THE INCORPORATED OWNERS OF WAH CHUN INDUSTRIAL CENTRE FOR AND ON BEHALF OF ITSELF AND ALL OWNERS OF WAH CHUN INDUSTRIAL CENTRE, NO. 54 TAI CHUNG ROAD, TSUEN WAN, NEW TERRITORIES, EXCEPT THE DEFENDANT v. COCA INVESTMENT COMPANY LTD

HCA 2064/2023

[2024] HKCFI 3240

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2064 OF 2023

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BETWEEN

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REASONS FOR DECISION (Leave Application) AND
DECISION (Variation Application)

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1.   Introduction

1.1  By a decision handed down on 20 June 2024 (“Decision”), I acceded to the Plaintiff’s[1] Injunction Summons in part, allowed the Plaintiff’s Amendment Summons, and made an order on the Defendant’s Transfer Summons to transfer the present proceedings to the District Court (“Transfer Order”). In respect of the Amendment Summons, I made a costs order nisi that the costs be paid by the Plaintiff to the Defendant to be summarily assessed (“Nisi Order”).

1.2  The Plaintiff now seeks leave to appeal against the Transfer Order (“Leave Application”) and a variation of the Nisi Order (“Variation Application”). In respect of the latter, the Plaintiff seeks an order that the Nisi Order should be varied to “costs of and occasioned by the amendment to the Defendant whilst the costs of the hearing before court to be to the Plaintiff”.

1.3  I have considered the written submissions lodged by Ms Carol Wong for the Plaintiff and Mr Justin Ismail[2] for the Defendant.

1.4  On 4 November 2024, I dismissed the Leave Application and indicated to the parties that I would provide my reasons on 12 November 2024. I was informed by the parties that there would be a hearing before Registrar S Kwang on 8 November 2024 and my decision on the Leave Application would assist the parties and the learned Registrar on the conduct of that hearing. I now provide my reasons, in addition to my decision on the Variation Application.

2.  The Leave Application

(i) Introduction

2.1  It is perhaps unsurprising that the Plaintiff has decided to pursue the Leave Application. As set out at Decision §§5.6-5.8, I commented that (1) disputes between co-owners of a building often generate very entrenched positions and (2) the positions adopted by the parties did not appear to me to be entirely reasonable. I also noted at Decision §5.8 that the Plaintiff was adamant that these proceedings should remain in the Court of First Instance.

2.2  At Decision Section 3, I set out the procedural history leading to the issuance of the Transfer Summons. It was pointed out that:

(1) Despite the Plaintiff having obtained the Interim-Interim Injunction in December 2023, no Statement of Claim had been filed before the hearing on 7 March 2024;

(2) At the hearing on 7 March 2024, it became apparent that there might be an issue (which was not raised by the parties or spotted by the court before that hearing) as to whether the present action fell within the jurisdiction of the District Court and that was relevant to the position then taken by the Defendant, which was for an order for speedy trial;

(3) I therefore directed the Plaintiff to file a Statement of Claim on or before 14 March 2024, the purpose of which was to assess whether the Plaintiff’s claim fell within the District Court;

(4) Instead of filing a Statement of Claim, on 14 March 2024, the Plaintiff took out the Amendment Summons to amend the Writ and also sought an extension of time of file the draft Statement of Claim (“Draft SOC”) annexed to the Amendment Summons; and

(5) No doubt having had sight of and considered the Draft SOC, the Defendant took out the Transfer Summons on 18 March 2024.

(ii) The proposed appeal

2.3  I set out my reasons for making the Transfer Order at Decision Section 6. In the proposed appeal, Ms Wong does not challenge my conclusion at §6.7 that the present case is not of such importance or complexity that it should remain in the Court of First Instance.

2.4  As set out at Decision Section 6, the only basis relied on by Ms Wong to resist a transfer to the District Court was that the Plaintiff’s claim for mesne profits was over HK$ 3 million. The table set out at Decision §6.2 was taken from Ms Wong’s Skeleton Submissions dated 18 March 2024 §14.

2.5  I had set out the approach adopted at Decision §§6.3 and 6.4. As I understand Ms Wong, it is not said that I had erred in my understanding on the proper approach to be adopted, namely a plaintiff should be entitled to frame his case in the manner that he wishes and his case on quantum ought to be viewed at its highest when determining the proper jurisdiction where the case should be brought. However, the foregoing was subject to the qualification of absence of abuse and the court had on previous occasions carried out an evaluation of the quantification advanced by a plaintiff, bearing in mind the requirement to err on the generous side.

