CHUNG HO MING v. CHAN WAI YIP AND ANOTHER
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DCPI 1012/2020
[2024] HKDC 269
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
PERSONAL INJURIES ACTION NO 1012 OF 2020
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BETWEEN | ||
| CHUNG HO MING | Plaintiff | |
| and | ||
| CHAN WAI YIP | 1st Defendant | |
| THE KOWLOON MOTOR BUS | 2nd Defendant | |
| COMPANY (1933) LIMITED | ||
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| Before: | His Honour Judge Andrew Li in Chambers (paper disposal) |
| Date of the defendants’ submissions: | 7 November 2023 |
| Date of the plaintiff’s reply: | 28 November 2023 |
| Date of Decision: | 19 February 2024 |
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DECISION
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BACKGROUND
1. The trial of this personal injuries action took place on 27, 29 and 31 March 2023 before me. Both issues of liability and quantum were in dispute. By a judgment dated 25 July 2023 (“the Judgment”), the plaintiff’s (“P”) claim was dismissed after trial. I made an order nisi in the Judgment that P should pay the 1st and 2nd defendants (“Ds”) the costs of this action to be taxed if not agreed, with certificate for one counsel.
2. For the factual background and the findings of the court in this case, I would refer the parties to the Judgment and would not repeat them here. The case has also been reported in both Hong Kong Law Reports and Digest and Hong Kong Cases, respectively under [2023] 4 HKLRD 237 and [2023] HKC 6 HKC 381.
The Ds’ Summons
3. By a summons dated 8 August 2023, Ds made an application to vary the costs order nisi (“Ds’ Summons”), to the effect that P do pay Ds the costs of this action to be taxed on an indemnity basis if not agreed with certificate for counsel. Ds also asked for the costs of Ds’ Summons to be paid by P on an indemnity basis.
4. Ds filed the 1st affidavit of Wong Lok Him Samuel, a solicitor in the employ of Messrs Mayer Brown (“Ds’ Solicitors”) dated 8 August 2023 in support of Ds’ Summons (“Wong’s 1st Affidavit”).
5. Ds’ Summons was originally fixed to be heard before me in chambers on 6 September 2023 (with 30 minutes reserved).
6. By a letter dated 25 August 2023, the court gave, inter alia, the following directions to the parties:-
“1. […]
2. The Defendants’ Summons will be dealt with by way of paper disposal.
3. The Plaintiff do file and serve his affirmation in opposition, if so advised, within 28 days from the date hereof.
4. The Plaintiff’s solicitors, namely, Messrs. B. Mak & Co., do file and serve an affirmation to show cause as to why the costs wasted as a result of the refusal to accept the 1st Offer made on 24 June 2021 and/or the 2nd Offer made on 5 August 2022 by the Defendants as referred to in the Defendants’ Affidavit should not be borne by the Plaintiff’s solicitors personally and on an indemnity basis under Order 62, rules 8, 8A & 8B of the Rules of the District Court within 28 days from the date hereof.
5. The 1st and 2nd Defendants do file and serve their affirmation in reply, if any, within 21 days thereafter.
[…]
9. The hearing scheduled on 6 September 2023 at 9:30 a.m. in Court no.8 be vacated.”
7. By a letter to the court dated 31 August 2023, Messrs B. Mak & Co., solicitors for P (“P’s Solicitors”) enquired as to, inter alia, “whether there is any other specific observation from the Learned Judge against us for the purpose of Order 62 Rule 8, R.D.C.” (“P’s 31.8.2023 Letter”).
8. This is despite of the fact that the court had already made it clear as to the basis upon which this enquiry for wasted costs was commenced, ie the materials being made available to it in support of Ds’ Summons relating to Ds’ offers for settlement out of court.
9. By a further letter dated 7 September 2023, the court directed that P’s Solicitors are required to file their affirmation as stated in §4 of the court’s directions dated 25 August 2023, but there would be an extension of 21 days until 28 September 2023 for P’s Solicitors to file such affirmation.
10. In the directions dated 7 September 2023, reference was made to P’s 31.8.2023 Letter.
11. Ds’ Solicitors therefore only came to know about the existence of this letter, which had previously not been copied or otherwise made available to them[1].
12. On 11 September 2023, Ds’ Solicitors wrote to P’s Solicitors asking for a copy of the same.[2]
13. By a letter dated 18 September 2023 from P’s Solicitors to Ds’ Solicitors, a copy of P’s 31.8.2023 Letter was provided to Ds’ Solicitors.[3] In the same letter and for the first time since Ds’ Summons was issued on 8 August 2023, P’s Solicitors indicated that their client has no objection to Ds’ Summons.
14. Mr Mak Yiu Wah Bilan, the principal of P’s Solicitors, deposed an affirmation dated 28 September 2023 (“Mak’s Affirmation”) in compliance with the court’s directions dated 25 August 2023 and 7 September 2023. However, Mak’s Affirmation and the exhibits attached thereto were not served upon Ds, despite a written request from Ds’ Solicitors on 3 October 2023.
15. A copy of the same was eventually obtained by Ds’ Solicitors by way of a court file search on 3 October 2023.[4]
16. On 19 October 2023, Wong filed his 2nd affidavit in response to Mak’s Affirmation (“Wong’s 2nd Affidavit”).
17. On 7 November 2023, Ds lodged their written submissions prepared by counsel (consisted of 22 pages) in support of Ds’ Summons.
18. On 28 November 2023, instead of lodging written submissions as directed by the court, P’s Solicitors replied by a one-page letter to, inter alia, inform the court that they had, on 18 September 2023, replied to Ds that P has no objection to Ds’ Summons (“P’s 28.11.2023 Letter”). They further claim that “[S]ince there was no reply from the 1st and 2nd Defendants, on 27th September 2023, we have further prepared our draft Consent Summons for disposal of the said Summons for their consideration.”
19. Ds’ Solicitors in their letter to the court on the next day, ie 29 November 2023, in answer to P’s 28.11.2023 Letter, stated that “contrary to the allegation of the Plaintiff’s solicitors, we have set out our reply to them in our letters dated 25 September 2023 and 3 October 2023 and explained our views on the (sic) why it would not be appropriate to dispose of the Summons filed on 8 August 2023 in light of the Directions by His Honour Judge Andrew Li on 25 August 2023…”.[5]
20. Thus, Ds say that P’s Solicitors were fully aware of Ds’ stance on the matter before they sent the draft consent summons for Ds’ Solicitors’ purported endorsement on 27 September 2023.
Events happened during the early stage of the proceedings
21. In order to decide whether the costs of this action should be paid by P to Ds on an indemnity basis and/or whether the court’s order asking P’s Solicitors to show cause are reasonable and appropriate, I think it is important to carefully examine the events happened during the early stage of the proceedings in this case. They are gleaned from the pleadings and without prejudice correspondences between the parties as disclosed under Wong’s 1st and 2nd’s Affidavits.
