Indah, Veby Mega v. Owt Asia Ltd

CAMP 504/2021

[2022] HKCA 1860

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 504 OF 2021

(ON AN INTENDED APPEAL FROM DCEC NO 1264 OF 2020)

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Before:  Hon Kwan VP and Yuen JA in Court

Dates of Written Submissions: 8 November 2021 and 22 November 2021

Date of Judgment:  16 December 2022

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

1.This is the Applicant’s renewed application for leave to appeal some costs orders made by HH Judge Levy (“the judge”) on 28 May 2021 (“the Decision”)[1], the judge having refused to give leave for reasons set out in a decision given on 14 September 2021. We consider it appropriate to determine this matter on paper pursuant to Order 59 rule 2A(5)(a) Rules of the High Court (“RHC”).

Background

2.The Applicant, who was employed as a journalist by the Respondent, was injured whilst covering an incident of social unrest in 2019.  The Applicant initially obtained legal aid and was represented by Ip, Kwan & Co (“IKC”). The Respondent was represented by Boase Cohen & Collins (“BCC”). 

3.In April 2020, BCC asked IKC for the Applicant’s medical records, but they were not provided.

4.1.  In July 2020, the Applicant filed a claim against the Respondent for employees’ compensation.

4.2.  On 28 July 2020, the Respondent admitted liability for the whole claim, with the quantum of compensation to be assessed by the court.

5.In the meantime, the Respondent had been paying periodical payments to the Applicant of $14,500 per month. 

6.On 4 September 2020, the Respondent made a sanctioned payment[2] into court of $870,000 (“the Sanctioned Payment”).  It did not make a periodical payment that month[3].

7.On 24 September 2020,

(1)  interlocutory judgment was entered for the Applicant, it being adjudged that the “Respondent do pay the Applicant compensation to be assessed and fixed costs at HK$6,500.00 on liability issue” (“the Fixed Costs”);

(2)  the Applicant filed a summons for interim payment (“the IP Summons”), returnable on 11 December 2020;

(3)  IKC provided BCC with the medical records that the latter had sought 5 months earlier.

8.1.  Shortly thereafter, on 9 October 2020, the Applicant made a sanctioned offer[4] of $1,246,549.79 (“the Sanctioned Offer”).

8.2.  On 28 October 2020, the Respondent accepted[5] the Sanctioned Offer. 

9.1.  On the same day, IKC sent a draft Consent Summons to BCC, including at §6, an order that “the Respondent do pay the Applicant the costs of these proceedings including the Applicant’s Summons, to be taxed if not agreed. ...”.  (Emphasis added).

9.2.  On 30 October 2020, BCC proposed an amendment to the draft Consent Summons substituting the words “the Respondent do pay the Applicant the costs on the issue of quantum” (emphasis added) in place of the italicized words in §9.1 above. 

9.3.  In its 1^st letter dated 30 October 2020, IKC took this position[6]:

“There is no order on costs in relation to issue of liability having been made. The fixed costs awarded on the interlocutory judgment does not refer to costs of liability at all. The scope of the said fixed costs will be a matter for taxation. Your limiting our costs entitlement to the issue of quantum is red-herring”. (Emphasis added).

9.4.  When BCC asserted in its letter in reply on the same day[7] that the Fixed Costs did refer to costs of liability, IKC said in its 2^nd letter of the same day[8]:

“Our position has all along been that for whatever had been covered by way of fixed costs in the interlocutory judgment, it should be a matter for taxation ...” and

“Even if the fixed costs is to cover the issue of liability, it does not affect our client’s rights to be paid costs of these proceedings pursuant to Order 22". (Emphasis added).

10.On 6 November 2020, the Respondent made an interim payment to the Applicant of $200,000.  This sum, together with the sum of $176,549.79 previously paid to the Applicant and the Sanctioned Payment into court of $870,000, came up to $1,246,549.79, the amount sought in the Sanctioned Offer.

11.On 13 November 2020, a Consent Summons was filed in which the parties agreed (among other things) on the compensation and the withdrawal of the IP summons. However, it did not contain an agreed order as to costs, whether “of these proceedings” (as sought by the Applicant) or “on the issue of quantum” (as proposed by the Respondent).  The Consent Summons, with amendments, was made an order of the court on 26 November 2020.

Issues before the judge

12.On 16 December 2020, the parties filed with the court a document entitled “Costs Disputes for Hearing on 27 January 202[1]” (“the Costs Disputes”), summarized below:

(1)  whether the Respondent should pay the Applicant’s costs of the IP summons (filed on 24 September 2020 and withdrawn on 13 November 2020) on an indemnity basis;

(2)  whether the Applicant is entitled to the costs “of the proceedings” or costs “on the issue of quantum”;

(3)  whether the Applicant should pay the Respondent’s costs after 30 October 2020; and

(4)  whether the Applicant should be awarded costs after acceptance of the Sanctioned Offer.

