DCCJ4/2015 CARRIE WOO v. I MO DOCK AND ANOTHER - LawHero
DCCJ4/2015
區域法院（民事）His Honour Judge KW WONG (In Chambers, by paper disposal)17/3/2019[2019] HKDC 348
DCCJ4/2015
A A
B B
DCCJ 4/2015
C
[2019] HKDC 348 C
IN THE DISTRICT COURT OF THE
D HONG KONG SPECIAL ADMINISTRATIVE REGION D
CIVIL ACTION NO. 4 OF 2015
E ________________ E
BETWEEN:
F F
CARRIE WOO Plaintiff
G G
and
H H
LUI MO DOCK and WONG MIU YUNG Defendants
I I
Coram: His Honour Judge KW WONG (In Chambers, by
paper disposal)
J J
Date of Defendants’ (1) 26 September 2018
K
Submission: (2) 18 October 2018 K
Date of Plaintiff’s 10 October 2018
L Submission: L
Date of Defendants’ 5 December 2018
M Further Submission: M
Date of Decision: 18 March 2019
N N
_____________
O O
DECISION
_____________
P P
Q Q
R R
A A
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B B
1. On 13 August 2018, this Court handed down a Judgment
C (“the said Judgment”) dismissing basically all the Plaintiff’s claims, save C
and except $5,000 representing the expenses for removal of the glass
D debris. This Court also made an order nisi ordering the Plaintiff to bear D
the Defendants’ costs, on District Court scale, with certificate for counsel.
E E
2. The Defendants issued a summons on 21 August 2018
F seeking, in gist, to vary the costs order in the following manner: F
i) the costs to be on an indemnity basis instead of party
G G
and party basis as from the commencement of the
Action, or alternatively, after 28 December 2015
H H
(“Cut-off date”) (“indemnity costs application”);
and
I I
ii) interest on such costs to be at an enhanced interest
rate of 10% above the judgment rate 1 or such other
J J
rate as this Court may think fit as from the
commencement of the Action, or alternatively, the
K K
Cut-off date or such other date as this Court may think
L
fit2 (“enhanced interest on costs application”). L
M 3. The parties have agreed to dispose of the said summons by M
way of written submission without a hearing. The agreement was made
N an order of the Court dated 29 August 2018. This Court invited further N
submission by its direction of 22 November 2018. Only the Defendants
O filed further submission. O
P P
1
See [3.2] of Mr Ernest Ng’s submission dated 26 September 2018
2
See [4.2] of Mr Ernest Ng’s submission dated 26 September 2018
Q Q
R R
A A
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B B
4. In the Court’s judgment, the Plaintiff should be regarded the
C losing party because she lost almost on each and every issue she asserted. C
It is essential to note that the Plaintiff is only opposing the liability to pay
D costs on indemnity basis to a certain extent. Her concessions are more D
particularly set out in [8] below3. She opposes the enhanced interest on
E costs application. E
F 5. In the further written submission dated 5 December 2018 F
lodged on the Defendants’ behalf, Mr Ng made it clear that in relation to
G G
the enhanced interest on costs application, the Defendants are seeking an
order that the Plaintiff do pay the Defendants’ interest on:
H H
i) the pre Cut-off date costs at an enhanced rate of 10%
above judgment rate as from date of judgment; and
I I
ii) on the post Cut-off costs at an enhanced rate of 10%
above judgment rate after the Cut-off date.
J J
Indemnity Costs Application
K K
L
6. This Court does not intend to repeat the said Judgment L
herein. Suffice it to say, for the purpose of this summons, that a structure
M was blown off the Defendants’ house during a typhoon. It fell onto the M
Plaintiff’s house. The Plaintiff sued for damages. After trial, this Court
N considered the Plaintiff and her key witness Ms Athena Luk totally N
dishonest, untruthful and not credible witnesses. They were found to have
O lied to this Court, exaggerated and fabricated evidence in many material O
respects. In particular, this Court rejected as untruthful all the evidence
P P
3
See [2] of Mr Patrick Chiu’s submission dated 10 October 2018
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A A
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B B
relating to the alleged July 26 flood4 and hard landing of the aluminium
C frame which had caused the alleged damages to her house. This Court C
considered the damages claimed grossly exaggerated and were totally
D unjustified. Of a claimed amount of $442,722, this Court only awarded D
the Plaintiff a sum of $5,000.
E E
The Defendants’ Case
F F
7. The Defendants’ grounds, as set out in Mr Ng’s written
G G
submission, can be summarized as follows 5:
i) The Defendants have made sanctioned payment of
H H
$57,1006 which was not accepted7. By virtue of O.22
r.23 RDC the Defendant is entitled to indemnity costs
I I
after the latest date i.e. 28 December 2015 (the Cut-off
date referred to above) on which the sanctioned
J J
payment could have been accepted without leave; and
ii) as a matter of principles, the conduct of the Plaintiff in
K K
the proceedings are such that she should be visited
L
with an indemnity order. L
M The Plaintiff’s Case M
N N
4
Defined in [34] of the August Judgment
O O
5
See [4.1] of the submission of Mr Ernest CY Ng of counsel for the Defendants
6
The Notice of (increased) Sanctioned Payment, making the total payment in being $58,100, was dated
P P
30 November 2015. It was served on the same date (Bundle/324).
7
According to O.22. r.15 RDC, the Plaintiff has 28 days to accept without leave of Court.
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R R
A A
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B B
8. The Plaintiff concedes that by reason of O.22 r.23 RDC, the
C Defendants should be entitled to indemnity costs after the Cut-off date. C
However, she opposes indemnity costs before this date8 , and contends
D that the party and party basis should apply. It is fair to summarize Mr D
Chiu’s grounds of objection for the Plaintiff as follows:
E i) the proceedings brought by the Plaintiff are neither E
scandalous, vexatious, oppressive nor with any
F ulterior motive. There is also no special or unusual F
feature that justifies an indemnity costs order;
G G
ii) the Plaintiff had acted reasonably by agreeing to
attempt mediation with the Defendants with a view to
H H
settling amicably the dispute with the Defendants. Yet
it is the Defendants who insisted to include the other
I I
co-owner who was, unfortunately, on bad terms with
the Plaintiff. The Defendants unreasonably rejected
J J
mediation despite the Plaintiff had agreed to provide
an indemnity.
K K
L
9. Mr Chiu relies on 2 Court of Final Appeal (“CFA”) L
decisions, namely, Town Planning Board v Society for Protection of the
M Harbour Ltd (No 2) 9 and Libertarian Investment Ltd v Thomas Alexej M
Hall10 in support.
N N
10. In the Court’s judgment, the 2 cases cannot help the Plaintiff.
O O
8
See [6] of Mr Patrick Chiu of counsel for the Plaintiff dated 10 October 2018
P 9 P
(2004) 7 HKCFAR 114
10
(unrep) FACV 14 of 2012, 11/03/2014
Q Q
R R
A A
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B B
Discussion
C C
11. The Plaintiff’s concession on indemnity costs after the Cut-
D off date is, in the Court’s judgment, a correct and sensible move. It is D
undisputed that the Defendants made a sanctioned payment of $58,100
E E
(exclusive of any interest) on 30 November 2015. It was rejected on 14
December 2015. At the end of the day the Plaintiff could not achieve a
F F
better result than the Defendants’ offer. According to O.22 r.15 RDC,
time for acceptance expired after 28 December 2015, i.e. the Cut-off date.
G G
Under O.22 r.23(5) RDC, the Court shall make such order unless it
considers unjust to do so. When considering whether or not it is unjust to
H H
do the court should, according to O.22 r.23(6) take into consideration of
all circumstances, including the 4 conditions particularly spelt out in sub-
I I
paragraphs (a) to (d).
J J
12. In the present case, the Plaintiff can only achieve less than
K 10% of the sanctioned payment, and only about 1% of her pleaded claim. K
The payment was made sometime after the first round of pleadings was
L filed and after serveral exchanges of without prejudice save as costs L
correspondence. In fact, as early as May 2015, the solicitors for the
M Defendants had pointed out to the Plaintiff the inconsistencies between M
the Plaintiff’s pleaded case and her own evidence. Some $57,100 was
N offered for settlement. By then the Plaintiff had already instructed N
valuation professional to help assess her damages but the Defendants had
O not. The Plaintiff should have a better understanding and assessment than O
the Defendants of the merit of her own case. She was therefore in no
P P
disadvantageous position to consider whether to accept the Defendants’
offer.
Q Q
R R
A A
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B B
C 13. The major reason for the Plaintiff’s failure in the Action is, C
as apparent from the said Judgment, that she pursued the dishonest
D aspects of her claim. She and her witness fabricated the alleged July 26 D
flood following the blown-off incident which formed the whole basis of
E her claims. This Court considers it not unjust to make the indemnity costs E
order under O.22. The onus is on the Plaintiff to show otherwise, and she
F does not seek to do so. For reasons set out in this paragraph and below, it F
would be difficult, if not impossible for the Plaintiff to argue it unjust to
G G
do so. Had she not made the concession, this Court would definitely order
the Plaintiff to pay costs on indemnity basis pursuant to O,22 r.23 RDC
H H
as from date following the Cut-off date, i.e. 29 December 2015.
I I
14. As regards costs incurred prior and up to the Cut-off date,
this Court does not believe the parties have any quarrel that as a matter of
J J
general principle, costs are entirely a matter of discretion of the Court
taking into account all circumstances including the conduct of the parties
K K
in the proceedings, see: O.62 r.5 RDC. For costs to be taxed on indemnity
L
basis, the costs awarded should provide that there shall be allowed all L
such costs as are necessary or proper for attainment of justice or for
M defending the rights of a party whose costs are being taxed, see: O.62 M
r.28(4A) RDC.
