FUNG WING YEE v. CHEN JUNG CHIEN

HCPI 657/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 657 OF 2007

----------------------

----------------------

----------------------

D E C I S I O N

----------------------

1.  On 23 March 2010 my written judgment was handed down after an assessment hearing giving the plaintiff judgment in the amount of $2,216,396.85 to be paid into court by the defendant within 21 days by reason that the plaintiff is a minor, suing by her next friend.

2.  In that written judgment, a costs order nisi was made that the defendant do pay the plaintiff her costs of the assessment including the costs of the further application for payment out to be taxed if not agreed and the plaintiff’s own costs to be taxed in accordance with Legal Aid Regulations.

3.  The plaintiff now applies for variation of the costs order nisi by Summons dated 1 April 2010.  The plaintiff’s application for variation is two-folds as follows :

(a)  the costs to the plaintiff to be taxed on common fund basis; and

(b) enhanced costs and interests under Order 22 rule 24 on the basis that the plaintiff had done better than her sanctioned offer made on 2 December 2009.

4.  The two limbs of the application have different basis and need to be dealt with separately.

Common fund costs

5.  The basis upon which this limb of the variation to the costs order nisi is made is that the plaintiff in this case is a minor.

6.  Reliance was sought on this limb of the application upon a short written ruling titled “Review of Nisi Costs Order” of Master Barnes (as she then was) in Wai Yin Wa by her next friend Choi Siu Yick v Laminate Enterprises Ltd, HCPI514/1997 wherein the Master stated in paragraph 3 of that ruling :

“… After considering the authority of Tai Chau Yung and Chu Yau v Ng Jim et al (HCPI No. 753 of 1997), I am of the view that a court in exercising its discretion should award costs on a Common Fund basis to safeguard the interest of an aided Plaintiff who is under a disability. I am also of the view that the same approach should be adopted whether the case was compromised by settlement or concluded after a full assessment.”

7.  On that last sentence cited above, it was submitted by Mr Sakhrani, counsel for the plaintiff, that even though in the present case judgment was given after a full assessment hearing, the costs of the plaintiff should be taxed on common fund basis.

8.  In Order 62 of the Hong Kong White Book, under marginal note 62/App/8 there appears the following commentary :

“When to Order common fund costs—To justify an order for costs on the common fund basis, the case has to have some special or unusual feature (Overseas Trust Bank Ltd v Coopers & Lybrand (a firm) & Ors [1991] H.K.L.R.177).  It has now become the general practice of the court in cases settled or compromised in favour of an infant or a patient plaintiff to award costs on common fund basis and not party and party basis as the courts needed to be sure of adequacy of settlement (Tai Chau Yung & Anr v Ng & Anr [1999] 2 H.K.L.R.D.549).”

9.  What was said in Tai Chau Yung’s case was as follows :

“In coming to a decision on the question of costs, first of all, I note that the award of costs is always a matter left to the discretion of the court.  Secondly, it has been a long standing practice at least in England if not in Hong Kong for costs to be awarded on a common fund basis to a successful infant plaintiff where the matter is compromised or settled, so that the court can be reasonably sure of the adequacy of the settlement to the infant.  If this practice is not one which has been prevalent in Hong Kong hitherto, the time has come for those advising in such cases where infant interest or patients are involved to take note of this long adopted practice in England which, in the views of judges dealing with the PI List, should be applied with much more regularity in Hong Kong, where appropriate, than has been the case.  Especially taking into account the fact that costs in Hong Kong greatly exceed that in England where litigation is concerned, such that a successful infant or patient, where a case is settled or compromised, is often left with much less than the amount upon which the case was compromised for. …”

From those words it can be seen that the rationale for that practice in ordering common fund costs when the case is settled or compromised when a person under disability is involved is such that the court can be reasonably sure of the adequacy of the settlement to the person under disability. 

10.  Seemingly therefore, between the two passages cited above, one from Master Barnes and the other from the commentary in the Hong Kong White Book, there would appear to be some inconsistency in that the view taken by Master Barnes that the approach contained in Tai Chau Yung’s cases should be adopted irrespective of whether it is a settlement or a full assessment differs with what is stated in the commentary in the Hong Kong White Book. 

