YEUNG LAI PING v. SECRETARY FOR JUSTICE

HCPI 833/2002

[2023] HKCFI 2396

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 833 OF 2002

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BETWEEN

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DECISION

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Introduction

1.  By this summons, the plaintiff seeks for, inter alia, the following orders:

“1. Pursuant to the Sanctioned Offer made by the Plaintiff to the Defendant dated 3 November 2016, the Judgment of Bharwaney J entered on 1 April 2019 (as varied by the Order dated 16 October 2019) be varied as follows:

(1) Interest be granted on the whole of the judgment sum of $22,015,833 awarded to the Plaintiff at a rate not exceeding 10% above judgment rate for all the period after 1 December 2016 until the date of the judgment sum;

(2) Costs of the action be to the Plaintiff with certificate for two counsel on a party and party basis up to 1 December 2016 and thereafter from 2 December 2016, on an indemnity basis to be taxed if not agreed;

(3) Interest on the Plaintiff’s legal costs at a rate not exceeding 10% above judgment rate for all the period after 1 December 2016 until the date of payment.

1A. In so far as it is necessary, and for the avoidance of doubt, the Order of Bharwaney J dated 4 November 2019 be amended by way of corrigendum to the effect that, time be extended to vary the costs and interest order nisi until 28 days after the determination of the appeal and/or such order that the Court in its discretion deems appropriate and just.

1B. Alternatively, in so far as it is necessary or required, the time to vary the Judgment of Bharwaney J dated 1 April 2019 pursuant to the Order dated 4 November 2019 be extended to the filing of the original Sanctioned Offer Summons dated and filed on 2 August 2022 and/or such period as the Court considers just.”

2.  The trial of this action took place before Bharwaney J in December 2016^[1]. The plaintiff, a dentist by profession, sued the defendant^[2] for breach of duty as her employer^[3] by assigning to her excessive surgical extractions when she was working at the North District Hospital in October 1999.

3.  On 1 April 2019, Bharwaney J handed down his judgment^[4] (“Judgment”) in favour of the plaintiff awarding her a sum of $20,810,161. In the Judgment His Lordship gave the following orders:

“194. I grant liberty to the parties to apply to vary my awards for pre-trial and future loss of earnings and loss of pension benefits, net of tax, on account of the rise in salary of a dental officer, and the tax on such increased salary and pension benefits, and of the plaintiff’s notional salary from January 2017 to March 2019, and the tax on such increased salary and pension benefits.

…

211. I am satisfied that special reasons have been established for me to depart from requirement in section 48 (1) and (2) of the High Court Ordinance to award interest for the full pre-trial period in this case. In the exercise of my discretion, I award interest as follows:

(a) interest is awarded at the rate of 2% per annum on general damages for PSLA, including damages for loss of congenial employment, from the date of service of the writ up to 31 December 2004 and from 1 September 2011 to the date of judgment;

(b) interest is awarded at 4.0625% on pre-trial special damages, including pre-trial loss of earnings, from the date of the accident up to the date of payment of employees’ compensation on 30 July 2004 and, thereafter, on the remaining balance of the special damages and pre-trial loss of earnings, after deducting the amount of employees’ compensation therefrom, from 31 July 2004 to 31 December 2004 and, thereafter, on the said remaining balance from 1 September 2011 up to the date of judgment.

…

213. I award damages to the plaintiff in the total sum of $20,810,161 ($475,000 + $9,592,775 + $10,742,386) and interest to be calculated. This award is not final and can be varied in accordance with the liberty to apply I have granted in §194 above.

214. I make a costs order nisi that the defendant pays the plaintiff’s [costs] to be taxed, if not agreed, and that the plaintiff’s own costs be taxed pursuant to the Legal Aid Regulations.”

4.  By virtue of the liberty to apply given under paragraph 194 of the Judgment, the parties made a joint request to Bharwaney J to adjust the award to $22,015,833. On 16 October 2019, His Lordship made the following order:

“The quantum of the damages awarded to the Plaintiff be varied from the total sum of $20,810,161 and interest to be calculated to the total sum of $22,015,833 and interest to be calculated.”

