CHAN WAI KIT v. LAI KWOK LEUNG alias FRANCIS LAI or FRANCIS

DCCJ 5320/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5320 OF 2009

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J U D G M E N T

1.  Chan, the Plaintiff, and Lai, the Defendant, jointly invested in a residential property in 1997. The property was in the sole name of Lai subject to a declaration of trust in favour of both of them. In 2009, Lai sold the property. Chan complains that Lai did so without his consent. Hence the dispute and this action.

Background

2.  Chan and Lai used to be colleagues at a bank in Hong Kong during the period between 1995 and 1997.  In May 1997, they discussed and agreed to jointly invest in a residential property with a view to sale for profit in the short run.  Lai was short of capital and convinced Chan to provide the initial money for purchasing the property.

3.  On 26 May 1997, Lai in his sole name entered into a provisional sale and purchase agreement to purchase the property situated on the 32th Floor, Block 5. Tsing Yi Garden, New Territories (“the Property”) at the price of HK$2,650,000.

4.  Lai then signed a Memorandum of Undertaking in favour of Chan (“the Undertakings”) which contained the following terms:

“In consideration of your having advanced money to me or disbursed on my behalf in settlement of my share in the purchase proceeds in respect of purchase of the property at …… under my own name upon trust for the undersigned and you, Chan Wai Kit …… in equal shares, I, Lai Kwok Leung, …… hereby undertake the following:-

1. That I, undersigned, hereby undertake to repay to you the unpaid sum that you have advanced to me or disbursed on my behalf in respect of my share in the completion of the purchase and holding of the abovementioned property and any amounts that you have paid on my behalf for my share in the purchase proceeds (inclusive of legal fees, brokerage, and any other expenses whatsoever you may incur) of the abovementioned property plus funding cost of the advances that you may incur.

2. That I, undersigned, hereby assign my share in the sale proceeds of the abovementioned property to you as security for repayment of all unpaid amounts due to you by the undersigned plus funding cost of all the advances and/or disbursement that you may incur as aforesaid and all other moneys from time to time owing by the undersigned to you under whatsoever circumstances.

3.     That I, the undersigned, hereby undertake to indemnify you in respect of all liabilities, expenses and other losses of whatsoever kind and whatsoever nature which you may incur as a result of your recovering your share of rights and interest in the abovementioned property and the sale proceeds in case of disposal thereof.”

5.  By an Assignment dated 10 July 1997, Lai became the owner of the Property.  Lai then signed a written declaration of trust (“the Deed of Trust”) in the following terms:

“…… one equal half part or share of the purchase price was in fact money belonging to and provided by CHAN WAI KIT …… and the said premises comprised in and assigned to me under the said Assignment was in fact assigned to me as Trustee for myself and the said CHAN WAI KIT NOW THESE PRESENTS WITNESSETH that I …… for myself …… DO HEREBY DECLARE that I shall henceforth at all times hereafter stand possessed of one moiety or one equal half part of share of and in the said premises UPON TRUST for CHAN WAI KIT … AND I for myself …… HEREBY AGREE to convey and assign one moiety or equal half part or share of and in the said premises at the request and cost of the said CHAN WAI KIT to such person or persons at such time or times and in such manner as the said CHAN WAI KIT shall in writing direct and appoint.”

6.  Chan put up funds for the initial 30% of the price.  The 70% balance, HK$1,855,000, was financed by a charge by Lai of the Property to the bank.  Chan also funded the payment of the stamp duty, legal fees and estate agency commission.  In total, Chan had contributed HK$863,260.  By the end of July 1997, Lai had repaid a sum of HK$430,625 to Chan.  This was apparently half of what Chan had contributed except for the legal fees.

7.  The Property had since been let out.

8.  12 years later, on or about 4 July 2009, Lai entered into a provisional agreement to sell the Property at HK$1,450,000.  In the same month, he entered into the formal agreement.  Completion was to take place on 7 October 2009; but was eventually brought forward to 16 September 2009.

9.  Chan complained about the sale at the price without his consent.  Failing to resolve the dispute, Chan commenced the present action in October 2009.