N N
15. Applying O.62 r5(2) RDC to specifically the Plaintiff’s
O conduct in the present case, this Court has to take into account: O
i) whether it is reasonable for the Plaintiff to pursue the
P present claim based mainly on the alleged July 26 P
flood;
Q Q
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B B
ii) the manner in which the Plaintiff has pursued her
C claim; C
iii) whether the Plaintiff has exaggerated her claim; and
D iv) her conduct before, as well as during, the proceedings. D
E 16. As to how justice can be attained by awarding an indemnity E
costs, the CFA’s decision in Town Planning Board (supra) is apposite.
F That case was concerned with whether it is appropriate for indemnity F
costs to be imposed in favour of the Society who succeeded in its
G G
application. The following principles can be derived:
i) indemnity costs, which is a more generous basis, will
H H
usually enable the successful party to recover more of
his costs. It can therefore be perceived as achieving a
I I
fairer result than that on a party and party basis.
However, such difference on its own is insufficient to
J J
justify an award of indemnity costs;
ii) “special or unusual feature’ must be shown by the
K K
successful party;
L
iii) an award of indemnity costs will be made in cases L
brought with an ulterior motive, for an improper
M purpose, or where there was deception or underhand M
conduct on the part of the losing party, but is not only
N confined to them; N
iv) it will be undesirable to define all circumstances
O leading to grant of costs on indemnity basis, as O
discretion may be fettered;
P P
Q Q
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A A
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v) the attributes of the parties and the character of the
C proceedings were not irrelevant to the exercise of the C
discretion; and
D vi) The grounds for making an indemnity costs order D
must be connected with the case and might extend to
E any matter relating to the litigation and the parties’ E
conduct in it, and also to the circumstances leading to
F the litigation, but no further. F
G G
17. The CFA decision of Libertarian Investments (supra)
explained that improper conducts (which includes deception or underhand
H H
conduct on the part of the losing party) generally refer to the conduct of
the litigation rather than conduct which constituted the cause of matter
I I
giving rise to the litigation 11. Accordingly, even in contempt cases, there
is no general rule that indemnity costs should be awarded against the
J J
contemnor. The remedies granted in the action have reflected the
appropriate compensation, and unless there are other conducts which
K K
justified a separate penalty, indemnity costs might not be justified.
L L
18. The CFA’s decisions are of course binding on this Court.
M However, reading Libertarian Investments (supra) in the context and M
together with Town Planning Board (supra), they do not support a
N proposition that the CFA has excluded as irrelevant pre-action conduct. N
Libertarian Investments (supra) stated that generally, the improper
O conduct which brought about the causes of action of the winning party O
would have been sufficiently compensated by the remedies granted by the
P court. However, it never said then no indemnity costs would then be P
11
See [6] of Libertarian Investments (supra)
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A A
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imposed when improper pre-action conduct is involved. In appropriate
C circumstances, indemnity costs could still be imposed, see: [6] of C
Libertarian Investments (supra).
D D
19. In the present case, the Plaintiff lost on almost each and
E every issue she contended. Her case was a pack of lies and therefore she E
pursued a dishonest claim. The followings are some examples of such lies
F listed in the said Judgment. The square brackets denote paragraph F
referred to in the said Judgment:
G G
(i) the removal of the glass fragments by Luk’s
volunteers using plastic buckets, see: [117];
H H
(ii) the concerted denial of the issue of her 3rd Letter and
the Ngai Sing’s 2012 quotation. On the other hand,
I I
they turned around and accused the Defendants of
having fabricated the said documents. This Court
J J
considers it a wicked move, see: [120] - [123];
(iii) the Plaintiff’s detailed, vivid but false account of how
K K
she removed the glass fragments that choked the roof
L
drain not sitting well with objective roof and drain L
structure, see: [129], [130];
M (iv) the plucking and clearing away of glass fragments M
from the drain by the volunteers was a highly
N exaggerated fabrication, see: [131]. N
O 20. In addition, she only raised the matter of flood some 3 years O
after the alleged incident, see: [127] of the said Judgment. The quantum
P of her case fluctuated from initially some $57,10012 to almost $2 million13 P
12
See [54] of the August Judgment
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A A
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B B
before Action, and then to $442,722 when the proceedings were issued.
C By the time she raised the water damages, it would be quite impossible C
for expert to conduct any meaningful examination to verify the alleged
D flood. Yet, expert evidence had to be obtained and the Defendants were D
put to expenses to engaging their team to assist the Court and to defend
E their position. E
F 21. It has to be remembered the Plaintiff’s version of story was F
not one which the Defendants could easily brushed aside. It is because as
G G
a matter of fact, a structure had been blown off their house and landed on
the Plaintiff’s house. It was a hard fact which the Defendants did not seek,
H H
and I think fairly and correctly, to deny. Although it does not mean that a
flood would automatically follow as alleged, the blown-off incident set an
I I
apparently natural stage for the Plaintiff to build upon her story. It forms
an added hurdle when the Defendants sought to refute the Plaintiff’s case.
J J
That is the unfortunate situation in which the Defendants were stuck. The
Plaintiff made use of the opportunity with a view to gaining unwarranted
K K
advantages. Substantial time and costs had to be incurred to refute the
L
Plaintiff’s case. L
M 22. The fabricated story of the Plaintiff and her inflated claim M
were only dismissed after a full-blown trial, particularly after thorough
N cross-examination by the good job of the Defendants’ counsel. It was a N
time consuming and costly exercise. Only $5,000 was awarded for
O removal of debris the liability to pay the Defendants had all along O
accepted. The Plaintiff ran a dishonest case. This is exactly what an
P indemnity costs order should condemn. She must compensate the P
13
See [67] of the August Judgment in which she asked for $1,959,000, to be exact.
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A A
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B B
Defendants for the costs of responding to her dishonest claim. This Court
C wonders how the Plaintiff can possibly argue her case is otherwise than C
with any ulterior motive or there is no underhand conduct.
D D
23. The $58,100 was rejected only 14 days of the offer14. Such
E being the case and given the Plaintiff’s persistence in pursuing her E
dishonest claim, this Court does not believe mediation, if going ahead,
F could bring about any fruitful settlement. Further, the Defendants’ F
concern of the Plaintiff’s brother suing after the present Action was a
G G
legitimate one. In the Court’s judgment, the mediation ground raised by
Mr Chiu cannot assist the Plaintiff.
H H
24. This Court sees nothing unjust to award costs on indemnity
I I
basis for the entire action and now so vary the costs order nisi to
indemnity costs. That is to achieve, as far as money can redress, a fairer
J J
result in circumstances of the present case.
K K
Enhanced Interest on Costs Application
L L
The Defendants’ Case
M M
25. Again, there are 2 parts of costs which attract the enhanced
N interest rate. They are costs incurred prior to and including the Cut-off N
date and those after it.
O O
26. For the post Cut-off date costs, Mr Ng relies on the same
P O.22 r.23 RDC which provides for indemnity costs as well as enhanced P
14
The rejection was made within 14 days after the Defendants topped up its payment to $58,100
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A A
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B B
interest rate if a plaintiff cannot obtain an award better than the refused
C sanctioned payment. The relevant rules provide that: C
i) the court may order that the Plaintiff to (a) pay the
D Defendants’ costs on indemnity basis after the Cut-off D
date [i.e. 28 December 2015 in the present case] and
E (b) interest thereon at a rate not exceeding 10% above E
judgment rate; and
F ii) where this rule applies, the court shall make the order F
aforementioned unless it considers it unjust to do so,
G G
and in considering whether it is unjust, the court is
required to take into account all circumstances
H H
including those set out in sub-paragraph 6 (a) to (d)15.
I I
27. As for the pre Cut-off date costs, Mr Ng asks for the same
10% above the judgment rate. His grounds can be summarized as:
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i) this Court has an inherent jurisdiction to grant such
enhanced rate, and is in any event not limited by O.22
K K
16
r.23(7) RDC to grant such enhanced rate;
L
ii) the Plaintiff has run a dishonest case and should be L
liable to pay the enhanced rate;
M iii) there is a need to show the Court’s disapproval of the M
Plaintiff’s conduct in line with the award of indemnity
N N
15
Subparagraphs (a) to (d) of O,22 r.23(6) RDC provide: “(a) the terms of any sanctioned payment or
O sanctioned offer; (b) the stage in the proceedings at which any sanctioned payment or sanctioned offer O
was made; (c) the information available to the parties at the time when the sanctioned payment or
sanctioned offer was made; and (d) the conduct of the parties with regard to the giving or refusing to
give information for the purposes of enabling the payment or offer to be made or evaluated.”
P P
O.23 r.23(7) provides “The power of the Court under this rule is in addition to any other power it
16
may have to award or disallow interest.”
