WHARF PROPERTIES LTD AND ANOTHER v. ERIC CUMINE ASSOCIATES, ARCHITECTS, ENGINEERS & SURVEYORS (A FIRM) AND OTHERS

IN THE HIGH COURT OF JUSTICE

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RULING

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1. The stage has been reached in the course of hearing these applications where my ruling is required. I do not propose to review the background to this action in any detail. I hope the outline which I now give is sufficient.

2. The plaintiffs are the developers of a site or sites in Kowloon which comprise the well-known Ocean Terminal Centre and the Harbour City Development. They have on foot an action against some eighteen defendants in all, the first of which is a firm of architects, engineers and surveyors. It was the firm of architects concerned in the development of the site or sites to which I have referred. The action as a whole, as I have had reason to say in the past, is a very large one. What I am concerned with today on the 1st defendants' application is just one aspect of it.

3. In part of their Statement of Claim, the plaintiffs allege against the 1st defendants, the architects, that they failed to achieve the maximum density of development which would have been permitted under the various regulations. Broadly they put their case in three ways.

4. In the first place, they say that the defendants did not achieve in negotiating with the authorities, the highest plot ratio which was available to them. That part of the claim is also broken down into, I think, two parts. The first is that the defendants failed to achieve an overall agreed plot ratio for the site including that part of the site which is now occupied by the Ocean Terminal as favourable to the plaintiffs as they should because it is said that the Ocean Terminal site was in the event never developed to its maximum permitted density and there was, therefore, and I hope the choice of words is not inappropriate, a carry over of plot ratio which might have been employed in developing to a greater density the Harbour City portion. Then, they say that it was open to the 1st defendants to apply for certain exemptions with regard to parts of the proposed development so that those areas need not be taken into account in making the calculation of plot ratio, thus producing in the result a greater area of building capable of producing a return.

5. In their second broad head of claim, the plaintiffs say against the 1st defendants "even for the plot ratio which was achieved, you did not design Harbour City so as to completely exhaust that plot ratio. You left some plot ratio unused. We have suffered loss as a result of that."

6. The attack from the 1st defendants coming under 0.18 r.19 is to strike out those parts of the Statement of Claim under this section which, in the first place, rest upon the allegation that the defendants did not succeed in carrying over all that might have been carried over in the way of plot ratio from that part of the site occupied by Ocean Terminal to that the part of the site upon which Harbour City is built and in the second place with regard to the alleged failure to apply for exemptions.

7. The first assault comes about because in the pleading as it presently stands, so it is said, it is reasonable to read the claim as meaning that if you take that portion of the site which is now occupied by Ocean Terminal and calculate its plot ratio on the basis that it is to be for entirely non-domestic use, you achieve a plot ratio in excess of 12.2 and says Mr. Lee for the defendants, it is then reasonable to read the Statement of Claim as going on to allege that that gives a carry over of a plot ratio of 5 because Ocean Terminal in the event has only been developed to a density of 7. 2. That, says Mr. Lee as a proposition, is simply unsustainable in law and he had referred me to some interesting though not altogether easy provisions of the Building Regulations. Well, if that is what the pleading was intended to say, I think Mr. Lee has a point of substance and I would not hesitate to intervene if it could be shown that as pleaded, the claim in that respect was unsustainable in point of law, even though should I have so found, I have been asked to say that that is not a proper basis for striking out. But Mr. Phillips has said, first of all, that the Statement of Claim is not to be read in that way and it is unreasonable to read it in that way and so preserves his position on that but says, "nevertheless, if that is how you think it does read, it does not reflect the intention of the plaintiffs nor the way in which the claim is put. All we are intending to say is that the defendants should have negotiated a plot ratio for the site as a whole and if having done that, part of the site was under-developed, it ought to have been possible by agreement with the authorities to use to the extent that that part of the site was undeveloped, the surplus or carry over in increasing the density on the other part of the site."  Now, it is not for me to say at this stage or even offer a view as to the merit or lack of merit of such a contention, but if that is what is being alleged it seems to me that it is not a claim which does not disclose a reasonable cause of action, nor is it scandalous, frivolous or vexatious nor, if claimed as stated, does it prejudice, embarrass or delay the fair trial of the action, nor does it seem to me to constitute an abuse to the process of the court.  So, I indicated during the course of argument that if that is really what it is intended to be pleaded and to be put forward as the plaintiffs' case, this is not a proper case for striking out though it may be a proper case if necessary in which a court would order an amendment to the pleadings. That question has not been argued fully before me and for this reason; Mr. Phillips has indicated, again without prejudice to the necessity for so doing, that the plaintiffs are prepared to amend their Statement of Claim in such a way as to put their claim as he has stated it to be in the course of argument; and this morning, he put before me a draft of the proposed amendments and after further argument indicated that the plaintiffs are prepared to further amend the draft, proposed amendment by eliminating two paragraphs, the numbers of which I cannot for the moment recall, but I am sure the parties can.

