Li Chun Bon v Yuen Suk Yee

CACV 405/2024, [2026] HKCA 1304

ON APPEAL FROM [2023] HKDC 466

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 405 OF 2024

(ON APPEAL FROM DCCJ NO. 617 OF 2017)

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BETWEEN

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DECISION ON COSTS

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Hon Cheung JA (giving the Decision of the Court) :

I. Costs of the trial

1)  Our judgment

1.In our judgment of 28 January 2026, we allowed the plaintiffs’ appeal and awarded them damages of $41,867 (as assessed by H H Judge Ko) with interest (as agreed by the parties) from the date of the commencement of the action on 9 February 2017 to the date of judgment below on 25 May 2003 at the rate of prime plus one. Thereafter, the interest is at judgment rate until payment.  We ordered the plaintiffs to have costs of the appeal and reserved the decision on the costs of the trial below which we will now give on paper.  Both parties have lodged written submissions.

2)  The Judge’s orders

2.The Judge dismissed the plaintiffs’ claim and in his Decision on Costs dated 2 November 2023, the Judge made the following order for the costs of the trial :

‘ 37(a) The plaintiffs do pay the defendant’s costs up to and including 23 August 2017 on a party-to-party basis, to be taxed if not agreed;

(b)  The plaintiffs do pay the defendant’s costs after 23 August 2017 on an indemnity basis, to be taxed if not agreed; and,

(c)  The plaintiffs do pay interest on the amount payable under (b) at 4.9375% per annum from 23 August 2017 until the date of the Judgment.’

3.The Judge’s costs order was made on the ground that the plaintiffs had failed to better a sanctioned offer made by the defendant under Order 22, rule 23 of the Rules of the District Court, Cap. 336H of $63,333.40 with costs of the action up to the date of acceptance in settlement of the plaintiffs’ claim.  The plaintiffs did not accept the offer on the deadline of 23 August 2017.  The interest ordered by the Judge was by way of enhanced interest at half of 9.875% (4% above the then prime rate of 5.875%) adopting the approach of Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273.

4.The relevant terms of the Sanctioned Offer are as follows :

‘ 1)  On a without admission of liability basis China Mobile Hong Kong Company Limited (‘defendant’) pays to Li Chun Ban and Yuen Suk Yee (‘plaintiffs’) the total sum of $63,333.40 (Sixty Three Thousand Three Hundred and Thirty Three Hong Kong Dollars and Forty Cents) in full and final settlement (inclusive of interest) of the proceedings DCCJ 617 of 2017 (‘Action’) to be paid out from the sanctioned payment of $63,333.40 made into Court under the Notice of Sanctioned Payment dated 21 July 2017.

2)  Costs of this action be to the plaintiffs to be taxed if not agreed.

3)  The plaintiffs agree to settle the entire action as per items 1) and 2) above, and shall deliver a draft Consent Order to the defendant’s solicitor, Squire Patton Boggs for approval and signature for plaintiffs subsequent filing.  The plaintiffs and the defendant do take all necessary steps to discontinue the action after the settlement of the costs pursuant to Clause 2 hereof at their own costs.

4)  The plaintiffs further undertake and agree that they will not, either jointly or individually, commence a fresh action in relation to the facts or subject matter of this DCCJ 617 of 2017 action.

5)  The plaintiffs and the defendant shall not at any time make any announcement in respect of this settlement and/or disclose any term of this settlement or the negotiation and discussions leading up to it, which shall remain strictly confidential to the plaintiffs, the defendant, and their legal, tax and professional advisers save and except :

(1)  to the extent as may be required by law or in any local court or arbitration and/or as necessary for the purposes of complying with the relevant rules and regulations of any statutory body, including any tax authority and/or as necessary to carry out or enforce the terms of the order being made herein; and

(2)  that in response to a direct enquiry about the action, either of the parties may make the following statement :

‘ [The parties / We] have reached a settlement, the terms of which are confidential.’

This Sanctioned Offer shall be inclusive of all interest (up to 28 days from the date of this Sanctioned Offer) claimed in this action.’

5.The Sanctioned Offer contained both monetary terms and non‑monetary terms, namely, Clauses 4 and 5.  The Judge described Clause 5 as the ‘confidentiality provisions’.  He addressed the issue whether the plaintiffs have failed to obtain a more advantageous judgment with reference to the ‘confidentiality provisions’ :

‘ 15. Relying on paras 19-20 of Ryder Industries v Timely Electronics Co Ltd [2013] 5 HKLRD 343, the plaintiffs’ counsel argues that the confidentiality provision of the Sanctioned Offer “is significant as it constituted an additional element of the Sanctioned Offer which the offeror, [the defendant], must better at trial”. She submits that “[i]t was [the defendant] who sought to impose a condition not within the scope of relief sought by [the plaintiffs] without bringing any feasible counterclaim or applying for an appropriate gagging order. Thus, it must be prepared to accept the consequence of its failing to better its own additional demand in the sanctioned offer.”

16.  I do not think the confidentiality provision has the wide effect contended for by the plaintiffs.  A plain and literal reading of the provision reveals that its scope is confined to the negotiation leading to and the terms of any settlement.  Thus, whether or not the Sanctioned Offer is accepted, there is nothing to prohibit the plaintiffs from discussing the action with others.

….

