FIRST KIND LTD v. YUET LOONG INVESTMENT COMPANY LTD

LDCS 14000/2014 & LDCS 15000/2014 (Heard Together)
[2018] HKLdT 7

LDCS 14000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAINAPPLICATION NO 14000 OF 2014

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LDCS 15000/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

LAND COMPULSORY SALE MAIN APPLICATION NO 15000 OF 2014

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___________________

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D E C I S I O N
(Setting Aside Notice of Discontinuance)

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1.  The applicant in both applications, i.e. LDCS14000/2014 (“CS14”) and LDCS15000/2014 (“CS15”), is the majority owner whereas the respondents are minorities in 2 compulsory sale applications taken out under the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545 (“LCSRO”).

2.  This is the hearing of the applications by the 2^nd respondent (“R2”) in CS14 and the 1^st, 2^nd and 3^rd respondents (“R1”, “R2” and “R3” respectively) in CS15 to set aside the Notices of Discontinuance filed by the applicant in both applications on 23 March 2017[1]. For ease of discussion, the 4 respondents were collectively referred to as the “participating Rs”, and the LCSRO applications CS applications. As an alternative, the participating Rs ask that the discontinuance should be subject to terms, namely, it should be without prejudice to their respective appeals now pending in the Court of Appeal (“CA”) in respect of which leave to appeal has already been granted by this Tribunal.

3.  All participating Rs were initially represented by the solicitor firm of Lo and Lo (“LL”). R2 in CS15 filed a Notice to Act in person on 14 August 2017. By a Notice to Act filed on 18 September 2017, R2 was represented by Ho & Wong.She was absent at the hearing.

Brief Background

4.  The applicant together with its related company have made a total of 6 applications (collectively “the said CS Applications”) to this Tribunal each for a compulsory sale order under LCSRO for the purpose of redeveloping a certain section of Canton Road between Dundas Street and Soy Street in Mongkok. The said section of Canton Road comprises 6 pairs of 5-storey contiguous buildings erected on 6 pairs of consecutive lots with each pair-building standing on a pair-lot. All these buildings are now over 60 years old. The buildings in the 6 pairs are assigned street numbers, counting from Dundas Street, as Nos. 925-927, 929-931, 933-935, 937-939, 941-943 and 945-947 of Canton Road. The related applications to this Tribunal are as follows:

i)   Canton Road 925-927: LDCS 20000/2014 (“CS20”);

ii)   Canton Road 929-931: LDCS 12000/2014 (“CS12”);

iii)   Canton Road 933-935: LDCS 14000/2014 (“CS14”);

iv)   Canton Road 937-939: LDCS 13000/2014 (“CS13”);

v)   Canton Road 941-943: LDCS 15000/2014 (“CS15”); and

vi)   Canton Road 945-947: LDCS 21000/2014 (“CS21”)

5.  From the façade of these 6 tenant buildings along Canton Road, they are of similar design but each pair are not connected to the other except on the roof. Some minorities in the 6 CS Applications raised several preliminary issues for the Tribunal’s determination, arguing that the 6 pairs of lots should be sold as if a merged site despite they are comprised individually in 6 separate applications. The redevelopment value (“RDV”) for the purpose of the LCSRO auction should be assessed on this basis. There is no dispute that the RDV based on a merged site basis is substantially higher than the aggregate of the 6 pairs valued individually.

6.  On 6 May 2016, this Tribunal handed down a decision basically ruling against the minorities on these preliminary issues concerning merged site valuation. In fact it was similar to my decision in Day Bright Development Ltd & Ors v Choi Pak Ling & Ors[2] given on 14 March 2014. However, this Tribunal ruled in their favour in that the 6 CS Applications be heard together because there are common issues of facts and laws.

7.  The minorities in these CS Applications applied for leave to appeal in respect of those issues made against them. By the Tribunal’s decision dated 13 January 2017, leave to appeal were granted in 5 applications except CS21. In sequential order along Canton Road, they are, CS20 (Canton Road 925-927), CS12 (Canton Road 929-931), CS14 (Canton Road 933-935), CS13 (Canton Road 937-939) and CS15 (Canton Road 941-943). Though CS21 (Canton Road 945-947) is not involved, it is noted that the 5 pair-lots involved in the appeal are still connecting. The preliminary issues will affect directly the RDV of these 5 consecutive pairs under appeal, and understandably, indirectly the pair not under appeal.

