CHOY BING WING t/a BING CHOY & ASSOCIATES v. THE HONG KONG & SHANGHAI HOTELS, LTD.

Civil Appeal No. 218 of l994

IN THE COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT

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Decision
on Interest and Costs relating to
Assessment of Quantum Meruit

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Court of Appeal decision of l0th May, l995

1. The assessment of the quantum meruit before Master Jennings arose out of the Court of Appeal decision of l0th May, l995, in which Godfrey J.A., at page 6 of the judgment, said

"I would propose that we do this (that is, exercising the powers under O.59.r.l0(3) of RSC) by setting aside the whole of the Judge's order and substitute for it an order that it be referred to a Master to assess what is a reasonable sum to be paid by the Defendant to the Plaintiff for the services rendered by the Plaintiff to the Defendant between 25 July, l990, and 5 November, l990, in relation to Activities A, C and D to which I have referred (and also the Activities E and F which are, it is accepted, properly the subject of a similar determination)."

2. The Court of Appeal made the following costs order -

(i) that the costs up to 22 October, l994 (the date of the trial judge's order) to be taxed, and that the Plaintiff pay three quarters of such costs. These costs have been taxed and certified at $l,080,708, under an allocatur issued on llth July, l996.

(ii) that the Defendant's costs of the Appeal be taxed and be paid by the Plaintiff. These costs have been taxed and certified at $4l5,2l7, under an allocatur issued on l0th July, l996.

3. The total costs, which have not been paid by the plaintiff, amount to $l,495,925, plus interest.

Jurisdiction

4. Master Jennings delivered his decision on the assessment of the quantum meruit on 5th May, l997, stating that "I will hear the parties on the question of interest and costs on a date to be fixed." Master Jennings retired in June, l997, and the issues of interest and costs came before me on 7th October, l997. I declined jurisdiction on the basis that the parties should proceed by way of an appeal on the grounds that Master Jennings had omitted to make a decision on all the issues in the case of which he was seized. On appeal, the judge held that any Master has jurisdiction to decide the matter of interest and costs in this case, and directed that the parties should appear before a Master to obtain a decision. The parties returned before me and, having heard them on these issues, I now render my decision.

Introduction

5. The defendant originally employed the plaintiff as a structural engineer to the Peninsula extension project. In July l990 the defendant's services were terminated and an agreed sum of $3,768,080 was paid in full and final settlement of all work to date. In addition, the plaintiff was asked to finish certain specified works referred to as Activities A to F, but there was no specific agreement as to how the plaintiff would be paid for these works.

6. On 5th November, the defendant terminated the plaintiff's services other than the continuing obligations in respect of Activities A, C and D. On 9th November, the plaintiff wrote to the defendant terminating his engagement for all services.

7. The plaintiff claimed $3,504,860 in respect of Activities A to F for services rendered during the period between 25 July l990 and 5 November l990, which the defendant refused to pay. The plaintiff commenced proceedings on 8th January, l99l.

Quantum Meruit Award of l5th May l997

8. Master Jennings awarded the following -

Activity A	- nothing
Activity B	- claim not pursued
Activity C	- nothing
Activity D	- $446,2l5
Acitivities E and F	- $l25,000 by consent
Total award	- $57l,2l5

Payment into Court on 26th January, l99l

9. The Defendant paid into court the sum of $300,000 in satisfaction of all the causes of action including interest. This was not accepted by the plaintiff.

Calderbank Letter dated 7th November, l995

10. The Defendant made a Calderbank offer to the Plaintiff to compromise the referral to Master in relation to Activities A, C and D in the sum of $538,860 principal and $234,902.55 interest, on condition that the sum payable would be reduced by the payment into court with the defendant consenting to late payment out, that the plaintiff's solicitors would accept and retain the payments into court in accordance with RHC Order 22 r.5, and that the total sum payable would be paid into a solicitors' stakeholder account to be held to the joint order of the parties until taxation of the costs pursuant to the Court of Appeal's Order dated l0 May, l995. The sum so held would be paid to the defendant as a payment on account of that costs liability. The plaintiff did not accept the offer.

11. While the Calderbank offer was more than the sum awarded by Master Jennings' in relation to Activities A, C and D, it was less than the total sum awarded.

12. At the hearings before me, Mr. Natali for the defendant handed up detailed submissions on the history of this matter, part of which I have set out above, and the law relating to the question of costs, and he addressed me orally. The plaintiff also addressed me.

