陳淑珍及另一人 v. 陳玉珍

DCCJ 3460/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3460 OF 2008

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DECISION

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1.  The plaintiffs, daughters of Madam Kwok Yuk Mui (“Madam Kwok”) and the registered owners of the land in question in Sai Kung, New Territories, commenced this action to recover, among other things, vacant possession of part of that lot of land (“the Subject Portion”) that the defendant and her late husband have been occupying. The defendant opposed and counter-claimed for her rights in the Subject Portion.

2.  After trial, this court handed down the written judgment on 9 December 2011 (“the Judgment”).  Except for the plaintiffs’ claim for rates and Government rent, which was settled and in respect of which I needed to make no order, the claim was dismissed.  In respect of the counterclaim, I made a declaration of the defendant’s entitlement to occupy the Subject Portion as part of the status quo of the neighbours’ respective occupation of the adjoining lots of land in the vicinity.

3.  As to the costs, I made a nisi order that the defendant should have the costs of this action, including any costs reserved.  Costs should be taxed, if not agreed, with certificate for counsel.  The defendant’s own costs should be taxed in accordance with the Legal Aid Regulations.  The parties had 14 days to apply for variation of the nisi order or the order would become absolute.

4.  This was the plaintiffs’ application to vary the nisi costs order.  After the hearing this morning, I dismissed the application; and the nisi costs order became absolute. Accordingly I ordered that the defendant shall have the costs of this application; costs shall be taxed, if not agreed, with certificate for counsel.  The defendant’s own costs shall be taxed in accordance with the Legal Aid Regulations.  As indicated, I now give my reasons.

THE VARIATION SOUGHT

5.  The plaintiffs’ primary stance was to ask to vary the nisi order to become no order as to costs of this action.  Alternatively they asked the court to exercise discretion to make a costs order that “reflects the time spent on the failed claims of the parties”.  By that, Ms Daley for the plaintiffs, after some attempt during the hearing, suggested that the court should somehow order the defendant to pay ¾ of the plaintiffs’ costs.  That would even be more favourable than what was understood to be her client’s primary stance.

DISCUSSION

6.  Pursuant to O.62, r.3 of the Rules of the District Court, the Court shall order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.

7.  The current O.62, r.5 provides that:

“(1) The Court in exercising its discretion to costs shall, to such extent, as may be appropriate in the circumstances, take into account:-

(aa) the underlying objective set out in Order 1A, rule 1;

……

(e) the conduct of all the parties;

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

……

(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 defend 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.”

8.  The common ground was that the boundary dispute among the neighbours eventually led to the written agreement dated 28 August 1977 (“the Agreement”). But they had different interpretation of the Agreement.

9.  The Statement of Claim and the Amended Reply together defined the plaintiffs’ case to be that the defendant (and her late husband) occupied the Subject Portion under a licence pursuant to the Agreement.  The licence was allegedly subject to termination by reasonable notice, which the plaintiffs allegedly gave by way of letter dated 18 September 2007.

10.  The defendant’s case was that the Agreement amounted to an outright sale of the respective parts of the land affected.  Alternatively, an easement was created.  Alternatively this amounted to a covenant running with the respective parts of the land affected.  It was also contended that the plaintiffs were bound by the defendant’s equity in the Subject Portion and were estopped from recovering it.

11.  When the trial began, the defendant dropped the contention on the basis of easement. As mentioned, the parties informed the court of their settlement in respect of the plaintiffs’ claim for damages.

12.  At the end, I found that the Agreement did not amount to an outright sale of the Subject Portion by Madam Kwok; but this was a licence to the defendant to occupy the portion as part of a multi-party status quo of occupation of land by the parties to the Agreement.  I also found an equity arisen in favour of the defendant subsequent to the Agreement; and that it was and is binding on the plaintiffs who were the donees of the Subject Portion from Madam Kwok with notice.

13.  I found that the appropriate way to give effect to the equity in the circumstances of this case would be to uphold the multi-party status quo of occupation of the land by the neighbours, the parties included, and hence the defendant’s right to occupy the Subject Portion free from the plaintiffs’ unilateral eviction.

14.  Clearly, at the same time of ruling against the plaintiffs’ alleged entitlement to recover from the defendant vacant possession of the Subject Portion, this court granted the relief that the circumstances, as found, warranted.

15.  It was argued that the defendant has not actually prayed for a declaration in the counterclaim.  However, the court has ancillary jurisdiction under section 48 of the District Court Ordinance to grant the relief, redress or remedy or combination of remedies and to give effect to every ground of defence or counterclaim, equitable or legal.  In view of the circumstances of the present case found as a matter of fact, this court was entitled to and did grant the relief that was appropriate within what the defendant prayed for in the counterclaim (under “法庭頒佈合適的法令”).