Ds’ 1st Offer
22. As deposed in Wong’s 1st Affidavit, Ds’ Solicitors had by their letter dated 24 June 2021 put forward a “drop-hands” offer to P (with no order as to costs) (“Ds’ 1st Offer”).[6]
23. Ds’ 1st Offer was made the day after P had filed his Answer to Ds’ Request for Further and Better Particulars of the Statement of Claim on 23 June 2021 (“P’s Answer to FBP”), but before the filing of the Defence on 23 July 2021. That was purportedly done with the view of resolving the matter amicably without proceeding to trial.[7]
24. In the said letter, Ds’ Solicitors have highlighted, inter alia, the following:-
“(1) P’s inconsistent versions of events in the Statement of Claim filed on 8 February 2021 (the “SOC”) and P’s Answer to FBP when compared with his earlier police statement dated 7 December 2017 (“P’s Police Statement”);
(2) The relevant BOM records, and how they objectively show that the Bus at the material time was travelling at a slow speed with gradual deceleration (and therefore irreconcilable with P’s pleaded case);
(3) The Bus Captain was not prosecuted for any traffic offence;
(4) Other reasons as to why P’s case is bound for failure, backed by caselaw such as Sum Shu Lam v Poon Pak Shing & Anor, HCPI 89/1997 (11 November 1999) and So Kam v Guildford Limited & Cheng Yiu Fai, DCPI 192/2016.”
[emphasis appeared in original text]
25. Ds’ 1st Offer was not accepted by P.
26. Subsequent to P’s filing of the Reply to the Defence on 16 October 2021 (“the Reply”), Ds’ Solicitors issued another letter on 29 October 2021 to P’s Solicitors, setting out further inconsistencies in the Reply when compared with P’s Police statement.
27. This letter was ignored by P.
28. The parties attempted mediation on 29 July 2022, which was unsuccessful.
Ds’ 2nd Offer
29. By a letter dated 5 August 2022, Ds’ Solicitors put forward another offer for settlement to P on behalf of Ds, asking P to withdraw this action with costs to the Ds at HK$200,000 (“Ds’ 2nd Offer”).[8]
30. In this letter, Ds’ Solicitors again highlighted the lack of merits of P’s case on the liability front, reiterating how his case has all along been inconsistent.
31. This offer was not accepted by P either.
P’s “drop-hands” offer
32. Almost 2 months later, without any explanations or reasons in support, by a letter dated 3 October 2022, P made a “drop-hands” offer to Ds, with no order as to costs.[9]
33. This was not accepted by Ds. Ds’ Solicitors indicated by letter to P’s Solicitors dated 7 October 2022 that Ds intend to proceed to trial and recoup their costs thereafter.[10]
Ds’ submissions
34. By reason of the inclusion of terms as to costs in both Ds’ 1st and 2nd Offers, Ms Lui, Ds’ counsel, submits that these offers would not have been qualified for the form/regime of a sanctioned payment/offer pursuant to O 22 of the Rules of the District court (“the RDC”). Given how the present case does not involve any sanctioned payment/offer, therefore the mechanism of costs consideration under O 22 of the RDC does not apply. P was nevertheless warned (in all of the three letters from Ds’ Solicitors mentioned above) that failure to accept the offers/to achieve out-of-court settlement as soon as possible might result in adverse costs consequences. In the two letters conveying the 1st and 2nd Offers, it was even explained that P’s Solicitors may be personally liable for wasted costs if the claim should fail after trial.
35. Ds submit that the court ought to duly take into account the 1st and 2nd Offers in exercising its discretion as to costs under O 62 r 5(1)(d) of the RDC.
36. Further, in light of the 1st and 2nd Offers put forward by Ds, Ds submit that the trial of the present action could well have been avoided, saving time and costs for all parties involved. Ds further submit that the action was destined for failure from even the pre-action stage.
37. Last but not the least, Ds submit that P’s Solicitors ought to have been well aware of the contents of both P’s Police statement and the 1st defendant (“D1”)’s record of interview made with the Police dated 6 March 2018, given that they were already provided to the 2nd defendant (“D2”) at the pre-action stage on or about 6 January 2023.[11] By the time of the 1st Offer, P and/or P’s Solicitors ought to have been able to realistically assess the merits of P’s case (or the lack thereof).
38. Hence, Ds consider that the 1st and 2nd Offers put forward by them were entirely reasonable, if not on the generous side. P has failed to obtain judgment better than these offers after trial.
39. By reason of the foregoing, Ds submit that costs of this action should be borne by P to Ds on an indemnity basis, regardless of whether P’s Solicitors should be made personally responsible for the wasted costs or not.
Interim events
40. Gleaning from the parties’ without prejudice correspondences, it can be seen that P’s Solicitors only attempted to settle Ds’ Summons out of court, after the court’s directions on 25 August 2023 and 7 September 2023 but not before.
41. As mentioned above, by a letter dated 18 September 2023 from P’s Solicitors to Ds’ Solicitors, P’s Solicitors indicated in writing that their client has no objection to Ds’ Summons.[12] P’s Solicitors also explored with Ds the possibility of settling Ds’ Summons by way of a consent summons: See letter from P’s Solicitors to Ds’ Solicitors dated 27 September 2023.[13]
42. Ds’ Solicitors already explained to P’s Solicitors by their letter dated 25 September 2023 that, in light of P’s 31.8.2023 Letter and the court’s directions dated 7 September 2023[14], it was apparent that P’s Solicitors would in any event have to comply with §4 of the directions dated 25 August 2023 to show cause. P’s Solicitors’ attention was also drawn to the case of Sek Man Lai v William Engineering Limited & Ors, DCPI 3266/2019 (7 September 2023) where, upon directing the plaintiff’s solicitors therein to show cause in an application for the amendment of pleadings and filing of supplemental witness statements, the court refused to approve the parties’ consent summons for discontinuance with no order as to costs, and requested parties to make further submissions on costs accordingly.
43. Given the court’s enquiry as to whether P’s Solicitors should be made personally liable for wasted costs, and its directions for both P and Ds to make submissions on this issue, Ds’ Solicitors considered it would not have been appropriate for Ds to agree to the proposed consent summons put forward by P. This would have interfered with the court’s enquiry.
44. Furthermore, Ds consider there may also exist a potential conflict of interest between P’s Solicitors and P, by reason of P’s Solicitors putting forth such an offer for settlement of Ds’ Summons (which only seeks costs on an indemnity basis against P, but not against P’s Solicitors personally). There is the possibility that at the conclusion of this application for variation of costs order nisi, an adverse costs order might be made either against P or P’s Solicitors personally. At the time of P’s Solicitors proposed settlement by way of signing the consent summons, it is unclear as to whether P’s Solicitors have informed/explained to P about the court’s directions as to showing cause by P’s Solicitors, or whether P’s Solicitors have advised P to seek independent legal advice on this matter. If P had no or no sufficient understanding of the court’s enquiry to show cause, then P would not have been in a proper position to give instructions for the proposed consent summons. It is also unclear as to whether P’s Solicitors have explored the possibility of ceasing to act for P for the purpose of the present application, unless they are satisfied that there is no conflict of interest involved.
45. Principle 7.02 of HKSG sets out the duties of a solicitor to act in the best interest of his client, and that he must not put himself in a position where his own interests conflict or are likely to conflict with his duty to his client.
46. Hence, Ds ask the court to take into account the matters mentioned above in determining the outcome of Ds’ Summons.
DISCUSSION
(I) P’s liability to pay costs
47. Based on the above factual matrix, there is no doubt in my mind that P should be held liable to pay Ds’ costs of the action, as well as D’s Summons, on an indemnity basis. The following are my reasons why this should be the case.
