MOHAMMAD-RIASAT v. WANTON BUSINESS SERVICES LTD

HCPI 312/2021

[2026] HKCFI 567

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 312 OF 2021

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BETWEEN

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DECISION ON COSTS

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1.  On 19 September 2025, this court handed down the judgment after trial (“the Judgment”) in favour of the plaintiff with a nisi costs order (“the Nisi Costs Order”). The defendant now applies to vary the Nisi Costs Order.

BACKGROUND

2.  The background, dispute and findings were set out in the Judgment, which will not be repeated. The same definitions and abbreviations are adopted for the present purpose.

3.  By the Judgment, this court awarded the plaintiff (“MR”) damages in the sum of HK$952,477.44, net of contributory negligence and employees’ compensation received. By the Nisi Costs Order, the defendant (“WBS”) shall pay MR’s costs of the action, including any costs reserved, to be taxed on the District Court scale, while MR’s own costs up to discharge of his legal aid shall be taxed in accordance with legal aid regulations.

4.  On 2 October 2025, WBS filed its summons to vary the Nisi Costs Order (the “Summons”) in the following terms:

(1) WBS do pay MR’s costs of this action (including all costs reserved, if any) up to 15 June 2022 on party and party basis, to be taxed on the District Court scale if not agreed;

(2) WBS shall pay interest on the judgment damages up to 15 June 2022, the total amount of such interest being HK$20,406.18 (“the Judgment Interest”);

(3) No interest shall accrue on the judgment damages after 15 June 2022;

(4) The judgment damages of HK$952,477.44 together with the Judgment Interest of HK$20,406.18 amounting to HK$972,883.62 in total (“the Judgment Sum”) shall remain in Court until further order;

(5) MR shall pay WBS’ costs of this action (including all costs reserved, if any) with certificate for counsel incurred after 15 June 2022 on an indemnity basis, to be taxed on High Court scale if not agreed;

(6) MR shall pay enhanced interest on WBS’ costs (inclusive of counsel’s fees) incurred after 15 June 2022 at 10% per annum above judgment rate (or at any rate as the Court sees fit) from the date of payment of such costs by WBS or its insurer until full payment of the same;

(7) Pursuant to section 18A(4) of the Legal Aid Ordinance (Cap. 91), the Judgment Sum shall be set off against WBS’ costs incurred in this action from 6 July 2023;

(8) Out of the total amount of sanctioned payments of HK$2,400,000.00 paid into Court, the sum of HK$1,427,116.38, representing the balance after deducting the Judgment Sum of HK$972,883.62 together with any accrued interest (if any) shall forthwith be paid out to WBS through its solicitors, Chu & Lau;

(9) Upon agreement or taxation of MR’s costs under paragraph (1) above and WBS’ costs under paragraph (5) above, if WBS’ costs together with interest exceed MR’s costs, the Court shall forthwith pay out to WBS through its solicitors, Chu & Lau, from the Judgment Sum remaining in Court, the net amount of WBS’ costs and interests after deduction of MR’s costs; and

(10) The costs of and occasioned by the Summons be paid by MR to WBS with certificate for counsel, on an indemnity basis to be taxed on High Court scale if not agreed.

5.  MR’s legal aid lasted from 4 November 2020 until 6 July 2023 (the “Legal Aid Period”). Legal Aid Counsel appeared at the hearing of the Summons on behalf of the Director of Legal Aid (“DLA”), and made submission insofar as DLA’s interest in relation to the Legal Aid Period is concerned.

THE PRINCIPLES

6.  O22, r23 of the Rules of the High Court, Cap 4A (“RHC”) provides:

“(1) This rule applies where a plaintiff—

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

(b) fails to obtain a judgment that is more advantageous than a defendant’s sanctioned offer.

(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 sub-paragraph (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.”

7.  Pursuant to O22A, r1(2) RHC, upon the satisfaction of the cause or causes of action or to the extent to which the sanctioned payment may be withdrawn or diminished pursuant to O22, and where money in court is a sanctioned payment made in accordance with O22, an order may be made for the money to be paid out. This is the court’s discretion: see MGA Entertainment Inc formerly known as ABC International Traders, Inc doing business as MGA Entertainment v Toy and Trends (Hong Kong) Ltd & Ors [2014] HKCU 1645 at §§15-17.

