YEUNG YAT KWONG PETER v. HARVEST CHINA INVESTMENT LTD AND ANOTHER

DCCJ3018/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3018 OF 2014

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DECISION

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1.  This is a dispute about the outstanding costs between the plaintiff (“P”), the 1^st defendant (“D1”) and the 2^nd defendant (“D2”) in a water seepage case which the parties managed to settle without going to trial.

BACKGROUND

2.  At all material times, P was and is the registered owner of a premises located at Flat A-4, 9^th Floor, Friends’ House on Carnavon Road, Tsim Sha Tsui, Kowloon (“P’s Premises”).  P’s Premises is one of the top floor units situated just below the roof of the building (“the Roof”).  D1 was and is the registered owner of Portion A of the Roof (“D1’s Premises”).  P’s Premises is situated immediately below D1’s Premises. D2 is the Incorporated Owners of the building.

3.  P alleged that since early 2014, rain water started to seep through the waterproof layer/membrane and the concrete surface of the floor slab of D1’s Premises and/or the external walls of the building into P’s Premises, causing extensive damage to the fixture and fittings inside.  The waterproof layer/membrane and the external walls are the common parts/facilities of the building belonged to D2.  The concrete surface of the floor slab belonged to D1. 

4.  D1 in its defence denied that the concrete floor slab was damaged or defective and/or it was the cause of the water seepage.

5.  D2 in its defence claimed that prior to the removal of the illegal structure ordered by the Buildings Department by D1, there had never been any complaints of water seepage.  It claimed that D1, under the deed of mutual covenants, had the responsibility to repair and maintain the Roof and was negligent in doing so.  Following the demands made by D2, D1 removed the illegal structure built on the Roof, starting gradually in March 2013 and ultimately removing all of it in about May 2014.  P’s complaints of seepage coincided with such removals.  On 18 July 2014, D2’s solicitors demanded D1 to repair the waterproof layer and structure of the Roof.

6.  Upon D2’s admission, interlocutory judgment was entered against D2 with costs in favour of P up to the date of the pre-trial review (“PTR”) on 29 February 2016 for: (i) D2 to carry out all necessary works and repairs to stop the water leakage from D1’s Premises and/or external walls into P’s Premises; and (ii) damages to be assessed.  On the same day, leave was granted to P to discontinue his action against D1.

7.  14 months later, P’s damages claim against D2 was settled by consent and an order of this court dated 24 April 2017 endorsed the settlement.

8.  Thus, the only outstanding issue is the costs between the parties.

Outstanding Costs Issues

9.  The arguments on costs principally involved P’s costs against D1 and D1’s own costs in this action.  However, they also involved some reserved costs orders.

10.  The outstanding costs issues are:-

(1)   the reserved costs of the consent summons before Master Ho on 2 June 2016;

(2)   the reserved costs of the hearing on 24 April 2017 before this court;

(3)   P’s own costs since the interlocutory judgment on 29 February 2016;

(4)   D1’s own costs in defending the action and P’s costs of the action against D1.

Costs orders P is now seeking

11.  P is now seeking the following orders on costs:-

(1)   Costs referred to in §10(1) above be costs in the cause;

(2)   Costs referred to in §10(2) above be in the cause of this hearing;

(3)   Costs referred to in §10(3) above be paid by D2 to P;

(4)   Costs referred to in §10(4) be:

(i)   D2 pays D1’s costs of defending the action, ie a Sanderson order;

(ii)   Alternatively, no order as to D1’s costs in defending the action; and

(iii)   D2 pays P’s costs of the action against D1.

Costs of the consent summons before Master Ho on 2 June 2016

12.  On 2 June 2016, Master Ho directed the assessment of damages be adjourned and to be heard by a judge.  As a result, the issue of costs between all parties was also adjourned.  Master Ho ordered the costs of that summons to be reserved.

