Chan Wai Chung v. China Travel Tours Transportation Development (HK) Ltd and Another
Read the full judgment text of HCPI 914/2015 on BabelCite. This High Court CFI judgment.
1. The trial of the present action was heard by this court. On 14 December 2022, I handed down written judgment (“ Written Judgment ”) granting judgment in favour of the plaintiff (“ P ”) against the 2 nd and 4 th defendants (“ D2 ” and “ D4 ”) jointly and severally in the sum of $5,409,023.31 with interest payable on (a) the award for pain, suffering and loss of amenities at 2%pa from the date of the writ of summons to the date of judgment therein, and (b) special damages from the date of
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HCPI 914/2015 [2023] HKCFI 1442 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE PERSONAL INJURIES ACTION NO. 914 OF 2015 ________________________ BETWEEN
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________________________ DECISION ON COSTS ________________________ I. INTRODUCTION 1.The trial of the present action was heard by this court. On 14 December 2022, I handed down written judgment (“Written Judgment”) granting judgment in favour of the plaintiff (“P”) against the 2nd and 4th defendants (“D2” and “D4”) jointly and severally in the sum of $5,409,023.31 with interest payable on (a) the award for pain, suffering and loss of amenities at 2%pa from the date of the writ of summons to the date of judgment therein, and (b) special damages from the date of the subject accident (“Accident”) to the date of judgment therein at half judgment rate, and thereafter at judgment rate until payment (“Judgment”). I also granted a costs order nisi that D2 and D4 shall jointly and severally pay P’s costs of and occasioned by the present action (including all costs reserved if any) to be taxed if not agreed, and P’s own costs be taxed in accordance with Legal Aid Regulations (“Costs Order Nisi”). 2.On 28 December 2022, P filed a summons to seek the following reliefs (“Summons”):
3.On 17 January 2023, DHCJ Leung inter alia (a) granted case management directions for filing/serving affidavits and written submissions to support and to oppose the Summons, and (b) directed that the Summons shall be determined by paper disposal unless the court otherwise directed (“17/1/23 Order”). 4.On 18 January 2023, DHCJ Leung inter alia directed P and D2/D4 to agree on the mathematical calculations of the judgment sum pursuant to the Judgment comprising (a) the awards in paragraph 399 of the Written Judgment, and (b) the accrued interest up to the date of the Judgment in paragraph 400 of the Written Judgment (“Agreed Calculations”) no later than 21 days from the date of the order (“18/1/23 Order”). 5.Pursuant to the 17/1/23 Order, P filed the affidavits of P’s solicitors Or Kwong Fai (“Or”) and Wong Hoi Yi Venus (“HYV Wong”) on 20 December 2022 and 28 March 2023 (“Or Aff” and “HYV Wong Aff”) respectively in support of the Summons, and D2/D4 filed the affirmation of D2’s/D4’s general manager Wong Ming Chi (“Mr Wong”) on 7 February 2013 (“Wong 2nd Aff”) to oppose the Summons. 6.In relation to the HYV Wong Aff, paragraph 2 of the 17/1/23 Order required P to file/serve his affidavit in reply within 21 days after the Wong 2nd Aff. P failed to file/serve such affidavit in reply within the prescribed time. On 10 March 2023 (ie after expiry of the prescribed time), P filed/served a time summons to seek inter alia time extension to file/serve his affidavit in reply (if any) on/before 31 March 2023 (“Time Summons”). The Time Summons was heard by Master Rita So on 21 March 2023 (“Master Hearing”). After hearing from the solicitors for P and for D2/D4, the learned master granted the following order:
7.Pursuant to the 18/1/23 Order, P and D2/D4 jointly lodged with court the Agreed Calculations. According to the Agreed Calculations, (a) the total sum of the awards granted in paragraph 399 of the Written Judgment was $5,409,023.31, (b) the amount of interest on general damages from the date of the writ of summons (27 August 2015) up to the date of the Judgment (14 December 2022) was $172,411.64,[2] and (c) the amount of interest on special damages from the date of the Accident (22 October 2013) up to the date of the Judgment (14 December 2022) and taking the denomination of 365 days/year was $460,139.95,[3] so the awards and accrued interests up to the date of the Judgment (14 December 2022) was $5,409,023.31 + $172,411.64 + $460,139.95 = $6,041,574.90. 8.Ms Lee, counsel for P, lodged her written submissions on 3 April 2023, and Mr Lam, counsel for D2/D4, lodged his written submissions on 24 April 2013. 9.For convenience, I shall adopt the abbreviations in the Written Judgment. II. OR AFF 10.The Or Aff stated that pursuant to Order 22 rule 24 of the RHC P’s solicitors by a without prejudice letter of his solicitors on 3 April 2019 made a sanctioned offer in the sum of $5,500,000 (inclusive of interests) plus costs of the present action to be taxed if not agreed (“3/4/19 Letter” or “Sanctioned Offer”). The 3/4/19 Letter exhibited to the Or Aff was marked “without prejudice save as to costs” and “sanctioned offer”, and stated as follows:
11.It was said that as a result of the Judgment with accrued interest up to the time of the Judgment (now known to be $6,041,574.90 according to the Agreed Calculations), P did better than his Sanctioned Offer of $5,500,000 (inclusive of interest) in the 3/4/19 Letter, so P sought an order pursuant to Order 22 rule 24 of the RHC (a) to have his costs on indemnity basis after the latest date on which D2/D4 could have accepted the offer without requiring leave of the court (ie 1 May 2019), and (b) to have interest on costs as prayed for in the Summons. III. WONG 2ND AFF 12.Mr Wong accepted P did better than his proposal in the 3/4/19 Letter, so D2/D4 (as advised by their solicitors) had to show it was unjust to order indemnity costs and interest on costs against them. 13.The Wong 2nd Aff claimed the chronology below showed D2/D4 had acted reasonably in the settlement process, and it was reasonable for them not to accept the Sanctioned Offer made on 3 April 2019 on/before 1 May 2019 and to participate in the 2nd mediation which should be attended by all parties:
14.D2’s/D4’s solicitors advised D2/D4 and Mr Wong believed that as a result of P’s conduct, (a) P discontinued his claim against D1 on 31 May 2019 and against D3 on the 2nd day of the trial, and (b) (as recorded in paragraph 23 of the Written Judgment) Ms Lee in her written closing submissions at the end of the trial indicated P would rely on P’s 3rd Case and the 2nd Alternative Contract, so costs were increased or incurred. 15.By reason of the above matters, D2/D4 urged the court to dismiss the Summons with costs to them. IV. HYV WONG AFF 16.HYV Wong noted that Mr Wong by the Wong 2nd Aff accepted P had done better than the Sanctioned Offer. 17.HYV Wong rejected D2’s/D4’s reliance on the anticipation that the 2nd mediation would be held on 5 July 2019 as reasonable justification for them not to accept the Sanctioned Offer made on 3 April 2019. HYV Wong noted D2/D4 filed/served their Answer on 20 January 2019, so by April 2019 pleadings had been closed and all evidence for D2/D4 to consider the reasonableness of P’s Sanctioned Offer was already in place. Had D2/D4 accepted the Sanctioned Offer within the stipulated 28 days, the parties could have saved the costs of the mediation that was scheduled to be held 3 months after the Sanctioned Offer was made, and P would not have been kept out of his damages for another 3½ years. 18.As regards D2’s/D4’s claim that P only discontinued his claim against D3 on the 2nd day of the trial, HYV Wong said (a) the fact P pleaded an alternative case (ie P’s 3rd Case) and relied on the 2nd Alternative Contract did not affect D2’s/D4’s potential liability, and (b) the fact there were contribution proceedings between D3 and D2/D4 was not a sound/valid reason for D2/D4 not to accept the Sanctioned Offer. There was no impediment for D2/D4 to pursue their contribution claim against D3 after accepting the Sanctioned Offer. 19.HYV Wong highlighted the following conduct by D2/D4: (a) D2 did not call any witness including the drivers involved in the Accident who were employed by subsidiary companies of D2/D4, (b) D2 did not advance a positive case as to why the Archived Webpages were not theirs, and (c) instead D2/D4 called a witness from D4 (ie Mr Wong) who appeared to know little about the operation side of the business of D2/D4, which conduct drew adverse comments in the Written Judgment.[4] HYV Wong claimed D2/D4 had persisted in an unmeritorious defence, did not call relevant witnesses and did not produce relevant documentary evidence, which conduct was not looked upon kindly by the trial judge, so there was nothing unjust in visiting upon D2/D4 the costs consequences under Order 22 rule 24 of the RHC. 20.The Wong 2nd Aff did not address on the question whether interest on costs as requested in the Summons should be ordered against D2/D4. HYV Wong invited the court to grant such interest so as to reflect the full consequences of D2/D4 failing to better the Sanctioned Offer. 21.As regards the Time Summons, D2/D4 remarked to the court at the Master Hearing on 21 March 2023 that P should not claim interest or enhanced interest from 28 February up to 31 March 2023 because P sought indulgence from the court for further time to file the affidavit in reply (ie the HYV Wong Aff). HYV Wong said that compared with the substantial time/costs P incurred after D2/D4 rejected the Sanctioned Offer, the impact/prejudice to D2/D4 of a delay of approximately 1 month due to time extension required for filing/serving P’s affidavit in reply was minimal, which should not be a ground to deny any interest or enhanced interest to P. 22.Pursuant to Order 22 rule 24 of the RHC, HYV Wong urged the court to order that P be entitled to (a) his costs on indemnity basis after the last date on which D2/D4 could have accepted the Sanctioned Offer without requiring leave of the court (ie 1 May 2019), and (b) interest on costs as prayed for in the Summons. V. UNDISPUTED MATTERS 23.There were 4 undisputed matters material to the Summons. 