10.  The above background is not in dispute.

The claim

11.  By pleading, Chan says that during the 12 years following the purchase of the Property, he had made monthly remittance to Lai as his contribution towards the instalment repayment of the mortgage loan in the total sum of HK$783,000.  As soon as he was informed of the signing of the provisional agreement, Chan communicated to Lai his objection to sale of the Property at the price.  Nevertheless, Lai proceeded with the sale and even brought forward the completion without his knowledge or consent.

12.  Chan claims on the basis of contract.  He relies on the indemnity under clause 3 of the Undertakings and effectively claims for all his contribution back (i.e., HK$863,260 and HK$783,000 mentioned above), subject to giving credit to the amount that Lai has paid (i.e., HK$430,635 mentioned above together with a sum of HK$50,033.20 subsequently paid).  The sum so claimed boils down to HK$1,165,601.80.

13.  Chan also claims for breach of fiduciary duty on the part of Lai as trustee.  Besides selling the Property without Chan’s authorisation, Lai is also criticised for selling at undervalue.  The market price of the Property as at the date of writ (and statement of claim) is said to be HK$1,750,000 and therefore the Property was sold for HK$300,000 less.  Chan claims for damages in the sum of HK$150,000 being half of the difference.

14.  Lai is also said to have refused or failed to render a true and full account of his own contribution towards the purchase and maintenance of the Property as well as all income derived from the letting and sale of the Property.  Chan claims for an account and order for payment consequential upon account.

15.  Two things should be noted.  First, Chan also seeks a declaration that Lai has been holding the Property on trust for both of them in equal shares or alternatively in such shares as the court shall determine.  The trust for both parties in equal shares is a common ground.  There is no real pleading of actual claim for different beneficial shares to support the prayer.  Further declaration by the court of the trust is not necessary.  Second, the claim for all money back exceeds the jurisdiction of this court.  By amending the pleading in August 2010, Chan now waives the excess.

Defence

16.  By pleading, Lai refers to the drop in value of the Property during the Asian financial crisis in the latter half of 1997.  It was allegedly the intention of the parties that the Property would be sold at a time when the value of the Property rose again.

17.  Since mid-2008, there was allegedly an oral agreement between the parties to sell the Property, provided that the sale proceeds sufficed to redeem the mortgage.  Pursuant to that, Lai then appointed estate agents to offer the Property for sale at HK$1,650,000, when the market value was about HK$1,600,000 and the outstanding mortgage loan was about HK$1,380,000.  Due to the financial tsunami in late 2008, the Property became a negative equity and there was no interested buyer. In early 2009, the parties allegedly re-confirmed the intention to sell the Property provided that the sales proceeds sufficed to settle the outstanding mortgage loan.

18.  Before 4 July 2009, Lai had allegedly informed Chan of his entering into the provisional agreement for the sale of the Property; and Chan raised no objection.  However after the formal agreement for sale and purchase of the Property, Chan started to complain and demand increasing amount of compensation from him.

19.  As to the Undertakings and the Deed of Trust, Lai says that they were signed at the office of the then solicitors acting for Chan.  He had never been told the contents of the Undertakings.  Nor had he been provided with a copy of the Undertakings or the Deed of Trust until 31 October 2009.

Issues

20.  Broadly, there are the following issues:

(1) whether Chan consented to the sale of the Property;

(2) if the answer to (1) is no, whether Chan is entitled to claim for breach of the Undertakings or breach of trust; and

(3) if answer to (2) is yes, to what remedies Chan is entitled.

Whether Chan consented to the sale of the Property

21.  This was apparently another instance of property investment in 1997 getting caught by the Asian financial crisis in the same year.  Not surprisingly, the prospect of sale with a view to quick gain turned dim.  The fact was that the Property was let out and the status quo had been maintained for the following decade.  The objective facts, I find, were consistent with the consensus of the parties to hold the Property.

22.  The oral agreement between the parties to sell the Property alleged by Lai came in mid-2008.  The documents show that Lai appointed Centaline Property Agency Limited toward the end of June 2008 to list and advertise the Property (then subject to tenancy until October of that year) at the price of HK$1.65 million.  The appointment would last until mid-2009.

23.  In the subsequent email correspondence between the parties in early August 2008, Lai was seen pushing for the renovation of the Property with a view to selling it as soon as possible.  Lai was then working at the mortgage sales team of the consumer finance of another bank.  He suggested that the estimated value of the Property was HK$1.6 million; but the estate agent reckoned that the Property should fetch a price of about HK$1.5 to 1.55 million.  The outstanding mortgage loan then was HK$1.38 million.  Lai proposed to list the Property for sale with one more estate agent, namely, Midland Realty, at HK$1.55 million.

