BUILDING AUTHORITY v. APPEAL TRIBUNAL (BUILDINGS)

HCAL 25/2014

[2020] HKCFI 1245

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 25 OF 2014

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DECISION ON COSTS

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A.  Introduction

1.  This court handed down its judgment (“the Judgment”) on 20 December 2018, dismissing the applicant’s judicial review.

2.  The court at [89] of the Judgment made a costs order nisi that the applicant shall pay half of the costs of the judicial review to the interested parties (“the IPs”) (being the only active opponent of the judicial review).  This costs order nisi was made on the basis that, although the applicant failed in the judicial review as the court rejected its Grounds 1 and 3, it was successful in its Ground 2.  In those circumstances, the court formed the view that a fair and just costs order should be that the applicant shall bear half of the costs of the judicial review.

3.  Further, at [88] of the Judgment, the court allowed the applicant’s late amendments to the Form 86, with costs of the application to re-amend be in the costs of the application.  Given that I had not heard any submissions on costs when that order was made, that costs order should also be understood to be made on a nisi order basis.

4.  This is now the IPs’ application to vary the costs orders nisi[1].  They seek to vary them to the extent that the IP should have the full costs of the judicial review, or alternatively two-thirds of those costs.  It also asks for the full costs of the re-amendment in any event.

5.  The court directed that the application be dealt with on paper.  The parties have for that purpose filed their respective written submissions.

6.  This is the decision on the costs variation application.  This decision should be read together with the Judgment.  Unless otherwise stated, I adopt herein the abbreviations used in the Judgment.

B.  This costs variation application

7.  For the present purpose, I will bear in mind the following relevant principles in dealing with costs[2]:

(1)  The general rule is that costs should follow the event, but the court retains a wide discretion to order differently where it finds it just and fair in all the circumstances of the case.

(2)  In particular, the court may disallow some of a successful applicant’s costs to reflect the fact that significant time and costs in litigation were incurred by the applicant raising unsuccessful grounds.

(3)  While departures from the general rule will be approached with due circumspection, the court in the post-CJR era is more readily prepared to depart from the general rule.  Such departures do not necessarily require showing that the failed grounds were raised unreasonably or improperly.

8.  In support of the application that the IPs should have the full costs of the judicial review, Mr Ismail’s main contention is this:

(1)  The starting position is costs should follow the event.

(2)  The event is the judicial review itself.

(3)  The IP was wholly successful in resisting the application (and hence the event) despite the applicant was successful in Ground 2.  This is so as the court has made it clear that the applicant failed in the judicial review upon the dismissal of Grounds 1 and 3 and strictly speaking it was not necessary to deal with Ground 2 (see [72] and [87] of the Judgment).  The court only went on to deal with Ground 2 for “completeness sake” (see [73] of the Judgment).

(4)  The fact that the applicant succeeded on Ground 2 therefore did not make a difference to the outcome of the judicial review application.  Ground 2 was not so separate and distinct in itself that the decision of it could be said to constitute on “event”.  This approach is supported by Seepersad v Persad [2004] UKPC 19 at [24] as follows[3]:

“… The general rule which should be observed unless there is sufficient reason to the contrary is that costs will follow the event. Where the party who has been successful overall has failed on one or more issues, particularly where consideration of those issues has occupied a material amount of hearing time or otherwise led to the incurring of significant expense, the court may in its discretion order a reduction in the award of costs to him, either by a separate assessment of costs attributable to that issue or, as is now preferred, making a percentage reduction in the award of costs … The Court of Appeal’s order was predicated upon the proposition that the assessment of damages for pain and suffering and loss of amenity was a separate issue from the assessment of the other heads of damage. This was an incorrect assumption. An issue for these purposes must be something so distinct and separate in itself that the decision of it constitutes an ‘event’. The ‘event’ was the quantum of damages to which the appellant was entitled and he succeeded on his appeal in obtaining a higher award than the judge had given … Their Lordships accordingly consider that the Court of Appeal had insufficient ground for reducing the award of costs made to the appellant and that he should have been awarded full costs in that court …”

9.  With respect to Mr Ismail, I am not convinced by this submission.

10.  The applicant in the judicial review sought the relief of (a) quashing the Tribunal’s Decision which allowed the IPs’ appeal, and (b) remitting the appeal to a differently constituted Tribunal to reconsider it.  The Tribunal allowed the appeal on the basis of the First Reason and/or the Second Reason.  As noted in the Judgment, these First and Second Reasons are distinct and separate reasons as to why the Tribunal allowed the appeal, and related to different obligations that the Tribunal said were imposed on the IPs by SC8 on a proper construction: see [20] - [24] of the Judgment.  Hence, in order to succeed in the judicial review, the applicant had to succeed in challenging both the First Reason (based on Grounds 1 and 3) and the Second Reason (based on Ground 2).

