Carrie Woo v. I Mo Dock and Another

DCCJ 4/2015

[2019] HKDC 348

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4 OF 2015

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BETWEEN:

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D E C I S I O N

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1.On 13 August 2018, this Court handed down a Judgment (“the said Judgment”) dismissing basically all the Plaintiff’s claims, save and except $5,000 representing the expenses for removal of the glass debris. This Court also made an order nisi ordering the Plaintiff to bear the Defendants’ costs, on District Court scale, with certificate for counsel.

2.The Defendants issued a summons on 21 August 2018 seeking, in gist, to vary the costs order in the following manner:

i) the costs to be on an indemnity basis instead of party  and party basis as from the commencement of the Action, or alternatively, after 28 December 2015  (“Cut-off date”) (“indemnity costs application”);    and

ii) interest on such costs to be at an enhanced interest rate of 10% above the judgment rate[1] or such other    rate as this Court may think fit as from the  commencement of the Action, or alternatively, the Cut-off date or such other date as this Court may think  fit[2] (“enhanced interest on costs application”).

3.The parties have agreed to dispose of the said summons by way of written submission without a hearing. The agreement was made an order of the Court dated 29 August 2018. This Court invited further submission by its direction of 22 November 2018. Only the Defendants filed further submission.

4.In the Court’s judgment, the Plaintiff should be regarded the losing party because she lost almost on each and every issue she asserted. It is essential to note that the Plaintiff is only opposing the liability to pay costs on indemnity basis to a certain extent. Her concessions are more particularly set out in [8] below[3] . She opposes the enhanced interest on costs application.

5.In the further written submission dated 5 December 2018 lodged on the Defendants’ behalf, Mr Ng made it clear that in relation to the enhanced interest on costs application, the Defendants are seeking an order that the Plaintiff do pay the Defendants’ interest on:

i) the pre Cut-off date costs at an enhanced rate of 10%  above judgment rate as from date of judgment; and

ii) on the post Cut-off costs at an enhanced rate of 10%  above judgment rate after the Cut-off date.

Indemnity Costs Application

6.This Court does not intend to repeat the said Judgment herein. Suffice it to say, for the purpose of this summons, that a structure was blown off the Defendants’ house during a typhoon. It fell onto the Plaintiff’s house. The Plaintiff sued for damages. After trial, this Court considered the Plaintiff and her key witness Ms Athena Luk totally dishonest, untruthful and not credible witnesses. They were found to have lied to this Court, exaggerated and fabricated evidence in many material respects. In particular, this Court rejected as untruthful all the evidence relating to the alleged July 26 flood[4] and hard landing of the aluminium frame which had caused the alleged damages to her house. This Court considered the damages claimed grossly exaggerated and were totally unjustified. Of a claimed amount of $442,722, this Court only awarded the Plaintiff a sum of $5,000.

The Defendants’ Case

7.The Defendants’ grounds, as set out in Mr Ng’s written submission, can be summarized as follows[5] :

i) The Defendants have made sanctioned payment of $57,100[6] which was not accepted[7] . By virtue of O.22    r.23 RDC the Defendant is entitled to indemnity costs after the latest date i.e. 28 December 2015 (the Cut-off   date referred to above) on which the sanctioned  payment could have been accepted without leave; and

ii) as a matter of principles, the conduct of the Plaintiff in   the proceedings are such that she should be visited  with an indemnity order.

The Plaintiff’s Case

8.The Plaintiff concedes that by reason of O.22 r.23 RDC, the Defendants should be entitled to indemnity costs after the Cut-off date. However, she opposes indemnity costs before this date[8] , and contends that the party and party basis should apply. It is fair to summarize Mr Chiu’s grounds of objection for the Plaintiff as follows:

i) the proceedings brought by the Plaintiff are neither  scandalous, vexatious, oppressive nor with any   ulterior motive. There is also no special or unusual  feature that justifies an indemnity costs order;

ii) the Plaintiff had acted reasonably by agreeing to   attempt mediation with the Defendants with a view to   settling amicably the dispute with the Defendants. Yet    it is the Defendants who insisted to include the other  co-owner who was, unfortunately, on bad terms with the Plaintiff. The Defendants unreasonably rejected  mediation despite the Plaintiff had agreed to provide  an indemnity.

