CHEUNG YUEN LAN on behalf of herself and the other dependents of ABDUL WAHED, deceased v. ROTH & SONS ESTATES MANAGEMENT LTD AND ANOTHER

DCPI 1304/2015 &
DCPI 841/2016
(Consolidated)

[2023] HKDC 1000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO. 1304 OF 2015

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BETWEEN

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO. 841 OF 2016

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BETWEEN

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DECISION

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A. INTRODUCTION

1.  This consolidated personal injuries (“PI”) action involves the untimely death of one of the plaintiffs, namely, Abdul Wahed Tariq Aquash (“P1”) in DCPI 1304/2015 and the non-appearance of the other plaintiff, namely, Tariq Aqash (“P2”) (jointly as “Ps”) in DCPI 841/2016, on the first day of trial. Both cases involve a very dubious and questionable claim out of the same alleged lift accident. However, due to the untimely death and the non-appearance of Ps, the claims were basically abandoned by Ps.

2.  It now leaves the question of who should bear the costs of the defendants and the third party in the proceedings. Most likely, it will end up with one of the “innocent” parties, namely, either the defendants, namely, the 1^st defendant, Roth & Sons Estates Management Limited (“D1”), and the 2^nd defendant, namely, The Incorporated Owners of Yau Fook Building (“D2”) (jointly as “Ds”), or the third party, namely, Rich Mark Engineering Limited (“TP”), in the above two actions, will have to pay for the costs as a result of the very dubious claims brought by Ps in the first place.

3.  The present applications by Ds and TP are related to who should ultimately be responsible for paying the costs of the main actions (“the Main Actions”) and the third party proceedings (“TP Proceedings”).

4.  There are three summonses taken out by Ds and TP which are required to be dealt with by this court. They are:-

(1) Summons dated 14 March 2022 issued by TP (“TP’s Summons”) for:-

(i) dismissal of the corresponding TP Proceedings upon the dismissal of Ps Main Actions against Ds; and

(ii) Ds do pay TP’s costs of both corresponding TP Proceedings, with certificate for counsel.

(2) Summons dated 14 March 2022 issued by Ds (“Ds’ 1^st Summons”) for:-

(i) under the Main Actions: Ps do pay Ds’ costs of the whole action on an indemnity basis with certificate for counsel;

(ii) under the TP Proceedings: TP/Ps do pay Ds’ costs on an indemnity basis with certificate for counsel; Ps do pay TP’s costs; and

(iii) Ps/TP do pay Ds’ costs of Ds’ 1^st Summons on an indemnity basis with certificate for counsel.

(3) Summons dated 23 March 2022 issued by Ds (“Ds’ 2^nd Summons”) for:

(i) leave for Ds to discontinue the TP Actions;

(ii) costs of the TP Proceedings be provided for with reference to relevant orders sought in Ds’ 1^st Summons; and

(iii) TP do pay Ds’ costs of the application for discontinuance/no order as to costs.

5.  TP filed two affirmations in support of its applications:-

(1) Affirmation of Hung Chun Bong Michael dated 14 March 2022 (“TP’s 1^st Aff”); and

(2) 2^nd affirmation of Hung Chun Bong Michael dated 28 March 2022 (“TP’s 2^nd Aff”).

6.  Ds have filed three affirmations in support of their applications:-

(1) Affirmation of Lam Kwan Bo dated 14 March 2022 (“Ds’ 1^st Aff”);

(2) 2^nd affirmation of Lam Kwan Bo dated 23 March 2022 (“Ds’ 2^nd Aff”); and

(3) 3^rd affirmation of Lam Kwan Bo dated 28 March 2022 (“Ds’ 3^rd Aff”).

B. BACKGROUND

7.  By the Main Actions, P1 and P2 claim against Ds, who were respectively (i) the incorporated owners of the building; and (ii) the management company of the building where the alleged accident took place. Ps claim damages for the alleged personal injuries sustained by them in the same alleged lift accident that occurred on 16 May 2013, wherein the lift had allegedly malfunctioned and dropped from 1/F to G/F in a “free fall” manner (“the Accident”).

8.  Ds instituted the TP Proceedings against TP, ie the lift maintenance company, in both actions.

9.  TP’s solicitors, Messrs Clyde & Co (“CC”), had by their letter dated 25 July 2016 to Messrs Tsang, Chan & Wong (“TCW”), solicitors for Ds, pointed out to Ds that Ps’ pleaded case of a “free-fall accident” of the lift was “totally impossible and fake”, with the support of relevant evidence of (i) a joint inspection of the lift by the Electrical and Mechanical Services Department (“EMSD”) and the TP’s appointed engineer immediately after the Accident; and (ii) the regular maintenance undertaken by TP earlier and, within a month of the Accident, found lift in normal working order, thereby discharging its duty of care.

10.  It is significant to note here that both Ds and TP took a common front in their respective defence of the Main Actions and the TP Proceedings, namely, that Ps’ pleaded case of a “free-fall accident” of the lift and that the Accident was “totally impossible and fake”.

11.  Evidence shows that Ps had taken a conscious decision to sue Ds only, but not TP. Ps’ own engineering expert opines that, even assuming that the Accident had occurred, the cause of the Accident/fault lies with Ds, namely, in failing to keep proper records and follow up repair and maintenance work. However, that has completely ignored the fact that the primary finding of Ps’ own expert is that the “free fall” was “totally impossible and fake”.

12.  TCW had, by their letter dated as early as 16 March 2016, pointed out to Ps’ solicitors that they should have sued TP instead of Ds[1]. Ps had, however, decided to continue to sue Ds only in the Main Actions, though indicating that they would have no objection for Ds to commence third party proceedings against TP.

13.  P1’s claim in DCPI 1304/2015 was struck out and the action was dismissed on 13 January 2022 by this court upon his breach of an Unless Order dated 23 December 2021.

14.  P2’s claim in DCPI 841/2016 was provisionally struck out by an order of this court dated 30 November 2021 due to his absence at the hearings and inactions prior to the trial. The claim was eventually struck out and the action was dismissed by an order of this court dated 1 March 2022.

15.  Against this background and as directed by this court in a letter dated 26 January 2022, TP issued the TP’s Summons on 14 March 2022 asking the court to deal with the following outstanding matters, namely, (i) disposal of the corresponding TP Proceedings; and (ii) costs of the TP Proceedings between Ds and TP (including the costs of the 3 Summonses).

16.  Without obtaining a formal court order of disposal of the TP Proceedings (and before the court hears any applications or submissions on costs from Ds and TP), TCW had, on behalf of Ds, on 14 January 2022, unbeknownst to TP, lodged in court for approval a draft order with provision for costs of the third party proceedings against P1 and in favour of Ds and TP[2]. The draft order though approved was not sealed upon TP’s objection/application. Pursuant to the court’s directions dated 17 March 2022, the matter was adjourned for arguments in court on the above dates of hearing.

C. DISCUSSION

C.1 TP’s submissions

C.1.1 Dismissal or Discontinuance of the TP Actions

17.  Ms Phillis Loh represents TP in this case.

18.  Ms Loh submits that the TP Proceedings should be dismissed, on the basis that the Main Actions had both been dismissed and the cause of action arising out of the subject Accident had extinguished.

19.  In TP’s submissions, in the circumstances of these cases where the Main Actions had been dismissed and there existed no cause of action or basis of seeking indemnity/contribution by Ds against TP, the court, in the discharge of its functions of case management, has inherent jurisdiction and full power under Hong Kong Civil Procedure 2022 O 1B r 2 to dismiss the TP Proceedings, whether of its own motion or upon application.

20.  Ms Loh further submits that Ds’ application for leave to discontinue (as opposed to dismiss) the TP Proceedings is inappropriate. She submits that it is trite that a discontinuance is no bar to a subsequent action for the same, or substantially the same, cause of action. In the present case, Ps’ causes of action and claims arising out of the subject lift accident, based on which the TP Proceedings were instituted, had extinguished. An order of dismissal of the TP Proceedings should therefore follow and would be appropriate.

21.  In any event, whether an order of dismissal or discontinuance is made of the TP Proceedings, Ms Loh submits that it should have no bearing on costs because in either case, Ds would be the losing/conceding party. TP, being the winning party of the TP Proceedings, should have costs against Ds.

22.  Ms Loh further submits that as Ds had made the decision to sue TP despite Ps’ refusal to sue TP and join them as a co-defendant in the Main Actions, Ds should be fully aware of the risks of costs consequences and must therefore take responsibility. In her submissions, TP were wholly passive in being sued by Ds, and had done nothing improper or unreasonable so that they, as the winning party upon the dismissal/discontinuance of the TP Proceedings, should be deprived of their entitlement to costs.

C.1.2 Legal principles on costs relied on by TP

23.  In TP’s submissions, the starting point is costs should follow the event in accordance with O 62 r 3(2). Upon a dismissal of the TP Proceedings, TP should be regarded as the winning party, and Ds the losing party. The burden rests upon the losing party, ie Ds in the present case, to justify any departure: See Halsbury Laws of Hong Kong Vol.11 (second edition) [90.1285] (with footnotes) at pp 727-737.

24.  Footnote 5 of that passage at pp 727-728 cited by Ms Loh states as follows:-

“In the application of this rule to third party proceeding it will generally be found that the defendant and the third party stand in relation to one another as if the defendant had brought a separate action against the third party…although the court might order that the costs payable by the defendant to a successful third party be recovered from an unsuccessful plaintiff”.

25.  In Johnson v Ribbins & Anors [1977] 1 All ER 806, the English Court of Appeal states, per Goff LJ, at pp 810j-811a as follows:-

“In the exercise of that discretion … the court should be guided by the principle that normally costs follow the event as is expressly provided by Rules of the Supreme Court O 62 r 3(2) and should, therefore, normally order the defendant, though successful in the action, to pay the costs of the third party if he also be successful. Then, if in the circumstances of the case these costs ought fairly to be borne by the plaintiff, the court will further order that they be added to the defendant’s costs of the action as against the plaintiff”.