11.  It was therefore necessary for the applicant to raise and advance Ground 2 in the judicial review.  Consequently, it was also necessary for the IPs to advance full submissions to contest it at the hearing.

12.  In the premises, in my view, the issue raised under Ground 2 in seeking to challenge the Second Reason (which the applicant succeeded) is so separate and distinct in itself that the decision of it could be said to constitute on “event”.

13.  I therefore do not agree with Mr Ismail that Ground 2 itself for the purpose of considering costs did not constitute a distinct and separate “event” (where the applicant succeeded) and hence the IPs should be entitled to the full costs.

14.  I have arrived in the above conclusion even by adopting what Mr Ismail has submitted to be the “distinct and separate” approach laid down in Seepersad to construe what constitutes an “event” for the purpose of costs determination.

15.  However, I must also mention that Mr Lui for the applicant has submitted that after the implementation of CJR in Hong Kong, the narrow approach to construing “event” in Seepersad should no longer be adopted.  In support, he relies on Lam VP’s observations in Chan Shun Kei v Hong Kong Construction (Hong Kong) Ltd (CACV 192/2014, 7 March 2016) at [24] - [25]:

“24. … Since the introduction of Order 62 Rule 5, in particular Rule 5(2), under the Civil Justice Reform, the courts are more ready to depart from the starting point of costs following the event: see Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2) [2012] 2 HKLRD 1128; Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679; Pfeiffer GmbH v Cheung Hay Kit CACV 245 of 2013, 29 October 2014. Given the failure of the Plaintiff in respect of 6 issues out of the 8 issues addressed at the January trial and the impact of those issues in the substantial reduction of the Plaintiff’s claim and costs and time incurred on those issues, it is wholly unrealistic to suggest that the judge erred in principle in not giving the Plaintiff the whole of the costs of the action.

25. We have no hesitation in rejecting Mr Lee’s submission that the issue based approach should not be applicable in the instant case because the so-called issues identified in the judgment constitute only one event. Citing Seepersad v Persad (2004) 64 WIR 378, Mr Lee submitted that in the application of the issue based approach espoused by In re Elgindata (No 2) [1992] 1 WLR 1207, the court should only embark on that approach if an issue is something so distinct and separate in itself that the decision of it constitutes an event. With respect, that is a too narrow interpretation of the issue based approach after the introduction of Civil Justice Reform. Order 62 Rule 5(2)(a) and (b) particularly directs the court to consider the conduct of the parties including whether it was reasonable for him to raise, pursue or contest a particular allegation or issue and the manner in which a particular allegation or issue was pursued. We do not think the ‘issue or allegation’ in such context should be so narrowly confined. Such narrow construction is not in line with Order 1A Rule 1.” (emphasis added)

16.  If needed, I will also respectfully adopt Lam VP’s above observations in Chan Shun Kei.  In my view, even if Seepersad indeed was intended to lay down a more restrictive approach as to what constituted an “event” for the purpose of costs, it must now be understood and applied in Hong Kong in the context of our own jurisprudence and principles over costs determination developed and summarized in [7] above.  In any event, Chan Shun Kei is binding on this court and represents the guiding principle this court should adopt in determining this application.  Applying that, I would also clearly conclude that the issue raised under Ground 2 constituted an “event” which the applicant had succeeded.

17.  I now turn to the alternative contention raised by the IPs that they should be entitled to two-thirds of the costs instead of one-half.  This is so, Mr Ismail submits, as the majority of the legal arguments and analysis made and debated in the judicial review and at the hearing were related to Grounds 1 and 3.  In the premises, it will not be just and fair to deprive the IPs half of their costs.

18.  On reflection, I agree with Mr Ismail.  It is indeed correct that a substantial part of the arguments and evidence referred to in the judicial review and in particular at the hearing were related to Grounds 1 and 3.  In the circumstances, even though the IPs were unsuccessful in defending Ground 2, it would not be fair and just to deprive them half of their costs.  Applying the principles summarized at [7] above, and taking the matters in the round, I would vary the costs order nisi to the extent that the applicant shall pay the IPs two-thirds of the costs of the judicial review.

19.  Finally, the IPs say they should be entitled to all the costs of the applicant’s application to re-amend the Form 86.  Mr Lui for the applicant has fairly agreed in his written submission that the applicant should bear such costs.

20.  I would therefore also vary that costs order to the extent that the costs of the re-amendment application be to the IPs.

C.  Disposition

21.  I will vary the costs orders nisi to the following extent:

(1)  Costs of the application to re-amend the Form 86 be to the IPs, to be taxed if not agreed.

(2)  Two-thirds of the costs of the judicial review be to the IPs, to be taxed if not agreed.

22.  As the IPs are successful in this variation application, I further order that costs of this application be to the IPs, to be taxed if not agreed.

23.  I thank counsel’s assistance in this matter.