GURUNG ROMI v. PIZZAEXPRESS (HONG KONG) LTD

HCPI 63/2019

[2024] HKCFI 1199

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 63 OF 2019

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REASONS FOR DECISION ON COSTS

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1.  The plaintiff (“Gurung”) commenced the present action against the defendant (“PE”) for injury allegedly sustained in an accident at work in the course of her employment. On 21 December 2023, this court handed down the judgment after trial (“the Judgment”), whereby this court dismissed the claim and made a nisi order that Gurung should pay PE’s costs of the action. On 31 January 2024, this court heard and allowed PE’s application for variation of the nisi costs order. These are my reasons.

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

3.  Besides the lack of precision in pleadings and witness statement, Gurung admittedly changed her version of where in the Kitchen and the course of conduct during which the alleged accident happened during cross examination at the trial. There lacked properly disclosed and pleaded factual basis for the consideration of the claim on the basis of the new version. Even though this court did proceed to consider the issue of liability on the basis of both the original and the new versions, this court concluded that Gurung still failed to prove breach on the part of PE and thus liability for her injury.

4.  Academic as it may seem, this court further proceeded to consider the issue of contributory negligence assuming that PE should somehow be liable. In accordance with the original version of the incident alleged by Gurung, this court found that she would have been negligent in contributing to her own accident, in my judgment, to the extent of 80%. Alternatively, assuming that PE should somehow be liable for the accident according to her version first revealed in court, I found that her contributory negligence would not have exceeded 20%.

5.  Neither of the above scenarios however would have helped Gurung, in view of the quantum assessed. After discount on account of her pre-existing degeneration by 50% (as opposed to 70% contended by PE) and contributory negligence, the quantum net of the employees’ compensation in the sum of HK$259,497 already received would have been nil.

6.  Hence the dismissal of the claim, and the Nisi Costs Order in the following terms:

(1)  Gurung shall pay PE’s costs of the action, including any costs reserved, to be taxed, if not agreed, with certificate for one counsel.

(2)  Costs under (1) above shall include the costs incurred in and occasioned by the Deposition Proceedings on 19 November 2021 save that there will be no order as to (i) the costs occasioned by engaging the examiner; (ii) fees of the examiner; (iii) cost of the examination venue; (iv) cost of recording, transcripts and translation services, all already borne by PE.

(3)  Gurung’s own costs up to discharge of legal aid shall be taxed in accordance with the legal aid regulations.

7.  In the absence of application in 14 days to vary, the Nisi Costs Order would become absolute in the absence of further order.

8.  By summons filed on 3 January 2024, PE seeks variation of the Nisi Costs Order. The extent of variation however was adjusted prior to the hearing as follows:

(1)  Gurung do pay PE’s costs of the action, including all costs reserved, up to and including 19 November 2019 on party and party basis and thereafter on indemnity basis at the High Court scale with certificate for one counsel, to be taxed if not agreed;

(2)  Gurung do pay PE interest on costs and disbursements as per the schedule attached (to be taxed, if not agreed) from the dates of their actual payments to 21 December 2023 (ie the date of the Judgment) at judgment rate plus 1% per annum, and thereafter at judgment rate until full payment;

(3)  The sum of HK$1 being the sanctioned payment made by PE on 22 October 2019 together with interest thereon, if any, be paid out of court to PE forthwith through its solicitors;

(4)  Costs of the present application on indemnity basis at High Court scale, to be taxed if not agreed.

9.  The schedule attached to the proposed order presented to this court during the hearing sets out various items of disbursements settled by the insurer of PE on various dates during the period between January 2020 and May 2023 in the total sum of HK$1,242,500. That, according to the affirmation of those acting for PE, formed part of the total legal costs in excess of HK$2.2 million.

10.  Gurung used to be legally aided until February 2022 but continued to be represented by the same solicitors. She filed her notice to act in person on 4 January 2024. She was absent from the present hearing. Satisfied with the affirmation of service, this court allowed PE to proceed. Interested in the application, the representative of the Director of Legal Aid also attended.

11.  O22, r23 of the Rules of the High Court, Cap 4A provides that where the plaintiff fails to obtain a judgment that is more advantageous than a defendant’s sanction payment:

“…

(3) The Court may order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment … 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 … 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 …;

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

(c) the information available to the parties at the time when the sanctioned payment … 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 … to be made or evaluated.