THE SANCTIONED PAYMENTS

8.  In 2020, MR filed his employees’ compensation claim against WBS. This was settled in January 2021 at the sum of HK$380,000.

9.  On 29 September 2021, MR commenced the present action, claiming against WBS damages in the sum of HK$4,400,000.

10.  On 18 May 2022, WBS made its first sanctioned payment in the sum of HK$1,000,000 (the “1^st Sanctioned Payment”). On 25 May 2022, MR’s then solicitors rejected the settlement offer, and demanded a sum of HK$5,050,000. Even higher than the pleaded claim, that was.

11.  On 15 July 2022, WBS increased its sanctioned payment by a sum of HK$300,000. On 22 July and 3 August 2022, MR’s solicitors rejected the settlement offer, and demanded a sum of HK$5,030,000. Negligibly less than the sum demanded previously, that was.

12.  On 15 December 2022 and 2 February 2023, WBS further increased its sanctioned payment by a sum of HK$100,000 respectively. There was no response from MR’s solicitors.

13.  On 6 July 2023, MR’s legal aid certificate was discharged.

14.  On 4 October 2023, WBS further increased its sanctioned payment by a sum of HK$900,000 (the “Final Sanctioned Payment”), bringing the sanctioned payments to a total sum of HK$2,400,000. There was no response from MR.

15.  On 21 October 2024, which was 5 days after the pre-trial review (“PTR”) hearing, WBS reiterated the sanctioned payments to MR and that that would be the ultimate, final and non-negotiable offer. On 17 December 2024, MR rejected and counter-offered to settle at the sum of HK$3,200,000, inclusive of the employees’ compensation received. WBS rejected that.

DISCUSSION

16.  Undoubtedly, MR failed to obtain a better result than the sanctioned payments made by WBS, probably not even the 1^st Sanctioned Payment as at the time when it was made back in May 2022. The present case falls within the rule so that this court shall make the orders pursuant to §§(2), (3) and (4) of O22, r23 unless it would be unjust to do so. It is the burden of MR to satisfy this court that this would be unjust, considering the circumstances including those set out in §(6) of the rule.

17.  By letters dated 4 October and 20 October 2025, MR made his representations. So did he at the hearing.

18.  In view of the history set out above and the period during which MR was acting on legal advice, I can only consider his repeated rejections of the settlement offers of WBS were conscious and informed decisions on his part. For the purpose of O22, r23(6), it is not about subjective good faith on his part to negotiate for settlement as MR suggests in his submission. His counter-offers through his then solicitors reflect inadequate readiness to compromise, which is the foundation of any settlement.

19.  Contrary to MR’s submission, I do not agree that it was unfair for WBS to reiterate the Final Sanctioned Payment with a view to settlement when MR was acting in person. I see no reason for suspecting that the maintenance of his stance in rejecting such settlement offer, while acting in person, was adopted out of any insufficient understanding, as he did consciously make his counter-offer in reply. It is also unfair for MR to suggest now that WBS’ negotiation for settlement was mere tactic. The fact of the repeated sanctioned payments, so that MR could have put an end to the litigation by walking away with HK$2.4 million with costs, speaks for itself. MR’s argument that making the order would “dismiss the true meaning of justice” lacks substance for the purpose of r23(6), and defies understanding in the circumstances discussed above.

20.  Therefore, the variation of the Nisi Costs Order in terms of §4(1), (2), (3) and (5) above in my view is justified. So is §4(8) above whereby the balance of the sanctioned payments in court after deducting the Judgment Sum should be paid out to WBS.

21.  The following terms of variation sought may deserve further consideration in view of the DLA’s submission:

(1) Insofar as MR should pay enhanced interest on WBS’ costs payable by him (§4(6) above), the appropriate rate of such interest;

(2) the retention of the Judgment Sum in court pending (3) and (4) below (§4(4));

(3) the set-off between the Judgment Sum and WBS’ costs payable by MR (§4(7) above);

(4) in connection with (2) and (3) above, payment out from the Judgment Sum only after the parties’ respective costs have been ascertained and set off (§4(9) above).

22.  Regarding the above issues, DLA made the following submission:

(1) The enhanced interest rate should be 1% or in any event no more than 5% above judgment rate.

