SINO ESTATES MANAGEMENT LTD v. LEUNG WAI PIU

LDBM  238 of 2004

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 238 OF 2004

 _________________

_________________

_________________

J U D G M E N T

_________________

1.  The Applicant is the Estate Manager of Hong Kong Gold Coast, a residential development in Tuen Mun whilst the Respondent is the owner of a unit in the said estate.  This is the Respondent’s application for costs upon a Notice of Discontinuance filed by the Applicant.

Undisputed Facts

2.  The Applicant had taken out an application at the Small Claims Tribunal on 8 March 2004 against the Respondent for payment of contribution for repair works (case reference SCTC 016125/04).  By an order of the Small Claims Tribunal dated 29 June 2004, the case was transferred to the Lands Tribunal for further disposal.  Yet, the Applicant took out another application before the Small Claims Tribunal in February 2007 (case reference SCTC 008732/07) which was dismissed for want of prosecution on 11 April 2008. 

3.  In pursuance to the order dated 29 June 2004, the Applicant filed the present application with the Lands Tribunal on 18 March 2009 with the Respondent filing his Notice of Opposition and Counter Claim on 20 November 2009.  On 27 November 2009, the Applicant had filed a Notice of Discontinuance.  The Respondent had also filed his Notice of Discontinuance for the Counter Claim on 29 January 2010 and asked for costs of these proceedings. 

The Argument

4.  It is accepted by the Applicant that a party is entitled to his costs as brought on by the discontinuance of the action by another party without leave (RHC Order 62 rule 10 and Paragraph 21/5/8 and 62/10/2 of Hong Kong Civil Procedure 2010).  But it is submitted by the Applicant that there are special circumstances exist in this case which warrants the departure from the general rule. 

5.  It is submitted by the Applicant that Section 27 of the Lands Tribunal Rules required the Respondent to apply for an order for costs.  So Order 62 rule 10 should not be applicable in cases at the Lands Tribunal.  And drawing an analogy from the statutory provision in Section 27, it is not as of right for the Respondent to be entitled to costs upon a discontinuance of proceedings by the Applicant.

6.  Furthermore, the Applicant being the agent for all owners to enforce the Deed of Mutual Covenant is duty bound to take out these legal proceedings against the Respondent.  Any costs order made against the Applicant will be borne by the owners including the Respondent.  The application is well justified since the Applicant had succeeded in a similar application against another owner.  Even though the application is meritorious, the owners were concerned about the level of costs to be incurred which is disproportionate to the claim itself.  Hence, the Applicant was forced to discontinue with the proceedings. 

7.  And since this proceedings is still at the initial stage, the Respondent should not be prejudiced even if he cannot have his costs.  And should the Respondent be entitled to have his costs upon the Applicant’s discontinuance of this proceedings, the Applicant is also entitled to have costs against the Respondent for the counter claim.  So the proper order should be no order as to costs.

8.  The Respondent, on the other hand, argued that he should be entitled to costs of the action in the Lands Tribunal as well as at the Small Claims Tribunal upon the application being discontinued without leave.  Given the fact that this action had been dragged on for 5 years since 2004, he should be compensated for all the time and effort spent.  It is inappropriate for the court to consider merits of the case or the reason of discontinuance at this stage since these are irrelevant.  Whilst the counter claim is entirely consequential upon the claim by the Applicant, the Respondent had acted reasonably in discontinuing his claim as a result of the Applicant’s discontinuance.

Liability

9.    It is said by Keith J in Trend Pblishing v Vivien Chan & Co (a firm) [1996] 2 HKLR 227 that :

“It is well settled that the general rule is that a defendant is entitled to the costs of the action if the action is discontinued…But that is not an absolute rule.  The rules recognise that there may be circumstances in which a plaintiff should be permitted to discontinue an action without having to pay the defendant’s cost.”

10.  I found this general rule is applicable to cases in the Lands Tribunal and Section 27 of the Lands Tribunal Rules only stipulated the procedure that the Respondent have to apply for costs upon the Applicant filing the Notice of Discontinuance.  It is then for the Tribunal to consider the question of costs and to make such order as it thinks fit, subject to the general rule stated above.  I accept that the Respondent is not entitled to costs as of right.

11.  Yet, the burden is on the Applicant to show good reason for displacing the general rule governing costs upon discontinuance.  I found the Applicant had failed to discharge such burden in the present case. 

12.  The fact that any costs order against the Applicant will be shouldered by the owners of the estate including the Respondent is not a relevant factor to be considered in the question of costs.  The Applicant is acting for and on behalf of the owners of the estate and it is only fair for the owners to bear the costs upon discontinuance, should the court so ordered.  No matter how meritorious was the claim against the Respondent, the Applicant decided not to pursue with the claim, not because the issue had become academic but the owners’ reluctance to incur further costs.  The Applicant had decided not to go for trial for the issue to be determined by this court to save costs, the merits of their case is irrelevant. 

13.  These proceedings commenced in 2004 and the Applicant had all along been laxed in proceeding with the case.  The Respondent had stated in his Statement of Costs that he had attended court on 13 occasions (which is not disputed by the Applicant).  Under such circumstances, I can’t see how the Applicant can say that the Respondent would not be prejudiced if he didn’t get his costs.

14.  Even though the Respondent had also discontinued his Counter Claim, the Applicant had in fact discontinued this application 7 days after the filing of the Counter Claim and had not done anything in reply to the Counter Claim.  Compared to the time and effort spent by the Respondent in defending the Applicant’s claim, whatever costs incurred by the Applicant in answer to the Respondent’s Counter Claim should be nominal.  In any event, there is no application by the Applicant for costs before me.

15.  I made an order for costs of this application together with costs at the Small Claims Tribunal be to the Respondent.

Quantum

16.  The Respondent had compiled a Statement of Costs which detailed 37 hours spent, including the time for attendance in court plus disbursement of $5015.40.  The Respondent agreed to adopt the charge of $200 per hour as provided in Order 62 rule 28A(3) RHC.  The Applicant submitted that 37 hours are excessive and 12 hours should be more reasonable.

17.  After perusing the Statement of Costs prepared by the Respondent, I found the time spent on the preparation and drafting of defence excessive and repetitive.  Facing the same allegation all through, the Respondent should not required further time in the preparation of the defence time and again.  And even if he had to perfect his defence, the time span stated in the Statement of Costs is unreasonable and excessive.  The photocopying charges are excessive given the volume of document involved in this case and costs incurred for copies to the Duty Lawyer and Councillor are also unnecessary.  The contingency fee of $500 should also be disallowed.

18.  I found 15 hours of work spent including attendance in court is reasonable for the Respondent in defending the claims by the Applicant against him plus a disbursement of $1590.

Order

19.  The Applicant should pay the Respondent costs of this application together with costs in the Small Claims Tribunal, summarily assessed at $4590.