LAU CHUN HUNG v. LAU YUET WAH, the executrix of the estate of AU-YEUNG YUET YING aka AU YEUNG YUET YING, the Deceased, and in her own capacity AND ANOTHER

DCMP 5762/2023

[2024] HKDC 1074

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 5762 OF 2023

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BETWEEN

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DECISION ON COSTS

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Introduction

1.  The Plaintiff, the 1^st Defendant and the 2^nd Defendant are siblings and are co-owners of the property situate at Flat H on 7/F, Block 3, No 13 Tai Man Street, Neptune Terrace, Hong Kong (“Property”). By the Originating Summons (subsequently amended with cosmetic changes), the Plaintiff sought an order for vacant possession of and an order for sale of the Property, with ancillary directions.

2.  At the first hearing of the Originating Summons on 14 June 2024, the 2^nd Defendant indicated he was neutral to the application and wanted no further involvement in the proceedings. I noted that the 1^st Defendant did not oppose an order for sale per se, and the differences between her and the Plaintiff were narrow. I thus invited the Plaintiff and the 1^st Defendant to try to agree on the terms of the order, instead of incurring further costs to have the matter adjourned for substantive argument.

3.  Eventually the parties sensibly agreed on the terms of the order and I made an order along those terms, with the issue of costs to be reserved and disposed of on paper. This is my decision on costs after considering the parties’ written submissions.

Background

4.  The Property used to be solely owned by the siblings’ late father, Mr Lau Bing Chee. The father passed away on 25 April 2013. In his will dated 23 May 2021, he bequeathed the Property to his wife, Ms Au Yeung Yuet Ying (the “Mother”), and the three siblings in four equal shares.

5.  An assent executed by the Mother and the siblings dated 15 March 2014 was registered with the Land Registry (“Assent”), and from that date onwards, the Mother and the three siblings held the Property in tenants-in-common in equal shares, ie ¼ each.

6.  At the material time the Mother and the 1^st Defendant resided in the Property. The Mother died on 3 May 2020, and probate of her estate was granted to the 1^st Defendant. According to the probate, the 1^st Defendant is the sole beneficiary of the Mother’s estate, including the Mother’s ¼ share in the Property.

Events Leading to this Action

7.  In November 2022, the siblings first discussed the administration of the father’s estate, and the Plaintiff proposed selling the Property and distributing the sale proceeds, or having the 1^st Defendant to buy out the Plaintiff’s share.

8.  It is the Plaintiff’s case that:-

(1) In May 2023, the 1^st Defendant told the Plaintiff she would not want to sell the Property and would buy out the Plaintiff’s share.

(2) However, subsequently in June 2023, the 1^st Defendant changed her mind and proposed selling the Property instead. On around 5 June 2023, the three siblings agreed to sell the Property in the open market with an estimated price of HK$6 million.

(3) On 14 June 2023, he attended the Property and requested the 1^st Defendant to give him the keys. On 5 August 2023, the 1^st Defendant declined the Plaintiff’s request to move in and said the Property would be sold.

(4) The Plaintiff was informed by the Housing Authority that it had not been informed of or consented to the Assent. The Plaintiff thus instructed his solicitors to write to the 1^st Defendant on 1 November 2023, demanding (a) a full account of the estate of the father; (b) an explanation of the steps taken by the 1^st Defendant in selling the Property; (c) rectification of the record with the Housing Authority.

(5) The 1^st Defendant issued two holding replies without substantive response to the letter dated 1 November 2023. Given that the matter had dragged on for a long time, the Plaintiff had no alternative but to commence this action on 12 December 2023.

9.  On the other hand, the 1^st Defendant’s case is that:-

(1) Her two brothers moved out of the Property in the 1990s. After the father passed away, the siblings agreed that the Mother could continue to live in the Property and the 1^st Defendant could also live there rent-free to take care of the Mother. The Plaintiff has used part of the Property to store his personal belongings.

(2) After the Mother passed away, the 1^st Defendant said her two brothers could move into the Property but none of them indicated any intention to do so.

(3) After the Plaintiff first indicated his desire to cash out and have his share in the Property realized in November 2022, the 1^st Defendant made various enquiries with the Housing Authority.

(4) In May 2023, the 1^st Defendant did not outright accept or reject the Plaintiff’s proposal for her to buy out the Plaintiff’s share. After checking the estimated price of the Property, she informed her siblings that she could not afford to buy out the Plaintiff’s share.

(5) On 5 June 2023, the siblings agreed to sell the Property with an estimated price of HK$6 million, and all siblings could engage estate agents to sell the Property. The Plaintiff could move into the Property from end of July 2023 until it was sold.

(6) On 14 June 2023, when the Plaintiff and his wife attended the Property, they were hostile and the Plaintiff’s wife video-recorded the interior of the Property, causing the 1^st Defendant to feel that her privacy was being infringed.

(7) On 16 June 2023, the 1^st Defendant engaged an estate agent (Hang Fung Real Estate Agency (HK) Ltd) to handle the intended sale of the Property, and she also wanted to have the Property sold as soon as possible. She informed her siblings of the engagement of the agent and the sale advertisement the next two days.

(8) The 1^st Defendant passed one set of keys to the Plaintiff. On 1 August 2023, the Plaintiff went to the Property and proposed various re-arrangements of the furniture and electric appliances. Being concerned that the Plaintiff would continue to create trouble, the 1^st Defendant became more eager to have the Property sold.

(9) On 4 August 2023, the 1^st Defendant engaged another estate agent (Winner Estate Agency) to sell the Property. The 1^st Defendant did have regular communications with both estate agents from June to December 2023.

