Temporosa, Ma. Carla Arangote, The Executrix of the Estate of Guting, Joan Sarmiento, Deceased v. Choy Chiu Yee Rita

DCEO 13/2019 & DCCJ 3408/2020
(Consolidated)

[2024] HKDC 1589

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EQUAL OPPORTUNITIES ACTION NO. 13 OF 2019

---------------------------

BETWEEN

---------------------------

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3408 OF 2020

---------------------------

BETWEEN

---------------------------

(Consolidated pursuant to the Order of His Honour Judge Leung
dated 11^th September 2020)

---------------------------

---------------------------------

DECISION ON COSTS

---------------------------------

Introduction

1.Following the trial of these actions, in my Judgment handed down on 8 July 2024 ([2024] HKDC 747), I dismissed all of the Claimant’s claims and made a costs order nisi that there be no order as to costs of both actions. The detailed background of these actions and reasons for dismissing the Claimant’s claims have been set out in my Judgment and shall not be repeated herein. For convenience, I shall adopt the same definitions and abbreviations therein.

2.This is the Respondent’s application to vary the costs order nisi to an order that the Claimant is to pay the Respondent’s costs of these actions, with certificate for counsel, to be taxed if not agreed.

Applicable Principles

3.It is not in dispute that in disability discrimination proceedings, the general or default rule is that each party is to bear its own costs unless the proceedings were brought maliciously or frivolously or that there are special circumstances warranting an award of costs: see s 73C(3) of the District Court Ordinance, Cap 336 (“DCO”).

4.In Haden, Francis William v Leighton Contractors (Asia) Limited [2022] HKDC 423 at §5, HH Judge H Au-Yeung (as he then was) helpfully summarized the applicable legal principles which I gratefully adopt:

(1) The normal rule of “costs follow the event” does not automatically apply in discrimination claims;

(2) The rationale for the non-application of the said normal rule is that if the court makes an adverse costs order against unsuccessful claimants too readily, it may discourage those who may have legitimate grievance in enforcing their civil rights, and this would defeat the purpose of the discrimination legislations. This will not be conducive to the objectives of the legislations to eliminate discrimination and to change prejudicial attitudes that may exist in our society;

(3) However, on the other hand, over-leniency to unsuccessful claimants in discrimination cases would have a side-effect in that claimants may be encouraged to lodge discrimination claims even if those claims are unmeritorious. This obviously is not the intention of the legislature;

(4) In order to strike the right balance, s 73E(3) of DCO and similar statutory provisions applicable to other kinds of discrimination cases (“the Statutory Provisions on Costs”) stipulate that the court has the power to make a costs order other than “no order as to costs” in discrimination proceedings if (a) the proceedings were brought maliciously or frivolously; or (b) there are special circumstances which warrant an award of costs;

(5) Proceedings are brought maliciously if the claimant commenced them not only out of spite or ill-will but also where there is improper motive;

(6) Proceedings are brought frivolously when:

(a) the claimant subjectively knew that there was no substance in his/her claim and that it was bound to fail; or

(b) objectively considered, the claim is so manifestly misconceived that it could have no prospect of success;

(7) The court is given a wide discretion under the “special circumstances” limb of the Statutory Provisions on Costs. The court should consider whether justice requires that an adverse costs order be made. In this regard, the court can take into account not only the litigation conduct of a party at every stage of the proceedings but also his/her pre-litigation conduct;

(8) In the past, the court had ruled that the presence of a party’s oppressive conduct before the commencement of proceedings, a party’s dilatory, obstructive or oppressive conduct in the course of the proceedings, a party’s oppressive tactics and where proceedings could have been avoided but for a party’s unreasonable conduct would amount to “special circumstances”. The list is not closed, and the court’s hands are not tied; and

(9) The burden to show that costs should be awarded is on the party who asks for costs of the proceedings.