26.  In Liu Ma Cheung v Liau Yin Fu, unreported, HCA 181/2004 (Mr Recorder Kwok SC; 21 December 2007) where the plaintiff sued the defendant who joined the third party, both the defendant and the third party shared common interest in the defence and adopted a common front in defending the action. When the plaintiff became unsuccessful, the court ordered the defendant to pay the costs of the third party and those costs be recoverable from the plaintiff. The learned recorder has specifically cited the above passage of Goff LJ in Johnson v Ribbins & Anors, supra and found that where third party proceedings are dismissed, a third party should normally be awarded its costs against the defendant “even though they cannot be recovered from the plaintiff due to its insolvency”: See also Concorde Construction Co Ltd v Colgan Co Ltd (Hsia & Associates (a firm), third party), unreported, HCCL 36/1984 (Penlington J, 22 April 1985).

27.  Ms Loh submits that the position is no different with discontinuance, ie the party seeking to discontinue its action should pay the costs of the other party. The burden of persuading the court to depart from the general rule rests on the party who seeks to discontinue/withdraw. Good reasons ought to be shown for departure: See Hong Kong Civil Procedure 2022, §21/5/12A.

28.  In the Hong Kong Court of Appeal (“CA”) case of China Baoli Technologies Holdings Ltd v Orient Equal International Group Ltd , unreported, CACV 34/2018 (Yuen, Barma JJA; 3 November 2021), the CA held that the defendants, in deciding to withdraw the third party proceedings, are to be regarded as the conceding party. Having regard to all the circumstances and the parties’ conduct, the court found no reason to depart from the general rule that the party applying to discontinue/withdraw (ie the defendants) should bear the costs of the third party.[3]

29.  Ms Loh submits that the English position is the same as that stated in Johnson v Ribbins & Anors (supra) and Kemp & Kemp: Personal Injury Law, Practice and Procedure [12-017]:-

“Where the main claim is dismissed and as a result the additional claims are dismissed (because there is no liability for the defendant to pass on to the additional defendants), then, as a general rule, the claimant must pay the defendant’s costs and the defendant must pay the third party’s costs. However, if the defendant has acted reasonably in issuing an additional claim, then the claimant will generally be taken to foresee the eventuality of the defendant bringing an additional claim and so the claimant’s costs liability to the defendant will include paying the costs of the additional claim as well. If the defendant knows that the claimant is impecunious and cannot pay the defendant’s costs, but decides to bring an additional claim anyway, then the defendant cannot rely on the claimant’s impecuniosity as a reason to avoid paying the third party’s costs of the additional claim, save in exceptional circumstances.”

[emphasis added]

30.  In Arkin v Borchard Lines Ltd & Anors (No. 3) [2003] EWHC 3088 (Comm), it was held that the mere fact that the defendant would not be able to recover his costs as against an unsuccessful claimant, because of the latter’s impecuniosity, was not a sufficient reason for departing from the usual rule that where a defendant brought in a third party, and the claimant’s claim meant that the defendant’s claim against the third party also failed, that the defendant should be ordered to pay the third party’s costs of the third party proceedings:-

“… if that defendant, with knowledge of the claimant’s lack of resources, then chooses to protect his position by joining a third party Part 20 defendant, it is in the interests of justice that the third party should be placed in a similar position as to the recovery of his costs, if successful, to that of the defendant who has chosen to join him. It is indeed hard to see why the apparent injustice to the defendant by reason of his inability to recover his costs from the impecunious claimant should ordinarily be spread to the third party who has been sued involuntarily by a sufficiently resourced defendant. If, as it is ultimately decided, he has been wrongly sued and is under no liability to the defendant, to expose him by a costs order to the impecuniosity of the claimant would normally not only be unnecessary to do justice to the defendant but would do serious injustice to the third party…”

The court highlighted the “separability principle” in that the TP Proceedings are treated as separate proceedings from the Main Actions. The court would approach the exercise of discretion on costs on the basis that it will only be in exceptional circumstances that the “separability principle” will justifiably be departed from.

31.  Ms Loh further cited the case of Kwan Chui Kwok Ying v Tao Wai Chun & Anors, unreported, HCMP 2996/1990 (Deputy High Court Judge To; 30 May 2006) (Third Party Proceedings), where the court, in considering the entitlement of costs of the winning third party (the 15^th defendant) against the 6^th defendant who issued the third party proceedings, states the general principle that costs should follow the event; the losing 6^th defendant who seeks to deprive the third party of costs bears the burden of justifying the exceptional costs order. Thus, “a successful party may be deprived of his costs if he (1) has brought about the litigation, (2) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3) has done some wrongful act in the course of the transaction of which his opponent complains.” (See §21).

32.  Ms Loh also relied on the passage below in that case where DHCJ To (as he then was) stated the following at §23:-

“The burden of proof is on the unsuccessful party. The focal point is on the conduct of the successful party in the particular circumstances. His conduct must be material or operative on the mind of the unsuccessful party in that it induced him to take the course he took which he otherwise would not have taken. In other words, the unsuccessful party must show that he instigated the litigation or persisted in the defence because he was led to the belief that he has a good cause of action or a good defence by reason of the conduct of the successful party. He must genuinely hold that belief and on reasonable ground. If he does not hold that belief, the conduct of the successful party howsoever heinous is not causative. He must hold that belief on reasonably ground, otherwise there is no justification for such a reverse costs order. If the unsuccessful party fails to discharge the burden, the successful party is entitled to his costs.” [emphasis added]

C.1.3 TP’s application of the legal principles to the present case

33.  Ms Loh submits that, by applying the above cited legal principles on costs of the winning third party to the present case, the burden rests on Ds to show why there are exceptional circumstances justifying a departure from the general rule that the winning third party should have their costs against Ds or TP should be deprived of their costs of the TP Proceedings.

34.  TP submits that no exceptional circumstances have been demonstrated by Ds.

C.1.4 TP’s conduct in the third party proceedings

35.  Ms Loh further relies on the conduct of the TP as the ground of why Ds should pay TP’s costs in this case.

36.  According to Ms Loh, TP had since day one (ie in their letter dated 25 July 2016 to TCW) pointed out the evidence that Ps’ alleged “free-fall” accident of the lift was “impossible and fake”, and that TP had inspected the lift shortly before and within 1 month from the date of the accident and found it to be in normal working order, thereby discharging their duty of care.

37.  Ms Loh submits that there was nothing TP had done which would have led Ds to believe that they had a good cause of action against TP.

38.  Further, TP says that the TP Proceedings had gone on for 5-6 years. TP had incurred substantial time and costs in defending the third party claims.

39.  In addition, Ms Loh submits that TP had all along conducted the TP Proceedings in a reasonable manner and engaged in “without prejudice” settlement discussions with Ds. Solely for a commercial decision to expedite conclusion of the TP Proceedings and save costs, TP had in as early as April 2017 made a settlement offer to TCW of HK$80,000 with no order as to costs of the TP Actions. With the view to doing away with a costly trial, TP made to Ds a “without prejudice” settlement offer to pay HK$100,000 with no order as to costs of the TP Proceedings on 10 September 2021.

40.  On the other hand, TP contends that Ds had taken an unreasonable stance on settlement, with their last offer to TP (made on 17 June 2019) of a payment HK$800,000 plus costs to Ds.

41.  Lastly, according to Ms Loh, there is no evidence that TP had by their unreasonable conduct delayed or added to the costs of the proceedings, to justify departure from the general rule that costs should follow the event.

C.1.5 Common front of defence

42.  Upon the evidence adduced by TP and that of the engineering experts of Ds and TP, Ds and TP adopted a common front/defence (ie that Ps’ pleaded accident was “impossible and fake”) and shared common interest in the defence.

43.  As in the cases of Liu Ma Cheung, supra, Concorde Construction Co Ltd, supra, and Arkin v Borchard Lines Ltd, supra, upon dismissal of Ps’ claims, Ds should be ordered to pay costs of TP, even though those costs may be ordered to be recoverable from Ps. The fact that Ps are impecunious and may not be able to pay Ds the costs ordered would not prevent a costs order made against Ds in respect of costs of the TP Proceedings.

C.1.6 Concerning Ds’ arguments as set out in Ds’ Affirmations

44.  Ds argue that the TP Proceedings were appropriate and necessary: it was not possible for Ds to defend the claims without involving TP; also, it was necessary for Ds to sue TP for a contractual indemnity.

45.  Ms Loh argues that TP had provided from day one of this case all the evidence in their possession related to the EMSD inspection conducted on the same day and immediately after the Accident. Ds have also obtained evidence from their appointed engineering expert. The Accident was shown to be “impossible and fake”. There was no necessity for Ds to sue TP in order to defend the Main Actions.

46.  Further, Ds’ case against TP is based on negligence of TP or their employees/tort, ie the same basis as Ps’ claims against them. Upon Ds’ pleaded defence in the Main Actions that the Accident was “impossible and fake”, there was no basis nor necessity for them to sue TP for negligent maintenance/repair that had allegedly caused the Accident. There is no provision of “contractual indemnity” by TP in favour of Ds in the Maintenance Contract.

47.  Ms Loh submits that there is no evidence to support Ds’ argument that the TP Proceedings were appropriate and necessary. In any event, in her submissions, these are not relevant factors nor would amount to exceptional circumstances justifying deprivation of costs entitlement of TP (who are allegedly the winning party of the TP Proceedings).

48.  As stated in Kwan Chui Kwok Ying, supra, the focal point is on the conduct of the successful party, ie TP, if “he (1) has brought about the litigation, (2) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3) has done some wrongful act in the course of the transaction of which his opponent complains….” so that deprivation of his costs would be justified.

49.  TP argues that the matters raised in Ds’ arguments are not related to the “conduct of TP” that could be said to have led Ds to instigate and persist with the TP Proceedings.

50.  Ds seek costs of the TP Proceedings against TP whose “originating fault” (i.e. in failing to maintain the lift properly) was, according to Ds, the sole cause of these actions. This is wholly wrong when fault was not proved and Ps’ actions were dismissed, not to mention that the alleged fault of TP is wholly inconsistent with Ds’ own defence that the Accident was “impossible and fake”. In any event, the problem of “dislocation of car door sensor” found by EMSD could not have caused a free-fall accident of the lift as alleged by Ps, which was, as found by both Ps & Ds’ experts, “impossible and fake”.

