CHAN TO NING v. TSUI YU MING t/a MING TAK ELECTRICAL CO AND ANOTHER

HCPI 849/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 849 OF 2009

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DECISION ON COSTS
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1. By a Judgment handed down on 13 November 2013, I found in favour of the Plaintiff on liability without any deduction for contributory negligence and assessed damages at $672,844.20 (net of the employees’ compensation of $413,091.20 agreed between the parties on 22 September 2010 and received by the Plaintiff on 7 October 2010) with interest on damages for PSLA at 2% per annum from the date of service of the Writ of Summons to the date of judgment and interest on damages for loss of pre-trial earnings and special damages at half judgment rate from the date of the accident to the date of judgment (“Judgment”).

2. I also made an order nisi that the Defendants should pay the Plaintiff’s costs of the action, to be taxed if not agreed.

3. In fact, the Defendants had prior to the trial jointly made successive sanctioned payments (“Sanctioned Payments” collectively) as follows:

(1) $755,000 on 18 July 2011 (“1^st Sanctioned Payment”);

(2) $820,000 on 22 August 2011; and

(3) $954,000 on 12 January 2012.

4. Pursuant to Order 22, rule 5, the time within which the Plaintiff could accept the 1^st Sanctioned Payment without leave of the Court expired on 15 August 2011.

5. As a result of the Plaintiff’s non-acceptance of the Sanctioned Payments, this action proceeded to trial and the Defendants incurred at least the following further costs:

	Amount	Nature	Payment Date
1st Defendant	$275,000	Counsel fee for advice and trial	6 June 2012
2nd Defendant	$130,600	Solicitors costs and counsel fee for trial	28 February 2012

6. There was no dispute between the parties that damages together with interests up to and including 15 August 2011 add up to $724,445.14 only. In other words, the Plaintiff failed to obtain a judgment better than the 1^st Sanctioned Payment.

Applications before the court

7. By a Summons dated 20 November 2013, the 1^st Defendant applied to vary the awards of interests and costs as follows:

(1) that interest on damages for PSLA should be awarded up to 15 August 2011 only but not thereafter;

(2) that interest on damages for pre-trial loss of earnings and special damages should be awarded up to 15 August 2011 only but not thereafter;

(3) that the award of damages should not carry any judgment interest;

(4) that a sum of $724,445.14 be paid out of Court to the Director of Legal Aid on behalf of the Plaintiff in full satisfaction of the damages and interests awarded;

(5) that the balance of the Sanctioned Payments (together with interest thereon if any) be paid out to Messrs Chong & Partners on behalf of the 1^st and 2^nd Defendants;

(6) that the costs of the action up to 15 August 2011 be paid by the 1^st and 2^nd Defendants to the Plaintiff on the District Court scale and on party-and-party basis, to be taxed if not agreed;

(7) that the costs of the action after 15 August 2011 be paid by the Plaintiff to the 1^st and 2^nd Defendants on the High Court scale and on indemnity basis, to be taxed if not agreed; and

(8) that the Plaintiff should pay enhanced interest on costs at 9% per annum (or any other rate to be determined by the Court) to the 1^st Defendant on the sum of $275,000 (being the 1^st Defendant’s counsel fee incurred after 15 August 2011) from 6 June 2012 up to the date of judgment.

8. By a Summons dated 3 December 2013, the 2^nd Defendant applied for the same variations save:

(1) that according to the 2^nd Defendant, the Plaintiff should be paid his costs of the action from 30 December 2009 to 18 January 2010 on the High Court scale and from 18 January 2010 to 15 August 2011 on the District Court scale; and

(2) that the 2^nd Defendant asked for enhanced interest on part of the 2^nd Defendant’s solicitors’ costs and counsel fee after 15 August 2011 in the sum of $130,600 at 9% per annum (or any other rate to be determined by the Court) from 28 February 2012 up to the date of judgment.

Issues

9. The 1^st Defendant’s application (save and except that for enhanced interest on the 1^st Defendant’s costs which was apparently raised for the first time when the 1^st Defendant took out his Summons) was preceded by correspondence with the Plaintiff’s solicitors. In particular, in reply to the 1^st Defendant’s solicitors’ letter dated 14 November 2013, the Plaintiff had through his solicitors’ letter dated 19 November 2013 indicated his agreement to orders in the terms set out in paragraph 7(1), (2), (3), (4), (5) and (7) above but insisted that he should have his costs up to 15 August 2011 on the High Court scale.

10. Hence, what remain in issue are:

(1) whether the Plaintiff should recover his costs of the action for any part of the period up to 15 August 2011 only on the District Court scale;

(2) whether the Defendants should be given enhanced interest on the costs incurred by them after 15 August 2011 and, if so, at what rate and for what period.

