WONG HING CHEONG AND ANOTHER v. WAH E INVESTMENT LTD. AND ANOTHER

CACV 908/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 908 OF2001

(ON APPEAL FROM DCCJ NO. 13999 OF 2000)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1. This is an appeal from an order of HH Judge Li made on 22 February 2001. The order made was on a summons for an interlocutory injunction. At the conclusion of the hearing of the summons the plaintiff's solicitors gave an undertaking to discontinue the action. It was ordered that there should be no order as to costs in respect of either the summons or in respect of the action. At the hearing of this appeal, this court allowed the appeal in respect of the costs of the summons for an interlocutory injunction but dismissed the appeal in respect of the costs of the action generally. This court said that it would give its reasons, together with its ruling as to costs of the appeal, in writing, which we now do.

Background

2. The plaintiffs are the owners of a flat together with car parking space No. 3 in Jade Court, Peony Road, Kowloon. That car park space is at right angles to space No. 4. Space No. 4 belongs to the 1st defendant. In 1999 that space was rented by the 1st defendant to the 2nd defendant. Car park space No. 4 is apparently some 3.93 metres long. The 2nd defendant's car which he parked there was apparently 4.22 metres long. Quite clearly although the 2nd defendant's car was not a particularly large car it would not fit in space No. 4. As a result it frequently occurred that when the 2nd defendant's car was parked in space No. 4 it either prevented the plaintiffs parking their car in space No. 3 or prevented them from driving their car out.

3. These difficulties had arisen at least by September 1999. The plaintiffs tried through direct representation and through the management committee to prevent the 2nd defendant's car being parked in space No. 4 in a way which would inconvenience them. That was to no avail. In the end, in September 2000 the plaintiffs commenced this action in the District Court against both defendants. In the statement of claim the plaintiffs based their action both on the terms of the Deed of Mutual Covenant and in nuisance caused by the 2nd defendant. The plaintiffs sought an injunction to prevent obstruction through the parking of a vehicle in space No. 4. A defence was filed within time and a list of the documents was filed.

4. On 8 February 2001, a summons for an interlocutory injunction was issued on behalf of the plaintiffs. That matter came before Judge Li on 22 February 2001. The first matter which might be observed is that the application for the interlocutory injunction was made more than four months after the commencement of the action and that, itself, was a year after the nuisance complained of had commenced. Any application for an interlocutory injunction based on acts which have arisen 16 months or more before is almost certainly doomed to failure unless there are special circumstances. This point was mentioned by Judge Li at the hearing.

5. In addition, however, the judge raised the question of the jurisdiction of the District Court in relation to the pleaded causes of action. This court was provided with a transcript of that hearing. It is clear that the judge expressed his views forcefully as to the matter of jurisdiction and asked for submissions. The plaintiffs' solicitor attempted as best as he could to explain to the judge how the plaintiffs had, on advice of counsel, sued the 2nd defendant in nuisance and that there was a doubt, to say the least, that the Lands Tribunal would have jurisdiction in respect of that claim. The judge dismissed those objections saying that the Lands Tribunal could transfer the matter to court should that be necessary. It was clear that the judge's view as to the lack of jurisdiction to hear the case remained unshaken. This was coupled with an indication that there would be no order as to costs if the plaintiff withdrew its claim. The plaintiff's solicitor took the almost inevitable course of protecting his clients' interest as best he could by undertaking to withdraw the claim in the District Court. Although a draft order was submitted for the court's approval it was returned unapproved because it was stated to be unnecessary.

6. The plaintiffs' solicitor then filed a notice of discontinuance but, on the defendants' solicitors insistence, a summons was taken out for leave to discontinue. That was heard before Master Kwang who granted leave to discontinue but ordered that the parties should seek clarification from the judge as to his order on costs of the action. Subsequently, it was indicated by letter that the costs of the action were to be no order as to costs and on 19 April 2001 the judge gave reasons for his decision.

7. In his reasons for decision dated 19 April 2001 the judge recognised that the plaintiffs' claim against the 2nd defendant was based on nuisance and that prima facie the District Court had jurisdiction. It might be observed in passing, that it is difficult to see how the Lands Tribunal would have had jurisdiction in respect of a claim for nuisance against the 2nd defendant. Be that as it may, the judge considered that it was "unwise, possibly an abuse of process," for the plaintiffs to have brought such a claim in the District Court.

