TSANG TAT KEUNG v. LAM YUN FONG

HCMP 2903/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2903 OF 2012

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D E C I S I O N

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1.  This is the defendant’s application for a costs order against the third party pursuant to section 52A(2) of the High Court Ordinance, Cap 4.

Background

2.  The plaintiff is the registered owner of Lot 103 in DD 256, Sai Kung, New Territories (“Lot 103”).  The defendant is the owner of 3 vehicles parked on the Lot (“the Cars”).  The third party is the attorney appointed by the plaintiff under a power of attorney which he executed in England on 27 November 2012 for the purpose of instituting the present proceedings to recover vacant possession of Lot 103.  (But as will be seen in a moment, she played a bigger role than a mere attorney.)

3.  The present main proceedings were commenced on 31 December 2012.  The defendant filed an acknowledgement of service contesting the claim on 15 January 2013.  On 1 February 2013, the defendant obtained leave from the master to issue these costs-only proceedings (“the Costs Proceedings”) against the third party.

4.  On 4 March 2013, the master entered judgment for the plaintiff against the defendant for recovery of vacant possession of Lot 103 with costs.  The parties later agreed on the amount of costs at HK$50,000 which the defendant paid on 30 May 2013.

5.  The defendant now seeks an order that the third party do pay her costs in the main proceedings and the Costs Proceedings, both on an indemnity basis; and to fully indemnify her for the plaintiff’s costs in the main proceedings in the sum of HK$50,000.

The guiding principle

6.  Section 52A(2) provides that the court may make an order awarding costs against a person who is not a party to the relevant proceedings if the court is satisfied that it is in the interest of justice to do so.  The guiding principle for the exercise of this exceptional jurisdiction to order costs against a non-party is whether it is in the interest of the particular circumstances of the case to do so.  As Lord Brown put in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (PC) [2004] 1 WLR 2807 :

“25. … Although costs orders against non-parties are to be regarded as ‘exceptional’, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question is any such ‘exceptional’ case is whether in all the circumstances it is just to make the order. It must be recognized that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour or an order, some against. …”

7.  Mr Pun, for the third party, submitted that it is usually for the receiving party to apply for a non-party costs order to meet his costs wich, for some reasons, he is unable to recover from the party in the main proceedings.  There is no legal basis for a losing party, as is the defendant here, to apply for a non-party costs order for indemnity of the costs that he is ordered to pay to the receiving party in the main proceedings.  Mr Pun cited no authority to support his proposition.  He however said he could not find any authority where a losing party successfully obtained a non-party costs order to indemnify the costs he was ordered to pay to the receiving party in the main proceedings.  The absence of such authority, Mr Pun submitted, supports his proposition.  With respect, I disagree.

8.  The absence of direct authority on the point hitherto does not support Mr Pun’s contention for the simple reason that section 52A(2) does not limit the non-party costs jurisdiction in such a way. As rightly observed by Millet LJ (as he then was) in Metalloy Supplies Ltd v MA (UK) Ltd [1997] 1 WLR 1613 at p 1620B, after acknowledging that a non-costs order is exceptional :

“It may be made in a wide variety of circumstances…”

His Lordship then gave examples where such an order may be made, including cases where the non-party is considered to be the real party interested in the outcome of the suit, where the non-party has been responsible for bringing the proceedings and they have been bought in bad faith or for an ulterior purpose or there is some other conduct on his party which makes it just and reasonable to make the order against him.

9.  With the guiding principle enunciated by Lord Brown in mind, I now consider if the defendant has made out her application against the third party.

The present application

10.  The defendant has filed an affidavit dated 25 January 2013 in support of her application, raising a number of allegations against the third party.  She said :

“Background

6. In or about early 2007, for the consideration of HK$1,200 quarter-yearly, [the third party] granted me a licence (‘the said Licence’) for:-

(i) parking of the [Cars] on any of the properties, including but not limited to [Lot 103];

(ii) a right of way through the property of Lot No 119 in DD256, Sai Kung, New Territories, Hong Kong (“Lot 119”); and

(iii) a right of way through the property of Lot No 121 in DD 256, Sai Kung, New Territories, Hong Kong (“Lot 121”)

7. At all material times:-

(i) Mr Tsang Kwok Piu is and was one of the registered owners of Lot 119 and Lot 121; and

(ii) Mr Tsang Kwok Piu is and was the husband of [the third party].