(2) The balance of the Judgment Sum after set off against WBS’ costs incurred after the discharge of legal aid should be paid out to DLA forthwith.

23.  DLA also asks that MR’s own costs during the Legal Aid Period to be taxed in accordance with Legal Aid Regulations. On this, this court actually included such order in the Nisi Costs Order, which WBS does not seek to vary by the Summons. In other words, this part of the Nisi Costs Order simply stands.

ENHANCED INTEREST RATE

24.  The enhanced interest and its rate under O22, r23 are matters of the court’s discretion. In Imran v Intrafor Hong Kong Ltd [2024] HKCFI 100, this court had this to say:

“12. Extreme cases involving complete lack of merits, untruthful account, egregious character and manifest exaggeration have attracted award by the court of enhanced interest rate near the top end of the range: see for instance Grupo Pacifica Incorporada v Worldwide Marine Product Ltd & Ors [2018] HKCFI 2584, [17], [19]; Wong Giles v Donowho Simon Christopher & Anor [2020] HKCFI 1053, [27]; Yeung Ho Man v Shum Kin Leung & Anor [2020] HKCFI 2781, [17], [23]; Angbuhhang Netra Jang v Laing O’Rourke Construction Hong Kong Ltd & Anor [2021] HKCFI 232, [11]–[12]; Thapa Hari Bahadur v Paramount Engineering & Manpower & Anor [2022] HKCFI 1305, [11].

13. The court has awarded relatively lower enhanced interest rate despite finding of exaggeration or dishonesty: see instance Ki Tak Yan v The Incorporated Owners of Kam Yuen Building, Boundary Street [2021] HKCFI 1148, [36] (6% above judgment rate); Tse Lai Sing v Tung Wah Group of Hospitals [2021] HKDC 1095, [16] (5% above judgment rate); Carrie Woo v Lui Mo Dock and Wong Miu Yung [2019] HKDC 348 (4% above judgment rate).

14. For less serious cases, the court has awarded further lower enhanced rates: see for instance Maysun Engineering Co Ltd v International Education and Academic Exchanges Foundation Co Ltd [2011] 2 HKLRD 844 (2% above judgment rate); Chan Lap Kwan v Skypy Ltd & Anor (HCPI 258/2012, [2016] HKEC 1944, 7 September 2016) (2% above judgment rate); Union Glory Finance Inc & Ors v Merrill Lynch International Bank Ltd & Anor (HCA 2494/2013, [2016] HKEC 2688, 13 December 2016) (2.5% above judgment rate); Tsang Chiu Yip v Ho Kwok Leung (HCPI 305/2013, [2016] HKEC 1725, 8 August 2016) (3% above judgment rate).”

25.  DLA also refers to this court’s judgment in So Sin Ying v JV Fitness Ltd [2023] HKCFI 3352 as well as the judgments in Yeung Kiu Ying v Fairwood Fast Food Ltd t/a Fairwood [2020] HKDC 293 and Hui Pui Man v Intercontinental Limousine Company Ltd [2025] HKDC 1721 in support of his submission that the rate should be no more than 5%.

26.  In Cheung Hon Kin v Chubb Life Insurance Company Ltd (formerly known as New York Life Insurance Worldwide Ltd v Ace Life Insurance Company Ltd. respectively) [2024] HKCFI 3623, the Court explained (at §§19-21) the two approaches in determining the enhanced interest rate. The traditional approach is to calculate the interest on each item of expenditure from the actual date of payment. The modified approach, on the other hand, is to order interest at half the rate which the court would otherwise order for the whole of the relevant period. Both WBS and the DLA left that to this court.

27.  Considering the findings in the Judgment as well as the history and conduct of litigation summarised above, I am not inclined to think this as one of the extreme cases warranting the maximum enhanced interest rate of 10%. WBS has provided the receipts of disbursements made by the insurers of WBS since 15 June 2022, but they have yet to settle its solicitors’ bills. I accede to the variation sought in terms of the traditional approach, and set the rate of the enhanced interest at 3% per annum above judgment rate in respect of the costs and disbursements of WBS from their actual payment.