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A A
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B B
costs, and therefore a comparable rate should be
C awarded for the period prior to the Cut-off Date; C
iv) D1 was under stress since 2013 when the Plaintiff
D threatened legal action until trial. The Defendants D
were also out of pocket since 2015 when the action
E was commenced. Accordingly, the Defendants should E
be properly and adequately compensated by the
F enhanced rate prior to the Cut-off date. F
G G
28. This Court has raised queries as to the jurisdiction of this
Court to direct costs to run from a date prior to judgment which is
H H
normally the date on which interest on costs start to accrue17. Through Mr
Ng’s further submission, the Defendants have clarified their position as
I I
follows18:
i) as for the pre Cut-off date costs, enhanced interest of
J J
10% over judgment rate is to run from date of
judgment until payment;
K K
ii) as for the post Cut-off date costs, enhanced interest of
L
10% over judgment rate is to run from the Cut-off date. L
M The Plaintiff’s Case M
N 29. The Plaintiff’s position is, so far as can be discerned from N
his submission, this19:
O O
17
The local authority supporting interest to run from date of judgment can be found in Caltex Oil Hong
Kong v Director of Buildings and Lands [1994] HKDCLR 31 at [8], relying on the English House of
Lord decision in Hunt v RM Douglas (Roofing) Ltd [1900] 1 AC 398
P P
18
See the “Revised Draft Minutes of Order” attached to the submission dated 5 December 2018
19
See [11] of Mr Chiu’s written submission
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A A
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B B
i) no enhanced interest rate should be imposed for costs
C incurred prior to the Cut-off date; C
ii) no enhanced interest rate should be imposed for costs
D after the Cut-off date, or alternatively, the enhanced D
rate of 4.5% instead of 10% as adopted by Lam J (as
E the learned VP then was) in Golden Eagle E
International (Group) Ltd v GR Investment Holdings
F Ltd as in [19]20 . F
G G
30. Mr Chiu further submits that since there is no supporting
affidavit to explain how disbursements, costs and costs on account were
H H
paid from commencement of the action to the Cut-off date. As in the case
of Shih Pik Nog v G2000 (Apparel) Ltd21, this Court is in no position to
I I
decide on the matter, and Mr Chiu invites this Court to reject the
Defendants’ claim.
J J
31. Mr Ng submits that since Mr Chiu raises no jurisdictional
K K
challenge to enhanced interest running prior to the Cut-off date, the only
L
question is whether this Court should impose such enhanced rate, and if L
so, what it is . A solicitor’s statement on costs so far paid and when they
22
M were paid by the Defendants was annexed to his reply submission. M
N Discussion N
O O
20
[2010] 3 HKLRD 273 at 280
P 21 P
[2011] 4 HKLRD 121 per Hon Bharwaney J
22
See [10] of Mr Ng’s Reply submission.
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A A
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B B
32. In Golden Eagle International (Group) Ltd v GR Investment
C Holdings Ltd (supra), the plaintiff eventually achieved a result in the final C
judgment better than its sanctioned offer which was rejected. The issues
D before Lam J (as the learned VP then was) were, inter alia, firstly, D
whether the plaintiff should be granted indemnity costs after the latest
E date on which the sanctioned offer could have been accepted without E
leave, and secondly, the appropriate interest rate on those costs.
F F
33. Lam J (as the learned VP then was) in that case reviewed a
G G
number of English authorities and endorsed the principles in McPhilemy v
Times Newspapers Ltd (No 2) 23 and KR v Bryn Alyn Community
H H
(Holdings) Ltd 24 . Golden Eagle (supra) has since been followed by a
number of subsequent decisions, e.g. Lo Yuk Sui v Fubon Bank (Hong
I I
Kong) Limited25, Maysun Engineering Co Ltd v International Education
and Academic Exchanges Foundation Co Ltd26, etc. The followings can
J J
be distilled from Golden Eagle (supra) regarding the costs and the
enhanced interest thereon under O.22 of the RHC (applicable to the RDC
K K
which is couched in exactly the same terms):
L
i) when the sanctioned offer was not accepted but the L
plaintiff can achieve better in the end, the court should
M exercise power under O.22 r.24 (and similarly under M
O.22 r.23) unless considers unjust to do so;
N N
O 23
[2002] 1 WLR 934, 4 All ER 861, EWCA Civ 933 O
24
[2003] PIQR P30, [2003] EWCA Civ 383
P 25 P
(unrep) HCA409/2005, 19/12/2016 per Hon Ng J
26
[2011] 2 HKLRD 844
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A A
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B B
ii) the powers under O.22 r.24 (and similarly under O.22
C r.23) aim at achieving a fairer result for the winning C
party27;
D iii) the purpose of awarding indemnity costs is to enable D
the court to address the unfairness which arises when
E the usual costs is awarded on standard basis, which E
almost invariably is less than what he has paid his
F solicitors28; F
iv) the purpose of awarding enhanced interest on costs is
G G
to redress the element of perceived unfairness which
arises from the general rule that interest is not allowed
H H
on costs before judgment, so that even if a successful
claimant who would obtain indemnity costs at trial, he
I I
has to first of all make payments to his solicitors on
account of costs out of his own pocket in advance of
J J
trial. The successful party will get nothing to
compensate him for the costs of money (or the loss of
K K
the use of money) which he has to bear before trial in
L
respect of his costs on account paid to his solicitors, L
and such order enables the court to achieve a fairer
M result. It will therefore not be unjust to ask his M
opponent, who should have accepted the sanctioned
N payment thus bringing the proceedings to an end and N
successful party’s costs not being funded. Without
O specific evidence, the court can direct interest to run O
P 27 P
See [10] of Golden Eagle (supra)
28
See [13] of Golden Eagle (supra)
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A A
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B B
from the date when the work was done or liability for
C disbursement was incurred29; and C
v) the Court has power to direct, as a matter of principle,
D interest to run on costs incurred after the relevant cut- D
off date from a date when the works were respectively
E done30. E
F 34. In KR (supra), Walker LJ said at [22] F
“If an order is made to pay costs on an indemnity basis, it is
unlikely to be unjust to make the party pay interest on those
G G
costs for the period when litigation is being funded when
acceptance of a Pt 36 offer should have led to it not being
funded…”
H H
35. This Court agrees to the above observation in KR (supra) as
I I
well as the similar observation by Lam J in Golden Eagle (supra). As this
Court has already come to the conclusion that the Plaintiff should pay
J J
post Cut-off date costs on indemnity basis 31, for the same reasons and in
order to better compensate the Defendants in a fairer way, this Court
K K
should award enhanced interest rate for the post Cut-off date costs. The
question is what the rate should be and when it should start to run.
L L
36. Lam J in Golden Eagle (supra), following McPhilemy (No.2)
M M
(supra), considered enhanced interest rate should be compensatory and
N
not penal in nature; and costs of money appears to be a relevant N
O O
29
See [16] to [18] of Golden Eagle (supra)
30
See [18] of Golden Eagle (supra)
P P
31
For the avoidance of doubt, it has to be stated clearly that this Court has come to the conclusion that
the Plaintiff should pay indemnity costs before as well as after the Cut-off date
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A A
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B B
yardstick32. The learned judge adopted 4% over prime (which was then at
C 5% p.a.), making a total of 9% p.a. reasonable and, in fact, a generous C
assessment of costs of funding. He applied the rate of 4.5% p.a. Similar
D rate was followed in many decisions of the first instance, e.g. Lo Yuk Sui D
(supra) (5% p.a.), The Owners and/or Demise Charterers of the Ship or
E Vessel “MCC Jakarta” v The Owners and/or Demise Charterers of the E
Ship or Vessel “Xin Nan Tai 77”33 (half of 4% over prime), and even in
F the CA decision of Antwerp Diamond Bank NV v Brink's Incorporated F
(No. 2)34 (4% over prime).
G G
37. In relation to awarding only half of the costs of funding, this
H H
Court can readily appreciate the rationale behind such award. It is
because normally, costs were incurred and/or works done from time to
I I
time throughout the proceedings until their conclusion. It therefore makes
perfect sense for halving the rate in order to reflect the reality that not all
J J
items of legal works were done or payment paid in one go at the Cut-off
date when the award is made under the O.22 regime. Halving of the
K K
interest rate reflects this rationale. Implicitly, it also reflects that the
L
enhanced rate is compensatory and not penal. L
M 38. However, the cost of money approach seems to have been M
departed from in many decisions depending on facts of the cases. A
N greater uplift of interest on costs can be found in, for example, Force Way N
Engineering Limited v The Incorporated Owners of Grand Court (half of
O O
32
See [19] of Golden Eagle (supra)
P 33 P
(unrep) HCAJ 48/2011, 158/2012 & 49/2013, 30/11/2017 at [49]
34
[2015] 4 HKLRD 628
Q Q
R R
A A
- 20 -
B B
4% above judgment rate) 35 . In Maysun Engineering (supra), HHJ
C Mimmie Chan (as Hon Chan J then was) even awarded a rate of 2% C
above judgement rate (without halving it) from the relevant date on which
D the 2nd offer should have been accepted without leave, until judgement. D
E 39. Mr Ng for the Defendants urged this Court to adopt 10% E
over judgment rate (currently at 8.088% p.a. as from 1 January 2019, and
F will be 8.125% p.a. as from 1 April 2019). He does not propose halving it. F
The effective rate is therefore 18.088% p.a. and apparently, there is a
G G
punitive element in it.
H H
40. Mr Ng refers this Court to the recent English Court of
Appeal decision in OMV Petrom SA v Glencore International AG36 which
I I
was decided recently and after Golden Eagle (supra). He submitted that
OMV Petrom (supa) supported his proposition that the enhanced interest
J J
rate and the costs sanction embodied in the O.22 regime is not entirely
compensatory; and in appropriate cases, a punitive element can be
K K
factored in to mark the court’s disapproval of any unreasonable and
L
improper conduct. L
M 41. In OMV Petrom (supa), the claimant sued the defendant in M
deceit and made offer for settlement. The defendant rejected it and
N vigorously contested the claim. After a lengthy trial, judgment was N
entered against the defendant for a sum significantly greater than the offer.
