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DCCJ 27/2006
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 27 OF 2006
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BETWEEN
| MAYSUN ENGINEERING COMPANY LIMITED |
Plaintiff |
| and |
| INTERNATIONAL EDUCATION AND ACADEMIC EXCHANGES FOUNDATION COMPANY LIMITED TRADING AS HONG KONG INSTITUTE OF TECHNOLOGY |
Defendant |
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Coram : Her Honour Judge Mimmie Chan in Chambers (open to public)
Dates of hearing : 26 & 28 January, 2011
Date of handing down Decision : 18 March, 2011
DECISION
Background
1. On 12 January 2011, this Court handed down judgment in favor of the Plaintiff ("MEC"), whereby the Defendant ("Institute") was ordered to pay to MEC the sum of $394,203.21 ("Judgment Sum") together with interest at judgment rate from the date of the Writ until payment ("Judgment"). The Institute's Counterclaim was dismissed. An order nisi was made that the Institute should pay to MEC the costs of the main action and of the Counterclaim, to be taxed if not agreed.
2. By its Summons dated 21 January 2011 ("Summons"), MEC applied under Order 22 rule 24 of the Rules of the District Court (“RDC”) for the Institute's payment of costs of the main action and of the Counterclaim on an indemnity basis after 2 June 2009, with interest on costs at 10% above judgment rate until payment. The Summons was returnable on 26 January 2011.
3. On 25 January 2011, MEC applied by a further summons to amend the Summons, seeking :
(1) the Institute's payment of indemnity costs from 2 June 2009, or 18 September 2009, or a date to be determined by the court, with interest on costs at a rate of not exceeding 10% above judgment rate until payment;
(2) the variation of the rate of interest on the Judgment Sum to a rate not exceeding 10% after 2 June 2009, or 18 September 2009, or a date to be determined by the court;
(3) costs of the entire main action and of the Counterclaim to be paid to MEC on an indemnity basis; and
(4) costs of the application by the Summons to be on an indemnity basis.
4. The Summons to seek indemnity costs and interest on such indemnity costs is based on a sanctioned offer made by MEC to the Institute on 4 May 2009 ("1st Sanctioned Offer"), whereas the application to amend the Summons is based on a further sanctioned offer made by MEC on 20 August 2009 ("2nd Sanctioned Offer").
5. At the hearing of the Summons on 26 January 2011, Counsel for the Institute applied for the hearing to be adjourned, to consider with the Institute whether evidence should be filed to resist the extended ambit of the application by virtue of the summons to amend. I took the view that when instructions were sought from the Institute on the original ambit of the Summons, such instructions would inevitably have covered events from the 1st Sanctioned Offer until the commencement of trial, including the making of the 2nd Sanctioned offer, but to avoid any injustice to the Institute, I granted a short adjournment to 28 January 2011.
6. At the adjourned hearing on the 28 January 2011, Counsel for the Institute confirmed that no further evidence would be filed.
7. It is not disputed that on 4 May 2009, MEC made the 1st Sanctioned Offer to accept a sum of $550,000 in settlement of the entirety of its claim against the Institute. The sum proposed was stated to have taken into account the whole of the Institute's Counterclaim against MEC, and includes interest. On 20 August 2009, MEC made the 2nd Sanctioned Offer, proposing to accept the lesser sum of $430,000 in settlement of its claim. The settlement sum was again stated to have taken into account the whole of the Institute's Counterclaim, and to include interest.
8. The payment sought by MEC in the Writ and the Statement of Claim was $641,133.69. After trial, the Judgment Sum awarded to MEC was $394,203.21. The Judgment Sum, and interest thereon as at the date of the Judgment, was $578,838.07. By the time of the hearing on 28 January 2011, the Institute no longer disputes MEC's entitlement to enhanced interest and indemnity costs from 18 September 2009 on the basis of the 2nd Sanctioned Offer, and MEC no longer pursues any claim in reliance on the 1st Sanctioned Offer. The dispute relates to the rate of interest, the relevant period to be covered and whether the Institute should be liable for costs of the entire action including the Counterclaim on indemnity basis.
9. The 1st Sanctioned Offer was superseded by the 2nd Sanctioned Offer, and since the Institute is held liable for more than the proposal contained in the 2nd Sanctioned Offer, Order 22 rule 24 is triggered. Under rule 24 (2), the Court may order interest on the whole or part of any sum of money awarded to MEC at a rate not exceeding 10% above judgment rate. The Court may also order costs on an indemnity basis and interest on costs under rule 24 (3). Under Order 22 rule 24 (4), the Court shall make the orders in question unless it considers it unjust to do so.
Is it unjust to make the orders sought?
10. In considering whether it would be unjust to make the orders referred to in Order 22 rule 24 (2) and (3), the Court is to take into account all the circumstances of the case including the terms of the sanctioned offer, the stage at which any sanctioned offer was made, the information available to the parties at the time when the sanctioned offer was made, and the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.
11. With regard to the terms of the sanctioned offers, the 1st Sanctioned Offer was made on 4 May 2009. By then, leave had been granted by the Court for the parties to file and exchange expert reports. The 2nd Sanctioned Offer was made on 20 August 2009. By then, an order had been made by the Court on 4 June 2009, directing the parties' experts to meet on or before 2 July 2009, for the purpose of preparing a joint statement to indicate those parts of their evidence on which they were, and those parts on which they were not, in agreement. After some procrastination (details of which I had referred to in my earlier Decision on experts' reports handed down on 22 September 2010), the experts' meeting was finally held on 30 July 2009, leading to the filing of the Joint Experts’ Report on 19 August 2009. Areas of agreement and disagreement were defined, and this led MEC to propose the terms of settlement set out in the 2nd Sanctioned Offer.
12. I have not been referred to any evidence that the Institute had asked to be provided with any information which they needed in order to be able to assess whether or not to accept either of the sanctioned offers, but were refused such information. As evidenced by the Joint Experts’ Report filed after the joint meeting of the experts, the Institute should have had adequate information by the time of the 2nd Sanctioned Offer as to the basis of the claims for payments made by MEC for the work carried out and materials left on the site, and to compare these claims with the amount proposed in the 2nd Sanctioned Offer.
13. The 2nd Sanctioned Offer was made in good time before trial, with ample time given to the Institute to consider its terms, and reasonable opportunity to avoid incurring the costs of trial.
14. In McPhilemy v. Times Newspapers Ltd. (No. 2)[2002]1 WLR 934, it was made very clear that an order under rule 36.21 of the English rules...
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