…

8. As a matter of geography, for any vehicles to get to [Lot 103], they had to go through Lot 119 and Lot 121. …

9. When [the third party] granted me the said Licence, I was told that since all of our vehicles had to by-pass Lot 119 and Lot 121 for the access to and ingress from the main road, we had to pay for the right of way in respect of Lot 119 and Lot 121 together with the right to park [the Cars] on any of the properties but not limited to [Lot 103]. I was also told by [the third party] that she was in charge of [Lot 103] and also the surrounding properties as she was given the authority from her relatives who owned these properties to accept payment on their behalf for the usage of these properties, but not limited to [Lot 103] for the parking of [the Cars]. I had duly paid the quarter-yearly licence fees of the said Licence between the period of March 2007 and October 2010. To facilitate the payments of the licence fees, [the third party] had given me her bank account in Bank of China (Hong Kong) Limited number [xxx] so that I could transfer quarter-yearly licence fees from my bank account in the amount of HK$1,200 quarter-yearly into [her] bank account. There is now produced and shown to me exhibit marked “LYF-3” the said transfer slips to [the third party’s] bank account.

…

11. I had been told by the plaintiff’s relatives and was aware that the plaintiff has at all material times been residing overseas in the UK. I have never met the plaintiff in person nor had the plaintiff and/or his representatives approached me to ask me to remove [the Cars] until around October 2012 when I received the solicitor’s notices stating they are representing the plaintiff and seeking possession of [Lot 103].

12. It was not until around December 2011, suddenly a car with registration number [YYY] (“the Obstructing Car”) appeared to be parked on Lot 121 blocking the path leading out to main road. Therefore in order for me to remove [the Cars], I would need to by-pass Lot 121 which the Obstructing Car had been parked. …

13. In order for me to comply with the plaintiff’s request, I did on or about 17^th and 18^th October 2012, visited the workplace of Mr Tsang Kwok Piu, [the third party’s] husband, and requested him to remove the Obstructing Car that was parked on his land, Lot 121, so that I could remove [the Cars] from [Lot 103]. On both occasions, Mr Tsang Kwok Piu told me to contact [the third party] directly because she was in charge of the whole matter and he had nothing to do with the matter.

14. On or about 18^th October 2012, I had no alternative so I reported the matter to the police in order for me to ask for the removal of Obstructing car so that I could remove [the Cars] from [Lot 103]. On this occasion, a police officer arrived at [Lot 103] and checked the identity of the registered owner of the Obstructing Car with his communication device, whence I overheard that the registered owner of the Obstructing Car was a “Li Sin Ping”, ie, the name of [the third party]. I informed the police of my finding, and told the police the location of [the third party’s] home, which was near [Lot 103]. The Police made a telephone call to [the third party] but she did not answer the calls. The Police then subsequently approached [the third party’s] home, but no one answered the door.

15. I subsequently checked the identity of the registered owner of the Obstructing Car, and confirmed that it was indeed [the third party’s] car. There is now produced and shown to me exhibit marked “LYF-6” being copy of Certificate of Particulars of Vehicle showing [the third party] as the registered owner of the Obstructing Car.

16. On or about 26 October 2012, I sent a letter to Mr Tsang Kwok Piu and made may request again for the Obstructing car to be removed, but with no avail. …

17. Further on or about 10^th November 2012, I sent a letter to [the third party] requesting her to remove the Obstructing Car, but also with no avail. …

18. Unknown to me at that time, the 50% share of the Property held by Mr Tsang Heung Wai had been transferred to the plaintiff on 3^rd March 2012. However, I did on or about 11^th October 2012 asked the previous part owner of the said Property Mr Tsang Heung Wai as to how I could remove the Obstructing Car so that I could remove [the Cars] from the Property, but Mr Tsang Heung Wai also told me that I would need to find [the third party] to solve the matter as she was involved with giving instructions to the plaintiff’s solicitors. Mr Tsang Heung Wai also told me that [the third party] had full authority to deal with [Lot 103]. Therefore, I had every reason to believe that [the third party] was involved in recovery of [Lot 103] for and on behalf of the plaintiff.

19. Had it not been for the Obstructing Car of [the third party] obstructing the pathway of Lot 121 leading out to the main road, I would have been able to remove [the Cars] away from [Lot 103] with no difficulties and therefore preventing these proceedings from being taken out by the plaintiff.

20. I have all along reasons to believe that [the third party] was the mastermind behind these Proceedings, and in one way she was deliberately preventing me from removing [the Cars] from [Lot 103] by blocking the way out with the Obstructing Car, and in another way she was acting on behalf of the plaintiff in taking action to recover possession for the removal of [the Cars].

21. By reason of the matters aforesaid, I believe I had no alternative other than to leave [the Cars] on [Lot 103] until the removal of the Obstructing Car and/or the consent from [the third party’s] husband as the owner of Lot 119 and Lot 121 to allow [the Cars] to pass his lands.

…

23.     I state that I have all along intended to remove [the Cars] from [Lot 103], but due to the obstruction from the Obstructing Car of [the third party], I was prevented from removing [the Cars] from [Lot 103].  In those circumstances, any legal costs incurred by the said plaintiff and by me should be borne by [the third party] alone.”