9.Mr Chiu relies on 2 Court of Final Appeal (“CFA”) decisions, namely, Town Planning Board v Society for Protection of the Harbour Ltd (No 2)[9] and Libertarian Investment Ltd v Thomas Alexej Hall[10] in support.

10.In the Court’s judgment, the 2 cases cannot help the Plaintiff.

Discussion

11.The Plaintiff’s concession on indemnity costs after the Cut-off date is, in the Court’s judgment, a correct and sensible move. It is undisputed that the Defendants made a sanctioned payment of $58,100 (exclusive of any interest) on 30 November 2015. It was rejected on 14 December 2015. At the end of the day the Plaintiff could not achieve a better result than the Defendants’ offer. According to O.22 r.15 RDC, time for acceptance expired after 28 December 2015, i.e. the Cut-off date. Under O.22 r.23(5) RDC, the Court shall make such order unless it considers unjust to do so. When considering whether or not it is unjust to do the court should, according to O.22 r.23(6) take into consideration of all circumstances, including the 4 conditions particularly spelt out in sub-paragraphs (a) to (d).

12.In the present case, the Plaintiff can only achieve less than 10% of the sanctioned payment, and only about 1% of her pleaded claim. The payment was made sometime after the first round of pleadings was filed and after serveral exchanges of without prejudice save as costs correspondence. In fact, as early as May 2015, the solicitors for the Defendants had pointed out to the Plaintiff the inconsistencies between the Plaintiff’s pleaded case and her own evidence. Some $57,100 was offered for settlement. By then the Plaintiff had already instructed valuation professional to help assess her damages but the Defendants had not. The Plaintiff should have a better understanding and assessment than the Defendants of the merit of her own case. She was therefore in no disadvantageous position to consider whether to accept the Defendants’ offer.

13.The major reason for the Plaintiff’s failure in the Action is, as apparent from the said Judgment, that she pursued the dishonest aspects of her claim. She and her witness fabricated the alleged July 26 flood following the blown-off incident which formed the whole basis of her claims. This Court considers it not unjust to make the indemnity costs order under O.22. The onus is on the Plaintiff to show otherwise, and she does not seek to do so. For reasons set out in this paragraph and below, it would be difficult, if not impossible for the Plaintiff to argue it unjust to do so. Had she not made the concession, this Court would definitely order the Plaintiff to pay costs on indemnity basis pursuant to O,22 r.23 RDC as from date following the Cut-off date, i.e. 29 December 2015.

14.As regards costs incurred prior and up to the Cut-off date, this Court does not believe the parties have any quarrel that as a matter of general principle, costs are entirely a matter of discretion of the Court taking into account all circumstances including the conduct of the parties in the proceedings, see: O.62 r.5 RDC. For costs to be taxed on indemnity basis, the costs awarded should provide that there shall be allowed all such costs as are necessary or proper for attainment of justice or for defending the rights of a party whose costs are being taxed, see: O.62 r.28(4A) RDC.

15.Applying O.62 r5(2) RDC to specifically the Plaintiff’s conduct in the present case, this Court has to take into account:

i) whether it is reasonable for the Plaintiff to pursue the  present claim based mainly on the alleged July 26    flood;

ii) the manner in which the Plaintiff has pursued her   claim;

iii) whether the Plaintiff has exaggerated her claim; and

iv) her conduct before, as well as during, the proceedings.

16.As to how justice can be attained by awarding an indemnity costs, the CFA’s decision in Town Planning Board (supra) is apposite. That case was concerned with whether it is appropriate for indemnity costs to be imposed in favour of the Society who succeeded in its application. The following principles can be derived:

i) indemnity costs, which is a more generous basis, will  usually enable the successful party to recover more of  his costs. It can therefore be perceived as achieving a fairer result than that on a party and party basis.  However, such difference on its own is insufficient to    justify an award of indemnity costs; 

ii) “special or unusual feature’ must be shown by the successful party;

iii) an award of indemnity costs will be made in cases brought with an ulterior motive, for an improper   purpose, or where there was deception or underhand  conduct on the part of the losing party, but is not only    confined to them;

iv) it will be undesirable to define all circumstances    leading to grant of costs on indemnity basis, as   discretion may be fettered;

v) the attributes of the parties and the character of the proceedings were not irrelevant to the exercise of the discretion; and

vi) The grounds for making an indemnity costs order   must be connected with the case and might extend to   any matter relating to the litigation and the parties’  conduct in it, and also to the circumstances leading to    the litigation, but no further.

