SPOKESMAN ENTERPRISES LTD v. CHEUNG YUK SHING t/a KAM SHING MOTOR TRADING CO

HCA3764/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3764 OF 2003

------------------------------

---------------------

----------------------

J U D G M E N T

----------------------

1. The defendant is appealing against the decision of the Master in granting a charging order absolute against his land.  The plaintiff is conceding the appeal but is asking for costs.

Background

2. The plaintiff let the suit property to the defendant for a term of two years commencing 1 January 2002 at a monthly rent of $150,000 payable in advance.  On 1 April 2004, the plaintiff obtained a summary judgment for vacant possession of the suit property and mesne profit from 1 December 2003 until delivery of possession at a rate of $150,000 per month and costs of $95,000.  The defendant obtained unconditional leave to defend in respect of the rest of the claim.

3. On 8 April 2004, the defendant filed a notice of appeal to a judge in chambers.  By consent, the charging order nisi obtained was stayed.  The appeal against the summary judgment was dismissed by Deputy Judge To on 30 November 2004.  Further appeal to the Court of Appeal was dismissed on 1 June 2005.

4. After the handing-down of the summary judgment, the defendant demanded and received rent from the defendant’s sub-tenant since 1 April 2004.  Both parties accepted that such action amounted to the delivery of possession.  Hence, mesne profits were confined to the period of 1 December 2003 to the end of March 2003.

5. Only this morning, the defendant filed further evidence that the plaintiff was in fact collecting rent from the defendant’s tenant in respect of land owned by the defendant neighbouring the plaintiff’s land, and such sums had more than extinguished the judgment debt.

6. The plaintiff disputes such fact but it is not going to file any evidence in reply because the charging order has become academic.  The defendant’s land was in fact sold by the mortgagee and the plaintiff was unable to register the charging order at the Land Office.  Hence, the plaintiff is conceding the appeal in order to save unnecessary costs.

The Plaintiff’s Argument on Costs

7. The plaintiff asks for costs because the execution by charging order was stayed pending appeal by the defendant against the summary judgment.  The plaintiff had no notice of sale by the mortgagee until 8 September 2005.  Hence, the execution is rendered ineffective by accommodating the defendant’s appeal which has ultimately failed.

The Defendant’s Argument on Costs

8. The defendant submitted that the sale by the mortgagee occurred in October 2003.  In the ordinary course of event, the plaintiff should have received notice of that and should not have proceeded the charging order nisi to order absolute.  Mr Wong, for the defendant submitted that as the court does not really know what has happened as to the mortgagee sale, it should either order no order as to costs, or reserve the matter to the trial judge when things may become clearer.

Consideration

9. I agree entirely that this appeal should now cease lest it become a peg to hang costs on.  In the ordinary course, the defendant must have known the mortgagee sale as he was the party affected.  He should have notified the plaintiff in order that further costs not be incurred unnecessarily.  Hence, if anyone is to be blamed, it is the defendant for not having done so.

10. The charging order nisi was stayed and now it has become academic.  It was stayed by reason of the appeal.  Hence, its fate should follow the result of the appeal.  In the premises, I allow the appeal and set aside the charging order absolute, but I order the defendant do pay the costs of this appeal and the costs of the charging order to the plaintiff, to be taxed if not agreed.