Yuen Siu v. Lam Mow Hoi

DCPI 2430/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURISES ACTION NO. 2430 of 2009

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BETWEEN

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JUDGMENT

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The Application

1.This is an application by the Defendant, who is the paying party, to vary the costs order nisi dated 25 May 2011 to the extent that:-

(1) the Plaintiff, who is the receiving party, to pay costs for taxation of the Plaintiff’s costs in the main action incurred after the date of a Calderbank Offer, namely on 22 June 2011; and

(2) those costs and taxing fees allowed during taxation be disallowed.

Background

2.The main action concerned a simple personal injuries claim arising from a traffic accident. The Plaintiff was legally aided. The accident happened on 13 January 2008 and the main action commenced in the usually way on 10 December 2009 when the Writ of Summons was issued. The main action was settled by the Plaintiff’s acceptance of the Defendant’s Sanctioned Payment on 24 February 2010 for a sum of $164,420.00.

3.As usual, costs would follow the event when the acceptance of the Sanctioned Payment was effected within the prescribed time and the Plaintiff, who is the receiving party, started the discussion on costs with the Defendant on a “without prejudice save as to costs” basis.

4.By a letter dated 19 March 2010, an offer was made by the Plaintiff for settling the costs liability of the Defendant for a sum of $153,890.00 with $131,400.00 as profit costs and $22,490.00 as disbursements.

5.The Defendant however held a different view and made a Sanctioned Payment of $64,000.00 for the Plaintiff’s consideration.

6.The Plaintiff did not think that the Sanctioned Payment was reasonable and made a further offer, by a letter dated 12 May 2010, for $142,490.00 with $120,000.00 for profits costs and $22,490.00 for disbursements. In response, the Defendant did not make any further payment into Court but, by a letter dated 22 June 2010, made a counter-offer for $76,500.00 with a breakdown of $52,000.00 for profit costs, $22,290.00 for disbursements and the rest on interest. This was, however, not accepted by the Plaintiff and, by a letter dated 18 August 2010, the Plaintiff delivered a copy of the Plaintiff’s bill to the Defendant claiming for a sum of $141,729.67 with $105,424,67 as profit costs, $22,090.00 as disbursements and $ 14,215.00 as costs of taxation.

7.The Defendant did not accept the Plaintiff’s bill and did not make any further offers to settle the matter.  The Plaintiff, acting on the advice of Law Costs Draftsman, also decided not to continue with the negotiation and to proceed with taxation by filing a Notice of Commencement of Taxation on 10 September 2010.

8.The provisional taxation of the Plaintiff’s bill took place on 30 December 2010 and a sum of $70,498.10 was allowed, with $35,599.70 as profit costs, $ 22,090.00 as disbursements, $9,448.40 as costs of taxation and $ 3,360.00 as taxing fee.

9.The Plaintiff was not satisfied with the provisional taxation and proceeded with formal taxation before Master B. Mak. The taxation hearing completed on 25 May 2011 and the learned Master assessed the costs in the usual way and made the relevant orders.

10.After the formal taxation, the Plaintiff’s costs of the main action was allowed at $98,818.00 with $54,403.00 as profit costs, $22,090.00 as disbursements, $17,615.00 as costs of taxation and $4,710.00 as taxing fee.

11.For a fair comparison of the figures, some adjustment may have to be made. Taking away the costs of taxation and taxing fee but adding interest from 24 February 2011 to 22 June 2010, the Plaintiff’s costs after taxation was $78,488.11, which was greater than the last Calderbank offer of the Defendant, dated 22 June 2010, of $76,500.00 for a sum of $1,988.11.

The Parties’ Arguments

12.Despite the fact that the Plaintiff’s costs after taxation (including interest) was greater than the Calderbank offer by a sum of $1,988.11, the Defendant argues that, taking all the circumstances into consideration, the Plaintiff was unreasonable to proceed with taxation after receiving the last Calderbank offer dated 22 June 2010. The Defendant therefore asked for variation of the costs order of Master B. Mak to disallow the costs of taxation and taxing fee and to award costs of the taxation after 22 June 2010 to the Defendant.

13.Since the Plaintiff is legally aided, the usual rules under Order 62A of the Rules of the District Court do not apply and according to the decision of Barnett J in Tso Wing Au Anita v Lau Siu Fan [1998] 2 HKC 286, a taxing master in exercising his/her discretion on costs for taxation should also consider the various Calderbank offers made during the negotiation.

14.In support of his argument, the Defendant relies on the judgment of Mr. Recorder A. Chow, S.C.’s in Singh Gorinder Bal v. Chan Nga Kai HCPI 840 of 2008, unreported, 13 May 2011. Singh Gorinder Balwas also a personal injuries claim arising from a traffic accident and the Plaintiff was also legally aided. After the settlement was reached, the parties had a dispute on the quantum of costs of the action. After certain rounds of negotiation, the Defendant finally offered a sum of $334,000 (including interest) to the Plaintiff to settle the matter. After taxation, the costs (including interest up to the date of the final offer) was assessed at $334,558.50 which was just greater than the final offer made by the Defendant only by a very small sum of $558.50. The learned Judge took all the circumstances into consideration, including, inter alia, the facts that:-

(1) only a small portion (namely, 37.9%) of the profit costs in the bill was allowed after taxation;

(2) the amount of taxed costs and disbursements only exceeded the Calderbank offer by an insignificant amount (namely, $558.50);

(3) the Calderbank offers (including the final one) of the Defendant were all very close to the final amount taxed;

(4) the Plaintiff’s offers were unrealistic when viewed with the final amount taxed; and

(5) nothing of real value had been achieved by taxation proceedings after the date of the final Calderbank offer.

