GOVINDAN SAKHIVEL v. SECRETARY FOR JUSTICE sued for and on behalf of the DIRECTOR OF IMMIGRATION

DCCJ 214/2021

[2023] HKDC 1211

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 214 OF 2021

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DECISION

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INTRODUCTION

1.  This is the decision on whether the costs of the proceedings should be taxed at the District Court scale, or at a level similar to actions began in the Small Claims Tribunal (“the SCT”).

BACKGROUND

2.  The plaintiff issued a writ of summons together with the statement on claim (“the SOC”) on 15 January 2021.  The plaintiff’s claim as stated in the SOC is as follows:-

(i)    The plaintiff was unlawfully detained at the Castle Peak Bay Immigration Centre (“CIC”) and the Ma Tau Kok Detention Centre (“MTKDC”) from 20 April 2020 to 24 April 2020 and from 5 May 2020 to 22 November 2020 (a period of 207 days), which was in breach of the Hardial Singh principles; and

(ii)   The plaintiff was wrongfully body searched.

3.  The plaintiff did not quantify the amount of damages in the SOC.

4.  The plaintiff further particularises his claims stated in the SOC and made new allegations in his witness statement:-

(i)    The plaintiff was strip-searched 3 times during his detention at the CIC;

(ii)   The plaintiff was strip-searched 1 time during his detention at the MTKDC; and

(iii)  The plaintiff was handcuffed 1 time by the police officers when he was transferred to the CIC.

5.  On 10 March 2023, the defendant served a Notice of Sanctioned Payment (“NoSP”) to the plaintiff’s solicitors as a full and final settlement of the plaintiff’s claim for a sum of HK$39,292 (“the Sanctioned Payment”).

6.  The plaintiff accepted the Sanctioned Payment by filing a Notice of Acceptance of Sanctioned Payment on 13 March 2023.

7.  Given the fact that the settlement sum in the Sanctioned Payment is within the monetary jurisdiction of the SCT, ie HK$75,000[1]. On 22 March 2023, I directed the parties to make submissions on whether the court should allow the costs to be taxed at the District Court scale when the action apparently ought to have issued/commenced at the SCT, instead of the District Court.

DISCUSSION

A.   Prima facie rule

8.  The prima facie rule on costs following by the plaintiff’s acceptance of the Sanctioned Payment to settle the whole of his claim is stated in O 22 r 20(1) of the Rules of the District Court (“RDC”):-

“Where a defendant’s sanctioned offer or sanctioned payment to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date of serving notice of acceptance, unless the Court otherwise orders.” [emphasis added]

9.  O 62 r 9(1) of the RDC further states that:-

“Subject to this Order, where by or under these Rules or any order or direction of the Court costs are to be paid to any person, that person shall be entitled to his taxed costs.”

10.  Under O 62 r 1 of the RDC, “taxed costs” means “costs taxed in accordance with this Order [Order 62 of the RDC]”.

11.  Under the construction of the above provisions, the plaintiff is prima facie entitled to his costs of the proceedings up to 13 March 2023, the date when the plaintiff served the Notice of Acceptance of Sanctioned Payment, to be taxed at the District Court scale (“the prima facie rule”): See Wong Chim Hing v Discovery Bay Transit Services Ltd [2016] 1 HKC 491, per Bharwaney J, at §§6-9.

12.  The rationale of the prima facie rule is the certainty of costs. Under the regime of sanctioned payment/offer, the plaintiff would have his exposure or entitlement to costs in mind in accordance with O 22 of the RDC, when he made the decision to accept the sanctioned payment/offer.  Generally, it is impermissible for the defendant to apply to the court to depart from the prima facie rule afterwards as it would impose uncertainty on the plaintiff’s expectation of his entitlement to costs: See Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd [2013] 2 HKLRD 1184, per Poon J (as he then was), §19.

