HONG ALEX YEE SHING v. SHEK KAM MAN AND OTHERS

LDBM 100/2016

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 100 OF 2016

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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 discontinuance by the applicant by way of a Notice of Discontinuance dated 30 September 2016 (“the Notice”).

Background

2.  The applicant is the owner of a unit in Kensington Mansion and the ex-chairman of the Incorporated Owners of Kensington Mansion (“IO”).  The 5 respondents are members of the management committee of the IO (“MC”) purportedly elected by the owners at an owners’ meeting held on 4 February 2015 (“Feb 4 OM”).  By a judgment handed down in LDBM34/2015 on 28 January 2016, the Feb 4 OM as well as the appointment of the respondents as MC members were declared to be invalid.

3.  On 21 May 2016, the applicant filed the Notice of Application in this case against the respondents, quoting 10 incidents in support, and asked for an order that “due to their … unreasonable acts, improper procedures and resolutions made during the period from 4^th February 2015 to 28 January 2016, Mr Shek and other respondents shall bear the personal liability and the associated cost incurred which are required to be reimbursed to the Incorporated Owners of Committee.  Total cost: $435,464.”

4.  The respondents had filed a Notice of Opposition in joint names on 10 June 2016.

5.  At the first call-over hearing on 18 July 2016, this court had raised with the parties as to the locus of the applicant to sue for damages which should be due to the IO instead.  The call-over hearing was then adjourned to enable the applicant to seek legal advice on the issue of locus.

6.  At the resumed hearing on 24 August 2016, the applicant informed this court that after seeking legal advice, he had decided to proceed with this case but asked for this case to be transferred to the judge who had been dealing with LDBM34/2015. The application to transfer this case is refused and dismissed.

7.  By a summons filed on 5 September 2016 (“Summons”), the respondents asked for the claim to be struck out on the ground of locus.  Upon an indication by the applicant that he opposed to the Summons, case is adjourned to 19 October 2016 for argument and directions were given for parties to file and serve witness statement in support and in opposition of the Summons.

8.  Solicitors acting for the respondents had filed the Notice to Act on 17 September 2016 as well as a summons to withdraw the Summons (“Summons dated 17 September”).  On 24 September 2016, solicitors for the respondents filed another summons seeking leave to withdraw the Summons dated 17 September.  At the hearing on 28 September 2016, leave is granted for the respondents to withdraw the Summons dated 17 September and for costs to be paid to the applicant for the Summons dated 17 September and 24 September. 

9.  At the hearing on 28 September 2016, time had also been extended for the parties to file their witness statement in relation to the Summons (“the Statement”), ie the respondents have to file and serve their Statement on or before 3 October 2016.

10.  On 30 September 2016, the applicant filed the Notice with this Tribunal.  Since there is a dispute as to what happened on 30 September 2016, I shall deal with this in more detail later.

11.  When a clerk of the solicitors for the respondents attempted to file the Statement with this Tribunal on 3 October 2016, this was refused on the ground that the Notice had been filed by the applicant on 30 September 2016.

12.  Mr Leong for the respondents (“Mr Leong”) had received an email from the applicant on 3 October 2016 enclosing a copy of the Notice.  Another copy of the Notice was being sent to Mr Leong by post on the same day which was received on 4 October 2016.

13.  By a summons filed on 17 October 2016, the respondents ask for costs of this case. 

Costs upon Discontinuance

14.  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.”

15.  In the case of Sino Estates Management Ltd v Leung Wai Piu LDBM238/2004 (unreported 28 May 2010), when dealing with the question of costs on discontinuance for an application in the Lands Tribunal, this court had made the following findings: -

“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.”  

16.  The applicant has no quarrel as to costs be to the respondents but takes issue as to:

a)  Costs should be allowed up to 30 September 2016 only and not 3 October 2016 as suggested by the respondents; and

b)  The quantum of costs on summary assessment.

Costs up to 30 September 2016

17.  It is the applicant’s evidence that he had called Mr Leong at around 4pm on 30 September 2016 but could not reach him.  So he had told the assistant of Mr Leong about the filing of the Notice that day and asked Mr Leong to withhold any work in the preparation and filing of the Statement.  He had also “reminded the assistant to ask Mr Leong to return my call but in vain” (page 6 of A’s witness statement filed on 22 November 2016). 

18.  Mr Leong submitted that in view of the time allowed at the hearing on 28 September 2016, the respondents basically only had 3 days (ie 28^th, 29^th and 30^th September 2016) to prepare the Statement since 1^st October 2016 was a Sunday whilst 2^nd October 2016 was a public holiday.  The Statement was finalised and signed by the 1^st respondent for and on behalf of all the other respondents on 2^nd October 2016.  So costs had been incurred on the preparation of the Statement.  Even though the applicant had on 28^th and 29^th September 2016 approached Mr Leong for a settlement discussion suggesting discontinuance of the case, no settlement had been reached nor any notice of discontinuance was received.  On 30 September 2016, when the applicant called, he was only talking to the receptionist who had requested the applicant to call back but the applicant had never done so.  Mr Leong only received the email from the applicant after a clerk of his firm had attempted to file the Statement with the Lands Tribunal.  Under such circumstances, Mr Leong submitted that the respondents should be entitled to have their costs up till 3 October 2016.

