Kan Lai Ling v. Wong Man Kit

DCCJ 5594/2018

[2024] HKDC 1686

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5594 OF 2018

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BETWEEN

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REASONS FOR DECISION

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Background

1.By this court’s judgment dated 26 March 2024 ([2024] HKDC 459), the plaintiff’s claims were dismissed (“Judgment”). This court made a costs order nisi that the plaintiff should pay the defendant the costs of the action to be taxed if not agreed, with a certificate for counsel. Where necessary, this decision shall adopt the definitions and abbreviations used in the Judgment.

2.By summons dated 8 April 2024 (“Summons”), the defendant applied to vary the costs order nisi to the following extent: -

“1. The costs order nisi made by Deputy District Judge Norman Hui in Paragraph 130 of the Judgment dated 26 March 2024 (“Judgment”) be varied as follows: -

(1) The Plaintiff do pay to the Defendant the costs of the action (including all costs reserved) (i) up to and inclusive of 31 January 2019 on a party-and-party basis, and (ii) as from and inclusive of 1 February 2019 on an indemnity basis, to be taxed if not agreed with certificate for counsel; and

(2) The Plaintiff do pay interest at 3% above judgment rate on the costs incurred by the Defendant after 31 January 2019 up to the date of the Judgment;

2. The sanctioned payment sum of HK$100,000 (together with interest accrued thereon) be paid out to the Defendant forthwith; and

3. The costs of this application be to the Defendant on an indemnity basis.”

3.At the hearing of the Summons, this court made an order in terms of the Summons together with an order for the quantum of costs awarded for the Summons itself. These are the written reasons for the decision made.

4.The Summons is based on a sanctioned payment of $100,000 made by the defendant on 3 January 2019, which the plaintiff did not accept. The defendant therefore sought the relief per the Summons pursuant to the Rules of District Court (“RDC”) Order 22 rule 23.

Factual background to the Summons

5.In a letter dated 5 September 2018, the plaintiff issued a demand letter that the defendant do pay damages in the total amount of $158,074.99 and to rectify the water seepage from Flat 608 to Flat 508.

6.In response the defendant issued its letter dated 19 September 2018 with a counter-offer of $77,000 for full and final settlement of the disputed matter.

7.Thereafter the plaintiff responded on 9 October 2018 in a without prejudice save as to costs letter that the offer of $77,000 was “[on] the lower side”, was stated to be unacceptable and the plaintiff proposed a full and final settlement of $130,000.

8.On 10 December 2018, the Writ of Summons of the current action was filed.

9.It is not disputed that on 3 January 2019, the defendant made a sanctioned payment of $100,000 (“Sanctioned Payment”) in settlement of the entirety of the plaintiff’s claim. The Sanctioned Payment was made 24 days after the filing of the Writ of Summons.

10.The plaintiff does not allege that the Sanctioned Payment was defective in any way.

11.In accordance with RDC Order 22 rule 15(1), the last day the plaintiff could have accepted the Sanctioned Payment without leave was 31 January 2019 but this did not happen.

12.Thereafter on 23 June 2020 that the plaintiff issued P’s Interlocutory Injunction which was dismissed by HH Judge Harold Leung via the 4 September 2020 Order.

13.The trial was heard on various dates between 9 to 30 August 2023 and the plaintiff’s case was dismissed on 26 March 2024. As such, the Judgment established that the plaintiff failed to obtain a judgment better than the Sanctioned Payment.

Analysis

14.RDC Order 22 is a self-contained code that is procedural in nature. Whether a sanctioned payment is valid, the preliminary matter to determine is whether the prescribed formalities in RDC Order 22 rule 8(2) have been complied with.

15.In the present case, it is not disputed that the Sanctioned Payment of $100,000 was validly made on 3 January 2019.

16.The provisions in RDC Order 22 rule 23 are “mandatory directions”, unless the Court considers it “unjust” to apply the same as per Tsang Chiu Yip v Ho Kwok Leung HCPI 305/2013, 8 August 2016, Marlene Ng J at §63.