13.  P submits that this set of costs should be costs in the cause of the hearing on 12 June 2017.

14.  D1 makes no specific submission on this matter.

15.  D2 has no objection to such costs being in the cause of the hearing.

16.  I agree that the costs reserved by Master Ho on 2 June 2016 should be made in the cause of this hearing.

Costs of the hearing on 24 April 2017 before this Court

17.  There is also an outstanding issue of costs relating the hearing of the summons dated 20 April 2017 that took place before me on 24 April 2017.

18.  On that date, I commented that the hearing could have been avoided by the parties entering into an agreement.  However, P submits that, due to the events which took place between February 2016 and April 2017, the issue of who should be responsible for the continuous leakage and repairs was still very much alive.[1]

19.  In the premises and accordingly, P submits and I accept that the hearing on 24 April 2017 was necessitated by the amendments to the consent summons made by D1 and D2.

20.  P submits that the costs of the hearing on 24 April 2017 should be in the cause of the present summons.

21.  D1 makes no specific submissions on this matter save from its overarching submission that all reserved costs, including costs of P and D1, should be made in the cause of the action to be paid by D2.  However, I note that D1 took an active role in the preparation of the draft consent summons which was presented to the court on 24 April 2017. 

22.  D2 submits that insofar as amendments were made by D1 to the consent summons, they were of no concern to D2 for which D2 should bear no responsibility in respect of the costs.[2]

23.  I agree with Mr Tim Kwok, counsel for P, that, for the reasons set out by him in his submissions, the costs of the hearing on 24 April 2017 should be made in the cause of the present summons.

P’s costs since the Interlocutory Judgment on 29 February 2016

24.  At the PTR hearing on 29 February 2016, interlocutory judgment was entered against D2 with costs to P paid by D2 up to and including that date only.

25.  By a letter dated 7 April 2017, D2 offered P a sum of HK$668,000 as damages and P’s costs against D2 for the proceedings.

26.  By a summons dated 20 April 2017, P asked for D2 to pay costs incurred since the date of the interlocutory judgment, ie 29 February 2016.

27.  P submits that it appears D2 is not disputing that they should pay P’s costs of the entire proceedings until its conclusion.  D2 does not seem to dispute this at the hearing. 

D1’s general position on costs

28.  D1’s position is simple.  They support P’s primary case that the costs between P and D1 should be paid directly by D2 under a Sanderson order.

29.  Alternatively, D1 submits that P should pay D1’s costs on the basis that if the case were to go to trial, they would have won.  This is based on their interpretation of the joint expert’s opinion which seems to suggest that the water seepage was never due to D1’s fault.  However, as Mr Kenneth Lam, counsel for D1, has repeatedly stressed, this is not their primary submission.  Their primary case remains that a Sanderson order should be made.

D2’s general position on costs

30.  Mr Jeevan Hingorani, counsel for D2, submits it is self-evident that P was entitled to make claims against both D1 and D2.

31.  At the beginning of his oral submissions, Mr Hingorani, who came into this case late, has candidly admitted that had he been counsel for D2, he personally would not have withdrawn the contribution notice against D1, although he would still have admitted liability vis-à-vis P.  He frankly admitted that there were 2 regrettable incidents from D2’s point of view in this case.  They were: (i) the withdrawal of the contribution notice against D1; and (ii) D2’s application in June 2016 to re-open the case on liability after the consent summons on liability had been entered.[3] While I could quite understand his sentiments in light of the evidence, they are of course “water under the bridge” now.  D2 is bound by its own acts and such acts would no doubt affect its position on costs as I would explain later.

32.  In his written submissions, after a detailed analysis of the joint expert opinion, Mr Hingorani submits that it would have been apparent to P that he had little or no prospect of success against D1 in view of findings of the experts.  D2 says that at that stage, ie when the joint expert opinion was issued, P ought to have discontinued its action against D1.