48. First and foremost, in my judgment, it is clear that P has a very weak case on merits right from the start, a fact which was known to P and/or P’s Solicitors at an early stage of the proceedings, if not during the pre-action stage.
49. In Ds’ Solicitors letter dated 24 June 2021 which contained the 1st Offer, Ds have set out their grounds in details, which included: (i) the movements of the Bus as shown by the BOM records; (ii) the inconsistent versions of events provided by P in his Police statement when compared with the accounts stated in the SOC and the Answer; (iii) D1’s evidence; (iv) no report of injuries by other passengers of the Bus; and (v) the lack of police prosecution brought against D1.
50. In this without prejudice letter, Ds have explained in details why they considered P’s claim was unmeritorious. They explained clearly the basis of the 1st Offer where Ds were willing to “drop-hands” at that stage, despite they claimed that they had already incurred considerable costs and expenses in investigating and defending the matter at that stage.
51. I noted that the 1st Offer was simply ignored by P and/or P’s Solicitors as Ds had not received a reply from them.
52. This led to Ds’ Solicitors’ further without prejudice letter dated 29 October 2021 where they highlighted the inconsistencies in P’s case and its contradictions to the BOM records. Ds reiterated their “drop-hands” positon in this letter and asked P to reply within 7 days.
53. Again, this without prejudice letter was ignored by P and/or P’s Solicitors.
54. Then 9 months later, Ds’ sent a letter on 5 August 2022 to P which contained the 2nd Offer. By this time, P had filed his witness statement and mediation had taken place. In the letter, Ds highlighted the fact that P’s witness statement failed to provide any plausible explanation to the inconsistences found in his previous statements and was in contradiction with the BOM records. However, again, P failed to respond to Ds’ 2nd Offer within the requested time.
55. It was only almost 2 months later, on 3 October 2022, without setting out any reasons or explanations, P’s Solicitors made a without prejudice offer to the effect that P was willing to discontinue the action on a “drop-hands” basis.
56. P’s “drop-hands” offer was promptly rejected by Ds in their without prejudice letter sent 4 days later on 7 October 2022.
57. Judging from the above, I think it is fair to say that apart from his own bare assertions (which are inconsistent with P’s Police statement), P’s case is completely devoid of any credible objective evidence in support. Most important of all, P’s case was in complete contradiction with the BOM records. In my view, this is the most objective and indisputable piece of evidence for P and his legal advisors to make a fair and accurate assessment of whether P’s allegation that the Bus had made an abrupt and sudden acceleration or stop could be true or not. Despite of such indisputable and objective piece of evidence, P, presumably on the advice of P’s Solicitors, insisted on taking the case to a full trial, only to find that the result was exactly as predicted by Ds in Ds’ letter dated 24 June 2021 which contained the 1st Offer.
58. What I find most troubling about this case is the fact that the subsequent findings (and the reasoning thereof) of the court as contained in the Judgment are almost exactly the same as the grounds set out by Ds in their letter contained the 1st Offer written back in June 2021, which was almost 2 years before the trial took place: See §§48-63 of the Judgment.
59. I note further that P’s Solicitors had never bothered to reply to the two without prejudice letters which respectively contained the 1st and 2nd Offers. They had not stated the reasons why they considered Ds’ basis of making those offers were unsound or unreasonable. Instead, they waited until October 2022 to make P’s “drop-hands” offer but without as much as any reasons or explanations. By this time, of course substantial amount of costs had already been incurred on both sides.
60. When P’s “drop-hands” offer was not accepted by Ds, P then very belatedly applied for legal aid in November 2022.[15] That application was refused by the Director of Legal Aid on 19 January 2023. I think the refusal could not have been due to the failure of the means test as during the trial P informed the court that he had semi-retired and was only working as a part-time chef at the time of the Accident. He allegedly had to borrow money from his brother to fund the litigation. Thus, most likely, his application was refused due to lack of merits.
61. Hence, based on the above, I find both P and P’s Solicitors knew very well from an early stage of the proceedings that P’s case contained little or no merits at all. In my view, they should have accepted the 1st Offer in the first place. That would have avoided a full trial and saved a lot of costs and time on both sides and the court’s resources.
62. Second, P has not done better than Ds’ 1st and 2nd Offers made at the early stage of the proceedings.
63. As Ms Lui has pointed in her submissions, by reason of the fact that Ds’ 1st and 2nd Offers included terms as to costs, those offers could not have been qualified for the form/regime of a sanctioned payment/offer pursuant to O 22 of the RDC. However, I accept Ds’ submissions that both P and P’s Solicitors had been duly warned of the adverse costs consequences for failure in accepting Ds’ 1st and 2nd Offers. I also accept that the court is entitled to take into account of Ds’ 1st and 2nd Offers when exercising its discretion as to costs under O 62 r 5(1)(d) of the RDC: See for example Choi Tak Man v Chan Yuk Lan, Didi & Anor [2017] 5 HKLRD 619 (30 October 2017); Lee Po Chu Feona v Joyce Chan & Co (a firm)[2023] HKCFI 1878 (21 July 2023).
64. In my view, P has clearly failed to do better in the trial than what Ds had offered him under Ds’ 1st and 2nd Offers. As such, I do not see why he should not bear the costs of the action on an indemnity basis.
65. Third, I consider that P’s “drop-hands” offer in October 2022 has come too little, too late.
66. I think it is clear that P or P’s Solicitors have failed to seize the two golden opportunities to settle the case by accepting either Ds’ 1st Offer or 2nd Offer. It was not until after the witness statements on both sides had been exchanged; medical expert opinions had been prepared and the case was ready to be set down for trial that P’s Solicitors offered to settle the case by “dropping hands”. No reason was given and no authorities were provided. Only a lot of unnecessary costs and time had been wasted in the interim. I consider such a move on the part of P was disingenuous and not genuine at all. It was, in my view, came too little, too late.
67. Fourth, Ds are entitled not to accept the belated concession to Ds’ Summons after the court’s directions to P’s Solicitors to show cause.
68. I agree with Ds’ submissions that in light of the court’s directions to ask P’s Solicitors to show cause, it was only proper and right for Ds to make further submissions on the matter rather than to “short-circuit” it by conceding to Ds’ Summons. As submitted by Ms Lui, this opens up a lot of different issues which I would discuss under the separate heading on the potential wasted costs order in Part II of this decision below.
69. One observation I would like to make here is that the concession of Ds’ Summons by P’s Solicitors on behalf of their client was not made until well after the court had made its directions to P’s Solicitors to show cause in this case. Had that concession been made in good time and in an open manner, I would consider that as a genuine and bona fide concession on the part of P. However, given the belated timing and the way it was made (Ds had to find out the letter of concession by a search of the court file), I have good reasons to believe and hold that it was not a genuine and bona fide attempt to settle Ds’ Summons at all.
Conclusion on P’s liability to pay costs on indemnity basis
70. Based on the above discussions, I am of the view that, disregard of P’s belated concession, this is a clear case where P should be held liable to pay Ds’ costs of the action to be taxed on an indemnity basis, with certificate for counsel. I am also of the view that P should be held liable to pay for the costs of Ds’ Summons, such costs also to be taxed on an indemnity basis, with certificate for counsel. I so make such an order.