17.The plaintiff relies on the operation of RDC Order 22 rule 23(6) and submits that it would be unjust to apply the costs consequences in RDC Order 22 rule 23.

18.RDC Order 22 rule 23(6) states that the court should take into account all the circumstances of the case and lists out 4 non-exhaustive considerations in determining whether it would be unjust to apply the relevant costs consequences.

“(6) In considering whether it would be unjust to make the orders referred to in paragraphs (2), (3) and (4), the Court shall take into account all the circumstances of the case including —

(a) the terms of any sanctioned payment or sanctioned offer;

(b) the stage in the proceedings at which any sanctioned payment or sanctioned offer was made;

(c) the information available to the parties at the time when the sanctioned payment or sanctioned offer was made; and

(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the payment or offer to be made or evaluated.”

19.The plaintiff bears the burden of showing that it would be unjust to make an enhanced costs order under Order 22 rule 23 as per Kwan JA (as she then was) in CEP Ltd v Wuxi Jiacheng Solar Energy Technology Ltd Co [2016] 1 HKLRD 960 at §31.

20.The plaintiff made submissions on the said criteria under RDC Order 22 rule 23(6).

The terms of any sanctioned payment or sanctioned offer

21.The plaintiff submitted that the court should take into account the relief the plaintiff was seeking in the action. In the present case, the plaintiff was experiencing water leakage in her flat and injunctive relief was being sought.

22.The plaintiff further submitted that the defendant could have chosen the effect of the sanctioned payment to settle “part of your claim” or “a certain issue or certain issues arising from your claim” which were available choices in the notice of the Sanctioned Payment.

23.As such the plaintiff’s position was that it would be unfair to disallow her to pursue injunctive relief given the plaintiff was still experiencing water leakage in her flat, namely Flat 508.

24.Tsang Chiu Yip (ibid) at §54 and §59 held that once a sanctioned payment is made by a defendant, the lis between the parties simply becomes “is the amount of sanctioned payment sufficient to cover the damage that has been suffered?”

25.The consideration for the plaintiff after the Sanctioned Payment was made was whether the payment itself would be sufficient to cover the damage that she had suffered.

26.As per the Judgment, the plaintiff’s claims have all been dismissed completely, failing on both the injunctive relief and damages. Therefore, the plaintiff’s submissions that it would be unfair to disallow her to pursue injunctive relief failed entirely.

27.The plaintiff’s foregoing submissions failed when also considering her conduct. The plaintiff whilst arguing that the injunctive relief is the reason for her not accepting the Sanctioned Payment, the plaintiff made a counteroffer for full and final settlement on 9 October 2018 for the amount of $130,000. This clearly shows that the plaintiff was willing to settle the dispute with monetary compensation only.

28.The plaintiff’s submissions on the terms of the Sanctioned Payment being unfair were rejected.

The stage in the proceedings at which any sanctioned payment or sanctioned offer was made

29.The plaintiff submitted that it was unfair to her given that particulars of her claim had yet to be pleaded. The plaintiff submitted that the defendant filed the Sanctioned Payment on 3 January 2019 after the plaintiff filed her Writ of Summons on 10 December 2018, but prior to the filing of Statement of Claim and Defence.

30.Tsang Chiu Yip at §47 held that “A defendant can make a sanctioned payment at any time (e.g. before disclosure of witness statements and/or expert reports and hence before the plaintiff knows the full extent of the defendant’s case, and there is no embarrassment even if it is not clear how the sanctioned payment is calculated.”

31.The timing of the Sanctioned Payment does not create unfairness to the plaintiff, as the defendant is entitled to make a sanctioned payment at any time and a defendant is entitled to “protect himself as to costs by this device from the earliest possible moment” as per Hong Kong Civil Procedure 2024 at §22/3/1A.

32.The more obvious point is that the plaintiff has carriage of the action and it cannot be fair for the plaintiff to complain of the defendant’s Sanctioned Payment being too early when particulars of the plaintiff’s own claim have not yet been pleaded.