24.  More than a month later, Lai appointed Midland Realty; but the price listed was not HK$1.55 million but HK$1.65 million.  According to the relevant agency agreement, the appointment would last until the end of 2009.  However, the Property had not been successfully sold before the arrival of the worldwide financial tsunami in late 2008.  Lai had to continue to hold the Property.

25.  Up till then, had Chan consented to putting the Property up for sale?  Lai alleged that there was already agreement in mid-2008 to put the Property up for sale.  Indeed Lai also appointed Centaline towards the end of June 2008.  However, in his email to Chan in early August 2008, Lai still asked if Chan would mind putting the Property for sale as soon as possible.  This would appear to have been unnecessary if the parties had already agreed to appoint estate agent for such purpose back in June.

26.  I see no subsequent correspondence or document suggesting any objection by Chan to Lai’s proposal to appoint Midland Realty.  According to Chan, he did telephone Lai and suggest holding the Property.  In court, Chan added that he objected to listing the Property even for testing the market.

27.  Chan explained his philosophy that he definitely would not sell unless at a profit.  He also explained that the Property had after all been held for over a decade and the rental income and mortgage repayment had been steady.  He saw no need to hurry. Indeed just in February 2009, the Property was let for another term of 2 years at the monthly rent of HK$5,000.

28.  But the undeniable fact was that even in August 2008, the Property had not recovered the drop by HK$1 million in value since 1997.  Then there was the further hit due to the worldwide financial tsunami soon after Midland Realty was appointed.  In view of that and the outstanding mortgage loan, for someone to suggest the so-called philosophy of ‘no profit, no sale’ at the material time is too unrealistic to be believable.  For an apparently experienced property investor like Chan to insist on that is even more unbelievable.

29.  Copies of certain email correspondence in April 2009 were disclosed.  Nothing in relation to the Property was mentioned.  The next email disclosed was the one from Lai to Chan after the formal agreement for the sale and purchase of the Property had already been entered into in July 2009.

30.  However, assuming that there was consensus between the parties by early 2009 that they were prepared to sell the Property provided that the sales proceeds sufficed to cover the outstanding mortgage loan, does that mean Lai had the requisite consent to sell the Property at the price that he sold it in July 2009?

31.  Chan suggested that putting the Property up for sale through the estate agents did not mean an offer to sell; but merely advertised interest to sell.  Indeed at least in the agency agreement with Centaline, it was expressly provided that the agent was not thereby authorised to accept an offer to purchase at the listing price.  I think Chan’s evidence could be understood in the light of that.

32.  It should also be noted that Lai actually agreed to sell at a price which was not HK$1.65 million or even HK$1.55 million at which Lai had instructed the estate agents to list the Property for sale.  This reflects that even Lai had not committed to the listing prices.

33.  In a property market as volatile as Hong Kong, it surprises no one that owners could change their mind at any time before appending their signatures on an agreement.  Likewise, joint owners or co-owners could have different views as to the achievable price, though the price offered may be within the range acceptable to them.  In the present case, it was never suggested that as between the parties, the Property had to be sold once there was a willing purchaser offering a price enough to cover the outstanding mortgage loan.  Further, according to Chan, he never even had any solid idea about the outstanding loan as at July 2009.  That was probably true, because Lai, being the owner, had got to be in a better position to know the exact figures.

34.  In my view, general consent or standing instruction from Chan to sell the property upon satisfaction of certain condition precedent including an acceptable range of price was not sufficient.  The Deed of Trust provided that Chan’s consent to sell at the price had to be in writing.  There was no such written instruction or consent.  Whether or not it had to be in writing, I find that Chan’s consent to commit to sell at a particular price must be specific.  Not only do I find that the need for such specific consent accords with common sense in the local circumstances, but I also find that Lai in his fiduciary position owed Chan a duty not less than that before committing to sell at the price.

35.  Did Lai have the specific consent from Chan to sell the Property at HK$1.54 million before committing to do so by entering into the provisional agreement on 4 July 2009? Lai said he did during a meeting with Chan on 22 June 2009 at a café in Wanchai.  Chan denied that, saying that he was informed of the sale only after the provisional agreement was entered into.  He immediately complained to Lai about that on the telephone.