33.  D2 also contends that, on the basis of the agreed expert opinion, it could not pursue D1 by way of contribution.  D2 submits that in view of the joint expert report, D2 appropriately withdrew its contribution notice against D1 on 15 September 2015.  D2 further submits that following the publication of the joint expert report, P ought to have discontinued its action against D1 on 3 August 2015.

34.  Alternatively, D2 submits that P ought to have discontinued its action against D1 upon the withdrawal by D2 of its contribution notice against D1 without recourse on 15 September 2015.

35.  Hence, it is D2’s primary case that it ought not to be held liable for D1’s costs after 3 August 2015 (date of the joint expert report), or alternatively, 15 September 2015 (date of withdrawal of its contribution notice against D1).

36.  Alternatively, D2 submits that there should be no order as to D1’s costs.  It says in any event D2 ought not to be liable for D1’s costs beyond the withdrawal of its contribution notice. 

DISCUSSION

Legal principles involved

37.  Where more than one defendants are sued, the court may make a Bullock or Sanderson order. Where a plaintiff has properly, in the court’s view, sued 2 defendants with his claims against them in the alternative but succeeds against only one of them, the court may order that the successful defendant’s costs be paid by the unsuccessful defendant, ie a Sanderson order: see §62/1/5 of the HKCP 2017.

38.  Obviously, in deciding whether to make a Sanderson or Bullock order, the court is exercising a discretion.  And in exercising that discretion, the court looks at whether it was reasonable in all the circumstances of the case for the plaintiff to join the successful defendant in the action, taking into account of the vicissitudes of litigation: see Leung Lai Ha and Another v Hon Sau Ling and Another [1993] 1 HKLR 86, at pp 89-90 per Kempster JA citing Vaughan Williams LJ in Besterman v British Motor Cab Company, Limited [1914] 3 KB 181 at pp 186 & 187.

39.  Although the court has a wide discretion as to costs, it has been said that such discretion must be exercised judicially and according to rules of reason and justice.  It has also been said that where a party successfully enforces a legal right, and in no way misconduct himself, he is entitled to costs as of right: see Order 62, rule 2(4) of the Rules of the District Court (“RDC”) and §62/6/2 of Hong Kong Civil Procedure 2017 (“HKCP 2017).

40.  It has been held by the Court of Appeal that while a principled approach should be taken in such cases, the practical consequence should also be taken into account: see Chong Ngan Seng v China Harbour Engineering Company Limited and Others, unrep., CACV 54/2012 (Lam VP, Fok & Brama JJA; 25.9.2013) §§31-33.

41.  In exercising its discretion whether to make a Sanderson or Bullock order, the court would have regard to all the circumstances of the case and the state of the evidence to determine whether or not it was reasonable for the plaintiff to pursue the successful defendant.  It has been said that in making its decision, the court “must be careful not to lose sight of the uncertainties surrounding the case before its conclusion”: see Fung Chun Man v Hospital Authority and Another, unrep., HCPI 1113 of 2006 (Bharwaney J; 20.2.2012) at §7.   

42.  Thus, the primary question this court has to ask is whether it was reasonable in all the circumstances of the case for P to join D1 in this action, if so, whether it was reasonable to continue his action against D1 at least until D2 admitted liability.  The question is not, in my view, whether P or D2 is likely to succeed against D1 had there been a trial or how strong a case P or D2 might have against D1, as none of us would have a crystal ball to predict the outcome of a trial, with all its uncertainties and vicissitudes. 

Circumstances and Evidence of the case

43.  As said, D1 is the owner of Portion A of the Roof.  There were altogether 4 building orders issued by the Buildings Department for the removal of the illegal structure built on the Roof.  The illegal structure comprised 3 separate residential units built by D1.  The 3 units were inhabited by D1’s tenants.

44.  D1 refused to carry out repair works and stated that it was only willing to do so upon evidence proving water leakage.

45.  It was only after several building orders and superseding building orders issued by the Buildings Department between 2012 and 2013 that D1 was prepared to comply with those orders in early 2014.