(II) Wasted costs order
71. While Ds did not ask for wasted costs against P’s Solicitors personally under Ds’ Summons, in light of the relevant directions given by the court, Ms Lui has very helpfully summarized the relevant legal principles in this area to act as an aide-memoire in her submissions to the court.
72. I find Ms Lui’s summary of the law relevant and helpful and, where appropriate, would respectfully adopt them hereinbelow. I would also add my own observations as to what I consider the law to be in this area, particularly in light of a couple of recent decisions made by this court and in the Court of First Instance, before reaching my own conclusion as to whether a wasted costs order should be made against P’s Solicitors personally in this case.
Relevant principles on wasted costs order
73. In general, the court has a wide discretion as to costs: See O 62 r 3 of the RDC. In exercising such a discretion, the court shall take into account all the appropriate circumstances: See O 62 r 5 of the RDC. Such circumstances include the making and terms of any sanctioned offer/payment, any Calderbank offer and conduct of the parties. The court may make an order for costs to be taxed on an indemnity basis: See O 62 r 28 of the RDC.
74. Section 53 of the District Court Ordinance (Cap 336) (“the DCO”) provides that:-
“(1) The costs of and incidental to all proceedings in the Court, including the administration of estates and trusts, are in the discretion of the Court, and the Court has full power to determine by whom and to what extent the costs are to be paid.
(2) […]
(3) In any civil proceedings before it, the Court may, in accordance with rules of court, by order disallow, or order the legal representative concerned to meet, the whole or any part of any wasted costs.
(4) When determining whether or not to make an order under subsection (3), the Court shall, in addition to all other relevant circumstances, take into account the interest that there be fearless advocacy under the adversarial system of justice.
(5) In subsection (3), wasted costs (虛耗訟費) means any costs incurred by a party as a result of—
(a) an improper or unreasonable act or omission; or
(b) any undue delay or other misconduct or default, on the part of any legal representative, whether personally or through an employee or agent of the legal representative.
(6) In this section, legal representative (法律代表), in relation to a party to any proceedings, means a counsel or solicitor conducting litigation on behalf of the party.”
75. Under O 62 r 8 of the RDC, a court is empowered to make, whether on its own motion or on application, a wasted costs order against a legal representative, if:-
“(a) the legal representative, whether personally or through his employee or agent, has caused a party to incur wasted costs as defined in section 53(5) of the [District Court] Ordinance; and
(b) it is just in all the circumstances to order the legal representative to compensate the party for the whole or part of those costs.”
76. O 62 r 8B of the RDC provides that:-
“(1) The Court shall consider whether to make a wasted costs order in 2 stages—
(a) in the first stage, the Court must be satisfied that—
(i) it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and
(ii) the wasted costs proceedings are justified notwithstanding the likely costs involved; and
(b) in the second stage (even if the Court is satisfied under subparagraph (a)), the Court shall consider, after giving the legal representative an opportunity to give reasons why the Court should not make a wasted costs order, whether it is appropriate to make the order in accordance with rule 8.”
77. Apart from power conferred upon the court by s 53 of the DCO and O 62 of the RDC, there is also a parallel inherent jurisdiction of the court to order a solicitor to pay wasted costs: See Jackson and Powell on Professional Liability (9th Edn) at [11-126]; Chiu Sui Ching, the administrator of the estate of Leung Ho Tin, deceased v Cheng Kwai Hung t/a Hang Nagi Works & Ors[2023] HKCFI 1417; DCPI 939/2017 (Marlene Ng J; 31 May 2023) at §§37; 40).
78. It is trite that, save in obvious cases, the court should be slow to initiate an enquiry as to whether a wasted costs order should be made: See Jackson and Powell, op cit. at [11-132].
79. In Ma So So v Chin Yuk Lun & Anor [2004] 7 HKCFAR 300, the Court of Final Appeal explained at 309 B-E that a court should consider three questions when dealing with its jurisdiction to make a wasted costs order against a solicitor under O 62 r 8 of the RDC:-
“(1) Whether the solicitor was responsible for (i) acting improperly or without reasonable cause; or (ii) for undue delay or any other misconduct or default in the proceedings.
(2) Whether the conduct of the solicitor caused costs to be incurred or wasted so that there was a causal link between the conduct and the costs incurred.
(3) Whether the court should exercise its discretion to make a wasted costs order against the solicitor.”
80. In Decollin International Ltd v Kenpark International Ltd DCCJ 20/2008 (11 July 2008, at §§5-8), the principles regarding the exercise of the court’s jurisdiction over solicitors in relation to the costs of legal proceedings have been succinctly summarised as follows:-
“5. The mere fact that there was an error of judgment, even an error that was of an order which constituted or was equivalent to negligence is no reason for invoking the jurisdiction of the court. There has to be something which amounted to a serious dereliction of duty: Ho Lee Man v Wong Wai Kai [1993] 1 HKC 193, adopting Orchard v South Eastern Electricity [1987] 1 QB 565.
6. The initiation or continuation of an action which had no or substantially no chance of success might constitute such serious misconduct (Ho Lee Man, supra).
7. Although Order 62 Rule 8 is cast in wide terms, “misconduct or default” is not so wide as to encompass mere incompetence or negligence. There must be something more (Re a firm of solicitors, unreported, 19 March 1997, CCAV 190/1996.)
8. In all cases, it has been emphasized that the jurisdiction of the court should be exercised with care and discretion and only in clear cases.” [emphasis added]
81. In Ho Lee Man v Wong Wai Kai (No.2) [1993] 1 HKC 193 (at 195-196), the Hong Kong Court of Appeal, citing Edwards v Edwards [1958] P235 and Orchard v SE Electricity Board [1987] 1 QB 565, explained that the initiation of continuance of an action when it had no, or substantially no chance of success, might constitute such serious misconduct giving rise to a wasted costs order. On the other hand, the solicitor should not be required to “pre-screen” the merits of the litigant’s case. There are factors on both sides of the balance which ought to be carefully considered and weighed:-
“Although this inherent jurisdiction to make solicitors personally liable for the costs of proceedings has existed for a very long time, it has been seldom exercised. This can be seen from the rarity of authorities. The reason is obvious. In litigation, there is almost invariably a winner and a loser. The losing party often feels disgruntled — sometimes against his own solicitors. In the course of civil litigation, there are usually many interlocutory steps — sometimes too many. The outcome cannot be always predicted with accuracy. If a solicitor should run the risk of being personally liable for the costs every time his client takes a wrong step, this would have a profoundly harmful effect on the normal conduct of civil litigation. A solicitor, instead of doing his best in the circumstances for his client, would tremulously be looking to his own pocket, fearful of the consequences if he loses. Such an attitude would also have a harmful effect upon the organization of the profession. Often, litigation is put in the charge of an employed solicitor. It would be a most unfortunate development if firms, in employing young solicitors, should adopt a practice of requiring an indemnity from the young solicitor to cover the situation where the firm might incur liability for costs, as a result of some erroneous step taken in litigation. It is probably for reasons such as these that Sir John Donaldson MR in Orchard v South Eastern Electricity Board default (supra) at p 572 cautioned against an overzealous use of the jurisdiction under O 62 r 8(1) of the Rules of the Supreme Court. In that passage, the Master of the Rolls referred to the judgment of Sachs J in Edwards v Edwards [1958] P 235 and said:-
Sachs J examined the authorities and stated that it was axiomatic that the mere fact that the litigation failed was no reason for invoking the jurisdiction — nor was an error of judgment, nor even the mere fact that an error was of an order which constituted, or was equivalent to, negligence. There had to be something which amounted to a serious dereliction of duty (see p 248). The decision of this court in Davy-Chiesman v Davy-Chiesman default [1984] Fam 48 was to the like effect. The jurisdiction could only be invoked in the case of serious misconduct and the initiation or continuance of an action when it had no, or substantially no, chance of success which might constitute such misconduct (per Dillon LJ at p 67).
