Heung Wing Yan v. Hangway Housing Management Ltd and Others
Read the full judgment text of HCPI 347/2012 on BabelCite. This High Court CFI judgment was delivered on 14 February 2017.
1. On 14 October 2016, I handed down Judgment in the present action (“ Judgment ”) whereby I (a) awarded the plaintiff (“ P ”) damages in the sum of HK$1,017,545.35 with interest and costs against the 2 nd and 3 rd defendants (“ D2 ” and “ D3 ”), (b) dismissed P’s claim against the 1 st defendant (“ D1 ”), and (c) dismissed D1’s claim against D2 and D3 in the contribution proceedings. D1, D2 and D3 are collectively referred to as “ Ds ” below. For convenience, I will adopt the abbreviations in t
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HCPI 347/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE PERSONAL INJURIES ACTION NO 347 OF 2012 _________________________
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________________ DECISION ________________ I. INTRODUCTION 1.On 14 October 2016, I handed down Judgment in the present action (“Judgment”) whereby I (a) awarded the plaintiff (“P”) damages in the sum of HK$1,017,545.35 with interest and costs against the 2nd and 3rd defendants (“D2” and “D3”), (b) dismissed P’s claim against the 1st defendant (“D1”), and (c) dismissed D1’s claim against D2 and D3 in the contribution proceedings. D1, D2 and D3 are collectively referred to as “Ds” below. For convenience, I will adopt the abbreviations in the Judgment. 2.I also granted the following cost orders nisi: (a) D2 and D3 shall pay P’s costs of the main action against them (including all costs reserved if any) to be taxed if not agreed, (b) P shall pay D1’s costs of the main action against it (including all costs reserved if any) to be taxed if not agreed (“Cost Order Nisi”), and (c) there be no order as to costs as between D1 on the one part and D2 and D3 on the other part in the contribution proceedings, and (d) P’s own costs be taxed in accordance with Legal Aid Regulations. The cost orders in (a), (c) and (d) above had since become absolute. 3.On 28 October 2016, D1 applied by summons to vary the Costs Order Nisi (“Summons”) for an order that (a) costs of the main action be paid by P to D1 on indemnity basis to be taxed if not agreed, (b) P shall pay D1’s enhanced interest at the rate of 9% pa on the disbursements already paid and incurred up to the date of the Judgment and thereafter at judgment rate from the date of the Judgment until payment, (c) costs of and occasioned by such application be paid by P to D1 on indemnity basis to be taxed if not agreed, and (d) P’s own costs be taxed in accordance with Legal Aid Regulations. At the hearing of the Summons on 8 February 2017 (“Cost Hearing”), Mr Lim, counsel for D1, informed this court that in respect of (c) above, D1 would be content with an award of costs of and occasioned by such application on party-and-party basis to be taxed if not agreed. 4.On 28 October 2016 and 5 January 2017 respectively, D1 filed the 1st and 2nd affirmations of its solicitor Leung Bo Yee Nancy to support the Summons (“Leung 1st and 2nd Affs”). On 8 December 2016, P filed the 2nd affirmation of his solicitor Mak Yiu Wah Bilan to oppose the Summons (“Mak Aff”). II. LETTERS 5.P’s present action against Ds began life in the District Court on 21 October 2011 as DCPI2085/2011 whereby P claimed damages for personal injuries based on allegations inter alia that Ds were negligent and/or in breach of statutory duty. DCPI2085/2011 was transferred to the Court of First Instance pursuant to the order of Master S P Yip dated 18 April 2012, and it became the present action. 6.There was no dispute that D1’s solicitors wrote the following letters to P’s solicitors:
7.At the Cost Hearing, Mr Lim, counsel for D1, agreed (a) the 4th Letter was not any offer at all (whether Calderbank, open or otherwise), and (b) the 1st, 2nd, 3rd and 5th Letters were open offers (and not Calderbank offers or sanctioned offers under Order 22 of the Rules of the High Court (“RHC”)). P did not accept any of the offers in the 1st, 2nd, 3rd and 5th Letters. However, there was dispute as to whether the 6th Letter amounted to a sanctioned offer, but more of that below. 8.In the Mak Aff, it was suggested D1 was not entitled to indemnity costs and enhanced interest under Order 22 of the RHC as (a) the 1st to 6th Letters were not genuine settlement offers and did not constitute either Calderbank or sanctioned offers, (b) indemnity costs could only be awarded after and not before the expiry of 6th Letter (even if it was a sanctioned offer), and (c) it would be inappropriate to award indemnity costs even in the exercise of discretion under Order 22 rule 23 of the RHC. III. LEGAL PRINCIPLES: SANCTIONED OFFER 9.Order 22 rules 3, 5 and 15 of the RHC provide as follows:
10.Order 22 rule 23 of the RHC provides as follows:
IV. SANCTIONED OFFER 11.Given Mr Lim’s concession in paragraph 7(b) above, the question was whether the offer in the 6th Letter was a sanctioned offer prescribed by Order 22 rule 5 of the RHC. 12.In Kwok Chin Wing v 21 Holdings Ltd (previously known as inter alia Rockapetta Holdings Ltd) & anor,[1] Saunders J said at p 546 as follows:
