Lau Mung Lam v. Ichi Star Ltd Formerly Known As Cars' Mate Ltd and Another

DCCJ 3238/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3238 OF 2009

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Before: His Hon Judge Leung in Chambers (open to public)

Date of Hearing: 27 July 2012

Date of Decision: 27 July 2012

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D E C I S I O N

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1.The plaintiff commenced this action against the 1^st defendant for the value of the balance of prepaid beauty treatment packages yet to be provided by the time when the 1^st defendant ceased business. Lau joined the 2^nd defendant and held her liable under the Transfer of Business (Protection of Creditors) Ordinance, Cap 49. Default judgment was entered against the 1^st defendant for damages to be assessed. The 2^nd defendant disputed liability.

2.After trial, this court handed down written judgment on 23 May 2012 whereby judgment was entered against the 2^nd defendant.  Damages that the defendants shall pay to the plaintiff were assessed at the sum of HK$278,969 with interest (except for the period between 24 September 2009 and 21 June 2011).

3.I made a nisi order that the 2^nd defendant shall pay the plaintiff’s costs of the action against her, including any costs between them that have been reserved.  I make no separate order as to costs of these proceedings between Lau and the 1^st defendant.  All costs shall be taxed, if not agreed, with certificate for counsel.  The parties had 14 days to apply to vary the nisi costs order.

4.By summons filed on 4 June 2012, the plaintiff applies for variation of the nisi costs order.  She seeks the following variation of the nisi costs order:

(1)  the plaintiff’s costs up to 28 December 2011 shall be taxed on a party and party basis and those thereafter shall be taxed on indemnity basis;

(2)  interest shall be awarded on the indemnity costs above from 29 December 2011 to 23 May 2012 (date of judgment) at half enhanced rate (the enhanced rate being 4% above the judgment rate);

(3)  subject to the period over which interest was disallowed (as mentioned above), interest on the judgment sum shall run at 1% above HSBC best lending rate from the date of writ until 28 December 2011; and

(4)  interest on the judgment sum from 29 December 2011 until full payment shall run at the enhanced rate of 4% above judgment rate.

5.The plaintiff also asks for costs of this application on an indemnity basis.

THE SANCTIONED OFFER

6.The date of 28 December 2011 referred to in the proposed variation of the nisi costs order was the deadline by which the plaintiff’s sanctioned offer to settle her claim against the 2^nd defendant could have been accepted without leave of the court.  The sanctioned offer was contained in the letter to the 2^nd defendant from the plaintiff’s solicitors dated 28 November 2011.

7.By the sanctioned offer, the plaintiff proposed to settle her claim against the 2^nd defendant by the latter paying a sum of HK$200,000 (inclusive of interest) within 14 days.  The 2^nd defendant had the statutory period of 28 days to accept the offer.  Of course, the offer was not accepted at all.

O.22, R.24

8.O.22, r.24 of the Rules of the District applies where a defendant is held liable for more than the proposals contained in the plaintiff’s sanctioned offer; or the judgment against the defendant is more advantageous to the plaintiff than the proposals contained in the plaintiff’s sanctioned offer.  In that case, the court has discretion to make the following orders as to interest on the judgment sum and costs.

9.First r.24(2) provides that in that case, the court may order interest on the whole or part of any sum (excluding interest) awarded to the plaintiff at a rate not exceeding 10% above judgment rate for some or all of the period after the latest date on which the defendant could have accepted the offer without leave of the court.

10.Second r.24(3) provides that the court may order the plaintiff is entitled to his costs on the indemnity basis after the latest date on which the defendant could have accepted the offer without leave of the court; and interest on those costs at a rate not exceeding 10% above judgment rate.

11.R.24(4) provides that the court shall make the above special orders unless it is unjust to do so.  In considering whether it would be unjust to do so, the court shall take into account all the circumstances of the case including:

(1) the terms of the sanctioned offer;

(2) the stage in the proceedings at which any sanctioned offer was made;

(3) the information available to the parties at the time when the sanctioned offer was made; and

(4) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.

12.Mr Ng for the plaintiff referred to Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273 and Poon Yiu Cheung v World Mastery Technology Limited DCCJ 632/2005 (30 September 2011) for the approach of the court in exercising the discretion to order indemnity costs and enhanced interest.

13.Among others, the court has awarded (i) interest on the indemnity costs at half the enhanced rate from the last date on which the sanctioned offer could have been accepted without leave until the date of judgment; and (ii) interest on the judgment sum (in that case, over HK$330,000) at the enhanced rate from the last date on which the sanctioned offer could have been accepted until full payment.

THE PRESENT CASE

14.The plaintiffs have produced evidence of service of the sanctioned offer to the 2^nd defendant, which is deemed to reach her on 30 November 2011.  No contrary evidence by affidavit is produced by the 2^nd defendant.  Nor does the 2^nd defendant dispute that in court.  Hence the last date for acceptance of the offer was rightly 28 December 2011 pursuant to O.22, r.16.

15.The plaintiff managed to obtain an award (exclusive of interest) more advantageous than the settlement sum offered (which was inclusive of interest).  R.24 applies. Unless it is unjust to do so, this court shall make the orders as to interest on the judgment sum and costs under sub-rules (2) and (3) above.

16.No circumstance is shown that it is unjust to make the orders in the present case.

17.I allow the plaintiffs’ application to vary the nisi order as to the costs between the plaintiff and the 2^nd defendant to the extent as set out above.  I also order the 2^nd defendant to pay the plaintiff’s costs of this application to be taxed on indemnity basis.

Mr W K NG of Messrs Lui & Law for the plaintiff

The 2^nd defendant, in person, present

Interpreter assistance shall be provided to the 2^nd defendant in receiving this written decision, if required.