8. Subsequently application was made to the judge for leave to appeal on the question of costs. Leave was refused but was granted by a single judge the Court of Appeal.

This appeal

9. On the hearing of this appeal we were informed that no application has in fact been made to the Lands Tribunal. Indeed, we were told that the 2nd defendant is now no longer the 1st defendant's tenant and his car is no longer parked there. It is possible that inconvenience is from time to time caused by other cars parked in space No. 4.

10. At the hearing, this court raised with counsel the question as to whether the view taken, that the District Court did not have any jurisdiction to hear the action, was correct. If it was not correct it would seem that a substantial injustice had been occasioned to the plaintiffs because what was very little short of a decision had undoubtedly caused the withdrawal of the plaintiffs' action. Miss Lan, who appeared on behalf of the defendants did not seek to support the view that the District Court did not have jurisdiction to hear the action. Indeed, counsel pointed out that the action against the 2nd defendant was one in nuisance and that none of the provisions of the Building Management Ordinance, Cap. 344 ("the Ordinance"), whether they be section 45 or the Tenth Schedule, gave rise to the conclusion that the District Court did not have jurisdiction in relation to an action of nuisance brought by the owner of a car park space in a building. Despite the fact that Mr McLeish, who appeared for the plaintiffs, also did not address this court on the application of section 45 and the Tenth Schedule of the Ordinance, it appears to me to be necessary to decide the matter for the purposes of this case.

11. Section 45 was inserted in the Ordinance in its present form in 1993. It has been the subject of judicial observation on a number of occasions the first of which was in the case of Winbase Industrial Limited v Mightyton Property Management Limited A 10232 of 1994, 1994 HKC Lexis 142. The action concerned an action by owners of properties in Red Hill Peninsula against the management company. There appear to have been various complaints of incompetence, negligence and dishonesty. The application before the judge was made by the plaintiffs to be allowed to represent all the other owners and have their costs recouped out of the management funds. In other words it was akin to a Beddoe application.

12. It would appear from the judgment of Mayo J, as he then was, that he took the action to have related exclusively to matters which arose out of the Ordinance. What is not clear is whether the judge took the view that there was a cause of action where the right or remedy claimed existed independently of the Ordinance. Mayo J held that the provisions of section 45(1) and the Tenth Schedule of the Ordinance vested exclusive jurisdiction in the matters arising in that action in the Lands Tribunal.

13. Section 45(1) of the Ordinance reads:

"The tribunal shall have jurisdiction to hear and determine any proceedings specified in the Tenth Schedule."

It is convenient to set out the Tenth Schedule.

"TENTH SCHEDULE

HEARING AND DETERMINATION OF SPECIFIED PROCEEDINGS BY TRIBUNAL

1. Proceedings relating to the interpretation and enforcement of the provisions of this Ordinance.

2. Proceedings relating to the interpretation and enforcement of the terms and provisions of a deed of mutual covenant, including such terms or provisions impliedly incorporated into a deed of mutual covenant under Part VIA.

3. Proceedings relating to the use, occupation, enjoyment, possession or ownership of the common parts or any other part of a building in which the owners have a common interest.

4. Proceedings relating to the calculation or apportionment of-

(a) any sums payable or purported to be payable under a deed of mutual covenant (if any);

(b) the funds and contributions referred to in sections 20 and 21;

(c) any management expenses or charges (howsoever named);

(d) any other outgoings, payments, debts or liabilities due or liable under this Ordinance or in accordance with the terms and provisions of an instrument which is registered in the Land Registry including a deed of mutual covenant (if any).

5. Proceedings relating to any question of law concerning the powers and duties of-

(a) a corporation;

(b) a management committee, and of the chairman, secretary and treasurer thereof;

(c) a manager within the meaning of section 34D(1);

(d) an owners' committee within the meaning of that section;

(e) the tenants' representative,

including such powers and duties (if any) of a financial, pecuniary or fiduciary nature.

6. Proceedings relating to any question of law concerning ownership, occupation or possession of the whole or any part of the building, including ownership or an undivided share in a building or in land on which there is a building.

