呂潔冰及另一人 v. 李漢斌

LDBM 356/2012

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 356 OF 2012

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J U D G M E N T

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1.  This is an application for costs made by the Respondent upon the Applicants’ filing of a Notice of Discontinuance. The application is made out of time and leave for extension of time has also to be sought.

Extension of Time

2.  The procedure on discontinuing an action in the Tribunal and the consequence thereupon is set out in rule 27 of Cap 17A:

(1)	A party may, without leave of the Tribunal, discontinue the proceedings or withdraw any part thereof by serving a notice to that effect on the other party.
(2)	A party upon whom a notice mentioned in subrule (1) is served may, within 14 days of that service, apply to the Tribunal for an order for costs and, subject to the Landlord and Tenant (Consolidation) Ordinance (Cap 7), the Tribunal may make such order as it thinks fit.

3.  The Respondent said that the application for costs was not made within the prescribed time because the legal representative had never received the Notice of Discontinuance until they did a search in the court file 9 months afterwards.  It is not disputed that the Notice of Discontinuance was only served on the Respondent himself notwithstanding that it had been made clear in the Notice of Opposition that the address of service should be that of his lawyers.  The reason for not serving on the lawyers was, according to the Applicants, that they did not agree that the Incorporated Owners should hire a lawyer for the Respondent.  

4.  Mr Lun, counsel acting for the Applicants, submitted that the Notice of Discontinuance had actually been received by the Respondent and therefore he was not prejudiced.  I could not agree.  The Respondent had the right to be properly served the Notice of Discontinuance under the law; upon notice of discontinuance he had the right to apply for costs but within a prescribed time.  As what had happened in this case, when it was not served on the lawyers, no application for costs had been made within time and application for extension of time had to be made necessary.  Yet, the Applicants refused to grant consent for extension of time despite of their own breach.  I am of the view that in the circumstances, the Respondent must have been prejudiced.  I am of the view that if the Applicants chose to take such course of action, they have to bear the consequence.  I now grant leave for extension of time for the application for costs and find that the Applicants should bear costs for such application.

Costs of the Proceedings

5.  The Respondent asked for costs from commencement of proceedings to the date they discovered the Notice of Discontinuance by searching the court file on 4 March 2014, as mention, which was 9 months from the actual date of issuance of the same in June 2013.  I was informed that fortunate to the parties the delay did not cause any difference in costs because no professional work had been done during the time.

6.  There was no argument on the legal principles on costs upon discontinuance of an action.  It is trite that in the normal course of event the party who discontinues the action should pay costs.  This does not however mean that the other party is entitled to costs as of right.  There are exceptions.  See Trend Publishing v Vivien Chan & Co (a firm) [1996] 2 HKLR 227 and Lai Kwok Wah v Leung Kwok Hung LDBM 292/2004. The exception relevant to the present proceedings is that, according to the Applicants, “the issue had become academic”.

7.  The Applicants, by their affirmations, asserted that they took out these proceedings because the Respondent, who was the chairman of the Incorporated Owners, had twice refused to convene an owners’ meeting upon request made by 5% of the owners.  The purpose of the requests was to remove the then management committee and to re-elect members to the same (“the Requests”).  Since there was an AGM held on 27 January 2013, about one month after the Notice of Application was filed, and a new management committee had been elected, the issue had therefore become academic.  They explained that they did not file the Notice of Discontinuance soon after the AGM because they did not know how to discontinue an action.

8.  The Respondent said that not only had they not refused to convene the meeting, they had a formal discussion with the owners who made the Requests including the 2^nd Applicant at a management committee meeting held on 24 December 2012 (“the 24 December MC Meeting”), which was 10 days after the 2^nd  Request.  According to the Respondent, the Request was costly because the then committee members were about to step down in the natural course of event by March 2013.  The Respondent who was the then chairman endeavoured to find out from the owners who made the Requests whether they would agree to have the Request dealt with in the AGM brought forward to January 2013.  This would save a lot of time and money for the owners.  At the 24 December MC Meeting, there was discussion as to how and when the Request should be acceded to.  The owners who made the Requests had been alerted to the fact that if the AGM was to be brought forward to 27 January 2013, it would be 2 days outside the prescribed 45 days for the owners meeting to be held under the 2^nd Request.  If they took issue on these 2 days, the AGM would be brought further forward to 24 January 2013 instead to abide by the rule.  The Respondent’s case was that the Applicants had agreed that the 2^nd Request would be dealt with at an AGM to be brought forward to 27 January from March 2013.

