WU KIN HO v. WONG KONG HOP KENNETH

DCPI 2469/2014

[2019] HKDC 324

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 2469 OF 2014

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DECISION

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1.  This is an application by the plaintiff to seek leave to appeal against a Decision made by me on 28 September 2018 (“the Decision”) whereby I had dismissed the plaintiff’s summons to vary the costs order nisi made in the assessment of damages dated 11 May 2018.

2.  In the Decision, I held that:-

(a)   the plaintiff’s summons to vary with the costs order nisi be dismissed;

(b)   the costs order nisi to be made absolute in that the plaintiff is entitled to the costs of the assessment on a party and party basis with certificate for counsel; and

(c)   costs of the plaintiff’s summons to vary the costs order nisi be to the defendant on an indemnity basis with certificate for counsel.

BACKGROUND

3.  For the background of this case and in particular in relation to the costs argument, I would refer the parties to §§18 to 29 of the Decision.

DISCUSSION

Draft Notice of Appeal

4.  In the draft notice of appeal, the plaintiff claims that I had erred in law in holding that the Second Sanctioned Offer had superseded the First Sanctioned Offer which rendered the First Sanctioned Offer invalid and incapable of being accepted: (See §39 of the Decision).  Further, the plaintiff alleges that even if I was right in holding that the First Sanctioned Offer was superseded by the Second Sanctioned Offer (which is denied), I had erred in law in holding the sanctioned offer containing terms as to costs was not a valid offer: (See §32 of the Decision). The plaintiff also claims that I had erred in holding the Second Sanctioned Offer did not have the consequences specified in O 22 r 24(2) & (3) of the Rules of the District Court (“RDC”): (See §40 of the Decision). 

5.  Instead, the plaintiff says that I should have held that:-

(a)   the Sanctioned Offers containing terms as to costs are not invalid sanctioned offer;

(b)   the fact that the Second Sanctioned Offer contains terms as to costs does not render the Second Sanctioned Offer invalid and incapable of being accepted; and

(c)   the Second Sanctioned Offer is a valid sanctioned offer and would have the consequences specified in O 22 r 24(2) & (3) of the RDC.

6.  Further, the plaintiff claims that I had erred in law in holding that it would be unjust to award indemnity costs to the plaintiff based on O 22 r 24(2) & (3) “in the absence of any valid sanctioned offer”: (See §41 of the Decision). He claims that there was/were valid sanctioned offer(s), namely, the First Sanctioned Offer and/or the Second Sanctioned Offer.

7.  Lastly, the plaintiff claims that even if I was right to hold that there was no valid sanctioned offer (which is denied), I had failed to consider whether to exercise the discretion under O 62 to award indemnity costs to the plaintiff as they consider the offer made by the plaintiff were valid Calderbank offers.

8.  I shall deal with the plaintiff’s application under the 4 different grounds as set out in the draft notice of appeal.

(1) Ground 1: Superseding of sanctioned offer

9.  The plaintiff submits that there was reasonable prospect of success in appealing against my finding in holding the Second Sanctioned Offer had superseded the First Sanctioned Offer which rendered the First Sanctioned Offer invalid and incapable of being accepted.

10.  Mr Albert Wan, the plaintiff’s counsel, submits that O 22 is a self-contained code which provides expressly for the manner in which offers may be made, modified and withdrawn. As such, it displaces the ordinary rules of common law. Once made, a sanctioned offer under O 22 remains open for acceptance until the start of trial or his withdrawal under O 22 r 7.  This is not disputed by the defendant.    

11.  Mr Wan relies on the case of Gibbon v Manchester City Council [2010] EWCA Civ 726; [2010] 1 WLR 2081 where the English Court of Appeal found that the judge below was wrong to hold that the two earlier sanctioned offers in May and August 2007 were superseded by the subsequent offer made in February 2008.  The plaintiff says that Gibbon has been applied in Hong Kong in Rai v Pacific Construction (HK) Co Ltd [2011] 3 HKLRD 469 at 485-486, §24.

12.  Thus, he submits that making subsequent sanctioned offers does not constitute withdrawal or supersedence of earlier sanctioned offers.  The subsisting sanctioned offer which is not beaten by the offeree after trial can be relied upon by the offeror to invoke the court’s jurisdiction to award costs on indemnity basis and interest at enhanced rates.

13.  In Rai v Pacific Construction (HK) Co Ltd,supra, a decision which is binding on me, Bharwaney J held at 486, §26 that:-

“The fact that a second or third increased sanctioned offer is made in the course of the proceedings does not constitute a withdrawal of earlier unaccepted offers which remain subsisting. The subsisting sanctioned offer which is not beaten by the offeree after trial can be relied upon by the offeror to invoke the court’s jurisdiction to award costs on an indemnity basis and interest at enhanced rates.”

14.  The plaintiff therefore submits that, as a matter of law, the First Sanctioned Offer was not withdrawn or had been superseded as:-

(1)   no leave was granted by the court to withdraw or diminish the First Sanctioned Offer under O 22 r 7 of RDC; and

(2)   the making of the sanctioned offers, such as the Second Sanctioned Offer, does not constitute withdrawal or supersedence of the First Sanctioned Offer.

15.  Mr Wan further submits that there was nothing in the Second Sanctioned Offer to suggest that the First Sanctioned Offer should be considered as having been withdrawn or superseded. They included the fact that:-

(1)   the label “2^nd Letter” contained in the Second Sanctioned Offer merely means it was a second letter sent to the defendant’s solicitors on 5 December 2017 and was only used to avoid any confusion with the First Sanctioned Offer dated the same day;

(2)   rejecting the defendant’s offer at HK$90,000 plus costs does not mean that the First Sanctioned Offer had been revoked.  The plaintiff says that there was simply no causal connection between the two; and

(3)   purporting to put forward a new sanctioned offer does not mean it should supersede the previous sanctioned offer.  They could both co-exist at the same time and acted as alternatives for the defendant to choose from.

16.  The plaintiff therefore contends that the First Sanctioned Offer remains open for the acceptance for 28 days and, after 28 days, it can be accepted if the parties can agree on the costs or if the court grant leave for them to do so: See O 22 r 5(7).  The plaintiff submits that, since the subsisting First Sanctioned Offer had not been beaten by the defendant after trial, it could be relied upon by him to invoke the court’s jurisdiction to award costs on an indemnity basis.

17.  In my judgment, it cannot be disputed that in this particular case, the First Sanctioned Offer made by the plaintiff, when standing on its own, could constitute to a valid sanctioned offer.  The only question is whether, as I had found in the Decision, the Second Sanctioned Offer had the effect of replacing or superseding the First Sanctioned Offer in the particular circumstances of this case.

18.  I have no problem in accepting the principles laid down in Gibbon or Ria as cited by Mr Wan above.  They must be right.  However, in Gibbon, unlike our present case, there had been no express withdrawal of the offer made: (See §29 on p 2089).  As I found in §39 of the Decision and for the reasons stated therein, on the particular circumstances of this case, the Second Sanctioned Offer was meant to replace and/or supersede the First Sanctioned Offer. Further, unlike in Gibbon where multiple offers were made concurrently over a span of time, the present case is one in which I found the offeror clearly had intended to have only one offer available on the table for the offeree, having presented their letter in such a format.  In other words, I found on the facts of this case that, unlike in Gibbon, there was a clear intention on the part of the plaintiff to withdraw and supersede the First Sanctioned Offer with the Second Sanctioned Offer.    

19.  As I found in the Decision, the Second Sanctioned Offer contained terms as to costs which, it could not act as a valid sanctioned offer: (See §32 of the Decision).  Thus, in my judgment, there was no valid sanctioned offer left on the table for the defendant to accept after the Second Sanctioned Offer was made.

20.  As such, I do not consider that there will be reasonable prospect of success for the plaintiff to argue on the validity of the First Sanctioned Offer.

21.  I would therefore refuse to grant leave to the plaintiff to appeal against my Decision based on Ground 1.

(2) Ground 2: Sanctioned Offer contains terms as to costs

22.  Mr Wan in his oral submission has made it clear that their main reliance in the leave application is on Ground 1.  Hence, the other grounds are “subsidiary” to Ground 1 only.