8. The second ground of attack made by the defendants on the pleadings relates to the claim arising out of an alleged failure on their part to apply for exemptions for parts of the development for the purpose of calculating plot ratio. What has been pleaded is that the defendants failed to apply for such exemptions; and the areas which might be encompassed in such an application are indicated on one of the plans which had been shown to me, shaded blue in one case and in the other case blue hatched pink. The plaintiffs claim that as a result of that failure to apply for exemptions, they were not given exemption in the one cage in which they probably would have been given and in the other case, exemptions were not granted when it was possible that the authorities would have granted them.   Mr. Lee said in a submission which certainly carried me for a while that where you can only say that damage may possibly flow from some breach of duty, you fail to make out a case and, says Mr. Lee, it stems from the pleading itself.  Mr. Phillips reminded me in argument of those not altogether easy authorities where there has.been a breach of duty which has caused to the plaintiffs the loss of a chance or an opportunity where it was held that there was a cause of action. I think on a proper reading of this pleading, that is what the plaintiffs are claiming. Whether it will avail them in the end is entirely a separate matter. But as I read the Statement of Claim, it is alleged that by failing to make application, the plaintiffs lost the chance of being granted exemptions in relation to those areas shaded blue on the plan. In my view, that too is not a pleading which falls foul of 0.18 r.19.

9. So, I have come to the conclusion that on the summons as it stands, it would not be right to strike out any part of this Statement of Claim as against the plaintiffs, but I take the view, and I do not think anyone seriously contends to the contrary, that the summons being in the form it is, it places before me also the question of the amendment of the Statement of Claim, and if it is to be pursued, whether or not amendments should be ordered. For the time being, I have not been called upon to make a decision about that because amendments are to be made voluntarily and I indicate now that it would only be in relation to those matters that I might have made an order had it been necessary to do so.

Further argument on costs

10. I have heard submissions on both sides. The application is by the plaintiffs for the costs of the hearing. It is said, and I think said rightly, that save with regard to one matter, it cannot be said that the defendants have succeeded at all. Even as to the one matter, it is debatable as to whether it can be said that the defendants have succeeded. That is with regard to the amendments which are now to come voluntarily as a result of what has been said before me. Of course, if they would not have been ordered in any event, it cannot be said that the defendants have succeeded at all and it would follow, I think, in the exercise of my discretion, that the plaintiffs should have the whole of the costs of this application. But Mr. Lee has submitted that the amendments which are now volunteered should and would have been ordered in any event, if not in their entirety, at least to a substantial degree; and although I had not at one time thought it unnecessary to resolve that question, I am now put in the position where I am obliged to, and I say that I find that had it be necessary, I should have ordered at least some and probably a substantial part of those amendments to be made so as clear up what I regard as the ambiguity of the plaintiffs' claim, and so as to permit the defendants to be able to plead. And to that extent, I would have found that the pleading was embarrassing within the meaning of 0.18 r.19: not so as to justify striking out as I have already indicated in my ruling, merely to lead had it been necessary to an order for amendment of the pleading. Because I so find does it follow that the defendants should be spared any part of the burden of costs arising from this hearing?  Only, I feel, if it can be said that in some way the hearing itself or time taken during the hearing is not the defendants' responsibility. So I have had to ask myself whether the hearing could have been avoided bearing in mind that in the event, these amendments are to come without the necessity of any order. I find that a very difficult question to answer. In part, I think it can be said that it is the plaintiffs' fault that the matter has come to hearing in that its pleading was not as clear as it ought to have been. In part, I feel it is the defendants' fault in that there was a chance the hearing might have been avoided if the matters now to be incorporated in the pleading, by consent or by agreement, had been raised in correspondence prior to the hearing. I take all those matters into account. I think the fairest order I can make in the circumstances and in the exercise of my discretion is that the costs involved in the furnishing of affidavit evidence should be borne by the defendants in any event but that otherwise, the costs of this hearing should be costs in the cause.