CHEUNG MAN KOK v. CHAN YEE LING ELAINE

CAMP 18/2021

[2021] HKCA 455

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 18 OF 2021

(ON AN INTENDED APPEAL FROM DCPI 1665/2011)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

Background

1.  This is the Defendant’s renewed application for leave to appeal against a decision on costs of Deputy District Court Judge Kam K L Cheung (“the Judge”) on 20 March 2019. 

2.  The action arose out of a scuffle between two solicitors that happened at the office of Christine M Koo & Yip on 30 July 2011.  The 2^nd Plaintiff alleged that she was assaulted, or alternatively, injured by the Defendant.  In turn, the Defendant alleged that she was assaulted and falsely imprisoned by the 2^nd Plaintiff. 

3.  On 17 August 2016, in his written judgment, the Judge dismissed the 2^nd Plaintiff’s claim and the Defendant’s counterclaim. The Judge made a costs order nisi that there would be no order as to costs. 

4.  On 29 and 31 August 2016, the 2^nd Plaintiff and Defendant took out a summons respectively to vary the costs order nisi.  Those applications were heard on 19 October 2016.

5.  On 20 March 2019, the Judge gave his written decision on costs (“the Costs Decision”). In view of the Plaintiff’s sanctioned payment in the sum of HK$50,000 on 29 October 2014 (the “Sanctioned Payment”), the Judge awarded costs to the 2^nd Plaintiff as from 26 November 2014 in accordance with Order 22 Rule 23 of the Rules of the District Court (Cap 336H) since the Defendant did not do better than the Sanctioned Payment. 

6.  The Judge made the following costs order:

(a)  The costs of these proceedings, including any reserved costs, incurred by the 2^nd Plaintiff from 26 November 2014 be paid by the Defendant to the 2^nd Plaintiff, to be taxed on an indemnity basis if not agreed with certificate for one counsel;

(b)  Interest on those costs above to be at 2% above judgment rate; and

(c)  Costs of the 2^nd Plaintiff’s summons and the Defendant’s summons (including costs of the hearing) be to the 2^nd Plaintiff with certificate for counsel.

(“the Costs Order”)

7.  The Defendant sought leave from the Judge to appeal against the Costs Order. 

8.  On 30 December 2020, the Judge dismissed the Defendant’s application for leave to appeal with costs to the 2^nd Plaintiff with certificate for counsel (“the Leave Decision”).

9.  On 13 January 2021, the Defendant took out the present renewed application seeking this Court’s leave to appeal against the Costs Order.  

10.  As set out in para 8 of the Defendant’s statement of 2 February 2021, her intended grounds of appeal can be grouped into two main heads:

(a)  The Judge erred in finding that the Sanctioned Payment was valid; and

(b)  Even if the Sanctioned Payment were valid, the Judge did not exercise his discretion to consider if it would be unjust to make the Costs Order.

11.  There is a dispute as to whether the Defendant had disputed that the Sanction Payment was validly made. According to the Judge, there had not been any serious challenge on that when costs were argued before him, see [19] of the Costs Decision. Be that as it may, the Judge considered such challenge in the application for leave to appeal and addressed the same at [7] to [14] of the Leave Decision. 

12.  Similar arguments are advanced before us. With respect, we cannot see any merit in the contention that the 2^nd Plaintiff could not make a sanctioned payment. The Judge had given adequate reasons for rejecting the argument. In addition, one only needs to refer to the definitions for “claim”, “plaintiff” and “defendant” in Order 22 Rule 1(1) to dismiss such contention.

13.  There is no merit in the attempt to challenge the validity of the Sanctioned Payment.

14.  The Defendant refers to the history of the litigation and contends that it was unjust to visit her with the consequences set out in Order 22 Rule 23.

15.  In Antwerp Diamond Bank NV v Brink’s Incorporated (No 2) [2015] 4 HKLRD 628, this Court considered it difficult to find a costs order was unjust simply because a sanctioned payment or offer was made with a very small discount. Such an offer can serve the purpose of starting the negotiation process. 

16.  In Or Siu Lung v Fu Hong Home for the Elderly [2018] HKCA 44, this Court had this to say with regard to what is unjust in the context of Order 22 Rule 23:

“ 20.  … In some of the authorities cited to us (and as in the present case), judges reduced the question to whether the plaintiff demonstrated there were special circumstances to justify departure from the normal rule.  With respect, in light of the provision in Rule 23(5), it is better to examine the issue by asking if it would be unjust to apply the normal costs consequences in the facts and circumstances of the case.

21. Further, in considering that question, one must have regard to the underlying purpose for the sanctioned payment regime in Order 22.  The underlying purpose of the regime is to encourage settlement and to discourage unnecessary litigation.  It is therefore normally consistent with such purpose that, having rejected a sanctioned payment, a party who fails to achieve a better outcome should pay for the costs incurred after the sanctioned payment.  However, there are situations where such rationale is not applicable and the imposition of the normal costs consequences may become unjust.  Flexibility is therefore built into the regime under Rule 23(5) and (6).  As Arden LJ observed in SG v Hewitt, supra, at [76], the power of the court to order otherwise is a deliberate and important safety valve.

