KAI SHING MANAGEMENT SERVICES LTD v. CHAN YUNG AND ANOTHER

HCSA 25/2021

[2021] HKCFI 2825

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO 25 OF 2021

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL CLAIM

NO 2889 OF 2021)

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DECISION

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Introduction

1.  This is the 1^st and 2^nd defendants’ application for leave to appeal against the order made by Ms Isabella Chu, adjudicator, on 20 July 2021 in the Small Claims Tribunal proceedings in SCTC 2889/2021.

The claim

2.  On 20 January 2021, the claimant, Kai Shing Management Services Limited, filed a general claim form with the Small Claims Tribunal.  The claimant is the company managing the residential estate known as Park Island, No 8 Pak Lai Road, Ma Wan.  The defendants are the owners of one of the flats in the estate.  The claim is for the sum of $3,466.61, representing outstanding management fees for September, November and December 2020 together with interest.

3.  The claim form is signed by a Yu Tsz Wai.  The company chop is stamped next to the signature.  As will be seen below, the authority of Yu to represent the claimant is an issue hotly disputed by the defendants. 

4.  On the court’s records, the claimant has filed three documents in relation to the authorisation of Yu:

(a)   Written resolutions of all the directors of the claimant dated 14 May 2009.  It was resolved, among other things, that any person delegated by any one director be authorised to represent the claimant in a sole capacity to appear before the Small Claims Tribunal.  One of the directors who signed on the written resolution is a Mr Patrick Lam.

(b)   Letter of authorisation dated 11 May 2020.  Yu and other individuals were authorised by the claimant to appear before the Small Claims Tribunal.  The letter was apparently signed by Patrick Lam.

(c)   Annual return made up to 3 March 2020 of the claimant and filed with the Companies Registry on 6 March 2020.  It shows that Patrick Lam was a director of the claimant.

5.  On the face of these documents, Yu would appear to have been authorised by the claimant to conduct the Small Claims proceedings on its behalf.

6.  Shortly after the claimant commenced the proceedings, the defendants made payments for the November and December management fees on 22 and 30 January 2021 respectively.  It also transpired that the September management fee had already been fully settled when the claim was commenced.

7.  On about 1 February 2021, the defendants filed with the court and served on the claimant a document entitled “Proof of Payments for the Claim” in which they requested the defendants to discontinue the claim.

8.  This the claimant did by filing and serving a notice of discontinuance on about 9 February 2021.

9.  The first call-over hearing scheduled for 17 February 2021 was then vacated.

The defendants’ application for costs

10.  By letter dated 20 February 2021, the defendants applied for costs against the claimant in the sum of $4,539.40.  Included in the sum were printing and postage costs, costs of the envelopes, travelling expenses and “salary” incurred by the defendants for sending four mails in the course of the Small Claims proceedings in late January and early February 2021.  The claim under “salary” amounted to $4,000.  Both defendants were not employed and earned no income during the relevant time.  The “salary” was calculated using an hourly rate of $200.  Ten hours were claimed by each of the defendants for sending the four mails.

11.  The hearing of the defendants’ application for costs took place on 6 July 2021.  At the end of the hearing, the adjudicator dismissed the application and made no order on the costs of the hearing.

12.  The adjudicator gave a number of reasons for refusing to award costs to the defendants.  For today’s purposes, it would be sufficient to recite the first reason given which is as follows.  When the claimant commenced the claim on 20 January 2021, the November and December management fees were owed and outstanding.  Even though the September management fee had been settled by then, it is indisputable that the defendants only settled the majority of the claimed amount after the claim was commenced. The four mails sent by the defendants were all sent after the commencement of the claim.  The adjudicator was of the view that if the defendants had paid all the outstanding management fees punctually, the claimant would not have had to bring the proceedings in the first place.  In the circumstances, it would not be right for the defendants to claim the costs of the mails from the claimant.

The defendants’ application for review

13.  On 15 July 2021, the defendants filed an application for review of the adjudicator’s order made on 6 July 2021.  The defendants put forward three grounds in support.

14.  The first ground is entitled “Improper Letter of Authorisation”.  In essence, the defendants complained that Yu was not properly authorised to conduct the proceedings on the claimant’s behalf. 

15.  The defendants relied on two documents obtained from the Companies Registry:

(a)   Form ND2A filed by the claimant on 6 January 2021.  It reveals that Patrick Lam resigned as a director of the claimant with effect from 1 January of the same year.

(b)  Annual return made up to 3 March 2021 of the claimant and dated 8 March 2021.  It shows that Patrick Lam was no longer a director of the claimant.

16.  Based on the above documents, the defendants argued that the letter of authorisation dated 11 May 2020, which was produced by the claimant in the proceedings to show Yu’s authorisation, had expired and become invalid since the date of Patrick Lam’s resignation.  The defendants said that Yu should not have brought the improper letter of authorisation to court.

