Civil procedure — costs — sanctioned offer or payment — approach to awarding of enhanced interest and indemnity costs when plaintiff did better than sanctioned offer
By an order nisi it was ordered that costs be to P, with a certificate for counsel, to be taxed if not agreed, and that there be legal aid taxation of P’s costs. Both parties applied for the order nisi to be varied. P’s application was made on the basis that since her sanctioned offer to accept $300,000 (including interest but excluding costs) in full and final settlement of her claim was rejected, and since she was awarded $304,342 and costs, she should, under O. 22 r. 24 of the Rules of the District Court (Cap. 336H, Sub. Leg.) (“RDC”), be awarded enhanced interest and indemnity costs. P submitted that as long as a plaintiff did better than a sanctioned offer, even by a small margin, that plaintiff should be awarded enhanced interest and indemnity costs. D submitted that P should not be awarded enhanced interest or indemnity costs since: she did not succeed in every allegation; there was apparent evidence of gross exaggeration and/or unreasonable conduct on her part; and she did better than the sanctioned offer by a very minimal amount of $4,342. D’s application for variation was made in reliance on O. 62 r. 5(1) and (2) of the RDC, on the basis that P’s costs should only be partially allowed since she only succeeded in less than one third of her claim for special damages and failed completely in her claim for future expenses.
Held, granting P’s application and dismissing D’s application, that:
1) The ultimate question was whether it was unjust to order enhanced interest and indemnity costs in all the circumstances of the case. If it was not unjust to do so, such orders should be made in accordance with O. 22 r. 24. (See para. 13.)
2) Such circumstances as relied upon by D did not make it unjust to order enhanced interest and indemnity costs (Gurung Devchandra v Pacific Construction (HK) Co Ltd (HCPI 138/2011,  HKEC 1784) applied). (See paras. 14–18.)
3) A “clear-cut rule” should be applied so that the fact that the plaintiff did better than the sanctioned offer by only a small margin should not lead to a refusal of enhanced interest and should be reflected only by a 2 percent enhancement rather than the 5 percent enhancement suggested by P (Charm Marine Incorporated v Elborne Mitchell) (Transcript: Smith Bernal, 22 July 1997), Wong Ka Ming v Ng Yin King (HCPI 760/2009,  HKEC 992), Gurung Devchandra v Pacific Construction (HK) Co Ltd (HCPI 138/2011,  HKEC 1784) applied). (See paras. 9–10, 19–20).
4) D’s application failed for the reasons why P’s application succeeded. (See para. 26.)
These were applications by the plaintiff and the defendant respectively for variation of a costs order nisi made by Judge Edmond Lee in the District Court on 11 January 2019 (see  HKEC 72). The facts are set out in the judgment.
Editorial note: As to enhanced interest, the “clear-cut rule” applied here was (i) that enhancement ought not to be refused altogether just because it was only by a small margin that the plaintiff did better than the sanctioned offer; although (ii) the smallness of the margin may be reflected in enhancement to a lesser extent than might otherwise have been ordered.