O The trial judge commented that the defendant had put the claimant O
through the hoops of having to establish liability in a very flagrant case of
P 35 P
(unrep) DCCJ 3216/2016 13/8/2018, [2018] HKDC 991 at [8]
36
[2017] 1 WLR 3465
Q Q
R R
A A
- 21 -
B B
fraud and in a manner which was wholly unreasonable. However,
C following the McPhilemy (No.2) (supra), the judge refused to award the C
maximum enhanced rate under the English counterpart of the Hong Kong
D O.22 r.24 37 and held they were compensatory rather than penal. The D
claimant appealed and it was allowed unanimously by the English CA.
E E
42. In OMV Petrom (supa), Sir Geoffrey Vos C (with whom
F Kitchin and Floyd LJJ agreed) has this to say at [43] and [44] on F
enhanced interest on costs:
G “43. As I have said, I do not think that we are bound by G
McPhilemy case to decide that the assessment of the rate of
interest on costs should be such as to achieve a fairer result
H for the claimant than would otherwise have been the case. H
That does not, however, indicate that some of the factors I
have already mentioned may be relevant. Moreover, once
I again I do not regard the award as purely compensatory. I
As I have said, different factors may in practice apply to the
enhanced interest under CPR rr36.14(3)(a)(c) …
J 44. I have considered carefully the judge’s approach to J
the award of enhanced interest on costs. He applied para 23
of McPhilemy case as he was entitled to do so, but I think
K he fell into error, through no fault of his own, by failing to K
take into account some of the other factors I have
mentioned including in particular the fact the costs on
L which enhanced interest was claimed were largely L
incurred unreasonably in advancing a dishonest and
unreasonable defence. … I would hold that the correct rate
of enhancement is once again the maximum of 10% per
M annum for the reasons I have mostly already given. I do, M
however, also think that the factors I mentioned above in
relation to the enhanced rate of interest under CPR
N r.36.14(3)(a) were also relevant to the interest awarded on N
costs, because this was a bad case of the defendant simply
ignoring a proper offer and running up costs thereafter.”
O (Emphasis added) O
P P
37
CPR r.36.14(3)(a)(c)
Q Q
R R
A A
- 22 -
B B
43. Although OMV Petrom (supra) is not binding on this Court,
C it is highly persuasive. I accept Mr Ng’s submission that when Golden C
Eagle (supra) was decided, the court then was without the benefit of the
D subsequent development in the jurisprudence of this area in England, D
particularly in the regime of costs/interest sanctions and rewards based on
E which the Hong Kong rules are modelled. It is apparent that the sanctions E
and rewards are introduced to incentivise parties to behave reasonably in
F litigation and encourage good practice. It also serves to save resources of F
the parties and the Judiciary. Further, if the enhanced interest is only
G G
restricted to costs of money, the rules are expected to be drafted very
differently and, perhaps, more directly. It is because when at low interest
H H
environment, 10% over judgement can rarely, if not never, be awarded,
and reference to all circumstances, including conduct of a party, may be
I I
unnecessary. A survey of decided Hong Kong cases in this area shows
that the court’s discretion on this area remains unfettered, and the court
J J
always exercises the discretion on the interest uplift taking into
consideration of all circumstances.
K K
L
44. The factors which Sir Vos C considered relevant when L
imposing the full 10% uplift included:
M i) the unsuccessful party was guilty of lying; M
ii) there was deplorable, if not outrageous conduct such
N as using vast asset base to frustrate the claimant’s N
attempts to settle;
O iii) the unsuccessful party had refused to engage in O
settlement discussion or response to the sanctioned
P offer with the eventual award being very significantly P
greater than the O.22 offer;
Q Q
R R
A A
- 23 -
B B
iv) the running of unsustainable grounds of appeal by the
C unsuccessful party. C
D 45. In the present case, the Plaintiff took advantage of an D
unfortunate accident and fabricated a claim against the Defendants;
E inflated her claims and therefore had repeatedly rejected the Defendants’ E
offer as being too low; and insisting on fighting a hopeless case when the
F evidence was so inherently inconsistent and bad from the beginning. In F
my judgement, although there is always a possibility of a worse case than
G G
the present one, this is definitely a very bad case that should be visited
with an enhanced interest rate over and above the costs of money. Taking
H H
into consideration that this Court is not going to half the rate to be
awarded, and some $1.76 million38 had been paid since the post Cut-off
I I
date which was substantial to the Defendants who are retired school
teachers, this Court will award an enhanced rate of 4% over the judgment
J J
rate on the post Cut-off date costs. The rate would be marginally over
12% p.a. which is definitely higher than 4.5% p.a. applied by Lam J in
K K
Golden Eagle (supra).
L L
46. In light of OMV Petrom (supra), it will be unnecessary for
M this Court to engage in a tedious exercise to find out the costs of money, M
and when and how the Defendants had actually settled their bills with a
N view to avoiding over-compensation. This Court accepts certain punitive N
element can be included to reflect the Court’s dissatisfaction on a party’s
O unacceptable conduct. In any event the Defendants’ solicitors have O
provided a statement as to when the Defendants have paid their costs on
P accounts and settlement of bills and counsel’s fees. P
38
According to the solicitor’s statement (attached to the reply submission of Mr Ng)
Q Q
R R
A A
- 24 -
B B
C 47. As regards when such interest should start to run, it appears C
the learned judge in Golden Eagle (supra) accepted readily that the
D current O.22 empowered the court to order interest to run before D
judgment, just like what the English counterpart has operated39, though
E there is no detail discussion on how such jurisdiction is conferred by the E
present O.22 RDC (or RHC) regime. The jurisdiction to award interest on
F costs to run before judgment under the current O.22 regime has been F
consistently exercised in many cases including those referred to above.
G G
This Court will therefore follow the aforesaid line of cases and directed
that in the present case, interest on costs is also to run from the date
H H
following the Cut-off date.
I I
48. The Defendants are also seeking the same enhanced interest
on the pre Cut-off date costs, though to run from date of judgment.
J J
Section 50 of the District Court Ordinance, Cap 336 (“DCO”) provides
for outstanding judgment debts (of which costs order is one) are to carry
K K
interest:
“(a) at the rate the Court orders; or
L L
(b) in the absence of an order, at the rate the Chief
Justice determines by order,”
M M
49. Obviously, this Court is empowered by the aforesaid
provision to direct interest on costs, on good reason, to accrue at a rate
N N
other than that prescribed by the Chief Justice. O.22 r.23(4)(b) RDC
O
expressly empowers the Court to order enhanced interest rate for post O
Cut-off date costs. It is an express power and a gloss on the post Cut-off
P P
39
In Golden Eagle (supra), the court ordered the defendant to pay 4.5% p.a. on the awarded indemnity
costs as from the date on which the sanctioned offer should have been accepted.
Q Q
R R
A A
- 25 -
B B
date costs. However, the lack of express provision in the RDC covering
C pre Cut-off date costs will not take away the Court’s power under s.50 of C
the DCO to impose a different interest rate, enhanced or otherwise, to
D different part of the costs order. It has to be remembered that O.22 r.23(7) D
RDC provides expressly that the Court’s power under the rule being in
E addition to any other power it may have to award or disallow interest. E
F 50. The next question is whether this Court should exercise such F
discretion, and if so, what that rate is, and whether it is the same as that
G G
applicable to the post Cut-off date costs.
H H
51. There is no reasons why the principles in OMV Petrom
(supra) should not be applied to deal with the pre Cut-off date costs. In
I I
the judgment of this Court, the Plaintiff should compensate the
Defendants for the costs of responding to her totally unwarranted and
J J
dishonest claim, and bear whatever consequence, sanction or otherwise,
that may flow from it. I therefore do so direct the same enhanced interest
K K
rate be applied to the Defendants’ pre Cut-off date costs, and to run from
L
date of judgment until payment. L
M Disposition and Orders M
N 52. The costs order nisi made by this Court on 13 August 2018 N
be varied to the followings:
O i) the Plaintiff do pay the Defendants’ costs of the entire O
Action, i.e. costs from the commencement of the
P action to 28 December 2015 (“pre Cut-off date costs”) P
and from 29 December 2015 to the date of payment of
Q Q
R R
A A
- 26 -
B B
payment (“post Cut-off date costs”), on indemnity
C basis, with certificate for counsel, to be taxed if not C
agreed;
D ii) the Plaintiff do pay interest on the Defendants’ pre D
Cut-off date costs at a rate of 4% above judgment rate
E as from the date of judgment until full payment; and E
iii) the Plaintiff do pay interest on the Defendants’ post
F Cut-off date costs at a rate of 4% above judgment rate F
as from the date following the Cut-off date until full
G G
payment.
H H
53. Regarding costs of this application, there is no reason why
the usual rule of costs to follow the event inapplicable, and should not be
I I
on indemnity basis which is the same as the main action. I do order that
the Plaintiff do pay the Defendants costs of this application on indemnity
J J
basis, with certificate for counsel, to be taxed if not agreed.