17.  The second ground is entitled “Lack of Proper Verification by the Court”.  The defendants complained that the court had simply relied on the annual return made up to 3 March 2020, which was produced by the claimant, to verify the authorisation of Yu.  That annual return was outdated.  The court had thus not undertaken proper verification.

18.  The third ground is entitled “Costs arising from misconduct or neglect (O.62, r. 7)”.

19.  The defendants contended that the improper letter of authorisation and the lack of proper verification by the court “may cause misconduct proceedings and unfair judgment for the claim”.

20.  On 20 July 2021, the adjudicator refused the review application.

The adjudicator’s reasons for refusal of review

21.  In paragraph 15 of the Reasons for Judgment dated 31 August 2021, the adjudicator recited the reasons in support of her decision to refuse costs.  They are substantially the same as what she said at the hearing on 6 July 2021.  She arrived at the same conclusion that the defendants’ costs application should be refused.

22.  Further, the adjudicator dealt with the review grounds put forward by the defendants.  She was of the view that they were irrelevant to the costs application.  In short, she took the view that even if the court accepted that the letter of authorisation was invalid and even if the court had disallowed Yu to appear for the claimant at the hearing on 6 July 2021, the court would still have refused the defendants’ costs application for the reasons which she had given.  The validity or invalidity of the authorisation of Yu would have made no difference to the court’s decision.  Hence she refused the review application.

23.  It is against the adjudicator’s decision to refuse the review application which the defendants now seek leave to appeal.

Proposed grounds of appeal

24.  In their Form 9, the defendants put forward the following grounds to say that the decision is erroneous in point of law:

“1.  Improper “Letter of Authorisation” provided by the Claimant, and

2.  Lack of proper verification by the Court,

3.  caused misconduct proceedings and unfair judgment for the claim

4.  Please see the attachments for the details, total 36 pages.”

25.  It would appear that in the present application, the defendants are repeating and relying on the same grounds which they relied on for their review application.

Discussion

26.  Section 28(1) of the Small Claims Tribunal Ordinance, Cap 338, provides as follows:

“Any party who is aggrieved by a decision of the tribunal—

(a) on any ground involving a question of law alone; or

(b) on the ground that the claim was outside the jurisdiction of the tribunal,

may apply to the Court of First Instance for leave to appeal and the Court of First Instance may grant such leave if it thinks fit.”

27.  Here, the crux of the defendants’ complaint is that Yu was not properly authorised to appear for the claimant in these Small Claims proceedings and at the hearing on 6 July 2021.

28.  On the face of the materials before me, I am unable to come to this conclusion.

29.  By the letter of authorisation signed by Patrick Lam as director in May 2020, the claimant authorised Yu to appear before the Small Claims Tribunal on its behalf.  Subsequently, Patrick Lam resigned as a director which took effect on 1 January 2021. 

30.  Prima facie, the mere fact of the resignation of Patrick Lam by itself does not have the automatic effect of bringing to an end the authorisation which the claimant had previously given to Yu.  When signing the letter of authorisation, Patrick Lam acted in his capacity of the claimant’s director.  The act of authorisation was thus an act of the claimant as a company.  Generally speaking, the subsequent resignation of the individual director does not mean that the company’s authorisation would automatically expire or lapse.  The defendants have not produced any evidence suggesting the contrary.  In the circumstances, in my view, the authorisation granted by the claimant through Patrick Lam in May 2020 remained valid at the material time notwithstanding that the latter ceased to be a director in January 2021.

31.  In other words, when the claimant commenced the claim and throughout the Small Claims proceedings, Yu was properly authorised to act on behalf of the claimant based on the materials before the court.

32.  The lack of authorisation is the foundation of the defendants’ proposed grounds of appeal.  That foundation is not valid. Those grounds are bound to fail.  For that reason, I refuse to grant leave to the defendants to appeal against the adjudicator’s order.

33.  In any event, I am of the view that the adjudicator’s reasons for refusing the costs application and the review application are sound.

34.  Therefore if I am wrong in my analysis above and the letter of authorisation had in fact become invalid shortly before the claim was commenced, I consider that it would have made no difference to the outcome of the defendants’ costs application.  Even if the adjudicator had treated the claimant as absent at the hearing on 6 July 2021 on the basis that Yu was not properly authorised, it would still have been incumbent on the defendants to demonstrate why they should be given costs incurred in sending the four mails. I agree with the adjudicator’s reasoning as recited in paragraph 12 above.  I detect no error of law in the adjudicator’s decision and her reasoning in support. 

35.  There is therefore no unfairness to the defendants if the adjudicator’s decision is upheld even if Yu was not properly authorised.  There is no prospect of success in the defendants’ intended appeal.

Conclusion

36.  For the above reasons, I dismiss the defendants’ application for leave to appeal.