The Parties’ Submissions

5.Mr Chan, counsel for the Respondent, submitted both the “frivolous” limb and the “special circumstances” limb are satisfied. Essentially, he submitted that the following matters show that these actions were brought frivolously and they amount to special circumstances justifying an award of costs in favour of the Respondent:

(1) The Claimant’s entire claim was built on hearsay evidence and there was an absence of contemporaneous documents in support of the Claimant’s case. On the other hand, there were contemporaneous WhatsApp messages, CCTV footage and transcript of the audio recordings of the termination of Joan’s employment on the night of 30 April 2017 which contradicted the Claimant’s case;

(2) The EOC had considered the WhatsApp message submitted by the Respondent and took the view that the Respondent and her family reached a consensus of dismissing Joan prior to knowing of Joan’s disabilities and discontinued the investigation of Joan’s complaint. Had the Claimant accepted the EOC’s decision, these proceedings would have been avoided;

(3) The Claimant’s claim under ss 32A and 33(4B) of EO was fundamentally misconceived as it was not disputed that 30 April 2017 was Joan’s rest day;

(4) The Claimant unreasonably failed to respond to the Respondent’s without prejudice save as to costs letter dated 15 December 2023 (“WP Letter”) which offered HK$30,000 as damages; and

(5) The conduct of the Claimant by running unpleaded points and giving evidence which went beyond Joan’s Statements and the witnesses’ own witness statements, and maintaining unreasonable and hopeless assertions.

6.Ms Souza, counsel for the Claimant, opposed the application and submitted that there should be no order as to costs of both actions. It was submitted that these proceedings were not frivolously pursued and there are otherwise no special circumstances to warrant costs against the Claimant. In a nutshell, she submitted:

(1) Joan and/or the Claimant subjectively believed Joan had a properly arguable claim in unlawful disability discrimination:

(a) The first time that there was any mention of termination of employment to Joan was on 25 March 2017 after Joan was diagnosed with the Illness and Joan could not have known of the earlier decision of Rita and her family to terminate her on 13 February 2017;

(b) As stated by Joan in her statements to EOC and Labour Department, she did not believe the reasons provided in the Termination Letter were true, especially when prior to her dismissal those reasons were never discussed with Joan nor did Rita confront her about the “sexy photos”;

(c) The court had found it was plain that the Respondent’s attitude to Joan was less than welcomed and even quite hostile on occasions, and on the evening of the termination, Joan had no choice but to sign the documents and leave the Residence that evening;

(2) Joan’s claim presented at least a prima facie case for direct disability discrimination and there was on the evidence a sufficient basis for inferring that her treatment was on the grounds of disability. The court should not judge the merits on the basis of the results of the claim with the benefit of hindsight and should bear in mind the inherent difficulties of proof faced by claimants in discrimination claims given the covert nature of the discrimination (see X v Melvyn Kai Fan Lai & anor [2019] HKDC 122, §14 and Haden, Francis William, §7). The difficulties in the present case were exacerbated because Joan had passed away at the early stage of these proceedings;

(3) In Chan Choi Yin Janice v Toppan Forms (HK) Ltd (unrep) DCEO 6/2002, 17 November 2006, §10 per HH Judge H C Wong, the court identified examples of factors giving rise to “special circumstances”, none of which are present in the present case: (a) oppressive conduct; (b) where litigation could have been avoided but failed or refused; (c) where the party had been dilatory, obstructive and oppressive during the course of litigation; and (d) where the issuance of civil proceedings had been used to put pressure on the other party;

(4) On the other hand, the Claimant as executrix of Joan’s estate pursued these proceedings in good faith and there was no ulterior motive for continuing these proceedings given she had nothing to gain personally;

(5) It was not correct that the Claimant had not made any reply to the WP Letter. Multiple offers to settle had been made prior but were not accepted. Besides, the Respondent’s offer was not made by way of a sanctioned payment in accordance with O 22 of the Rules of the District Court, Cap 336H and if she had done so could have secured the consequences set out in O 22. Instead, the Respondent seeks an even more favourable costs order for costs of the whole of both actions;

(6) The fact that the witnesses mentioned facts not in their witness statements should not amount to “special circumstances” and the conduct of these proceedings did not unnecessarily prolong the trial (cf Chan Choi Yin Janice where the court found the defendant had fought every point and called a large number of witnesses to prolong the trial and ought to have known it was a hopeless case by the time witness statements were prepared or at the commencement of trial); and

(7) To a large extent the Claimant’s claims were not established on the evidence due to Joan not being able to give evidence and had to rely on hearsay evidence which was not the fault of the Claimant.

