Chen Kam Nga v. Lee Ho Yin

HCA 553/2016 and
HCA 356/2017

[2021] HKCFI 3163

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 553 OF 2016 AND 356 OF 2017

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(Consolidated by the Order of Mr Registrar Ho

dated the 20^th day of December 2017)

Before:  Hon Au-Yeung J in Chambers

Closing Date for Written Submission: 6 August 2021

Date of Decision: 22 October 2021

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D E C I S I O N

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1.By a Judgment handed down on 12 May 2021, (“the Judgment”) I made no order as to costs between the parties after trial. This is the Defendant’ application for variation of the costs order nisi such that (i) the Plaintiff do pay his costs from the last day of trial on indemnity basis; and (ii) 60% of his other costs of this action and of the counterclaim. The reason was that the Plaintiff has failed to beat the Defendant’s offer to settle (“the Offer”).

2.The application is opposed by the Plaintiff on the ground that it was reasonable for her not to accept the Offer that came less than a month before trial. 

3.The abbreviations in the Judgment are adopted in this Decision.

Offer to settle

4.On 6 January 2021, 26 days before the trial started on 1 February, the Defendant made the Offer, described as a “sanctioned offer”.  The “last day of acceptance without leave” was to be 3 February (the 3^rd day of trial).  The Offer was not accepted.

5.The Offer was partly for the Defendant to transfer his legal title in the Delya Property to the Plaintiff for free.  The Defendant would satisfy the Investment Claim and Funds Claim, whereas the Plaintiff would satisfy the 2 limbs of counterclaim.  There would be no order as to costs, save those costs orders already made and unpaid.

6.The Offer was worth about HK$1,677,582 (as it involved conversion of RMB into HK$) computed as follows:

D to pay P

Half the value of the Delya Property (agreed to be HK$3,000,000)	HK$1,500,000.00
Investment Claim	RMB200,000.00
Funds Claim (inclusive of interest)	RMB102,348.07

P to pay D

Counterclaim (inclusive of interest)	HK$110,000.00
Counterclaim for RMB (inclusive of interest)	RMB20,000.00

Net result

D was to pay P HK$1,390,000.00 and RMB 252,348.07.

7.Under the Judgment,

D to pay P

15.3% of Flat 1C (agreed to be HK$5,536,000)	HK$847,008.00
Investment Claim	RMB200,000.00
Interest thereon (up to 60 days post-judgment)	RMB14,701.00
Funds Claim	RMB103,226.37
Interest thereon (up to 60 days post-judgment)	RMB16,887.00

P to pay D

Counterclaim	HK$110,000.00
Interest thereon (up to 60 days post-judgment)	HK$72,544.00

Net result

D has to pay P HK$664,464.00 and RMB334,814.37.  The total monetary value was approximately HK$1,032,759.00.

8.Accordingly, the Plaintiff has failed to beat the Offer.

Legal principles

9.Under Order 22, rule 3(2) of the Rules of the High Court (“RHC”), where an offer by a defendant involves a payment of money to the plaintiff, the offer must be made by way of a sanctioned payment.

10.Under Order 62, rule 5(1)(d), RHC:

“The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account—

(d)   any written offer which is expressed to be ‘without prejudice save as to costs’ and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22.”

11.There is no principle of law that the Court must always award indemnity costs against a party who failed to beat an offer after trial.  It is just one of the factors to be taken into account: Choi Tak Man v Chan Yu Lan Didi [2017] 5 HKLRD 619, DHCJ Anson Wong SC, §25.

Nature of the Offer

12.The Offer was marked as “without prejudice save as to costs”.  It was caught by Order 62, rule 5(1)(d) in that:

(1)  The Offer would have required the Defendant to pay a net sum to the Plaintiff but the Defendant had not complied with Order 22, rule 3(2) to make a sanctioned payment.

(2)  An offer including terms as to costs was not a sanctioned offer under Order 22 RHC: Choi Tak Man, §14.