…”

12.  It is the burden of the paying party, ie Gurung, to show that it is unjust to make the order under O22, r23.

13.  The appropriate enhanced interest rate within the range not exceeding 10% above the judgment rate is a matter of the court’s discretion to be exercised according to the circumstances of the case. This court has previously awarded enhanced interest on costs at the rate of 1-2% per annum above the judgment rate according to the circumstances of those cases. As mentioned, PE seeks the enhanced interest rate of 1% per annum above the judgment rate.

14.  The problems in Gurung’s case were multiple. It is against this background that one considers the application of O22, r23. Gurung failed on liability or, even assuming that liability were somehow established, on quantum in any event. By the sanctioned payment back in 2019, PE effectively put Gurung to seriously consider, with proper legal advice, whether or not to proceed with the action at all. Had the payment been accepted, PE would have been prepared to pay her costs of the action up till then pursuant to the operation of the rule. In these circumstances, there was nothing unreasonable about PE’s making a sanctioned payment of a mere nominal sum in order to trigger the applicability of O22, r23 in due course for the benefit of placing the burden on Gurung to demonstrate that it would be unjust to make the order under the rule.

15.  The sanctioned payment was made slightly less than 8 months after the writ of summons was served on PE. However, there is nothing to suggest that Gurung had difficulty in assessing her risk of litigation at the time of the sanctioned payment. This court makes no assumption in respect of the reason for the subsequent discharge of her legal aid in February 2022. However, she remained legally represented throughout until then. Insofar as whether or not to proceed at all is concerned, it was up to her decision with proper legal advice at any time even after the time for acceptance of the sanctioned payment without leave has expired. The fact was that she made the conscious decision to proceed without any counter-offer for settlement, but only to reveal a substantially different version of the accident never disclosed by pleading and contradicted by her stance at the Deposition Proceedings and her evidence in chief at the trial.

16.  Essentially, it could be said that the action should not have been commenced. Hence the premise for PE’s present application for its costs to be paid by Gurung on an indemnity basis. The court’s jurisdiction to consider awarding costs on such basis is inherent even without O22, r23. This is where the interest of the Director of Legal Aid sets in. Subsequent to the communication with the Director of Legal Aid, those acting for PE accepted that the Director of Legal Aid could only address the issue of PE’s such costs on party and party basis up to the discharge of legal aid. This was confirmed during the hearing. Hence the terms of the variation revised accordingly.

17.  As to enhanced interest on PE’s costs payable by Gurung, PE relies on O22, r23 and seeks an order with effect from the date after the deadline for accepting the sanctioned payment without leave of the court. The principles explained in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273, which were adopted in Shih Pik Nog v G2000 (Apparel) Limited [2011] 4 HKLRD 121 are relevant. Where there is no evidence before the court as to what and when costs and disbursements were actually paid after the expiry of the deadline for accepting the sanctioned payment without leave of the court or where the payments were multiple over a long period of time since then, the court may adopt the modified approach by ordering such costs to be paid at half of the enhanced interest over the period. This court had thought this was such a case.

18.  However, 2 days prior to the hearing, PE did present evidence in respect of the actual dates of settlement of various items of disbursements by PE’s insurer since the deadline for the acceptance of the sanctioned payment without leave by way of the further affirmation of those acting for PE. That was done apparently after consideration of the concern of the Director of Legal Aid in that the Director would only be in a position to address such costs up to the discharge of legal aid. Hence the revised variation to the effect that interest on those items of costs and disbursements shall run at the enhanced rate of judgment rate plus 1% per annum from their respective dates of actual payment up to the date of judgment, and thereafter at the judgment rate until payment.

19.  This court explained in the Judgment why certain costs incurred in connection with the Deposition Proceedings borne by PE should remain that way (see §6(2) above). PE confirmed that that part of the order shall remain. So shall the order as to the legal aid taxation of Gurung’s own costs up to the discharge of her legal aid (see §6(3) above).

20.  All matters considered, I made an order in terms of the variation of the Nisi Costs Order as sought and amended in court. I also ordered Gurung to pay PE’s costs of the present application on an indemnity basis as sought.

[If requested, English/Nepalese interpreter would be arranged to assist Gurung at the time when these reasons are handed down.]