7. Without prejudice to paragraph 6 and subject to section 45(3), proceedings relating to any question of law concerning the extent and applicability or otherwise of any contractual or proprietory right enjoyed by owners and occupiers or otherwise referred to in the terms and provisions of an instrument which is registered in the Land Registry including a deed of mutual covenant (if any).

8. Proceedings relating to any question of law concerning any breach or alleged breach of any covenant, term or condition specified in an instrument which is registered in the Land Registry including a deed of mutual covenant (if any).

9. Proceedings relating to the enforcement of any contractual or proprietory right referred to in paragraph 7 or any covenant, term or condition referred to in paragraph 8, as the case may be, whether by way of specific performance, injunction, declaration, damages or otherwise."

14. It is clear from the judgment that Mayo J gave a restricted meaning to the Tenth Schedule because he said:

"I agree with Mr Tang and if the 10th Schedule is considered in the context of Part VIII generally it is quite clear that proceedings referred to in the 10th Schedule are limited to matters coming within the ambit of the Building Management Ordinance, Cap. 344. This is the only sensible way of interpreting the legislation."

15. The judge then relied on the reasoning of Trainor J in Kong Hoa (Hong Kong) Limited v Lau Hung-Kwan [1976] HKLR 62 and interpreted section 45 as giving the exclusive jurisdiction in relation to the matters arising in that case to the Lands Tribunal.

16. In the Kong Hoa case Trainor J considered an application for the recovery of premises on the ground of forfeiture for non-payment of monthly rent. The premises in question were in an entirely new building. The rights and remedies of the plaintiff in that case were governed under Part II of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. Section 68(6) had a similar provision to section 45 in the following terms:

"The court shall have the jurisdiction conferred on it by this Part notwithstanding anything in the District Court Ordinance."

The definition section in Part II of that Ordinance defined the court as being the District Court.

17. It is clear from the first paragraph from page 65 of the report of the judgment that Trainor J regarded the relief sought in the action as one which was contemplated by, and which arose as a result of a right created by, the Landlord and Tenant (Consolidation) Ordinance. Trainor J rejected the argument that there would be concurrent jurisdiction vested in both the Supreme Court and the District Court on the basis that it would give rise to an anomaly that there could be appeals to the Full Court and the Privy Council if the proceedings were conducted in the Supreme Court whereas because of the provisions of section 68(7) of the Landlord and Tenant (Consolidation) Ordinance the matter would be final if conducted in the District Court. He held that the District Court had, as a result, the exclusive jurisdiction to adjudicate on disputes between landlords and tenants as to the tenure of rented premises to which Part II of the Landlord and Tenant (Consolidation) Ordinance applied.

18. The decision of Mayo J in the Winbase case was followed by Yam J in Mass Transit Railway Corporation v Lam Kai Fai and Others A 1796 of 1994, 21 July 1995. That case involved a claim to enforce the covenants and conditions contained in the relevant deed of mutual covenant. Yam J relied upon the decision of Mayo J and drew attention to the fact that there would be a discrepancy in the rights of appeal should there be concurrent jurisdiction both in the District Court under the Ordinance and in the Supreme Court. Under the Lands Tribunal Ordinance appeals may only be brought on a point of law. Whereas of course appeals are as a matter of right in respect of decisions of the Court of First Instance (previously the Supreme Court).

19. Yam J does not appear to have had the benefit of seeing the judgment of Findlay J in Ngan Chor Ying Ann and another v Year Trend Development Limited and another A 10337 of 1994, 13 January 1995. In that case the plaintiff sought to enforce the deed of mutual covenant to prevent the defendants carrying on business as real estate agents in some of the shops on the relevant premises. The matter of jurisdiction was argued before the judge and he stated (at page 2):

"My understanding of the law in this area is that where an Ordinance creates a right or remedy; that is, the right or remedy has no existence independently of the Ordinance creating it, and, at the same time, the Ordinance lays down a particular method of pursuing it in a particular court or tribunal, the courts will, without more, tend to confine a person in pursuit of that right or remedy to that particular court or tribunal. But an Ordinance should not be interpreted so as to take away the jurisdiction of the superior courts unless it does so by express words or necessary implication."

