REAL HONOUR LTD. v. GAMUSE CO. LTD.

HCSA29/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO.29 OF 1999

(On appeal from Case No.SCTC017852 of 1999)

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J U D G M E N T

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The particulars of the appeal

1. This is an appeal by the claimant against the decision of the learned adjudicator of the Small Claims Tribunal, which was made on 3 December 1999. Her decision included two orders:

(1) The application by the claimant for an order to allow the claimant and/or its solicitors and/or its agents and/or its expert witness(es) to enter upon the meter room and/or other relevant premises relating to the claim of the Bank of America Tower to conduct an inspection and/or examination and/or test on the relevant facilities as may be necessary is dismissed.

(2) The claimant do pay costs of $3,830 to the defendant in any event.

2. Leave to appeal was granted by Deputy Judge Z.E. Li after hearing the parties on 23 February 2000. I had heard the substantive appeal before my leave in July 2000 and the decision was given after the hearing. I said I would hand down my written reasons after my return. I shall do so now.

Background of the case

3. This claim originally arose from a tenancy agreement made between the parties in March 1999. The defendant is the property owner of all the units on the 24th floor of the Bank of America Tower. By a tenancy agreement, the defendant leased one of the units, i.e. unit 2403 ("the premises"), to the claimant.

4. Although the lease was made between two limited companies, the parties behind were both solicitor firms. The claimant moved into the premises and had contracted one Shun Tung Electric Company Ltd, to deal with the electrical wiring work. In fact, this company was nominated by the management office. The fee for the work was $14,500. It had been duly paid by the claimant. However, the claimant contended that such expenses, which related to the supply of electricity from the meter room to the premises, should be borne by the landlord under the tenancy agreement. Therefore, it commenced proceedings in the Small Claims Tribunal for this amount when some effort at settlement failed. Later, the claimant considered it necessary to apply to the Tribunal for an order of inspection so that an expert could be allowed access to the meter room. The adjudicator dismissed the application with costs in the sum of $3,830 in favour of the defendant. The claimant sought to appeal against these orders.

The issues

5. I shall deal with the question of the inspection order first. The applicant stated that there were four main issues in this case. They were :

(1) What actually was the work done at the costs of $14,500.00?

(2) Why was such work required?

(3) Who had, in the light of the answers to (1) and (2), the responsibility for such work under the tenancy agreement or by reason of representations made to the Claimant prior to the tenancy agreement?

(4) If the work done comprised different parts, which parts of such work should have been taken up by the Defendant and how much should that cost?

6. In connection with the first two matters, the applicant argued that they required expert evidence. The staff who had originally done the work was naturally an important witness. However, the applicant said there was a problem because this worker had only provided oral information about the condition of the meter room at the time of his work. He would not sign a witness statement, although a draft was prepared based on what he had said. Hence, the applicant wished to have another expert to look at the meter room in order to carry out an inspection and to prepare a report. In this regard, the applicant suggested that :

"... it is simply prudent for the Claimant to safeguard its position and improve on its evidence by applying for an inspection of the meter room so that an expert report could be prepared." (See p.4 of the Claimant's Skeleton Argument.)

However, having heard the submissions, the adjudicator refused the application and ordered the claimant to pay costs.

The grounds of appeal

7. Regarding the decision by the learned adjudicator, the applicant had put forward, inter alia, the following complaints :

(1) The adjudicator was waiving on whether she had the power to make the order as requested. The meter room in question was not a common area within the control of the management office. Therefore, it was open to the Tribunal to make an order for its inspection against the respondent. The Tribunal should also hear evidence on this matter and not to assume the management office had the control of the meter room.

(2) By finding that a subsequent inspection would not be relevant to the state of the meter room before the work, the adjudicator had usurped the role of an expert. Whether the expert could find anything relevant would be a matter for him to find out.

(3) If the applicant did not apply for such an order and would only rely on the hearsay evidence, there could be a possible objection at the trial. Therefore the Tribunal should allow the inspection to be made now to avoid unnecessary arguments later.

8. On the other hand, it was argued by the respondent that the applicant had failed to show that the meter room was in the possession and control of the respondent, so it was correct for the adjudicator to hold that she did not have the power to make the order sought. In any case, the adjudicator had a discretion in this regard and she could not be criticized for not granting the order.

The basis of the adjudicator's decision

9. The learned adjudicator had given a detailed Reasons for Decision. To put it simply, she had considered and decided the application from the angle of relevancy. She agreed that this Mr Jacky Cheng, the staff who had done the original wiring work, was a material witness for the applicant. Although he might be unwilling to sign a witness statement, the adjudicator was not satisfied that he would not appear at the trial to testify. The adjudicator pointed out that this potential witness had once appeared before her in response to the witness summons, thinking that the trial was going to take place on that occasion. And even if Mr Cheng was not going to give evidence, the adjudicator stated that another witness could be arranged to give evidence and produce the relevant documents. She emphasized the special situation of the Tribunal as the statute allowed it to receive hearsay evidence. She also took the view that an inspection of the meter room now could have no relevance as to its condition in April 1999.

