YUM SIU WAH v. WONG CHI SHING

HCPI 473/2018

[2021] HKCFI 1930

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 473 OF 2018

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DECISION ON COSTS

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Background

1.  After my judgment dated 2 June 2021, both parties applied to vary my order nisi on costs.  Counsel on both sides filed submissions and were heard for a full afternoon on 25 June 2021.  At the end of that hearing, they agreed that there are nine issues.

2.  My decision on the nine issues as follows.  I adopt the same abbreviations as in my judgment.

Issue 1: Sanctioned Payment

3.  The parties are ad idem that costs should be to Mr Yum up to the last day when he could have accepted the relevant sanctioned payment.  The issue is which sanction payment should be the relevant one.

4.  Mr Yum commenced these proceedings on 4 May 2018, at the time claiming $32,941,423.  There was an interim payment to him on 27 December 2018 of $930,000.  He revised his claim on 24 May 2019, down to $25,770,672.

5.  Mr Wong made 4 additional sanction payments of $670,000 on 4 December 2019; $900,000 on 11 December 2019; $1,030,000 on 20 January 2020; and $2,270,000 on 13 May 2020.

6.  At trial commencing on 3 June 2020, Mr Yum further reduced his claims to $10,786,842.

7.  In my judgment I assessed total damages of $1,479,580.  This is far short of the $5,800,000 which Mr Wong paid plus ultimately offered.  It is less than the sum of $1,600,000 paid plus offered in the first sanctioned payment, if interest on damages is excluded or is calculated a certain way.  It is definitely less than the $2,500,000 paid plus offered upon the second sanction payment.

8.  The first sanctioned payment could have been accepted up to 2 January 2020; the second up to 9 January 2020.

9.  I think the latter sanctioned payment is the more relevant one and the latter date a fairer measure of when Mr Yum could have accepted what had been offered.

10.  Within days of the first sanctioned payment, Mr Wong made another substantial additional offer.  The first offer, whilst technically live, was in practice superseded by the second.  In Mr Yum’s mind, the question must be whether to accept the second sanctioned payment.

11.  I order that costs be to Mr Yum up to 9 January 2020.

Issue 2: District Court Scale

12.  Counsel for Mr Wong submits that, even though Mr Yum is entitled to costs up to the relevant date, such costs should be taxed on the District Court scale.  Although at the time Mr Yum commenced this action, the jurisdictional limit of the District Court was $1 million, it was increased to $3 million on 3 December 2018.  Counsel submits it can be said that Mr Yum should have transferred the case to the District Court thereafter.

13.  Whilst costs is by nature a matter assessed in retrospect, I do not think it automatically follows that because Mr Yum ultimately received less than $3 million, he is to be seen as wrongly maintaining his suit in the High Court.  In particular, I note that Mr Wong’s highest offer was nearly $6 million.  This may have contributed to Mr Yum’s and his legal team’s continuing belief about where the parties should litigate their dispute.

14.  I decline to order taxation of Mr Yum’s costs at the District Court scale.

Issue 3: Indemnity Basis

15.  Mr Wong asks for the usual heightened basis for his costs after 9 January 2020.

16.  Counsel for Mr Yum accepts that this is the usual practice.  He asks the Court, however, to not follow that practice because Mr Yum had incurred substantial costs of his own and because I had granted certificate for two counsel.

17.  I do not think a party’s own costs is generally any justification for reducing the other side’s entitlement to costs.  Nor the fact that the case was suitable for two counsel.  This must be especially when it is the losing party’s own choice of claims which complicated the case.

18.  It may be that Counsel had in mind the costs of the particular two defence counsel, both very experienced.  Certainly, Counsel for Mr Wong, who being led did not have a chance to shine during the trial, spoke confidently before me during the hearing on costs.  I am, however, not in a position to assess actual costs and will have to defer to the taxing master.

