LI KWONG WONG & OTHERS v. EVER PROPERTY MANAGEMENT LTD & OTHERS

IN THE COURT OF APPEAL

1995, No. 62

(Civil)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. We have before us an appeal and a cross-appeal against a number of costs orders made by Leong, J. on 24 February 1995; these come before us by leave of the judge granted the same day.

Background

2. The litigation of which the judge was disposing by his order of 24 February 1995 arose out of a dispute between the owners (or some of them) of Wing's Building, a multi-storey building in Queen's Road Central ("the owners"); the former managers of the building Ever Property Management Ltd ("the Manager") and a number of workmen engaged in and about the care and maintenance of the building ("the workmen"). The owners fell out with, and sacked, the Manager; and the Manager sacked the workmen. The workmen became entitled to some back pay and, more importantly, to substantial severance and long service payments. But from whom : the Manager or the owners? Each sought to throw the liability on the other; so the workmen, although taking the view that it was clearly the Manager who was liable to them, rather than the owners, sued both of them, the owners and the Manager, in the alternative.

The order of the Master

3. In the case of the Manager they took out a summons for summary judgment against it; but on 2 November 1993 the Master (presumably persuaded that the Manager had an arguable point) gave the Manager unconditional leave to defend the claims for severance and long service payments, and went on to deal, as he had to do, with the costs of the proceedings before him. The usual order, perhaps, would have been for the costs to be costs in the cause; but the Master, having apparently formed the view that it clearly was the Manager, not the owners, who were obliged to settle with the workmen, and having given summary judgment for some small sums against the Manager in favour of two of the workmen, made an order for costs in any event in favour of the workmen against the Manager. This exercise by the Master of his discretion as to the costs of the proceedings before him may have been a little unusual but did not, in my judgment, fall outside the ambit of the discretion conferred on him in dealing with such cases. In making an award of costs in proceedings for summary judgment :

"..... the award of costs will of course depend on the nature of the application under O.14 and the circumstances of the case."

See the Supreme Court Practice 1995, 14/7/6.

The order of Rhind, J.

4. However, the Manager, aggrieved by the Master's order, appealed to the judge. The appeal came before Rhind, J. on 12 November 1993. He took the view that the issue as to liability of the Manager ought not to be decided summarily. However, instead of affirming the order of the Master giving the Manager unconditional leave to defend, as in the circumstances he should have done, he adjourned, or purported to adjourn, the hearing of the Manager's appeal to the trial of the action. He had, as I think, no jurisdiction to do this, and the fact that the parties consented to his doing so, as they did, could not have conferred on him any jurisdiction which he did not otherwise have. But the fact that the Manager consented to this course does demonstrate an election on the part of the Manager, for whatever reason, not immediately to prosecute its appeal; the Manager was no doubt content to take this course since, as part of the arrangement between the parties, it had been agreed that the execution of the order of 2 November 1993 should be stayed, as indeed, by the order made on 12 November 1993, it was.

The payment into court

5. But the workmen's proceedings against the Manager juddered to a halt when, a couple of months before the trial of the action was due to start, the owners paid into court, to answer the workmen's claims, sufficient money to satisfy those claims in full. Naturally, the workmen no longer wanted to chase the Manager for their money; all they wanted now was to take out of court the moneys paid into court by the owners and to put paid to the whole litigation.

The application for payment out

6. For this purpose the workmen applied, as they had to do, for an order of the court in that connection. Since the money paid in was paid in by some of the defendants, the owners, and not all of the defendants (of whom the Manager, sued in the alternative, was one) the necessary order had to be one which dealt with the whole costs of the action : see O.22 r.4 of the Rules of the Supreme Court (I should add, in parenthesis, that although the owners, and the Manager, were sued in the alternative, there was only one cause of action here, that is to say the claim of the workmen against whoever was their employer : this is therefore not a case in which the order for costs was required, under O.22 r.4 to deal only with one cause of action and not another).

The order of Leong, J.

7. On 23 February 1995 the workmen's application under O.22 r.4 came before Leong, J. He ordered (among other things) that :

(1) the workmen's costs in the O.14 proceedings be to the workmen against the Manager;

(2) the workmen's costs on the appeal against the O.14 decision be to the workmen against the Manager (with a certificate for two counsel);

(3) there be no order as to costs of the hearing before him as between the workmen and the Manager.

The appeal

8. The Manager now appeals against the first two of these orders. The workmen appeal against the third order.

9. The first order did no more than re-state what had been ordered by the Master as to the costs of the O.14 proceedings. I have already indicated that, in my judgment, the order as to costs made by the Master was one which it was within his discretion to make. I see no reason to interfere with this order of the judge having the same result and, in effect, refusing to interfere with the order made by the Master.