Sir John Donaldson MR went on at p 572-E to emphasize that the jurisdiction had to be exercised with care and discretion, and only in clear cases:
‘… it must never be forgotten that it is not for solicitors or counsel to impose a pre-trial screen through which a litigant must pass before he can put his complaint or defence to the court.’” [emphasis added]
82. In Edwards v Edwards, supra at 248 provided elucidation as to when this jurisdiction to make an order for wasted costs may be invoked:-
“No definition or list of the classes of improper acts which attract the jurisdiction can, of course, be made; but they certainly include anything which can be termed an abuse of the process of the court and oppressive conduct generally. It is also from the authorities clear, and no submission to the contrary has been here made, that unreasonably to initiate or continue an action when it has no or substantially no chance of success may constitute conduct attracting an exercise of the above jurisdiction.” [emphasis added]
83. The English Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205 at 233F – 234F (relied upon in Chiu Sui Ching, supra, and also cited in Jackson and Powell at [11-138]) stated that a legal representative would not have acted improperly, unreasonably or negligently merely because he acted for a party who pursued a claim or defence which was plainly doomed to fail. However, he should not lend assistance to proceedings which are an abuse of process.
84. As Ms Lui has pointed out, somewhat convolutedly, the authorities in this area show that whether the proceedings/application were an “abuse of process” is an issue which is “often closely allied to whether proceedings were hopeless”: See Jackson and Powell at [11-140]. It would appear that much would turn upon whether the solicitor had personal knowledge of the falsity of evidence/matters put forward to the court, and whether there is evidence in support of such a contention.
85. By way of illustration, in Alastair Brett v Solicitors’ Regulation Authority [2014] EWHC 2794 at §§112-113 (cited in Chiu Sui Ching, supra, at §84, footnote 85), it was explained that the advocate or litigator’s forefront duty was to the court, and that he should not put forward matters which he knows not to be true:-
“Where an advocate or other representative or a litigator puts before the court matters which he knows not to be true or by omission leads the court to believe something he knows not to be true, then as an advocate knows of these duties, the inference will be inevitable that he has deceived the court, acted dishonestly and is not fit to be a member of any part of the legal profession.
As conduct that is dishonest, such as misleading the court with such knowledge will inevitably be, is so serious, it is of the utmost importance that in difficult circumstances which can confront any advocate or litigator, that advocate or litigator has at the forefront of his mind his duty to the court, the necessity to avoid breach of that duty and, if he has any doubt as to how to discharge that duty, by taking independent advice.” [emphasis added]
86. In Chiu Sui Ching, supra, the court set out in great detail the relevant principles regarding when a wasted costs order may be ordered against a party. In particular, at §§88-90, the court highlighted that the solicitor has a duty not to mislead the court, or misstate the facts to the court:-
“88. This brings me to 3 further points in relation to the duty not to mislead the court in the context of the adversarial legal system. First, solicitors must not connive at the client’s falsity, assist in the client’s improper/dishonourable conduct and/or help to substantiate a fraud (eg in circumstances when the solicitors learn that the client intends to give deliberately false evidence at the trial). As explained above, where there is conflict between the solicitor’s duty to the court not to corrupt the proper administration of justice and the duty to the client to advance his best case, the former prevails and is paramount. But if the solicitor only has a suspicion but no proof of falsity, it is for the court and not for the solicitor to determine the reliability of the client’s or the witness’ testimony.
89. Secondly, the fact that a solicitor must not mislead the court or misstate the facts to the court does not mean that he or she must, in all the circumstances, disclose all the facts to the court, eg (a) solicitors for the defendant have no duty to bring to the court’s attention facts favourable to but not proved by the plaintiff, or (b) where in a civil case there may be several witnesses who can speak to a certain matter of fact with some supporting one side and the others the opposite case, neither the litigant nor his legal representatives are bound to call those witnesses who do not support their case. There is a distinction between falsifying/ fabricating evidence or knowingly presenting false evidence whether by act or omission (which is not allowed) and not disclosing evidence (which is allowed). Commentary 6 under Principle 10.03 in The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 provides as follows:-
‘6. A solicitor knowing facts which, or of a witness who, would assist his adversary is not under any duty to inform his adversary or the court of this to the prejudice of his own client …… he must not, however, himself knowingly put forward or let his client put forward false information with intent to mislead the court. ……’
90. Thirdly, as noted in The Hong Kong Solicitors’ Guide to Professional Conduct, ‘[in] general, there is no duty upon a solicitor to enquire in every case where he is instructed as to whether his client is telling the truth and it will be for the court, and not the solicitor, to assess the truth or otherwise of the client’s statement’, and ‘[if], either before or during the course of the proceedings, a client makes statements to his solicitor which are inconsistent, this is not of itself a ground for the solicitor to refuse to act further on behalf of the client’. In short, no general obligation is imposed on the litigation solicitor to conduct pre-trial screen of his client’s case claim or defence. To require a litigation solicitor to conduct a pre-trial screen will put him in a position of conflict by making him a preliminary assessor or judge of the issue in dispute.” [emphasis added]
87. It can accordingly be distilled from the foregoing authorities that while merely representing a client with a weak claim or defence upon the client’s instructions would not amount to “abuse of process” nor attract a wasted costs order, the situation is different from where the solicitor has somehow connived at the client’s falsity, or assisted in the client’s improper/dishonourable conduct (Chiu Sui Ching, supra). The latter would amount to a serious dereliction of duty, invoking the court’s jurisdiction for a wasted costs order.
88. Ms Lui added by way of a footnote, and without prejudice to the aforementioned authorities and submissions that, when considering the relevant HK and UK caselaw for wasted costs (including those not mentioned above), the following should be borne in mind.
89. By reason that the term “negligent act” is absent in the relevant provisions relating to wasted costs in Hong Kong: See s 53 of the DCO, but is expressly provided for in the UK: See s.51(7)(a) of the Senior Courts Act 1981, certain UK authorities (such as Dempsey v Johnstone [2003] EWCA Civ 113, mentioned in Chiu Sui Ching) dealing with this “negligence” limb should be interpreted and understood in light of the differences in the wording of the respective statutory provisions.
90. In cases where the solicitor is unable to give a full account of events because the client refused to waive privilege, the court should proceed carefully and give the solicitor benefit of the doubt. Having said that, the existence of privileged material does not by itself operate as an absolute bar to a wasted costs order under O 62 r 8 of the RDC. Once the benefit of the doubt is given to the solicitor concerned, any element of unfairness is removed and should a wasted cost order still be made in the circumstances, the solicitor has no cause to complain: See Yau Chiu Wah v Gold Chief Investment Ltd & Anor [2003] 3 HKLRD 553, §§41-42.
91. I entirely agree with Ms Lui’s above submissions on the law.
92. In addition to the above, Ms Lui has also reminded me of my own judgments in cases such as So Kam, supra and Shahid Muhammad v The Kowloon Motor Bus Co (1933) Ltd, DCPI 527/2020 (2 December 2022). In the former case, the plaintiff’s solicitors therein were asked to show cause. In the latter one, a wasted costs order was made against the plaintiff’s solicitors at the end of the enquiry.
The Court’s observations
93. I would like to add my own observations as to the findings in the case of So Kam, in the light of comments made by the learned judge in Chiu Sui Ching.
The effects of So Kam in the light of Chiu Sui Ching
94. In So Kam, I think my ruling, as far as it is relevant to a wasted costs order, can be summed up as follow:-
1. The merits were hopeless. There was no evidence on the negligence of the defendant. (See §101)
2. The plaintiff had no money and the solicitor was conducting the case without costs upfront, and even paid the disbursements (§93). This was not objectionable but this is something the court must bear in mind. (See §§98,99)
3. The court did not suggest that the plaintiff’s solicitor was intending to share the damages, so champerty/maintenance was not in consideration. However, it was clear that the solicitor was hoping to recoup the costs if the action was successful. Following the case of Clyne, he should only do so when he believed there was a reasonable chance of success and merits. (See §102)
95. For the above reasons, I made an order for the plaintiff’s solicitors therein to show cause under the wasted costs order provisions.
96. In the case of Chiu Sui Ching, surpa, So Kam was discussed extensively by Hon Marlene Ng J. I think one can elicit the following principles from that judgment.
(A) Principles of maintenance and champerty, non-party costs orders
97. Where the solicitors are involved in champerty/maintenance, the remedy is the non-party costs regime instead of wasted costs orders: See §§149-150 of Chiu Sui Ching. This is because the solicitors would have become a non-party. The court only grants wasted costs order against solicitors qua legal representative: See §149 of Chiu Sui Ching.
98. With greatest respect, it is not easy to understand why in Chiu Sui Ching the learned judge said So Kam “elided” the principle of maintenance and champerty into wasted costs order: See §§141 and 149 of Chiu Sui Ching, when there was no finding of maintenance or champerty made in that case.
99. So Kam referred to the case of Winnie Lo v HKSAR (2012) 15 HKCFAR 16 (a leading case on champerty and maintenance) not because there was any allegation of champerty against the plaintiff’s solicitors, it was only relying on the comments of CFA in Winnie Lo that it is not objectionable for the solicitors to pay the disbursements. It is even laudable to take on bona fide cases on behalf of their client, but the solicitors will be under duty to make sure that there is a reasonable cause of action: See §§98-102 of So Kam. This is the principle in Ladd and Clyne: See the analysis in §147 of Chiu Sui Ching. It is clear that acting in this fashion is not champerty/maintenance.
100. In any event, I consider whether one labels these as the “principles of maintenance and champerty” is only semantic. However, I think it must be right to say that there is no authority to suggest this duty should be excluded from consideration in the context of a wasted costs order.
101. In the analysis of case authorities between §§149 to 184, Chiu Sui Ching clearly explained that claiming costs against the solicitors qua legal representative should be wasted costs order and not the non-party costs order. Hence, this would require something more than hopelessness when acting for an impecunious client: See §§182 of Chiu Sui Ching.
102. I have no problem in following the learned judge’s reasoning and ruling on this at all.
(B) What is “something more” than hopelessness?
103. Where a hopeless case is involved, this is by establishing something more than just presenting a hopeless case on behalf of an impecunious client, ie that the legal representatives have lent their assistance to proceedings which are akin to an abuse of process: See §182 of Chiu Sui Ching. [16]
104. In Labour Buildings (CACV 37/2010), Roger JA criticized the appeal to be hopeless and that the solicitor was acting improperly in the conduct of the appeal. As the appellant obviously could not pay the costs, he ordered the solicitor to pay: See §§7 and 8 of that judgment.
105. In that case, there was no accusation of delay, though the solicitor did unsuccessfully ask for an adjournment. One can perhaps infer “misconduct” as the court criticized that solicitor trying to instruct counsel on speculative fee basis. But such delay and misconduct has little (if any) to do with the prosecution of the application.
(C) Impecuniosity
106. In Chiu Sui Ching, Marlene Ng J stressed that impecuniosity by itself is insufficient to justify a wasted costs order, but it is part of the background or an overall matrix to consider: See §191 when discussing Labour Buildings and Tolstoy.
107. Again, I have no qualm with this.
108. I take this to mean that impecuniosity needs not be excluded from consideration, particularly at the 1st stage of the enquiry. This was part of my observation in So Kam too: See §§99(4) and (5) of So Kam, supra.
(D) Abuse of process
109. In making a wasted cost order, the court must consider the public interest that there should be fearless advocacy under the adversarial system: See s 53(5) of the DCO and §31 of PD 14.5.
110. Based on the authorities referred to in Chiu Sui Ching and based on the above principle, where the solicitors are accused of conducting a hopeless case, it is clear that the court would require something more than hopelessness to impose a wasted costs order: See §§107, 110 and 182 of Chiu Sui Ching. However, what exactly is the something over and above hopelessness is obviously a matter of discretion and each case must be decided on its own unique facts.
111. The most common form of this something more is “abuse of process”: See Ridehalgh, supra quoted in §100 of Chiu Sui Ching.
112. The question one would rhetorically ask is: what can constitute “something more” than hopelessness? Does it have to be something other than hopelessness?
113. There are authorities to suggest that where the hopelessness is sufficiently bad, it can cross the border into abuse of process.
114. In Flatementos Maritimos SA v Effjohn Intenational BV [1997] Lexis Citation 4918, the plaintiff unsuccessfully sought leave to appeal. The arguments were said to be hopeless. The defendant applied for a wasted costs order against the plaintiff’s solicitor. Simon Brown LJ, quoted the submission of the defendant that the plaintiff’s application “crossed the borderline from mere hopelessness into abuse of process”: See §4 on page 3 of the judgment. And upon the solicitor trying to raise privilege (apparently attempting a partial waiver only), Brown LJ dismissed his argument and said on p12 that:-
“the privilege point seems to me to founder upon the recognition that the arguments advanced here (a) crossed the line from hopelessness into abuse of process, and (b) not merely were not discouraged but in fact were actively encouraged by (the solicitor)”
…..
“To my mind “a clear picture” does emerge in this case of solicitors lending themselves inventively and enthusiastically to litigation in which they should have been reluctant to be involved at all…………. This litigation permitted of no reasonable explanation. It failed "the acid test.” It amounted to an abuse of process.”
[emphasis added]
115. Based on this, I am of the view that legal representatives should not think that, where there is only hopelessness, they are immune from a wasted costs order. Although the threshold is high, serious cases of hopelessness may cross the border.
