Lai Wing Kan v. Tak Wan Construction & Grilling Co Ltd and Another

DCEC 1663/2017

[2018] HKDC 1254

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1663 OF 2017

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DECISION

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1.I have before me today the applicant’s summons taken out on 21 August 2018 seeking an order that the costs of this employee compensation application (“EC Action”) be paid by the respondents to be summarily assessed.

2.The respondents opposed on the ground that the EC Action has already been wholly discontinued and the court has no jurisdiction to make the order sought.

3.The EC Action was commenced on 20 July 2017.  The applicant has all along been legally represented by his present solicitors.  The respondents were not.  The respondents are now legally represented for the purpose of this summons.

4.In November 2017 and through a number of without prejudice correspondences, the parties have reached a settlement which included a term that the respondents would pay the applicant his costs and disbursements of the EC Action on party and party basis to be taxed if not agreed.  This is not disputed by the respondents.

5.By a letter dated 28 November 2018, the applicant’s solicitors informed the court that the EC Action has been settled and asked that the first hearing fixed on 14 December 2017 be vacated.  The court responded by asking the applicant to dispose of the proceedings properly.

6.As the first hearing was imminent and on 5 December 2017, the applicant’s solicitors filed a Notice of Discontinuance (“the Notice”) without leave, as he was entitled to under Order 21 rule 2(1) since the Answer has not been filed, to “wholly discontinues this case as against the 1^st and 2^nd Respondents with no order as to costs in relation to this Notice”. 

7.There is no suggestion that the Notice has otherwise than validly discontinued the EC Action.

8.Under section 21(1) of the Employees’ Compensation Ordinance, Cap 282, the rules and practice relating to a civil action in the District Court shall apply to employees’ compensation cases.

9.Order 62 rule 10(1) provides that:-

“Where a plaintiff by notice in writing and without leave either wholly discontinues his action against any defendant or withdraws any particular claim made or question raised by him therein as against any defendant, the defendant may tax his costs of the action or his costs occasioned by the matter withdrawn, as the case may be …”

10.Thus, the default position is that the plaintiff discontinuing an action without leave must pay the costs of the action, up to date of notice to discontinuance (§62/10/2 & 21/5/9 Hong Kong Civil Procedure 2018).  If the plaintiff wishes to discontinue the action without being liable for the defendant’s costs, he must obtain leave under Order 21 rule 3(1) (§21/5/9 Hong Kong Civil Procedure 2018, Trend Publishing (H.K.) Ltd v Vivien Chan & Co [1996] 2 HKLR 227).  Where parties have agreed to discontinue on a costs order other than the said default position, the parties should therefore apply for leave by consent under Order 21 rule 3(1) to discontinue on the agreed term as to costs.

11.The applicant not having done so here, whether by oversight or otherwise, the default position on costs would remain.

12.Moreover, it is trite that a discontinuance is a final termination of the whole action or counterclaim, so that no part of it survives an effective discontinuance (§21/5/1 Hong Kong Civil Procedure 2018); and that save those limited cases where the court exercises its inherent jurisdiction to set aside a notice of discontinuance to prevent an abuse of process by the plaintiff, the plaintiff is not able to revive proceedings that have been discontinued by a valid notice of discontinuance (§21/5/5 Hong Kong Civil Procedure 2018).

13.In the circumstances, it is clear that the EC Action has already been wholly terminated by the Notice.  The EC Action therefore has ceased to exist.

14.The applicant relies on Order 62 rule 4(1) which provides that:-

“Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings …” (emphasis added by the Applicant”)

15.The applicant essentially submits that the Notice only brought about “the conclusion of the proceedings” within the meaning of Order 62 rule 4(1) and therefore the question of costs may still be dealt with.

16.If such submission is right, then Order 62 rule 4(1) would render totally otiose Order 62 rule 10(1) and all the cases and the established practice in relation to the need to seek a different costs order by and during the application for leave to discontinue, as mentioned in paragraph 10 above.

17.This cannot be right.  In my view, it is patently clear that the wordings “after the conclusion of the proceedings” in Order 62 rule 4(1) do not extend the application of that rule to the time when or the situation where the proceedings or action have been effectively terminated by a notice of discontinuance, as in the present case.

18.Therefore, though the applicant is indisputably entitled to the costs of the EC Action, I must conclude that I have no jurisdiction to hear this application, which is misconceived.  The applicant may have to find recourse in a fresh action to recover the said costs.

19.I would dismiss the applicant’s summons with costs summarily assessed at HK$12,000.

20.It appears to me that this application was made to attempt to redress the oversight or otherwise fault of the applicant’s solicitors but then this application is also misconceived; such that it also appears to me that the applicant should not personally pay the above summarily assessed costs of HK$12,000, or should he be charged the costs incurred by his solicitors in relation to this application.

21.In the hearing, I indicate to the applicant’s solicitors my provisional views set out in the preceding paragraph and that I am mindful of making a wasted costs order on my own volition against them under Order 62 rule 8 and pursuant to Order 62 rule 8A(1) that (a) they do repay the applicant the said costs in sum of HK$12,000 and (b) the costs of this application be disallowed as between the applicant’s solicitors and the applicant.  I then invite the applicant’s solicitors to address me on the directions to be given to afford them a reasonable opportunity to attend a hearing to give reasons why the court should not make the said orders.  After having time for and due consideration, Mr Kwan on behalf of the applicant’s solicitors indicate that they accept the making of the said wasted costs orders and do not need to be heard further.  I therefore so order.

Mr. William Kwan of Or & Lau for the applicant

Mr C H Lam of Cheng, Yeung & Co for the 1^st and 2^nd respondents