BIRKENHEAD PROPERTIES AND INVESTMENTS LTD v. LEUNG CHI CHEONG

HCA 6145/1992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6145 OF 1992

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BETWEEN

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R U L I N G

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1.  This is an application to vary a costs order nisi that I made. The claim was brought by the plaintiff to recover part of Lot 769 in Demarcation District 99 Mai Po, San Tin, Yuen Long as occupied by the defendant.

2.  The defendant did not dispute that the plaintiff was the registered owner, but counterclaimed the area on the basis of adverse possession.  It was thus for the defendant to prove his case.  In the end, the defendant succeeded in his counterclaim substantially and I ordered that the plaintiff should pay him 75 per cent of the costs of the action including the counterclaim, with certificate for counsel.

3.  The plaintiff is not satisfied with the costs order nisi and wishes to have it varied to no order as to costs, or for that the costs payable to the defendant to be reduced to significantly below 75 per cent.

4.  Though the plaintiff started the action, it being the registered owner was never contested by the defendant.  The whole case was on the counterclaim.  The plaintiff needed to prove nothing.  It was for the defendant to prove his counterclaim.  The defendant had the burden to prove each and every element of his case and he had to do so as the plaintiff was, as it was entitled to, putting him to strict proof on each and every matter that was material to his case.  This case is thus different from Medway Oil v Continental Contractors [1929] AC 88. 

5.  In the end, the defendant succeeded substantially.  In the usual case, the costs should follow the event.  I only gave the defendant 75 per cent of the costs because I took the view that he was too ambitious in his counterclaim.  He did not succeed in several areas for insufficient period of occupation.  I applied the third principle summarized in re Elgindata No. 2 [1992] 1 WLR 1207 at 1214A. 

6.  In this application, Mr Chan, leading counsel for the plaintiff, submitted on different approaches to decide the order of costs. 

7.  The first approach is to consider how much the defendant has succeeded in terms of percentage of the land originally claimed in the counterclaim.  Since the defendant has succeeded in obtaining about 65 per cent of the land originally claimed, he should be paid 65 per cent of his costs by the plaintiff and should also pay the plaintiff 35 per cent of the plaintiff’s costs.

8.  I do not agree with this approach.  It does not reflect the conduct of the parties in the prosecution and defence of the counterclaim as a whole and is not a fair way to deal with the costs issue. This is particularly so when there was a long and wide embankment of a fish pond that the defendant did not succeed more because of the court’s intervention.

9.  The second approach suggested by the plaintiff is to consider the specific areas that constitute the whole counterclaimed area and see which of the areas the defendant had succeeded and which he did not. Mr Chan described this approach as an event-based approach.

10.  His solicitors also prepared a table showing the time taken up by the evidence of each and every area.  He then submitted that the total time taken up by the evidence relating to the areas that the defendant has succeeded was only about 45 per cent of the trial period.  Hence, he submitted that there should be no order as to costs.

11.  I think this approach is also not appropriate for this case.  This approach deems that there was a separate and independent counterclaim for each of the areas in the original counterclaim, but in fact there was one counterclaim based on the case that Mr Leung Fai and his wife had settled in the Lot in early 1960s.  Mr Leung and his wife built houses and dug up and enlarged a fish pond for fish farming in the Lot.  He remained there until the early 1990s, when he converted the fish pond into a parking compound.  His compound in fact covered areas adjacent to his houses and fish pond.

12.  His son, who continued the case after his death, gave evidence to extend Leung Fai’s occupation to cover the adjacent areas.  In the end, he only succeeded in the main story and obtained the areas covered by the houses and the pond and some nearby areas used for raising poultry, but he lost the adjacent areas.  These areas, save the embankment mentioned above, are relatively small comparing with the areas that he has succeeded.

13.  Since the plaintiff was putting the defendant to strict proof including the fact that Leung Fai’s family had ever resided on the Lot, a lot of preparation was made to substantiate the main story. 

14.  If I were to adopt this so-called event-based approach, I would be losing sight of the preparation for the main story and would be treating the different areas as subject to separate and distinct counterclaims.

15.  Furthermore, more than a day has been spent on the evidence in respect of when did a small pond called Pond D had come into existence.  The defendant’s evidence was accepted though the defendant did not succeed in obtaining this area as a matter of law.

16.  If I allocate the time spent on the evidence in relation to Pond D in favour of the defendant, the total time used for matters that the defendant has succeeded would be more than 80 per cent of the trial period.  However, I do not regard this approach as appropriate and I would not order costs on the basis of such percentage.

17.  I think this case requires a global approach. The defendant has succeeded in the main case, but he was too ambitious and lost the adjacent areas.  If he had not included those areas in the counterclaim, the matter would have been more straightforward.  However, I do not think he has made any allegation improperly or unreasonably to the extent that I should apply the fourth principle in Elgindata and require him to pay costs to the plaintiff for areas that he lost.

18.  On the whole, I think the costs order nisi is a fair one and I am not going to vary it.  The plaintiff has thus lost this application.  The parties agree that costs of this application should follow the event.  I therefore order the plaintiff to pay the defendant the costs of this application, with certificate for counsel, and that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.