8.  Costs of arguing the preliminary issues were, however, granted in favour of those contesting respondents according to the principles set out in Good Faith Properties Ltd & Ors v Cibean Development Co Ltd^[3]. This was disposed of by my same written decision handed down on 13 January 2017 dealing with the leave to appeal application.

9.  The majority owner applied for leave to appeal against my costs orders. Their applications were refused. This was dealt with my another reasons for decision given on 2 March 2017.

10.  The present applications do not concern the issue of costs.

11.  Five notices of appeal were accordingly issued by the minorities granted with leave to appeal by the Tribunal. Those relating to these proceedings were issued on 13 January 2017.

12.  Of the 5 CS Applications under appeal, Chui and Lau represent the minorities in CS20 (Canton Road 925-927). Lo and Lo (“LL”) represent some respondents in the 4 following connecting pair-lots down the road (Canton Road 929-931, 933-935, 937-939, 941-943)[4].

13.  On 23 March 2017, the applicant, who is the sole applicant in CS20, CS14 and CS15, filed a notice of discontinuance in each of these CS Applications (collectively “Notices” and individually “Notice”). The Notices bring about an effect that no pair-lots before the CA are now connecting.

14.  Subsequently, by consent, the appellants in CS20 (not represented by LL) agreed to have the appeal (CACV22/2017) dismissed. The following is a table showing the appeals in respect of the 4 CS Applications with minorities acted upon by LL and whose appeal are now still pending before the CA:

Canton Road	929-931	933-935	937-939	941-943
Tribunal’s Case No	CS12	CS14	CS13	CS15
Civil Appeal No	CACV18/2017	CACV20/2017	CACV19/2017	CACV21/2017
Respondents Involved	R2	R2	R2	R1, R2 & R3

15.  As can be seen in the preceding paragraph, after the discontinuance of the 2 applications herein, i.e. CS14 and CS15, there will be no consecutive lots capable of a merged site valuation for consideration by any court. The question of a merged site development before the CA has apparently been rendered academic by applicant’s Notices. Further, the appellate proceedings from the discontinued proceedings, namely CACV20/2017 (appeal from CS14), CACV21/2017 (appeal from CS15) and CACV22/2017 (CS20) would become ipso facto vacated without the need of filing a separate notice in each of those appeal: see Hong Kong Civil Procedure 2018 para 21/5/15.

16.  Based on the correspondence exchanged between Lo, Wong and Tsui (“LWT”), solicitors for the applicant in CS14 and CS15 and LL exhibited[5], the participating Rs took the view the discontinuance a strategic move with a view to frustrating the appeals now pending in the CA. The participating Rs took the view the discontinuance was with a “malicious intent”[6]. LL had asked for the reasons for discontinuance in this unusual manner and whether there could be any guarantee in future the same application would not be brought before the Tribunal. There was basically no reply. LWT appeared to stress that it is the right of the applicant or its successor-in-title to make re-application, if sees fit to do so.

17.  The applicant does not deny in the affirmation of Mr Ho Wing Hang filed on its behalf that the other applicant in the 6 CS Applications is its associated company[7]. Basically, it was the applicant’s explanation that the initial 6 CS Applications were taken out on the basis that the development is financially feasible taking into consideration of the then prevailing market condition, the relevant laws and the estimated time frame for disposal of the LCSRO applications in the Tribunal, which they thought would take only 2 to 3 years.

18.  It was said by Mr Ho that the applicant acknowledged they might not be successful in acquiring all lots in the 6 CS Applications at the end of the day. They therefore disagreed with the suggestion that they had planned and determined to redevelop the 6 pair-lots as one site.

19.  Mr Ho said that before any direction for progress of the cases was made, the proceedings were brought to a halt by the minorities represented by LL, and later joined by others, raising the preliminary issues and the appeal despite they were the successful parties in respect of these preliminary issues. Further they were required to bear the costs despite the minorities’ defeat. Out of frustration and without detailed thoughts the deponent admitted they had ever threatened to withdraw the 6 CS Applications. However, upon counsel’s advice, they had decided to withhold such withdrawal before the outcome of the appeal to the CA is known.

