FIRST KIND LTD AND ANOTHER v. LIU KENG CHOR, THE ADMINISTRATOR OF THE ESTATE OF LI FUNG MAN DECEASED AND ANOTHER

LDCS 12000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 12000 OF 2014

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LDCS 13000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 13000 OF 2014

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LDCS 14000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 14000 OF 2014

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LDCS 15000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 15000 OF 2014

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LDCS 20000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 20000 OF 2014

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LDCS 21000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE APPLICATION NO. 21000 OF 2014

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REASONS FOR DECISION
(Leave to Appeal on Costs)

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1.  On 6 May 2016, this Tribunal handed down a decision on, inter alia, a number of preliminary issues basically against the minority respondents who raised them but with a costs order nisi that their costs be paid by the applicants in the 6 CS Applications herein according to the compensation approach. The applicants sought to vary the said costs order. This application was heard on 16 December 2016. The said order nisi was made absolute (“preliminary issues costs order”) by another decision of this Tribunal handed down on 13 January 2017. The Tribunal also directed the costs of the costs variation application were to be paid by the applicants, and it was in the form of an order nisi (“costs variation costs order”).

2.  This is the hearing of the applicants’ 6 summonses all dated 27 January 2017 for leave to appeal against the following 2 orders made on 13 January 2017:

i) the preliminary issues costs order; and

ii) the costs variation costs order.

3.  After reading the affirmations, documents, counsel’s written skeletons and hearing counsel’s submission, this Tribunal refused to grant the leave to appeal. The applicants’ 6 summonses were dismissed with costs paid by the applicants to the respective participating respondents on High Court scale with certificate for counsel. The said costs were assessed at $106,890 to be appropriated equally to each of CS-12, CS-13, CS-14 and CS-15, and $64,780 for CS-20[1].

4.  At the conclusion of the hearing the Tribunal indicated to the parties that brief reasons for decision would be handed down, and they are as follows.

5.  Although in respect of the preliminary issues the Tribunal ruled against the participating respondents in the 6 CS applications, based on the compensation principles set out in Good Faith Properties v Cibean Development Co Ltd[2] costs were awarded to these respondents. My reasons for making the preliminary issues costs order were stated in [41] to [45] of my written decision of 13 January 2017, and the same would not be repeated here. Since costs are to follow the event, this Tribunal also made the costs variation costs order in favour of the respondents.

6.  After reading the draft notice of appeal settled by senior counsel and the submission of Mr But, it is fair to say that the grounds of appeal can be grouped under the following 3 broad grounds:

i)   In determining costs in respect of the “preliminary issues” which were raised by the respondents, the Tribunal erred in applying the compensation approach on costs as set out in Good Faith (supra);

ii)   Even if the compensation approach were applicable, the Tribunal erred in applying the said approach to the present case. The Tribunal is plainly wrong in applying such approach in an overly-rigid and mechanistic manner which resulted in grave injustice to the applicants; and

iii)   In any event the proposed appeal should be heard under the “in the interests of justice” limb under s.11AA(6)(b) of the Lands Tribunal Ordinance, Cap 17 (“LTO”)[3] so that the Court of Appeal (“CA”) would not be technically barred from considering the incidental question of costs should the CA find the respondents’ appeal so devoid of merit.

7.  Regarding the first broad ground, so far as can be discerned from Mr But’s submission, it is the applicants’ case that the “preliminary issues” raised in applying the “merged site” basis falls outside the ordinary scope of issues and/or elements to be proved by the majority owners under the Lands (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (the “LSCRO”). The issues, which have been well  settled by another decision of the Tribunal in Day Bright Development & Ors v Choi Pak Ling & Ors[4], have been blown up and re-argued again in the present case.

8.  There is no challenge by the applicants that the preliminary issues sought to be argued here are not interlocutory in nature in that they finally dispose of substantial issues in the action. Further, this Tribunal shares Miss Ngai’s contention that the setting of “reserve price” is one important step in the statutory process under the LCSRO scheme. It is an important yardstick to counter-check whether the offers made by the majority are fair and reasonable in the circumstances: see [5] to [16] of Good Faith (supra). Accordingly, it cannot be said that the “merged site” argument is an extraordinary issue sought to be argued. Of course, if there are no adjoining sites, or that these adjourning lots are not before the Tribunal, argument of “merged site” development can be said to be fanciful. It can then be contended that such preliminary issues are extraordinary. However, in the present case, the 6 applications herein are taken out by the same and/or similar group of applicants. The Tribunal is now seized of the matter. Since there are conflicting decisions at the same level of court, it would be surprising if such issues were not taken on board, one way or the other, by any competent team of lawyers representing the minorities. The fact that Day Bright (supra) is squarely on the issue is neither here nor there because there are also other conflicting decisions of the same level in support of the respondents’ case.

9.  There are parallel applications for the 6 cases to be heard together, and the Tribunal’s decision so directing has not been challenged. In the Tribunal’s judgment the preliminary issues, if not raised at this stage, would be raised anyway at trial. The costs incurred would become part and parcel of the costs of the applicants in going through the LCSRO process. The contention that the compensation approach is inapplicable is devoid of merit.

