THE INCORPORATED OWNERS OF HING WONG MANSION v. LEE LENG KONG AND ANOTHER

DCCJ 4633/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4633 OF 2006

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ASSESSMENT OF DAMAGES

1.  Lee (the 1^st Defendant) and Wong (the 2^nd Defendant) are the former chairman and secretary respectively of the Incorporated Owners of Hing Wong Mansion in Tai Kok Tsui, Kowloon (the Plaintiff).  Due to a dispute over the building renovation, one of the owners, Fung, commenced legal proceedings in the Lands Tribunal in 2004 (LDBM 367/2004).  All the 3 parties in the present action were sued as the respondents.  After trial, the Tribunal handed down the judgment on 12 October 2005 and granted essentially what Fung prayed for.  The Tribunal also awarded Fung costs against the respondents with certificate for counsel and to be taxed on a District Court scale.

2.  Eventually, the Incorporated Owners settled the costs of Fung and the respondents’ own costs in the Lands Tribunal action.  Neither Lee nor Wong made any contribution.

3.  In a case where there is a costs order against several parties, such costs liability should be joint and several.  If any one of them satisfies such costs liability, he should be entitled to apply to the court or the tribunal which made the costs order for an apportionment of such costs liability among the liable parties: see Halsbury’s Laws of England (4^th ed) Vol.20(1) at para.254 & footnote 5.

4.  The present case is different.  The Incorporated Owners contends that Lee and Wong, in their then capacities, acted unreasonably in choosing to defend the Lands Tribunal action in the name of the Incorporated Owners.  The Incorporated Owners therefore commenced the present action, claiming damages that effectively represent an indemnity from Lee and Wong in respect of the costs liability of the Incorporated Owners in that action.

5.  In default of notice of intention to defend, on 14 and 30 November 2006, the Incorporated Owners obtained interlocutory judgment for damages to be assessed against Wong and Lee respectively.

6.  When the present case was before H H Judge Ng last May, Judge Ng raised a requisition as to the basis for the Incorporated Owners to claim that Lee and Kong acted unreasonably in choosing to defend the Lands Tribunal case and incurring the consequential costs liability.  Section 29A of the Building Management Ordinance, Cap.344 provides that members of the management committee of an owners’ corporation shall not be personally liable for any act done or default made by or on behalf of the corporation, so long as he acts in good faith and in a reasonable manner.  I can understand the prudent approach of Judge Ng, notwithstanding that the default judgment has already been entered.

7.  When the matter came before me last August, Wong appeared and indicated an intention to set aside the interlocutory judgment.  I adjourned the assessment.  Wong did take out such an application afterwards.  Yet, eventually, she settled with the Incorporated Owners by paying HK$120,000 towards their claim in the present action.  The present action against Wong was recently discontinued.

8.  Now the Incorporated Owners asks for damages against Lee in the amount claimed minus the amount received from Wong.

9.  As before, Lee did not appear in this hearing. I see no reason that the Incorporated Owners should be prevented from proceeding.  Li Yip Fu, formerly of the management committee too, attended as witness and adopted his 2 statements as his evidence.  To address the requisition raised by Judge Ng previously, he stated that Lee and Wong had without reasonable cause chose to defend the Lands Tribunal action in the name of the Incorporated Owners.  He referred to the judgment of the Lands Tribunal in support.  But more importantly he confirmed that the meeting and resolution whereby the decision to defend and to instruct solicitors and counsel on behalf of the Incorporated Owners was made was improper and invalid due to insufficient proper quorum.  I accept his evidence.

10.  Fung’s solicitors proposed for taxation a bill of costs and disbursement in the Lands Tribunal action in excess of a total sum of HK$570,000.  The contemporaneous correspondence evidence the negotiation between the parties and HK$530,000 was the settled amount.  The own costs of the Incorporated Owners, Lee and Wong were HK$270,000.  The documents evidence that the Incorporated Owners have paid both amounts of HK$530,000 and HK$270,000 by various instalments.  I see nothing that suggests that the amount of costs incurred is unreasonable.

11.  I therefore order that Lee shall pay to the Incorporated Owners damages in the amount of HK$680,000 together with interest thereon at the judgment rate from the date of writ until payment.  Lee shall pay his share of the costs of this action, including the assessment proceedings, and any costs reserved.  But the costs of this hearing, which concerned Lee only, shall be borne by him solely.  Costs shall be taxed, if not agreed.

Representation: