馮慶及另一人(以萬安膠輪公司的名營業) v. 地政總署署長

LDLR 3 OF 2006

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LANDS RESUMPTION APPLICATION NO. 3 OF 2006

----------------------

----------------------

----------------------

D E C I S I O N

----------------------

Background

1.  On 24 April 2006, the Applicants applied to the Lands Tribunal for determination of compensation pursuant to the provisions of the Lands Resumption Ordinance, Cap. 124 (“the Ordinance”).  The Applicants claimed for the following items: -

(1)  $997,472 plus interest for land taken under section 10(2)(b) of the Ordinance;

(2)  $1,562,500 plus interest for loss of goodwill under section 10(2)(d) of the Ordinance;

(3)  $801,600 plus interest for several payment under section 10(2)(e)(i) of the Ordinance;

(4)  surveyor’s fee to be calculated in accordance with the HKIS Fee Scale 10 under section 10(2)(e)(ii) of the Ordinance.

2. On 12 May 2006, the Respondent filed the Notice of Opposition to deny that the Applicants had any right to claim compensation or alternatively that the amount claimed was assessed in accordance with the Ordinance.  The Respondent also contended that the amount claimed was excessive.

3. The parties reached partial settlement and filed a consent summons on 31 December 2007 to settle the first item of claim, i.e. the Respondent agreed to pay the Applicants $700,000 as compensation for the value of land resumed.  The remaining items were not settled and hence the trial of the remaining items proceeded on divers dates in January 2008.

4. After trial, I gave my judgment on 6 February 2008 and ordered   that: -

“(1)   The Respondent do pay the Applicants the sum of $885,014 as the total compensation for the total extinguishment of the business on the Property including the loss of goodwill of $704,100 and the severance payments of $180,914;

(2)    The matters of professional fees, interest and costs be adjourned to a date to be fixed, with liberty to apply for consequential and ancillary matters.”

5. The parties could not agree on the liabilities for professional fees and costs and hence these two matters same back before me for determination.

The Respondent’s position

6. At the hearing on 9 September 2008, the Respondent submitted that section 12 of the Lands Tribunal Ordinance, Cap. 127 had provisions on costs, as follows: -

“(1)   Subject to the provisions of the Ordinance giving the Tribunal jurisdiction in any matter, the Tribunal may award costs to and against any party to any proceedings and may order that those costs be taxed on the basis of any one of the Scales of Costs set out in the Schedules to Order 62 of: -

(a)    the Rules of the High Court (Cap. 4 sub. leg. A); or

(b)    the Rules of the District Court (Cap. 336 sub. leg. H).

(2)   Subject to any rules made by the Chief Justice under section 10(3), Order 62 of the Rules of the High Court (Cap. 4 sub. leg. A) shall apply to the award, taxation and recovery of costs in the Tribunal.”

7. The Respondent submitted that “under Order 62, rule 5 of the Rules of the High Court, Cap. 4A, the court in exercising its discretion to costs shall take into account any written offer made under Order 22, rule 14 provided that the court shall not take such an offer into account if at the time it is made the party making it could have protected his position as to costs by means of a payment into court under Order 22”.  In addition, the Respondent submitted that “Order 22, rule 1 provides for a defendant making a payment into court in any action for a debt or damages” and “it is by now clear that a claim for compensation made to the Lands Tribunal is not such an action: Director of Buildings & Lands v. Shun Fung Ironworks Ltd [1995] 1 HKC 417, per Lord Nicholls, at p.443B-D.” 

8. Accordingly, the Respondent submitted that the Tribunal, in exercising its discretion on costs, should take into account the Respondent’s last written offer of $895,739 (the Calderbank offer) made on 2 January 2008.

9. The Respondent contended that the important question to be asked by the Tribunal was whether the Applicants had “acted unreasonably in refusing to accept such offer from the Respondent”: the oft-quoted passage in Butcher v. Wolfe [1999] 1 FLR 334, per Mummery LJ, at p. 340B-C, followed by Wong Wai Chun v. Lewin [2000] 2 HKC 271, per Master Poon, at p. 277 refers (paragraph 62/5/3, Hong Kong Civil Procedure 2008 (Vol. 1)): -

 “The proper approach of a Calderbank offer, when it is taken into account on a later argument on costs, is to ask whether the party to whom the offer was made ‘ought reasonably to have accepted the proposal in the letter?’  Or, to put it another way, account must be taken of the reasonableness or otherwise of the refusal to accept the offer: see Cutts v. Head, supra, per Oliver J at 302 and Chrulew & Ors v. Borm-Reid & Co [1992] 1 WLR 176 at 182A.  This approach is to be compared with payment into court where, in the absence of a special reason for depriving the offering party of his post-offer costs, the simple question is whether the payment in is equal to or is beaten by the defendants at trial.”

