Lam Chi Sheung v. Kin Wah Engineering Co. Another
Read the full judgment text of HCPI 596/1997 on BabelCite. This High Court CFI judgment was delivered on 2 June 2000.
1. This is the defendants' application for a review of the taxing master's certificate sealed on 31 March 2000.
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HCPI000596/1997 HCPI 596/1997 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE PERSONAL INJURIES LIST NO. 596 OF 1997 -----------------
------------------ Coram: Hon Cheung J in Chambers Date of Hearing: 30 May 2000 Date of Decision: 2 June 2000 -------------------- D E C I S I O N -------------------- Review of the taxing master's certificate 1. This is the defendants' application for a review of the taxing master's certificate sealed on 31 March 2000. 2. The master taxed the plaintiff's costs on 12 July 1999 and heard arguments on the costs of taxation on 7 October 1999. He ordered the costs of the taxation to the plaintiff. The defendants asked for a review of the costs and the arguments took place on 3 December 1999 and 1 February 2000. The master refused the defendants' application and made no order as to costs of the review. 3. The defendants now ask for the following relief :
4. The ground relied upon by the defendants is that the plaintiff was unable to beat the defendants' "Calderbank" offer on the plaintiff's costs. History 5. This is a personal injury case. The plaintiff is legally aided. The case was settled by the parties. The parties started their negotiation on costs from 28 September 1998 when Gallant Y.T. Ho & Co. ("Ho"), the plaintiff's solicitors, wrote to the defendants' solicitors Cheng, Yeung & Co. ("Cheng Yeung") proposing to agree profit costs of $128,375 and disbursement of $98,209. The latter included counsel's fee of $85,500 and other disbursements of $12,709. 6. There were exchange of correspondence. Eventually on 6 November 1998, Ho wrote to Cheng Yeung stating that unless a reasonable offer was made within six days, they would proceed to taxation without further notice. On 24 November 1998, Cheng Yeung made a further offer in full and final settlement of the costs. On 30 November 1998, Ho wrote back stating that as the counter-offer was not put forward within the prescribed time limit stated in the letter of 6 November, Ho had on 23 November 1998 sent the file to the law costs draftsman to prepare the bill of costs for taxation. 7. The bill of costs was later rendered. A call-over hearing of the taxation was held on 26 February 2000. The defendants delivered their List of Objections to the bill on the same date. The Calderbank offer 8. On 4 March 1999, Cheng Yeung made a "without prejudice" offer of $333,729 to the plaintiff's bill of costs. This amount is particularized as follows :
9. The offer of 4 March 1999 was stated to be in full and final settlement of the plaintiff's costs and disbursements in the action. It stated that :
On 9 March 1999, Ho wrote back stating that the offer was too low to be acceptable. They stated that :
The taxed figures 10. The master taxed the costs at $301,948. The breakdown is :
Thus, the plaintiff was unable to beat the Calderbank offer globally and also in respect of profits costs. Tso Wing Yu Anita v. Lau Siu Fan & Another 11. The parties agreed with the approach of Barnett J in Tso Wing Yu Anita v. Lau Siu Fan & Another [1998] 2 HKC 286 that in legally aided cases, unlike the position in England, a Calderbank offer may be taken into account when the master considered the order for the costs of the taxation. The learned judge held that to be effective, the offer must be divided at least into offers for profit costs, counsel's fees and other disbursements. Further it might well be that the particular circumstances of a case would call for further division. The plaintiff's position 12. Ms Lee, solicitor for the plaintiff, argued that the offer of 4 March 1999 was not a proper Calderbank offer because it did not itemize the disbursements. It also did not provide for the interest payable on taxation. The correspondence 13. To deal with the first matter, it is necessary to refer to the correspondence between the parties. After Ho had made the initial offer, Cheng Yeung, on 12 October 1998, asked for a breakdown of the figures. On 26 October 1998, Ho provided the breakdown. The disbursements included :
14. On 12 October 1998, Cheng Yeung offered to settle the plaintiff's costs at $189,470. On 30 October 1998, they gave a breakdown of the offer of $189,470 : $95,000 as profit costs and $94,470 as disbursements which were :
15. On 6 November 1998, Ho wrote and maintained that the plaintiff was entitled to the total amount of disbursements. On 24 November 1998, Cheng Yeung offered a total of $204,470 in full and final settlement of the plaintiff's costs :
16. Although the offer of 4 March 1999 did not give a breakdown of the disbursements offered at $133,729, the correspondence shown that the defendants had previously itemized counsel's fees at $85,500 and doctors' fees and court fees at $8,970. 17. Ms Lee argued that the chain of offer had been broken because of the bill of costs and the List of Objections provided by the defendants. The bill of costs included further disbursements relating to the costs of taxation. These included drafting the bill of costs, attendance at the taxation hearing and consequential steps to be taken after taxation. This amounted to $52,013. Ms Lee argued that even assuming that the defendants had agreed to pay counsel's fees of $85,500, there would only be a sum of $48,229 (i.e. $133,729 less $85,500) left to satisfy the other disbursements claimed in the bill. Furthermore, the List of Objections lodged by the defendants only agreed to counsel's fees of $31,000 from the plaintiff's claim of $85,500. The offer was a proper Calderbank offer 18. In my view, the offer of 4 March 1999 was a proper Calderbank offer. Despite the bill of costs and the List of Objections filed by the defendants, one really has to consider the history of negotiation between the parties. It can be seen from the letter of 9 March 1999 that Ho at that stage was not really concerned with the breakdown of the offer. It is plain that their concern was on the level of the offer itself. If Ho was really interested in knowing the breakdown, request for information could be included in the letter of 9 March 1999. In considering a Calderbank offer, one has to take an overview to see if the sum offered should be accepted or not, bearing in mind the risk on costs if the offer was later found to be higher than the eventual taxed sum. One cannot demand an exact quantification beyond a broad division of the sum offered into recognized categories. 