HCPI 601/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 601 OF 2008

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JUDGMENT

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1. This is an application to vary the cost order nisi made in a judgment handed down on 11 September 2009.  In that judgment I gave judgment in favour of the plaintiff in the sum of $1,751,185 together with interest and costs.

2. The plaintiff’s application is based on an offer made on 27 August 2009 on behalf of the plaintiff to settle the action for a sum of $1.3 million inclusive of interest plus costs to be taxed.  Shortly after the offer was made the case was put on the warned list and on 3 September 2009, the action was warned to be tried on 4 September 2009. The trial commenced on that day and concluded on 8 September 2009.

3. There is no dispute that the offer was a sanctioned offer within the terms of Order 22.  There is also no dispute that the conditions specified in Order 22, rule 24(1) was satisfied in that the judgment made was more advantageous to the plaintiff than the proposal.

4. The mere fact that the offer, as it turned out, was made not more than 28 days before commencement of trial does not ipso facto prevent the offer from being accepted.  See Herbert Choi Hong Kong v Kok Wai Chun [2009] 4 HKLRD 215.  The difficulty with the plaintiff’s argument however is that this is a case where the plaintiff was under disability.  Not only does Order 80, rule 10 apply to prevent any settlement to be valid without court approval, Order 22, rule 19 specifically provides that in proceedings under Order 80 a sanctioned offer cannot be accepted without leave of the court.

5. That being the case, I cannot see how the sanction under Order 22, rule 24(2) and (3) can apply.  These provide :

Sub-rule (2) :

“The court may order interest on the whole or part of any sum of money (excluding interest) awarded to the Plaintiff at a rate not exceeding 10 per cent above judgment rate for some or all of the period after the latest date on which the Defendant could have accepted the offer without requiring the leave of the court.”

Sub-rule (3) :

“The court may also order that the Plaintiff is entitled to:

a) His costs on an indemnity basis after the latest date on which the Defendant could have accepted the offer without requiring the leave of the court; and

b) Interest on those costs at a rate not exceeding 10 per cent above judgment rate.”

6. Given the terms of Order 22, rule 19 it is not possible to say that there is a date on which the defendant could have accepted the offer without leave of the court. 

7. Mr Lam, on behalf of the plaintiff, argues that notwithstanding Order 22, rule 19, the defendant could still have accepted the offer and the parties should then obtain the court’s approval under Order 80, rule 10 and Order 22, rule 19.  He argues that unless the court construes rule 19 in the manner he suggests it would frustrate the purpose of the new legislation in encouraging early settlement. 

8. I have a great deal of sympathy with that argument but in my view rule 19 is clear.  The offer may, “only be accepted with the leave of the court.”  There is hence no date one can point to for the purpose of rule 24 that the defendant, “could have accepted the offer without requiring the leave of the court.” 

9. Mr Lee, on behalf of the defendant, suggests that a sanctioned offer can still be taken into account under Order 60, rule 5.  That may be the case, but in my view, the present rules do leave a lacuna for proceedings governed by Order 80. 

10. So for these reasons I would not accede to the plaintiff’s application to vary the cost order to provide for indemnity costs and for the increased rate of interest.  This leaves the defendant’s cross-application to vary the cost order on the basis that the plaintiff should be deprived of part of its costs by reason of its conduct before and during the trial.  I have read the defendant’s submission and listened to Mr Lee’s argument on this but I can see no merit in that application. 

11. The parties are, nevertheless, agreed that the standard of taxation in this case should be on a common fund basis.  I therefore make an order to vary the order nisi to provide that the costs of this action be taxed on a common fund basis. 

(Discussion re costs)

12. I think, having heard the argument, and noting the defendant’s Calderbank offer, a fair order is to make no order as to costs and I so order.