Civil procedure — costs — sanctioned offer or payment — acceptance out of time — whether usual costs order should apply — correct approach — question was whether unjust to make usual order, not whether there were special circumstances — Rules of the High Court (Cap. 4A, Sub.Leg.) O. 22 r. 23
Personal injuries claim — original elderly plaintiff did not accept defendant’s sanctioned payment within prescribed time — after her death, new plaintiff (representing her estate) granted leave to accept payment out of time
In 2013, the original plaintiff, L, then aged 88, sustained injuries in an accident at the residential care home operated by D. On 6 July 2015, L brought personal injury proceedings against D. On 17 July 2015, D made a sanctioned payment into court of $380,000 (the ‘Payment’). On 31 July 2015, interlocutory judgment was entered for L, who did not accept the Payment within the prescribed time. L died of unrelated causes in February 2016. L’s son, P, the representative of her estate, took over her action and on 14 July 2016 applied for leave to accept the Payment and costs of the action. The Deputy Judge granted leave and ordered D to pay P’s costs up to 14 August 2015 and P to pay D’s costs from 15 August 2015, including of the application (the ‘Costs Order’); finding that L’s death was a contingency inherent in litigation and not a special circumstance justifying a departure from the usual costs order. The Deputy Judge refused P leave to appeal against the Costs Order and P obtained leave from the Court of Appeal. Under O. 22 r. 23 of the Rules of the High Court (Cap. 4A, Sub.Leg.) (‘RHC’), the court could order the plaintiff to pay any costs incurred by the defendant after the latest date on which the payment or offer could have been accepted without leave (r. 23(3)); and it shall make such order unless it considered it unjust to do so (r. 23(5)) in all the circumstances of the case (r. 23(6)).
Held, allow the appeal by setting aside the Costs Order, that:
- Under O. 22 r. 23 of the RHC, injustice should be the benchmark based on “what the fairness of the situation demands”, rather than “exceptional circumstances” which suggested that only extreme circumstances would count. The reasonableness of a plaintiff rejecting the sanctioned payment within time was a relevant consideration but, depending on the facts, not necessarily determinative. Ultimately, the question was whether it was unjust to make the normal costs order. Costs decisions were highly fact-sensitive and it was not helpful to compare one case with another (Matthews v. Metal Improvements Co Inc  EWCA Civ 215, SG v. Hewitt  1 All ER 1118 applied; (Wong Ching Wan v. AS Watson & Co Ltd  4 HKLRD 362 not followed). (See paras. 17–20.)
- As there were situations where imposing the normal costs consequence might be unjust, flexibility was built into the O. 22 regime under r. 23(5) and (6) as a deliberate and important safety valve. A classic example was where the plaintiff changed his mind after reassessing the risk based on relevant information withheld by the defendant. A party might change his mind for other reasons including a change in the person in charge of a corporate plaintiff; a change of legal advisor who took a different view of the case; and a change of circumstances due to contingencies inherent in litigation. None of these situations was likely to constitute injustice (Jones v. Jones (unrep,, 13 October 1999), SG v. Hewitt  1 All ER 1118 applied). (See paras. 21–26.)
- The Deputy Judge had not considered whether it would be unjust to order costs against P in the circumstances of the case. Consequently, the Costs Order was set aside and the discretion exercised afresh. Although the Court could not adjudicate on the merits at a costs hearing, in a case of acceptance out of time with leave where the application of the normal costs rule was disputed, under O. 22 r. 23(6)(a), the Court was obliged to consider the reasonableness of the sanctioned payment albeit on a very broad-brush basis to assess if it was unjust to apply the normal costs rule. (See paras. 28, 30.)
- Here, D admitted liability and there was no contributory negligence. P’s injuries fell within the serious injury category for which awards for pain, suffering and loss of amenities ranged from $510,000 to $692,000. Even taking into account L’s age and pre-existing condition, it was reasonable for P to have rejected the Payment (Wong Man Kin v. Golden Wheel (C&HK) Transportation Co Ltd  5 HKC 570 applied). (See para. 31.)
- Given the history of the action up to L’s death and the manifestly inadequate Payment, since D had not filed an answer to the statement of damages, P’s lawyers could not properly and accurately advise her on quantum. It was open to P to accept the Payment and seek costs up to the date of late acceptance. Applying O. 22, including r. 15(3) with r. 23, it was unjust to require P to pay costs to D. The costs incurred since the Payment could not have been avoided. D was ordered to pay the costs of the action up to the date of late acceptance and the costs of this appeal, including the costs of the application for leave. (See paras. 34, 38–41.)
This was an appeal by the representative of the estate of the deceased in a personal injuries action against the costs order made against him by Deputy Judge Eric Tam in the District Court following his application for leave to accept out of time a sanctioned payment made by the defendant (see  1 HKLRD 308). The facts are set out in the judgment.