13.  With that being said, there are circumstances where fairness requires the court to invoke the later phase of the O 22 r 20(1) of the RDC, “unless the Court otherwise orders” (“the Otherwise Proviso”) to deprive the plaintiff of his costs by ordering the costs to be taxed at a scale of a lower court.  The court retains discretion to make such order if it saw fit.

B.   The Otherwise Proviso

14.  A two-stage test was adopted for the court to invoke the “Otherwise Proviso” in Etratech:-

“20. By virtue of the Otherwise Proviso, the court retains the discretion to depart from the prima facie rule where necessary. But the discretion should only be exercised in exceptional circumstances that clearly warrant a different costs order…

……

23. Further, when applying the Otherwise Proviso, the court is in effect depriving the plaintiff of his costs or even ordering him to pay the defendant’s costs. The plaintiff will be significantly disadvantaged. In my view, fairness dictates that the plaintiff, who is considering whether to accept the sanctioned payment or sanctioned offer, should be given a prior warning that the defendant will apply to invoke the Otherwise Proviso and how it is to be invoked…

……

26. In sum, the prima facie rule in O.22 r.20(1) should apply unless (1) the defendant discharges the burden of showing exceptional circumstances that justify a departure; and (b) he has given a prior warning to the plaintiff that he will apply to invoke the Otherwise Proviso upon acceptance of the sanctioned payment or sanctioned offer.”

15.  In short, for the court to invoke the “Otherwise Proviso” in the present case, the following requirements need to be met:-

(i)    There are exceptional circumstances that justify the departure of the prima facie rule; and

(ii)   The defendant has given a prior warning to the plaintiff that he will invoke the “Otherwise Proviso” to ask the court to order the costs of the proceedings be taxed at a level similar to actions began in the SCT.

16.  I bear in mind that the defendant bears the burden to establish any exceptional circumstances at the first stage.  If the defendant failed to do so, the second stage becomes academic: See Etratech, at §31.

17.  I will deal with the above two requirements in turn.

C.   Exceptional circumstances

C.1.  Whether the defendant has showed any exceptional circumstances

18.  It is important to note that the threshold for the defendant to establish any exceptional circumstance is high. The Otherwise Proviso should not be invoked lightly. The certainty of costs is a fundamental principle embedded in O 22 r 20(1) of the RDC. Strong justification is needed for the court to depart from the prima facie rule and deprive the plaintiff of his entitlement to costs.  

19.  There is not an exhaustive list for exceptional circumstances, and it is impossible for the court to make one.  It is for the defendant to suggest to the court of any particular exceptional circumstance in the present case.

20.  The defendant argues that the low settlement sum, ie HK$39,292, constitutes an exceptional circumstance.  The settlement sum was “well-below” the ceiling of the SCT’s jurisdiction, which demonstrates that the plaintiff’s claim was unmeritorious to be pursued in the District Court.

21.  I accept the defendant’s submission. I find that a below-jurisdiction settlement sum in a sanctioned payment is an established exceptional circumstance under Wong Chim Hing:-_

“20. Where the application for an otherwise order is based on the monetary amount of the sanctioned payment, I would apply Poon J’s ‘exceptional circumstance principle’ by ruling that the acceptance by the plaintiff of an amount less than $1,000,000 ($75,000 in this case) would constitute an exceptional circumstance for the exercise of the court’s discretion to make an otherwise order, under O 22 r20(1) or (2) (of the RDC in this case) that costs be taxed on the District Court scale (at a level similar to actions began in the SCT in this case)…”

22.  The defendant’s duty does not end here.  Given my understanding of the authorities of Etratech and Wong Chim Hing, the defendant also needs to persuade the court that the exceptional circumstance suggested by him should triumph over other unfavourable considerations for the court to invoke the Otherwise Proviso, as explained by Bharwaney J immediately after the above cited paragraph:-

