LUK MEI SUET MICHELLE v. AFSAFARI SERVICES CO LTD AND OTHERS

DCCJ 5593/2018

[2022] HKDC 481

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5593 OF 2018

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BETWEEN

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DECISION

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1.  By summons dated 4 March 2022 (“the Summons”), Madam Luk applies for a variation of the order made by this court on 28 February 2022 (“the Order”) in respect of the provisions for interest and costs.

2.  By order dated 28 March 2022, this court gave directions for filing of written submissions and ordered that the Summons be determined on paper. By letter dated 29 April 2022, the solicitors for Madam Luk informed this court that D3 had failed to file and serve its written submissions as director. This court has heard nothing from D3 and therefore decided to proceed to dispose of the Summons.

3.  In this Decision, I shall adopt the abbreviations used in the Judgment handed down on 23 February 2022 (“the Judgment”).

4.  First, in respect of interest, by the Order, this court allowed Madam Luk’s claim for interest on the judgment sum of USD41,550 (“the Judgment Sum”) from the date of the Writ to the date of the Judgment at the best lending rate of HSBC plus 1% and at judgment rate thereafter until full payment.

5.  Madam Luk now asks for an order that D3 do pay her interest on the Judgment Sum (i) at the best lending rate of HSBC plus 1% from 7 December 2018 to 6 February 2019 (both dates inclusive); (ii) at the rate of 4% above the judgment rate 7 February 2019 to 23 February 2022 (both days inclusive); and (iii) the judgment rate from and including 24 February 2022 until full payment.

6.  Madam Luk’s application is based on a sanctioned offer by way of letter dated 9 January 2019 (“the Sanctioned Offer”). The terms of the Sanctioned Offer are as follows:

(1) D3 shall pay Madam Luk a sum of HK$300,000 (“the Offered Sum”) in full and final settlement of her claim against D3;

(2) The Offered Sum was inclusive of interest but exclusive of Madam Luk’s costs and disbursements incurred; and

(3) After the expiry of 28 days from the date of the Sanctioned Offer was made, D3 as the offeree may only accept it if (a) the parties agree on the liability for costs; or (b) the Court grants leave to accept it.

7.  I am satisfied that the Sanctioned Offer is in compliance with O. 22 r.5, Rules of the District Court.

8.  It cannot be disputed that the Judgment Sum exceeds the Offered Sum. D3 is held liable for more than the proposed amount in the Sanctioned Offer and Madam Luk does better than she proposed in the Sanctioned Offer. O.22 r.24 is engaged.

9.  Under O.22 r.24, this court has discretion to order enhanced interest on the whole or part of any sum of money awarded to Madam Luk at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which D3 could have accepted the Sanctioned Offer without requiring the leave of the court. Furthermore, this court has jurisdiction to order D3 to pay Madam Luk her costs on the indemnity basis after the latest date on which D3 could have accepted the Sanctioned Offer without requiring the leave of the court.

10.  There is nothing unjust for this court to order enhanced interest and indemnity costs in the circumstances of the present case. The Sanctioned Offer was made at a very early stage of these proceedings. Whilst the fact that Madam Luk was deceived into transferring the Judgment Sum to the bank account of D3 is not in dispute, D3 could not begin to make out the defence of change of position. Whether D3 had sufficient, or any at all, evidence to support this purported defence is something entirely within its own knowledge. D3 could make a realistic evaluation of its chance of success in these proceedings and make an informed decision on its own. There is nothing coming from Madam Luk which has made it believe that its defence is stronger than it actually is.

11.  In the premises, I am convinced that an order for enhanced interest is appropriate. The rate Madam Luk now asks for, i.e. 4% above the judgment rate, is in the middle of the allowable range. The starting date should be 7 February 2019 (“the Date”), which is the last day D3 could have accepted the Sanctioned Offer without leave. I accept that Madam Luk should be entitled to interest on the Judgment Sum from the Date to 23 February 2022 at the rate of 4% above the judgment rate. Thereafter, judgment rate applies until full payment of the Judgment Sum.

12.  In regard to indemnity costs, this court should further have regard to O.62 r.5(1): Grupo Pacifica Incoporada v Worldwide Marine Product Ltd and Ors. [2018] HKCFI 2584 per Hon Au-Yeung J at para. 6.

In particular, I would consider the conduct of D3 in these proceedings.

13.  In my view, D3 unreasonably persisted in its unmeritorious defence, which was prepared in a half-hearted manner. The relevant defence witness was not called and the relevant documentary evidence was not produced. The bulk of the relevant evidence was disclosed for the first time by Madam Chen, the only live defence witness, under cross-examination. This court was totally unimpressed with her evidence and made a number of criticisms extensively in the Judgment.

14.  The unacceptable commercial practice adopted by D3 in dealing with its African customers to defeat their local foreign currency control policies is most objectionable and must be lamented. It facilities money laundry and international fraud. I have little sympathy with D3 even if its transactions with Malaika were genuine.

15.  In light of the Sanctioned Offer, an award of indemnity costs is amply justified in the circumstances.

16.  Furthermore, Madam Luk asks both costs of this action and costs of the Summons be summarily assessed. In the absence of any objection, I proceed to assess such costs summarily on an indemnity basis. In doing so, I bear in mind that I should take a broad-brush approach and should not embark on a mini-taxation.

17.  For the costs of this action, I have read the Statement of Costs prepared by Madam Luk’s solicitors. I have gone through each and every items in this document and I cannot detect any unreasonable elements.

18.  Proportionality is at the forefront of my mind. Out of the total amount of HK$327,860.33 claimed, I allow HK$280,000.

19.  I should add that I find the professional fees of Ms Tam, the trial counsel for Madam Luk, to be very reasonable. She has rendered helpful assistance to this court.

20.  Lastly, Madam Luk asks for HK$19,710 as her costs of the present application. She has changed her counsel and the new counsel has only charged modestly for her 15-page written submissions in support of her application. Looking the matter in the round, I allow HK$15,000 as costs of the Summons.

21.  In conclusion, I accede to Madam Luk’s application by way of the Summons. I allow her enhanced interest on the Judgment Sum from the Date to 23 February 2022 as stated above and indemnity costs in the total amount of HK$295,000 to be paid forthwith.

22.  I should mark my disapproval of the total nonresponse of D3’s solicitors. I have been informed by Madam Luk’s solicitors that they have found out that D3's solicitors would apply for an order to cease to act for D3 soon. However, as long as they remain on record the solicitors for D3, I see no reason why they can ignore the Summons and failed to file anything in response. They may have no instructions from D3 in respect of the Summons at all but at the very least they should write to the other side and this court to indicate their position. Their failure to do so is discourteous and reflects badly on their professionalism.