Costs consequences in discrimination claims – an update on the “gweilo” case and a minefield for the unwary

Further to our news update on 31 March 2022, the District Court handed down its decision on costs in Francis William Haden v Leighton Contractors (Asia) Limited [2022] HKDC 152 on 11 May 2022.  Previously on 11 February 2022, the District Court dismissed the claimant’s race discrimination claim (where, among others, the use of the term “gweilo” in the work place was alleged to be contributing to race discrimination) and made a costs order nisi that there be no order as to the costs of the action.

It is worth noting that the normal rule of “costs follow the event” does not automatically apply in discrimination claims.  The rationale is that if the Court makes an adverse costs order against unsuccessful claimants too readily, it may discourage those who may have legitimate grievances in enforcing their civil rights.  Pursuant to section 73E(3) of the District Court Ordinance (Cap.336), the default costs position in race discrimination claims is that each party should bear its own costs unless the Court otherwise orders on the ground that:

  • the proceedings were brought maliciously or frivolously; or
  • there are special circumstances which warrant an award of costs.

The provision is in place to strike a balance between the legislative objectives to eliminate discrimination and change prejudicial attitudes that may exist in society on the one hand, and the concern that over-leniency will encourage the lodging of unmeritorious discrimination claims on the other.

In this case, the Court varied the order nisi that there be no order as to costs and instead ordered the claimant to bear the respondent’s costs of the action (including all costs reserved).  The Court held that the proceedings had been brought frivolously when considered objectively.  After an evaluation of the evidence relied on by the claimant, the Court was of the view that the action should not have been commenced in the first place. There are also special circumstances in that the claimant unreasonably turned down a previous offer by the respondent to withdraw or discontinue his claim with no order as to costs.

This decision illustrates the importance to conduct an early evaluation of the merits of a claim and to consider offers made by the other side seriously and realistically.  Notwithstanding the statutory provision on costs, prospective claimants should still be mindful of potential costs consequences in deciding whether to bring a discrimination claim.

MinterEllison LLP acted for the respondent in successfully defending the discrimination claim and now varying the costs order nisi such that the claimant pays the respondent’s costs.

24 June 2022