“21. Of course, there may be other considerations, such as the complexity of the factual and legal issues involved, which would justify proceedings being brought in the High Court (the District Court in the this case)… One cannot exhaustively state all the circumstances that may arise which may be relevant to the exercise of the court’s discretion to invoke the proviso and make an otherwise order departing from the default position. However, it seems to me that where the sanctioned payment that had been accepted is in a sum less than $1,000,000 ($75,000 in the this case), the defendant enjoys good prospects of obtaining an order for costs to be taxed on the District Court scale (at a level similar to actions began in the SCT in this case), absent some good reason to justify the proceedings being brought in the High Court. (the District Court in this case)” [emphasis added]

C.2.  Whether there is any “good reason” justifying the proceedings being brought in the District Court

23.  The plaintiff submits there are two “good reasons” for the court to exercise the discretion to order the costs be taxed at the District Court scale:-

(i)    The plaintiff has a reasonable prospect to recover for more than HK$75,000 for an unlawful detention of 207 days, 4 times of unlawful body/strip searches, and 1 time of unlawful handcuffing; and

(ii)   The plaintiff requires the assistance from his legal representatives to conduct any litigation due to his illiteracy.

24.  Dealing with the first reason, the test to determine the reasonable prospect of a case is stated in Wong Chim Hing, at §23, and further elaborated in Leizel Dalere Ramones v Lee Kut Ting, unreported, HCPI 1264/2015 (Master Leong; 28 October 2016).  The test requires the court to examine whether the plaintiff has a reasonable prospect in recovering in excess of the SCT jurisdiction, ie HK$75,000, in light of all the evidence, not only at the commencement of the proceedings, but also at each and every stage of the proceedings when more evidence become available.

25.  It is not in dispute that the plaintiff had been detained by the defendant for 207 days.  Though I agree with the defendant’s contention that not all of the 207 days were in breach of the Hardial Singh principles, I am of the view that it should not have taken around 200 days for the defendant to realise he could not effect the plaintiff’s release within a reasonable time under the 3^rd limb of the Hardial Singh principles.  The plaintiff should have been released at an earlier date.  As I said in another decision which is handed down today at the same time as this decision in Sundari v Secretary for Justice Director of Immigration [2023] HKDC 1212, DCCJ 3805/2011, generally speaking, in my view, a 6-8 weeks should be considered as a reasonable time to take the defendant to effect the release: See Ghulam Rbani v Secretary for Justice (2014) 17 HKCFAR 138, per Ribeiro PJ, at §60.

26.  In assessing the amount of damages arising from unlawful detention, there is no arithmetic approach.  A daily rate is discouraged by the court, as the amount of damages tend to be progressively reducing for each day of detention: See A v Director of Immigration [2009] 3 HKLRD 44, per Cheung J (as he then was), at §111.  With that being said, I am of the view that the court takes reference from the amount of damages awarded in previous cases, and adopt a general sum of HK$1,000 per day (with a descending sliding scale changing in the length of the detention) in making an estimation of the amount of damages that the plaintiff is entitled to without trial: Abid Saeed v Secretary for Justice [2015] 1 HKLRD 1030, Ghulam Rbani v Secretary for Justice (2014) 17 HKCFAR 138, and A v Director of Immigration, supra.

27.  The plaintiff also claims damages for unlawful body/strip searches and handcuffing.  Given the small amount of body/strip searches and handcuffing, contrary to the plaintiff’s submission, I am of the view that they were likely necessary and justified.  It is generally acceptable to the court for the defendant to search the plaintiff upon his admission to the detention centre and imposing handcuff to facilitate transferral of the plaintiff from the police station to the detention centre: See Saeed, at §§178, 248.

28.  After considering the above factors, in my judgment, it is an obvious case that the plaintiff has a reasonable prospect to recover more than HK$75,000, in light of the long period of detention.

29.  But it does not conclude the matter.  It is important to note that difference between cases settled by way of consent summons and sanctioned payment, in relation to the determination of costs scale.