51.  Ds also argue that TP, defending via their insurer, should pay Ds’ costs in place of Ps who are impecunious and would have no means to pay.

52.  Ms Loh submits that these arguments are wholly wrong and lack legal basis.

53.  Recently, Ds by TCW’s letter dated 8 March 2022 requested (in respect of both actions) Ps to pay all costs of Ds and TP; alternatively, they proposed that there be no order as to costs of the TP Proceedings, which Ms Loh considers as wholly unreasonable. Ms Loh submits that it is also wrong and without legal basis for Ds to argue for indemnity costs in the event that TP is eventually unable to do better than the terms of the offer.

C.2 Ds’ Submissions

C.2.1 Costs do not necessaily follow the event in such cases

54.  Mr Tim Kwok who represents Ds in these applications started with the general proposition that costs is ultimately a matter of discretion of the court as stated in s 53(1) of Cap 336 District Court Ordinance:-

“The costs of and incidental to all proceedings in the Court, including the administration of estates and trusts, are in the discretion of the Court, and the Court has full power to determine by whom and to what extent the costs are to be paid”.

55.  Mr Kwok further relies on the well-established rule that once the court is satisfied that a third party action is justified, it may order an unsuccessful plaintiff to pay the defendant’s costs of the third party actions as well as the third or fourth parties’ costs of the third party action: See Hong Kong Civil Procedure 2022 §16/7/4 at p 466. In particular, Mr Kwok relies on the several cases mentioned in that paragraph: including Edginton v Clark [1964] 1 QB 367 at pp 378, 379 and 384; Thomas v Times Book Company Limited [1966] 1 WLR 911, at 919G & 920 A-B; Nam Kwong Medicines & Health Product Co Ltd v China Insurance Company Limited & Anoor (2002), unreported, HCCL 27/1999 (Stone J; 13 November 2002). At §17 of the last case, it has been clearly stated by the learned judge that: “It seems well-established that the court may order an unsuccessful plaintiff to pay the costs of third or fourth parties whose joinder was made inevitable by the plaintiff’s claim….”.

56.   In Townmens Investment Co Ltd v Wider River Limited (in liquidation) & Anors, unreported, HCA 538 of 2009, (Master Levy; 21 September 2010) where the learned master stated that “concerning the court’s approach to a third party’s costs upon a court dismissing a plaintiff’s claim against the defendant, (a) the court has complete discretion. (b) Court may order an unsuccessful plaintiff to pay the costs of a third party whose joinder was made inevitable by the plaintiff’s claim”.

57.  In Man Sun Finance (Holdings) Ltd v Foo Sau Chun Richard and Anors, unreported, HCA 1297/2002 (Deputy High Court Judge Saunders; 18 August 2005), the court commented in §8 of the judgment that “Upon Man Sun Finance joining David Chan as a 2^nd Defendant in the proceedings he joined Richard seeking an indemnity by way of Third Party Notice. That was a perfectly proper step for him to take”.

C.2.2 Authorities on discontinuance

58.  Mr Kwok submits that Ds seek leave to discontinue the TP Proceedings under O 21 r 3(1) of Cap 336H The Rules of the District Court (“the RDC”) where the court may give leave on terms of costs and subsequent action or otherwise:-

“Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counterclaim, or withdraw any particular claim made by him therein, without the leave of the Court, and the Court hearing an application for the grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just”.

59.  Mr Kwok further briefly summarized a number of authorities on costs upon discontinuance. They included:-

(1) Inchroy Credit Corporation Ltd v Cheung Man-cheung [1992] 1 HKLR 120 where the case becomes academic, unnecessary or futile and where the claimant was an innocent party;

(2) Trend Publishing (HK) Ltd v Vivien Chan & Co (a firm) [1996] 2 HKLR 227: If a claimant wishes to discontinue without paying costs, he must obtain leave under O 21 r 3. Prima facie rule that costs follow the event, but it is not an absolute rule. Departure is justified when circumstances exist. It is of complete discretion to do justice between the parties and the case becomes academic and merits relevant. Although discontinuance does not prevent a subsequent action, terms for discontinuance may include the condition of not commencing another action on the same matter;

(3) Leung Yuet Ching & Anor v Leung Yuet Kuen & Anor, unreported, HCA 9924/2000 (Deputy High Court Judge Muttrie; 24 September 2001): When the matter becomes academic rather than acknowledgement of defeat relevant, the court may make no order as to costs;

(4) Lai Kwok Wah Kenneth & Anors v Leung Kwok Hung Jonathan & Anors, unreported, LDBM 292/2004 (M. Wong J; 25 May 2010): Costs can be decided without resolving substantive issues at a full-blown trial. If the court is unable to say who would have succeeded, it may make no order as to costs. When there is no proper basis on which the court can say the claim would fail, it is just and fair to make no order as to costs. Issues that become academic would justify a departure from the general rule. The court may make no order as to costs if justice requires;

(5) R (on the application of Boxall) v Waltham Forest LBC Queen’s Bench Division (Administrative Court): Wide discretion to depart from the general rule. When the case becomes academic, the court may make no order. When there are no rigid guidelines, the claimant’s chance of success would be high even if one just looks at the papers briefly. With the principles established, it would uphold justice for the one who would have won. Cases in between are less clear and will depend on the circumstances. In the absence of a good reason, the fall back is to make no order as to costs;

(6) Elpe International (Far East) Ltd v Hewlett Packard Hong Kong Ltd, unreported, CACV 58/1993 (Power VP, Nazareth & Bokhary JJA; 30 July 1993): The real winner may be a consideration;

(7) Brawley v Marczynski & Anors [2002] EWCA Civ 756: The Judgment has endorsed and adopted the principles set out in Boxall, supra;

(8) Perrine Chamonix Ltd v Star League Ltd and Anors, unreported, HCA 1139/2017 (Deputy High Court Judge William Wong SC; 13 September 2017): No mechanic approach adopted. The court shall look at the substance and merits of an application. When there is an effective winner of the case, it becomes unnecessary or academic;

(9) Bankamerica Finance Ltd v Nock [1988] I AC 1002 (A Bullock/Sanderson case): Normal rule adopted with costs following the event. While the court has unlimited discretion to make an order to meet justice, a successful party has a reasonable expectation to costs but “has no right to such an order” because it depends on discretionary jurisdiction. The question of impecuniosity may be relevant. The court may balance and spread hardship;

(10) China Everbright Finance Ltd and Anor v Chan Yung and Anor, unreported, HCA 18300/1999 (Deputy High Court Judge Muttrie; 12 December 2006) (A Bullock/Sanderson case): The court carried out a “balance of hardship” exercise when presented with an impecunious party;

(11) Ta Tung China & Arts Ltd v Fontana Restaurant Ltd and Anors [1999] I HKLRD 404: There are two ways to determine costs when a matter becomes academic. First, to apply for leave to discontinue and ask for determination of costs. It is possible but unusual for a claimant to apply for a costs order upon a discontinuance and to seek costs from the defendant. Second, to have a trial, but it is not desirable:

“12. There is no doubt that there are two ways in which a party can have the matter of costs determined if the liability issues in the action have become academic. First, he may apply for leave to discontinue the action and ask for the costs to be determined. In those circumstances, although it would not be impossible for the plaintiff to ask for an order for the payment of the costs by the party against whom he is discontinuing, it undoubtedly would be most unusual. For my part, I have never come across such a case.

13. The second way in which this issue can be resolved is for the parties to go to trial and to have the costs dealt with after trial. Of course, the issues on such a trial would be extremely limited.”

(12) Robbins & Anor v Peaktop Technologies (USA) HIC Ltd, unreported, HCMP 2456/2006 (Barma J; 16 May 2007): This is an example of claimant getting costs in a withdrawal case. But for the defendant’s action, the claimant would have obtained the leave sought and be substantially successful in getting costs.

C.2.3 Authorities on indemnity costs

60.  Mr Kwok further states that the following principles have been established:-

(1) Sung Foo Kee Ltd v Pak Lik co (a Firm) [1996] 3 HKC 570: Indemnity costs is appropriate not only in cases of deception or underhand conduct, but also in a variety of circumstances. The court’s discretion is not fettered beyond the requirement that the indemnity basis must be appropriate, while this case is inappropriate to define circumstances; and

(2) Town Planning Board (CFA) v Society for Protection of the Harbour Ltd, unreported, FACV 14/2003 (Li CJ, Bokhary, Chan, Ribeiro PJJ, Mason NPJ; 2 April 2004): The case has some special or unusual feature. It is not confined to deception or underhand conduct. And discretion is not to be fettered. Circumstances may extend to any matter relating to the litigation, such as, parties’ conduct and also the circumstances leading to the litigation.

C.2.4 TP’s liability to Ps and Ds at law

61.  Mr Kwok has fairly commented that there is no dispute that Ds owed a duty of care to the Ps at common law and under the Occupiers Liability Ordinance, Cap 314 (“OLO”). Likewise, TP, here as the lift contractor engaged under a contract by Ds, owed the Ps a duty of care at common law. TP’s duty to the lift users cannot be disputed. It is similar to a car accident caused by faulty maintenance and repair by a reputable garage which must be answerable to the injured person.

62.  S 3(4)(b) of the OLO:-

“where damage is caused to a visitor by a danger due to the faulty execution of any work of construction, maintenance or repair by an independent contractor employed by the occupier, the occupier is not to be treated without more as answerable for the danger if in all the circumstances he had acted reasonably in entrusting the work to an independent contractor and had taken such steps (if any) as he reasonably ought in order to satisfy himself that the contractor was competent and that the work had been properly done”.

63.  This subsection is designed to afford protection to the occupier (Ds here) when Ds have entrusted an independent contractor. If the contractor is considered as competent, the occupier would not be liable unless there is evidence that his act or omission caused the injury. See: Ferguson v welsh [1987] 1 WLR 1553, pp 1560 at D, G, H; p 1564.

64.  In the context of lift accidents, the lift contractor owes lift users a common law duty of care and the occupier has a complete defence when the appointed contractor is a competent lift contractor. See: Haseldine v CA Daw and Son Ltd [1941] 2 KB 343 pp 347, 356, 357, 363, 369, 370, 374, 375, 379, 380.

