THE INCORPORATED OWNERS OF PEARL GARDENS HONG KONG AND OTHERS v. GILES WONG

LDBM 136/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 136 OF 2014

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DECISION ON COSTS

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1.  This is an application by the respondents for costs of these proceedings upon the discontinuance by the 1^st applicant by way of a Notice of Discontinuance dated 6 August 2015.

Background

2.  The 1^st applicant is the Incorporated Owners of Pearl Gardens Hong Kong (“IO”).  The 2^nd applicant is one of the directors of the 5^th applicant, who is the registered owner of Flat 3F.  The 3^rd applicants are the directors of New Modern Limited, the registered owner of Flat 5F.  The 4^th applicants are the registered owners and occupants of Flat 6F.  The respondents are the registered owners of Flat 4F.

3.  Since about February 2013, the IO and Synergis Management Services Limited (“Synergis”), the management company of Pearl Gardens, have received numerous complaints from many owners within Pearl Gardens including the 2^nd to 5^th applicants regarding continuous and excessive loud noises emanating from Flat 4F caused by radio and/or television and/or Hi-Fi and/or other electronic media.

4.  The noises were persistent in duration, lasting throughout the day from 7am to 11pm, and at unreasonable hours.  The 3^rd applicants and their family had to move out of Flat 5F due to the noise nuisance created by the respondents.  Between 25 February 2013 and 3 March 2014, the owners or management staff have had to formally report to the police on no less than 31 occasions to complain about noise nuisance emanating from Flat 4F.

5.  On 29 May 2014, the applicants commenced the present proceedings by filing a Notice of Application for breach of Deed of Mutual Covenant (“DMC”), seeking injunctive relief to restrain the respondents from emanating noise and excessive vibration which caused nuisance to other occupiers of Pearl Gardens.  The 2^nd to 5^th applicants also claimed damages for distress and inconvenience, loss in revenue, costs of relocation and letting out, as well as loss in rental income against the respondents.

6.  On 25 July 2014, the applicants filed an application for an interlocutory injunction against the respondents.  Directions were given for the filing of evidence and no date was fixed for substantive argument as the parties thereafter went into settlement negotiations. 

7.  On 6 August 2015, the IO has filed and served a Notice of Discontinuance with this Tribunal.  On 20 August 2015, the respondents has taken out an interlocutory application asking for an order that the IO do forthwith pay 25% of the costs of these proceedings (including the costs of the interlocutory application filed on 25 July 2014) up to the date of the Notice of Discontinuance.

8.  The IO has filed the 2^nd Affidavit of Leung Man Lai dated 6 August 2015 to explain the reason behind the decision to discontinue these proceedings, namely the IO and Synergis had received no further complaint from owners or occupiers regarding noise nuisance emitting from Flat 4F since around February 2015, so it was no longer necessary to seek an injunctive relief against the respondents.

9.  It is the submission of Ms. Lam for the IO that where the discontinuance of the proceedings is due to the matter having become academic, the court may depart from the general rule that a defendant is entitled to the costs of the action if the action is discontinued.

10.  Mr Leung SC for the respondents submitted that the IO should never be a necessary party to these proceedings in the first place and the IO had failed to discharge the burden of showing there is special circumstances in this case which justified a departure from the general rule.  Since there are still live issues to be determined in this case, the argument that the matter had become academic must fail.  In any event, it is not for the IO to decide whether the argument had become academic or not. 

Costs upon Discontinuance

11.  Rule 27 of the Lands Tribunal Rules (“LTR”) allows this Tribunal wide discretion in the determination of the question of costs upon discontinuance as it thinks fit.  Rule 27 LTR provided that :

“(1) A party may, without leave of the Tribunal, discontinue the proceedings or withdraw any part thereof by serving a notice to that effect on the other party.

(2)   A party upon whom a notice mentioned in subrule (1) is served may, within 14 days of that service, apply to the Tribunal for an order for costs and, subject to the Landlord and Tenant (Consolidation) Ordinance (Cap 7), the Tribunal may make such order as it thinks fit.”