Analysis and Disposition

7.Whilst, Mr Chan submitted that Joan could not have subjectively believed that there was substance to her claims following the decision of EOC to discontinue investigation of Joan’s complaint, I am not able to not find that Joan subjectively knew there was no substance in her claims and they were bound to fail. The assessment of EOC was on the basis of written statements without the benefit of live evidence, so Joan may have taken the view that this court could come to a different view. The manner of Joan’s dismissal (which EOC had said was “extremely undesirable”) and the Respondent’s reasons given for her dismissal which Joan said she did not believe were true (as they were never previously mentioned) might have led her to subjectively believe there was substance to her claims. As I did not have the opportunity to observe her give evidence and she was not cross-examined on what she stated in Joan’s Statements, I do not believe it is right for me to speculate on Joan’s subjective belief and what she knew about the merits of her claims.

8.As to whether objectively considered, the claims of the Claimant was so manifestly misconceived that it can have no prospect of success, whilst I agree with Mr Chan and as noted in my Judgment at §§50-52, there were great difficulties faced by the Claimant to prove her case, I am of the view that the hurdle to establish that the claim was “manifestly misconceived” is a high one.

9.An adverse costs order should not be made simply because the Claimant’s claim is dismissed. The court should consider what evidence the claimant had in hand before he/she commenced these proceedings, and assess objectively whether he/she could succeed with such evidence. The court has to guard against judging the merits of the claim with the benefit of hindsight. Furthermore, because discrimination is usually not overt, the claimant would have to rely on circumstantial evidence and the drawing of inferences. See Haden, Francis William §§6-7 and 16.

10.In the present case, whilst the Claimant’s case was based on hearsay alone with hardly any contemporaneous document in support, but given the position adopted by the Respondent, that no issue was taken on the admissibility of Joan’s Statements, the question of weight could only have been determined following the trial, having heard all the evidence and submissions of the parties on the matters provided for in s 49(2) of Cap 8. As for the weight to be attached to the hearsay evidence of the Claimant’s witnesses, the assessment could have only be made after trial when their evidence is tested in cross-examination and against the documents adduced by the parties.

11.In all, I do not consider that objectively assessed, the Claimant’s claims were manifestly misconceived and were bound to fail.

12.As for any special circumstances warranting an award of costs against the Claimant, I agree with Ms Souza that the Claimant’s reliance on matters not pleaded or mentioned in witness statements, which I found undesirable especially when the Claimant was legally represented, do not amount to special circumstances. There is also no basis to find that the Claimants had been dilatory, obstructive or oppressive during the course of litigation. The trial had not been unnecessarily prolonged by taking hopeless points.

13.Finally, as to whether these proceedings could have been avoided but for the party’s unreasonable conduct, given the offer to settle contained in the WP Letter required the Claimant to discontinue these actions and issue written notices of the discontinuance and publish on media specified by the Respondent to the effect that no discrimination and unlawful termination had ever taken place, I take the view that it was not unreasonable for the Claimant not to settle.

14.For all the above reasons, I am not satisfied that the Respondent has discharged the burden to show these actions were brought frivolously or there were special circumstances to award costs to the Respondent.

15.That said, I do not see why the normal rule that costs should follow event should not apply to the Claimant’s employment claim under DCCJ 3408/2020. Bearing in mind the extent of overlap between the two actions and the time spent on the issues relevant to the employment claim at trial, adopting a broad-brush approach, I would vary the costs order nisi and hereby order that the Claimant pay to the Respondent 25% of the costs of these actions with certificate for counsel, to be taxed on party and party basis if not agreed. The Claimant’s own costs be taxed in accordance with the Legal Aid Regulations.

16.As for the costs of this application, although I have varied the costs order nisi, I had not accepted the arguments advanced on behalf of the Respondent. I believe that a fair order would be no order as to costs of this application. This is a costs order nisi which shall become absolute in the absence of any application to vary within 14 days hereof. If any party wishes to vary this costs order nisi:

(1) Such a party shall lodge and serve written submissions within 14 days hereof;

(2) The other party shall lodge and serve written submissions within 14 days thereafter;

(3) The applying party shall lodge and serve written submission in reply within 7 days thereafter; and

(4) The application shall then be disposed of by me on papers.

Ms Denise Souza, instructed by Haldanes, assigned by the Director of Legal Aid, for the Claimant/Plaintiff

Mr Chan Yip Hei, instructed by Joseph M K Chan, Solicitors, for the Respondent/Defendant