65.  Lift accidents may be created by the sudden and erratic behaviour of a lift. Sudden and unexpected falls or drops are not uncommon features among the lift accident cases. Examples of lift erratic movements are as follows:-

(i) The lift’s sudden 2/3 fold increase of speed downward, shaking movements and sudden stop. Case against the incorporated owners and the building manager proved on the basis of the evidence of their negligent management of the lift. Kong Lin Fat Johnny v The Incorporated Owners of Chang Pao Ching Building and Anor, unreported, DCPI 1580/2010 (Deputy District Judge CK Siu; 12 September 2014) §§35 to 38; 205.

(ii) Lift suddenly plunged and jerked twice before it stopped and stalled violently at approximately 1-2 feet below the lobby floor. Accident was caused by some contactor problem (接觸點) of the KVAB Relay (繼電器), a relay for drive motion signalling, of the Lift (It somewhat resembles the present case). Case proved against the lift contractor. The case against the building manager failed on the basis that the building manager could rely on the expertise of the lift contractor. Yau Po Shan v The Express Lift Co Ltd & Anor, unreported, DCPI 2370/2014 (Deputy District Judge SH Lee; 8 November 2019) §§2; 63,64; 66-68; 148; 160. Application for leave to appeal was refused by the trial judge and the Court of Appeal.

66.  Mr Kwok argues that while there is no dispute that Ds owed a duty of care to Ps at common law and under the OLO, TP, here as the lift contractor engaged under a contract by Ds, owed Ps a duty of care at common law also.

67.  Ps alleged Ds liable as particularized in their statement of claim (“SOC”)[4]. Ds submit that joining TP in the TP Proceedings for a statutory and contractual indemnity/contribution was inevitable and perfectly proper and is a classic situation. It should also be noted that after the commencement of the TP Proceedings, TP also accused Ds guilty of acts of negligence causing the accident.

68.  Ds submit that if the case had gone to trial and the Accident and liability are proved, they were bound to win against TP in the TP Proceedings.

C.2.5 TP’s authorities

69.  TP has cited the following cases to support its argument. They include:

(i) Johnson v Ribbins & Anors [1977] 1 All ER 806;

(ii) Liu Ma Cheung & Anors v Liau Yin Fu & Anors (unreported, HCA 181/2004);

(iii) Concorde Construction Co Ltd v Colgan Co Ltd (Hsia & Associates (a firm), third party) (unreported, Con L36/1984, 1985);

(iv) China Baoli Technologies Holdings v Orient Equal International Group Ltd & Anors, CACV 34/2018;

(v) Kemp & Kemp Personal Injury Law, Practice and Procedure [12-016] [12-017];

(vi) Arkin v Boarchard Lines Ltd & Anors (No 3) [2003] EWHC 3088 (Comm); and

(vii) Kwan Chui Kwok Ying & Anor v Tao Wai Chun & Anors, HCMP 2996/1990.

C.2.6 Ds’ Submissions based on the above authorities

70.  Ds submit that the authorities on TP Proceedings and those on discontinuance would apply to this case regardless of whether the TP Proceedings are discontinued or dismissed, for discretion of the court is wide and there is no automatic entitlement to costs where the TP Proceedings are dismissed or discontinued. There is only a general rule that costs follow the event. But the authorities show that the court does not adopt a mechanical approach and there is no hard and fast rule: See §21/5/12A of Hong Kong Civil Procedures.

71.  Ds further submit that all the authorities cited by TP involved cases that had been decided on the merits through trial. Each of those cases is different from the present one. Discretion was applied to each case on its own facts according to principles. No straight jacketing is feasible, nor is it appropriate to do so. In fact, the principles stated in those cases support Ds’ application for the costs orders stated in their summons. Contrary to TP’s contentions, their authorities help Ds rather than TP.

72.  Ds say that there should be an order for discontinuance rather than dismissal. There was no trial on the claims and the TP Proceedings that would have led to findings on merits. The TP Proceedings had become academic. Once the claims were dismissed, there is no true dispute and the outcome of the TP Proceedings cannot affect the parties: See China Baoli at §33.

73.  The claims were abandoned and that necessitated a discontinuance of the TP Proceedings or dismissal as the case may be. There is no question of acknowledgment of defeat. It is impossible that TP could be regarded as a winning party.

74.  Mr Kwok submits that it is wrong for TP to treat Ps claims and the TP Proceedings as being bound to fail because of the evidence of two experts against one. There have been decided cases of lift accidents caused by erratic lift behaviour due to faulty electrical/electronic devices. The expert evidence could have gone either way. If they truly believe that to be the case, they should have applied for a strike out of the TP Proceedings many months ago. Instead, they made offers to settle the TP Proceedings. That evidently was some certain acknowledgement of defeat or future defeat.

75.  In terms of merits, there have been past cases of lift accident caused by erratic behaviour of the lift. While the two experts for Ds and TP both said that the lift could not have behaved in the way as alleged[5], the expert for Ps said that it could, stating that such erratic behaviour was likely to be due to faulty sensor devices (an electronic/electric component)[6], somewhat similar to the decided case cited by Mr Kwok above. This issue would have been a question of fact for the trial court. Had the case gone to trial and facts found in favour of Ps and judgment entered against Ds in the Main Actions, Ds would have been bound to succeed against TP.

76.  Hence, as submitted by Mr Kwok, joining TP by way of the TP Proceedings was necessary, inevitable and proper. Mr Kwok submits that this case is a classic case of a joinder by way of third party action.

77.  Mr Kwok further submits that there is no question of Ds knowing that the Ps were impecunious. As a matter of fact, it is not known whether they were impecunious or not. It only felt that they would not be willing or able to meet the costs of these proceedings. The statement that the estate of Mr Wahed “has no assets” is a mere assertion. So far, no probate documents have been disclosed by the estate’s solicitors despite repeated requests. In any event, if Ps are impecunious, this is a clear case where the hardship of not being able to recover costs should be spread between Ds and TP.

78.  Ds go further to submit that TP should pay Ds costs of the TP Proceedings on an indemnity basis in the exceptional circumstances of this case. Mr Kwok argues that notwithstanding that the matter has not been decided by a trial, the fact was that the two claims had been brought about by an alleged act or omission on the part of TP in respect of maintenance and repair of the lift which was “some wrongful act in the course of the transaction of which the plaintiff complains”: See Ritter v Godfrey cited in Kwan Chui Kwok Ying. The EMSD informed that the Accident was caused by the breakdown of the lift due to dislocation of the car door sensor at car top: See §6 of Lam’s Affirmation at [B1-187]. Such faulty maintenance and repair, act or omission, had nothing to do with Ds, and where TP professed itself to be the best grade engineering maintenance contractor in Hong Kong, TP should reimburse Ds costs of the TP Proceedings.

79.  Costs should be on the indemnity scale having regard to the principles covering not only the conduct of the parties but also “any matter relating to the litigation and the parties’ conduct in it and also the circumstances leading to the litigation”: Town Planning Board (CFA), supra.

80.  In the aforestated premises, Ds ask the court to make the costs orders as stated in the Summons dated 14 March 2022, some of them in the alternative.

C.3 TP’s Submissions in reply

81.  In reply, Ms Loh submits that while the court has full and unfettered discretion on costs, it must exercise the discretion judicially and in accordance with established guiding principles.

82.  Established legal principles on costs of third party actions are set out in Halsbury Laws of Hong Kong [90.1285] and Kemp & Kemp: Personal Injury Law, Practice and Procedure [12-017] (See §§23 and 29).

C.3.1 Consideration of Costs: The Separability Principle

83.  Ms Loh submits that TP Proceedings are separate from the Main Actions.

84.  Much has been said by Ds about “whether Ds were justified in issuing third party proceedings against TP”; Ds go further to say that in the present case, once the third party actions are found justified, Ps should be ordered to pay TP costs, ie a “direct/cut-through” of costs liability between Ps and TP.

85.  Ms Loh suggests that the starting principle stated at §2 of D’s Submissions ie quoted from White Book 2022 16/7/4 at p 466, does not give the full picture, and can be misleading.

86.  The 2 leading cases in Hong Kong Civil Procedures 2022 16/7/4 quoted in support of Ds’ starting principle:-

“Edginton – The plaintiff’s action was dismissed with costs. A third-party costs order was made against the defendants in favour of the third parties. The defendants had paid those costs; their appeal dealt only with recoupment of those paid costs from the plaintiff. The plaintiff was ordered to pay the third parties costs on appeal.

Thomas – A case of peculiar facts in which the real issue was between the plaintiff and the 4^th party (whether a gift was made), not between plaintiff and the defendant. Plaintiff’s action was dismissed. Plaintiff was ordered to pay the costs of the 3^rd and 4^th parties”.

87.  Ds’ cited cases of Edginton and Thomas were considered in Johnson v Ribbins, at p811b-h, a landmark case on third party costs where clear principles on costs between defendants and third parties were established, as summarised in Halsbury and Kemp & Kemp, and followed in recent Hong Kong cases cited by TP.

88.  It was pointed out by the Court of Appeal in Johnson v Ribbins that in Thomas, the questions whether the 3^rd party should pay the 4^th party and recover from the defendant, and whether the defendant should recover all those costs and his own from the plaintiff, instead of a “direct/cut-through” costs order against the plaintiff did not appear to have been canvassed at all. It is therefore submitted by Ms Loh that this case should not be regarded as an authority on a “direct/cut-through” costs order between parties in the separate, main and third party actions.

89.  Ms Loh further submits that there is no established legal principle on the “direct/cut-through” costs order proposed by Ds. Ds’ cited cases do not support a “direct/cut-through” third party costs order between Ps and TP. It has jumped a step and left out the central question on costs: whether Ds should pay costs of TP in the TP Proceedings.

90.  TP’s cited recent cases on TP costs represent the current position/judicial and proper approach in the court’s consideration of costs of TP actions, giving full weight to the “separability principle”.

