INDAH, VEBY MEGA v. OWT ASIA LTD

DCEC 1264/2020

[2021] HKDC 1137

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1264 OF 2020

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IN THE MATTER OF AN APPLICATION BETWEEN

	INDAH, VEBY MEGA	Applicant
and
	OWT ASIA LIMITED	Respondent

--------------------

Before: Her Honour Judge Levy in Chambers (paper disposal)

Date of Applicant’s Written Submissions: 30 July 2021

Date of Respondent’s Written Skeleton Submissions: 9 August 2021

Date of Applicant’s Written Reply Submissions: 17 August 2021

Date of Decision: 14 September 2021

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DECISION

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A. Background Facts

1.  This is the legally-aided Applicant’s application by summons (“Leave Summons”) for leave to appeal to the Court of Appeal against the Decision (“Subject Decision”) this court handed down on 28 May 2021^[1]. The Applicant is still represented by the same assigned solicitor, Ms Kwan Long Yee Corrina (“Ms Kwan”) of Messrs Ip, Kwan & Co (“IKC”). The Respondent, represented by the same solicitors, Messrs Boase, Cohen & Collins (“BCC”), opposed the Leave Summons. Unless otherwise specified, I will adopt the same nomenclature used in the Subject Decision.

2.  For better understanding of the Leave Summons, I will briefly summarize the relevant facts of the Subject Decision as follows.

3.  In this employees’ compensation claim, liability and its costs were disposed of by an interlocutory judgment (“IJ”) granted pursuant to an admission made under O 13A of the Rules of the District Court^[2]. In the IJ, the court awarded fixed costs of $6,500 on the issue of liability (“Fixed Costs”).

4.  After the Respondent paid a Sanctioned Payment into court, it stopped paying periodical payments to the Applicant. An issue of interim payment arose, and the parties eventually agreed the payment of $200,000 as an interim payment but disagreed over the question of whether the payment should be applied from the Sanctioned Payment, and one of the conditions, Condition 3, the Respondent required the Applicant to comply with. The Applicant then issued a summons for an interim payment (“IP Summons”).

5.  These proceedings were eventually settled by way of Consent Summons with the Acceptance by the Respondent of the Applicant’s Sanctioned Offer. The Respondent agreed to pay the costs of the Consent Summons, and costs having been incurred up to 30 October 2020, the date on which BCC revised IKC’s draft consent summons regarding the disputes over the provisions for costs. The Applicant contended that since these proceedings were settled by the Sanctioned Offer, the Applicant should be entitled to have “the costs of the proceedings” as stated in the provisions of O 22, r 21(1). The Respondent contended that costs should be limited to quantum since the costs of liability were already disposed of by the Fixed Costs (“Dispute 1”).

6.  Since the case was settled by the Consent Summons, the IP Summons was also agreed to be withdrawn with the Respondent paying its costs. The parties however disputed the basis of the costs. The Applicant applied for costs to be awarded on an indemnity basis (“Dispute 2”).

7.  The Applicant succeeded in her arguments on Dispute 1. I ordered the Respondent to pay the Applicant’s costs of the proceedings up to 30 October 2020 (including the Consent Summons) on a party and party basis (Subject Decision, Section E (1)). This court however made no order as to costs after 30 October 2020 in relation to Dispute 1 (Subject Decision, Section E (4)).

8.  The Applicant did not succeed in persuading this court to order the Respondent to pay indemnity costs for the IP Summons. Upon the Applicant having failed in Dispute 2, I ordered the Applicant to pay the Respondent’s costs in relation to the arguments for Dispute 2 (Subject Decision, Section E (3)).

B. The Leave Summons

9.  The Leave Summons filed on 10 June 2021 was issued pursuant to s 63 of the District Court Ordinance^[3]. It was supported by the 3^rd Affirmation of Ms Kwan (“Kwan’s 3^rd Affirmation”).

10.  It is not clear from the Leave Summons as to which orders the Applicant wishes to appeal against. It is only from IKC’s letter exhibited as “KLYC-11” to Kwan’s 3^rd Affirmation can it be gleaned that the Applicant is appealing against the two costs orders stated in Section E (3) and (4) of the Subject Decision respectively in relation to Disputes 2 and 1, which will be respectively referred to as “Dispute 2Costs Order” and “Dispute 1 Costs Order” in this Decision.

11.  For Dispute 1, I further made an order in Section E (5) of the Subject Decision disallowing legal aid taxation of the Applicant’s own costs after 30 October 2020. This order was referred to as the “No Legal Aid Taxation Order” (“NLATO”) in Kwan’s 3^rd Affirmation. The Applicant had concurrently filed in the Court of Appeal a Notice of Appeal against NLATO (“NLATO Appeal”) as of right without having to obtain leave. The Leave Summons does not concern the NLATO Appeal, but it will be referred to in the arguments (in Section F.2 below) in relation to Dispute 1 Costs Order.

12.  This court directed paper disposal of the Leave Summons. The written submissions and reply submissions of Mr Patrick Lim, the Applicant’s Legal Aid assigned counsel, and the opposing skeleton submissions of Mr Jeffrey Chau, the Respondent’s counsel, have been lodged.

C. A preliminary matter

13.  A preliminary issue has arisen from the 4^th Affirmation of Ms Kwan (“Kwan’s 4^th Affirmation”) the Applicant filed on 14 July 2021.

14.  The Respondent objected to the admissibility of Kwan’s 4^th Affirmation for the reasons that it was filed without leave of the court, and that it contained new evidence^[4]. Mr Chau suggested that it be considered on a de bene esse basis.

15.  In his contentions, Mr Lim stated that the new materials consisted of only two documents concerning the NLATO Appeal^[5], and that the rest of the evidence was from the documents extracted from the original hearing bundle.

16.  It is noted that the Respondent took issue not only with Kwan’s 4^th Affirmation, but also with Kwan’s 3^rd Affirmation in BCC’s letter dated 19 July 2021, contending that they were filed without leave. In the letter, the Respondent reserved its rights to challenge the admissibility and propriety of the Affirmations, and asked to be given a reasonable chance to respond.

17.  The only response the Respondent made is by Mr Chau’s opposition submissions. I note in agreement with Mr Lim that the bulk of the evidence in Kwan’s 4^th Affirmation was evidence previously before this court and the new evidence indeed comprises the documents relating to the NLATO Appeal, which are uncontentious as far as the disputes in the Leave Summons is concerned. Having regard to the fact that the Applicant would be relying on the NLATO Appeal to advance one of the grounds of the proposed reasons for leave to appeal against the Dispute 1 Costs Order, and that there is no evidence that the granting of leave to the Applicant to file Kwan’s 4^th Affirmation would cause any prejudice to the Respondent, I grant retrospective leave to the Applicant to file Kwan’s 4^th Affirmation, and its filing does stand.

