SHRESTHA DENIKA v. PIZZAEXPRESS (HONG KONG) LTD

DCPI 1661/2021

[2023] HKDC 1677

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 1661 OF 2021

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DECISION ON COSTS

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1.  I refer to my Judgment handed down on 3 November 2023. For the reasons set out therein, I assessed damages at HK$40,355.50 (the “Judgment Sum”) plus pre-judgment interest at the rate of 2% per annum from the date of the Writ. I also made a costs order nisi that the Defendant pay the costs of this action from 14 January 2022 onwards to the Plaintiff on a party and party basis, to be taxed if not agreed (the “Costs Order Nisi”).

2.  By a Summons dated 16 November 2023 (the “Summons”):

2.1.  The Defendant applies to vary the Costs Order Nisi to the extent that:

(a)  The Plaintiff do pay the Defendant’s costs of the action on quantum from 10 December 2021 onwards, including all costs reserved, on an indemnity basis with certificate for counsel, to be taxed if not agreed (§1(i) of the Summons); and

(b)  The Plaintiff do pay the Defendant interest on the disbursements from 10 December 2021 to 3 November 2023 at judgment rate plus 1% per annum for the aforementioned period, and thereafter at judgment rate until full payment of the same (§1(ii) of the Summons).

2.2.  The Defendant applies for the interest on the Judgment Sum ordered in §60 of the Judgment on or after 10 December 2021 to be disallowed (§2 of the Summons).

2.3.  The Defendant also applies for a sum of HK$159,226.57, being part of the sanctioned payment made by the Defendant on 11 November 2021 together with the interest accrued thereon (if any), to be paid out of Court to the Defendant forthwith through its solicitors, Messrs. Zhong Lun Law Firm LLP (§3 of the Summons).

3.  Essentially the Defendant relies on its sanctioned payment made on 11 November 2021. On 11 November 2021, the Defendant filed a Notice of Sanctioned Payment and made a sanctioned payment of Hk$200,000 on top of the sum of HK$400,000 already paid to the Plaintiff (the “Sanctioned Payment”), and the last day which the Plaintiff could have accepted the Sanctioned Payment without leave was 9 December 2021. The Sanctioned Payment exceeds the Judgment Sum plus interest.

4.  The Plaintiff did not attend the hearing of the Defendant’s Summons on 23 November 2023. However, having perused the 2^nd Affirmation of Service of Cheung Ka Ho dated 21 November 2023, I am satisfied that the Plaintiff has been duly served with the Summons and the other relevant papers for this hearing, and has been duly notified of this hearing.

A.  DISCUSSION

A1.  Variation of the Costs Order Nisi

5.  Order 22 rule 23 of the RDC provides as follows:

“(1) This rule applies where a plaintiff –

(a) fails to obtain a judgment better than the sanctioned payment; or

…

(2) The court may by order disallow all or part of any interest otherwise payable under section 48 of the Ordinance on the whole or part of any sum of money awarded to the plaintiff for some or all of the period after the latest date on which the payment or offer could have been accepted without requiring the leave of the court.

(3) The Court may order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without requiring the leave of the Court.

(4) The Court may also order that the defendant is entitled to –

(a) his costs on the indemnity basis after the latest date on which the plaintiff could have accepted the payment or offer without requiring the leave of the Court; and

(b) interest on the costs referred to in paragraph (3) or subparagraph (a) at a rate not exceeding 10% above judgment rate.

(5) Where this rule applies, the Court shall make the orders referred to in paragraphs (2), (3) and (4) unless it considers it unjust to do so.

(6) In considering whether it would be unjust to make the orders referred to in paragraphs (2), (3) and (4), the Court shall take into account all the circumstances of the case including—

(a) the terms of any sanctioned payment or sanctioned offer;

(b) the stage in the proceedings at which any sanctioned payment or sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned payment or sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the payment or offer to be made or evaluated.

(7) The power of the Court under this rule is in addition to any other power it may have to award or disallow interest.”

6.  The Plaintiff has failed to obtain a judgment which is better than the Sanctioned Payment. Thus, Order 22 rule 23 is applicable. As stated in Order 22 rule 23(5), the Court shall make the orders in Order 22 rules 23(3) and (4) of the RDC unless it considers it unjust to do so.

7.  I agree with Mr Ho that there are no particular reasons in the present case which make it unjust to make orders in Order 22 rules 23(3) and (4) to order: (1) that the Plaintiff pay the Defendant’s costs on an indemnity basis, with certificate for counsel, to be taxed if not agreed, from 10 December 2021 onwards; and (2) that the Plaintiff pay the Defendant’s costs of the action from 10 December 2021 onwards at an enhanced interest rate.

8.  Thus, I make an order in terms of §1(i) of the Summons, and order that the Plaintiff pay the Defendant’s costs of the action on quantum from 10 December 2021 onwards (including all costs reserved) on an indemnity basis, with certificate for counsel, to be taxed if not agreed.

9.  As to enhanced interest sought under §1(ii) of the Summons, the Court’s approach is as follows:

9.1.  An order for interest or enhanced interest on costs should be made only if the receiving party has in fact made payment of costs and disbursements incurred. Otherwise, the rationale for awarding interest or enhanced interest on costs would not apply, and an order for interest or enhanced interest would produce an unjust windfall for the receiving party. See Shih Pik Nog v G2000 (Apparel) Ltd [2011] 4 HKLRD 121, §21.