33.As an aside, the defence had pleaded a denial to the plaintiff’s case of the alleged source of the water seepage coming from Flat 608 and the plaintiff was put to strict proof but the plaintiff decided not to amend her pleadings to further particularize her complaints.

34.As mentioned in the Judgment at §111, no complaint can be made against the defendant given the state of the pleadings in this case:

“111. It is noted that the pleadings in this case are highly simple and without much particularity as reflected in the bare assertion in the statement of claim dated 28 February 2019 where the plaintiff pleaded: “Further and/or alternatively, at all material times, the Defendant was well aware of the source of the water seepage / leakage in the Water Seepage / Leakage Incident.” which had no particulars of how the defendant would have been “well aware”.”

The information available to the parties at the time when the sanctioned payment or sanctioned offer was made

35.The plaintiff further submitted that when the Sanctioned Payment was made, the only information available to the parties was the SCEL Report dated 15 August 2018 concluding that the water seepage was due to the defendant.

36.As previously mentioned, a defendant is entitled to make a sanctioned payment at any time, for example, before any expert reports are filed.

37.Hui Wai Man v Chan Mei Wah, DCPI 1948/2012, 11 June 2015, DDJ M Lam held at §10 and §17 that:-

“10. A plaintiff’s subjective belief that he has a good claim does not constitute a relevant consideration to override the mandatory direction in Order 22 rule 23…”

“17. While the plaintiff had the right to bring the case to trial, it is just for the plaintiff to bear the Specified Consequences imposed by Order 22 rule 23 RDC. His desire to test the defendant’s evidence and to resolve the issue at trial does not render it unjust for him to bear the costs of the defendant that should not have been incurred.”

38.Again as per Tsang Chiu Yip (supra) at §47 it was held that:

“Even if the plaintiff decides not to accept the sanctioned payment within the prescribed time, it is always open to him to reassess the risk, and if on such reassessment he decides it will be in his interest to accept the sanctioned payment, he can apply to the court for leave to accept the sanctioned payment.”

39.Firstly, the plaintiff’s submissions failed since her reliance on the SCEL Report dated 15 August 2018 was prior to the demand letter of 5 September 2018 (and issue of the Writ of Summons on 10 December 2018), it does not constitute a relevant consideration to override the mandatory direction despite possibly having given the plaintiff a subjective belief that she had a good claim.

40.Given the commentary in the Judgment at, inter alia, §54, 66, 93, the SCEL Report was proven to be less than adequate, was relied upon only in general and not formally admitted as expert evidence which therefore shows that the plaintiff putting any reliance on the said report was a calculated risk taken by the plaintiff.

41.Secondly, despite the plaintiff’s submissions that there was a lack of expert evidence available at the time is untenable as found hereinabove, nonetheless the plaintiff could have still applied for leave of the court to accept the Sanctioned Payment but did not after further expert evidence was produced as per Tsang Chiu Yip (ibid) at §47.

The conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the payment or offer to be made or evaluated

42.The plaintiff submitted that assistance was provided to the investigations conducted by the Buildings Department and FEHD regarding water seepage at Flat 508, therefore her conduct in the case should not be held against her. However, the plaintiff cited only select instances of the plaintiff’s cooperation whereas the totality of the evidence showed that this was not the case. In a water seepage case, it would only be sensible and proper for parties in a multi-storey building to allow for inspection where such request(s) is reasonable.

43.The findings as per the Judgment at, inter alia, §65 showed that the plaintiff was “not always forthcoming to assist by allowing inspection of Flat 508”.

44.For the foregoing reasons, the plaintiff failed to discharge the burden of showing that the costs consequences sought by the defendant were unjust.

Enhanced interest

45.For completeness sake, the defendant sought enhanced interest of 3% above judgment rate which the plaintiff did not object to and this court so ordered.

Miss Eugenia Yang, instructed by Deannie Yew & Associates, for the plaintiff

Mr Martin Kok, instructed by Chan, Wong & Lam, for the defendant