ANDREW WILLIAM MAXWELL v. KELISTON MARINE (FAR EAST) LTD (now in liquidation) AND ANOTHER

HCPI 945/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 945 OF 2003

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BETWEEN

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D E C I S I O N

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1.  On 20 January 2012, I handed down my judgment in favour of the plaintiff for damages and interest against the 1^st and 2^nd defendants in these proceedings and I also directed the parties to exchange written submissions on costs. After the exchange of submissions, I heard the parties on the issue of costs on 21 March 2012.

2.  Mr Ashok Sakhrani, counsel for the defendants, sought an order that the defendants pay to the plaintiff the costs of the action up to 4 April 2006, to be taxed on the District Court Scale, if not agreed, and that the plaintiff pays to the defendants the costs of the action incurred thereafter, to be taxed on the High Court Scale, if not agreed. It is common ground that the judgment I gave in favour of the plaintiff for the damages and interest came up to a sum that was just under HK$603,000 and that, for this reason, the plaintiff should be awarded his costs to be taxed on the District Court Scale. 

3.  Mr Sakhrani asked me to depart from the normal rule that costs follow the event by pointing to two payments into court made by the defendants, one in the District Court in the employees’ compensation proceedings brought by the plaintiff which were never pursued to trial, and the other being the payment and increased payment made in the High Court in these proceedings. Although the amount paid into court in these proceedings was less than the judgment sum, the combined amounts of the payments into court in these proceedings and in the employees’ compensation proceedings came to HK$750,000 which was substantially higher than the judgment sum. 

4.  By a notice dated 6 January 2006, given in Employees’ Compensation Proceedings No. DCEC 951/2002, the solicitors for the 1^st and 2^nd respondents, who are the same parties as the 1^st and 2^nd defendants in this proceedings, gave notice that they had jointly paid HK$255,000 into the District Court and that the said sum was inclusive of interest and in satisfaction of all causes of action against the 1^st and 2^nd respondents in respect of the applicant’s claims. 

5.  The relevant payment into court in these proceedings was one made on 4 April 2006.  By a notice of given on that day, the plaintiff was informed that the 1^st and 2^nd defendants had increased the original payment into court, made on 6 January 2006 in the sum of HK$195,000, and had paid the further sum of HK$300,000 into court, and that this total sum of HK$495,000 was inclusive of interest and in satisfaction of all causes of action in respect of which the plaintiff claimed against the 1^st and 2^nd defendants. 

6.  This notice did not expressly state that the 1^st and 2^nd defendants had taken into account the payment into court they had made in the employees’ compensation proceedings. 

7.  I refer to the transitional provision contained in the current Ord. 22, r. 28 of the Rules of the High Court, Cap. 4, (“ RHC”) which states that:

“Where-

(a) a payment into court has been made in accordance with Order 22 (‘the repealed Order’) repealed by rule 111 (‘the repealing rule’) of the Amendment Rules 2008; and

(b) the disposal of the payment is pending immediately before the commencement of the repealing rule (i.e. 2 April 2009),

then nothing in Division 1 of Part 9 of the Amendment Rules 2008 (which contains rule 111 which repeals the old Order 22) applies in relation to that payment, and the repealed Order and all the other provisions amended or repealed by that Division, as in force immediately before the commencement, continue to apply in relation to that payment as if that Division had not been made.”

8.  Since the disposal of the payments into court in these proceedings were pending immediately before 2 April 2009 and, indeed, are remain pending up to now, I must determine this application, which is made by reference to those payments into court, by having regard to the provisions of the repealed Order 22, and not the current Order 22.

9.  The receipt of the notice of 4 April 2006 prompted the plaintiff’s solicitors to write to the solicitors for the 1^st and 2^nd defendants by letter dated 6 April 2006.  In that letter, they acknowledged receipt of the notice of increased payment into court dated 4 April 2006, and they expressed their understanding that the sum of HK$495,000 paid into the High Court, together with the sum of HK$255,000 paid into the District Court in the connected employees’ compensation proceedings “makes a total present offer of HK$750,000”.  They also stated that they would take instructions from their client on the increased offer made by the defendants and, to assist them in doing so, they requested a breakdown of this amount. 