20.  The applicant denied any abuse of process. So far as can be discerned from Mr Ho’s affirmation, the discontinuance of CS14, CS15 and CS20 was based on material change of circumstances:

i) The proceedings were issued in 2014, but yet still there is no progress except that the parties were entangled in argument of legal issues, and they expected the battle on legal issues may continue until reaching the highest court. The entire process will take long. Further, when the substantive application comes back to the Tribunal, the same cycle may repeat in respect of other interlocutory orders/issues as well as the judgment after trial. The applicant was frustrated by the unexpected delay and huge costs incurred or to be incurred;

ii) if the CA decides in favour of a merged site valuation in the appeal, the outcome would cast doubt on whether their offers to acquire were reasonable. Taking into account the legal costs, profit return, surging of shop prices recently and the current property bubble, etc, they are forced to re-consider their development plan;

iii) the withdrawal of 3 CS Applications but not all would mean not all legal costs incurred would be wasted;

iv) the applicant is only a small-scale developer. The proceedings of some CS Application but not all helps avoid hostile bidding which is very likely to take place had the 6 pair-lots were to be offered for sale in one single auction;

v) the auction prices of the remaining CS Applications are likely to be within the means of the applicant and its associated company. The auction price may give an indication to the applicant as to how much more costs would be required for continuation, if see fit to do so, of acquiring units in the 3 discontinued CS Applications;

vi) meantime, they may continue to negotiate with the minorities of the discontinued lots to purchase their interest;

vii) as to why they choose not to discontinue CS12, CS13 and CS21 resulting in connection of lots being broken, his explanation is basically it is not a deliberate arrangement. His explanations are:

a) CS12: the applicant has already incurred substantial costs to appoint someone to represent the estate one of the deceased minority owner (R1). To the applicant, it is an expensive case. It does not want to wholly waste the costs already incurred;

b) CS21: the minority either did not appeal or not take part in the preliminary issue argument;

c) CS13: the other minority represented by KB Chau had not taken part in the preliminary issue argument;

d) All: apparently the minorities in these applications not discontinued do not wish to be dragged down by the appeal. It would be just and fair for applicant to proceed with the applications as they have not pursued the merged site valuation approach;

viii)   There is no basis for the minorities to compel the applicant to acquire all lots at one time, and accordingly there is no absolute right to appeal from the preliminary issues. A right of appeal may be lost owing to change of circumstances; and

ix)   A majority owner is entitled to make any commercial decision as to whether, and if so, when and how it pursues its application. The mere fact that it does not pursue the LCSRO application to acquire a particular adjourning lot cannot constitute abuse of process.

The Participating Rs’ Summonses

21.  The participating Rs in CS14 and CS15 are now asking this Tribunal to determine the following summonses in each of the applications:

i)   A summons dated 5 April 2017 taken out under Rule 27(2) of the Lands Tribunal Rules, Cap 17A (“LTR”) that the applicant do pay them costs of the CS Application (save and except those already made by the Tribunal) with certificate for 2 counsel on an indemnity basis; and

ii)   A summons dated 11 April 2017 and amended on 5 July 2017 and further amended on 21 September 2017[8] that the Notice be set aside or alternatively, the Notice be set aside without prejudice to the participating minority respondents’ right of appeal in the CA.

22.  It is the participating Rs’ position that only when this Tribunal considers the discontinuance effective that this Tribunal is required to make determination in respect of the summons on costs.

23.  Shortly before the substantive hearing and by a letter dated 15 September 2017, the parties have jointly informed this Tribunal to the effect that should this Tribunal rule the Notices effective, the applicant do pay R2 in CS14 and R1 and R3 in CS15 costs of the proceedings on party-and-party basis on the High Court scale, including all costs reserved but excluding all costs which have already been determined by the Court or agreed upon, with certificate for one counsel, to be taxed if not agreed.

24.  It has to be noted that the alternative relief sought in the setting aside summons, prior to the latest amendment, is for the setting aside subject to condition that no further or other CS applications be made by the applicant or successor-in-title together with the other pair-lots under the LCSRO. The participating Rs represented by LL sought further amendment to the present form by 2 respective summonses on 4 September 2017. The proposed amendment was not opposed to and was granted at the hearing on 21 September 2017.

25.  Accordingly, only the setting aside applications (in its re-amended version stated in [21(ii)] above) and costs of such applications fall to be determined at this hearing.

The Grounds of the Parties

26.  Counsel for both parties have filed lengthy submissions with lots of authorities. The centre of the dispute hinges on construction of Rule 27(1) of the LTR relied on by the applicant. It is stipulated in the said provision that:

“A party may, without leave of the Tribunal, discontinue the proceedings or withdraw any part thereof by serving a notice to that effect on the other party.” (Emphasis added by the applicant)

27.  Mr CY Li SC for the applicant submitted that the provision is clear and unambiguous. According to its plain meaning, the applicant is entitled to discontinue the proceedings as of right.

