JET VICTORY INVESTMENT LTD v. WONG LEUNG TAT

LDBM 238/2015

[2025] HKLdT 9

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 238 OF 2015

___________________

BETWEEN

___________________

_________________

D E C I S I O N

_________________

APPLICATION

1.  This is the Respondent’s application for variation of the costs order nisi (“Order Nisi”) made in §125 of the Judgment[1] (“Judgment”) handed down by this Tribunal on 26 August 2024. The abbreviations in the Judgment are adopted herein.

2.  This is a water seepage case. In the Notice of Application, the Applicant prayed for, other than interest and costs, in gist,

(1) a mandatory injunction compelling the Respondent to carry out remedial works to rectify the water seepage problem (“Mandatory Injunction Claim”);

(2) a prohibitory injunction restraining the Respondent from using the Upper Premises or allowing the same to be used as a guesthouse instead of for private residential purposes (“Prohibitory Injunction Claim”).

(3) damages (“Damages Claim”).

3.  The Judgment was handed down after trial, in that, the Applicant’s claims were disposed of as follows:-

(1) no order was made for the Mandatory Injunction Claim.

(2) the Prohibitory Injunction Claim was dealt with by the undertaking given by the Respondent in almost the same terms as per the Prohibitory Injunction Claim (“Undertaking”).

(3) the Damages Claim was allowed, in part and to the extent of

(a) HK$180,000 for cost of remedial works; and

(b) HK$50,000 for general damages plus pre-judgment interest.

4.  By the Order Nisi, the Respondent was ordered to pay the Applicant 40% of the costs of this Action, including all costs reserved, to be taxed if not agreed, with certificate for counsel.

5.  In making the Order Nisi, this Tribunal expressly took into account the matter overall and the issues litigated, including the Applicant only succeeded in some of its claims and the extent of success was, in monetary terms, substantially reduced[2].

6.  By the Form 1 filed on 9 September 2024, the Respondent makes the present application for variation of the Order Nisi to the effect that (i) the Respondent’s costs of this Action on and after 12 January 2016, including all costs reserved, be paid by the Applicant, to be taxed if not agreed, with certificate for counsel, or alternatively (ii) there be no order as to costs.

7.  In the Respondent’s Skeleton Submissions, the present application focuses on two main grounds: -

(1) the settlement offer (in a typewritten paper slip) put forward by the Respondent in late 2015 (“Settlement Offer Ground”);

(2) the Applicant’s unreasonable conduct (“Unreasonable Conduct Ground”).

8.   The Applicant opposes the present application. It contends that the Order Nisi has already struck the fairest balance, reflecting the Applicant’s degree of success and failure, and there is no good ground for the Respondent to disturb the same.

LEGAL PRINCIPLES

9.  It is trite that costs are in the discretion of the Court. The discretion is a wide one, albeit to be exercised judicially. In exercising its discretion, the court will take into account the matters such as the conduct of the parties, whether a party has succeeded on his case, in whole or in part, together with sensible offers to settle: Order 62 rule 5(1) of the Rules of the High Court, Cap. 4A (“RHC”); section 12(7) of the Lands Tribunal Ordinance, Cap. 17.

10.  A settlement offer is a matter which the court is entitled to take into account in exercising its discretion as to costs pursuant to Order 62 rule 5 RHC. The question is whether, on the basis of the facts known to the offeree and his advisers and without the advantage of hindsight, he ought to have accepted the offer, bearing in mind the difficulty of making accurate forecasts. The rejection of a reasonable settlement offer may attract an adverse cost order against the offeree. The extent depends on the circumstances of the case.