Scale of costs

11. With regard to the scale for taxation of the Plaintiff’s costs up to 15 August 2011, by paragraph 9 of the 1^st Defendant’s solicitors’ Skeleton Submissions dated 3 December 2013 and paragraph 11 of the 2^nd Defendant’s solicitors’ Skeleton Submissions dated 4 December 2013, the Defendants revised the order sought by them to one for the application of the District Court scale only to the costs incurred by the Plaintiff from 23 December 2010 up to 15 August 2011.

12. In short, the Defendants no longer took issue with the commencement and prosecution of this action in the High Court prior to the conclusion of the Plaintiff’s employees’ compensation claim given that damages exceeded $1 million before deduction of the employees’ compensation. However, they took the view that once the Plaintiff’s employees’ compensation claim was settled at $413,091.20 on 22 September 2010, his claim for common law damages was reduced to $672,844.20, which was well within the jurisdiction of the District Court, whereupon the Plaintiff should have applied for this action to be transferred to the District Court. In support, reference was made to paragraph 97 of Practice Direction 18.1 (The Personal Injuries List) and the reminder sounded by Master Marlene Ng (as she then was) in Hung Chor Hung John v Li Kwok Kin, HCPI 251/2009, unreported (10 November 2009) at paragraphs 71-72. The Defendants were prepared to allow the Plaintiff a notional period of 3 months (which expired on 22 December 2010) to do so.

13. The actual assessment of damages, net of employees’ compensation, after trial below $1 million is not determinative of the scale for the taxation of the costs of a successful plaintiff in a personal injuries action commenced and prosecuted in the High Court but which concluded in an award within the jurisdictional limit of the District Court. All parties cited Seagroatt J’s decision in Lai Ki v B+B Construction Co Ltd [2003] 3 HKC 322 as laying down the relevant test, which is whether the Plaintiff had a reasonable prospect of recovering a sum of money in excess of the District Court jurisdiction.

14. Another way of putting the matter is whether it would be obvious to a reasonable plaintiff or his legal advisors that the case was a District Court rather than High Court case: Wong Chi Ho Jacky v Poon Yuk Shan, HCPI 910/2002, unreported (7 May 2004), per Deputy High Court Judge Jat SC at paragraph 28.

15. The question to be asked here is whether, upon the settlement of the Plaintiff’s employees’ compensation claim at $413,091.20, it should have become reasonably obvious to the Plaintiff or his legal advisors that the Plaintiff’s net claim for common law damages would fall to or below $1 million.

16. The assessment of damages in a personal injuries action is not an exact science. And evidence often evolves in ways that are unforeseen/unforeseeable. One should resist the temptation of being wise after the event. What Suffiad J said in Lam Wong Sum Monica v Tam Ka Kit Joe, HCPI 933/2005, unreported (26 June 2006) is instructive:

“13. When a solicitor is presented with a prospective claim by a client as a plaintiff in a personal injuries case, if that prospective claim works out to be a border line one, that is one which may on one view exceeds, even though marginally, the District Court jurisdiction but on another view may be assessed at just below the $1 million mark, that solicitor would normally be put in a dilemma as to where to start the claim if at the end of the day, it is the exact amount which is either assessed or settled that matters.

14. It is for this very reason that the court has seen fit to allow for High Court’s scale of costs if such a claim is brought in the High Court, but as it turned out, settled for an amount below the $1 million mark. This is reflected in the very words used being the criteria for the determination of the scale of costs to apply, namely, that the plaintiff had a reasonable prospect of recovering an amount over the District Court jurisdictional limit.

15. It is only where the court having viewed the overall circumstances of the case and obviously the facts of that case and can then say, given all the facts of the plaintiff’s case when pitched at its highest, the plaintiff could not have had any reasonable prospect of claiming beyond $1 million through liability, then in those circumstances would the court order District Court’s scale to apply. …” (emphasis added)

17. I am not persuaded, for the reasons to be set out in the next paragraph, that this is a case where it should have been reasonably obvious to the Plaintiff or those acting for him that his claim herein, taken at its highest, could not have exceeded $1 million after taking into account the employees’ compensation that he had obtained.

18. The most crucial element of the Plaintiff’s case on quantum, for present purposes, was the loss of earnings claim. In this connection, as noted in paragraph 91 of the Judgment, there was no dispute that the Plaintiff and Mr Cheng Tung Chau (“Mr T C Cheng”) did not agree on the Plaintiff’s wages when Mr T C Cheng employed him on behalf of the 1^st Defendant. By the time of the accident giving rise to this action, the Plaintiff had only worked for the 1^st Defendant for 20 days or so and had not yet received any payment of wages save that he was advanced on account of his wages $2,000 after the 3^rd or 4^th day and another $2,500 on 29 October 2009.

