CHENG SING KEUNG AND ANOTHER v. CHAN KA HAY AND OTHERS

HCA 2164/2013

[2021] HKCFI 2646

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2164 OF 2013

________________________

________________________

________________________

DECISION

________________________

1.  On 28 May 2021, I handed down the judgment in this action. Save for the declaration which I granted in favour of the 1^st and 2^nd plaintiffs confirming their pedestrian right of way over the Main Gate, I dismissed the rest of the plaintiffs’ claims. I also dismissed the counterclaim pursued by some of the defendants against the plaintiffs. As between the plaintiffs and the 1^st defendant, I made a costs order nisi that the 1^st defendant should have costs of the action. (The 1^st defendant did not make any counterclaim against the plaintiffs.)

2.  There are now before me two summonses which seek to vary the above costs order nisi:

(1)  The 1^st defendant’s summons filed on 10 June 2021; and

(2)  The plaintiffs’ summons filed on 11 June 2021.

3.  I shall adopt below the terms defined in the judgment.

The 1^st defendant’s summons

4.  In his summons, the 1^st defendant asks for the costs order nisi be varied such that (a)  the 1^st defendant should have the costs on an indemnity basis, and (b)  the costs of the action should be inclusive of all costs reserved.

5.  The 1^st defendant relies on two offers which he made by letters dated 8 December 2014 and 16 May 2019 sent by his solicitors to the plaintiffs’ solicitors.  Both letters were marked “SANCTIONED OFFER” and “WITHOUT PREJUDICE SAVE AS TO COSTS”. 

6.  In the first letter, the 1^st defendant’s solicitors stated that a sanctioned offer was made pursuant to Order 22, rules 3 and 5 of the Rules of the High Court.  The offer was in the following terms:

“(1)  Your clients’ claim be dismissed; and

(2)  Your clients (i.e. the Plaintiffs)  do pay 75% of our client’s costs in these proceedings to be taxed on party-and-party basis.”

7.  The content of the second letter was substantially the same as the first letter, save that the terms of the offer included a further clause:

“The existing Undertaking given by our client be continued.”

8.  The “existing Undertaking” was the undertaking referred to in para 108 of the judgment.

9.  Notwithstanding the express label applied by the 1^st defendant’s solicitors, the offers contained in the two letters do not qualify as “sanctioned offers” under Order 22, rule 23.  This is because they contained terms making provisions for costs which are incompatible with the automatic costs consequence provided for in Order 22, rule 20(1)  when a sanctioned offer is accepted: Leung Lai Kwan v Lo Kai Wing HCMP 1554/2015, 20 August 2015 at para 7; Wong Yim Man Anthea v Wong Ho Ming Felix [2016] 3 HKLRD 249 at paras 18, 38 to 42; Choi Tak Man v Chan Yuk Lan, Didi [2017] 5 HKLRD 619 at paras 15 to 19. 

10.  Order 22, rule 20(1)  provides that where a defendant’s sanctioned offer to settle the whole claim is accepted without requiring the leave of the court, the plaintiff is entitled to his costs of the proceedings up to the date of the service of the notice of acceptance, unless the court otherwise orders.  Here, in each of the offers, one of the terms was that the plaintiffs should pay 75% of the 1^st defendant’s costs in the proceedings.  If the offers had been accepted, this term would have deviated from, and could not have been reconciled with, the cost consequence stipulated in the Rules.  As such, the offers do not qualify as “sanctioned offers” for the purpose of the Rules.

11.  Mr Brian Tsui, counsel for the 1^st defendant, appears to have accepted this analysis in his written submissions in reply.

12.  Given that the offers could not have been made by way of sanctioned offers, the fact that they were made and their content are matters that I can take into account when exercising my discretion as to whether I should vary the costs order nisi in the way advocated by the 1^st defendant: Order 62, rule 5(1)(d).

13.  That said, I decline to grant indemnity costs to the 1^st defendant on the strength of the offers. 

14.  Mr Tsui submits that at trial the “only live issue” between the plaintiffs and the 1^st defendant was whether there was substantial interference with the plaintiffs’ right of way by reason of the 2008 and 2013 incidents.  The plaintiffs claimed damages in the sum of $70,000. The outcome was that the plaintiffs “fail completely on all claims” against the 1^st defendant.  In the circumstances, as the plaintiffs failed to accept the offers, it led to the need for a full-blown trial which is wholly disproportionate to the claim.

