XCHRX RISEWAY INVESTMENT LTD. v. WONG KWOK CHIANG and Another

1994, MP No. 603

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. On 6 March 1995, I handed down a judgment following an inquiry into the nature of the defendants' occupancy in a property in Waterloo Road. This inquiry had been directed by Patrick Chan J after he had made an order under the Partition Ordinance (Chapter 352) for the sale of the property by public auction.

2. In that judgment, I said "Under the order of Chan J of 30 November 1994, the costs were reserved. I have heard no argument on this aspect of the matter. In the absence of agreement, I will hear counsel.". There was no agreement, and I have now heard counsel.

3. The first defendant does not appear. Mr Wong says that he is seeking no order against him. I was told that he was told by the plaintiff's solicitors that he did not need to attend.

4. The order by Chan J was taken on appeal. This appeal was heard on 22 March 1995. The Court of Appeal allowed the appeal, but, in the exercise of its discretion, ordered afresh that there should be a sale. This was because it was held that Chan J should have ensured that the inquiry I conducted was conducted before he made the order, but, because changed circumstances indicated this was the only sensible order, a order for sale should be made. The Court of Appeal held that this was the only sensible order in the light of "the events which had happened, namely (1) the conclusions reached by Findlay J on the inquiry; and (2) the every recent event whereby Wong Kwok Chiang capitulated and sold out to the respondent."

5. Apart from the main hearing before Chan J and my inquiry, there were a number of interlocutory hearings in connection with these proceedings. In my view, the costs of these hearings should be in the cause, and I so order.

6. The Court of Appeal has held that Chan J should not have made the order he did when he did. He should have conducted an inquiry before he made the order. For the purposes of deciding on the issue of costs, I shall assume that the matter was dealt with by holding an inquiry and then making a decision as to the sale, as one process. I do not think it is sensible to conclude that, because the second defendant was successful on appeal because of an error that was "technical rather than substanial", the plaintiff should pay the second defendant's costs. The fact that Chan J disqualified himself, and I conducted the inquiry, makes no difference, in my view, to this approach.

7. As I said in my judgment of 6 March 1995 - "At one stage, both defendants were claiming something in the nature of a life interest, but, at the hearing before Chan J. on 23 December 1994, Mr Mok, who appeared then, as he does now, for the second defendant, said that his client was no longer claiming this. Mr Mok repeated this before me, and said that the second defendant's claim to occupancy's rights was restricted to rights of tenancy; that is ordinary periodic tenancies over the basement and the first and second floors terminable with the appropriate notice. Mr Chang, who appeared for the plaintiff does not seriously challenge this occupancy right." Mr Chang said that he did not intend to challenge the evidence of the second defendant regarding the periodic tenancies, but it was never formally conceded that these tenancies existed. It cannot be said, therefore, that the second defendant did not have to assert his rights at the inquiry.

8. The second defendant, on the other hand, was asserting a right in the nature of a life interest, and this claim was hotly disputed. He failed in establishing this right, and, in the ordinary course of events, he would have to pay the costs accordingly. The fact that the plaintiff does not seek such an order against the first defendant cannot prejudice the second defendant's position.

9. The manner in which the inquiry was conducted had an unusual feature. I described the situation in my judgment of 6 March 1995 in this way - "The first defendant was unrepresented at the inquiry. In other circumstances, this might have caused me concern because I am not sure that, by reason of illness, the first defendant was capable of presenting his own case. However, Mr Mok, in the best traditions of the Bar, in effect and effectively, presented his case, and has said everything that could possibly have been said on his behalf. I am most grateful to him for this."

10. Again, I do not believe this circumstance should prejudice the second defendant. Most of Mr Mok's time and energies were devoted to presenting the first defendant's case, but this did not harm to the plaintiff. If the first defendant had been otherwise represented, about the same amount of time would have been spent, and, if Mr Mok had not, in effect, represented him, a great deal more time would have been spent ensuring that the first defendant understood what was going on and giving him every assistance to present his case. The proceedings would have been very protracted.

11. If the plaintiff were seeking an order for costs against the first defendant and the first defendant had been formally represented by Mr Mok at the inquiry, my order for costs would have been that the first defendant pay the plaintiff's costs, as taxed if not agreed, and that the second defendant pay the plaintiff's costs, as taxed if not agreed, until 23 December 1994, when the second defendant dropped his claim to a life interest, and that the plaintiff pay the second defendant's costs, as taxed if not agreed, thereafter up to and including the first day of the inquiry, estimating that this day would have been sufficient to establish the second defendant's claim to the tenancies he claimed.

12. Taking the first defendant out of the equation, in my judgment, the just order as to costs is as follows: Until 23 December 1994, the second defendant should pay half the plaintiff's costs, as taxed if not agreed. From then on, up to and including the first day of the inquiry, the plaintiff should pay the second defendant's costs, as taxed if not agreed.

13. Neither party has been substantially successful. My feeling is that there should no order as to costs in relation to this application for costs, and I make an order nisi accrodingly.