Cost Consequence of Sanctioned Payment with "Otherwise Proviso" - Li Suk Yee v. ParknShop (HK) Limited [2023] HKDC 1670

Background and Decision of the Court Master

The Plaintiff was a store attendant in a supermarket. She claimed that she fell from a ladder while working at the supermarket when a shopping cart controlled by a customer collided with the ladder from behind as she was climbing down. However, this was contradicted by the CCTV footage.

Despite the fact that the CCTV footage was already disclosed during the pre-trial stage, the Plaintiff nonetheless decided to proceed with the lawsuit to claim over HK$2.05 million.

The Defendant (as the employer of the Plaintiff) had subsequently made a sanctioned payment of HK$5,000, with an "otherwise proviso" stating that the Defendant would apply for costs of the entire court proceedings upon acceptance of the sanctioned payment.

The Plaintiff took out a Summons to accept the sanctioned payment out of time, and asked for costs up to 28 days after the sanctioned payment had been made.

In light of the CCTV footage, the Master of the High Court hearing the Summons took the view that there was no basis for the Plaintiff to proceed with her pleaded case. Yet, she maintained her case throughout the proceedings which the Court found unreasonable. Ultimately, the Court allowed the Plaintiff to accept the sanctioned payment out of time, and awarded costs to the Plaintiff up to the filing of the list of documents by the Defendant, which the Court considered to be an indication that the Defendant would “formally rely on the CCTV as a defence”. Thereafter, costs will be awarded to the Defendant.

The Defendant appealed against the decision of the Master on the issue of costs, arguing that the costs of the whole action should be to the Defendant.

HH Judge Andrew Li's Decision on Appeal

On appeal, HH Judge Andrew Li granted costs of the whole proceedings to the Defendant, and held that the Master was wrong to fix the “cut-off date” at the time of the filing of the list of documents, because the Master had failed to take into account the fact that the CCTV footage had been made available to the Plaintiff during the pre-trial stage.

The relevant paragraph in the judgement is as follows:

“Once the Master accepted that the CCTV footage played a vital role in whether the Plaintiff was able to prove her pleaded case, then the crucial date must be when it was first disclosed to the Plaintiff, and not when it was formally discovered under the List of Documents.”

Hence, the Defendant should be entitled to the costs of the whole proceedings.

Takeaway

In this judgement, the Court stresses the importance of the pre-action/pre-trial protocol, where it expects the parties to disclose evidence and plaintiffs should use this opportunity to realistically consider whether to proceed with the case. If they choose to proceed with the case in a way that contradicts with the evidence disclosed, the Court will be prepared to make an adverse costs order against them at an appropriate opportunity.

As for the insurers / defendants, this serves as a reminder of the importance of obtaining and disclosing important evidence on liability and quantum (e.g., CCTV, surveillance, medical reports, etc.) an the early stage of a case in order to protect their costs position. It should also be noted that in appropriate cases where the plaintiff’s case is weak, the defendant can consider taking a more aggressive approach by making a nominal sanctioned payment with an “otherwise proviso” asking for costs of the proceedings.