28.  Ms Ngai, counsel for the participating Rs disagreed. She relies on Order 21 Rule 3(1) of the Rules of the High Court, Cap 4A (“RHC”), applied through section 10(1) of the Lands Tribunal Ordinance, Cap 17 (“LTO”). The respective provisions are as follows:

i)   S10(1) LTO

“The Tribunal may, so far as it thinks fit, follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction, and for this purpose, has the same jurisdiction, powers and duties of the Court of First Instance in respect of such practice and procedure.”

ii)   O21 r3(1) RHC

“Except as provided by rule 2, a party may not discontinue an action (whether begun by writ or otherwise) or counter-claim, or withdraw any particular claim made by him therein, without the leave of Court, and the Court hearing an application for the grant of such leave may order the action or counterclaim to be discontinued, or any particular claim made therein to be struck out, as against any or all of the parties against whom it is brought or made on such terms as to costs, the bringing of a subsequent action or otherwise as it thinks just.”

The Participating Rs’ Grounds

29.  It is fair to summarize Ms Ngai’s case into the following broad grounds:

i)   The applicable rules for discontinuance should be O21 r3 of the RHC instead of R27(1) of the LTR. She prays in aid of section 10(1) of the LTO. Further, she submits O21 r2 RHC[9] is inapplicable as a compulsory sale application is neither begun by writ nor originating summons;

ii)   There has already been a final decision or “judgment” of the Tribunal on the preliminary issue against the participating Rs whom have been granted leave to appeal. The participating Rs had already filed the Notice of Appeal. It is a right already accrued to the participating Rs. The applicant is no longer dominus litus. As soon as the appeal procedure has been kick-started, it is the participating Rs who have become the dominus litus. The law-suit belongs to the participating Rs, not the applicant;

iii)   Alternatively, the discontinuance should be granted on terms, namely, it should be without prejudice to the participating Rs’ appeal. It is because the Tribunal’s decisions on the merged site valuation was against the participating Rs. It amounts to a stigma and damage to their title to their properties. They should be allowed to remove the “blot” on their title to their properties because it “devalues” their properties. It will be inequitable to the participating Rs if the applicant is allowed to discontinue after gaining an advantage in the proceedings or frustrating the appeal which is their accrued right; and

iv)   The Tribunal has the “inherent jurisdiction” to set aside the Notices as they constitute abuse of court process.

The Applicant’s Grounds of Opposition

30.  After reading and hearing the submission of Mr Li SC (with whom Mr Adrian But appears), the applicant’s grounds can broadly be summarized as follows:

i)   The Tribunal simply has no jurisdiction to set aside notice of discontinuance because Rule 27(1) of LTR expressly states that a party may discontinue the proceedings or any part thereof without leave of the Tribunal. No qualification is imposed. The particular provision of the LTR is clear and unambiguous; and section 10(1) of the LTO cannot help;

ii)   It is only when the unqualified right to discontinue is abused that the court will exercise discretion under its inherent jurisdiction to intervene by setting it aside or granting leave to discontinue on terms: see Hong Kong Civil Procedure 2017, para 21/5/5 and Castanho v Brown & Root (UK) Ltd[10]. However, the Tribunal, being an inferior court of record, has no inherent jurisdiction as the High Court does. The High Court’s inherent jurisdiction cannot be inherited through the backdoor of section 10(1) of the LTO. Accordingly, the relevant Notices cannot be aside;

iii)   On the other hand, there is simply no abuse as alleged.

a)   The applicant cannot be forced to litigate against its will, particularly in LCSRO application which is motivated out of commercial consideration. The majority cannot be forced to carry on a loss-making business. So long as the legal costs incurred by the minority owners in the discontinued applications are adequately compensated, there is no question of abuse;

b)   There is no “collateral advantage” or “unjust advantage” obtained by the applicant as it was only a winner of preliminary issues on law, not “advantage” in the form of monetary award or otherwise as discussed in Castanho (supra);

c)   On the other hand, the applicant is still liable in respect of costs and there is delay in the matters. Should the applicant re-apply for compulsory sale order in future, the same issue will re-surface again;

iv)   There is no prejudice suffered by the participating Rs as they do not have an absolute right or locus standi to raise the preliminary issues or lodge an appeal in respect of those issues. There is no right or legitimate expectation for the participating Rs to expect their ownership or interest in the land be bought out or valued together with the adjacent lots. In any event the applicant would not be debarred from discontinuing even after the disposal of the appeal in the participating Rs’ favour on the applicant’s own reasons;

