Ng Wai Tao v. Siu Patrick Chun Wai and Another

DCPI 1198/2020

[2023] HKDC 650

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 1198 OF 2020

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BETWEEN

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DECISION

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A. INTRODUCTION

1.On 13 February 2023, I handed down the judgment in respect of the present proceedings (the “Judgment”)[1]: see [2023] HKDC 193.

2.Whilst I ordered the 1^st defendant to pay damages of HK$166,700.26 together with interest to the plaintiff (see Judgment §83), I dismissed the plaintiff’s claims against the 2^nd defendant (see Judgment §84).

3.I also made a costs order nisi (the “Costs Order Nisi”) that the 1^st defendant do pay the plaintiff’s costs in these proceedings to be taxed if not agreed (with certificate for Counsel), and that the plaintiff do pay the 2^nd defendant’s costs in these proceedings to be taxed if not agreed (with certificate for counsel) (see Judgment §90).

4.The plaintiff has applied to vary my Costs Order Nisi. He seeks a costs order along the following lines:-

(1) Insofar as the position of the 1^st defendant is concerned:-

(a) The 1^st defendant do pay the plaintiff’s costs on a party-to-party basis with certificate for counsel.

(b) The plaintiff be entitled to costs on liability on an indemnity basis from 3 November 2020 onwards, and interest thereon at a rate not exceeding 10% above judgment rate.

(c) The plaintiff be entitled to costs on quantum on an indemnity basis from 12 October 2022 onwards, and interest thereon at a rate not exceeding 10% above judgment rate.

(2) Insofar as the position of the 2^nd defendant is concerned:-

(a) There be no order as to costs between the plaintiff and the 2^nd defendant.

(b) In the alternative, the 2^nd defendant do pay the plaintiff’s costs up to 26 March 2021 to be taxed if not agreed, and the plaintiff do pay the 2^nd defendant 1/2 or alternatively 2/3 of the costs of this action after 26 March 2021 to be taxed if not agreed.

B. THE 1^st DEFENDANT’S POSITION

B.1 Background

5.On 7 October 2020, the plaintiff’s solicitors issued a letter that was marked “Without Prejudice Save as to Costs” and “Sanctioned Offer”. In this letter, it was stated that “[a]s instructed by the Plaintiff and pursuant to Order 22 Rule 4 of the Rules of District Court, Cap. 336H (“RDC”), we hereby make a Sanctioned Offer on liability that the 1^st and 2^nd Defendants be wholly liable in the captioned PI action”. (hereinafter the “1^st Sanctioned Offer”)

6.Neither the 1^st defendant nor 2^nd defendant had responded to the 1^st Sanctioned Offer.

7.On 14 September 2022, the plaintiff’s solicitors issued another letter that was marked “Without Prejudice Save as to Costs” and “Sanctioned Offer”. In this letter, the plaintiff put forward a further settlement offer as follows: “the Plaintiff is prepared to accept the sum of HK$100,000 (inclusive of interest but on top of employees’ compensation HK$107,273.41) plus costs to be taxed if not agreed in full and final settlement of the captioned common law action. This offer is made pursuant to Order 22 Rule 4 of the Rules of District Court, Cap.336H (“RDC”)”. (hereinafter the “2^nd Sanctioned Offer”)

8.Again, neither the 1^st defendant nor the 2^nd defendant had responded to the 2^nd Sanctioned Offer.

B.2 The Plaintiff’s Contention

9.Insofar as the 1^st defendant is concerned, it is incontrovertible that the plaintiff has achieved an outcome that is more advantageous than the proposals under 1^st and 2^nd Sanctioned Offers. As such, the plaintiff contends that the costs consequences under Order 24, rule 22 are triggered. He asks the court to make a costs order absolute based on the terms set out in §4(1) above.

B.3 The 1^st Defendant’s Contention

10.The 1^st defendant opposes the plaintiff’s application. He contends that:-

(1) The 1^st and 2^nd Sanctioned Offers were defective, and not in compliance with the formal requirements. They were made to the defendants jointly, and as such they were incapable of being accepted or denied by the 1^st defendant.

(2) The 1^st Sanctioned Offer was merely a tactical one, and it would be unjust if the plaintiff can rely on it to claim indemnity costs and enhanced interests.

(3) The 2^nd Sanctioned Offer was confusing, and came late. As such, the plaintiff shall not be allowed to rely on it to claim indemnity costs and enhanced interests.

B.4 Analysis

Whether the 1^st and 2^nd Sanctioned Offers were defective?