11.  Despite the master’s directions, the third party has filed no affirmation in opposition to counter the defendant’s allegations. In the absence of any rebutting evidence from the third party, the defendant’s various allegations against her remain unchallenged.  Arising from on the defendant’s unchallenged evidence before me are the following points.

12.  First, the defendant was all along willing to remove the Cars once she received the notices of removal in October 2012.

13.  Mr Pun referred to the acknowledgment of service filed by the defendant in which she indicated her intention to defend and the fact that on the first call over hearing of the originating summons on 1 February 2013, she still contested the plaintiff’s claim.  However, that is perfectly understandable.  Obviously before she obtained the consent from the third party to make use of Lot 119 and Lot 121, she could not remove the Cars from Lot 103.  That was something she was still working on at the time.

14.  Further, the defendant’s overall conduct since October 2012 when she received the notices of removal clearly showed that she had every intention to remove the Cars as soon as possible even before the commencement of the main proceedings.  However, as explained below, she was prevented from doing so by the third party’s conduct.

15.  Second, because of the geographical location of the Lots, the defendant had to go through Lot 119 and Lot 121 in order to remove the Cars from Lot 103.  That is the only vehicular access from Lot 103 to the main road. 

16.  Referring to the Index Plan exhibited to the defendant’s affidavit, Mr Pun tried to submit that the defendant could have gone through other Lots to gain vehicular access from Lot 103 to the main road. What Mr Pun did was tantamount to giving evidence from the bar table when the third party had chosen not to do so by affidavit.  That is not permissible.  Mr Pun’s submission is also flatly contradicted by the fact that eventually on 15 March 2013, upon paying the towing fees for removing the third party’s car, the defendant removed the Cars from Lot 103.

17.  Third, the third party was fully aware of the fact that the only vehicular access from Lot 103 to the main road is through Lot 119 and Lot 121.

18.  Fourth, the third party was clearly in a position to give the defendant access through Lot 119 and Lot 121, although her husband is the registered owner of the land.  If she so decided, she could have allowed the defendant to go through Lot 119 and Lot 121 to remove the Cars before the main proceedings were commenced.

19.  This point is borne out by the defendant’s evidence that when she approached the third party’s husband on or about 17 and 18 October 2012, he told her to contact the third party directly as she was in charge of the whole matter and he had nothing to do with the matter.  This is also confirmed by the correspondence of the third party’s solicitors.  In the letter by the third party’s solicitors dated 15 February 2013, they wrote “…the Third Party is willing to allow your client to pass through her properties on one single occasion…”.  In another letter dated 28 February 2013, another firm of solicitors representing the third party referred to the third party as the authorized representative of her husband.

20.  Fifth, it was the third party who, acting on behalf of the plaintiff, gave instructions to the plaintiff’s solicitors to issue notices of removal in October 2012 and commence proceedings in December 2012.  She also made the affirmation dated 28 December 2012 in support of the originating summons.

21.  Sixth, but at the same time when the defendant tried to approach her, in person or by writing, to resolve the matter in October and November 2012, that is, before commencement of the proceedings, the third party, for no good reason, did not respond.  The third party did not explain her conduct by way of affidavit.  Mr Pun referred to the letter of her solicitors dated 28 February 2013 in which it was said :

“7. At no point of time did your client offer any such reasonable terms and conditions for our client’s consideration for granting such consent / permission, not to say, any offer to compensate our client for all necessary and reasonable costs and expenses for removing and returning [the third party’s car] away and back to Lot 121 for the purpose of allowing your client to remove the defendant’s Cars away from the plaintiff’s Land.”

22.  However, as rightly submitted by Mr Shek for the defendant, if that was third party’s real concern, she should have brought this matter to the defendant’s attention before giving instructions to the plaintiff’s solicitors to commence the present proceedings.  Had she done so, the parties could have reached a sensible solution, as they eventually did on 15 March 2013, to enable the defendant to remove the Cars without commencing the main proceedings.  In short, the main proceedings could well have been avoided had the third party responded to the defendant’s approach to resolve the matter timely.

23.  The third party’s conduct in instructing the plaintiff’s solicitors to commence proceedings while at the same time unjustifiably denying the defendant the chance to settle the matter with her, is most unreasonable.  It borders on abuse of process.  In the circumstances, it is just to exercise my discretion under section 52A(2) against her.

Dispositions

24.  I order the third party to fully indemnify the defendant for the plaintiff’s costs in the main proceedings in the sum of HK$50,000.

25.  The third party should also be visited with an order to pay the defendant her costs in the main proceedings and the Costs-only Proceedings on an indemnity basis.