LAU KWAI KIU v. BIAN XINTIAN AND ANOTHER

HCMP344/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 344 OF 2009

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REASONS FOR JUDGMENT ON COSTS

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1.  Further to my Judgment dated 11 November 2010, the plaintiff applied by summons dated 24 November 2010 for an order that, inter alia:

“3. The Defendants, T.C. Lau & Co. and their handling solicitor Mr Gabriel H.T. Leung-Jackson-Lipkin do pay indemnity costs for and incidental to and occasioned by this entire action to the Plaintiff jointly and severally to be taxed if not agreed;

4. Costs of this application be to the Plaintiff on indemnity basis to be taxed if not agreed.”

2.  The basis of the application could be found in my main Judgment as follows:

“59. On 6 August 2010, I inquired both parties as to whether a letter should be sent to the Lands Department to determine the content of the declaration that Mr Lau had to make in the application process. Messrs T.C. Lau & Co., solicitors representing the defendants, were the first to reply on 10 August 2010.

60. Surprisingly they were able to provide the answer to the query to the Lands Department before the Lands Department could have replied this court. As it turned out, they had providently raised the very same query on 20 October 2009 and received a reply (‘the Reply’) on 16 November 2009 but they had improvidently failed to produce the Reply during the trial.

61. The Reply was unfavourable to the defendants, as follows :

          ‘According to office record, no declaration by the grantee was found in related to the application for small house in respect of the captioned lot.’  [Their emphasis]

62. Messrs T.C. Lau & Co. explained that by the time the Reply was received, the defendants had filed their witness statements on 11 November 2009 so the reply ‘did not particularly arrest [their] attention’. They also blamed the lack of any formal discovery process or preparation of List of Documents for their failure to put their mind on the Reply. They also said that Mr Ma was not informed of the Reply and denied any intention to conceal its existence.

63. Messrs Lawrence K.Y. Lo & Co. replied on 20 August 2010. They doubted the explanation provided above and accused Messrs T.C. Lau & Co. of deliberately concealing the Reply. They think it is inconceivable that such an important letter could have escaped the attention of Messrs T.C. Lau & Co. when the issue was hotly debated during the trial. By a letter dated 1 September, they drew this court’s attention to the fact that Mr Ma hinted that the plaintiff was concealing documents that contained the declaration made by Mr Lau.

64. In my judgment, it is inconceivable that Messrs T.C. Lau & Co. could have forgotten such an important letter.  I cannot see how the making of the defendants’ witness statement could have caused the Reply to ‘not particularly arrest [their] attention’.  It is even more difficult to believe that despite the vigorous debate at the trial on the issue of illegality and the submission on Chung Mui Teck, they could still have forgotten about this letter.”

3.  By a letter dated 27 September 2010, the District Lands Office, Sha Tin, Lands Department, replied as follows:

“1. New Grant No. 12272 (the ‘New Grant’) is a Private Treaty Grant in Lok Lo Ha Village, which is not situate in a Village Expansion Area;

2. According to the current practice and procedure, the earliest date that the grantee may alienate the property would be on the date of issue of a Modification Letter removing the restriction on alienation to the grantee upon his payment of requisite additional premium under Special Condition 5(d)(ii) of the New Grant. The date of issue of the said Modification Letter is usually around 4 weeks after the day of payment by the grantee of the assessed additional premium; and

3. During the application that led to the grant of the New Grant which is a standard small house grant at a concessionary premium, the applicant was required to make a declaration declaring as to his entitlement to such a small house grant to the same effect of the matters stated in Special Condition No. 4(a) of the New Grant.  However, the grantee was not required to declare that he had not made any agreement with anyone to hold the property on trust and/or transfer the property at a later time.”

This is to the same effect as the Reply much earlier on 16 November 2009.

4.  Under the High Court Ordinance (Cap. 4) section 52A(4) to (7), and in particular (6):

“… ‘wasted costs’ means any costs incurred by a party as a result of—

(a) an improper or unreasonable act or omission; or

(b) any undue delay or other misconduct or default,

on the part of any legal representative…”

5.  Under O. 62 r. 8:

“The Court may make a wasted costs order against a legal representative, only if—

(a) the legal representative, whether personally or through his employee or agent, has caused a party to incur wasted costs as defined in section 52A(6) of the Ordinance; and

(b) it is just in all the circumstances to order the legal representative to compensate the party for the whole or part of those costs.

(See also the CFA Decision in Ma So So Josephine v Chin Yuk Lun Francis and Chan Mee Yee [2004] 3 HKLRD 294 (CFA) per Li CJ at 300 D-F.)

6.  The defendants and their legal team defended the case on the allegation of illegality which they plainly knew were false and/or misleading. I accept the plaintiff’s submissions that the defendants and their legal team have failed to provide any credible explanation for their conduct of concealing the Reply. 

7.  Accordingly, the failure to produce the Reply is an unreasonable omission on the part of the defendants’ solicitors, to say the least.

8.  I therefore made a “wasted costs order” against them in terms of paragraphs 3 and 4 of the plaintiff’s summons.