10. On the issue of whether the Small Claims Tribunal had the power to make such an order, the adjudicator relied on section 37 of the Small Claims Tribunal, Cap.338 and concluded that she did have the jurisdiction to make the order under Order 29 rule 3; however, she found that the application was unnecessary and irrelevant. Furthermore, the adjudicator pointed out that the order sought did not specify who had the possession of the meter room and against whom the order was to be made. Referring to the claimant's letter dated 24 November 1999, which proposed that the order should be made against the management office of the Bank of America Tower, the adjudicator commented that the manager was not a party to the proceedings and therefore the claimant's application must fail.

Reasons for dismissing the appeal on the inspector order

11. When I read the papers of this appeal, my first concern was that there seemed to be no clear resolution on who had the right to allow access to the meter room for an inspection. I would have thought that it was a simple but fundamental point. If the respondent was in lawful possession and control of the meter room, common sense would dictate that the application should of course be directed against it. However, if the management office was in possession and control of the area, then it would appear that the basis of the application was indeed questionable. And if it was the management office which was in possession and control, I did not see, from the available documents, that it had previously been approached by the claimant and/or that it had refused the claimant's request for access.

12. The skeleton submissions prepared by both counsel were very helpful. But they illustrated clearly that this basic issue remained an item of dispute. The applicant stated that according to the Deed of Mutual Covenant, the meter room was not a common area within the control of the management office; it was part of the premises occupied by the respondent. I had, at one stage at the hearing, enquired about who actually had the key to the meter room and no clear answer was immediately available. I then invited the applicant to try to find out and to confirm as to who was really in possession and control of the meter room. The respondent objected to this course of action. Counsel argued that it would be tantamount to this court receiving fresh evidence on appeal, which was apparently prohibited by section 29 of the Small Claims Tribunal Ordinance, Cap.338. However, by the same token, the respondent should not have filed the affirmation by one Lee Yiu Wing, which produced some coloured plans in order to support its position that the respondent was not in possession and control of the meter room.

13. As I said, I was rather surprised that this basic issue remained, as it were, unresolved. Counsel for the applicant had commented that the adjudicator should have, at the hearing, invited evidence on this point and not to make assumptions. Be that as it may, the adjudicator had finally made a decision by resorting to the onus of proof. She considered that :

"... the Claimant has to prove that the person against whom the order is made has possession of the 'meter room' and 'other relevant premises' of the Building referred in the Application. ..." (See para.27 of the Reasons for Decision.)

14. In any case, the learned adjudicator refused the application because the result of the inspection sought would be irrelevant and unnecessary to this dispute. I considered that she was entitled to reach that conclusion. And I was not persuaded that the adjudicator's decision should be overturned by any of the grounds advanced. To say that the learned adjudicator was wavering on the issue of whether she had the power to grant the order was neither here nor there. At the end, she did come to a decision after considering the submissions.

15. As to the second point, the adjudicator had only made an interlocutory ruling on whether a piece of evidence is relevant. There is not yet a final determination of the case. I cannot say the adjudicator was necessarily wrong by not granting the order. Regarding the applicant's suggestion that the order should be allowed simply to avoid possible objections at the trial, I do not think it was a valid reason to overturn the adjudicator's decision. If there was indeed such objections at the trial, the Tribunal could deal with them in light of the circumstances and development of the case.

16. The spirit of the Small Claims Tribunal is to provide a quick and efficient way to resolve dispute between citizens. The parties are all officers of the court and they should appreciate and uphold this primary object of the Tribunal. Looking at the state of the papers, the case has already become oversized and unnecessarily complicated. The adjudicator had implicitly urged the parties to swiftly proceed to trial. I agree with her concern. Although it was open to me to do so, I would not refer the matter back to the Tribunal just to investigate as to who had the possession and control of the meter room. It would be a further waste of time and costs, as in any case, the adjudicator had found a new inspection to be irrelevant. I would dismiss the appeal on the inspector order.

Reasons for allowing the appeal on costs

17. As to the point regarding the costs order, I would simply say that I agree with applicant's counsel that the calculation of costs should not be on such an hourly basis. Section 24(1)(a) and (b) of Small Claims Tribunal, Cap.338, states that :

"(1) Subject to subsection (2), the tribunal may award to a party costs and expenses, which may include -

(a) any reasonable expenses necessarily incurred and any loss of salary or wages suffered by that party; and

(b) any reasonable sum paid to a witness for expenses necessarily incurred and any loss of salary or wages suffered by him,

in attending the hearing."

18. I failed to see how this amount of cost could be described as "reasonable expenses necessarily incurred" or "loss of salary or wages suffered". The purpose of the section was compensatory in nature with an emphasis on reasonableness. The costs order is not meant to be punitive. I considered it generally inappropriate to take the hourly charge of a solicitor to be the basis of assessing loss of salary or wages or expenses when he appears as a litigant in the Tribunal. However, apart from the amount, the costs order was, in principal, correct. I would therefore allow the applicant's appeal on the costs order and substitute it with $500, which should be paid by the applicant in any event.

19. As to the costs of the appeal, having heard both sides, I had ordered that there be no orders as to costs on this appeal.