HUNG SAU FUNG v. LAI PING WAI AND OTHERS

CACV 240/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 240 OF 2011

(ON APPEAL FROM HCPI 204 OF 2009)

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DECISION
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Hon Cheung CJHC:

1. I agree with the judgment of Chu JA.

Hon Lam VP:

2. I agree.

Hon Chu JA:

A.   Introduction

3. On 22 October 2015, we handed down our judgment on the plaintiff’s appeal against the judgment of Bharwaney J (“the Judge”) awarding HK$1,128,419.40 (before deduction of the employees compensation award of HK$304,000) as damages for personal injuries sustained by him while working for the defendants.  We allowed the appeal to the extent of: (1) substituting HK$189,000 for the award for future loss of earnings; (2) substituting HK$30,000 for the award for the value of the plaintiff’s mother’s services; and (3) allowing an award for the plaintiff’s mother’s travelling expenses in the sum of HK$13,440.  We also made an order nisi that the defendants pay the plaintiff’s costs of this appeal, to be taxed if not agreed, and that the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.

4. By summons dated 5 November 2015, the defendants apply to vary our costs order nisi, and seek the following orders:

(1) The defendants pay half of the plaintiff’s costs of the appeal to be taxed on party and party basis if not agreed; and

(2) The plaintiff pays the defendants’ costs of the appeal to be taxed on party and party basis if not agreed.

(3) Alternative to (1) and (2), the plaintiff pays half of the defendants’ costs of the appeal to be taxed on party and party basis if not agreed.  

5. Pursuant to the court’s directions, the parties had lodged written submissions on the application. 

6. In addition to opposing the defendants’ application, the plaintiff asks by way of consequential orders that:

(1) The defendants return to the Director of Legal Aid the costs below incurred by the defendants from 23 March 2011 up to and including 16 May 2011, which the Director had paid to the defendants; and

(2) The defendants pay to the Director of Legal Aid the plaintiff’s costs below (including all costs reserved) incurred from 23 March 2011 up to and including 16 May 2011, to be taxed if not agreed.

B. Sanctioned payments made in HCPI 204/2009  

7. Underlying the parties’ respective applications are the sanctioned payments that the defendants had made in the action below.  Between 8 October 2010 and 17 May 2011, six sanctioned payments had been made, of which the last three are relevant for present purpose. They are:

	Date of sanctioned payment	Latest date on which the plaintiff could have accepted the payment without leave	Total amount of sanctioned payments (inclusive of interest)
4th	22 February 2011	22 March 2011	$900,000
5th	18 April 2011	16 May 2011	$1,200,000
6th	17 May 2011	14 June 2011	$1,500,000

C. The Judge’s costs order

8. The award made by the Judge (net of the employees’ compensation award) together with interest came to a total of $895,522.68 as at 22 March 2011, which is less than the total amount offered by the defendants after the 4^th sanctioned payment. 

9. Upon the defendants’ application, the Judge ordered, inter alia, that: (1) The defendants pay to the Director on behalf of the plaintiff the plaintiff’s costs of the action below, including all costs reserved, up to and including 22 March 2011, to be taxed on party and party basis on the High Court scale if not agreed; (2) The plaintiff pay the defendants their costs of the action below incurred after 22 March 2011 (except costs associated with the evidence of the loss adjusters), to be taxed on indemnity basis; and (3) The plaintiff pay the defendants enhanced interest at 9% per annum on the disbursements of $54,000 paid by the defendants’ insurers from 18 July to 7 October 2011 and the disbursements of $8,500 from 29 July to 7 October 2011.[1]

D. The result of the appeal

10. After the plaintiff had brought this appeal, the defendants’ solicitors by letter dated 29 May 2014 offered, without prejudice save as to costs, to pay on top of the award made by the Judge a further sum of $15,250 with no order as to costs of the appeal. 

11. As a result of our judgment allowing the plaintiff’s appeal in part, the amount of damages awarded to the plaintiff (net of the employees’ compensation award) is increased by $125,440 to $949,759.40. This is more than the total amount offered by the defendants after the 4^th sanctioned payment.

12. Up to 16 May 2011, which is the latest date on which the 5^th sanctioned payment could have been accepted by the plaintiff without leave, the total amount of damages and interest awarded to the plaintiff is $1,030,286.89.  The plaintiff has therefore failed to do better than the 5^th sanctioned payment.

E. The defendants’ application

13. The defendants accept, on the basis of the Court of Appeal’s recent decisions in Ryder Industries Limited v. Chan Shui Woo and Ryder Industries Limited v. Timely Electronics Company Limited, CACV 164 & 165 of 2013, unreported, 13 March 2015, and Law Yin Pok Bosco (A Minor) v. Dr Chan Yee Shing CACV 276 of 2012, unreported, 9 July 2015, that a sanctioned offer in the court below could not be relied on to invoke the provisions of Order 22 of The Rules of the High Court in respect of the costs of the appeal, but that such a sanctioned offer could, and should in appropriate cases, be taken into account, both in dealing with the costs below and on appeal.

14. The defendants therefore accept that, although the plaintiff failed to do better than the sanctioned payments made in the action below, he should not be deprived of all his costs of the appeal in that he did succeed in increasing the amount of the award, something that could not have been achieved without bringing the appeal.  The defendants however argue that the plaintiff should not have all his costs of the appeal because he has not been wholly successful in his appeal in that his appeal against the PSLA and pre-trial loss of earnings was not allowed and he had abandoned the appeal against loss of earning capacity and pre-trial medical and travelling expenses.  It is further argued that the unsuccessful grounds of appeal relating to the issues of muscle wasting and adoption of sick role had taken up most of the preparation and time of the appeal, hence the plaintiff should be deprived of half of his costs of the appeal.

