Tse Ngan Heung v. The Ritz-carlton Ltd and Others

cacv 312/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 312 of 2006

(on appeal from HCPI NOs. 565 of 1999, 570 of 2000

and 658 of 2000)

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HCPI 565/1999

BETWEEN

HCPI 570/2000

BETWEEN

HCPI 658/2000

BETWEEN

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(Consolidated pursuant to the Order of Mr Justice Seagroatt dated 21^st July 2000)

Before : Hon Rogers VP and Le Pichon JA in Court

Date of Hearing : 21 June 2007

Date of Handing Down Judgment: 17 July 2007

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J U D G M E N T

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Hon Rogers VP:

1.I agree with the judgment of Le Pichon JA.

Hon Le Pichon JA:

2.In his judgment of 6 August 2002 in an earlier application made in this action, Seagroatt J had this to say:

“	1.	This is a serious case of unnecessary satellite litigation involving an unreasonable amount of work and generating grossly disproportionate costs on the part of lawyers.  On this topic alone I remind the lawyers concerned of pages 15 and 16 of my judgment of 31 October 2000 in respect of an interlocutory hearing in the same action.  Amongst other comments I made was the following:
		“	In the context of the question of cost, about which I am to say a little more, I think these parties have wasted enough costs so far, that any Court would field itself obliged to take steps to prevent further wastage.” ”

3.Those observations were made in August 2002.  Almost 5 years later, they remain apt to describe the series of hearings commencing in April 2003 leading to and including the present appeal.  Those hearings comprised the application before Jackson J in April 2003, an appeal in December 2003 from Jackson J’s decision dated 5 May 2003 which was adjourned sine die, a summons for directions heard before Suffiad J in January 2006 which was treated as a preliminary hearing, with the substantive hearing taking place in April 2006 and the appeal from the decision of Suffiad J given on 10 August 2006 which is the present appeal.  It is a sorry state of affairs and little short of disgraceful that the judge’s admonition should go unheeded.

Background

4.The plaintiffs in the consolidated actions, namely, Tse Ngan Heung and Chan Yuet Lai Rebecca (respectively “Tse” and “Chan”) were injured when the car driven by the second defendant Lo Sin Tak (“Lo”) mounted the pavement.  Lo was employed as a car jockey by the first defendant the Ritz-Carlton Ltd (“the Hotel”).  The car in question was insured by The Ming An Insurance Co. (HK) Ltd (“Ming An”) and rented to the Hotel by the owner who was not a party to the proceedings.  Ming An was allowed to be joined as the third defendant because it had potential liabilities and obligations under the MIB Agreement, Lo being an uninsured driver and of little means.

5.At the trial in January 2001 on the issue of liability only, Seagroatt J held Lo liable but not the Hotel.  Interlocutory judgment with damages to be assessed was ordered in favour of the plaintiffs against Lo.  In November 2001, this court dismissed the appeal by Ming An against the finding that the Hotel was not liable.

6.Chan’s damages against Lo were assessed by Jackson J and found to be the sum of $19,243,576.  That sum was inclusive of interest at 2% on PSLA and at half the judgment rate on special damages (such interest being pre-judgment interest) up to the date of the final judgment which was 7 January 2002.

7.Master C B Chan assessed Tse’s damages against Lo at $1,001,775 on 10 January 2002.  Again, that sum was inclusive of pre-judgment interest.

8.Although an appeal to the Court of Final Appeal on the question of the Hotel’s liability was pending, Ming An did not obtain a stay of the final judgments obtained by the plaintiffs.  Ming An eventually paid to each of the plaintiffs the amount of the respective final judgments on 3 June 2002.  Between 4 June 2002 and 8 January 2003, Ming An made further payments to the plaintiffs amounting in total to $592,072.59, being post-judgment interest under both final judgments against Lo.

9.On 3 June 2002, each of the plaintiffs assigned their respective claims in the consolidated actions to Ming An.  On 4 December 2002, the Court of Final Appeal allowed Ming An’s appeal and held the Hotel equally liable (with Lo) to the plaintiffs.

