KAI SHING MANAGEMENT SERVICES LTD v. YUK YUN KIT AND OTHERS

LDBM 240/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 240 OF 2014

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D E C I S I O N
(Variation of Costs Order Nisi)

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1.  After hearing evidence and submissions, order has been made on 22 July 2016 as follows:-

(1)	The Respondents do within 3 months from date of this judgment remove all the dogs and cats from House No. 26.
(2)	---
(3)	The Respondents do pay the Applicant the costs of this application, with counsel certificate, to be taxed if not agreed at District Court Scale.  This is an order nisi to become absolute if no application is taken out to vary the same within 14 days from the date of this judgment.

Whether Costs should be Awarded on Indemnity Basis

2.  The Applicant now seeks to vary the above costs order nisi and asks that costs be awarded on indemnity basis.  It is said that this has been provided in the DMC and that the Respondents had conducted unreasonably.

3.  At the hearing of the present interlocutory application, the Respondents were not legally represented.  Through Ms Li, the 3^rd Respondent who also represented the other Respondents, it was said that they opposed to what the Applicant asked for because they had the right to defend in a suit and should not be penalized for that.

Discussion

Conduct

4.  On the complaint about conduct, the Applicant criticized the Respondents for taking every possible line of defence and thereby increasing the costs incurred on the Applicant.  It was also said that the tribunal has ruled against the Respondents on almost all of their assertions and line of defence.  Further there were remarks made by the tribunal against the 3^rd Respondent for being evasive and giving inconsistent evidence.  Mr Li relied on Choy Yee Chun (The Representative of estate of Chan Pui Yiu) v. Bond Star Development Limited [1997] H.K.L.R.D. 1327 CA in support of his submissions.

5.  I have read Choy Yee Chun.  I find the passage at p1335J – 1336B relevant:-

 “......In my judgment, the principles apply equally to those who not only institute proceedings but who defend them.  If a plaintiff has been forced to institute proceedings by a defendant whose conduct has been not only hostile in the normal litigious sense, but oppressive and with base ulterior motive, and if the pursuit of a defence constitutes conduct which is part of an oppressive game plan, then invocation of the power to award costs on an indemnity basis may well be justified.  Of course there will in most litigation be evidence which a court rejects, and it is far from rare that a court will find that evidence has been deliberately untruthful.  Such a finding will not necessarily in itself warrant an order for costs upon either of the bases alternative to party and party taxation.  But there will be cases - and it is true that they will be the exception and not the rule - where the conduct of a party in a case is of a more venal kind, where the conduct of the litigation has in some sense been wicked, and in such a situation the exceptional power can quite properly be applied.”

6.  Having considered the above passage and submission of Mr Li, I must say that the conduct of those of the Respondents should not be encouraged, it is however not a typical situation where they should be sanctioned by the tribunal by way of costs order under Order 62(5)(e) or otherwise.  They did not keep the dogs for a profit but with a view to keeping them from being homeless.  It is my findings that unfortunately when they were doing so they had inevitably infringed the right of their neighbours.  The conduct of the Respondents in the litigation was however no more than the usual course of action taken by other litigants.  It is not a case where their conduct calls for sanction by imposing costs order on a more stringent basis.

DMC Provisions

7.  The Applicant relied on two DMC provisions, namely Clause 6.5.4 and Clause 5.4.

8.  Clause 6.5.4  Recovery by distraint or civil action:-

“All amounts which become payable by any Owner in accordance with the provisions of this Deed and any relevant Sub-Deed, together with interest thereon as aforesaid and the said collection charges and all other expenses incurred in or in connection with recovering or attempting to recover the same, shall be recoverable by distraint or civil action at the suit of the Manager, and the claim in any such action may include a claim for the solicitor and own client costs of the Manager in such action, and the defaulting Owner shall in addition to the amount claimed in such action be liable for such costs.” (emphasis added)

9.  I do not find this a relevant provision to be relied on because it is for claiming arrears of payment where the present proceedings had nothing to do with that.

10.  Clause 5.4 To indemnify other Owners:-

“Each Owner shall indemnify all other Owners against any actions, proceedings, claims and demands whatsoever in respect of any loss or damage to any person caused by or as the result of the act or negligence of such Owner of his Unit or any person using his Unit with his consent expressed or implied or by or through or in any way owning to the overflow of water or the escape of fumes, smoke or anything else originating therefrom.” (emphasis added)

11.  I am of the view that these proceedings were taken out in respect of loss of the right to quiet enjoyment in their own property suffered by not less than 2 owners as a result of the act of the Respondents (the manner they had kept their cats and dogs in their own property).  I am of the view that although there was no claim for compensation by these 2 owners, other owners suffered loss as legal costs had to be incurred for bringing these proceedings against the Respondents who had failed to respond to warnings given.  The situation falls within Clause 5.4.  

12.  In the circumstances, the Respondents shall indemnify all the other owners.  I agree with Mr Li that to indemnify the owners on their payment for legal costs, costs to be borne by the Respondents shall be on indemnity basis.  I order that the costs order nisi be varied to the extent that they are to be taxed, if not agreed, on indemnity basis at District Court Scale with counsel certificate.

Costs of Summons

13.  I have heard submissions on costs of this interlocutory application.  There is no dispute that costs are to be in the cause.  I order that the Respondents do pay the Applicant the costs of this interlocutory application, on party and party basis, to be taxed if not agreed at District Court Scale.