18.  Despite the Respondent’s earlier objection to the filing of Kwan’s 3^rd Affirmation, that objection was no longer pursued.

D. Governing law and applicable principles

D.1 The statutory provisions

19.  The Leave Summons is pursuant to s 63A(2):-

“(2) Leave to appeal shall not be granted unless the judge … hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

20.  According to the commentary of the Hong Kong Civil Procedure 2021, Vol 1 (at §59/2A/4, pp1206-1207), the threshold test for the first limb of s 63A(2)(a) requires an applicant for leave to show that “he has an arguable case with reasonable chances of success on appeal.” It is insufficient to show that the appeal is “merely arguable” and “not fanciful”.

21.  As for the test concerning the second limb under s 63A(2)(b), it states that it is impossible to give an exhaustive list of the circumstances. Leave may be granted “if the question is one of general principle, decided for the first time; or a question of importance upon which further argument and a decision of the Court of Appeal would be to the public advantage”.

D.2 Principles governing an appeal against a costs order

22.  Since both the Disputes 1 and 2 Costs Orders are in the nature of costs orders, the consideration of the Leave Summons should further be guided by the principles set out in case of Chu Wai Leong v Leung Sum Kee^[6] (at §§30 and 31) which Mr Chau cited. Briefly stated, a costs order involves a discretion of a court, and it will only be overturned if palpable errors are made by the court. “[P]alpable errors are where the Judge has erred in principle, or did not exercise his discretion judicially having taken into account wholly extraneous and irrelevant matters, or the exercise of discretion was not based on facts or matters connected with or leading up to the litigation, or the decision was plainly wrong.” (per Kwan V-P at §31)

23.  The Dispute 2 Costs Order is more straightforward, I will therefore deal with it first.

E. Appeal against theDispute 2 CostsOrder

E.1 Arguments

24.  The reasons given for this costs order are set out in §41 of the Subject Decision, which order is a usual costs order of following the event.

25.  In his Written Submissions, Mr Lim only relied on §§10 to 12 of Kwan’s 4^th Affirmation, and referred to the Court of Appeal decision of King Royal Ltd v Lam Kwan Yuk^[7] as the authority that a District Court Judge, when granting leave to appeal, has no power to restrict the grounds which could be argued on the appeal.

26.  In Kwan’s 4^th Affirmation (at §§10 to 12), Ms Kwan stated that this court has failed to give effect to the legislative intent of s 10 of the Employees’ Compensation Ordinance (“ECO”) of curbing “irresponsible and oppressive conducts (sic)”. It was submitted that this court had wrongly overlooked the hardship and oppression caused to the Applicant brought about by the Respondent’s breach of s 10, ECO. It was also averred that the Respondent’s complaint and the court’s criticisms of the Applicant’s late disclosure of the Applicant’s two medical reports (exhibited as “KLYC-1” and “KLYC-2” to Kwan’s 1^st Affirmation) were not justified (see §§21, 31-32 of the Subject Decision) as these reports were not relevant to the Applicant’s entitlement to periodical payments under s 10 of the ECO.

27.  In his Skeleton Submissions, Mr Chau cited the authority of Town Planning Board v Society for Protection of the Harbour Ltd(No 2)^[8] at §§15-17 in suggesting that indemnity costs are awarded where there are some “special or unusual features” in a case. He stated that in determining whether to grant indemnity costs, this court’s primary task was to consider whether the Respondent’s conduct was unreasonable and oppressive. It was not necessary to determine whether the Applicant was technically entitled to periodical payments under s 10, ECO.

28.  Mr Chau argued that the Dispute 2 Costs Order is the usual costs order of following the event, and that the Applicant had failed to demonstrate that this court had failed to exercise its discretion judicially.

29.  Regarding King Royal Ltd which Mr Lim cited, Mr Chau contended that Mr Lim’s reliance on this authority was misplaced. The Court of Appeal in that case had only decided that there was no power for a District Judge to limit grounds of appeal when giving leave. The disposal of this Leave Summons does not concern limitation of grounds of appeal but concerns whether to grant leave to appeal against two separate costs orders – Disputes 1 and 2 Costs Orders.

30.  In the Reply Submissions, Mr Lim argued that this court’s refusal to make an indemnity costs order is tantamount to condoning an employer’s breach of the payment obligations under s 10, ECO if a sanctioned payment that is sufficient to settle all claims of compensation has been made by the employer: see Reply Submissions, §9.

31.  In Reply to Mr Chau’s submissions regarding King Royal Ltd and TownPlanning Board, Mr Lim seems to additionally suggest that this court’s refusal in Section E (2) of the Subject Decision to grant indemnity costs in favour of the Applicant of the IP Summons has also fallen into error notwithstanding that the Leave Summons is not concerned with the said costs order.

32.  In reply to Mr Chau’s submissions (that indemnity costs would only be awarded where there are some “special or unusual features), Mr Lim submitted that after Huge Dragon Corp Ltd v Incorporated Owners of Lung Mun Oasis^[9], the test for an indemnity costs order has been revised to a more liberal test.

E.2 Any reasonable prospect of success?

33.  Extensive submissions have been put forward on behalf of the Applicant in relation to the Respondent’s breach of its s 10 obligations under the ECO. They went as far as suggesting that this court’s refusal to order the Respondent to pay indemnity costs was tantamount to condoning the latter’s alleged flagrant breach, and was a disregard of the legislative intention of the s 10, ECO.

34.  In respect of the Applicant’s submissions regarding s 10, ECO, I think Mr Chau made a compelling argument that the primary task of the court in the costs disputes of the IP Summons was to determine if the Respondent had acted oppressively and unreasonably in the circumstances leading to the issuance of the IP Summons. It was not the duty of the court to determine the issue of periodical payments.

35.  As summarized in Section A above, the circumstances leading to the issuance of the IP Summons was due to the parties’ disagreements over the Respondent’s request for applying the Sanctioned Payment for the payment of the interim payment, and one of the four conditions, Condition 3, the Respondent had required the Applicant to comply with: see the Subject Decision §§12-14. This issue before me, as Mr Chau has succinctly put, was plainly not about whether the Respondent has provided any “reasonable excuse” in respect of its payment obligations under s 10(10) of the ECO. I therefore do not think that the Applicant’s submissions regarding s 10, ECO, have merits.

36.  This Leave Summons does not concern court’s refusal to grant an indemnity costs order. It is therefore strictly unnecessary to deal with the arguments on the criteria of the grant of indemnity costs. Out of deference to the diligence of counsel, I will simply state that the Court in Town Planning Board did not restrict the circumstances for the making of indemnity costs to cases of “special or unusual features”. It in fact reiterated the broad discretion a court had “to determine how costs should be paid and whether indemnity costs should be ordered”.^[10]

37.  Pertinently, it is noted that the Applicant has not provided any reasonable arguments demonstrating how the Dispute 2 Costs Order granted on the principle of “costs follow the event” was an improper deviation from the usual position of ordering a losing party (the Applicant) to pay the costs of the succeeding party (the Respondent).