v)   The discontinuance is based on genuine commercial considerations. To set aside the Notices would mean that the applicant will be forced to sell their interest against their will, which is against the intent of the LCSRO and Article 105 of the Bills of Right. Further, it would be meaningless to force the applicant to continue with a LCSRO application because it will be difficult to see how an unwilling applicant can satisfy the Tribunal all the statutory requirements under sections 3 and 5 of the said ordinance. The proceedings are bound to fail;

vi)   It would be impossible to revive CS14 in any event as R1 therein (i.e. Yuet Loong Investment Company Ltd) has not applied to set aside the Notice. It will be impossible for any sale order under LCSRO to be made in CS14 without all owners of a lot participating;

vii)   There is no jurisdiction to impose conditions on setting aside of the Notices. Apart from being prolix and unclear, the conditions originally sought to impose[11] operate to prohibit an exercise of a statutory right conferred upon a majority owner and must be ultra vires. It is similar to an anti-suit injunction or a Grepe v Loam Order under Ng Yat Chi v Max Share Ltd[12] completely shutting out the applicant from applying. It is unreasonable and disproportionate; and

viii)   Alternatively, even after the re-amendment, the Tribunal still has no jurisdiction over the appeal because it is functus officio on the preliminary issue, and the appeal is currently seized by the CA, not the Tribunal. Any declaration that the discontinuance being without prejudice to the appeal must be a matter for the CA.

Discussion

31.  R27(1) LTR is apparently couched in clear and unambiguous terms. The natural and in fact a critical question to ask is why it is to be disregarded in preference to O21 r3 RHC. In the Tribunal’s judgment, the following questions need be dealt with:

i)   Whether there is any ground for R27(1) LTR to be overridden, as contended by Ms Ngai, with O21 r3 RHC in place thereof;

ii)   If not, whether the Tribunal has jurisdiction, inheritance or otherwise, to set aside on the ground of abuse by virtue of s10(1) of the LTO;

iii)   If the Tribunal could, whether it should in the circumstances of this case to set aside the Notices, and if so, whether condition as now contended by the participating Rs should be imposed; and

iv)   If the applicable provision should be O21 r3 RHC instead of R27(1) of the LTR, whether leave to discontinue should be granted on the terms now contended by the participating Rs.

R27(1) LTR vs O21 r3 RHC

32.  Section 10(1) of the LTO[13] empowers the Tribunal to adopt the practice and procedure of the Court of First Instance (“CFI”) in exercise of its jurisdiction, so far as it thinks fit. However, R27(1) LTR[14] was drafted in clear and unambiguous terms that discontinuance by any applicant can be without leave of the Tribunal. As to whether in the circumstances of this case this Tribunal should invoke O21 RHC to replace R27(1) LTR, I agree with Mr Li SC that guidance can be derived from the Directions (LTPD: CJR No 1/2009) dated 12 February 2009 issued by Hon Lam J as the President of the Lands Tribunal (as the Vice President then was). It was issued under s10(5)(a) of the LTO shortly after s10(1) of LTO was amended to its present form[15]. The said Direction directs, inter alia,

i)   a flexible approach be adopted in adopting the new measures under the Civil Justice Reform;

ii)   the underlying objectives of the RHC set out in O1A of the RHC are applicable; and

iii)   in particular, under paragraph 10 of the said Direction:

“As a general rule, when there is already a clear procedure laid down in the Lands Tribunal Ordinance and the Lands Tribunal Rules in respect of a particular matter, the Tribunal shall not adopt the Rules of the High Court in respect of the same matter unless it is to supplement the powers and procedures that have not been expressly stated in the Lands Tribunal Ordinance or the Lands Tribunal Rules in respect of that matter.”

33.  It is noted that the phrase “without leave of the Tribunal” was employed in R27(1) of the LTR. There is no other provision in the LTR seeking to qualify the said provision. What follows after sub-rule (1) is the provisions regarding costs after discontinuance. It does appear that when making or reviewing the rule, the legislature was then well aware of the concept of a leave requirement when the issue of discontinuance arose. It saw fit to state expressly that no leave was required for the discontinuance, and no further qualification is imposed.

34.  On the other hand, to have these few words omitted in the construction of the said rule will lead to ambiguity as to whether or not leave is required, given the regime under the RHC. Further, it would appear that the rule would be drafted differently as at least whether the Tribunal is entitled to impose conditions, and the costs consequence that may follow from different scenarios would have been spelt out.