2.6  As set out in Ms Wong’s Written Submissions dated 25 July 2024 lodged for the Leave Application, the proposed appeal is directed at Decision §6.4, namely I had erred in:

(1) Failing to take into account the absence of valuation or other evidence (“Ground 1”);

(2) Failing to take into account the continuing and on-going occupation of the Defendant of the CPs which are not subject to the interlocutory injunction (“Ground 2”); and

(3) Whilst holding that the Plaintiff’s claim for mistaken payment fell within the jurisdiction limit of section 37 of the DCO, failing to recognize the existence of another independent cause of action, namely a contractual claim (“Ground 3”).

2.7  In relation to Ground 3, it is said that I fell into error by conflating the claim for mistaken payment with the contractual claim.

(iii) The applicable principles

2.8  There is no dispute between counsel on the applicable principles:

(1) The applicant for leave to appeal must satisfy the court that (a) the proposed appeal has a reasonable prospect of success or (b) there is some other reason in the interests of justice why the appeal should be heard. Ms Wong does not rely on the latter ground; and

(2) As the Transfer Order is a case management decision, the Plaintiff faces a very high hurdle and must show that (a) I had gone clearly wrong and the Transfer Order would clearly involve injustice or an inability for the trial court to carry out its task, (b) I had erred in principle or (c) the Transfer Order is irrational having regard to the issues that have to be resolved: Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887 §31.

(iv) Analysis

2.9  I am unable to accept that Ground 1 has a reasonable prospect of success:

(1) As acknowledged by Ms Wong at the hearing on 20 March 2024[3], I had at the hearing on 7 March 2024 sought clarification from her as to whether it was necessary for the Plaintiff to file evidence in order to satisfy the court that the claim would exceed HK$ 3 million. The position then taken by Ms Wong was that, based on the authorities, the answer was in the negative;

(2) In my view, it is not reasonably arguable that I had erred in not taking into account the absence of valuation evidence or other evidence which the Plaintiff had indicated was not required; and

(3) Further, and only for the sake of completeness, Ms Wong suggests that the present case is in the pleading stage and the Plaintiff has no obligation to prove its case with evidence at this stage. I am unable to accept that this is a correct submission. Were Ms Wong correct, any consideration of transfer can only be taken after a party has, in her words, “[completed] the discovery and witness statement”. In any event, there is no suggestion that any such valuation evidence or other evidence would have the effect of materially changing the figures advanced in Ms Wong’s own table which was reproduced at Decision §6.2.

2.10  Grounds 2 and 3 may conveniently be dealt with together, as both are concerned with the issue of quantification of the Plaintiff’s claim:

(1) At Decision §§2.5-2.9, I had set out the relevant factual background. It has not been suggested that those factual findings are incorrect. In particular, I pointed out that (a) the CPs were leased by the Defendant to the Plaintiff from 2006 to 31 March 2017, and (b) since the expiry of the tenancy agreement, the Plaintiff had various degrees of access to some of the CPs;

(2) The Plaintiff’s monetary claim is pleaded at Draft SOC §58. Draft SOC §58 (a) pleads a claim for mistaken payment of rent and Draft SOC §58(b) pleads a claim for damages for the Defendant’s wrongful occupation of the CPs;

(3) At Decision §6.5, I set out my views that the Plaintiff’s claim for mistaken payment was caught by jurisdictional limit set out at section 37 of the DCO (against which there is no appeal) and accepted Mr Suen’s submission that Ms Wong’s quantification did not take into account the fact that the Plaintiff had various degrees of access to the CPs for divers periods (and as a corollary the Defendant was not in occupation of those CPs);

(4) Returning to Ms Wong’s table reproduced at Decision §6.2, I had accepted Mr Suen’s submission that the Defendant was not in occupation during the currency of the tenancy agreements for the periods between December 2011 to March 2017 and the proper basis for the Plaintiff’s claim during that period would be a claim for mistaken payment. That would already result in a deduction of HK$702,000 and HK$545,000 (ie HK$1,247,000)[4] from Ms Wong’s quantification of HK$3,170,600 (plus ongoing). I therefore formed the view that the foregoing, plus further deductions for the various degrees of access to the CPs for divers period, would render the Plaintiff’s claim for mesne profits within the jurisdiction of the District Court;

(5) In relation to the period after the termination of the tenancy agreements, the varying degree of access would entail a further deduction of approximately $800,000 (argued at the hearing on 20 March 2024 and reproduced at Mr Ismail’s Written Submissions dated 8 August 2024). I do not understand Ms Wong to have disputed with the quantification, but she says that the Defendant’s wrongful assertion of right over the CPs, despite not being in occupation, would entitle the Plaintiff to claim mesne profits (Ms Wong’s Reply Submissions dated 12 August 2024 §4);