The judge’s Decision

Issue (1) - the indemnity costs issue

13.The judge’s reasons for awarding costs of the IP summons on a party and party basis, and not on an indemnity basis, are set out in Section C.2 (§§16-40) of the Decision and will not be repeated here.  Essentially, the judge held that the reason why the Respondent stopped making periodical payments was because it had made a Sanctioned Payment, and as it was unable to verify the Applicant’s injuries due to her refusal to provide her medical records, it was justifiably concerned that it might overpay her (§§31 - 32).  Accordingly, the judge did not consider that the Respondent’s conduct was scandalous or vexatious, or that it had acted maliciously, or for an ulterior motive, or in an oppressive manner such as to move the court to exercise its discretion to award costs for the IP summons on an indemnity basis (§16).

Issue (2) - the Order 22 rule 21(1) issue

14.1.  The judge’s reasons for ordering costs “of the proceedings”, as opposed to costs “on the issue of quantum” are set out in Section D.4 (§§55 - 67) of the Decision and will not be repeated here.  Essentially, the judge held that the procedural requirements (including any costs consequences) embodied in Order 22 must be strictly complied with, and under Order 22 rule 21(1) where a plaintiff’s sanctioned offer is accepted without requiring the court’s leave, the plaintiff is entitled to her costs of the proceedings up to the date when the defendant serves notice of acceptance, unless the court otherwise orders (“the Otherwise Proviso”). 

14.2.  The Respondent did not invoke the Otherwise Proviso when it accepted the Sanctioned Offer, contrary to the approach set out in RBA Far East Ltd v Yuen Chak Hang Edward & Ors[9].  Therefore, although the judge found that the Respondent “was justified in expressing its concern that the Applicant might get around the Fixed Costs in seeking costs on liability if she were to be allowed ‘costs of the proceedings’ ”[10], the judge held that the prima facie position of “costs of the proceedings” was not displaced[11].

Issues (3) and (4) - costs after 30 October 2020

15.As for the costs after 30 October 2020 (when the parties’ dispute over the terms of the costs order in the draft Consent Summons crystallized), the judge made no order as to costs, for reasons set out in Section D.5 (§§70-71) of the Decision.  Essentially, the judge did not award costs to the Applicant bearing in mind the contents of IKC’s letters and its submissions for the hearing, in which IKC argued that costs of the proceedings which were not covered by the Fixed Costs would include (non-exhaustively) costs “incurred in handling and attending other background issues in conducting the proceedings”[12]. The judge found that[13]:

“As I have stated above in §§62, 63 & 66, the costs disputes were substantially due to the Applicant’s insistence on her entitlement to costs beyond the Fixed Costs. Instead of allaying the Respondent’s wholly justified concern, the Applicant kept stating that her costs entitlement was not bound by the Fixed Costs”.

16.The judge made the following orders (“Orders (1) - (5)”):

(1)  The Respondent do pay the Applicant’s costs of the proceedings up to 30 October 2020 (including the Consent Summons) on a party and party basis, to be taxed if not agreed;

(2)  the Respondent do pay the Applicant’s costs of the IP summons on a party and party basis, to be taxed if not agreed;

(3)  the Applicant do pay the Respondent’s costs in relation to the arguments on the indemnity costs issue, to be taxed if not agreed;

(4)  there shall be no order as to costs after 30 October 2020 in relation to the Order 22 rule 21(1) issue; and

(5)  the Applicant’s own costs, save and except the costs incurred by the Applicant after 30 October 2020 in relation to the Order 22 rule 21(1) issue, shall be taxed in accordance with the Legal Aid Regulations. 

CACV 322 of 2021

17.1.   On 24 June 2021, the Applicant filed a Notice of Appeal in CACV322/2021 against that part of Order (5) stating that the costs after 30 October 2020 in relation to the Order 22 rule 21(1) issue shall not be taxed in accordance with Legal Aid Regulations. 

17.2.  No date has been fixed for the hearing of the appeal.

Renewed application for leave to appeal

18.1.  After failing to obtain leave from the judge, on 8 November 2021, the Applicant made a renewed application to this Court for leave to appeal Order (2) and Order (4).  The proposed grounds have been set out in a draft Notice of Appeal inserted in the Application Bundle accompanying the summons for the renewed application to this court, but which had not been attached to the summons filed in the court below for leave to appeal. 

18.2.  This is unsatisfactory as § 11 of Practice Direction 4.1 (Civil Appeals to the Court of Appeal) provides that an applicant in a renewed application for leave should inform the court whether the points argued in connection with the grounds of appeal had been canvassed at the substantive hearing and the application for leave to appeal in the court below.  If not, the applicant must explain why it was not argued then and why it should now be entertained by the Court. 