K K
L L
M M
(WONG King-wah)
District Judge
N N
O O
Mr Patrick PH Chiu, instructed by Cheung Fung & Hui, for the Plaintiff
P Mr Ernest CY Ng, instructed by J Chan, Yip, So & Partners, for the P
Defendants
Q Q
R R
A A
B B
DCCJ 4/2015
C
[2019] HKDC 348 C
IN THE DISTRICT COURT OF THE
D HONG KONG SPECIAL ADMINISTRATIVE REGION D
CIVIL ACTION NO. 4 OF 2015
E ________________ E
BETWEEN:
F F
CARRIE WOO Plaintiff
G G
and
H H
LUI MO DOCK and WONG MIU YUNG Defendants
I I
Coram: His Honour Judge KW WONG (In Chambers, by
paper disposal)
J J
Date of Defendants’ (1) 26 September 2018
K
Submission: (2) 18 October 2018 K
Date of Plaintiff’s 10 October 2018
L Submission: L
Date of Defendants’ 5 December 2018
M Further Submission: M
Date of Decision: 18 March 2019
N N
_____________
O O
DECISION
_____________
P P
Q Q
R R
A A
-2-
B B
1. On 13 August 2018, this Court handed down a Judgment
C (“the said Judgment”) dismissing basically all the Plaintiff’s claims, save C
and except $5,000 representing the expenses for removal of the glass
D debris. This Court also made an order nisi ordering the Plaintiff to bear D
the Defendants’ costs, on District Court scale, with certificate for counsel.
E E
2. The Defendants issued a summons on 21 August 2018
F seeking, in gist, to vary the costs order in the following manner: F
i) the costs to be on an indemnity basis instead of party
G G
and party basis as from the commencement of the
Action, or alternatively, after 28 December 2015
H H
(“Cut-off date”) (“indemnity costs application”);
and
I I
ii) interest on such costs to be at an enhanced interest
rate of 10% above the judgment rate 1 or such other
J J
rate as this Court may think fit as from the
commencement of the Action, or alternatively, the
K K
Cut-off date or such other date as this Court may think
L
fit2 (“enhanced interest on costs application”). L
M 3. The parties have agreed to dispose of the said summons by M
way of written submission without a hearing. The agreement was made
N an order of the Court dated 29 August 2018. This Court invited further N
submission by its direction of 22 November 2018. Only the Defendants
O filed further submission. O
P P
1
See [3.2] of Mr Ernest Ng’s submission dated 26 September 2018
2
See [4.2] of Mr Ernest Ng’s submission dated 26 September 2018
Q Q
R R
A A
-3-
B B
4. In the Court’s judgment, the Plaintiff should be regarded the
C losing party because she lost almost on each and every issue she asserted. C
It is essential to note that the Plaintiff is only opposing the liability to pay
D costs on indemnity basis to a certain extent. Her concessions are more D
particularly set out in [8] below3. She opposes the enhanced interest on
E costs application. E
F 5. In the further written submission dated 5 December 2018 F
lodged on the Defendants’ behalf, Mr Ng made it clear that in relation to
G G
the enhanced interest on costs application, the Defendants are seeking an
order that the Plaintiff do pay the Defendants’ interest on:
H H
i) the pre Cut-off date costs at an enhanced rate of 10%
above judgment rate as from date of judgment; and
I I
ii) on the post Cut-off costs at an enhanced rate of 10%
above judgment rate after the Cut-off date.
J J
Indemnity Costs Application
K K
L
6. This Court does not intend to repeat the said Judgment L
herein. Suffice it to say, for the purpose of this summons, that a structure
M was blown off the Defendants’ house during a typhoon. It fell onto the M
Plaintiff’s house. The Plaintiff sued for damages. After trial, this Court
N considered the Plaintiff and her key witness Ms Athena Luk totally N
dishonest, untruthful and not credible witnesses. They were found to have
O lied to this Court, exaggerated and fabricated evidence in many material O
respects. In particular, this Court rejected as untruthful all the evidence
P P
3
See [2] of Mr Patrick Chiu’s submission dated 10 October 2018
Q Q
R R
A A
-4-
B B
relating to the alleged July 26 flood4 and hard landing of the aluminium
C frame which had caused the alleged damages to her house. This Court C
considered the damages claimed grossly exaggerated and were totally
D unjustified. Of a claimed amount of $442,722, this Court only awarded D
the Plaintiff a sum of $5,000.
E E
The Defendants’ Case
F F
7. The Defendants’ grounds, as set out in Mr Ng’s written
G G
submission, can be summarized as follows 5:
i) The Defendants have made sanctioned payment of
H H
$57,1006 which was not accepted7. By virtue of O.22
r.23 RDC the Defendant is entitled to indemnity costs
I I
after the latest date i.e. 28 December 2015 (the Cut-off
date referred to above) on which the sanctioned
J J
payment could have been accepted without leave; and
ii) as a matter of principles, the conduct of the Plaintiff in
K K
the proceedings are such that she should be visited
L
with an indemnity order. L
M The Plaintiff’s Case M
N N
4
Defined in [34] of the August Judgment
O O
5
See [4.1] of the submission of Mr Ernest CY Ng of counsel for the Defendants
6
The Notice of (increased) Sanctioned Payment, making the total payment in being $58,100, was dated
P P
30 November 2015. It was served on the same date (Bundle/324).
7
According to O.22. r.15 RDC, the Plaintiff has 28 days to accept without leave of Court.
Q Q
R R
A A
-5-
B B
8. The Plaintiff concedes that by reason of O.22 r.23 RDC, the
C Defendants should be entitled to indemnity costs after the Cut-off date. C
However, she opposes indemnity costs before this date8 , and contends
D that the party and party basis should apply. It is fair to summarize Mr D
Chiu’s grounds of objection for the Plaintiff as follows:
E i) the proceedings brought by the Plaintiff are neither E
scandalous, vexatious, oppressive nor with any
F ulterior motive. There is also no special or unusual F
feature that justifies an indemnity costs order;
G G
ii) the Plaintiff had acted reasonably by agreeing to
attempt mediation with the Defendants with a view to
H H
settling amicably the dispute with the Defendants. Yet
it is the Defendants who insisted to include the other
I I
co-owner who was, unfortunately, on bad terms with
the Plaintiff. The Defendants unreasonably rejected
J J
mediation despite the Plaintiff had agreed to provide
an indemnity.
K K
L
9. Mr Chiu relies on 2 Court of Final Appeal (“CFA”) L
decisions, namely, Town Planning Board v Society for Protection of the
M Harbour Ltd (No 2) 9 and Libertarian Investment Ltd v Thomas Alexej M
Hall10 in support.
N N
10. In the Court’s judgment, the 2 cases cannot help the Plaintiff.
O O
8
See [6] of Mr Patrick Chiu of counsel for the Plaintiff dated 10 October 2018
P 9 P
(2004) 7 HKCFAR 114
10
(unrep) FACV 14 of 2012, 11/03/2014
Q Q
R R
A A
-6-
B B
Discussion
C C
11. The Plaintiff’s concession on indemnity costs after the Cut-
D off date is, in the Court’s judgment, a correct and sensible move. It is D
undisputed that the Defendants made a sanctioned payment of $58,100
E E
(exclusive of any interest) on 30 November 2015. It was rejected on 14
December 2015. At the end of the day the Plaintiff could not achieve a
F F
better result than the Defendants’ offer. According to O.22 r.15 RDC,
time for acceptance expired after 28 December 2015, i.e. the Cut-off date.
G G
Under O.22 r.23(5) RDC, the Court shall make such order unless it
considers unjust to do so. When considering whether or not it is unjust to
H H
do the court should, according to O.22 r.23(6) take into consideration of
all circumstances, including the 4 conditions particularly spelt out in sub-
I I
paragraphs (a) to (d).
J J
12. In the present case, the Plaintiff can only achieve less than
K 10% of the sanctioned payment, and only about 1% of her pleaded claim. K
The payment was made sometime after the first round of pleadings was
L filed and after serveral exchanges of without prejudice save as costs L
correspondence. In fact, as early as May 2015, the solicitors for the
M Defendants had pointed out to the Plaintiff the inconsistencies between M
the Plaintiff’s pleaded case and her own evidence. Some $57,100 was
N offered for settlement. By then the Plaintiff had already instructed N
valuation professional to help assess her damages but the Defendants had
O not. The Plaintiff should have a better understanding and assessment than O
the Defendants of the merit of her own case. She was therefore in no
P P
disadvantageous position to consider whether to accept the Defendants’
offer.
Q Q
R R
A A
-7-
B B
C 13. The major reason for the Plaintiff’s failure in the Action is, C
as apparent from the said Judgment, that she pursued the dishonest
D aspects of her claim. She and her witness fabricated the alleged July 26 D
flood following the blown-off incident which formed the whole basis of
E her claims. This Court considers it not unjust to make the indemnity costs E
order under O.22. The onus is on the Plaintiff to show otherwise, and she
F does not seek to do so. For reasons set out in this paragraph and below, it F
would be difficult, if not impossible for the Plaintiff to argue it unjust to
G G
do so. Had she not made the concession, this Court would definitely order
the Plaintiff to pay costs on indemnity basis pursuant to O,22 r.23 RDC
H H
as from date following the Cut-off date, i.e. 29 December 2015.
I I
14. As regards costs incurred prior and up to the Cut-off date,
this Court does not believe the parties have any quarrel that as a matter of
J J
general principle, costs are entirely a matter of discretion of the Court
taking into account all circumstances including the conduct of the parties
K K
in the proceedings, see: O.62 r.5 RDC. For costs to be taxed on indemnity
L
basis, the costs awarded should provide that there shall be allowed all L
such costs as are necessary or proper for attainment of justice or for
M defending the rights of a party whose costs are being taxed, see: O.62 M
r.28(4A) RDC.
N N
15. Applying O.62 r5(2) RDC to specifically the Plaintiff’s
O conduct in the present case, this Court has to take into account: O
i) whether it is reasonable for the Plaintiff to pursue the
P present claim based mainly on the alleged July 26 P
flood;
Q Q
R R
A A
-8-
B B
ii) the manner in which the Plaintiff has pursued her
C claim; C
iii) whether the Plaintiff has exaggerated her claim; and
D iv) her conduct before, as well as during, the proceedings. D
E 16. As to how justice can be attained by awarding an indemnity E
costs, the CFA’s decision in Town Planning Board (supra) is apposite.
F That case was concerned with whether it is appropriate for indemnity F
costs to be imposed in favour of the Society who succeeded in its
G G
application. The following principles can be derived:
i) indemnity costs, which is a more generous basis, will
H H
usually enable the successful party to recover more of
his costs. It can therefore be perceived as achieving a
I I
fairer result than that on a party and party basis.
However, such difference on its own is insufficient to
J J
justify an award of indemnity costs;
ii) “special or unusual feature’ must be shown by the
K K
successful party;
L
iii) an award of indemnity costs will be made in cases L
brought with an ulterior motive, for an improper
M purpose, or where there was deception or underhand M
conduct on the part of the losing party, but is not only
N confined to them; N
iv) it will be undesirable to define all circumstances
O leading to grant of costs on indemnity basis, as O
discretion may be fettered;
P P
Q Q
R R
A A
-9-
B B
v) the attributes of the parties and the character of the
C proceedings were not irrelevant to the exercise of the C
discretion; and
D vi) The grounds for making an indemnity costs order D
must be connected with the case and might extend to
E any matter relating to the litigation and the parties’ E
conduct in it, and also to the circumstances leading to
F the litigation, but no further. F
G G
17. The CFA decision of Libertarian Investments (supra)
explained that improper conducts (which includes deception or underhand
H H
conduct on the part of the losing party) generally refer to the conduct of
the litigation rather than conduct which constituted the cause of matter
I I
giving rise to the litigation 11. Accordingly, even in contempt cases, there
is no general rule that indemnity costs should be awarded against the
J J
contemnor. The remedies granted in the action have reflected the
appropriate compensation, and unless there are other conducts which
K K
justified a separate penalty, indemnity costs might not be justified.
L L
18. The CFA’s decisions are of course binding on this Court.
M However, reading Libertarian Investments (supra) in the context and M
together with Town Planning Board (supra), they do not support a
N proposition that the CFA has excluded as irrelevant pre-action conduct. N
Libertarian Investments (supra) stated that generally, the improper
O conduct which brought about the causes of action of the winning party O
would have been sufficiently compensated by the remedies granted by the
P court. However, it never said then no indemnity costs would then be P
11
See [6] of Libertarian Investments (supra)
Q Q
R R
A A
- 10 -
B B
imposed when improper pre-action conduct is involved. In appropriate
C circumstances, indemnity costs could still be imposed, see: [6] of C
Libertarian Investments (supra).
D D
19. In the present case, the Plaintiff lost on almost each and
E every issue she contended. Her case was a pack of lies and therefore she E
pursued a dishonest claim. The followings are some examples of such lies
F listed in the said Judgment. The square brackets denote paragraph F
referred to in the said Judgment:
G G
(i) the removal of the glass fragments by Luk’s
volunteers using plastic buckets, see: [117];
H H
(ii) the concerted denial of the issue of her 3rd Letter and
the Ngai Sing’s 2012 quotation. On the other hand,
I I
they turned around and accused the Defendants of
having fabricated the said documents. This Court
J J
considers it a wicked move, see: [120] - [123];
(iii) the Plaintiff’s detailed, vivid but false account of how
K K
she removed the glass fragments that choked the roof
L
drain not sitting well with objective roof and drain L
structure, see: [129], [130];
M (iv) the plucking and clearing away of glass fragments M
from the drain by the volunteers was a highly
N exaggerated fabrication, see: [131]. N
O 20. In addition, she only raised the matter of flood some 3 years O
after the alleged incident, see: [127] of the said Judgment. The quantum
P of her case fluctuated from initially some $57,10012 to almost $2 million13 P
12
See [54] of the August Judgment
Q Q
R R
A A
- 11 -
B B
before Action, and then to $442,722 when the proceedings were issued.
C By the time she raised the water damages, it would be quite impossible C
for expert to conduct any meaningful examination to verify the alleged
D flood. Yet, expert evidence had to be obtained and the Defendants were D
put to expenses to engaging their team to assist the Court and to defend
E their position. E
F 21. It has to be remembered the Plaintiff’s version of story was F
not one which the Defendants could easily brushed aside. It is because as
G G
a matter of fact, a structure had been blown off their house and landed on
the Plaintiff’s house. It was a hard fact which the Defendants did not seek,
H H
and I think fairly and correctly, to deny. Although it does not mean that a
flood would automatically follow as alleged, the blown-off incident set an
I I
apparently natural stage for the Plaintiff to build upon her story. It forms
an added hurdle when the Defendants sought to refute the Plaintiff’s case.
J J
That is the unfortunate situation in which the Defendants were stuck. The
Plaintiff made use of the opportunity with a view to gaining unwarranted
K K
advantages. Substantial time and costs had to be incurred to refute the
L
Plaintiff’s case. L
M 22. The fabricated story of the Plaintiff and her inflated claim M
were only dismissed after a full-blown trial, particularly after thorough
N cross-examination by the good job of the Defendants’ counsel. It was a N
time consuming and costly exercise. Only $5,000 was awarded for
O removal of debris the liability to pay the Defendants had all along O
accepted. The Plaintiff ran a dishonest case. This is exactly what an
P indemnity costs order should condemn. She must compensate the P
13
See [67] of the August Judgment in which she asked for $1,959,000, to be exact.
Q Q
R R
A A
- 12 -
B B
Defendants for the costs of responding to her dishonest claim. This Court
C wonders how the Plaintiff can possibly argue her case is otherwise than C
with any ulterior motive or there is no underhand conduct.
D D
23. The $58,100 was rejected only 14 days of the offer14. Such
E being the case and given the Plaintiff’s persistence in pursuing her E
dishonest claim, this Court does not believe mediation, if going ahead,
F could bring about any fruitful settlement. Further, the Defendants’ F
concern of the Plaintiff’s brother suing after the present Action was a
G G
legitimate one. In the Court’s judgment, the mediation ground raised by
Mr Chiu cannot assist the Plaintiff.
H H
24. This Court sees nothing unjust to award costs on indemnity
I I
basis for the entire action and now so vary the costs order nisi to
indemnity costs. That is to achieve, as far as money can redress, a fairer
J J
result in circumstances of the present case.
K K
Enhanced Interest on Costs Application
L L
The Defendants’ Case
M M
25. Again, there are 2 parts of costs which attract the enhanced
N interest rate. They are costs incurred prior to and including the Cut-off N
date and those after it.
O O
26. For the post Cut-off date costs, Mr Ng relies on the same
P O.22 r.23 RDC which provides for indemnity costs as well as enhanced P
14
The rejection was made within 14 days after the Defendants topped up its payment to $58,100
Q Q
R R
A A
- 13 -
B B
interest rate if a plaintiff cannot obtain an award better than the refused
C sanctioned payment. The relevant rules provide that: C
i) the court may order that the Plaintiff to (a) pay the
D Defendants’ costs on indemnity basis after the Cut-off D
date [i.e. 28 December 2015 in the present case] and
E (b) interest thereon at a rate not exceeding 10% above E
judgment rate; and
F ii) where this rule applies, the court shall make the order F
aforementioned unless it considers it unjust to do so,
G G
and in considering whether it is unjust, the court is
required to take into account all circumstances
H H
including those set out in sub-paragraph 6 (a) to (d)15.
I I
27. As for the pre Cut-off date costs, Mr Ng asks for the same
10% above the judgment rate. His grounds can be summarized as:
J J
i) this Court has an inherent jurisdiction to grant such
enhanced rate, and is in any event not limited by O.22
K K
16
r.23(7) RDC to grant such enhanced rate;
L
ii) the Plaintiff has run a dishonest case and should be L
liable to pay the enhanced rate;
M iii) there is a need to show the Court’s disapproval of the M
Plaintiff’s conduct in line with the award of indemnity
N N
15
Subparagraphs (a) to (d) of O,22 r.23(6) RDC provide: “(a) the terms of any sanctioned payment or
O sanctioned offer; (b) the stage in the proceedings at which any sanctioned payment or sanctioned offer O
was made; (c) the information available to the parties at the time when the sanctioned payment or
sanctioned offer was made; and (d) the conduct of the parties with regard to the giving or refusing to
give information for the purposes of enabling the payment or offer to be made or evaluated.”
P P
O.23 r.23(7) provides “The power of the Court under this rule is in addition to any other power it
16
may have to award or disallow interest.”