36.  In his statement, Lai actually admitted that when the estate agent proposed an offer to purchase the Property at HK$1.45 million, he decided to take it and proceeded to sign the provisional agreement.  It was only after that did he inform Chan of the deal.

37.  Chan referred to the calls details report supplied by the mobile phone service provider as evidence of his telephone calls made to Lai upon receipt of Lai’s message about the signing of the provisional agreement.

38.  On 25 July 2009, Lai sent to Chan an email setting out recent transactions of properties at Tsing Yi Garden sourced from the data contained in the website of Centaline Property that was responsible for introducing the deal.  It was said that the average price of those deals was HK$1.45 million.

39.  Objectively, Lai’s above email seems to serve the purpose of justifying that the Property was sold at the prevailing market price.  One wonders why Lai found it necessary to do so, if he did sell at the price that Chan had agreed.

40.  In his reply dated 27 July 2009, Chan complained that Lai had signed an agreement to sell the Property at that price without his authorisation.  Chan also recited the content of 2 mobile phone text messages that he sent to Lai earlier on the date of this email.

41.  In his first message, Chan expressed his surprise to receive Lai’s message on 4 July 2009 that the (provisional) agreement had been signed without first contacting him.  Chan also referred to the explanation that Lai gave on the telephone on the date of this email, namely that Lai had forgotten to seek Chan’s consent.  Chan found the explanation to be absolutely unacceptable.  Chan reserved the right to claim against Lai.

42.  In his second message, Chan reiterated that up till then, he had never concurred in selling the Property. Lai was warned that he took his own risk and Chan would claim against him for disposing of his interest in the Property without his permission.  The message ended with Chan’s demand that Lai took appropriate rectification action at his own costs.

43.  It was only on 7 August 2009 when Lai attached to his email to Chan the provisional agreement, apparently after their telephone conversation a few days ago.  In the same email, Lai sent more recent transaction records sourced from another property agent for Chan’s reference.  He further proposed to settle Chan’s complaint by paying Chan what he considered to be the difference between his assumed market price and sales price of the Property.

44.  The parties apparently talked on the telephone a few days later.  On 13 August 2009, Lai sent an email to Chan adjusting his assumed market price of the Property at the time of the sale and thus the difference that he proposed to pay to Chan to settle Chan’s complaint.

45.  Chan did not accept Lai’s proposal.  In his email 2 days later, Chan reiterated that the Property had been held for over 12 years.  He was paying only HK$5,000 towards maintaining the Property.  The interest rate was expected to drop to almost nil.  He expected the Property to appreciate in value by 20-30%.  Chan attached for Lai’s comment a draft undertaking agreement for settlement.  According to the draft, Chan expected to have been able to sell the Property at HK$1,812,500.  Chan expected Lai to accept and to sign the draft agreement prior to the completion of the sale of the Property on 7 October 2009.

46.  Chan had since been chasing for a reply from Lai.  That included his email on 18 September 2009 whereby Chan attached a survey of recent transactions of properties at Tsing Yi Garden including one similar to the Property sold at HK$1.72 million.

47.  However, in his letter of reply on the same day, Lai informed Chan that completion of the sale of the Property had already taken place on 16 September 2009.  Lai admitted in his evidence that it was his initiative to ask the purchaser to bring forward the completion from 7 October 2009 so as to pre-empt any possible attempt by Chan to temper the completion.  By the same letter, Lai tendered what he said to be half of the net sales proceeds, HK$50,033.20, to Chan.  Chan admitted in his pleading that he had received this amount from Lai.

48.  By his solicitors’ letter dated 12 October 2009, Chan put on record the above background, including Lai’s having brought forward the completion date again without prior notice to Chan.  Chan demanded Lai to compensate him a sum of HK$135,000 being half of the difference between the sale price (HK$1.45 million) and what Chan suggested to be the current market value of the Property (HK$1.72 million).

49.  One week later, Chan commenced the present action.

50.  Considering the evidence of the parties and the contemporaneous documents, I find that whilst there might be understanding in early 2009 that the Property could be sold if it fetched a price enough to settle the outstanding mortgage loan, Lai did not possess Chan’s specific consent to sell the Property at HK$1.45 million when he entered into the provisional agreement dated 4 July 2009.