16.  The event of this action was that the defendant succeeded in her defence and the counterclaim.  Following this event, costs was ordered in favour of the defendant. The argument now by the plaintiffs that both the claim and the counterclaim have failed cannot be right.

17.  As to the issue approach, the relevant principles in Re Elgindata Ltd (No 2) [1993] 1 All ER 232 (at 237e-h, per Nourse LJ) are well known.  They were set out in Wang Din Shin v Nina Kung, CACV 460/2002 & CACV 67/2003 (19 April 2005 at §39) as follows:

(1)  Costs are in the discretion of the court.

(2)  Costs should follow the event, except where it appears to the court that in the circumstances of the case some other order should be made.

(3)  The general principle that costs follow the event does not cease to apply simply because the successful party raised issues or made allegations that failed, but that he could be deprived of his costs in whole or in part where he had caused a significant increase in the length of the proceedings.

(4)  Where the successful party raised issues or made allegations improperly or unreasonably, the court could not only deprive him of his costs but could also order him to pay the whole or part of the unsuccessful party’s costs.

18.  In Akai Holdings Limited (in liquidation) v Thanakharn Kasikorn Thai Chamkat (Mahachon) [2008] 6 HKC 82, Stone J commented:

“26. For my own part I am able to identify no predisposition in the Hong Kong courts similar to that to which Lord Woolf made reference in AEI Rediffusion Music Ltd, op cit, that is, to a movement away from the Elginata approach towards a situation wherein, as Lord Woolf expressed it, even prior to the fundamental changes in English civil procedure there had been a change of emphasis abroad requiring the courts to be more ready to make separate orders reflective of the outcome of different issues, and that the new Civil Procedure Rules simply had accentuated this pre-existing tendency.

27. I do not consider this to be the case in Hong Kong.”

19.  Kwan J (as she then was) in re Moulin Global Eyecare Holdings Limited, HCCW 470/2005 (17 October 2008) took a similar view of the local situation (at §11) after summarising the following principles derived from the previous authorities (at §10):

(1)  The party seeking to displace the general rule that costs should follow the event bears the burden of showing that the circumstances justify the exceptional course of such displacement.

(2)  The court has discretion whether to deprive a party of all or part of his costs in respect of those issues on which he has failed.  The court has to exercise its discretion to achieve a just result having regard to the circumstances of the case.

(3)  Where the party who has been successful overall has failed on one or more issues, particular where such issues have occupied a significant amount of hearing time or led to the incurring of significant expense, the court may in its discretion order a reduction in the award of the costs to him.  An issue for this purpose must be something so distinct and separate in itself that the decision of it constitutes an “event”.

(4)  It is not the case that lack of success in any specific argument of itself attracts costs sanction.  It is only if it is possible to isolate an issue in the case in that it can properly be said it is unnecessarily pursued as having no bearing on the real questions in the suit that it would be proper to deprive the successful party of all costs of that issue, otherwise a more general assessment should be made.  Unless discrete points can safely be isolated and can be shown to have led to a wastage of time and costs, the practice of the court is not to engage in any “filleting” of cases according to success or failure of the disparate issues which, when taken cumulatively, constitute the dispute to be judged.

20.  Ms Daley, and Mr Szeto for the defendant, referred to numerous other authorities; but I do not see that the court in those cases advocated deviation from the above principles.  Recently in Ghulam Rbani v Secretary for Justice, DCCJ 531/2010 (16 February 2012), I rehearsed the above principles and took the view that they remain valuable guidance to the exercise of the discretion as to costs under the current statutory framework after the civil justice reform (see §§26-34).

21.  As mentioned, the common ground of the parties is the Agreement.  The dispute to be judged consisted of two major questions: first the effect of the Agreement; and second how the parties have conducted themselves since the Agreement and the effect of such conduct.

22.  In respect of the first question, the contentions of the defendant (sale or licence, easement and covenant running with the land) did not constitute discrete issues that could be isolated from essentially the construction of the Agreement in the factual context prevailing at the time.  None of them entailed distinct factual dispute or introduction of additional evidence.  They were not so isolated in themselves that the decision of them constituted “events” that would affect the incidence of the costs liability.

23.  The second question was different in that allegations of fact were made and evidence was adduced in support of the development of the equity in favour of the defendant since the Agreement.  However, this court actually made findings of fact in this respect in favour of the defendant; and concluded that an equity was resulted that was and is binding on the plaintiffs.  The defendant succeeded on her reliance on the principles similar to those of proprietary estoppel.

