METRO CITY MANAGEMENT LTD v. TSUI FEE HUNG VINCENT AND ANOTHER

CACV 328/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CIVIL APPEAL NO. 328 OF 2005

(ON APPEAL FROM HCA NO. 4327 OF 2003)

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HCMP 1893/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1893 OF 2005

(ON APPEAL FROM HCA NO. 4327 OF 2003)

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BETWEEN

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REVIEWS OF TAXATION

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Applications

1. There are 2 reviews of taxation before me under 2 related proceedings.

Background

2. Briefly, in 2000, Mr. and Mrs. Tsui purchased a property at Metro City.  The property enjoyed a flat roof and they erected a few retractable canopies (“the Canopies”) on the exterior wall of the property, covering part of the flat roof.

3. By HCA 4327/2003, the Management Company sought to remove the Canopies.  It was said that Mr. And Mrs. Tsui had been in breach of clauses B1, B2 and B9 of the relevant Deed of Mutual Covenant (the “DMC”).

4. In 2005, the trial judge ruled that there had been breach of B1, but not B2 and B9.  He gave judgment for the Management Company with costs.

5. Mr. Tsui took up B1 to appeal.  He was late and had to issue HCMP 1893/2005 to apply for leave out of time.  The Hon. Rogers VP granted him the leave and ordered that costs in the appeal.  CACV 328/2005 then began.  The Management Company opposed the appeal and further cross-appealed on B2 and B9.  In 2006, the Court of Appeal dismissed both the appeal and the cross-appeal.

(a) “IT IS ORDERED that:-

1.      the Defendants’ appeal be dismissed;

2.      the Plaintiff’s cross-appeal be dismissed; and

3.      there be an order nisi that the costs of the appeal be to the Plaintiff and the costs of the cross-appeal by way of Respondent’s Notice be to the Defendants.”

(b) The Hon. Rogers VP further commented:

“ 20.    In conclusion, therefore, I do not consider that there are grounds for differing from the conclusion reached by the judge.  This conclusion does not give me much satisfaction.  The defendants purchased the flat and the roof.  Clearly it was intended that the roof should be used.  Realistically if the roof were to be used for sitting out it would be inevitable that those doing so would need shade.  When it was put to Mr Leong that the plaintiff would have no grounds for objecting to the use of large sun umbrellas, whether standing independently or as part of an outdoor table, he did not seek to argue otherwise.  The court was shown a brochure produced when the flats in the development were sold.  Naturally, the document was excluded from having any contractual force, nevertheless, it clearly shows large plants on the relevant roofs and in one instance possibly some other form of shading.  If the plaintiff were to attempt to prevent the defendants from erecting any type of sun shade questions of derogation from grant would arise.  As it is, the present objection to the canopies demonstrate a vacillation on the part of the plaintiff.”

6. Mr. Tsui was not happy about the above costs order nisi and sought to vary it.  On 11 August 2006, the Court of Appeal ruled that:

“ 2.      Having considered the written submissions and taking into account the issues involved and argued on the appeal and the success and failure of each party in respect of those issues, we consider that the fair order to make in the circumstances is that the plaintiff should have two thirds of its costs on this appeal.”

7. Later, upon receiving further enquiries from Mr. Tsui, it was replied that:

“Your various letters have been placed before their Lordships.  I have been asked to draw your attention to the fact that when the court considers orders as to costs it considers all the costs in relation to the matter in question.  As such, when reviewing the order nisi, the court considered the effect of the order in relation to the costs of the appeal and cross-appeal, which were heard together.

On taxation a litigant who is not legally represented is only able to recover a fraction of the amount in costs which would be allowed to a legally represented litigant.  Because of this difference in the amount allowed on taxation, the effect of the order absolute made on 11 August 2006 was in all likelihood to reduce the net amount which the appellant would have to pay the respondent.

Since order absolute in relation to costs has been made, the court will not entertain any further correspondence in the matter.”

8.  The matter ended there leaving the 3 taxations between the parties.  Costs of the Management Company under HCA 4327/2003 were settled and paid.  As to the remaining 2 bills, I sum up their position in the followings.

HCMP 1983/2005

9. The bill under HCMP 1983/2005 is a small one concerning a sum less than $50,000 because it only touches on Mr. Tsui’s leave to appeal out of time.  I taxed it on 12 October 2007 and directed that:

(a)       Mr. Tsui will be required to pay two thirds only in line with the costs order absolute.

(b)       No allocatur shall be issued unless the Management Company will satisfy this Court that the indemnity principle has not been breached.

(c)       Costs of taxation made nisi.

Mr. Tsui applied to review the same.  In essence, he told this Court that the Management Company and its solicitors were unreasonable during the negotiation of the appeal bills.  As such, I should deprive them from interest and award him costs of the review.

CACV328/2005

10. The Bill covering CACV 328/2005 is a much larger bill for over $0.6 m.  I dealt with it on 2 days, 12 October 2007 and 24 January 2008.  On the 1^st hearing day, I ruled a preliminary question regarding the scope of the costs order in CACV 328/2005.  The ruling was against the Management Company because I took the view that it was not entitled to the costs of the cross-appeal.  I explained that:

(a)       In the costs order absolute, costs of cross-appeal were no longer mentioned.  As a matter of usual rule, there was no order relating to the costs of cross-appeal.  Probably, that was why Mr. Tsui, after the making of the costs absolute, kept writing to the Court complaining about the same.

