FONG YAU HEI suing by his next friend BONG PIT FONG v. GAMMON CONSTRUCTION LTD AND OTHERS

HCPI 1222/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 1222 OF 2003

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REASONS FOR DECISION

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1.  Although I heard this matter in Chambers (Not Open to Public), the points raised are of some importance and I hereby direct that these reasons for decision be published.

2.  These proceedings have had a chequered history. The plaintiff suffered very serious head injuries in an accident on a tug boat on 12 November 2000 such that he has become a mentally incapacitated person and has to act by next friend.  There was a trial on liability and the plaintiff obtained judgment on 17 January 2006 against the 1^st, 2^nd and 3^rd defendants for damages to be assessed[1]. The 2^nd and 3^rd defendants were unsuccessful on a limitation point they had taken and they appealed, also unsuccessfully, to the Court of Appeal[2] and to the Court of Final Appeal[3]. In the absence of an application by the 2^nd and 3^rd defendants for stay of proceedings pending appeal, the plaintiff could have proceeded to an assessment of damages against the defendants.  Even if the 2^nd and 3^rd defendants successfully stayed the proceedings pending appeal, the plaintiff could have proceeded to an assessment of damages against the 1^st defendant [4], which was and is a substantial company.  I did not receive a proper explanation why this was not done.  The plaintiff waited for the Court of Final Appeal to finally dispose of the limitation point against the 2^nd and 3^rd defendants before proceeding to assess damages against the 3 defendants.  By the time the matter came before me for an approval of settlement on 21 January 2014, more than 13 years had passed since the accident and more than 10 years had passed since proceedings had been commenced on 7 November 2003.

3.  This is not and has never been a legally aided case.  During this period of time, the plaintiff had been represented by Messrs. Anthony Kwan & Co until 3 December 2012 when the plaintiff was, and continues to be, represented by Messrs. Damien Shea & Co.  Mr Stephen Fong has acted as counsel for the plaintiff on the instructions of these 2 firms from the time proceedings were commenced on 7 November 2003 until, at least, 8 October 2015.  He appeared before the Mental Health Court on 7 October 2003 in HCMP 4051 of 2003 and obtained an order that Madam Bong Pit Fong, the wife of the plaintiff, be appointed as the Committee of his estate with the right to manage plaintiff’s assets, including his bank accounts, and to deal with sums received to pay for the maintenance and general benefit of the plaintiff, Madam Bong, and their daughter, and to pay the debts, if any, of the plaintiff.  The affirmation of Madam Bong filed in support of the application in HCMP 4051 of 2003 had made mention of the, then, current employees’ compensation proceedings and of the right of the plaintiff to claim damages at common law; and the Originating Summons sought orders, including orders that the applicant as Committee of the plaintiff’s estate be empowered to sue for damages and be empowered to prepare, commence and conduct the intended legal action, and to apply any damages received for the care and maintenance of the plaintiff.

4.  However, the Mental Health Judge only granted the orders that I have recited above and did not grant any of these further orders that had been sought.  This was in 2003, and the then understanding was that sections 10A and 10B of the Mental Health Ordinance, Cap 136, were merely concerned with orders and directions concerning the property and affairs of mentally incapacitated persons, and that matters concerning commencement and continuance of litigation on behalf of mentally incapacitated persons came within the provisions of Order 80 of the Rules of the High Court for appointment of next friend.

5.  Following upon the decision of the Mental Health Judge, the Writ was issued on 7 November 2003 with Madan Bong acting as next friend. Order 80, r.3(3) of the RHC provides:

“3. Appointment of next friend or guardian ad litem (O. 80, r. 3)

(3)  Where a person is authorized under Part II of the Ordinance to conduct legal proceedings in the name of a mentally incapacitated person or on his behalf, that person shall be entitled to be next friend or guardian ad litem, as the case may be, of the mentally incapacitated person in any proceedings to which his authority extends unless, in a case to which paragraph (4) or (5) or rule 6 applies, some other person is appointed by the Court under that paragraph or rule to be next friend or guardian ad litem, as the case may be, of the mentally incapacitated person in those proceedings. (81 of 1997 s. 59)”

Although Madam Bong had not been authorised under Part II of the Mental Health Ordinance, Cap. 136, as she was the Committee appointed by the Mental Health Judge, she was the proper person to bring the proceedings as the next friend of the mentally incapacitated plaintiff. Notwithstanding the absence of authority under Part II of the Mental Health Ordinance, the proceedings were properly commenced and pursued pursuant to the provisions of Order 80. The practice of the Mental Health Court has evolved over the years and nowadays one would expect the Committee that has been appointed to obtain and be granted authorisation under Part II of the Mental Health Ordinance to commence and conduct proceedings on behalf of the mentally incapacitated plaintiff.

6.  When the matter came before me on 21 January 2014, I was not informed that a Committee had been appointed.  I was not informed on, or before, 21 January 2014 that Madam Bong had been appointed as the Committee of the estate of the plaintiff on 7 October 2003 in HCMP 4051 of 2003.  On 21 January 2014, I did not grant the approval sought as I formed the view that the settlement sum that had been offered was too low and that a settlement in that amount would not be reasonable and would not be in the best interests of the plaintiff.  Claims for value of services and for suitable accommodation had not been advanced.  There had been no updating of the Statement of Damages and the assessment of the plaintiff’s claim for loss of earnings had been made based on his earnings in 2004, without regard to the rise in wages in the 13 years that had passed since then.  I gave directions to update the Statement of Damages, to serve a revised Answer, and for the 2^nd and 3^rd defendants to provide evidence of earnings. I also fixed a Pre-Trial Review on 20 February 2014.

7.  After the hearing on 21 January 2014, Mr Michael Ozorio SC was instructed to act for and to advise the plaintiff.  From 21 January 2014 to 8 October 2015, I gave a number of case management directions.

Settlement approved on 8 October 2015

8.  On 8 October 2015, I heard an application to approve settlement in an amount that was more than double the amount initially offered.  Having perused the advices of Mr Ozorio dated 20 August 2015 and 18 September 2015 and the Memorandum of Settlement filed by the plaintiff’s solicitors, also dated 18 September 2015, I had no difficulty in concluding that I ought to approve the settlement as a reasonable settlement that was in the best interests of the plaintiff.  By this time, claims for value of services and for suitable accommodation had been advanced and accepted by the defendants.  The memorandum of settlement stated that the settlement sum “includes damages for a health care worker and a foreign domestic helper plus damages for the pre- and post-trial services of the wife. It also includes damages for alternative accommodation comprising 3 bedrooms which will allow the helper and daughter to have their own bedrooms, which they did not enjoy at the moment. The settlement also includes damages for future therapies and equipment and for the proposed committee … to receive specialist advice as to fund management”. In their Note of Advice dated 18 September 2015, Mr Ozorio and Mr Fong stated that “Madam Bong quite rightly wishes to purchase 3 bedroomed accommodation in the private sector for many good reasons. However we advised that such applications … are now reserved for to the [Mental Health Court]”.

