Salleh Abu Baker v. Anway Ltd

HCA 2359/2019

[2022] HKCFI 2055

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2359 OF 2019

(Transferred from Labour Tribunal Claim No LBTC 2813/2019)

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Before:  Mr Recorder William Wong SC in Chambers (by Paper Disposal)

Date of Written Submissions by the Defendant: 4 March 2022

Date of Written Submissions by the Plaintiff:  1 April 2022

Date of Reply Submissions by the Defendant: 21 April 2022

Date of Reply Submissions by the Plaintiff:  12 May 2022

Date of Decision:  7 July 2022

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DECISION ON COSTS

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INTRODUCTION

1.On 17 November 2021, this Court handed down its judgment (the “Judgment”) dismissing the Plaintiff’s claim that the Defendant wrongfully terminated the Plaintiff’s employment contract by giving only 3 months’ salary in lieu of notice.

2.This Court made a costs order nisi that the Plaintiff should pay the costs of and occasioned by this action to the Defendant, to be taxed on a party to party basis, with a certificate for one counsel.

3.By summons dated 29 November 2021 (“D’s Summons”), the Defendant seeks to vary the costs order nisi, relying on its sanctioned payment made on 17 March 2020 in the sum of HK$10,000. Pursuant to O.22, r.23 of the Rules of the High Court (Cap. 4A), the Defendant seeks:

(a)  Costs of the action up to and including 14 April 2020 (being the latest date for the Plaintiff to accept the Defendant’s sanctioned payment without leave of the Court) on a party and party basis, and thereafter on an indemnity basis; and

(b)  Interest on costs after 14 April 2020 at 10% above judgment rate.

4.The Plaintiff opposes D’s Summons and has filed a summons on 17 December 2021 (“P’s Summons”), by which it seeks to vary the costs order nisi such that the Defendant be deprived of the whole or part of its costs.

5.P’s Summons is out of time, but I am of the view that no prejudice has been caused to the Defendant as the Plaintiff’s submissions is the flip side of the arguments against D’s Summons. It is only fair that this Court determine both Summonses in one go.

APPLICABLE LEGAL PRINCIPLES ON SANCTIONED PAYMENT UNDER O.22, r.23

6.O.22, r.23 applies if a plaintiff “fails to obtain a judgment better than the sanctioned payment”: O.22, r.23(1)(a).

7.Under O.22, r.23(4), the Court may order that the defendant is entitled to:

(a)  Costs on the indemnity basis after the latest date on which the plaintiff could have accepted the payment or offer without requiring the leave of the Court; and

(b)  Interest on those costs at a rate not exceeding 10% above judgment rate.

8.Where O.22, r.23 applies, the Court “shall” make the above orders “unless it considers it unjust to do so”: O.22, r.23(5). The Plainiff has the burden of showing why it would be unjust (See: CEP Ltd v Wuxi Jiacheng Solar Energy Technology Ltd Co [2016] 1 HKLRD 960 (CA) at §31 per Kwan JA (as she then was)).

9.In considering whether it would be unjust to make the orders, the Court shall take into account “all the circumstances of the case”: O.22, r.23(6). The question is highly fact-sensitive, and it would not generally be helpful to compare one case with another (See: Or Siu Lung v Fu Hong Home for the Elderly Co Ltd [2018] HKCA 44 at §§17(e), 39 per Lam VP.)

ANALYSIS

10.There is no dispute that the Defendant made a sanctioned payment on 17 March 2020 in the sum of HK$10,000, which was not accepted by the Plaintiff.  It is true that the Plaintiff did not do better than this sanctioned payment.

11.The Plaintiff’s main ground for inviting this Court to depart from the usual costs order under O.22, r.23 is that the Defendant unreasonably applied for a transfer of the case from the Labour Tribunal (the “Tribunal”) to the High Court. This case should never have been transferred to the High Court, hence, the Defendant should not be entitled to any costs on the High Court scale and the regime under O.22, r.23 should not apply.  Mr Chau for the Plaintiff submitted that had the Defendant not unjustifiably overcomplicated its case during its application to transfer, this case should and most likely would be dealt with by the Tribunal. Costs incurred by both parties at the Tribunal would have been minimal. 

12.The parties have filed extensive rounds of written submissions on both the D’s Summons and the P’s Summons to which I have duly read and considered them carefully. I am not persuaded that there are sufficient reasons to depart from the usual costs order under O.22, r.23. First, it is not proper for this Court, at this stage, to decide whether it is correct or not for this case to be transferred to the High Court. The application was made before the Tribunal. The Plaintiff has not appealed or sought to review the decision of the Tribunal to transfer this case to the High Court. I am not entirely sure that it is correct for this Court to in effect overrule the decision of the Tribunal at this stage.

13.I bear in mind the Defendant’s submission that the Tribunal has an “unfettered discretion” to order a transfer, so long as it is of the opinion that “for any reason” the claim should not be heard and determined by it; for example, “if it considers that by reason of the complexity of the claim, whether in terms of legal or factual issues, it would be to the parties’ best interest that they should be legally represented” (See: Murdock v Dresser-Rand Services Sarl [2002] 2 HKC 85 at §§8, 11 per Deputy High Court Judge To). The Plaintiff’s claim was sizeable, for a sum of HK$9,770,880.

