional approach was to make a detailed calculation of the full enhanced pre-judgment interest on each payment of costs from the actual date of payment to the date of judgment.  However, the court could also adopt a simplified approach to reduce the enhanced interest by half and award the half rate for the whole period from the last day on which the plaintiff could have accepted the sanctioned payment without leave to the date of judgment.

19.  In the telephone conversation on 20 October 2020, the plaintiff said to my clerk that he objected to paying any interest on costs. Again, he did not give any reasons for his objection.

20.  The Director of Legal Aid submitted, in his letter dated 23 October 2020, that whilst the 1^st and 2^nd defendants would be entitled to costs on an indemnity basis and enhanced interest from 9 April 2019, being the day after the latest date of acceptance, without leave of court, of the sanctioned payment made on 11 March 2019, the rate of interest sought by the 1^st and 2^nd defendants was unreasonably high and excessive. He cited my decision in Shih Pik Nog v. G2000 (Apparel) Ltd.  HCPI 832/2009, 6 July 2011, and §20 thereof, and submitted that the purpose of an order to pay costs on indemnity basis and interest at an enhanced rate under O.22 r.23 was not to create a windfall to the defendant’s solicitors but was to ensure that the defendants, or their insurers, were not out of pocket in respect of legal expenses incurred after the last date of acceptance, without leave of court, of a successful sanctioned payment or offer.  The Director of Legal Aid also submitted that the power of court in this regard was not penal in nature and means to achieve a fairer result.

21.  The Director of Legal Aid also submitted that the 1^st and 2^nd defendants should submit to court a supporting affidavit or a statement setting out the amount of disbursements, costs and costs on account paid to the solicitors from 9 April 2019.  The 1^st and 2^nd defendants have done so and rely on the contents of the 2^nd affirmation of Mr Chan Yik Chong, solicitor of M/s Deacons, that was affirmed on 7 October 2020, which was filed in court on 12 October 2020.

22.  Finally, the Director of Legal Aid submitted, given the current HSBC prime rate of 5% and the current judgment rate of 8%, that if the court were minded to order enhanced interest, the rate to be adopted ought to be 9% on costs incurred and paid after 8 April 2019 from the date or dates of payment up to the date of judgment; or, adopting the modified approach, at half the rate, i.e. at 4.5% on costs incurred after 8 April 2019 up to the date of judgment.

23.  I accept the submissions of the 1^st and 2^nd defendants.  My decision in Shih Pik Nog v. G2000 (Apparel) Ltd  HCPI 832/2009 was in respect of the run-of-the-mill case where the only failure of the plaintiff was a failure to accept the successful sanctioned payment.  The present case is entirely different and provokes the exercise of the court’s discretion to set the rate of interest that is greater than purely compensatory in order to mark the court’s disapproval of improper conduct.  Having regard to the egregious character of the plaintiff’s conduct, I exercise my discretion and order the plaintiff to pay the 1^st and 2^nd defendants enhanced interest at 10% above judgment rate on each payment of costs incurred after 8 April 2019 from the date of payment by the defendants up to the date of judgment.  I prefer the traditional approach in the present case as the payments are few and well documented in the exhibits to the 2^nd affirmation of Mr Chan Yik Chong, and can be easily calculated.

24.  Finally, I order the plaintiff to pay the costs of the application to vary my costs order nisi to the 1^st and 2^nd defendants to be taxed on an indemnity basis, if not agreed.

Appendix 1

   HCPI 547/2017

書記與原告人(楊)的電話對話

對話日期：2020年 10月20日  16:42-16:45

楊：  封信咁由呢個法援嗰度轉交畀我嘅。

書記：  係，你收到法援嗰度然後就轉交畀你嘅，我地嗰啲信，係。

楊：   係，就咁呀，被告呀，要求呢個增加呢個訟費嘅利息。

書記：  係。

楊：   吓，我就唔同意嘅。

書記：  你唔同意對方申請話增加嗰個訟費嘅利息，係咪﹖ 喂﹖

楊：   我唔同意呀。

書記：  嗯，係 係，你唔同意﹖

楊：   反對呀。

書記：  係… 係，仲有冇其他… 需要講嘅呢﹖有冇其他陳詞呢你﹖

楊：   呀… 就呢單案件呢就果個判決書已經收到架啦，但對方要求我呀作出賠償我堅決反對嘅。

書記：  你堅決反對對方要求你作出賠償，係咪﹖

楊：   係係係。

書記：  嗯，你會唔會除咗打呢個電話之外…嗱我當然知道啦呢個係法庭畀你可以係打電話嚟講呢個陳詞啦，咁但係我都問番你一句吖你會唔會去寫番用書面咁樣畀番我地嘅呢﹖你嗰個立場，同埋你嗰個陳詞。