35.  In this connection, this Tribunal tends to agree with Mr Li SC’s submission that in order to construe the said provision, the “rule against surplusage” should be adopted. The learned author of Bennion on Statutory Interpretation (6^th Ed) at Section 198 (page 515) has this to say:

“It is a rule of law that the legislator intends the interpreter of an enactment to obey the maxim ut res magis valeat quam pereat (it is better for a thing to have effect than to be made void); so that he must construe the enactment in such a way as to implement, rather than defeat, the legislative purpose.”

36.  Since the meaning and procedure prescribed under R27(1) LTR is clear and unambiguous, this Tribunal considers R27(1) LTR instead of O21 r3 RHC should be applicable in the case of Discontinuance.

   Whether the Tribunal has Inherent Jurisdiction of the CFI

37.  Tse Wai Chun Paul v Solicitors Disciplinary Tribunal & Ors[16] is a CA decision. One of the questions before the CA in that case was whether the Solicitors Disciplinary Tribunal was a court of the classic kind. In the course of discussion, Hon Le Pichon JA (with Rogers VP and Sakhrani J agreeing) considered only superior courts of record such as the CFI, CA and CFA have inherent jurisdiction. It was cited as example that inferior court of record, like the Lands Tribunal, does not have any inherent jurisdiction despite section 10(1) of the LTO which was expressly referred to in the decision: see [20] of Tse Wai Chun Paul (supra).

38.  Tse Wai Chun Paul (supra) was decided in September 2002 before the present s10(1) was amended on 2 April 2009. The then section 10(1) was couched in terms which, I consider, are more limited and restrictive than that of the present form (see [28] above). For easy comparison the then s10(1) of the LTO (“old section 10(1)”) is set out below:

“(1) The Tribunal shall have the powers which are vested in the Court of First Instance in the exercise of its civil jurisdiction in respect of the following matters—

(a) the attendance, examination and payment of witnesses;

(b) the hearing of any matter with the assistance of an assessor or assessors;

(c) the consolidation or hearing of any matters;

(d) the punishment of persons guilty of contempt;

(e) the ordering of inspection of any premises or place;

(f) the entering and viewing of any premises or place;

(g) the enforcement of decisions, judgments and orders;

(h) the making of orders as to interim payments;

(i) the making of orders in default of any action by a party,

and, so far as it thinks fit, may follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction.”

39.  It is apparent from the old s10(1) LTO that only powers more particularly spelt out were vested in the Tribunal. In other words, powers not specifically stated will not be available to the Tribunal. By the amendment effective April 2009, s10(1) was re-drafted in a totally different manner. It was couched in a general but all-embracing term. Instead of spelling out each and every power, the new s10(1) LTO basically incorporated in a wholesale manner the CFI’s practice and procedure in exercise of its civil jurisdiction. Further, in order to enable the Tribunal to adopt these practice and procedure, the new s10(1) LTO states that the Tribunal “… has the same jurisdiction, powers and duties of the Court of First Instance in respect of such practice and procedure” (my emphasis).

40.  In my judgment, although the Tribunal has no inherent jurisdiction of its own, by the new (i.e. the current) s10(1) LTO, it has statutorily “inherited” the CFI’s inherent jurisdiction in exercise of its civil jurisdiction. Accordingly, if the CFI has inherent jurisdiction to set aside a notice of discontinuance given without leave, the Tribunal will likewise have such jurisdiction to do so.

41.  Ms Ngai has helpfully referred this Tribunal to the Legislative Council Brief (File Ref: CSO/ADM CR 4/3221/04) dated 28 March 2007 when the amendment Bill, namely, the Civil Justice (Miscellaneous Amendments) Bill 2007 was introduced to the Legislative Council and for public consultation. Part 12 of the said Bill concerned amendment to the LTO including amending the old s10(1) to the current form. It was stated in paragraph 20 of the said Brief as follows:

“Part 12 amends the LTO to provide greater flexibility for the LT to adopt the practice and procedures of the CFI and streamline the processing of claims. Specifically, this Part –

(a) …

(b) Makes it clear that the LT has the same jurisdiction, powers and duties of the CFI in respect of its practice and procedure;

[(c) to (e) irrelevant for the present discussion]

   ….”

(Emphasis added by Ms Ngai)

42.  The said Brief supports the conclusion arrived at by this Tribunal.

43.  In the English House of Lords (“HL”) decision of Castanho (supra), the plaintiff therein issued a notice of discontinuance under the then O21 r2(1) (leave was not required) after obtaining interim payment and an admission of liability from the defendants. The discontinuance was with a view to pursuing another action in the court of the States which was likely to award a higher damage. It was opposed. The HL upheld unanimously the setting aside of the notice of discontinuance. Lord Scarman had this to say:

“Unless, therefore, it is possible to treat a notice of discontinuance without leave which complies with the Rules of the Supreme Court as an abuse of process …, the notice cannot be struck out.” (571F)

...

