MVO MANAGEMENT LTD v. THE INCORPORATED OWNERS OF ASCOT TOWER (VILLAGE ROAD)

DCCJ 1311/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1311 OF 2015

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DECISION

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Introduction

1.  The trial of this action took place before me from 5 to 8, and on 12 June 2017.  On 21 June 2017, I handed down a judgment (“the Judgment”), in which I dismissed MVO’s claim and made a costs order awarding costs of these proceedings to the IO (“the Costs Order”). The facts and the reasons for the judgment have been set out in the Judgment and I do not repeat the same herein.  For ease of reference, the abbreviations used in the Judgment are adopted in this decision.

2.  On 3 July 2017, the IO filed a summons (“the IO’s Summons”) to seek a variation of the Costs Order, ie all the IO’s costs incurred after 25 April 2017 be taxed on indemnity basis.

3.  On 5 July 2017, MVO filed a summons (“MVO’s 1^st Summons”) to seek the following variations of the Costs Order:-

(a) costs of proving authenticity of the documents contained in Trial Bundles C1 and C2, the originals of which are in Exhibit P1, be to MVO;

(b) costs of and occasioned by the issue(s) of breach of fiduciary’s duty and/or conflict of interest be to MVO;

(c) costs of and occasioned by the issue(s) of fraudulent and/or dishonest behaviour on the part of MVO in respect of the minutes of the owners’ meeting be to MVO, and those costs be paid on indemnity basis.

4.  On 18 July 2017, MVO filed a summons (“MVO’s 2^nd Summons”) to seek the following order:-

(a) the Judgment be reviewed in the light of the grounds set out in the draft notice of appeal (“the Draft Notice of Appeal”) annexed to that summons;

(b) leave to appeal from the Judgment;

(c) if necessary, leave to MVO to make the application for leave to appeal out of time.

5.  On 20 July 2017, the order made in the Judgment (including the Costs Order) drawn up by the IO’s solicitors was sealed.

6.  On 15 September 2017, MVO took out a further summons (“MVO’s 3^rd Summons”), seeking leave to file and serve a further affirmation in support of MVO’s 1^st Summons.

7.  I will deal with these summonses in turn in the paragraphs below.

The IO’s Summons

8.  The ground of the IO’s application is that the IO’s sanctioned offer as per their solicitors’ letter dated 21 March 2017 has not been accepted by MVO.  In that letter, the IO proposes that MVO should drop all its claims against the IO, and IO in return would not claim any costs against MVO.  The IO has given MVO 28 days to consider this offer, but at the end this offer has not been accepted by MVO.  After trial, MVO’s claim has been dismissed with costs.  Relying on the Rules of the District Court, Order 22 rule 23, the IO submits that all the costs incurred by the IO after 25 April 2017 should be taxed on indemnity basis.

9.  As submitted by Mr Amos Ma for the IO, the IO’s application is made on a sound basis.  Mr Timothy Harry (leading Ms Jacqueline Lam) for MVO fairly accepts this.  However, notwithstanding all these, I cannot allow this application, for I do not have jurisdiction to alter the Costs Order now.

10.  The Costs Order provided in the Judgment is not a costs order nisi but a costs order absolute.  At the end of the trial, I have invited submissions on costs, and both the counsel for MVO and the counsel for the IO unreservedly agreed that costs should follow the event, with a certificate for counsel.  In the light of the agreement between counsel, I made the Costs Order in the Judgment.  The Costs Order is made on the basis of the agreement between counsel, it is a final and not a provisional order.  The Costs Order has been drawn up by the IO’s solicitors and sealed. Accordingly, I am now functus and cannot make any change to the Costs Order.

11.  The IO’s summons must be dismissed with costs to MVO. With no disrespect to Mr Harry and Ms Lam, the application as per the IO’s summons is not a complicated matter, and I am unable to grant a certificate for two counsel in these circumstances.  Costs of the IO’s summons should be to MVO, with a certificate for one counsel, to be taxed if not agreed.

MVO’s 1^st and 3^rd Summonses

12.  At the beginning of this hearing, I allow the application as per MVO’s 3^rd Summons and give leave to MVO to rely upon that further affirmation in this hearing.

