THE INCORPORATED OWNERS OF BONHAM CREST v. LAI FELIX YIRID AND ANOTHER

LDBM 78/2015

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 78 OF 2015

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D E C I S I O N

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1.  This is the application by the applicant (“IO”) for costs thrown away by the amendment of the counterclaim of the respondents be to the IO in any event.

Background

2.  The IO filed the Notice of Application in this case on 21 April 2015 alleging a breach of the Deed of Mutual Covenant (“DMC”).  The respondents filed a Notice of Opposition on 13 May 2015 (“NOO”) with a counterclaim for damages against the IO for its failure to discharge its duties (“C/C”) with particulars as follows (B/23-24):

a)   Refusing to refund the decoration deposit of HK$10,000 to the respondents upon completion of the decoration of the respondents’ premises (“the Premises”) (“Original §2a);

b)   Failing to act reasonably in processing the application from the respondents for a phone cable route to be installed for the purpose of a fixed line telephone for the Premises (“the Cable Route Application”) (“Original §2b”);

c)   Failing to render assistance to PCCW, the service provider in the Cable Route Application and failed to attend site inspection meetings with PCCW on a number of occasions (“Original §2c”);

d)   Failing to follow the guidance in the “Code of Practice for the Provision of Access Facilities in Buildings for the Supply of Telecommunications and Broadcasting Services” issued by the Office of the Communications Authority (“Original §2d”);

e)   Having acted in extreme bad faith in the processing of the Cable Route Application and launching a smear campaign against the respondents by lodging complaints with different government departments (“Original §2e”);

f)   Failing to disclose relevant information conducive to reasonably resolving the issues in the Cable Route Application (“Original §2f”);

g)   Having abused the 999 emergency services (“Original §2g”); and

h)   Having abused the Lands Tribunal judicial process by filing this application prematurely and unnecessarily (“Original §2h”).

3.  The respondents counter-claimed for the refund of the decoration deposit of $10,000 together with damages caused to the respondents for the IO’s failure to discharge its duty.

4.  The IO had served a Request for Further and Better Particulars of the NOO and C/C on 9 September 2015 (“1st Request”).  The respondents had filed a reply to it on 2 October 2015 (B/32-38).

5.  Reply and Defence to C/C was filed by the IO on 30 September 2015 which was amended on 20 October 2016 (B/45-60). The respondents had filed their Reply to Defence to C/C on 16 October 2015.

6.  The IO served another Request for Further and Better Particulars of the Reply to Defence to C/C on 28 December 2015 (B/68-72) and the respondents had answered the same on 27 January 2016 (B/39-44) (“2nd Request”). 

7.  At the hearing on 29 August 2016, upon this Tribunal indicating that most of the items in the C/C may not fall within the jurisdiction of this Tribunal, the respondents seek, and was granted leave to amend the C/C.

8.  In the Amended C/C filed on 26 September 2016 (“Amended C/C”) (B/23-31), the original particulars of claim were deleted and replaced by the followings:

a)   unreasonably delayed in the processing of the Cable Route Application with the Original §2b, §2c and §2f as particulars in support (“Cable Route Application Claim”);

b)   engagement of the law firm in writing a pre-action letter to the respondents dated 15 October 2014 is not authorised by the management committee (“MC”) or at any owner’s meeting;

c)   annual general meetings of the IO (“AGM”) were not held within 12-15 month interval in breach of Paragraph 5(1) Schedule 2 Building Management Ordinance (“BMO”) and no election of the MC members since 14 August 2014, hence the validity of the incumbency of the MC members became doubtful; and

d)   since the validity of the incumbency of the MC members are doubtful,

(i) the MC meeting held on 29 October 2014 appointing the law firm in this case was not in line with the BMO;

(ii) the resolution passed at the Extraordinary General Meeting on 18 December 2014 (“EGM”) on the respondents’ breach of DMC was not in line with the BMO; and

(iii) the resolutions passed at the AGM on 7 January 2015 for the litigation of this case was not in line with the BMO.

9.  The respondents counterclaimed for:

a)   compensation for inconvenience and anxiety caused to the respondents due to the IO’s unreasonable delay;

b)   damages caused due to the wasted telephone line fee and wasted costs for booking PCCW to attend the meetings; and

c)   declaration that the resolutions passed at the EGM and AGM pleaded are not in compliance with the BMO. 

IO’s Contention

10.  Mr Chan for the IO submitted that the Amended C/C had abandoned the original C/C in total and had added 9 new paragraphs.  The respondents had in effect abandoned the C/C and all prayers.  Relying on Order 62 rule 3(7) of the Rules the of High Court (“O 62 r 3(7)”), the IO should be entitled to have the costs occasioned by the claim withdrawn.  And given the fact that the Original §2b remains in the Amended C/C, the IO is only seeking to have costs thrown away by the Amended C/C instead of costs of the whole action under O 62 r 3(7). 

