LERTVARANURAK, VARAVOOT v. WONG, KAM WAI DAVID AND OTHERS

LDBM 128/2024

[2026] HKLdT 41

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 128 OF 2024

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BETWEEN

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J U D G M E N T

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1.  The parties seek their respective costs of this action after having settled the action on the first day of trial.

BACKGROUND

2.  The Applicant is the owner of Shops 4, 5, 8 and 9 (collectively referred to as “the Shops”) on the Ground Floor of Civic Commercial Building (“the Building”).

3.  According to the Applicant’s witness statement, he tried to secure the Respondent’s consent to install individual water meters to the Shops since 2023. However, the Respondent refused the Applicant’s request without reason. As proof of the Respondent’s refusal, the Applicant produced a phone message sent from a Mr. Chan (the property manager at the time of the message) in June 2024.

4.  The Applicant filed his Notice of Application (“Form 29”) on 15 July 2024 and sought the following relief (see paragraph 1 of the Form 29):

“The Applicant(s) apply(ies) for an order relating to enforcement of the terms and provisions of the Deed of Mutual Covenant of the Civic Commercial Building, specifically the privileges that were granted to an owner explicitly and implicitly in Sections 3c and 5 respectively.”

5.  In addition to the relief pleaded in the Form 29, the Applicant urged the Tribunal to compel the Respondent to give their consent to his application for the installation of individual water meters for the Shops.

6.  The Respondent denied they had refused the Applicant’s request to install individual water meters for the Shops. The Respondent made it clear to the Applicant that he must comply with various conditions before the Respondent could consider whether consent could be given in respect of the proposed installation of water meters to the Shops.

7.  The conditions imposed by the Respondent are set out in the Notice of Opposition (dated 7 October 2024), and summarized as follows (collectively referred to as “the Conditions”):

1) The Applicant must make a written application to the Respondent.

2) The installation works must be carried out by qualified plumbers and technicians. Details of the works must be provided to the Respondent including plans of pipes and various installations.

3) The Respondent will need to consider whether other owners also intend to install separate water meters and consider whether the water supply system can support the extra water demand.

4) The Respondent must call an owners’ meeting to decide on the matter and obtain consent from all owners before consent can be given to the Applicant’s application.

5) The Applicant must be responsible for the costs of the installation and undertake to compensate other owners for any damage and/or loss caused by the installation works proposed by the Applicant.

8.  On 5 December 2025, HHJ SH Lee ordered the trial of the Applicant’s Form 29 be heard on 3 March 2026 with 3 days reserved.

9.  On the first day of trial (that is, 3 March 2026), the parties reached a settlement on all matters except for costs before the calling of evidence. By consent of the parties, the following orders were made (“the Settlement Agreement”):

1. The 3rd Respondent agrees to provide conditional consent to the Applicant for the installation of a separate government water meter for his shops Nos. 4-5 and 8-9 at the Ground Floor (the “Shops”) of Civic Commercial Building (the “Building”) of 165-167, Woosung Street, Kowloon, Hong Kong, subject to the following conditions that:-

(a) The owners of the Shops shall bear all costs and expenses arising from the application for and installation of a separate government water meter, including but not limited to any professional fees prescribed by the Water Supplies Department (“WSD”) and all necessary internal and external pipework and associated works;

(b) The said installation works shall be carried out by a licensed plumber approved by the WSD and shall in all respects comply with the relevant requirements of the WSD and the Buildings Ordinance, Cap.123 (“BO”); and

(c) The said installation works shall not cause any damage to or undue nuisance affecting the common parts of the Building or any other owners. Any damage arising from such water supply installation shall be promptly repaired and the costs thereof borne by the owners of the Shops; and

2. Costs of this action be reserved.

10.  Since parties were unable to reach an agreement on costs, I ordered the parties to make submissions on costs and adjourned the hearing to the next day of trial (that is, 4 March 2026).

11.  Counsel for the Respondent, Mr. Leung, submitted the Respondent should be considered substantially successful in these proceedings and therefore should get their costs. Mr Leung’s submissions are summarized as follows:

1) As early as October 2024 (that is, the date of the Notice of Opposition), the Respondent made the Conditions known to the Applicant. However, the Applicant did not comply with the said Conditions.

2) The Applicant’s litigation conduct warrants a costs order against him. The conduct complained of are as follows:

a) The Applicant raised many complaints in his Re-Re-Amended Notice of Application, which generated a number of collateral issues to be dealt with at the trial.

b) The Applicant habitually disobeyed deadlines given by the Tribunal. For example, the Applicant frequently filed documents out of time and made late interlocutory applications.

c) The Applicant’s position kept changing.

d) The Applicant all along insisted the Respondent give its unconditional consent and refused to abide by the Conditions set by the Respondent.

e) The terms of the Settlement Agreement mirror the Conditions.

