FELAN INVESTMENT LTD v. SARWIN INDUSTRIES LTD AND ANOTHER

CAMP 130/2018

[2019] HKCA 96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 130 OF 2018

(ON AN INTENDED APPEAL FROM LDBM NO 7 OF 2015)

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the court):

1.  This application for leave to appeal is taken out by the 1^st respondent against a costs order made by His Honour Judge K W Wong, Presiding Officer of the Lands Tribunal, upon the discontinuance of the applicant’s claim against the two respondents and the discontinuance by the 1^st respondent of its counterclaim against the applicant. A hearing was convened to hear arguments on costs, which took two full days. The judge handed down his decision on costs on 16 March 2018 (“the Decision”). Leave to appeal to the Court of Appeal against the Decision was refused by the judge on 15 August 2018, with reasons handed down on 22 August 2018 (“the Leave Decision”).

2.  The 1^st respondent issued a summons in the present proceedings to renew its leave application on 29 August 2018.  The draft notice of appeal attached to the summons raised the same grounds of appeal that have been considered by the judge.  The 1^st respondent filed a statement setting out the reasons why leave should be granted.

3.  The 2^nd respondent adopts a neutral stance in this application and agrees to be bound by the outcome of the leave application.  The applicant has filed a statement in opposition.

4.  It is stipulated in Practice Direction 4.1 §8 that a written statement in support of an application for leave to appeal to the Court of Appeal should not be more than five pages on A4 paper legibly printed in no less than 14 font size and 1.5 line spacing, unless otherwise directed by the Court.  The statement prepared by the 1^st respondent’s solicitors ran into 11 pages.  No permission was sought from this court as to why the page limit should be exceeded, and we see no reason why five pages are insufficient for arguments to be advanced for the purpose of this leave application.  The importance of keeping to the page limit as required by the Practice Direction has been drawn to the attention of practitioners in a reported decision five years ago (CWG v MH [2014] 1 HKLRD 838 at §§9 to 11).  But for the fact that we do not wish to delay giving our decision any further, we would have returned the 1^st respondent’s statement unread.

5.  Having considered the papers, we have decided to exercise the power under Order 59 rule 2A(5)(a) of the Rules of the High Court to determine this application on paper without an oral hearing.

6.  By the Decision, the following costs orders were made:

(1)  the 1^st respondent do pay 90% of the applicant’s costs of its claim against the respondents and defending the 1^st respondent’s counterclaim;

(2)  the 1^st respondent do pay to the 2^nd respondent directly the latter’s costs of defending the applicant’s claim (i.e. a Sanderson order), such costs to be on the District Court scale, to be taxed if not agreed; and

(3)  a costs order nisi that the respondents do pay the applicant’s costs of the argument on costs, apportioned as to 80% to be paid by the 1^st respondent and 20% by the 2^nd respondent, on the District Court scale, with certificate for counsel, to be taxed if not agreed.

7.  In the proposed appeal, the 1^st respondent sought to set aside the above costs orders and substitute them with the following:

(1)  the applicant do pay the 1^st respondent’s costs of defending the applicant’s claim and pursuing the 1^st respondent’s counterclaim;

(2)  the applicant do pay the 2^nd respondent’s costs of defending the applicant’s claim; and

(3)  the applicant do pay the respondents’ costs of the argument on costs.

8.  The above position of the 1^st respondent in the intended appeal is wholly unrealistic.  And this leave application should not have been brought.

9.  It is unnecessary to recite the background matters, which have been set out in full in the two decisions of the judge, see Decision §§1 to 18, Leave Decision §§5 to 12.  The Decision took up 34 pages, and the judge used a further 18 pages to deal with each of the intended grounds of appeal.  The judge had obviously paid painstaking attention to detail and had carefully considered the submissions made to him.

10.  As we are in complete agreement with the judge, we do not propose to repeat his reasons in the two decisions.  We would only emphasise the following matters.

11.  First, the intended appeal is against the costs orders made in the exercise of the judge’s discretion.  The appeal court will not interfere with the exercise of a judge’s discretion in the award of costs unless it was shown that he had failed to exercise the discretion, or exercised it on a false principle, or did not exercise it judicially or the exercise of discretion was demonstrably flawed (Choy Yee Chun (The representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd [1997] HKLRD 1327; China Venturetechno International Co Ltd v New Century Chain Development Co Ltd [1996] 2 HKLR 18).  The hurdle for appellate intervention is high.

12.  Second, where it is sought to rely on the same grounds of appeal as those that have been considered by the judge in the leave application, it would serve no useful purpose to repeat arguments that have been rejected by the judge, without showing how and why the judge is said to be in error in rejecting those arguments.

13.  Third, the judge had made clear he adopted the successful party approach agreed upon by the parties[1] and he had considered the parties’ respective claims in detail based on the evidence adduced and determined that had the matter gone to trial, who would be successful as regards each head of claim[2].  He took into account the merits of the respective heads of claim as well as the overall conduct of the parties in exercising his discretion on costs[3].  It is quite wrong for the 1^st respondent to contend that the “major basis” of the Decision was its initial non‑admission that it had erected the air-conditioner.

14.  Fourth, it is wrong in law for the 1^st respondent to contend that its conduct after the issue of the writ was irrelevant and the judge should only look at the 1^st respondent’s conduct prior to the commencement of action in deciding whether the 1^st respondent should be responsible for the 2^nd respondent’s costs in successfully defending the applicant’s claim.  See Fung Chun Man v Hospital Authority & Anr [2012] 1 HKC 531 at §6.  Further, the judge is clearly entitled to take into account the 1^st respondent’s conduct before and during the proceedings (see Rules of the High Court, Order 62 rules 5(1)(aa), (e), (2)(b) and (d))[4].

15.  Fifth, the challenge against the judge’s conclusion that there was disturbance and nuisance amounting to breach of the relevant clauses of the DMC is in respect of a finding based on evaluation of facts.  As stated by the judge, it is a matter of fact and degree[5].  It involves an assessment of a number of different factors which have to be weighed against each other and upon which different judges can legitimately differ.  The appeal court would approach this in a similar way to an appeal against the exercise of a discretion (Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2003] 1 WLR 577 at §16; ZJW v SY, CACV 10/2017, 1 December 2017 at §33).  We can discern no error of law in the judge’s finding and no basis for interference.

16.  We decline to grant leave to appeal as the intended appeal clearly has no reasonable prospect of success, nor is there any other reason why in the interests of justice it should be heard.

17.  Further, as this application is entirely without merit, we make a further order under Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be considered at an oral hearing inter partes.

18.  There is no reason why costs of this application should not follow the event.  We make an order nisi the 1^st respondent should pay the applicant’s costs of this summons.  We have considered the applicant’s statement of costs for summary assessment.  We bear in mind the application for leave to appeal was made to the judge on the same grounds and the applicant is represented by the same team of lawyers throughout.  We reduce the amount of reasonable costs from $92,800 to $66,400.

19.  The costs order nisi and gross sum assessment will be made absolute if no application for variation is made by any party within 14 days of the handing down of this judgment.