YIM TIN FOOK AND ANOTHER v. YU CHOR LAI, KONG WAI HUNG and SOU KA LUN t/a WANG CHEUNG INDUSTRIAL CHEMICALS CO AND ANOTHER

HCA 2613/2006

[2019] HKCFI 2933

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2613 OF 2006

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(By Original Action)

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(By Counterclaim)

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DECISION ON RELIEF AND COSTS

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1. I refer to my Decision herein dated 16 October 2019 (the “Order 14A Decision”), and adopt the terminology in that Decision.  

2.  At §§126 – 128 of the Order 14A Decision, I gave directions for the exchange of written submissions on the form of judgment and orders(s) sought by the parties, together with costs.

3.  I subsequently received the parties’ said written submissions, and now give my decision on those issues.

Form of judgment and orders

4.  In their post-Decision written submissions, D1 and D2 objected to only very limited portions of the judgment and orders proposed by Ps.

5.  For example, D1 and D2 raised no objection to Ps’ request for an order that D1 and D2 demolish the structures on land belonging to Ps, and deliver vacant possession to Ps, nor to an assessment of damages by way of mesne profits.

6.  Other than arguments on costs, the only real point taken by D1 and D2 was that the resolution of questions under Order 14A should not be effective in favour of DC3, DC4, DC5 or DC9, because those parties did not appear at the hearing or resist D2’s claim.  For the same reason, it was submitted that D2’s counterclaim should not be dismissed as against DC3, DC4, DC5 or DC9.

7.  I do not accept these points.  D2’s summons under Order 14A sought the resolution of questions of law and construction and the entry of judgment as against all defendants to D2’s counterclaim.  The determination of three questions in the Order 14A Decision takes effect as between all parties to the proceedings, including those who did not appear.  It follows that D2’s counterclaim fails as against all of the Registered Owners.

8.  On a related note, by written submissions DC6 sought (inter alia) final judgment for an order that D1 and D2 demolish the structures on DC6’s portion of the land and deliver up vacant possession to DC6.  Whilst D2’s counterclaim against DC6 falls to be dismissed, I do not see that DC6 is entitled to this additional relief since DC6 never issued a counterclaim against D1 and D2 for such relief.

9.  As to D2’s counterclaim against DC8 (and DC7), D2 and DC8 were ad idem that the extant issues would have to proceed to trial (unless resolved by agreement): see Order 14A Decision §§118 – 123.

Assessment of damages between Ps, D1 and D2

10.  By their post-Decision written submissions, Ps sought (inter alia) interlocutory judgment against D1 and D2 for damages by way of mesne profits, to be assessed, and further requested directions for an assessment of damages.

11.  As noted above, the reply submissions of D1 and D2 contained no objection on these points and expressly stated that D1 and D2 had no comment on (inter alia) Ps’ proposed directions for an assessment of damages.

12.  Accordingly,I will grant the orders and directions sought by Ps in this regard, subject to minor revisions as set out below.

Costs

13.  Ps sought their costs from D1 and D2, in respect of the original action, counterclaim and two Order 14A summons, on the basis that Ps have ultimately succeeded.  DC6 sought a similar costs order.

14.  D1 and D2 argued that there were three main questions considered in the Order 14A Decision, and that Ps and DC6 should be deprived of their costs in relation to two of those, on which they failed.

15.  The principles on “issue based” costs orders are well known, and are summarised in Hong Kong Civil Procedure 2020 at §62/5/7.  I have considered these principles, but am not persuaded that I should deprive Ps or DC6 of any of their costs.

16.  I accept that D1 and D2 succeeded on certain of the legal issues considered in the Order 14A Decision, and that inevitably, these would have increased the time taken for the hearing and the costs incurred, to some extent.

17.  However, I also consider the following: (i) the Registered Owners are the clear overall winners on the central issue of title in the Order 14A Decision and these proceedings (ie the “real winners”); (ii) D2 initiated the Order 14A proceedings with the objective of resolving the entire action in his favour, but the outcome is essentially the opposite; (iii) the discrete legal points upon which the Registered Owners failed were difficult points, and the result on those points is somewhat counterintuitive (see Order 14A Decision §§80 – 87); (iv) on the findings made the Registered Owners have been wrongly deprived of possession of their respective properties for many years, and on the basis of a case pleaded by D2 which has shifted multiple times.

18.  Ultimately, the court exercises a discretion to make a costs order which is fair and just in all the circumstances. Given the outcome and features referred to above, I do not consider it fair to deprive the Registered Owners of any of their costs.  Further, given the complexity of the issues, a certificate for two counsel is justified for the hearing before me.