24.  Ms Daley submitted that the contentions advanced by the defendant constituted discrete heads of claim in the counterclaim; and one of them was withdrawn or discontinued while the others failed.  This is incorrect.  The same contentions in defence were repeated to form the basis of the counterclaim.  They together constituted the dispute to be judged.

25.  Contrary to suggestion, I also do not see that the trial was significantly, if at all, prolonged or time and costs were wasted as a result of allegations made by the defendant unreasonably or unnecessarily.  After all, the trial was finished less than the 5 days reserved.

26.  One of the witnesses for the defendant, Liu Yau Fong (“Liu”), was not called during the trial.  It was argued that the plaintiffs should not be made to bear the defendant’s costs of preparing this statement.  It should be noted that Liu was not an ordinary witness but one of the neighbours and parties to the Agreement.  According to the explanation given during the trial, Liu had recently been admitted to the hospital for suffering from stroke.  His condition was said to be serious and his speech ability impaired.  Therefore he was not called.  Whilst for fairness I had to disregard his statement, I have no doubt about the relevance of the evidence that Liu had intended to give or the defendant’s intention to have him called but for the sudden change in Liu’s circumstances.

27.  The plaintiffs also asked that the cost of the surveyor’s report should be disallowed.  At the beginning of the hearing, Ms Daley, and I think rightly, conceded that.

CONCLUSION

28.  For the above reasons, I dismissed the plaintiffs’ application.

PROCEDURE

29.  The plaintiffs’ solicitors first sent their letter dated 13 December 2011 informing the court of their instruction to apply to vary the nisi costs order; and asking the court to inform them whether oral or written submissions would be needed to be made for the application.  The plaintiffs’ letter did not set out how the nisi costs order was sought to be varied.

30.  That letter was copied to the defendant’s solicitors; but the position of the defendant was unknown by then.  I therefore directed the plaintiffs to take out an application to set out precisely the variation being sought; but added that upon the plaintiffs’ application, the parties had the liberty to apply jointly for the disposal of the application on paper without hearing.

31.  However the plaintiffs sent a second letter 2 days later whereby they purported to make their application to vary the nisi costs order.  Though the letter set out the primary stance of the plaintiffs being to seek no order as to costs of this action, their alternative, as mentioned, was to ask the court “to exercise its discretion in this case to make costs order that reflects the time spent on the failed claims of the parties”.  They still asked the court to direct whether an oral hearing would be necessary.

32.  In their reply, the defendant’s solicitors indicated their position to oppose the application; and proposed that unless the court directed that the oral hearing be dispensed with, hearing was to be fixed for 2 hours; and that the parties did file their respective written submissions.  Before such reply reached this court, the plaintiffs have proceeded to file their summons whereby they asked for an order in the exact terms as proposed by the defendant’s solicitors.

33.  A summons for hearing the plaintiffs’ application for an order in terms as proposed by the defendant above was odd.  Subsequently another summons was taken out, this time a consent summons of the parties for an order in terms of the plaintiffs’ summons and thus the vacating of the date of hearing of the plaintiffs’ summons.  The hearing for the argument on the variation of the nisi costs order was thus fixed.

34.  It should be borne in mind that an order, albeit nisi, has been made.  In PCCW-HKT Telephone v Telecommunications Authority, CACV 274/2003 (7 September 2004), Ma CJHC (as he then was) (at §11) made clear that application to vary a nisi costs order should be made by way of summons (or motion) instead of letter. The purpose of that was to enable the other side and the court to understand exactly the costs order, as varied from the nisi order, being sought.  This explains my direction to the parties from the outset.  Had a summons been taken out, the parties could still have jointly applied for directions for ruling on paper and the hearing could be vacated.

35.  In Ghulam Rbani (above at §55), I ventured to suggest that it may now be possible for the applying party to apply by letter on condition that he set out in writing (as if in a summons) precisely the order being sought; and sought the other party’s agreement to jointly apply to the court for directions for a ruling on paper.  Prudence and co-operation between legal representatives would be the key to the feasibility of this alternative manner of lodging the application.

36.  Neither course was taken in the present case.  Even when it became apparent that the plaintiffs’ solicitors were prepared to agree to the directions proposed by the defendant’s solicitors, they chose to take out a summons for an order in those terms, only to be followed by a consent summons of the parties.

37.  I presume that the intention behind the very first letter from the plaintiffs’ solicitors was to see if the hearing of a summons could be dispensed with in order to save costs.  Nevertheless such intention has to be manifested the right way.  Legal representatives need no reminder of the current litigation culture that encourages professional sense and liaison.  Otherwise, the result may be counter-productive as what happened in the present case.