Saunders J must have in mind Order 22 rule 2 of the RHC which provides as follows:
13.In respect of the 6th Letter, Mr Lin argued that Order 22 rule 5(3) of the RHC mandates any sanctioned offer must state inter alia whether it relates to the whole claim or to part of it or to an issue arising from it and if so to which part or issue, but the 6th Letter failed to comply with such provision. I disagree. As Mr Lim submitted, the offer in the 6th Letter was for D1 “to consent to [P] discontinuing her common law claim against [D1] on the condition that [P] shall pay the costs and disbursements as incurred by [D1] up to the date of acceptance of this sanctioned offer on a party-to-party basis”. In my view, it was obvious that a proposal for P to discontinue “her common law claim” against D1 with costs to date necessarily referred to P’s whole claim against D1. 14.Mr Lin next argued that the offer in the 6th Letter was not a sanctioned offer as it imposed a condition that P should pay costs and disbursements incurred by D1 which ran counter to the provisions in Order 22 rule 20(1) of the RHC that provide “[where] a defendant’s sanctioned offer ...... to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date of serving notice of acceptance, unless the Court otherwise orders”.[2] I agree that the offer in the 6th Letter for P to “withdraw her claim with costs to date” did not sit well with the prima facie rule in Order 22 rule 20 of the RHC. Hence, the 6th Letter did not meet the requirements in Order 22 rule 5 of the RHC. Mr Lim submitted the 6th Letter gave P another chance to withdraw her claim against D1. But this is not a sufficient answer because sanctioned offers are creatures of statute and therefore they have to meet the statutory requirements. Moreover, Mr Lim did not attempt to invoke the “otherwise proviso” (ie “unless the Court so orders”) in Order 22 rule 2(4) of the RHC. No doubt, Mr Lim was well aware of the heavy burden that has to be discharged for invoking the “otherwise proviso” as explained by Poon J in Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd in relation to the similar “otherwise proviso” in Order 22 rule 20(1) of the RHC.[3] 15.I therefore conclude that the 6th Letter was not a properly constituted sanctioned offer, and did not have the consequences set out in Order 22 rule 23(4) of the RHC. In the circumstances, there is no need for me to consider Mr Lin’s submissions that (a) the 6th Letter was a tactical ploy and not any genuine offer and/or (b) there was insufficient disclosure of relevant disbursements, costs and costs on account paid to D1’s solicitors[4] to support a claim for enhanced interest. V. LEGAL PRINCIPLES: INDEMNITY BASIS 16.Mr Lim submitted that even in the absence of a sanctioned offer, the nature of P’s claim against D1 and P’s conduct of the proceedings when viewed against D1’s offers and admonitions in the 1st to 6th Letters would lead this court to the conclusion that costs awarded in favour of D1 should be taxed on indemnity basis. Before I turn to Mr Lim’s arguments, I set out the relevant legal principles. 17.Order 62 rule 5 of the RHC provides as follows:
18.Order 62 rule 28(3) of the RHC provides that “[the] Court in awarding costs ...... may in any case in which it thinks fit to do so order or direct that the costs shall be taxed ...... on the indemnity basis”. Hong Kong Civil Procedure 2017 summarises the relevant principles as follows:[5]
19.Although the discretion to award indemnity costs is unfettered and uncircumscribed,[6] there must be some special or unusual feature in the case to justify an order for indemnity costs.[7] I accept indemnity costs are no longer limited to cases where a party’s conduct lacks moral probity or deserves moral condemnation for which the court wishes to express disapproval. But such conduct must be “unreasonable to a high degree; unreasonable in this context certainly does not mean merely wrong or misguided in hindsight..... It follows from all this ...... it will be a rare case indeed where the refusal of a settlement offer will attract ...... not merely an adverse order for costs, but an order on an indemnity rather than standard basis”.[8] Further, whilst pursuit of a weak claim will not usually, on its own, justify an order for indemnity costs, the pursuit of a hopeless claim (or a claim which the party pursuing it should have realised was hopeless) may well lead to such an order.[9] 20.But there is an infinite variety of situations which can come before the courts and which the courts may be consider appropriate to make an indemnity order. So the court must consider each case on its own facts to ascertain whether there is something in the conduct of the action, or the circumstances of the case in question that takes it out of the norm so as to justify an award of indemnity costs. VI. INDEMNITY COSTS 21.Despite the force of Mr Lim’s submissions, I have come to the view that the appropriate order is that the relevant costs should be taxed on party-and-party basis. 22.Mr Lim submitted P’s claim against D1 was misconceived and fundamentally flawed, which should not have been brought in the first place, especially when (a) she had a good claim against D2/D3 and (b) various invitations had been made to her to discontinue her claim against D1. But Mr Lin submitted P’s case against D1 was not so doomed to fail that it warranted an order for indemnity costs. 