MOHAMMAD AMJAD v. JOHN M PICKAVANT & CO

HCPI 100/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 100 OF 2009

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J U D G M E N T
(INTERESTS AND COSTS)

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Introduction

1.  On 18 November 2013, this court handed down a judgment (“Main Judgment”) in respective of the plaintiff’s claims for loss and damages out of personal injuries sustained by him as a result of an accident at work in the defendant’s office.

2.  This is the judgment on interests and costs.

3.  I shall adopt the same abbreviations as in the Main Judgment.

4.  In the Main Judgment, P was awarded a total of HK$2,626,182.50, and after giving credit for the Employees Compensation paid by D of HK$2,125,869.64, the net award was HK$490,312.86 (“ Net Award”), with interest on PSLA at 2% per annum from the date of the writ ( 13 February 2009) to the date of the Main Judgment (18 November 2013), and interest on special damages at half judgment rate from the date of the Accident (1 March 2006) to the date of the Main Judgment (18 November 2013).  The question of costs was reserved, and directions were given for the lodging of submissions thereon.

5.  The day after the handing down of the Main Judgment, ie on 19 November 2013, D’s solicitors wrote to the court indicating they wish to make submissions to on interests, as well as costs.  P’s solicitors then responded on 21 November 2013 indicating that they had no objection thereto.  It was under these circumstances, and as the order had not yet been sealed, I gave directions for both parties to lodge submissions on both interests and costs.

Interests

6.  The order on interests made by this court in the Main Judgment was an usual order.  P’s Counsel, Mr Shum, submitted that D was bound by this order on interests.  As mentioned earlier, there was no objection from P for D to make further submissions on interests.  Further, as there were sanctioned payments and/or other payments into court in the EC proceedings instituted by P (“EC Proceedings”), and order for payment out, which this court was not aware of at the time of the trial, I was of the view that it would be open for the parties to make further submissions notwithstanding the interests order made in the Main Judgment.

7.  P was awarded a sum of HK$1,825,841.50 in the EC Judgment on 11 May 2009 (“EC Award”), to be paid by D within 14 days. P was awarded interest on the EC Award with interest thereon at ½ judgment rate from 1 March 2006 to 11 May 2009.

8.  On 2 June 2009, D made a payment of HK$1.8m into court in compliance with the order made by Judge Chow on 22 May 2009, as security for stay of execution pending appeal.  Together with the previous sanctioned payments of HK$300,000, this made a total of HK$2.1m being then held by the court.  The total sum of HK$2.1m was ordered to be released and paid out forthwith to P through the Director of Legal Aid, as partial satisfaction of the EC Judgment, pursuant to an order of Judge Chow dated 15 March 2010.  This sum was paid out to the Director of Legal Aid on 13 April 2010 (“Payment Out Date”).

9.  P received a total of HK$2,215,869.64 on 2 June 2010. 

10.  The main issue between P and D was whether interest on the special damages should be payable after the Payment Out Date.

11.  D’s Counsel Mr Wong referred this court to the case of Lam Fuk Pau v Canton Curtain Wall Engineering Ltd & Another HCPI 488 of 2004.  In that case, DHCJ Muttrie ordered interest at 2% per annum on the award of general damages from date of writ to date of judgment and thereafter at judgment rate.  Interest at ½ judgment rate was ordered from date of accident until the date of payment of the employees’ compensation on the total award in respect of the pre-trial loss of earnings and special damages; and from that date to the date of judgment at that total figure minus the employees’ compensation figure; and thereafter at the judgment rate until payment.

12.  The total of special damages and pre-trial loss of earnings and MPF found by this court in the Main Judgment totalled HK$1,563,872.50. 

13.  According to Mr Wong’s calculations, the total interest on the sum of HK$1,563,872.50 from 1 March 2006 until Payment Out Date should be HK$306,909.85, and thereafter, Mr Wong had submitted that P should not be entitled to interest on the special damages, as P had already received an amount more than HK$1,563,872.50. 

14.  P had received HK$2,125,869.64, ie an amount ofHK$300,028.10over and above the EC Award, being interest.

15.  There was no dispute that the calculations of interest on the PSLA was HK$28,586.30, from date of writ to date of Main Judgment.

16.  To summarise, Mr Wong submitted that the total sum which D should pay being interest before Main Judgment should be HK$335,496.15, being HK$306,909.85 + HK$28,586.30.  Thereafter, the Net Award should carry interest at judgment rate until payment.