15.  Mr Tsui also submits that since at the time the action was commenced, the 1^st defendant was no longer the legal owner of the land over which the Main Gate is located, no declaratory relief is capable of being granted against the 1^st defendant in respect of the right of way. 

16.  I do not accept Mr Tsui’s submissions for the following reasons.

17.  In his amended defence, the 1^st defendant entered a plea of denial in answer to the plaintiffs’ claim for a right of way, whether on foot or by vehicle, over the Main Gate.  See paras 17 and 61 of the statement of claim and paras 13, 14 and 46 of the 1^st defendant’s amended defence. (This is to be contrasted with the position taken by the other defendants in their pleading.  In para 78 of their defence and counterclaim, they accepted that the plaintiffs have a right of way over the Main Gate but the right is “limited to one on foot only”.)

18.  It was on the first day of the trial that the 1^st defendant accepted that the plaintiffs enjoy a pedestrian right of way over the Main Gate.

19.  In the judgment, I recorded (at para 110)  that the defendants agree that the plaintiffs have a pedestrian right of way over the Main Gate.  At the end of the judgment (at para 185), I proceeded to grant the declaration reflecting the plaintiffs’ right.

20.  In this action, as recorded in para 7 of the judgment, insofar as the Main Gate is concerned, the plaintiffs’ case is, in substance, that they have right of access over the Main Gate, both on foot and with vehicles and, further, that those rights were infringed by the 1^st defendant and the other defendants in the 2008 incident and the 2013 incident.

21.  I rejected the plaintiffs’ claim against, among others, the 1^st defendant that the latter had interfered with their rights in 2008 and 2013 as alleged (see paras 173 and 178).  The premise of my rulings remain, however, that the plaintiffs do have a pedestrian right of way over the Main Gate in the first place.  The plaintiffs’ claim failed because I found that his claim of interference in respect of the 2008 incident was not made out on the evidence and his inability to enter the Estate on foot via the Main Gate in 2013 was self-induced.

22.  As a matter of analysis, the plaintiffs’ claim against the 1^st defendant had all along depended on, first and foremost, the existence of their right and, secondly, if the right was established, whether there was the alleged interference.

23.  Analysed that way, the issue of the existence of the pedestrian right of way over the Main Gate plainly concerns the 1^st defendant, even though when the action was commenced, he was no longer the legal owner of the land where the Main Gate is located.  That was an issue that needed to be resolved as between the plaintiffs and the 1^st defendant in order to adjudicate on the interference claims.  The declaration granted in this regard was made against all the defendants, the 1^st defendant included.

24.  Returning to the content of the offers, they required that all the claims made by the plaintiffs against the 1^st defendant be dismissed.  The 1^st defendant did not agree to the grant of the declaration in relation to the pedestrian right of way over the Main Gate.  In fact, in opening, Mr Tsui only orally accepted that the 1^st defendant is entitled to such a right of way.  He did not expressly accept that a declaration should be granted to that effect.  That was a relief which the plaintiffs had to fight for as against the 1^st defendant throughout these proceedings up to the trial itself. 

25.  In the end, I granted the declaration.  Hence, this is not a case where if the plaintiffs had accepted the offers, it would have obviated the need for the plaintiffs and the 1^st defendant to go to a trial.  This is because it was only after the trial hearing that the plaintiffs managed to obtain the above declaration.  The offers did not have the effect of saving costs as far as the plaintiffs and the 1^st defendant are concerned.

26.  The making of the offers is the only reason put forward by the 1^st defendant to seek indemnity costs.  That reason is not a valid one.  I therefore decline to award the costs on a higher basis than the party-to-party basis.

