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HCMP1095/2005
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 1095 OF 2005
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IN THE MATTER of Section B of Shaukiwan Inland Lot No.152, Section C of Shaukiwan Inland Lot No.151, Section D of Shaukiwan Inland Lot No.150 and Subsection 3 of Section A of Shaukiwan Inland Lot No.150 (Shaukiwan Inland Lot is now known as Sowkewan Lot) (Nos. 25 and 27 Shaukeiwan Main Street East, Hong Kong) |
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and |
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IN THE MATTER OF Partition Ordinance cap.352 of the Laws of Hong Kong |
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BETWEEN
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TEAMWELL ENTERPRISES LIMITED |
1st Plaintiff |
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HARVEST WELL INDUSTRIAL LIMITED |
2nd Plaintiff |
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and |
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NG SHING SHE |
1st Defendant |
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PRIME CENTRE LIMITED |
2nd Defendant |
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Before : Hon Chu J in Chambers
Date of Hearing : 14 May 2007
Date of Decision : 14 May 2007
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DECISION ON COSTS
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1. The plaintiffs commenced these proceedings by Originating Summons dated 30 May 2005 to seek principally for an order to partition the piece of land standing on Nos. 25 and 27 of Shaukeiwan Main Street East, Hong Kong (“the Land”).
2. There were initially two buildings on the Land, standing respectively on No.25 and No. 27 of Shaukeiwan Main Street East, and they were joined by a common staircase. Each building was notionally divided into 7 shares. The plaintiffs together owned the whole of the building on No.25. Other than the Ground Floor and Cockloft that was owned by the 1st defendant and the Third Floor that was owned by the 2nd defendant, the 1st plaintiff also owned the building on No.27. The plaintiffs, the 1st and 2nd defendants respectively held 11 shares, 2 shares and1 share out of the 14 shares in the Land.
3. By January 2005, which was before the commencement of these proceedings, the plaintiffs had already demolished the building on No.25 for the purpose of redevelopment together with adjoining properties.
4. In the affirmation in support of the application for partition, the plaintiffs put forward two proposals for partitioning the Lands. These proposals were communicated to the 1st and 2nd defendants by letters dated 20 May 2005 and the defendants were asked to indicate their consent to a partition order by 27 May 2005. The defendants did not respond. The plaintiffs proceeded to issue the Originating Summons herein.
5. Initially both defendants opposed the application for partition. The 1st defendant opposed on the basis of unfairness and undue hardship. In the case of the 2nd defendant, apart from referring to structural and other problems caused to the building on No.27, it also raised the point that the application for partition was to overcome the terms of the Land (Compulsory Sale for Redevelopment) Ordinance. This was because the plaintiffs’ interest in the Land was less than 90%, such that they were not in a position to compel the defendants to sell their properties.
6. The Originating Summons was originally adjourned for argument. But on 11 January 2006, Deputy Judge Muttrie ordered that the case be tried on 26 to 29 September 2006. The trial however did not materialize.
7. Meanwhile, the 1st defendant sold his interest in the Ground Floor and Cockloft of No.27 to the plaintiffs. By a consent order filed on 7 July 2006, the plaintiffs discontinued the action against the 1st defendant with no order as to costs.
8. In consequence of the sale by the 1st defendant, the plaintiffs come to hold 13 out of the 14 shares (i.e. over 90% of the interest) in the Land. In recognition of this development, the 2nd defendant’s solicitors wrote to the plaintiffs’ solicitors on 22 April 2006, stating that it no longer resisted the application for partition and asked to have a consent summons for approval so as to dispose of the action.
9. On 10 November 2006, the case was listed for a direction hearing at the court’s initiative. Although the 2nd defendant maintained its consent to partitioning the Land, the plaintiffs were not prepared to agree to an order for partition. The matter was adjourned to 5 December 2006 for further direction.
10. On 22 November 2006, the 2nd defendant issued a summons seeking an order of partition in accordance with the terms of the Originating Summons (“the 2nd defendant’s summons”). On 1 December 2006, the plaintiffs issued summons seeking, inter alia, to stay the proceedings until after the determination of their application in the Lands Tribunal for compulsory sale (“the plaintiffs’ summons”). The two summonses were listed for arguments on 14 May 2007.