17.  D’s calculation of interest was based on the whole of the EC Award and payment should be set off against the special damages awarded to P in the present action and P’s Counsel, Mr Shum submitted that this basis was wrong.  Mr Shum submitted that as the employees’ compensation is an independent statutory scheme of compensation whereas personal injury claims in the present action are based on common law, the EC Award should be set off the damages in the common law claim (ie principal versus principal) and the interest from the EC Award be set off against the interest from the damages in the common law claim (ie interest versus interest). 

18.  According to the calculations of P’s Counsel, Mr Shum, the total interest on the special damages awarded at ½ judgment rate from date of accident to date of the Main Judgment should be a total of HK$560,693.77, and that this total amount of interest should be added back to the sum of the Net Award, to make a total judgment sum of HK$1,051,006.63, and this entire judgment sum should carry interest at judgment rate from date of the Main Judgment until payment.

19.  There were no authorities provided by Mr Shum on his proposed methods of calculating interests.

20.  The principles on the court’s exercise of power to award interest on damages for personal injuries have been set out in paragraph 6/L/26 of the Hong Kong Civil Procedure 2014.  As stated therein, the governing principles is that interest should be awarded to the plaintiff, not as compensation for the damage done, but for being kept out of money which ought to have been paid to him.  It is further stated therein that ordinarily interest should be awarded on the total sum of the special damages from the date of the accident until the date of trial at half the appropriate rate of interest, but interest should not be awarded on any money received by the plaintiff from any other source, eg half of his sickness benefit or an interest free loan.

21.  In the present case, the award for special damages including pre-trial loss of earning and MPF formed about 60% of the total award in the Main Judgment.  Further, about 80% of the total award had been paid out to P.  Having considered both parties’ submissions, I am of the view that interest on the special damages at ½ judgment rate should be paid by D to P, from the date of accident until the Payment Out Date only, and thus the sum of interest before judgment to be paid by D should be a total of HK$335,496.15.  Thereafter, the Net Award should carry interest at judgment rate until payment.

Whether P should be entitled to costs of the whole action

22.  The court has a wide discretion in costs.  Order 62 rule 5 of the RHC now provides that:

“(1) 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-

(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;

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

(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.

(2) For the purpose of paragraph (1)(e), 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.”

23.  P had claimed a total of more than HK$8.5m at the time when he issued the writ.  Mr Shum in his opening submissions at the trial summarized the total of P’s claims to be HK$9,191,227, and after credit being given for the employees’ compensation, this represented a net claim of HK$7,065,357.36.  The Net Award was considerably less.

24.  D made a sanctioned payment of HK$200,000 into court on 1 February 2011 under Order 22 Rule 8 of RHC, net of the employees’ compensation (“Sanctioned Payment”).

25.  On 11 February 2011, P made a sanctioned offer of HK$3.5m.  On 3 March 2011, P made a sanctioned offer of HK$3.25m, and on 15 July 2013, P made a sanctioned offer of HK$5m.  All P’s sanctioned offers were net of the employees’ compensation.

26.  As D’s Sanctioned Payment was less than 50% of the Net Award, Mr Shum submitted that P should be entitled to the costs of the whole action.

27.  Mr Wong conceded that P should be entitled to his costs on the issue of liability, as this court had found for P on this issue. On the issue of quantum, Mr Wong submitted that there should be no order as to costs, and that all costs should be on High Court scale up to 11 May 2009, the date of the EC Judgment, and thereafter on District Court scale.

28.  Mr Wong submitted that this court should take into account of P’s conduct in its exercise of discretion on costs.

29.  It was this court’s finding that P was feigning the condition of his right hand during the trial, and that P was exaggerating parts of his evidence.  This court did not find P an entirely credible and reliable witness.[1] Having said this, D’s Sanctioned Payment was substantially lower than the Net Award.  Even if one were to take into account the total payments into court made by D in the EC Proceedings and the present proceedings, such would still be lower than the total award in the Main Judgment. 

30.  Having considered the matters in Order 62 rule 5 of the RHC, and the circumstances of this case, I am of the view that P should be entitled to the costs of the whole action.

Scale of Costs

31.  Mr Shum had referred this court to Hopkins v Rees & Kirby Ltd [1959] 1 WLR 740 where it was held that the test was whether the plaintiff as a reasonable man would at the time of issuing the writ have concluded that no judge would award more than £400 (the then county court amount) and that since, in the circumstances, such a conclusion would not have been warranted, the plaintiff in that case was entitled to High Court costs.