19.  I order that costs be to Mr Wong after 9 January 2020 at an indemnity basis.

Issue 4: Enhanced Interest

20.  Counsel for Mr Wong submits that Mr Wong’s costs should enjoy enhanced interest at the maximum rate of 10% above the judgment rate, i.e., 10% + 8% = 18%.  He relies in particular on the wide gap between the eventual amount of damages and Mr Wong’s highest offer.  He further refers to an aspect of Mr Yum’s case, about an alleged employment offer, as false and justifying a high rate of interest.

21.  I think 18% is too high for this case.  One must bear in mind that a judgment rate of 8% is already substantially above the market rate of interest. One-month HIBOR has been around 0.1% for some time.

22.  Moreover, in this case, although Mr Yum’s claims may seem aggressive in the light of the eventual assessment, it may to some extent be understandable. Parties in litigation often claim, counterclaim, and counter offer aggressively.  They may even believe in the reasonableness of their positions. I do not think the figures by themselves show Mr Yum to be so unreasonable as to justify the kind of enhanced interest which Counsel for Mr Wong suggests.

23.  I order that interest for Mr Wong’s costs be at the rate of 2% above the judgment rate.

Issue 5: Disallowance/ Discount

24.  Counsel for Mr Yum suggests that a part of Mr Wong’s costs should be disallowed and/or discounted because he had pursued a certain discovery application in the course of proceedings on an issue which turned out not to feature much in the trial, and because he had taken time to adduce evidence which turned out not to assist the Court.

25.  In litigation, often an issue is pursued and put to rest, exactly because the pursuit has borne fruit.    And if the pursuit leads to evidence which ultimately does not assist the Court, the attempt to gather and present evidence is not unreasonable.  In any event, in this case, if anyone is to be blamed for the state of the evidence, both sides should be.

26.  Incidentally,Counsel for Mr Wong referred to my query in my judgment as to the medical experts not being called to give oral evidence.  Counsel said that in practice medical experts are rarely, if not never, called in personal injury cases.  Three points may be worth noting.

(1)  As I said in my judgment (see, e.g., paragraph 70), this case had special features.

(2)  I gather this is not the first time the Court has reminded the parties and the practitioners of the duty to assess the need to call medical experts, despite any practice not to do so.  See: Rai Siva Raj v Norman Liang & Anr [2020] HKCFI 710, per DHCJ Raymond Leung SC, 20 May 2020, at paragraphs 19 and 20.  See also the cases cited in those paragraphs.

(3)  The defence in personal injury cases may tend to think it advantageous to it for the medical expert evidence to be inadequate, because it means the plaintiff would not discharge his burden of proof. This is a dangerous tactic. As in this case, an issue may be decided in favour of the plaintiff in the absence of full evidence.  Moreover, as other judges have stressed, the duty to assess whether the medical experts should be called is a duty on all the parties and practitioners.

27.  That said, and partly exactly since the duty to assist the Court is on all parties, I decline to disallow or discount a part of Mr Wong’s costs.

Issue 6: Loss of Earning Capacity

28.  Parties are in disagreement as to whether the damages for loss of earning capacity should attract interest.

29.  In my judgment paragraph 43, I noted that there was no useful evidence on what income Mr Yum could earn.  I declined to, because there was no evidence for me to, assess any actual loss of earnings.  At paragraph 44, I noted that there was some evidence but from a different angle, namely the medical experts’ estimate on loss of earning capacity.

30.  At paragraphs 54 to 57, I assessed loss of earnings during, per my finding, the one-year recovery period.  There is no dispute that this was an assessment of actual loss and the damages would attract interest.

31.  At paragraphs 58 to 61, I assessed damages for loss of earning capacity.  There seems to be a disagreement now about what I meant when I referred to “loss of earnings capacity”, “small adverse effect”, and “some compensation”, and about the logic of my calculations.  As I told the parties at the hearing, I shall refrain from interpreting my own judgment.

32.  For present purposes, I shall simply note that loss of earning capacity is not actual loss, thus damages therefor does not attract interest before judgment.  I order accordingly.