11.Despite the force of Mr Danny Chan’s submissions, I am not of the view that the 1^st and 2^nd Sanctioned Offers were defective. I am unable to accept the 1^st defendant’s suggestion that the 1^st and 2^nd Sanctioned Offers were made to both defendants jointly, and hence incapable of being accepted by the 1^st defendant alone.

12.It is true that under the 1^st Sanctioned Offer, it was proposed that “the 1^st and 2^nd Defendants be wholly liable”. However, as pleaded in the Statement of Claim, the factual and legal bases relied on by the plaintiff in pursuing claims against the 1^st and 2^nd defendant are different. In my view, any reasonable bystander with some knowledge of the background of the parties’ dispute would appreciate that the settlement offer in question was made to the 1^st and 2^nd defendant on a “joint and several” basis. Hence, it was open to the 1^st defendant to accept the 1^st Sanctioned Offer, irrespective of the stance taken by the 2^nd defendant.

13.There is no room for the 1^st defendant to make a song and dance about the words in the solicitors’ correspondence. Litigation is not a game of words. The 1^st defendant (who was legally advised all along) had never sought clarification from the plaintiff’s solicitors as to whether the settlement proposal under the 1^st Sanctioned Offer was put forward to the defendants jointly. It appears to me that the confusion alleged by the 1^st defendant now is just an afterthought, and the reality was that he chose not to accept the 1^st Sanctioned Offer.

14.The analysis above applies to the 2^nd Sanctioned Offer as well.

15.Indeed, the 2^nd Sanctioned Offer merely stated that “the Plaintiff is prepared to accept the sum of HK$100,000 (inclusive of interest but on top of employees’ compensation HK$107,273.41)…”. There is no room for the 1^st defendant to contend that the 2^nd Sanctioned Offer was only capable of being accepted by both defendants jointly. Nothing in the letter suggested that this was the case.

16.In this connection, I cannot see how the 1^st defendant can seek to rely on the following sentence in the letter: “We believe that you will advise the Defendants about the consequence of failing to do better than this Sanctioned Offer”. This sentence did not suggest that the 2^nd Sanctioned Offer was made to both defendants jointly, and hence could only be accepted by both of them on a joint basis. The plaintiff’s solicitors merely stated that the defendants’ solicitors were expected to advise their clients about the proposed settlement. This sentence is neither here nor there, and does not avail the 1^st defendant at all.

17.In my view, any reasonable bystander with some knowledge of the background would have understood that the settlement proposal under the 2^nd Sanctioned Offer was made to the 1^st defendant and 2^nd defendant on a “joint and several” basis, and as such it was capable of being accepted by the 1^st defendant alone, regardless of the 2^nd defendant’s stance. I am also of the view that there was no confusion on the part of the 1^st defendant, and he knowingly chose not to accept the 2^nd Sanctioned Offer. This was why the defendants’ solicitors did not seek clarification from the plaintiffs’ solicitors.

Whether the 1^st Sanctioned Offer was Genuine?

18.I now deal with the 1^st defendant’s contention that the 1^st Sanctioned Offer was merely a tactical one.

19.It has been suggested that all sanctioned payments and sanctioned offers are tactical steps in litigations: see Tsang Chiu Yip v Ho Kwok Leung (HCPI 305/2013, 8 August 2016), §71 (per DHCJ Marlene Ng, as Marlene Ng J then was); and Wharton v Bancroft & Ors [2012] EWHC 91 (Ch), §22 (per Norris J).

20.The issue is whether it can be said that the 1^st Sanctioned Offer was a genuine and realistic attempt to resolve the parties’ dispute.

21.In Huck v Robson [2003] 1 WLR 1340, §63, Jonathan Parker LJ stated:-

“it is in my judgment implicit in r 36.21 that, consistently with the philosophy underlying Pt 36 (to which I have already referred), in order to qualify for the incentives provided by paras (2) and (3) of the rule, a claimant’s Pt 36 offer must represent at the very least a genuine and realistic attempt by the claimant to resolve the dispute by agreement. Such an offer is to be contrasted with one which creates no real opportunity for settlement but is merely a tactical step designed to secure the benefit of the incentives. That is not to say that the offer must be one which it would be unreasonable for the defendant to refuse; that would be too strict a test, and would introduce considerations of punishment and moral condemnation which (on the authority of Petrotrade Inc v Texaco Ltd [2001] 4 All ER 853, [2002] 1 WLR 947 and McPhilemy v Times Newspapers Ltd (No 2) [2001] 4 All ER 861, [2002] 1 WLR 934) are irrelevant in the context of para (3) of r 36.21. Indeed, the terms of the offer may reflect a degree of optimism and confidence on the part of the claimant/offeror. Provided only that the offer represents a genuine and realistic offer to resolve the dispute by agreement, it is for the claimant to decide at what level to pitch his offer. In some cases, an offer which allows only a small discount from 100% success on the claim may be a genuine and realistic offer; in other cases, it may not.” (emphasis added)

