SIMON CHRISTOPHER DONOWHO AND OTHERS v. GILES WONG AND OTHRERS

LDBM 136/2014

BUILDING MANAGEMENT APPLICATION NO 136 OF 2014

_________________

_________________

_________________

DECISION ON COSTS
_________________

1.  This is a ruling on the question of costs for the interlocutory application taken out by the respondents dated 3 November 2015 (“the Stay Application”).

Background

2.  The 1^st applicant is the Incorporated Owners of Pearl Gardens Hong Kong (“IO”).  The 2^nd applicant is one of the directors of the 5^th applicant, who is the registered owner of Flat 3F.  The 3^rd applicants are the directors of New Modern Limited, the registered owner of Flat 5F.  The 4^th applicants are the registered owners and occupants of Flat 6F.  The respondents are the registered owners of Flat 4F.

3.  Since about February 2013, the IO and Synergis Management Services Limited (“Synergis”), the management company of Pearl Gardens, have received numerous complaints from many owners within Pearl Gardens including the 2^nd to 5^th applicants regarding continuous and excessive loud noises emanating from Flat 4F caused by radio and/or television and/or Hi-Fi and/or other electronic media.

4.  On 29 May 2014, the applicants commenced the present proceedings by filing a Notice of Application alleging breach of Deed of Mutual Covenant (“DMC”), seeking injunctive relief to restrain the respondents from emanating noise and excessive vibration which caused nuisance to other occupiers of Pearl Gardens. The 2^nd to 5^th applicants also claimed damages for distress and inconvenience, loss in revenue, costs of relocation and letting out, as well as loss in rental income against the respondents.  All applicants are represented by the same firm of solicitors, Messrs SK Lam, Alfred Chan & Co (“SK Lam”).

5.  On 25 July 2014, the applicants filed an application for an interlocutory injunction against the respondents.  In late 2014, there was an interim stay of these proceedings, along with the interlocutory injunction application, pending mediation.  Upon unsuccessful attempt of mediation, the application for interlocutory injunction was fixed to be heard on 27 November 2015. 

6.  The IO has filed a Notice of Discontinuance of the application on 6 August 2015 against the respondents so the IO is no longer a party in these proceedings.

7.  On 14 September 2015, Messrs Tanner De Witt solicitors (“TDW”) filed a Notice of Change of Solicitors (“the 1^st Notice”) purporting to act as solicitors for the 2^nd and 5^th applicants in place of SK Lam.  On 14 October 2015, TDW filed another Notice of Change of Solicitors (“the 2^nd Notice”) purporting to act as solicitors for the 3^rd applicants as well.  As a result, there were on record separate legal representations for the applicants, with SK Lam still acting for the 4^th applicants whilst the 2^nd, 3^rd and 5^th applicants are represented by TDW.

8.  The respondents filed the Stay Application on 3 November 2015 asking for a stay of all further proceedings between the 2^nd to 5^th applicants and the respondents on the ground that the present proceedings are not properly constituted and irregular by reason of the purported separate legal representation of the applicants in these proceedings.

9.  The 2^nd and 5^th applicants had filed their Notice of Discontinuance on 17 November 2015.

10.  At the hearing of the Stay Application on 19 November 2015, the 3^rd and 4^th applicants agreed to the stay of these proceedings as requested by the respondents.  The only issue is costs of the Stay Application.  I have heard submissions of the parties at the hearing and allowed the 4^th applicants and the respondents to file further written submissions as well.  The respondents are asking for costs of the Stay Application to be borne by the 3^rd and 4^th applicants.  TDW for the 3^rd applicants asked for costs of the Stay Application be in the cause whilst SK Lam for the 4^th applicants is asking for costs of the Stay Application as well.

11.  The following exchange of correspondence is relevant to the determination of the costs of the Stay Application.

The Respondents’ Contention

12.  Mr Leung SC for the respondents submitted that it is trite law that co-plaintiffs will not be allowed to sever or take inconsistent steps and must appear at the trial by the same solicitor and counsel (Hong Kong Civil Procedure 2016, Vol 1 para 15/4/3).  This is a rule established in common law and premised on procedural fairness and equality of arms, which apply with equal force to the application before the Lands Tribunal.  Co-plaintiffs would not have the unfair advantage of dual representations and if the defendants lose in the proceedings, they should not suffer the disadvantage of facing two sets of costs, which would be the case if the co-plaintiffs have separate representation.