9.  In his advice dated 18 September 2015, Mr Ozorio stated that a Mental Health Committee had not been set up and could take up to 6 months to set up.  In the Memorandum of Settlement dated 18 September 2015 that was signed by Mr Shea Ying Fai, the sole proprietor of Messrs. Damien Shea & Co, it was also stated that it would be necessary to set up a Committee under the Mental Health Ordinance and that doing so was likely to take some time. In the draft order for apportionment, payment out and investment of the balance, it was stated that the balance of the settlement sum remaining in court, after payment out, be invested “pending the set up of a committee under the Mental Health Ordinance and until further order.”  Clearly, Mr Fong, who was Mr Ozorio’s junior and who had also signed, together with Mr Ozorio, the advices dated 20 August 2015 and 18 September 2015, had no recollection of the order he had sought and obtained on 7 October 2003 in HCMP 4051 of 2003.

10.  However, at the hearing for the approval of settlement on 8 October 2015, I was informed by Mr Ozorio that he had been made aware recently that a Committee had been set up in HCMP 4051 of 2003.  However, he was not sure what applications had been made by the Committee to the Mental Health Court under HCMP 4051 of 2003.  It was only recently that I viewed the court file in HCMP 4051 of 2003 and became aware, as we had all assumed at the hearing on 8 October 2015, that no applications had been made in HCMP 4051 of 2003 to obtain the sanction of the Mental Health Court to the proposed settlement. Indeed, after the appointment of the Committee, no further applications had made in HCMP 4051 of 2003 in the 12 years that had passed from 7 October 2003 to 8 October 2015. 

11.  After I approved the settlement at the hearing on 8 October 2015, I revised the draft orders presented to me and I made orders in terms of those draft orders but with the revisions that the provisions for a Committee under the Mental Health Ordinance to be set up were deleted and replaced with a notation that the Committee had been set up under HCMP 4051 of 2003; that the balance sums remaining in court be invested for the maintenance and care of the plaintiff until further order, instead of be invested “pending the set up of a committee under the Mental Health Ordinance and until further order”; and that monthly payments for the maintenance and care of the plaintiff be paid out to the Committee, Madam Bong, instead of “to the next friend, Madam Bong”.  I should mention at this point that, on an application for approval of settlement, it is incumbent on the plaintiff’s solicitors to provide the PI Judge with all necessary information of what has transpired in the Mental Health proceedings.  Just as I did in this case, the Mental Health Court might have indicated that it would only grant its sanction for the proposed settlement if the settlement included a provision for suitable accommodation to be acquired.  These matters should be made known to the PI Judge on the application for approval of settlement.

12.  The order I made approving the settlement contained the usual terms in such cases that “the Plaintiff’s costs of the action including the mediation and the approval of settlement be taxed on a common fund basis”.

Sanction from the Mental Health Court before applying for approval of settlement

13.  There was a failure on the part of the plaintiff’s solicitors to follow proper protocols, in particular, the requirement under §197 of PD 18.1 to obtain sanction from the Mental Health Court under Part II of the Mental Health Ordinance before applying for approval of settlement under Order 80 of the RHC.

14.  Solicitors commencing Part II proceedings must have regard to Practice Direction 30.1 on Applications under Part II of the Mental Health Ordinance, Cap. 136. I draw specific attention to §5.01 and 5.02 of the said Practice Direction:

“V. Personal Injuries Cases

5.01 In the handling of personal injuries cases in which an injured person who has been granted or who is seeking compensation may fall within the meaning of “a mentally incapacitated person” of the MHO, consideration should be given to whether an application under Part II of the MHO should be made, see Re LWO.

5.02  Where it is considered necessary for the Plaintiff to apply for a committee to be appointed, this should be brought to the notice of the judge hearing the PI claim. The compensation may include the costs of a Part II application.”

In Re:LWO, HCMP 2965/2001, 30 June 2005, Lam J., as he then was, explained:

“20.  Hence, it is important before a large sum is authorized to be paid out from the Suitors’ Fund to a family member, consideration should be given as to proper legal documentation to record the interest of the person under disability.  One option is to direct an application be made under Part II of the Mental Health Ordinance. In England, the practice is that before a compromise involving a patient is sanctioned, the approval of the Court of Protection is required and the settlement sums or damages awarded would be transferred to the Court of Protection, see The Supreme Court Practice 1999 Paras.80/11/20 and 80/11/21.  It is a moot point as to whether payment out to a next friend can be authorized in the light of Order 80 Rule 12(3) and Leather v Kirby [1965] 1 WLR 1489.  I am not going to express any conclusion in that regard since I have not heard arguments. That point would have to be decided on another occasion.  However, putting aside the question whether a next friend is functus after the litigation have been concluded by a judgment of the court, I wish to point out that on its face, Rule 12(3) only authorizes payment to the next friend “in respect of moneys paid or expenses incurred”.  The next friend therefore has to show that the money has been spent before he could apply for reimbursement.  From a practical point of view, although we do not have a separate Court of Protection in Hong Kong, practitioners are well advised to consider whether it is necessary to apply for direction under Part II of the Mental Health Ordinance in cases involving substantial awards in favour of a plaintiff [who] suffers from mental incapacity.”

Lam J. provided further guidance in Re: CK, HCMP 1150/2006, 4 August 2006 as follows:

“24. Having reflected on the matter, I am of the view that in cases where Part II proceedings are desirable but have yet to be commenced, it is possible to obtain approval under Order 80 without requiring a committee to be in place as a prerequisite. The terms to be approved under Order 80 should provide for,

(1) Funds remaining in court pending Part II proceedings; and

(2) The disposal of the funds in court shall be in accordance with the directions of the court in the Part II proceedings.

I understand this is the procedure adopted by Suffiad J in Sin Kam Hei v Transward Ltd HCPI 293 of 2004 although that order was not recited in the Ruling of 14 July 2006.

25. Generally, this would be the appropriate way to proceed with the matter. There could of course be exceptional cases where circumstances dictate Part II proceedings should be on foot before any settlement.

26.  For cases where a committee has been set up before settlement, the principle set out in Re L HCMP 1120 of 2003, 12 May 2006 shall apply.  To minimize the costs implications stemming from duplicating applications for approval under Part II and Order 80, the application under Part II will be dealt with in the following manner.  The committee shall file the application in the context of the Part II proceedings in which the committee was appointed and the papers will be passed to the Registrar for a report under Section 13 of the MHO.  Based on the report of the Registrar, the court will usually deal with the application on papers.  A hearing will only be required if the court so directs.  The committee should only apply for Order 80 approval after it has obtained sanction under Part II.  The committee should also draw the court’s attention to the Part II approval in the Order 80 application.  In that sort of cases, it is likely that Order 80 approval could be dealt with in a cost effective manner.”