27.  I shall revert to the other variation sought by the 1^st defendant regarding “reserved costs” below.

The plaintiffs’ summons

28.  In their summons, the plaintiffs ask for the costs order nisi be varied as follows:

“[T]here be no order as to costs between the Plaintiffs and the 1^st Defendant in the present proceedings save that the 1^st Defendant do pay costs of the 1^st and 2^nd Plaintiff’s interlocutory injunction by way of Summons filed on 12 November 2013”

29.  I shall first deal with the “no order as to costs” part.

30.  In my view, there is no basis for the plaintiffs’ suggested variation. Apart from the issue of the pedestrian right of way over the Main Gate which was resolved in the plaintiffs’ favour (by agreement at the trial), I rejected all the other claims made by the plaintiffs.

31.  I have mentioned above my rulings against the plaintiffs on the alleged interference incidents in 2008 and 2013.  In the judgment (at paras 157 to 172), I also rejected the plaintiffs’ claim of vehicular right of access over the Main Gate.  All the legal basis put forward by the plaintiffs were rejected, including proprietary estoppel, implied grant and the 2006 Deed. These were the causes of action which the plaintiffs had fought all the way to trial and lost.  In my view, as between the plaintiffs and the 1^st defendant, the 1^st defendant is the substantial winner in this action.

32.  In the circumstances, I do not consider that it would be right to make no order as to costs, as suggested by the plaintiffs.

33.  I also decline to award the costs in relation to the interlocutory injunction summons to the plaintiffs.

34.  Mr Patrick Chong, counsel for the plaintiffs, makes the following submission:

“Eventually, Ds (including D1)  gave an undertaking to provide the access cards to Ps upon paying $150 deposit for the said access cards (see Madam Justice Mimmie Chan’s order …)  Had they (including D1)  acted reasonably, it was not necessary for Ps to take out the interlocutory injunction application since D1 and all the owners were already given a pre-action demand letter … All these disputes could have been resolved amicably.”

35.  The undertaking was given by, among others, the 1^st defendant on the return day of the plaintiffs’ inter partes summons for interlocutory injunction (see para 108).  According to the sealed order, the plaintiffs also gave a number of undertakings.  Most notably for present purpose, the plaintiffs undertook that if the court dismisses their summons or as directed by the court, they would forthwith return the access key cards to, among others, the 1^st defendant.

36.  Upon the undertakings given by the parties, directions were given for the filing of evidence and for the adjournment of the summons for substantive argument.  Costs were reserved.

37.  In the end, the substantive hearing did not take place.  I have not been informed by the parties why that was so.  In the present application, the plaintiffs have not filed any supporting evidence at all. 

38.  On the face of the order, it seems to me clear that the undertakings given by both sides were intended to be an interim measure pending the substantive disposal of the injunction summons.  The intention was that the defendants would give the access cards to the plaintiffs if a deposit was paid but the cards would have to be returned if the plaintiffs failed in their substantive application.

39.  I therefore reject Mr Chong’s submission insofar as he suggests that the 1^st defendant’s agreeing to provide the plaintiffs with the access cards only after the summons was taken out is an indication that he had acted unreasonably and had he acted reasonably, there would have been no need for the plaintiffs to take out the summons in the first place.  The undertaking given by the 1^st defendant, when viewed against the cross-undertaking given by the plaintiffs, was clearly meant to be a temporary holding measure when it was not yet known which side had merits on the interlocutory injunction summons.

40.  Furthermore, Mr Chong’s submission is contrary to my ruling that the inability of the plaintiffs to enter the Estate via the Main Gate in 2013 was self-induced (see para 178).  I held that the act of the 1^st defendant in the 2013 incident did not amount to any interference with the plaintiffs’ right of way.  I rejected the cause of action and no final injunction was granted as a result.

41.  In the circumstances, there is no reason for the plaintiffs to be awarded their costs of the interlocutory injunction summons.  They have actually failed in their claim.  I agree with Mr Tsui that the proper thing to do should instead be to award the 1^st defendant the costs reserved in respect of that summons.

42.  I would therefore vary the costs order nisi by giving the 1^st defendant such costs reserved.

Conclusion

43.  For the above reasons, I dismiss the plaintiffs’ summons.

44.  In respect of the 1^st defendant’s summons, I vary the costs order nisi by also awarding the costs reserved in respect of the plaintiffs’ summons filed on 12 November 2013 to the 1^st defendant.

45.  As neither side substantially succeeds in getting what they apply for in their respective summonses, I make a costs order nisi that there be no order as to costs of the two summonses.