CHONG SIU WA v. YU KWOK YEUNG AND OTHERS

DCPI 3918/2021

[2024] HKDC 295

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 3918 OF 2021

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DECISION

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Background

1.  The facts and procedural history pertaining to the instant case has been set out in my written decision (the “Decision”)  [Bundle pp 36-51] handed down on 13 July 2023.  I do not intend to recite them in full and will refer to the same when necessary.

2.  In short, by Summons (the “Joinder Summons”)  dated 9 September 2022, the plaintiff applied to join the Intended 4^th defendant (“ID4”)  in this action.

3.  The Joinder Summons was heard by me on 4 May 2023 with decision reserved.  By the Decision I dismissed the Joinder Summons.  I made a costs order nisi that the plaintiff do pay to the ID4 the costs of and/or occasioned by the Joinder Summons, with certificate for counsel, to be taxed if not agreed.

4.  By Summons (the “Costs Variation Summons”)  [Bundle pp 1-3]dated 27 July 2023, the ID4 applied to vary the costs order nisi in the following manner:

(a)  The plaintiff do pay the ID4’s costs of and incidental to the Joinder Summons, including all costs reserved, up to 15 December 2022 on party and party basis to be taxed if not agreed;

(b)  The plaintiff do pay the ID4’s costs of and incidental to the Joinder Summons, including all costs reserved, from 16 December 2022 onwards up to the date of my decision on indemnity basis with Certificate for Counsel to be taxed if not agreed;

(c)  The plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations;

(d)  The Costs of the Costs Variation Summons be paid by the plaintiff to the ID4 on indemnity basis to be taxed if not agreed, save the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.

5.  By a Consent Order dated 24 August 2023 [Bundle pp 6-8], I ordered that the Costs Variation Summons to be dealt with on paper.

6.  This is my written decision regarding the Costs Variation Summons.

The Intended 4^th defendant’s Stance

7.  After the taking out of the Joinder Summons on 27 July 2023 by the ID4, by a without prejudice letter (the “WP Letter”) [Bundle pp 27-29] dated 1 December 2022, the ID4 invited the plaintiff to withdraw the Joinder Summons with no order as to costs. 

8.  In the WP Letter, the ID4 made clear its view that the intended claim by the plaintiff against the ID4 has been time barred.  The ID4 also opined that there were no grounds for the plaintiff to join ID4 as a party. 

9.  The ID4 also made clear that should the plaintiff insist on proceeding with the Joinder Summons and fail, indemnity costs would be sought against the plaintiff. 

10.  It is unclear as to how the plaintiff responded to the WP Letter.  Suffice it to say, the ID4’s proposal contained in the WP Letter was not accepted by the plaintiff.

11.  It is the ID4’s stance that given the lack of merits for the Joinder Summons, and also in light of the proposal contained in the WP Letter, the plaintiff should have withdrawn the Joinder Summons, and it was unreasonable for the plaintiff to proceed with the same. On this basis the ID4 argues that indemnity costs should be awarded to the ID4 from the date of the WP Letter.

The plaintiff’s Stance

12.  In his written submissions (“P’s Written Submissions”)  dated 30 November 2023, the plaintiff puts forward his objections to the Costs Variation Summons based on various grounds:

(1)  There was no special or unusual feature warranting an indemnity costs order, despite the plaintiff’s refusal to withdraw the Joinder Summons in light of the WP Letter – P’s Written Submissions at [12]–[17].

(2)  It was not unreasonable for the plaintiff to take out and/or persisted with the Joinder Summons, given the lack of response from the ID4 in regards to the Joinder Summons – P’s Written Submissions at [18]–[26].

(3)  There was procedural irregularity on the part of the ID4, in that the Joinder Summons was not served on the plaintiff’s solicitors on the same day it was taken out - P’s Written Submissions at [27].

The Legal Principles

13.  It is not in dispute that the court has a general and unfettered discretion to award indemnity costs in appropriate circumstances.  See Re Guy Kwok Hung Lam, ex p Tor Asia Credit Master Fund LP [2023] HKCA 1099 at [22].  This is obviously separate and distinct from the court’s power to order indemnity costs under the sanction payment/offer regime prescribed by Order 22, RHC.  In this respect, parties’ citation and reliance on authorities decided under Order 22 are clearly misconceived.

14.  The legal principles applicable to an application for indemnity costs can be summarized as follows:

(a)  In certain circumstances, costs may be awarded on a more generous than usual basis of taxation so as to achieve a fairer result.

(b)  It is for the receiving party to show that the case has some special or unusual feature.

(c)  Such features are not confined to an ulterior motive, an improper purpose, deception or underhand conduct on the part of the paying party.

(d)  Neither the attributes of the parties nor the character of the proceedings are irrelevant to the question of whether a more generous than usual basis of taxation should be ordered.

(e)  The discretion to order a more generous than usual basis of taxation is not to be fettered or circumscribed beyond the requirement that such taxation be ordered only when it is “appropriate” to do so.

(f)  The grounds on which a more generous than usual basis of taxation is to be ordered must be “connected with the case” ie any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation.

  See Commissioner of Inland Revenue v Poon Cho Ming John (No 2) (2020)  23 HKCFAR 74 at [4].