楊：   Eh…

書記：係，聽唔到唔好意思。

楊：   我可唔可以寄畀你呀﹖    

書記：  寄畀我呀…但係法官係想你今個禮拜五之前架喎。

楊：   今個星期五呀…咁我口頭同你講唔算咩﹖

書記：可以可以可以可以，不過…我都係所以循例問番你除咗你打電話畀我呢個對話之外，你係會唔會交書面啫，咁你話你唔會交書面或者你唔會、唔方便交啦係呢個日期之前，咁冇問題架我地寫番低啦。

楊：  星期五之前我就唔得啦，我輪椅壞咗，你都知道我行路唔方便，我去唔到架。

書記：  哦，好好好。

楊：   如果係星期五之前我就口頭同你講啦。

書記：  嗯，咁我重覆啦，你講嘅就係你反對對方啦申請嗰個增加嗰個利息啦，同埋你反對對方要求你賠償嘅。

楊：   係呀係呀。

書記：  嗯，咁仲有冇其他嘢呢﹖…係﹖喂﹖

楊：   **雜音**…冇啦，冇啦。

書記：  可唔可以大聲D呀﹖收得唔係幾好呀﹖

楊：   冇其他…呢個… **雜音**

書記：  冇其他嘢需要講啦係咪﹖

楊：   係呀係呀，我淨係反對佢地同我收費啫。

書記：  嗯，反對佢地同你收費，好吖咁樣，咁我寫番低交番畀法官啦。

楊：   好嘅，好嘅，唔該哂你。

書記：  好啦，咁唔該你，拜拜。

Appendix 2
English Translation

HCPI 547/2017

Telephone conversation between the Clerk & the Plaintiff (Yeung)

Date of conversation: 20 October 2020 16:42-16:45

Yeung:  Well the letter was passed onto me by the Legal Aid.

Clerk:  Yes, you received our letter which had been passed onto you by the Legal Aid, yes.

Yeung:  It’s like this, the defendant requested to increase the interest of the costs.

Clerk:  Yes.

Yeung:  Huh, I don’t agree to that.

Clerk:  You don’t agree that the other side’s application for an increase in the interest of the costs, right? Hello?

Yeung:  I disagree.

Clerk:  Um, yes, yes. You disagree?

Yeung:  I object to that.

Clerk:   Yes……yes, anything else……that you need to say? Do you have any other submission to make?

Yeung:  Well……I have already received the judgment of this case. However, as to the fact that the other side requested me to make a compensation, I firmly object to that. 

Clerk:  You firmly object to the fact that the other side requested you to make a compensation, right?

Yeung:  Right, right, right.

Clerk:  Um, I wonder whether you, in addition to making this phone call… well, certainly I know that the Court allows you to make your submission on the phone, yet I’d like to ascertain from you by asking whether you would provide us with a written submission of yours concerning your stance and what you have just submitted?

Yeung:  Eh……

Clerk:  Yes, excuse me, I didn’t hear you.

Yeung:  Can I mail it to you?

Clerk:  Mail it to me……but the Judge would like that to be done before this Friday.

Yeung:  This Friday……? Well, doesn’t what I’ve told you verbally count?

Clerk:  Sure, sure, sure, sure. It’s just that……I am duty-bound to ascertain from you in addition to our phone conversation, whether you would like to make a written submission. Since you said you wouldn’t do so by writing or you were not – it’s not convenient to hand it in before the date, there is no problem about that. We will make a written record of this.

Yeung:  I can’t make it before Friday. My wheelchair is out of order. You know it’s inconvenient for me to walk. I can’t get there.

Clerk:  Oh, okay, okay, okay.

Yeung:  If it’s before Friday, I will do so with you verbally.

Clerk:  Um, well, let me repeat. You said that you objected to the application made by the other side to increase the interest. Besides, you object to the request made by the other side for you to make a compensation.

Yeung:  Right, right.

Clerk:  Um, is there anything else? ……yes? Hello?

Yeung:  **Noise**…… nothing else, nothing else.

Clerk:  Could you speak up? The reception is not very good!

Yeung:  Nothing else ……. this ……**Noise**

Clerk:  Nothing else that you need to say, right?

Yeung:  Right, right. I only object to their charging me.

Clerk:  Um, you object to their charging you. In that case, okay, I make a written record of this and hand it to the Judge.

Yeung:  Good, good. Thank you very much.

Clerk:  Okay, thank you. Good-bye.