13.  Upon the filing of the 1^st Notice, there was on record separate legal representations for the applicants and this rendered the proceedings irregular.  Despite being alerted of the irregularity, SK Lam and TDW had done nothing to remedy the same and allows the irregularity to remain. Since the proceedings are irregular and not properly constituted, there is only one proper way for the respondents to respond, which is to seek a stay until the proceedings are properly constituted.

14.  At the hearing, since both the 3^rd applicants and the 4^th applicants conceded and agreed to the Stay Application, costs should follow the event, hence both the 3^rd and 4^th applicants should bear the costs of the respondents in this Stay Application.  If not for the irregularity, the respondents did not have to take out the Stay Application. The Stay Application is through no fault of the respondents and notwithstanding being alerted of the irregularity, there was no application by either applicants for leave to retain separate representation.  Despite the lapse of more than 7 days after the issuance of the Stay Application, the respondents heard nothing from the applicants who were under a duty to put their own house in order.

15.  And it is no excuse for the 4^th applicants to shift the blame to other applicants (particularly the 3^rd applicants).  All applicants should ensure that they have no conflict of interest and are represented by the same firm of solicitors.  In Lewis v Daily Telegraph (No. 2) (1964) 2 QB 601, it is said by Pearson LJ that :

"When the solicitors, who had been acting for the plaintiff company and the plaintiff Lewis jointly throughout the first trial, found it necessary to withdraw from the record, the two plaintiffs should have concurred in appointing a new firm of solicitors to represent the two of them.  That is still, in my view what ought to be done, and the only satisfactory basis.  Until that is done the action is not properly constituted ..." (at 622) (emphasis added).

16.  The separate representation was caused by the 3^rd and 4^th applicants. Before the change of representation by any of them, it is inconceivable that they would not have discussed the matters amongst themselves, or that they would not have been advised by SK Lam of the legal consequences.

17.  Once it is realised that the 3^rd and 4^th applicants cannot agree on the retention of a single firm of solicitors, it is incumbent on them to apply for leave so that they can each be represented by different lawyers.  The 4^th applicants should either sort things out with the 3^rd applicants, or else they should apply for leave from the Tribunal, yet the 4^th applicants had done neither.

The 3^rd Applicants’ Contention

18.  It is admitted by Mr Lane who appeared for the 3^rd applicants that there is an irregularity in the proceedings due to the fact that 2 of the applicants are separately represented.  However, it is the submission of Mr Lane that the respondents have pursued with the Stay Application with some vigor, by imposing arbitrary time limits and following the passing of those time limits, issued brief to counsels and insisted proceeding with the hearing notwithstanding repeated requests by the 3^rd and 4^th applicants to have the application adjourned to the hearing scheduled on 27 November 2015.  The rationale for the suggestion of an adjournment is for the irregularity to be resolved, either by the discontinuance of the 4^th applicants or the question of legal representation to be sorted out between the 3^rd and 4^th applicants.  With a little more cooperation between the parties, the hearing for the Stay Application can be avoided.  Mr Lane submitted that there should be a stay of the proceedings with costs be in the cause.

The 4^th Applicants’ Contention

19.  Mr Ho for the 4^th applicants submitted that the 4^th applicants should have its costs incurred in respect of this Stay Application since such an application is academic and unnecessary.  As found by this Tribunal in its Decision dated 13 November 2015 concerning costs between the 1^st applicant and the respondents upon the discontinuance of the action, since there is no longer any need for an injunction against the respondents, the whole case become academic.  The 4^th applicants had tried to settle the entire proceedings with the respondents with no order as to costs but such had been refused by the respondents.  Since the issue of noise nuisance had become academic, parties should settle the entire action on a drop hand basis, rather than to incur disproportionate costs in pursuing pointless and academic applications like the Stay Application.