51.  Lai alleged that if Chan had objected to the sale after the provisional agreement, he could still have opted out of the agreement upon return of the initial deposit and payment of liquidated damages.  Yet the fact was that he would commit to sell at the price by signing the provisional agreement prior to notifying Chan.  Further, according to Chan, he actually had no idea when the formal sale and purchase agreement would be signed until he was informed by Lai’s email on 27 July 2009 that it had already been signed.  Lai said in court that he could not recall if he actually informed Chan of the date for signing of the formal sale and purchase agreement.  The fact, I find, was that Chan did object to the deal as soon as he was informed of the conclusion of the provisional agreement.

The Undertakings and the Deed of Trust

52.  There is no dispute that the Undertakings and the Deed of Trust were prepared by a Charles Man (“Man”) who is a solicitor.  Lai’s pleaded case is that Man was then acting for Chan. The documents were signed at Man’s office and copies of the documents were not provided to him then.  He claims no knowledge about the contents of the documents.

53.  According to Chan, Man was in fact a common business friend serving the bank in which both Chan and Lai were working then.  Man was asked to assist in preparing the documents for the parties on a friendly basis.  There was no question of Man acting for Chan. They were indeed signed at the office of Man but in the absence of Chan.  Chan is not in a position to tell exactly how they were executed.  I accept Chan’s evidence in this respect.

54.  Insofar as the validity and binding effect of the documents are concerned, Lai’s allegations are immaterial.  I have no reason to doubt Lai’s ability to understand the documents that he executed.  After all, he was from the outset behind the steering wheel in the venture.  There is no dispute that he was responsible for dealing with his solicitors in the conveyancing.  In the light of the investment venture, the terms of the Undertakings and the Deed of Trust, in my view, are not extraordinary.  The bottom line is he signed them with open eyes.

55.  I should mention this. There is no issue of enforceability of the Deed of Trust, notwithstanding the fact that it was not registered in the Land Registry.  In any event, the position of Lai as a trustee and thus his fiduciary duty as such to Chan is not open to dispute.  In his statement (at para.2), Lai also accepted that he was in a position of a trustee in holding the Property then.

The claim pursuant to the Undertaking

56.  Chan claims for all his money back subject to credit to what Lai has repaid him.  He says that shortly before 26 May 1997, Lai promised to indemnify him against any loss or liability that might arise from the investment venture.  In court, Chan reiterated his understanding that if the investment made profit, he would be entitled to half of it.  But if it failed and led to loss, Lai would have to indemnify him.  Effectively Chan was in a guaranteed position.

57.  Chan’s stance is astonishing and defies understanding according to common sense.  Further, any oral agreement as to the fundamental element of profit and loss sharing would have been reduced into writing.  In this respect, Chan contends that this is the effect of clause 3 of the Undertakings.  I do not see how.  Pursuant to that clause, Lai undertakes to indemnify Chan against any liabilities, expenses and losses incurred as a result of recovering his share of rights and interest in Property and the sale proceeds in case of its disposal.  In the draft undertaking agreement that Chan produced to Lai in August 2009, the same undertaking was repeated to that effect (clause 3).  This obviously has nothing to do with the investment loss as Chan now alleges.  The claim on this basis is devoid of merit.

Claim pursuant to trust

58.  Whether the Deed of Trust is enforceable, the position of Lai as the trustee and thus his fiduciary duty owed to Chan are not up to dispute.  Sale of the Property at HK$1.45 million without Chan’s specific consent, in writing or not, was breach of such fiduciary duty.

Price difference

59.  By sale at undervalue, Chan is not differentiating the sale price of HK$1.45 million from what should have been the price at the time of the sale.  The pleaded case of Chan is that the Property could and would have been sold later at a higher price.  He pleaded the alleged market value of the Property as at the date of writ, i.e., December 2009, was HK$1.75 million.

60.  At the beginning of the trial, I expressed my reservation about the complete lack of evidence of valuation of the Property.  Mr Tsui suggested to adjourning the issue of quantum for assessment upon the court’s decision on the issue of liability.  I rejected that, as there has been no application or order for split trial.