5.  Nonetheless and quite correctly, the parties viewed that interest should not be calculated at that time as the defendant had lodged an appeal against the Judgment on issues of liability and quantum and the amount of interest may vary depending on the results. As such, they wrote a joint letter to the Judge seeking “a further extension of time to vary the costs order nisi and to finalize the calculation of interest pending the determination of the appeal”.

6.  Acceding to the parties’ request, Bharwaney J gave an order on 4 November 2019 that:

“Time extended to vary the costs order nisi and to finalize the calculation of interest until 28 days after the determination of the appeal.”

This is the order referred to under paragraphs 1A and 1B of the plaintiff’s present summons.

7.  Pursuant to Order 22 rule 24 of RHC, the plaintiff now applies for enhanced interest of the award, indemnity costs and interest on costs, on the ground that the award is in an amount higher than the sanctioned offer of $15,000,000 made by the plaintiff on 3 November 2016.

Jurisdictional Issue

8.  Regarding the plaintiff’s application for enhanced interest, the primary contention of the defendant is that the Court has become functus officio as Bharwaney J had determined a formula for calculation of interest of the award in the Judgment^[5] and there was no liberty to apply given for variation of the award of interest, nor was the award of interest being made an order nisi. Given that the Judgment was sealed and therefore perfected on 3 May 2019, this court has no jurisdiction to reopen the issue of interest.

9.  In response to the defendant’s contention, the plaintiff argued that:

“ (1) pursuant to the ‘costs order nisi’ made under the Judgment, the Court has jurisdiction to vary both interests and costs by operation of the non-acceptance of the plaintiff’s sanctioned offer;

(2) The Court is not functus officio and has the jurisdiction to deal with the question of interest:

a. it was the intention of Bharwaney J to award interest to the plaintiff subject to any application to vary the same, including, but not limited to, the operation of a sanctioned offer;

b. In Zief Incorporated v Tekchandani Ajai Mohan [2021] HKCFI 730 the Court varied the interest awarded in the sealed judgment on account of a sanctioned offer pursuant to the ‘slip rule’ under O.20 r.11 RHC (Cap.4A); and

c. In the premises, and in so far as it is necessary and/or for the avoidance of doubt, the Order dated 4 November 2019 be amended such that time be extended to vary the costs and interests order nisi until 28 days after the determination of the appeal pursuant to the ‘slip rule’.

(3) The context and/or interpretation of all the correspondence exchanged between the parties shows that P obtained successive extensions of time, without delay, such that the jurisdiction of the Court was wholly preserved until the resolution of the appeal and filing of this Summons (originally dated 2 August 2022), such that the Judgment Order dated 4 November 2019 can be varied pursuant to O.22 r.24 and/or O.20 r.11 RHC (Cap.4A).”

10.  Mr Ruy Barretto SC^[6], indicated in his written submissions that the plaintiff’s “principal submissions” is argument (1) above and he elaborated that:

(a) “The statutory entitlement to apply for an award for both enhanced interests ‘and’ enhanced costs conferred by O.22 r.24 (4) RHC (Cap.4A) becomes applicable when there is a holding or judgment which falls within the terms of O.22 r.24 (1) (a) and/or (b) RHC (Cap.4A), i.e. when P beat the sanctioned offer of $15m, unless the Court considers it unjust to do so (Tsoi Hak Kong Herbert v Kok Wai Chun [2009] 4 HKLRD 215, para.35 (a));

(b) D’s case recognized that the Court has jurisdiction to vary costs, must also require the Court to have the jurisdiction to vary interest which is one of the 3 statutory consequences. Hence D’s case that the Court has no jurisdiction for varying interest only is misconceived;

(c) Post-judgment interest is mandatory under s.49 (1) (b) of High Court Ordinance (Cap.4) and a judgment drawn up should contain ‘no provision’ for any specified rate of post-judgment interest, pursuant to paragraph 2 of Practice Direction 16.3. Accordingly, the absence of words ‘interest order nisi’ (or words to that effect) is consistent with the judicial practice of not expressly stating post-judgment interest;

(d) The absence of the words ‘interest order nisi’ in these orders does not render the jurisdiction of the Court functus officio in factual situations where, either the Court had indicated that the order was provisional, (as in the instant case), or there were matters (such as the sanctioned offer) which the Court was unaware of, at the time of making the order (Kung Kwok Wai David v Commissioner of Estate Duty [2022] 1 HKLRD 965, para.7 & 12) (as in the instant case).”

Discussion on the jurisdictional issue

11.  The defendant has no dispute that this court has jurisdiction to vary Bharwaney J’s costs order as it was made explicitly an order nisi. Although Mr Barretto framed the issue in a more sophisticated way, the critical consideration here remains whether the court has jurisdiction to vary an award of interest in the situation where the interest order was not given as an order nisi.

12.  In Kung Kwok Wai David v Commissioner of Estate Duty^[7], the Commissioner of Estate Duty (“the Commissioner”) applied to vary the costs order made by Chow JA^[8] in his reserved judgment despite the fact that the costs order was not expressly stated to be an order nisi under the judgment. His Lordship considered O.42 r.5B(6) of the Rules of the High Court and had the following to say^[9]:

“It seems to me clear that under this rule, the court has a discretion, but is not bound, to make to make (sic) a costs order nisi. A costs order, like any order of the court, is prima facie an order absolute, and may only be challenged by way of an appeal but not an application to vary. There are of course exceptions to this general position, eg an ex parte order, or where the court indicates (either expressly or by necessary implication) at the time of the making of the order that it is provisional only. There may be other exceptions, but they are exceptions to the general rule. In my view, a simple order as to costs made by the court, without more, should be regarded as an order absolute, and not an order nisi.”

13.  With the above ruling Chow JA dismissed the Commissioner’s argument that the costs order was an order nisi notwithstanding it was not expressed as such in the reserved written judgment. However, as the costs order had not been sealed or perfected in that case, Chow JA was prepared to exceptionally exercise the court’s inherent discretion to consider the issue of variation.

14.  The same principles can be applied regarding Bharwaney J’s award of interest in the present case.

15.  An award/order of interest, similar to a costs order and like any other order of the court, is prima facie an order absolute, unless it is indicated by the court who made the award/order, either expressly or by necessary implication, that it is an order nisi or provisional.

16.  I am aware that there is no similar provision as O.42 r.5B giving express power to the court to make an interest order nisi in a reserved judgment as in the case of a costs order. In my judgment, it makes no difference as the court has no doubt the inherent power to make provisional interest awards just as in the case of giving parties liberty to apply.

17.  In the present case, Bharwaney J did not say the award of interest is provisional. In fact, he set out in detail a clear formula for parties to work out the amount of interest awarded in respect of different heads of damages with reference to specific rates and periods for calculation. What was required of for parties to do was to fill in the respective amount of the damages awarded to the formula to arrive at the actual amount of the interest.

18.  Under §213 of the Judgment Bharwaney J did mention that the award is not final and can be varied. However, any such variation shall be in accordance with the liberty to apply he has granted under §194, that is, the liberty to apply to vary the awards regarding “pre-trial and future loss of earnings and loss of pension benefits, net of tax, on account of the rise in salary of a dental officer, and the tax on such increased salary and pension benefits, and of the plaintiff’s notional salary from January 2017 to March 2019, and the tax on such increased salary and pension benefits”. There was no liberty to apply given for variation of the interest awarded.

19.  Bharwaney J’s intention has also been manifested in subsequent orders. In his order to vary the amount of the award, the learned judge ordered that the interest is to be “calculated”; and in granting the order for extension of time, he ordered that time be extended “to finalize the calculation of interest”. Apparently, those words have been deliberately chosen by his lordship as regarding the costs order nisi, the word “vary” was used.

20.  In the circumstances, I have no doubt Bharwaney J did not intend the interest award to be provisional at the time he gave the Judgment. Nor do I think that it was the intention of Bharwaney J to award interest to the plaintiff subject to any application to vary the same.

21.  Mr Barretto relied on Zief Incorporated v. Tekchandani Ajai Mohan^[10] to suggest that the Court can vary the interest awarded in the sealed judgment on account of a sanctioned offer pursuant to the “slip rule” under O.20 r.11. With respect to Mr Barretto, the situation in Zief is totally different from the present case.

22.  In Zief, Mr Recorder Eugene Fung SC ordered in his judgment that the plaintiff should be entitled to interest on the award and there was no formula or any methodology specified for parties to arrive at the amount of interest. The learned Recorder directed the parties to submit an agreed order for his approval within 14 days on the applicable pre-judgment interest rate and the date on which pre-judgment interest is to run, and gave liberty to apply in the event the parties are unable to agree. Without the knowledge of the plaintiff, the defendant submitted a draft order for the court’s approval in which there was no mentioning of the award of interest and without the knowledge of the learned Recorder, the draft order was approved and sealed. It was under these circumstances that the learned Recorder ruled that he was not functus officio regarding the issue of interest and agreed to deal with the issue of interest notwithstanding the judgment has already been sealed.

23.  As identified by the learned Recorder in his judgment:

“In order for the ‘slip rule’ to be engaged, it is necessary to identify a clerical mistake, or an error arising from any accidental slip or omission, in a judgment or order. One instance where such a mistake or error may be identified if the judgment or order does not reflect or encapsulate the true and objective intention of the Court.”

24.  In the present case, no such error can be found. I can see no valid ground for the “slip rule” to be engaged.

25.  To conclude, the award of interest by Bharwaney J in the Judgment is a final order. As the order has been perfected this court is functus officio regarding the issue of interest and I shall have no jurisdiction to reopen it.

26.  There is also no valid reason to amend the order of Bharwaney J dated 4 November 2019 as it has reflected accurately the intention of the learned judge.

Variation of Costs Order

27.  As the plaintiff succeeded in obtaining an award better than her sanctioned offer, I see no reason why costs from 2 December 2016 onwards should not be awarded on an indemnity basis as I do not consider it unjust to do so.

28.  Under O.22, r.24(3)(b), the court has the power to award interest on costs at a rate not exceeding 10% above the judgment rate.

29.  In distinct to the interest awarded on the damages awarded under the Judgment, I am of the view that Bharwaney J had never touched upon the issue of interest on costs and hence, this court is not funtus on this issue. I see no reason why an enhanced interest on costs should not be given.

30.  Mr Burretto submitted that the appropriate rate for the interest on costs should be 3% + 8% representing the enhanced interest rate plus the judgment rate.

31.  In my view, the suggestion of 3% as enhanced interest is a reasonable rate as the award obtained by the plaintiff was way more than the amount of the sanctioned offer.

32.  I do not find it necessary to look into the evidence in detail to arrive at the appropriate rate as I am of the view that this is a suitable case where this court should adopt a broad brush approach for the reasons that the matter was not tried before me and it had concluded a long time ago.

33.  In the circumstances, I vary the costs order nisi of Bharwaney J by substituting the following orders:

(a) Costs of the proceedings up to 1 December 2016 be to the plaintiff to be taxed if not agreed with certificate of two counsel on a party and party basis with interest at judgment rate from the date of judgment until payment;

(b) Costs of the proceedings after 1 December 2016 be to the plaintiff to be taxed if not agreed with certificate of two counsel on an indemnity basis with interest thereon at a rate of 11% from the date of judgment until payment; and

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

34.  For clarity, the above costs order covers only the costs of the proceedings in the Court of First Instance. Mr Burretto asked this court to give costs orders regarding the plaintiff’s costs in the appeal proceedings to the Court of Appeal and the Court of Final Appeal which, as I respectfully agree with Mr Simon Lam, counsel for the defendant, that this court has simply no jurisdiction to award.

Disposition

35.  The plaintiff’s application for enhanced interest on damages be dismissed.

36.  Bharwaney J’s costs order nisi in the Judgment be varied as set out in paragraph 33 above.

37.  Paragraphs 1A and 1B of the plaintiff’s Amended Summons be dismissed.

38.  Time for taxation of costs of the plaintiff be extended to 3 months after the date of this decision.

39.  50% of the costs of the defendant in this application shall be borne by the plaintiff on a party and party basis to be taxed if not agreed.

40.  The above is a costs order nisi and will be made absolute unless any of the parties apply to vary within 14 days.

41.  The plaintiff’s own costs be taxed in accordance with Legal Aid Regulations.