Lau King Keung and Another v. 地政總署署長

LDGA 75/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

GOVERNMENT RENT APPEAL NO 75 OF 2014

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DECISION ON COSTS

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1.This is an application by the respondent for costs of this appeal upon discontinuance by the appellants by way of a Notice of Discontinuance (“NOD”) dated 17 July 2015.

Undisputed Background

2.The old agricultural lots, namely (a) the Remaining Portion of Lot No 749, (b) Lot No 750 and (c) Lot No 751A all in Demarcation District No 17 (“the Original Lots”), were registered with the Land Registry in the sole name of Mr Lau Hing, the appellants’ father (“the Father”) on 24 March 1970 and 16 April 1974.  The Father was a New Territories Indigenous Villager (“NTIV”).

3.By an Instrument Succession To Property dated 25 August 1981 registered by Memorial No 205187, the appellants, together with their 3 other brothers, all being the lawful successors of the Father, acquired interests of and in the Original Lots as tenants in common in equal share (with the mother Madam Lee Lin as trustee for the 2^nd appellant who was then aged 20) (“5 Owners”).

4.The 5 Owners submitted a rent concession application in relation to the Original Lots to the Lands Department on 11 September 2002.  An approval letter dated 19 December 2002 was issued to the 5 Owners granting rent exemption under section 4 of the Government Rent (Assessment and Collection) Ordinance, Cap 515 (“the Ordinance”), effective from 28 June 1997 upon confirmation of the NTIV status of all 5 Owners.

5.By the Assignment executed on 15 October 2005 registered by Memorial No 05111501630023 (“the Assignment”), the Original Lots was assigned by the 5 Owners to the appellants as the Purchaser as tenants in common in equal shares in consideration of a sum of HK$800,000. 

6.By the Deed Poll dated 13 June 2007 registered by Memorial No 07061801310046 in Land Registry, the Remaining Portion of the Lot No 749 and Lot No 750 of the Lots were divided into different portions namely, Lot Nos 749B & 749RP and Lot Nos 750A & 750RP all in Demarcation District No 17.

7.The appellants submitted their application dated 10 July 2012 for rent concession in respect of Lot Nos 749B, 749RP, 750A, 750RP and 751A all in Demarcation District No 17 (“the Appeal Lots”).  Such application was refused by the respondent by way of a Preliminary Rejection Notification Letter dated 28 October 2014 (“the 1^st Letter”) and a Finalised Rejection Notification Letter dated 1 December 2014 (“the 2^nd Letter”) giving the reason that there was a change in the ownership or interest of the Appeal Lots after 30 June 1984 (「該地段/物業的業權或權益在1984年6月30日後有所改變」).

8.In the 2^nd Letter, section 26 of the Ordinance is being stated therein to alert the appellants of their right to lodge an appeal with the Lands Tribunal should they be dissatisfied with the decision of the respondent in the 1^st and 2^nd Letter. 

9.The application for appeal in this case was filed and served by the appellants on 29 December 2014.  The respondent filed its Notice of Opposition (“NOO”) on 19 January 2015 stating the same defence as stated in the 1^st and 2^nd Letter but in more detail, ie the appellants acquired the interest of and in the Appeal Lots by way of the inter vivo conveyance transaction between them and their brothers by the Assignment and not by way of lawful succession defined in section 2 of the Ordinance after 30 June 1984.

10.At the direction hearing on 24 February 2015, since the appellants insisted to proceed with the appeal, this Tribunal ordered the parties to file and serve their witness statements on or before 17 March 2015 with the trial fixed to be heard on 3 August 2015.

11.The respondent had filed and served its witness statement on 17 March 2015 but the appellants failed to do so.  On 8 July 2015, the appellants, through their representative Mr Lau, sent a letter to the Tribunal seeking in the last paragraph of the letter “the kind consideration of the Honorable (sic) Judge to allow the appellants to withdraw the appeal case in view of the appellants’ circumstances”. 

12.In the letter dated 10 July 2015, this Tribunal replied that “(I)f the appellants are minded to withdraw or discontinue with this case, the appellants should file a Notice of Discontinuance with the Lands Tribunal”.  On 17 July 2015, the appellants filed and served a NOD with this Tribunal and upon perusal of the NOD, this Tribunal ordered on the same day that the trial date be vacated.  A letter dated 20 July 2015 was sent from this Tribunal to both parties (“720 Letter”), contents of which is as follows :

“你於2015年7月17日提交的中止通知書, 已由本審裁處審閱及指示將原定於2015年8月3日之聆訊日期取消。”

(Translation: Upon perusal of the Notice of Discontinuance submitted by you on 17 July 2015, it is directed that the original hearing date on 3 August 2015 be vacated.)

13.On 31 July 2015, the respondent filed an interlocutory application asking for costs of this appeal with costs to be summarily assessed by the Tribunal. 

Legal Principles

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. 

15.Section 12(1) and (7) of the Lands Tribunal Ordinance (“LTO”) provides that :

“(1) The costs of and incidental to all proceedings in the Tribunal are in the discretion of the Tribunal, and the Tribunal has full power to determine by whom and to what extent the costs are to be paid.