13.  For the reason set out in §10 above, MVO’s application as per their 1^st Summons cannot succeed.  I simply do not have jurisdiction to make any change to the Costs Order now.

14.  Even if I have the jurisdiction to make the order sought by MVO in the 1^st Summons, I would exercise my discretion to refuse to do so.  At the end of the day, the IO is the successful party.  It would be exceptional to deprive a successful party the whole or part of his costs[1]. It would be most exceptional to order a successful party to pay costs to the unsuccessful party, and I am not aware of any case in which the successful part is ordered to pay any indemnity costs to the unsuccessful party.

15.  As said by the Court of Final Appeal in the CIR v HIT Finance Ltd (No 2), “there is nothing exceptional about a case being won on only some of the winner’s points”.  In my judgment, the matters raised in MVO’s 1^st Summons and the supporting affirmations do not justify a departure from the general rule of costs following the event.  The time spent on those matters, in the context of the whole action, does not constitute a significant part of the time spent by the parties in this litigation.

16.  In my judgment, MVO’s 1^st Summons should be dismissed with costs to the IO.  Since the purpose of MVO’s 3^rd Summons is to seek leave to file a further affirmation in support of the 1^st Summons, as a result of the dismissal of the 1^st Summons, costs of the 3^rd Summons should also be to the IO.  All these costs are to be taxed if not agreed, with a certificate for counsel.

MVO’s 2^nd Summons

17.  There is no review procedure in the District Court, and the unsuccessful party cannot simply ask the court to review and reconsider the judgment.  While it is true that the court retains a jurisdiction to vary an order before that order is sealed, the court would not do so in the absence of any strong reason, and this power would only be exercised in exceptional circumstances[2]. In my view, there is no exceptional circumstances justifying a review of the Judgment.  In any event, the order made pursuant to the Judgment has been sealed, and I have no jurisdiction to alter the Judgment now.

18.  MVO’s 2^nd Summons was taken out within the 28-day period after the handing down of the Judgment. Accordingly, the application for leave to appeal made in that summons is made within the prescribed time.  I would proceed to consider whether MVO should be given leave to appeal from the Judgment.

19.  The principles concerning leave to appeal are trite:-

(a) Leave to appeal can only be granted if the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard[3].

(b) Reasonable prospects of success involve the notion that the prospects of succeeding must be reasonable and therefore more than fanciful, without having to be probable[4].

(c) The appellant has to overcome a very high threshold in order to successfully challenge the factual findings made by the trial judge.  The Court of Appeal would not interfere unless the factual findings made by the trial judge are plainly wrong[5].

20.  As per the Draft Notice of Appeal, MVO’s grounds of appeal are as follows:-

“1. The Learned Trial Judge erred in arriving at his conclusion that maintenance services in respect of the drainage system, water and electricity supply as well as the fire prevention system (“the maintenance services”) were not provided to [the Building] by [the 4 Companies] in the following respects:

(1) The Learned Trial Judge failed to appreciate that the FS251 certificate could never lawfully have been issued by either [MVO] itself or any of the 4 companies, but only by a registered company authorized pursuant to the Fire Service (Installation and Equipment) Regulations, i.e. [YIL], [CF] and [RCCL]; (paragraph 43(g) of the Judgement)

(2) the Learned Trial Judge failed to appreciate that monthly maintenance must have been done on the fire prevention system by a licensed contractor (i.e. the 4 companies) in order for a FS251 certificate to be issued every 12 months by an authorized registered contractor;

(3) the Learned Trial Judge failed to appreciate that monthly maintenance must have been done on the drainage system, water and electricity supply by a licensed contractor (i.e. the 4 companies) in order for a WR2 certificate to be issued every 5 years by an authorized registered contractor (indeed the Learned Trial Judge did not mention WR2 certificate in the Judgement)

(4) the Learned Trial Judge erred in asserting as relevant that there was no documentary evidence demonstrating the licences of the 4 companies for the specialist services provided by these 4 companies: the existence of such licences was never an issue, either raised by the Learned Trial Judge or [the IO] in the proceedings (whether in the pleadings or at trial) (and in fact there were such licences and they would have been disclosed if they were relevant);

