KING SMART INVESTMENTS LTD v. COMMISSIONER FOR TRANSPORT AND ANOTHER

HCA 2108/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2108 OF 2012

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D E C I S I O N

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THE APPLICATION

1.  By summons dated 13 May 2015, the plaintiff applied for leave to serve the witness statement of Tam Ming Yip (copy thereof attached) and to put the questions set out in the schedule by way of letter to the single joint expert for clarification of the joint valuation report dated 15 February 2015.

2.  The defendants oppose  this application on the ground that the plaintiff had refused to answer their enquiries as to the basis of the application. They say that they are entitled to insist upon the plaintiff coming before this Court to justify the application and to show why the Court should grant the order as applied for.

3.  Recently, this Court has seen cases where the parties are conducting the interlocutory proceedings as matters of games.  Unfortunately, as seen from the defendants’ reason above, this is yet another case of the same kind as can be seen below.  The parties are legally represented.

4.  In the case before this Court a few days ago, Joytex Development Ltd v Super Homes Ltd (unrep, HCA 18/2012, 16 October 2015), I had pointed out that parties’ legal representatives seemed to have ignored their duty of properly advising their clients before taking out or defending interlocutory applications. I had also cited Long Hai Hong v Chan Yu Lydia & Others (unrep. HCMP 3179/2013, 12 October 2015), in which A. Chan J. had expressed the comments on the parties. He said:

“13. With respect, these facts very much speak for themselves.  Taking advantage of a genuine mistake by a staff of CWL when there was no prejudice suffered as a consequence of the short delay in receiving the Answers can only be seen as opportunistic (it will be seen below that this court is unable to find any merit in this appeal), and quite contrary to the objectives enshrined in O 1A, r 1 (“Objectives”). 

14. If CJR has not achieved the desired change in attitude to litigation, this court would be forced to act.  Unfortunately, the most effective, and possibly the only effective, way to enforce the Objectives is to penalise unreasonableness with costs.  If similar or comparable circumstances arise in the future, this court would have to consider making an award of indemnity costs against the unreasonable party.”

5.  The defendants, in the first paragraph of their letter to the plaintiff, had stated that they would contest the plaintiff’s application and they asked the plaintiff to set down the hearing before me for argument, with estimated length of hearing of two hours.  They had, in another paragraph of the letter asked the plaintiff to explain the basis of the application.

6.  In reply to this letter, the plaintiff, who might have been offended by the said letter, retorted as follows:

“With all due respect, it is our view that whilst you could resist the Summons inter-partes taken out on 19 May 2015, you have no right to ask for us for an explanation for taking out the said Summons and to justify the application. This would be a matter of argument before the Court. In any event, we opine that the proposed witness statement is covered by the issue raised in the pleadings, i.e. the loss and damages suffered or will be suffered by our client.”

7.  In my view, the argument between the parties in their letters is unnecessary and not conducive to an amicable settlement of their disputes.

8.  The application was taken out by the plaintiff, who summons the defendants to court.  It has the duty to advise the defendants the bases in support of the application. This is the starting point of the application.  One wonders what prejudice would cause to the plaintiff for telling the defendants its bases for the application.  Why should such fundamental bases be a matter of argument before this Court?  This obstacle to the defendants’ enquiry was unreasonable. Had the plaintiff given the bases for the application, the defendants might be in a better position to consider whether they should oppose the application.  If they had no reasons to oppose, they may be penalized by costs by this Court.

9.  Even up to 22 October 2015, the plaintiff’s solicitor was still arguing with the defendants’ legal representatives as to whether he had complied with Practice Direction 5.4, which the solicitor said was not the same as the directions given by my clerk to the parties.  It is trite that the Practice Directions are standing directions without any further directions and are subject to the court’s specific directions.  This kind of hostile attitude has no place in the business of the court.  It is inconsistent with the spirit of the CJR as the Court of Final Appeal has said in Wing Fai Construction Company Limited (in Compulsory Liquidation) v Yip Kwong Robert & Others (2011) 14 HKCFAR935 at §32(3) “It will be through active case management by the courts, supported by the duty on the parties and their legal representatives to assist, that the just resolution of disputes will be achieved.”

