KANG CHI KEUNG v. LAI YAU KAI, JUDY AND OTHERS

DCPI 2310/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 2310 OF 2013

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DECISION ON COSTS

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1.  Before me are two summonses for variation of costs orders nisi made in the judgment handed down on 13 October 2015 (the “Judgment”) taken out respectively by the 1^st and 2^nd defendants and the 3^rd defendant.

2.  By way of background, after trial, I found in favour of the plaintiff in his claim against all three defendants.  The liability was to be borne equally by the 1^st and 2^nd defendants on one hand and the 3^rd defendant on the other hand. In the contribution proceedings commenced by the 3^rd defendant against the 1^st and 2^nd defendants, I ordered the 1^st and 2^nd defendants to make 50% contribution to the 3^rd defendant in respect of the total sum of $238,390.25 being the employees’ compensation and costs paid to the plaintiff before this action.  An order nisi was made in the main action that the defendants shall pay the plaintiff’s costs to be taxed if not agreed.

3.  The 1^st and 2^nd defendants applied to vary the costs order nisi and argued that the plaintiff shall pay their costs of the proceedings, alternatively there shall be no order as to costs of the proceedings.

4.  The 3^rd defendant, by its Summons (as amended), asked for orders that the 1^st and 2^nd defendants shall pay the following costs with certificate for counsel:-

(1) the costs that the 3^rd defendant is liable to pay the plaintiff on an indemnity basis;

(2) the 3^rd defendant’s own costs in defending the plaintiff’s claim on a party and party basis;

(3) the 3^rd defendant’s costs in the contribution proceedings up to 31 March 2015 on a party and party basis;

(4) the 3^rd defendant’s costs in the contribution proceedings from 1April 2015 on an indemnity basis;

(5) the 3^rd defendant’s costs in this application on an indemnity basis.

The legal principles

5.  The court has a wide discretion on the decision of costs (Section 53 of the District Court Ordinance). 

6.  Order 62 rule 5 of the Rules of District Court sets out the following special matters that this court shall take into account:-

“(aa) the underlying objectives set out in Order 1A, rule 1;

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

…..

(c) any written offer made under Order 33, rule 4A(2);

(d) any written offer which is expressed to be "without prejudice save as to costs" and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g) any admissible offer to settle made by a party, which is drawn to the Court's attention.”

7.  The conduct of the parties referred to in Order 62 rule 5(1)(e) include:-

“(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

8.  It is trite that costs generally follow the event. (Re Elgindata Ltd (No 2) [1992] 1 WLR 1207; Order 62 rule 3(2) of Rules of District Court) The discretion to depart from the general rule shall be approached with due circumspection. (Commissioner of Inland Revenue v HIT Finance Ltd (No 2), [2014] 4 HKLRD 412; Kinetics Medical and Health Group Company Limited v Dr Tse Ivan Cheong Yau, unreported, HCA 1115 of 2010, 7 April 2014)

9.  In Kwan Siu Wa Becky v Cathay Pacific Airways Limited, unreported, CACV 92 of 2010, 19 April 2011, Tang Ag CJHC (as the learned PJ then was) adopted the approach succinctly summarized by Nourse LJ in Re Elgindata, supra, as follows:-

“The principles are these (i) Costs are in the discretion of the court. (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.”

10.  The Court of Appeal also quoted with approval the following passage of Lord Carswell in Seepersad v Persad [2004] UKPC 19:-

“The general rule which should be observed unless there is sufficient reason to the contrary is that costs will follow the event.  Where the party who has been successful overall has failed on one or more issues, particularly where consideration of those issues has occupied a material amount of hearing time or otherwise led to the incurring of significant expenses, the court may in its discretion order a reduction in the award of costs to him, either by a separate assessment of costs attributable to that issue or, as is now preferred, making a percentage reduction in the award of costs …  The Court of Appeal’s order was predicated upon the proposition that the assessment of damages for pain and suffering and loss of amenity was a separate issue from the assessment of the other heads of damages.  This was an incorrect assumption.  An issue for these purposes must be something so distinct and separate in itself that the decision of it constitutes as (sic) “event”. … ”

The 1^st and 2^nd defendants’ summons

11.  Mr Kim, counsel for the 1^st and 2^nd defendants, argued that the ultimate net award to the plaintiff was $2,909.79 after giving credit to the amount of employees’ compensation paid to him in the sum of $148,095.25 before trial.  This award, he contended, is a nominal amount and is far below the amount of $742,165.03 claimed by the plaintiff in the Revised Statement of Damages.  Mr Kim contended that the court should exercise the discretion and award costs in favour of the 1^st and 2^nd defendants.

12.  Mr Kim contended that the net award was a nominal sum because it was a small amount and it represented a very small percentage of the total amount claimed.  Mr Kim did not refer to any authority to support this contention. Neither has the plaintiff referred to any authority on this point.

13.  Before the hearing, I drew to the attention of counsel the case of Yeung Ping Hung trading as Alfred Yeung & Co v Ha Chiu Ping, unreported, HCA 4370 of 2003, 21 July 2006.  I have given them a copy of the judgment and invited them to make submission on the same.

14.  In Yeung Ping Hung, the Court applied the case of Mediana [1900] AC 113 and held that:-

“Even a small amount does not cease to be a sum of substance and becomes a nominal sum by reason only of its being small in absolute term or insignificant in relative term.”

15.  In Mediana, supra, the English court has held that:-

“Nominal damages is awarded when the plaintiff or the claimant cannot prove any actual damages at all.”

16.  Mr Kim did not make any submission that Yeung Ping Hung should not be followed or that the learned judge’s explanation of the meaning of “nominal sum” is incorrect.