SETTLEMENT OFFER GROUND

11.  I should first deal with the Settlement Offer Ground.

12.  Much reliance has been placed by the Respondent on his settlement offer, which was typewritten in a paper slip he gave to Lam in late December 2015 (“Written Offer”). The Written Offer reads:-

「林先生，

關於金冠大廈13C單位，我誠心希望盡快解決這件事，因此我願意接受以$280,000來和解，而營運持牌賓館方面我亦希望與你繼續坦誠溝通達致雙方能夠接受的方案。

雙方在下面簽署確認作為和解, 收取此金額後你同意不再追究任何費用包括裝修費, 維修費, 律師費, 法庭費等的一切費用, 雙方亦同意繼續合理地坦誠溝通13C營運持牌賓館的事宜。

12C業主林先生		13C業主黃先生
/2015		/2015	」

13.  Premised on the Written Offer, the Respondent argues that given the Written Offer had offered a sum of HK$280,000 with no order as to costs for settlement whereas the Applicant was only awarded damages in the sum of HK$230,000 after trial, the Applicant failed to obtain a judgment better than the Written Offer. The Applicant therefore should not be entitled to the costs after its rejection of the Written Offer on 12 January 2016 or there should be no order as to costs because the post-Written Offer costs of the proceedings could have been saved if the Applicant had accepted the Written Offer, which turns out to be higher than the damages awarded to the Applicant under the Judgment.

14.  As a start, both parties have no disagreement that the Written Offer neither constitutes a sanctioned offer nor falls into the scope of the sanctioned payment regime. The sanctioned payment/ offer regime under Order 22 RHC has no room to play and the exclusionary rule under Order 62 rule 5(1)(d) RHC is not engaged.

15.  Mr Ng, Counsel for the Respondent, suggests that the Written Offer is not a Calderbank Offer but an “Open Offer” without much elaboration as to the distinction between them and his definition of the “Open Offer”. While I would have considered the expression “open offer” carries with it an implication that it is an offer which contains a concession of some nature which might be put before a trial judge, I do not think it is necessary to characterize the Written Offer precisely for the present purpose.

16.  Suffice it to say that the Written Offer had not been put before this Tribunal during trial until the present application. Further, the Applicant agrees that the Written Offer can be a factor to be considered in exercising the discretion as to costs. It only disputes that the Written Offer should not be given the undue weight as advocated by the Respondent.

17.  I should start with the implication and effect of the Written Offer. The Written Offer provides that: -

(1) a sum of HK$280,000 (“Settlement Sum”) was offered “for settlement” (“來和解”).

(2) upon receipt of the Settlement Sum, the Applicant is bound to:-

(a) cease pursuing its claim for payments of any kinds including renovation fees, repair fees, solicitors fees and court fees; and

(b) continue to communicate with the Respondent reasonably and candidly on the issue of operating licensed guesthouse at the Upper Premises (“Communication Obligation”).

18.  Strictly, the Written Offer features 3 salient points as follows:-

(1) The subject matter of the settlement was not clearly identified. It only referred to “the matter” (“這件事”) “relating to the Upper Premises” (“關於金冠大廈13C單位”). The present proceedings was not mentioned, nor was the offer expressed to be “without prejudice save as to costs” or “open offer”.

(2) The signing of the Written Offer or the receipt of the Settlement Sum would not have the effect of putting all the matters in dispute in these proceedings to an end or discharging the parties from any further obligations.

(3) The Written Offer only referred to the matters relating to the Applicant’s monetary claims (ie the Damages Claim, interest and costs) but kept silence on its non-monetary claims (ie the Mandatory Injunction Claim and, in particular, the Prohibitory Injunction Claim). Rather, it obliged the Applicant to continue to communicate with the Respondent reasonably and candidly on the issue of operating licensed guesthouse at the Upper Premises.

19.  Viewed in this light, it is difficult to regard the Written Offer as a plain, unequivocal and unconditional settlement offer for full and final settlement of all of the Applicant’s claims in the present action. Indeed, the imposition of the Communication Obligation obliged the Applicant to continue to communicate with the Respondent on the issue of operating licensed guesthouse at the Upper Premises, which was the subject of complaint under the Prohibitory Injunction Claim. The Communication Obligation was related to and virtually, contrary to the Prohibitory Injunction Claim, and its scope, duration, nature and mode of communication was undefined in the Written Offer.