(6) No authority has been cited by Ms Wong as to why (1) the Plaintiff is entitled to claim mesne profits during currency of the tenancy agreements when the Defendant was not in occupation of the CPs and (2) the Plaintiff is entitled to claim a sum equivalent to a complete deprivation of access after the expiry of the tenancy agreement when, as found by me, the Plaintiff had access to some of the CPs;

(7) In relation to the first point of the preceding subparagraph, it is the Plaintiff’s own pleaded case at Draft SOC §58(b) that the claim is based on wrongful occupation. In relation to the latter point, according to Ms Wong’s table reproduced at Decision §6.2, it was acknowledged that, if by the injunction the Plaintiff were granted access to some of the CPs, no mesne profit would be claimed for those CPs (yet the Defendant is plainly still asserting the rights over the CPs);

(8) For the above reasons, I do not regard Grounds 2 and 3 have a reasonable prospect of success.

(v) Overarching observations

2.11  In the Leave Application, Ms Wong contends that the Transfer Order involves an injustice and an inability for the trial court to carry out its task. I find that submission difficult to follow.

2.12  Even disregarding the deductions to be made for the period subsequent to the expiry of the tenancy agreements, the quantification of the Plaintiff’s claim as at March 2024 is [HK$3,170,600[5] – HK$1,247,000 =] HK$1,923,600. Since the Interim-Interim Injunction, the Plaintiff has had access to 2 of the 4 CPs. According to Ms Wong’s table, the monthly claim is therefore [HK$22,900 / 2 =] HK$11,450. It would therefore take [(HK$3,000,000 – HK$1,923,600) / HK$11,450/month =] 94 months from March 2024 for the ongoing claim to take the Plaintiff’s claim beyond the jurisdictional limit of HK$3,000,000. The period would even be longer were the access to the CPs after the expiry of the tenancy agreement taken into account.

2.13  The Transfer Order does not deprive the Plaintiff of any of the matters suggested by Ms Wong. The Plaintiff is perfectly entitled to prepare its case after the present action is transferred to the District Court and it cannot be suggested any procedural tools to assist the preparation of the Plaintiff’s case are not available in the District Court. When thought justified, the Plaintiff is perfectly entitled to apply to transfer to the proceedings to back to the Court of First Instance pursuant to section 42 of the DCO.

2.14  I am unable to accept that it is reasonably arguable that a correct exercise of the case management discretion is to allow the present proceedings to remain in the Court of First Instance when it is far from clear at this stage that the Plaintiff’s claim does not fall within the jurisdiction of the District Court. One has to bear in mind that section 43(1) of the DCO that a transfer order may be made if it appears to the Court of First Instance that a claim is likely to be within the jurisdiction of the District Court.

2.15  In my view, the proposed appeal does not meet the very high hurdle that has to be met by the Plaintiff.

2.16  It is for the above reasons I dismissed the Leave Application. I also make a costs order nisi that the Plaintiff is to pay to the Defendant the costs of the Leave Application to be summarily assessed. The Defendant is to lodge and serve its Statement of Costs within 3 days hereof and the Plaintiff its Statement of Objection within 3 days thereafter. I will thereafter conduct the summary assessment on the papers.

3. Variation Application

3.1  On any view, the costs at stake cannot be said to be substantial. The Amendment Summons only took up very little time at the hearing although it has to be said that the Defendant did object to part of the amendments which I had stated ought to be litigated on another occasion (Decision §4.7).

3.2  However, as set out at Decision §4.5, the objection raised by the Defendant was that some of the claims set out at draft Statement of Claim were time-barred. I think Ms Wong acknowledges (in part) the correctness of that opposition, as Ms Wong’s table reproduced at Decision §6.2 does not advance part of the claims in Draft SOC which were pleaded to have accrued in 1991. I accept Mr Ismail’s submissions that that objection was relevant to my deliberation in the Transfer Summons.

3.3  I take into account (1) the Amendment Summons was only an application to amend the Writ, (2) the Defendant had at the time of the Amendment Summons not yet filed a defence, (3) the Amendment Summons included an application for an extension of time which was an application for indulgence, (4) the Defendant’s objection made against the Draft SOC was probably not justified as no leave was required (Decision §4.7) but (5) the objection was relevant to the arguments ventilated in the Transfer Summons, I will vary the Nisi Order to “no order as to costs is made on the Amendment Summons”.

3.4  I note that the Defendant had sought to dispose of the Variation Application by consent by varying the Nisi Order to “costs in the cause”.

3.5  In the exercise of my discretion, I make an order nisi that there be no order as to costs on the Variation Application.