(b)       The Court of Appeal varied the costs order nisi because both sides succeeded party and failed partly.  A “set-off” was inevitable.  To relieve the job of the taxing master, the costs order made previously in favour of Mr. Tsui, i.e. costs of the cross-appeal to Mr. Tsui, was used to “exchange” for one third of the costs against him.

Taxation of the CACV 328/2005 bill went on upon such basis.  Further, since the bill was prepared on the basis that the Management Company was entitled to the whole costs of appeal (i.e. the appeal as well as the cross-appeal) I made an appointment that costs of the cross-appeal took about 40% of the time and effort spent by the Court, the solicitors and Counsel for items charged for both the appeal and the cross-appeal. 

11. Upon conclusion of the taxation on 24 January 2008, I further directed, inter alia, that:

(a)       The Management Company shall submit evidence in relation to the indemnity principle within 28 days.

(b)       Costs of taxation made nisi, and to become absolute within 28 days after the decision of this Court regarding whether the indemnity principle has or has not been breached.

(c)       Unless otherwise ordered by this Court, allocatur will be issued within 28 days thereafter.

12. Anyway, the Management Company also applied to review the taxation.  To sum up, it disagreed with my said interpretation on the costs order absolute of the Court of Appeal.  My apportionment of 40% effort spent by the parties on the cross-appeal was also challenged.  Finally, it was said that I should not have taxed off so much of the counsel fees.

Decisions

13. I heard the substantive reviews of taxation on 5 May 2008.  Mr. Tsui appeared in person and Mr. W. Wong of Counsel represented the Management Company.  Having considered all the evidence authorities and submission from the parties, I decline to review any of my decisions made at the taxation of the two bills.  My reasons appear in below.

Reasons

14. With respect, I am not persuaded to change my ruling on the preliminary issue made.  My views on paragraphs 10(a) and (b) are maintained.  I should further add the followings.

(a)       In upholding the decision down below, the Court of Appeal demonstrated certain “sympathy” over Mr. Tsui’s position.

(b)       Costs usually follow the event.  It was what the costs nisi stated.  Therefore, the Management Company would have costs in defending Mr. Tsui’s appeal, and Mr. Tsui would have costs in defending the Management Company’s cross-appeal.

(c)       Mr. Tsui applied to vary the costs order nisi.  The Management Company opposed it but did not ask to vary the order nisi in its favour.  Apparently, the Court of Appeal agreed with Mr. Tsui  to the extent of taking into account the fact that he was not legally represented.

(d)       The costs order nisi was varied to become that Mr. Tsui do pay the Management Company two thirds of its costs of appeal.  By referring to costs of “appeal”, it is Mr. Tsui’s appeal only, but not the whole appeal proceedings, i.e. appeal + cross-appeal.

(e)       In fact, subsequent to the order absolute, Mr. Tsui wrote further to the Court asking for confirmation that he still could recover in costs in defending the cross-appeal.  It then triggered the Court’s clarification as per paragraph 7 hereinabove.

15. HCMP 1983/2005 touches on Mr. Tsui’s appeal only.  Cross-appeal is not relevant at all.  So, parties in principle agree that Mr. Tsui should pay 2/3 of the amount taxed.

16. However, concerning CACV 328/2005, the solicitors took the view that the Management Company was entitled to 2/3 of the whole appeal (appeal + cross-appeal) and prepared the bill accordingly, I had to make an appointment.  Upon considering the parties’ documents filed in pursuing the appeal and the cross-appeal (including those voluminous ones of Mr. Tsui), the hearing notes of the Court on 27 April 2006, the Judgment dated 6 June 2006, the parties’ subsequent correspondence and written submissions as well as the Ruling on Costs on 11 August 2006, I found that 60% of effort was spent on the appeal and 40%, on the cross-appeal.  Although I appreciate that the appeal touched on B1 only and cross-appeal, B2 and B9, the way that Mr. Tsui has been conducting the proceedings, in my view, justify more time and effort to be allocated on his appeal.

17. As to Counsel’s fee, I agree with Mr. Wong to the extent that every Counsel’s fee shall be allowed unless this Court is satisfied that the same is excessive and unreasonable.  However, it is of course subject to the rider that such fee should have come under the proper or necessary test in party-and-party taxation.  With respect, other than repeating the above general principle, Mr. Wong has not explained to me how Counsel’s fee has been deducted excessively or unreasonably.  I therefore will not make any revision of Counsel’s fee allowed or taxed off in the original taxation.

18. Finally, as to Mr. Tsui’s review, I do not consider it appropriate to deprive the Management Company of any interest.  As a matter of law, I see no jurisdiction to do so.  Upon facts of the case, on balance, I am not satisfied that there has been any undue delay.  As to whether the Management Company has beaten the offer of Mr. Tsui and the reasonableness of the parties’ conduct in negotiation for settlement, it is to be considered after the solicitor will clarify the issue of indemnity principle.  The costs of taxation for HCMP 1893/2005 and CACV 328/2005 were made nisi only.  The parties should see how the matter is to be dealt with in due course.

Conclusion

19. In the end, I order that:

(a)       Both reviews are dismissed.

(b)       Time for the Management Company to adduce evidence before this Court on the issue of indemnity principle under HCMP 1893/2005 and CACV 328/2005 is extended for 28 days from today.

Costs

20. There will be an order nisi that each party shall bear its own costs on both of the reviews for taxation.