20.  Thus considered, the Applicant should not be blamed for not accepting the Written Offer, which was unclear, ambiguous and rather, couched in special terms imposing an undefined obligation on the Applicant to perform even after the signing of the Written Offer and the acceptance of the Settlement Sum.

21.  After all, I am not persuaded that the Written Offer was more generous than what the Applicant was awarded under the Judgment. The Respondent’s contention that the Applicant has failed to beat the Written Offer is unjustified. It is in ignorance of the fact that the Applicant was given the Undertaking by the Respondent. The Undertaking in substance fed the Prohibitory Injunction Claim and in effect restraining the Respondent from using the Upper Premises or allowing the same to be used as a guesthouse instead of for private residential purposes. Hence, under the Judgment, the Applicant actually succeeded in not only obtaining an award of HK$230,000, but also significant interest and the Prohibitory Injunction Claim (by way of the Undertaking).

22.  Indeed, the Respondent is not entitled to merely single out the Settlement Sum to contend that the Applicant has failed to obtain a judgment better than the Settlement Sum, without giving due regard to the implication and effect of the imposition of the Communication Obligation (which formed part and parcel of the Written Offer) as well as his giving of the Undertaking (under the Judgment).

23.  For the reasons set out above, I am not convinced that the Applicant had acted unreasonably in not accepting the Written Offer. Nor am I persuaded that the Applicant had failed to do better than the Written Offer. Plainly, the Written Offer lends no support to the Respondent’s present application and the Settlement Offer Ground is unmeritorious.

24.  In my view, neither party had ever put forward any reasonable or realistic settlement offer. It is unfortunate that the Respondent had chosen to impose the illogical and impracticable Communication Obligation in the Written Offer. Such offer was followed by the Applicant’s settlement offer asking for an unrealistic sum of HK$1,050,000 on 28 December 2015 and later, an unreasonable request for the Respondent to concede the whole issue of liability as to water seepage in exchange of an abandonment of the Prohibitory Injunction Claim on 12 January 2016. In all, it is immediately apparent from the rulings of the Judgment that none of such settlement offers was sensible or realistic.

25.  It has been argued for the Respondent that he had adopted a proactive attitude and actions in following up Lam’s complaints of resumption of water seepage since August 2015[3] together with putting forward of the Written Offer. However, the subsequent change of attitude in following up the water-seepage complaints and putting forward the problematic Written Offer did not brush aside his failure in taking timely and effective action to stop the pre-September 2014 water seepage at the Two Areas[4], in defending the liability and quantum relating to the pre-September 2014 water seepage of the Two Areas and the Prohibitory Injunction Claim, ending up with such disputes being hotly contested at trial and the Applicant being awarded with damages and the Undertaking.

26.  In the premises, the fact that the parties had put forward some settlement offers in the past brings no significant impact on the order nisi.

UNREASONABLE CONDUCT GROUND

27.  Under the Unreasonable Conduct Ground, the Respondent complains the Applicant to have prosecuted its claim unreasonably.

28.  While it is beyond dispute that unreasonable conducts of the parties are factors to be considered when awarding costs, the Unreasonable Conduct Ground does not advance the Respondent’s position any further for the reasons that this Tribunal has already taken into account of all the relevant factors under Order 62 rule 5 of the RHC, including the relevant conducts of both parties, when making the Order Nisi.

29.  In exercising the discretion as to costs, the fact that the Applicant’s witnesses had been untruthful in various aspects of their evidence and in particular, Lam was not a reliable witness[5], has been fully considered. This Tribunal has not ignored the Applicant’s unsubstantiated claims of water seepage at the Living Room Area or of the post-September 2014 reoccurrence of water seepage. Nor have I neglected its exaggeration of its loss and damages flowing from the water seepage[6].