19. The Plaintiff had since the amendment of the Revised Statement of Damages in January 2011 rested his claim for loss of earnings on the handwritten note by Mr T C Cheng found by him on 13 December 2010. Although I held in the final analysis that such document should not be treated as conclusive evidence that the sum of $15,000 mentioned therein was paid just for the 20 days that the Plaintiff had worked for the 1^st Defendant without regard to other relevant facts and circumstances (Judgement paragraph 111(1)), it does not mean that the Plaintiff should have ignored this piece of evidence.

20. The content of this note (set out in paragraph 95 of the Judgment) was plainly subject to interpretation, depending on what other relevant facts and circumstances were present. The other relevant facts and circumstances that I had paid regard to included the modest value of the 1^st Defendant’s sub-contract, how the 1^st Defendant budgeted for such sub-contract and the daily wages paid by the 1^st Defendant to Mr T C Cheng and Mr Choy Kam Yau. However, evidence of these facts did not appear to have emerged until well after the conclusion of the Plaintiff’s employees’ compensation claim.

21. Also, evidence of Mr Choy’s earnings at the time of the trial (which I adopt as what the Plaintiff would have been making at the time of the trial) came out in the course of cross-examination.

22. In view of the aforesaid, I do not think the Plaintiff or his legal advisors could be faulted for not seeing that the Plaintiff’s claim for common law damages would drop below $1 million, and for not applying to transfer this action to the District Court, shortly after the settlement of the Plaintiff’s employees’ compensation case.

Enhanced interest on the Defendants’ costs

23. Mr Steven Lau, counsel for the Plaintiff, did not dispute that the Court has the power to award enhanced interest on the Defendants’ costs and disbursements at 9% in view of Shih Pik Bog v G2000 (Apparel) Ltd [2011] 4 HKLRD 121.

24. Mr Lau however reminded me of the time that I had taken in handing down the Judgment (for which I regret and apologise to the parties) and suggested that a plaintiff would not normally have to bear enhanced interest on the defendant’s costs for such a lengthy period for failing to beat a sanctioned payment.

25. I accept that Mr Lau had a point and consider it appropriate to order the Plaintiff to pay the Defendants enhanced interests on costs up to 31 December 2012 only. I adopt 31 December 2012 as the cut-off date after considering all the circumstances, including the usual time within which parties could expect judgment from the Court, the complexity of the case and the level of assistance that I got from the parties at the trial of the action.

Orders

26. For the above reasons, I make the following orders in variation of the award of interests and the costs order nisi that I had made:

(1) that interest on damages for PSLA should be awarded up to 15 August 2011 only but not thereafter;

(2) that interest on damages for pre-trial loss of earnings and special damages should be awarded up to 15 August 2011 only but not thereafter;

(3) that the award of damages should not carry any judgment interest (although this really goes without saying in view of the preceding 2 sub-paragraphs);

(4) that a sum of $724,445.14 be paid out of Court to the Director of Legal Aid on behalf of the Plaintiff in full satisfaction of the damages and interests awarded;

(5) that the balance of the Sanctioned Payments (together with interest thereon if any) be paid out to Messrs Chong & Partners on behalf of the 1^st and 2^nd Defendants;

(6) that the costs of the action up to 15 August 2011 be paid by the 1^st and 2^nd Defendants to the Plaintiff on the High Court scale and on party-and-party basis, to be taxed if not agreed;

(7) that the costs of the action after 15 August 2011 be paid by the Plaintiff to the 1^st and 2^nd Defendants on the High Court scale and on indemnity basis, to be taxed if not agreed; and

(8) that the Plaintiff should pay enhanced interest at 9% per annum on the 1^st Defendant’s costs in the sum of $275,000 from 6 June 2012 up to 31 December 2012; and

(9) that the Plaintiff should pay enhanced interest at 9% per annum on the 2^nd Defendant’s costs in the sum of $130,600 from 28 February 2012 up to 31 December 2012.

27. As for costs, the Defendants asked in their Summonses for costs of these applications to be paid by the Plaintiff on the High Court scale and on indemnity basis. However, I repeat paragraphs 9 and 10 above. These applications became necessary because of the parties’ failure to agree on, initially, the scale for the taxation of the Plaintiff’s costs up to 15 August 2011 and later the period for which the Plaintiff should pay the Defendants enhanced interests on costs. The Plaintiff has succeeded on the first issue (which took up the bulk of the arguments both in writing and orally) and also improved his position in respect of the second. I therefore make an order nisi that the 1^st and 2^nd Defendants should pay the Plaintiff 70% of his costs of and occasioned by these applications, with Certificate for Counsel, on the High Court scale and on a party-and-party basis, to be taxed if not agreed. The Plaintiff’s own costs shall be taxed in accordance with the Legal Aid Regulations.