15.  It is timely to remind practitioners in the field of personal injury litigation to pay heed to the advice of Registrar Queeny Au-Yeung, as she then was, which she gave by way of a letter dated 29 August 2007 addressed to Ms Lisa Wong SC, the then Honorary Secretary of the Hong Kong Bar Association, and which was circulated by the Hong Kong Bar Association, by Bar Circular No. 77/07 dated 3 September 2007. The observations and advice of Lam J. that is contained in this letter bear repeating.  In R: CK, HCMP 1150/2006, 4 August 2006, Lam J. stated:

“17. What is important is that not only will this question [i.e. the question of appointing a committee] be considered by the court, but it will also be at the forefront of the minds of those representing the next friend who brought the claim on behalf of the MIP. Although they are lawyers engaged by the next friend, they should regard it as their duties to protect the interest of the MIP in dealing with the disposal of the settlement monies. In the settlement terms presented to the court for approval, the lawyers should include measures and mechanism to ensure that the monies will be used for the benefit of the MIP.”

Lam J. identified the extent of the advice that should be given:

“18. It is also their duties to advise the next friend that monies paid out pursuant to Order 80, unless the court otherwise directs specifically, should only be used for the maintenance of the MIP. The next friend should also be advised of his duty to keep the court informed about any material changes in circumstances that could have a bearing on the monthly sums to be paid out, e.g. reduction or increase in expenditure required for maintenance of the MIP, recovery or deterioration of the MIP, accumulation of surplus from monies paid out, acquisition of properties of a capital nature with monies paid out and the use of such capital assets, changes in the relationship between the MIP and the next friend, changes in the needs of the MIP. The next friend should keep account of the monies paid to him or her and if the court requests, such account should be produced for inspection. If monies were paid for a specified purpose, it should not be used for other purposes without any prior approval from the court.”

16.  Registrar Queeny Au-Yeung also advised in the said letter that in cases where a Committee is appointed, the lawyer has to advise the Committee of its powers and duties and she appended a very helpful guidance note prepared by the Official Solicitor.

17.  The letter dated 29 August 2007 is appended to these reasons for decision. The appendix to the letter, namely, the “Guidance Note to Persons appointed as Committee of Estate of a Mentally Incapacitated Person (“MIP”)”, including templates of the Yearly Report, the Monthly Account of the Estate and the Assets of the Estate, is also appended to these reasons for decision.

18.  Finally, it is timely to remind practitioners in the field of personal injury litigation to pay heed to the following provisions of PD18.1 in relation to actions on behalf of mentally incapacitated persons:

“X Actions by Persons under Disability

…

188. In respect of a person under disability by reason of mental incapacity, practitioners should be mindful of the jurisdiction of the High Court under Part II of the Mental Health Ordinance (Cap. 136) (“MHO”) and the practice set out under Part Y hereof. Solicitors are expected to advise their clients (both the person under disability as well as his next friend and other relatives) about the same before the commencement of legal proceedings, during the course of the proceedings as well as after judgment is entered and / or settlement is achieved.

…

Y Part II of MHO

193.	(1)	Practitioners acting for a mentally incapacitated person (“MIP”) on instructions from a next friend should bear in mind their duties towards the MIP and give consideration to the appointment of a committee or seeking other directions under Part II of the MHO.  Relevant guidance is set out in Re CK, HCMP 1150 of 2006 and Re YPC, HCMP 1174 of 2006
	(2)	Solicitors acting for an MIP who has been a breadwinner for his / her family should take specific instructions regarding the means of support for the family after the accident.  If loans were raised for that purpose, an application under Part II of the MHO should be made to avoid the difficulties in Re YWK HCMP 2467 of 2006 and Re C HCMP 15 of 2002.
	(3)	Practitioners are reminded that after an appointment of committee under Part II of the MHO, nobody else apart from the committee should be permitted to act as the next friend of an MIP to pursue a claim for the MIP unless the Court otherwise orders.

194.  A committee should apply for specific authorization under Part II of the MHO to commence or defend legal proceedings. Such application should be supported by evidence as to the following:

(1)  the merits of the intended claim;

(2)  the benefit that the MIP might derive from the intended claim;

(3)  the estimate costs of prosecuting the claim;

(4)  the resource available to meet such costs;

(5)  the alternative options including alternative modes of dispute resolution that may achieve similar benefit for the MIP; and

(6)  the exposure of the estate of the MIP to costs liability of the opposite party in case the action fails.

Z    Approval of Settlement under RHC, Order 80 involving an MIP

195.  Where Part II proceedings have not been commenced before settlement, the Court may direct such proceedings to be commenced in the course of approval of settlement. In considering whether Part II proceedings should be required when approving a settlement under RHC, Order 80 involving an MIP, the Court will exercise its discretion by reference to what is in the best interest of that particular MIP in the context of the factual matrix of the case before the Court.  The following factors can be relevant:

(1)  the condition of the MIP including his or her age and prognosis;

(2)  the future needs and requirements of the MIP;

(3)  the quantum of the award and, without prejudice to the Court's discretion to direct proceedings under Part II of the MHO to be commenced in respect of the particular case before the Court, the appointment of a committee will generally not be necessary when the award, and where the particular MIP is involved in more than one action, the accumulated awards, is / are not more than HK$1 million or such sum as the Court may direct from time to time;

(4)  the background and experience of the next friend including the relationship of the next friend with the MIP and the ability of the next friend to keep proper account and to appreciate his duty;

(5)  the adequacy of advice regarding the duty of a next friend;

(6)  the needs and resources of the MIP’s family;

(7)  the likelihood of applications to use funds in Court for acquisitions of a capital nature;

(8)  the attitude of the primary carer of the MIP and, to a lesser extent, the attitude of the immediate family members of the MIP; and

(9)  the possible alternatives in terms of investment of the funds as opposed to leaving the monies in Court.

196.  If the Court comes to the conclusion that Part II proceedings should be instituted to protect the interest of the MIP but the proceedings have yet to be commenced, approval for settlement may still be obtained under RHC, Order 80 provided that the terms to be approved under RHC, Order 80 should provide for the following:

(1)  for once and for all payment out (if any) like disbursement of legal expenses or reimbursement of money previously spent on maintenance of the MIP and / or periodic payment out for maintenance of the MIP (if any), the PI Judge or PI Master can deal with the same under RHC, Order 80, rule 12;

(2)  the balance of the funds shall remain in Court pending Part II proceedings; and

(3)  the disposal of the balance of the funds in Court shall be in accordance with the directions of the Court in the Part II proceedings.