9.  The discussion had been recorded as minutes of the 24 December MC Meeting.  Relevant passages of the minutes are as follows:

“1.討論法團接納超過5%業主簽名要求召開業主大會後的安排（屆時邀請提交5%業主簽名的會議召集人共同商議）

...

李主席表示如果按5%業主意願於一月份召開特別業主大會重選第五屆管理委員會，然後於二月份進行交接，而三月十五日前必須按法例規定召開業主週年大會，選出第六屆管理委員會成員。而且召開業主大會每次勻需要花費萬多元... 即表示重選的第五屆管理委員會成員，任期亦只有個多月左右。故希望會議聯絡人可以取消5%業主簽名召開特別業主大會，令現屆管理委員會可以直接召開週年業主大會，直接選出第六屆管理委員會。

而會議聯絡人李女士問，可否於1月份召開業主大會並直接選出第六屆管理委員會。李主席回覆原則上可以，但時間安排會非常愴悴。...

有聯絡人表示，5%業主簽名的大會可以與業主週年大會一同召開，便可以直接選出第六屆管理委會員。李主席回覆現任管理委員會的原意就是希望聯絡人同意取消召開特別大會，使管理委員會可直接召開業主週年大會，選出第六屆管理委員會。... 若聯絡人同意取消5%簽名，可將原訂於3月3日的業主週年大會提前至2013年1月27日舉行，屆時將會選出第六屆管理委員會，而社區會堂亦回覆當天有檔期可借予本苑，有待管理委員會簽妥文件，確認租期。但聯絡人表示，如於1月27日舉行，則超過法例規定於收到5%業主簽名後45天內召開特別大會的限期。李主席回覆，是超過兩天。但若聯絡人同意，則可將會議日期押後，否則亦可按聯絡人意願於1月24日前召開業主特別大會，重選第五屆管理委員會，及於3月3日舉行業主週年大會，選出第六屆管理委員會，將會議分開進行。聯絡人並無出言反對。... 李主席表示，聯絡人必須先明白5%業主簽名召開特別業主大會的目的為何，若仍不同意取消有關簽名，2013年1月27日的業主週年大會則志在必行，大會將會有兩個議程，第一選出第六屆管理委員會成員；第二推翻第五屆管理委員會並重新選出第五屆管理委員會成員。惟此舉只能推翻第五屆管理委員會，並不影響第六屆管理委員會的選舉結果。請聯絡人慎重考慮是否取消5%業主簽名。

2.討論及議決本苑週年業主大會舉行之日期、時間及地點

因剛才聯絡人已同意委員會建議於1月27日召開業主大會。管理委員會決定於2013年1月27日召開業主週年大會。時間為下午3時正，於建生社區會堂舉行。有關之議程為選出第六屆管理委員會成員，各與會委員一致同意有關決定。李主席指令管業處擬定業主週年大會之議程。”

10.  From the above, although it was not very clear that there was agreement from the Applicants themselves that the 2^nd Request would be dealt with by bringing forward the AGM but it was the 2^nd Applicant who had raised the question as to whether the 2^nd Request could be dealt with by an AGM to be held in January 2013.  There was no opposition raised except there was a discussion on the delay of 2 days.  No owners insisted that the AGM should take place on 24 January 2013 instead.  The real contention there and then was on whether the Requests should be withdrawn.  It is however clear that at the conclusion of the discussion the management committee resolved that an AGM would be held to elect a new committee on 27 January 2013.

11.  As I can see from the minutes, the 2^nd Request was the only agenda item for the 24 December MC Meeting.  I am of the view that the Applicants should at least be aware of the resolution that a new management committee would be elected in a brought forward AGM to be held on 27 January 2013.  This was in any event not disputed by the Applicants.  What they said was they had not agreed to it.  Be that as it may, I am of the view that knowing that an AGM would be held on 27 January 2013 to elect a new management committee and yet insisted in bringing an action on 27 December 2012, the Applicant would have to bear the consequences of their decision.

