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

LDBM 169/2020

[2022] HKLdT 70

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 169 OF 2020

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BETWEEN

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DECISION

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Application for Leave to Appeal

1.  By an interlocutory application taken out by the respondent on 18 July 2022, it applies for leave to appeal against the order I gave on 4 July 2022. I start with some background history leading to my ruling on 4 July 2022.

Background

2.  This is an application by the applicant under Cap. 344 for certain documents that the respondent fails to provide, and which the applicant claims that he is entitled under Cap. 344. The respondent is the incorporated owners of Ho On Mansion and the applicant is an owner thereat.

3.  The respondent filed its Notice of Opposition on 26 November 2020, when it was acting in person. It is not clear if the respondent opposes providing the documents, or that it is explaining the reason for the delay in supplying the documents. Anyway, the case continued. Interlocutory application has been heard, and direction hearings have been held by this Tribunal. Directions have been given including filing and serving of witness statements.

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 without 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. The respondent now seeks leave to appeal against my costs order.

Legal Principle

9.  For this application for leave to appeal, the respondent is represented by counsel Ms. Lilian Ip. The applicant is represented by counsel Ms. Carmen Kei. They have kindly set out the relevant legal principle which are not in dispute.

10.  I first adopt the legal principle in Ms. Ip’s submission on “leave to appeal”, and I do not repeat section 11 and 11AA of the Lands Tribunal Ordinance. Ms. Ip agrees that for leave of appeal to be granted, the respondent has to have a reasonable prospect of success, and “reasonable prospect of success” means an appeal with prospect that are more than fanciful, without having to be “probable”. (see SMSE v KL [2009] 4 HKLRD 125, paragraph 17.)

11.  And further, the intended appeal against the costs order must be erroneous on law in order for leave to be granted.

12.  Ms. Kei added that the intended appeal is one against exercise of discretion by the Tribunal. Unless it is extremely plain that the Tribunal had gone wrong when making the costs order, the Court of Appeal would not interfere with the discretion exercised by the Tribunal. (see NPYJ v SMRC [2018] 1 HKLRD 573.)

13.  I would add these. By section 12(1) of the Lands Tribunal Ordinance, Cap. 17, costs are in the discretion of the Tribunal. Order 62 of the Rules of High Court, Cap. 4A, applies to the Lands Tribunal with necessary modifications. Section 12(1) & (7) reads:

“(1) The costs of and incidental to all proceedings in the Tribunal are in the discretion of the Tribunal, and the Tribunal has full power to determine by whom and to what extent the costs are to be paid.

(7) Notwithstanding subsection (1) and section 12C but subject to subsection (5) and any rules made by the Chief Justice under section 10(3), Order 62 of the Rules of the High Court (Cap. 4 sub. leg. A) applies, with the necessary modifications, to the award, taxation and recovery of costs in the Tribunal.”

14.  And when the main dispute of a case has been resolved, and the only outstanding issue is costs, the Court would not have a full trial to determine the question of costs. A broad brush approach would be taken by referring to all matters already laid before the Court to determine the issue if the applicant has substantially obtained the relief. I refer to the judgment of Madam Justice Au Yeung given in Famous Marvel Company Limited & Ors v Conversant Group Limited & Ors HCA2153/2009.

“22. There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs. There is no tradition for there to be “no order as to costs” in such a scenario. I am guided by the following principles in deciding costs:

(i) The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties. Brawley v Marcynski (No.1) [2003] 1 WLR 813.

(iii) The Court will first consider if it is in a position to say what the likely outcome after trial would have been. If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1),at para 18, Longmore LJ; followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv) The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12. However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in RHC Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v) A broad brush can be taken by referring to all matters already laid before the Court, e.g. pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi) The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional cost: Brawley v Marcynski (No.1).”

15.  I agree with the approach of Madam Justice Au Yeung. And on 4 July 2022, the main dispute has been resolved and the only outstanding matter is costs. I have 2 applications before me. The applicant is applying for costs, and the respondent is asking for no order as to costs. And I am dealing with these applications together.

Proposed Grounds of Appeal by the Respondent

16.  Two proposed grounds have been raised –

1. Whether the Judge has erred in law in observing a proper standard pursuant to relevant sections of [Cap. 344] when considering whether the respondent has taken reasonable steps to comply with the Request at reasonable time in imposing the [Decision on costs]?

2. Whether the Judge should assess the [Decision on costs] by analogy to the standard laid down under Order 21, rule 3 of the Rules of High Court (Cap. 4A) or Rule 27(1) of the Rules of [Lands Tribunal] (Cap. 17A)?

17.  I shall take the second proposed ground first.

Discontinuance

18.  It is true that the provision for costs when a Notice of Discontinuance is served according to the Lands Tribunal Rules is different from the Rules of High Court. Ms. Ip refers to Rule 27 of the Rules of Lands Tribunal which reads:-

“27. Discontinuance and withdrawal

(1) A party may, without leave of the Tribunal, discontinue the proceedings or withdraw any part thereof by serving a notice to that effect on the other party.

(2) A party upon whom a notice mentioned in subrule (1) is served may, within 14 days of that service, apply to the Tribunal for an order for costs and, subject to the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), the Tribunal may make such order as it thinks fit.

(3) ….”

19.  In the Lands Tribunal, a party may discontinue an application by filing and serving a Notice of Discontinuance. The receiving party would not automatically be entitled to costs, and have to apply under Rule 27(2) for an order for costs. Ms. Ip also refers to Bright China Investment Limited v Yip Siu Kwong Timmy & Ors, LDBM 303/2015 (unrep., 21 June 2018), which is a case when Notice of Discontinuance has been served. She submits that the starting consideration must be the party who is received the Notice shall be entitled to costs. She submits that since I have not adopted the correct approach, leave should be granted.

20.  But we have no Notice of Discontinuance served in this case. This is a case when the issue in dispute has been resolved upon the respondent providing the requested document. Naturally, both parties want to discontinue the action. They both ask for leave to withdraw or discontinue the action with leave of this Tribunal and for their respective proposed costs order. Hence the application before me is when leave is granted for discontinuance, what should be the fair and just order for costs.

21.  Yes, the application has been discontinued by leave of this Tribunal. This is to give effect to the similar application by the parties to put an end to the application. Rule 27 has no application and I do not see any prospect of success with the second proposed ground of appeal.

22.  Further, I refer to another decision of HHJ Simon Lo given in 陳小華及另十五人 對 鄭道珍LDBM95/2018. This is another case when leave was granted for the applicants to discontinue the action. HHJ Simon Lo adopted the successful party approach, which I agree. There is no merit in the second proposed ground of appeal.

23.  I shall move on to the first proposed ground of appeal.

How to Exercise the Discretion on Costs

24.  In any event, the reason why the applicant discontinues the application is clear. He has obtained what he asked for in the application, and the issues become academic.

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.

33.  In all, I do not accept the submission of Ms. Ip. I found there is no prospect of success with the first ground of appeal.

Conclusion

34.  Taking all the submission into account, I am not persuaded that there is reasonable prospect of success in any of the 2 proposed grounds of appeal and I therefore dismiss the application with an order nisi that the applicant do have costs of the application (including all costs reserved) with certificate for counsel. The order nisi shall become absolute within 14 days from today, and failing agreement, the applicant may present the costs statement for my assessment at District Court scale.