91.  Ms Loh submits that the proper 2-stage approach is as follows:-

(i) The court should deal with costs of the third party action first (costs should follow the event), and consider whether there are any reasons/exceptional circumstances for depriving the successful third party of costs. The burden is on the unsuccessful/conceding party to show why costs should not be ordered to follow the event. If not, the third party should have costs against the defendant; and

(ii) The court will next consider the question of “justification”. If yes, the plaintiff should pay the costs of the third party action. The defendant should be allowed to add those costs to his costs/seek recoupment against the plaintiff as in Edginton and cases cited by Ds (ie indirect costs order between P and TP).

92.  Ds proposed “direct/cut-through” approach in effect will by-pass the 2-stage consideration, ie a “direct/cut-through” costs order between Ps and TP. By making this order, the court is effectively making “no order as to costs” in the third party actions and “costs of the third party actions against Ps in the main action”. This is against the established legal principles.

93.  A “direct/cut-through” costs order is well recognized between co-defendants within the same main action (but not between plaintiff and third party), in which case both defendants had no choice in being sued by the plaintiff. Usual situations: the plaintiff wins against one defendant and loses against the other, but was justified in suing the winning defendant, so that the losing defendant should also bear the costs of the winning defendant, whether by (1) paying directly to the winning defendant or (2) reimbursing the plaintiff for those costs paid to the winning defendant (Sanderson/Bullock orders).

94.  Separate actions/“separability” principle in third party actions: it is a well-established legal principle that even where third party proceedings were justified, TP should have costs directly against Ds, who may be ordered to add those costs against Ps/seek recoupment from Ps – There was simply no question of a “ direct/cut-through” costs order between Ps and TP: See Edginton and Ds’ authorities.

95.  Once it is established that TP is the winning party, costs should follow the event. Entitlement to costs – unless there are exceptional circumstances that they should be deprived of costs; burden on Ds to demonstrate exceptional circumstances – focal point is on conduct of the successful party: See Kwan Chui Kwok Ying, supra.

C.3.2 Whether Ds were justified in issuing third party proceedings

96.  TP says “No”. TP urges the court to consider the background, evidence of the accident, evidence and TP’s conduct, in particular, CC’s reply letter dated 25 July 2016 to TCW, stating clearly why the alleged Accident was “fake and impossible” – which turned out to be the same conclusions of the engineering experts of Ds and TP. The only mechanical problem of “dislocation of car door sensor” would only cause the lift to stall which was exactly what happened: a lift stoppage/trapping of passengers incident. There was no evidence of any mechanical failure/ damage of the lift; impossibility of a lift free fall accident/injury to passenger: See joint engineering experts reports at A(2) pp 375, 400, 403.

97.  Further, Ms Loh says that TP had taken prompt and reasonable steps to investigate the Accident and informed Ds why they were of the firm view that Ps’ claims were “fake and impossible”.

98.  As there were serious doubts of a “fake claim” involving dishonest claimants, TP submits that Ds should have conducted investigation/obtained an engineering report, etc. to assess whether it was indeed a “fake and impossible” accident. More importantly, Ds should be alert to the risks on costs of issuing third party actions against TP.

99.  Evidence shows that Ps had made a considered decision to sue Ds only (in their capacity as the occupier and user), not TP. TP had just taken over maintenance of the lift on 16 April 2013 (a month before the accident on 16 May 2013). TP had conducted takeover and maintenance examinations of the lift on 23 and 27 April 2013 and 9 May 2013 and found it in normal working conditions. Presumably, the lift had functioned properly until the time of the Accident[7]. Ps’ engineering expert concludes that responsibility of the accident lies with Ds in failing to keep proper records and report of previous lift incidents (in breach of EMSD requirement), rendering TP unable to check the history of maintenance in the takeover examination[8]. P’s expert suggests that “it is not sufficient to attribute lift malfunction to mechanical breakdown…more likely to be caused by electric/electronic components (the sensor device) system malfunctioning…”[9]. “These sudden flashing movement made the lift stop abruptly but it resumed normal immediately …”[10].

100.  TP further submits that it is incorrect for Ds to state that the Accident (which was “fake and impossible” in both Ds’ and TP’s case) was due to mechanical failure and once the Accident is proved, TP being the lift contractor should automatically be liable.

101.  In Kong Lin Fat Johnny, which is a PI claim arising out of a lift accident, the plaintiff sued the incorporated owners and management company but not the lift contractor (like in the present case). The court in that case noted the history of poor service and lift incidents records. The defendants having the management and ownership of the lift had failed to solve the problems or review the condition from time to time, but had left the matter with the watchmen. The defendants were found liable.

102.  In the present case, the “fake and impossible” claims became clear upon obtaining engineering expert evidence. Opportunities for Ds to discontinue the third party proceedings (TP had offered to pay Ds $80,000 with no order as to costs in 2017). It was not justified for Ds to continue the third party actions for 5 to 6 years, in particular after obtaining the expert evidence.

C.3.3 Impecuniosity/empty costs order against Ps

103.  As regards to Ds’ suggestion of “shift and share hardship” between Ds and TP, Ms Loh submits that this is a wholly wrong approach and against the established legal principles regarding impecuniosity of claimants in cases on costs of third party.

104.  Ms Loh contends that the authorities show that Ds’ proposed “balance/spread of hardship” approach is applicable only as between co-defendants (Bullock/Sanderson orders) in the same main action as in the two cases Bankamerica Finance and China Everbright Finance cited by Ds. In those cases, the plaintiffs sued two defendants, won against one and lost against the other. Questions of costs arose as to whether the losing defendant should pay the costs of the winning defendant directly (Sanderson), or if the plaintiff should pay the winning defendant, and recoup costs from the losing defendant (Bullock).

105.  Finally, Ms Loh submits that there is no authority in support of Ds’ proposition that “balance of hardship” would justify a direct costs order against a losing impecunious claimant in favour of a successful third party, resulting in deprivation of costs of the successful third party due to the claimant’s impecuniosity. The authorities suggest the contrary that a successful third party should normally be awarded its costs against the defendant even though they cannot be recovered from an impecunious plaintiff.

D. FINDINGS OF THE COURT

106.  I have to admit that this is not an easy case for the court to decide and hence it has taken the court a long time to consider what would be a fair and just result on costs for Ds and TP in the rather unusual circumstances of this case.

107.  Principally, it is because in my view the costs incurred by Ds and TP are not due to their own fault or unreasonableness in conducting their respective case, but mainly, if not solely, due to the very questionable and dubious nature of the claims brought by Ps in the Main Actions in the first place.

108.  The reasons I come to this conclusion are based on (i) the procedural history of the case; and (ii) the unequivocal opinions and conclusions reached by the experts appointed by the parties.

109.  I shall deal with the above in turn.

D.1 Procedural History

110.  As said, this case involves an alleged “free fall” lift accident which happened in the early hours of 16 May 2013 in an old building in Cha Kwo Ling Road, Yau Tong, Kowloon. There was no CCTV footage or independent witnesses to the Accident.

111.  The writ of DCPI 1304/2015 was first issued on 11 June 2015 against D1 (the management company), well before the expiry of the 3-year limitation period. However, it was not amended to include D2 (the incorporated owners) until 17 March 2016, a couple of months before the expiry of the limitation period.

112.  The SOC of DCPI 1304/2015 which was settled by counsel was a very brief 2½ page document where the Accident was simply pleaded as follows:-

“3. At about 0024 hours on 16^th May 2013, the Lift of the Building malfunctioned while the Plaintiff, and other passengers were travelling on it. The Lift suddenly dropped from 1/f (sic) to G/F in free fall manner, The Lift then suddenly ascended to the 3^rd floor without a stop.”

113.  It went on to plead that:-

“4. As a result, the Plaintiff knelt onto the ground with his right knee and his body bumped the lift violently. The Plaintiff sustained right knee injury. The Plaintiff was diagnosed as right knee injury and right ankle sprain injury.”

114.  The SOC of DCPI 841/2016 was the same as above in so far as it described the Accident, while the only difference on the alleged injuries sustained by P2 which was pleaded as follows:-

“4. As a result, the Plaintiff knelt onto the ground with his left knee. The Plaintiff’s head was hit on the left side. The Plaintiff sustained left knee and head injury. The Plaintiff was diagnosed as left knee contusion and minor head injury.”

115.  Thus, both SOCs were extraordinarily brief with little details about the Accident itself. They do not in my view form a sound foundation of Ps’ causes of action against Ds.

116.  On top of that, it is clear that, throughout the proceedings, Ps had not been conducting the litigation in a diligent and efficient manner. On an objective reading of the steps taken by Ps prior to the case being set down for trial, it is quite apparent that Ps had been dragging their feet and made very little efforts to bring the case to trial. For example, Ps’ then solicitors, Messrs Jal N Karbhari & Co, had failed to observe Practice Directions 18.1 in preparing for the 1^st case management conference on 22 June 2021: See my Order dated 22 June 2021, at §12, where I ordered the costs of the first hour of the hearing to be borne by Ps.

117.  In any event, the Main Actions had ended in an abrupt way. In DCPI 1304/2015, P1 failed to comply with the Unless Order dated 23 December 2021 given by the court at the Pre-trial Review. Hence, I ordered the claim to be struck out on 13 January 2022. In DCPI 841/2016, P2 failed to comply with the Unless Order dated 30 November 2021 to make an application for restoration of his claim before 28 February 2022. I therefore ordered the claim to be struck out on 1 March 2022.

118.  In other words, the Main Actions ended upon P1’s and P2’s untimely death and non-appearances respectively. It is not my intention to speculate the true reasons behind their conduct of the case, but my own observations are that if the claims were genuine and could be substantiated, it is only reasonable to expect that Ps would pursue the proceedings with due diligence and would make every effort to present their case in court in order to claim whatever damages they are entitled to resulting from the Accident. P1’s death would not have prevented him from pursuing the claim since his estate/dependents (as represented by his wife) could continue to pursue the claim and would be able to benefit from any damages recovered from Ds. Given the above, I am of the view that the evidential foundation of the Main Actions is very questionable and on the then available evidence, it is difficult to see how Ps can establish their case against Ds if they were to proceed to trial.