(7) Notwithstanding subsection (1) and section 12C but subject to subsection (5) and any rules made by the Chief Justice under section 10(3), Order 62 of the Rules of High Court applies, with the necessary modifications, to the award, taxation and recovery of costs in the Tribunal.”

16.Order 62, rule 3(2) of the Rules of High Court (“RHC”) states the general proposition that costs should follow the event, unless in the circumstances of the case some other order should be made as to the whole or any part of the costs.

17.Order 62, rule 5 RHC reads :

“5(1) The court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account -

(aa) the underlying objectives set out in Order 1A rule 1;

(a) any such offer of contribution as is mentioned in Order 16 rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33 rule 4A(2);

(d) any written offer which is expressed to be ‘without prejudice save as to costs’ and which relates to any issue in the proceedings, but the court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g) any admissible offer to settle made by a party, which is drawn to the court’s attention.

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes -

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d)   conduct before, as well as during, the proceedings.”

18.Mr Lau appearing for the appellants had submitted written submissions raising objections to the application for costs by the respondent and raised several grounds in support.  Bearing in mind the legal provisions stated above, I shall deal with the grounds raised in seriatim.

Rule 27 Lands Tribunal Rules not applicable

19.Rule 27 of the 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.” 

20.Mr Lau submitted that since his application for discontinuance is with leave of this Tribunal as ordered in the 720 Letter whilst Rule 27(1) only applies when a party discontinues the proceedings or withdraws any part thereof “without leave of the Tribunal”, Rule 27 LTR is not applicable and the respondent cannot rely on Rule 27(2) to ask for costs.

21.As this Tribunal had indicated to Mr Lau, he had misunderstood the effect of the NOD and the effect of Rule 27.  The wordings of the NOD is that “TAKE NOTICE that the above-named appellant wholly discontinue(s) the appeal herein”.  This is not an application seeking leave to discontinue the case, rather the appellants are informing the Tribunal as well as the respondent of its discontinuance of the appeal without leave of this Tribunal.  This is why the only order made by this Tribunal upon receipt of the NOD is for the hearing date to be vacated and was silent as to leave being granted for the discontinuance.  This explains why the contents of the 720 Letter did not mention about leave being granted for the discontinuance.

22.Under such circumstances, the contention by Mr Lau that Rule 27 of LTR is not applicable is misconceived.   The discontinuance by the appellants of this appeal is not with leave of the court and falls squarely into the scenario of Rule 27(1).  The respondent is entitled to rely on Rule 27(2) to ask for costs and this Tribunal should consider the issue of costs according to what it thinks fit.

23.Even if I am wrong on this, ie the discontinuance was with the leave of this Tribunal (as contended by Mr Lau), this Tribunal has complete discretion in dealing with the issue of costs and to do justice between the parties (§21/5/12 of Hong Kong Civil Procedure 2015).

The appellants should not be made to pay for the respondent’s costs

24.Mr Lau based on the following reasons :

(a)     the respondent instigated this appeal by stating in the 2^nd Letter that the appellants can make an application to the Lands Tribunal, yet had not mentioned about the consequences of costs when “it is the responsibility of the Director of Lands to point out to any appellant who wishes to make the appeal and to caution them that they might be required to pay for the costs of the Lands Department”, by so doing, the respondent “tempts the appellants falling into the legal trap and subject to heavy costs which they might not be prepared to pay in the first place” (page 2 of the written submission);

(b)     it is the duties of the respondent to deal with the appeal as part of its own administrative duties, the costs incurred by the respondent should be regarded as discharging its administrative duties and not as litigation action where legal costs may arise (page 3 of the written submission);

(c)     the respondent is duty bound to explain its decision to the appellants and the reasons were not fully set out in the 1^st and 2^nd Letters, hence the appeal procedure with the Lands Tribunal was the only available option to the appellants in order to seek justice (page 3 of the written submission).

25.It is not in dispute that the respondent did alert the appellants of their right to appeal in the 2^nd Letter but I do not agree that by so doing, the respondent had instigated this appeal as alleged by Mr Lau.  All the respondent did in the 2^nd Letter was to inform the appellants of their rights to bring the matter to this Tribunal if they were dissatisfied with the final assessment of the respondent.  It is never the case that the appellants have to go along with such suggestion.  Whether to lodge this appeal is a conscious decision of the appellants and they could blame no one for making them to proceed with the same.

26.As for the question of costs, I do not agree with the appellants that the respondent was duty bound to caution them of the consequences of costs on appeal.  To do so would give one the impression that the respondent is trying to scare the appellants off from lodging the appeal against its decision.  The appellants should have considered their own stance and if in need, seek independent legal advice on the appeal.  They cannot put the blame on the respondent who is not the legal adviser of the appellants and had no duty in alerting the appellants of the consequences of costs.

27.And I do not accept that the handling of this appeal by the respondent is just an administrative work which should not involve legal costs.  The dealing with the application of the appellants for the exemption of liability to pay Government rent is an administrative work of the respondent.  But once the matter was being brought to this Tribunal, it turns into a legal proceedings and it is no longer within the administrative regime of the respondent.