10.Chan and Tse served notices pursuant to section 9 of the Law Amendment and Reform (Consolidation) Ordinance on the Hotel on 11 December 2002.  On receipt of the notices, Ming An’s solicitors wrote to the Hotel’s solicitors on the same day in the following terms:

“	We instruct to demand your client to make payment of HK$20,218,530.00 (comprising the two judgment sums) together with interest accrued thereon from the respective judgments given on assessment of damages within 10 days of this letter.”

11.Within the time period stipulated, the Hotel’s solicitors sent a cheque from the Hotel’s insurer in the sum of HK$20,317,458 “in full and final settlement of the judgment sums and interest to be reimbursed to your client”.  That sum was made up of the sum of $20,218,530 (being the aggregate of the judgment sums) and $72,107 (being interest on the judgment sums for 16 days from 4 to 19 December 2002 at judgment rate).

12.Ming An did not consider that the payment made was sufficient.  This led to the series of hearings culminating in the present appeal.

13.The hearing before Jackson J was a summons by the Hotel for (1) post-judgment interest on each of the final judgment sums from the respective dates of final assessment, (2) interest on the sum of $629,866.05 allegedly advanced by Ming An on behalf of the Hotel in settlement of the interest claimed by the plaintiffs, and (3) interest on the interest so claimed in (1) and (2) from the date of the Court of Final Appeal judgment until payment.  (Pausing here, the discrepancy between the amount in (2) and the post-judgment interest actually paid of $592,072.59 has not been explained.)  At paragraphs 10 and 12 of his judgment, the judge set out the difficulties with the relief claimed by Ming An.  He considered that had it been open to him to do so, he would have adopted a broad brush approach to the summons and to have amendments made to it and possibly order a sum of $519,965.59 (being $592,072.59 less $72,107) in favour of Ming An.  Absent a restitutionary claim, Jackson J felt he had no alternative but to dismiss Ming An’s claim.  It is to be noted that the interest claimed before Jackson J amounted to just over $2 million.

14.On appeal, this court (Ma CJHC and Cheung JA) adjourned the hearing sine die in view of the fact that interlocutory judgment had not yet been formally entered against the Hotel in favour of the plaintiffs.  Some 6 months later, interlocutory judgment was formally entered on 12 June 2004 but the appeal hearing was never restored.  Rather, some 18 months later, Ming An issued a summons for, inter alia, “the assessment of damages and interest as between the plaintiffs and the [Hotel] pursuant to and/or in furtherance of the [interlocutory judgment]”.

15.In paragraph 22 of his judgment, Suffiad J set out what Ming An considered to be the Hotel’s liability: (1) the sum of $592,072.59 being post-judgment interest on the final judgments against Lo that Ming An had been compelled to pay the plaintiffs; and (2) post-judgment interest from the date of judgment against Lo up to the date of payment by the Hotel to Ming An (19 December 2002) and from that date to the present.  At the judge’s request and for illustrative purposes, Ming An had proferred 3 different scenarios for the calculation of post-judgment interest.  The amounts ranged from $1.8 million to $1.32 million.  The judge dismissed Ming An’s claim.

The present appeal

16.Under the MIB Agreement and until the Hotel was held liable by the Court of Final Appeal, Ming An was obligated to make payment of the final judgment sums on Lo’s behalf.  As against Lo, under the final judgments, the plaintiffs were entitled to be paid the judgment sums together with post-judgment interest until payment.  Ming An has discharged that liability by paying the judgment sums together with post-judgment interest thereon.  Had the Hotel and Lo been held liable at the same time, the MIB Agreement would have had no relevance and Ming An would have had no liability thereunder to make any payments to the plaintiffs.

17.That Ming An should not be “out of pocket” as a result of the unusual order of events and should be made whole would accord with common sense.  A claim in restitution would achieve that.  That was clearly what Jackson J had in mind in the penultimate paragraph of his judgment and more forcefully brought to Ming An’s attention during the hearing by this court (Ma CJHC and Cheung JA) in December 2003.  But Ming An has resolutely refused to advance a claim in restitution.  Therefore at the outset of the appeal hearing, Ming An was asked to clarify what it was seeking to achieve by its summons.  Suffiad J had accepted the suggestion that Ming An was attempting to gain a windfall by pursuing the matter in the way it had done.  There is the fact that as noted above, the amount sought before Jackson J had been just over $2 million and before Suffiad J between $1.8 and $1.32 million.  This court made it plain that it would have difficulty granting any relief that would enable Ming An to reap a profit.