46.  It should be noted that in December 2013, when P carried out internal decoration work in P’s Premises, which was underneath the Roof, there was no water leakage problem.

47.  On 4 March 2014, D1 appointed a contractor and commenced demolition of the illegal structure.  Work was completed in mid-May 2014.

48.  In late March 2014, in the course of the removal work of the illegal structure by D1’s contractor, P discovered water starting to seep into his premises.  The situation was worse during rainfall.  This led P to believe that rain water seeped into the defective floor slab of the Roof and the water proofing membrane.

49.  The parties then engaged in a chain of pre-action correspondence between April and July 2014 prior to P’s issue of writ.  P requested D1 to repair the floor slab and water-proof layer/membrane.  D1 then tried to shift the blame on D2 and said that the membrane belonged to D2.  It however made no mention of the fact that the floor slab belonged to it.

50.  In May and June 2014, P’s expert carried out dye tests and confirmed that cause of the water leakage was due to the damaged waterproof membrane.  In a letter dated 11 July 2014 to D1, P pointed out that according to his expert, the water seepage was also due to and aggravated by the damaged condition of the floor slab on the Roof.  Further, according to P’s expert, the installation of the illegal structure imposed unnecessary load on the floor slab which accelerated the deterioration of the waterproof membrane.

51.  On 17 July 2014, D2 informed P that they would commence legal action against D1.

52.  On 18 July 2014, D1 wrote to D2 urging them to remedy the leakage.  On the same day, D2 wrote to D1 alleging that it was the building and dismantling of the illegal structure that had caused damage to the waterproof membrane.  D2 urged D1 to carry out the repair and restore membrane.

53.  On 6 August 2014, P issued the writ against D1 and D2.

54.  On 16 September 2014, D1 filed its defence denying defective and/or damaged floor slab, or alternatively, if floor slab was damaged, it was not the cause of the water seepage. 

55.  On 17 September 2014, D2 filed its defence alleging that the source of water leakage was due to the damage to the waterproofing layer which was caused by the removal of the illegal structure.  D2 says that D1 should be solely liable to P and that the failure to maintain the floor slab was a breach of the DMC.  It further says that it will seek contribution from D1.  On the same day, D2 issued a contribution notice against D1. 

56.  Pursuant to an order made by a master during the case management summons on 9 March 2015,  a joint expert inspection and a joint expert report on the cause of the water seepage was ordered.

57.  Thus, a joint inspection was conducted by the 3 experts respectively appointed by the parties on 12 June 2015 and a joint expert report was produced on 3 August 2015 (“the Joint Report”).

58.  According to the Joint Report:-

(1)   P’s expert stated that the leakage problem was caused:

(a)   by defective waterproofing system which became more serious after removal of the unauthorized structure at portion A of the Roof; and

(b)   thickening/addition of the floor finishes (to Roof) would have accelerated deterioration of the original bitumen or may have certain degrees of adverse effect of additional loading to the original membrane.

(2)   According to D1’s expert, there was no water leakage at the time of inspection but dampness was caused by water condensation.  If there was water leakage, it was caused by aging of the waterproofing system of the roof and was not caused by the illegal structure.

(3)   According to D2’s expert, the leakage was mainly due to defective waterproofing system.

(4)   The agreed opinion of the joint experts was that the water leakage problem was mainly due to the defective waterproofing system on top of Portion A of the Roof.

(5)   The joint experts agreed that removal of the unauthorized structure would not have affected the existing waterproof membrane above the roof floor slab.  However, certain fixings and support members which had been removed may have differing degrees of adverse effect to the water tightness of the parent building.  However, the fixings and support members should not have touched the waterproofing membrane.  Therefore, there should not have been any damage to the waterproofing membrane.