23.  The plaintiff submits that I was wrong to refer the judgment of Master Marlene Ng (as she then was) in Lin Yanjin v Smart Billion Engineering Ltd (unreported, HCPI 739/2009, 10 August 2011) and the English Court of Appeal Decision in Mitchell & Ors v James & Ors [2003] 2 All ER 1064 as authorities to support my decision to find that any sanctioned offer containing terms as to costs should be held invalid.  The reason being that, according to the plaintiff, there is a line of Court of Appeal authorities where offers contained terms as to costs and was held to be valid sanctioned offers and thereby attracted the usual costs consequences under O 22 r 24(4).  In this regard, the plaintiff relies on Central Management Ltd v Light Field Investment Ltd [2011] 2 HKLRD 34, and Chan Kwing Chiu & Another v陳志球(transliterated asChan Chi Kau) also known as Johnnie C K Chan (unreported, CACV 209/2012, 3 October 2013).

24.  In my judgment, the case of Central Management Ltd v Light Field Investment Ltd, supra can be easily distinguished by the fact that in that case there was a valid sanctioned offer made and the defendant was penalized for costs on an indemnity basis due to the failure of the defendant to respond to the plaintiff’s sanctioned offer: (See §32 of Central Management).  Hence, that decision was made on the basis that was a valid sanctioned offer and does not, in my view, support the plaintiff’s contention that a sanctioned offer which contains terms as to costs is still valid.  What happened in Central Management was that the offer was made with “no order as to costs in full and final settlement of the parties’ claim and counterclaim”.  This was considered as a valid offer. It was, unlike the present case, where a specific sum was specifically mentioned by the plaintiff as “terms of costs” for the purpose of O 22 r 24.

25.  Similarly, in my view, the case of Chan Kwing Chiu & Another, supra and Chen Tek Yee v Chan Moon Shing [2015] 3 HKC 622 can both be distinguished on their own facts. In Chan Kwing Chiu,the sanctioned offer was made on a “drop hands” basis, with no order as to costs.  In Chen Tek Yee, surpa, the costs order was made on the facts peculiar to that case and does not in my view lay down any rules that an offer containing terms of costs should still be regarded as a valid offer.   

26.  Therefore, I am of the view that Ground 2 of the proposed grounds of appeal does not contain any real substance and is unlikely to succeed.  I would also refuse leave based on this ground.

(3) Ground 3: whether unjust to award indemnity costs

27.  This issue is closely linked to Ground 1 above.  If the plaintiff is able to succeed on Ground 1 on appeal, obviously the plaintiff will normally be entitled to indemnity costs against the defendant who did not beat the sanctioned offer.  On the other hand, if the plaintiff does not succeed on Ground 1, it is unlikely that indemnity costs will follow.

28.  As it would appear clear in the Decision, my reason for awarding indemnity costs in favour of the defendant on the plaintiff’s summons was made on the basis that that the plaintiff’s legal team had failed to disclose the Second Sanctioned Offer to the court when they first applied to have the costs order nisi varied.  In this regard, I cannot agree with Mr Wan’s very bold submission that his legal team did not owe a general duty of full disclosure to the court in an inter partes application. In my judgment, his reliance on para 28/0/2 (p 723) of the White Book 2019 has clearly been misconceived and was taken out of context as O 28 deals with originating summons procedures and does not give support to such bold proposition made by Mr Wan. 

29.  With respect, the particular passage cited only applies to an “inter partes proceedings commenced by way of originating summons” and does not support a general proposition that it applies in all inter partes summons as Mr Wan has put forward.  In my view, only in such limited circumstances, there was no duty of full and frank disclosure of all material facts.  It has been stated that, subject to the duty of not to mislead the court, in an application by originating summons, a party is entitled to put before the court only such material as it thinks is necessary in the order for it to establish its own case: See Wing Hang Bank Ltd v Kit Choy Development Ltd & Another (unreported, HCMP 5172/2002, [2006] HKCE 1591). 

30.  I therefore would reject Mr Wan’s submission that there was no duty on the part of the plaintiff to disclose the Second Sanctioned Offer to the court when the plaintiff first applied for the variation of the court order.