116. Last but not the least, I think it is important for us not to forget the words of Simon Brown LJ in Flatementos, supra. At the end of his judgment (on p12), the learned judge summed up the balance between fearless advocacy and responsible advocacy. Upon confirming the wasted costs order, the learned judge said:-
“Nothing in this judgment should, or I believe will, deflect legal representatives, on instructions, from vigorously pursuing and arguing the most difficult cases. An argument, however unpromising, is perfectly properly advanced (not least on an application for leave to appeal) provided only and always that it is respectable and is not being pursued for reasons other than a genuine belief in the possibility of its success. If our order today were to discourage some of the more absurd arguments with which this Court is sometimes plagued, I for one should not be regretful.” [emphasis added]
(E) Wasted costs order - a 2-stage procedure
117. In Hong Kong, the court rules expressly require a two-stage inquiry before making a wasted cost order. At the 1st stage, the court must find, inter alia, that there is “evidence or other material, which, if unanswered, would likely lead to a wasted costs order”. This effectively is an order nisi for the legal representatives to show cause. At the 2nd stage, after giving an opportunity to the solicitor (or counsel) to make representations, the court will then decide whether or not to make a wasted costs order (O 62 r 8B of the RDC): See §§55-63 of Chiu Sui Ching.
118. In the UK, the corresponding provisions do not expressly say it is a 2-stage procedure as do its Hong Kong counterpart. However, I think the effect is actually the same:-
“CPR 46.8
(1)This rule applies where the court is considering whether to make an order under section 51(6) of the Supreme Court Act 1981(court’s power to…… order a legal representative to meet, ‘wasted costs’)
(2) the court will give the legal representative a reasonable opportunity to make written submissions or,… to attend a hearing before it makes such an order.”
119. Under the HK rules, before making the wasted costs order, the court shall take into account “the fearless advocacy under the adversarial system”: See s 53(4) of the DCO. So a wasted costs order will not be lightly made against a solicitor merely for conducting a hopeless case for an impecunious client. This was stressed repeatedly in the case of Chiu Sui Ching: See for example §§110, 130, etc.
120. However, this refers to the making of the wasted costs order, which is in the 2nd stage of the procedure: See s 53 of the DCO and §31 of PD 14.5.
121. In So Kam, the court only made a stage one order. There was no suggestion that the court did not have the necessary materials for a stage one order.
(F) Is negligence irrelevant?
122. In Hong Kong, the provisions for wasted costs order noticeably missing the word “negligent” as compared to the English provisions. This was not an inadvertent: See the case Dolphin Advertising, discussed in §44 of Chiu Sui Ching. In the same paragraph, the court took the view that negligence is “irrelevant” in Hong Kong. In §54, it said that negligence has “no applicability” to wasted costs order. This was stressed many times under different paragraphs in that case.
123. Based on existing legal authorities referred to below and with greatest respect to the learned judge in Chiu Sui Ching, it appears that negligence of a serious nature is not necessarily excluded from wasted costs order considerations.
124. In the case of Yau Chiu Wah v Gold Chief Investment Limited [2003] 3 HKLRD 553 at §36, Ma JA (as the Chief Justice then was) said:-
“While mere mistake or error of judgment may not necessarily be enough, misconduct, default or even negligence will be if this is serious or worse still, gross.” [emphasis added]
125. In Chan Wai Tung v Tang Kwok Kwong & Others (2010), unreported, DCPI 1503 / 2007, HH Judge Mimmie Chan (as she then was) said those words of the Hon Ma JA to be “just as relevant and useful after the CJR. The most that can be said by way of comparison to the English rules is that negligence has not been expressly included in Order 62 rule 8.”: See §13 of the judgment and E1/52A/5 of Volume 2 of the Whitebook.
126. This was exactly what happened in the Court of Appeal case of Akhtar Junaid v Ngai Sum Ming & The Kowloon Motor Bus Company (1933) Limited, unreported, CACV 610/2020 (Lam VP and Chu JA; 31 March 2021). In that case, the solicitors for the plaintiff lodged an appeal against the decision of a master of the District Court. The proper procedure should be by way of an appeal to a judge of the same court: See O 58 of the RDC. The solicitors insisted to, and did, file a notice of appeal in the Court of Appeal. Then they served a notice of discontinuance (as opposed to applying for dismissal). The plaintiff then quickly filed a notice to act in person.
127. By paper disposal, the Court of Appeal ordered the former solicitors to show cause as to why they should not bear the costs personally as wasted costs under O 62 r 8 of the RDC (ie a stage one order). The Court of Appeal considered the error they made was “quite elementary”: See §22 of that judgment.
128. In my view, such mistakes would cry out for a wasted costs order made against the solicitors involved (regardless of whether their client is impecunious). These are clear cases of negligence leading to a stage one order. Hence, at the very least, I consider that negligence was not totally irrelevant under such circumstances.
129. It seems that the above 3 cases were not cited to the learned judge in Chiu Sui Ching regarding negligence.
130. The Hong Kong rules for wasted costs order only rely on:-
(a) an improper or unreasonable act or omission; or
(b) any undue delay or other misconduct or default.
131. In Ridehalgh, supra, the Master of the Rolls considered that it was unnecessary to have a sharp differentiation between the words in the UK provisions. He said at page 233E (cited by Harris J in §12 of Dolphin Advertising Limited v Tronken Enterprises Limited, unreported, (2009) HCA 2409 of 2006):-
“We were invited to give the three adjectives… specific, self-contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended”. [emphasis added]
132. Harris J said that it does not mean that unreasonable conduct will automatically engage wasted costs order considerations: See the same observation at §12 in Dolphin. This must be correct. Unreasonable act, whether it is negligent or not, does not automatically engage wasted costs order. Conversely, in my view, neither can it be said that negligence is necessarily to be excluded from consideration.
(III) Whether a wasted costs order should be made in this case?
133. It is trite that whether a wasted costs order should be made depends on the factual circumstances of each case and the evidence relating to the conduct of the solicitor in question.
134. Based on the principles derived from the above authorities, I think it must be correct to say that P’s Solicitors should not be faulted for running an unmeritorious claim, per se. However, in my view, there are obvious reasons why this court commenced the 1st stage enquiry, ie asking P’s Solicitors to show cause, in the light of materials disclosed under Wong’s 1st Affidavit.
135. These would include the inconsistencies of P’s case when compared to the Police statement made by him; no mention of any sudden movement of the Bus in both P and D1’s Police statements; the discrepancies between P’s case as pleaded in the statement of claim and the version contained in the Police statement and the Answer; and, perhaps most important of all, the direct contradiction of P’s case when compared with the BOM records.
136. The without prejudice correspondences exchanged between the parties during the pre-trial stage showed that at the time of making the 1st Offer on 24 June 2021 (which was before the filing of the Defence), the BOM records were disclosed to P’s Solicitors. Neither P nor P’s Solicitors complained that they did not know how to read or interpret those data or records. There was simply no response to the 1st Offer. In any event, Ds’ Solicitors had in their letter containing the 1st Offer specifically pointed out to P’s Solicitors that “[t]he slow speed and gradual deceleration supports the fact that there was no sudden braking of the Bus, contrary to your client’s allegations in the [SOC]. Clearly, the Bus did not move or jerk about in any unusual manner at the material time, and on this basis alone your client will not be able to succeed in his claim for negligence against our clients.”[17]
137. In my judgment, once the BOM records have been shown to P’s Solicitors, they ought to have realized, at that early stage of the proceedings, that P’s case was not merely weak, but inherently improbable or illogical.