Q Q
R R
A A
- 14 -
B B
costs, and therefore a comparable rate should be
C awarded for the period prior to the Cut-off Date; C
iv) D1 was under stress since 2013 when the Plaintiff
D threatened legal action until trial. The Defendants D
were also out of pocket since 2015 when the action
E was commenced. Accordingly, the Defendants should E
be properly and adequately compensated by the
F enhanced rate prior to the Cut-off date. F
G G
28. This Court has raised queries as to the jurisdiction of this
Court to direct costs to run from a date prior to judgment which is
H H
normally the date on which interest on costs start to accrue17. Through Mr
Ng’s further submission, the Defendants have clarified their position as
I I
follows18:
i) as for the pre Cut-off date costs, enhanced interest of
J J
10% over judgment rate is to run from date of
judgment until payment;
K K
ii) as for the post Cut-off date costs, enhanced interest of
L
10% over judgment rate is to run from the Cut-off date. L
M The Plaintiff’s Case M
N 29. The Plaintiff’s position is, so far as can be discerned from N
his submission, this19:
O O
17
The local authority supporting interest to run from date of judgment can be found in Caltex Oil Hong
Kong v Director of Buildings and Lands [1994] HKDCLR 31 at [8], relying on the English House of
Lord decision in Hunt v RM Douglas (Roofing) Ltd [1900] 1 AC 398
P P
18
See the “Revised Draft Minutes of Order” attached to the submission dated 5 December 2018
19
See [11] of Mr Chiu’s written submission
Q Q
R R
A A
- 15 -
B B
i) no enhanced interest rate should be imposed for costs
C incurred prior to the Cut-off date; C
ii) no enhanced interest rate should be imposed for costs
D after the Cut-off date, or alternatively, the enhanced D
rate of 4.5% instead of 10% as adopted by Lam J (as
E the learned VP then was) in Golden Eagle E
International (Group) Ltd v GR Investment Holdings
F Ltd as in [19]20 . F
G G
30. Mr Chiu further submits that since there is no supporting
affidavit to explain how disbursements, costs and costs on account were
H H
paid from commencement of the action to the Cut-off date. As in the case
of Shih Pik Nog v G2000 (Apparel) Ltd21, this Court is in no position to
I I
decide on the matter, and Mr Chiu invites this Court to reject the
Defendants’ claim.
J J
31. Mr Ng submits that since Mr Chiu raises no jurisdictional
K K
challenge to enhanced interest running prior to the Cut-off date, the only
L
question is whether this Court should impose such enhanced rate, and if L
so, what it is . A solicitor’s statement on costs so far paid and when they
22
M were paid by the Defendants was annexed to his reply submission. M
N Discussion N
O O
20
[2010] 3 HKLRD 273 at 280
P 21 P
[2011] 4 HKLRD 121 per Hon Bharwaney J
22
See [10] of Mr Ng’s Reply submission.
Q Q
R R
A A
- 16 -
B B
32. In Golden Eagle International (Group) Ltd v GR Investment
C Holdings Ltd (supra), the plaintiff eventually achieved a result in the final C
judgment better than its sanctioned offer which was rejected. The issues
D before Lam J (as the learned VP then was) were, inter alia, firstly, D
whether the plaintiff should be granted indemnity costs after the latest
E date on which the sanctioned offer could have been accepted without E
leave, and secondly, the appropriate interest rate on those costs.
F F
33. Lam J (as the learned VP then was) in that case reviewed a
G G
number of English authorities and endorsed the principles in McPhilemy v
Times Newspapers Ltd (No 2) 23 and KR v Bryn Alyn Community
H H
(Holdings) Ltd 24 . Golden Eagle (supra) has since been followed by a
number of subsequent decisions, e.g. Lo Yuk Sui v Fubon Bank (Hong
I I
Kong) Limited25, Maysun Engineering Co Ltd v International Education
and Academic Exchanges Foundation Co Ltd26, etc. The followings can
J J
be distilled from Golden Eagle (supra) regarding the costs and the
enhanced interest thereon under O.22 of the RHC (applicable to the RDC
K K
which is couched in exactly the same terms):
L
i) when the sanctioned offer was not accepted but the L
plaintiff can achieve better in the end, the court should
M exercise power under O.22 r.24 (and similarly under M
O.22 r.23) unless considers unjust to do so;
N N
O 23
[2002] 1 WLR 934, 4 All ER 861, EWCA Civ 933 O
24
[2003] PIQR P30, [2003] EWCA Civ 383
P 25 P
(unrep) HCA409/2005, 19/12/2016 per Hon Ng J
26
[2011] 2 HKLRD 844
Q Q
R R
A A
- 17 -
B B
ii) the powers under O.22 r.24 (and similarly under O.22
C r.23) aim at achieving a fairer result for the winning C
party27;
D iii) the purpose of awarding indemnity costs is to enable D
the court to address the unfairness which arises when
E the usual costs is awarded on standard basis, which E
almost invariably is less than what he has paid his
F solicitors28; F
iv) the purpose of awarding enhanced interest on costs is
G G
to redress the element of perceived unfairness which
arises from the general rule that interest is not allowed
H H
on costs before judgment, so that even if a successful
claimant who would obtain indemnity costs at trial, he
I I
has to first of all make payments to his solicitors on
account of costs out of his own pocket in advance of
J J
trial. The successful party will get nothing to
compensate him for the costs of money (or the loss of
K K
the use of money) which he has to bear before trial in
L
respect of his costs on account paid to his solicitors, L
and such order enables the court to achieve a fairer
M result. It will therefore not be unjust to ask his M
opponent, who should have accepted the sanctioned
N payment thus bringing the proceedings to an end and N
successful party’s costs not being funded. Without
O specific evidence, the court can direct interest to run O
P 27 P
See [10] of Golden Eagle (supra)
28
See [13] of Golden Eagle (supra)
Q Q
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A A
- 18 -
B B
from the date when the work was done or liability for
C disbursement was incurred29; and C
v) the Court has power to direct, as a matter of principle,
D interest to run on costs incurred after the relevant cut- D
off date from a date when the works were respectively
E done30. E
F 34. In KR (supra), Walker LJ said at [22] F
“If an order is made to pay costs on an indemnity basis, it is
unlikely to be unjust to make the party pay interest on those
G G
costs for the period when litigation is being funded when
acceptance of a Pt 36 offer should have led to it not being
funded…”
H H
35. This Court agrees to the above observation in KR (supra) as
I I
well as the similar observation by Lam J in Golden Eagle (supra). As this
Court has already come to the conclusion that the Plaintiff should pay
J J
post Cut-off date costs on indemnity basis 31, for the same reasons and in
order to better compensate the Defendants in a fairer way, this Court
K K
should award enhanced interest rate for the post Cut-off date costs. The
question is what the rate should be and when it should start to run.
L L
36. Lam J in Golden Eagle (supra), following McPhilemy (No.2)
M M
(supra), considered enhanced interest rate should be compensatory and
N
not penal in nature; and costs of money appears to be a relevant N
O O
29
See [16] to [18] of Golden Eagle (supra)
30
See [18] of Golden Eagle (supra)
P P
31
For the avoidance of doubt, it has to be stated clearly that this Court has come to the conclusion that
the Plaintiff should pay indemnity costs before as well as after the Cut-off date
Q Q
R R
A A
- 19 -
B B
yardstick32. The learned judge adopted 4% over prime (which was then at
C 5% p.a.), making a total of 9% p.a. reasonable and, in fact, a generous C
assessment of costs of funding. He applied the rate of 4.5% p.a. Similar
D rate was followed in many decisions of the first instance, e.g. Lo Yuk Sui D
(supra) (5% p.a.), The Owners and/or Demise Charterers of the Ship or
E Vessel “MCC Jakarta” v The Owners and/or Demise Charterers of the E
Ship or Vessel “Xin Nan Tai 77”33 (half of 4% over prime), and even in
F the CA decision of Antwerp Diamond Bank NV v Brink's Incorporated F
(No. 2)34 (4% over prime).
G G
37. In relation to awarding only half of the costs of funding, this
H H
Court can readily appreciate the rationale behind such award. It is
because normally, costs were incurred and/or works done from time to
I I
time throughout the proceedings until their conclusion. It therefore makes
perfect sense for halving the rate in order to reflect the reality that not all
J J
items of legal works were done or payment paid in one go at the Cut-off
date when the award is made under the O.22 regime. Halving of the
K K
interest rate reflects this rationale. Implicitly, it also reflects that the
L
enhanced rate is compensatory and not penal. L
M 38. However, the cost of money approach seems to have been M
departed from in many decisions depending on facts of the cases. A
N greater uplift of interest on costs can be found in, for example, Force Way N
Engineering Limited v The Incorporated Owners of Grand Court (half of
O O
32
See [19] of Golden Eagle (supra)
P 33 P
(unrep) HCAJ 48/2011, 158/2012 & 49/2013, 30/11/2017 at [49]
34
[2015] 4 HKLRD 628
Q Q
R R
A A
- 20 -
B B
4% above judgment rate) 35 . In Maysun Engineering (supra), HHJ
C Mimmie Chan (as Hon Chan J then was) even awarded a rate of 2% C
above judgement rate (without halving it) from the relevant date on which
D the 2nd offer should have been accepted without leave, until judgement. D
E 39. Mr Ng for the Defendants urged this Court to adopt 10% E
over judgment rate (currently at 8.088% p.a. as from 1 January 2019, and
F will be 8.125% p.a. as from 1 April 2019). He does not propose halving it. F
The effective rate is therefore 18.088% p.a. and apparently, there is a
G G
punitive element in it.
H H
40. Mr Ng refers this Court to the recent English Court of
Appeal decision in OMV Petrom SA v Glencore International AG36 which
I I
was decided recently and after Golden Eagle (supra). He submitted that
OMV Petrom (supa) supported his proposition that the enhanced interest
J J
rate and the costs sanction embodied in the O.22 regime is not entirely
compensatory; and in appropriate cases, a punitive element can be
K K
factored in to mark the court’s disapproval of any unreasonable and
L
improper conduct. L
M 41. In OMV Petrom (supa), the claimant sued the defendant in M
deceit and made offer for settlement. The defendant rejected it and
N vigorously contested the claim. After a lengthy trial, judgment was N
entered against the defendant for a sum significantly greater than the offer.