10. The Respondent submitted that the Applicants were unreasonable in refusing to accept the Respondent’s last written offer for the following  reasons: -

(1) Compared to the compensation sum of $885,014 awarded by the Tribunal on 6 February 2008, the Applicants’ last proposed figure of $980,000 (on the basis of exclusive of severance payments) made on 31 December 2007 was proved to be excessive whilst the Respondent’s final offer of $895,739 (on the basis of inclusive of severance payments but with separate provisions to cover interest and costs, same as that of the compensation award) was proved to be reasonable.

(2) The accusation of brevity of the period for acceptance of the final offer from the Respondent could not be accepted because (i) the Applicants’ expert had been involved throughout their claim; (ii) their solicitors, Messrs. Charles Ho & Co. were not new to the Applicants’ case either; (iii) it took the Applicants no difficulty to promptly respond to the Respondent’s earlier counter-offer made on 28 December 2007 and, (iv) if the Applicants’ contention were right that they required more time to consider their position, the Applicants failed to explain why they had never cared to ask the Respondent for an extension of time when the last offer dated 2 January 2008 made by the Respondent was received by the Applicants.

11. In summary, the Respondent submitted that it should be entitled to professional fees and costs with certificate for counsel starting from 3 January 2008, to be taxed on the High Court scale if not agreed.  In other words, the Respondent did not disagree that the Applicants should be entitled to professional fees and costs up to and including 2 January 2008, the date of last written offer from the Respondent before the trial took place from 7 January 2008.

The Applicants’ position

12. The Applicants sought professional fees and costs against the Respondent for the whole case, including the hearing on 9 September 2008.

13. The Applicants submitted that even though the elderly Applicants could not beat the last offer of the Respondent, the Tribunal should nevertheless grant costs to the Applicants since the Respondent had failed to allow the Applicants sufficient time for consideration of the Respondent’s offer.  Therefore, the decision of the Land’s Tribunal in Wong Yik Po & Ors v. Director of Lands [1996] 1 HKC 586 should be followed.  In that particular case, it was held that,

“the applicants were entitled to their costs as the Calderbank letter gave insufficient time to consider the offer.  The brevity of the offer was exacerbated by the amount of expert witness involved in the case.  The respondent had ample time to make a Calderbank letter offer, well before 17 March 1995.  There were no special circumstances in the present case to support the very short period the letter allowed.  Hence, the costs order nisi was made absolute.  The Salavery [1968] 1 Lloyd’s Rep 53 applied (at 595G-H 596A-C).”

14. The Applicants submitted that in the present case, the Tribunal should take into consideration the following factors: -

(1) At the date of the trial, the 1^st Applicant was aged about 81;

(2) According to the last offer made by the Respondent dated 2January 2008, the Respondent only allowed 1 working day for the Applicants to consider;

(3) The last offer made by the Respondent was $895,739, which was only $10,725 more than the compensation of $885,014 awarded by the Tribunal; and

(4) On 27 December 2007, the Respondent had made another offer of $815,739, for which the Applicants were able to beat.

The chronology of events

15. Before determining the important issue of whether the Applicants had acted unreasonably in refusing to accept the “Calderbank offer” made by the Respondent on 2 January 2008, I set out below the offers and counter-offers made between the parties during the period of between two and three weeks prior to the first date of trial hearing on 7 January 2008: -

	Applicants (“A”)	Respondent (“R”)
20/12/2007 (Thursday)	A proposed $1,265,468.70 (excl. severance payment)
28/12/2007 (Friday)		R counter offered $815,739 (by fax & post)
31/12/2007 (Monday)	A refused to accept $815,739 but proposed $980,000 (excl. severance payment). Offer lapsed on 4/1/2008. Offer received by R on 29/12/2007 (Saturday) at 17:51
31/12/2007 (Monday)	Settlement by A and R on the value of land (at $700,000)
2/1/2008 (Wednesday)		R made final offer of $895,739, requiring acceptance by 4/1/2008 (Friday)
7/1/2008 (Monday)	Trial began