28.As for the duty of the respondent to explain the reason for rejecting the appellants’ application, the respondent had done so in the 1^st Letter and 2^nd Letter already.  I found the reason stated in the 1^st and 2^nd Letter is sufficient.  The appellants lodged this appeal only because they are not satisfied with the explanation.  If the appellants decided to seek justice by way of legal proceedings, they should be aware that there may be legal costs to be incurred by the respondent.  In any event, the appellants insisted in proceeding with this appeal even after the detailed reason for the rejection was being stated in the NOO filed by the respondent.  It is apparent that no matter how detailed the explanation offered by the respondent, this would not stop the appellants from lodging or proceeding with this appeal.

Legal representation by the Department of Justice (“DOJ”) is not necessary and not authorised to take out this application for costs

29.Mr Lau submitted that intervention by the DOJ was not required or necessary since the appellants’ appeal was made to the respondent which had the administrative duties to answer to the appellants’ questions.  The engagement of the DOJ to represent the respondent was made at the respondent’s own choice and costs incurred should not be passed to the appellants.  Furthermore, Mr Lau queried if the DOJ was authorised by the respondent in taking out this application for costs and submitted that if this application for costs was made out of the own volition of DOJ, the Tribunal should not make any order for costs (page 4 of the written submission).

30.As stated above, the handling of this appeal by the respondent is not an administrative duty.  And I accept the submission of Ms Chan that the DOJ is the legal adviser for all government departments and it is justified for the DOJ to be involved in this appeal which did involve a legal issue about the entitlement of the appellants.  The fact that the appellants did not have legal representation is neither here nor there and could not stop the respondent from being represented by the DOJ.

31.As for the authority to take out this application for costs, the DOJ was acting for the respondent as its legal adviser and in fact the DOJ is the legal adviser of all government departments.  The DOJ is the only eligible legal adviser to act for the respondent.  In any event, when a lawyer purports to act for a client, he/she impliedly warranted that he/she has the authority to represent the client (Grand Field Group Holdings Ltd v Tsang Wai Lun Wayland & Ors [2010] 5 HKC 441 at 444).  I found the query by Mr Lau in this regard unjustified and without basis.

Merits of the Appeal

32.Mr Lau submitted that the appellants lodged this appeal since “they would be entitled to the exemption of Government rent under the Ordinance”.

33.However, I agree with Ms Chan for the respondent that the appeal in this case is devoid of merits and should never have been brought.  As rightly pointed out by the appellants in the Notice of Appeal (“NOA”), the appellants’ entitlement as to exemption from liability to pay Government rent turns on whether the requirement under section 4(1) of the Ordinance is satisfied (§4). 

34.The relevant part of section 4(1) of the Ordinance as quoted by the appellants in the NOA reads :

“4(1) Subject to other provisions of this section, an exemption from liability to pay Government rent applies to an interest held under –

(a) An applicable lease of a rural holding that an indigenous villager held on 30 June 1984;

and –

(i) which the indigenous villagers continues to hold; or

(ii) which –

(B) continues to be held by a person who is a lawful successor in the male line of the indigenous villager.” (my emphasis)

35.“Lawful successor” (合法繼承人) is defined in the Ordinance to mean “a person, male or female, who on the death of an indigenous villager is or becomes entitled to an interest in the estate of the deceased by lawful succession and which person is a descendant through the male line of the deceased”.  In this case, the appellants became the owner of the Appeal Lots not as a lawful successor from the estate of the Father but by way of an assignment from the other successors of the Father.  The requirement under section 4(1)(a)(ii)(B) of the Ordinance is not satisfied, hence the appellants are not entitled to an exemption from liability to pay the Government rent and their appeal is bound to fail.  There is no justification in the commencement of this appeal in the first place.

36.The submission by Mr Lau that “there is a large number of cases similar to the appellants’ situation and this needs to be reviewed by the Lands Tribunal” is not a valid factor to be considered by this Tribunal.  Each case must be determined on its own facts.  Mr Lau had also stated in the written submission the personal reasons for the appellants to discontinue with this appeal (page 5).  I have considered all the reasons stated therein but did not find them to be special circumstances to justify a deviation from the norm that the discontinuing party should bear the costs of the other party.

Conclusion

37.Having considered all the above, I found the appellants should bear the costs of the respondent in this appeal as well as this application for costs upon discontinuance of this appeal.

Summary Assessment of Costs

38.Ms Chan for the respondent had submitted a Statement of Costs for summary assessment.

39.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 & Anor [2012] 5 HKLRD 512 and it is suffice to quote the headnote of the reported judgment as follows :

“(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 cost reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable…” (at page 513).

40.Mr Lau had been invited to address this Tribunal on the Statement of Costs but all he did was repeating his contention that the appellants should not be made to pay the costs of the respondent.

41.Having perused the Statement of Costs, I found the total costs claimed are proportionate to the nature and complexity of this appeal and each item is reasonable and far from excessive.

Order

42.It is ordered that costs of this appeal together with the application for costs be to the respondent summarily assessed at $18,379.00.