GREAT TOWER DEVELOPMENT LTD v. THE INCORPORATED OWNERS OF LUSO APARTMENTS

DCCJ 2308/2017

[2021] HKDC 338

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2308 OF 2017

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DECISION

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THE PLAINTIFF’S APPLICATIONS

1.  The plaintiff has filed 2 summonses on 1 March 2021 and 11 March 2021 respectively for:

(1)  Leave to file and serve a supplemental expert report; and

(2)  Leave to file and serve a Surrejoinder.

2.  Both summonses have been fixed to be heard today in the Pre-Trial Review Hearing.  The trial (which is estimated to last for 7 days) will take place 2 months later on 26 May 2021.

3.  At the hearing this morning, upon the court’s enquiry, the plaintiff has decided to withdraw its application for leave to file and serve supplemental expert report.  Therefore, the only outstanding matter is the application for leave to file and serve Surrejoinder.

THE CLAIM AND COUNTERCLAIM

4.  By this action, the plaintiff sues the defendant for a mandatory injunction to repair certain common areas of Luso Apartments so as to cure a water leakage problem and damages caused by such a problem.

5.  The defendant denies liability, and counterclaims for $218,600 as the outstanding management fees payable by the plaintiff.

LEAVE TO FILE AND SERVE SURREJOINDER

6.  In its Re-Amended Reply and Defence to Counterclaim filed on 10 April 2019, the plaintiff alleged that it is not liable to pay management fees because the defendant has failed to discharge certain obligations imposed in the Deed of Mutual Covenant, including but not limited to the preparation of annual budgets and true and proper accounts of monies collected.

7.  In the Rejoinder filed on 5 July 2019, the defendant, among other things, denied that it had failed to prepare any annual budget as alleged, and asserted further that even if it had failed to do so, it could rely on the management expenses incurred for the previous financial year as the “deemed” figure in the then current year.

8.  The purpose of the plaintiff in filing a Surrejoinder is to include a Counterclaim to Counterclaim.  The only relevant part of this draft pleading reads as follows:

“By way of Counterclaim to Counterclaim, the Plaintiff counterclaims and prays for a declaration that the Plaintiff shall not be liable to pay the monthly management fees as claimed by the Defendant until true and proper accounts of all income and expenditure being rendered on a basis consistent and in compliance with the prevailing accounting principles and standards in respect of the Annual Budgets for accounting periods from 1 April 2005 to 31 March 2017 pursuant to clause 7(v)(a) of the DMC and/or section 27(1AA) of BMO are produced by the Defendant.” (emphasis added)

9.  The plaintiff’s proposed counterclaim is bound to fail because there is no pleaded basis for the plaintiff to require that any accounts prepared by the defendant have to be in compliance and consistent with the prevailing accounting principles and standards.  Neither clause 7(v)(a) of the DMC nor section 27(1AA) of the Buildings Management Ordinance mentions about such a requirement.  Further, as confirmed by Mr Lam, as far as the plaintiff’s defence to the defendant’s counterclaim is concerned, the plaintiff had not pleaded that it was entitled to withhold payment if the defendant’s accounts were not in compliance and consistent with the prevailing accounting principles and standards.  That being the case, there is no reason why (and the plaintiff had not explained why) it would be entitled to make such a counterclaim against the defendant.

10.  Upon the court’s requisition on this matter during the hearing, Mr Lam withdrew his application in relation to the plea on “prevailing accounting principles and standards”.  Be that as it may, I am not prepared to grant leave for the following reasons:

(1)  It is trite that leave to file and serve a Rejoinder or subsequent pleading (including a Surrejoinder) will not be granted unless it is really required (Choy Po Chun v Au Wing Lun [2012] 2 HKLRD 148 at paragraph 42).  I am of the view that the proposed counterclaim to counterclaim in the form of a declaration is not necessary at all, because if the plaintiff is right, the court would dismiss the defendant’s counterclaim anyway.  In substance, there is no difference even if the court does not make any declaration sought.

(2)  This application is very late.  As aforesaid, the defendant’s Rejoinder was filed on 5 July 2019, more than 1 year and 8 months ago.  There is no reason why the plaintiff could not make this application earlier.  Indeed, no affirmation has been filed to explain the delay.  It should be borne in mind that the plaintiff had been ordered on 12 April 2019 to obtain counsel’s advice (if it so wished) by 15 July 2019.  On two separate occasions, namely, 4 September 2019 and 16 March 2020, the plaintiff had filed Listing Questionnaires, and confirmed that: (i) it had no further interlocutory application to be taken out; and (ii) all steps that ought to be taken to prepare its case for trial had been duly taken.  There is no explanation given as to why these confirmations have turned out to be inaccurate. 

11.  I would therefore dismiss the plaintiff’s application.

COSTS

12.  While the defendant’s solicitors had, by letter, informed the court yesterday that the defendant would oppose the plaintiff’s applications and proposed, among other things, that the plaintiff’s applications to be adjourned for argument with 3 hours reserved, the defendant’s counsel has not lodged any skeleton argument for the purpose of the hearing today.  He explained that since the defendant’s legal team thought that the court would not have enough time to deal with the applications today anyway, it was not necessary to lodge any submission. 

13.  With respect, the way this matter was handled by the defendant’s legal team is not satisfactory.  It is because of the tightness of time that skeleton arguments (or even full written submissions) are even more needed in the circumstances so that the matter could be dealt with as efficiently as possible. 

14.  Bearing in mind that the trial will commence in slightly more than 2 months’ time, it is also unrealistic for the defendant to propose that the plaintiff’s applications be adjourned for argument with 3 hours reserved.  Solicitors should recognise that the likelihood is that such a date for substantive argument would end up to be a date after the trial date.

15.  As the defendant’s legal team has offered nearly no assistance to the court for the purpose of the plaintiff’s applications, I do not consider that it should be entitled to any costs apart from the costs of attendance for the hearing today for 1 hour (in total).  Mr Chok did not argue otherwise.

16.  I therefore order that the plaintiff shall pay the defendant’s costs of the summonses summarily assessed pursuant to Order 62 rule 9A(1)(a) of the Rules of the District Court at $1,300 each on or before 31 March 2021.