With reference to the decision of Trainor J in the Kong Hoa case, Findlay J stated that he had no quarrel with the decision if it were based upon the proposition that where a right or relief arises from an Ordinance and jurisdiction in respect of that right or relief is given to a particular tribunal it should be taken that the particular tribunal has exclusive jurisdiction in that regard. Again, in respect of the Winbase decision Findlay J expressed similar views.

20. For completeness further decisions might be commented upon. In Broadway-Nassau Investments Limited and Lo Yu Ho and Others, HCA 6471 of 1998, 18 January 1999, Mr Recorder Chan SC considered the previous decisions. In view of the conflicting decisions he rightly held that there was no binding decision upon him. He preferred the reasoning of Findlay J and held that the High Court had jurisdiction in respect of proceedings to enforce the terms of a deed of mutual covenant notwithstanding section 45 and the Tenth Schedule of the Ordinance.

21. In a brief judgment in the case of Incorporated Owners of Yuen Sun Mansion v Luk Nga Ling Irene and another [1999] 1 HKC 410 Suffiad J came to a similar conclusion in a case which apparently involved the rights and liabilities arising out of a deed of mutual covenant.

22. The judge below had also considered the matter whilst sitting as a Deputy Judge of the High Court in the case of Colliers Jardine Management Limited v Chow Yuk Lan HCA 16082 of 1998, 13 April 1999. In that case he appeared to come to a rather different conclusion to any of the other judges holding that cases of the type with which he was concerned should be commenced in the Lands Tribunal but that, if on a reasonable request by the parties, the matter were not transferred to the High Court the matter could be appealed to the Court of Appeal. He came to the conclusion that it would be an abuse of process to commence most proceedings in the High Court when they could be commenced in the Lands Tribunal. In those circumstances, he considered it open to the Court of First Instance to stay such proceedings as being an abuse of judicial resources. This is an approach to case management which I find questionable to say the least. If a party is entitled to bring proceedings in a particular court or tribunal then subject to the court or the tribunal's power to transfer it to some other forum that party is entitled to a decision in its chosen forum.

23. In the case of the Incorporated Owners of Finance Building v Bright Hill Management Consultants Company Limited CACV 386 of 2000, 29 November 2001 in this court, Leung CJHC, Woo and Cheung JJA, the court was concerned with a case which had been commenced originally in the High Court but transferred by consent to the Lands Tribunal. The action concerned management fees and contributions in respect of maintenance of buildings. The fees and contributions were said to have been raised improperly. Declarations were sought that charges, which had been registered against the property, should be vacated and that notices in respect of the charges were invalid. The court did not consider it necessary to determine the matter of jurisdiction. The court referred to the cases to which I have referred but indicated that it was not necessary to resolve the conflict on the appeal and the matter should await adjudication in the future. I would merely add as an aside, however, that if there had been no jurisdiction in the High Court to consider the matter, the High Court would not have been in a position to transfer the matter to the Lands Tribunal: it would have had no jurisdiction and jurisdiction could not even have been conferred by consent.

24. I, too, would also agree with the approach of Findlay J. It cannot be overlooked, as was pointed out in his judgment in Nan Chor Ying Ann, that other ordinances such as the Small Claims Tribunal Ordinance, Cap. 338 and the Labour Tribunal Ordinance, Cap. 25 contain provisions which explicitly grant exclusive jurisdiction to the relevant tribunals. As has already been observed, there is no similar provision in the Ordinance.

25. Turning to the Tenth Schedule itself, it is no exaggeration to say that many of the cases involving land in Hong Kong would fall within paragraphs 1 and 2. When paragraph 6 is considered the matter is, in my view, conclusive. The actions which would fall within the categories specified in paragraph 6 are simply legion. In this respect it is to be observed that by reason of the nature of Hong Kong land law, the rights of exclusive occupation of any part of a building, such as a flat in a block of flats, stem from the deed of mutual covenant to which the owners of the undivided shares in the land have become parties or are otherwise bound. Hence, any conveyancing case which involves a question of law which concerns the ownership or possession of a flat would fall within paragraph 6. In the majority of instances it would be difficult to perceive how such matters come "within the ambit of the" Ordinance as referred to by Mayo J or related to a right or remedy created by the Ordinance. Similarly, paragraph 8 of the Tenth Schedule covers disputes arising out of hosts of documents such as conveyances, agreements and mortgage deeds to which the other provisions of the Ordinance have no application.