The court has inherent power to prevent a party from obtaining by the use of its process a collateral advantage which it would be unjust for him to retain: and termination of process can, like any other step in the process, be so used.” (571G-H)

44.  Since the CFI has the inherent power to set aside the notice of discontinuance filed and served without leave on ground of abuse, this Tribunal, likewise, by reason of s10(1) of the LTO, acquires the same inherent jurisdiction to do so. In the Tribunal’s judgment, discontinuance notice served under R27(1) LTR, despite being stated to be “without leave of the Tribunal”, is liable to be set aside by the Tribunal under its “inherited” inherent jurisdiction.

   Whether the Notices should be Set Aside

45.  Lord Scarman had approved a test for assessing abuse in Castanho (supra) (at 572A-B):

“… A sensible test is that which both the judge and Lord Denning M.R. applied. Suppose leave had been required… would the court have granted unconditional leave? It is inconceivable that the court would have allowed a plaintiff, who had secured interim payments and an admission of liability by proceeding in the English court, to discontinue his action in order to improve his chances in a foreign suit without being put upon terms, which could well include not only repayment of the moneys received but an undertaking not to issue a second writ in England.

The notice being an abuse of process, Parker J. was right, in my judgment, to strike it out. It does not, however, follow that the court may not thereafter give the plaintiff leave upon terms to discontinue.”  

46.  One of the abuses said by the participating Rs is that the discontinuance serves to deprive a right, namely, the right of appeal in respect of which leave has already granted by this Tribunal. Further, the discontinuance is orchestrated in such manner as to defeat their appeal in respect of the preliminary issues concerning merged site development. The manner in which the 3 applications were discontinued amounts to an abuse.

47.  After reading the affirmation evidence filed on behalf of the applicant and despite the able submission of Mr Li SC, while acknowledging delay and escalation of the acquisition costs are real problems now faced by the applicant, the Tribunal cannot help form the provisional view that the discontinuance of 3 CS Applications in the manner as it now stands is a strategic move to defeat the merged site development argument before the CA. In the Tribunal’s judgment, it is at least one of the main purposes for the discontinuance. The applicant’s explanation that the result of defeating such argument being by chance more than by arrangement is, in my view, not convincing. It is noted that so long as the combined development of these lots remains a live option (and from the applicant’s affirmation it is still making effort to acquire the minority interests), hostile bidding which the applicant seeks to allegedly avoid cannot, as a matter of fact, possibly be avoided. Further, it will be unrealistic for the applicant to expect the minorities putting up no resistance or will be readily acceding to whatever price the applicant may offer in the acquisition process. The property market, though volatile, is rocketing high for the time being. One may expect during boom time, the asking price will be on the rise. It is natural even it may exceed the statutory limit. One should not readily accuse them of being greedy if this happens. The merged site argument now raised by the participating Rs is a decently framed one, though has been ruled against by this Tribunal once before. No one should be blamed for raising and taking such argument further to a higher court. The original time estimate of 2 years obviously is obviously the most optimistic one, and should not be regarded as a norm.

48.  In the Tribunal’s judgment, at least one of the purposes of the discontinuance is to create a reality that the court seizes no connecting lots for consideration of the merged site issues. However, having said that, the fact that one of the purposes being to render the issues being appealed against academic per se is, without more, in the Tribunal’s judgment, not good enough to establish an abuse.

49.  This Tribunal bears in mind that when the applicant invokes the statutory scheme under the LCSRO, it will be reasonable to presume that the parties must have already put their heads together before on the purchase price but failed. Although no one has committed any wrong in a LCSRO application as in an ordinary litigation, court action (and this one is no exception) is very often an unfriendly or even hostile affair, or at least it is perceived as such. While the minorities are entitled to join forces to pursue these preliminary issues with a view to achieving a maximum RDV, the corresponding move of the majorities to counter or neutralize such effect should not be readily condemned as an abuse.

50.  Firstly, the LCSRO does not mandate applications concerning adjacent lots to be made in one single application: see my decision in Day Bright (supra). The applicant is not obliged to enlist assistance of the LCSRO, and is free to decide whether they really want to face the legal problem, or which lot or lots they wish to pursue first.

51.  Secondly, no one should be compelled to continue with any intended development under the statutory scheme because, as corrected submitted by Mr Li SC, the application will bound to fail for the simple reason that the majority owner is unlikely to bring about satisfaction of all the LCSRO requirements if forced to do so. In that event, determination of any joint site development issues will become meaningless.