59.  Based on the above, D2 submits that it would have been apparent to P that he had little or no prospect of success against D1 in view of the findings of the expert and their agreed opinion.  Further, based on the agreed expert opinion, it would have been apparent to D2 that it could not pursue D1 by way of contribution.

60.  Most likely as a result of reading the Joint Report and in view of the joint agreed opinions reached by the 3 experts, D2 withdrew its contribution notice against D1 on 15 September 2015.

61.  A number of correspondence took place between the parties after that date which eventually led D2 writing to P on 25 February 2016 admitting full liability and agreed to pay P the following:-

(a)   all losses and damages as a result of the water seepage problem; and

(b)   legal costs of the proceedings to be taxed if not agreed.

62.  On 29 February 2016, this court made an order reflecting the above admission of D2.  On the same day, leave was granted to P to discontinue its action against D1 with costs to be determined.

Orders to be made and findings of the court

63.  In the aforesaid premises, the outstanding costs orders which the court has to decide will include:-

(A)   P’s costs of the action against D1 and D1’s own costs in defending the action; and  

(B)   P’s costs since the interlocutory judgment on 29 February 2016.

(A)    P’s costs of the action against D1 and D1’s own costs in defending the action

64.  Based on the circumstances and the evidence set out in §§43-62 above, I think it would be appropriate to ask the following questions in order to determine the above issue:-

(i)   Was it reasonable for P to join D1 as a defendant in this case?

(ii)   If so, whether it was reasonable for P to continue its action against D1 after receiving the Joint Report and/or after the withdrawal of contribution notice against D1 by D2?

(i)   Was it reasonable for P to join D1 as a defendant?

65.  First and foremost, I think it is important to bear in mind that P was the victim in this whole saga.  He had done nothing which led to the water seepage.  Whatever the cause, it was not due to his own fault that water started to seep into his flat in early 2014.  He did what he could as a property owner before commencing legal proceedings against both defendants, including issuing pre-action letters and instructing an expert to carry out dye tests to ascertain the possible cause of the seepage.  However, that was met with the defendants in blaming each other only.  It was not until months after the release of the Joint Report that D2 agreed to admit liability.  Thus, whatever costs order the court is going to make in this case, it has to recognize that P, at least in the eyes of the court, has not misconducted himself in any way.  Hence, P should not find himself out of pocket, whether when it comes to his own costs in bringing the action against D1 or in relation to D1’s costs in defending the action.

66.  Having examined the evidence as set out above, in my judgment, it was perfectly reasonable for P to join D1 as one of the defendants in this case, as there was plenty of evidence, both prior to and after the publication of the Joint Report, to suggest that either one or both of the defendants could have been liable for causing the seepage.

67.  Mr Hingorani does not seek to dispute this.  In fact, he submits that it was “self-evident” that P was entitled to make claims against both D1 and D2.

68.  In my view, there was clear evidence from P’s expert to suggest that there had been several damaged parts to the floor slab.  P’s expert concluded that the waterproofing membrane had been damaged and the cause of the water leakage into P’s property was due to the damaged roof floor slab as well as the damaged water proofing membrane.  This strongly suggests that the leakage was caused by the damage on D1’s Roof floor slab as well as D2’s failure to maintain the water proofing membrane[4]. The opinion that there was damage to the floor slab was also supported by the conclusions made by the D2’s expert in his sub-report.

69.  Another factor to take into account is the fact that all 3 experts appointed by the parties have jointly agreed that the fixings and support members of the illegal structures may have “differing degrees of adverse effect to the water tightness of the parent building”[5]. 

70.  It is also important to note that, as a matter of timing, the water seepage occurred during the course of D1’s contractor demolishing the illegal structure on the Roof.  Prior to that, even though the membrane had not been replaced by D2 for many years, there had never been any leakage of water into P’s Premises from the Roof. Thus, in my judgment, it would not take a lot for P to ask the court to draw the inference that the leakage of water had something to do with the illegal structure built and subsequently demolished by D1.  