197.  Where a committee has been set up before settlement, the committee shall file an application in the context of the Part II proceedings for sanctioning the settlement in which the committee was appointed and the papers will be passed to the Registrar of the High Court for a report under section 13 of the MHO.  Based on the report of the Registrar, the Court will usually deal with the application on paper.  A hearing will only be required if the Court so directs.  The committee should only apply for approval pursuant to RHC, Order 80 after it has obtained sanction under Part II of the MHO.  The committee should also draw the Court's attention to the Part II approval in the Order 80 application.

198.  For cases where the Court does not require Part II proceedings to be taken out and orders payment out from the Suitors’ Fund on a periodical basis or otherwise for the maintenance or benefit of the MIP, Solicitors acting for the MIP should advise the recipient of the periodical payments as regards the following:

(1)  the money is to be paid to the recipient for the maintenance and benefit of the MIP and not for any other purposes;

(2)  the recipient should keep account of monies paid to him / her and upon request by the Court, he / she should be ready to produce such account for inspection;

(3)  if the Court pays out a sum for a specific purpose, it should not be used for other purposes without any prior approval from the Court;

(4)  the recipient has a duty to inform the Master in charge of Suitors’ Fund of any material change of circumstances including reduction or increase in expenditure for the maintenance of the MIP, recovery or deterioration of the MIP, accumulation of surplus from monies paid out, changes in the relationship between the MIP and the recipient, and changes in the needs of the MIP.

199.  The Court may require assurance from the Solicitor acting for the MIP that the above advice has been given and undertakings from the recipient to comply with paragraphs 198(1) to 198(4) hereof.”

19.  The duties of solicitors acting for the mentally incapacitated person in cases where a committee has not been formed, set out in §198 of PD18.1 quoted above, track the duties of a solicitor acting for such persons that were highlighted by Lam. J in Re: CK, which I have set out in §15 above. In future, I expect to see, in a memorandum in support of settlement, an express statement and assurance from the solicitor acting for the mentally incapacitated person that the advice identified in §198(1) to 198(4) has been given and that undertakings from the recipient to comply with such duties have been received.  I also expect to see in a memorandum in support of settlement, in a case where a Committee has already been formed, a similar express statement and assurance as regards the duties of the Committee.

Approval of settlement on the basis that plaintiff’s costs are taxed on a common fund basis

20.  As I have stated above, the order I made approving the settlement contained the usual terms in such cases that “the Plaintiff’s costs of the action including the mediation and the approval of settlement be taxed on a common fund basis”.  Persons under disability do not enjoy special rights and privileges under the law. All parties appearing in our courts are treated equally.  If a person under disability sues by next friend and obtains judgment and a costs order in his favour after trial, the normal order for costs will be made, namely, that the plaintiff’s costs are to be taxed on a party and party basis.  The reason why terms of settlement are only approved on the basis that the plaintiff’s costs are to be taxed on a common fund basis is to ensure that the settlement sum is not diluted by any payment that needs to be made to the plaintiff’s solicitors towards their costs and disbursements that have not been recovered from the defendant. The court cannot assess the reasonableness of the settlement sum and grant approval for the settlement if it does not know how much of that sum would be required to pay the plaintiff’s legal costs and disbursements.  In these cases, the plaintiff’s solicitors usually waive any claim for further costs, as explained in the Hong Kong Civil Procedure 2017 at Marginal Note 80/12/14:

“Costs – A compromise of a claim on behalf of a minor or an infant has to include an agreement in respect of costs. Without such agreement it is not a full compromise to put before a court for its approval. The court is asked to approve a fixed sum of money as reflecting a proper settlement. If there is any uncertainty as to whether the proposed settlement figure may be reduced by any liability for costs, it may not be approved. In any event, the solicitors representing the plaintiff will be required to explain such potential liability fully. In normal circumstances, where the settlement provides for costs on a common fund basis, solicitors will be expected to waive any claim for further costs. This is because the basis of common fund costs is a reasonable amount in respect of all costs reasonably incurred. The corollary is that any costs not recoverable from the defendant on this basis are deemed to be not reasonable and not reasonably incurred. The court is then likely to take the view that they should not be payable out of a plaintiff’s damages, and should not be recoverable out of the Legal Aid Fund.

Solicitors therefore should be wary of agreeing common fund costs with the defendants in the hope of having any costs which it does not have to recover from the defendants allowed on taxation of Legal Aid costs. With a waiver by the plaintiff’s solicitors of any costs over and above the common fund costs it is only in rare circumstances that a Legal Aid Taxation will be necessary. (See also paras 80/12/17-80/12/18.)”

21.  It is also important to have regard to Marginal Note 80/11/1:

“Compromise of claims of minors and patients - general scheme of the rules ( rr.10 and 11 ) - Rules 10 and 11 must be read together with r.12. Together they provide a comprehensive code the objects of which are :

…

(c)  to ensure that solicitors acting for a minor or mentally incapacitated person are paid their proper costs and no more. It was found that there were two dangers: first that the plaintiff might be overcharged and, second (and, perhaps, worse) that a solicitor might be influenced to recommend an unfavourable settlement by a tempting offer to agree his costs. Accordingly O.62, r.29 and 30 provides that, unless the court otherwise orders, the costs payable to a solicitor acting for a plaintiff under a disability, who has claimed or recovered money (e.g. damages), must be taxed and that only those costs allowed on taxation should be paid. These dangers have been diminished by the growth of legal aid and the court is often ready to dispense with taxation if satisfied that it is proper to do so. See further, para.80/12/16.”

22.  It is also clearly stated in Hong Kong Civil Court Practice 2017 at Marginal Note 80/11/2 that:

“Order 80 rule 11 should be read together with Order 62 rule 30 which provides that, unless the court otherwise directs, the costs payable to his solicitor by any plaintiff under a disability shall be taxed. This rule is clearly made for the protection of plaintiffs under disability.”

23.  Most practitioners are familiar with Order 62, r.29 of the RHC which provides that, on a taxation of a solicitor’s bill to his own client, all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.  Much less familiar to many practitioners is Order 62, r.30 of the RHC which provides:

“30. Costs payable to solicitor where money recovered by or on behalf of infant, etc. (O. 62, r. 30)

(1) This rule applies to–

(a) any proceedings in which money is claimed or recovered by or on behalf of, or adjudged or ordered or agreed to be paid to, or for the benefit of, a person who is a minor or a mentally disordered person within the meaning of the Mental Health Ordinance (Cap. 136) or in which money paid into court is accepted by or on behalf of such a person; and

(b) any proceedings under the Fatal Accidents Ordinance (Cap. 22), in which money is recovered by or on behalf of, or adjudged or ordered or agreed to be paid to, or for the benefit of, the widow of the person whose death gave rise to the proceedings in satisfaction of a claim under the said Ordinance or in which money paid into court is accepted by her or on her behalf in satisfaction of such a claim, if the proceedings were for the benefit also of a person who, when the money is recovered, or adjudged or ordered or agreed to be paid, or accepted, is a minor; and

(c) any proceedings in the Court of Appeal on an application or appeal made in connection with any such proceedings to which this rule applies by virtue of the foregoing provisions of this paragraph.