24.First, the 3/4/19 Letter was a valid sanctioned offer within the meaning of Order 22 rule 5 of the RHC. Although a sanctioned offer that includes an offer as to costs is generally inconsistent with the statutory regime under Order 22 of the RHC for attracting the costs/ interest consequences prescribed thereunder,[5] such restriction does not render the sanctioned offer invalid if the term as to costs in the offer is consistent with the costs consequences prescribed by, say, Order 22 rule 21 of the RHC.[6] 25.Secondly, there was no reply by D2/D4 to the Sanctioned Offer, which was not accepted within the statutory prescribed time or at all. 26.Thirdly, by the Judgment, P did better than the Sanctioned Offer. Indeed, Mr Wong admitted as much in the Wong 2nd Aff (see paragraph 12 above). 27.Fourthly, by the Summons, P sought variation of the Costs Order Nisi by claiming that he was entitled to costs on indemnity basis for the period on/after 2 May 2019 pursuant to Order 22 rule 24(3)(a) of the RHC (see paragraph 2(a)(ii) above and paragraph below) and interest on such costs pursuant to Order 22 rule 24(3)(b) of the RHC (see paragraph 2(a)(iii) above and paragraph below). There was no application by P in the Summons or otherwise for enhanced interest “on the whole or part of any sum of money (excluding interest) awarded” under the Judgment pursuant to Order 22 rule 24(2) of the RHC (see paragraph below). VI. LEGAL PRINCIPLES 28.Order 22 of the RHC provides as follows:
29.The starting point is that the sanctioned offer regime under Order 22 of the RHC is a statutory creature that is wholly procedural in nature, and its purpose is to promote settlement and to save costs.[7] In Qvist Henrik v Clatronic Far East Ltd,[8] Recorder Stewart Wong SC endorsed the observations by Mimmie Chan J in Maysun Engineering Co Ltd v International Education and Academic Exchanges Foundation Co Ltd that:[9]
30.Costs on an indemnity basis after the last date on which the defendant can have accepted the plaintiff’s sanctioned offer without requiring the leave of the court is justified where a defendant fails to respond to a sanctioned offer (unless it is unjust to do so) (see Central Management Ltd v Light Field Investment Ltd[10]). Thus, a defendant who rejects a plaintiff’s sanctioned offer is at risk as to costs and further financial penalty under Order 22 rule 24(2)-(3) of the RHC. Indeed, where the defendant fails to do better than the sanctioned offer under the judgment, the court shall make the orders for indemnity costs and enhanced interest under Order 22 rule 24(2)-(3) of the RHC unless the court considers it unjust to do so (see Order 22 rule 24(4) of the RHC and paragraph 28 above).[11] 31.The onus is on the defendant to show that in view of all the circumstances of the case, including the factors in Order 22 rule 24(5) of the RHC, it is unjust to make the orders in Order 22 rule 24(2)-(3) of the RHC.[12] Further, it is a question of fact in each case whether a defendant is able to persuade the court it is unjust to allow the statutory consequences.[13] Recorder Stewart Wong SC at pages 711-712 in Qvist Henrik explained the court’s approach as follows:[14]
32.In short, when undertaking the evaluative exercise for determining whether it is unjust to award indemnity costs and/or interest on costs, the court is entitled to and should assess the conduct of the defendant over the course of the litigation and the reasonableness or otherwise of the defendant’s non-acceptance of the plaintiff’s sanctioned offer.[18] 33.The court will take into account all the circumstances of the case, including the factors in Order 22 rule 24(5) of the RHC, such as whether the parties had all the information to make an informed decision whether to accept a sanctioned offer or not. But on receiving a sanctioned offer which a defendant considers he is unable to evaluate properly because of insufficient information or evidence, he should seek further information if possible. “A defendant therefore ought to make reasonable efforts to settle the matter as early as possible; if he does not react to an early sanctioned offer at all but simply sits on his hands without attempting to seek any further information, he will need to convince the Court that he has not been acting unreasonably.”[19] VII. ISSUE 34.D2/D4 opposed the Summons and contended that they should not be visited with the statutorily mandated consequences under Order 22 rule 24(3)(a)-(b) of the RHC. D2/D4 argued it was unjust to award indemnity costs and interest on costs against them because (a) they had acted reasonably in the settlement process and in not accepting the Sanctioned Offer on/before 1 May 2019, and (b) P had acted unreasonably such that costs were unnecessarily increased or incurred. VIII. D2/D4 ACTED REASONABLY? 35.Mr Lam submitted that D2/D4 acted reasonably in the settlement process and in not accepting the Sanctioned Offer on/before 1 May 2019. D2’s/D4’s contentions in this regard essentially raised 2 matters. 36.First, it was said that at the time of the Sanctioned Offer, there were discussions for arranging a 2nd mediation with a view to compromise P’s claim. P kickstarted the negotiations in relation to the arrangements for the proposed 2nd mediation on 6 March 2019 (when D1 and D3 were still parties to the action) by proposing Mr Brian Wong as mediator (see paragraph 13(a) above). About 1½ months later (ie on 23 April 2019), D2/D4 accepted P’s suggestion to have Mr Brian Wong as mediator for the proposed 2nd mediation (see paragraph 13(b) above). By 31 May 2019, P wholly discontinued his claim against D1 by way of a consent order filed on the same day,[20] and P, D2/D4 and D3 resolved the choice of mediator (see paragraph 13(b)-(d) above). The 2nd mediation was held on 5 July 2019 and was attended by P, D3 and D2/D4 (see paragraph 13(e) above). 37.Mr Lam submitted that since P, D1 (who dropped out of the picture since 1 June 2019), D3 and D2/D4 were organising the proposed 2nd mediation and attempting to agree on the choice of mediator for the period from March to May 2019, it was reasonable for D2/D4 not to accept the Sanctioned Offer dated 3 April 2019 within 28 days (ie on/before 1 May 2019) and to participate in the settlement process by way of the 2nd mediation, especially when D1 and D3 were parties to the action in the period from March to May 2019. It was said that (a) D2/D4 reasonably waited for the results of the mediation (in which all parties were expected to attend) instead of accepting the Sanctioned Offer that was addressed to D2/D4 alone, and (b) the significance of the 2nd mediation and the reasonableness for the parties to await its outcome was borne out by the fact that P only applied to set the case down for trial on 2 August 2019 (see paragraph 13(f) above). 38.I am not persuaded that such argument sufficiently showed it would be unjust in all the circumstances for the consequences under Order 22 rule 24(3)(a)-(b) of the RHC to follow. I agree with Ms Lee that a pending mediation is not sufficient reason to reject a sanctioned offer. Here, not only did D2/D4 not accept or even respond (whether by way of sanctioned payment or open/Calderbank offer) to the Sanctioned Offer pending mediation, there was no response from them even after the mediation took place and failed. There was also no application to seek leave to accept the Sanctioned Offer out of time accompanied by a request to the court to make an order as to costs (see Order 22 rule 16(2)-(3) of the RHC). 39.A party’s unreasonable failure to mediate attracts its own costs consequences. Johnson Lam J (as he then was) in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd said as follows:[21]
40.But the present issue was not about any failure to mediate, but about whether D2’s/D4’s willingness to mediate and/or actual participation in mediation would cause the court to disapply the consequences in Order 22 rule 24(3)(a)-(b) of the RHC. In Shih Pik Nog v G2000 (Apparel) Limited,[22] Bharwaney J said that in principle it would not be unjust for those consequences to apply:
41.Secondly, Ms Lee submitted that the fact there were contribution proceedings by D3 against D2/D4 (which contribution proceedings were not withdrawn until the 2nd day of trial when P discontinued his claim against D3) should not have affected D2/D4’s consideration/acceptance of and/or response to the Sanctioned Offer, so the consequences under Order 22 rule 24(3)(a)-(b) of the RHC would not be precluded. 42.In any event, paragraphs 14-15 of Mr Lam’s written submissions clarified that D2’s/D4’s “present complaint is not about the existence of third party proceedings, but [P’s] unreasonable conducts”. I will deal with P’s alleged unreasonable conduct in Part IX below, but it appeared from Mr Lam’s written submissions that he did not dispute Ms Lee’s general proposition in the above paragraph. 43.Ms Lee cited Ho Kin Pong & anor v Tam Kok Hung & anor[23] and Yau Po Shan v The Express Lift Company Limited & anor[24] in support of her proposition in paragraph 41 above:
44.I agree with Ms Lee’s proposition in paragraph 41 above, and in coming to this view I bear in mind:
IX. P ACTED UNREASONABLY? 45.Mr Lam submitted that P’s conduct was unreasonable, so it would be unjust to allow the consequences under Order 22 rule 24(3)(a)-(b) of the RHC. D2/D4 essentially relied on 2 grounds. 46.First, D2/D4 accepted they should fully bear the damages awarded after trial, but complained (a) P discontinued his claim against D1 on 31 May 2019, which was after 1 May 2019 being the last date D2/D4 could have accepted the Sanctioned Offer without leave of the court, and (b) P discontinued his claim against D3 on the 2nd day of the trial.[26] D2/D4 pointed out that P did not explain his reason for discontinuing his claim against D3 at such a late stage, and suggested that “costs were increased or incurred due to [P] choosing the wrong party to sue. [D2/D4] submits that it is unjust for [D2/D4] to solely bear indemnity costs of the whole action after 1 May 2019, particularly from 1 May 2019 to the 2nd day of trial on 29 September 2021”. 47.The Accident happened on 22 October 2013,[27] and P commenced the present action on 27 August 2015.[28] By the date of the Sanctioned Offer (ie 3 April 2019), pleadings were closed and all evidence was available to the parties. I agree with Ms Lee that by such time D2/D4 had all the information needed to assess their potential liability to P and the reasonableness of P’s Sanctioned Offer. Neither the Wong 2nd Aff nor Mr Lam suggested otherwise. However, D2/D4 did not respond to the Sanctioned Offer whether on/before or after 1 May 2019, which required P to incur time, effort and costs for (a) the 2nd mediation, and (b) when that failed, the eventual trial. 48.In any event, D2’s/D4’s suggestions, ie (a) costs were increased or incurred due to P choosing the wrong party to sue, and (b) it would be unjust for D2/D4 to solely bear indemnity costs for the whole action after 1 May 2019, especially for the period from 1 May 2019 (ie the last date on which D2/D4 could have accepted the Sanctioned Offer without leave of the court) to 29 September 2019 (ie the 2nd day of the trial when P discontinued her claim against D3), were not understood, and might have resulted from misunderstanding of the effect of the Costs Order Nisi. 49.By a consent order filed on 31 May 2019, P’s claim against D1 was compromised, and it was ordered by consent that:
Then on 29 September 2021 (ie the 2nd day of the trial), P’s claim against D3 and D3’s contribution claim against D4 were also compromised, and I granted orders by consent that:
and that:
50.The above clearly showed P’s claims against D1 and D3 had been fully compromised, which resolutions covered both the substantive proceedings and the matter of costs between P and D1 as well as between P and D3. There were no outstanding/unresolved costs issues in relation to the proceedings between P and D1, P and D3, and D3 and D4. As a result, there were 2 consequences on the then remaining proceedings in the present action between P and D2/D4:
51.That being the case, the only costs requiring adjudication by this court at the trial were costs of the proceedings between P and D2/D4, which costs were the subject matter of the Costs Order Nisi. So, the reference to “P’s costs of and occasioned by the present action” in the Costs Order Nisi in paragraph 401 of the Written Judgment must be read accordingly. On this proper understanding, I cannot see why it would be unjust for D2/D4 to bear P’s costs of the present action (ie the costs of the litigation between P and D2/D4 that were resolved by the Costs Order Nisi) on indemnity basis after 1 May 2019 (including the period from 2 May 2019 to 29 September 2021) when the Costs Order Nisi only captured P’s costs of his claims against D2/D4, and would not cover P’s costs that were “incurred” or allegedly “increased” as a result of having sued D1 and/or D3. 52.In any event, I note there had not been any admission or finding that P in choosing to also sue D1 and D3 in fact sued the wrong parties. There had been no adjudication by the court on this, and the orders in paragraph 49 above did not acknowledge this. The fact P discontinued his claims against D1 and D3 did not ipso facto mean D1 and D3 were wrongly sued. Discontinuance of proceedings would not have precluded a negotiated compromise/settlement with genuine give and take between the relevant parties. It is not unknown that parties may adopt the legal methodology of simple discontinuance to bring formal closure to legal proceedings whilst they keep the terms of the negotiated compromise/settlement out of the prying eyes of the court and (with leave of the court to search the court file) others. 53.Secondly, D2/D4 complained it was only in Ms Lee’s written closing submissions that she indicated P would rely on P’s 3rd Case and the 2nd Alternative Contract,[31] so costs were unnecessarily increased or incurred by P pleading various different alternatives that he eventually did not rely on. 54.I am not persuaded by D2/D4’s contention in the above paragraph. The starting point was that P as a passenger on the Coach had little idea of the business arrangements in relation to the cross border operations of the Service, but (in view of my findings in relation to the Corporate Issue in the Written Judgment) D2/D4 well knew about such business operations because they were party to or commercially involved in the same. P first sued D1/D2 when he commenced the present action,[32] and joined D3/D4 as additional defendants in the course of the litigation when they came to learn about the Co-operation Agreement.[33] 55.And yet D2/D4 adopted a coy approach towards the issue of liability (ie the Corporate Issue) by putting P to strict proof not only as to any contract between P and D2/D4 and also as to the authenticity and admissibility of the Archived Webpages[34] even though it must have been within D2’s/D4’s (or at the very least D4’s) own knowledge (i) whether the Website was D2’s/D4’s and/or pertained to D2/D4, and (ii) if so, whether the digital content of the Archived Webpages of the Website was genuine.[35] I have concluded in the Written Judgment that “[after] all, one would have expected D2/D4 (or at the very least D4) to have material, circumstance, documents and/or witnesses that would have clarified/explained whether they themselves or any group/holding/ related/service/agent company on their behalf (a) were the holders/owners of the domain being the Website Address with any domain host, (b) built the Website by filling it with digital content (and thereby would have known the file paths of the webpages so built), and/or (c) built the previous Archived Webpages that pertained to D2/D4”.[36] 56.But apart from D2 admitting that the registered owners of the Coach and the Other Coach were D2’s subsidiary companies,[37] and D4 admitting D3 and D4 (which were engaged in the business of providing the Service between, say, ZS and HK) had signed the Co-operation Agreement to jointly operate the Service between ZS and HK with D1 as selling agent of the Bus Tickets,[38] D2’s D2RAD and D4’s D4D merely denied liability, denied any contract with P, and put P to proof on the sale of the Bus Ticket(s) (including the sale of P’s Ticket Package and P’s Bus Ticket to P) and the matters concerning the Corporate Issue (including the business relationships of various group companies, the Service, the Co-operation Agreement, the Ticket Packages and the Archived Webpages of the Website).[39] 57.Further, it was only on the 1st day of the trial that leave was granted for D4 to serve the Mr Wong WStmt and to call Mr Wong as its factual witness on the Corporate Issue,[40] which meant the D4 Chart annexed to the Mr Wong WStmt that was said to be a chart showing D4’s relationship with other parties (including D1, D2, D3 and the ticketing agents) was only adduced on the 1st day of the trial.[41] But even though Mr Wong was the only witness for D4 (as D2 had withdrawn To who was previously put forward as its sole factual witness – see paragraph below), he had practically little knowledge/experience concerning the websites/ webpages (including the Archived Webpages of the Website) pertaining to D2/D4, and could not say much about (a) why it was said the Archived Webpages of the Website were allegedly not from D2’s/D4’s website(s) or any website of any group/holding/related/service/agent company that pertained to D2/D4, and/or (b) the business operations of the Service (of which the sale/marketing of the Bus Tickets and the Ticket Packages was an essential part).[42] 58.Then, in the course of the trial and after P closed his case, D2 decided not to call To (whose witness statement dealt with the Corporate Issue) to give oral evidence.[43] In the Written Judgment, I have found that “To was expected to have been called to give oral evidence in view of D2’s denial of P’s case and D2’s defence pleas on the Corporate Issue, and had To given oral evidence it was likely that as a director of D2 he would have been questioned on D2’s operations, its corporate/business relationship with D1, D3 and/or D4, its involvement in the Service …… D2’s website and webpages, and the Archived Webpages of the Website, especially when such matters necessarily would have been more in the knowledge of D2 and/or its directors (of which To was one) than P (as mere passenger of the Coach)”.[44] More importantly, I concluded that “[in] the absence of cogent explanation for the last-minute decision not to produce To for questioning, D2 obviously waged a battle of tactics to prevent P from eliciting evidence on the Corporate Issue by examining To. In my view, D2’s failure to call To as witness to be examined at trial should lead to an inference being drawn against D2 that it feared his evidence would not have assisted its case on the Corporate Issue. I can think of no other credible explanation”.[45] 59.Still further, even though D2/D4 were expected to have some material, circumstance, documents and/or witness(es) about the issue in paragraph 55(i) above, they failed to bring forward such material, circumstance, documents and/or witness(es) that would elucidate the facts, which could not simply be answered by putting P to strict proof. 60.In all the circumstances, given D2’s withdrawal of To from being examined at the trial on the Corporate Issue, D4’s non-production of Liang as witness,[46] D4’s failure to call Zhu to give oral evidence at the trial,[47] and D4’s introduction of Mr Wong (who had little relevant knowledge and/or experience on the Corporate Issue – see paragraph 57 above) as its witness, which reflected “a last minute and complete overhaul of D2’s/D4’s factual witness(es) for the trial”,[48] this court concluded in the Written Judgment as follows:
61.Against such background when P had to proceed initially in the dark as to the business operations concerning the Service rendered by the Coach, it was not unreasonable for P to proceed against D1 and D2 and later to join D3 and D4 (when he learned about the Co-operation Agreement) by pleading and relying on P’s 1st, 2nd and/or 3rd Cases and the Contract, the 1st Alternative Contract and the 2nd Alternative Contract.[49] It was also not unreasonable for P to narrow his reliance to P’s 3rd Case and the 2nd Alternative Contract at closing submissions after (a) P compromised his claims against D1 and D3 (the latter of which happened on the 2nd day of the trial), (b) the aforesaid developments as explained in paragraph 53-59 above that largely happened at the trial, and (c) Mr Wong’s evidence on the Corporate Issue was elicited during cross-examination at the trial. 62.In my view, if costs were “incurred” and/or “increased” in resolving the Corporate Issue, the major players who contributed to such incurred and/or increased costs would have been D2/D4 (who had the requisite information but was coy with their pleadings/evidence) rather than P (who had no knowledge/evidence to give and who had to rely on his legal representatives who by dint of investigative diligence and legal skill discovered the Archived Webpages (which this court eventually found on the balance of probabilities to be genuine/authentic past webpages of the Website with the Website Address[50] that belonged and/or pertained to D2/D4[51]) and legally framed P’s alternative cases against D1, D2, D3 and D4). I also agree with Ms Lee that P’s reliance on P’s 3rd Case and the 2nd Alternative Contract should not have caught D2/D4 by surprise as they were clearly in issue in P’s pleadings, and P was entitled to pursue his pleaded case in face of the way D2/D4 conducted their defence as explained above. 63.Finally, Ms Lee went on to submit it was not P’s conduct but rather it was D2’s/D4’s litigation/settlement conduct that increased costs and lengthened the trial:
64.In all the circumstances, I do not find it unjust to order indemnity costs and interest on costs against D2/D4. X. TIME SUMMONS 65.At the Master Hearing, the solicitor for D2/D4 submitted to Master Rita So that enhanced interest or interest should not be paid to P for the period from 28 February 2023 (original deadline) to 31 March 2023 (extended deadline) as P had to seek time indulgence from the court to file/serve the affidavit in reply for the Summons. P’s solicitor explained to the learned master that (a) the due date for P to file/serve affidavit in reply pursuant to the 17/1/23 Order fell on 28 February 2023, (b) P had applied for legal aid to proceed with the Summons, (c) a legal aid certificate that extended the scope of legal aid to cover the Summons was issued only on 7 March 2023, which P’s solicitors received on 8 March 2023, (d) P by his solicitors promptly on 10 March 2023 issued the Time Summons which was returnable on 21 March 2023, and (e) the HYV Wong Aff was filed on 28 March 2023, so P could not have issued the Time Summons or prepared the HYV Wong Aff any sooner. 66.Ms Lee submitted there was no conduct on P’s part deserving of censure, and P ought not to be deprived of interest or enhanced interest for the unavoidable delay in relation to the Time Summons. She also contended that since the HYV Wong Aff was filed on 28 March 2023, any diminution in interest awarded should take that as the determinative date. 67.As regards interest on damages for the period before the date of the Judgment payable by D2/D4 to P, it was set out in the Judgment itself (see paragraph 1(a)-(b) above), which was a final order. As regards interest on damages after the date of the Judgment, section 49(1) of the High Court Ordinance Cap 4 provides that:
By the Judgment, I expressly ordered that interest on damages awarded thereunder for the period after the date of the Judgment until payment be payable by D2/D4 to P at judgment rate. This was, again, a final order. This court was no longer in a position to “deprive” P of the interest on damages awarded under the Judgment. In any event, D2/D4 did not file any summons/application to seek any order to such effect. 68.Further, as there was no application in the Summons or otherwise for enhanced interest on the whole or part of the damages awarded under the Judgment pursuant to Order 22 rule 24(2) of the RHC, there was, quite simply, no enhanced interest on damages to speak of. 69.As regards interest on P’s costs, (a) there was no basis for disallowing P’s entitlement to interest on costs in the post-Judgment period from 28 February to 31 (or 28) March 2023 when D2/D4 did not file any application for such purpose (and P’s Summons merely concerned variation of the Costs Order Nisi for seeking inter alia pre-Judgment interest on costs under Order 22 rule 24(3)(b) of the RHC), (b) there was no suggestion that P’s costs had been taxed (or agreed) and/or paid during the period from 28 February to 31 (or 28 March 2023) which logically would have stopped interest from accruing, (c) D2/D4 could have protected themselves on costs (and hence interest to be accrued thereon) by making sanctioned payment on costs pursuant to Order 62A of the RHC, and (d) P gave reasonable explanation in paragraph 65 above for the brief delay for filing/serving the HYV Wong Aff out of time, so there was no justifiable basis to “deprive” P of interest on costs for the period from 28 February to 31 (or 28 March) 2023. Indeed, the complaint by D2’s/D4’s solicitors aired at the Master Hearing did not even feature in Mr Lam’s written submissions. 70.As regards enhanced interest on costs, the short answer was that P’s Summons did not seek enhanced interest on costs under Order 22 rule 24(3)(b) of the RHC for the post-Judgment period from 28 February to 31 (or 28) March 2023. In any event, P’s solicitors could not have taken steps in relation to the HYV Wong Aff and/or other preparations for the Summons pending extension of the relevant legal aid certificate, so P would not have incurred any or any significant costs during such period that would have attracted interest. As regards previously incurred (but as yet unpaid) costs payable by D2/D4 to P, the interest accrued thereon during the period from 28 February to 31 (or 28) March 2023 was not caused by the slight delay in filing/serving the HYV Wong Aff but by the fact that those costs were as yet unpaid. XI. INDEMNITY COSTS 71.For all of the above reasons, I do not think it had been shown to be unjust to order indemnity costs after the last day on which D2/D4 could have accepted the Sanctioned Offer without leave of the court, and I so order. XII. INTEREST ON COSTS (a) Parties’ stance 72.Ms Lee submitted that although Order 22 rule 24(3)(b) of the RHC provides that the ceiling for interest on costs is not to exceed 10%pa above judgment rate, P would ask for interest on costs at 5%pa above judgment rate,[53] which sought middle ground and was reasonable. 73.But Mr Lam invited the court to consider the approach adopted in the following cases:
(b) Legal principles – rationale for interest on cost 74.Following the incipitur rule, interest on costs runs from the date of judgment at judgment rate.[55] Such post-judgment interest is not awarded on costs incurred and paid by the successful party before judgment, and does not depend on whether the receiving party (usually the successful party) has been out of pocket. Such non-discretionary statutory interest is automatically paid pursuant to a costs order which carries interest under section 49 of the High Court Ordinance Cap 4 as if it were a judgment debt.[56] 75.Indeed, but for the statutory provisions as to interest on costs in Order 22 rule 23(4)(b) and/or rule 24(3)(b) of the RHC, there can be no interest on costs incurred prior to the judgment or order. As I have explained in IMY (a minor) v Dr Lo Ni Boon Peter,[57]
76.Order 22 rule 24(3)(b) of the RHC gives power to the court to award interest on costs incurred prior to judgment. Johnson Lam J (as he then was) at page 279 in Golden Eagle International (Group) Ltd cited with approval the explanations by Chadwick LJ in McPhilemy v Times Newspapers (No 2)[61] and by Walker LJ in KR v Byrn Alyn Community (Holdings) Ltd[62] on the rationale for such power as follows:
(c) Legal principles – approaches 77.“Modified” approach Johnson Lam J (as he then was) at pages 279-280 in Golden Eagle International (Group) Ltd adopted a simplified or “modified” approach where there was no evidence of actual payment of costs by the receiving party[63] because “[in] principle the defendant should pay the plaintiff interest on the costs incurred after 1 February 2010 [ie the last day on which the defendant could have accepted the plaintiff’s sanctioned offer without leave of the court] running from the date when the works were done respectively”, but “it would be a complicated process if each item of work were to carry interest from a different date”. 78.Bharwaney J at page 129 in Shih Pik Nog commended such approach, which he summarised at 128 as follows:
79.The “modified” approach in Golden Eagle International (Group) Ltd was approved and applied by the Court of Appeal in Wong Tang Keung v Lee Wai Engineering Co Ltd (No 2)[64] and Antwerp Diamond Bank NV v Brink’s Incorporated (No 2):[65]
80.The “modified” approach expounded in Golden Eagle International (Group) Ltd was followed in a number of cases:
81.The “modified” approach in Golden Eagle International (Group) Ltd was also followed and adopted in a number of personal injury cases in which the plaintiff sought interest on costs under Order 22 rule 24(3)(b) of the RHC (or RDC) when the defendant failed to do better than the plaintiff’s sanctioned offer, but did not submit information as to incurred/paid costs and disbursements. An example is Rich Metro Ltd v Ka Ming Court Castle Peak Road (IO).[71] In that case, the plaintiff sought inter alia indemnity costs as from early December 2014 and interest on such costs pursuant to Order 22 rule 24(3)(b) of the RDC. The plaintiff asked for interest on costs at 4%pa above judgment rate (ie 4%pa + 8%pa = 12%pa). DDJ Lee Siu Ho was satisfied that in the absence of any suggestion that the plaintiff was funded by its insurer, “the plaintiff would have funded the trial by paying costs on account to the plaintiff’s solicitors in advance. Absent detailed account of the amount of such costs paid by the plaintiff and the dates thereof, [the learned deputy judge] decide, as the case law suggested, to award interest at half of 12% pa sought by [the plaintiff’s counsel] ie 6% pa on the indemnity costs [the learned deputy judge] award to the plaintiff as from 5 December 2014. Such interest should be paid up to judgment” (pages 668-669). 82.Likewise, the “modified” approach in Golden Eagle International (Group) Ltd was adopted in personal injury cases where the defendant sought interest on costs under Order 22 rule 23(4)(b) of the RHC (or the RDC) when the plaintiff failed to do better than the defendant’s sanctioned payment, but did not submit information as to incurred/paid costs and disbursements:
83.To award interest on costs under the “modified” approach, the court would first determine the full enhanced rate of interest, and would then apply half of such full rate to all items of costs and disbursements incurred by the successful litigant for the period after the last date on which the paying party (usually the unsuccessful litigant) could have accepted the sanctioned offer/payment without leave of the court until the date of judgment, irrespective when each such item of costs/disbursements was paid or advanced. 84.“Full rate” approach In Shih Pik Nog, Bharwaney J agreed that the “modified” approach usefully did away with the need to ascertain the actual dates when the receiving party had to put up funds on account of costs and from which interest would run at the full enhanced rate of interest (eg 9%pa in Golden Eagle International (Group) Ltd) to the date of judgment, but the learned judge took the view that in personal injury cases where the receiving party was the defendant and the defendant’s insurer had the carriage of the case on behalf of the defendant, the court should not award any interest on costs in favour of the defendant if the defendant’s insurer had not made any advance on account of fees incurred since an order for interest on costs incurred after the last date for acceptance of the sanctioned payment without leave of the court under Order 22 rule 23(4)(b) of the RHC because otherwise it would produce an unjust windfall for the insurer (page 130). Bharwaney J said at page 130 as follows:
85.In Shih Pik Nog, the defendant was directed to and did provide “a statement of the funds …… advanced by the defendant’s insurer on account of costs during the relevant period”. Of the costs and disbursements incurred from 5 November 2011 (ie the day after the last date for acceptance of the sanctioned payment without leave of the court) up to 25 May 2011 (ie the date of judgment) that amounted to $461,980.50, the defendant’s insurer had paid $62,228 and $148,000 on 15 March and 4 April 2011 respectively, so Bharwaney J eventually ordered the plaintiff to pay interest at the full enhanced rate of 9%pa only on the sums of (a) $62,288 from 15 March 2011 to the date of judgment and (b) $148,000 from 4 April 2011 to the date of judgment (page 131). 86.Subsequently, Bharwaney J in Fung Chun Man v Hospital Authority[75] adjusted his “full rate” approach. In that case, he awarded interest on costs to 1 of the defendants who was publicly funded and represented by the Department of Justice on the basis that “[if] any such costs were incurred during the period from the last date of acceptance of the sanctioned payment or offer until the date of judgment, an order for enhanced interest may be made in respect of such costs, from the dates on which the work was done up to judgment, notwithstanding that no payment in respect of or on account of those costs had been paid by the aided person or government department involved in the litigation” (my emphasis) (page 492). But in respect of enhanced interest on disbursements, the learned judge said at page 493 as follows:
87.At page 150 in IMY (a minor), I summarised Bharwaney J’s approached in Shih Pik Nog as adjusted by Fung Chun Man as follows:
88.Bharwaney J applied the “full rate” approach in Shih Pik Nog (as adjusted by Fung Chun Man) in 2 further cases in which the plaintiff failed to do better than the defendant’s sanctioned payment/offer such that the consequences in Order 22 rule 23 of the RHC were applicable:
89.Subsequently, other courts followed the “full rate” approach in Shih Pik Nog (as adjusted by Fung Chun Man for publicly funded cases) by applying the full enhanced rate of interest to items of costs/ disbursements incurred and paid/advanced during the relevant period:
90.To award interest on costs under the “full rate” approach, the court would first determine the full enhanced rate of interest, and would then apply such full rate to each item of costs and disbursements incurred by the receiving party (ueually the successful party) (as disclosed in affirmation evidence) since the last date on which the paying party (usually the unsuccessful party) could have accepted the sanctioned offer/ payment without leave of the court that has been paid or advanced for the period from the actual date of payment by such party or his insurer up to the date of judgment. (d) Legal principles – legal aid cases 91.In Shih Pik Nog, although the matter was not argued before him, Bharwaney J indicated his “agreement with Waller LJ who stated in paragraph 23 of his judgment in KR v Bryn Alyn Community (Holdings) Ltd[90] that the court has power to award enhanced interest on costs to parties who are publicly funded and who may obtain an award of enhanced interest costs and disbursements which have been incurred but not yet paid or fully paid” (page 130). The learned judge explained at page 130 as follows:
92.This issue came squarely before Suffiad J shortly thereafter in Lau Koon Loi v Wong Wai Sing & anor.[91] In that case, the legally- aided plaintiff applied to vary the costs order nisi given in the written judgment after trial and to seek orders inter alia that (a) the defendants do pay the plaintiff’s costs on an indemnity basis from 4 February 2010 at the latest and (b) such costs to bear interest thereon at 10%pa above judgment rate (which then stood at 8%pa), ie the maximum rate provided by Order 22 rule 24(3)(b) of the RHC (paragraphs 14-16), on the premise that he had done better than his sanctioned offer made to the defendants which they did not accept (paragraphs 1-2 and 9). The relief in (a) above was not disputed. 93.Suffiad J, citing the rationale expressed by Chadwick LJ in McPhilemy set out in paragraph 76 above, explained that the power to award interest on costs under Order 22 rule 24(3)(b) of the RHC is not penal in nature (paragraph 17). The learned judge accepted such statutory consequence applies to successful legally-aided litigants. He went on firstly to determine the full enhanced rate of interest, and came to the view that since “interest on costs is to redress the perceived unfairness arising from loss of use of money”, a rate of interest at 2%pa above the then judgment rate (which was equivalent to 2%pa + 8%pa = 10%pa) “will fairly and sufficiently compensate the plaintiff in that respect rather than 10% above judgment rate as sought by the plaintiff” (paragraph 18). Then, the learned judge adopted the “modified” approach in Golden Eagle International (Group) Ltd which he considered to be appropriate for legally-aided cases:
94.Very shortly thereafter, Bharwaney J in Fung Chun Mun also confirmed the court had power to award interest on costs under Order 22 rules 23-24 of the RHC to parties who are publicly funded. But the learned judge adopted the “full rate” approach in Shih Pik Nog with slight adjustment as explained in paragraphs 86-87 above. 95.Thus, both the “modified” approach and the “full rate” approach have been applied for awarding interest on costs in favour of publicly funded litigants. 96.Confusion However, there are a number of cases that raise confusion as to whether the “modified” approach or the “full rate” approach was adopted. 97.In Maysun Engineering Co Ltd (which was handed down several months before Bharwaney J handed down his decision in Shih Pik Nog), the defendant was held liable for more than the proposal in the plaintiff’s 2nd sanctioned offer, so Order 22 rule 24 of the RDC was triggered (pages 848-849). After considering all the circumstances, DDJ Mimmie Chan (as she then was) saw nothing which would make it unjust to grant orders for indemnity costs and interest on costs (page 850). The learned judge said “[there] is no evidence in this case as to when the plaintiff was out of pocket in having to make payment on account of costs, or in having to actually put up funds for payment of its legal costs. Nor is there evidence of when liability for disbursements such as counsel’s fees was incurred” (page 852). Unfortunately, the learned judge’s attention was not drawn to the “modified” approach in Golden Eagle International (Group) Ltd (which she cited on other matters at page 850) that squarely addressed her concerns about the absence of payment information. The learned judge’s answer to her concerns at page 852 was as follows:
However, Golden Eagle International (Group) Ltd had already addressed the learned judge’s concerns by adopting the “modified” approach that applied half of the full enhanced rate of interest on all items of costs incurred after expiry of the last date upon which the defendant could have accepted the plaintiff’s sanctioned offer to the date of judgment (rather than by a “lower” full enhanced rate of interest), but the “modified” approach was unfortunately not referred to. The learned judge also did not have the benefit of the subsequent guidance by Bharwaney J in Shih Pik Nog that applied the full enhanced rate only to incurred items of costs and disbursements paid or advanced by the receiving party. Maysun Engineering Co Ltd was an early decision handed down not long after the introduction of the new Order 22 regime, but the more recent decisions by the learned judge in Americhip Inc and Hydrotech Waterproofing Solutions Limited & anor in paragraph 80(c) above showed she was well aware of and did apply half of the enhanced rate of interest under the “modified” approach as explained above. 98.In Au Man Ming v Goldwell Property Management Limited,[92] HHJ Leung gave a short ex tempore judgment in which he ordered the plaintiff (whose claim was dismissed and hence failed to do better than the defendant’s sanctioned payment) to pay interest on costs under Order 22 rule 23 of the RDC at “the enhanced rate” of “9%pa, that is 1% above the judgment rate, as proposed by [the defendant]” (paragraph 15). Neither Golden Eagle International (Group) Ltd or Shih Pik Nog was cited. Given its brief ex tempore nature, the judgment was unclear as to (although the parties at the hearing probably understood) whether such interest was to be imposed on all items of costs incurred after expiry of the last date on which the plaintiff could have accepted the defendant’s sanctioned offer without leave or on specific items of such incurred costs/disbursements that had been paid or advanced by the defendant or its insurers when the learned judge directed that “[what] costs of [the defendant] under this order shall be taxed on indemnity basis and carrying enhanced interest will be a matter for taxation, if not agreed” (paragraph 15). 99.In Chan Lap Kwan v Skypy Limited & anor,[93] the plaintiff failed to recover an amount under the judgment which was higher than the 1st sanctioned payment. Mimmie Chan J ordered the plaintiff to pay the defendant’s costs of the action incurred from 17 July 2014 onwards (ie after expiry of the last date on which the plaintiff could have accepted the 1st sanctioned payment without leave of the court) on High Court scale and on indemnity basis, and “[the] Plaintiff is also to pay interest on these costs incurred from 17 July 2014, at 2% above judgment rate” (paragraph 11). In that case, the plaintiff was self-represented, and the decision did not contain any discussion as to how the interest rate of 2%pa above judgment rate was arrived at, and made no reference to either the “modified” approach in Golden Eagle International (Group) Ltd and/or the “full rate” approach in Shih Pik Nog. But as explained in paragraph 97 above, the more recent decisions by the learned judge in paragraphs 80(c) above showed she was well aware of and did adopt the “modified” approach by applying only half of the full enhanced rate of interest to costs incurred during the relevant period. 100.In Xu Xinhong v Cheung Chu Lau,[94] the plaintiff applied for inter alia costs to be awarded on indemnity basis with interest on costs after the defendant failed to do better than her sanctioned offer (paragraphs 1 and 5). The plaintiff proposed that the defendant shall pay (a) her costs (with certificate for counsel) on party-and-party basis up to 24 August 2016 and thereafter on indemnity basis to be taxed if not agreed, and (b) interest on her costs at 2%pa above judgment rate for the period from 24 August 2016 to the date of judgment (paragraph 10). The defendant had no objection to such reliefs (paragraph 11), and Master J Wong granted orders as proposed by the plaintiff accordingly (see paragraph 25(2)-(3)). 101.In my view, none of the cases in paragraphs 97-100 above shed useful light on the reasoned approach(es) of the courts towards the exercise of discretion on interest on costs under Order 22 rule 23 and/or rule 24 of the RHC or on the relevant rate of interest to be applied under the “modified” approach or the “full rate” approach. 102.In Union Glory Finance Inc & ors v Merrill Lynch International Bank Limited & anor,[95] the plaintiffs’ claim was dismissed, so they failed to do better than the defendants’ sanctioned payment. DHCJ Cooney SC considered it would not be unjust to award indemnity costs and interest on costs under Order 22 rule 23 of the RHC in favour of the defendants (paragraphs 19 and 23). The learned judge referred to Kai Min Fashion (HK) Ltd, CEP Ltd and Maysun Engineering Co Ltd (see paragraphs 80(a)-(b) and 97 above), and said as follows:
Consequently, DHCJ Cooney SC ordered the plaintiffs to pay inter alia the defendants’ costs on an indemnity basis from 27 June 2015 (ie after expiry of the last day on which the plaintiffs could have accepted the defendants’ sanctioned payment without leave of the court) with certificate for two counsel and “[interest] on indemnity costs at a rate of 2½% above judgment rate from 27 June 2015 until payment” (my emphasis) (paragraph 41(2)-(3)). 103.I have explained why with the benefit of hindsight of judicial guidance that has fallen from various courts since the early days, it is unsafe to rely on Maysun Engineering Co Ltd (which was decided before Shih Pik Nog and without consideration of the fullness of the “modified” approach in Golden Eagle International (Group) Ltd). Further, the methodology adopted in Union Glory Finance Inc & ors might have rested on misunderstanding of Recorder Jat SC’s decisions in Kai Min Fashion (HK) Ltd and CEP Ltd because although the learned recorder in those 2 cases held that the full enhanced rate of interest was respectively (a) the lower of (i) 6%pa above US dollar prime rate from time to time or (ii) 2%pa above judgment rate from 5 June 2012 (ie after expiry of the last date on which the 2nd defendant could have accepted the plaintiff’s sanctioned offer without leave of the court) until judgment (see paragraph 80(a) above) and (b) 5%pa above judgment rate (see paragraph 80(b) above), he applied only half of such full rates and not the full rates to all items of costs incurred after the last date on which the plaintiff could have accepted the 2nd defendant or the defendant’s sanctioned payment without leave of the court until the date of judgment. By accepting inter alia that the rates adopted Recorder Jat SC appropriately justify a full enhanced rate of interest of “2½% above judgment rate”, but failing to apply half of such full enhanced rate of interest to all indemnity costs incurred since 27 June 2015 until payment, Union Glory Finance Inc appeared to have misapplied Kai Min Fashion (HK) Ltd and CEP Ltd, and more fundamentally, might have misapplied the “modified” approach in Golden Eagle International (Group) Ltd. 104.In Man Hin Fung v SKH Chan Young Secondary School, the plaintiff failed to do better than the defendant’s sanctioned payment, so the defendant applied to vary the costs order nisi by requiring the plaintiff to pay its costs on indemnity basis and to pay enhanced interest on costs at the rate ot 10%pa above judgment rate (but by the time of the hearing the defendant’s counsel was prepared to accept enhanced interest on costs a rate at 5%pa above judgment rate) (paragraphs 4-5 and 15). 105.HHJ Andrew Li agreed with and adopted the “modified” approach in Golden Eagle International (Group) Ltd, which he said was adopted by DDJ Simon Ho in Fan Kai Ming v Lam Susan Shui Hing[96] (paragraphs 16-19), and held as follows:
106.In fact, Fan Kai Ming that HHJ Andrew Li referred to in his decision correctly applied the “modified” approach. In that case, the plaintiff failed to do better than the sanctioned payment by the defendant, so interest on costs could start to accrue after the last day on which the plaintiff could have accepted the sanctioned payment without leave of the court (page 237). The defendant’s counsel made no submissions and cited no authority as to what appropriate rate of enhanced interest should be adopted (page 237). DDJ Simon Ho noted there was no evidence of actual payment of costs by the defendant, but accepted that “in principle, it should run from the date when the works were done or liabilities for disbursements were incurred” (page 238). The learned deputy judge adopted the “modified” approach in Golden Eagle International (Group) Ltd, and “[after] considering the circumstances of this case in the round, [the learned deputy judge] also see it appropriate to order the enhanced interest be accrued on the defendant’s costs of this action from 26 June 2015 onwards until the date of judgment at half of the relevant rate, viz 4% above the prevailing HSBC’s prime rate, as held by Lam J to be appropriate in Golden Eagle International. Prima facie, such rate is also applicable here, and [the learned deputy judge has] heard no submission from either party to the otherwise” (page 238). Hence, DDJ Simon Ho ordered that the costs order nisi be varied to inter alia the following terms (page 241):