(5) the Learned Trial Judge failed to give any consideration to the Fire Services Maintenance Checklist dated 25^th January 2010 and the Water and Electricity Maintenance Checklist dated 6^th January 2009, in arriving at his finding that there was no document showing maintenance services rendered to the Building by HR and ADCBW after having been notified by the Plaintiff with the slips; (paragraphs 33, 34, 73(g) and 75 of the Judgement)

(6) the Learned Trial Judge, in concluding that the receipts, invoices and debit notes issued by Coper, HR, AD and ADCBW to [MVO] were “insufficient evidence” for the performance of maintenance services by the 4 said companies and for the payment made by [MVO], has contradicted his finding on the authenticity of these documents (having rejected the argument by [the IO] that these documents were not authentic), in that the Learned Trial Judge wrongfully now appears to accept that these documents did not truly reflect what they stated; (paragraphs 28, 73 (d)-(f), 74 and 75 of the Judgement)

2. The Learned Trial Judge thereby erred in arriving at his conclusion that the Plaintiff did not make any payment to AD, ADCBW, Coper and HR for the provision of maintenance services to the Building, in that:

(1) the Learned Trial Judge, in arriving at his finding that payments shown in the Table annexed to the Judgement (“the Table”) did not include sums arising from maintenance services provided to the Building by HR, AD or ADBCW, failed to take into account properly or sufficiently:-

(a) the authentic nature of the receipts, invoices and debit notes issued by these companies to [MVO];

(b) that the dates shown in the Table were the dates on which the cheques were drawn rather than when they were issued and so did not substantiate his finding that the evidence of Shum ([MVO] 's witness) in respect of the payment pattern was inconsistent with the information illustrated in the Table.  (paragraphs 28, 53 and 55 of the Judgement)

(2) the Learned Trial Judge, in arriving at his finding that in the absence of the “Underlying Documents” (the meaning and relevance of which are not understood) and Audited Accounts there were no payments made by [MVO] to the 4 companies, has wrongfully assumed:

(a) the existence of the Underlying Documents without paying due regard to:

(i) the authentic receipts, invoices and debit notes issued by the 4 companies to [MVO]; and

(ii) the evidence of Shum ([MVO]’s witness) that she issued the cheque upon receipt of invoices and debit notes referred above at paragraph 2(2)(a)(i)

(b) the relevance of Audited Accounts by ignoring that:

(i) the Audited Accounts were of a generic nature and did not specify the building to which maintenance services were rendered by those 4 companies engaged by [MVO] (and so whilst they existed, and could have been disclosed, they were irrelevant as not being evidentially probative of anything); and

(ii) it was on this footing (i.e. they were irrelevant) that [MVO] did not disclose them, and [the IO] never sought them. (paragraphs 45(c)(d)(f)(g) and 55 of the Judgement)

3. The Learned Trial Judge, in assessing the weight of [MVO]’s evidence and the credibility of [MVO] 's witnesses, was wrongly influenced by the issue of conflict of interest/breach of fiduciary duty that was never a pleaded case of [the IO], in that:

(1) the Learned Trial Judge erred in rejecting the evidence of [MVO] on disclosure of interest, which had not been challenged by [the IO] at any time in the proceedings;

(2) The Learned Trial Judge erred in requiring [MVO] to disclose and produce the Underlying Documents and Audited Accounts, the relevance of which was assumed by the Learned Trial Judge as referred to at paragraph 2(2) above;

(3) the Learned Trial Judge failed to give any/sufficient consideration to the following documents:

(a) the authentic slips, Fire Services Maintenance Checklists and Water and Electricity Maintenance Checklists;

(b) the authentic invoices, debit notes and receipts;

(c) the Minute of Owners’ Meeting in 1999 with a Chinese transliteration “contract” next to “General Maintenance” that corroborated the evidence of the Plaintiff's witnesses. (paragraphs 42, 43(1), 44(i) and 46 of the Judgement)

4. The Learned Trial Judge erred in accepting the accounts given by [the IO]’s witnesses in respect of the Minutes of the Owners’ Meetings particularly in April 2012, May 2012, March 2013, in that:

(1) the Learned Trial Judge did not give any/sufficient consideration to the following facts in the trial proceedings:

(a) The accounts given by [the IO]’s witnesses were relating to fraudulent acts on the part of [MVO], which had never been pleaded, nor had the authenticity of the Minutes of the Owners’ Meetings particularly in April 2012, May 2012, March 2013 been challenged pursuant to Order 27 rule 4(2) of the Rules of District Court;

(b) it was on this footing that no cross examination of [MVO]’s witnesses on this matter was allowed;

(c) [MVO]’s witnesses, particularly Fok, were deprived of an opportunity to answer this serious allegation;

(2) the Learned Trial Judge also did not pay due regard to the following evidence of Wong ([the IO]’s witness) that:

(a) there were inherent inconsistencies in Wong's evidence as to his signature on the Minute of the Owners’ Meeting in June 2012;

(b)    the Minute of the Owners’ Meeting in June 2012 referred to the sum owed by [the IO] to [MVO] as mentioned in the Minutes of the Owners’ Meetings particularly in April 2012, May 2012;

(c)    other minutes bore only [the IO]’s chop without the signature of Wong. (paragraphs 64-66, 76 of the Judgement)

5. Further and/or alternatively, the reasoning of the Learned Trial Judge, in having accepted the provision of maintenance services to the Building by the Plaintiff as shown in the Fire Services Maintenance Checklists and the Water and Electricity Maintenance Checklists, was logically flawed in so far as he concluded that the maintenance services were not provided by the 4 companies in the following respects:

(1) there was no evidence suggested by [the IO] that the maintenance services were provided by other companies or indeed by any other entities;

(2) with the authenticity of those invoices, receipts and debit notes issued by the 4 companies accepted by the Court, there was no basis upon which the Learned Trial Judge could in fact find that they did not represent what they purported to represent (and quantum was never an issue);

(3) Chinese transliterations of “maintenance of fire prevention system and water and electricity supply of the building” and “contract” were stated beside “General Maintenance” in the Minutes of Owners’ Meeting in 1999, the authenticity of which was not in dispute;

(4) there was no separate item in the Income and Expenditure Account which charged for the monthly provision of maintenance services to the Building, except under the item “General Maintenance”;

(5) the Learned Trial Judge failed to take into account that the 4 companies were instructed by [MVO] for their specialist skills (Tang’s Witness Statement).  (paragraph 80 of the Judgement)

6. Further and/or alternatively, the Learned Trial Judge (if he did not go wrong in the previous respects), in having accepted that the maintenance services had been provided by [MVO] to the Building (paragraphs 80 and 89 of the Judgement), erred in ruling that [MVO] was not entitled to any remuneration either on the basis of the Deed of Mutual Covenant or unjust enrichment, particularly in circumstances where the Amended Statement of Claim is expressly in terms of a claim by [MVO] and not by the 4 companies.  The Learned Trial Judge concluded that the maintenance services were provided by the Plaintiff but not the 4 companies but then went on to conclude that the sum claimed was not due: this is illogical, and has the result that [the IO] received the services without making payment to [MVO] either pursuant to the Deed of Mutual Covenant or under the principle of unjust enrichment.”

21.  In my view, none of these grounds has merit.

22.  Ground 1:

(a) I have gone through the documents in this case and heard the evidence given by the witnesses.  I have provided my reasons in the Judgment as to why I come to the conclusion that there is no reliable evidence showing that any services have actually been provided by the 4 Companies to the Building.

(b) In respect of the FS251 certificates, I have dealt with these at length in the Judgment[6].  There is no substance in §1(1) and (2) of the Draft Notice of Appeal.

(c) As to §1(3), the fallacy of this paragraph is in the words “(i.e. the 4 companies)”.  The problem in MVO’s case is that there is no certificate issued by any of the 4 Companies.

(d) As to §1(4), the existence of the 4 Companies is neither here nor there.  The point is whether there is any reliable evidence showing that the 4 Companies have provided services to the Building.  My conclusion on this question is “No”.  I am not persuaded that MVO has shown that my conclusion is plainly wrong.

(e) §1(5) is misconceived.  From the paragraphs of the Judgment cited in that §1(5), one can immediately see that the 2 documents mentioned in §1(5) have been considered by this court.

(f) As to §1(6), I have given my analysis of the documents in Exhibit P1 in the Judgment[7].  It has not been shown that my analysis is plainly wrong.