22. A classic situation where the normal rule should not apply is the withholding of information relevant to the assessment as to the acceptability of the payment, see the Final Report on the Civil Justice Reform at para 305 citing Ford v GKR Construction Ltd (Practice Note) [2000] 1 WLR 1397 at 1403; Wong Ching Wan v AS Watson & Co Ltd [2007]4 HKLRD 362 at [40] citing the judgment of Chadwick LJ in the unreported English case of Jones v Jones 13 October 1999.

23. In Jones v Jones 13 October 1999, Chadwick LJ shed some light on the process of reassessment of risk regarding a sanctioned payment:

‘ If the plaintiff decides not to accept the payment in within the 21-day period, then he cannot accept it without leave. But it is always open to him to reassess the risk in the light of anything which subsequently emerges in the course of the proceedings …If, on a reassessment of the risk, the plaintiff decides that it would be in his interest to accept the payment-in, then, he or she can apply to the court for an order that it be paid out. In deciding what order to make on such an application, the Court can take into account what costs the defendant has occurred since the date of the payment in: costs which, if the plaintiff had accepted the payment in within the period limited by the rules, would not have been incurred.

The Court may also take into account the circumstances which have given rise to the plaintiff’s change of mind.  In particular, if the court were satisfied that that change of mind - arising from a reassessment of the risk in the light of new material - was attributable to the defendant’s failure to produce that material at an earlier date … it may take the view that the plaintiff should not be required to bear all or some part of any intervening costs….’  

24. We would add these observations.  First, a party may change his mind not because of new information calling for reassessment of risk.  It may due to a change in the person in charge of a corporate plaintiff.  It may due to change of legal advisor who takes a different view of the case.  Plainly, change of mind in such circumstances could not normally, without more, be a ground for the disapplication of the normal costs rule.

25. Second, reassessment of risk arising from change of circumstances can be manifold.  Unavailability of a material witness, the change in the law brought about by new authorities from a higher court, unfavourable opinion in an expert report are some such examples.  All these could be unforeseen by a plaintiff but, consistent with the spirit of the sanctioned offer regime, it is unlikely that any of these contingencies in litigation can constitute injustice in the application of the normal costs rule.  In Matthews v Metal Improvements Co Inc, supra, it was held that on the facts of that case the change in the life expectancy of a plaintiff due to illness was a contingency which, coupled with the inadequate response of the plaintiff to a Part 36 offer, did not render it unjust to follow the normal costs rule.  

26. Third, as illustrated by the facts of SG v Hewitt, supra, there are cases where the court may find it unjust to impose the normal costs rule notwithstanding that the defendant did not withhold any material information.  The injustice in that case was pinpointed by Black LJ at [71] (see also Arden LJ at [77] and Pill LJ at [90] and [94]).  That was a case where by the evolving nature of the injury the plaintiff could not have made a proper assessment of the acceptability of the Part 36 offer.”  

17.  In the present application, the Defendant relies on the matters set out at para 9 of the Defendant’s statement of 2 February 2021 to contend that the Costs Order is unjust.

18.  Those matters relate to the history of the litigation and settlement offers. There is nothing to suggest that the Defendant was handicapped in her assessment of risk and her claim during the course of the litigation. Whilst there had been offers from the Defendant which were not accepted by the 2^nd Plaintiff, none of those offers could be relied upon as the 2^nd Plaintiff did achieve a better result (from her point of view) than those offers. There is nothing to suggest that the Defendant had been misled or ill-informed in her response to the Sanctioned Payment: see Order 22 Rule 23(5). We do not find any reasonably arguable basis for holding that it is unjust to visit the Defendant with the consequences in accordance with Order 22 Rule 23.

19.  Since the matter is governed by Order 22 Rule 23, the citation of Ritter v Godfrey [1920] 2 KB 4 (which should now be read with qualification as discussed in Lo Yuk Sui v. Fubon Bank (Hong Kong) Ltd formerly known as International Bank of Asia Ltd [2019] HKCA 1345 at [12] to [17]) is of no assistance to the Defendant.  

20.  The challenge based on injustice also has no merit.

21.  The intended appeal has no reasonable prospect of success. Nor do we see any other ground in the interest of justice for leave to be granted.

22.  For all the reasons above, we refuse to grant leave and dismiss the Defendant’s application.

23.  Costs should follow the event.  After considering the Statement of Costs dated 17 February 2021 (in which the 2^nd Plaintiff asked for $75,260), we fix such costs by way of gross sum assessment at HK$60,000 (which include costs incurred after 17 February 2021 up to the date of this decision).  

24.  As the application is totally without permit, pursuant to Order 59 Rule 2A(8) of the Rules of the High Court (Cap 4A), we further order that no party may request our determination herein be reconsidered at an oral hearing inter partes.