10.  As regards the second broad ground, Mr But agreed that when appealing against an exercise of discretion, he had a high hurdle to overcome. He accepted that the appellate court would not normally interfere with the decision of the lower court even if it would have come to a different conclusion had it exercised the discretion afresh. He accepted the only situation for the appellate court to interfere is either when the decision is plainly wrong, or that irrelevant matters have been taken on board, or relevant matters overlooked. He then referred the Tribunal to [27] of his written skeleton to illustrate his submission that the Tribunal had offended the accepted principles. Having gone through the relevant paragraph, in the Tribunal’s judgment, it does not support his case. The applicants are simply saying that the discretion should be exercised in such a way as to come to a “middle-ground” of no order as to costs to reflect that the respondents had lost in an argument which had been dealt with once in Day Bright (supra). However, that is not the same as the exercise of discretion by the Tribunal being plainly wrong.

11.  Mr But also relied on my decision of Oriental Generation & Others v Ngo Kui Sing & Other[5] in support. In Oriental Generation (supra), apart from disallowing certain costs of the minorities, the Tribunal even made adverse costs order against the same group of minorities in respect of some issues raised by them. It has to be noted that Oriental Generation (supra) is with very extreme facts, and is in no way similar to the present case. Firstly, Oriental Generation (supra) follows the “compensation approach” enunciated in Good Faith (supra) on costs. Secondly, and most important of all, in Oriental Generation (supra), the defending carpark minorities were found acting in concert perpetrating a scheme with a view to inflate the redevelopment value (“RDV”) as well as the existing value (“EUV”) of their car parking spaces. In this connection, experts instructed by them produced reports which were obviously falling short of the required professional standards. The minorities and their legal teams chose to embrace such reports which were so apparently faulted. Argument was built up and developed on these totally unreliable valuations. As a result, lot of time and costs were wasted. 

12.  Obviously, it is not the case here.

13.  Mr But also relied on a recent CA decision on costs in Penny’s Bay Investment Company Ltd v Director of Lands[6] which has not been discussed in the costs variation hearing. It is submitted by Mr But that according to [6] to [9] of Penny’s Bay, the CA said that a landowner claimant whose land was acquired/resumed had the benefit of his case to be considered under an existing judgment below. If that claimant still elected to pursue an unsuccessful appeal, there was no justification for shifting the burden of costs to the acquiring authority under the “compensation approach”. It was decided that the approach in Good Faith (supra) shall no longer be applicable to an unsuccessful appellant. Instead, costs should follow the event[7].

14.  He drew analogy and submitted that the respondents who chose to re-litigate the “merged site approach” here should be met with the usual “costs to follow the event” order.

15.  With due respect, the Tribunal disagrees. Firstly, we are not dealing with an appeal as in the case of Penny’s Bay. There is simply no first instance decision in respect of these 6 Applications to which the respondents could benefit from as in Penny’s Bay. Secondly, although the Tribunal disagreed with what had been submitted by the respondents, as said in my leave to appeal decision the argument raised has merit or is arguable based on arguable authorities. It should not be brushed aside simply because it has been dealt with once at the same level of court. It has to be remembered that Day Bright (supra) was decided when there was no active opposing party. Here, the Tribunal has the benefit of argument from both side after a full blown hearing. In the Tribunal’s judgment, the respondents’ argument deserves to be heard on appeal[8]. It is only fair to say that the respondents have the benefit/burden of 2 lines of conflicting decisions of the same level and can choose from among them. They are entitled to present their best case before the Tribunal by adopting their preferred line of decisions. This is part and parcel of their defence to the Applicants’ claim under the LCSRO statutory framework, and cannot be regarded as “special reasons” under the compensation approach that warrant a departure from the compensation appraoch.  

16.  Section 11(2) of the LTO provides that any appeal to the CA against a decision of the Tribunal shall be on the ground that such decision is erroneous in point of law. As analyzed above, the first broad ground is really weak and is totally without merit. As for the second ground it is not said that compensation principles have been wrongly applied. From what have been stated above, it is entirely a matter of disagreement by the applicants to the outcome of the exercise of the Tribunal’s discretion rather than the decision being obviously wrong. Neither is it a case of irrelevant consideration being taken on board nor relevant consideration ignored. The applicants cannot identify clearly what has gone wrong as a matter of law. Accordingly, this Tribunal does not consider the first limb of section 11AA(6), which is set out below, satisfied:

“(6) Leave to appeal shall not be granted unless the Tribunal, the Court of Appeal or the registrar hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) (b)  there is some other reason in the interest of      justice why the appeal should be heard”

17.  As regarding the 3^rd broad ground which is with a view to engage the second limb of section 11AA(6), Mr But is basically talking about a possibility that the CA may reach a finding that the respondents’ appeal on the preliminary issues are so devoid of merits, and that it should also want to deal with the costs in one go. In the Tribunal’s judgment it is a mere guess, and this Tribunal does not share his view. It will be up to the applicants to convince the CA that this is a valid consideration and leave in this respect should be granted.

18.  The applicants’ leave to appeal was therefore dismissed.

19.  These applications for leave arise from the preliminary issues applications which are awarded the High Court scale. Further, matters raised in the preliminary issues argument and in connection with the construction of LCSRO are touched upon in the argument here. It will be fair and reasonable that costs of this hearing be awarded on High Court scale.

20.  After reading the summary of costs submitted on behalf of the 2 participating respondent teams, this Tribunal accepted the hourly rate for the respective handling solicitors of the two team at $4,000; accepted in full counsel’s brief; and adjusted the time spent on the itemized works. The aggregate for the team represented by Lo & Lo is $106,890 and $64,780 for the team represented by Chui and Lau.