23.It is true P’s claim against D1 was not a strong one, and this appears in the Judgment after trial. However, I do not regard it as having been so weak to be especially remarkable. P’s claim against D1 was essentially for negligence, breach of the implied terms of her contract of employment, and breach of the OSHO. P’s case on negligence turned on her belief that D1 must have known all along cleaners had been mopping the Floor without any Sign or notice and/or without cordoning off the area cleaned, so it behoved D1 to take steps to warn/instruct her about the relevant dangers and to take reasonable precautions to ensure her reasonable safety. P essentially invited inferences that D1 had knowledge/ awareness to be drawn from the evidence. But it transpired that the evidence as to D1’s knowledge/awareness was not greatly impressive, and it was starkly exposed at trial. Perhaps P had hopes that such evidence might be elicited from Yu (intended witness for D1), but such hopes were dashed when D1 decided not to call Yu to give oral evidence, and this court decided in the overall factual matrix it was inappropriate to draw adverse inference against D1 for not calling Yu as witness. 24.The above matters also affected P’s claim for breach of statutory duty. This court accepted the Corridor where P slipped/fell was wet and slippery due to mopping by D3 without using any Sign or other measures and was therefore unsafe, but found that the need to take precautions was not reasonably foreseeable. It must not be forgotten that I accepted P’s account of the Accident and that of her witness Ng, and I further found P was not contributorily negligent. Taking all those matters into account, there was some basis, albeit weak, on which P’s allegations against D1 could be taken to trial. The exposure of such weakness at trial was a different matter from saying that the pursuit of the case in reliance on it was unreasonable to such a high degree that it ought to be marked by an award of indemnity costs. As explained above, the matter should not be viewed with hindsight. 25.Mr Lim next complained P’s claim against D1 was made with ulterior motive as evident from the Mak Aff. The Mak Aff stated that P was forced to sue and maintain her claim against D1 due to D2’s allegations that D3 was an independent contractor.[10] It appeared P feared the fact D3 did not have insurance cover at the time would pose a serious litigation risk of an empty judgment even if she were to succeed on her claim against D3 since D2 would not be vicariously liable for an independent contractor’s liability. 26.Mr Lim submitted this was not justified because P’s causes of action against D1 (employer) and D2/D3 (tortfeasor and her employer) were different, and whether or not D3 was an independent contractor was irrelevant to P’s claim against D1. Further, as early as on 3 September 2012 D2 by her Amended Defence removed her allegations against D1, and about a fortnight later on 19 September 2012 D2’s solicitors sent a “without prejudice save as to costs” letter to P’s solicitors to highlight such fact, ie D2 no longer placed any blame on D1, and to urge P to drop her claim against D1. On 20 August 2014, D2’s and D3’s pleadings were amended to admit their employer-employee relationship, and at the pre-trial review on 27 October 2015 this court urged both P and D2/D3 to consider their respective positions in relation to the former’s claim against D1 and latter’s resistance to D1’s contribution claim in view of the acknowledgment of employment relationship between D2 and D3. Mr Lim also asked this court to consider the 1st to 6th Letters in such context (especially the 6th Letter which was sent 2 days after the aforesaid pre-trial review), and he submitted that for P not to heed all such reminders and to pursue her claim against D1 (whom she knew from the Amended Form 2 was insured for the Accident) because D3 was uninsured, the inference must be that P’s claim against D1, despite its obvious lack of merit, had been pursued in the hope of pressurising D1 and its insurer to avoid the stress and irrecoverable expense of prolonged proceedings and a trial by making an offer for settlement. It was suggested that this was oppressive against D1. 27.As evident from the Judgment, P had a meritorious claim in respect of the Accident, and I have found that overall she was a truthful and reliable witness. She did not make any false or grossly exaggerated claim. Further, as explained above, even though the nature of P’s claim against D1 was weak and perhaps evidence as to D1’s knowledge or awareness of the cleaning arrangements for the Corridor was thin, her case against D1 was not entirely hopeless. Whilst P might have practical fears about whether she would be able to actually recover compensation for her genuine claim in respect of her personal injuries, I see no reason to believe that the proceedings against D1 were pursued to pressuring its insurer to settle an unmeritorious claim. Her conduct was nothing that of Choy Yee Chun,[11] Sung Foo Kee Ltd[12] or Amoco (UK) Exploration Company v British American Offshove Ltd (No 2).