15.  Further, the court’s discretion to order indemnity costs may be exercised where the application is entirely devoid of merits and should never have been launched or persisted, but the party has nevertheless unreasonably and unjustifiably persisted.  See Huge Dragon Corp Ltd v Lung Mun Oasis (IO) [2014] 3 HKLRD 286 at [13]-[15].

Analysis

16.  It is clear from the authorities that the court’s discretion to order indemnity costs is not confined to cases where there are some “special or unusual features” as suggested by the plaintiff, but rather whether indemnity costs are “appropriate” taking into account all circumstances – see China Medical Technologies, Inc (in liquidation)  v Wu XiaoDong [2023] HKCFI 2735 at [26]–[27].

17.  After considering all circumstances, I am of the view that it is appropriate to order indemnity costs against the plaintiff in relation to the Joinder Summons:

(1)  The Joinder Summons was held to be unmeritorious and was dismissed.

(2)  It is obvious that the plaintiff’s intended claim against the ID4 was time barred, since the plaintiff clearly had constructive knowledge of the same since the date of the accident – the Decision at [28]–[35], [Bundle pp 45-46]. 

(3)  I also refused to exercised discretion to extend the limitation period under Section 30(1)  of the Limitation Ordinance based on various factors, in particular in light of the delay by the plaintiff in seeking information from the other defendants regarding the ID4, and also the delay in taking out the Joinder Summons once the plaintiff allegedly became aware of his potential claims against the ID4 – the Decision at [38(1)]–[38(5)], [Bundle pp 47-49].  No reasonable explanation has been provided for the delay by the plaintiff.

(4)  Under these circumstances, the delay clearly was of the plaintiff’s own doing and the plaintiff only has himself to blame.  The plaintiff’s failure to make reasonable enquiries to ascertain the identity of the employer of the 1^st defendant with due haste before action, and before the taking out of the Joinder Summons was particularly glaring.

(5)  It also appears to me that the joinder of the ID4 has no practical benefit to the plaintiff, since his claims against the 1^st and 2^nd defendants have been taken over by the motor vehicle insurer, which are not affected by limitation. The plaintiff would have recourse against the motor vehicle insurer regardless, should the plaintiff succeed in such claims – the Decision at [38(8)], [Bundle pp 49-50].

(6)  Under these circumstances, the Joinder Summons should not have been taken out by the plaintiff.

(7)  Despite the proposal set out in the WP Letter for disposing of the Joinder Summons, the plaintiff still persisted with the same.

(8)  In deciding to continue to proceed with the Joinder Summons after the receipt of the WP Letter, it appears that the plaintiff took into account that “substantial costs” were already incurred in taking out the Joinder Summons – 3^rd Affirmation of Chong Siu Wa at [13], [Bundle p 17].  In my view, this is not a factor which the plaintiff should have taken into account in considering whether to press on with the Joinder Summons.  Instead the merits of the application should have been the most important consideration.  In any event, the plaintiff should have withdrawn the Summons, and should have asked for costs to be argued, instead of proceeding with the Joinder Summons with full blown arguments on the merits.

(9)  In light of the matters canvassed above, I consider the plaintiff to be unreasonable in persisting with the Joinder Summons.  The plaintiff should have withdrawn the Joinder Summons upon receiving the WP Letter.

(10)  The plaintiff seeks to justify his stance by putting the blame on the ID4 for its lack of timely response - P’s Written Submissions at [21]–[24].  I reject these submissions.  It was clearly incumbent on the plaintiff to assess the merits of the joinder application before proceeding with it.  The ID4 had no obligation to assist the plaintiff in perfecting his case.  Further as canvassed above, it was the plaintiff’s own delay in making proper enquiries which led to the proceeding with the Joinder Summons.  In any event when the ID4 did reply by way of the WP letter, the plaintiff unreasonably rejected the proposal contained therein.  It therefore lies ill in one’s mouth for the plaintiff to complain about the conduct of the ID4 in these circumstances.

(11)  I do not accept that there was procedural irregularity as alleged by the plaintiff.  Under Order 42 rule 5B (6), RHC, there was no requirement for the Costs Variation Summons to be served on the same date of which it was taken out.  Instead it appears to me that the Costs Variation Summons could be served 2 clear days before the first hearing date pursuant to Order 32 rule 3, RHC. In any event the plaintiff has not suggested such alleged irregularity has caused any prejudice.  I therefore put no weight on the same in making this decision.

Conclusion

18.  The application for variation of my costs order under the Costs Variation Summons is hereby granted, and I make orders in terms of Paragraphs 1(a), (b)  and (c)  of the Costs Variation Summons.

19.  As for the costs of the Costs Variation Summons, given that the issue of such costs formed part of the subject matter of the Joinder Summons, and also given the fact the plaintiff failed to respond to the ID4’s correspondence for disposing the Costs Variation Summons – see Affirmation of Luk King Kong filed on 31 July 2023 at [8] [Bundle p 10], and Exhibit LKK-1-2 at [Bundle pp 30-35], I consider it appropriate to order costs on indemnity basis for the Costs Variation Summons.

20.  I therefore also make an order in terms of Paragraph 2 of the Costs Variation Summons.