SHINELAND CORPORATION LTD v. GLADFORD LTD AND OTHERS

HCMP 1972/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1972 OF 2017

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DECISION ON COSTS

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A. Introduction

1.  On 30 November 2017, I handed down my decision on the Summons issued by Glendale (“the Decision”).  This decision on costs should be read together with the Decision.  I shall adopt herein the same abbreviations and expressions which I used in the Decision.

2.  In the Decision, I said:

“ 76. The OS is plainly not registrable as a lis pendens. Its status as a document pending registration in the Land Registry must be removed and vacated.

77. The attempt to register the OS should never have been made. The plaintiff has made no attempt to justify the registrability of the OS, and it must have been plain to it that the same is not registrable.

78. Instead of seeking to resolve the question of registrability as a substantive issue and in a reasonable manner before me, the plaintiff resorts to a number of unmeritorious procedural and technical objections to the Summons.  It is quite clear to me that the plaintiff is not interested in having the question of registrability resolved at all, but is seeking to have the OS remaining on the ‘deeds pending registration’ section of the Land Registry as long as possible knowing all the consequences this will have on the pending completion of the sale of the Properties, with no basis (as none is advanced) to support any belief that the OS is registrable at all.  Its refusal to withdraw the OS from the Land Registry while at the same time maintaining that the Summons is academic is otherwise difficult to understand.  This is an absolute abuse of the land registration system in Hong Kong.”

3.  I made an order nisi that the plaintiff was to pay the costs of Glendale, including the costs of the hearings on 17 and 28 November 2017 before me, on an indemnity basis.  The plaintiff has applied to vary the costs order nisi.

4.  The plaintiff asks for the order nisi be varied in two aspects: (a) the costs of the hearing on 17 November 2017 be paid by Glendale to it on a party and party basis, or alternatively that there should be no order as to costs for that hearing; (b) costs that are to be paid by it to be on a party and party basis.

B.   Costs of hearing on 17 November 2017

5.  When the Summons was issued on behalf of Glendale, the hearing was fixed at 9:30 am on 17 November 2017, for 3 minutes.

6.  Even though dBL received the Summons on 31 October 2017, it was not until 13 November 2017 that it wrote to PCW saying that the plaintiff intended to oppose the application, and said that the time allotted for the hearing on 17 November 2017 was insufficient.  It also suggested that the plaintiff would be filing evidence. dBL therefore asked PCW to agree to adjourn the hearing on 17 November 2017 to another date (with two hours reserved), and with directions for the filing of evidence by the plaintiff within 28 days.

7.  I note that dBL did not indicate on what grounds the plaintiff would be opposing the application under the Summons.

8.  On 14 November 2017, PCW replied saying that as it was clear that the OS was not registrable, it did not see why a 2-hour hearing would be required, and said it would proceed to seek an order in terms of the Summons at the hearing on 17 November 2017.  A very short skeleton and authorities in support of the application under the Summons were also filed by PCW on that date.

9.  On 15 November 2017, dBL wrote back saying that “the issue at hand is quite evidently not as simple as you say it is, or else you would not have otherwise filed on 14 November 2017, Skeleton Arguments and List of Authorities on behalf of [Glendale]”.  dBL said it would be agreeable to a one-hour hearing but warned PCW that should the hearing overrun it would have to explain to the Court.  It also said, quite inappropriately in my view, that it was “highly irregular” for PCW to file skeleton and authorities for a 3-minute hearing, as I do not see why it is not regular for a party or its solicitors to seek to assist the Court to dispose of a matter expeditiously.

10.  I note that dBL still had not set out what were the grounds of opposition.

11.  On the same date, dBL also wrote to the Court stating its intention to oppose the Summons, to seek directions for the filing of evidence,and informing the Court of PCW’s refusal to agree to adjourn the hearing on 17 November 2017, and the (then) pending application to amend the OS.

12.  Still, the grounds of opposition were not set out.

13.  In the late afternoon of 16 November 2017, the day before the hearing, at my direction, dBL filed a short skeleton setting out in outline the plaintiff’s grounds of opposition. In the skeleton, various procedural and technical objections were taken, but nothing was said about the substantive issue, ie the registrability of the OS (as opposed to the Amended OS) at the Land Registry as a lis pendens.

14.  The hearing before me on 17 November 2017 (at which the plaintiff and Glendale were both represented by their respective solicitors, dBL and PCW, and not by counsel) eventually took about an hour, including a short stand-down of about 15 minutes for the parties to discuss with the matter could be resolved in a more costs effective manner given that by thenthe OS had been amended.  The reason for the hearing to have taken an hourthat day was for me to consider the procedural and technical objections taken by the plaintiff and how to deal with them (ie should I adjourn and give a longer hearing time) and the question of evidence to be filed by the plaintiff.  Eventually, to be totally fair to the plaintiff, I agreed to adjourn the matter to 28 November 2017 for a 2-hour hearing so that: (a) more time could be given to the plaintiff to argue its objections; and (b) it could file evidence in opposition. 