31.  Based on the above, I would also refuse leave for appeal based on this proposed ground.

(4) Ground 4:  failure to consider exercising discretion under O 62

32.  The plaintiff’s submission based on this proposed ground of appeal is that even if I was right to hold that there is no valid sanctioned offer (which is denied) in this case, I have failed to consider whether to exercise the discretion under O 62 to award indemnity costs to the plaintiff.

33.  As Mr Wan has rightly pointed out, this is a general discretion under O 62 to award indemnity costs: See O 62 r 28(3) of RDC. 

34.  However, what I cannot agree with the plaintiff is that in a case where a sanctioned offer has been made, I would still be required to take into account any written offers “without prejudice save as to costs”, e.g. Calderbank offers, under O 62 r 5(1)(d).  As stated in Ria, supra, O 22 is a self-contained code.  Once it is made, it is governed by the rules under this Order and does not require the court to refer back to the general discretionary power under O 62.

35.  Thus, I do not consider I should give leave to appeal based on this proposed ground also.

CONCLUSION

36.  In conclusion, for the aforestated reasons, I would refuse to grant leave to the plaintiff based on the draft notice of appeal.

37.  It follows that the costs of this application should be in favour of the defendant, such costs to be taxed if not agreed, with certificate for counsel.        

DCPI 2469/2014

[2018] HKDC 1216

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

PERSONAL INJURIES ACTION NO 2469 OF 2014

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DECISION

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1.  There are 2 summonses involved in this decision.

2.  The defendant’s summons is one for leave to appeal against the assessment of damages made by me on 11 May 2018 (“the Judgment”) under O 58 r 2 of the Rules of the District Court (“RDC”) and for a stay of execution pending the determination of the defendant’s appeal under section 66 of the District Court Ordinance, Cap 336 (“DCO”) (“D’s Summons”).

3.  The plaintiff’s summons is one to vary the costs order nisi contained in the Judgment under O 22 r 19 and 24 and O 62 r 3 of the RDC (“P’s Summons”). 

4.  I shall first deal with D’s Summons for leave to appeal and stay of execution and then to deal with P’s Summons for the variation of the costs order nisi.

(I)   D’s Summons

5.  As said, this summons taken out by the defendant is for an application to seek leave to appeal, which, if granted, to apply for a stay of execution pending the determination of the appeal.

6.  The legal principles on granting leave of appeal are well settled and are not in dispute.  They can be briefly summarized as follows:

(i)   leave to appeal shall not be granted under section 63A of the DCO unless this court is satisfied that the appeal has a reasonable prospect of success or there is some other reasons in the interests of justice that the appeal should be heard; and

(ii)   the applicant bears the burden of satisfying the court that his appeal has reasonable prospect of success which means an appeal with prospects that are more than fanciful but which do not need to be shown to be probable.  When the applicant seeks to challenge the finding of fact made by the court below, unless he can show that the trial judge misunderstood the evidence, or failed to appreciate its effects, or overlook some documentary or other indisputable evidence which should have compelled him to a different conclusion, the court of appeal will not interfere with those findings of the facts: see Lee Chick Choi v Best Spirits Co Ltd[2018] HKCA 449.

The defendant’s draft grounds of appeal

7.  In the draft notice of appeal attached to D’s Summons, the defendant relies on the following grounds:

(1)   HK$100,000 for pain, suffering and loss of amenities (“PSLA”) award is inconsistent with the findings of the joint medical expert report in that:

(a)   there might be residual damage from the 2011 Accident;

(b)   intervertebral disc at L5/S1 level was due to pre-existing degeneration of the disc.

(2)   the court should not award pre-trial loss of earnings to the plaintiff in the absence of any documentary evidence; and

(3)   the court has erred in attaching too much credibility and accepting what the plaintiff has stated in his oral evidence, which the defendant says was far from believable and genuine.

8.  In relation to Ground 1 of the proposed grounds of appeal, I do not consider that the award of the HK$100,000 for PSLA allowed in this case was excessive; nor do I consider that taking into account of the element of inflation over the years since some of those cases referred to the court had been decided was either incorrect as a matter of principle or excessive as a matter of quantum. 