10.  Messrs Deacons responded to this letter, on behalf of the 1^st and 2^nd defendants, by their without prejudice letter dated 10 April 2006 which bore the caption “DCEC 951 of 2002 / HCPI No. 945 of 2003”.  They referred to the plaintiff’s solicitors’ letter dated 6 April 2006 and continued:

“The offer of settlement (by way of payments into court) is made for purely commercial reasons and in an attempt to settle the claims without the necessity of trials. As such, in relation to the common law claim, we have not ‘allocated’ a particular amount to each head of claim. The amount presently paid into court is the maximum amount that our client and the 1^st Defendant are willing to pay to settle the claims.

We consider the offer extremely generous. …

…

We hope that your client will now give serious consideration to accepting the payments into court before further costs are incurred. …If the payments in are not accepted our client will proceed on the basis that both actions are to go to trial.”

11.  It is common ground that this letter was not a Calderbank offer.  In my judgment, the offer made by the 1^st and 2^nd defendants was better than a Calderbank offer in that it contained an invitation to accept money that had been paid into court and which was available for the plaintiff to accept.  The plaintiff could accept the amount paid into the High Court without leave of court provided that the plaintiff accepted that amount within 14 days after receipt of notice of increased payment, pursuant to Ord. 22, r. 3 of the RHC then prevailing.  At the same time, the plaintiff’s solicitors could also have obtained leave of the District Court to accept, out of time, the payment into court made in the employees’ compensation proceedings, even if they did not issue a consent summons signed by all parties for payment out to them of that amount.  To obtain that leave, all they had to do was to accept the settlement offer contained in the without prejudice letter dated 10 April 2006 and to produce the same, together with their letter of acceptance, to the District Court master.

12.  Mr Sakhrani placed reliance on section 54A of the High Court Ordinance, Cap 4, which provides, and provided prior to 2 April 2009:

“(1) Subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of Appeal in its civil jurisdiction and in the Court of First Instance, including the administration of estates and trusts, shall be in the discretion of the Court, and the Court shall have full power to determine by whom and to what extent the costs are to be paid.”

13.  Mr Sakhrani submitted, and I agree, that I enjoy a wide discretion in the award of costs.  As was made clear in the English Court of Appeal decision in Goldsworth v Brickell [1987] 1 Ch 378, the authority of the court over costs is very wide.  The primary principle that governs the exercise of the court’s discretion on the award of costs is that costs should follow the event, except when it appears to the court, in the circumstances of the case, that some other order should be made. This principle arises from Ord. 62, r. 3(2) of the RHC which states:

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings, the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

14.  Ord. 62, r. 3(2) was amended on 2 April 2009 by inclusion of the words “(other than interlocutory proceedings)”.  This amendment was effected to ensure that r. 3(2) no longer applied to interlocutory proceedings, the intention being that “costs to follow the event” should no longer be the usual order in such proceedings, but one of the options available to the court dealing with interlocutory applications.

15.  Where there has been a payment into court, the exercise of the court’s discretion is governed by Ord. 62, r. 5 of the RHC which states:

“5. The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

…

(b)   any payment of money into court and the amount of such payment.”

Although Ord. 62, r. 5 of the RHC was amended on 2 April 2009, the above quoted provision was not altered.    

16.  Somervell LJ in Findlay v Railway Executive [1950] 2 All E.R. 969, at p 971, explained the purpose of this rule as follows:

“The main purpose of the rules for payment into court is the hope that further litigation will be avoided, the plaintiff being encouraged to take out the sum paid in, if it be a reasonable sum, whereas, if he goes on and gets a smaller sum, he will be penalised wholly or to some extent in costs. Once, therefore, the money has been paid in, the lis between the parties is simply this: Is that sum sufficient to cover the damage which has been suffered. Prima facie, therefore, the defendants in the present case are entitled to be paid their costs as from the date of payment in, but, of course, as in other cases, there may be circumstances connected with the case which entitled the judge to make some order other than that of giving the successful litigant his costs.”

Chadwick LJ in Rogan v Waterseal (Waterbar and Sealants) Ltd. (English Court of Appeal, (unreported), 18 March 1999), agreed with the observations of Parker LJ in King v Weston-Howell [1989] 1 WLR 579, at p586E, that the basis of the ordinary order is that, where the plaintiff recovers no more than the payment-in, the defendant is, from the date of payment-in, the successful litigant and thus, in the absence of some sufficient reason to deprive him thereof, entitled to his costs.  Chadwick LJ concluded in that case that once there has been a payment into court, the “event”, for the purposes of the costs following that payment-in, is in the success or failure of the plaintiff in obtaining an order for damages which exceeds the amount paid in.