38.  I am in agreement with Mr Chau’s submissions. The issue of the limitation of grounds concerning King Royal Ltd Mr Lim referred to does not arise in relation to the Leave Summons, which concerns two separate and distinct costs orders.

39.  In the circumstances, I am not satisfied that the Applicant has demonstrated that she has a reasonable prospect of success in the Leave Summons regarding the Dispute 2 Costs Order.

F. Appeal against the Dispute 1 Costs Order

F.1 “Any prospect of success”

F.1.1 Arguments

40.  The Dispute 2 Costs Order was an order following the event. However, the Dispute 1 Costs Order was a departure from the usual costs order. The reasons for the departure is set out in §§62, 63, 64, 65, 66, 67 and 71 of the Subject Decision.

41.  In Kwan’s 4^th Affirmation, Ms Kwan repeated the correspondence exchanges previously adduced at the substantive costs arguments. Broadly, it was stated that the Applicant had all along taken a pragmatic approach in resolving the costs disputes. The disputes were necessitated by the ignorance on the part of BCC as to the legal position of O 22, r 21. It was further stated that since there was no evidence before the court in showing how the Applicant could have claimed more costs than the subsisting Fixed Costs, the court was therefore wrong in accepting that BCC’s concern and anxiety over the alleged claiming by the Applicant for more costs was justified.^[11]

42.  In his submissions, Mr Lim basically repeated the Applicant’s position set out in the preceding paragraph. It was submitted “IKC’s wrong averment in their letter dated 30 October 2020 was immediately corrected on the same day (Subject Decision §63). It is unfair to put the blame on the Applicant and her solicitor”.

43.  It was further pointed out that this court had misconstrued the Applicant’s position on the Fixed Costs entitlement (Mr Lim’s Written Submissions at §20). Mr Lim also stated that the Applicant’s said stance was clearly underlined by Ms Kwan’s letter to BCC stating that ‘ “the Taxing Master will always be able to tax the costs of proceedings having regard to the costs order already made” and [the Applicant] has all along made it clear that she did not seek taxed costs on liability” ’. Mr Lim therefore argued that there was no reasonable justification for the Respondent’s “concern” for paying more costs to the Applicant on liability. The Applicant was right to insist on using the wording of O 22, r 21(1) in view of the misguided view held by the Respondent.

44.  In opposing the Leave Summons, Mr Chau argued that the Applicant has failed to put forth any meritorious reasons for the appeal. It was contended that the overall circumstances of this case wholly justified the discretion exercised by this court in making an order as to no costs after it had concluded that both parties were equally responsible for the O 22, r 21 disputes: Wong Wai Wing v Mang Fan Lin^[12] and YBL v LWC (No 2)^[13].

45.  Mr Chau submitted that the court’s accepting of the Respondent’s concern that the Applicant was seeking more costs should be viewed in the context of the combative and aggressive attitude of the Applicant/her solicitor as found by this court.

46.  Mr Chau also stated that despite the Applicant’s acknowledgement of the mistake of the extent of the costs covered by the Fixed Costs, the Applicant nonetheless maintained that her rights to be paid the costs of the whole proceedings (liability and quantum) had not been affected^[14].

47.  In fortification of his submissions that the Respondent’s concern in relation to costs beyond Fixed Costs was totally justified, Mr Chau stated (Skeleton Submissions §46) that it was not uncommon for a court to make an order by expressly limiting costs to quantum only. He cited, by way of example, Riasat Ali v Kenwa Industrial (HK) Ltd^[15] and Kaur Paramjit v Li On Na^[16].

F.1.2 Discussion

48.  I will first state that the two cases Mr Chau referred to in the preceding paragraph are irrelevant and will be disregarded. The costs orders granted in the two cases that Mr Chau relied on were stated as “costs of assessment of compensation”. However, these costs orders were the usual orders made after a trial of assessment of compensation. In the instant case, the disputes arose from a fixed costs order granted pursuant to O 13A, and the attendant arguments over the statutory provisions of O 22, r 21(1).

49.  As the Dispute 1 Costs Order is a departure from the usual starting point, it will be instructive to set out the applicable legal principles stated in the Court of Appeal decision of YBL (supra) cited by Mr Chau:-

“[10] …

(a) whilst the courts often start with the proposition of costs following event, it is no longer a general rule but a starting point …

(b) there have to be some justifications for depriving a successful party of his costs;

(c) in measuring who is the successful party and the extent of his success, the court must examine the reality and justice of the case. …;

(d) in addition, under O.62 r.5, the court in exercising its discretion shall take into account the matters set out in r.5(1) as may be appropriate in the circumstances;

(e) Rule 5(2) highlights some conduct which the court may take into account including whether it is reasonable for a party to take an issue, the manner in which the matter was pursued or defended, the extent of success, and conduct before, as well as during the proceedings;

(f) if a successful party has brought the litigation upon himself or has done some wrongful act in the course of the transaction, he could be deprived of his costs.” (per Lam V-P)

50.  The main plank of the Applicant’s arguments is that it is not justifiable for this court to have faulted the Applicant when the O 22, r 21 disputes were caused by the ignorance of the Respondent/BCC as to the proper interpretation of the wording of “costs of the proceedings” provided in O 22, r 21(1). In gist, the Applicant argued that since the Applicant had no power to override the Fixed Costs, and had in fact readily accepted and corrected the mistake regarding her costs entitlement, this court was wrong to have overlooked the root cause of the disputes.

51.  It is true that the Applicant had acknowledged the mistake she had initially made on the extent of the costs under the Fixed Costs. However, the Applicant, as Mr Chau contended, had continued to conduct herself in a manner that created a genuine concern on the Respondent/BCC; that the Applicant could somehow find a way to claim more costs beyond quantum (see the Subject Decision §66).

52.  It cannot be gainsaid that the Applicant’s entitlement to costs on liability was bound by the Fixed Costs. The Applicant’s reliance on the irrefutable binding nature of the Fixed Costs to advance her arguments that the court was wrong to have accepted the Respondent’s “concern” as justified, in my view, was merely done with hindsight.

53.  Indeed, when the Applicant’s conduct is examined in context, quite a different picture emerges. Despite their recognition that the costs on liability were already fixed by the Fixed Costs, IKC had on no occasions clarified to BCC that their proposed wording of “costs of the proceedings” was merely to follow the statutory provisions of O 22, r 21(1) rather than as an enabling vehicle for the Applicant to claim costs beyond quantum.

