SPEEDY GAINER LTD v. THE INCORPORATED OWNERS OF MALAHON APARTMENTS AND ANOTHER

CACV 336/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL APPEAL NO. 336 OF 2004

(ON APPEAL FROM LDBM NO. 248 OF 2004)

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D E C I S I O N

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Preliminary Issue

1. The paying party in the taxation herein raised the question of indemnity principle as a preliminary issue to be decided by this Court.

Background

2. On 20 July 2004, the Applicant (“Speedy Gainer”) commenced LDBM 248/2004 in the Lands Tribunal against the 1^st Respondent (“the IO”) and the 2^nd Respondent (“the Manager”) for inspection of the books and accounts of Malahon Apartments.  The matter was heard by H.H. Judge Chan on 7 October 2004 and 2 November 2004.  The learned Judge, by a decision on 5 November 2003, dismissed the application with costs because he found that no valid request had been made by Speedy Gainer before action and as such, both the IO and the Manager were not obliged to allow an inspection.  Further, the notice of application under LDBM 248/2004 could not be regarded as a valid request at all.

3. Speedy Gainer took the matter to appeal under the present proceedings CACV 336/2004 (“the Appeal hearing”).  On 8 July 2005, the Court of Appeal unanimously dismissed the appeal with costs to be paid by Speedy Gainer to the IO and the Manager, to be taxed on party and party basis, if not agreed.

4. Pursuant to the costs order of the Court of Appeal, the IO filed its bill on 24 January 2006 (“the Bill”).

5. Taxation of the Bill was heard by me on 23 June 2006 and Mr. Ngo, for Speedy Gainer, raised a preliminary issue on the indemnity principle, namely, the total sums claimed under the Bill exceeded $100,000 and as such, the engagement of legal service in the Appeal hearing was null and void for breach of section 20A(2)(a) Building Management Ordinance (Cap. 344) (“BMO”):

“(2)	Any supplies, goods or services referred to in subsection (1) the value of which exceeds or is likely to exceed—
	(a)	the sum of $100,000 or such other sum in substitution therefor as the Authority may specify by notice in the Gazette; or
	(b)	… …

whichever is the lesser, shall be procured by invitation to tender.”

6. Upon consideration of all the evidence (including the privileged affirmation of Tse Yuen Ming dated 7 July 2006) authorities and submission from the parties, I have come to the conclusion that, on balance of probabilities, section 20A(2)(a) BMO has not been breached in the Appeal proceedings.  My reasons appear below.

(a)   There is before me evidence from the IO that the retainer between the IO and its solicitors firm was kept at the ceiling of $90,000 only.

“		美漢大厦業主立案法團
		管理委員會會議紀錄
日期：	2005年7月4日
時間：	下午七時正
地點：	香港告士打道250伊利莎伯大厦1樓百里祥海鮮酒家
出席：	主席：區懿明、秘書：鄧平、司庫：趙玉儀、委員：林港玲、劉福忠、龔美玲。
列席：	港深聯合物業管理有限公司：柳炳達、容雅儀、李炳寰
	董吳謝律師事務所：謝遠明律師、周鳳祥律師。
	彭耀光律師行：彭耀光律師
	張立群大律師
缺席：	羅國標、莊惠英、吳潔英、慕容國輝
紀錄：	鄧平
會議過程：
(一)	委員會一致通過2005年6月14日之會議紀錄（決議1）。
(二)	商討現時正進行的高院案件：
	(1)	……
	(2)	……
	(3)	……
	(4)	有關已勝訴案件LDBM 248/2004的上訴案件CACV 336/2004，已排期於2005年7月8日上午10時於高等法院上訴法庭聆訊，需時3小時。董吳謝律師事務所提出有3位大律師報價，分別為Maurice Chan、Alan Ng及Charles Wang，董吳謝律師事務所已書面訂出該聆訊，以當事人水平計算不逾90,000元包括大律師費用的收費。
……”

(b)   Mr. Ngo persuaded me to be skeptical about the aforesaid board minutes because “they were made to circumvent section 20A BMO”.  I must say that the burden of challenging the authenticity of a document is heavy especially when the allegation might amount to attempting to pervert the course of justice by making and using false document.  In light of the aforesaid board minutes, I do not think that Speedy Gainer, without adducing any evidence, has able to discharge such burden.

(c)   The job of Mr. Ngo has become even more difficult because of the privileged affirmation put before me.  The solicitor-in-charge has confirmed on oath of his retainer with the IO and produced the relevant office bill issued under the Appeal proceedings.

7. Having ruled that section 20A(2)(a) BMO has not been breached on balance, I do not have to consider the fall-back position of Mr. Ngo, i.e. the present taxation should be stayed pending the determination of the similar issue raised by other registered owner(s) of the Building against the IO and the Manager.

8. Finally, as to the complaint that the Bill asks for more than the sum of $160,000, how could it be resolved with the agreement of fee up to only $90,000?  The answer can be located in paragraph 62/App/3 of HKCP 2006 at page 959:

“… Where the recovering parties’ solicitors had agreed with their client that they would limit their charges to a certain sum, this ceiling is to be applied at the end of the taxation against the paying party and that the bill as drawn is not limited to this figure.

Where the recovering party has agreed with its solicitors on the amount of costs to be charged, that party is not entitled to recover upon taxation a sum larger than that agreed.  This is the indemnity principle.  However, when drawing up the bill for taxation, the solicitors are not limited by this ceiling.  Thus the amount of costs stated in the bill may be greater.  The amount allowed on taxation may not exceed the ceiling.  If it is the former case, the ceiling would apply and limit the amount recovered accordingly.”

Conclusion

9. In the circumstances, I rule against Speedy Gainer on the preliminary issue and direct that, subject to the ceiling of $90,000 (excluding interest and taxing fee), the taxation of the Bill is to be restored to be heard before me for 2 hours.  There will also be an order nisi that costs for the hearing on 23 June 2006 together with the costs of preparing the privileged affirmation are borne by Speedy Gainer to be dealt with at the end of this taxation, if not agreed.