The Tribunal’s determination

16. Having considered the submissions of both parties, I accept the Respondent’s submission that it was unreasonable for the Applicants not to accept the Calderbank offer made by the Respondent on 2 January 2008.  For the reasons stated by the Respondent and set out in paragraph 10 above, I agree that it was not unreasonable in the circumstances for the Respondent to require the Applicants to accept the Calderbank offer by 4 January 2008, that being the Friday before 7 January 2008 (Monday), the date fixed for the trial of the Applicants’ application.  In reaching that conclusion, I find that I must also take into consideration the following two facts: (i) that the parties were negotiating in final details after the Applicants first put up the proposed compensation sum of $1,265,468.70 in the letter dated 20 December 2007 from the Applicants’ solicitor to the Respondent; and (ii) the parties were able to reach a settlement on 31 December 2008 on the compensation for land taken. 

17. I find that one must distinguish the present case from Wong Yik Po case (supra) in which it was held that,

 “the tribunal, as a matter of law, is obliged to exercise its costs discretion judicially, on the basis of the present facts.  To the extent that binding cases set down guidelines, they must of course, be followed.  Where other cases exercise a similar discretion they are at least of interest.  When the facts are similar, they will invariably be helpful.”

18. The distinguishment is appropriate because there are many obvious differences between the present case and Wong Yik Po case, as follows: -

(1)  In Wong Yik Po case, there was no evidence of any prior offer to the applicants from the respondent.  On the other hand, there were exchanges of serious offers between the parties in the present case since 20 December 2007.

(2)  In Wong Yik Po case, it was held that “the proper consideration of any offer, proof if the dispute went to trial and the tribunal’s ultimate determination, all principally depend on expert valuation evidence”.  The dependence on expert valuation evidence is similar in the present case.  However, unlike Wong Yik Po case, when the Tribunal held that “an applicant should in the absence of special circumstances, reasonably be allowed more than four days immediately before trial (reduced to two and a half working days) to consider an offer of $34 m”, the Applicants in the present case had been considering offers from the Respondent since 28 December 2007.  Indeed, the Applicants were able to respond, rejecting that offer by a letter dated 31 December 2007.  Besides, the Applicants did reach a settlement with the Respondent on the compensation for the value of land taken.  So, one can infer from these that the Applicants had been considering, at least since 28 December 2007, the issues of all compensation items with the benefit of expert and legal advice from their appointed valuation expert and their solicitor respectively.

(3)  In Wong Yik Po case, it was held that “the chronology established by the pleadings and other document filed, also demonstrates that the respondent had ample time to make a Calderbank letter offer.  There are no special circumstances … to support the very short period the letter allowed”.  On the contrary, in the present case, the Respondent required the response from the Applicants by 4 January 2008 because that was the last working day before the trial began on 7 January 2008, should there be no agreement between the parties.  Obviously, this is because the Respondent wished to make use of the very limited time, between the date of the Respondent’s last offer and the first day of the listed trial date, to see if there could be a settlement.

19. On the whole, therefore, I find that there are special circumstances in the present case to support the short period of time allowed for in the Respondent’s Calderbank letter dated 2 January 2008.

20. As to the costs for the hearing on 9 September 2008, I am of the view that the Applicants do pay the Respondent costs, as the Respondent has succeeded in her arguments.

21. Both parties have agreed that the costs should be on High Court Scale because, among other reasons, the total sum of claims of $1,332,000 lodged by the Applicants exceeded the jurisdiction of the District Court.  I also agree that High Court Scale is appropriate for this case.

Conclusion

22. I therefore order as follows: -

(1)  The Respondent do pay the Applicants professional fees and costs for the proceedings incurred up to and including 2 January 2008;

(2)  The Applicants do pay the Respondent professional fees and costs starting from 3 January 2008;

(3)  The amounts of the professional fees are to be assessed by the Tribunal if not agreed; and

(4)  The costs are to be taxed on High Court Scale with certificate for counsel if not agreed.