LAU TSZ HA v. CHUI SANG CHOY AND ANOTHER

HCPI 489/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 489 OF 2006

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D E C I S I O N

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1.  This is an application to vary the costs order nisi made on 9 March 2010 wherein I ordered costs in favour of the Plaintiff.

Background

2.  The Plaintiff claimed damages for personal injuries sustained by her in a traffic accident.  The initial statement of damages in 2006 sought damages of about $3 million whereas the revised version in 2007 sought about $6.7 million.

3.  On 5 September 2007 (“Date A”), D1 paid in $420,000.  On 23 November 2009 (“Date B”), D3’s solicitors notified the Plaintiff that the payment in was made jointly by D1 and D3 (collectively “the Defendants”). 

4.  The Plaintiff was eventually awarded damages of $347,496.10.  The award plus accrued interest up to the date of payment in, failed to beat the payment in by a margin of $72,503.90. 

5.  The parties agreed, as a starting point, that the Plaintiff should have costs of the action before Date A, that D1 should have the costs after Date A and that D3 should have the costs after Date B. 

6.  The issues that remain are:

(A)    As against the Defendants, whether the Plaintiff should bear their costs in relation to the claims for pre-trial and future loss of earnings, MPF and loss of earning capacity before Date A?  The Defendants submit that the Plaintiff should bear all or 30% of such costs.

(B)    As against D3, whether the Plaintiff should bear costs for the period between Date A and Date B?

The relevant rule

7.  Order 62, rule 3(2) empowers the Court to make costs orders other than one to follow the event.  The factors that the Court can take into account are listed in Order 62, rule 5 and they include the conduct of the parties.  The conduct of the parties includes:

(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. 

(A) Whether the Plaintiff should bear all or part of the Defendants’ costs in relation to the claims for pre-trial and future loss of earnings, MPF and loss of earning capacity before Date A? 

8.  The total damages awarded were 5.2% of the amount claimed.  The Defendants submit that the Plaintiff should not have proceeded with the claim for her pre-trial loss of earnings except for the loss during her sick leave and at PU.  The rest of the claims, they submit, were misconceived.   D3 also stated that the Plaintiff had not made a realistic counter offer to settle.  Hence, the Plaintiff should bear the Defendants’ costs of investigating and defending those claims.  Alternatively, the Defendants propose that she should only get 30% of her costs of the action prior to Date A.   In support of this latter proposition, the Defendants rely on 2 cases:

(i)  Lai Ka Yiu v. Chan Yin Kei, DCPI 453/2008: the court was of the view that the Plaintiff magnified her symptoms and disbelieved the Plaintiff on various aspects of her evidence.   The damages recovered were 10.38% of the total claim.  The Court awarded the Plaintiff only 50% of the costs of the action.

(ii)  Chiu Kwok Hung Ban v. Ng Fu Wing trading as Wing Kee Aquarium Eng Co. & others, DCEC 887/2002:  The Plaintiff obtained less than 15% of the claim and he was awarded 25% of his costs with certificate for counsel.

9.  I have taken into account the Order dated 19 December 2008 under which Master Kwan ordered the Defendants to pay the Plaintiff’s costs of the action up to Date A in the proportion of 80:20.  By raising issue (A), the Defendants are effectively asking me to vary that Order.  I have no power to do so. 

10.  If I am wrong, I have however taken into account the following circumstances.  With regard to loss of earnings, the Plaintiff did have full documentation to show, as her solicitors have put it, “an iron fact” that she did not earn as much as she did before the accident. I did not reject her version as to actual reduction in earnings (and this was not challenged by the Defendants as well).  With respect, it was thus erroneous for D3’s counsel to state that “there was not one single piece of independent evidence to support her claim for loss of earnings”.  During the assessment, she did apply for and was allowed to expand her witness statement to explain the difficulties she faced in her jobs.  The “new” evidence was relevant and was referred to substantially in my judgment.  I even accepted the events described in paragraph 7 of the judgment to have happened. I did find in her favour partial loss of earnings in relation to PU, an item of loss which the Defendants have never conceded. The Plaintiff lost a substantial part of her claim because her complaint of residual disabilities was not substantiated by objective medical evidence; and she failed to establish causation between her pain and loss of earnings.  I made no findings, however, of malingering, exaggeration or lying against her. 

11.  Loss of MPF was an ancillary claim to loss of earnings.  It was reasonable for the Plaintiff to claim it.  It did not take up much time at the assessment.  Neither did the claim for loss of earning capacity.  These 2 matters were discussed only at closing submission.

12.  I have been told by the Plaintiff’s solicitors that a second opinion has been sought from counsel on her claim and hence it was not unreasonable for the Plaintiff to proceed with her claim.  I place no weight on this matter, not having had the opportunity to consider that second opinion.

13.  In summary, I find that it was not unreasonable for the Plaintiff to raise the claims in full.  I have considered the 2 District Court cases referred to above.  The Court does have the power to award only a portion of costs.  Those cases cited, however, do not lay down any principles not covered by Order 62, rule 5.