22.In Antwerp Diamond Bank NV v Brink’s Incorporated (No 2) [2015] 4 HKLRD 628, §§18-20, our Court of Appeal (per Lam VP (as Lam PJ then was), Lunn VP and Barma JA) stated:-

“18. The suggestion that in order to attract the consequences of Order 22, a sanctioned offer (or payment) must be a “genuine” rather than a “tactical” one was made by Tuckey LJ in Huck v Robson [2002] 3 All ER 263, at paragraph 71. In that case, which involved a claim for personal injuries arising out of a traffic accident, Tuckey LJ expressed the view that an offer that gave only a 0.1% discount on the amount claimed might be regarded as merely “tactical”, and thus not one that would attract the consequences of the English equivalent of Order 22. Further, in the same case Jonathan Parker LJ at paragraph 63 contrasted between offer which represented a genuine and realistic attempt to resolve dispute by agreement and offer which created no real opportunity for settlement but is merely a tactical step designed to secure the benefit of the incentives. The approach was applied by Deputy Judge Lai in Gill Ajmer Singh v Wah Hing Scaffolding Engineering Ltd [2014] 1 HKC 495 in an employee compensation case in which a respondent had made a sanctioned offer on the basis that the applicant shall discontinue with the claim.

19. In Kai Min Fashion (HK) Limited v Fond Express Logistics Limited and anor [2013] 1 HKC 563, a misdelivery case (like the present) where a discount of 2% was offered, Recorder Jat SC said (at paragraph 14 of his judgment):

“… Huck v Robson was a traffic accident case and in that type of cases [sic] issues of contributory negligence often arise, making it uncertain as to the extent of the parties’ respective responsibility for the accident. Thus making a sanctioned offer of the kind described by Tuckey LJ may be seen as a tactical move. This case, on the other hand, is what may be called a “mis-delivery” case and claimants in such cases are often, and justifiably, confident of success if the carrier has delivered the goods without production of the original bills of lading. I do not see why the Plaintiffs should not offer a small discount in this type of case to reflect their reasonably justified confidence in the strength of their claims.”

20. In the present case, the extent of the discount offered is even less than that in Kai Min Fashion. But it does not follow that it would therefore be unjust to make orders of the sort envisaged by Order 22 rules 24(2) and (3). Just as in Kai Min Fashion, the Plaintiff here could well have genuinely regarded its claim as an extremely strong one (and there is no reason to suppose that it did not). We therefore do not think that the smallness of the discount offered of itself renders it unjust to make the orders which the Plaintiff seeks on the basis that the offer was to be castigated as merely “tactical”. Moreover, in this regard, we would, with respect, agree with the observations of Norris J in Wharton v Bancroft [2012] EWHC 91 at paragraph 22 that:

“The concept is not an easy one to apply. All Part 36 offers are tactical in the sense that they are designed to take advantage of the incentives provided by Part 36. A low offer in a case in which the offeror considers that the offeree’s position has no merit cannot be written off as self evidently ‘merely a tactical step’.” (emphasis added)

23.In Gill Ajmer Singh v Wah Hing Scaffolding Engineering Ltd [2014] 1 HKC 495, §§35-35, Deputy District Judge R Lai (as he then was) stated:-

“35. It can be seen that our system of sanctioned offer is modelled on the Part 36 offer of the 1998 English Civil Procedure Rules. In East West Corp v DKBS 1912 and AKTS Svendborg (No. 2) [2002] 2 Lloyd’s Rep 222 Thomas J considered that an offer from the plaintiff to settle for 100% of their claim was “no offer to settle in the ordinary sense of the word” (see para 15 of the judgment). His Lordship expressed in para 14 of the judgment at 225 his following observations in respect of the Part 36 offer:-

“the Part 36 offer is aimed at an offer to settle, that is to say a genuine offer to settle and not some tactical ploy for the purpose of advancing a claim under Part 36.21 [ie pre 6 April 2007 English Civil Procedure Rules dealing with costs and other consequences where claimant did better than he proposed in his Part 36 offer which provided for sanctions similar to Order 22, rule 23 of the Rules of the District Court in Hong Kong]. The purpose of the award of an enhanced rate of interest or indemnity costs is to encourage parties to make offers of settlement in the ordinary sense of that word.”