17.The CFA decision of Libertarian Investments (supra) explained that improper conducts (which includes deception or underhand conduct on the part of the losing party) generally refer to the conduct of the litigation rather than conduct which constituted the cause of matter giving rise to the litigation[11] . Accordingly, even in contempt cases, there is no general rule that indemnity costs should be awarded against the contemnor. The remedies granted in the action have reflected the appropriate compensation, and unless there are other conducts which justified a separate penalty, indemnity costs might not be justified.

18.The CFA’s decisions are of course binding on this Court. However, reading Libertarian Investments (supra) in the context and together withTown Planning Board (supra), they do not support a proposition that the CFA has excluded as irrelevant pre-action conduct. Libertarian Investments (supra) stated that generally, the improper conduct which brought about the causes of action of the winning party would have been sufficiently compensated by the remedies granted by the court. However, it never said then no indemnity costs would then be imposed when improper pre-action conduct is involved. In appropriate circumstances, indemnity costs could still be imposed, see: [6] of Libertarian Investments (supra).

19.In the present case, the Plaintiff lost on almost each and every issue she contended. Her case was a pack of lies and therefore she pursued a dishonest claim. The followings are some examples of such lies listed in the said Judgment. The square brackets denote paragraph referred to in the said Judgment:

(i) the removal of the glass fragments by Luk’s volunteers using plastic buckets, see: [117];

(ii) the concerted denial of the issue of her 3^rd Letter and  the Ngai Sing’s 2012 quotation. On the other hand,   they turned around and accused the Defendants of  having fabricated the said documents. This Court considers it a wicked move, see: [120] - [123];

(iii) the Plaintiff’s detailed, vivid but false account of how she removed the glass fragments that choked the roof drain not sitting well with objective roof and drain structure, see: [129], [130];

(iv) the plucking and clearing away of glass fragments from the drain by the volunteers was a highly exaggerated fabrication, see: [131].

20.In addition, she only raised the matter of flood some 3 years after the alleged incident, see: [127] of the said Judgment. The quantum of her case fluctuated from initially some $57,100[12] to almost $2 million[13] before Action, and then to $442,722 when the proceedings were issued. By the time she raised the water damages, it would be quite impossible for expert to conduct any meaningful examination to verify the alleged flood. Yet, expert evidence had to be obtained and the Defendants were put to expenses to engaging their team to assist the Court and to defend their position.

21.It has to be remembered the Plaintiff’s version of story was not one which the Defendants could easily brushed aside. It is because as a matter of fact, a structure had been blown off their house and landed on the Plaintiff’s house. It was a hard fact which the Defendants did not seek, and I think fairly and correctly, to deny. Although it does not mean that a flood would automatically follow as alleged, the blown-off incident set an apparently natural stage for the Plaintiff to build upon her story. It forms an added hurdle when the Defendants sought to refute the Plaintiff’s case. That is the unfortunate situation in which the Defendants were stuck. The Plaintiff made use of the opportunity with a view to gaining unwarranted advantages. Substantial time and costs had to be incurred to refute the Plaintiff’s case.

22.The fabricated story of the Plaintiff and her inflated claim were only dismissed after a full-blown trial, particularly after thorough cross-examination by the good job of the Defendants’ counsel. It was a time consuming and costly exercise. Only $5,000 was awarded for removal of debris the liability to pay the Defendants had all along accepted. The Plaintiff ran a dishonest case. This is exactly what an indemnity costs order should condemn. She must compensate the Defendants for the costs of responding to her dishonest claim. This Court wonders how the Plaintiff can possibly argue her case is otherwise than with any ulterior motive or there is no underhand conduct.

23.The $58,100 was rejected only 14 days of the offer[14] . Such being the case and given the Plaintiff’s persistence in pursuing her dishonest claim, this Court does not believe mediation, if going ahead, could bring about any fruitful settlement. Further, the Defendants’ concern of the Plaintiff’s brother suing after the present Action was a legitimate one. In the Court’s judgment, the mediation ground raised by Mr Chiu cannot assist the Plaintiff.