D.2 The Experts’ Opinions

119.  First, in regard to the cause of the Accident itself, it is important to note that in the initial Joint Expert Report (“JER”) dated 25 April 2018, the two lift/engineering experts appointed by Ds & TP respectively came to the unanimous view that (i) the lift did not go down to the ground floor in a “free fall” manner; (ii) the lift did not “bump the ground floor”; (iii) the lift “did not go overspeed”; and (iv) the Ps’ version of the Accident is “not possible”: See §§18-26 of JER.[11]

120.  Only Ps’ expert, while not disagreeing with the opinions and conclusions reached by Ds and TP’s experts, managed to come up with a different/additional theory, which in my view is hardly a convincing one. His opinion is that the Accident was caused by a sudden flashing movement of the sensor devices, which stopped the lift abruptly in its course of descending from the 1^st floor to the ground floor. With the disturbance, the lift did not stop at the proper location upon reaching the ground floor with the doors closed. The control system of the lift tried to correct itself by ascending and eventually stopped near the 3^rd floor: See §4.1 of the Supplementary Joint Expert Report (“SJER”).[12] In my judgment, the mechanism of how the Accident happened according to the opinion of Ps’ expert is highly unlikely and extremely questionable.

121.  In the JER, Ps’ expert identified the major control components of the lift and concluded that the Accident may have occurred if the encoder detecting lift speed control and the micro-processor relaying speed signals were defective, causing the lift to move at improper speed: See §§27(B) of JER[13].

122.  But all the experts, including Ps’ own expert, confirmed in the JER that the only defect found during the joint inspection was the dislocation of the car door sensor: See §3 of SJER[14]. Hence, it seems to me that the initial findings of Ps’ expert were merely theoretical and not supported by the actual physical findings at the joint inspection.

123.  I further note that it was only in the SJER that Ps proposed another possible cause of the Accident mentioned at §122 above, which was completely untouched upon in the JER.

124.  It appears to me that Ps’ expert was merely suggesting a possible explanation for the Accident based on the assumption that it did in fact occur, instead of examining whether the Accident could have occurred according to the theory stated in the SJER, not to mention that the theory proposed by Ps’ expert contains ambiguity, viz (i) how the flashing movement disrupted the lift from descending; and (ii) how the control system was triggered to “automatically compensate” the descending movement. Ps’ expert in my view has simply failed to respond to Ds and TP’s experts’ opinion that the dislocation of the car door sensor would only cause the lift to stall.

125.  In my view, even if the Accident did happen and according to how Ps’ expert has described it (which is highly unlikely), Ps’ expert still failed to establish the causative link between the up and down movement of the lift and Ps’ injuries. While Ds and TPs’ experts gave calculations to the court to clearly explain why the force generated by the lift could not have caused any injury[15], Ps’ expert did not dispute those calculations and simply agreed that no overspeed had occurred in the lift.[16]

126.  Given the dire lack of any credible evidence to show (i) how the Accident occurred; (ii) what caused the sudden descend (if it did happen); and (iii) the causative link between the alleged fall and the alleged injuries sustained by Ps, I am of the opinion that Ps’ case against Ds in the Main Actions has a very weak evidential basis and devoid of merit.

D.3 Costs of the Main Actions

127.  With the Main Actions being struck out due to Ps’ failure to comply with the court directions, the costs should follow the event. Ps should bear Ds’ costs in the Main Actions. Ds’ counsel also invites the court to exercise the discretionary power to order Ps to pay the costs on an indemnity basis.

128.  In exercising its discretion on costs, the court should take into account the conduct of the parties in accordance with O 62 r 5(1)(e) of the RDC, such conduct is defined in O 62 r 5(2) of the RDC to include:-

“(a) whether it was reasonable for a party to raise, pursue or defend a particular allegation or issue;

(b) the manner in which the party had pursued or defended the 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.”

129.  As I found at §§106-126 above, Ps’ Main Actions were shadowy and highly dubious. Given the clearly unsustainable allegations and weak evidence that Ps’ claims were based on, it is in my view unreasonable for them to be pursued. In addition, it is apparent that Ps’ conduct of abandoning the claim just before trial without good reason was highly irresponsible, causing Ds to incur costs for over 7 to 8 years in the Main Actions. In my judgment, it is only fair for Ps to bear the consequences of conducting litigation in such an irresponsible manner by allowing Ds to recover costs on an indemnity basis.

130.  I therefore make an order that Ps should pay Ds’ costs in the Main Actions on an indemnity basis, with certificate for counsel, such costs to be taxed if not agreed.

D.4 Disposal of the TP Proceedings

131.  In my judgment, the TP Proceedings shall be dismissed, rather than discontinued.

132.  The court has the power to dismiss the TP Proceedings under O 1B r 3 of the RDC on its own motion, or the power to order the TP Proceedings to be discontinued under O 21 r 3(1) of the RDC. The difference between the two is that the latter is no bar for Ds to commence subsequent proceedings on the same cause of action: See O 21 r 4 of the RDC.

133.  In the Amended Third Party Notice by Ds in DCPI 1304/2015[17] and DCPI 841/2016[18] respectively, Ds claim against TP for: (i) indemnity if Ps were awarded any damages, and (ii) contribution if Ps were awarded any damages. Hence, both claims would stand or fall with the Main Actions. Ds only sought to rely on the force of the maintenance contract between Ds and TP but had not brought a separate head of contractual claim against TP in the TP Proceedings.

134.  With the Main Actions being dismissed (DCPI 1304/2015 on 13 January 2022 and DCPI 814/2016 on 1 March 2022 respectively), in my judgment, Ds’ cause of action in the TP Proceedings also extinguished.

135.  With my finding at §§106-126 above, due to the lack of merit of the Main Actions, Ds’ cause of action in the TP Proceedings not only became academic as Ds’ counsel suggests, but in my view was bound to fail. Thus, in my judgment, a dismissal is more appropriate than a discontinuance in the circumstances.

136.  With that being said, the dismissal does not prevent Ds to commence a new cause of action to claim contractual indemnity against TP in pursuant of the maintenance contract if Ds so wish.

137.  In my judgment, the TP Proceedings therefore shall be dismissed.

D.5 Costs in the TP Proceedings

138.  However, whether the TP Proceedings are dismissed or allowed to be discontinued, it should make little difference to my decision on the issue of costs for the TP Proceedings.

139.  Ds and TP suggested various ways to deal with the issue of costs in the TP Proceedings in the Summonses.

140.  I agree with Ms Loh’s primary submission that the court shall first approach the matter with the general rule that the costs should follow the event: See O 62, r 3(2) of the RDC.

141.  With that in mind, I shall deal with the different alternatives suggested by counsel in turn.

142.  In this case, it is not without its difficulties to apply the general rule with the dismissal of the TP Proceedings, as I consider neither Ds nor TP are the “losing” party in this case, but in fact the “winning” parties in light of the Main Actions being struck out.

143.  I found guidance to deal with the situation from Johnson v Ribbins & Anors [1977] 1 All ER 806 at pp 810j-811a:-

“In the exercise of that discretion, however, in our judgment the court should be guided by the principle that normally costs follow the event as is expressly provided by Rules of the Supreme Court Ord 62, r 3(2), and should, therefore, normally order the defendant, though successful in the action, to pay the costs of the third party if he also be successful. Then, if in the circumstances of the case, these costs ought fairly to be borne by the plaintiff, the court will further order that they be added to the defendants’ costs of the action as against the plaintiff”. [emphasis added]

144.  I agree with the reasoning in Johnson that despite the fact that both Ds and TPs are successful in the sense of defeating Ps in the Main Actions, the court cannot ignore the “separability” principle for the TP Proceedings, ie the TP Proceedings are to be treated as separate proceedings from the Main Actions, in which Ds and TP stand in relation to one another as if Ds had brought a separate action against TP: See Johnson, at p 811b-c. Therefore, the starting point on the costs of the TP Proceedings is that Ds shall pay TP’s costs.

145.  Mr Kwok, Ds’ counsel, argues that instead of asking Ds to pay for TP’s costs in the TP Proceedings from the outset and to consider whether Ps should reimburse Ds for the costs, the court should make a “direct/cut-through” costs order to ask Ps to pay for TP’s costs in the TP Proceedings if it saw fit. However, I find such a “direct/cut-through” costs order not only not known to the existing law, the authorities cited by Ds’ counsel do not in my view support such contention.

146.  Two of the cases cited by Ds in support of his approach, namely, Edginton v Clark [1964] 1 QB 367 and Thomas v Times Book Co. Ltd [1966] 2 All ER 241 could in my view be distinguished from the present case by relying on the findings in Johnson:-

(i) In Edginton, the defendant had already paid third party costs of the third party proceedings and was only asking for recoupment by the plaintiff. The question of whether the plaintiff should directly pay the third party costs was never in issue: See Johnson at p 811f; and

(ii) In Thomas, the court applied Edginton and by exercising its discretion on costs, ordered the plaintiff to pay the third and fourth parties’ costs since the plaintiff was the losing party and her claim rendered the third and fourth parties proceedings inevitable. However, no comparison was made between the two alternatives. The question of whether a “direct/cut-through” costs order should be made or the defendant should pay the third and fourth parties costs and in turn recover their costs plus his own costs from the plaintiff was never considered by the court: See Johnson at p 811f.

147.  In addition, I am of the view that the remaining three Hong Kong cases cited by Ds’ counsel could also be distinguished:-

(i) In Nam Kwong Medicines & Health Product Co Ltd v China Insurance Co Ltd, unreported, HCCL 27/1999 (Stone J; 13 November 2002), the issue at hand, as stated at §2, was whether the plaintiff should pay the defendant’s costs of the third party proceedings. The idea of a “direct/cut-through” costs order had not been suggested. It was only in this context that the learned judge said at §17:-

“…It seems well-established that the court may order an unsuccessful plaintiff to pay the costs of third or fourth parties whose joinder was made inevitable by the plaintiff’s claim…”

(ii) In Townmens Investment Co Ltd v Wider River Limited, unreported, HCA 538/2009, (Master Levy; 21 September 2010), the learned master made no assessment on the availability of a “direct/cut-through” costs order. The main focus of that case was which of the defendant or the third party should pay for the costs of the third party proceedings: See Townmens at §§42-44. To be fair, Mr Kwok only cited Townmens for general principles which are already known by the court.