54.  All in all, I find that the Applicant’s reasons for the intended appeal are mostly a rehashing of the background facts and the submissions made only with the advantages of hindsight. In conclusion, therefore, I am not persuaded that the Applicant has demonstrated reasonable merits in the Leave Summons.

F.2 Some other reason in the interests of justice

55.  The relevant criteria for the grant of leave on the second limb of s 63A(2) of “some other reason in the interests of justice” stated in the UK case of Smith v Cosworth Casting Processes Ltd [1997] 1 WLR 1538 were recapitulated by the Hong Kong Court of Appeal in Ma Bik Yung v Ko Chuen^[17] cited by Mr Chau as follows.

“[5] …

‘1. …

2. The court can grant the [leave] application even if it is not so satisfied. There can be many reasons for granting leave even if the court is not satisfied that the appeal has any prospect of success. For example, the issue may be one which the court considers should in the public interest be examined by this court or, to be more specific, this court may take the view that the case raises an issue where the law requires clarifying.”

56.  The Applicant relied on the NLATO Appeal to ground her arguments. However, the Applicant’s reasoning under this limb is a bit difficult to follow. It is submitted that irrespective of the outcome of the NLATO Appeal, the Applicant’s compensation would likely be diminished if the Applicant is denied leave and a chance to successfully overturn the Dispute 1 Costs Order on appeal. She therefore submitted that it is in the interests of justice that the Applicant should get leave to appeal so that she be given an opportunity to overturn the Dispute 1 Costs Order.

57.  In his contentions, Mr Chau argued that the Applicant’s reliance on the second limb was not easily understood as the Applicant did not demonstrate why the financial implication on the legally aided Applicant would constitute “reason in the interests of justice”.

58.  Therefore, in order to test the validity of the Applicant’s arguments, it will be useful to examine the possible implications of the result of the NLATO Appeal on the Applicant on the existing Dispute 1 Costs Order.

59.  In the event of a successful NLATO Appeal, the NLATO disallowing legal aid taxation will be overturned and replaced with a direction for the Applicant’s own costs be taxed. Since the Dispute 1 Costs Order is an order of no costs for the costs of Dispute 1 after 30 October 2020, the Applicant’s own costs having been personally incurred by the Director of Legal Aid, including the costs of IKC, for this portion will be taxed and be paid from the compensation she had received. Thus a successful outcome may likely have an adverse financial implication on the Applicant.

60.  Conversely, if the NLATO Appeal fails, the NLATO will then remain intact – no Legal Aid taxation for costs after 30 October 2020 for Dispute 1. This means that the statutory route that enables the Applicant’s assigned solicitors to tax their costs is not available. IKC will suffer financially as a consequence. In such instance, a failed outcome may have more adverse effect on IKC rather than the Applicant personally.

61.  Thus analyzed, it seems that the bringing of the NLATO Appeal may have been more for the benefit of the assigned solicitors than for the preservation of the Applicant’s compensation. I agree with Mr Chau that neither the financial implication of the NLATO Appeal, if any, on the Applicant nor the Respondent’s neutral stance in the NLATO Appeal constitutes good reasons for the grant of leave.

62.  In the circumstances, whilst I accept Mr Lim’s Reply Submissions that Ma Bik Yung did not intend to set out an exhaustive list for the consideration of the second limb for leave to appeal, I do not accept, from the above analysis, that the Applicant’s NLATO Appeal constitutes a good reason in the interests of justice to grant leave under the second limb.

G. Disposition

63.  For the reasons stated above, I decline to grant leave to the Applicant to appeal, and dismiss the summons.

64.  I grant a costs order nisi that the Applicant do pay the Respondent’s costs of the summons, with certificate for counsel, to be taxed if not agreed. The Applicant’s own costs are to be taxed in accordance with the Legal Aid Regulations. This nisi order shall become absolute unless an application is made to vary it within 14 days of the handing down of this Decision.

65.  Lastly, I wish to thank Mr Lim and Mr Chau for their assistance rendered to this court.

	( Katina Levy )
	District Judge

Mr Patrick D Lim, instructed by Ip, Kwan & Co, assigned by the Director of Legal Aid, for the applicant

Mr Jeffrey Chau, instructed by Boase, Cohen & Collins, for the respondent

DCEC 1264/2020

[2021] HKDC 617

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 1264 OF 2020

________________________

IN THE MATTER OF AN APPLICATION BETWEEN

	INDAH, VEBY MEGA	Applicant
	and
	OWT ASIA LIMITED	Respondent

________________________

Before:  Her Honour Judge Levy in Chambers (Open to Public)

Date of Hearing:  27 January 2021

Date of Applicant’s Supplemental Written Submissions:  17 February 2021

Date of Respondent’s Supplemental Submissions:  3 March 2021

Date of Applicant’s Note of Reply to the Respondent’s Supplemental Submissions dated 3 March 2021:  4 March 2021

Date of Decision:  28 May 2021

________________________

DECISION

________________________

A.  Background facts

1.  On 8 July 2020, the Applicant, through her Legal-Aid assigned solicitors, Messrs Ip, Kwan & Co (“IKC”), filed these employees’ compensation proceedings against the Respondent pursuant to the Employees’ Compensation Ordinance[1].

2.  On 28 July 2020, the Respondent, through its solicitors, Messrs Boase Cohen & Collins (“BCC”), filed an admission in the prescribed Form No 16C in accordance with O 13A, r 6(2) of the Rules of the District Court[2], admitting liability for the whole claim but wanting the court to decide the amount of compensation payable.

3.  On 24 September 2020, the Applicant obtained an interlocutory judgment (“IJ”) upon her request for judgment, with costs fixed at “$6,500 on liability issue” (“Fixed Costs”).  On the same day, she also issued a summons for interim payment (“IP Summons”), which was fixed to be heard on 11 December 2020.

4.  On 13 November 2020, before the hearing of the IP Summons, the Applicant filed a consent summons (“Consent Summons”) by which the total amount of compensation was agreed at $1,246,549.79 (“Agreed Compensation”), which was in fact the amount the Applicant offered in her sanctioned offer (“Sanctioned Offer”) made on 9 October 2020 pursuant to O 22.  The Sanctioned Offer was accepted by letter on 28 October 2020 (“Acceptance”).

5.  The Agreed Compensation, according to §2 of the Consent Summons, was made up of (i) an advance payment of $176,549.79 (“Advance Payment”) already received by the Applicant; (ii) the interim payment of $200,000 (“Interim Payment”) which the Respondent made to the Applicant on 6 November 2020; and (iii) the sanctioned payment in the sum of $870,000 (“Sanctioned Payment”) which the Respondent paid into court on 4 September 2020.

6.  With the settlement of the entire proceedings, the IP Summons was agreed to be withdrawn with costs to be paid by the Respondent. However, the Respondent objected to the Applicant’s application for indemnity costs.