10. The second order was, in my judgment, also one with which this court should not interfere.

11. The arrangement under which, in effect, the fate of the Manager's appeal against the order of the Master giving the workmen the costs of their application for summary judgment was left to be decided at the trial of the action was frustrated by the new circumstance, that because the workmen no longer wanted any relief against the Manager, there was never going to be any trial. When costs are, for this sort of reason, left dangling in the air, it is absurd for the case to go on simply about costs, as Lord Denning, M.R. remarked in J.T. Stratford & Son Ltd. v. Lindley and others (No. 2) [1969] 1 WLR 1547 at p.1553E. The court cannot try the action at this stage. It must put aside the respective merits of the dispute, as the Court of Appeal did in the case cited (see p.1554B).

12. In the exercise of his discretion in our case, the judge thought the right course, in all the circumstances of the case, was to order the Manager to pay the workmen's costs of this appeal by the Manager which was, now, never going to proceed to a resolution. I cannot see how this exercise by the judge of his discretion can be faulted. The Manager did not choose to prosecute its appeal before Rhind, J. and (no doubt very sensibly) did not insist on the action proceeding so that it could be proved right in the end and get its costs of the action, including the costs of the appeal, at the conclusion of the trial of the action. I do not think that it can legitimately complain, in these circumstances, of the order made against it as to the costs of the appeal.

13. The third order also seems to me an unobjectionable exercise of discretion. The judge did not think it right, in all the circumstances of the case, to make an order against the Manager for the costs of an application by the workmen the effect of which was to bring to an end the workmen's proceedings against the Manager. I would have made the same order as the judge.

The result

14. In the result, I would dismiss the appeal and the cross appeal, and proceed to hear counsel as to the costs of the appeal and cross appeal.

Ryan J :

15. I agree with the judgment delivered by my brother Godfrey JA. I too would dismiss the appeal and the cross-appeal and I have nothing to add.

Litton, V-P :

16. This appeal is concerned with the exercise of discretion by Leong J under Order 22 rule 4 of the Rules of the Supreme Court. Leave was given by Leong J to take money out of court and, in accordance with rule 4, he proceeded to deal with the whole costs of the action to which the payments related. This is an exercise of discretion by a High Court Judge with which this court rarely interferes.

17. The appellant (D1 in the court below) is a limited company engaged to render a whole range of management services in relation to Wing's Building. The building is in multiple ownership. To discharge its contractual obligations as managers of the building, D1 had to engage the services of people like the plaintiffs: an electrical technician and caretakers.

18. The plaintiffs were not paid as they should. So they sued D1 who employed them. From this simple set of facts there has been erected this monumental piece of litigation which has now been on foot for over four years. (The notices of dismissal go back to July 1991). The appeal bundles before us add up to over 300 pages. And what is all this sound and fury about? It now boils down to these questions: Whether the judge in putting, in effect, an end to the litigation, should have (i) confirmed an order for costs which Master Woolley had already made against D1 and (ii) ordered that the plaintiffs' costs incurred on the appeal against Master Woolley's order for summary judgment be paid by D1, with a certificate for two counsel.

19. The judge, in considering the exercise of his discretion, thought it reasonable that the plaintiffs should have taken out Order 14 proceedings against D1. Whilst I would not disagree with his conclusion, on the facts as I see them, I am by no means persuaded that his approach was correct. That issue was, in a sense, academic, because he was no longer concerned with the merits of the Order 14 application. A firmer foundation for the exercise of the judge's discretion would have been this: Master Woolley's order of 2 November 1993 stood, at the end of the day, unimpeached; the plaintiffs had incurred legal costs in defending that order against D1's appeal; the appeal was in the end never heard: So why should D1 not be ordered to pay the plaintiffs' costs incurred on that appeal?

20. I accept Mr Wong QC's submission that, at first blush, there is something rather odd in the judge awarding to D1 its costs in defending the plaintiffs' claim and, in the same breath, saying that it was reasonable for the plaintiffs to have taken out Order 14 proceedings for summary judgment against D1. Perhaps the judge was over-generous in giving to D1 the rest of the costs: for my part, I cannot begin to understand how it could be argued that a management company which employed people like the plaintiffs to enable it to discharge its functions as this building's manager was not "an employer" within the meaning of the Employment Ordinance. Be that as it may, we are at the end of the day concerned with an exercise of broad discretion. The apparent illogicality in the judge's order has certainly aroused anxiety on my part but, at the end of the day, I am not persuaded that we should interfere with his order.

21. I would accordingly dismiss D1's appeal.

22. As to the plaintiffs' cross-appeal against the judge's order that there should be no order as to the costs of the summons which he had heard, that too, in my judgment, should be dismissed for the reasons which my brother Godfrey JA has given. The result is therefore that the appeal and the cross-appeal are dismissed.