19.  DC8 sought his costs of D2’s summons from D2.  D2 argued that the extant questions between D2 and DC8 will be resolved in due course, such that costs between D2 and DC8 should be reserved.

20.  On the three main questions considered in the Order 14A Decision, DC8 took the same position as D2.  As to the other questions relating to D2 and DC8 — which were not summarily resolved — DC8 did not uniformly oppose their summary resolution.

21.  I consider that in respect of D2’s Order 14A summons, as between D2 and DC8, the fair order is DC8’s costs in the cause.  The same applies as between D2 and DC7.

Other matters

22.  There was reference in the correspondence and post-Decision submissions to certain issues regarding a potential appeal from the Order 14A Decision.

23.  In light of the further correspondence and submissions received, I do not consider it necessary to deal with these points (some of which were in any event for an appellate court, if any).

Disposition

24.  For the reasons above, I will make orders to the following effect:

 (1) The following questions are determined between the parties under Order 14A of the Rules of the High Court (with terms as defined in the Decision herein dated 16 October 2019):

Question 1:	Did the 1983 Lease (if validly executed) operate as an assignment from Madam Tang to D2 of the leasehold estate held by Madam Tang in the Parent Lot for the residue of the term under the Block Lease?
Answer   :	Yes.
Question 2:	What was the effect of the NTLEO and the extension of the leasehold term thereunder, on the ownership of the leasehold estate in the Parent Lot?  Who was entitled to the benefit of the extended lease granted by the NTLEO?
Answer   :	The statutory extension of the term of the Block Lease which was effected by the NTLEO in 1988, did not alter the legal or beneficial ownership of the leasehold estate in the Parent Lot, which remained with D2.
Question 3:	By virtue of the LRO, is the 1983 Lease, which was registrable but not registered, null and void as against the Registered Owners as bona fide purchasers for value under assignments which were duly registered?  What is the effect of the LRO on the competing claims to title made by D2 and the Registered Owners?
Answer   :	Yes.  Pursuant to section 3(2) of the LRO, the Registered Owners took good title to their respective portions of land deriving from the Parent Lot, and D2’s rival claim based on the unregistered 1983 Lease is defeated.

 (2) Final and interlocutory judgment be entered for Ps against D1 and D2 as follows:

 (a) There be an order that D1 and D2 do forthwith demolish the structures on subsections 3, 8 and 9 and subsections 6, 7 and 15 of Section A of Lot No 1180 in Demarcation District No 130, Tuen Mun, New Territories, Hong Kong(collectively “P’s Land”) as more particularly defined in the Amended Statement of Claim filed on 15 December 2014, and deliver up vacant possession of the said land to P1 and P2 respectively.

 (b) Damages by way of mesne profits, together with interest thereon, to be assessed, be payable by D1 and D2 to Ps in respect of the said land.

 (3) As to the said assessment of damages between Ps, D1 and D2: 

 (a) Ps do have leave to adduce expert evidence in the form of a valuation report from surveyor Mr Keith L H Siu of RHL Appraisal Limited on the issue of mesne profits in respect of P’s Land from 10 May 1997 up to the date of the valuation report;

 (b) The said valuation report shall be filed and served within 60 days from the date of this order;

 (c) D1 and D2 do have leave to file and serve a valuation report on mesne profits within 60 days from the date of this order;

 (d) Thereafter the parties shall apply to the Practice Master for an appointment for the assessment of damages and leave to set it down for hearing;

 (e) Unless otherwise directed, the signed witness statements of Ps and D2 already filed and exchanged do stand as evidence at the hearing for assessment of damages;

 (4) D2’s counterclaim herein be dismissed as against Ps, DC3 to DC6 and DC9;

 (5) Save that the costs of the assessment of damages be reserved:

 (a) Ps’ costs of the original action including all costs reserved, and of Ps’ Order 14A summons, be paid by D1 and D2 jointly and severally; and

 (b) Ps’ costs of D2’s counterclaim including all costs reserved, and of D2’s Order 14A summons, be paid by D2;

with certificate for two counsel, to be taxed if not agreed.

 (6) The costs of DC3 to DC6 and DC9 of D2’s counterclaim, including all costs reserved and D2’s Order 14A summons, be paid by D2, to be taxed if not agreed. 

 (7) The costs of DC7 and DC8 in respect of D2’s Order 14A summons, as against D2, be DC7’s and DC8’s costs in the cause. 

 (8) There be liberty to D2 and DC3 to DC9 to apply regarding other matters outstanding in respect of D2’s counterclaim.