7.  The second remaining dispute concerns the costs of the proceedings which the Applicant sought.  The Respondent contends that since the Fixed Costs were already granted for the costs on liability, the Applicant should not be entitled to the costs of the proceedings when the remaining issue on quantum was settled by the Respondent’s Acceptance of the Sanctioned Offer.

8.  The parties are at loggerheads over these two costs disputes despite the court’s directions urging the parties to make endeavours to settle the matter.

B.  Affidavit Evidence

9.  Altogether there was one affidavit and three affirmations filed in relation to the costs disputes.  Mr Teddy Lam of BCC had prepared one affirmation dated 26 November 2020 (“Lam’s Affirmation”).

10.  For the Applicant, there are the:-

(i)  Affirmation of Kwan Long Yee Corrina (“Ms Kwan”) of IKC filed on 24 September 2020 in support of the IP Summons (“Kwan’s 1^st Affirmation”);

(ii)  Affidavit of the Applicant filed on 2 November 2020 in support of her application for indemnity costs against the Respondent; and

(iii)  Second Affirmation of Ms Kwan (“Kwan’s 2^nd Affirmation) filed on 31 December 2020 in reply to Lam’s Affirmation.  This is a bulky document, running to 31 pages with a 334-page exhibit, “KLYC-10”.

C.  Whether the Applicant should get indemnity costs for the withdrawn IP Summons?

C.1  Circumstances leading to the issuance of the IP Summons

11.  There is no dispute that the Respondent paid periodical payments until 7 August 2020.  After the Respondent had paid the Sanctioned Payment on 4 September 2020, it stopped paying the Applicant periodical payments.

12.  After several exchanges of correspondence between the solicitors, the parties were able to agree to an interim payment of $200,000 being paid out from the Sanctioned Payment as well as 3 of the 4 conditions BCC stated in their letter of 22 September 2020.  IKC agreed to conditions 1, 2 and 4 respectively about deduction of the interim payment from the compensation; taking the interim payment into account for the calculation of interest; and repayment of the interim payment or any part thereof in excess of the total compensation awarded.

13.  IKC could not agree to condition 3 (“Condition 3”) by which the Respondent wanted to have the amount of the Sanctioned Payment remaining unchanged after the payment of the $200,000 interim payment from it. IKC took the view that the amount of the Sanctioned Payment should be reduced by the amount of the interim payment of $200,000.

14.  As the differences could not be resolved despite correspondence and telephone exchanges, the IP Summons was issued.

15.  As stated above, the IP Summons was overtaken by the Consent Summons after the Respondent accepted the Sanctioned Offer and paid the Interim Payment before its scheduled hearing on 11 December 2020.

C.2  Discussion

16.  It is not disputed that indemnity costs will only be awarded against a party where the conduct of a party to proceedings is scandalous or vexatious, or where the party had initiated or prosecuted proceedings maliciously, or for an ulterior motive, or in an oppressive manner: Hong Kong Civil Procedure 2021 (“HKCP”), Vol 1,at §62/App/12.

17.  The Applicant argued that the Respondent was clearly in breach of its obligation under s 10 in having failed to pay her periodical payments.  Ms Kwan stated (in Kwan’s 2^nd Affirmation) that when the Applicant eventually received the Interim Payment, the Applicant had effectively not been paid for an interval of 3 months between the last periodical payment on 7 August 2020 and the receipt of the Interim Payment on 6 November 2020.

18.  Ms Kwan therefore submitted that the IP Summons could have been avoided if the Respondent had continued paying periodical payments.  By imposing the four conditions, and in insisting on Condition 3, Ms Kwan stated that the Respondent conducted the proceedings oppressively and with ulterior motive when it imposed the four conditions with a view to gain tactical advantage by pressuring the Applicant “to accept the ‘underpaid’ Sanctioned Payment”: Kwan’s 2^nd Affirmation at §63.

19.  Ms Kwan believed that the Respondent had only consented to pay the Interim Payment and to accept the Sanctioned Offer after the Applicant lodged a complaint to the Labour Department against the Respondent for having failed to pay her periodical payments.

20.  Mr Lam denied the above allegations, and maintained that the Respondent had acted reasonably throughout, intent in settling the disputes amicably.

21.  Mr Lam stated that BCC had already, before the commencement of these proceedings, as early as 17 April 2020, requested IKC to provide the Applicant’s medical records and notes.  IKC challenged the basis of these requests and refused disclosure.  It was only when Ms Kwan exhibited the Applicant’s two medical reports prepared by the Department of Ophthalmology and the Department of Psychiatry of Pamela Youde Nethersole Eastern Hospital respectively dated 19 March and 6 March 2020 to Kwan’s 1^st Affirmation as “KLYC-1” and “KLYC-2” did it become apparent to BCC that the Applicant was already in possession of these reports 4 months before the commencement of these proceedings.

22.  Mr Lam stated that despite the Applicant’s failure to disclose her medical records, the Respondent nonetheless made the Sanctioned Payment at a very early stage after filing its O 13A admission.

23.  It was suggested that the Applicant’s refusal to disclose her medical records entitled the Respondent to stop paying the Applicant periodical payments after the Sanctioned Payment was made.  This was because the Sanctioned Payment was expressly stated to be in settlement of whole of the Applicant’s claim (inclusive of interest), and also after having taken into account the Advance Payment the Applicant had already received.  Hence, the payment of the Sanctioned Payment would have included all the compensation for her claim, including periodical payments.

24.  It was submitted that the Respondent’s reasonable conduct could clearly be evidenced by BCC having taken the initiative on 15 September 2020 in suggesting that the interim payment be paid out of the Sanctioned Payment.  The Respondent also later agreed on 22 September 2020 to have the $200,000 interim payment paid out from the Sanctioned Payment.

25.  As for the disputed Condition 3 imposed by the Respondent, Mr Lam submitted that the Respondent acted reasonably in insisting on this condition as the Court of Appeal in Kan Wai Ming v Hong Kong Airport Services Ltd[3]had authoritatively held (at §32) that an employee’s compensation for temporary incapacity under s 10 cannot be set off against his compensation under s 9 (for permanent incapacity).

26.  Given that the Applicant’s monthly periodical payment at the material time was $14,500, and further that the Applicant had not yet disclosed any medical reports before the filing of Kwan’s 1^st Affirmation, the agreed sum of $200,000 was not only substantial, it was in fact periodical payments made in advance.  Mr Lam disagreed with Ms Kwan’s allegation made in her submission (at §55) that the Respondent had “cornered” the Applicant into accepting the 4 conditions.