14.  The burden of having to pay costs of D1 from Date A and of D3 from Date B is sufficient penalty for the Plaintiff’s failure to accept the payment in.  There was nothing in her conduct which would justify further reducing her costs recoverable.  I make no order against her as regards the Defendants’ costs of investigating her claims prior to Date A.

(B) Whether the Plaintiff should bear D3’s costs for the period between Date A and Date B?

15.  It was not disputed that D3’s insurers had (prior to its provisional liquidation) contributed 20% of the payment into court to D1 on 19 December 2008 and that the Plaintiff was only first notified that the payment in was jointly made by D1 and D3 on Date B.

16.  To answer Issue (B), one only needs to look at the notice of payment in (“the Notice”).  The Notice was signed by D1’s solicitors.  On its face, it did not even state that it has been copied to D3 who has been separately represented all along, although D3’s solicitors confirmed in its letter dated 19 March 2010 to the Plaintiff’s solicitors that the Notice had been received by its predecessor.  A reasonable reader could not have inferred from reading the Notice that it was intended that D3 should take any benefit thereunder.  The fact that the Plaintiff had refused to accept the payment into Court whether paid in by D1 or D3 in any case could not affect my conclusion.  The Plaintiff’s failure to make any reply or raise any particular concern to the Notice could not operate against her either as she was not obliged to do so.

17.  The scheme of Order 22 (the pre-CJR version applies in this case) governs the position between the plaintiff and the individual defendant making payment in.  As the Plaintiff’s solicitors rightly submit, it does not extend the benefit to a co-defendant.

18.  The answer to Issue (B) is “No”. 

Costs of the Submission on Variation of Costs Order Nisi

19.  As both Defendants have failed in their arguments on variation and the Plaintiff has not sought costs, I make no order as to costs on this aspect.

Quantum of Plaintiff’s Costs

20.  I allow the hourly rate of the solicitors in charge and that of counsel.  The total fees incurred before Date A were reasonable.  I allow them in full.  Out of the items claimed, there were 4 letters (from 17.9.07 to  23.10.07) post-Date A.  The costs thereunder should be borne by D3 solely.  I thus allow $188,100, of which $6,000 shall be borne by D3 solely and the rest by D1 and D3 in the proportion of 80:20.

21.  Costs claimed between Dates A and B were also reasonable.  However, I deduct as a matter of principle:

(i)    The costs of perusing a without prejudice letter from D1’s solicitors (2 hours) as it did not arise out of D3’s conduct of the proceedings; and

(ii)  The costs of instructing counsel for a second opinion (3.5 hours  + $37,750) which was not party-and-party costs.

I allow a total of $113,000 (i.e. $172,750 – 5.5 hours x $4,000 - $37,750) for this phase, to be borne solely by D3.  D3’s liability should not just be 20% because the Plaintiff has to go through the same process even if D3 has remained the only defendant in the assessment.

22.  There will be no costs to the Plaintiff for the period post-Date B.

Quantum of D1’s Costs

23.  I allow the hourly rate of the solicitors in charge.  The costs claimed were quite exhorbitant for an assessment of this nature where D1 led no evidence as to facts and virtually left the Plaintiff to strict proof.   The time said to be spent on hearings was in excess of the court’s record.  Further, without disrespect to counsel for D1, this assessment does not warrant engagement of counsel of 28 years’ experience.  The brief and refreshers thus have to be substantially reduced.  The costs of LCD are also disallowed as costs for gathering information and drafting a statement of costs will not be granted on summary assessment: paragraph 13 of PD 14.3.   I assess the costs summarily and allow a total of $250,000.

Quantum of D3’s Costs

24.  Up to 20 April 2010 when D3’s solicitors lodged the submission on variation of costs order nisi, the former solicitors for D3 have not submitted the costs statement despite notice given to them.  Therefore, costs incurred by his former solicitors will not be considered.

25.  In view of my ruling on the 2 issues, only the costs claimed under Annexure II of D3’s Submission become relevant.  I allow the hourly rates claimed. I disallow some of the costs on preparation for trial and the legal research which in my view could have been covered by counsel’s involvement.  The costs for general care and conduct should be reduced as a matter of principle because the period involved was only 4 months.  I make no reduction of counsel’s fees.  I summarily assess the costs of D3 at $150,000.

Conclusion

26.  The costs order nisi is varied as follows:

(1)  The Plaintiff shall have the costs of the action prior to Date A against D1 and D3.  Such costs are summarily assessed at $188,100, of which $6,000 shall be borne by D3 solely and the balance by D1 and D3 in the proportion of 80:20.

(2)  The Plaintiff shall have the costs of the action between Dates A and B against D3, summarily assessed at $113,000.

(3)  The Plaintiff shall bear the costs of D1 incurred after Date A, summarily assessed at $250,000.

(4)  The Plaintiff shall bear the costs of D3 incurred after Date B, summarily assessed at $150,000.

(5)  There be no order as to costs in relation to this application for variation of costs order.

(6)  There shall be set-off of the Plaintiff’s costs against the respective Defendant’s costs.   

(7)  The parties should work out the net figures due and endeavour to agree on the terms for payment out of the monies and accrued interest in court.