EAST SURPLUS INVESTMENT LTD v. TINCHO INDUSTRIAL CO LTD AND ANOTHER

DCCJ 3417/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3417 OF 2010

--------------------

________________________

REASONS FOR DECISION

________________________

Introduction

1.  Before me was an application made by the 1^st Defendant to adduce a further expert valuation report from the single joint expert (Mr Keith Siu, a surveyor from RHL Appraised Limited) on, inter alias, the total area and market rental value of the so-called “non-wall” and “wall” structures of the exterior wall (“Exterior Wall”) of the ground floor of Kaiser Estate, 3^rd Phase, Nos 9, 11 & 11A Hok Yuen Street, No 18 Man Lok Street, Kowloon (“Building”).

2.  The application was made about 1 month before the trial of this action which will commence before me on 2 May 2012 for 3 days.

3.  No affirmation was filed by the 1^st Defendant in support of this application.

4.  At the end of the hearing, I refused the 1^st Defendant’s application and dismissed its summons with reasons reserved. I now give my reasons.

Background

5.  At all material times, the 1^st Defendant is the registered owner of Shop P on the ground floor of the Building (“1^st Defendant’s Property”). The 2^nd Defendant was the tenant of the 1^st Defendant.

6.  The Plaintiff is the registered owner of the Exterior Wall of the Building.

7.  This action concerns a dispute between the parties on the part of the Exterior Wall of the ground floor of the Building which circumscribed the 1^st Defendant’s Property.

8.  The Plaintiff alleges that the exterior walls of the 1^st Defendant’s Property are part of the Exterior Wall. It further alleges that the 1^st and the 2^nd Defendants have trespassed into those parts of the Exterior Wall by replacing substantial parts of the same with wooden or other material and by affixing to the same signboards or advertisements. It thus seeks an order from the court restraining the Defendants from using or trespassing any part of the Exterior Wall without the Plaintiff’s consent; removing all objects affixed by the Defendants to the Exterior Walls; and damages to be assessed.

9.  The 2^nd Defendant has not been actively participating in this action since or about October 2011. As such, its defence was struck out pursuant to an Order made by the Master on 15 November 2011.

10.  The 1^st Defendant denies the Plaintiff’s claim and avers that it has obtained an exclusive right to use and possess, as the owner and/or tenant and/or licensee, of those parts of the Exterior Wall which circumscribed the 1^st Defendant’s Property.

11.  An earlier joint valuation report prepared by the same single joint valuer dated 6 January 2012 (“Joint Expert Report”) was already filed into Court pursuant to the directions given by Master I Wong dated 1 August 2011 and 15 November 2011 respectively. The said two court orders have limited the issue, on which the single joint valuer was allowed to give his opinion, to the following:

“Assuming that 1^st Defendant and/or 2^nd Defendant has trespassed the Exterior Wall or any part thereof as defined and as pleaded in the Statement of Claim, what is the average monthly rental loss of the Plaintiff, as the registered owner of the Exterior Wall, has suffered, and what is the average monthly rental loss the Plaintiff will continue to suffer in the coming 18 months.

For the purpose of giving the expert opinion, the relevant parts of the Exterior Wall as defined and as pleaded in the Statement of Claim are those shown on the 5 photographs and framed in red as enclosed in the letter dated 25^th August 2011 by the Plaintiff’s solicitors to the Solicitors for the 1^st Defendant and the Solicitors for the 2^nd Defendant.”

12.  I was told that the 5 photographs mentioned in the above order of the learned Master were not included in the trial bundle, for the same has been reduced into 2 photographs now appeared on p31 of trial bundle C.

13.  A pre-trial review (“PTR”) of this action was already held before me on 1^st March 2012 whereby parties were represented by the same Counsel now appearing before me in this application.   In the PTR, Mr Poon, Counsel for the 1^st Defendant, made no comment on the insufficiency in or any possible misunderstanding to the Joint Expert Report. In fact, Mr Poon confirmed to me that there was no dispute on the valuation of the Joint Expert Report.

The 1^st Defendant’s Argument

14.  In his submission, Mr Poon referred me to the Appendix 3 of the Joint Expert Report (p24 of trial bundle C) showing the latest approved building plan of the Exterior Wall. He said that the little grids on the building plan showed that the Exterior Wall was divided into “non-wall” (by which the 1^st Defendant said they were “windows”) and “wall” structures. However, the Plaintiff did not seem to agree that there were windows on the Exterior Wall.

