THE INCORPORATED OWNERS OF FLORA GARDEN v. LI DO WAI AND OTHERS

LDBM 283/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 283 OF 2014

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LDBM 285/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 285 OF 2014

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LDBM 286/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 286 OF 2014

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LDBM 287/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 287 OF 2014

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LDBM 288/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 288 OF 2014

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LDBM 289/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 289 OF 2014

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D E C I S I O N

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1.  This is the application by all the respondents for variation of the costs order nisi made on 2 occasions.  The first one being the judgment handed down on 25 August 2016 (“the Judgment”) for the main application and the second one being the decision handed down on 31 October 2016 (“the Decision”) for the leave to appeal application.  The background and findings of this case had been set out in the Judgment and the Decision, I shall not repeat here.  For convenience, I shall adopt the abbreviations used in the same.

2.  Upon hearing from the respondents, the basis for their application for variation of the costs order nisi in the Judgment (“ Judgment Order Nisi”) to one of no order as to costs is that :

a.  The IO refused to go for another round of mediation when the respondents were always eager to settle and prepared to pay whatever they should;

b.  The IO had chosen to litigate in a wrong venue, given the amount claimed, the IO should take out these proceedings at the Small Claims Tribunal, so there should be no order as to costs to condone such abuse or alternatively, the costs should be taxed at a scale applied in the Small Claims Tribunal;

c.  The respondents had succeeded in their defence over the claim of 10% Additional Costs;

d.  Conduct of the solicitors for the IO in repeated failure to comply with rules and practice in the service of documents as well as unsuccessful objection to representation by Mr Ronald for respondents of other cases;

e.  The unnecessary adjournment of the trial on 15 May 2015 since the IO had not adduced any new evidence thereafter;

f.  Unnecessary abuse of calling 2 witnesses giving unreliable and not concrete evidence resulted in the proceedings being prolonged.

3.  For the variation of the costs order nisi in the Decision (“Decision Order Nisi”), the respondents solely relied on ground (b) above.

Legal Principles

4.  Section 12(1) and (7) of the Lands Tribunal Ordinance (“LTO”) provides that :

“(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 High Court applies, with the necessary modifications, to the award, taxation and recovery of costs in the Tribunal.”

5.  Order 62, rule 3(2) states the general proposition that costs should follow the event, unless in the circumstances of the case some other order should be made as to the whole or any part of the costs.

6.  Order 62, rule 5 reads :

“5(1) 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 -

(aa) the underlying objectives set out in Order 1A rule 1;

(a) any such offer of contribution as is mentioned in Order 16 rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33 rule 4A(2);

(d) any written offer which is expressed to be ‘without prejudice save as to costs’ and which relates to any issue in the proceedings, but the court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful;

(g) any admissible offer to settle made by a party, which is drawn to the court’s attention.

(2) For the purpose of paragraph (1)(e), 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.”

Conduct of the IO at mediation

7.  It is the respondents’ case that the IO had refused to mediate by withdrawing unilaterally after the first session of mediation at which Mr Ip for the IO insisted that the respondents should pay all the amount claimed.  Since the IO had not been able to obtain a judgment for all money claimed, there should be no order as to costs.

8.  Ms Lee submitted that both parties had attempted mediation and the IO had also indicated its willingness to attempt further mediation session in the Reports on Mediation dated 6 February 2015 (B/697-705).  But ultimately, for whatever reason, no more mediation session was arranged.  Under such circumstances, there should not be any adverse costs order against any party for unreasonable failure to engage in mediation.  

9.  From the court record, solicitors for the IO filed a letter with this Tribunal on 6 February 2015 stating that parties failed to reach any settlement after mediation and sought for court’s direction.  This Tribunal had, on 9 February 2015, gave directions for case to be set down for a call over hearing.  On 10 February 2015, the respondents filed their respective Reports on Mediation dated 6 February 2015 indicated that the IO refused to go for a second attempt even though the respondents were prepared to do so.  Solicitors for the IO filed a letter on 17 February 2015 with the respondents’ Reports on Mediation attached to it but on each of the reports, indicated that the IO was prepared to go for further mediation.  There is no evidence before the court as to what happened thereafter and why no further mediation was arranged.  It is quite likely that since a date had been fixed by this Tribunal, parties had not taken further action for mediation.  There is no basis to conclude that the IO had acted unreasonably in the course of mediation.

Should commence proceedings in the Small Claims Tribunal

10.  The respondents argued that the claimed amount in each case is only a little bit more than $50,000.  Had the IO taken into account the $10,000 paid by the respondents of each case, the claimed amount falls below $50,000 which is within the jurisdiction of the Small Claims Tribunal (“SCT”).  So the IO should have commenced these proceedings in the SCT in the first place hence there should be no order as to costs.  Alternatively, the Judgment Order Nisi should be varied to costs of the IO be taxed at a scale adopted by the SCT instead.  The respondents are relying on this ground in support of the application for variation of the Decision Order Nisi.

11.  The IO contends that since the claim for share of contribution of the Works falls within the jurisdiction of the Lands Tribunal, and given the numerous complicated legal arguments raised by the respondents which are clearly outside the ability and knowledge of a reasonable layman, it is justified for the IO to engage legal representation and to commence these proceedings at this Tribunal. As for the application for variation of the Decision Order Nisi, Ms Lee submitted that since the respondents had failed in the application for leave to appeal, costs should follow the event.  And since it is an appeal against the Judgment of this Tribunal, it must be dealt with at this Tribunal so costs should be taxed at District Court scale.

12.  I agree with the IO’s contention.  The arguments raised by the respondents at trial may not be complicated enough to justify a counsel’s involvement, but the issues raised are numerous and convoluted and cannot easily be handled by any layman. The decision of the IO to engage lawyers and to commence these proceedings at this Tribunal is not unreasonable so as to deprive the IO of its costs or to be taxed at a scale other than the District Court scale.

13.  Since the respondents had failed in their application for leave to appeal, there is no justification for depriving the IO of the costs in regard to such application. Given my ruling at §12 above, the application by the respondents for variation of the Decision Order Nisi to be taxed not at District Court scale must also fail.

Costs should follow the event

14.  The respondents contend that since the respondents had succeeded in their defence in the claim of 10% Additional Costs, the “event” should therefore include such successful defence and if costs were to follow the event, there ought to be an order for no order as to costs with each party bearing their own costs. 

15.  Ms Lee for the IO submitted that even though the respondents had succeeded in the claim for 10% Additional Costs, they failed in all remaining issues and the issue of 10% Additional Costs constitutes just a little portion of the whole case.  When the usual practice is costs to follow the event, it is absolutely reasonable to order the respondents to be fully liable for the IO’s costs.

16.  The issue about the 10% Additional Costs is being dealt with at §§33-36 of the Judgment. As can be seen from the findings therein, the facts of this issue is not in dispute and there is no cross-examination of Mr Ip or Ms Choy on this issue.  The IO has been successful in all its claim except this issue which had not occupied a significant amount of hearing time or led to the incurring of significant expenses.  This issue is not so distinct or separate in itself that the decision of it constitutes an event.  This Tribunal finds it not reasonable to deprive the IO of all its costs nor its costs of this issue.

Conduct of the solicitors for the IO

17.  It is the contention of the respondents that solicitors acting for the IO had, before trial, out of their own neglect or incompetence, repeatedly failed to comply with the rules and practice in the service of documents on the respondents.  This includes:

a.  30 March 2015 for leave to file and serve Reply out of time;

b.  13 July 2015 for leave to file and serve witness statement of an additional witness;

c.  7 January 2016 for leave to serve witness statement; and

d.  Serving of 6 sets of documents on the respondents in ignorance of court’s direction.

18.  It is also the argument by counsel acting for the IO about the representation by Mr Ronald for all other respondents except LDBM 286/2014.  The argument failed and costs had not been dealt with then and the time wasted for this argument should be reflected in the Judgment Order Nisi as well.

19.  For the allegedly non-compliance of the rules and practice in the service of documents, costs orders had already been made in all the above hearings and I can’t see how the respondents can rely on these as a ground to vary the Judgment Order Nisi at the end of the trial.