(iii) In Man Sun Finance (Holdings) Ltd v Foo Sau Chun Richard and Anors, unreported, HCA 1297 of 2002 (Deputy High Court Judge Saunders; 18 August 2005). This case was a little bit more complicated, as the first defendant and the third party appeared to be the same person. The CFI held that it was inevitable to serve a third party notice to the first defendant with the joinder of the second defendant (at §9). The CFI found the joinder of the second defendant, as well as the third party notice to the first defendant, unnecessary (at §10). In this context, the learned judge referred to Nam Kwong Medicines (the cited paragraph above) to order the plaintiff to pay the first defendant’s costs on the Third Party Notice. Again, a “direct/cut-through” costs order was not involved.

148.  Based on the aforesaid, the authorities cited by Ds’ counsel do not in my view satisfactorily address the issue of whether costs of TP Proceedings should be (i) borne by Ds and be recovered from Ps; or (ii) borne by Ps directly, when TP Proceedings have been dismissed following the striking out of the Main Actions. Hence, the general rule that Ds shall bear the TP costs remains. Whether Ds have been able to show exceptional circumstances to justify the departure from the general rule or that Ps should bear Ds’ costs in the TP Proceedings are matters I shall address below.

D.6 Exceptional circumstance(s) to the general rule on costs

149.  I bear in mind that the burden of showing any exceptional circumstances is on Ds.

D.6.1 Reverse costs order

150.  Ds’ counsel invites the court to order TP to pay Ds’ costs in the TP Proceedings on an indemnity basis.

151.  Counsel of both Ds and TP adopted the test in Ritter v Godfrey [1920] KB 47, cited in Kwan Chui Kwok Ying v Tao Wai Chun & Ors, unreported, HCMP 2996/1990 (Deputy High Court Judge To (as he then was); 30 May 2006), to determine whether a successful party should be deprived of costs. Atkins LJ stated the following three categories in which the successful parties should be deprived of costs (See Kwan Chui Kwok Ying at §21):-

(i) The successful party brought about the litigation, or

(ii) The successful party has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or

(iii) The successful party has done some wrongful act in the course of the transaction of which his opponent complains.

152.  Ds’ counsel argues that TP’s situation falls squarely within the third category, ie TP has done some wrongful act in the course of which the plaintiff complains. The wrongful conduct alleged was that TP had failed to keep proper maintenance and repair of the lift, which caused the Accident, if it did in fact happen. With the faulty maintenance, TP breached the common duty of care owed to Ps. Ds should not be liable to Ps’ negligence claims with the effect of s 3(4)(b) of the OLO.

153.  Ds’ counsel kept emphasizing if a full-blown trial had been carried out all the way to the end, Ds were bound to win against TP in the TP Proceedings. TP was only lucky that Ps decided not to join TP as a defendant in the Main Actions.

154.  With respect, I am of the view that Ds’ counsel forwarded this argument upon a wrong reading of Ritter and Kwan Chui Kwok Ying. I wish to revisit what the learned judge said in Kwan Chui Kwok Ying at §23:-

“The burden of proof is on the unsuccessful party. The focal point is on the conduct of the successful party in the particular circumstances. His conduct must be material or operative on the mind of the unsuccessful party in that it induced him to take the course he took which he otherwise would not have taken. In other words, the unsuccessful party must show that he instigated the litigation or persisted in the defence because he was led to the belief that he has a good cause of action or a good defence by reason of the conduct of the successful party. He must genuinely hold that belief and on reasonable ground. If he does not hold that belief, the conduct of the successful party howsoever heinous is not causative. He must hold that belief on reasonably ground, otherwise there is no justification for such a reverse costs order. If the unsuccessful party fails to discharge the burden, the successful party is entitled to his costs.” [emphasis added]

155.  The gist of the test is whether TP had done something wrongful, which induced Ds to have an honest and reasonable belief that they would have a good cause of action against TP in the TP Proceedings.

156.  As far as I can see and read from the documents in this case, TP has always held the view that the Accident was “fake and impossible”. More importantly, such contention was adopted as a common front by Ds and TP in their defence in the Main Actions.

157.  I do not see how Ds can now say that they held an honest and reasonable belief that Ds had a good cause of action against TP. In my view, it went directly contrary to the common front of defence that they adopted.

158.  Further, in my judgment, two settlement offers made by TP on 11 April 2017[19] and 10 September 2021[20], did not suggest that TP had admitted any wrongful act as they were made on a without prejudice basis.

159.  Even assuming that TP did fail to keep proper maintenance and repair on the lift, it simply did not cause the Accident. It is important to note that, as agreed by all experts, the only defect found during the joint inspection was the dislocation of the car door sensor. As analysed at §§120-126 above, I am inclined to believe Ds and TP’s experts’ evidence that the dislocation did not cause the accident. Be it that TP’s failure to keep proper maintenance and repair was heinous itself, no cause of action would arise without the necessary causation between TP’s faulty maintenance and Ps’ injuries established. Regrettably, I could not find any honest and reasonable belief on Ds that they had a good cause of action against TP.

160.  Ps’ expert gave another suggestion about the cause of the Accident in the SJER, which is Ds’ failure to keep a proper record of the log book for TP to properly examine the lift[21]. As I am of the view that the Accident never happened in the way described by Ps, I would give little or no weight to such suggestion. I would not use this finding of Ps’ expert against Ds.

161.  For the sake of completeness, I will give my analysis as to whether TP should pay Ds’ costs on an indemnity basis. I accept Ds’ counsel’s submission that “circumstances leading to the litigation” is a relevant factor for the court to exercise the discretion to award costs on an indemnity basis: See Town Planning Board v Society for Protection of the Harbour Ltd, unreported, FACV 14/2003 (Li CJ, Bokhary, Chan, Ribeiro PJJ, Mason NPJ; 2 April 2004).

162.  However, in this case, I simply do not see how TP had done anything to lead to the present litigation. Indeed, I have questions on whether the present litigation should even arise from the outset due to the very doubtful nature of the claims brought by Ps in the Main Actions (See §§106-126 above).

163.  On the other hand, I also do not see how there are any “special or unusual” features which justifies the court to order Ds to pay TP’s costs on an indemnity basis, as I find below that Ds’ commencement of the TP Proceedings was reasonable.

D.6.2 No order as to costs

164.  Alternatively, Ds’ counsel had cited in total six authorities to support his contention that no order as to costs should be made in the TP Proceedings[22] as the dispute in the TP Proceedings became academic: (Inchroy Credit Corporation Ltd v Cheung Man-cheung [1992] 1 HKLR 120; Trend Publishing (HK) Ltd v Vivien Chan & Co (a firm) [1996] 2 HKLRD 227; Leung Yuet Ching & Anor v Leung Yuet Kuen & Anor, unreported, HCA 9924/2000 (Deputy High Court Judge Muttrie; 24 September 2001); Lai Kwok Wah Kenneth & Anors v Leung Kwok Hung Jonathan & Or , unreported, LDBM 292/2004 (M. Wong J; 23 April 2010); R. (on the application of Boxall) v Waltham Forest LBC Queen’s Bench Division (Administrative Court); Brawley v Marczynski & Anor [2002] EWCA Civ 756).

165.  I do not find the above cases helpful for two reasons. First, as stated at §135 above, I find Ds’ claim against TP not only became academic but ought to fail, considering the lack of merit of Ps’ Main Actions. Second, the cases cited do not involve a third party. All consideration given in the six cases were on how to do justice on costs when the disputes between original parties became academic. Even if I adopt Mr Kwok’s submission that the dispute in the present TP Proceedings did become academic, I incline to follow Johnson that TP should not be deprived of its costs when the TP proceedings ended with no fault from either Ds or TP, but Ps’ failure to establish his claim in the Main Actions. Ds took the risk by commencing the TP Proceedings against TP when Ps refused to join it as an additional defendant. They must take the consequence when Ps failed to establish their claims in the Main Actions. In my judgment, the only resort of Ds in the present case is to recover those costs from Ps.

166.  Further, I find the two authorities cited by Ds’ counsel, regarding which party is the “effective winner” of the litigation, irrelevant. Elpe International (Far East) Ltd v Hewlett Packard Hong Kong Ltd, unreported, CACV 58/1993 (Litton JA; 30 June 1993) deals with whether the plaintiff should be entitled to costs under the general rule when he was only awarded nominal damages (at p11); Perrine Chamonix Ltd v Star League Ltd and Anor, unreported, HCA 1139/2017 (Deputy High Court Judge William Wong SC; 13 September 2017) determines which party is the substantive winner when the defendant complied with the undertakings he gave in the course of the litigation, which rendered the plaintiff’s action unnecessary (at §29). In the present case, I reiterate that I do not see either Ds or TP as the “losing” party of the TP Proceedings.

D.6.3 Impecuniosity of Ps

167.  It seems rather obvious that Ps would not be able to pay any costs. P1 was impecunious as shown in the letter by Ps’ solicitors dated 24 January 2022, that the deceased does not have any assets[23]. Though, as Ds’ counsel rightly pointed out, P1 has yet to produce any probate documents. I do not think Ds’ counsel is seriously contesting the impecuniosity of P1. P2 has simply gone missing.

168.  I however agree with Mr Kwok that there is no evidence showing that Ds in fact knew Ps were impecunious when he brought the TP Proceedings.

169.  Assuming Ds had no knowledge about Ps’ ability to meet any costs order, I am still of the view that Ps’ impecuniosity itself is not sufficient to constitute any exceptional circumstances. Bearing the “separability” principle in mind, I see no good reason to depart from the general rule to deprive TP of the costs it was entitled to against Ds. In my judgment, it is not fair to allocate the misfortune of Ds in the Main Actions to another “innocent” party in a separate proceeding: See Johnson v Ribbins, supra, at p 811g-h.

170.  Further, I find the “balance of hardship” principle, suggested by Ds’ counsel, did not apply to a third party proceeding. Ds’ counsel referred to Bankamerica Finance and China Everbright Finance to invoke the concept of Sanderson/Bullock order.