30.  It goes without saying that the time and costs spent as a result of Lam’s unjustified ad hoc allegations of occasional water seepages in recent years as well as of the water seepage in August 2015 was caused by the water pipes of the Upper Premises during trial were also considered[7].

31.  On the other hand, this Tribunal has also been alive to the Respondent’s unfounded allegations, including but not limited to, his unjustified serious allegations of the Applicant’s dishonest fabrication of evidence of water seepage as water marks, drippings[8] and the test results[9], of the non-existence of the pre-September 2014 water seepage at the Corridor Area and at the Room 4 Area, of the Applicant having the practice of obtaining compensation by extortion[10], of the continuance of the water seepage despite renovation work and non-use of the Upper Premises (so as to deny the Upper Premises being the source of the water seepage)[11], of the occupation of the Upper Premises by his friends during the period concerned[12].

32.  In my view, the present action does not differ much from some hostile litigations in the normal litigious sense involving credibility and hostility. Both parties have, in various aspects and to different extent, made unsubstantiated allegations and unjustified complaints against each other.

33.  In the costs-assessment exercise, this Tribunal has also paid due regard to the Applicant’s successful claims relating to the water seepage at the Corridor Area and at the Room 4 Area to the extent that a meaningful sum of HK$230,000 plus pre-judgment interest was awarded and the Respondent was held responsible to the Undertaking. Besides, the Applicant’s failure in proving the Mandatory Injunction Claim (which did not take much time or efforts in the whole proceedings) and a substantial part of the Damages Claim was also considered.

34.  In reaching the conclusion that the Respondent shall pay the Applicant 40% of the Applicant’s costs, this Tribunal has in fact thoroughly taken into account all the relevant matters as set out in Order 62 rule 5 RHC. The Order Nisi reflects the outcome of the different issues as well as the litigation conducts of both parties.

35.  As to the Respondent’s complaint of the delay of proceedings by the Applicant between 2016 and 2020, a matter which was mentioned in the Respondent’s affirmation and was sensibly not seriously pursued by Mr Ng in his written submissions, such complaint does not assist the Respondent in the present application.

36.  Section 14(1)(a) of the Lands Tribunal Rules, Cap. 17A, provides that where a notice of opposition has been filed, any party to the application, on giving notice to all other parties, may apply to the registrar in accordance with Form 31 to list the application for hearing.

37.  Given the Respondent filed its Notice of Opposition on 3 February 2016 with the assistance of his then solicitors, it was open for him to apply to list the Applicant’s Notice of Application for the first call-over hearing or make application to strike the Notice of Application out for want of prosecution, bearing in mind that both parties have the same duties to ensure that a case is dealt with as expeditiously as is reasonably practicable under Order 1A rules 1(b) and 3 of RHC.

38.  It is noteworthy that there were also occasions that the Respondent had asked for time extensions of filing of documents. I share the view with Mr Cheung, Counsel for the Applicant, that the Respondent’s health condition back in 2015, while understandable, is irrelevant to the issue of costs. In particular, I observe that the Notice of Opposition was filed on 3 February 2016 and both parties had been inaction since then until 2020.

39.  All matters considered, the Respondent’s complaints do not assist him in the present application for variation of the costs order nisi.

DISPOSITION

40.  Having considered all the Parties’ submissions and the relevant circumstances, I come to the conclusion that the Order Nisi is just and fair. The Respondent’s application is bound to fail.

41.  By reason of the matters set out above, I make the following order: -

(1) the Respondent’s application be dismissed.

(2) the Costs Order Nisi made on 26 August 2024 be made absolute as follows: -

the respondent do pay the applicant 40% of the costs of this action, including all costs reserved, to be taxed on the District Court scale if not agreed, with certificate for counsel.

(3) costs order nisi for the present application that the Respondent do pay the Applicant costs of the present application, to be taxed on the District Court scale if not agreed, with certificate for counsel.

(4) the aforesaid costs order nisi shall become absolute in the absence of any application to vary by filing of Form 1 within the next 14 days.