[13] 28.As regards the 1st to 6th Letters and other indications to P to drop her claim against D1, it has to be something more than merely non‑acceptance of offer(s) before it is appropriate to make an order for indemnity costs. Whilst it is possible that an unreasonable failure to accept an offer for settlement or an unreasonable resistance to a sensible approach to finding a solution for the proceedings may attract indemnity case, it has been described as “a rare case indeed” (see paragraph 19 above). Often hindsight might show it was unreasonable or imprudent not to accept a better offer, but that will not normally be sufficient for an award of indemnity costs. 29.In my view, the dismissal of P’s claim against D1 would not as a matter of course attract costs on indemnity basis. P’s claim against D could not be said to have been commenced or prosecuted in such a manner as to constitute to an affront to the court. I do not accept the circumstances of the present action were so insufficient as to put it outside ordinary hostile litigation, or cause the court to feel a proper sense of indignation at P’s conduct that arose out of concern over eventual recovery of her entitlement to compensation for personal injuries. P’s claim against D1 was a far cry from having knowingly put forward a false case from the start. With hindsight the 1st to 6th Letters as well as the letter dated 19 September 2012 by D2’s solicitors that Mr Lim relied on were sensible offers that ought to have been seriously considered or even accepted, but P had some basis for her claim against D1, albeit somewhat weak and thin, and her rejection of such proposals was not so unreasonable as to be in that “rare” category of case that justified an award of indemnity costs. VII. CONCLUSION 30.In the circumstances, the Summons is dismissed, and the Cost Order Nisi is made absolute. There is no reason why costs should not follow event. I grant a cost order nisi that D1 should pay P costs of the Summons (including all costs reserved, if any) to be taxed if not agreed on party-and-party basis, and P’s own costs be taxed in accordance with Legal Aid Regulations.
Mr Kenny Lin, instructed by B Mak & Co, for the plaintiff Mr Patrick Lim, instructed by Leung & Lau, for the 1st defendant [1] [2011] 3 HKC 542 [2] see Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd [2013] 4 HKC 282 where it was held that Order 22 rule 20(1) of the RHC envisaged that upon acceptance of a sanctioned payment or sanctioned offer the plaintiff was prima facie entitled to costs up to the date of acceptance, and such prima facie rule created certainty as to the costs consequences upon acceptance of a sanctioned payment or sanctioned offer, and facilitated the objective of sanctioned payments and sanctioned offers, which was to encourage settlement [3] [2013] 4 HKC 282, 289 [4] see Shih Pik Nog v G2000 (Apparel) Limited HCPI832/2009, Bharwaney J (unreported, 6 July 2011) para 17, and also Antwerp Diamond Bank NV v Brink’s Inc & ors (No 2) [2015] 5 HKC 329, 339 [5] Vol 1 para 62/App/12 at p 1251 (see also Sung Foo Kee Ltd v Pak Lik Co (a firm) [1996] 3 HKC 570) [6] see Town Planning Board v Society for the Protection of the Harbour Limited (2004) 7 HKCFAR 114 [7] see Jackson Xu Zhao Ze & anor v Tsai Tim Yuen & anor HCA902/2011, DHCJ Winnie Tam SC (unreported, 30 August 2013) paras 6-9 [8] see Kiam v MGN Ltd (No 2) [2002] 2 All ER 242, 246 per Simon Brown LJ [9] see Wates Construction Limited v HGP Greentree Allchurch Evans Limited 105 CLR 47, 55 [10] P said her concern was justified because ever since the pre-action stage D2 maintained D3 was her independent contractor and filed 2 witness statements to support such false plea [11] in that case, a developer sought to recover possession of premises and the tenant had no tenable or respectable argument that might support a finding of adverse possession with not even an attempt by a person in possession to retain possession to avoid the cost and inconvenience of having to move, so it was held that the ulterior objective of the defence was to put the landlord under the greatest possible pressure to pay compensation well above that which was otherwise merited [12] in that case, the defendant’s oppressive litigation conduct (by deploying legal process to prevent the plaintiff from obtaining its just payment) was described as one of the worst cases of this kind the court had seen [13] [2001] EWHC 484 (Comm) (22 November 2001) at para 6 per Langley J where the plaintiff conducted itself on the basis that its commercial interests took precedence over the rights and wrongs of the situation, and it was prepared to risk the outcome of litigation should the defendant resist the pressures upon it and take on the challenge, so when the plaintiff “suffers a resounding defeat, involving the rejection of much of the evidence adduced in support of its case, ...... that provides a proper basis on which it is appropriate to award costs on an indemnity basis” (my emphasis) | |||||||||||||||||||||||||||||||||||||
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