12.  The Applicant argued it was the Respondent’s unreasonable refusal to his proposed installation works that necessitated the need to proceed with the present litigation. The Applicant submitted he should be awarded the costs of the proceedings by reason of the Respondent’s litigation conduct as follows:

1) During 2023 – 2024, the Respondent gave a blanket refusal to the Applicant’s application. It was not until the Respondent changed its chairman, did the Respondent then proceed to propose the Conditions as a pre-condition to granting consent to the Applicant’s application.

2) The Applicant is of the view the Conditions were “discriminatory and unprecedented” as no other owner had been subjected to the same conditions when they made similar installations. In fact, the Respondent granted approval or acquiesced to the same situation in respect of other owners (namely, owners of Shops 2 and 3).

3) The Applicant made a “Calderbank Offer” on 28 January 2026 but the same was rejected by the Respondent. Furthermore, in addition to rejecting the Applicant’s proposed costs order, the Respondent unreasonably insisted on indemnity costs.

13.  I now proceed to set out the legal principles governing the present costs application.

THE LAW

14.  The Tribunal’s power to award costs is set out in section 12 of the Lands Tribunal Ordinance, which states, inter alia:

(1) The costs of and incidental to all proceedings in the Tribunal are in the discretion of the Tribunal, and the Tribunal has full power to determine by whom and to what extent the costs are to be paid.

15.  When exercising the Tribunal’s discretion on costs, the Tribunal should have regard to the matters set out in Order 62 Rule 5 Rules of High Court (Cap 4A):

“1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account— (L.N. 152 of 2008)

(aa)the underlying objectives set out in Order 1A, rule 1; (L.N. 152 of 2008)

(a)any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b)any payment of money into court and the amount of such payment;

(c)any written offer made under Order 33, rule 4A(2); (L.N. 152 of 2008)

(d)any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22; (L.N. 152 of 2008)

(e)the conduct of all the parties; (L.N. 152 of 2008)

(f)whether a party has succeeded on part of his case, even if he has not been wholly successful; and (L.N. 152 of 2008)

(g)any admissible offer to settle made by a party, which is drawn to the Court’s attention. (L.N. 152 of 2008)

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a)whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)conduct before, as well as during, the proceedings. (L.N. 152 of 2008)”

16.  In considering the appropriate costs order to be made after the trial has been settled, the Hon Au-Yeung J has succinctly summarised the matters to be considered in the case of Famous Marvel Co Ltd & Ors v Conversant Group Ltd & Ors, HCA 2153/2009, (unrep), 29 October 2012, at paragraph 22 of the judgment as follows:

“22. There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs. There is no tradition for there to be "no order as to costs" in such a scenario. I am guided by the following principles in deciding costs:

(i) The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion. In between, the position will, in differing degrees, be less clear. How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties. Brawley v Marcynski (No. 1) [2003] 1 WLR 813.

(iii) The Court will first consider if it is in a position to say what the likely outcome after trial would have been. If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1), at para 18, Longmore LJ; followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv) The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12. However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v) A broad brush can be taken by referring to all matters already laid before the Court, eg pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi) The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional cost: Brawley v Marcynski (No.1).”

17.  With the above principles in mind, I now proceed to consider the parties’ respective application for costs.

WHETHER THE PROCEEDINGS WERE UNNECESSARILY BROUGHT AGAINST THE RESPONDENT

18.  One of the main disputes between the parties is whether the present action was avoidable or whether it was commenced unnecessarily.

19.  I am of the view this action was unavoidable.

20.  The Applicant produced evidence to prove he was informed by a Mr Chan (a representative of the management company) that his application to install water meters in the Shops was rejected by the Respondent. Despite the Respondent’s attempt to absolve itself from any representations made by the previous chairman, the Respondent has not adduced any evidence to rebut the Applicant’s evidence. The Respondent merely explained they have not found any record of rejection or approval of the proposed installation works before 2019.

21.  Furthermore, there is no evidence produced by the Respondent to prove the Respondent communicated the Conditions to the Applicant prior to the filing of their Notice of Opposition. In other words, in so far as the Applicant is concerned, the Respondent’s position up until the filing of the Form 29 was a point-blank refusal to the Applicant’s application for installation of water meters.

22.  Hence, I do not find the proceedings to be avoidable or unnecessarily commenced.

WHETHER EITHER PARTY CAN BE CONSIDERED SUBSTANTIALLY SUCCESSFUL IN THESE PROCEEDINGS

23.  I am of the view the Respondent could not be considered to be substantially successful in the present proceedings.

24.  There is no evidence before me to prove whether the Conditions were made known to the Applicant prior to the filing of the Notice of Opposition. On the documentary evidence before the Tribunal, the Notice of Opposition is the first written record of the Conditions.

25.  It is clear that once the Conditions were made known to the Applicant through the Notice of Opposition, the Applicant submitted his written application on 10 February 2025 (“the Written Application”). In the Written Application, the Applicant acceded to the Conditions as follows:

1) He provided the intended plumbing route plan showing the route and location of the water pipes.