15.  Mr Poon said that in such circumstances the Plaintiff and the 1^st Defendant have obviously different understanding to the Joint Expert Report. The further expert report to be adduced would enable the parties to “review their positions as to whether they still want to agree to the report…”

16.  Mr Poon also said that the intended further expert report would have a direct impact on quantum, as the Plaintiff should not be allowed to any rental of these “windows” (even assuming that the Plaintiff was able to establish liability).

17.  He concluded that the further expert report was necessary for fair disposal of the case. He thus prayed for an order that the intended further expert report be filed within 14 days.

The Plaintiff’s Reply

18.  Mr Lam, Counsel for the Plaintiff, opposed the application on 5 grounds.

19.  First, he argued that what the 1^st Defendant now sought was essentially to raise the issue of what constituted the Exterior Wall. Yet this was no longer an issue, as the parties have agreed what constituted the Exterior Wall, as evidenced by the Order made by Master I Wong date 15 November 2011.

20.  Secondly, the 1^st Defendant has, through its Counsel in the PTR, confirmed that the Joint Expert Report was not in dispute.

21.  Thirdly, it was incomprehensible as to what the 1^st Defendant meant by “non-wall structures”, as the photographs in the Joint Expert Report do not show any window on the Exterior Wall at all.

22.  Fourthly, if the further expert report was allowed, the parties might, depending on the further opinion of the expert, have to apply for further expert report and/or the expert to give oral evidence in the trial. The trial will be lengthened.

23.  Lastly, Mr Lam pointed out that no explanation has been offered by the 1^st Defendant seeking the court’s indulgence; thus, its application should not be allowed.

Discussion

24.  It is really trite to repeat the spirit of the Civil Justice Reform and the changes brought about by it on civil litigation. Any late application that may usurp the milestone date(s) or the trial date will not be met by mere rubber stamping from the court.

25.  One will not seriously dispute that this application of the 1^st Defendant is a belated one, made only about 1 month when the trial is due to commence. As such, this court should be provided with an acceptable explanation from the 1^st Defendant on the delay.

26.  When asked by me that given such contention of the 1^st Defendant on the Exterior Wall, why the 1^st Defendant did not make this known to Master I Wong back in August or November 2011 when the relevant orders on expert report was given, Mr Poon replied that at that time, the 1^st Defendant was not aware that the Plaintiff would be departing from its pleaded case. The 1^st Defendant only knew that the Plaintiff did not agree that there were windows on the Exterior Wall on 19 March 2012 when the Plaintiff made a reply to the 1^st Defendant’s letter of 8 March 2012 requesting the Plaintiff to express its view on the “windows” and impact on quantum.

27.  Yet, I do not find this explanation offered by the 1^st Defendant convincing in any respect. It is pertinent to note that the Joint Expert Report was made ready and available to the parties as early as January 2012. Any alleged difference in understanding as to whether the Exterior Wall consisted of the so-called “non-wall”/”window” and “wall” structures would be eminent to the 1^st Defendant by a diligent review of the Joint Expert Report. It seems clear to me that the 1^st Defendant has failed to do so and in a timely manner. With respect, in such circumstances, no one but the 1^st Defendant itself should bear the result of its own folic.

28.  Further, there cannot be any dispute that it is entirely a matter of discretion of the court in deciding whether this application of the 1^st Defendant should be allowed or not.

29.  The court will have to carry out the requisite balancing exercise, weighing (i) the prejudice that may be caused to the 1^st Defendant if the intended further expert report was not allowed with (ii) the prejudice that may be caused to the Plaintiff if the same was allowed at this late stage.

30.  I am with Mr Lam that if the further expert report was allowed, it is more likely than not that further expert report and/or oral testimony of the expert would be required, leading to the inevitable result that the trial has to be adjourned or lengthened.  In my view, the result of the balancing exercise does not favour allowing the further expert report.