11. At the hearing, Mr Dawes indicated that the plaintiffs would not proceed with the application. The parties also agreed that an order for partition should be made and a draft consent order was put before the court. The parties were however unable to agree on costs and the court was asked to adjudicate on it.
12. The plaintiffs’ initially position was that they should have the costs of these proceedings, save that the costs of the plaintiffs’ summons and the 2nd defendant’s summons should be to the 2nd defendant. As for the 2nd defendant, its initial position was that the plaintiffs should pay the costs of the proceedings.
13. After the case was stood down for the parties to reconsider the costs issue, the plaintiffs indicated that they only sought the costs up to April 2006 and agreed that the 2nd defendant should have the costs thereafter. The 2nd defendant also changed its position. It asked that no order be made as to the costs up to April 2006 and that the plaintiffs paid the costs incurred thereafter.
14. Costs is a matter of the court’s discretion. In the context of the present case, it is important to note the following. First, given that the plaintiffs had opted to partition the Land, an application to the court is inevitable and the costs of the Originating Summons and an appearance before the court are also unavoidable.
15. Second, the consent order for partition is a practical solution to the problem between the plaintiffs and the 2nd defendant, considering in particular that the building on No.25 had already been demolished and the majority of the shares in No.27 and also in the Land as a whole is now owned by the plaintiffs. The consent order for partition is not conclusive of the merits of the case. Neither should it be taken as a yardstick or even the starting point for deciding on the parties’ liabilities for costs of these proceedings.
16. Third, an order that gives the plaintiffs the costs of this action up to April 2006 can only be properly made after an examination of the merits of the plaintiffs’ claim and the 2nd defendant’s initial opposition. As Mr Cheung pointed out in his submission, the 2nd defendant opposed the application on a number of grounds. It can be seen from the plaintiffs’ affirmation in reply that the plaintiffs had to take steps to deal with the points raised in opposition. Without proceeding to trial and short of analysing the respective merits of the application and the opposition as they stood before April 2006, the court cannot say that the 2nd defendant’s initial opposition was unreasonable or that it had no chance of success. It is to be noted that neither counsel had in their submissions on costs, gone into the details of the merits or demerits of the parties’ case. A detailed analysis of and full arguments on the parties’ case, however, would have defeated the purpose of the consent order.
17. As to the authorities relied upon by the parties: Chan Shee Yuen v. Chan Shu Fong (unreported) HCA93/2002, 28 April 2006, Yau Kwai & Others v. Yau Kar Siu alias Yau Lam Sung & Others (unreported) HCA7129/1997 & HCMP1363/2003 (consolidated), 16 December 2004 and Beautiglory Investment Limited v. Tang Moon Sum, Tang Kau, Tang Ching Nin and all members of Tang Yat Tai Tong including infants and those yet to be born & Others (unreported) HCMP531/1989, 10 December 2003, the costs orders were all made after trial or determination of the merits. The costs orders were all reflective of the rule of costs follow event.
18. The present case is however different. There was no trial or determination on the parties’ case and arguments. I do not consider that the court should make an order of costs that mirrors the rule of costs follow event. Quite apart from the fact that the court had not been addressed on the full merits of the case, it would also be against the spirit of the consent order to embark upon an analysis and determination of the issues between the parties. To make no order as to costs will be more consistent with the spirit underlying the consent order for partition.
19. That said, there is one aspect of the proceedings that is relevant to the question of costs between the plaintiffs and the 2nd defendant. It is that the action has been unnecessarily prolonged. The 2nd defendant had since April 2006 indicated unequivocally that it consented to an order for partition. That was not taken up by the plaintiffs. On the other hand, it was open to the 2nd defendant to apply to the court for an order for partition, which it only did in November 2006.
20. In light of the above, an appropriate costs order is to make no order as to costs between the plaintiffs and the 2nd defendant, save that the costs of the plaintiffs’ summons and the 2nd defendant’s summons be paid by the plaintiffs to the 2nd defendant, to be taxed if not agreed. As to the costs of partition, the parties are in agreement that they should be borne by the plaintiffs and the 2nd defendant in proportion to their shares in the Land, and I so order.
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(C Chu)
Judge of Court of First Instance
High Court |
Mr Victor Dawes instructed by Messrs Paul KC Chan & Partners for the 1st and 2nd plaintiffs.
Mr Lawrence Cheung instructed by Messrs Poon & Cheung for the 2nd defendant.
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