2) He explained the intended location at which the water meters would be installed.

3) He agreed the works would be carried out by licensed plumber.

4) He agreed he would submit the proper documentation to the WSD (Water Supplied Department) for their approval.

5) He agreed the installation would comply with all relevant regulations and guidelines set down by the WSD.

26.  Although the Applicant did not expressly say he would be responsible for the costs of the installation works, I am of the view it has been the implicit understanding between the parties the Applicant would pay for the said installation works. In any event, there is no evidence the Applicant requests the Respondent to the pay the same.

27.  Hence, save and except for the undertaking to compensate owners for any damage or loss arising from the installation, the Applicant acceded to all of the Conditions.

28.  I note the Respondent in his witness statement formulated the condition regarding compensation differently from that as pleaded in the Notice of Opposition. The Respondent stated the Applicant was required to undertake to be responsible for all maintenance and repairs of the installed water pipes during and after the installation works, and any loss/damages arising from the same (see the Respondent’s Witness Statement).

29.  It is trite to say, if the Applicant causes any loss or damage by reason of works undertaken by himself or his agents, the Respondent would have a right to seek compensation against the Applicant. Hence, the insistence of any undertaking to that effect does not place the Respondent in a better position.

30.  Furthermore, with regards to the undertaking to compensate other owners, the Tribunal is not in a position to make orders for the benefit of non-parties. Hence the Respondent’s request for a pre-emptive undertaking for the benefit of other owners, whom are non-parties to this action, would not be granted by this Tribunal.

31.  I therefore do not see the inclusion of paragraph 1(c) of the Settlement Agreement to be indicative of the Respondent’s success in defending the proceedings.

32.  However, this does not mean the Applicant is to be considered the successful party. The Applicant’s Form 29 is not without its problems. For example, the Applicant’s understanding of the Deed of Mutual Covenant is not entirely correct, if at all.

33.  The Deed of Mutual Covenant (“the DMC”) does not make any provision for an owner’s request to install independent water meters. Clause 3(c) of the DMC (regarding right to “free and uninterrupted passage of water”) , as relied on by the Applicant, does not override all other provisions of the DMC. As per Clause 11 of the DMC, the water tanks, meter rooms pump rooms etc are all under the exclusive control of the Manager and any alterations would require the Manager’s consent. Furthermore, any pipes to be erected in the common areas or within common facilities must be installed with the owners’ consent. Hence it is clear the Applicant’s understanding of his rights under Clause 3(c) of the DMS is not correct.

34.  I refrain from opining whether any party would likely succeed if the matter had gone to trial because the present case is fact sensitive. The Tribunal would need to assess the evidence and factual witnesses in order to understand whether in fact the Applicant’s right to free passage of water to the Shops has been hindered by the refusal of the Respondent to grant consent to the Applicant’s application. The Tribunal would also need to make factual determinations on whether the Respondent’s initial refusal was made unreasonably. It is not possible without the benefit of factual evidence to gauge who would likely be successful had the matter proceeded to full trial.

35.  I note the Settlement Agreement reached between the parties on 3 March 2026 involves conditional consent from the Respondent and a statement that the Applicant would be responsible for remedial works and the costs of such works in the event of any loss or damage. The Settlement Agreement is clearly an order that could only have been made with the consent of the parties. It is not an order that would have been made by the Tribunal after trial.

36.  Since the terms of the Settlement Agreement are a product of the parties’ consensus, I am of the view neither parties can be considered to be largely successful and no costs order should be made against either party.

THE APPLICANT’S “CALDERBANK OFFER”

37.  The Applicant claims to have made a Calderbank offer to the Respondent by way of his draft consent order dated 28 January 2026 (“the Draft Consent Order”).

38.  The Respondent denied having received any Calderbank offer on costs. The Respondent explained that upon receipt of the Draft Consent Order, they told the Applicant they do not agree to no order as to costs and would seek costs. However, the Applicant refused to pay the Respondent’s costs and did not make any further counter-offer.

39.  Having considered the parties’ submissions, I agree the Applicant’s Draft Consent Order cannot be considered a Calderbank offer for the following reasons:

1) The Draft Consent Order contains various provisions relating to the settlement of the whole action and not just on costs.

2) It is unclear whether the Applicant’s proposed costs order was independent of other terms set out in the Draft Consent Order. There is no evidence to prove the Applicant’s proposed costs order could be considered independently of other terms in the draft consent order.

3) It is unclear how long the purported offer was to be valid for or when the deadline for the Respondent to accept was.

40.  Hence in absence of an unequivocal offer on costs from the Applicant, I do not accept the Applicant made a Calderbank offer to the Respondent. I therefore do not accept the Applicant should be awarded costs on the basis of his Draft Consent Order.

SUMMARY

41.  By reason of the matters set out above, I am of the view the no costs order should be made. I therefore make no order as to costs of these proceedings, including all costs reserved.