20.  For the sending of 6 sets of documents on the respondents in disregard of the court’s direction, this should be an issue to be dealt with at taxation and not at the stage where liability of costs is being considered.

21.  At the hearing on 15 May 2015, counsel of the IO did raise the observation as to the representation by Mr Ronald for respondents of other cases and citing Rule 26 of the Lands Tribunal Rules about leave is required for such representation.  The representation by Mr Ronald for other respondents is made by way of a written application signed by the other respondents and filed with the Tribunal on 10 December 2014.  Since this may be unknown to the IO, the query raised by counsel is not unreasonable.  In any event, this issue had only taken up 4 minutes of the hearing time which is nominal.  This Tribunal failed to see how would this be a valid ground to vary the Judgment Order Nisi.

Wasted Costs for the adjournment of the trial

22.  At the hearing on 15 May 2015, during cross-examination of Mr Ip, the respondents raised a new issue about the 10% Additional Costs.  Upon objection from the IO that the respondents should not raise new issues not included in their pleadings, the respondents applied for an adjournment of the trial.  Hence, trial was adjourned for the respondents to amend their Notice of Opposition to include the following new issues, namely:

a.  the IO failed to give a proper account of the respective costs of the items of Works;

b.  the 10% Collection Charge never on agenda or approved at the 215 EGM and without any tender being called for;

c.  tiling of 3 external walls, renovation of main lobby on Cloud View Road and renovation of the car park entrance on Cloud View Road were not on the agenda of the 215 EGM;

d.  failure of the IO to provide the documents requested by the respondents;

e.  5% Surcharge and Collection Fee are for repair works and not improvement works and such clauses in the DMC are penalty clause; and

f.  insurance premium of the Building increased upon completion of the Works.

23.  At this hearing, the respondents sought to argue that the adjournment was for the purpose of allowing the IO to adduce further evidence to support the case that it was repair works that was intended all along.  But it turned out that such adjournment served no purpose since the IO had failed to adduce any evidence in support of this.  

24.  From the background leading to the adjournment stated at §22 above, the respondents had apparently mis-stated the reason leading to the adjournment.  Since it was the respondents’ application for the adjournment to include new defences in their pleadings, the adjournment is through no fault of the IO so it is ordered there and then that the respondents should bear the costs of the IO occasioned by the adjournment. This Tribunal failed to see how can the respondents raise this as a ground in support of the variation of the Judgment Order Nisi.

Calling of additional witness by the IO

25.  The respondents contend that the IO had sought leave to file and serve the statement of Ms Choy to substitute Mr Ip, the first witness, who would soon leave the employment and could not attend court to complete his evidence.  Yet, both Mr Ip and Ms Choy showed up at the adjourned hearing to give evidence.  The respondents said that this is an abuse of process wasting time and costs.

26.  Ms Lee gave the explanation that since Mr Ip refused to sign any supplemental witness statement after submitting his resignation, it is a must for the IO to arrange for Ms Choy to take up as a witness.  But Ms Choy had also resigned after filing of the witness statement.  It turned out that both Mr Ip and Ms Choy were kind enough to show up at the hearing on 13 June 2016.  Yet, the respondents decided not to cross-examine them so not much time and costs had been wasted.

27.  The issue as to allow Ms Choy to be called as an additional witness had been dealt with on 17 July 2015 with costs to the respondents.  This Tribunal had, by then, accepted the explanation of the IO and allowed the filing of the witness statement and the calling of Ms Choy.  The respondents cannot seek to re-visit the reasonableness of so doing at this hearing.  This Tribunal agree with Ms Lee that since the respondents had not conducted any cross-examination of both Mr Ip and Ms Choy at the resumed hearing, not much time and costs had been wasted or sufficient to convince this Tribunal not to go along the principles of costs should follow the event in the Judgment Order Nisi.

Conclusion

28.  Having considered all the argument and submissions, it is ordered that:

a.  the application for variation of the costs order nisi by the respondents in the summons dated 7 September 2016 and 14 November 2016 be dismissed;

b.  costs of the 2 summonses for variation of the costs order nisi be to the applicant, to be taxed if not agreed at District Court scale.