12.  Even if for whatever reasons they said they did not know about such resolution, or they did not trust that this resolution would be carried out and therefore they issued the Notice of Application on 27 December 2012 (in fact this was not their case), there was a notice announcing the resolution issued by the Incorporated Owners on the same day, i.e. 27 December 2012, probably after their filing of the Notice of Application with the Tribunal at noon time.  Content of the Notice is as follows:

“有關召開業主大會事宜

本法團有見該大會的訴求與原先籌備的業主大會相距只有一個多月。… 如依照聯絡人 (召集人) 要求進行業主大會，只能延續第五屆管理委員會任期至2013年3月15日前，此舉將會對屋苑造成浪費及滋擾。因此，本法團為免對業主造成滋擾及浪費本苑人力、物力等資源，經2012年12月24日法團特別會議與聯絡人李女士及呂女士會議後，議決通過提前於2013年1月27日召開業主大會，並於業主大會中選出新一屆 (即第六屆) 管理委員會成員。 鑒於第六屆管理委員會委員選出後，本法團將無法按照聯絡人 (召集人) 的訴求撤換前一屆 (即第五屆) 管理委員會成員，特此公告各業主及大會聯絡人。”

13.  There was no allegation that they did not come across this notice.  If they discontinued these proceedings promptly after knowing about this notice, the costs issue would be immaterial because resolution was passed to appoint lawyers for the Respondent on 11 January 2013.  Unfortunately, the action was not discontinued. There was yet another notice; and that was the Notice of the AGM issued on 11 January 2013.  The Applicant must have learnt from it that there would be election of a new management committee at the AGM to be held on 27 January 2013, yet they did not discontinue the proceedings.  The Respondent filed a Notice of Opposition on 17 January 2013, 6 days after the Notice of the AGM.  Even after a new management committee was elected on 27 January 2013, they did not discontinue the proceedings.  Although there would not be much difference in the costs incurred if the Applicants had discontinued the action on or soon after 27 January 2013, their failure in doing so is definitely not going to assist them in resisting the Respondent’s application for costs.  Their saying that they did not know how to discontinue an action is not a good reason even if accepted.  If they decided not to find it out they should be responsible for their ignorance, to say the least.

14.  The Applicants said that they discontinued because the issue had become academic.  Such assertion was not supported by their evidence.  The Applicants said in their affirmations that although they had no intention to proceed after the AGM, they filed no Notice of Discontinuance.  Such notice was only filed in June 2013, 5 months afterwards, and that was for the purpose of facilitating the investigation of the ICAC officers.

15.  Even if I accept that the action was discontinued because the issue had become academic, I am of the view that such event should have been apparent to them before or soon after they filed the Notice of Application on 27 December 2012.  I am of the view that it would be wise had they waited until 27 January 2013 to see whether it was necessary to commence these proceedings; or in any event they had ample opportunities to discontinue the proceedings before the Respondent filed his Notice of Opposition on 17 January 2013.

16.  The Applicants had advanced an argument that they should not bear costs of these proceedings because the hiring of lawyers to represent the Respondent had not been properly authorized by an owners’ meeting. I am of the view that this point could not assist them either. The I.O., the alleged funder of the litigation, had not been joined as party to deal with this point.  Or even if the Applicant could successfully make out this point, one of the consequences would be to declare the contract null and void and that the Respondent might have to bear the costs personally or that the I.O. would still have to shoulder the legal fees on the basis of quantum meruit. Since costs order is now made against the Applicant, these consequences are not material.

17.  I see no valid reason for the Applicants to ask this Tribunal to exercise discretion in their favour by departing from the usual costs order that the party who discontinues the action should bear costs. Discretion should be exercised judicially. I find that the Applicants should bear costs from commencement of these proceedings to 4 March 2014, the date on which the Respondent’s legal representative discovered a copy of the Notice of Discontinuance from the court file.

Costs of the Application for Costs

18.  Costs of the present application should follow the event.  This is an order nisi that costs of this application be to the Respondent, to be taxed at District Court Scale with certificate for counsel if not agreed.  This order nisi is to become absolute if no application is taken out to vary the same within 14 days.

19.  Further, the legal representative of the Respondent is to bear costs personally for 10 minutes of the present hearing for wasting the court’s time.

Order

20.  My order is as follows:-

1.	The Applicants do bear the costs of these proceedings to be taxed at District Court Scale if not agreed from date of commencement upto 4 March 2014;
2.	There be an order nisi that costs of the present application be to the Respondent, to be taxed at District Court Scale with certificate for counsel if not agreed.  This is an order nisi to become absolute if no application is taken out to vary the same within 14 days; and
3.	The legal representative of the Respondent is to bear costs personally for 10 minutes of the present hearing.