HUI HEON MING HERMAN v. INCORPORATED OWNERS OF HO ON MANSION

CAMP 14/2023, [2023] HKCA 643

On An Intended Appeal From [2022] HKLdT 70

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 14 OF 2023

(ON AN INTENDED APPEAL FROM LDBM NO 169 OF 2020)

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JUDGMENT

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  This is the renewed application of the Incorporated Owners of Ho On Mansion (“IO”) for leave to appeal against the order (“Order”) of Deputy District Judge Roy Yu dated 4 July 2022 that the costs of the proceedings below, summarily assessed by the Deputy Judge in the amount of HK$58,000, be to Hui Heon Ming Herman (“Applicant”), leave to appeal having been refused by the Deputy Judge: see the Deputy Judge’s Decision dated 29 December 2022 (“Decision”).

2.  Having considered the documents filed by the parties, we consider that it is appropriate to determine this application on the basis of written submissions only pursuant to Order 59, rule 2A(5)(a) of the Rules of the High Court, Cap 4A.

BACKGROUND FACTS

3.  The Applicant is a solicitor by profession, and an owner of a unit in Ho On Mansion, 107-109 Austin Road, Kowloon, Hong Kong.

4.  On 5 November 2020, the Applicant made an application to the Lands Tribunal pursuant to the Building Management Ordinance, Cap 344, against the IO for disclosure of the following classes of documents, namely, (i) books of account of the IO from 1 January 2019 to 30 September 2020, (ii) minutes of meetings of the management committee from January 2019 to August 2020, and (iii) minutes of general meetings of the owners from 1 January 2019 to September 2020 (“the Documents”).

5.  On 26 November 2020, the IO filed a Notice of Opposition.  As noted by the Deputy Judge at §3 of the Decision, it was not entirely clear from the Notice of Opposition whether the IO opposed the application, or was merely explaining the reason(s) for the delay in providing the Documents.

6.  The matter then proceeded as follows, as set out in the Decision:

“[4] The case first came before me on 12 April 2022 for directions. After some discussion, the respondent agreed to allow the applicant to inspect the document it retained, being books of account, minutes of management committee meetings and general meeting of owners from 1 January 2019 to 30 September 2020. Hence I directed the applicant’s solicitors to report to this Tribunal on or before 17 June 2022 if the claim for inspection had been resolved and if so, a hearing be fixed for parties to return to resolve any outstanding matters including costs. In any event, a direction hearing has been fixed on 4 July 2022 to monitor the progress.

[5] By a letter dated 17 May 2022, the respondent claims that the request of the applicant had been satisfied and applied for this application be discontinued [with] no order as to costs, and the hearing on 4 July 2022 be vacated. As this was an ex parte application, I asked the respondent to obtain the consent of the applicant. And by letter dated 25 May 2022, the respondent claimed that it did not know the intention of the applicant and repeated the request for the action be discontinued.

[6] And by letter dated 30 May 2022, the applicant raised his objection to the ex parte application by the respondent. By a further letter dated 16 June 2022, the applicant confirmed that he was satisfied with the inspection and document obtained. The only outstanding issue was costs of this application. He asked for the matter be dealt with by written submission and oral hearing. As I did not consider the matter of costs complicated, I directed on 23 June 2022 in writing that the direction hearing on 4 July 2022 be retained to deal with the question of costs in the hope to save some costs on exchange of written submission.

[7] Before the hearing, the applicant had served a written submission seeking costs of the application. I had indeed directed on 23 June 2022 that written submission was not necessary for the hearing on 4 July 2022. Anyway, I heard parties on costs.

[8] As the main dispute has been resolved, I therefore direct the action be discontinued, which is the similar application by both parties. And after hearing parties on their submission on the costs issue, I granted costs in favour of the applicant…”

7.  In short, the Applicant’s request for the Documents was eventually met by the IO on or about 17 May 2022, leaving the issue of the costs of the application outstanding for determination.

8.  The Deputy Judge’s reasons for his decision on costs can be gleaned from the following paragraphs in the Decision:

“[25] The applicant submits that he has obtained what he asked for in the Notice of Application, and is the de facto successful party. It cannot be disputed that the applicant did obtain the document he asked for as set out in the Notice of Application.

[26] I have heard the submission from the respondent on this issue, and I have run through the wordings of the Notice of Application at the hearing with the representative of the respondent. And in the discussion, there is no suggestion by the respondent that the applicant is not entitled to the documents he asked for.

[27] There are complaints by the respondent on the various letter applications by the applicant for document covering different periods. It was explained that the respondent could not provide the document before the application and there was delay. But a careful reading of the Notice of Application shows that the class of documents and the relevant periods have been clearly set out. There is no reason why the respondent could not be certain of the document requested, lately on receipt of the Notice of Application.