19.  Having considered the submissions and evidence of the parties, I agree with the respondents that they should have costs of this case up till 3 October 2016.

20.  It is the duty of the applicant to serve the Notice on the respondents.  Rule 7(1)(a) of the LTR stipulated that :

“(1)  Service of a document required to be served on any person may be effected---

(a)  if the person is acting by a solicitor, by delivering it to or leaving it for the solicitor or sending it by ordinary post addressed to the solicitor, at the address for service or at his place of business.”

21.  By calling Mr Leong on 30 September 2016 cannot be accepted as a valid service of the Notice.  The fact that the applicant had conveyed the message to the assistant of Mr Leong did not satisfy the requirement of service of the Notice as required under Rule 7(1)(a) of the LTR.  I failed to see how the applicant can successfully argue that Mr Leong should withhold any further action without seeing the actual Notice being served.

22.  In any event, the call made by the applicant on the 30^th September 2016 cannot change the fact that the Statement had already been prepared and costs had been incurred as a result.  I do not accept that the costs incurred for the Statement before 30 September 2016 should be disallowed.

23.  I find as a fact that the Notice was only served on 3 October 2016 and the respondents are entitled to have the costs of this case up till then.

Summary Assessment of Costs

24.  The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512. It is sufficient to refer to the headnote of the reported judgment at pp.512-513 as follows:

“(2)  As in an ordinary taxation, under Order 62, rule 28(2) the Rules of the High Court (Cap 4A) (the RHC), in a summary assessment, party-and-party costs were allowed only if they were “necessary or proper” for the attainment of justice or for enforcing or defending the rights of the receiving party.  Pursuant to the Practice Direction 14.3, the court adopted a broad-brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in Order 1A of the RHC, even if there was no challenge to individual items. 

(3)  A summary assessment required a two-stage approach.  If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the costs reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its cost was reasonable.  A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty.  The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary.”

25.  Having perused the Statement of Costs submitted by the respondents, I agree with the applicant that the overall costs of $49,260.50 appeared to be disproportionate and unreasonable. 

26.  The costs of the respondents can be divided into 2 parts, from the very beginning of these proceedings till they are legally represented (“Part I”) and after they are legally represented (“Part II”).

27.  For Part I, since they are unrepresented and without any proof of pecuniary loss in doing any work to which the costs relate, I am satisfied that their hourly rate should be fixed at $200 an hour in respect of the time reasonably spent in this litigation (see Hong Kong Civil Procedure 2017 Vol 1 at Para. 62/App/56). R5’s claim for $350 per hour is disallowed.

28.  Even though the applicant had taken issue as to the photocopying charges at $1 per page, I accept this is a reasonable figure in line with the scale of costs (see Hong Kong Civil Procedure 2017 Vol 1 at Para. 62/38).  I also agree with the respondents’ contention that each of them should be entitled to keep a copy of each document.

29.  And I also find the challenge by the applicant against the time spent by the respondents in the preparation and perusal of documents unjustified.  Each of the respondents has to read the Notice of Application and supporting witness statement filed by the applicant and I find 2 hours each is reasonable.  Time spent in preparing their joint Notice of Opposition and affirmation in reply by R3 is also a must but a bit on the high side.  I find 2 hours should be sufficient given the length of the 2 documents.

30.  Other than the above, I am satisfied that all other items particularised in the Statement of Costs for Part I is reasonable.

31.  The costs for Part I should be summarily assessed at $3,715.

32.  As for the costs of Part II, I find the professional work of the legal representative for the preparation of document, perusal of document and to attend 2 hearings, including taking instructions before all these works, is necessary and reasonable.  Yet, I do not accept that 2 solicitors need to be involved with Mr Lam of almost 20 years of experience and Mr Leong with 4 years experience.  Mr Leong explained that Mr Lam is only involved in approving all professional works done by him.  Given the nature and complexity of this case, I find with Mr Leong’s experience, he is more than competent to deal with the same on his own without the necessity of Mr Lam’s endorsement.  Mr Lam’s costs should be disallowed.

33.  A total of 26 hours of professional work is claimed under Mr Leong’s name.  The work involved after Mr Leong came into the picture in this case includes perusal of documents, taking initial instructions, the preparation of the witness statement in support of the striking out application, an affirmation in support of the application for costs as well as attending 2 hearings in court (2 hours in total).  I find a claim of 26 hours including the court hearing is far too excessive and should be adjusted down to 12 hours.  The other heads of claim under disbursements and manual work by litigation clerk is allowed except with the adjustment of 2 copies of photocopying charges for each of the documents involved.  The traveling expenses for the solicitor to attend the hearings is also disallowed.

34.  The costs for Part II is summarily assessed at $20,815.50.

Order

35.  Costs of this case be to the respondents, summarily assessed at $24,530.50.