NG SHUI CHING v. CHEUNG MAN CHAN AND OTHERS

HCPI 910/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 910 OF 2004

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J U D G M E N T

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1.  This action is a claim for damages for injuries suffered by the plaintiff in an accident at his workplace.  He was incapacitated and as a result is suing through his wife and next friend.  Those she sues are her husband’s employer (the 1^st defendant) and principal contractors and sub-contractors (the 2^nd to 5^th defendants).  The suit against all defendants is joint and severable.  At all times the 1^st defendant on the one hand and the 2^nd to 5^th defendants on the other have been separately represented.

2.  The matter before me is a preliminary issue; namely, whether there is an agreement between the plaintiff and the 1^st defendant to the effect that the 1^st defendant has conceded liability to the extent of 85 per centum with 15 per centum contribution by the plaintiff.

3.  It is the plaintiff’s case that the respective solicitors explored settlement on liability in an exchange of correspondence from 29 August 2005.  This culminated in an offer made by the 1^st defendant’s solicitors of 7 December 2005 which was accepted by response from the plaintiff’s solicitors of 13 December 2005.

4.  The 1^st defendant’s case is that the offer was made to all the parties to the litigation, not just the plaintiff.  There was no response from the 2^nd to 5^th defendants, and thus no acceptance by them.  And so the matter lapsed.  There is no agreement on the issue of liability which remains live to be determined after trial.

The Pertinent Letters

5.  Although the summons refers to correspondence going to settlement from 29 August, the only letters germaine to the matter before me are the one written by the 1^st defendant’s solicitors, W K To & Co. (WKT) of 7 December to the solicitors for the plaintiff, Wilkinson & Grist (WG) and those for the 2^nd to 5^th defendants, and the response from the plaintiff’s solicitors of 13 December.  The correspondence up to this point amounted to negotiations between the parties and is thus inadmissible.

6.  That of 7 December from WKT reads as follows:

“	We refer to the above matter.
	As of today, the 2nd to 5th Defendants have still failed and/or refused to co-operate with our client for making a joint offer to the Plaintiff on the issue of contributory negligence.
	For the purpose of saving costs and time and in order to avoid further delay, the 1st Defendant hereby proposes that insofar as the 1st Defendant is concerned, he is prepared to admit liability (to the effect that 85% liability amongst all the Defendants be admitted in favour of the Plaintiff) subject of course to the Plaintiff accepting 15% contributory negligence in favour of the Defendants.  To put the record strict, we hereby invite all parties to seriously consider the above proposal and revert to us within the next 7 days, failing which the above offer shall lapse automatically.
	Kindly note that if the above offer is not accepted by either or both of the Plaintiff and/or the 2nd to 5th Defendants and the Court ultimately finds contributory negligence of 15% on the part of the Plaintiff, we shall argue that costs have been unnecessarily incurred in relation to the issue of contributory negligence of the Plaintiff and the issue of liability, as between the Plaintiff and the Defendants, shall be borne by the party or parties who unreasonably refuse(s) our client’s offer herein.  We hereby put all the parties on notice.  This is a calderbank offer.
	We expressly reserve our client’s right and remedies to produce a copy of this letter to the attention of the court on the question of costs should circumstances arise.”

7.  The response from WG of 13 December stated:

“	We refer to your without prejudice letter of 7th December 2005.
	In response to your offer, we can confirm that the Plaintiff agrees to accept 15% contributory negligence on his part (subject to the Court’s approval under Order 80, Rules of High Court), on the basis that the 1st Defendant admits liability to the extent of 85% vis-à-vis the Plaintiff, without prejudice to its right to seek contribution from the 2nd to 5th Defendants.”

8.  There was no response at all from those representing the 2^nd to 5^th Defendants.

9.  There the matter rested, until some 6 months later when, in June 2006, WG wrote to WKT giving notice of an intention to seek to enter interlocutory judgment against the 1^st defendant as to liability, based on the agreement on liability they had arrived at.

10.  This drew from WKT a denial that there was such agreement; that the proposal to admit liability as to 85% was based on agreement to that course by all parties, not just the plaintiff.