Defendant's Case

13. In his submissions, Mr. Natali noted the usual rule is that costs follow the event, except when it appears to the court that in the circumstances some other order should be made. In this case, he submits, given the amounts certified on taxation and due to the defendant, the defendant is the winner and should therefore recover its costs, and he seeks an order that the plaintiff do pay the defendant's costs of the quantum meruit application.

14. If I reject this argument, then I should take into account the payment in, as well as the amount paid in, and the Calderbank offer. Mr. Natali acknowledges that the payment into court was less than the total awarded to the plaintiff by Master Jennings. The sum in the Calderbank letter was greater than Master Jennings' quantum meruit order in respect of the specific Activities. The court has a discretion in deciding whether the Calderbank offer was effective in protecting the defendant's position on costs. Mr. Natali supported his submissions with authority, included in the Bundle.

15. The defendant substantially succeeded in rebutting the claims made by the plaintiff. The plaintiff claimed $3,504,860 in respect of Activities A to F, he did not pursue his claim in respect of Activity B, by consent he was awarded $l25,000 for Activities E and F, he was awarded nothing in respect of Activities A and C, and he recovered $446,2l5 in respect of Activity D.

16. In considering the claim for Activity D, Master Jennings commented at page 7 of his decision that "It seems to me that the figures produced in the last two paragraphs are helpful in supporting my conclusion that the plaintiff's claim is unrealistic." The hearing was substantially taken up with the claim for Activities A, C and D. The figure of $l25,000 for Activities E and F was awarded by consent, and was referred to only briefly by Master Jennings when he said at page 2 of his decision that "The question of payment for two other Activities, known as E and F, had also been referred to a Master by Kaplan J. and this was not subject of the appeal to the Court of Appeal. In relation to those Activities, the parties have reached agreement. By consent, I award the sum of $l25,000 in respect of those Activities."

Plaintiff's case

17. Mr. Choy bing wing addressed me in opposition to the defendant's submissions. Mr. Choy submitted that I should not construe the letter of 7th November, l99l, as having continuing effect, referring to the final paragraph which states that 'This offer is open for acceptance for a period of 2l days from the date of the letter. Thereafter, the offer may be accepted only on condition that Bing Choi pays HKSH's costs incurred from the date of expiry of the 2l day period of acceptance, such costs to be taxed on a party and party basis if not agreed'. Mr. Choy submitted the case of Oriental Press Group Limited v. Apple Daily, Civil Appeal No. l04 of l997, which inter alia concerned the construction an offer made before proceedings had been instituted and which was not expressed to be limited as to time.

Conclusions

18. I do not accept that the amount of the costs owed to the defendant in the Court of Appeal costs order should influence my decision as to which party should bear the costs of the assessment of quantum meruit before the Master. I should only have regard to the outcome of the assessment of the quantum meruit in deciding the costs liability.

19. Since the $300,000 paid into court on 26 January, l99l, was less than Master Jennings' award, it does not affect the basic rule that the costs should follow the event.

20. As to the Calderbank offer, I do not accept that the letter was of continuing effect, since it incorporated a time limit within its terms. In considering the offer, I am satisfied that the total award on the quantum meruit of $57l,2l5 is the figure I should take into account in exercising my discretion. Although $l25,000 of that figure was in respect of Activities E and F, and was awarded by consent, it nevertheless forms part of the sum awarded and is part of the assessment. As to the offer itself, the figure I should use in my consideration is $538,860, ignoring the sum of $234,902.55, representing interest. While the plaintiff's claims may have been considerably larger than the award, the Calderbank offer was less than the final award. Although it can be said that the difference in the comparative values of the Calderbank offer and the quantum meruit award is not great, it does not alter the fact that the offer fell short of the award. I am satisfied that the Calderbank offer of $538,860 was not effective in protecting the defendant's position on costs.

21. I therefore find myself satisfied that the usual rule that costs follow the event is applicable, and I order that the plaintiff do pay the defendant's costs of the assessment, including the hearings before me on the issues of costs and interest, on a party and party basis, such costs to be taxed if not agreed, with interest on those costs at judgment rate from 5 May, l997, the date of the assessment of the quantum meruit, until payment.

22. As to the quantum meruit award of $57l,2l5, interest is to be paid at judgment rate from 9 November, l990, being the date of termination of the plaintiff's employment with the defendant, until payment.

23. As to the costs payable by the plaintiff to the defendant by order of the Court of Appeal (that is, the costs awarded to the defendant up to 22 October, l994, and costs awarded in respect of the appeal itself, totalling $l,495,925) interest is to be paid on those costs by the plaintiff at judgment rate from l0 May, l995, until payment.

24. Finally, I give leave to the defendant to withdraw the sum of $300,000 paid into court on 26 January, l99l, together with the accrued interest.