18.After taking instructions, Mr Leung who appeared for Ming An indicated that his client was prepared to undertake that if it were allowed to go ahead and assess damages that it would not make any profit out of the exercise.  Mr Leung went on to state that if the monies disbursed had been raised by borrowings, the percentage of interest and the period of interest would have to be argued at the assessment because they would turn on the facts and if Ming An had used its own monies, it would be necessary to ascertain “how much profit would have been made by investing the monies”.  Of course whether there had been any borrowings and at what cost or whether Ming An’s own monies have been used is a matter to which only Ming An is privy.  What is surprising is the need to postulate the alternatives.  It suggests that even at this late stage, Ming An is less than willing to be forthcoming.  But if the latter scenario (i.e. use of Ming An’s own funds) were the case, Ming An’s stance in seeking ‘profits’ from investing the funds would effectively negate the proposed undertaking.

19.On analysis, from a restitutionary point of view, having been reimbursed the final judgments sums with interest from the date of the Court of Final Appeal’s judgment, there can only be two respects in which Ming An would be out of pocket.  First, there is the post-judgment interest of $592,072.59 paid to the plaintiffs.  Second, there is the financing cost to Ming An for the period from 3 June 2002 until 4 December 2002 in respect of the $20 million odd paid to the plaintiffs.  As regards post-judgment interest, in the absence of any valid reason for delaying payment of the final judgment sums the post-judgment interest incurred could be said to be self-induced.  As appears from the judgment of Seagroatt J dated 6 August 2002, although there were errors in the figures in the judgment, these were quickly agreed to and amended.  What caused the delay would appear to be disagreement over the contents of the assignment.  At paragraphs 11 and 12 of his judgment, Seagroatt J said:

“	11.	What occasions considerable surprise is this.  The basis upon which the M.I.B. had agreed that it was liable to satisfy the judgment and costs if Ritz Carlton escaped liability, had been established even before I gave judgment on liability.  It had been the reasoning behind the application of the third Defendant to be joined in the action.  It was the reason for the Plaintiff agreeing to rejoin the first Defendant in the proceedings upon the M.I.B.’s undertaking as to costs.  I do not understand why the assignment, appropriately drafted to reflect the state of play, could not have been drawn up and put to the Plaintiff before my judgment.  If not then (for some reason which I cannot fathom), it could have been dealt with before the appeal against my judgment was heard by the Court of Appeal.  As almost a last endeavour it could have been dealt with before Jackson, J. made the assessment of damages.  At any of those stages it would have involved minimal work, documentation and skill.  The assignment is standard.  The Plaintiff wanted her damages.  She was entitled to recourse against the M.I.B.  She had complied with its requirement to pursue the first Defendant.  It was inconceivable that she would not assign her rights of recourse against any defendant, existing or potential, in exchange for the satisfying of her judgment.
	12.	Somehow the lawyers for both parties contrived to turn an extremely simple, uncomplicated exercise into the inflated issue before me.”

Suffice it to say that having regard to those remarks, I do not regard the reason for the delay as being either valid or reasonable.  In those circumstances, it is not at all obvious on what basis it could be said that Ming An should be reimbursed for all or part of that sum, save possibly for that part of the interest which is not attributable to the higher rate of interest paid on judgment debts.

20.Be that as it may, assuming Ming An were prepared to proceed on the basis of a restitutionary claim, Mr Bharwaney who appeared for the Hotel indicated that the Hotel would be content to reimburse the amount of post-judgment interest and to calculate interest on the judgment sums totalling $20 million odd at the commercial rate of interest which he submitted should be at say, 2.5% per annum, being Hibor plus 0.5% given the ready access to money markets by an insurer such as Ming An.  According to his calculations the total amount would come to $793,121.38.  There is in fact a typographical error in the amount of the post-judgment interest set out in Mr Bharwaney’s calculations which, if corrected, would increase the amount to $794,121.38.  It would be fair to say that all along the Hotel had been willing to accede to a claim in restitution but Ming An has refused to proceed on that basis.