THE FACTUAL BACKGROUND

10.  This dispute between the parties is over the interference with the right of an access to open space adjacent to the industrial building, of which the plaintiff is the owner of the ground floor, the 1^st floor, the 2^nd floor and certain portions of the 3^rd floor. The plaintiff claims that the open space was included in the New Grant and formed part of the building as loading and unloading area.  The Deed of Mutual Covenant had included it as common area and the design for the car parking spaces had also taken into account of this open space as the loading and unloading area. Since March 2011, the 1^st defendant had caused to be erected a number of bollards at the part of the boundary of the land preventing vehicular access to and egress from the open space. The plaintiff therefore claims against the defendants for damages as such bollards would affect the value of the properties, in particular, the market rental value of them. The defendants oppose. First, the 1^st defendant’s defence is that the bollards were installed pursuant to statutory authority and therefore not an actionable wrong.[1]  Second, they say that the open space, a common area within the lot of land, was never designed to be accessible by vehicles for the purpose of loading and unloading.[2]  Third, they say that such bollards will not affect the value of the properties as alleged by the plaintiff.

11.  For this purpose, a single joint expert has been appointed by consent of the parties and she had compiled a report, in which the expert said that the bollards made no material difference to the rental value of the properties.[3]  Obviously, the plaintiff is not satisfied with the assessment of the single joint expert over the effects of the bollards on the value of the properties.  The plaintiff therefore proposed to serve a witness statement of Mr. Tam, a leasing manager of the plaintiff, who will say the difficulties he had come across in leasing the property after the erection of the bollards and the devaluation of the rental as well.

THE SUPPLEMENTAL WITNESS STATEMENT

12.  As to the witness statement, the defendants’ objection seems to be premised upon the fact in that the subject premises were let at a lower rent “did not preclude the possibility that the rent asked of the tenant was in fact below the market rent and there was nothing in P’s then witness statements to suggest that the subject premises could not be let at the full market rent because of the fear or apprehension by potential tenants that vehicular access would be blocked upon completion of installation of the bollards, …”[4]  The plaintiff is, of course, at liberty to take whatever stance it is entitled to at the trial in relation to the single joint expert report and it is also entitled to take whatever steps it considers appropriate to redress its concern, provided that it does in accordance with the law.  See what the Court of Appeal said in Chan Cheung Ming Jacky v Siu Sin Man [2014] 5 HKLRD 89 at §28:

“In general, subject to the questions of admissibility and relevance, each party in the proceedings is at liberty to call whatever evidence he or she considers necessary provided that procedural requirements are complied with.”

The defendants’ reasons above are not legitimate reasons to stop the plaintiff from addressing its concern. The deficiencies as outlined by the plaintiff can be put to the witness at the trial by way of cross-examination or by final submission.

13.  Yesterday, the defendants submit supplemental written submissions.  By supplemental written submissions, the defendants further argue that the plaintiff’s pleaded case is that the property was “for damages on the basis that the subject premises have been rendered unlettable (as pleaded in paragraph 18 of Amended Statement of Claim)” It had not made a claim for damages on the basis that the market rental value of the subject premises has been diminished by the alleged wrongful acts of the defendants.  Upon careful reading of the paragraph as referred to and as explained by counsel for the plaintiff this morning, it is not correct to say that the plaintiff’s claim is on the basis that the property was “unlettable”.  The particulars of damages as pleaded in the paragraph are for the period between September 2011 and October 2012 and it further pleaded loss and damage “continuing”.[5]  The plaintiff explains that it has to mitigate its loss and the Flat was subsequently leased out.  The supplemental witness statement is clearly filling the gap.  The plaintiff stands by its pleadings and said that it would not make further amendment to them.

14.  On the existing pleaded case, the plaintiff is entitled to put in the proposed witness statement for assessment of the damages at the trial.  Leave should therefore be given to the plaintiff to do so.

QUESTIONS FOR THE SINGLE JOINT EXPERT

15.  As to the application for leave to put questions to the single joint expert, the defendants, by their supplemental written submissions, have raised the issue of proper procedural for the application, relying upon HKCP 2016 at 38/4A/6.

16.  “Modern judicial authorities recognize that the court has inherent power to rule on the admissibility of expert evidence at a pre-trial stage: Woodford and Ackroyd v Burgess [2000] CP report 79, Ko Chi Keung v Lee Ping Yan Andrew [2001] 2 HKC 63 and Annabell Kin Yee Lee & Others v Lee Wing Kim (May Lee) & Anor (unreported), HCA9522/1997.”  See paragraph 11 of Wong Hoi Fung v American International Assurance Company (Bermuda) Limited & Another [2002] 3 HKLRD 507.  Therefore it is a matter of the court’s discretion.