[28] And I refer to the Notice of Opposition. There is complaint that the applicant’ requests are confusing and vary from time to time. The requests have been set out in paragraph 6 of the Notice of Opposition. Leaving aside the request on 18 March 2020, the applicant made request monthly since July 2020. And starting with the request dated 7 July 2020, the applicant is asking for documents from January 2019 and up-to-date. I fail to see why they are confusing.

[29] Having considering all matters before me, I come to my conclusion that the applicant was the de facto successful party.

[30] Ms. Ip submits that I have applied the wrong test. In particular, I should not consider the delay after the application has been taken out. I fail to see why not. The breach is a continuous breach.

[31] Further, according to Order 62 rule 5, in exercising the discretion on costs, this Tribunal is entitled to look at the conduct of the parties. The issue of conduct after application commenced would be relevant to decide if any parties have acted in breach of the underlying principles of Order 1A and may be given an adverse costs order, in whole or in part. And the lack of explanation beside the time claimed for preparation or misunderstanding of the document required, which I rejected, strengthens the applicant’s argument that he was the de facto successful party and should be award the costs.

[32] The determination on costs is an examination of the reason for providing the document only at mid 2022. I have engaged in a broad brush approach to determine the issue. As I found that the applicant is the de facto successful party, that is my starting point in that he should be entitled to costs. And there should be no deduction or partial award on costs having considered the conduct of the parties.”

9.  The IO was not satisfied with the Deputy Judge’s decision on costs, and sought leave to appeal on 18 July 2022.  As earlier mentioned, the Deputy Judge refused to grant leave to appeal on 29 December 2022.

THE PRESENT APPLICATION

10.  On 12 January 2023, the IO filed a summons (“the Summons”) in the Court of Appeal to renew the application for leave to appeal, raising the following intended grounds of appeal:

(1)  The Deputy Judge erred in law in wrongly adopting the “Successful Party Approach” based on entitlement of the requested documents.

(2)  The Deputy Judge erred in law in wrongly taking into account “unpleaded cases and/or an irrelevant period”.

(3)  The Deputy Judge failed to properly evaluate the overall conduct of the parties and/or the overall circumstances of the present case.

DISCUSSION

(i)  Applicable principles

11.  Section 11(2) of the Lands Tribunal Ordinance, Cap 17 (“the LTO”), so far as relevant, provides that any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.

12.  Section 11AA(1) of the LTO provides that, subject to sub-section (2) (which has no application in the present case), no appeal may be made under s 11(2) unless leave to appeal has been granted by the Tribunal or the Court of Appeal. Section 11AA(6) further provides that leave to appeal shall not be granted unless the Court is satisfied that the appeal has a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.

13.  A “reasonable prospect of success” means an appeal with a prospect that is more than fanciful without having to be probable: SMSE v KL [2009] 4 HKLRD 125 at §17.

14.  Unless the Tribunal has made a plain error in a costs order, which is an exercise of discretion, the Court of Appeal will not interfere with the discretion so exercised: NPYJ v SMRC [2018] 1 HKLRD 573[1].

(ii)  Ground 1

15.  Under this ground, the IO argues that:

(1)  the “Successful Party Approach” based on entitlement of the Documents requested by the Applicant is not applicable because “the [Applicant] will obtain the relief anyway as conceded all along by the [IO]”[2];

(2)  instead, the Deputy Judge ought to have applied the general rule in Order 21, rule 3 of the Rules of the High Court, that upon discontinuance the Applicant should pay the costs of the proceedings[3]; and

(3)  the Deputy Judge also erred in shifting the burden of proof to the IO to ask for reasons why there should be no order as to costs, and failed to apply the proper test to impose the burden on the Applicant to show that there were good reasons for him to be entitled to costs[4].

16.  This ground of appeal has no merit.

17.  As for (1), the fact that the IO had agreed to provide the Documents to the Applicant did not absolve it of the duty to actually produce the Documents.  That was what the Applicant asked for in the Notice of Application dated 5 November 2020, and his request was not met by the IO until around 18 months later in May 2022.  The fact that the Applicant was substantially the successful party in the application was plainly a relevant and material consideration which the Judge was entitled to take into account in the exercise of his discretion on the issue of costs.

18.  As for (2), although the general rule is that a respondent is entitled to costs when proceedings in the Lands Tribunal are discontinued, this rule is not an inflexible one, and may be departed from where the discontinuance is due to good reason(s) (see Bright China Investment Limited v Yip Siu Kwong Timmy and Others [2018] HKLdT 46, at §20).  In the present case, as pointed out by the Deputy Judge, both parties wanted the application to be withdrawn or discontinued because the underlying dispute had been resolved upon the IO providing the Documents sought by the Applicant (see §20 of the Decision).  This fact constituted a good reason to depart from the aforesaid general rule.