THE SET-OFF AND PAYMENT OUT

28.  Counsel for WBS acknowledges that it is not the usual practice of the court to allow the judgment sum to remain in court to enable the requesting party to enjoy effective security for his costs, unless he manages to demonstrate good reasons: see Darcy Grant Dmetrichuk v Tung Wah Group of Hospitals Wong Fut Nam College [2006] HKCU 1362 at §18; Ng Chi Kwan, Danny Summer & Anor v Yeung Yiu Kwai & Anor HCPI 633/2011 (28 November 2014) at §§31-34; Sandhu Jatinder Singh v Ma Shiu Ming & Anor DCPI 2647/2022 (11 December 2024) at §66.

29.  In the present case, counsel asks this court to take into account the circumstances of the present case as found, namely that MR has admittedly not worked at all since the accident but been depending on comprehensive social security assistance. It is therefore unlikely that MR would have the means to discharge his liability to pay WBS’ costs. WBS may only look to the prospect of recovering its costs from the Judgment Sum to which he is adjudged to be entitled.

30.  WBS’ application that MR should be entitled to no interest on the Judgment Damages after 15 June 2022 caused this court to raise the concern whether this would be unfair if the Judgment Sum is to be further retained in court pending the set-off. Counsel submits that the root cause of MR’s predicament, notwithstanding judgment in his favour, is the consequence he must bear which triggers the operation of O22, r23 against him. Further, while the Judgment Sum remains in court pending set off and payment out, such sum should still attract interest in the suitors’ funds accounts. Hence no substantial unfairness.

31.  As for the DLA, section 18A(4) of the Legal Aid Ordinance, Cap 91 (“the LAO”) provides that the legal aid first charge on any damages or costs (awarded to the aided person) shall not prevent a court allowing them to be set off against other damages or costs in any case where a solicitor’s lien for costs would not prevent it. The set-off sought under §4(7) above refers to WBS’ costs incurred after the discharge of legal aid on 6 July 2023. DLA observes that other than that, the costs are really those between the DLA and WBS during the Legal Aid Period. This brings about DLA’s following submission.

32.  DLA submits that instead of allowing the balance of the Judgment Sum to be withheld by the court pending set-off of the parties’ respective costs during the Legal Aid Period, such balance should be paid out to the DLA pursuant to section 19A of the LAO. DLA is concerned about the delay due to the uncertain and probably different timing of any agreement or, even more so, the taxation of the parties’ respective costs. This, the DLA argues, is unnecessary and avoidable as the position of DLA to pay WBS’ costs during the Legal Aid Period ought not to be doubted. Hence no real concern referred to above which may otherwise justify the proposed stalling of the payment out. Disposal of the matter this way, it is also submitted, would become relatively neater, and further involvement of this court would be saved as well.

33.  I see the sense in the DLA’s submission. So did counsel for WBS so that she also proposed to revise the terms of the variation to accommodate the DLA.

ORDER

34.  Hence the following order:

(1) Order in terms of §4(1), (2), (3), (5) above;

(2) Order in terms of §4(6) above save that the enhanced interest rate is 3% per annum above judgment rate;

(3) The sanctioned payments in court to the extent of the judgment damages of HK$952,477.44 together with the Judgment Interest of HK$20,406.18, amounting to HK$972,883.62 in total (“the Judgment Sum”), shall be disposed of in the following manner:

(a) Pursuant to section 18A(4) of the LAO, the Judgment Sum shall be set off against WBS’ costs incurred in this action from 6 July 2023;

(b) Unless disposed of at the same time pursuant to (4) below, the balance of the Judgment Sum after the set off pursuant to (a) above shall be paid out of court to the DLA forthwith;

(4) Upon agreement or taxation of their respective costs incurred up to 6 July 2023, MR (through the DLA) or WBS, as the case may be, shall pay the other such costs or upon set off, any net amount of such costs, together with interest;

(5) Order in terms of §4(8) above;

(6) The Nisi Costs Order that MR’s own costs during the Legal Aid Period shall be taxed in accordance with legal aid regulation do stand.

COSTS OF THE SUMMONS

35.  The terms of §4(10) above are appropriate. Therefore the costs of and occasioned by the Summons be paid by MR to WBS with certificate for counsel, on an indemnity basis to be taxed on High Court scale if not agreed.