DNG GLOBAL INVESTMENT LTD v. I L CONSULTANTS & SERVICES LTD

HCA 734/2019

[2019] HKCFI 2741

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 734 OF 2019

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DECISION

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Introduction

1.  By a summons filed on 25 June 2019 (“the Summons”), the Plaintiff (“P”) applied for interim payment pursuant to Order 29 rule 12(b) and rule 12(c) of the RHC, on the purported ground that P’s claims against the Defendant (“D”) herein included a claim for possession of land and, if this action proceeded to trial, D would necessarily be held liable to pay to P a sum of money in respect of D’s use and occupation of the land during the pendency of this action, even if a final judgment or order were given or made in favour of D. 

2.  I heard the Summons substantively today.  My decision is to (1) dismiss the Summons; and (2) order P to pay the costs of the Summons, including all costs reserved, summarily assessed by me with Certificate for Counsel at HKD 217,680, to D forthwith (“the Decision”).

3.  My reasons for the Decision are as set out below.

Background Facts

4.  P was the registered owner of House No. 36, Strawberry Hill, No. 8 Plunkett’s Road, The Peak, Hong Kong (“the House”). There was a written tenancy agreement between P and D dated 18 October 2017 (“the Tenancy Agreement”) by which P rented the House to D for a fixed term of 2 years, starting on 6 December 2017, at a monthly rent of HKD 170,000. 

5.  P’s case was that D, in clear breach of the Tenancy Agreement, refused to pay rent to P after 6 March 2018 but remained in occupation of the House, and as such P was entitled to (1) vacant possession of the House; and/or (2) outstanding rent and/or mesne profits at the rate of HKD 170,000 per month. 

6.  D’s case was that water leakage and/or mushroom issues were found and reported to P on 5 March 2018 so that on 7 March 2018, P agreed to suspend rent for the House until all necessary repair works to the affected rooms were completed and the affected rooms became fit for habitation, in consideration of which D agreed to suspend bringing civil actions against P for P’s breach of its covenant to maintain the structural parts of the House including its drains and pipes (“the Suspension Agreement”). 

7.  D’s case was that by reason of the Suspension Agreement, and the fact that the necessary repair works had never been completed, D was under no obligation to pay rent. 

8.  In reply to D’s case, P said all necessary repair works had been completed by 28 June 2018. 

P’s Submissions

9.  Ms Sakinah Sat, Counsel for P, submitted, inter alia, that D’s case was unbelievable or unarguable so that D would inevitably lose if this action proceeded to trial, and there should therefore be an order in terms of the Summons. 

D’s Submissions

10.  Mr Toby Brown, Counsel for D, submitted, inter alia, that D had shown a credible defence on its affidavit evidence, and the Summons should therefore be dismissed with costs. 

My View

11.  In gist, I agree with D’s submissions. 

12.  As DHCJ Lam (as Lam V-P then was) observed in Winsworld Properties Limited v Chance Full International Development Limited and Another (unrep, HCA 4161/2002, 14 February 2003, paragraph 12), when faced with an interim payment application, a court of law could not resolve a dispute of facts on affidavit evidence, but would nevertheless be obliged to make a provisional assessment on the strength of the evidence.  Having heard Counsel for the parties and made the required provisional assessment, I am of the view that D’s case cannot be said to be so incredible as to justify an interim payment order being made against D. 

13.  Firstly, D’s case is partially supported by P’s affirmation filed herein on 25 June 2019, paragraph 6 of which admitted the existence of a rent waiving agreement of some sort between P and D. 

14.  Secondly, there is no credible explanation from P on affidavit as to why, if all repair works had been completed by 28 June 2018, and D did not pay rent thereafter, P did not commence this action until 26 April 2019, close to 10 months after the cause of action allegedly accrued.

15.  Thirdly, it is with respect extraordinary that Mr George Yuen Chee Mok, the solicitor who made P’s affirmation in reply filed herein on 15 August 2019, alleged the repair works had been completed by 28 June 2018, on affirmation, by exhibiting and relying on a debit note which was plainly neither here nor there, instead of, for example, inspecting the House itself and deposing to his observations at such a physical inspection. 

16.  Fourthly, D’s case that the repair works in question had never been completed is supported by D’s affirmation filed herein on 1 August 2019, paragraphs 20 to 43 of which deposed to the relevant facts with full particulars, and full cross-references to contemporaneous email messages, and none of such contents can be summarily said to be unbelievable. 

17.  Fifthly, D exhibited an email from P to D dated 20 February 2019 which reads “We hereby reserve all our rights to cease the rent free period” – this supports D’s case that the rent free period went way beyond 28 June 2018. 

18.  Sixthly, D exhibited a letter from its solicitors to P’s solicitors dated 13 June 2019, enclosing photos taken on 12 June 2019 which showed that the repair works at the House were plainly still on-going and far from completion.  In fact, one may even say those photos showed that as of 12 June 2019, the House was plainly unfit for residential occupation.

19.  All things considered, it is in my view entirely possible for the trial judge to accept D’s case as true and/or to reject P’s case as false.  This being my provisional assessment, I must dismiss the Summons.

Costs

20.  There is no reason why costs should not follow the event.  D was the clear winner and P was the clear loser.  The costs of the Summons should be paid by P to D. 

21.  On the question of Certificate for Counsel, in my judgment it was reasonable, necessary and proper for the parties to engage Counsel to argue the Summons, given the amount of money involved.  Indeed, both parties engaged Counsel, and both Counsel had been extremely helpful to this Court. 

22.  On the quantum of costs, D claims HKD 255,720. Pursuant to paragraphs 13 & 14 of Practice Direction 14.3, I examined each item in D’s Statement of Costs, and also the final figure.  I take the view that Item D1 is slightly excessive as it should be more than sufficient for documents to be drafted by an associate solicitor admitted in 2013, with a partner and Mr Brown giving those documents some final touch.  The involvement of the trainee in the drafting work is with respect superfluous.  Furthermore, the costs for drafting a Statement of Costs should generally be disallowed.  I should thus reduce the amount claimed under Item D1 by HKD 3,910. 

23.  More importantly, Item D4 is excessive.  Once a competent Counsel like Mr Brown has been engaged (I allow Mr Brown’s fees in full), it is unnecessary for senior solicitors to be present in Court at the same time.  I would only allow HKD 1,700 for Item D4, conceptually for 1 hour of a trainee solicitor’s time. 

24.  Taking a broad-brush approach in assessing quantum of costs, I consider a total figure of HKD 217,680 would be fair and reasonable. 

Final Remarks

25.  As Au J (as Au JA then was) aptly observed in Guo Jing Jing v Art Master Investment Limited & 3 Others (unrep., HCA 1008/2009, 11 December 2009, paragraph 88), the test for granting interim payment “is a high one”, and the court must be satisfied that the plaintiff “would” obtain judgment for substantial damages against the defendant, not “would likely to”.  That being the case, it was extraordinary that P, despite being legally represented, saw fit to take out the Summons notwithstanding the existence of contemporaneous documents which clearly showed that D’s case should pass the “arguable defence” test with no problem at all.  Bluntly put, it is plain and obvious that P should never have taken out the Summons.

26.  Litigants are reminded that after the CJR came into effect over 10 years ago on 2 April 2009, unmeritorious or unwarranted interlocutory applications (such as the Summons herein) would be discouraged, whether by costs ordered to be paid forthwith or otherwise. 

27.  I do thank both Counsel for their most able assistance.