10.  It is common ground that the 1^st Defendant has not eventually responded to the Plaintiff’s solicitors’ letter dated 1 November 2023. The Plaintiff took out this Originating Summons on 12 December 2023.

Settlement Offers

11.  After the commencement of this action, both the Plaintiff and the 1^st Defendant have proposed settlement offers. On 12 March 2024, the Plaintiff issued an open letter to the 1^st Defendant, containing among others the following settlement terms:-

(1) The 1^st Defendant do deliver up vacant possession of the Property and all the title deeds and documents of the Property to the Plaintiff.

(2) The 1^st Defendant do pay all government rent, rates, management fees and other outgoings of the Property until delivery up of vacant possession of the Property.

(3) The conveyancing procedure be committed to the Plaintiff’s solicitors.

(4) Costs of HK$30,000 be paid by the 1^st Defendant to the Plaintiff, or the issue of costs to be determined by the court.

12.  The Plaintiff’s aforesaid offer was not accepted. On 14 May 2024, the 1^st Defendant counter-proposed among others the following settlement terms by way of a “without prejudice save as to costs” letter (which were also not accepted by the Plaintiff):-

(1) Upon the signing of the preliminary sale and purchase agreement, the title deeds and documents of the Property be delivered directly to the purchaser’s solicitors.

(2) All rate, government rent, management fees, expenses incurred under notices and orders issued by the Buildings Department and all other outgoings of the Property be borne by the owners according to their percentage of ownership.

(3) The 1^st Defendant shall have the right to continue to reside in the Property until completion of the sale, and she shall pay rent to the Plaintiff and the 2^nd Defendant for her residence.

(4) The Plaintiff shall bear the 1^st Defendant’s costs in the proceedings.

Determination of Costs

13.  I bear in mind that in exercising my discretion as to costs, I should take into account the matters as specified in Order 62 rule 5 of the Rules of the District Court.

14.  Insofar as costs are concerned, a most relevant matter in this case is whether it was necessary for the Plaintiff to start this action in the first place. The Plaintiff contends that his request to move into the Property was rejected by the 1^st Defendant, and that the 1^st Defendant has failed to respond to his solicitors’ letter dated 1 November 2023. As such, he had no choice but to commence this action.

15.  However, from the available evidence, in particular the WhatsApp messages produced by the 1^st Defendant, I have the following observations:-

(1) On 5 June 2023, the three siblings already reached an agreement to sell the Property.

(2) The 1^st Defendant has not resiled from the agreement. On the contrary, she has taken real and practical steps in arranging for the sale of the Property. She has engaged two property agents and she has been in regular communications with them.

(3) The 1^st Defendant has not forestalled the Plaintiff or the 2^nd Defendant from using their own efforts in attempting to sell the Property. On the contrary, the Plaintiff has not adduced any evidence to say there has been any endeavour on his part to sell the Property.

(4) It also does not appear to me that the Plaintiff’s desire to move back into the Property was genuine, given the parties’ decision to sell the Property imminently. In any event, I do not see any evidence that the 1^st Defendant has declined the Plaintiff’s request to move into the Property, and she has given a set of the keys to the Plaintiff.

(5) As to the letter dated 1 November 2023, the 1^st Defendant was back then not legally represented and it was perfectly understandable that she required more time to respond to it. In the said letter, the Plaintiff asked for an account of the father’s estate and rectification of the records with the Housing Authority, which clearly were red herrings given that the father’s interest in the Property had long been distributed to the Mother and the siblings, and that the fact that the Property had not been sold yet has nothing to do with the Housing Authority records. The Plaintiff has always known that the 1^st Defendant had engaged property agents in trying to sell the Property.

16.  As the 1^st Defendant has not reneged on her agreement to sell the Property and she has taken steps to arrange for the sale of the Property, I consider that it was not necessary for the Plaintiff to commence this action.

17.  In the Originating Summons, the reliefs sought by the Plaintiff are wider than what the siblings agreed on 5 June 2023. For instance, the Plaintiff sought an order for the vacant possession and the title deeds and documents of the Property, and an order that the 1^st Defendant shall be responsible for all government rent, rates, management fees and other outgoings. The Plaintiff also requested that the sale of the Property be conducted by his solicitors.

18.  While the 1^st Defendant chose to contest the Originating Summons, she has made it clear in her affirmation that she does not object to an order for sale. Rather, her primary objections relate to those other reliefs sought by the Plaintiff. The differences between the Plaintiff and the 1^st Defendant are also reflected in their respective settlement proposals as set out above.

19.  Eventually, in the order that I made (as agreed between the Plaintiff and the 1^st Defendant), the sale of the Property was committed to the 1^st Defendant’s solicitors. Vacant possession of the Property would be delivered only on the completion date of the sale transaction. All government rent, rates, management fees and other outgoings are to be borne by the three siblings in accordance with their percentage of ownership.

20.  In other words, while the Plaintiff did obtain an order for sale, the 1^st Defendant has never objected to it. The Plaintiff did not obtain other reliefs sought by him, and it was the 1^st Defendant’s proposals that found their way into the final order.

21.  Considering that the Plaintiff has jumped the gun in commencing this action and that at the end of the day the 1^st Defendant’s position mostly prevailed, I order that the Plaintiff do pay the 1^st Defendant’s costs in this action (including the costs of the hearing on 14 June 2024) on party and party basis, to be taxed if not agreed, with no certificate for counsel. As much as I have been assisted by Mr Lo’s submissions for the 1^st Defendant, I do not think the costs argument justifies the engagement of counsel, especially when the hearing of the Originating Summons itself was attended by solicitors.