24.This Court sees nothing unjust to award costs on indemnity basis for the entire action and now so vary the costs order nisi to indemnity costs. That is to achieve, as far as money can redress, a fairer result in circumstances of the present case.

Enhanced Interest on Costs Application

 The Defendants’ Case

25.Again, there are 2 parts of costs which attract the enhanced interest rate. They are costs incurred prior to and including the Cut-off date and those after it.

26.For the post Cut-off date costs, Mr Ng relies on the same O.22 r.23 RDC which provides for indemnity costs as well as enhanced interest rate if a plaintiff cannot obtain an award better than the refused sanctioned payment. The relevant rules provide that:

i) the court may order that the Plaintiff to (a) pay the Defendants’ costs on indemnity basis after the Cut-off  date [i.e. 28 December 2015 in the present case] and   (b) interest thereon at a rate not exceeding 10% above    judgment rate; and

ii) where this rule applies, the court shall make the order    aforementioned unless it considers it unjust to do so,   and in considering whether it is unjust, the court is  required to take into account all circumstances  including those set out in sub-paragraph 6 (a) to (d)[15] .

27.As for the pre Cut-off date costs, Mr Ng asks for the same 10% above the judgment rate. His grounds can be summarized as:

i) this Court has an inherent jurisdiction to grant such  enhanced rate, and is in any event not limited by O.22  r.23(7) RDC [16] to grant such enhanced rate;

ii) the Plaintiff has run a dishonest case and should be  liable to pay the enhanced rate;

iii)   there is a need to show the Court’s disapproval of the  Plaintiff’s conduct in line with the award of indemnity costs, and therefore a comparable rate should be  awarded for the period prior to the Cut-off Date;

iv)   D1 was under stress since 2013 when the Plaintiff threatened legal action until trial. The Defendants  were also out of pocket since 2015 when the action  was commenced. Accordingly, the Defendants should    be properly and adequately compensated by the enhanced rate prior to the Cut-off date.

28.This Court has raised queries as to the jurisdiction of this Court to direct costs to run from a date prior to judgment which is normally the date on which interest on costs start to accrue[17] . Through Mr Ng’s further submission, the Defendants have clarified their position as follows[18] :

i) as for the pre Cut-off date costs, enhanced interest of  10% over judgment rate is to run from date of    judgment until payment;

ii) as for the post Cut-off date costs, enhanced interest of    10% over judgment rate is to run from the Cut-off date.

The Plaintiff’s Case

29.The Plaintiff’s position is, so far as can be discerned from his submission, this[19] :

i) no enhanced interest rate should be imposed for costs    incurred prior to the Cut-off date;

ii) no enhanced interest rate should be imposed for costs    after the Cut-off date, or alternatively, the enhanced   rate of 4.5% instead of 10% as adopted by Lam J (as   the learned VP then was) in Golden Eagle    International (Group) Ltd v GR Investment Holdings   Ltd as in [19][20] .

30.Mr Chiu further submits that since there is no supporting affidavit to explain how disbursements, costs and costs on account were paid from commencement of the action to the Cut-off date. As in the case of Shih Pik Nog v G2000 (Apparel) Ltd[21], this Court is in no position to decide on the matter, and Mr Chiu invites this Court to reject the Defendants’ claim.

31.Mr Ng submits that since Mr Chiu raises no jurisdictional challenge to enhanced interest running prior to the Cut-off date, the only question is whether this Court should impose such enhanced rate, and if so, what it is[22] . A solicitor’s statement on costs so far paid and when they were paid by the Defendants was annexed to his reply submission.

Discussion

32.In Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd (supra), the plaintiff eventually achieved a result in the final judgment better than its sanctioned offer which was rejected. The issues before Lam J (as the learned VP then was) were, inter alia, firstly, whether the plaintiff should be granted indemnity costs after the latest date on which the sanctioned offer could have been accepted without leave, and secondly, the appropriate interest rate on those costs.