Issue 7: Net-off against Interim Payment

33.  A relatively minor calculation issue arose at the hearing.

34.  The parties agree that the interim payment of $930,000 on 27 December 2018 should be applied to the damages awarded, with interest accrued up to then, so as to reduce the total amount with interest continuing to accrue. Counsel for Mr Yum submits that the net-off should be against all heads of damages, regardless of whether there is prejudgment interest, in a weighted, pro rata manner.  Counsel for Mr Wong submits that the net off should be only against those heads which would be attracting interest up to the date of the interim payment.

35.  Neither Counsel refers to any authorities to guide this exercise.  Their argument suggests the issue can be treated as a matter of logic.

36.  Logic seems to me to run as follows: where a head of damages does not attract interest before judgment, it is not “payable” until judgment.  The interim payment was paid to Mr Yum on 27 December 2018.  At that point in time, it should be applied to damages which was already “payable”, even if the amounts were not yet assessed.

37.  A quick search for authorities has led me to Lau Koon Loi v Wong Wai Sing & Anr, HCPI No. 445 of 2007, per Suffiad J, 15 August 2011, at paragraph 32, where the same logic appears to have been applied.

38.  I order that the interim payment be applied to those heads of damages which attract interest accruing up to the date of the payment.  To any extent different heads may attract interest at different rates, a weighted, pro rata approach shall be adopted.

Issue 8: Payment out to Mr Yum

39.  Mr Yum asks for payment out of the sum found due to him, being $1,479,580 - $930,000 = $549,580, plus interest.

40.  Counsel on both sides agree, as is obvious, that the net costs due to Mr Wong will far exceed the sum still due to Mr Yum.  Moreover, such costs would attract interest at higher significantly than the market rate.  It would be in Mr Yum’s interest to apply the sum due against his liability for costs as early as practicable.

41.  Mr Wong raises a real concern that Mr Yum will be unable or unwilling to satisfy his liability for costs.  Mr Yum has not filed, despite having ample opportunity to do so, any affirmation to claim otherwise.  His solicitors’ evidence that Mr Yum has paid his own lawyers (so far) is hardly evidence of ability and willingness to pay the other side’s legal costs.  On the contrary, it begs the question of why Mr Yum has chosen not to speak at all about his ability or willingness to pay.

42.  The economics seems to me that the only plausible reason for Mr Yum’s silence and for his insistence on payment out instead of an early setoff against his liability for costs is that he does not intend to satisfy his liability, timeously or at all.  I put this possibility to Counsel for Mr Yum at the hearing.  No substantive answer was given.

43.  Counsel for Mr Yum may have made a hint that Mr Yum may need funds to finance further advice or proceedings.  There is no evidence whatsoever.  To any extent this means Mr Yum is in financial difficulty, it would only add to Mr Wong’s concern and, if there are further proceedings, even invite an invitation for security for costs.  In any case, absent evidence, I cannot and do not ascribe any weight to Counsel’s hint or the possibility.

44.  Counsel refers me to Ng Chi Kwan, Danny Summer & Anr v Yeung Yiu Kwai & Anr, HCPI No. 633 of 2011, per DHCJ Marlene Ng (as her Ladyship then was), 28 November 2014.  I have read that decision carefully, and accordingly take into account that not paying out a sum due to Mr Yum would be to give Mr Wong a form of security for costs and that Mr Wong must show some good reason for me to do so.

45.  I do not read anything in Danny Summer as suggesting that a real concern about the other party’s ability and willingness to pay is never good reason.  In the circumstances of this case, considering the figures and Mr Yum’s silence, I believe Mr Wong has shown good reasons.

46.  I decline to order payment out to Mr Yum.

Issue 9: Payment out to Mr Wong

47.  Mr Wong applies for payment out of the excess portion of the sanctioned payments, after calculating and duly taking into account interest.  Mr Yum does not seriously dispute this.  I so order.

Costs for Arguing Costs

48.  It is regrettable that further costs have to be incurred to argue about costs.

49.  My impression from the papers and the hearing is that Issues 2 (scale), 4 (enhanced interest), 6 (interest on damages for loss of earning capacity), and 8 (payment out to Mr Yum) most divided the parties.  They took up much of the time.  Viewing them collectively, neither side is a clear winner.

50.  I make an order nisi that there be no order as to costs.