15. At the same time, Miss Leong for the defendants submitted that on the basis of the principles set out in paragraph 13 above, since the plaintiff has after appeal still failed to do better than the 5^th sanctioned payment, he should be ordered to pay the defendants’ costs of the appeal.  It is argued that the plaintiff should have accepted the sanctioned payments made below, in which case the defendants would not have to incur costs for the trial as well as the appeal.   

16. The plaintiff, on the other hand, asks that the costs order nisi be made absolute.  It is argued that the six sanctioned payments made before the trial have already been given effect to and reflected in paragraphs 6 and 7 of the Judge’s costs order.  It is further pointed out that the defendants’ offer in respect of the appeal is lower than the additional award made in this appeal.

17. In my view, the plaintiff should have the costs of the appeal.  Similar to what was observed in Law Yin Pok Bosco Bosco (A Minor) v. Dr Chan Yee Shing (at paragraphs 11 and 12), the plaintiff has been successful in his appeal, although not completely, and he has to bring the appeal to obtain the increase to his award.  The order on costs of the appeal should reflect his success.  I do not agree that the plaintiff should not be allowed all of his costs of the appeal.  Even though he has not been successful on the issue of the adoption of the sick role and the related issue of muscle wastage, which, if allowed, will have an important impact on the amount of his award for damages, it was not improper or unreasonable for him to raise the issues in the appeal.  While the failed aspect of the appeal had, as is natural, lengthened the hearing of the appeal, I do not think it had led to very significant increase in the costs of the appeal, bearing in mind the main arguments are primarily legal arguments.   

18. As to the defendants’ application to have their costs of the appeal paid by the plaintiff, it is inappropriate. Firstly, although it is in principle not impossible to make a cross order as to costs, that is, on the one hand, the defendant is ordered to pay the plaintiff’ costs of the proceedings, and, on the other hand, the plaintiff is ordered to pay the defendant’s costs of the proceedings, this is a highly unusual order and should be avoided. Such an order will unnecessarily complicate the taxation procedure and increase the costs of taxation. 

19. Secondly, a costs order against the plaintiff is not a proper reflection of the outcome of the appeal.  The fact that the plaintiff has failed to do better than the sanctioned payments made in the action below has been reflected in the costs order below.  There are no other circumstances in the case justifying a departure from the normal rule.  It is also not to be forgotten that the plaintiff has done better than the defendants’ offer made in the appeal.    

F. The plaintiff’s application

20. The plaintiff’s application is effectively seeking to change the Judge’s costs order so as to reflect the improvement to his position after the appeal, namely, he has done better than the 4^th sanctioned payment but failed to beat the 5^th sanctioned payment.

21. In opposing the application, Miss Leong argued that the plaintiff is asking for variation of the costs order nisi, which is impermissible because the plaintiff has not taken out any summons to vary the costs order nisi.  Reliance is placed on the judgment in The Incorporated Owners of Tung Lo Court v. Tsui Wai Yip CACV 27 of 2015, unreported, 25 November 2015.   

22. In my view, given the result of the appeal, it is open to the plaintiff to seek to replace the Judge’s costs order with a costs order that reflects his improved position.  Such an order is consequential upon our order allowing the appeal.  In the Supplementary Notice of Appeal, the plaintiff has sought an order for costs of the action below.  As the Judge’s costs order and decision on costs are not in the appeal bundle, which is proper, we have not in our previous Judgment and order dealt with the costs order below.

23. The case of The Incorporated Owners of Tung Lo Court is therefore different in that the costs order nisi made by the Court of Appeal in that case covered both the costs below and the costs of the appeal.  The plaintiff in that case, after issuing a summons to vary the costs of the appeal and a further summons for leave to put in affidavit and submission out of time, applied in the written submissions to also vary the costs below.  The application was refused because pursuant to Order 42 rule 5B(6) of The Rules of the High Court, the part of the Court of Appeal’s costs order nisi relating to the costs below had in the meantime become absolute.

24. While I accept the proper way is for the plaintiff to issue a summons to vary the costs order of the Judge, instead of making the application by way of affidavit and submissions, I see no injustice or prejudice to the defendants to waive the formal requirement of a summons.  On the contrary, fairness requires the appellate court, in disposing of the appeal, to vary the costs order below to reflect the improvement to the plaintiff’s award.  I would therefore order that paragraphs 6 and 7 of the costs order of the Judge be varied by substituting references to “22^nd March 2011” with “16^th May 2011”.  While I believe the defendants will in light of our variation of the costs order below, return to the Director of Legal Aid the amount of their costs incurred from 23 March 2011 up to and including 16 May 2011, which the Director had paid to them, I would, for avoidance of doubt, direct the defendants to make the refund.  

G. Costs of the present application

25. Applying the normal rule of costs follow event, the defendants should be ordered to pay the plaintiff the costs of the application to vary the costs order nisi.

H. Conclusion

26. For the above reasons, I would order that:

(1) The costs order nisi made in this appeal on 22 October 2015 be made absolute.

(2) The costs order made in HCPI 240/2011 dated 9 January 2012 be varied by substituting all references to “22^nd March 2011” in paragraphs 6 and 7 with “16^th May 2011”.

(3) The defendants shall return to the Director of Legal Aid their costs below incurred from 23 March 2011 up to and including 16 May 2011, which the Director of Legal Aid had paid to the defendants.

(4) The defendants pay the plaintiff the costs of the application to vary the costs order nisi, to be taxed if not agreed. 

(5) The plaintiff’s own costs be taxed in accordance with Legal Aid Regulations. 

 

Hon Cheung CJHC:

27. Accordingly, we make the orders proposed in paragraph 26 above.