61.  In his submission, Mr Tsui suggested that valuation should not be an issue, as the same is also not in the list of issues.  This cannot be right.  The court must determine the issues as apparent from pleadings; and according to the pleadings, the alleged market value of the Property as at the date of writ is denied and therefore in issue.  Chan cannot escape from having to prove that.  Eventually Mr Tsui still applied to adjourn question of quantum.

62.  Both sides are represented.  The issue of the value of the Property is readily apparent from the pleadings.  The parties had ample opportunity to consider how this ought to be proved at trial.  They made the conscious decision to proceed to trial the way they did.  This is reflected by the parties’ listing questionnaires stating that neither of them had any intention to adduce expert evidence.  The case was fixed for trial accordingly.  Against this background, entertaining such an application merely due to some second thought at such a late stage will not sit well with the current litigation culture and practice.  I do not allow that.

63.  In his email dated 25 July 2009, Lai provided Chan with what were said to be recent transactions of properties at Tsing Yi Garden.  However, they involved properties situated between the 2^nd and the 7^th Floor.  One would normally expect the location of the Property on the 32^nd Floor should have some material bearing on the price.  In his reply dated 27 July 2009, Chan did make this point.  In court, Lai also explained that the data were meant to be for Chan’s reference only.  On 7 August 2009, Lai proposed to value the Property at HK$1.55 million.  This was adjusted to HK$1.6 million on 13 August 2009.

64.  On 15 August 2009, by way of proposed settlement, Chan suggested the expected sale value of HK$1,812,500. According to his solicitors’ letter to Lai dated 12 October 2009, Chan instructed that the then current market price of the Property was HK$1.72 million.  Even that, according to Chan in court, was a suggested figure for the purpose of negotiating settlement.  A week later, Chan commenced this action, now claiming that the then current market price of the Property was HK$1.75 million.

65.  Both parties had referred to some data of transactions involving properties at Tsing Yi Garden obtained from their own sources at some stage in their correspondence.  But not even such hearsay evidence has been disclosed and produced.  I simply have no basis for concluding that what Chan asserts should be preferred to what Lai says about the market value.  The alleged market value of the Property of HK$1.75 million as at the date of writ is simply not proved.

66.  The inevitable conclusion is that only nominal damages can be awarded to Chan for Lai’s breach.

Account

67.  Chan claims for an account of Lai’s own contribution towards the purchase and maintenance of the Property and the income derived from the letting and sale of the Property.  Lai denies that he has failed or refused to give an account as alleged.

68.  In court, Chan admitted having received from Lai at some stage report sheets in this respect.  The subject of Lai’s email dated 23 July 2009 suggests that he apparently provided Chan with some sort of “breakdown” in relation to the Property after the provisional sale and purchase agreement had been entered into.  The document actually attached to the email was not produced.

69.  There is a “summary statement for property” apparently printed on 12 January 2010 and 8 November 2010, both being identical.  The summary statement set out the monthly mortgage repayment, management fee, contributions by Chan and Lai as well as the rental income.  The summary statement also set out other payments made and income received by Lai.  But the same covers only the period from April 2000 up to the sale of the Property in July 2009.  It is incomplete.  There is also no suggestion that any document that may substantiate those figures have ever been disclosed to Chan.

70.  I think Chan is entitled to an account to be taken of Lai’s contribution towards the purchase and maintenance of the Property as well as all rental income immediately prior to the sale of the Property.  But I expect the parties to be sensible about the costs implication of further legal proceedings, if the parties could not settle the accounts between themselves.

Others

71.  Various other points were advanced in Mr Tsui’s submission on behalf of Chan.  They are in my view not particularly relevant; and the determination of those points is not called for in view of the above findings.

Order

72.  There will be judgment against Lai for nominal damages in the sum of HK$10 with interest at the judgment rate from the date of writ until today.  Interest from today runs at the judgment rate until full payment.

73.  There will be an order for an account to be taken of Lai’s contribution towards the purchase and maintenance of the Property as well as all rental income received immediately prior to the sale of the Property; and an order for payment of the amount found due to Chan upon taking of the account, if any.  Application for directions for the taking of account, if any, shall be made within 30 days from today.

74.  I make a nisi order that Lai shall pay Chan’s costs of this action, including any costs reserved. Costs shall be taxed, if not agreed, with certificate for counsel.  In the absence of application within 14 days to vary, the costs order shall become absolute.