17.  In King v Weston-Howell, Parker LJ also said at p 588E:

“… Since, when a payment-in exceeds the amount recovered, the defendant has been successful the starting point of the discretion must be that the defendant should have his costs from that date. Other circumstances may justify a departure from the prima facie position …”

18.  Our Court of Appeal in Choy Leung Yiu v Yip Chic Ching [2007] 1 HKLRD 813 approved and followed the decisions in Findley v Railway Executive and King v Weston-Howell holding that, generally, where a party made a payment-in which was not accepted and the amount of damages awarded by the court was lower than the amount of payment-in, the paying party should be awarded costs from the date of the payment-in, and that any departure from this rule had to be justified by the circumstances of the litigation or the manner in which the litigation was conducted.

19.  Chadwick LJ observed in Rogan v Waterseal (Waterbar and Sealants) Ltd. that the decision in King v Weston-Howell was not that a late payment into court, for which no provisions had been made in the rules, may be taken into account by the court in the exercise of its discretion as to costs but that the fact of the payment-in must be taken into account even though the payment-in was made less than 21 days before the commencement of the trial (being the minimum time prescribed by the then UK rule). 

20.  I would not, however, construe Ord. 62, rule 5(1)(b) of the RHC to mean that I must take into account any payment into court made in other proceedings such as, in this case, the employees’ compensation proceedings in the District Court.  For Ord. 62, r. 5(1)(b) to apply, the payment into court must be made in the proceedings in which the court is being asked to exercise its discretion as to costs.  Since the judgment I gave exceeded the sum of HK$495,000 that was paid into court in these High Court proceedings, it cannot be said that the defendants were the successful party in these proceedings.

21.  For the defendants to succeed, they must, therefore, persuade me that the costs in this case should not follow the event but that, in the circumstances of the case, some other order should be made as to be whole or any part of the costs.  The specific circumstance that was drawn to my attention was the payment into court in the employees’ compensation proceedings.  Mr Sakhrani submitted, citing the decisions in Shah Nisar v Wai Kit Engineering Co Ltd and Others, DCEC 1094/2004, 15 December 2005 and Miah Mohammed Tara v. Hyundai-CCECC Joint Venture, DCEC 1068/2005, 22 May 2006, that the defendants would have been in the unenviable position of being without protection as to costs in the employees’ compensation proceedings had they not made a payment into court in those proceedings.  On the other hand, he submitted, the plaintiff would get a windfall if the defendants had paid into court in the High Court proceedings the full amount of the common law claim and also paid an amount into court, in the District Court proceedings, in respect of the employees’ compensation claim, which payments the plaintiff could accept in both proceedings by serving notice of acceptance within the prescribed time without the need to apply for leave of court to do so. 

22.  H H Judge Marlene Ng was right to observe, in Miah Mohammed Tara v. Hyundai-CCECC Joint Venture, that, by not making a payment into court in the employees’ compensation proceedings, the defendants “will be in an unenviable position of being without protection on costs afforded by rule 20 of the Employees’ Compensation Rules and Order 22 of the Rules of the District Court should the applicant demand costs of the employees’ compensation action following the acceptance of the payment into court in the personal injury action and the withdrawal of the employees’ compensation action.”  In Shah Nisar v Wai Kit Engineering Co Ltd and Others, the plaintiff, having obtained judgment in the common law proceedings, sought to withdraw the employees’ compensation proceedings and successfully obtained costs against the respondent who had not made any payment into court in the latter proceedings.  In Gurung Durga Bahadur v. Kam Tai Constrcution Co Ltd. & Anor, DCEC 224/2002, 12 October 2009, the court dismissed the employees’ compensation proceedings on the ground that the common law award of damages, which had been made to the applicant, already covered the awards payable to him by way of employees’ compensation. Although the court awarded the costs of the dismissal application to the respondent, the court, nevertheless, awarded costs of the employees’ compensation proceedings, incurred before the dismissal application, to the applicant.

23.  I agree with the submission that it is appropriate for the court, exercising its discretion as to costs in the common law proceedings, to have regard to the fact and amount of any payment made into court in the employees’ compensation proceedings.  Of course, the respondent can protect himself from the risk of an adverse costs order and from the risk of the applicant obtaining a windfall, by making a “nominal” payment in the employees’ compensation proceedings, and a “full” payment in the common law proceedings, if the former proceedings are held in abeyance pending the determination of the latter proceedings.