107.Returning to Man Hin Fung, even though HHJ Andrew Li confirmed that he agreed with and that he would follow and adopt the “modified” approach in Golden Eagle International (Group) Ltd because there was no evidence of actual payment of costs in the case before him, he actually did not do so. Instead of applying half of the full enhanced rate of interest in Golden Eagle International (Group) Ltd (which full rate was 9%pa being either 4% above the then prime rate or 1%pa above the then judgment rate – see paragraph 78 above), ie 4.5%pa, the learned judge thought the “modified” rate of interest in Golden Eagle International (Group) Ltd was “4.5% above the judgment rate” and he ordered interest on costs at such latter rate accordingly. In the circumstances, I find myself unable to draw assistance from Man Hin Fung. 108.In Hu Wan v Sanwo International Company Ltd,[97] the legally-aided plaintiff applied to vary the costs order nisi pursuant to Order 22 rule 24 of the RDC to ask for costs on indemnity basis and interest on costs at 10%pa above judgment rate on the basis that the defendant failed to do better than the plaintiff’s sanctioned offer (paragraphs 1 and 47). HHJ Andrew Li found there was no injustice caused to the defendant in allowing the consequences under Order 22 rule 24 of the RDC (paragraph 37). As regards interest on costs, at the hearing before the learned judge, the plaintiff sought interest on costs at 2%pa above judgment rate by relying a number of case authorities (paragraph 47). HHJ Andrew Li noted the plaintiff’s latest concession, and awarded “enhanced interest on costs [incurred after 2 June 2020] at 2% above judgment rate from 3 June 2020 [ie after expiry of the period when the defendant could have accepted the plaintiff’s sanctioned offer without leave of the court] until date of Judgment ……” (paragraphs 48 and 57(3)). 109.The learned judge did not expressly refer to the “modified” approach in Golden Eagle International (Group) Ltd or the “full rate” approach in Shih Pik Nog as adjusted by Fung Chun Man. But since there was no mention in the decision that the legally-aided plaintiff in that case provided any information on disbursements that were incurred after expiry of the deadline for accepting the plaintiff’s sanctioned offer and actually paid/advanced (which information was necessary for applying the “full rate” approach under Shih Pik Nog as adjusted by Fung Chun Man), it was likely that the learned judge looked to the “modified” approach under Golden Eagle International (Group) Ltd that obviated the need to ascertain which item of costs/disbursements was to carry interest from which date it was incurred/paid. 110.In my view, although not expressly stated by HHJ Andrew Li in his decision, the ordered rate of interest on costs at 2%pa over judgment rate was obviously the full enhanced rate of interest because (a) if it were the half “modified” rate as adopted in Gold Eagle International (Group) Ltd, the full rate would have been (2%pa + 8%pa being the then judgment rate) x 2 = 20%pa, and (b) a full enhanced rate of interest at 20%pa (ie 12%pa above the then judgment rate of 8%pa) would have exceeded and therefore outwith the statutory maximum of 10%pa above judgment rate under Order 22 rule 24(3)(b) of the RHC. But if the ordered rate of interest at 2%pa above judgment rate was the “full” rate, the learned judge did not apply such “full” rate (which rate is relevant to the “full rate” approach under Shih Pik Nog as adjusted by Fung Chun Man for legally-aided cases) to costs incurred as well as disbursements incurred and advanced/paid for the relevant period. Instead, the learned judge applied the “full” rate (and not the half “modified” rate) to all costs incurred, ie irrespective whether any disbursements had been paid or not (which wide scope was relevant to the “modified” approach under Golden Eagle International (Group) Ltd and not the “full rate” approach under Shih Pik Nog as adjusted by Fung Chun Man), for the relevant period. 111.As regards the case authorities relied on by the plaintiff in Hu Wan, as I have explained above, (a) Maysun Engineering Co Ltd, Au Man Ming, Chan Lap Kwan and Xu Xinhong do not give useful insight as to the proper application of the “modified” approach in Golden Eagle International (Group) Ltd as explained by Johnson Lam J (as he then was) (see paragraph 97-101 above), (b) Union Glory Finance Inc & Co probably misunderstood the “modified” approach in Golden Eagle International (Group) Ltd as applied by Recorder Jat SC in Kai Min Fashion (HK) Ltd and CEP Ltd when the full enhanced rate of interest at 2%pa above judgment rate was adopted as the applicable rate for interest on costs for the “modified” approach (see paragraphs 102-103 above), and (c) my decision in Tsang Chiu Yip in fact adopted the “full rate” approach under Shih Pik Nog (and not the “modified” approach under Golden Eagle International (Group) Ltd) by applying the full enhanced rate of interest at 3%pa above judgment rate to several specific items of disbursements advanced by the defendant’s insurers and not to all items of costs incurred after expiry of the last date on which the plaintiff could have accepted the defendant’s sanctioned payment without leave of the court (see paragraph 89(c) above). 112.In the circumstances, I am not persuaded that I can safely draw assistance from Hu Wan on the matter of enhanced interest on costs.[98] 113.Which approach? Both the “modified” approach under Golden Eagle International (Group) Ltd and the “full rate” approach under Shih Pik Nog as adjusted by Fung Chun Man for publicly funded cases have been adopted and followed in subsequent cases, and both are viable approaches. 114.In Antwerp Diamond Bank NV, the Court of Appeal at pages 638-639 discussed Shih Pik Nog as follows:
115.Thus, where insurers were involved for defendants in personal injury cases, it is likely that the courts would expect such defendants to adduce relevant evidence for the “full rate” approach, failing which there is risk that the court may not allow enhanced interest on costs (see Bokkim Dil Kumar in paragraph 89(g) above). But in other cases, in the absence of information as to when legal costs/disbursements were paid, it is likely that the court may find the “modified” approach under Golden Eagle International (Group) Ltd appropriate. Indeed, in publicly funded cases, the courts have applied both the “full rate” approach (see Fung Chun Man in paragraphs 86-87 and 94 above) and the “modified” approach (see Lau Koon Loi in paragraphs 92-93 above). 116.In my view, where a successful legally-aided party seeks enhanced interest on costs under Order 22 rules 23-24 of the RHC and does not place information as to whether and if so when the costs/ disbursements incurred by such legally-aided party after expiry of the deadline for the unsuccessful party to accept his sanctioned payment/offer have been advanced/paid, the “modified” approach under Golden Eagle International (Group) Ltd should be followed, especially when there have been work done over a long period of time. 117.Under section 20 of the Legal Aid Ordinance Cap 91, the Director of Legal Aid (“DLA”) assumes an obligation to pay the assigned solicitor such fees and costs as prescribed by the ordinance and the regulations made thereunder. The amount payable by the DLA to an assigned solicitor is prescribed by regulations 5-6 of the Legal Aid (Scale of Fees) Regulations Cap 91C (“LA(SOF)R”):
118.Thus, regulation 5 of the LA(SOF)R requires an assigned solicitor’s costs/disbursements to be either taxed or determined by the DLA at his discretion, and regulation 6 thereof permits partial payment of the assigned solicitor’s profit costs and disbursements (presumably under interim bills) with “claw back” provision under regulation 6(2) thereof. This suggests the DLA is likely to have advanced some costs and disbursements for work done, but it will be a complicated matter to identify which item of cost/disbursement has been paid or not, and if paid, whether it will be clawed back upon taxation. In my view, it is therefore plainly suitable to adopt the “modified” approach under Golden Eagle International (Group) Ltd (as in Lau Koon Loi in paragraphs 92-93 above). 119.Discussion The level of enhanced interest awarded must be proportionate to the circumstances of the case, which circumstances include those set out by Sir Goffrey Vos C in OMV Petrom SA (see paragraph 31 above), bearing in mind that the maximum of 10%pa above judgment rate must be reserved for the worst kind of cases.[99] 120.Bearing in mind the aforesaid principles, the length of time that elapsed between the deadline for accepting the Sanctioned Offer (1 May 2019) and the Judgment (13 December 2022), the parties’ litigation/settlement conduct as discussed above, and the fact P had to go through the mediation and the trial upon D2’s/D4’s non-acceptance of the Sanctioned Offer to secure his award of damages, I adopt the current judgment rate of 8.583%pa (which is slightly higher than that at the time of Golden Eagle International (Group) Ltd) and which also reflects an increase in the cost of money) as a starting point, and consider that the appropriate full enhanced rate of interest should be 3%pa above judgment rate, ie 3%pa + 8.583%pa = 11.583%pa. Applying the “modified” approach and the half “modified” rate of 11.583%pa ÷ 2 = 5.7915%pa, which I round up to 5.8%pa, it is appropriate to award interest on costs incurred by P after 1 May 2019 (ie the last date on which D2/D4 could have accepted the Sanctioned Offer without leave of the court) at the rate of 5.8%pa from 2 May 2019 to 14 December 2022 (ie the date of the Judgment). XIII. CONCLUSION 121.In the circumstances, the Costs Order Nisi is varied to the effect that D2 and D4 shall jointly and severally pay P’s costs of and occasioned by the present action (which, as explained in paragraphs 48-51 above, referred to costs of the proceedings between P and D2/D4) (including all costs reserved if any) on party-and-party basis up to 1 May 2019 and on indemnity basis from 2 May 2019 with interest on P’s costs incurred from 2 May 2019 up to the date of Judgment at 5.8%pa, and P’s own costs be taxed in accordance with Legal Aid Regulations. 122.P asked for costs of and occasioned by the Summons on indemnity basis with certificate for counsel. D2/D4 readily accepted costs should follow event in relation to the Summons, but they argued that it should be on party-and-party basis. Although I see the force of P’s contention given that (a) costs incurred from 2 May 2019 onwards were awarded on indemnity basis, and (b) D2/D4 were generally unsuccessful in resisting the Summons, I note the rate of enhanced interest on costs was reduced from 5%pa above judgment rate as proposed by Ms Lee to a level much closer to the position adopted by Mr Lam. In all the circumstances, I consider that costs of and occasioned by the Summons should instead be taxed on usual party-and-party basis. I therefore grant a costs order nisi that D2 and D4 shall jointly and severally pay P’s costs of and occasioned by the Summons (including all costs reserved, if any) to be taxed on party-and-party basis if not agreed, and P’s own costs be taxed in accordance with Legal Aid Regulations.