36. An offer requiring the opponent to pay 100% of the claim or to wholly discontinue the claim is “no offer to settle in the ordinary sense of the word”. (emphasis added)

24.Applying the legal principles, I am of the view that the 1^st Sanctioned Offer was not “a genuine and realistic attempt by the [Plaintiff] to resolve the dispute by agreement”. The plaintiff merely proposed that the 1^st and/or 2^nd defendants should admit liability, and be liable for the entirety of his claim. This proposal, which was made at a very early stage of the proceedings, was completely hollow.

25.If the 1^st Sanctioned Offer were a genuine and realistic settlement proposal that is capable of triggering the costs consequences under Order 24, rule 22, then, any claimant who litigate in Hong Kong may, immediately after the action is commenced, mechanically and mindlessly request the respondent to admit liabilities under a purported sanctioned offer, and if the claims succeed at the end of the day, indemnity costs and enhanced interest would invariably be ordered against the respondent. Bearing in mind that the purpose of the regime is to encourage genuine settlement negotiation (rather than exerting undue pressure on respondents), this cannot be right.

26.Unlike the scenario in Kai Min Fashion (HK) Limited v Fond Express Logistics Limited and anor [2013] 1 HKC 563, §14 (regarding mis-delivery), I fail see how it could be said that the plaintiff might have a “reasonably justified confidence in the strength of [his] case”. As discussed in §§41-47 of the Judgment, the plaintiff’s case against the 2^nd defendant was utterly hollow, and not supported by a shred of evidence. Further, as observed by Recorder Jat SC in Kai Min Fashion (HK) Limited, in a traffic accident case (which is the present scenario), issues of contributory negligence often arise, and it is uncertain as to the extent of the parties’ respective responsibility.

27.Based on the materials available to me, the 1^st Sanctioned Offer was nothing more than a mechanical, mindless and effortless attempt inviting the defendants to waive the white flag. How could this amount to a genuine and realistic attempt to resolve the dispute in the present proceedings? How could this constitute an “offer to settle in the ordinary sense of the word”?

28.In the premises, I am of the view that the 1^st Sanctioned Offer was not a genuine and bona fide attempt to achieve settlement. In my view, it would be unjust to permit the plaintiff to rely on the 1^st Sanctioned Offer, and I am mind to exercise my discretion against the plaintiff.

Whether it would be unjust to allow the Plaintiff to rely on the 2^nd Sanctioned Offer?

29.In the 2^nd Sanctioned Offer, it was stated the plaintiff was prepared to accept a sum of HK$100,000 in full and final settlement, and this was inclusive of interest. Unlike the 1^st Sanctioned Offer, the settlement proposal under 2^nd Sanctioned Offer was of substance. It was plainly a genuine, bona fide and realistic attempt to resolve the disputes under the present proceedings.

30.The 2^nd Sanctioned Offer was made around 5 months before the trial of the present proceedings took place. The 1^st defendant had ample time to consider the 2^nd Sanctioned Offer. He did not even need to seek leave from the court in order to accept the same: see Order 22, rule 16(1). I disagree that the 2^nd Sanctioned Offer came late.

31.For the reasons set out in §§14-17 above, I disagree that the 2^nd Sanctioned Offer was vague or equivocal. I am of the view that the 1^st defendant, who was legally represented all along and who never sought clarification from the plaintiff, had made a knowing decision not to accept the 2^nd Sanctioned Offer.

32.I do not see any reason why it would be unjust to allow the plaintiff to rely on the 2^nd Sanctioned Offer.

B.5 Sum Up

33.For the reasons set out above, I am of the view that whilst it would be unjust to allow the plaintiff to rely on the 1^st Sanctioned Offer, the plaintiff is entitled to rely on the 2^nd Sanctioned Offer to seek indemnity costs and enhanced interest thereon against the 1^st defendant.

34.I am of the view 5% above judgment rate is proportionate in the circumstances of the present case.

35.In the premises, I am prepared to vary the Costs Order Nisi in respect of the 1^st defendant, and I make a costs order absolute as follows:-

(1) The 1^st defendant do pay the plaintiff’s costs in the present proceedings up to 12 October 2022[2] on a party-to-party basis with certificate for counsel.

(2) The 1^st defendant do pay the plaintiff’s costs in the present proceedings after 12 October 2022 on an indemnity basis and interest thereon at 5% above judgment rate.