27.  Mr Lam further submitted that the Respondent’s Condition 3 would not have prejudiced the Applicant.  This is because it is established that a court, when deciding whether an award was beaten by a sanctioned payment, would take into account any amount of interim payment having been paid out from it: see Lam Po Yee & Anor v Dr Chan Yee Shing aka Dr Chan Yee Shing Alvin[4], in which IKC were coincidentally the plaintiffs’  solicitors.

28.  Having considered the circumstances giving rise to the issuance of the IP Summons, I do not agree with the Applicant’s allegations that the Respondent had acted unreasonably or oppressively.

29.  The basis of the Applicant’s complaint of unreasonable conduct against the Respondent was its ceasing to pay her periodical payments after the Sanctioned Payment was made.  To underline the alleged seriousness of the Respondent’s stopping of paying periodical payments, Ms Kwan in her submissions referred to a large volume of materials in relation to the legislative intent of s 10.

30.  With respect to Ms Kwan, I do not think that the references to such massive materials such as documents on the legislative processes of the Employees’ Compensation (Amendment) Bill as well as the related authorities[5] are helpful to this court to resolve the matter in dispute.

31.  Since it is not in dispute that the Respondent stopped paying periodical payments in the month following the making of the Sanctioned Payment, I believe that it is necessary to examine the Respondent’s reason for having stopped the payments.  Pertinently, I find the fact of the Sanctioned Payment, and the Applicant’s refusal to disclose the said medical reports exhibited to Kwan’s 1^st Affirmation before the issuance of the IP Summons, is significant. Apart from IKC’s challenge in their letter[6] to the requests for medical reports, IKC had not explained why the said reports were only disclosed when issuing the IP Summons, but not before.

32.  The Applicant in fact relied on these medical reports to support her application for interim payment, and they are therefore highly relevant.  The 19 March report gave information concerning the Applicant’s eye injury while the 6 March report gave information concerning the Applicant’s psychiatric conditions.

33.  Since the Respondent was not provided with these important medical reports before the IP Summons, the Respondent, in my view, was justified to have been concerned with the possible injustice of an overpayment of periodical payments (see Kan Wai Ming, supra).  The amount of $200,000 the Respondent agreed to pay as interim payment in fact amounted to roughly one year of periodical payments to the Applicant.  Mr Lam was correct in stating that the amount represented an advance payment already. Seen in this way, I am of the view that the Respondent had provided a wholly reasonable excuse for stopping periodical payments after the Sanctioned Payment had been made, which Sanctioned Payment was clearly made to try to settle the whole claim, including periodical payments.

34.  Contrary to Ms Kwan’s allegation that the Respondent was acting oppressively, I find that the Respondent had indeed been the more reasonable party in this matter, which is evidenced by the suggestion of payment of interim payment from the Sanctioned Payment out of BCC’s own volition on 15 September 2020, and its agreement on 22 September 2020 to the amount of $200,000 as IKC suggested.

35.  I do not think that the four conditions BCC imposed were unreasonable conditions, three of which IKC in fact accepted without demur.  As for the contentious Condition 3, the stumbling block to the parties’ reaching of an agreement in relation to the logistics of the payment of interim payment, Lam Po Yee (supra) clearly shows that the disputes are otiose.  Since the amount of the payment out from the Sanctioned Payment would have to be taken into consideration when considering the costs consequence under O 22, Ms Kwan’s insistence that the amount of the Sanctioned Payment should have been expressly stated to have been diminished by the amount of the interim payment clearly serves no useful purpose.

36.  From the contents of the correspondence exchanged, and Ms Kwan’s submissions, I was under the impression that the Applicant / Ms Kwan had on the whole been very combative when dealing with the Respondent / BCC.  Such conduct probably unfortunately created a lot of unnecessary disputes.  The lodging of a complaint against the Respondent for its non-payment of the periodical payments by IKC’s letter on 30 September 2020[7] to the Labour Department, alleging the Respondent of the breach of s 10(10) is a good illustration.

37.  In the letter to the Labour Department (which I believe was probably drafted by Ms Kwan), IKC seem to have omitted a lot of background facts.  No disclosure was made about the fact that the Respondent had made the Sanctioned Payment to settle the whole claim when the periodical payments were stopped.  Pertinently, the Labour Department was not informed that the IP Summons in relation to the non-payment of the periodical payments had been issued and that the hearing date had been fixed for December 2020.

38.  In my view, IKC had clearly presented to the Labour Department a biased and misleading version of events.  As expected, the Labour Department, after having received the response / explanation from BCC, concluded that no action would be taken and had, rightly in my view, deferred the disputes to the court’s adjudication.

39.  I find it astonishing for Ms Kwan to have accused BCC of having misled the Labour Department when BCC only told the latter the truth about the pending hearing of the IP Summons.  There is no basis, in my view, to support Ms Kwan’s allegation that the Labour Department had been deterred from pursuing the investigation as a result of BCC’s response.  I’m more inclined to the view that the lodging of the complaint to the Labour Department was probably motivated by spite.  It might have also been used as a means of exerting pressure on the Respondent to accept the Sanctioned Offer which the Applicant might have been thinking of making.

40.  In the circumstances, I am unable to find any conduct that justifies my exercise of discretion in making an indemnity costs order.  I therefore decline to do so and order costs payable to the Applicant on the usual party and party basis.

41.  Since the Applicant failed to obtain an indemnity costs order in her favour, I consider that it is just to order her to pay the Respondent’s costs of and occasioned by the arguments relating to the indemnity costs issue.

D.  Whether the Applicant is entitled to the costs of the proceedings?

D.1  The parties’ positions

42.  In the Sanctioned Offer, the Applicant expressly stated that it was made pursuant to O 22.  When accepting the Sanctioned Offer, the Respondent had not stated in its Acceptance that the acceptance was not within O 22.  In the circumstances, I consider that it is beyond argument that the Sanctioned Offer and the Acceptance were made and accepted within the O 22 regime.  Since the Sanctioned Offer was made by the Applicant, the governing rule for the costs consequences should therefore be r 21(1): “Costs consequences of acceptance of plaintiff’s sanctioned offer”, which provides:-

“Where a plaintiff’s sanctioned offer to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date upon which the defendant serves notice of acceptance, unless the Court otherwise orders.” (Emphasis is added)

43.  The words that I have underlined underscore the parties’ disputes in the following ways.

44.  For the Applicant, it was submitted that pursuant to r 21(1), “costs of the proceedings” is the usual costs consequence “unless the Court otherwise orders” (“Otherwise Proviso”).  The Applicant therefore stated that in the absence of any circumstances that justified a departure from the usual costs order of “costs of the proceedings”, the Applicant should be entitled to the costs of these proceedings consequent on the Respondent’s Acceptance of the Sanctioned Offer.