Ms Christina Lee, instructed by Or & Partners, solicitors for the plaintiff Mr Solomon Lam, instructed by P Y Cheung & Co, solicitors for the 2nd and 4th defendants [1] pursuant to a letter application dated 22 March 2023 by P’s solicitors and a letter response dated 29 March 2023 by D2’s/D4’s solicitors, the order dated 21 March 2023 by Master Rita So in relation to costs of the Time Summons was varied to “costs of this application be paid by [P] to [D2/D4] in any event summarily assessed at $1,040” [2] $1,180,000 x 2% x 2,667/365 [3] (a) $1,254,398.88 x 4% x 675 days / 365 (22 October 2013 to 27 August 2015) = $92,791.15, (b) $1,254,398.88 x 4% x 1,222 days / 365 (28 August 2015 to 31 December 2018) = $167,986.35, (c) $1,254,398.88 x 4.044% x 90 days / 365 (1 January 2019 to 31 March 2019) = $12,508.25, (d) $1,254,398.88 x 4.063% x 275 days / 365 (1 April 2019 to 31 December 2019) = $38,394.49, (e) $1,254,398.88 x 4.042% x 91 days / 365 (1 January 2020 to 31 March 2020) = $12,640.97, and (f) $1,254,398.88 x 4% x 988 days / 365 (1 April 2020 to 14 December 2022) = $135,818.75 [4] see eg para 54 of the Written Judgment [5] see Order 22 rules 4-5 of the RHC, Hong Kong Civil Procedure 2023 Vol 1 para 22/4/A at p 622 and郭生琼作為2015年8月5日法庭命令委任為死者馬黑皮的遺產代表人及另一人對黃文俊及另二人 HCPI995/2013 (unreported, 30 November 2021) paras 65-83 [6] see 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” HCAJ48/2011, Ng J (unreported, 30 November 2017) paras 25-31 [7] see Hong Kong Civil Procedure 2023 Vol 1 paras 22/1/B, 22/1/1, 22/1/4 and 22/24/1 at pp 613-614 and 637-638 which states that “…… [these] rules are designed to provide important incentives to encourage plaintiffs to make, and defendants to accept, settlement offers at appropriate levels as early as possible. Such an incentive would be deprived of effect unless the non-acceptance of an offer, which subsequently proves to have been a sufficient offer, ordinarily will advantage the plaintiff in the manner foreseen in the rules ……” [8] [2020] 1 HKLRD 703, 711 [9] [2011] 2 HKLRD 844, 850 (see also Zief Incorporated v Tekchandani Ajai Mohan (trading as D’Ziner Collections (Hong Kong)) & ors HCA2459/2017, Recorder Eugene Fung SC (unreported, 23 March 2021) para 32) [10] [2011] 2 HKLRD 34, 44 [11] see Qvist Henrik at p 711 [12] see Wah Lun International Development Limited v Lau Chiu Shing HCA1429/2015, DHCJ William Wong SC (unreported, 8 July 2021) para 7 [13] see Hong Kong Civil Procedure 2023 Vol 1 para 22/24/1 at p 638 [14] see also Hong Kong Civil Procedure 2023 Vol 1 para 22/24/1 at p 639 and Wah Lun International Development Limited at para 10(5) [15] with whom Kitchin LJ (as he then was) and Floyd LJ agreed [16] [2017] 1 WLR 3465 [17] [2019] HKCFI 91, [2019] HKEC 1023 (10 January 2019) at [12(1)] [18] see Wah Lun International Development Ltd at para 10(7) [19] see Hong Kong Civil Procedure 2023 Vol 1 para 22/24/1 at pp 638 and 641-642 (see also Key Light Holdings Ltd & anor v Shih Hua Min & anor DCCJ1167/2020, HHJ Kent Yee (unreported, 2 September 2013) paras 42-43) [20] see para 16 of the Written Judgment [21] [2010] 3 HKLRD 273, 284-285 (see also Kan Wan Chung v Leung Man Kon & anor DCCJ2388/2016, DDJ Connie Lee (unreported, 2 September 2019) paras 12-19) [22] [2011] 4 HKLRD 121, 125 (followed by DDJ Lee Siu Ho in Rich Metro Ltd v Ka Ming Court Castle Peak Road (IO) [2018] 5 HKLRD 653, 663) [23] DCCJ624/2010, HHJ Mimmie Chan (as she then was) (unreported, 27 June 2011) [24] DCPI2370/2014, DDJ S H Lee (unreported, 27 March 2020) [25] see Hong Kong Civil Procedure 2023 Vol 1 para 22/1/23 at p 619 [26] see para 21 of the Written Judgment [27] see para 1 of the Written Judgment [28] see para 15 of the Written Judgment [29] see Hong Kong Civil Procedure 2023 Vol 1 para 62/1/5 at p 1305 [30] see Hong Kong Civil Procedure 2023 Vol 1 para 62/1/6 at p 1305 [31] see para 23 of the Written Judgment [32] see para 15 of the Written Judgment [33] see para 15 of the Written Judgment [34] see para 19 of the Written Judgment [35] see para 49 of the Written Judgment [36] see para 49 of the Written Judgment [37] see para 8 of the Written Judgment [38] see para 9 of the Written Judgment [39] see paras 9-10 of the Written Judgment [40] see para 30 of the Written Judgment [41] see para 156(b) and the 2nd Schedule of the Written Judgment [42] see paras 50-51 and 53 of the Written Judgment [43] see para 22 of the Written Judgment [44] see para 45 of the Written Judgment [45] see para 45 of the Written Judgment [46] see paras 38-44 of the Written Judgment [47] see paras 32-37 of the Written Judgment [48] see para 30 of the Written Judgment [49] see paras 3-5 of the Written Judgment [50] see para 219 of the Written Judgment [51] see para 221 of the Written Judgment [52] see para 54 of the Written Judgment (see para 60 above) [53] the judgment rate was 8.583%pa as from 1 April 2023 [54] or to put it in a different way, 3%pa above the usual rate of interest in commercial cases being 1%pa over the then prime rate of 5%pa (see para 78 below) [55] see section 49 of the High Court Ordinance Cap 4, Wong Wai Chun & anor v Lewin [2000] 2 HKC 271, 276, Shih Pik Nog at p 128 and IMY (a minor) v Dr Lo Ni Boon Peter [2014] 5 HKLRD 109, 115 [56] see IMY (a minor) at p 142 and para 67 above [57] [2014] 5 HKLRD 109, 142 [58] [2002] 1 WLR 934, 944 [59] [2011] 4 HKLRD 121, 127-128 [60] [1990] 1 AC 398, 415 [61] [2002] 1 WLR 934 [62] [2003] PIQR P30 [63] ie the plaintiff in that case, whose sanctioned offer was not accepted but who was able to secure judgment after trial that was more advantageous than such offer [64] [2014] 1 HKLRD 409 [65] [2015] 4 HKLRD 628 [66] [2013] 1 HKC 563 [67] [2014] 4 HKLRD 44 [68] HCA1644/2016, Mimmie Chan J (unreported, 23 November 2021) para 14 [69] HCA1950/2017, DHCJ Alexander Stock SC (unreported, 20 January 2023) paras 25-26 and 29(3) [70] HCCT44/2020, Mimmie Chan J (unreported, 27 February 2023) para 37 [71] [2018] 5 HKLRD 653, 656 and 668-669 [72] DCPI2473/2009, DDJ A Kot (as she then was) (unreported, 6 May 2011) paras 13 and 14(b) [73] DCPI2242/2013, DDJ Lawrence Hui (unreported, 11 July 2016) paras 31-34 and 55(e)-(f) [74] HCPI999/2015, DHCJ Kent Yee (unreported, 11 July 2018) paras 5-11 and 14 [75] [2012] 2 HKLRD 490 [76] HCPI204/2009, Bharwaney J (unreported, 9 January 2012) paras 3-5 where the learned judge said “[save] where the receiving party is legally aided, enhanced interest should only be awarded on paid costs and disbursements for the period from the date of payment up to the date of judgment and should not be awarded beyond that date (see Shih Pik Nog …… at §13)” (para 5) [77] HCPI547/2017, Bharwaney J (unreported, 30 October 2020) paras 16-23 [78] HCPI494/2013, DHCJ Nicolas Cooney SC (unreported, 23 June 2015) paras 4(4), 23-25 and 26(3), but allowed on appeal in CACV96/2015 (unreported, 13 October 2015) paras 9, 12, 14 and 16 on the basis that the half share of mediation fees were incurred by the defendants before 16 December 2014 but paid after that date, so it did not fall within the statutory provisions in Order 22 rule 23(4)(b) of the RHC which provides that the defendant is entitled to “interest on costs referred to in paragraph (3) …… at a rate not exceeding 10% above judgment rate” and Order 22 rule 24(3) of the RHC which provides that the court may order the plaintiff to pay “any costs incurred by the defendant after the latest date on which the payment …… could have been accepted without requiring the leave of the Court” (para 16) [79] HCPI219/2013, B Chu J (unreported, 11 January 2016) paras 24-26 and 30 [80] HCPI305/2013 (unreported, 8 August 2016) paras 3, 4(e), 7, 12, 15 and 80, and the only debate in that case was whether the full enhanced rate of interest was payable on 100% (according to the defendant) or 40% (according to the plaintiff) of the defendnat’s incurred disbursements of $445,990 (subject to taxation) (para 15), and this court held that interest on costs was payable on 100% of the defendant’s incurred disbursements (paras 79-80) [81] DCPI1622/2015, DDJ Gary C C Lam (unreported, 1 June 2017) [82] HCPI48/2012, Lisa Wong J (unreported, 20 November 2017) paras 4,13-15 and 16(2)-(3) [83] see Yeung Ho Man and para 88(b) above [84] see Grupo Pacifica Incorporada v Worldwide Marine Product Ltd & ors HCA2640/2014, Au-Yeung J (unreported, 22 November 2018) paras 4 and 16-23 [85] according to the defendants’ supporting affirmation, “the defendants’ insurers have incurred total legal fees and disbursements of $649,705.30 after 26 February 2015 paid from 1 April 2015 to 22 June 2020” (para 4) [86] HCPI69/2015, Lisa Wong J (unreported, 27 January 2021) paras 3-4, 7, 14 and 16 [87] HCPI995/2018, DHCJ Paul Lam SC (unreported, 22 February 2021) paras 8-9 [88] HCPI505/2017 (unreported, 30 September 2021) paras 17 and 26 [89] HCPI228/2018, DHCJ Herbert Au-yeung (unreported, 25 November 2022) [90] [2003] PIQR P30 [91] HCPI445/2007, Suffiad J (unreported, 15 August 2011) [92] DCPI636/2010, HHJ Leung (unreported, 28 September 2011) [93] HCPI258/2012, Mimmie Chan J (unreported, 7 September 2016) [94] HCPI554/2015, Master J Wong (unreported, 11 July 2019) [95] HCA2494/2013, DHCJ Cooney SC (unreported, 13 December 2016) [96] [2017] 5 HKC 230 [97] DCPI3621/2019, HHJ Andrew Li (unreported, 11 August 2021) [98] Master Matthew Leung in Chan Chun Long Sunny v EGL Tours Company Limited DCPI3307/2019 (unreported, 19 September 2022) followed Hu Wan in adopting 2%pa above judgment rate as the enhanced rate for interest on costs (para 26) despite having cited and adopted the “modified” approach in Golden Eagle International (Group) Ltd that applied the half “modified” rate rather than the “full” rate for enhanced interest on costs incurred after expiry of the deadline for accepting the sanctioned offer/payment without leave of the court (paras 22-24) [99] see Qvist Henrik at p 715 (see also Yeung Ho Man in para 88(b) above and Angbuhhang Netra Jang in para 89(f) above) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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