24.  Mr Sakhrani also submitted that, although the employees’ compensation proceedings were held in abeyance and only the High Court proceedings were prosecuted, it was, nevertheless, right and necessary for the defendant to make a payment into court in the employees’ compensation proceedings, and for the court to have regard to both payments in the exercise of its discretion as to costs, given the terms of the proviso to section 26(1) of the Employees’ Compensation Ordinance (“ECO”) which provided that:

“…any damages awarded against an employer in an action at common law or under any enactment in respect of any such negligence, breach of statutory duty, wrongful act or admission, shall be reduced by the value, as decided by the Court of First Instance or the District Court, as the case may be, or any compensation which has been paid or is payable under the provisions of this Ordinance in respect of the injury sustained by the employee.”

25.  I agree with this submission.  If the plaintiff had accepted the payment into court in the employees’ compensation proceedings, then the court would be obliged, by the proviso to section 26(1) of the ECO, to deduct, from the award of damages, the amount of the payment into court, that being the proper measure of the compensation.  Since the decisions of the Court of Appeal in Li Kwok Shing v. Law Ka Fu trading as Wing Fai Electrical Engineering & anor, CACV 212/2002, 21 June 2003, and Sun Jiangqiang v. Trans-Island Limousine Service Ltd, CACV 20/2003, 17 November 2003, it is clear that acceptance of the payment into court would bring the proceedings to an end without the need for a court determination.  In these circumstances, the value of the employees’ compensation must be the amount of the payment into court which has been accepted.  Where the amount paid in has not been accepted, as in the present case, and the employees’ compensation proceedings are held in abeyance or have not yet progressed to trial, it is logical for the court to have regard to the amount paid into court in the employees’ compensation proceedings when exercising its discretion to award costs in the common law proceedings.

26.  Mr Sakhrani relied not only on the logic of that proposition but also on the without prejudice letter of 10 April 2006 expressly inviting the plaintiff to accept the payments made in both proceedings to achieve a final resolution.  In my judgment, the court’s view cannot be so blinkered as to cause it to ignore that letter which has a higher status than a Calderbank offer in that it did not contain an offer to pay money but an invitation to accept moneys already paid into court.

27.  Mr Victor Gidwani, who appeared for the plaintiff, submitted that the notice of payment-in of 4 April 2004 was defective in that it did not state that the amount paid into the High Court took into account the amount paid into court in the employees’ compensation proceedings, which was a requirement under Ord. 22, r. 8(2)(c) of the current Order 22.  The latter provision states that the notice of sanctioned payment must state “whether it takes into account any counterclaim or set-off’”. Although provision was made in the repealed Order 22 for counterclaims to be mentioned in the notice of payment into court, there was no specific provision for “set-offs” to be mentioned. Even so, it was the practice, as evidenced by the notice of payment-in served on the applicant in Miah Mohammed Tara v. Hyundai-CCECC Joint Venture, to do so and to mention, in the notice of payment-in, that the payment into court in the common law proceedings took into account the amount paid into court in the employees’ compensation proceedings.

28.  I do not accept this submission.  In the case of interim payments, Ord 29, r. 16 of the RHC, which was not amended on 2 April 2009, stipulates that the notice should state that the defendant paying money into court has taken into account any interim payment.  In Prudential Mall Ltd. v. P H Shek Ltd & Anor. [1993] 1 HKLR 195, the Privy Council had to consider the effect of Ord 29, r. 16 of the RHC and held that a defendant who made a successful payment into court but who did not comply with the rules ran the risk of being deprived of costs if there were reasonable grounds for a plaintiff being misled by the omission to mention the interim payment.  However, the Privy Council went on to hold that a failure to mention the interim payment might be regarded as an irregularity which did not render the notice invalid if, on a proper construction of the notice, the court concluded that the defendant intended that an interim payment should be taken into account.  By the same token, and given the letters of 6 and 10 April 2006, there was no possibility of the plaintiff being misled by the omission to mention, in the notice of payment-in, that the payment into court in the common law proceedings took into account the amount paid into court in the employees’ compensation proceedings.  It was obvious to the plaintiff, as expressly acknowledged by his solicitors, that it was the intention of the defendants to pay the sum of HK$495,000 in satisfaction of the common law claim after taking into account the amount paid into court in the employees’ compensation proceedings.

29.  Mr Gidwani made the further and somewhat startling submission that the employees’ compensation proceedings were still afoot and that the applicant could pursue those proceedings to obtain an award in excess of the combined amount of HK$750,000 paid into court in the two proceedings.  He could not, however, substantiate his assertion. 

30.  In Gurung Durga Bahadur v. Kam Tai Construction Co Ltd. & Anor, DCEC 224/2002, 12 October 2009, the court dismissed the employees’ compensation proceedings on the ground that the common law award of damages, which had been made to the applicant, already covered the awards payable to him by way of employees’ compensation.  HH Judge Chow assessed the employees’ compensation claims and offset them against the corresponding common law awards for pre-trial and future loss of earnings. He also offset the claim, under section 10A of the ECO, for expenses relating to medical treatment against the common law award of special damages for pre-trial medical expenses.  I do not agree with his approach.  The proviso to section 26(1) of the ECO stipulates that “any” damages awarded against an employer in an action at common law shall be reduced by the value, as decided by the Court of First Instance or the District Court, as the case may be, of any compensation which has been paid or is payable under the provisions of the ECO.  Even if the only award in common law proceedings is the award of damages for PSLA, that award must be reduced by the amount of any compensation which has been paid or is payable.  This is consistent with the nature and purpose of the legislation, having its origins in the Workmen’s Compensation Act of 1897 that was described as the “pioneer of social security”, to provide “no fault” compensation in cases where common law damages would not be awarded.  The statutory award of employees’ compensation was not to be additional to any award of common law damages.  In cases where common law damages are awarded, that award must be reduced by the amount of compensation paid or payable under the ECO.  

31.  Therefore, in order to succeed on this submission, Mr Gidwani must demonstrate that the plaintiff can overcome any obstacle posed by the doctrine of issue estoppel and that he can obtain an award of employees’ compensation in excess of HK$750,000.  He has failed to do so.  There may be cases, such as cases where there is a high degree of contributory negligence, where the entitlement to employees’ compensation is higher than the entitlement to common law damages such that the application of the proviso to section 26(1) extinguishes entirely the common law award.  However, in the present case, the proper assessment of employees’ compensation, given my findings, is likely to produce an amount that is less than my award of damages.

32.  Very often the employees’ compensation proceedings are held in abeyance, pending the common law claim, to be revived in case the common law claim fails on the issue of liability.  I would observe that the proper course to take in such cases, where the employees’ compensation proceedings are held in abeyance pending the determination of the common law claim, is to mention that fact in the Statement of Damages and to state that the employees’ compensation proceedings would be discontinued in the event that damages are awarded to the plaintiff. This would avoid the need for a further contested application in the employees’ compensation proceedings.  Indeed, I question the jurisdictional basis of the District Court “dismissing” an employees’ compensation application for the reason that an award of damages has been made by another court.  The proviso to section 26(1) directs the court to reduce the award of common law damages by the value of the employees’ compensation paid or payable under the ECO.  It does not empower the employees’ compensation court to do the reserve, i.e. to reduce the amount of compensation by the amount of common law damages that was awarded.

33.  There may be cases where the plaintiff may still wish to pursue his employees’ compensation claim after the award of common law damages, for example, in cases where there is a concern that the court may assess a high degree of contributory negligence on the part of the plaintiff.  In such cases, the parties should first proceed with the employees’ compensation claim and the further prosecution of any common law claim should depend on and await the determination of the employees’ compensation proceedings.  Where the court, for good reason and in the exercise of its case management powers, permits the common law claim to proceed first and the plaintiff is unwilling to state, in his Statement of Damages, that he would discontinue the employees’ compensation proceedings in the event that he succeeds in the common law claim, then he must give particulars of his employees’ compensation claim in the Statement of Damages and request the court dealing with the common law claim to assess the value of the employees’ compensation claim that has not yet been determined by an employees’ compensation court, and to deduct that value from the award of common law damages, as required by the proviso to section 26(1) of the ECO. 

34.  Another point taken by Mr Gidwani was that I should make a separate award of costs in respect of the costs incurred on the issue of liability and to award those costs to the plaintiff.  Whilst the court may be more inclined to do so after the Civil Justice Reform, particularly in cases where the defence on liability is extremely tenuous, and I hasten to add that the present case is clearly not such a case, I intend to follow the practice prevailing before 2 April 2009, as reflected in the judgment of Sellers LJ in Hultquist v Universal Pattern and Precision Engineering Co. Ltd.[1960] 2 Q.B. 467 at pp 481-2:

“In my experience also it is very rarely that a plaintiff in such an action as this and in similar circumstances is awarded the costs of the issue of liability. It is a matter in the discretion of the trial judge and, whichever way he might exercise it, this court would not intervene except in special circumstances …

The action of tort consists of wrongdoing and damage resulting therefrom …; and the plaintiff must prove both to obtain a judgment. On the face of it, there can be no complaint and no ground for an order for costs of the issue of liability because the plaintiff has been called on to prove a case to establish his right to damages and has failed to get more than the amount in court. A payment into court is an offer to dispose of the action and, if accepted, prevents all further costs. A plaintiff who continues an action after a payment-in takes a risk and cannot normally complain if he has to pay all the costs which his acceptance of the offer would have avoided.