11.  And so an impasse, which remained unresolved; this summons was filed on 7 September 2006 by WG. 

12.  The issues required to be resolved are spelt out thus:

“	(1)	that the following preliminary issue be determined, namely:
		‘	following the exchange of correspondence between the Plaintiff and the 1st Defendant between 29th August 2005 and 13th December 2005, whether there has been a binding agreement reached between the Plaintiff and the 1st Defendant to dispose of the issue of liability as between them in the action herein by the 1st Defendant admitting liability to the extent of 85% and by the Plaintiff admitting contributory negligence to the extent of 15%’;
	(2)	that, if the question as set out in Paragraph (1) hereinabove is answered in the affirmative, the compromise on the issue of liability on the basis of the aforesaid agreement be approved by the court and interlocutory judgment be accordingly entered for the Plaintiff against the 1st Defendant, with damages to be assessed;
	(3)	that costs be provided for, with the Plaintiff’s own costs to be taxed in accordance with the Legal Aid Regulations.”

The Plaintiff’s Position

13.  … was dealt with in an affidavit by Fok Wing Kuen, a partner of WG having conduct of the case for the plaintiff, in support of the application.  In contending that the 1^st defendant’s offer was capable of being accepted by the plaintiff alone he prayed in aid the paragraph beginning “Kindly note …”.  As this spelt out the consequences of non-acceptance by either or both of the offerees, being an adverse costs order, it was thus an offer capable of acceptance by either or both.

The 1^st Defendant’s Response

14.  … is that the phrase in question read in context means that both sets of parties had to accept the offer for it to be effectively accepted.  When the 2^nd to 5^th defendants failed to respond the offer lapsed.  That was why there was no follow up in correspondence.  The purpose of the paragraph beginning “Kindly note” was to spell out the consequences of non-acceptance in costs, but this after trial of all issues between all parties, following the failure to achieve agreement by all parties.  The sentence “This is a Calderbank offer”, was to highlight this.

Analysis

15.  In a disputed compromise scenario, as here, the usual rules of construction apply.  Thus, the primary task is to establish what the parties’ intentions were, objectively ascertained, having regard to the words used.  If these can be established and a conclusion thus reached then that is the end of it.  There are other aids prospectively available such as the use of extrinsic evidence or evidence of subsequent conduct, but these have limited use in limited circumstances, and they fall away if the answer has already been found, in the words used by the parties.

16.  Focus in this case is on the offer itself.  For whom was it intended?  What was the intention of the offeror objectively viewed?

17.  First is that it was directed to all the parties.  It was sent to WG acting for the plaintiff and to the solicitors representing the other defendants.  It was not written for and on behalf of all defendants to their so-called opponent the plaintiff.  With all parties at risk of contributory negligence, there was no allegiance amongst the defendants.  That much is plain from the opening substantive paragraph. 

18.  The next paragraph sets out the proposal, or offer; that is, 85% liability amongst all defendants with 15% contributory to be accepted by the plaintiff.  It requires, on an ordinary construction of the words, participation by all parties.  And all parties were invited to consider the proposal within 7 days to avoid an automatic lapse. 

19.  I see within the construction of this paragraph no room for unilateral acceptance by the plaintiff.  That would have been but one step in the issue of liability being resolved by compromise where two were necessary.  The other ingredient was acceptance by the remaining defendants as well.  And that acceptance was not forthcoming.

20.  Does the 3^rd paragraph change things?

21.  I say no, it does not.  It is all about it being a Calderbank offer.  It is putting the parties, all of them opponents, on notice, that if one, or other, or both, were not to accept it, the judge might be told of that after trial.  And that could amount to adverse costs consequences. 

22.  So, this the Calderbank offer does not supplant the proposition that the offer was directed to all of the 2^nd to 5^th defendants as well as the plaintiff.

23.  I conclude that this was genuine attempt by the 1^st defendant to narrow the issues by getting a compromise on the matter of the plaintiff’s level of contribution on the issue of liability.  It required the agreement of all involved; for there would have been no benefit to the 1^st defendant to expose himself to an admission of liability without support of the remaining defendants.

Conclusion

24.  Much of the argument put forward by counsel dealt with the extent to which extrinsic evidence and subsequent conduct should influence or determine the outcome.  I am satisfied that this has already been determined by an ordinary meaning of the words used.

25.  I am satisfied there was no agreement reached between the plaintiff and the 1^st defendant to dispose of the issue of liability between them.  Thus my answer to the preliminary issue is ‘No’.

26.  At the request of counsel, I give liberty to apply, and reserve costs.