30.  For cases settled by way of consent summons, the focal issue for the court is whether there is a reasonable prospect for the plaintiff to recover more than the ceiling of the SCT’s jurisdiction: See May Fung Co. Ltd v Wing Lung Industrial Ltd and Anor, unreported, HCA 1607/2007 (Lam J (as he then was); 9 October 2009).  Other relevant factors for the court to exercise its discretion on costs, ie the low settlement sum, are only ancillary to the “reasonable prospect” test.  There is a high prospect for the court to allow the costs to be taxed at the District Court scale once the court found that there is a reasonable prospect for the plaintiff to recover more than HK$75,000.

31.  The position of law is different in cases settled by way of sanctioned payment. The focal issue is whether the defendant had established exceptional circumstances to invoke the Otherwise Proviso, and whether there are “good reasons” for the court to counterbalance the exceptional circumstances showcased by the defendant: See §22 above. The reasonable prospect of the plaintiff’s case is only one of the factors that the court needs to weigh against with the exceptional circumstances showcased by the defendant.  Much less weight is attached to the “reasonable prospect” test in a case settled by way of sanctioned payment when the court needs to exercise its discretion on costs sale.  On the other hand, the focus of the court should be on the settlement sum in the Sanctioned Payment.

32.  I wish to repeat what the learned judge said in Wong Chim Hing, at §23:-

“However, an order for costs to be taxed on the District Court scale (at a level similar to actions began in the SCT in this case) should not readily be made in cases where the amount of the sanctioned payment is close to the jurisdictional limit of the District Court (the SCT in this case) as to do so would unduly penalise a plaintiff who enjoyed good prospects of securing a judgment after trial in the sum of $1 million ($75,000 in this case) or more, but who was willing to settle at a discount to avoid the risks of litigation and in order to achieve a speedy resolution of the case”

33.  In the present case, the settlement sum (HK$39,292) is not close to the jurisdictional limit of the SCT (HK$75,000), but only about 52% of that.  I would conclude the settlement sum is “fairly-below” the jurisdictional limit of SCT.  Hence, the exceptional circumstance, ie the below-jurisdiction settlement sum, should prevail over the reasonable prospect of the plaintiff claim.  I see it suitable to deprive the plaintiff’s entitlement to costs despite he had reasonable prospect to recover more than HK$75,000.  This is to show the court’s strong disapproval for the plaintiff to settle his claim for an amount “fairly-below” or “grossly below” the District Court’s jurisdiction.  I could foresee if the present case is taxed at the District Court scale, the plaintiff’s costs would be disproportionately more than the settlement sum.  It goes against the underlying objectives of the RDC of ‘promoting a sense of reasonable proportion and procedural economy in the conduct of proceedings’: See    O 1A r 1(c) of the RDC. 

34.  For the second reason suggested by the plaintiff, I do accept the plaintiff’s difficulty in pursuing the present case in the SCT in person without the assistance from his legal representatives.  However, I do not see it as a strong justification for the court to order the costs be taxed at the District Court scale.  The design of the SCT is to facilitate of expeditious disposal of small monetary claims, ie below HK$75,000, without legal representatives from parties.  The disallowance of legal representatives in the SCT is to avoid the disproportionate escalation of legal costs in a small monetary claim.  I often see cases of small monetary claims be commenced in the District Court, only for incurred legal costs to be a few times (and sometimes even 10 times) more than the claimed amount.  To allow a claimant to pursue a below-jurisdiction claim in the District Court merely on the ground of his/her lack of literacy would go against the very design of the SCT.  I do not agree with the plaintiff’s submission that it is impossible for him to conduct the litigation in SCT in person.  The plaintiff may seek assistance from other resources such as the Free Legal Advice Scheme of the Duty Lawyer Service if he encountered any difficulty in prosecuting his claim in the STC.

35.  I am of the view that the two reasons suggested by the plaintiff, either each be treated alone or considered together, are insufficient to constitute a “good reason” to override the exceptional circumstances showcased by the defendant, namely the below-jurisdiction settlement sum.

