WU YIM KWONG KINDWIND v. MANHOOD DEVELOPMENT LTD

DCCJ3839/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3839 OF 2012

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DECISION

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Introduction

1. By my decision handed down on 24 July 2015[1], I varied the costs order nisi to the effect that there be no order as to costs of this action.

2. By a summons dated 7 August 2015, the defendant sought leave to appeal against the said decision.

Legal principle

3. Section 63A(2) of the District Court Ordinance provides:-

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that…

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

4. The test of whether an appeal has a reasonable prospect of success under the new statutory provision is the same test as applied before the amendment to Cap 336, ie whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal as is laid down in Ma Bik Yung v Ko Chuen [2009] 3 HKC 359.  A reasonable prospect of success means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: see Wing Tat Haberdashery Co Ltd v Elegance Development & Industrial Co Ltd, HCMP357/2011, 8/7/2011, unreported.

5. Where the appeal is against the exercise of a discretion, the appellant ought to demonstrate that the decision was plainly wrong, or that the trial judge has taken irrelevant matters into consideration or has ignored relevant matters: see SMM v TWM (Child: Relocation) [2010] 4 HKLRD 37 at p48.

The intended grounds of appeal

6. In a draft Notice of Appeal prepared by the defendant’s solicitors, there are 2 grounds of appeal :

(1)  In exercising his undoubted discretion to deprive the successful litigant on costs, the learned Deputy District Judge has not give sufficient or any weight to the following factors, namely

(a)  The Plaintiff was seeking to take away on the Defendant’s landed property by raising a claim of adverse possession which was rejected after a full trial (“1^st factor”).

(b)  The Plaintiff had on an ex parte basis obtained against the Defendant an injunction which was subsequently on an inter parte basis and after arguments discharged on 13 November 2012 with costs over which the Plaintiff had not responded to SIX (6) separate written attempts to settle in lieu of taxation thereby leading the Defendant reasonably to believe that the Plaintiff had no intention to settle and as obstructive as could be (“2^nd factor  ”).

(c)  Although mediation and without-prejudice offers to settle in lieu of trial are different in nature, their aims are identical which is to avoid the trial. The Plaintiff, apart from stating on paper that the Plaintiff was willing to mediate, had not even issued one without-prejudice offer to settle at any time since the commencement of the action (“3^rd factor”).

(d)  The conduct of the Plaintiff since the commencement of his action in 2012 up to the delivery of the judgment in December 2014 including his ex parte application for an injunction, his failure to settle the costs order against him; his failure to issue one single letter to settle in lieu of trial should be considered and given weight when exercising the discretion whether or not to deprive the successful litigant his costs (“4^th factor”).

(e)  The identified different scenarios whereby a compromise can be reached set out in paragraph 17 of the Decision are unrealistic given the animosity between the parties and the uncorporate (sic) attitude of the Plaintiff (“5^th factor”).

(f) The Defendant is in effect penalised by being frank (“6^th factor “) (“Ground 1”).

(2)  The Deputy District Judge had wrongly ruled that the Defendant had not discharged the burden of providing a reasonable explanation for not engaging in mediation pursuant to the Judgment delivered in Golden Eagle International (Group) Ltd v GR Investment Holdings Ltd [2010] 3 HKLRD 273 and the underlying objectives of Order 1A rule 1 of the Rules of the District Court (“Ground 2”).

Ground 1

7.   By this ground, the defendant complained that I have failed to consider matters that are listed in paragraph 6 hereof.

8.   The 1^st and 5^th factors can be dealt with together.

9.    The fact that the plaintiff’s claim is against the defendant’s land is not a bar to a compromise. The defendant’s argument was considered in my decision: see p601 D-I of the reported judgment. I do not accept that animosity between the parties is a valid reason for not attempting mediation : see p 602 B-F, G-H of the reported judgment.

10.    At the hearing, Mr Kwong for the defendant submitted that Lam J (as he then was) in Golden Eagle (supra) at para 30 left open the question of whether a party can rely on having a strong case as the ground for refusing mediation. He submitted that as the defendant in this case believed that he had a strong case, this is a suitable case for the Court of Appeal to deal with this question.

11.   The defendant only acquired the disputed land in July 2012, which was 18 years after the alleged possession in 1994 by the plaintiff. While it is incumbent on the plaintiff to prove his case, the defendant had no evidence to rebut the plaintiff’s claim except the aerial photographs. In this regard, the defendant was saying that prior to June 2012, there was no hoarding around the whole perimeter of the disputed land. Erection of fences around the disputed land is only one of the factors to be considered. Whether the defendant could successfully defend the claim depended very much on the veracity of the evidence called by the plaintiff at the trial. The chance of success of the defendant cannot be accurately assessed before trial. The fact that the plaintiff has failed to prove his case after trial does not necessarily mean that the defendant had a strong case. To say that the belief of the defendant was confirmed by the judgment of the Court is reversing the logic.

12.    That being the case, I see no basis for the defendant to believe that it had a strong case.  As the trial judge, I do not accept that the defendant did have a strong case. As a matter of fact, the various unsatisfactory aspects of the plaintiff’s evidence which led to the failure of the plaintiff’s claim were not drawn to the attention of this court by Mr Kwong’s submission.

13.   The 2^nd factor relates to the attitude of the plaintiff in relation to a costs order made upon discharge of an injunction order. It was considered in my decision under the heading “Attitude of the plaintiff” : see p 601I - 602H of the reported judgment.

14.   The 3^rd factor relates to the lack of offer for settlement from the plaintiff. It was considered in my decision under the heading “No offer of settlement from the plaintiff” : see p 602I - 603D of the reported judgment.

15.    The 4^th factor is only a combination of the 2^nd and 3^rd factors.

16.   In an application for variation of costs order on the ground that a party has refused to mediate, the court is required to consider the explanation put forward by that party to see if it is reasonable. The burden rests on the party refusing mediation. It is hard to imagine that the party bearing the burden would be less than frank in providing his explanation. Indeed, it is the duty of the party’s solicitor as an officer of the court to remind the party of the need to be truthful.  The suggestion of Mr Kwong that the defendant was penalised by being frank under the 6^th factor is in my view outrageous.

17.   Hence, the explanations put forward by the defendant were all considered before I exercised my discretion. I do not find that there is any reasonable prospect of success in Ground 1.

Ground 2

18.    At first glance, Ground 2 is not readily understandable. At the hearing, Mr Kwong explained that he was raising the question that even if a party had failed to mediate, whether it means that the party should be deprived the whole of his costs. In raising the question, Mr Kwong said the discretion of the court was not exercised judicially or wholly judicially. No authority was produced by Mr Kwong in support of his proposition.

19.   The extent to which the defendant should be deprived of its costs is a matter of discretion of the court. In doing so, I have referred to the recent decision of Deputy District Judge Anthony Chow in Kwan Wing Leung v Fung Chi Leung [2014] HKCU 2146, DCPI 2489/2013, 15/9/2014. In my view, Mr Kwong has not been able to demonstrate that my decision was plainly wrong, or that I have taken irrelevant matters into consideration or have ignored relevant matters.

20.   In the circumstances, I have to say that there is no merit in this ground.

Conclusion and order

21.    For the foregoing reasons, I am driven to the conclusion that the defendant’s application must be dismissed.

Costs

22.   Costs should follow the event. I order that the defendant shall pay the plaintiff costs of this application with certificate for counsel.

23.   By summary assessment, I order that the defendant shall pay the plaintiff costs of this application in the sum of $21,850.