45.  On the other hand, the Respondent contended that since the issue of liability was already disposed of by the IJ and the Fixed Costs, the costs should be expressly stated to be confined to quantum, which costs order would better reflect the real outstanding costs.  Thus, the Respondent only agrees to pay the Applicant’s costs (limited to quantum), including the costs of the Consent Summons, up to 30 October 2020, on which date BCC amended IKC’s draft costs order of “the Respondent do pay the Applicant the costs of these proceedings” stated in the latter’s draft consent summons to “the Respondent do pay the Applicant the costs on the issue of quantum” (“Amended Draft”).

D.2  The Applicant’s arguments

46.  The main authority in support of the Applicant’s arguments, is Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd[8], which was later followed by RBA Far East Ltd v Yuen Chak Hang Edward & Ors[9].

47.  Etratech Asia-Pacific Ltd was concerned with the costs consequence of the acceptance of a defendant’s / respondent’s sanctioned offer or sanctioned payment under O 22, r 20(1) of the Rules of the High Court (which rule is identical to O 22, r 20(1)).  Ms Kwan stated that the ratio stated in that case could be applied mutatis mutandis to O 22, r 21(1) as the key wording that where a defendant’s sanctioned offer or sanctioned payment “to settle the whole claim is accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date of serving notice of acceptance, unless the Court otherwise orders” is identical in both r 20(1) and r 21(1).

48.  In Etratech Asia-Pacific Ltd, Poon J (as he then was) stated:-

“[18] In my view, O.22 r.20(1) plainly envisages that upon acceptance of the sanctioned payment or sanctioned offer, the plaintiff is, as a prima facie rule, entitled to his costs of the proceedings up to the date of serving notice of acceptance. The prima facie rule may, however, be displaced when the court orders otherwise by applying the Otherwise Proviso.

[19] …

[20] By virtue of the Otherwise Proviso, the court retains the discretion to depart from the prima facie rule where necessary. But the discretion should only be exercised in exceptional circumstances that clearly warrant a different costs order. Otherwise, the certainty as to costs consequences created by the prima facie rule, one of the very important features underpinning the effectiveness of sanctioned payments and sanctioned offers, will be greatly diminished.

[21] While it is impossible and indeed imprudent to exhaustively state the exceptional circumstances that justify the departure from the prima facie rule, which by definition must be rare, the burden rests squarely on the party seeking to invoke the Otherwise Proviso to establish such circumstances.  The court will not lightly displace the prima facie rule until and unless the applicant has discharged the burden to its satisfaction.”

49.  Later in RBA Far East Ltd, Bharwaney J, when deciding whether the Otherwise Proviso under O 22, r 21(1) of the Rules of the High Court should be applied so as to deny the plaintiff’s costs up to the acceptance of the defendant’s sanctioned offer, agreed that the approach stated in Etratech Asia-Pacific Ltd was the proper approach, stating that:-

“[19] I agree with the recent of observations of Poon J on the proper approach to follow when faced with an application to apply the ‘Otherwise Proviso’ … Under r 21(1), where a plaintiff’s sanctioned offer to settle the whole claim as accepted without requiring the leave of the Court, the plaintiff is entitled to his costs of the proceedings up to the date on which the defendant served notice of acceptance. These prima facie costs consequences follow upon the stated event ‘unless the court otherwise orders’ (the Otherwise Proviso). In his judgment in Etratech Asia-Pacific Ltd v Leader Printed Circuit Boards Ltd [2013] 4 HKC 282, Poon J analysed the legal position and concluded that the prima facie rule in O 22 r 20(1) should apply unless (1) the defendant discharges the burden of showing exceptional circumstances that justify a departure; and (2) he has given a prior warning to the plaintiff that he will apply to invoke the Otherwise Proviso upon acceptance of the sanctioned payment or sanctioned offer. In my judgment, the same applies with regard to r 21(1) under which the defendant has to give a prior warning to the plaintiff that he would apply to invoke the Otherwise Proviso when he serves his notice of acceptance of the plaintiff’s sanctioned offer.”

50.  Based on the principles stated in the above-mentioned authorities, Ms Kwan suggested that the Respondent would first be required to give prior warning to the Applicant that it would invoke the Otherwise Proviso when the Acceptance was given.  All the Respondent stated however in the Acceptance was that the Respondent would pay “costs to be taxed if not agreed”.

51.  Not only had the Respondent failed to give the prior warning as required, Ms Kwan also submitted that the Respondent has not put forth any exceptional circumstances in justifying a departure from the prima facie costs provision provided in r 21(1).

52.  In any event, pursuant to O 62, r 10(5)[10], an order for the costs of the proceedings, Ms Kwan submitted, shall be deemed to have automatically been made upon the Acceptance on 28 October 2020 in settling the whole claim.

D.3  The Respondent’s arguments

53.  In Mr Lam’s lengthy submissions in both his Skeleton and Further Submissions, he made a number of points.  He submitted that the costs consequences of r 21(1) only apply to a situation where a plaintiff’s / applicant’s sanctioned offer is made to settle “the whole claim”.  The “whole claim”, according to O 22, r 1(2)(a)[11] must have meant liability and quantum: see Mr Lam’s “Supplemental Skeleton Submission”.

54.  In the present case, the Sanctioned Offer was made not to settle the “whole claim”, but to settle the remaining part of the claim, i.e. quantum only.  Hence, the Applicant should not be entitled to “the costs of the proceedings”, but only to the costs relating to quantum.

D.4  Analysis

55.  After an interlocutory judgment is entered against a defendant for damages to be assessed, the form of the order for the final award for damages can be found in the prescribed court form - Appendix A to the HKCP, Court Forms, Form No 43.  Mr Lam’s proposed costs order in the Respondent’s Acceptance for “costs to be taxed” seems to have followed this Court Form.

56.  Obviously, the above costs order specified in Form No 43 is an order a court gives after an assessment hearing, which is not the situation here.  In the present situation, the remaining quantum is disposed of through the O 22 procedure.  It is therefore necessary to have regard to the characteristics of this statutory procedure.

57.  It is now established that the O 22 regime provides a self-contained statutory procedure for settlement which is complete in its own right and without the need to have recourse to other measures.  One of the characteristics of a sanctioned offer (and a sanctioned payment) under O 22 is that it is wholly procedural in nature.  Hence, the procedural requirements (including any costs consequences) embodied in O 22 must be strictly complied with: see HKCP, Vol 1, §§22/1/A, 22/1/B and 22/5/A.

58.  As the present claim has been disposed of by the procedure set out in O 22, r 21(1), the express costs consequences stated in the said rule should be strictly complied with and should override either of the costs orders proposed by the Respondent for “costs to be taxed” stated in the Acceptance or for “costs on the issue of quantum” as stated in the Amended Draft.

59.  Hence, when the Sanctioned Offer was accepted, the costs consequences of “costs of the proceedings” provided in O 22, r 21(1) were immediately engaged unless displaced by the Otherwise Proviso.