17.  In Cosgrove v Pattison [2001] CP Rep 68, Neuberger J identified 9 factors for consideration in deciding whether to allow the evidence of a second expert, in addition to the evidence of an expert instructed jointly, under Civil Procedure Rules Part 35:

(1) the nature of the dispute;

(2) the number of disputes on which the expert evidence is relevant;

(3) the reason for requiring the second report;

(4) the amount at stake or the nature of the issues at stake;

(5) the effect of permitting a second expert report on the conduct of the trial;

(6) the delay in making the application;

(7) the delay that might be caused in the conduct of the proceedings;

(8) any other special features;

(9) the overall justice to the parties.

18.  The above authority was adopted in Daimler AG v Leiduck (re: expert evidence) [2014] 3 HKLRD 56.

19.  In my view, the same rationale should apply to the present situation where the plaintiff asks this Court to allow it to put questions to the single joint expert for clarification, but only with less stringent test as the element of a second expert is absent here.

20.  In fact, in the authority submitted by the plaintiff, Daniels v Walker[2000] 1 WLR 1382, CA at 1387F, the Court of Appeal agreed it was possible to allow questions to the expert who had already prepared a report.

21.  In the first written submissions, the defendants had only raised the objection on procedural technicality.  This morning, counsel for the defendants submits that those questions amount to cross-examination of the expert.  He further submits that in fact, those questions should have been dealt with in the joint instructions to the expert. See paragraph 4 of the letter of instructions dated 15 December 2014, in which it stated:

“Given the possibility of erection by the Government of bollards immediately outside the open space of The Venus Industrial Building which would have the effect of completely blocking vehicular access to the Open Area, a valuation expert’s opinion is required and be confined to comparing the open market rent of the above Factory Unit with (i) a threat of the Government to build and complete bollards with the effect of completely blocking the vehicular access of the open space; and (ii) without the threat and the presence of any bollard.”

22.  The plaintiff alleges, which the defendants do not dispute, that in the expert report, the expert took the view that the market rental value of the Flat would be higher with the bollards than if there were no such bollards.  The defendants submit that the value will not be much different.  The questions that the plaintiff proposed to put to the expert are asking the expert to give reasons for such findings.

23.  It is trite law that expert evidence is only for the purpose of assisting the court to come to a fair resolution of the disputes between the parties.  The court is not bound to accept the expert’s evidence as it is the ultimate decision-maker of the facts of the matter before it.

24.  Looking at the findings above, it seems contrary to common sense that the market rental value of the property can be higher with the obstruction of the bollards than without the obstruction.  This cries out for explanation from the expert.  I do not believe the trial judge will simply take the findings on their face value at trial.

25.  There are two alternatives: either by allowing the questions proposed to be put to the expert or for the plaintiff to take out an application to cross-examine this expert; or maybe another option is to have a second expert by the plaintiff to challenge this expert’s opinions.  The most economical means, in my view, would be the one proposed by the plaintiff in this application.

26.  There is not much reason from the defendants that this economical means should not be adopted.  They only say that the expert should have taken those questions into account when she compiled the expert report.  But as I have said, the court will take up the matter itself at trial.  It is better to do this exercise before trial.

27.  I allow the plaintiff’s application for putting the questions to the expert as per the summons.

COSTS AND ORDER

28.  As to costs of the application, the plaintiff admits that the costs of the application should not be allowed because of the conduct of the solicitor in the correspondence.  However, the plaintiff asks for cost for today’s hearing, as the defendants should have known the grounds for the application.  The defendants asked for costs for leave for the plaintiff to put in the witness statement. The normal rule of the costs following the event should apply in accordance with O.62, RHC. However, this Court will also take into consideration of the conduct of the parties as costs are a matter of discretion. See O.62, r.5.  Since the plaintiff has conceded to disallow the costs before the written submissions, those costs would be taken out.  The costs of this hearing, with counsel’s certificate, will be assessed summarily at $45,000, which is arrived at by deducting the agreed deductible costs and a discount of 40% of the remaining including the unreasonable conduct in the handling of this matter.

29.  I shall now make an order in terms as follows:

a. Leave be granted to the plaintiff as per paragraphs 1 and 2 of the summons;

b. Costs of this application, including the costs of today’s hearing be as per paragraph 28, to be paid by the defendants within 14 days from the date hereof.

30.  We shall now deal with the Case Management Conference.

31.  The matter be adjourned to 9:30 am on 23 December 2015 for the 5^th Case Management Conference, with directions as follows:

a. The parties shall file and serve the Listing Questionnaires informing this Court whether they are ready for trial;

b. Counsel’s estimates as to the length of the trial; and

c. Costs of this Case Management Conference be in the cause.