YAU YIC LOCK v. WU TSANG KWAI YUK AND ANOTHER

HCMP 2272/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2272 OF 2014

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D E C I S I O N
(Variation of Costs Order Nisi)

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Introduction

1.  On 29 August 2016, I handed down a judgment in this matter in which I have found in favour of P (“Judgment”).  I granted an order for P to recover possession of the disputed area and ordered D2 to deliver up possession of the relevant area within one month from the date of the Judgment.  I ordered, on a nisi basis, that Ds do pay P’s costs of this action, jointly and severally, to be taxed if not agreed on party and party basis (“Order Nisi”).

2.  In the present decision, I shall adopt the abbreviations in the Judgment, unless otherwise indicated.

3.  On 15 September 2016, Ds issued a summons to vary the Order Nisi to seek no order as to costs.  The application was supported by D2’s 5^th affirmation filed on 25 October 2016.

4.  Ds’ application was fixed for hearing on 28 October 2016, but one day before the hearing, Mr Hout, solicitor acting for P, filed his 1^st affidavit on behalf of P to oppose Ds’ application.  This resulted in the hearing having to be adjourned.  This court gave directions for Ds to file an affirmation in reply and for written reply submissions to be filed by Ds, and for this court to deal with the application on paper.

5.  However, thereafter, a number of further affidavits/ affirmations were filed, namely D1 filed her 5^th affirmation and D2 filed her 6^th affirmation, and in response, Mr Hout filed 2 further affidavits.  There were further letters of complaint from both sides.  Eventually, on 14 November 2014, this court granted leave for Ds to file one final affirmation in reply, which D2 filed on 18 November 2016.

Ds’ grounds for variation

6.  Essentially, Ds’ ground for variation was that prior to the commencement of these proceedings, neither P nor his solicitors had issued any letter before action to D1 or D2.  Further, P had refused to attend any settlement meeting.

7.  The correspondence between solicitors were as follows:

23.09.15	Ds’ solicitors wrote on without prejudice save as to cost to explore possibility of an amicable settlement.
24.09.15	P’s solicitors replied to say P did not have any settlement proposals but would consider terms proposed by Ds.
04.12.15	Ds’ solicitors wrote to invite P to a meeting to negotiate a settlement.
08.12.15	P’s solicitors replied to say P did not wish to attend any meeting but proposed certain terms including the following: (i)    That Ds acknowledge and admit P was /is the true rightful registered and beneficial owner of Lot 150 including the Occupied Portion; (ii)  That Ds pay 85% of P’s costs of the action.
12.12.15	Ds’ solicitors replied to say that P’s terms were unacceptable.

8.  D2 had said in his 5^th affirmation that the above proposals from P almost equaled to a complete surrender on Ds’ part and that the request to pay 85% of P’s costs was not acceptable.  D2 complained that P had refused to resolve the matter in a cost-effective manner by his reluctance to settle or to negotiate with Ds in good faith.

9.  The matter then proceeded to trial in March 2016.

10.  In Mr Hout’s 1^st affidavit, he pointed out that P did send a letter before action dated 22 July 2014 to D1, the registered owner of Lot 845 who allowed a wall to be erected on part of P’s land.  The letter was sent to D1 by registered and ordinary post, and Mr Hout had produced a copy of the said letter.  Mr Hout further explained that as D2 only was joined as a defendant in November 2014, it was not possible to send D2 any letter before action.

11.  Mr Hout further pointed out that although the originating summons was issued in September 2014, it was not until a year later, on 23 September 2015, that Ds’ solicitors wrote to request proposed terms of settlement.  Mr Hout thus said that P had all along been open to a settlement but that Ds had failed and refused to come up with any terms for P’s consideration.

12.  After receipt of Mr Hout’s 1^st affidavit, D1 had made an affirmation to say that she first saw a copy of the letter before action dated 22 July 2014 in September 2015 and that prior to that, she had not received, seen or had notice of the said letter.  D2 also made an affirmation to say that that P must have knowledge of D2’s involvement in the adverse possession of the Occupied Portion as early as 2012.

13.  In Mr Hout’s 2^nd affidavit, he had produced a copy of the post office receipt for posting the pre-action letter.

14.  Thereafter, Mr Hout filed a 3^rd affidavit to inform the court that although the original brick wall at the time of the trial had been removed, a new brick wall was erected on the trespassed portion.  D2 then filed his 7^th affirmation concerning this matter.

Discussion

15.  Order 62 rule 5(1) has set out those special matters which the court shall take into account in exercising its discretion over costs.  As submitted by Mr Chiu, the court will take into account the underlying objectives under Order 62 rule 5(1) (aa) and further the conduct of the parties under Order 62 rule 5(1) (e). 

16.  Both parties have the duty to assist the court to further the underlying objectives and to facilitate settlement of disputes between the parties.  Although PD 31 does not apply to proceedings commenced by originating summons, there is no reason for the parties not to attempt mediation.  However, in the present case, neither party has suggested mediation.

17.  P complained that Ds’ solicitors’ without prejudice save as to costs letter was sent over a year after the issue of the originating summons.  There was however no steps taken by P either to propose any settlement terms.

18.  Anyway, it was not until November 2014 that D2 was joined as a defendant and D’s solicitors’ 1^st letter at attempt to settle was eventually sent in September 2015.  Ds complained of P’s uncooperative attitude towards the settlement of the case by refusing to engage in any without prejudice negotiations. 

19.  However, having considered the letters, I am unable to say that P had refused to engage in any negotiation, even though P indicated that he did not wish to attend a meeting.

20.  There was no reason as to why negotiations could not be conducted through correspondence.  Having asked P for his proposals, even if P’s proposals were deemed by Ds to be unreasonable or unacceptable, there was no reason why Ds could not have set out their own proposals, rather than a letter simply to reject P’s proposals.  Ds’ solicitors’ 1^st letter was marked without prejudice save as to costs, and it was sent with the intention to protect Ds’ own costs position.  In my view, there was no reason why Ds could not have set out their own proposals for P’s consideration, and if P rejected their proposals unreasonably, then Ds would have been in a stronger position to argue costs.

21.  Having considered all the correspondence and the evidence before this court, I am unable to see sufficient evidence that P’s conduct had been unreasonable.  I am not prepared to vary the Order Nisi.

22.  As Ds have failed in this application, the costs of this application should follow the event, save that in my view there should be no order as to costs for any costs incurred after 3 November 2016.  The reasons are set out hereafter.

23.  On 28 October 2016, this court granted leave to Ds to file and serve affirmation(s) in reply to Mr Hout’s 1^st affidavit.  I do not think Ds had breached the order of 28 October 2016 by them each filing one affirmation.  In any event, the matter should have rested there since in Mr Hout’s 1^st affidavit, he had already said a pre-action letter was sent by registered and ordinary post to D1 and a copy of the letter was produced by him; and he had also explained why there was no pre-action letter to D2.

24.  I do not see that any further affidavits/affirmations would have added anything to or detracted anything from the parties’ respective arguments.  In particular, Mr Hout’s 3^rd affidavit had no relevance to this application.  There were also numerous letters to the court which no doubt added to the parties’ respective costs and also resulted in delay in the matter.  In my view, it was also not necessary for P’s Counsel to lodge any revised submissions.

25.  This is a simple application and Ds’ case was essentially based on those letters produced by D2 in his 5^th affirmation and Mr Hout’s 1^st affidavit.  I am therefore of the view that there should be no order as to costs after Ds’ reply affirmations were filed on 3 November 2016.