9.2.  The Court can make an order for a full enhanced interest on the actual amounts of disbursements, costs, and costs on account paid during the relevant period from the actual dates of payment. Alternatively, the Court can adopt the modified approach of Lam J (as he then was) in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273, where he awarded enhanced interest on costs incurred after the last date of acceptance of the sanctioned payment by taking the personal injury practice of awarding pre-trial loss and damage at half the usual rate, without needing to ascertain the actual dates when costs were paid or put on account. The normal commercial rate of interest awarded by the Courts was prime plus 1%, Lam J enhanced that rate of interest by 3% such that interest was at 4% above the prime rate (or 1% above judgment rate), and awarded interest at half of that rate, i.e. 4.5%. See Shih Pik Nog v G2000 (Apparel) Ltd, §§13, 15, 18.

9.3.  Lam J’s aforementioned modified approach would be suitable for cases where there are multiple items spanning a long period of time. See Shih Pik Nog v G2000 (Apparel) Ltd, §§18-19.

9.4.  The Court should not award enhanced interest on costs after the date of judgment. Where a sanctioned payment has not been accepted, the “successful” party is entitled to interest on his costs at judgment rate after the date of judgment. See Shih Pik Nog v G2000 (Apparel) Ltd, §14.

10.  Whilst the Defendant had at §1(ii) of its Summons sought an order that the Plaintiff do pay the Defendant interest on the disbursements from 10 December 2021 to 3 November 2023 at judgment rate plus 1% per annum, Mr Ho at §10 of his skeleton referred to Lam J’s approach in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd and sought interest on costs at the rate of half of judgment rate plus 1% per annum for the abovementioned period. I accept Mr Ho’s submission and follow Lam J’s approach in Golden Eagle.

11.  Although the Defendant incurred no less than HK$317,108 in legal costs from 16 November 2021 to 20 October 2023, I am of the view that I should only order interest on costs and disbursements which have already in fact been paid, namely the sum of HK$190,990. This is accepted by Mr Ho at §15 of his skeleton.

12.  Thus, insofar as §1(ii) of the Summons is concerned, I order that the Plaintiff do pay the Defendant interest on the sum of HK$190,990, being the costs already paid by the Defendant’s insurer, at the rate of half of judgment rate plus 1% per annum from 10 December 2021 to 3 November 2023 and thereafter at judgment rate until full payment of the same.

A2.  Interest on the Judgment Sum

13.  In light of the existence of the Sanctioned Payment, I consider that I should disallow interest on the Judgment Sum made at §60 of my Judgment pursuant to Order 22 rule 23(2). Thus, I make an order in terms of §2 of the Summons.

A3.  Payment out of the Sanctioned Payment

14.  The Defendant seeks: (1) the release of the sum of HK$159,226.57, being the difference between the Sanctioned Payment and the Judgment Sum, from the sum paid into Court by the Defendant as its Sanctioned Payment; and (2) the retention of the Judgment Sum in Court. The Defendant asks that the Judgment Sum remain in Court because it is concerned that the Plaintiff will likely be unable to pay the Defendant’s legal costs.

15.  Insofar as the release of the sum of HK$159,226.57 is concerned, I see no reason why that money should not be paid out to the Defendant since it exceeds the Judgment Sum, and I make an order in terms of §3 of the Summons. In that regard, I have borne in mind Order 22A rules 1 and 2 of the RDC:

“1. Money remaining in court (O. 22A, r. 1)

(1) Subject to Order 22, rule 17, any money paid into court in an action (whether or not in accordance with Order 22) may not be paid out except in pursuance of an order of the Court which may be made at any time before, at or after the trial or hearing of the action.

…

2. Person to whom payment to be made (O. 22A, r. 2)

(1) Where the party entitled to money in court is a person in respect of whom a certificate is or has been in force entitling him to legal aid under the Legal Aid Ordinance (Cap. 91), payment shall be made only to the Director of Legal Aid without the need for any authority from the party.

(2) Subject to paragraph (1), payment shall be made to the party entitled or to his solicitor.

(3) This rule applies whether the money in court has been paid into court under Order 22 or under an order of the Court or a certificate of the Registrar.”

16.  As for the Judgment Sum, in my view it is clear that the net costs due to the Defendant will far exceed the Judgment Sum still due to the Plaintiff. I accept Mr Ho’s submission that on the evidence available to me, there is real concern that the Plaintiff will be unable to pay the Defendant’s legal costs. I consider these to be good reasons for the Judgment Sum to remain in Court. See Yum Siu Wah v Wong Chi Shing [2021] HKCFI 1930, §§40-41, 44-45.

B.  CONCLUSION

17.  For all the above reasons, I make an order in terms of the Defendant’s Summons dated 16 November 2023 save that instead of §1(ii) of the Summons, I order that the Plaintiff should pay the Defendant interest on the sum of HK$190,990, being the costs already paid by the Defendant’s insurer, at the rate of half of judgment rate plus 1% per annum from 10 December 2021 to 3 November 2023 and thereafter at judgment rate until full payment of the same. For the avoidance of doubt, I consider that §8 above should also apply to the costs of the present application, and I order that the costs of this application be paid by the Plaintiff to the Defendant on an indemnity basis, with certificate for counsel.