9.  The defendant’s proposed appeal on this ground is based on an attack on the findings of facts made by me.  Since a trial judge has the advantage of assessing the credibility of the witnesses who gave evidence before him, unless the Court of Appeal is satisfied that the trial judge was plainly wrong, it usually would defer to the trial judge’s assessment even when there are some doubts on its correctness: see Ting Kwok Keung v Tam Dick Yuen [2002] 3 HKLRD 1 at 13E-48.

10.  As all personal injury lawyers would know, there is no exact formula to arrive a precise figure for a PSLA award in any given personal injury case.  In each case, the court will take into account of matters like the extent of the injuries suffered by the plaintiff, treatments received, length of hospitalization, period of recovery, the effects of the injury have on his daily life and employment, whether any loss of amenities like losing the ability to participate in a sport or hobby, etc.  The court will then make comparison with victims in other decided cases who had suffered from similar injuries.  It will then decide whether the injuries would fall within any of the 4 different categories as defined in landmark decisions like Lee Ting Lam v Leung Kam-Ming [1980] HKLR 657as updated in Chan Pui Ki v Leung On & Another [1996] 2 HKLR 401; Lawati Bhawani Bikram v Ting Kau Contractors Joint Venture (unrep, CACV 3002/2012, [2002] HKEC 1211; Lam Chan Hung v Hang Yue Engineering Ltd [2013] 3 HKLRD 420; and Wong Man Kin v Golden Wheel (C & HK) Transportation Co Ltd [2015] 5 HKC 570 at 586B.  After that, it will make adjustments for any inflationary increase.  At the end of the day, the court will arrive a figure which would fall within what I would describe as the “reasonable range” of PSLA award which is permissible in that particular case.  Sometimes, the court may be criticized as being too generous and sometimes being too mean with the assessment on this figure, depending on which side of the case the party is on.  However, in my judgment, one could not say the figure is plainly wrong or manifestly excessive, so long as it falls within that “reasonable range” which the court is entitled to award. 

11.  In the circumstances this case, I do not consider the HK$100,000 PSLA award could be regarded as falling outside of that “reasonable range”, which a court, having carefully considered the above matters, could arrive at: §§32-34 of the Judgment.

12.  In respect of Ground 2, the defendant says that the court should have rejected the plaintiff’s claim for pre-trial loss of earnings as there was no documentary evidence to support his income.

13.  In this regard, the defendant’s counsel Mr Kevin Lee relies on the decision of Master K Lo of the High Court in Chan Lung Hing v Ng Kam Man [2014] HKCFI 1121.  With respect, that case was decided on its own facts.  Like the present case, it was a pure finding of facts made by the learned master.  The decision is not binding on me nor do I consider it has laid down any important principles of law which I should follow. 

14.  In our present case, I was acutely aware that there was not a single document to support the plaintiff’s pre-accident income.  However, the plaintiff had given cogent oral evidence on this matter in the witness box and his evidence in this aspect was not shaken during cross-examination.   I have also given the reasons as to why I accepted his evidence in the absence of any documentary evidence: see §36 of the Judgment.

15.  Thus, I simply cannot see the defendant will have any reasonable prospect of success on appeal based on this ground also.

16.  In relation to Ground 3 of the proposal grounds of appeal, with respect to the defendant’s counsel, I simply cannot see how I could be said to be plainly wrong in accepting the plaintiff’s evidence or had attached too much weight to his evidence when not a single ounce of evidence was produced by the defendant to rebuke the plaintiff’s case.  In a trial, it is always open to a trial judge to accept part of the evidence of a witness and reject other parts of it. Just because I did not believe the plaintiff’s evidence in certain parts of his case does not mean that I should reject his evidence in other parts of his case also.  As stated in the Judgment, I found the modest income he was claiming during the pre-trial period was extremely reasonable, even in the absence of any documentary evidence.  Thus, I cannot see any reasonable prospect of success for an appeal based on this ground also.