11.  If there is such a difference, I prefer the commentary contained in the Hong Kong White Book as being a more accurate statement of that general practice which is adopted where there is a compromise or settlement involving a person under a disability.

12.  However that does not mean that in an appropriate case, that discretion given to the court cannot be so exercised by the court.

13.  I therefore read Master Barnes ruling in Wai Yin Wah’s case to be her exercise of discretion based on the special feature of that case, and not as of general application.

14.  In the present case, having assessed the damages after a full contested hearing, I do not find any special or unusual feature of the case, nor do I have any doubt as to the adequacy of the damages assessed and awarded to the plaintiff herein.  The fact that she is a minor suing by her next friend is not, per se, such a matter as would warrant the exercise of my discretion to order costs to be taxed on a common fund basis.

15.  For these reasons, I am not prepared to accede to the first limb of the application to vary the costs order nisi.

Plaintiff doing better than the sanctioned offer

16.  The claim was commenced by the plaintiff in July 2007 in respect of the accident to the plaintiff which occurred on 5 February 2006.

17.  The assessment hearing took place between 25 to 27 January 2010 and judgment was handed down on 23 March 2010.

18.  On 2 December 2009, the plaintiff’s solicitors made a sanctioned offer pursuant to Order 22 of RHC of $1.9 million (excluding interests) plus costs in full and final settlement of the plaintiff’s claim. There was no response from the defendant’s solicitors to that sanctioned offer.

19.  On 7 January 2010, Messrs Deacons acting for the defendant made a sanctioned offer to the plaintiff’s solicitors which was rejected by the plaintiff on the following date, namely, 8 January.

20.  On 15 January 2010, the defendant topped up their earlier sanctioned offer made on the 7 January by making a sanctioned payment into court of $1.1 million (net of interim payment of $150,000 but inclusive of interests) plus costs to be taxed if not agreed in full and final settlement of the plaintiff’s claim.  Same was rejected by the plaintiff.

21.  After the assessment hearing, I awarded judgment to the plaintiff of $2,216,396.85 upon the assessment with costs.

22.  This limb of the application for variation of the costs order is made pursuant to Order 22 rule 24(4) of RHC.

23.  The relevant provisions of rule 24 of Order 22 are as follows :

“(2) The Court may order interest on the whole or part of any sum of money (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court.

(3)   The Court may also order that the plaintiff is entitled to—

(a) his costs on the indemnity basis after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court; and

(b) interest on those costs at a rate not exceeding 10% above judgment rate.

(4)   Where this rule applies, the Court shall make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so.

(5)   In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3), the Court shall take into account all the circumstances of the case including—

(a) the terms of any sanctioned offer;

(b) the stage in the proceedings at which any sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purpose of enabling the offer to be made or evaluated.”

24.  The application by the plaintiff is that having done better than her sanctioned offer made on 2 December 2009, she now seeks to vary the costs order nisi as follows :

(i)  interest on the award be at a higher rate to be directed by the court;

(ii)  costs after 29 December 2009 be awarded to the plaintiff on an indemnity basis; and

(iii) interest on those costs be at a higher rate to be directed by the court.

25.  The defendant does not dispute that the sanctioned offer referred to above was made by the plaintiff’s solicitors on 2 December 2009 and therefore Order 22 rule 24 would apply in this case.

26.  The defendant, however, objects to the making of the enhanced interest and costs orders sought by the plaintiff on the grounds that it would be unjust to the defendant to make the orders sought by the plaintiff.

27.  It was submitted by the defendant that the unjustness arise in the following ways.

28.  Firstly, that the defendant was, at the start of these proceedings, insured by Anglo-Starlight Insurance Co. Ltd (“Anglo-Starlight”) and was represented by solicitors instructed by Anglo-Starlight.  Due to the liquidation of Anglo-Starlight, the Motor Insurers Bureau (“MIB”) had to take over the proceedings from Anglo-Starlight and instructed Messrs Deacons to handle these proceedings.  When the sanctioned offer of the plaintiff was made on 2 December 2009, Messrs Deacons had to take instructions from both the MIB as well as the provisional liquidators of Anglo-Starlight which took longer than usual and resulted in the inability for Messrs Deacons to reply to that sanctioned offer within the time stipulated.