C. THE 2^nd DEFENDANT’S POSITION

C.1 The Plaintiff’s Contention

36.The plaintiff does not dispute that he is the unsuccessful party in respect of the claims against the 2^nd defendant. However, he contends that (i) the 2^nd defendant should not have ignored his pre-action letter dated 14^th May 2020 and refused to provide the motor insurance policy; (ii) the 2^nd defendants’ Defence only contained a bare denial; and (iii) the 2^nd defendant, together with the 1^st defendant, failed on the issues relating to the Traffic Incident (such as breach of duties by the 1^st defendant and alleged contributorily negligence on the part of the plaintiff). Relying on these factors, the plaintiff argues that the costs awarded in favour of the 2^nd defendant shall be reduced, and he seeks a costs order based on the terms set out in §4(2) above.

C.2 Analysis

37.As pointed out in §§41-47 of the Judgment, there was not a shred of evidence showing that the 1^st defendant was the 2^nd defendant’s agent and/or servant. I cannot see how the plaintiff can blame the 2^nd defendant for making bare denials in his Defence when his own case was completely hollow: §§44 of the Judgment.

38.It is important to stress that the plaintiff was vested with the onus of proving that the 2^nd defendant was vicariously liable for the 1^st defendant’s wrongdoings. The plaintiff should not have brought a claim against the 2^nd defendant, unless he was satisfied that his claim stood on a solid evidential foundation. The plaintiff could have sought pre-action discovery against the relevant parties. I cannot see how the plaintiff can blame the 2^nd defendant for not assisting him by providing information and/or documents. In the absence of any order made by the court, the 2^nd defendant did not have any obligation to render assistance to the plaintiff.

39.However, I do not lose sight of the fact that the 2^nd defendant (who was under joint legal representation with the 1^st defendant and who filed a joint Defence with the 1^st defendant) did rely on the 1^st defendant’s pleas, evidence and submissions regarding the Traffic Accident to contest the plaintiff’s claims. The 2^nd defendant’s stance was that the 1^st defendant was not negligent during the Traffic Incident at all, and that the plaintiff’s claim was concocted.

40.For the reasons set out in §§21-40 of the Judgment, I rejected the defendants’ case regarding the Traffic Incident. Hence, it can be said that the 2^nd defendant failed on the issues relating to the Traffic Incident (such as negligence and alleged contributory negligence). Those issues were certainly crucial. I agree with Mr Tam that they significantly increased the length and costs of the present proceedings.

41.As pointed out G Lam J[3] (as G Lam JA then was) in Chow Kwan Yee v Leung Mei Yin May [2021] HKCA 832, §6:-

“[w]here a successful party has failed on an allegation that has caused a significant increase in the length or costs of the proceedings, that may be a reason for depriving him or the whole or part of his costs: see e.g. Zuhai International Container Terminals Ltd v Lo Tong Hoi (CACV 181/2011, 31^st July 2012)”.

42.The present scenario is similar to the scenario in the Chow Kwan Yee case. In that case, the 2^nd defendant was successful in defending the plaintiff’s action against him. However, he, together with the 1^st defendant, raised a defence of gift, which was rejected by the court. The failed defence of gift was fact-sensitive, and it took up substantial time and costs. As such, the Court of Appeal held that it would be just and fair to reduce the costs awarded in favour of the 2^nd defendant.

43.I have carefully considered the circumstances relating to the present proceedings, including the complexity of the issues relating to the Traffic Accident (which the 2^nd defendant failed) and the complexity of the issues in respect of vicarious liability (which the 2^nd defendant succeeded).

44.I am of the view that it would be just and fair to reduce the costs awarded to the 2^nd defendant by 50%.

C.3 Sum Up

45.In the premises, I will vary the Costs Order Nisi in respect of the 2^nd defendant. I make a costs order absolute that the plaintiff do pay 50% of the 2^nd defendant’s costs in the present proceedings on a party-to-party basis with certificate for counsel.

D. CONCLUSION

46.I order that the Costs Order Nisi be varied in terms of §§35 and 45 hereinabove.

47.As regards the costs of the present application to vary the Costs Order Nisi, I am inclined to the view that neither party is wholly successful. However, the plaintiff has managed to achieve a favourable outcome. In the premises, I make a costs order nisi that the plaintiff shall have 40% of the costs in respect of the application to vary the Costs Order Nisi with certificate for counsel to be taxed if not agreed. Any application to vary this costs order nisi shall be made within 14 days.

48.I thank Mr Tam and Mr Chan for their helpful assistance.

Written Submissions by Mr Tam Nok Ting, instructed by Huen & Partners, for the plaintiff

Written Submissions by Mr Chan Kin Keung, Danny, instructed by Francis Kong & Co, for the 1^st and 2^nd defendants