33.Lam J (as the learned VP then was) in that case reviewed a number of English authorities and endorsed the principles in McPhilemy v Times Newspapers Ltd (No 2)[23] and KR v Bryn Alyn Community (Holdings) Ltd[24]. Golden Eagle (supra) has since been followed by a number of subsequent decisions, e.g. Lo Yuk Sui v Fubon Bank (Hong Kong) Limited[25] , Maysun Engineering Co Ltd v International Education and Academic Exchanges Foundation Co Ltd[26] , etc. The followings can be distilled from Golden Eagle (supra) regarding the costs and the enhanced interest thereon under O.22 of the RHC (applicable to the RDC which is couched in exactly the same terms):

i) when the sanctioned offer was not accepted but the  plaintiff can achieve better in the end, the court should   exercise power under O.22 r.24 (and similarly under    O.22 r.23) unless considers unjust to do so;

ii) the powers under O.22 r.24 (and similarly under O.22    r.23) aim at achieving a fairer result for the winning  party[27] ;

iii)   the purpose of awarding indemnity costs is to enable  the court to address the unfairness which arises when    the usual costs is awarded on standard basis, which    almost invariably is less than what he has paid his  solicitors[28] ;

iv)   the purpose of awarding enhanced interest on costs is  to redress the element of perceived unfairness which  arises from the general rule that interest is not allowed   on costs before judgment, so that even if a successful  claimant who would obtain indemnity costs at trial, he   has to first of all make payments to his solicitors on    account of costs out of his own pocket in advance of   trial. The successful party will get nothing to  compensate him for the costs of money (or the loss of   the use of money) which he has to bear before trial in  respect of his costs on account paid to his solicitors,  and such order enables the court to achieve a fairer  result. It will therefore not be unjust to ask his   opponent, who should have accepted the sanctioned  payment thus bringing the proceedings to an end and  successful party’s costs not being funded. Without  specific evidence, the court can direct interest to run  from the date when the work was done or liability for  disbursement was incurred[29] ; and

v) the Court has power to direct, as a matter of principle,    interest to run on costs incurred after the relevant cut-   off date from a date when the works were respectively done[30] .

34.In KR (supra), Walker LJ said at [22]

“If an order is made to pay costs on an indemnity basis, it is unlikely to be unjust to make the party pay interest on those costs for the period when litigation is being funded when acceptance of a Pt 36 offer should have led to it not being funded…”

35.This Court agrees to the above observation in KR (supra) as well as the similar observation by Lam J in Golden Eagle (supra). As this Court has already come to the conclusion that the Plaintiff should pay post Cut-off date costs on indemnity basis[31] , for the same reasons and in order to better compensate the Defendants in a fairer way, this Court should award enhanced interest rate for the post Cut-off date costs. The question is what the rate should be and when it should start to run.

36.Lam J in Golden Eagle (supra), following McPhilemy (No.2) (supra), considered enhanced interest rate should be compensatory and  not penal in nature; and costs of money appears to be a relevant yardstick[32] . The learned judge adopted 4% over prime (which was then at 5% p.a.), making a total of 9% p.a. reasonable and, in fact, a generous assessment of costs of funding. He applied the rate of 4.5% p.a. Similar rate was followed in many decisions of the first instance, e.g. Lo Yuk Sui (supra) (5% p.a.), The Owners and/or Demise Charterers of the Ship or Vessel “MCC Jakarta” v The Owners and/or Demise Charterers of the Ship or Vessel “Xin Nan Tai 77”[33] (half of 4% over prime), and even in the CA decision of Antwerp Diamond Bank NV v Brink's Incorporated (No. 2)[34] (4% over prime).

37.In relation to awarding only half of the costs of funding, this Court can readily appreciate the rationale behind such award. It is because normally, costs were incurred and/or works done from time to time throughout the proceedings until their conclusion. It therefore makes perfect sense for halving the rate in order to reflect the reality that not all items of legal works were done or payment paid in one go at the Cut-off date when the award is made under the O.22 regime. Halving of the interest rate reflects this rationale. Implicitly, it also reflects that the enhanced rate is compensatory and not penal. 

38.However, the cost of money approach seems to have been departed from in many decisions depending on facts of the cases. A greater uplift of interest on costs can be found in, for example, Force Way Engineering Limited v The Incorporated Owners of Grand Court (half of4% above judgment rate)[35] . In Maysun Engineering (supra), HHJ Mimmie Chan (as Hon Chan J then was) even awarded a rate of 2% above judgement rate (without halving it) from the relevant date on which the 2^nd offer should have been accepted without leave, until judgement.

39.Mr Ng for the Defendants urged this Court to adopt 10% over judgment rate (currently at 8.088% p.a. as from 1 January 2019, and will be 8.125% p.a. as from 1 April 2019). He does not propose halving it. The effective rate is therefore 18.088% p.a. and apparently, there is a punitive element in it.