36.  I am satisfied that the defendant has established an exceptional circumstance for the court to invoke the Otherwise Proviso and met the first requirement of the two-stage test in Etratech. (See §15 above)

D.   Prior warning

37.  It is not in dispute that the defendant did not give any warning to the plaintiff that he will ask the court to invoke the “Otherwise Proviso”.

38.  The plaintiff submits that a prior warning is a pre-requisite for the court to invoke the “Otherwise Proviso”.  As the defendant failed to meet the pre-requisite, the court should not invoke the “Otherwise Proviso”.

39.  The defendant argues that failure for the defendant to serve a prior warning would not bar the court from invoking the “Otherwise Proviso”.  The defendant wishes to distinguish Etratech Asia-pacific Ltd v Leader printed Circuit Boards Ltd, supra, from the present case.  She argues the two-stage test provided by the learned judge in that case, as I summarised at §§14-15 above, was not dealing with the argument on costs scale, but what kinds of costs order that the court should make.  

40.  The defendant submits the court retains discretion to invoke the “Otherwise Proviso” once the defendant has established exceptional circumstances despite his failure to serve a prior notice.  The defendant cited the below paragraph, from Wong Chim Hing v Discovery Bay Transit Services Ltd, supra, to support her argument:-

“32. Finally, I would not exercise my discretion against the defendant, either on the ground that the application was not made by the defendant but by the plaintiff; or on the ground that the defendant did not give prior written warning of its intention to ask for taxation of the plaintiff’s costs on the District Court scale…” [emphasis added by the defendant]

41.  I prefer the plaintiff’s submission that a prior warning is a pre-requisite for the court to invoke the Otherwise Proviso.

42.  I do not agree with the defendant’s submission that the two-stage test in Etratech only applies to the variation of costs order, but not costs scale, though I fairly accept that Etratech had not ruled on this issue: See Etratech, at §35.

43.  But this issue was settled in Wong Chim Hing, where the learned judge extended the two-stage test to cases concerning costs scale, at §15:-

“Where the defendant wishes the court to make an order for costs to be taxed on the District Court scale (at a level similar to actions began in the SCT in this case), he should give written warning of his intention to invoke the proviso were the plaintiff to accept the sanctioned payment, and he should give that warning at the time when he serves the notice of sanctioned payment on the plaintiff.”

44.  With respect, the defendant took the Bharwaney J’s judgment out of context with the cited paragraph at §40 above, the defendant failed to notice that the learned judge only ignored the defendant’s failure to serve a prior warning since he was entertaining an appeal from Master by way of a rehearing de novo.  The learned judge had approached the appeal before him ‘without having regard to the decision of Poon J in Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd.’: See Wong Chim Hing, at §29. At the end of the judgment, the learned judge made a further remark to future cases at the same paragraph that the defendant cited:-

“32. …Of course, in future, the practice I have formulated above, following the judgment of Poon J in Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd, ought to be followed” [emphasis added]

45.  With a clear examination of the above authorities, in my judgment, it is more than obvious that a prior warning is a pre-requisite for the court to invoke the Otherwise Proviso to order costs to be taxed at a scale of a lower court.

46.  The principle behind the requirement of prior warning is self-evident. The design of O 22 r20(1) of the RDC is to promote amicable settlement in accordance with the certainty of costs.  As stated at §12 above, the rule allows the plaintiff to consider his exposure or entitlement to costs before accepting the defendant’s sanctioned payment in settling the whole of his claim.  It is not right to allow the defendant to ambush the plaintiff by applying to court for variation of costs scale without any forewarning at/or before the plaintiff’s acceptance to the Sanctioned Payment.  It would violate the plaintiff’s expectation that he was entitled to costs at the District Court scale.

47.  For this sole reason alone, despite the defendant had established exceptional circumstances in my judgment, the court should not depart from the prima facie rule.

CONCLUSION

48.  Based on the reasons above, I direct the costs to be taxed at the District Court scale in the particular circumstances of this case.