(2) Unless the Court otherwise directs the costs payable to his solicitor by any plaintiff in any proceedings to which this rule applies by virtue of paragraph (1)(a) or (b), being the costs of those proceedings or incident to the claim therein or consequent thereon, shall be taxed under rule 29; and no costs shall be payable to the solicitor of any plaintiff in respect of those proceedings, except such amount of costs as may be certified in accordance with this rule on the taxation under rule 29 of the solicitor’s bill to that plaintiff.”

24.  My review of this area of law cannot be complete without a reference to the statements in the Hong Kong Civil Procedure 2017 at Marginal Notes 80/12/15 to 80/12/18. It is stated in Marginal Note 80/12/15:

“(b) Costs between a minor or mentally incapacitated person plaintiff and his own solicitor—As explained in para.80/11/1 the solicitor cannot, except by express order of the court, receive more costs than he is allowed on taxation. Accordingly, subject to any such order, as to which see (c) below: the order mentioned in (a), above, will be sufficient.”

This statement is a little difficult to comprehend as there is no sub-paragraph (a) above Marginal Note 80/12/15.  A reference to Marginal Note 80/12/20 of the UK Supreme Court Practice 1999 solves the mystery.  The said Marginal Note 80/12/20 states:

“(a) Costs between a minor or patient and defendant – It will be sufficient to order that the defendant should pay the costs to be taxed on the standard basis; if the plaintiff is legally aided a further order should be made for legal aid taxation.

As the standard basis is similar to the old “common fund” basis the plaintiff’s solicitor will obtain reasonable remuneration. It is not necessary to persuade the defendants to pay indemnity costs, although, of course, they may do so if they wish.”

This was rightly omitted from the Hong Kong Civil Procedure as taxation on the standard basis does not exist in Hong Kong.  However, the editors of Hong Kong Civil Procedure ought to have omitted also the reference to sub-paragraph (a) in Marginal Note 80/12/15.

25.  Marginal Notes 80/12/16 to 80/12/18 of Hong Kong Civil Procedure 2017 state as follows:

“80/12/16

(c) Agreeing costs: dispensing with taxation—Generally speaking there is no objection to the plaintiff and the defendant agreeing the costs payable between parties. The plaintiff’s solicitor’s own costs must, however, be taxed unless the court dispenses with taxation, see RHC O.62 , r.30. This it may be prepared to do in the following cases:

(i) if the solicitors satisfy the court that their costs will be met by a third party without recourse to the plaintiff;

(ii) if the solicitors undertake to take no more than is recovered as costs from the defendant. It is then the practice to add to the order for costs against the defendant the words “the plaintiff’s solicitors waiving all further costs” and to make an order dispensing with taxation of the solicitor’s costs. See also the commentary on waiving costs and summary assessment thereof at para.80/12/14.

No difficulty arises where the plaintiff’s costs are to be taxed. If, however, the parties wish to agree the costs without taxation, most masters will require to be told the amount agreed before they dispense with taxation; this is to ensure that there is no great disproportion between the plaintiff’s damages and solicitor’s costs.

80/12/17

Standard basis does not exist in Hong Kong—In normal circumstances approval of a proposed compromise of such an action will not be given unless the plaintiff’s costs are to be paid on a common fund basis. Furthermore approval is unlikely to be given if the plaintiff’s solicitors seek to recover costs over and above those paid by the defendant on a common fund basis. Such additional costs would if allowed diminish what the court regards as a proper settlement figure. The court’s expectation that costs will be paid on a common fund basis is predicated on the basis that such basis is reasonable and proper remuneration (on a more generous basis than party and party costs) and that the settlement figure proposed is the sum that the plaintiff under a disability will receive. The court will not countenance any attempt to circumvent this by the solicitors seeking to charge costs against the next friend.

80/12/18

Practice Direction 18.1—Personal Injuries List—Practitioners with cases in the personal injuries list should refer to this Practice Direction for the detailed requirements of obtaining court approval for any compromise or settlement.”

26.  Finally, practitioners are reminded to have regard to the provisions of PD18.1 in relation to solicitor and own client costs:

“X Actions by Persons under Disability

...

189. Save as is otherwise ordered by the Judge the proper order for costs in respect of such compromised proceedings is on a common fund basis.

190. In the event of a Solicitor for a Plaintiff seeking to charge against a Plaintiff's damages, costs and disbursements which he considers he will not recover from the Defendant(s), he must produce at the hearing for approval a statement of the maximum amount of such costs and disbursements and will be required to justify them. The Plaintiff and / or the next friend must have been advised in writing of the estimate of the amount of costs and disbursements in question, and any consent thereto must be in writing and produced to the Court. The written advice must set out clearly why those costs and disbursements have been incurred and why it is considered that they are not recoverable from the Defendant(s). A general undertaking to be responsible for costs signed by the client will not be sufficient for these purposes.

The proposed direction set out by the Plaintiff's Solicitors pursuant to paragraph 187 hereof should also set out how the balance of the amount of such costs and disbursements after deduction of the taxed costs payable to them should be settled by or on behalf of the Plaintiff.

No approval will be given to any settlement unless the Court can be told with reasonable accuracy, the maximum amount it is sought to be deducted from the Plaintiff's damages. If the Court is not satisfied with the maximum amount as put forward by the Plaintiff's Solicitors as being necessary, the Court may, whilst granting an approval of the settlement figure, give such directions for dealing with the application for approval of the distribution of the award as it thinks fit, including a speedy taxation of all the costs and disbursements.

191. No amount of damages will be released from the Court’s control and investment on behalf of a claimant, save for direct transmission to the claimant e.g. for the benefit of the widow and family in a fatal claim, until it is satisfied that any claim for costs and disbursements as set out in paragraph 190 hereof and / or by virtue of the First Charge of the Director of Legal Aid has been quantified.

192.  If, after the Order 80 approval, it becomes apparent that a Plaintiff who is under disability will have to pay costs in an amount higher than the amount stated at the Order 80 hearing, the Plaintiff’s Solicitors should immediately inform the Court with full details of the reasons and seek directions.  The Court will not entertain such application unless the Plaintiff is properly represented and his interest is sufficiently protected.”