12.  Parties have no dispute about my findings in the case of Sino Estates Management Ltd v Leung Wai Piu LDBM238/2004 (unreported 28 May 2010) concerning costs on discontinuance for cases in the Lands Tribunal :-

“9. It is said by Keith J in Trend Publishing v Vivien Chan & Co (a firm) [1996] 2 HKLR 227 that :

‘It is well settled that the general rule is that a defendant is entitled to the costs of the action if the action is discontinued…But that is not an absolute rule. The rules recognise that there may be circumstances in which a plaintiff should be permitted to discontinue an action without having to pay the defendant’s cost.’

10. I found this general rule is applicable to cases in the Lands Tribunal and Section 27 of the Lands Tribunal Rules only stipulated the procedure that the Respondent have to apply for costs upon the Applicant filing the Notice of Discontinuance. It is then for the Tribunal to consider the question of costs and to make such order as it thinks fit, subject to the general rule stated above. I accept that the Respondent is not entitled to costs as of right.

11.     Yet, the burden is on the Applicant to show good reason for displacing the general rule governing costs upon discontinuance.”  

13.  It is also the recognised principles applicable to the determination of costs, where an action is discontinued, as set out in paragraph 21/5/12 of the Hong Kong Civil Procedure 2016 and the cases cited therein that:

“While the general rule is that a party withdrawing a claim should pay for the costs of the opposite party, the court has complete discretion in dealing with the issue of costs and to do justice between the parties. The general rule that a defendant is entitled to costs when an action is discontinued may be departed from in a case where the discontinuance of the proceedings is due to the matter having become academic, rather than to any acknowledgment by the plaintiff of likely defeat.”

Discussion

14.  The IO is relying on the fact that the matter between the IO and the respondents has become academic as a ground to justify a departure from the general rule that the party against whom the action was being discontinued should have costs of the proceedings.  The respondents disputed whether the matter has become academic.

15.  Having considered the submissions of the parties, I agree with the IO that the matter has become academic. 

16.  This is a case where the IO has acted upon complaints against the respondents for noise nuisance and the IO is asking for an injunctive relief in this case to stop the nuisance.  Given the fact that there were no more complaints since February 2015, the need for an injunction to restrain the respondents from making any noise nuisance is no longer necessary.  Since an injunction is no longer necessary, the matter as to whether there had been noise nuisance created by the respondents must have become academic as between the IO and the respondents.  These issues may still be alive as between the other applicants and the respondents and need to be resolved at trial.  But this is no longer the situation for the IO who is no longer seeking for the injunctive relief.  Since the complained act, which is the basis for the claim of injunctive relief had already ceased, even if the case were to proceed to trial, the IO will have difficulty in justifying why an injunction is still required.  And it would be a waste of time and costs should the IO elect to proceed under such circumstances.

17.  Parties had addressed this court on the merits of the IO’s case against the respondents. Whilst this is not the occasion for the merits of the case to be determined since the factual disputes has to be resolved after trial, the only observation to make is that in view of the number of complaints received by the IO and Synergis from a number of owners, it cannot be said that the IO does not have a case against the respondents.

18.  As for the argument that the IO was never a necessary party to these proceedings, I beg to differ.  The IO is duty bound to enforce the terms of the DMC and with the complaints lodged by the other owners, the IO should take action against the owner being complained of instead of leaving it to the respective owners to take action.  Even though the other applicants may have asked for an injunctive relief as well, without being involved in this case, the IO would not be in a position to enforce the court order even if an injunction is being granted against the respondents.  So to be involved in this case is what a responsible incorporated owner should do.

Order

19.  It is ordered that there shall be no order as to costs in these proceedings including the interlocutory application filed on 25 July 2014 as between the 1^st applicant and the respondents.

20.  Costs order nisi that costs of this costs application be to the 1^st applicant, with certificate for counsel, to be taxed if not agreed on District Court scale.  Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.