14.Secondly and importantly, although this Court came to its determination by resolving the main factual disputes between the parties, it is fair to say that had the Court came to a different assessment on the evidence of this case, the Court would need to address a number of complex legal issues. This is self-evident from the Plaintiff’s Opening Submissions. Hence, it cannot be said that the decision of the Tribunal is wrong with the benefit of hindsight. For instance, I am not persuaded that the issues of authority and intention to create legal relations are simple. There are High Court trials which only involve the issue of intention to create legal relations. 

15.Thirdly, I also accept Mr Jiang’s submission that the absence of a thorough discourse on an issue is not the same thing as the abandonment of that issue. For instance, the “void for uncertainty” issue said to have been abandoned by the Defendant was closely linked or related to paragraph 34 of the Judgment that it would not be proper for this Court to arbitrarily decide on the length of a notice period that would be considered reasonable without any evidential basis.

16.Fourthly, I also bear in mind that the Plaintiff also instructed counsel and advanced substantial factual and legal submissions which all required determination by the Court.

17.Fifthly, although the sanctioned payment was in the sum of HK$10,000, it is not necessarily unreasonable.  In CEP Ltd v Wuxi Jiacheng Solar Energy Technology Ltd Co [2016] 1 HKLRD 960 (CA), Kwan JA (as she then was) held that:

(1)  Even if the sanctioned payment is ‘of a nominal sum’ (in that case, HK$1,015: see §28), that does not mean that it is not a genuine offer to settle the claim (§42).

(2)  The small sum ‘would appear to reflect the confidence of the offeror of the strength of its case’ (§41).

(3)  On the evidence before the Court, there was ‘nothing […] to indicate that the defendant could not genuinely have considered its case as very strong’ (§42).

THE LEVEL OF ENHANCED INTEREST

18.The level of enhanced interest to award under O.22, r.23 is a matter of the Court’s discretion. The Hong Kong courts have adopted the principles laid down by the English Court of Appeal in OMV Petrom SA v Glencore International AG [2017] 1 WLR 3465 at §38 (per Sir Geoffrey Vos C):

“The court undoubtedly has a discretion to include a non-compensatory element to the award […], but the level of interest awarded must be proportionate to the circumstances of the case. […] [T]hose circumstances may include, for example, (a) the length of time that elapsed between the deadline for accepting the offer and judgment, (b) whether the defendant took entirely bad points or whether it had behaved reasonably in continuing the litigation, despite the offer, to pursue its defence, and (c) what general level of disruption can be seen, without a detailed inquiry, to have been caused to the claimant as a result of the refusal to negotiate or to accept the […] offer.” (emphasis added)

(See also Bank of India v Gimajasa Ltd [2021] HKCFI 521 at §§7-8 per Linda Chan J.)

19.In Bank of India at §14, Linda Chan J ordered enhanced interest at 7% above judgment rate (i.e. 15%) taking into account that, inter alia, (1) the plaintiff had withheld crucial evidence, (2) the plaintiff should have appreciated that the defendant had a very strong defence to the claim,(3)the plaintiff unreasonably failed to engage in mediation, and (4) the anxiety, stress and financial hardship caused to the defendant. She then reduced the rate from 15% to 8% to reflect the fact that the defendant did not incur all the costs at the outset.

20.The Defendant submits that the present case justifies an interest rate of 6% above judgment rate (i.e. 14% p.a.), which is slightly lower than the interest rate in Bank of India, taking into account the following facts:

(1)  First, the sanctioned payment was made very early on 17 March 2020, even before the Defendant filed its defence on 14 April 2020.

(2)  Secondly, the Plaintiff should have appreciated that the Defendant had a very strong defence to the claim, such that it was unreasonable for the Plaintiff to continue with its defence. The Plaintiff’s case was plainly bad. Not only was it unsupported by any documentary evidence, it was in fact self-contradicted by the Plaintiff’s own witness statement, the Plaintiff’s own testimony in court, and a letter written by the Plaintiff (see §§17-22 of the Judgment).

(3)  Thirdly, the Plaintiff’s persistence in the proceedings meant that the Defendant’s staff had to incur the anxiety, stress and inconvenience of dealing with the case and attending trial as witnesses.

19.   Having said that each case must depend on its own facts. On the facts of the present case although the Plaintiff loses its case at the end of the day, he did not withhold any critical and relevant documents. At the end of the day, this Court, on a balance of probabilities, chose to disbelieve the Plaintiff’s case. There were inconsistencies in the Plaintiff’s evidence but that happened in most civil trials. Doing the best this Court can, I order interest on costs for the whole period from 15 April 2020 to 17 November 2021 (the date of judgment) at the rate of 6% p.a. to reflect the fact that the Defendant did not incur all the costs at the outset.

20.   I also note that the Defendant rightly and fairly no longer insists on post-judgment interest.

DISPOSITION

21.For all the reasons stated above, I make the following orders:

(1)  The costs order nisi of the judgment dated 17 November 2021 be varied as follows:

a.  Costs of this action up to 14 April 2020 be paid by the Plaintiff to the Defendant, to be taxed on a party and party basis if not agreed; and

b.  Costs of this action from 15 April 2020 to 17 November 2021 be paid by the Plaintiff, to the Defendant to be taxed on an indemnity basis if not agreed, with interest on those costs at 6% p.a. and certificate for one counsel;

(2)  P’s Summons be dismissed; and

(3)  Costs of D’s Summons and P’s Summons be paid by the Plaintiff to the Defendant, to be taxed on an indemnity basis if not agreed.

22.Finally, I thank counsel for their helpful assistance to this Court.

Mr Ian Chau, instructed by Wong, Hui & Co, for the Plaintiff

Mr Jiang Zixin, instructed by George Hui Legal, for the Defendant