26. In those circumstances, it appears to me to be simply untenable that the provisions of section 45(1) and the Tenth Schedule when taken together can be interpreted as giving exclusive jurisdiction to the Lands Tribunal in respect of matters falling within the Tenth Schedule. I see no basis for construing, as it would appear on one reading at least that Mayo J considered was possible, the Tenth Schedule in a restricted way. The only thing that can be said, as has been said by Findlay J, is that if there is a right or remedy which arises out of the Ordinance alone, the only tribunal which would have jurisdiction in respect of that right or remedy would be the Lands Tribunal. Save in that very restricted sense, I can see no basis for holding that the Lands Tribunal has exclusive jurisdiction in respect of matters falling within the Tenth Schedule of the Ordinance.

The discretion as to costs

27. It is trite law that a judge has a very wide discretion as to costs. It is important that judges should be free to exercise that discretion in the manner they best see fit. There are, in this case, two different sets of costs which the judge below had regard to.

28. In the first place, the judge, on 22 February 2001 was concerned with the plaintiffs' summons for an interlocutory injunction. As already indicated, in view of the lengthy period which had occurred from the commencement of the acts complained of up until the application for the interlocutory injunction, any averment as to irreparable damage was inevitably doomed to failure. Indeed, no attempt was made in the evidence to show any such irreparable damage. In those circumstances, unless there were other relevant factors the costs of that application should have been awarded against the plaintiffs. There were no such other factors. There was a clear error, in my view, in not awarding costs for an application which should never have been brought. It was thus open to this court to correct that error.

29. Turning to the action, the judge took into account first the fact that the plaintiffs had a very strong case for relief. In the second place, he also took into account the fact that the plaintiffs had withdrawn their action as a result of what the court had said and that the defendants had not taken the point themselves. Furthermore, he considered the costs which had been incurred in preparing the case would not be thrown away because proceedings would be commenced in the Lands Tribunal.

30. As matters turned out, no proceedings have been commenced in the Lands Tribunal. Whether or not further proceedings will follow remains to be seen. This court was told that the 1st defendant no longer rents the space No. 4 to the 2nd defendant. It is, in my view, irrelevant as to whether a point upon which a case is decided was raised by the parties or by the court. As already explained, part at least of the considerations given by the judge below as to the award of cost was erroneous. It therefore fell to this court to review the exercise of the discretion. Nevertheless, this court did not disturb the order as to the costs of the action that there should be no order as to costs.

31. The action was one in which, to put it at its lowest, as expressed by the judge, the plaintiffs' case had substantial merits. Indeed, Miss Lan, on behalf of the defendants, did not seek to argue otherwise. For my part, I find it difficult to see how any tribunal could allow a situation to exist where a person can be deprived of legitimate access to its own premises.

32. Importantly for the purposes of this case, the discontinuance of the proceedings by the plaintiffs was as a result of what was in effect a judicial decision which was erroneous in point of law. A consideration of the transcript of the proceedings of 22 February 2001 can only lead to the conclusion that the plaintiffs' solicitor was put in a position where he felt obliged to conduct his clients' case before the Lands Tribunal. Since, on the judge's view of the law the District Court had no jurisdiction in the matter, it could not therefore transfer the matter to another tribunal and hence the mechanism of discontinuance and commencement of other proceedings was, in effect, the equivalent. In my view the fair order to make on the discontinuance of the action in the circumstances of this case was that there should be no order to costs.

33. At the conclusion of the appeal, the court reserved its decision as to the costs of this appeal. Although the defendants succeeded in obtaining the award of costs in respect of the interlocutory injunction application they have failed to disturb the order of no order as to costs in respect of the main action. Those costs would undoubtedly have been substantial. Taking all matters into consideration the fair order on this appeal is, in my view, that there should be no order to costs.

Hon Le Pichon JA:

34. I agree.

Hon Cheung JA:

35. I agree.

Hon Rogers VP:

36. The costs of the appeal will therefore be no order as to costs.