… Counsel for the appellant relied on a number of cases cited in the White Book …, and submitted that the plaintiff was entitled to the costs of the issue on which he had succeeded. Those cases must be treated as relying on their special facts. I do not think they can be regarded at the present time as authorities which require a judge to grant such costs, or which require this court to intervene if he fails to do so.”

I decline to make a separate award of costs in respect of the costs incurred on the issue of liability.

35.  I am persuaded that I should exercise my discretion in this case by ordering the plaintiff to pay the costs of the action after 4 April 2006.  As explained by Chadwick LJ in Rogan v Waterseal (Waterbar and Sealants) Ltd., the main purpose of the provision for payment into court is to encourage the plaintiff to compromise the proceedings by accepting the payment.  If the plaintiff unreasonably refuses to accept the payment-in and persists in his claim and the court assesses damages in a sum less than the amount paid into court then the court should penalise him and make him bear the costs that have been incurred as a result of his unreasonable persistence.  Although the plaintiff here was the successful party in that he was able to beat the payment-in made in these proceedings, for the same reason that he unreasonably refused to accept the payments into court that were made in the employees’ compensation and common law proceedings, I conclude that some other order as to costs should be made instead of the usual order that costs follow the event.

36.  If the defendants had not paid any money into court, I would have been attracted by the submission of Mr Sakhrani that I should disallow a substantial part of the plaintiff’s costs on the ground that he had brought grossly inflated claims in these proceedings, in which the plaintiff had claimed HK$17m in his Revised Statement of Damages and I had only awarded HKS$603,000.  On 6 October 2001, Suffiad J stated in Lam Wai Chun v. Tam Chi Wai HCPI 1352/2000 that:

“In the light of the amount of damages assessed in this case [$336,238], I would like to say that the claim by this plaintiff is put at over $2.8 million. It may be thought by some plaintiffs or even their legal advisers that by inflating the claim put forward they may, at the end of the day, be awarded a higher quantum by the courts due to that inflated claim. The sooner that myth is dispelled the better it is for all concerned. Claims in these courts are determined not on sympathy but on their merits and on the evidence. It is certainly not determined by the amount initially claimed by the plaintiff if that is an inflated amount nor, for that matter, by the Answer of defendants if they should try to swing it to the other extreme unreasonably.”

I have echoed these sentiments in the course of numerous case management conferences and pre-trial reviews and I have given notice that a plaintiff making a grossly inflated claim may expect an adverse costs order even if there is no sanctioned payment or even if he beats a sanctioned payment.  However, given my conclusions in the present case, I need not make an adverse costs order against the plaintiff on the ground that he has wasted costs by making a grossly inflated claim.

37.  A defendant faced with a similar situation today and who wishes to protect himself on costs would be well advised either to make a “nominal” sanctioned payment in the employees’ compensation proceedings and a “full” sanctioned payment in the common law proceedings or to split the total payment-in between the two proceedings, as was done in the present case, and, in either case, to make an additional sanctioned offer in both proceedings that the plaintiff/applicant is invited to accept both payments in full and final satisfaction of the employees’ compensation and common law claims.    

38.  Given my conclusions, I need not deal with the alternative order sought by the parties, on which there is much common ground, that the defendants pay to the plaintiff the costs of the action up to 12 August 2011 (the date of the latest sanctioned payment), to be taxed on the District Court Scale, if not agreed, and that the plaintiff pays to the defendants the costs of the action incurred thereafter, to be taxed on the High Court Scale, if not agreed.

39.  For these reasons, I order the defendants to pay to the plaintiff the costs of the action up to 4 April 2006, to be taxed on the District Court Scale, if not agreed, and the plaintiff to pay to the defendants the costs of the action incurred thereafter, including the costs of the hearing on 21 March 2012, to be taxed on the High Court Scale, if not agreed.  I give the parties liberty to apply for payment out of the amounts paid into court in the High Court proceedings.  The parties will, no doubt, make separate application in the employees’ compensation proceedings for payment out of the amount paid into the District Court.