71.  In the premises, I find on the evidence that it was perfectly reasonable for P to join D1 as a defendant in the circumstances in this case.

(ii)   Whether P should have discontinued its action against D1 earlier?

72.  The remaining question is whether P should have discontinued the action against D1 earlier, either on the date of receiving the Joint Report or the date when D2 withdrew its contribution notice against D1 as submitted by D2.

73.  With respect, I do not agree with D2’s submissions. 

74.  In my view, there are plenty of justifications to keep D1 as a defendant, at least until D2’s admission of full liability and pay P’s damages in this case.

75.  First, there was clear evidence to suggest that water came through the damaged floor slab of the Roof into the defective waterproof membrane.  D1 put up no positive case in this regard.  Instead, it tried to put the blame on the waterproof membrane which belonged to D2.  D2 alleged that the seepage was due to D1’s fault and expressly stated that they would bring proceedings against D1.  After the writ was issued, D2 did issue contribution proceedings against D1.  As the case developed, the evidence against D1 remained unchanged, particularly the contents of the P’s expert sub-report dated 3 August 2015. 

76.  With respect, I do not view the conclusions of the experts in the Joint Report as clear cut as those submitted by D2’s counsel.  Given P’s expert opinion on the matter[6], I do not think P’s case against D1 was unsustainable at all even after the publication of the Joint Report.  In fact, the photos taken after the illegal structure was taken down showed that there were numerous damage and defects left behind by D1.  Even D2’s own expert concluded in his sub-report (which was attached to the Joint Report) that “these damages (sic) and defective works will inevitably have differing degrees of adverse effects on the possibility of water ingress/egress to various premises located on the 9^th Floor of the parent building.”[7]

77.  Further, according to D2’s own expert, by visual inspection, general condition of the original parapet walls below the tile works could not be ascertained.  Therefore, there existed “inevitable situations” that rain water could seep through the defective parts and eventually egress to premises on the 9^th Floor.[8] Yet further, D2’s expert opined that there existed “inevitable possibilities” that rain water will ingress into the body of the roof parapet wall and eventually egress to P’s Premises through the steel tubs left by D1’s illegal structure on top of the roof parapet wall.[9]  

78.  Last but not the least, D2’s own expert in his sub-report concluded that the unauthorized drainage outlet which should at one time served an unauthorized kitchen situated in D1’s Premises would led to a “very high probability that the presence of this un-authorized drainage outlet should have damaged the former (waterproofing system) and could be regarded as one of the contributing factors towards the leakage found in P’s Premises”.[10]

79.  Thus, in my view, the agreed expert opinion stated in the Joint Report must be subjected to the above qualifications. 

80.  I therefore do not consider that it was unreasonable for P to maintain his claim against D1 even after the publication of the Joint Report.

81.  In my judgment, just because D2 had decided to withdraw its contribution notice against D1, it does not mean that P should also discontinue his action against D1.  Not only the considerations of that of a plaintiff are very different from that of a co-defendant, but also at that stage there existed a lot of uncertainties in the litigation.  There was, for example, no guarantee that D2 would admit liability and pay for the damages caused by the water seepage to P’s Premises.  It is also important to bear in mind that even after the contribution notice had been withdrawn by D2, active without prejudice negotiations were still taking place between the parties to decide who should be responsible for the costs of D1.[11]

Conclusion on P’s costs of the action against D1

82.  In the aforestated circumstances, I do not agree with D2’s counsel that P should have discontinued the case against D1 any earlier than the date before interlocutory judgment was entered against D2 on 29 February 2016.  In my view, D2 who has accepted full liability to the P should also be liable for the costs of P in bringing the action against D1.

Conclusion on D1’s own costs in defending the action

83.  In the normal course of events, the court may order an unsuccessful defendant to pay the costs of a successful defendant under a Sanderson order, this included the situation where a plaintiff discontinues the proceedings against a defendant upon admission of liability by the other defendant at the commencement of the trial or prior to the commencement of the trial: see for example Fung Chun Man v Hospital Authority and Another, supra.

