Hong Kong Personal Injury Brief - April 2021 edition

In this month’s brief, we highlight a case where Kennedys represented the successful defendant to defeat a construction injury claim. Indemnity costs and enhanced interest on costs at 10% above judgment rate were also awarded after trial.  We also review judgments involving (i) a personal costs order against a claimant solicitor (ii) a dispute on an EC policy stayed for arbitration and (iii) an EC interim payment allowed even though the amount was minimal.

Indemnity costs and enhanced interest

In Angbuhang Netra Jang HCPI 69/2015 (Kennedys represented the successful defendants), the plaintiff’s claim was dismissed with costs to the defendants. Since the plaintiff was unable to beat the sanctioned payments made by the defendants, costs was awarded on indemnity basis after the last date on which the first sanctioned payment could have been accepted. The fact that the plaintiff had been legally aided for part of the that period did not immunise him from such adverse costs order. In addition, enhanced interest at 10% above judgment rate was also awarded on costs from date incurred up to the date of judgment.

By contrast, the court declined to award any enhanced interest in Bokhim Dil Kumar HCPI 995/2018 where the plaintiff failed to beat the sanctioned payment as no supporting evidence had been provided by the defendant to show how much costs and disbursements had been paid by its insurers to their solicitors.

Wasted costs order

In So Kam v Guildford Ltd DCPI 1921/2016, HH Judge Andrew Li ordered the plaintiff’s solicitors to personally bear the costs of the action on indemnity basis (subject to them showing cause why such an order should not be made)  for pursuing a hopeless case when it should have been apparent that the plaintiff’s claim had no merit and he would not be in a positon to pay the successful defendant’s costs.  The plaintiff motorcycle rider claimed that his minor injuries were caused by the negligent driving of the taxi driver who collided into his motorcycle but he was unable to provide any credible evidence in support of his claim and was found  to be “plainly unbelievable”.

The Judge was highly critical of the plaintiff and the plaintiff’s solicitor’s handling of the case. He said there was simply no evidence to point to any negligence or breach of duties by the taxi driver and it was wrong for the plaintiff and his solicitors to push the case all the way to trial, “hoping that either the defendants or their insurers would somehow cave in to the hopeless claim or somehow a miracle would happen during the trial.”

He also directly addressed the issue of claimant law firms assisting unmeritorious litigants without any hope of success and wasting the court’s time. He noted that in the past few years, there has been a huge surge in such cases and if solicitors take on such hopeless cases, they should be made to pay for the costs of the defendant. It transpired during the course of trial that the plaintiff’s solicitors had paid for the medical expert and counsel’s fees upfront and although the court said there was nothing wrong with such practice, the burden was on the solicitor to make careful enquiry and to satisfy himself that there was at least a reasonable cause of action. “It is against both the letters and the spirit of the Civil Justice Reform to allow unmeritorious claims, no matter whether they are funded by a solicitor on behalf of his client or litigant who is acting in person, to proliferate”.

We hope that this judgment sends a strong message to claimant firms engaged in such practices that the courts may well hold them personally liable for costs if they fail to advise their clients to drop hopeless cases.

Policy dispute stayed for arbitration

In Lau Lan Ying v Tophill Company and others and Asia Insurance HCPI 6/2020, Asia had repudiated policy liability for failure to provide various information in relation to the accident in breach of claim conditions under the policy. The employees' compensation (EC) policy contained a usual arbitration clause which stipulated that all differences arising out the policy shall be determined by arbitration and if the issue is not referred within 12 months of liability being disclaimed, the claim shall be deemed to have been abandoned. The insured did not refer the dispute to arbitration but tried to join Asia as a third party in the main action. It argued that the repudiation was wrongful and also that since the underlying action is rooted in the EC Ordinance (ECO), it had a statutory right to join Asia as a third party and it would be against public policy to allow the Asia to rely on the boilerplate arbitration clause to stay legal proceedings. The court disagreed and found in favour of Asia.  It said that the public policy considerations and direct rights against insurers under the ECO scheme is to afford protection to an injured employee rather than to provide protection for insureds against the insurer. The insured’s claim against the insurer in this case could not be said to be a statutory claim and the ECO does not prohibit arbitration of such claims. This was essentially a private dispute or “difference” under the policy and was therefore capable of being arbitrated.

EC interim payment

In Tabassam Raheem v Chung Hung Engineering Ltd DCEC 2554/2019, the court said it was not necessary for the Applicant to prove that he would be able to obtain “substantial damages” in order for his application to succeed. Since liability had been admitted and he was likely to receive $37,843.20 under section 9 ECO, the Applicant was awarded $25,000 interim payment even though he had probably been overpaid under section 10 ECO but as no set off was allowed for such overpayment, the respondent will have to pay the interim payment. This judgment suggests that if liability is admitted, the threshold for interim payment to be awarded is quite low unless the respondent has strong expert medical expert evidence to refute the MAB finding.