21.Ming An’s position was that interest should be at prime plus 1% (i.e. 6.125%) for the six-month period and on that basis, the interest would come to $620,013.85.  The difference between the parties and which stood in the way of a settlement would thus appear to be approximately $418,000,000.  What is also clear is that the “bottom line” for Ming An (which was extracted with considerable difficulty just before the hearing ended) was in the order of $1.212 million.

The ‘intended assessment’

22.At the hearing, this court urged Ming An time and again to consider the Hotel’s offer seriously and highlighted the possibility of Ming An failing in its application altogether.  As Ming An has rejected the Hotel’s settlement proposal, I will proceed to consider the merits of its application for directions to proceed to assess damages against the Hotel.

23.It is important to bear in mind that the claim is brought by Ming An as assignee of the plaintiffs and not a restitutionary claim.  It stands to reason that as assignee Ming An can only recover what the plaintiffs themselves could recover.  An insurmountable obstacle in the way of the intended assessment is that the plaintiffs’ claim against Lo has been fully satisfied.  The plaintiffs were paid the judgment sums on 3 June 2002 and by 8 January 2003 had been paid all post-judgment interest to which they were entitled.  Although the Hotel became a joint tortfeasor with Lo on 4 December 2002, from the plaintiffs’ perspective as at the date of the summons issued in November 2005, that had little relevance because they had long since been paid what they were entitled to in respect of the damage they had suffered as a result of the accident and can have no further claim.  In other words, their claims have been fully satisfied and their causes of action extinguished.

24.The fact that there are concurrent tortfeasors makes no difference.  Satisfaction of a plaintiff’s claim by any one of several tortfeasors extinguishes the plaintiff’s cause of action for damages against all.  The rationale is to be found in the speech of Lord Hope in Jamieson v Central Electricity Generating Board [2000] 1 AC 455 at 471H-472B:

“

The basic rule is that a plaintiff cannot recover more by way of damages than the amount of his loss.  The object of an award of damages is to place the injured party as nearly as possible in the same financial position as he or she would have been in but for the accident.  The liability which is in issue in this case is that of concurrent tortfeasors, because the acts of negligence and breach of statutory duty which are alleged against Babcock and the defendant respectively are not the same.  So the plaintiff has a separate cause of action against each of them for the same loss.  But the existence of damage is an essential part of the cause of action in any claim for damages.  It would seem to follow, as a matter of principle, that once the plaintiff’s claim has been satisfied by any one of several tortfeasors, his cause of action for damages is extinguished against all of them.  As Lord Atkin said in Clark v. Urquhart [1930] A.C. 28, 66, “damage is an essential part of the cause of action and if already satisfied by one of the alleged tortfeasors the cause of action is destroyed.”

Lord Hope went on to say this (at 473E and G):

“

It cannot be doubted that, once the amount of the damages has been fixed by a judgment against any one of several concurrent tortfeasors, full satisfaction will have been achieved when the judgment is satisfied…  In the case of concurrent tortfeasors, a judgment recovered against one of them did not put an end to the cause of action against any of the other tortfeasors until it had been satisfied…  As the law now stands, a plaintiff is barred from going on with a separate action against another tortfeasor if the judgment which he has obtained in the first action has been satisfied.”

25.For these reasons, after 8 January 2003, neither the plaintiffs nor Ming An their assignee could continue with the action against the Hotel.  There is no question of their being able to enter final judgment against the Hotel.  Therefore, the present application for the intended assessment is misconceived.

26.As no restitutionary claim is being pursued, there is no question of granting any relief under that head.  I would add that, in any event, as regards the post-judgment interest of $592,072.59 Ming An has paid, there would not appear to be any valid excuse for the delay and, in my view, the extra liability of post judgment interest rate was self-induced.

27.I would dismiss the appeal.  I would also make an order nisi that the costs of the appeal be to the Hotel.

Hon Rogers VP:

28.There will therefore be an order in terms of paragraph 27 above.

Mr Mohan Bharwaney, instructed by Messrs Winnie Mak, Chan & Yeung, for the 1^st Defendant/Respondent

Mr Raymond Leung, instructed by Messrs Ip Kwan & Co., for the 3^rd Defendant/Appellant