19.  As for (3), although the burden would generally be on an applicant to justify why he should have the costs of the proceedings which he has discontinued, we do not see that the Deputy Judge wrongly shifted the burden of proof to the IO to explain why there should be no order as to costs.  The Deputy Judge took into account various matters, including the fact that the Applicant got what he asked for in the application (§§24-25 of the Decision), the Applicant’s entitlement to the Documents sought (§26 of the Decision), the clarity of the Applicant’s requests as set out in the Notice of Application (§§27-28 of the Decision), the fact that the Applicant was the de facto successful party (§29 of the Decision), and the IO’s delay in producing the Documents (§§30-31 of the Decision), and then considered the matter on a broad brush basis (§32 of the Decision).  It is clear that the Deputy Judge’s decision on costs was based on his assessment of what he considered to be the fair and just order for costs (§20 of the Decision), not on any consideration of burden of proof.

(iii)  Ground 2

20.  Under Ground 2, the IO argued that the Judge erred in taking into account matters which were either unpleaded, or post-dated the Notice of Application.

21.  This argument is wrong as a matter of principle.  The Tribunal has a broad discretion on matters relating to costs[5].  It is entitled to take into account all relevant circumstances, including the whole conduct of the parties up to the date of decision on costs, in the exercise of its discretion, and is not restricted to a consideration of matters raised in the pleadings, or prior to the commencement of proceedings.  Order 62, rule 5(1)(e) of the Rules of the High Court, applicable to the Lands Tribunal by virtue of s 12(7) of the LTO, states that the Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account “the conduct of all the parties”, and sub-paragraph (2) goes on to provide that, for this purpose, the conduct of the parties includes:

“(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

(iv)  Ground 3

22.  Under this ground, the IO argues that the Deputy Judge failed to properly evaluate the overall conduct of the parties and/or the overall circumstances of the present case, in particular:

(1)  The Applicant’s motive in initiating, and his conduct in, this application.

(2)  The fact that the IO acted in person, and had taken all reasonable steps to be cooperative and settle the case with the Applicant amicably even after the issuance of the Notice of Application.

(3)  The Deputy Judge’s erroneous conclusion that the IO had failed to take reasonable steps to comply with the Applicant’s request for disclosure of documents.

23.  In respect of (1), we do not consider that there is any, or any sufficient basis, to contend that the Applicant’s motive in initiating the application, or his conduct in the application, was improper.

24.  In respect of (2) and (3), we consider that it was open to the Deputy Judge to take the view that the IO had failed to adequately explain the delay in providing the Documents to the Applicant.  As for the matters relied upon by the IO at §33 of its Skeleton Submissions dated 12 January 2023:

(1)  The fact that the IO had been acting in person until 26 July 2022 cannot be a good or sufficient explanation for the delay. The Applicant’s request was a simple one, and could be met easily.  If the IO was in any doubt about its obligation, it could and should have sought legal advice promptly.

(2)  The mere fact that the IO had attended mediation with the Applicant 3 times is likewise not a good explanation for the delay. The matter of mediation was raised by the Tribunal on 10 December 2020.  The parties attended 3 mediation sessions on 14 January, 4 February and 17 March 2021, but failed to settle their differences[6]. The IO did not produce the Documents sought by the Applicant until around 17 May 2022.  There was plainly a substantial period of delay between the last mediation session and the date on which the Documents were produced which was not adequately explained to the satisfaction of the Deputy Judge.

(3)  While the IO claims that it had never been unwilling to comply with the Applicant’s request (or revised request), the issue was whether the IO had any good explanation for the delay in providing the Documents.  As noted above, the Judge found against the IO on this issue.

(4)  Lastly, regardless of the strictness of the IO’s obligation to provide the Documents, it has not been suggested that the IO was not required to provide the Documents sought by the Applicant in the circumstances of this case (see §26 of the Decision).

25.  In substance, the IO disagrees with the Judge’s assessment of the situation, and seeks to re-argue the case in the Court of Appeal.  Ground (3) does not constitute a valid ground of appeal.

26.  In all, none of the intended grounds of appeal has a reasonable prospect of success.  There is also no other reason in the interests of justice why the intended appeal should be heard.

DISPOSITION

27.  The IO’s application for leave to appeal is dismissed, with costs to the Applicant, to be summarily assessed.  The IO shall have leave to file and serve a statement of objections (limited to 2 pages) to the Applicant’s costs statement dated 26 January 2023 within 14 days from the date of this judgment.  Upon the expiration of the 14-day period and subject to such further directions as may be given, the Court will summarily assess the Applicant’s costs without further reference to the parties.

28.  Finally, as the IO’s application is totally without merit, pursuant to Order 59, rule 2A(8) of the Rules of the High Court, no party may request the present determination to be reconsidered at an oral hearing inter partes.

[1] Referred to at §12 of the Decision.

[2] §1.1 of the Summons.

[3] §§1.2-1.3 of the Summons.

[4] §1.4 of the Summons.

[5] See s 12(1) of the Lands Tribunal Ordinance.

[6] See §§4-5 of the Applicant’s submissions on costs before the Deputy Judge.