17.  He cited Islam v Ali [2003] EWCA Civ 612 and contended that due to the disparity between the amount claimed and the relatively small sum awarded to the plaintiff, the defendant was to be regarded the winner and the appropriate order was that no order as to costs was to be made.

18.  It is an over-simplistic view to approach the issue of costs only by comparing the amount claimed and the amount eventually awarded.  That was not the approach adopted in Islam v Ali, supra.  In that case, the court has considered a number of factors, including how the parties have pitched and pursued their cases, the issues that the judge found against one party and the issues found against the other party, as well as the settlement offers that the respective parties have made before trial.

19.  Mr Kim also relied on Fong Po Shan Eunice & Anor v Chung Wing Cheung Vincent, unreported, DCCJ 4063 of 2009, 26 January 2011.  Such reliance was entirely misplaced.  In that case, the defendants were awarded costs despite they were ordered to pay damages to the plaintiff, for the reason not because the amount of damages was small, but because the defendants have admitted the liability to pay $50,000 as damages pursuant to Order 13A rule 6(2) and the plaintiffs have failed to obtain a higher award than the admitted sum. The defendants therefore recovered from the plaintiffs the costs incurred after the notice of admission.  The case of Fong Po Shan is clearly different from the present case.

20.  Mr Kim next contended that the plaintiff has over-estimated the claims in the Revised Statement of Damages.

21.  I agree that the plaintiff’s legal adviser should be more realistic in advising the plaintiff’s claim.  Due regard should be given to the underlying objective of the rules of the court, including the promotion of a sense of reasonable proportion and procedural economy in the conduct of the proceedings, and ensuring fairness between the parties.  These should be the duties of all legal representatives, including those acting for the 1^st and 2^nd defendants.

22.  Taking into account the circumstances of the case and without benefit of hindsight, I do not consider that the plaintiff was unreasonable in pursuing the claim despite he has already received the employees’ compensation. 

23.  The net amount of damages awarded in the present case, albeit is a small sum, is not nominal.  Much of the time spent at trial was on the issue of the liability that the 1^st and 2^nd defendants have disputed throughout and failed.  I have rejected the evidence of the 1^st and 2^nd defendants as not truthful and contradictory to each other.  The issue on quantum that the plaintiff has failed in part did not significantly increase the costs or prolong the time of the proceedings.

24.  I dismiss the 1^st and 2^nd defendants’ summons and order that they should pay the plaintiff’s costs in this summons on a party and party basis to be taxed if not agreed, and with certificate for counsel. The plaintiff’s own costs to be taxed in accordance with the Legal Aid Regulations.

The 3^rd defendant’s summons

25.  The 3^rd defendant argued that as between it and the 1^st and 2^nd defendants, the 3^rd defendant should be considered the successful party.  The amount of employees’ compensation and costs paid by the 3^rd defendant before the commencement of this action exceeded the share of damages that the 3^rd defendant was liable to pay.  The 3^rd defendant also relied on the settlement offers it had made before trial but not accepted by the 1^st and 2^nd defendants.

26.  I was informed that before trial, the 3^rd defendant had made several offers to the 1^st and 2^nd defendants.  On 8 September 2014, the 3^rd defendant offered not to claim against the 1^st and 2^nd defendants the amount of employees’ compensation and costs paid on condition that the 1^st and 2^nd defendants were to bear the plaintiff’s claim in this action.  This was not accepted by the 1^st and 2^nd defendants. 

27.  In mid-March 2015, the 3^rd defendant commenced another round of without prejudice correspondences with the 1^st and 2^nd defendants. On 31 March 2015, the 3^rd defendant made an offer pursuant to Order 16 rule 10 of the Rules of District Court on the terms that the 3^rd defendant was to contribute 50% to the plaintiff’s damages and costs in the action, and to claim 50% contribution from the 1^st and 2^nd defendants in respect of the employees’ compensation and costs paid to the plaintiff (“the Offer”).

28.  The 1^st and 2^nd defendants did not respond to the Offer.  On 9 April 2015, the 3^rd defendant sent a chaser and put the 1^st and 2^nd defendants on notice that it would deliver brief to counsel if there was no reply on the following day.  As it transpired, the parties proceeded to trial.

29.  The 1^st and 2^nd defendants contended that the timing of the Offer made on 31 March 2015 was too close to the trial commenced on 20 April 2015.  They further contended that even if the 1^st and 2^nd defendants accepted the Offer, it would not have changed anything as between the 1^st and 2^nd defendants and the 3^rd defendant. 

30.  These are not valid reasons to reject the Offer without having the risk on costs.  The Offer was made 20 days before the commencement of the trial.  The timing itself is not a good reason to reject the Offer. Secondly, it is wrong to say that nothing would have changed as between the defendants if the Offer was accepted.  At least, the costs of the 3^rd defendant in the trial could be reduced or even saved.

31.  I also note that the 3^rd defendant had not made any settlement offer to the plaintiff. At trial, the 3^rd defendant disputed its liability against the plaintiff entirely and failed.

32.  Having regard to all the circumstances of the case, I order that the 1^st and 2^nd defendants shall pay the 3^rd defendant (1) the amount of the costs that the 3^rd defendant has paid to the plaintiff in this action pursuant to the Judgment; (2) the 3^rd defendant’s own costs in defending the plaintiff’s claim from 31 March 2015; (3) the 3^rd defendant’s costs in the contribution proceedings; and (4) the 3^rd defendant’s costs in this application.  Items (2) to (4) above shall be on a party and party basis, to be taxed if not agreed, with certificate for counsel.