Other reasons to consider the Offer

13.The Court can still consider the Offer as a Calderbank offer in substance.  Mr Timothy Wong invites the Court to take into account 3 factors:

(1)  Monetary basis: The Defendant was the winner in terms of monetary value.  He was successful with 74% of the monetary value of the dispute.

(2)  Time spent basis: 2 disputes relating to Flat 19A and Flat 6 were resolved in favour of The Defendant.  Overall about 80% of the trial time was spent on issues relating to the 4 properties and the Defendant was generally successful.  He should be entitled to some of the time spent.

(3)  Broad brush approach: The Defendant suggests that he should be awarded 70% of his costs.

14.Mr Thomas Wong submits that the Offer just came too late and it was reasonable not to accept it.  The action was commenced some 5 years ago and yet the Offer came only 12 days before the Plaintiff was to lodge her opening submission.  Her team had already started preparing for the trial.

15.However, as pointed out by Mr Timothy Wong, the Plaintiff’s own offer came only on 31 December 2020, just 6 days before the Defendant’s.  So the delay was on both sides.

16.With regard to the monetary basis, Mr Thomas Wong submits that whilst the Defendant now focuses on the “net result” in money terms, that was not how the Offer was formulated.  The Defendant did not offer a single sum for settlement but put forth a separate offer for each limb of claim or counterclaim. As it transpired, the Plaintiff has beaten the Defendant’s offers on most of those claims. 

17.Mr Thomas Wong’s view is over simplistic.  If the Defendant’s case were successful, it was likely that Delya Property had to be sold whilst he could keep Flat 1C.  If the Plaintiff had won, Flat 1C would have to be sold.  The rest were money claims.  Overall, there would be payment of a sum of money by the Defendant or the Plaintiff.  The net result in monetary terms had real meaning. 

18.The Defendant could not be blamed for giving a breakdown in his Offer. It was open to the Plaintiff to accept some limbs and reject others to narrow down the issues, but she did not.  She lost on the Delya Property and HK$110,000, both of which were substantial claims.

19.The monetary basis has merits.

20.With regard to the time spent basis, I do not consider this to be appropriate at all.  I reject the approach of Mr Timothy Wong in tabulating the items in dispute (in accordance with §36 of the Judgment) and suggesting an apportionment of time.  It is not possible for the trial judge to concentrate on the evidence whilst keeping track of the time spent on so many items and do the apportionment. 

21.For example, I agree with Mr Thomas Wong that although the Investment Claim amounted to only RMB200,000, considerable time was spent on the defence as to whether the Defendant had made a repayment of a loan, who owned Flat 19A and whether the Plaintiff owed the Defendant HK$139,000.

22.Further, this being a one-to-one case, the question of credibility simply could not be decided by looking at an individual limb in dispute in isolation.  In the end, the Court did not find either party to be entirely credible.  (Section E of the Judgment)

23.With regard to the broad brush approach, even if the Defendant were 70% successful in terms of value (as Mr Timothy Wong submits), it is wrong to award him 70% costs, because the Plaintiff was 30% successful too.  What the Court should do is to weigh the relative success of each party and come to a global order.

24.In my view, some weight should be put on the monetary basis.  However, the Defendant has caused the Offer to be described as a sanctioned offer and to be on the basis of no order as to costs.  Had it been accepted by the Plaintiff, it would only have saved the parties one day’s costs (ie one refresher of Mr Timothy Wong and 1½ hours of solicitors’ costs).

25.In exercise of my discretion, I will therefore only order the Plaintiff to bear the costs of the Defendant on the basis of one refresher of Mr Timothy Wong and 1½ hours of solicitors’ attendance on the last day of trial.  There is no justification for indemnity basis.

Conclusion

26.For all the reasons given, I will therefore vary the costs order nisi in accordance with paragraph 25 above. 

27.As regards this application, the Plaintiff shall also bear the Defendant’s costs, summarily assessed at $50,000.

28.I thank counsel for their assistance.

Written Submission by Mr Thomas Wong, instructed by Hampton, Winter & Glynn, for the Plaintiff

Written Submission by Mr Timothy Wong, instructed by Liu, Choi & Chan, for the Defendant