60.  Mr Lam’s argument that the O 22, r 21(1)’s “costs of the proceedings” is only applicable to situations where both liability and quantum are still at issue at the time when a sanctioned payment / offer was made by one party and accepted by the other within the prescribed time fails to have regard to the r 21(1)’s express costs consequences.  His stated reason for the purpose of clarity plainly does not fall within the Otherwise Proviso to justify a departure from the prevailing costs consequences.

61.  I further reject Mr Lam’s submissions that the Sanctioned Offer was not made to settle the whole claim on the ground that quantum was the only remaining issue.  In my view, Mr Lam has confused a claim with an issue in a claim.  For the present proceedings, the only claim that the Applicant made was a claim for employees’ compensation.  A claim however will usually comprise various issues and sub-issues.  The present case consisted of issues of liability and quantum, but the whole claim was a claim for compensation.

62.  From IKC’s immediate response to the amendment BCC made in the Amended Draft, I can understand the Respondent’s anxiety as to why it insisted on its costs position. IKC responded as follows:-

“There is no order on costs in relation to issue of liability having been made. The fixed costs awarded on the interlocutory judgment does not refer to costs of liability at all. The scope of the said costs will be a matter for taxation. Your limiting our costs entitlement to the issue of quantum is red-herring.”

63.  In view of the Fixed Costs set out in the IJ, IKC’s above averment that no costs on liability had been made is plainly wrong.  I believe the said stance IKC adopted has been the root cause of the ensuing disputes.  Notwithstanding their subsequent acknowledgement of the Fixed Costs in the IJ, IKC however continued to allude to costs not covered by the Fixed Costs.

“Our position has all along been that for whatever has been covered by way of fixed costs in the interlocutory judgment, it should be a matter for taxation and the Taxing Master will tax thee (sic) costs of proceedings having regard to the scope of the interlocutory costs orders already made”[12]

64.  In light of these comments made by IKC, the Respondent, in my view, was justified in expressing its concern that the Applicant might get around the Fixed Costs in seeking costs on liability if she were to be allowed “costs of the proceedings”.

65.  Despite her later recognition of the existence of the Fixed Costs, Ms Kwan continued making suggestions that the Applicant was entitled to more costs.

66.  For example, in her “Supplemental Submissions” (at §§29 & 30), Ms Kwan maintained that the Applicant would be entitled to various items of costs not covered by liability or quantum such as (a) court fees in issuing the present Employees’ Compensation proceedings; (b) costs of “General Care and Conduct”; and (c) “costs incurred in handling and attending other background issues in conducting the proceedings”.

67.  Based on the authority of Etratech Asia-Pacific Ltd, which was later applied in RBA Far East Ltd concerning r 21(1), I am in agreement with Ms Kwan’s submissions that the usual prima facie costs order of “costs of the proceedings” should apply in the present situation.  Despite my sympathy for the Respondent’s reason as to why it had wanted to limit costs to quantum, I am not persuaded by the Respondent’s reason of “clarity” as sufficient in constituting exceptional circumstances in displacing the prima facie position.  The Otherwise Proviso cannot be applied here.

68.  For these reasons, I conclude that the Applicant’s arguments are correct.  I order that the Respondent do pay the Applicant’s costs of these proceedings until 30 October 2020, including the costs of the drafting of the Consent Summons (as per the Respondent’s agreement).

D.5  Costs after 30 October 2020

69.  Both parties ask for costs after 30 October 2020.

70.  The order at §68 means that the Applicant is to be regarded as a winning party.  There is therefore no justification in my view for the Respondent to have its costs after 30 October 2020.

71.  I’d however be disinclined to award costs to the Applicant despite the court having ruled in her favour.  As I have stated above in §§62, 63 & 66, the costs disputes were substantially due to the Applicant’s insistence on her entitlement to costs beyond the Fixed Costs.  Instead of allaying the Respondent’s wholly justified concern, the Applicant kept stating that her costs entitlement was not bound by the Fixed Costs.  For these reasons, I do not think it is just for this court to award costs to the Applicant after 30 October 2020.

72.  Hence, I make a costs order that there shall be no order as to costs after 30 October 2020, including all costs reserved.

73.  Having regard to the circumstances giving rise to the present costs arguments, I do not think that this is a suitable case in giving the usual direction for Legal Aid taxation.  I therefore further direct that the Applicant’s own costs in relating to the “costs of the proceedings” arguments after 30 October 2020 shall not be taxed in accordance with the Legal Aid Regulations.

E.  Orders

(1)  The Respondent do pay the Applicant’s costs of the proceedings up to 30 October 2020 (including the Consent Summons) on a party and party basis, to be taxed if not agreed;

(2)  The Respondent do pay the Applicant’s costs of the Interim Payment Summons on a party and party basis, to be taxed if not agreed;

(3)  The Applicant do pay the Respondent’s costs in relation to the arguments on the indemnity costs issue, to be taxed if not agreed;

(4)  There shall be no order as to costs after 30 October 2020 in relation to the O 22, r 21(1) issue; and

(5)  The Applicant’s own costs, save and except the costs incurred by the Applicant after 30 October 2020 in relation to the O 22, r 21(1) issue, shall be taxed in accordance with the Legal Aid Regulations.

74.  Since these costs orders concern the Applicant’s own costs with the Director of Legal Aid, I will ask my clerk to also serve a copy of this Decision on the Director.

75.  Lastly, I’d like to remark on the voluminous submissions Ms Kwan had placed before this court.  Ms Kwan had altogether lodged four written submissions:-

(i)  On 20 January 2021, a 16-page “Submissions for the hearing on 27 January 2021”, together with a 10-page chronology of relevant events and 17 items of authorities attached to the “List of Authorities”.

(ii)  On 26 January 2021, a 5-page “Notes in Reply to R’s Submissions”, and 3 items of authorities were attached to the “Supplemental List of Authorities”.

(iii)  On 17 February 2021, a 14-page “Supplemental Submissions” and 14 cases were attached to the “2^nd Supplemental List of Authorities”.

(iv)  On 4 March 2021, a one-page letter, commenting on the Respondent’s Supplemental Submissions dated 3 March 2021.

76.  As it is apparent from the discussions above, the contentions between the parties are confined to narrow issues.  These voluminous submissions are excessive in the circumstances.  I also note that most of the case authorities in the Lists of Authorities were irrelevant in assisting this court to resolve the issues in dispute.  This style of submissions is certainly out of step with the requirements of succinctness and proportionality under the Civil Justice Reform.

	(Katina Levy)
	District Judge

Ms Corrina Kwan, of Ip, Kwan & Co, assigned by the Director of Legal Aid, for the applicant

Mr Teddy Lam, of Boase, Cohen & Collins, for the respondent