27.  There was no mention in the present case, at or before the hearing on 8 October 2015 for approval of settlement, of any need to seek, from the mentally incapacitated plaintiff, payment of the costs and disbursements not recoverable from the defendant.  No statement of such costs or disbursements was produced before me, at or before the hearing on 8 October 2015, in accordance with §190 of PD18.1. The draft order attached to the summons for approval of settlement sought the usual order that costs be taxed on the common fund basis.

The plaintiff’s solicitor’s correspondence regarding costs

28.  As I have stated above, it was only recently that I viewed the court file in HCMP 4051 of 2003.  I fixed the hearing on 28 July 2017 and perused the Mental Health Court file consequent upon an exchange of correspondence in relation to the plaintiff’s solicitors’ costs. The first letter I received, that was addressed to my clerk, was dated 18 April 2017.  It stated:

“We write to report that in relation to the costs issue of the captioned case was concluded and we write to seek your approval if necessary for our acceptance of Notice of 4^th Joint Sanctioned Payment (Order 62A) made by Messrs. Cheng, Yeung & Co. and Messrs. Ince & Co. filed on 10^th March 2017.”

29.  The Notice of 4th Joint Sanctioned Payment dated 10 March 2017 stated that the 1^st, 2^nd and 3^rd defendants:

“… jointly paid HK$200,000.00 into court in settlement of the whole of your costs … It is in addition to the amounts of HK$200,000.00, HK$50,000.00 and HK$100,000.00 already paid into court on 20 October 2016, 7 December 2016 and 10 January 2017 respectively and the total amount in court now offered in settlement of your costs is HK$550,000.00 … on top of interim payments mentioned below.”

The interim payments made to the plaintiff’s solicitors towards their costs are identified in page 2 of the said notice as the sums of HK$1,300,000 and HK$250,000 paid on 20 October 2016 and 7 December 2016 respectively by the defendants jointly.  By the letter dated 18 April 2017, the plaintiff’s solicitors sought leave to accept the total sum of HK$2,100,000 (HK$550,000 + HK$1,300,000 + HK$250,000) towards their costs and disbursements in lieu of taxation of these costs and disbursements on a common fund basis.

30.  The letter to my clerk dated 18 April 2017 appeared to have been issued, out of an abundance of caution, to seek my approval to accept the sanctioned payments towards costs, if my approval was necessary.  On 24 March 2017, Messrs. Damien Shea & Co. had already filed and served their Notice of Acceptance of the sanctioned payments towards their costs on top of the interim payments already received.

31.  Order 62A, r. 17 of the RHC provides:

“17. Where a sanctioned offer or a sanctioned payment is made in proceedings to which Order 80, rule 10 (Compromise, etc., by person under disability) applies–

(a) the offer or payment may be accepted only with the leave of the Court; and

(b) no payment out of any sum in court may be made without a court order.”

This provision applies to sanctioned payments made towards costs claimed on behalf of plaintiffs under disability. It was proper for the plaintiff’s solicitors to seek my approval.  They ought not to have filed and served a notice of acceptance without such approval.

32.  In response to the request for approval, I directed on 28 June 2017 that, if the plaintiff’s solicitors provided an undertaking that they would waive any costs incurred that had not been recovered from the 1^st, 2^nd and 3^rd defendants, approval of court was unnecessary for acceptance of sanctioned payments made to the court.  In effect, I was granting approval to accept the sanctioned payments upon the condition that the plaintiff’s solicitors provided an undertaking that they would waive any costs and disbursements incurred that had not been recovered from the 1^st, 2^nd and 3^rd defendants. In these cases, involving vulnerable plaintiffs, solicitors acting for them often offer an undertaking to waive any costs and disbursements incurred that have not been recovered from the defendants.  Such undertakings are readily and gratefully accepted.  If such an undertaking appears in an order granting approval of settlement that provides for the plaintiff’s costs to be taxed on a common fund basis, then the person under disability has no further interest in the taxation proceedings.  In such cases, the court will invariably grant approval to the plaintiff’s solicitors to accept sanctioned payments made in the taxation proceedings.

33.  Messrs. Damien Shea and Co did not agree to waive costs. Instead, they wrote to me on 20 June 2017 as follows:

“…

Your comment is noted. However, we hope that the Court could accept the next friend Bong Pik (sic) Fong undertakes to pay the balance of unrecovered costs incurred have not been recovered from the 1^st, 2^nd and 3^rd Defendants, a copy of her Undertaking is enclosed.

In this circumstance, we respectfully seek the Court’s directions that the Plaintiff is able to accept the sanctioned payment made towards costs without the Court’s approval.”

The English translation of the said undertaking in Chinese, signed by Madam Bong, stated:

“I, BONG PIT FONG, the wife of the Plaintiff Fong Yau Hei do hereby consent to accept the offer made by Defendants in the sum of HK$2,100,000 in full and final settlement of the costs and disbursements in lieu of taxation.

Furthermore, I give my undertaking and agree to pay the balance of the unrecovered costs and disbursements from the 1^st, 2^nd and 3^rd Defendants.

Dated this 16^th day June 2017”

34.  Upon receipt of this letter and undertaking, I made a direction on 28 June 2017 that the plaintiff’s solicitors do attend before me, together with Madam Bong, at a directions hearing on 13 July 2017.  That hearing was subsequently adjourned to 28 July 2017, when Mr Ozorio appeared on the instructions of the plaintiff’s solicitors. Madam Bong was also present.In directing a hearing to take place, I was clearly concerned that there was no mention, either in the letter or in the undertaking, of the requirement under Order 62, r.30 that solicitor and own client costs must be taxed in cases involving a mentally incapacitated plaintiff, and certainly no mention that the terms of Order 62, r.30 had been explained to Madam Bong.  Further, there was no mention in the letter and undertaking that a schedule of the costs that were considered to be potentially unrecoverable from the common fund taxation had been prepared, and certainly no mention that any such schedule had been provided and explained to Madam Bong. Finally, and most critically, I was concerned that, in asking for and obtaining the undertaking, Messrs Damien Shea and Co. were putting themselves in potential conflict with their client, and whether they could continue to act in the case.  As is clear from §190 of PD18.1, a general undertaking to be responsible for costs is unacceptable to the court.

35.  After I had given the direction on 28 June 2017, I called for the court file in HCMP 4051 of 2003.  To say I was disturbed by what I saw is an understatement.  Without my knowledge and without any reference to me, on 13 January 2016, Messrs. Damien Shea & Co. had written to the clerk to Lok J, the Judge in Charge of the Mental Health List, as follows:

“Re:	HCMP4051 of 2003 and HCPI1222 of 2003
	Mental Health Committee of Fong Yau Hei
	Committee Member: Bong Pit Fong

In pursuant to the Order made by Deputy High Court Judge To on 7^th October 2003, Bong Pit Fong, the wife of Fong Yau Hei, was appointed as the committee of Fong Yau Hei to manage Fong Yau Hei’s asset.