138. Mr Mak in his affirmation stated that, after receiving the 1st Offer from 24 June 2021, they took P’s instructions and he “maintained his case against [D1 and D2]”.[18] There was no explanation as to whether the contents of the BOM records had been explained to P and if so the reason(s) why they considered that P still had a viable claim against Ds on liability in light of those objective evidence. They merely claimed that they were acting in accordance with P’s instructions.
139. The same explanation was given by P’s Solicitors regarding Ds’ 2nd Offer which was made on 5 August 2022. P’s Solicitors explained in his affirmation that he had, during conferences on 26 July, 29 July and 2 August 2022 (which incidentally were dates before the 2nd Offer was made), he had advised P on the merits of the case and the risk and consequences of losing the case. However, P insisted to continue with the case and would only prepared to discontinue the action against Ds on the condition that there was no order as to costs.[19]
140. According to P’s Solicitors, that led to the issue of their “drop hands” offer in 3 October 2022, some 2 months later.[20]
141. After the refusal of legal aid, according to P’s Solicitors, P “insisted on proceeding with the trial.” P’s Solicitors claimed that “[A]s his solicitor, I was duty-bound to follow his instructions to represent him at the trial.”[21]
142. Thus, again, P did not explain why in the light of the indisputable objective evidence contained in the BOM records, P’s Solicitors still could maintain the view that P’s was not a hopeless case. They again claimed that they were merely acting in accordance with P’s instructions.
143. One further matter relied on by P’s Solicitors in Mak’s Affirmation is the fact that they had “engaged counsel, Mr Tommy Cheung (who is a Bar Scholar), to represent him at the trial. Our firm has not been put on any notice by our counsel that there was any impropriety in our conduct of the case.”[22] This however has not explained if any independent advice was obtained from Mr Cheung or any other counsel to advise on the issue of liability at an early stage of the proceedings after the BOM records were disclosed to P.
Whether P’s case was “hopeless”?
144. Given my analysis of the evidence above, I have no doubt that this is a hopeless case for P to pursue once the BOM records had been disclosed to P’s Solicitors by Ds.
Whether there was an abuse of process in this case?
145. However, while the case may be hopeless, whether the acts of P’s Solicitors amount to an abuse of process is a different matter.
146. In the circumstances of this case, while I think it was unreasonable for P’s Solicitors not to obtain independent advice from counsel after receiving the BOM records from Ds, it is difficult to see their inaction would take the case to “cross the line from hopelessness into abuse of process” as stated by Simon Brown LJ in Flatementos. As stated in §87 above, the authorities have clearly stated that merely representing a client with a weak claim or defence upon the client’s instructions would not amount to “abuse of process” nor attract a wasted costs order. Only if a solicitor has somehow connived at the client’s falsity, or assisted in the client’s improper/dishonourable conduct, then a solicitor will be made personally liable.
147. In this case, Mr Mak has repeatedly stated in his affirmation that he was merely following P’s instructions to pursue the claim.[23] Although no evidence has been put forward to support such claims, I am prepared to give the benefit of the doubt to P’s Solicitors. This is because I cannot say for sure that P’s Solicitors had personal knowledge of the falsity of evidence/matters put forward by P to the court in this case. All I can say is that given the BOM records and the contents of the letter from Ds’ Solicitors containing the 1st Offer, it was unreasonable for P’s Solicitors not to advise P strongly to discontinue the action at an early stage of the proceedings or, if such advice was not accepted by P, then they should themselves apply to the court to cease to act for P as their utmost duty is to the court and not his client. They cannot simply hide behind the cloak of “we are following the instructions of our client” each time.
148. However, on balance, I do not think there are sufficient evidence in this case to make P’s Solicitors personally liable for the costs of the proceedings in this case. I therefore decline to make a wasted costs order against P’s Solicitors in the particular circumstances of this case.
149. Having said that, I do not consider it was unreasonable for the court to make a 1st stage enquiry as to whether a wasted costs order should be made in this case in light of the materials disclosed under Wong’s 1st Affidavit. I am of the view that P’s Solicitors would have sufficient knowledge that P’s case (of sudden acceleration or braking of the Bus) was simply inherently improbable or illogical in the light of the BOM records.
150. Given the fact that P’s offer to concede to Ds’ Summons (ie to pay for the costs of the action and the costs of the summons on an indemnity basis) only come after the court’s directions for P’s Solicitors to show cause on 25 August 2023, I remain skeptical of whether such a concession was genuine or not. However, in the absence of any direct evidence of abuse of process, I think the costs of such enquiry should become part of the costs of Ds’ Summons and should be borne by P on an indemnity basis as found under Part I of this decision.
151. It remains for me to thank Ms Lui for the very detailed and helpful analysis of the law in this area which was set out in her written submissions.
| ( Andrew SY Li ) District Judge |
Mr B Mak of Messrs B Mak & Co., for the plaintiff
Ms Ann Lui instructed by Messrs Mayer Brown, for the 1st and 2nd defendants
[1] Ds allege that this is contrary to Principle 10.02 Commentary 3 of the Hong Kong Solicitors’ Guide to Professional Conduct (“HKSG”) which provides that if a written communication is made to a judge, a solicitor shall at the same time deliver a copy of it to his professional adversary.
[2] See §§30-32 and exhibit “WLHS-23”; Wong’s 2nd Affidavit.
[3] See exhibit “WLHS-23”; Wong’s 2nd Affidavit §§31-32.
[4] See exhibit “WLHS-24”; Wong’s 2nd Affidavit §§31-32.
[5] See exhibits “WLHS-26” and “WLHS-24”; Wong’s 2nd Affidavit.
[6] See exhibit “WLHS-1”; Wong’s 1st Affidavit.
[7] See Wong’s 1st Affidavit at §4.
[8] See exhibit “WLHS-3”; Wong’s 1st Affidavit §8.
[9] See exhibit “WLHS-4”; Wong’s 1st Affidavit §9.
[10] See exhibit “WHLS-5”, Wong’s 1st Affidavit §9.
[11] See exhibit “WLHS-14”, Wong’s 2nd Affidavit.
[12] See exhibit “WLHS-23”; Wong’s 2nd Affidavit §§ 31-32.
[13] See exhibit “WLHS-26”; Wong’s 2nd Affidavit.
[14] Which was sent to the parties on 11 September 2023.
[15] See memorandum of legal aid application dated 9 November 2022.
[16] Note: Chiu Sui Ching found “undue delay” and/or “misconduct” as the “something more” in the case of Labour Buildings: See §191 of Chiu Sui Ching.
[17] See exhibit “WLHS-1”; Wong’s 1st Affidavit.
[18] See §5 of Mak’s Affirmation.
[19] See §6 of Mak’s Affirmation.
[20] See §7 of Mak’s Affirmation.
[21] See §7 of Mak’s Affirmation.
[22] See §8 of Mak’s Affirmation.
[23] See §§5-7 of Mak’s Affirmation.