Integrity Financial Advice Network Co Ltd v. Lau Kong Kei

HCA 2165/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2165 OF 2011

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DECISION

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Introduction

1.I handed down my Judgment dated 31 August 2015 (“the Judgment”) whereby judgment was entered against the defendant. I also made a costs order nisi that the defendant should bear the costs of the plaintiff with a certificate for two counsel. I further allowed interest to run on the judgment sum at 1% over prime from 10 November 2011 until the date of the Judgment, thereafter at the judgment rate until full payment.

2.This is an application of the plaintiff to vary the costs order nisi on the strength of a sanctioned offer contained in a letter dated 14 July 2014 (“the Sanctioned Offer”) by its summons dated 14 September 2015 (“the Summons”).

3.The plaintiff in the Sanctioned Offer agreed to accept HK$15,700,000 (inclusive of interest until the lapse of the Sanctioned Offer) in full and final settlement of the present action. The Sanctioned Offer expired on 11 August 2014.

4.Long before its expiry, the defendant through his solicitors by their letter dated 24 July 2014 rejected the Sanctioned Offer without giving any reasons and/or counter proposal. The trial commenced on 9 October 2014 in the result.

5.The judgment sum is HK$17,348,941.43 (“the Amount”). The plaintiff has undoubtedly done better than the Sanctioned Offer.

6.By the Summons, the plaintiff asks for an order that (1) the defendant do pay the plaintiff’s costs of this action including any reserved costs incurred till 11 August 2014 to be taxed if not agreed on a party and party basis and thereafter on an indemnity basis and (2) the defendant do pay the plaintiff the Amount together with interest at 1% over prime from 10 November 2011 to 11 August 2014 and thereafter at a rate not exceeding 10% above judgment rate until full payment. The plaintiff also asks for enhanced interest on the costs payable by the defendant.

Discussion

7.Mr Chung for the plaintiff submits that by 11 August 2014, the defendant should be in a position with full information to fairly assess the merits of the defence. He submits that there is nothing unjust for this court to invoke the jurisdiction under Order 22 r. 24 (2) and (3), Rules of the High Court (“RHC”).

8.Indeed Mr Yam for the defendant has not suggested any injustice arising out of the application of the said provisions. I review the whole circumstances of the present action and consider the four factors set out in Order 22 r.24(5). The Sanctioned Offer was made well before the trial and there had not been any new development since it was made. Its term was generous in that the plaintiff agreed to abandon a considerable sum out of the Amount. The defendant should not have insisted on his incredible allegations of misrepresentation and attempted to rely on his unmeritorious legal arguments. He should have accepted the Sanctioned Offer in my view.

9.In the premises, I am satisfied that it is not unjust for this court to make the orders pursuant to the said provisions. In the first place, the defendant should pay the plaintiff’s costs of the action including all reserved costs on an indemnity basis to be taxed if not agreed on or after 12 August 2014. And, for the avoidance of doubt, prior to 12 August 2014, the defendant should also pay the plaintiff’s costs of the action including all reserved costs on a part to party basis. I so order.

10.As regards the amount of enhanced interest, Mr Chung submits that this case is not the worst example calling for the maximum rate, namely, 10% above the judgment rate (8% per annum). He suggests the appropriate rate should be 5% above judgment rate, taking a “middle of the road” approach.

11.Mr Yam does not have anything to say about the appropriate rate. He merely submits that the plaintiff cannot possibly claim enhanced interest on the Amount from 12 August 2014 onwards because this differs from the interest rate already ordered in the Judgment.

12.This submission is probably made out of a misunderstanding of Order 22 r.24(2). This court of course has a discretion to allow enhanced interest on the judgment sum notwithstanding an order on interest has already been made. When making the order in respect of the interest on the Amount in the Judgment, this court was for obvious reason not aware of the Sanctioned Offer. A sanctioned offer could only be disclosed to a trial judge after all the questions of liability and quantum have been decided. Order 22 r.24(2) does not make it a pre-condition that no order of interest has ever been made. The making of such an order could not debar this court from making an order when this court is made alive to the Sanctioned Offer. Otherwise, the mechanism under Order 22 r.24(2) would be rendered unworkable.

13.In view of the whole circumstances of the present case, particularly in the light of the term of the Sanctioned Offer and the merits of the defence, I agree with Mr Chung that 5% above the judgment rate should be a proper rate. I thus order that the defendant do pay the plaintiff interest on the Amount at 1% over prime from 10 November 2011 to 11 August 2014 and thereafter at 5% above the judgment rate until full payment. The defendant should also pay interest at such an enhanced rate on costs payable to the plaintiff from 12 August 2014 onwards.

14.For the avoidance of doubt, I have already granted a certificate for two counsel in the Judgment and there is no need for the plaintiff to ask for it in the Summons. The certificate remains intact and available to the plaintiff.

15.To sum up, I allow the plaintiff’s application and make an order in terms of paragraphs 1 to 4 of the Summons with the enhanced interest rate now decided to be 5% above the judgment rate.

16.The defendant should pay the plaintiff’s costs of this application. After perusing the statement of costs handed up to me, having regard to the indemnity basis upon which the plaintiff is entitled to have its costs to be taxed, I have summarily assessed the plaintiff’s costs immediately payable by the defendant at HK$10,000.  

17.Lastly, I thank Mr Chung and Mr Yam for their assistance.

Mr R. Chung of Kennedys for the plaintiff

Mr K.C. Yam of Johnnie Yam, Jacky Lee & Co, for the defendant