15.  At the hearing on 28 November 2017, the plaintiff repeated the, and added more, procedural and technical objections, while saying nothing about the substantive issue.  As can be seen from the Decision, I rejected all the procedural and technical objections, and found the OS to be plainly unregistrable.

16.  The plaintiff’s argument that it should not pay the costs of the hearing on 17 November 2017 is as follows:

“ 6. As anticipated by the Plaintiff, the hearing on 17 November lasted for approximately one hour, including a 15 minute stand-‌down, before being adjourned so that affirmation evidence could be filed.

7. The Plaintiff respectfully submits that [Glendale] should pay the Plaintiff’s costs of the 17 November hearing, as the said costs were incurred due to the Applicant’s failure to state a reasonable hearing duration in the Applicant’s Summons, and the Applicant’s failure to rectify this error when repeatedly given the opportunity to do so by the Plaintiff.”

17.  I reject this argument.

18.  At no time did the plaintiff indicate what were its grounds of opposition until the afternoon of 16 November 2017, and only at my direction,and even then not on the substantive issue.  In its reply submissions on costs,the plaintiff argues that it was not “at that stage” (which I take to mean before it did disclose its case in the late afternoon of 16 November 2017 but only at my direction) required to disclose the details of their opposing arguments to the applicant.  This kind of litigation by ambush is not to be encouraged but in any event whether the plaintiff was required to or should have put its cards on the table as soon as possible, the consequence of its non-disclosure is that Glendale was until then, in my judgment, entitled to take the view that the hearing, although only fixed for three minutes, and although it was opposed, would be sufficient to dispose of the matter, and refused to agree to an adjournment. 

19.  Without a shadow of doubt the hearing would have been sufficient to dispose of the substantive issue, given that the plaintiff did not at any time advance any arguments on the registrability of the OS, but for the procedural and technical objections which are totally devoid of merits, and the application for leave to file evidence which turns out to be of no assistance whatsoever on the issue of registrability.  The plaintiff is wholly responsible for the fact that the Summons was not disposed of on 17 November 2017, and for the need to have a hearing on 28 November 2017. 

C.   Indemnity costs

20.  My reasons for awarding indemnity costs against the plaintiff are those set out at §§76 – 78 of the Decision which I repeat above.

21.  No attempt is made by the plaintiff to address those reasons.

22.  Instead, the plaintiff refers to without prejudice correspondence between dBL and PCW subsequent to the 17 November 2017 hearing.

23.  On 17 November 2017, dBL wrote to PCW offering to withdraw the application to register the OS and to pay Glendale’s costs in the sum of $29,080.  The plaintiff now submits to me that that was about one third of the costs stated in a skeleton bill handed to dBL by PCW during the short break in Court on 17 November 2017.

24.  On 20 November 2017, PCW wrote back rejecting the offer, and counter-offered that the plaintiff should pay costs of $70,000.  That was not accepted by the plaintiff and no further offers were made by either side, and the hearing on 28 November 2017 proceeded.

25.  The plaintiff’s case is that its offer on 17 November 2017 was reasonable and should have been accepted by Glendale. Instead, Glendale asked for $70,000 which the plaintiff says “represented an 80% payment of the Applicant’s skeleton bill of costs, well beyond even indemnity standard recovery rates, and as the amount claimed in the Applicant’s skeleton bill ofcosts in and of itself was excessive and wholly unreasonable, this counter­offer was not acceptable”.

26.  I do not understand the reference to the 80% recovery rate on for indemnity costs.  Order 62, rule 28(4A) provides as follows:

“ On a taxation on the indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing master may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party; ….”

27.  Only unreasonable items are to be disallowed on a taxation on an indemnity basis, with any benefit of doubt being to the receiving party.  There is no rule or principle as to the percentage of the costs one is usually allowed: it all depends on the reasonableness or otherwise of each item.

28.  Thus, the question boils down to the reasonableness of the items in the skeleton bill presented by PCW, so as to see if the offer by dBL was reasonable, or whether the offer by PCW was reasonable, or neither.

29.  Having considered the skeleton bill (in the total sum of $87,240),which I asked for after the written submissions on costs have been filed, since astonishingly neither side produced a copy thereof to me in the first place, I am not satisfied that the offer by dBL was a reasonable one which PCW ought to have accepted.  It is not necessary for me to decide if the counter-‌offer by PCW was reasonable or not, because even if it was not the position is simply that neither side had made a reasonable offer, and the plaintiff has no basis to say that Glendale was to be blamed for the fact that the hearing on 28 November 2017 did take place.  The fact remains that the hearing took place because of the unmeritorious objections taken by the plaintiff.

D.   Disposition

30.  I make absolute the costs order nisi.  Glendale’s costs in relation to the application by the plaintiff to vary the costs order nisi is to be paid by the plaintiff on a party-and-party basis.

31.  I direct Glendale to file and serve its bill of costs of the Summons, including the hearings on 17 and 28 November 2017, and the plaintiff’s application to vary the costs order nisi, by 4 pm on 5 January 2018. The plaintiff is to be file and serve its response if it so wishes by 4 pm on 10 January 2018, and Glendale is to file and serve its reply if it so wishes by 4 pm on 15 January 2018.  I shall then assess the costs summarily.