40.Mr Ng refers this Court to the recent English Court of Appeal decision in OMV Petrom SA v Glencore International AG[36] which was decided recently and after Golden Eagle (supra). He submitted that OMV Petrom (supa) supported his proposition that the enhanced interest rate and the costs sanction embodied in the O.22 regime is not entirely compensatory; and in appropriate cases, a punitive element can be factored in to mark the court’s disapproval of any unreasonable and improper conduct.

41.In OMV Petrom (supa), the claimant sued the defendant in deceit and made offer for settlement. The defendant rejected it and vigorously contested the claim. After a lengthy trial, judgment was entered against the defendant for a sum significantly greater than the offer. The trial judge commented that the defendant had put the claimant through the hoops of having to establish liability in a very flagrant case of fraud and in a manner which was wholly unreasonable. However, following the McPhilemy (No.2) (supra), the judge refused to award the maximum enhanced rate under the English counterpart of the Hong Kong O.22 r.24[37] and held they were compensatory rather than penal. The claimant appealed and it was allowed unanimously by the English CA.

42.In OMV Petrom (supa), Sir Geoffrey Vos C (with whom Kitchin and Floyd LJJ agreed) has this to say at [43] and [44] on enhanced interest on costs:

“43. As I have said, I do not think that we are bound by McPhilemy case to decide that the assessment of the rate of interest on costs should be such as to achieve a fairer result for the claimant than would otherwise have been the case. That does not, however, indicate that some of the factors I have already mentioned may be relevant. Moreover, once again I do not regard the award as purely compensatory. As I have said, different factors may in practice apply to the enhanced interest under CPR rr36.14(3)(a)(c) …

44. I have considered carefully the judge’s approach to the award of enhanced interest on costs. He applied para 23 of McPhilemy case as he was entitled to do so, but I think he fell into error, through no fault of his own, by failing to take into account some of the other factors I have mentioned including in particular the fact the costs on which enhanced interest was claimed were largely incurred unreasonably in advancing a dishonest and unreasonable defence. … I would hold that the correct rate of enhancement is once again the maximum of 10% per annum for the reasons I have mostly already given. I do, however, also think that the factors I mentioned above in relation to the enhanced rate of interest under CPR r.36.14(3)(a) were also relevant to the interest awarded on costs, because this was a bad case of the defendant simply ignoring a proper offer and running up costs thereafter.”

(Emphasis added)

43.Although OMV Petrom (supra) is not binding on this Court, it is highly persuasive. I accept Mr Ng’s submission that when Golden Eagle (supra) was decided, the court then was without the benefit of the subsequent development in the jurisprudence of this area in England, particularly in the regime of costs/interest sanctions and rewards based on which the Hong Kong rules are modelled. It is apparent that the sanctions and rewards are introduced to incentivise parties to behave reasonably in litigation and encourage good practice. It also serves to save resources of the parties and the Judiciary. Further, if the enhanced interest is only restricted to costs of money, the rules are expected to be drafted very differently and, perhaps, more directly. It is because when at low interest environment, 10% over judgement can rarely, if not never, be awarded, and reference to all circumstances, including conduct of a party, may be unnecessary. A survey of decided Hong Kong cases in this area shows that the court’s discretion on this area remains unfettered, and the court always exercises the discretion on the interest uplift taking into consideration of all circumstances.

44.The factors which Sir Vos C considered relevant when imposing the full 10% uplift included:

i) the unsuccessful party was guilty of lying;

ii) there was deplorable, if not outrageous conduct such  as using vast asset base to frustrate the claimant’s   attempts to settle;

iii)   the unsuccessful party had refused to engage in    settlement discussion or response to the sanctioned  offer with the eventual award being very significantly greater than the O.22 offer;

iv)   the running of unsustainable grounds of appeal by the    unsuccessful party.

45.In the present case, the Plaintiff took advantage of an unfortunate accident and fabricated a claim against the Defendants; inflated her claims and therefore had repeatedly rejected the Defendants’ offer as being too low; and insisting on fighting a hopeless case when the evidence was so inherently inconsistent and bad from the beginning. In my judgement, although there is always a possibility of a worse case than the present one, this is definitely a very bad case that should be visited with an enhanced interest rate over and above the costs of money. Taking into consideration that this Court is not going to half the rate to be awarded, and some $1.76 million[38] had been paid since the post Cut-off date which was substantial to the Defendants who are retired school teachers, this Court will award an enhanced rate of 4% over the judgment rate on the post Cut-off date costs. The rate would be marginally over 12% p.a. which is definitely higher than 4.5% p.a. applied by Lam J in Golden Eagle (supra).

46.In light of OMV Petrom (supra), it will be unnecessary for this Court to engage in a tedious exercise to find out the costs of money, and when and how the Defendants had actually settled their bills with a view to avoiding over-compensation. This Court accepts certain punitive element can be included to reflect the Court’s dissatisfaction on a party’s unacceptable conduct. In any event the Defendants’ solicitors have provided a statement as to when the Defendants have paid their costs on accounts and settlement of bills and counsel’s fees.

47.As regards when such interest should start to run, it appears the learned judge in Golden Eagle (supra) accepted readily that the current O.22 empowered the court to order interest to run before judgment, just like what the English counterpart has operated[39] , though there is no detail discussion on how such jurisdiction is conferred by the present O.22 RDC (or RHC) regime. The jurisdiction to award interest on costs to run before judgment under the current O.22 regime has been consistently exercised in many cases including those referred to above. This Court will therefore follow the aforesaid line of cases and directed that in the present case, interest on costs is also to run from the date following the Cut-off date.

48.The Defendants are also seeking the same enhanced interest on the pre Cut-off date costs, though to run from date of judgment. Section 50 of the District Court Ordinance, Cap 336 (“DCO”) provides for outstanding judgment debts (of which costs order is one) are to carry interest:

“(a) at the rate the Court orders; or

(b) in the absence of an order, at the rate the Chief  Justice determines by order,”

49.Obviously, this Court is empowered by the aforesaid provision to direct interest on costs, on good reason, to accrue at a rate other than that prescribed by the Chief Justice. O.22 r.23(4)(b) RDC expressly empowers the Court to order enhanced interest rate for post Cut-off date costs. It is an express power and a gloss on the post Cut-off date costs. However, the lack of express provision in the RDC covering pre Cut-off date costs will not take away the Court’s power under s.50 of the DCO to impose a different interest rate, enhanced or otherwise, to different part of the costs order. It has to be remembered that O.22 r.23(7) RDC provides expressly that the Court’s power under the rule being in addition to any other power it may have to award or disallow interest.

50.The next question is whether this Court should exercise such discretion, and if so, what that rate is, and whether it is the same as that applicable to the post Cut-off date costs.

51.There is no reasons why the principles in OMV Petrom (supra) should not be applied to deal with the pre Cut-off date costs. In the judgment of this Court, the Plaintiff should compensate the Defendants for the costs of responding to her totally unwarranted and dishonest claim, and bear whatever consequence, sanction or otherwise, that may flow from it. I therefore do so direct the same enhanced interest rate be applied to the Defendants’ pre Cut-off date costs, and to run from date of judgment until payment.

Disposition and Orders

52.The costs order nisi made by this Court on 13 August 2018 be varied to the followings:

i) the Plaintiff do pay the Defendants’ costs of the entire    Action, i.e. costs from the commencement of the action to 28 December 2015 (“pre Cut-off date costs”)  and from 29 December 2015 to the date of payment of   payment (“post Cut-off date costs”), on indemnity    basis, with certificate for counsel, to be taxed if not  agreed;

ii) the Plaintiff do pay interest on the Defendants’ pre Cut-off date costs at a rate of 4% above judgment rate as from the date of judgment until full payment; and

iii)   the Plaintiff do pay interest on the Defendants’ post  Cut-off date costs at a rate of 4% above judgment rate    as from the date following the Cut-off date until full    payment.

53.Regarding costs of this application, there is no reason why the usual rule of costs to follow the event inapplicable, and should not be on indemnity basis which is the same as the main action. I do order that the Plaintiff do pay the Defendants costs of this application on indemnity basis, with certificate for counsel, to be taxed if not agreed.

Mr Patrick PH Chiu, instructed by Cheung Fung & Hui, for the Plaintiff

Mr Ernest CY Ng, instructed by J Chan, Yip, So & Partners, for the Defendants