29.  Secondly, when the sanctioned offer was made by the plaintiff, there were still outstanding documents in the form of supplemental witness statement of the plaintiff as well as supplemental list of documents by the plaintiff which were served and/or filed by the plaintiff in mid-December 2009.

30.  Thirdly, to make the orders now sought for enhanced costs and interest would deplete the MIB fund which would not be in the public interest.

Decision

31.  I am unable to accept any of the three matters submitted by the defendants to the effect that making the orders sought by the plaintiff would be unjust for the following reasons.

32.  The first reason given, that it took longer than normal for Deacons to take instructions from both those running the MIB as well as the provisional liquidators, may be a reason why they could not respond within the 28 days after the sanctioned offer was made.

33.  Be that as it may, subsequent events, namely the defendant’s sanctioned payment of $1.1 million made on 15 January 2010 clearly showed that even had instructions been obtained within those 28 days, the sanctioned offer of the plaintiff would not have been accepted by the defendant.

34.  As for the second reason advanced, namely, that supplemental witness statement of the plaintiff and a supplemental List of Documents of the plaintiff were only served and/or filed in mid December, in my view were not matters which in any way affected the decision making process of the defendant in this respect.

35.  As was pointed out by Mr Sakhrani, counsel for the plaintiff, it was only the 3^rd supplemental witness statement of the plaintiff which was served in mid December 2009 and that supplemental witness statement only brought up to date the circumstances of the plaintiff during her schooling in Form 4 and Form 5.  Likewise the supplemental List of Document filed in mid-December 2009 only disclosed her academic records for 2008 and 2009.

36.  Once again it can be seen that even after those documents were filed and/or served in December 2009, the defendant only decided to make a sanctioned payment of only $1.1 million on 15 January 2010, which was a top up of its sanctioned offer made on 7 January 2010 and rejected by the plaintiff on 8 January 2010.

37.  I also agree with Mr Sakhrani that where the defendant went wrong was that their estimate of the loss of earnings/earnings capacity of the plaintiff at only $150,000, as submitted by counsel for the defendant at the assessment hearing, was wholly unrealistic.  Ultimately that head of damage was assessed by me at $1.8 million.

38.  As for the third reason advanced, namely that this is a case in which the MIB is involved and therefore public funds, there is nothing in Order 22 which would suggest that where the MIB is involved as a party, different rules or yardstick should apply.

39.  Indeed I would have thought that where the MIB is involved, those administering such public funds should look upon themselves as shouldering a greater burden when administering such public funds (including the provisional liquidators) to take every step not to unnecessarily waste or deplete such public funds by dragging their feet when giving the necessary instructions.

40.  The rules were made to be followed and I do not see that a different standard should be applied simply by reason that the MIB or public funds are involved.

Variation to the cost order nisi

41.  For the reasons given above, there will be variation of the cost order nisi as follows :

(a)  For all special damages and the award for PSLA, interest will be calculated at 2% above the judgment rate of interest from 31 December 2009 until the date of judgment, namely, 23 March 2010.  Since the usual rate of interest had been awarded for both special damages and PSLA in the judgment and the judgment sum had been ordered to be paid into court within 21 days of that judgment, the additional amount now ordered (which can be left to be worked out by the solicitors for the parties) by reason of the enhanced interest now ordered on both special damages and PSLA is to be paid into court within 7 days of this Ruling.  Thereafter judgment rate of interest will apply.

(b) The plaintiff’s costs incurred after 31 December 2009 to be on indemnity basis.

(c) Interest on those costs in (b) above to be at 2% above judgment rate.

Costs of this application to vary

42.  Had this application for variation of the cost order nisi been made only on the second limb, namely, the plaintiff doing better than her sanctioned offer made on 2 December 2009, I would have little hesitation in ordering the enhanced costs including indemnity basis to also apply to the costs of this application.

43.  As it was, the defendant did succeed on the first limb, namely, common fund costs.

44.  Accepting therefore that the plaintiff had to come along to court for the variation of the cost order nisi, nevertheless, the plaintiff, in her application to vary, went one step too far.

45.  In the circumstances, I will order the costs of this application to be to the plaintiff, on party and party basis and that the enhanced costs ordered above not to apply to the costs of this application to vary.  Plaintiff’s own costs to be taxed in accordance with Legal Aid Regulations.