CHESTERTON PETTY LTD. v. TRADE WIN INVESTMENT LTD. AND ANOTHER

BETWEEN

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J U D G M E N T

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Clough, J.A. delivered the judgment of the court:

1. This is the adjourned hearing of an application by the defendant companies for leave to appeal against an order by His Honour Judge Yam in the District Court striking out their defence and giving summary judgment to the plaintiff in its action in that court.

2. The action vas brought by the plaintiff, Chesterton Petty Limited, as the administrator appointed under section 31 of the Multi-storey Buildings (Owners Incorporation) Ordinance (Cap 344) of a multi-storey building called Han Palace Building in Hong Kong, to recover management charges and deposits against each of the defendant companies as owners of part of the building. The plaintiff claimed a total sum of $46,852 with interest and costs on an indemnity basic against the defendant Trade Win Investment Limited. Against the other defendant, Root Power Company Limited, the plaintiff claimed a total sum of $19,466.34 with interest and costs on an indemnity basis. The claims related to the same properties of which the two defendants were successive owners. Trade Win Investment Limited succeeded Root Power Company Limited. Both defendants filed defences in similar terms denying the locus standi of the plaintiff and the validity of its claims.

3. On the 17th October 1988 the judge acceded to the plaintiff's application under Rules 27 and 38A of the District Court Civil Procedure (General) Rules and under the inherent jurisdiction of the court to strike out the defences of both defendants as disclosing no reasonable defence, and being frivolous and vexatious and an abuse of the process of the court. The plaintiff was given liberty to enter judgment against the defendants for the sums claimed with interest and costs on a full indemnity basis. Judgment was subsequently entered against Root Power Company Limited on the 4th November and Trade Win Investment Limited on the 8th November.

4. On the 31st October summonses were issued by both defendants for review under section 53(1) of the District Court Ordinance (Cap.336) of the strike out order made on the 17th October or for leave to appeal against that order under section 63 of the Ordinance.

5. On the 15th November the judge dismissed both the applications made under those summonses.

6. On the 28th November both defendants applied ex parte to the Court of Appeal under section 63 of the District Court Ordinance for leave to appeal against the strike out order and summary judgment given on the 17th October and against the refusal of the review on the 15th November.

7. On the 13th January 1989 Hunter J.A., exercising the powers of a single judge of the Court of Appeal under section 35 of the Supreme Court Ordinance (Cap 4), dismissed both applications.

8. On the 19th January, pursuant to section 35(3) of the Supreme Court Ordinance, each of the defendants in effect applied to discharge Hunter J A.'s order by renewing their application to the Court of Appeal for leave to appeal.

9. On the 10th March the application was adjourned pursuant to Order 59 ruler 14(2) to a date to be fixed, to facilitate notice of the application to be given to the plaintiff respondent and to permit the applicants to prepare all relevant documents.

10. The plaintiff has declined to appear at the resumed hearing of the application today in order to avoid incurring what it misapprehends to be irrecoverable costs.

11. Today Mr. Chain appears for the applicants. Another counsel represented the defendants when the application came before Hunter J.A. Mr. Chain seeks to obtain leave to appeal in order to advance three grounds of appeal.

12. His first proposed ground (which was not raised before Hunter J.A.) is that the plaintiff's claim could only have been prosecuted in the High Court. The basis of Mr. Chain's argument would be that the plaintiff's claim is too large for the Small Claims Tribunal, but that because section 37A of the District Court Ordinance refers not in terms to "claims" but to "any action or matter", the result is that the plaintiff's claim was not within the jurisdiction of the District Court by reason of the fact that the plaintiff's action embodied numerous small claims. In our view this contention is unarguable because "action or matter" in section 37A is clearly consistent with the definition of "claim" in section 2 of the Small Claims Tribunal Ordinance (Cap.338) as a proceeding in the tribunal between a claimant and a defendant and with the terms of section 5(2) of that Ordinance which contemplates that a claim is "actionable" whether in the Small Claims Tribunal or in any other Court.

13. Mr Chain's second proposed ground of appeal would attack the validity of the plaintiff's claim on the basis that the underlying order of Mayo J. made on the 15th January 1986 permitting the increase of the relevant management charges was not valid because the Multi-storey Buildings (Owners Incorporation) ordinance does not enable a judge to make such an order. That order was upheld by another division of this court in Civil Appeal No. 194 of 1985 but Mr. Chain would contend that the decision of the court is not res judicata as between the parties to these proceedings. He would rely on section 21 of the Ordinance to illustrate why the Court should not have jurisdiction in this matter. In our view Hunter J.A. was right in concluding that this jurisdictional issue, put in the way Mr Chain put it to us, was directly decided in the plaintiff's favour in the previous appeals and we do not see any reason to differ from Hunder J.A.'s decision refusing leave to appeal on this ground.

14. The third proposed ground of appeal relates to the order for coats on an indemnity basis. Mr Chain would attack the order on the basis of both jurisdiction and discretion.

15. On the issue of jurisdiction Mr Chain seeks to argue that whilst rule 3 of the District Court Civil Procedure (Costs) Rules permits the District Court to make an order for costs on any of the bases authorised in the High Court under Order 62, indemnity costs are not within the jurisdiction of the High Court and therefore not within the jurisdiction of the District Court. In this connection he relies on the unreported decision of Barnett J in Hanva Co. (HK) Ltd. v Everbright Shipping Co. Ltd. (A.J. 153 of 1988) to the effect that the High Court has no jurisdiction to award costs on an indemnity basis.

16. On this issue alone i.e. the jurisdiction issue (which we apprehend was not raised before Hunter J A) we grant leave to appeal.