31.  On the other hand, Mr Poon argued in the hearing that there was no admission or agreement ever made by the 1^st Defendant on the boundary of the Exterior Wall before Master I Wong on 15 November 2011.  He further added that the 1^st Defendant never disputed that the Plaintiff owned the Exterior Wall; what the 1^st Defendant disputed was what parts of the Exterior Wall was registrable and thus owned by the Plaintiff (“1^st Defendant’s Contention”).

32.  Mr Lam was right in submitting that the 1^st Defendant, by seeking to adduce the further expert report, now wished to raise the issue of “what constituted the Exterior Wall”.

33.  However, this does not seem to me to be the contention raised by the 1^st Defendant in its pleadings. When one reads paras 1 and 3 of statement of claim together with paras 2 and 18 of the defence, the 1^st Defendant in substance admitted that the exterior walls of the 1^st Defendant’s Property separating the 1^st Defendant’s Property from the outside public area (the 1^st Defendant defined this as the “Subject Wall” in its defence) was part of the Exterior Wall. The 1^st Defendant never pleaded in its defence the 1^st Defendant’s Contention, nor did it ever aver that the Subject Wall (and thus the relevant Exterior Wall) was divided into (i)  un-registrable “non-wall”/”windows” structures that were not owned by the Plaintiff  and (ii) registrable “wall” structures that was owned by the Plaintiff.

34.  If a further expert report was allowed, it would mean in effect that the 1^st Defendant would be permitted to raise an issue that was not pleaded specifically in its pleadings: see Order 18 rule 8 of the Rules of District Court.

35.  If my view on the above observation on the pleadings was wrong, then I say that I would agree with Mr Lam that this issue has, at the latest since the Order of Master I Wong dated 15 November 2011, become irrelevant. The Order of the learned Master has set out only one issue for the expert to comment on. It remains plain and clear that “what constituted the Exterior Wall” or the 1^st Defendant’s Contention is not an issue provided for in the said Order.

36.  It needs to be pointed out that no appeal has been lodged against the said Order of the learned Master.

37.  I am of the view that if the 1^st Defendant’s Contention was a true one, it remains unexplainable why the 1^st Defendant did not alert Master I Wong of same on 15 November 2011 or any of the other Masters hearing the 4 previous case management conferences held between 5 May 2011 and 11 October 2011. 

38.  The Agreed Statement of Issues in Dispute dated 15 July 2011 duly signed by all parties does not contain the 1^st Defendant’s Contention, either.

39.  I should now say a few more words on the PTR before me. As said above, the 1^st Defendant in the PTR, also represented by Mr Poon, confirmed to this court that the Joint Expert Report and the valuation therein were not in dispute. As such, Mr Poon (and also Mr Lam appearing for the Plaintiff in the PTR)  agreed that issues (1)[1] and (4)[2] stated in the Agreed Statement of Issues in Dispute dated 15 July 2011 were no longer any live issues and can be disregarded as issues of the case.

40.  The picture thus becomes quite clear. By making this application, the 1^st Defendant in effect attempted to raise an issue not pleaded or not contended by it through the back door. In my view, prejudice, which cannot be compensated by costs, will be caused to the Plaintiff if the 1^st Defendant was allowed to do so.

41.  Last but not the least, the 1^st Defendant has failed to satisfy me on the necessity of the further expert report. Mr Poon’s submission that the grids in Appendix 3 the Joint Export Report represented the “windows” and thus did not fall within the boundary of the Exterior Wall is, with respect, his guesswork only. Further, this submission does not seem to be inconformity with para 1 of the Joint Expert Report, which defined the Subject Property as more specifically framed in red on the latest approved building plan in Appendix 3; and the grids referred to by Mr Poon were within the perimeter of the red frame in Appendix 3.

42.  As such, if I was to allow the 1^st Defendant to adduce a further expert report as prayed, I would be allowing the 1^st Defendant to embark on a fishing expedition to see if the un-pleaded 1^st Defendant’s Contention could be established.

Conclusion

43.  For the reasons set out above, I refused the 1^st Defendant’s application to adduce further expert report and dismissed the 1^st Defendant’s summons herein.

44.  I also made a costs order that the Plaintiff do have costs of this application to be taxed if not agreed, with certificate for counsel.

[1] Issue (1) : Whether D1 and/or D2 occupies and uses any part of the External Wall.

[2] Issue (4) : The market rental value of the subject area of the External Wall.