20.  In any event, the 4^th applicants had already consented to the Stay Application in its letter dated 12 November 2015 and the 4^th applicants had all along instructed the same set of solicitors to act on their behalf, it was beyond their control that some of the other applicants decided to instruct a different set of solicitors.  Hence, the 4^th applicants should not be penalised in costs.

Discussion

21.  Having considered the submissions from all parties, I agree with the submissions by the respondents and I see no reason why the 3^rd and 4^th applicants should not bear the costs of the Stay Application on the principle of costs should follow the event. 

22.  The irregularity of separate legal representation is being caused by the 3^rd and 4^th applicants and the respondents have nothing to blame.  Unless such an irregularity is being remedied, there is in no way that this proceedings can be further proceeded and a stay is a must.  The cure of the irregularity can either be the discontinuance of the action by the 4^th applicants or the same solicitor firm acting for both the 3^rd and 4^th applicants. I cannot see how and why the 4^th applicants said that the Stay Application is unnecessary when neither of this happened.  The fact that an injunction against the respondents is no longer necessary in this action has nothing to do with the irregularity nor can it solve the irregularity.  Unless and until the irregularity is remedied, the respondents have to take out the Stay Application.

23.  TDW had failed to reply to the respondents’ proposal by letter and even though SK Lam agreed to the proposed directions, question of costs concerning the Stay Application is still in issue, Under such circumstances, the hearing of the Stay Application cannot be avoided.  The complaint by TDW that the respondents had set arbitrary time limits is also unfounded.  The applicants had been alerted of the irregularity since early October 2015.  It is the inaction of the 3^rd and 4^th applicants that leads to the taking out of the Stay Application on 3 November 2015.  The applicants had already been given time to deal with the matter before the taking out of the Stay Application. Yet the applicants had taken a stalling attitude towards the matter.  Given the upcoming hearing on 19 November 2015, the setting of deadlines for brief to be delivered to counsel cannot said to be unreasonable.

24.  The contention by the 3^rd applicants that the irregularity can be cured if the hearing for the Stay Application is to be adjourned and accused the respondents of having acted unreasonably in refusing an adjournment is also unfounded. The 3^rd and 4^th applicants had been alerted of the irregularity as early as 2 October 2015 and the problem had not been dealt with by the applicants, and as of today, the irregularity still remains.  The 3^rd and 4^th applicants had been given ample opportunity to rectify the situation but such had not been utilised to achieve any fruitful result, a further adjournment is just a waste of time and further delayed the matter.  Even given further time, it is unlikely that the irregularity can be resolved and the hearing of this Stay Application can be avoided.

25.  As for the 4^th applicants’ contention that they should not be blamed when the other applicants had elected to engage a different lawyer, I found this to be a futile attempt to shift the burden on the other applicants, including the 3^rd applicants.  The legal requirement that co-plaintiffs will not be allowed separate representation should be within the knowledge of SK Lam and TDW.  Each firm should have advised their respective clients of the consequences and the necessity of having a firm of solicitors to act for them.  It is the duty of the respective applicants to resolve the conflict amongst themselves and should not be the responsibility of one or some of the applicants.  Even though SK Lam is the solicitor who comes into the picture since the very beginning, this will not ease or discharge its burden in trying to remedy the irregularity.  The fact that the 3^rd and 4^th applicants remained to be represented separately, it is apparent that neither the 3^rd applicants nor the 4^th applicants are prepared to give up their own solicitors.  In the circumstances, the irregularity must be constituted by both the 3^rd and the 4^th applicants and neither of them can shift the blame on the other.

Conclusion

26.  Costs should follow the event.  I see no reason why the respondents should be deprived of its costs in the Stay Application or why the 4^th applicants should be awarded costs of this Stay Application.  And I also found counsel’s certificate is justified given the legal arguments involved.

Order

27.  It is ordered that costs of, occasioned by and/or arising out of this Stay Application and any costs wasted by reason of the Stay Application, including the costs of the hearing on 19 November 2015, be borne by the 3^rd and 4^th applicants, with certificate for 1 counsel, to be taxed if not agreed on District Court scale and to be paid forthwith.