He then came to the view that it was unreasonable for the Plaintiff to reject the Calderbank offer of the Defendant and proceeded with taxation. He, therefore, disallowed the costs of taxation after the date of the Calderbank offer against the receiving party, namely the Plaintiff, in that case.

15.The Defendant urges this Court to follow the decision of Singh Gorinder Bal and argues that, by incurring a sum of $22,325 as costs of taxation and taxing fee, but only achieving a very small improvement of $1,988.11 on the Calderbank offer of the Defendant, was totally unreasonable. The Defendant even criticises that the Plaintiff’s conduct was not in line with the underlying objectives provided in Order 1A rule 1 of the Rules of District Court, namely costs-effectiveness, reasonable proportion and procedural economy in the conduct of proceedings.

16.On the other hand, the Plaintiff’s argument is simple. The Plaintiff argues that a successful party is normally entitled to its costs and there should be some exceptional and compelling grounds to depart from this usual rule. For the present case, the Plaintiff has beaten each and every Calderbank offer made by the Defendant and in the absence of any exceptional and compelling grounds, the costs order nisi of Master B. Mak should stand.

Decision

17.There is no dispute that Order 62A of the Rules of District Court does not apply because the Plaintiff is legally aided and this Court is entitled to take all the circumstances into consideration for determination of costs of taxation. I also agree with Mr. Recorder A. Chow, S.C. who adopted the approach of Barnett J in Tso Wing Au Anita v Lau Siu Fan [1998] 2 HKC 286 that a taxing master in deciding the questions on costs of taxation is entitled to consider the Calderbank offers made by parties.

18.However, in my judgment, the facts in the authority of Singh Gorinder Baare distinguishable from the present case.

19.First of all the, in Singh Gorinder Ba, only 37.9% of the profit costs was allowed but in the present case, 51.7% of the profit costs was allowed by the taxing master. In my judgment, when 51.7% of the profit costs was allowed, the bill could not be described as “very substantially inflated”. To be fair to the Plaintiff’s solicitors, at most, the bill could only be said to be on the high side.

20.Secondly, in my judgment, in Singh Gorinder Ba, the Defendant’s Calderbank offer of $334,000 was only beaten by an insignificant amount of $558.50 but, in the present case, the Calderbank offer of $76,493.00 was beaten by a far more significant amount, both in absolute and relative terms, of $1,988.11. If the receiving party was entitled to this extra amount and the paying party was unwilling to make an offer to pay this amount, it was reasonable for the Plaintiff to proceed with taxation to obtain this extra amount of $1,988.11, despite spending a greater amount of, but reasonable, legal costs. I am also of the view that this extra amount is not de minimus.

21.Thirdly, by reasons of the aforesaid, in my judgment, there was indeed some real value achieved by the Plaintiff by her continued pursuit of the taxation proceedings after 22 June 2010.

22.I also agree with the Plaintiff’s submissions that costs should normally follow the event in taxation, unless there are some exceptional and compelling reasons not to do so. In other words, if a legally aided receiving party would be able to achieve a sum in taxation greater than the amount offered by paying party, costs of taxation should normally be awarded to the receiving party. One of the exceptional and compelling reasons to depart from the usual rule is, perhaps, when the Calderbank offer is only beaten by an insignificant or de minimus amount, like what happened in Singh Gorinder Ba. However, for the present application, I do not see any exceptional or compelling reason to do so.

23.I would also like to add that there is no hard and far rule for determination of what an insignificant amount is. The decision must be made objectively taking into account of all the circumstances. Furthermore, although I am not entirely against using percentages for analysis, I agree with the Plaintiff that sometimes they could be misleading and therefore must be used with a lot caution.

24.In the premises, I do not agree with the Defendant’s application for variation of the costs order nisi and therefore order that the said application be dismissed. I also further order that the costs order nisi be made absolute.

25.There is however one thing which, in my judgment, the parties could have done better. After the Defendant made the final Calderbank offer on 22 June 2010, the Plaintiff then prepared the bill and proceeded with taxation. Both parties then stopped making any further offers. It seems that, on the evidence, both parties were, in fact,willing to make some improvement every time when they made a new offer. Although I do not think that it was unreasonable for the Plaintiff to proceed with taxation after all, both parties are somewhat to be blamed for not moving forward in the negotiation with a little more effort to achieve a probable settlement. In particular, there was nothing stopping the receiving party, namely the Plaintiff, to continue with the “without prejudice” negotiation even after the bill was prepared. One of the underlying objectives of the Civil Justice Reform is to promote and facilitate settlement. I do not think that the parties had conducted sufficient negotiation to achieve a, in fact probable, settlement. To reflect this inaction by both parties during the negotiation, although I agree with the Plaintiff and dismiss the application by the Defendant, I decide not to make any costs order in the Plaintiff’s favour. There will be no order as to costs for the summons.

26.It remains for me to thank Mr. Huang and Miss Leung for their helpful submissions and invaluable assistance.

Mr. L H Huang of M/S Waller Ma Huang & Yeung, for the Plaintiff.

Miss Pauline Leung, instructed by M/S Kenneth CC Man & Co., for the Defendant.