18.3.  No proposed grounds of appeal having been attached to the summons for leave before the judge, the parties are in dispute as to whether Order (2) i.e. party and party costs rather than indemnity costs for the IP summons, was advanced before the judge as a ground of appeal. The Respondent points to the fact that IKC had stated in its letter dated 8 June 2021[14] and its submissions dated 30 July 2021[15] that the “2 Costs Orders” which it intended to appeal were Order (4) and Order (3), not Order (2).

18.4.  Be that as it may, to avoid further costs being expended in satellite litigation, we will assume that the Applicant did argue before the judge that it should have leave to appeal Order (4) and Order (2).   

Legal principles

19.Section 63A(2) District Court Ordinance cap.336 stipulates that leave to appeal shall not be granted unless the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

20.The prospect of a successful appeal on the present application must be measured against well-established law on the proper approach of an appellate court in matters of costs orders, which are decisions made in the discretion of the judge[16]:

“30. It is acknowledged that costs are a matter of discretion of the primary judge and the appeal court should be circumspect in interfering with the exercise of this discretion, as it is institutionally disadvantaged from re-assessing a decision of this nature and the primary judge is the best person to exercise the discretion because he is most familiar with the conduct of the case presented before him and the impact of the success and failure on each issue canvassed before him. In the absence of palpable error in the exercise of the discretion, the mere fact that the appeal court might have exercised the discretion in a different way is not sufficient to warrant interference with the decision on costs.

31. Examples of palpable errors are where the judge has erred in principle, or did not exercise his discretion judicially having taken into account wholly extraneous and irrelevant matters, or the exercise of discretion was not based on facts or matters connected with or leading up to the litigation, or the decision was plainly wrong”.

Discussion

21.Dealing first with Order (3), the main submission advanced by the Applicant is that a period covered by sick leave certificates is deemed to be a period of temporary total incapacity under s.10(2) Employees Compensation Ordinance cap.282, for which periodical payments are payable.  Therefore, the Respondent should not have stopped such payments.  The Applicant sought an indemnity costs order as she considers that the Respondent’s conduct was designed to coerce her to accept the Sanctioned Payment.

22.The judge declined to adopt the Applicant’s cynical perception of the Respondent’s conduct.  The judge took the view that the Respondent was reasonably concerned about overpayment having made a Sanctioned Payment of $870,000 in circumstances where it could not properly assess compensation without the Applicant’s medical records.

23.1.  We do not see any reasonable prospect of an appellate court interfering with that decision.  

23.2.  Regarding the Applicant’s argument[17] that the medical records “had nothing to do with the Applicant’s entitlement under section 10 at all”, first this is inconsistent with her own conduct in producing them in support of the IP summons. 

23.3.  Secondly, the importance of these records is obviously not only for periodical payments, but for a proper assessment by the Respondent of the Applicant’s compensation claim so that a proper Sanctioned Payment, founded on relevant medical material, could be made.  The Applicant has not explained why she refused to produce the medical records to the Respondent when asked for them earlier.

23.4.  In §31 of the Decision, the judge held that these two factors (the Sanctioned Payment and the Applicant’s refusal to provide the medical records to the Respondent) were “significant”.  As such, it is not necessary to consider other matters in the draft Notice of Appeal, such as the proposal for interim payments to be made out of the Sanctioned Payment, and the Applicant’s complaint to the Labour Department.  In the exercise of discretion, the weighing of factors is a matter for the judge.  We do not see any reasonable prospect of an appellate court interfering with the judge’s view that, on the strength of those two factors, an indemnity costs order was not appropriate. 

24.As for Order (4), in the draft Notice of Appeal, the Applicant has relied on some excerpts from the correspondence between the parties’ respective solicitors to support her submission that the judge had “failed to take into account” matters therein which the Applicant considers to be in her favour, or that the judge was wrong not to find that the Costs Disputes were caused by the Respondent’s solicitors’ “intransigent” attitude to the wording of the draft Consent Summons.  

25.However, it is apparent from some of IKC’s letters after 30 October 2020 (eg 23 November 2020[18], 26 November 2020[19], and 10 December 2020[20]) that the language used was evidence on which the judge was entitled to find that it was still insisting on costs beyond the Fixed Costs in respect of liability[21].  The judge concluded that both sides were to blame for the Costs Disputes.  We do not see any palpable error to justify an appellate court interfering with the judge’s conclusion and the exercise of discretion to make no order as to costs.

Order

26.1.  For the reasons set out above, we see no reasonable prospect of success, nor do we see any reason in the interests of justice why leave to appeal should be given.  The Applicant’s summons filed on 8 November 2021 is dismissed with an order nisi that she pay the costs of the Respondent, which we would summarily assess at $80,000. 

26.2.  As we consider the renewed application to be totally without merit, we order pursuant to Order 59 rule 2A(8) that no party may request the determination to be reconsidered at an oral hearing inter partes.  

Mr Patrick D Lim, instructed by Ip, Kwan & Co, for the applicant

Mr Jeffrey Chau, instructed by Boase Cohen & Collins, for the respondent