52.  Thirdly, it is to be noted that such move is not without a price, and the costs are not insubstantial. Any intended development will be delayed. Apart from costs incurred in the proceedings necessarily be thrown away, the applicant has to compensate the minorities for their costs incurred, and in fact they have agreed to do so. Further, the challenge cannot be entirely be avoided in future if they make similar application to the Tribunal again, unless adjacent lots have been 100% owned by it, in which event the principles in the CA decision of Bond Star Development Ltd v Capital Wall Ltd^[17] apply. From this point of view, one really cannot lightly come to a view the applicant is abusing the process by the mere fact of discontinuance.

53.  It is Ms Ngai’s submission that leave to appeal is a right already accrued to the participating Rs whereby the applicant is no longer dominus litus. Alternatively, the applicant has gained a collateral benefit and should not be allowed to discontinue without any condition.

54.  Regarding the alternative point raised, in Castanho (supra), the benefits gained by the plaintiff were substantial benefit based on assessment of the particular facts or merits of that case, namely, interim payment which had actually been paid and received, and admission of liability. In the present case, the decision on the preliminary issues is on a question of law. The Tribunal, in reaching its own conclusion, only proclaims (be it rightly or wrongly) the position of the law. No finding of fact has ever been made. Neither has the Tribunal made any decisions on any of the pre-requisites required under LCSRO. In fact, the decision of this Tribunal on the said preliminary issues is no different from that already reached by this Tribunal in Day Bright (supra). As such this Tribunal disagrees with Ms Ngai’s submission that the applicant has gained a benefit, or that the participating Rs’ title has been blotted. To state the position of the law, which is in a party’s favour, cannot be regarded as a benefit gained by that party, or blotting of the other party’s title on the other hand.

55.  Furthermore, this Tribunal accepts the submission of Mr Li SC that there is no magic in the Latin of the dominus litus. They only mean, according to the Black’s Law Dictionary (10^th Ed, 2014):

“The party who makes the decision in a lawsuit…”

56.  Accordingly, the participating Rs, having lodged an appeal pursuant to a leave granted by this Tribunal, are the appellant in the appeal. They are the dominus litus in the appeal. However, they are not dominus litus in the main suit and cannot, in the Tribunal’s judgment, force the applicant to litigate against its will. They cannot constitute any right otherwise an appeal would not be vacated ipso facto upon discontinuance of the main suit: see Hong Kong Civil Procedure 2018 para 21/5/15.

57.  Even if this Tribunal were wrong and should have come to a conclusion that there was abuse, this Tribunal considers that it has no jurisdiction to impose the condition now being sought by the participating Rs. Whether the preliminary issues can be argued before the CA despite discontinuance is not something that the Tribunal, being a lower court in the hierarchy and having no power in the appeal, can have any say. The jurisdiction on whether to continue hearing the appeal of the preliminary issues, in the Tribunal’s judgment, must lie with the CA. In fact, Ms Ngai refers to this Tribunal no authority that it has jurisdiction to direct the CA dealing with those preliminary issues despite the discontinuance.

58.  By the reasons set out in the preceding paragraphs, this Tribunal does not come to any conclusion that there is abuse on the part of the applicant in filing and serving the Notices of Discontinuance. Accordingly, it is unnecessary for this Tribunal to consider the question in [31(iv)] above.

Conclusion and Disposition

59.  The participating Rs’ 2 summonses to set aside the Notice of Discontinuance filed in each of the applications herein be dismissed.

60.  Concerning costs of the 2 setting aside summonses, the questions to be dealt with here are not directly relating to the compulsory acquisition or compensation issues but concerns basically procedural rules. The situation is apparently different from that when one is defending a LCSRO application.  The usual rule of costs to follow the event should apply. This Tribunal therefore orders that all participating Rs (R2 in CS15 up to and inclusive of 13 August 2017) do pay the costs of the applicant with certificate for one counsel on High Court scale, to be taxed if not agreed. There is no order as to costs between the applicant and R2 in CS15 since 14 August 2017. The costs orders for the setting aside summonses are in the form of order nisi. Unless any of the parties apply by summons to vary, the costs order nisi shall be made absolute upon expiry of 14 days from today.

61.  As regards the summonses concerning costs upon discontinuance, this Tribunal makes an order in terms of the agreement as embodied in LWT’s letter dated 15 September 2017.

62.  It remains for me to thank counsel on both sides for their able assistance provided to the Tribunal.