23.  Ground 2:

I have considered all the evidence, including the Table and the documents in Exhibit P1^[8], and come to the conclusion that there is no reliable evidence showing that MVO has made any payments to the 4 Companies in respect of the services relating to the Building.  I am not persuaded that MVO has shown that I am plainly wrong in my analysis.

24.  Ground 3:

(a) In respect of §3(1) of the Draft Notice of Appeal, Tang’s evidence is that he disclosed that he had engaged associated companies to provide services to the Building in the owners’ meeting held on 2 September 1999.  This court is entitled to examine the minutes of the said meeting and make the analysis as set out in §42 of the Judgment.

(b) As to §3(2), this court is entitled to take into account the absence of the Underlying Documents and the Audited Accounts in support of the payments to the 4 Companies as claimed by Tang.

(c) As to §3(3), this court has not overlooked the documents mentioned therein.

25.  Ground 4:

Here, MVO’s complaint is that the authenticity of the minutes of the April 2012, May 2012, and March 2013 meetings has not been challenged and there is no allegation that MVO has done any fraudulent acts in relation to these minutes.  MVO says that this court has failed to take these into account in assessing the IO’s evidence concerning these minutes.  In my view, MVO has misunderstood the point.  The difference between MVO and the IO on these minutes is whether the contents of these minutes have been confirmed by Wong. The IO is not saying that all the contents in these minutes are fabrication. In fact, I have taken the contents of these minutes and the contents of other IO minutes into account, and I conclude that the IO has not passed any resolution confirming any indebtedness owed to MVO[9]. There is no merit in this ground.

26.  Ground 5:

The crux of the matter is, taking all the evidence as a whole, whether it can be said that I am plainly wrong in arriving at the conclusion that there is no reliable evidence showing that services have been provided by the 4 Companies to the Building.  In my judgment, MVO has not overcome the very high threshold and has not shown an affirmative answer to this.

27.  Ground 6:

(a) The parties have agreed that the issues to be determined in the trial are the 8 issues set out in the “Agreed Statement of Issue in Dispute” dated 7 December 2016 and signed by the parties’ legal representatives[10] (“the Agreed List of Issues”), no more and no less.

(b) As agreed between the parties, issue no 7 and issue no 8 are as follows:-

Issue No 7:

Whether MVO is entitled to be reimbursed by the IO with the sum of HK$348,056.08 for the work done and expenses incurred in the provision of the general maintenance by the 4 Companies to the Building;

Issue No 8:

Whether MVO is entitled to claim against the IO for HK$348,056.08 on the basis that the IO was unjustly enriched at the expense of MVO for the provision of the general maintenance by the 4 Companies;

(c) As a result of the answers to issues nos 1 to 4, it is clear that the answers to both issue no 7 and issue no 8 are “No”.

(d) Mr Harry submits that I have only premised my findings on the issues as set out in the Agreed List of Issues without any consideration or analysis of MVO’s claim as pleaded, particularly §§18C to 18E of the Amended Statement of Claim.  In my view, those paragraphs of the Amended Statement of Claim cannot be read in isolation and must be read in the context of the MVO’s pleadings.  Reading MVO’s pleadings as a whole, clearly MVO’s claim is based upon the general maintenance services provided by the 4 Companies and not by any other companies.  In §3(a) of the Amended Reply, MVO clearly and unequivocally pleaded:

“…… [MVO] further avers that all the general maintenance services were provided by [the 4 Companies] appointed by [MVO] to [the IO], and all service fees were therefore charged directly by [MVO] to [the IO].” (Emphasis added)

The parties have correctly set out the issues in dispute in the Agreed List of Issues.  I have given answers to those issues in the Judgment, and I am not persuaded that any answer given is plainly wrong.

28.  In my judgment, there is no reasonable prospect of success in MVO’s appeal.  I am also of the view that there is no other reason that the appeal should be heard in the interests of justice.  MVO’s 2^nd Summons should be dismissed with costs to the IO, with a certificate for counsel, to be taxed if not agreed.

Disposition

29.  I make the orders as set out in §§11, 12, 16 and 28 above.

30.  I thank Mr Ma, Mr Harry and Ms Lam for the assistance provided to the court.