32.  The above case was referred to by Seagroatt J in Lai Ki v B+B Construction Company Limited & Anor [2003] 3 HKLRD 192, where he had also said[2]:

“21. The position in relation to a claim in the High Court settled or adjudicated upon in a sum which is within the District Court jurisdiction is as follows:

(1) The usual order will mean that costs will be on the District Court scale unless the High Court is, in the exercise of its discretion, persuaded that there was a reasonable prospect of obtaining an award in excess of the District Court jurisdiction. To that end the valuation of the claim must be on the basis of full liability; …”

33.  P issued the writ in these proceedings in the High Court on 13 February 2009, which was well before the EC Judgment, and at that time of the issue of the writ, no money had been paid by D to P, and therefore there was nothing to be deducted.  The total award for damages plus interests in the Main Judgment was over HK$2.6m.

34.  Having considered the above, I accept Mr Shum’s submission that at the time of the issue of the writ, P had a reasonable prospect of recovering a sum of money in excess of the District Court jurisdiction.

35.  Mr Wong did not seem to dispute this, since what he proposed was that after the EC Judgment, the costs should be on the District Court scale.

36.  Mr Wong referred this court to the case of Lam Wai Chun and Tam Chi Wai & Wong Yau Pui, HCPI 1352/2000, 6 October 2001.  In that case, the plaintiff has claimed over HK$2.8m, but the award made by Suffiad J was only HK$336,238, and costs were awarded to the plaintiff only on the District Court scale.  Suffiad J had said:

“… It may be though 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 to swing it to the other extreme unreasonably.”[3]

37.  Mr Wong further referred this court to the case of Andrew William Maxwell and Keliston Marine (Far East) Limited (Now in Liquidation) & Paul Y-Seli Joint Venture (a firm), 11 April 2012. The amount awarded by Bharwaney J in that case to the plaintiff was just under HK$603,000.  The amount paid into court in that action and also in the employees’ compensation proceedings came to HK$750,000, which was higher than the judgment sum.  Bharwarney J echoed what was said by Suffiad J in the above case, and awarded plaintiff costs only on the District Court scale.

38.  Neither Counsel had referred this court to the case of  Oriental Daily Publisher Limited & Anor and Ming Pao Holdings Limited & Others, CACV 139 of 2010, 9 May 2011, where Tang JA, Ag CJHC, as he then was, in considering whether to vary a costs order nisi, and agreeing that the plaintiffs in that case had no reasonable prospect of recovering a sum in excess of the District Court jurisdiction, had commented obiter after referring to what was said by Seagroatt J in the Lai Ki case : 

“I would leave for future determination whether having regard to the important objectives of promoting a sense of reasonable proportion and to ensure fairness (see Order 1A rule 1) the Court should adopt a more stringent test against a plaintiff who has overestimated (though reasonably so) his claim. It is arguable that the defendant should not suffer for the wrong (though reasonable) estimate.”[4]

39.  Even though the Net Award exceeded the Sanctioned Payment, P’s claims were clearly grossly inflated.  In the EC Judgment, it was found that P’s earning capacity from expiry of his sick leave to the date of the EC Judgment to be HK$11,000 per month, and yet he maintained that he was only working part-time in KB Chau & Co earning HK$3,000 per month after 4 November 2008.  I do not need to repeat my findings on his credibility. 

40.  The first joint examination took place on 18 August 2009, about 3 months after the EC Judgment, and the 2009 Joint Report was dated 27 September 2009.  By then, it was agreed by the 2 experts that P had improved significantly, and had only mild to moderate problem in returning to his pre-injury job and that there were signs of symptom magnification on the part of P.  In my view, that by this time, it should be obvious to P that it would be unlikely that the court would accept what he claimed to be his earning capacity thereafter, and further that it would be unlikely for him to receive the substantial amount for future loss of earnings claimed by him, and that the Net Award would be within the jurisdiction of the District Court.  P should have considered making an application to transfer the matter to the District Court by end of September 2009, pursuant to paragraph 97 of PD 18.1.  

41.  Having considered all circumstances, I am of the view that P should be entitled to costs up to end of September 2009 on High Court scale, and thereafter on District Court scale.

Order

42.  This court’s order is thus as follows:

(i)   D shall pay P HK$335,496.14 being interest before Main Judgment.  Thereafter, the Net Award of HK$490,312.86 shall carry interest at judgment rate until actual payment.

(ii)   D shall pay P’s costs of the whole action, to be taxed if not agreed on the High Court Scale up to end of September 2009, and thereafter on District Court scale with certificate for counsel.  P’s own costs are to be taxed according to the Legal Aid Regulations.