17.  In the aforestated premises, I see no reason why leave should be granted based on the 3 grounds relied on by the defendant.  Further, in my view, there are also no reasons in the interests of justice why the appeal should be heard.  Thus, I would dismiss D’s Summons seeking leave to appeal.  It follows that the defendant’s application for stay of execution will be dismissed also.  I would also award costs of the summons in favour of the plaintiff, such costs to be taxed if not agreed, with certificate for counsel. 

II.   P’s Summons

18.  P’s Summons is to vary the costs order nisi contained in §55 of the Judgment where I ordered that “the defendant do pay the costs of this assessment with certificate for counsel, such costs to be taxed if not agreed”.

19.  In P’s Summons, the plaintiff asked the costs nisi to be varied to the following:

“The defendant do pay the plaintiff’s costs of this action on party and party basis up to 2 January 2018, and thereafter on indemnity basis to be taxed if not agree, with certificate for counsel, with enhanced interest on the indemnity costs at the rate of 4% above judgment rate until actual payment”.

20.  The plaintiff also asked the sanctioned payment of HK$68,000 paid by the defendant on 27 January 2015 and HK$24,000 on 16 March 2015, together with any accrued interest thereon, be paid out to the plaintiff via his solicitors forthwith in partial satisfaction of the awarded damages and interest.

21.  Further, the plaintiff asked that the defendant to pay the plaintiff’s costs of the application on an indemnity basis, such costs to be taxed if not agreed, with enhanced interest at the rate of 4% above judgment rate until actual payment.  In his amended summons dated 13 June 2018, the plaintiff added “or any other terms as the court deems fit” at the end of the paragraph which seeks enhanced interest.

Relevant events

22.  At the hearing original fixed before me on 8 June 2018 (which was adjourned due to the late filing of hearing bundles and submissions on the part of the defendant), the plaintiff’s counsel Mr Jacky Jim had only mentioned the following what he would describe as “important events” in his skeleton submissions:

“i Interlocutory judgment on liability has been entered on 29 December 2014.

ii The Defendant made two sanctioned payments of HK$68,000.00 and HK$24,000.00 (totaling HK$92,000.00) on 27^th January 2015 and 16^th March 2015 respectively.

iii On 5^th December 2017, the Plaintiff made a sanctioned offer (AYCS-1) to the Defendant that he agreed to accept HK$120,000.00 (inclusive of interest) plus costs to be taxed if not agreed for a full and final settlement of the claim herein (“the Sanctioned Offer”). The latest day for accepting the same without leave was due on 2^nd January, 2018.

iv Assessment on damages was held on 5^th January, 2018.

v By the Judgment of His Honour Judge Andrew Li dated 11^th May 2018, the Plaintiff has been awarded damages of HK$135,167.00 together with interest i.e. HK$155,438.37 as seen in the letter (AYCS-2).

vi On 15^th May 2018, the Plaintiff’s solicitors wrote to the Defendant’s solicitors asking for their consent to vary the costs order and to seek leave for the payment out of HK$92,000.00 as partial payment of the awarded damages. But no reply is heard from the Defendant.”

23.  As Mr Kevin Lee, counsel for the defendant, has rightly pointed out in his skeleton argument for the hearing on 8 June 2018, the plaintiff had failed to disclose some of the material facts pertaining to this issue.  In particular, the plaintiff had failed to mention the fact that he had sent out 2 letters containing sanctioned offers both dated 5 December 2017 but both coached in very different terms.

24.  The first sanctioned offer was made by a letter dated 5 December 2017, which was referred to by the plaintiff’s counsel in his skeleton submissions, where the plaintiff had offered to accept a sum of “HK$120,000 (inclusive of interest) plus costs on the District Court scale” (“the First Sanctioned Offer”).

25.  However, what the plaintiff had failed to mention in his June 2018 skeleton submissions is the important fact that the First Sanctioned Offer was superseded by a second sanctioned offer contained in a letter dated 5 December 2017 (but received by the defendant by fax on 6 December 2017 at 10:59 am only).  In this letter, the plaintiff offered to accept “HK$95,000 plus specified costs of HK$150,000” (“the Second Sanctioned Offer”).  It is to be noted also that, after receiving the First Sanctioned Offer, the defendant’s solicitors had acted in good faith and further negotiations took place between the parties.  A reply letter was sent by the defendant to the plaintiff on 5 December 2017 (“the Reply Letter”).  In the Reply Letter, the defendant’s solicitors have neither accepted nor rejected the plaintiff’s offer.  Instead, they reiterated their sanctioned payment of HK$90,000 was sufficient to satisfy the plaintiff’s claim.  They further asked the plaintiff’s solicitors what was their “agreed costs” so that they could take instructions from their client.  In my view, that was clearly an attempt on the part of the defendant to try to negotiate for an early settlement.

