LUNG PO KWAN AND ANOTHER v. TANG KAM SHEUNG AND ANOTHER

CACV 164/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 164 OF 2010

(ON APPEAL FROM LANDS TRIBUNAL BUILDING
MANAGEMENT APPLICATION NO. 243 OF 2005)

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Hon Tang Acting CJHC:

1.  In the Lands Tribunal, the 1^st and 2^nd Applicants’ claim against the 1^st Respondent (Ms Tang) was dismissed by Judge M Wong (Presiding Officer of the Lands Tribunal) with costs.

2.  On appeal, we allowed the 1^st and 2^nd Applicants’ appeal, set aside the order of the learned Presiding Officer, and made an order nisi that Ms Tang do pay the 1^st and 2^nd Applicants their costs below and of the appeal with certificate of two counsel to be taxed if not agreed.

3.  This is the 1^st and 2^nd Applicants’ application for costs of the appeal to be taxed on an indemnity basis.

4.  This application is made because the 1^st and 2^nd Applicants had, through their solicitors, made a “without prejudice offer save as to costs” offer by a letter dated 18 May 2010 (“the offer”) (prior to their application for leave to appeal) to the 1^st Respondent, whereby the Applicants had offered to abandon their appeal on condition that Ms Tang waived the order of costs made in her favour by the Lands Tribunal; and that there be no order as to costs of the appeal.

5.  That offer was not accepted.

6.  As noted, the 1^st and 2^nd Applicants have succeeded in their appeals.  They have been granted an injunction and awarded damages.

7.  As the following summary in the Supreme Court Practice at 62/App/12 shows the discretion to award indemnity costs:

“… was not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be ‘appropriate’. The principle for the award of an order of costs on an indemnity basis applied equally to those who not only instituted proceedings but who defended them. …” Choy Yee Chun (The Representative of the estate of Chan Pui Yiu) v. Bond Star Development Ltd [1997] H.K.L.R.D. 1327.

8.  Mr Shum, for the 1^st and 2^nd Applicants, submitted that this is an appropriate case for an indemnity award.  He described the offer as generous.  He submitted that, in the context of costs, Order 62 rules 5(1) mandates the Court to take into account the following:

“(aa) the underlying objectives set out in Order 1A, rule 1;

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(d) any written offer which is expressed to be "without prejudice save as to costs" and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;”

9.  Under Order 22, a party could make a sanctioned payment or offer, in which event, where the other party fails to do better than the sanctioned offer or payment,

“The Court may also order the (party making the offer) is entitled to –

(a) his costs on an indemnity basis …” Order 22 rule 23(4)

10.  Even so, it does not follow that costs on an indemnity basis will follow a sanctioned offer or payment, but such an order may be made when the circumstances are right.

11.  Here, we are not concerned with a sanctioned offer, none could have been made, but the offer was indeed generous.  Ms Tang is substantially worse off as a result of our decision.  Also, this is not a case where difficult or unsettled law as involved.  With respect to the learned Presiding Officer, his judgment was clearly wrong.  So, I believe the rejection of the offer was unreasonable.

12.  In the circumstance, this is an appropriate case for costs on an indemnity basis and I would so order.

Hon Le Pichon JA:

13.  I agree and have nothing to add.

Hon Saunders J:

14.  I agree.

Hon Tang Acting CJHC:

15.  We order that Ms Tang do pay the 1^st and 2^nd Applicants’ costs of the appeal to be taxed on an indemnity basis unless agreed.