21.  Unlike the condition in Ryder Industries, the confidentiality provision under discussion has nothing to do with the subsequent trial.  Once the offer is rejected, there is no settlement to be kept confidential (subject to the “without prejudice save as to costs” stipulation discussed above).  If the plaintiffs were right, then there would automatically be an additional element to better at trial by reason of Order 22, rule 25(1) for every sanctioned offer rejected.  I therefore reject the plaintiffs’ suggestion to treat the confidentiality provision as an additional element of the Sanctioned Offer that the defendant must better at trial.’

II.  The parties’ position

1)  The defendant

6.The defendant argues that the costs order below should stand except

1)  [37(a)] be varied to ‘[the Defendant] do pay [the Plaintiffs’] costs up to and including 23 August 2017 on a party and party basis, to be taxed if not agreed.

2)  In respect of the costs of the plaintiffs’ application before the Judge for leave to appeal, ‘the defendant do pay the plaintiffs the costs attributable to this application in respect of ground 1 and the plaintiffs do pay 50% of the defendant’s costs of this application, to be taxed on a party and party basis if not agreed’.

2)  The plaintiffs

7.Whilst the plaintiffs accepted that the monetary award of $41.867 with interest (total $43,272.13) they obtained by way of our judgment is less than the Sanctioned Offer of $63,333.40, they, nonetheless, argued that they have obtained a judgment that is more advantageous than the Sanctioned Offer because the defendant has failed to beat the non‑monetary elements of the Sanctioned Offer.  The plaintiffs, therefore, should be awarded the costs below on a party‑to‑party basis, to be taxed if not agreed. 

8.In respect of Clause 4 (the Restrictive Condition), Mr Lee for the plaintiffs argued that although the defendant may, in principle, apply to strike out any potential fresh action seeking to relitigate matters determined in the present action even if the plaintiffs did not accept the Sanctioned Offer, the Restrictive Condition is worded far more broadly than that, seeking to restrain the plaintiffs from commencing any action ‘in relation to the facts or subject matter’ of this action in the first place.  It is for all intents and purposes a restrictive order, which is a draconian remedy reserved for exceptional cases against vexatious litigants.  The defendant has, therefore, sought to impose a significant limitation on the plaintiffs’ rights which does not relate to the reliefs sought by the plaintiffs and goes far beyond the general law.  As the defendant did not apply for or succeed in obtaining any injunctive relief or restrictive order mirroring or reflecting the Restrictive Condition against the plaintiffs, the defendant has clearly failed to better this element of the Sanctioned Offer.

9.In respect of Clause 5 (the Confidentiality Condition), Mr Lee argued that it seeks to restrain the plaintiffs from disclosing to third parties 1) negotiations and discussions for the purposes of settlement, 2) the fact of settlement and 3) the terms of the settlement subject to narrow exceptions.  While it is true that once the Sanctioned Offer is rejected, there is by definition no settlement or settlement terms to be kept confidential and the plaintiffs would be free to discuss the action with others in any event, the plaintiffs should still be able to disclose (1) to third parties despite the Sanctioned Offer being deemed as without prejudice save as to costs by Order 22, rule 25(1) of the Rules of the District Court : EMW Law LLP v Halborg [2017] EWHC 1014 (Ch).  Thus, as with the Restrictive Condition, the defendant has sought to impose a significant limitation on the plaintiffs’ rights which does not relate to the reliefs sought by the plaintiffs and goes far beyond the general law.  As the defendant did not apply for or succeed in obtaining any injunctive relief or gagging order mirroring or reflecting the Confidentiality Condition against the plaintiffs, the defendant has also failed to better this element of the Sanctioned Offer.

III.  Our view

10.In Ryder Industries Ltd v Timely Electronics Co Ltd [2013] 5 HKLRD 343, Recorder Anthony Houghton SC addressed the issue of additional conditions to the terms of an offer which have satisfied the minimum requirements for a valid sanctioned offer.  Drawing assistance from the Court of Appeal’s judgment in Gibbon v Manchester City Council [2010] 1 WLR 2081 [4]‑[6], he held :

‘ [20] ….. If those requirements have been met, but conditions have been added to the offer, it seems to me that these conditions are to be considered in the context of whether or not the particular offer which has been made has been bettered, not whether it is an offer at all. I do not accept therefore that the fact that an otherwise compliant (with O.22) offer contains a condition precludes it from being a valid offer for these purposes. This appears moreover to be the implication of O.22 r 24(5)(a). The better approach in my judgment is for the condition (where relevant) to be considered as an additional element of the offer which the offeror itself has to “better” at trial in order to be able to claim the specified consequences.’

11.In our view, the judgment obtained by the plaintiffs is not more advantageous to the Sanctioned Offer in the way argued by Mr Lee.  In respect of Clause 4, the plaintiffs, in any event, could not litigate again on the same subject matter of this case.  In respect of Clause 5, the ability of the plaintiffs to disclose to third parties the negotiation and discussion leading to the settlement, gives them no practical advantage.

12.Accordingly, we will make the following costs orders for the trial :

1)  The defendant to pay the plaintiffs’ costs up to and including 23 August 2017 on a party‑to‑party basis, to be taxed if not agreed,

2)  The plaintiffs do pay the defendant’s costs after 23 August 2017 on an indemnity basis, to be taxed if not agreed; and,

3)  The plaintiffs do pay interest on the amount payable under 2) at 4.9375% per annum from 23 August 2017 until the date of the judgment.

13.In respect of the costs of the plaintiffs’ application before the Judge for leave to appeal, we will set aside the order below and make no order as to costs.

Mr Jonathan Lee, instructed by C Y Tsang & Co, for the 1^st and 2^nd Plaintiffs

Mr Ernest Ng and Mr Fergus Tam, instructed by Squire Patton Boggs, for the Defendant