LAM CHAK MAN ESTATES LTD v. KUNG KWOK WAI DAVID

HCMP 1975/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1975 OF 2007

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REASONS FOR DECISION ON COSTS

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1. At the end of the hearing on 18 June 2012, the following costs order was made:

(a)  there be no order as to the costs of this action up to and including 20 July 2008;

(b)  the costs of this action from 21 July 2008 to 18 June 2012 (both inclusive) be paid by the plaintiff to the defendant to be taxed if not agreed.

I indicated at the time of the costs order:

(1)  I disagreed with the plaintiff’s arguments on costs; and

(2)  slightly more detailed reasons would be given later.

They are as follows.

2. The plaintiff commenced this action in October 2007 seeking primarily an order for the sale of lots of land in the Yuen Long/Tuen Mun area which have been jointly owned by the parties herein (and other related (or consequential) relief).

3. The action was set down for a 3-day hearing commencing on 15 June 2012 but the matter was settled on the first hearing day when an order for sale was made by consent (“the Consent Order”).  The only outstanding dispute related to the costs of the action.

4. The significance of the date “21 July 2008” (para 1(b) above) is related to the 2-week or so period subsequent to the defendant’s “without prejudice save as to costs” letter dated 5 July 2008 (“defendant’s settlement offer”).

5. Put simply, the defendant sought costs of the action since that date because the terms of the Consent Order were materially the same as those set out in the defendant’s settlement offer.

6. On the other hand, in his 8-page written submissions dated 18 June 2012, the plaintiff resisted the defendant’s application for costs and contended that he ought to be awarded the costs of the action.

7. The grounds put forth by the plaintiff were:

(a)  the terms of the Consent Order were more favourable to the plaintiff (and/or less favourable to the defendant) than those put forth in the defendant’s settlement offer;

(b)  further to (a) above, the respective terms were “materially different” or “very different”;

(c)   the plaintiff has in his “without prejudice save as to costs” letter dated 21 December 2011 offered in effect to partition the lots (“plaintiff’s settlement offer”) but the defendant failed to respond.

8. The matters said to support the plaintiff’s contention set out in para 7(a) and (b) above were:

(1)  probate in respect of the estate of the defendant’s predecessor-in-title had not been cleared earlier;

(2)  some matters were not dealt with in the defendant’s settlement offer but they had been dealt with in the Consent Order:

(i)   estate duty-related matters concerning the lots of land;

(ii)   some of the lots of land were actually possessed by squatters or licensees (as the case may be);

(iii)  the quantification of the costs for (or arising from) the sale;

(iv)  the individuals expressly appointed to represent the parties herein in the sale;

(v)   the management of the lots of land before the completion of the sale.

(3)  in relation to para 7(b) above, there were material differences between the terms proposed in the defendant’s settlement offer and those in the Consent Order (the former terms are followed by the latter terms):

(i)   “public tender within 6 months” and “public auction not earlier than 10 months [nor] later than 12 months [of the date of the Consent Order]”;

(ii)   “reserve price of HK$[30 million]” and “reserve price of not less than HK$[15 million]”.

9. The matter set out in para 8(1) above is irrelevant to the discretion to be exercised as regards costs.  There is no basis to connect the parties’ earlier failure to settle the action with the grant of probate.

10. As regards the matters set out in para 8(2)(i) to (v) above:

(a)  these are in the nature of detailed mechanisms in the carrying out of the contemplated sale;

(b)  in any event, not only is there no evidence the defendant would not agree to the same, the fact that the Consent Order was agreed upon within a relatively short period of time (see para 13 below for more details) shows that he would have done so if they had been proposed earlier.

11. As regards the matters set out in para 8(3)(i) to (ii) above:

(1)  they cannot properly be regarded as “material” differences;

(2)  similar observation as that set out in para 10(b) above is also applicable here.

12. Finally, the plaintiff’s settlement offer cannot advance the plaintiff’s arguments.  A partition of the lots of land can easily give rise to further and/or other substantial dispute, such as which party should be allocated which portion(s) of the lots of land.  It can be inferred from the terms of the Consent Order the parties in fact preferred sale of the lots of land to partition (sale is much more suitable for a “clean-break” resolution of the parties’ main dispute herein).

13. The defendant’s settlement offer has given the plaintiff a 2-week period from 5 July 2008 to respond.  I understand the recent “without prejudice” discussion leading to the Consent Order to have lasted for about 4 days only (12 to 15 June).  Bearing in mind an imminent court hearing might have shortened the parties’ settlement discussion, I consider the 2-week period to be reasonable.