TSE CHI SHING v. TANG WING HONG ANDREW AND OTHERS

HCA 1846/2015

[2018] HKCFI 2079

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1846 OF 2015

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DECISION
(Variation of Costs Order nisi)

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1.  By a judgment handed down on 29 June 2018, I found in favour of the Plaintiff in his claim herein for professional negligence against the Defendant in the handling of a transaction for the purchase of a Temporary House in Yuen Long.

2.  I also awarded damages in the sum of HK$1,287,050 consisting of (a) HK$700,000 being the equivalent of the purchase price ofthe Temporary House; and (b) HK$578,050 being consequential losses including monies incurred on repair work done to or at the Temporary House.

3.  At the commencement of the trial, the total claim for the various items of consequential losses was in the sum of HK$2,642,794 as pleaded in the Re-Amended Statement of Claim.  Hence, the Plaintiff only succeeded in recovering about 20% of the pleaded consequential losses.

4.  In the Judgment, I made an order nisi that the Plaintiff’s costs be paid by the Defendant, with directions for written submissions to be served in the event of an application for variation of the order nisi.  This is the Defendant’s application to vary the costs order.

5.  In short, the Defendant submits that there should be a reduction in the Plaintiff’s costs on the ground that the trial was unnecessarily lengthened due to the unsatisfactory way in which the Plaintiff’s quantum case was canvassed and presented.

6.  I agree with the Defendant that, to put it mildly, the Plaintiff’spreparation and presentation of his case on quantum is far from satisfactory.  Whether it is precipitated by a lack of instructions from the Plaintiff or want of diligence on the part of his legal representatives is beyond my fathom.

7.  The net effect is that a stack of illegible, unintelligible and haphazardly arranged receipts, hand-written in Chinese and running up to over 60 pages, were inserted into the trial bundle.  No proper effort was madeby the Plaintiff to correlate the information contained in those receipts with the various heads of claims, whether in the pleadings or witness statement.

8.  Upon detailed analysis, which was only made possible with oral evidence by way of examination-in-chief (with leave of the Court) and cross-examination by the Defendant as well as clarification sought by the Court, it transpired that most of the Plaintiff’s claim for consequential losses was either factually wrong or legally unsustainable and, hence, not attributable to the Defendant.

9.  The shortcomings on the part of the Plaintiff and/or his legal representatives have been set out in paragraphs 202 to 213 of the Judgment.  There is no need to repeat them here.  Suffice it to say that I am driven to the conclusion that the Plaintiff’s claim was grossly inflated.

10.  The knock-on effect is that time and costs were unnecessarily wasted.  The Defendant reckoned that the additional time spent on various issues of quantum came to 5 hours 25 minutes (about 1 day).

11.  The Plaintiff opposes the Defendant’s application and seeks to argue that:

(a) instead of the reckoning of the Defendant, the additional timespent on quantum issues was only 3 hours 40 minutes by way of examination-in-chief and cross-examination;

(b) the time spent on clarification sought by the Court (about 33 minutes) should not be counted against the Plaintiff;

(c) time could have been saved if the Defendant had accepted an offer for settlement in an amount less than that awarded in theJudgment, which was communicated to the Defendant through counsel on the third day of the trial.

12.  It is trite that costs is a matter of discretion of the Court (see section 52A of the High Court Ordinance, Cap 4 and Order 62, rule 2(4) ofthe Rules of the High Court).  Further, it is provided in Order 62, rule 5 that:

“ 5. (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;

…

(e) the conduct of all the parties;

…

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

13.  Needless to say, the underlying objectives set out in Order 1A, rule 1 is a reflection of the spirit and the need to resolve a dispute in a cost-effective, proportionate, expeditious and fair manner.  It is also provided in Order 1A, rule 3 that:

“ The parties to any legal proceedings and their legal representatives shall assist the Court to further the underlying objectives of these rules.” (emphasis added)

14.  Where a party inflates his claim, it may constitute a relevant conduct to be taken into account in the exercise of discretion on costs notwithstanding that he is successful in establishing liability against the opposing party (see Hong Kong Civil Procedure 2018, §62/5/7 referring to Aspin v Metric Group Ltd [2007] EWCA Civ 922).

15.  In Andrew William Maxwell v Keliston Marine (Far East) Limited & Anor HCPI 945/2003, unreported, 11 April 2012, Bharwaney J said:

“ 36. … On 6 October 2001, Suffiad J stated in Lam Wai Chun v. Tam Chi Wai HCPI 1352/2000 that:

‘ In the light of the amount of damages assessed in this case [$336,238], I would like to say that the claim by this plaintiff is put at over $2.8 million. It may be thought 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 inflatedclaim. 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 try to swing it to the other extreme unreasonably.’

I have echoed these sentiments in the course of numerous case management conferences and pre-trial reviews and I have given notice that a plaintiff making a grossly inflated claim may expect an adverse costs order even if there is no sanctioned payment or even if he beats a sanctioned payment. …” (emphasis added)

16.  In this case, it was the duty of the Plaintiff and his legal representatives to critically examine the evidence to ensure that the case on quantum was factually correct and legally sound or, at least, responsibly arguable.

17.  If the Plaintiff and/or his legal representatives had examined the stack of receipts carefully in light of (a) the facts known to them at all times, as now found by the Court, and (b) the requirement to prove causation, they ought to have known, if they in fact did not know, the majority of the items of claim for consequential loss should not have been made.

18.  The fact that the Plaintiff has made a without prejudice offer to settle the case for a lower sum (as compared to the final award of damages) is relevant but not sufficient to undo the adverse effects of the inflated claim.  The offer was made in the middle of the trial by which stage the Defendant would have already formulated a view based on the haphazard and unintelligible quantum evidence.

19.  Importantly, the Defendant has been most reasonable not to oppose the amendment to the Re-Amended Statement of Claim.  But then again, even with the latest amendment, the Plaintiff singularly failed to properly particularize the various items of claims for consequential loss.  I have already decided that most of the items of claim were either factually incorrect or legally unsound and hence they were disallowed.

20.  Further, I have no hesitation in rejecting the Plaintiff’s submission that the time and costs to be spent on setting out details of the various items of consequential loss in the Plaintiff’s witness statement would have balanced out the time spent in oral examination at the trial. 

21.  With respect, this argument is totally beside the point.  If the Plaintiff and his legal representatives had properly addressed their mind to the evidence and the issue of causation, most of the claims would not and ought not have been made in the first place.

22.  Ruling on costs is to be made on a broad-brush approach.  In all circumstances, I agree with the Defendant that about one day was wasted at trial on issues of quantum, which could have been avoided if the Plaintiff had properly prepared his case.  Accordingly, the costs order nisi is varied as follows:

“(a) The Defendant do pay the Plaintiff’s costs of the action herein, to be taxed if not agreed, except the costs for one trial day;

(b) The Plaintiff do pay the Defendant the costs of one trial day (consisting of one refresher for counsel and time costs for attendance by solicitor) to be taxed if not agreed and set off against the costs of the action payable by the Defendant.”

23.  I further order that the Plaintiff do pay the Defendant’s costs in respect of the application herein, to be taxed if not agreed.