26.  On 13 December 2018, the plaintiff sent a letter to the defendant making a without prejudice offer of “HK$92,000 (inclusive of interest) plus costs of HK$70,400” in settlement of the whole of the plaintiff’s claim.  

27.  On 3 January 2018, the plaintiff produced another letter purporting to record the fact that the parties had reached a settlement (“the January Letter”).  In the January Letter, the plaintiff claimed that the parties had agreed to settle the damages in the sum of HK$92,000 and costs at HK$70,400.  The defendant said that no such agreement had ever been reached by the parties, something which has been belatedly conceded by the plaintiff’s solicitors in a second affirmation filed on 11 July 2018 after the June 2018 hearing.  

28.  What is really troubling to this court in this case is that the plaintiff had conveniently failed to mention the existence of the Second Sanctioned Offer, the Reply Letter and the January Letter in the skeleton submissions of his counsel lodged for the purpose of the original hearing fixed on 8 June 2018.

29.  However, as said, the original hearing on 8 June 2018 was adjourned due to the defendant’s failure to lodge his submissions and hearing bundles in time in accordance with the practice directions.  That hearing was adjourned to 10 August 2018 for substantive arguments with wasted costs to be borne by the defendant.  In the interim, the plaintiff took the opportunity to amend his summons to add after the paragraphs seeking enhanced interest rate to include the sentence of “or any other terms as the court deems fit” and to file the 2^nd affirmation of Au-Yeung Chi Sang, the plaintiff’s solicitor who handled the case. The latter clearly was filed in order to plug the holes which were created by the incomplete picture disclosed to the court under the skeleton submissions.  

Relevant legal principle

30.  Order 22 rule 24 of the RDC provides as follows:

“Costs and other consequences where plaintiff does better than he proposed in his sanctioned offer (O 22, r 24)

(1) This rule applies where –

(a) a defendant is held liable for more than the proposals contained in a plaintiff’s sanctioned offer; or

(b) the judgment against a defendant is more advantageous to the plaintiff than the proposals contained in a plaintiff’s sanctioned offer.

(2) The Court may order interest on the whole or part of any sum of money (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 requiring the leave of the Court.

(3) The Court may also order that the plaintiff is entitled to –

(a) his costs on the indemnity basis after the latest date on which the defendant could have accepted the offer without requiring the leave of the Court; and

(b) interest on those costs at a rate not exceeding 10% above judgment rate.

(4) Where this rule applies, the Court shall make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so.

(5) In considering whether it would be unjust to make the orders referred to in paragraphs (2) and (3), the Court shall take into account all the circumstances of the case including –

(a) the terms of any sanctioned offer;

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

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

(d) 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.

(6)   The power of the Court under this rule is in addition to any other power it may have to award interest.”

31.  Order 22 rules 24(5) contains an important provision which confers upon the court a discretion not to award indemnity interest where it would be unjust to do so.  In determining what is considered to be “unjust”, the court is to take into account of all the circumstances of the case, including the matters contained in under rule 24(5).

32.  In cases where the sanctioned offer contains terms as to costs, as in the present case under the Second Sanctioned Offer, it has been held that such an offer is not a valid one: see Mitchell & Ors v James & Ors [2003] 2 All ER 1064 at §§30-33; Lin Yanjin v Smart Billion Engineering Limited HCPI 739/2009, unreported, (Master Marlene Ng; 10 August 2011) at §§70-76.

Is the plaintiff entitled to enhanced interest in this case?

33.  I agree with Mr Lee that, given the less than frank attitude and the rather shadowy conduct of the plaintiff, coupled with the invalid Second Sanctioned Offer which contained terms as to costs, the starting point in dealing with costs of the assessment is that the usual costs consequences of O 22 r 22 do not apply.     