O The trial judge commented that the defendant had put the claimant O
through the hoops of having to establish liability in a very flagrant case of
P 35 P
(unrep) DCCJ 3216/2016 13/8/2018, [2018] HKDC 991 at [8]
36
[2017] 1 WLR 3465
Q Q
R R
A A
- 21 -
B B
fraud and in a manner which was wholly unreasonable. However,
C following the McPhilemy (No.2) (supra), the judge refused to award the C
maximum enhanced rate under the English counterpart of the Hong Kong
D O.22 r.24 37 and held they were compensatory rather than penal. The D
claimant appealed and it was allowed unanimously by the English CA.
E E
42. In OMV Petrom (supa), Sir Geoffrey Vos C (with whom
F Kitchin and Floyd LJJ agreed) has this to say at [43] and [44] on F
enhanced interest on costs:
G “43. As I have said, I do not think that we are bound by G
McPhilemy case to decide that the assessment of the rate of
interest on costs should be such as to achieve a fairer result
H for the claimant than would otherwise have been the case. H
That does not, however, indicate that some of the factors I
have already mentioned may be relevant. Moreover, once
I again I do not regard the award as purely compensatory. I
As I have said, different factors may in practice apply to the
enhanced interest under CPR rr36.14(3)(a)(c) …
J 44. I have considered carefully the judge’s approach to J
the award of enhanced interest on costs. He applied para 23
of McPhilemy case as he was entitled to do so, but I think
K he fell into error, through no fault of his own, by failing to K
take into account some of the other factors I have
mentioned including in particular the fact the costs on
L which enhanced interest was claimed were largely L
incurred unreasonably in advancing a dishonest and
unreasonable defence. … I would hold that the correct rate
of enhancement is once again the maximum of 10% per
M annum for the reasons I have mostly already given. I do, M
however, also think that the factors I mentioned above in
relation to the enhanced rate of interest under CPR
N r.36.14(3)(a) were also relevant to the interest awarded on N
costs, because this was a bad case of the defendant simply
ignoring a proper offer and running up costs thereafter.”
O (Emphasis added) O
P P
37
CPR r.36.14(3)(a)(c)
Q Q
R R
A A
- 22 -
B B
43. Although OMV Petrom (supra) is not binding on this Court,
C it is highly persuasive. I accept Mr Ng’s submission that when Golden C
Eagle (supra) was decided, the court then was without the benefit of the
D subsequent development in the jurisprudence of this area in England, D
particularly in the regime of costs/interest sanctions and rewards based on
E which the Hong Kong rules are modelled. It is apparent that the sanctions E
and rewards are introduced to incentivise parties to behave reasonably in
F litigation and encourage good practice. It also serves to save resources of F
the parties and the Judiciary. Further, if the enhanced interest is only
G G
restricted to costs of money, the rules are expected to be drafted very
differently and, perhaps, more directly. It is because when at low interest
H H
environment, 10% over judgement can rarely, if not never, be awarded,
and reference to all circumstances, including conduct of a party, may be
I I
unnecessary. A survey of decided Hong Kong cases in this area shows
that the court’s discretion on this area remains unfettered, and the court
J J
always exercises the discretion on the interest uplift taking into
consideration of all circumstances.
K K
L
44. The factors which Sir Vos C considered relevant when L
imposing the full 10% uplift included:
M i) the unsuccessful party was guilty of lying; M
ii) there was deplorable, if not outrageous conduct such
N as using vast asset base to frustrate the claimant’s N
attempts to settle;
O iii) the unsuccessful party had refused to engage in O
settlement discussion or response to the sanctioned
P offer with the eventual award being very significantly P
greater than the O.22 offer;
Q Q
R R
A A
- 23 -
B B
iv) the running of unsustainable grounds of appeal by the
C unsuccessful party. C
D 45. In the present case, the Plaintiff took advantage of an D
unfortunate accident and fabricated a claim against the Defendants;
E inflated her claims and therefore had repeatedly rejected the Defendants’ E
offer as being too low; and insisting on fighting a hopeless case when the
F evidence was so inherently inconsistent and bad from the beginning. In F
my judgement, although there is always a possibility of a worse case than
G G
the present one, this is definitely a very bad case that should be visited
with an enhanced interest rate over and above the costs of money. Taking
H H
into consideration that this Court is not going to half the rate to be
awarded, and some $1.76 million38 had been paid since the post Cut-off
I I
date which was substantial to the Defendants who are retired school
teachers, this Court will award an enhanced rate of 4% over the judgment
J J
rate on the post Cut-off date costs. The rate would be marginally over
12% p.a. which is definitely higher than 4.5% p.a. applied by Lam J in
K K
Golden Eagle (supra).
L L
46. In light of OMV Petrom (supra), it will be unnecessary for
M this Court to engage in a tedious exercise to find out the costs of money, M
and when and how the Defendants had actually settled their bills with a
N view to avoiding over-compensation. This Court accepts certain punitive N
element can be included to reflect the Court’s dissatisfaction on a party’s
O unacceptable conduct. In any event the Defendants’ solicitors have O
provided a statement as to when the Defendants have paid their costs on
P accounts and settlement of bills and counsel’s fees. P
38
According to the solicitor’s statement (attached to the reply submission of Mr Ng)
Q Q
R R
A A
- 24 -
B B
C 47. As regards when such interest should start to run, it appears C
the learned judge in Golden Eagle (supra) accepted readily that the
D current O.22 empowered the court to order interest to run before D
judgment, just like what the English counterpart has operated39, though
E there is no detail discussion on how such jurisdiction is conferred by the E
present O.22 RDC (or RHC) regime. The jurisdiction to award interest on
F costs to run before judgment under the current O.22 regime has been F
consistently exercised in many cases including those referred to above.
G G
This Court will therefore follow the aforesaid line of cases and directed
that in the present case, interest on costs is also to run from the date
H H
following the Cut-off date.
I I
48. The Defendants are also seeking the same enhanced interest
on the pre Cut-off date costs, though to run from date of judgment.
J J
Section 50 of the District Court Ordinance, Cap 336 (“DCO”) provides
for outstanding judgment debts (of which costs order is one) are to carry
K K
interest:
“(a) at the rate the Court orders; or
L L
(b) in the absence of an order, at the rate the Chief
Justice determines by order,”
M M
49. Obviously, this Court is empowered by the aforesaid
provision to direct interest on costs, on good reason, to accrue at a rate
N N
other than that prescribed by the Chief Justice. O.22 r.23(4)(b) RDC
O
expressly empowers the Court to order enhanced interest rate for post O
Cut-off date costs. It is an express power and a gloss on the post Cut-off
P P
39
In Golden Eagle (supra), the court ordered the defendant to pay 4.5% p.a. on the awarded indemnity
costs as from the date on which the sanctioned offer should have been accepted.
Q Q
R R
A A
- 25 -
B B
date costs. However, the lack of express provision in the RDC covering
C pre Cut-off date costs will not take away the Court’s power under s.50 of C
the DCO to impose a different interest rate, enhanced or otherwise, to
D different part of the costs order. It has to be remembered that O.22 r.23(7) D
RDC provides expressly that the Court’s power under the rule being in
E addition to any other power it may have to award or disallow interest. E
F 50. The next question is whether this Court should exercise such F
discretion, and if so, what that rate is, and whether it is the same as that
G G
applicable to the post Cut-off date costs.
H H
51. There is no reasons why the principles in OMV Petrom
(supra) should not be applied to deal with the pre Cut-off date costs. In
I I
the judgment of this Court, the Plaintiff should compensate the
Defendants for the costs of responding to her totally unwarranted and
J J
dishonest claim, and bear whatever consequence, sanction or otherwise,
that may flow from it. I therefore do so direct the same enhanced interest
K K
rate be applied to the Defendants’ pre Cut-off date costs, and to run from
L
date of judgment until payment. L
M Disposition and Orders M
N 52. The costs order nisi made by this Court on 13 August 2018 N
be varied to the followings:
O i) the Plaintiff do pay the Defendants’ costs of the entire O
Action, i.e. costs from the commencement of the
P action to 28 December 2015 (“pre Cut-off date costs”) P
and from 29 December 2015 to the date of payment of
Q Q
R R
A A
- 26 -
B B
payment (“post Cut-off date costs”), on indemnity
C basis, with certificate for counsel, to be taxed if not C
agreed;
D ii) the Plaintiff do pay interest on the Defendants’ pre D
Cut-off date costs at a rate of 4% above judgment rate
E as from the date of judgment until full payment; and E
iii) the Plaintiff do pay interest on the Defendants’ post
F Cut-off date costs at a rate of 4% above judgment rate F
as from the date following the Cut-off date until full
G G
payment.
H H
53. Regarding costs of this application, there is no reason why
the usual rule of costs to follow the event inapplicable, and should not be
I I
on indemnity basis which is the same as the main action. I do order that
the Plaintiff do pay the Defendants costs of this application on indemnity
J J
basis, with certificate for counsel, to be taxed if not agreed.
K K
L L
M M
(WONG King-wah)
District Judge
N N
O O
Mr Patrick PH Chiu, instructed by Cheung Fung & Hui, for the Plaintiff
P Mr Ernest CY Ng, instructed by J Chan, Yip, So & Partners, for the P
Defendants
Q Q
R R