19. The Hong Kong position as stated in Caltex Oil Hong Kong v. The Director of Buildings & Lands [1994] 1 HKDCLR 31 is that costs carry interest because an order for costs is a judgment debt. Interest is clearly an item that should be taken into account together with the taxed figures in considering the adequacy of a Calderbank offer in taxation proceedings : see Hoffman :Taxation Handbook 1997 referring to the case of Bell v. Mahoney, May 17, 1999 (unreported). In this case, although the offer did not provide for interest, it would not make it an improper one in view of what I had said. Taxing fee 20. Ms Lee further argued that the taxing fee should be added onto the taxed costs in order to consider the effectiveness of the offer. The master awarded a taxing fee of $14,127. The Taxation Handbook stated that :
21. Taxing fee is prescribed in Rule 19 of the High Court Fees Rules. These are fees payable to the court on taxation. Rule 19 sets out the scales of the fee. Because the exact fee would depend on the taxed costs, it is not quantified in the bill of costs. The practice of the High Court Registry is to require the party applying for taxation to make a deposit on account of the fee. The excess is later returned after taxation. In the case of a legally aided person, he does not have to pay the deposit immediately. When the Legal Aid Department eventually received the taxing fee from the paying party, it would then pay the High Court Registry. As a matter of practice, when the legally aided person was unable to recover the taxing fee, the Legal Aid Department would request the High Court Registry to waive the taxing fee. 22. In his judgment on review, the master stated that the taxing fee should be ignored in considering the "Calderbank" letter. He gave two reasons. First, the offer itself necessarily assumes that there would be no taxation if it is accepted. Second, if a bill has already been filed, taxing masters will usually return the fee if the bill is withdrawn seven days before the hearing. 23. I agree that the taxing fee should be ignored for the purpose of calculating the final taxed costs. If a bill has to be taxed, then the taxing fee has to be incurred. But irrespective of whether the receiving party will be entitled to the taxing fee at the end of the day, the bill of costs does not quantify the taxing fee. The taxing fee is not an item that requires taxation. Since this fee was not quantified in the bill, then clearly the defendants had made no response to it. In the circumstances, the taxing fee should not be included in the taxed costs when one considers whether the Calderbank offer had been beaten or not. Offer exceeded taxed costs and interest 24. This being a proper Calderbank offer, the ultimate costs that were taxed were below that of the offer. Even if one adds the interest to the taxed costs, the offer was still unbeaten globally.
The master's approach 25. In considering how the discretion on costs should be exercised, the master said that :
Mr Ip, solicitor for the defendants argued that of the 419 items in the bill of costs, only 22 items represented disbursements, and 14 items were on common fund taxation, hence the bulk of the bill was on profit costs. The defendants' offer on profit costs exceeded the taxed figure plus interest. My approach 26. Although the disbursements formed only 22 items in the bill, as of 4 March 1999, the disbursements claimed was $141,529 and the profits costs were $274,446. Hence in terms of value, their difference is not that high. I accept Ho had made genuine attempts in resolving the question of costs. However, recognition has to be given to the offer made by the defendants as well. My approach is this : although the offer made by the defendants exceeded the final costs recovered by the plaintiff, one has to bear in mind that the plaintiff's costs consist of two distinct categories. The requirement by Barnett J that the paying party had to itemize the costs in the Calderbank offer clearly recognized this distinction. The problem is more acute in legal aid cases where counsel's fees are not subject to negotiation before counsel is instructed. Looking at things in the round and that each of the parties is successful in one of the categories of costs when the offer is considered, in my view, the appropriate order for costs of the taxation and review is that each party should bear its own costs. The master had already made no order as to costs for the review. This is not a case where the rejection of the offer was so unreasonable that the plaintiff should be ordered to pay for the defendants' costs. 27. As for the costs relating to the taxation, items 370-399 were already incurred when the offer of 4 March 1999 was made. Subject to the amount that had been taxed off, the plaintiff is clearly entitled to items 370-399. As for items 400-419, the plaintiff is only entitled to recover half of the taxed amounts. The plaintiff is likewise only entitled to recover half of the taxing fee from the defendants. Each party should bear its own costs of the review before me. Orders varied 28. The orders of the master are varied accordingly.
Representation: Ms Brenda Lee of Messrs Gallant Y.T. Ho & Co., for the Plaintiff Mr Wesley Ka Lun Ip of Messrs Cheng, Yeung & Co., for the Defendants Ms K.M. Lee, Solicitor of Department of Legal Aid |
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