34.  It is most unfortunate that the plaintiff’s counsel saw fit to base his application for the variation of the costs order on an incomplete history record to the court.  The Second Sanctioned Offer was clearly a material fact which ought to have been disclosed for the court’s consideration at the original hearing.  Yet it was not included until the hearing was adjourned due to other reasons.  Had the plaintiff disclosed the full picture, it would have been clear to all parties concerned that he had no basis to ask for a costs order founded on O22 r24 (2) & (3).

35.  I also note the fact that the plaintiff’s First Sanctioned Offer was almost immediately responded to by the defendant, demonstrating a genuine attempt on his part to reach an early settlement.  However, due to the rather unrealistic and totally disproportionate amount of costs claimed by the plaintiff’s solicitors in the Second Sanctioned Offer, namely HK$95,000 damages (inclusive of interest) plus HK$150,000 agreed costs, such offer was incapable of being accepted.

36.  In my view, even if the Second Sanctioned Offer was a valid one, the costs to be allowed according to the rules would have been costs incurred up to and including to that point only, ie well before the assessment hearing.  Thus, it is clear that if all cards were placed on the table, there was simply no basis for the plaintiff to seek for a variation of the costs order as stated in the P’s Summons.

37.  I also agree with Mr Lee’s submission that the plaintiff’s conduct had all the hallmarks of showing that he was being less than honest and sincere in settling the case.  With respect, it seems to me that the plaintiff’s solicitors were more keen to secure their agreed costs rather than the amount of damages the plaintiff would able to obtain at the end of the day.  This has been amply demonstrated by the disingenuous way of them first asking for an agreed costs at HK$150,000 under the Second Sanctioned Offer, only to reduce it by more than half to HK$74,000 within a week later (as contained in their letter dated 13 December 2017). 

38.  I have no hesitation to reject the rather disconcerting oral submission made by the plaintiff’s counsel at the hearing that the Frist Sanctioned Offer was valid and all the other letters were merely “red herrings” and not relevant to the plaintiff’s application.  As seen from my analysis above, this simply could not be the case.  When further pressed by the court why they were merely red herrings, Mr Jim could only say that “there was room for improvement” in the plaintiff’s case.

39.  In my judgment, it is plain and obvious that the Second Sanctioned Offer had superseded the First Sanctioned Offer.  This was clearly demonstrated in the letter itself.  First, it was labelled as “2^nd Letter”.  Second, it has unequivocally rejected the defendant’s settlement offer at HK$90,000 plus costs.  Third, it purportedly “put forward” a new sanctioned offer “under Order 22 rule 4 and 5 of the Rules of District Court (sic)” and “to accept a sum of HK$95,000 (inclusive of interest) plus costs of HK$150,000”.  

40.  As the Second Sanctioned Offer contained terms as to costs, it was an invalid offer.  It therefore means that the plaintiff had not made a valid sanctioned offer capable of accepting by the defendant.  Thus, the purported Sanctioned Offer made by the plaintiff did not have the costs consequences as specified in O22 r 24 (2) & (3): see Lin Yanjin, supra at §72.

41.  In the aforesaid circumstances, I am of the view that O22 r 24(4) applies in this case.  It would, in my judgment, be unjust to award indemnity costs to the plaintiff based on O22 r 24 (2) and (3) in the absence of any valid sanctioned offer made by them in this case. 

42.  On the other hand, since the plaintiff has managed to beat the sanctioned payments made by the defendant in this case, he is still entitled to his costs of the assessment, albeit not on an indemnity basis with enhanced interest as specified under O22 r 24.  I therefore order that the costs order nisi will be made absolute, namely, the plaintiff will be entitled to the costs of the assessment on a party and party basis, with certificate for counsel, such costs to be taxed if not agreed.

43.  As to P’s Summons, I am of the view there is an element of the plaintiff being less than frank with the court regarding the Second Sanctioned Offer and the summons should not have been taken out in the first place.  I therefore would dismiss P’s Summons with costs on an indemnity basis in favour of the defendant, with certificate for counsel, such costs to be taxed if not agreed.