84.  I must say that at first glance it was very tempting to try to attribute part of the blame on D1 in this case and make it pay for its own costs. However, upon mature consideration, I agree with Mr Lam that this is not the legal test and I do not think the blame worthiness of D1 is relevant in considering whether a Sanderson order should be made.  The test remains whether it was reasonable in all the circumstances of the case for P to join D1 in this action: see Leung Lai Ha v Hon Sau Ling, supra and my summary of the law at §§37-42 above.  In particular, I am conscious of the fact that when exercising my discretion on costs, I must take a principled approach and exercise my discretion judicially and according to rules of reason and justice. Given what both P and D2’s experts have stated in their sub-reports (of which D1’s expert did not put up a positive case to rebuke), it certainly was possible that D1 could have been held liable jointly with D2 after a trial. However, as all litigation lawyers would know well, anything could happen during a trial.  With all the uncertainties and vicissitudes associated with a trial, what may appear to be something arguable or very strong on paper may not be the actual outcome of the case.  Hence, it would not be right for the court to speculate what would have happened had there been a full blown trial in this case.

85.  In my judgment, while it is true that D1 was not a “successful” defendant in the sense that it did not succeed after a trial, nonetheless it has become “successful” after D2 had admitted “full liability” towards P in this case.  More importantly, D2 could have continued its contribution claim against D1 but it had chosen not to do so.  This is a matter D2 and its legal advisors must have had carefully thought through before it agreed to admit liability against P and withdraw its contribution notice against D1.  Despite its present regrets over those decisions and a previous futile attempt to re-open the issue of liability before me, D2 is bound by its own acts.  

86.  In the aforesaid premises, I do not see any good reason why D2 should not pay D1 costs under a Sanderson order. I so make such an order.

(B)   P’s costs since interlocutory judgment was entered

87.  Since D2 has admitted full liability in the case, I do not see why it should not also be responsible for the costs of P for the entire proceedings, including the costs after the interlocutory judgment was entered. 

88.  In this case, once D2 has admitted liability, P discontinued his case against D1.  In my view, it was a perfectly reasonable step for P to take.  As D2 had agreed to replace the waterproof membrane, the replacement work would necessitate the removal of the entire floor slab, including the damaged parts of the floor slab caused by the presence of the illegal structure and its removal.  The floor slab would have to be repaved.  There was, therefore, little point for P to persist its claim against D1.  The reasonable thing to do was to discontinue against D1 upon D2’s admission of liability.  This was exactly what P did.

89.  As there were still unresolved issues of costs and who should be responsible to carry out the final repairs and so on, which the parties had been actively engaging in negotiations since the interlocutory judgment was entered, it is in my view also reasonable that D2 should pay P’s costs up to the date hereof.

90.  In the aforesaid premises, I am of the view and so find that D2 should pay P’s costs since the interlocutory judgment up to today, including the reserved costs of the consent summons before Master Ho on 2 June 2016 and the reserved costs of the hearing on 24 April 2017 before this court. 

CONCLUSIONS

91.  In conclusion, I make the following costs orders sought by P in the summons dated 20 April 2017:-

(i)   D2 do pay P’s costs of the action against D1 and D1’s own costs in defending the action under a Sanderson order, such costs to be taxed if not agreed with certificate for counsel; and

(ii)   D2 do pay P’s costs of the action since the date of the interlocutory judgment on 29 February 2016, including the costs reserved before Master Ho on 2 April 2016 and the costs reserved by this court on 24 April 2017, such costs to be taxed if not agreed with certificate for counsel.

92.  As for the costs of the present summons, it will follow the event. I order that D2 do pay the costs of P and D1, such costs to be taxed if not agreed, with certificate for counsel.

93.  Lastly, I would like to thank counsel for their very helpful assistance.