11.  In the written submissions filed, Mr Chan stated that:

“To counteract the original C/C, the following pleadings had been prepared by the parties:

a) Original Defence to C/C (B/52-53);

b) Request and answers to C/C (B/36, 37 & 43);

c) Reply to Defence to C/C (B/61-67);

d)   Reply to Request for Further & Better Particulars of the Reply to Defence to C/C (B/73-77). ”

Mr. Chan submitted that costs caused by the amendment of the original C/C shall include the abandonment of the above pleadings.

Respondents’ Reply

12.  The respondents object to the application for costs thrown away by the amendment of the C/C on the following grounds:

a)   the IO had not apply to strike out any pleadings in the original C/C in the first place;

b)   the IO took almost 100 days out of time to apply for leave to file the Defence to C/C;

c)   the IO had served the 1st & 2nd Request on various parts of the C/C;

d)   the respondents had not abandoned their original C/C and still maintained the same stance that the IO had failed to discharge their duties but just had specifically pleaded the detail particulars in support;

e)   the deletion of those heads of claims that may not be within the jurisdiction of this Tribunal is to enable the whole matter to continue in this Tribunal;

f)   the question of whether the claim for decoration deposit falls within the jurisdiction of this Tribunal was not raised by the IO until 2 years after the C/C was being filed; and

g)   in amending the C/C, the respondents just followed the Tribunal’s directions and has not conducted themselves in any way that would warrant a cost penalty.

Discussion

13.  “The usual penalty imposed as a term for giving leave to amend is that the party seeking the amendment should pay in any event all the costs incurred and thrown away by the amendment and the costs of any consequent amendment” (Hong Kong Civil Procedure 2017 Vol.1 at 20/8/51).  Question of costs are matters of judicial discretion and in the exercise of such judicial discretion, to do justice to the parties according to the circumstances of the case is the primary consideration.

14.  As can be seen from the particulars of the C/C and the Amended C/C recited at §2 and §8 above, there is no doubt that the amendment is both fundamental and substantial. Apart from the Original §2b, §2c and §2f, all other heads of claims in the C/C had been abandoned with new allegations added in the Amended C/C.  The deletion of those heads of claim in the C/C is a fact that cannot be ignored irrespective of the intention behind it.  Even though the respondents may argue that the cause of action remained the same, i.e. the IO’s failure to discharge their duties, the substance and the basis in support are wholly different.  The IO is required to deal with the fundamental changes in the Amended C/C, to consider and to answer the newly pleaded case.  And as a result of the amendment, the time and effort spent in dealing with the documents named by Mr Chan at §11 above will become futile and wasted.  Under such circumstances, I fail to see why should the IO be deprived of the costs thrown away as a result of the amendment.

15.  The fact that the IO had not applied to strike out the C/C is neither here nor there in the consideration of the costs thrown away by the amendment of the C/C.  The respondents should be the only one to blame for having filed the C/C which required to be amended substantially in order to safeguard their claim.

16.  The 1^st and 2^nd Request served by the IO is a must then since these were served before the jurisdiction point taken.  The IO is entitled to ask for further and better particulars of the C/C and had a better understanding of the respondents’ claim before any Defence to C/C can be filed.  As long as the C/C still stands, the IO must deal with it and costs incurred as a result is inevitable.

17.  Nor is it relevant that leave for amendment had been granted by this Tribunal.  Leave to amend is a procedural requirement before any amendment of pleadings can be done. By the mere fact that leave had been granted, the respondents cannot equate this as a direction from the court requiring them to amend their pleadings. Such a conclusion is putting the cart before the horse.  Since the respondents had decided to seek leave to amend the C/C upon being alerted of the jurisdiction issue, the respondents cannot evade the consequences in costs as a result of the amendment.

18.  The fact that the IO had delayed in their filing of the Defence to C/C or to raise the jurisdiction issue had nothing to do with the decision to amend the C/C by the respondents.  I fail to see how could these be relevant in the consideration of the costs thrown away by the amendment.

19.  Having considered the above, the IO should be entitled to have the costs thrown away by the amendment of the C/C.

The Order

20.  It is ordered that:

a.   The respondents do pay the applicant costs thrown away by the amendment of the Counterclaim, to be taxed if not agreed at District Court scale and to be paid forthwith;

b.   Costs of and occasioned by the Summons including all costs reserved be to the applicant, to be taxed if not agreed at District Court scale and to be paid forthwith.