BONNIE BLAIR LTD v. WITMORE LTD AND ANOTHER

HCMP 1546/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1546 OF 2015

(ON AN INTENDED APPEAL FROM DCCJ NO 1871 OF 2011)

________________________

________________________

________________________

JUDGMENT
________________________

Hon Lam VP (giving the Judgment of the Court):

1.  On 6 February 2015, Judge Alex Lee [“the Judge”] of the District Court dismissed the Plaintiff’s claim (which was withdrawn by the Plaintiff at the trial in January 2015), awarded damages on the counterclaim in favour of the Defendants in the respective sums of $809,000 and $770,600 respectively. After deducting the interim payments already paid by the Plaintiff, the Judge ordered the 1^st defendant to refund $19,000 to the 1^st Defendant and $57,400 to the 2^nd Defendant. He also made a costs order nisi that there be no order as to costs in respect of the action.

2.  The Defendants applied to vary the costs order nisi.  That application was rejected by the Judge on 20 March 2015.  The Judge also ordered the Defendants to pay the costs of the application for variation.

3.  The Defendants sought leave to appeal against the decision of the Judge on the quantum of damages as well as the costs order. Leave was refused by the Judge on 12 June 2015.

4.  The Defendants now renew the application for leave before us.

5.  In respect of the intended appeal on quantum, the Defendants sought an extension of time for seeking leave on the ground that it was reasonable for them to wait for the outcome of the costs variation application before they launched the application for leave to appeal in one go. We accept that costs considerations loomed large in these proceedings and the Defendants may well wish to take into account commercial considerations before deciding whether to launch their appeal. In allowing the time limit to apply for leave to appeal to lapse, the Defendants ran the risk of the court refusing to extend time.

6.  We need say no more about this as we are of the view that the intended appeal on quantum has no reasonable prospect of success.  The intended ground of appeal contended that the Judge erred in assessing mesne profit on the basis of a notional tenancy for 2 years.  Mr Simon Chan submitted on behalf of the Defendants that the Judge failed to have regard to the evidence in the Joint Expert Report that the rental value has increased during the course of those 2 years.  He cited McGregor on Damages 19 Edn para 37-045 in support of the proposition that market fluctuation during the period of wrongful occupation should be taken into account.  Reference was also made to Hill & Redman’s Law of Landlord Tenant para A [5188].

7.  In his judgment of 6 February 2015 at paras 23 to 28, the Judge explained why in the circumstances of the present case, taking account of the length of the trespass, the nature of the properties concerned and market conditions, it was appropriate to assess the damages by reference to a notional tenancy of 2 years starting from the date of the wrongful occupation, thus taking the market rent at the beginning of that period as the basis for calculation.  This was based on his finding at para 28 on the evidence before him that the usual tenure the defendants would let the properties in question would be about 2 to 3 years.

8.  We do not read McGregor as laying down a strict rule of law as to how fluctuation in the market rent must be taken into account.  In our judgment, the Judge was quite entitled to have regard to the various factors he mentioned and it is not suggested that he did not have the evidential basis to make the finding that but for the trespass the Defendants would have let the properties on tenancies of 2 years.  That is a finding which this court has no reason to disturb in accordance with the well settled approach in respect of findings of fact.  Thus, there is no merit in Mr Chan’s intended ground of appeal.

9.  On the appeal as to costs, the Judge took account of a host of factors discussed at paras 65 to 69 of the judgment of 6 February 2015 and the costs judgment of 20 March 2015.  This court has repeatedly said that costs is very much a matter of discretion for the judge and an appellate court will only interfere with the exercise of that discretion when the first instance judge has erred in law or in principle, or taken account of matters which he should not or left out of account matters he should have regard to, or that his decision was plainly wrong, see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419.

10.  We are not impressed by Mr Chan’s submission that the Defendants should be regarded as the successful parties in the action. It is clear from the Judge’s analysis, after the Plaintiff had vacated from the properties in August 2012, with the interim payment, the litigation was continued at the behest of the Defendants because they wanted to achieve a quantum higher than the interim payment during the period of wrongful occupation. In that respect, the Defendants failed before the Judge and as discussed above, they also fail to persuade us that the Judge was wrong.  As far as the counterclaim is concerned, from a practical point of view, in light of the open offer from the Plaintiff, the principal battle-line was drawn in terms of the proper assessment of quantum and the extent to which it resulted in an award over and above the interim payment already received by the Defendants.  In reality, the Defendants cannot be regarded as the successful parties in the present circumstances.

11.  In this connection, we respectfully endorse what had been said as long ago as 1992 by Sir Thomas Bingham in an unreported judgment in Roache v News Group Newspaper Ltd (19 Nov 1992),

“The judge must look closely at the facts of the particular case before him and ask: who, as a matter of substance and reality has won? Has the plaintiff won anything of value which he could not have won without fighting the action through to a finish? Has the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?”

That dicta was subsequently cited by Simon Brown LJ in Butcher v Wolfe [1999] 1 FLR 334 and in Hong Kong, cited in Wealthy Plus Ltd v Lai Man Ho [2001] 4 HKC 691.

12.  These were said before the implementation of the Civil Justice Reform.  Since then, Order 1A Rule 3 and Order 62 Rule 5(1)(aa) and (e) and (2) provide firmer basis for the court to take a similar approach which mandates a realistic and pragmatic assessment of the real reason for causing costs to be incurred in the exercise of the discretion on costs.  We agree with the Judge’s observation on the disproportionate conduct on the part of the Defendants at para 27 of his costs judgment and he quite rightly took that into account in the exercise of his discretion.

13.  It has not escaped our attention that the Plaintiff only capitulated on the second day of trial in respect of its claims. And the Judge did take that into account.

14.  Likewise, since the Judge made the costs order nisi in the same judgment where he rejected the arguments of the Plaintiff on deductions based on government rent and management fees and incidence of tax, there is no proper basis for suggesting that the Judge did not take those matters into account in his decision on costs.

15.  We are also of the view that the Judge did not (as suggested by Mr Chan) penalise the Defendants on costs a second time by reason of the dismissal of their application for interlocutory injunction by Deputy Judge Chung.  The Judge’s reference to what happened at the interlocutory injunction hearing was to highlight the fact that the court had already drawn the attention of the parties to take a more pragmatic approach to this piece of litigation (see para 21 of the Costs Judgment).  The failure on the part of the Defendants to heed that advice is a legitimate matter that the Judge could take into account in the exercise of his discretion on costs.

16.  The Judge was entitled to take a global approach of awarding no order as to costs for the action instead of ordering costs against the Defendants in certain aspects and giving them costs on the other aspects.

17.  For these reasons, we do not see any reasonable prospect of success in relation to the intended appeal on costs.

18.  We refuse to grant leave.  We also order the Defendants to pay the costs of the Plaintiff in this application.  Having regard to the statement of costs provided by solicitors for the Plaintiff and heard submissions from the parties, we fixed the costs of the Plaintiff at $115,350.

19.  We further notice that in the statement of costs submitted by solicitors for the Defendants, the costs allegedly incurred by the Defendants were said to be $311,500 (for the paper application stage) and $86,500 (for the hearing).  We do not know whether such costs have actually been paid or whether the Defendants would actually be billed with such amounts. Nor do we know whether the Defendants had been advised of these amounts of costs by their solicitors and whether the Defendants have agreed to pay costs of such amounts with the solicitors.  In any event, these amounts seem to us to be wholly disproportionate for a leave application of this nature and if the costs are to be taxed between the Defendants and their own solicitors, there is certainly much room for taxing down a bill in those amounts.