We were instructed by Bong Pit Fong to represent her to act for and on behalf of Fong Yau Hei in his assessment of damages in HCPI 1222 of 2003.

By a settlement order approved by Mr. Justice Bharwaney on 8^th October 2015, a total sum of HK$XXX[5] has been paid into Court as full and final settlement of the personal injuries action HCPI 1222 of 2003 of Fong Yau Hei. In the said settlement order, Fong Yau Hei would be entitled to the costs of the action including mediation and approval of settlement with certificate for two Counsels.

Senior Counsel Mr. Michael Ozorio has been instructed to represent our client since January 2014 after Mr. Justice Bharwaney has rejected $YYY[6] as the appropriate sum of settlement in the present action.  With the tremendous effort made by Mr. Michael Ozorio and his junior Counsel Mr. Stephen  Fong, the settlement sum has drastically increased from $YYY to the present $ZZZ[7] which was approved by Mr. Justice Bharwaney as the appropriate sum of settlement.”

And here are the three paragraphs that raised the judicial eyebrow:

“Our client and her family members are grateful to the outcome of the case and our client knows that a lot of costs and disbursements, inclusive of 2 Counsels’ fees are still outstanding. It is anticipated that the time to conclude the cost dispute by way of taxation or otherwise would prudently take more than 1 year.

In the circumstances, our client Bong Pit Fong, as the committee of Fong Yau Hei would respectfully ask this Honourable Court to allow her to pay the costs and disbursements incurred under HCPI 1222 of 2003 due to us out of the settlement compensation received under HCPI 1222 of 2003. Thereafter those amounts recovered on taxation will be paid into the court and form part of Fong Yau Hei’s damages.

A copy of Bong Pit Fong’s signed approval for the arrangement is enclosed for your reference.  We would be obliged if we could receive any further direction on the matter.”

The enclosed signed consent of Madam Bong dated 12 January 2016 stated:

“TO WHOM IT MAY CONCERN

Re: HCMP4051 of 2003

BONG PIT FONG, the Applicant

FONG YAU HEI, the Respondent

and HCPI1222 of 2003

I, BONG PIT FONG, the Applicant as the committee of the Respondent’s estate do hereby consent to pay the costs and disbursements incurred under HCPI1222 of 2003 to our solicitors Messrs Damien Shea & Co., Solicitors out of the Respondent’s estate.

I also understand that the costs and disbursements will be recovered from the Defendants.”

36.  On 19 January 2016,  Lok J granted leave in these terms:

“Leave to the Committee to pay the costs and disbursements incurred under HCPI 1222 of 2003 out of the settlement compensation received in the same action.”

37.  The very next day, on 20 January 2016, Messrs. Damien Shea & Co. wrote to the accounts office of the High Court.  They referred to the sealed order of Lok J dated 19 January 2016 containing the aforesaid direction, and stated:

“Kindly arrange for payment out to our firm “Damien Shea & Co., Solicitors” a total sum of $4,215,161.00 being costs and disbursements due to our firm by Fong Yau Hei, the Plaintiff under HCPI1222 of 2003.”

38.  Payment of the sum of $4,215,161 was made from the amounts held in court for the plaintiff to Messrs. Damien Shea and Co. on 22 January 2016.

39.  Their letter dated 13 January 2016 to the clerk of Lok J. had expressly stated:

“Thereafter those amounts recovered on taxation will be paid into the court and form part of Fong Yau Hei’s damages.”

40.  At the hearing on 28 July 2017, I asked Mr Ozorio, why the interim payments made directly to Messrs. Damien Shea & Co. in the sums of $1,300,000 on 20 October 2016 and $250,000 on 7 December 2016 not been returned to court, as promised in the said letter of 13 January 2016.

41.  The result of extracting, on 22 January 2016, the sum of $4,215,161 from the moneys held in court for the plaintiff, and the acceptance of interim payments of $1,300,000 on 20 October 2016 and $250,000 on 7 December 2016, was that Messrs. Damien Shea & Co. have had in their possession the total sum of $5,515,161 since 20 October 2016 and the total sum of $5,765,161 since 7 December 2016.

42.  I directed Mr Ozorio’s attention to the provisions in Order 62, rr. 29 and 30 of the RHC.  As is clear from those provisions, absent a taxation between solicitor and own client pursuant to these provisions, Messrs. Damien & Shea had no entitlement to retain any sum towards their costs and disbursements other than those allowed or agreed on a common fund taxation.  I also reminded Mr Ozorio that, at the hearing for approval of settlement on 8 October 2015, no statement had been provided to me of the maximum amount of costs and disbursements that was considered to be not recoverable from the defendants and which Messrs. Damien Shea & Co wished to charge against the settlement sum, as was required by §190 of PD18.1.

43.  I then asked Mr Ozorio on what basis could his instructing solicitors retain the sum of $3,665,161, being the difference between $5,765,161 and the sum of $2,100,000 which they were agreeable to accept as common fund costs and disbursements?  Indeed, there was no basis for the plaintiff’s solicitors to write to the Mental Health Court and obtain payment of more than $4.2 million out of the amounts held in court for the plaintiff.  There was no basis for them to then retain the additional $1.55 million that they had been paid by the defendants’ solicitors, keeping in their pockets more than $5.7 million from the end of 2016. And, as at the date of the hearing on 28 July 2017, they had no basis to retain in their pockets more than $3.6 million.

44.  To his credit, Mr Ozorio did not seek to justify what his instructing solicitors had done but accepted my suggestion that we take a short adjournment. When we resumed the hearing, Mr Ozorio informed me that his instructing solicitors were willing to repay into court the sum of $1,550,000 within 7 days and the sum of $2,115,161 within 28 days making a total repayment of $3,665,161. Although they had received $4,215,161 from court on 22 January 2016, the defendant’s solicitors had made total sanctioned payments of $550,000 and this amount remained in court, leaving the balance of $1,550,000 and $2,115,161 to be repaid by Messrs. Damien Shea & Co. ($4,215,161 - $1,550,000 - $2,115,161 = $550,000).  I then made the following orders:

(a)   the plaintiff’s solicitors do pay HK$1,550,000 into the account of the plaintiff’s estate under case no. HCMP 4051 of 2003 within 7 days from the date hereof;

(b)  the plaintiff’s solicitors do pay HK$2,116,161[8] into the account of the plaintiff’s estate under case no. HCMP 4051 of 2003 within 28 days from the date hereof.

45.  These orders have been complied with. The sum of $1,550,000 was repaid on 31 July 2017 and the sum of $2,116,161 was repaid on 24 August 2017.

46.  For the sake of completeness, I ought to mention that, on 5 April 2017, Messrs. Damien Shea & Co. had written to the clerk to Lok J. in the same terms as their letter to me dated 18 April 2017 which is set out in §28 above. In response, Lok J. made the following observations:

“Noted. I understand that the Solicitors would write another letter to the Honourable Mr Justice Bharwaney to follow up on the matter”.

That prompted Messrs. Damien Shea & Co. to write to me on 18 April 2017, as I have set out above.

Further orders and directions made

47.  After further submissions, I made the further orders and directions:

(a)  the plaintiff’s solicitors be at liberty to apply to the PI Judge to obtain an Order for taxation pursuant to Order 62, rule 29 of the RHC;

(b)  today’s hearing be adjourned sine die with liberty to restore; and

(c)  liberty to apply.

In granting leave to the plaintiff’s solicitors to apply to obtain an order for taxation pursuant to Order 62 rule 29, I observed that I would want a summary statement of the solicitor and own account costs which have not been recovered from the common fund taxation before I would consider any such application.  Whether or not I grant leave to proceed to taxation of solicitor and own client costs would depend on the amount of costs likely to be allowed on such taxation and whether such amount would dilute the settlement sum to an extent as to render the settlement unreasonable.

48.  I also observed that it was a matter for the plaintiff’s solicitors to consider whether or not it was possible to reopen the common fund taxation of the costs to be paid by the defendants.  As stated in §30 above, on 24 March 2017, Messrs. Damien Shea & Co. had served on the defendants’ solicitors their notice of acceptance of the sanctioned payments towards their costs on top of the interim payments already received.  On 25 March 2017, they wrote to the Registrar to report that the case was concluded. They enclosed the said notice of acceptance and requested that the taxation hearing fixed on 21 August 2017 be vacated, which Master J. Wong did on 20 April 2017.

49.  I should add, by way of postscript, that on 15 August 2017 Messrs. Damien Shea and Co. wrote to the “Taxing Officer” of the High Court referring to my order of 28 July 2017 “whereat the Plaintiff’s Notice of Acceptance of Sanctioned Payment was not approved” and requesting the taxation hearing to be restored.  That is incorrect.  As stated in §32 above, my approval on 28 June 2017 was conditioned upon the plaintiff’s solicitors providing an undertaking that they would waive any costs and disbursements incurred that have not been recovered from the 1^st, 2^nd and 3^rd defendants, which, in the event, was not forthcoming.  On 16 August 2017, Messrs. Damien Shea and Co. wrote to my clerk referring to my order dated 28 July 2017 and seeking an order for taxation under Order 62, r.29.  If the common fund taxation is allowed to be re-opened, it must proceed first before any taxation of solicitor and own client costs.

Solicitor and own client costs in cases coming under Order 80 – going forward

50.  There are 3 types of cases. One type of case is the case in which the plaintiff’s solicitors are willing to waive all costs and disbursements not recovered after a common fund taxation.  Another type of case is a similar type of case in which the plaintiff’s solicitors are willing to waive all costs and disbursements not recovered after a common fund taxation except some specific disbursements not recoverable on a common fund taxation, such as the expense of an expert report not deployed in the proceedings. Whether or not they are legally aided cases, these cases are fairly easy to deal with.

51.  The third type of case is the current one where the plaintiff’s solicitors have not offered to waive their costs and disbursements that are not recovered after a common fund taxation.  If the plaintiff is legally aided, his solicitors can seek a direction that there be a taxation of the plaintiff’s costs pursuant to the Legal Aid Regulations.  As this is done on a common fund basis, the only further costs that might be recoverable are disbursements not recoverable from the defendant on a common fund taxation.  If the plaintiff is not legally aided, as in the present case, then §§190 to 192 of PD 18.1 must be strictly complied with and the PI Judge informed of the progress of the taxation proceedings, including any subsequent events that might dilute the settlement sum in respect of which approval has been given, such as an appreciation that the mentally incapacitated plaintiff may have to pay a higher amount of costs and disbursements than the amount set out in the statement provided pursuant to §190 of PD 18.1.  The statement of costs and disbursements provided pursuant to §190 must be complete and frank. The court’s paramount duty is to safeguard and protect the interests of the mentally incapacitated plaintiff and the court will closely and carefully scrutinise any claims that may be made for payment of an amount of costs and disbursements that is higher than the amount of the costs and disbursements set out in the statement provided pursuant to §190.

52.  I should mention that I recently approved a settlement in a case involving a plaintiff who was mentally incapacitated and in which the parties agreed that the plaintiffs’ costs were to be taxed on an indemnity basis.  In that case, the plaintiff’s solicitors offered to settle at $X[9] and costs to be taxed on an indemnity basis; or at $X and costs to be taxed on a common fund basis plus HK$1.5 million to cover costs likely to be allowed on a taxation between solicitor and own client, pursuant to Order 62, rr.29 and 30 of the RHC.  The defendant preferred to settle on the basis of the first mentioned offer.

Application to the Mental Health Court to obtain suitable accommodation and to implement a care regime

53.  It is a matter of great disappointment to me that from 8 October 2015 to 4 April 2017, the only applications made to the Mental Health Court were the applications made on 13 January 2016 and 20 January 2016 to take out the sum of $4,215,161 to pay the plaintiff’s costs and disbursements.  To my great surprise, no application was made to provide for better accommodation or to start the care regime in respect of which substantial damages had been awarded as set out in §8 above. There was no application to purchase suitable premises.

54.  In future, when I grant approval, as the PI Judge, for settlement in cases involving mentally incapacitated plaintiffs who require better accommodation and/or a care regiment to be implemented, I shall make an order in the usual terms, including the provision for periodical payments, and then I may consider adjourning the hearing before me to a later date to deal with the provision of better accommodation and/or the implementation of a care regime.  Future applications thereafter can be made to the Mental Health Court either to form a Committee, if so required, or if a Committee has already been formed, to deal with other matters.

55.  It is usual for the agreed costs to include the costs of forming a Committee[10].  In special cases where it may be appropriate for the PI Judge to assist in the provision of better accommodation or the implementation of a care regime, provision should also be made for payment by the defendant of the cost of the additional hearing before the PI Judge for this purpose.  Such costs can be kept to a minimum if proper quotations are provided in advance. The matter might even be dealt with on paper.

56.  It is my sincere hope that any legal aid certificate in place would not be discharged until such further necessary applications have been made.  These cases involve vulnerable persons who do not possess the ability to take care of these matters, securing suitable accommodation or implementing a care regime, by themselves.  Equally, I would expect solicitors, acting for a mentally incapacitated plaintiff who is not legally aided, to continue to assist the next friend or the Committee, if one has previously been appointed, to make these further necessary applications.  In all cases, whether legally aided or not, the next friend or the Committee ought to be guided to seek assistance from charitable or non-profit organisations with specialist knowledge and experience who provide assistance to mentally incapacitated persons and to their families.