171.  In a normal case of Sanderson/Bullock orders, there are three parties, namely the plaintiff, 1^st defendant, and the 2^nd defendant. If the plaintiff only succeeded against the 1^st defendant, but lost against the 2^nd defendant, under the general rule, the plaintiff would receive costs from the 1^st defendant, but at the same time, pay costs to the 2^nd defendant. A Sanderson order allows the 2^nd defendant to recover costs from the 1^st defendant directly, while a Bullock order allows the 2^nd defendant to recover costs from the plaintiff first, who could seek reimbursement of the 2^nd defendant’s costs, together with his own costs from the 1^st defendant subsequently. Both the 1^st defendant and the 2^nd defendant stand against the plaintiff in the action. When one of the three parties becomes insolvent, Sanderson/Bullock orders provide a flexible means for the court to spread hardship among the remaining two as it thinks fit.

172.  However, in the present case, involving a third party action, TP stands against the Ps in neither the Main Actions nor the TP Proceedings. TP is only a respondent in a separate set of proceedings brought by Ds. TP is not in the position to share Ds’ hardship arising from Ps’ impecuniosity: See Arkin v Borchard Lines (No.3) [2003] EWHC 3088 (Comm) at §31:-

“…The position therefore would be that, whereas the discretion to depart from the general rule can be exercised with reference to the impecuniosity of the claimant where co-defendants are involved, there could be no such justification in relation to third party proceedings. But such a distinction could be maintained only if there were some characteristic[s] of third party proceedings which as a matter of policy normally distinguished them from proceedings involving co-defendants and therefore called for the exclusion of that consideration.” [emphasis added]

173.  I see no such “characteristic” in the present case that justifies the application of the “balance of hardship” principle as in cases involving co-defendants. The fact that the Main Actions and the TP Proceedings are to be heard together is neither here nor there, as the learned Colman J continued at §32:-

“…Although it is true that both sets of proceedings may be tried together, that is a matter of good case management and does not detract from the essentially separate nature of the two proceedings…” [emphasis added]

174.  There is no evidence in support and Ds are not able to discharge the burden of showing “exceptional circumstances” justifying a departure from the general rule that the winning TP in the TP Proceedings are entitled to costs. Hence, in my judgment, Ds should pay for TP’s costs of the TP Proceedings.

D.6.4 Ds to recover costs of the TP Proceedings from Ps

175.  The threshold for Ds to recover costs in the TP Proceedings from Ps is set out in Hong Kong Civil Procedure 2023, at §16/7/4:-

“The plaintiff may be ordered to pay the costs of any party brought in under this procedure— e.g. a fourth party (Klawanski v Premier Petroleum Co. (1911) 104 LT 567).

The court may order the unsuccessful plaintiff to pay the costs of the third and fourth parties whose joinder was rendered inevitable by the plaintiff ’s claim (Thomas v Times Book Co. Ltd [1966] 1 WLR 911; [1966] 2 All ER 241, applying Edginton v Clark [1964] 1 QB 367; [1963] 3 All ER 468 (CA))…”

176.  The question is whether the TP Proceedings in the present case is inevitable. Ms Loh argues that it is not, considering the conclusion of the JER that the Accident was “fake and impossible”. I do not agree.

177.  One cannot judge the possibility of the Accident in hindsight. I agree with Ds’ counsel that the case could go either way without the evidence in the JER. It is important to note the chronology of the events. The TP Proceedings were commenced as early as 5 July 2016, while the JER only appeared on 25 April 2018. Further, it was only in the Re-Re-Amended Defence of Ds dated 5 July 2021 where Ds adopted the common front of defence that the Accident was “fake and impossible”.[24] The fact that Ds had adopted a common front of defence with TP after the JER would not affect the assessment of necessity for Ds to bring the TP Proceedings from the outset.

178.  If the JER had suggested otherwise that the Accident was at least possible, I saw good defence for Ds to rely on s 3(4)(b) of the OLO, as it was not in dispute that TP was, at least prima facie, a competent lift contractor with the accreditation of the EMSD in the Safety Performance Rating at the time of the Accident.[25]

179.  Ms Loh also argues Ps’ reluctance to sue TP as a defendant supporting her contention that the TP Proceedings were unnecessary. She suggests that Ps were also of the view that TP was not liable for the Accident. I do not find the argument persuasive. With limited evidence, I do not wish to speculate Ps’ reason for not joining TP as a defendant in the Main Actions. In Ps’ solicitors letter dated 21 March 2016, Ps stated that they had no objection for Ds to commence the TP Proceedings without any elaboration.

180.  Ms Loh further argues that if Ds had conducted investigation on their own before they commenced the TP Proceedings, Ds would have known the Accident was “fake and impossible”. I do not find it relevant, as one has to bear in mind that Ps have the burden of proof in the Main Actions. Ds have no duty whatsoever to investigate the cause of the Accident.

181.  In my judgment, it was a reasonable, perhaps necessary, step for Ds to commence the TP Proceedings to protect their liability, which may have arisen from the Main Actions, and to recover damages, if any, from TP.

D.6.5 Acts of Ps’ solicitors

182.  I have had my doubts on whether Ps had any reasonable cause of action against Ds from the start of the proceedings in view of their extraordinarily brief SOC, as analysed at §§112-115 above, prepared by Ps’ solicitors and counsel. Nonetheless, I do not wish to extinguish Ps’ causes of action from the outset without any discovery, exchange of witness statements, and the production of expert reports. However, by the time of trial, the evidence has become quite clear that Ps hardly had an arguable case.

183.  In the JER, even Ps’ own experts failed to provide a satisfactory explanation for the cause of the Accident. Ps’ expert also admitted that the lift could not have dropped in a “free fall” manner, which was directly contradictory to Ps’ pleaded case. I do not wish to form a conclusion on the now abandoned claims without a trial. Nonetheless, with the emergence of the JER, in my view, it became even more unlikely that Ps would be able to prove their cases in the trial.

184.  In my opinion, it was at that juncture that Ps’ solicitors should advise Ps on the dim prospect of success of the Main Actions. Ps’ solicitors should also suggest to Ps about ceasing the Main Actions to avoid further costs for all parties. Judging from the evolution of the cases since the emergence of the JER, I am doubtful as to whether Ps’ solicitors have in fact advised Ps in the said matter, though due to the legal profession privilege, the court would not know whether it was Ps who had insisted to proceed with the Main Actions despite the alleged strong advice given by their legal representatives.

185.  Ps’ then solicitors, Messrs Jal N Karhbari, ceased to act for P1 and P2 on 27 September 2021 in pursuant of the Orders made by Master Catherine Cheng respectively[26].

186.  Despite the current solicitors of Ps, Messrs Mohnani & Associates, only took over the cases for Ps in late 2021, they still owed a duty to advise Ps on the very dim prospect of success of the Main Actions, in light of all the evidence available, most importantly the JER and the SJER. The further pursuance of the Main Actions had led to the incurrence of a lot of unnecessary costs on all parties and the wasting of judicial resources, including the 2^nd case management conference held on 30 November 2021 and the Pre-trial review held on 23 December 2021.

187.  Solicitors in a PI action not only have the duty to arrange the production of an expert report for their client, but also to examine and test the credibility of the expert report. Experienced PI solicitors should be well-aware that an expert report may not record the true account of events. It is not uncommon for the court not to adopt an expert report in full, or even reject the whole, despite the report being made by an expert in the relevant field. Such scenario happens more often in cases involving a JER. As most of the time, the opinions of two experts, instructed by different parties, are polarised, the court must incline to accept one of the experts in determining the factual dispute in hand and reject the other. Solicitors should not use the expert reports as a shield against their continuing duty to review the evidence, including examining the credibility of the expert report, and advising their clients, if necessary, to cease the action if it is apparent that their cases cannot be supported by any objective evidence.

188.  In the present case, Ds and TP are put into an invidious positon, where one of them eventually would need to bear the costs of Ps’ irresponsible acts of bringing and pursuing two very dubious claims in the Main Actions without fault of their own. I am of the view that Ps’ solicitors are partly responsible for the present unfortunate scenario in that most likely Ds will not be able to recover any costs from Ps. However, while there is a very weak evidential foundation for Ps to pursue their claims in the Main Actions, I cannot rule out the possibility that it was Ps who had insisted to fight the case all along and Ps’ solicitors were merely acting upon their lay clients’ instructions. Hence, I do not consider that Ps’ solicitors should be made personally liable for the wasted costs in the particular circumstances in this case. However, I think any plaintiff’s solicitors in a PI action, particularly if their clients are not on legal aid, should exercise extreme caution when pursuing a claim with very weak legal or evidential foundation as they may eventually be found personally liable for any wasted costs.

CONCLUSION

189.  Based on the aforestated premises, I make the following orders for the Summonses:-

(i) In respect of TP’s Summons dated 14 March 2022, the TP Proceedings be dismissed upon the dismissal of the Main Actions against Ds;

(ii) Ds do pay TP’s costs of both corresponding TP Proceedings, on a party and party basis to be taxed if not agreed, with certificate for counsel;

(iii) Ds do pay TP’s costs of TP’s Summons, on a party and party basis to be taxed if not agreed, with certificate for counsel;

(iv) In respect of Ds’ 1^st Summons, under the Main Actions, Ps do pay Ds the costs of the Main Actions, on an indemnity basis, with certificate for counsel;

(v) Insofar as Ds seeking TP/Ps to pay Ds’ costs of TP Proceedings under D1’s 1^st Summons, such claims are dismissed with costs in favour of TP, on a party and party basis to be taxed if not agreed, with certificate for counsel;

(vi) Ds do pay the costs of Ds’ 1^st Summons on a party and party basis, such costs to be taxed if not agreed, with certificate for counsel;

(vii) In respect of Ds’ 2^nd Summons, the TP Proceedings brought by Ds against TP be dismissed with costs in favour of TP to be borne by Ds, on a party and party basis to be taxed if not agreed, with certificate for counsel;

(viii) Ds’ own costs in the TP Proceedings be paid by Ps in the Main Actions on an indemnity basis to be taxed if not agreed, with certificate for counsel; and

(ix) Ds do pay the costs of Ds’ 2^nd Summons on a party and party basis, such costs to be taxed if not agreed, with certificate for counsel.

190.  It remains for me to thank counsel for Ds and TP for their very helpful submissions in this case.