Atlantic Link Ltd v. The Incorporated Owners of Yen Ying Building and Others

DCCJ 1306/2018

[2019] HKDC 1518

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1306 OF 2018

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BETWEEN

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Before: Her Honour Judge Phoebe Man in Chambers (Open to Public)

Date of Hearing: 1 November 2019

Date of Decision: 15 November 2019

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DECISION

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INTRODUCTION

1.This is an appeal against Master S H Lee’s Decision by the 1^st to 3^rd defendants, the 6^th to 13^th defendants and the 15^th defendant (together the “Appellants”).

2.The 14^th defendant is represented by Messrs Lo & Lo (“LL”). They had written to the court indicating that they “will not claim any costs of and incidental to the hearing against any parties and will remain neutral (as it did in the hearing before the learned Master)” and that “they will not claim any costs of and incidental to the Notice of Appeal.”

3.I queried Mr Cheung, counsel for the 14^th defendant as to how he could remain neutral given the history of the case and the stance that had been taken by them (as can be seen in the subsequent paragraphs). Mr Cheung confirmed to the court their neutrality related only to the hearing below and the present hearing. He accepted that if the court finds that the past conduct of the 14^th defendant (which was in line with that of the Appellants) attracts any negative costs order, they should be liable for such costs as well.

BACKGROUND

4.The plaintiff is the registered owner of several units (including unit 2I) in a commercial building in Wanchai (the “Building”). The 1^st to 15^th defendants are the registered owners of other units on the 2^nd or 3^rd floor of the Building. In this action, the plaintiff claims against the defendants for damages and orders for repair to stop water leakage from the 2^nd floor and the 3^rd floor lavatories.

5.Pursuant to a case management summons, Registrar Ho ordered on 2 October 2018 (amongst other things) that:-

“…

3. Leave to the parties to adduce expert evidence on liability and quantum regarding the alleged water seepage, limited to one water leakage expert.

4. The 4^th and 5^th Defendants shall, … nominate their respective water leakage expert by way of letter to all other parties on or before 23^rd October 2018 … failing which the party in default shall be deemed to have elected not to adduce such expert evidence.

5. Subject to compliance with the preceding paragraph, all parties’ water leakage experts shall on or before 27^th November 2018 conduct a joint inspection of the subject premises and conduct such water leakage tests as may be agreed between/among the experts and immediately thereupon hold a without prejudice meeting for the purpose of preparing a joint expert report …

6. The joint expert report must address, inter alia, the following matters:

i. if different parameters have been used, the parameters upon which each expert’s opinion is based and the reasons for adopting different parameters;

ii. the issues on which the experts have reached a common and in respect of each such issue what that common opinion is;

iii. the issues on which the experts have failed to reach a common opinion and their competing views on each issue; and

iv. the reasons for a given expert’s disagreement with any opposing expert’s views on each such issue.

7. The joint expert report shall be lodged with the court on or before 8^th January 2019

…

13. The parties do obtain counsel’s advice, if necessary, and do take out all further interlocutory application on or before 26^th February 2019.

…”

6.Thus, it can be seen that the original time stipulated for the joint inspection to take place was on 29 November 2018. On 28 November 2018 [at 17:18 hours] (less than a day before the scheduled time for the inspection), solicitors for the Appellants (“SKLAC”) wrote to the parties to ask for a postponement of the joint inspection “to a date when sunny weather is expected for two days prior to and on the date of inspection. Nonetheless, if either the plaintiff or the 14^th defendant object to such postponement, Dr Lau will attend the inspection as originally scheduled.”  This request met with strong opposition from the plaintiff, whose solicitors (“IKC”) replied by letter on the same day to object to the basis of postponing the joint inspection. In the end, parties agreed over a telephone conversation that the experts shall still attend the appointment but solely to conduct visual inspection and to discuss the method statement directly.

7.Subsequent to the visual inspection on 29 November 2018, some issues were raised by the parties, which led to a summons for case management directions, after which Master David Chan ordered on 11 March 2019 (amongst other things) that:-

“…

3. On or before 13^th May 2019, the plaintiff shall remove the whole false ceiling inside the plaintiff’s premises … and make the plaintiff’s premises available for inspection and examination to be performed by the parties’ water leakage experts …

4. on or before 13^th May 2019, the 15^th defendant do make her property … available for inspection and examination to be performed by the parties’ water leakage experts;

5. Notwithstanding the time limits stipulated in paragraphs 5, 7 and 13 of the Order of Mr Registrar Ho dated 2^nd October 2018, time for:

(1) the water leakage experts of all parties to conduct a joint inspection of subject premises and conduct such water leakage test as may be agreed between/among the experts and to immediately thereupon to hold a without prejudice meeting be extended to 20^th May 2019;

(2) the joint expert report to be lodged with the Court be extended to 22^nd July 2019;

(3) the parties to obtain Counsel’s advice, if so desired, and to take out all further interlocutory applications, if any, be extended to 2^nd September 2019.”

8.The parties thereafter agreed through correspondence that the joint inspection should take place on i) 14 May 2019 on the 2^nd floor lavatory and unit 3J of the Building; and ii) on 20 May 2019 on the 3^rd floor lavatory and unit 3J of the Building. It is of note that in the letter dated 3 May 2019 from SKLAC, the expert for the Appellants insisted again that his availability for the joint inspection was subject to fine weather forecast on the day and the method statement having been agreed by the experts. IKC immediately replied and pointed out on the same day that there was no requirement in the court orders that the joint inspection should only be performed with an acceptable weather forecast and where the experts agreed on the method statement. 

9.In fact, paragraph 6(i) of the Order dated 2 October 2018 expressly provided for the scenario where the experts cannot agree on the methodology to be adopted.

10.By letter dated 8 May 2019, SKLAC again repeated that their expert’s availability for the joint inspection is subject to fine weather forecast on the day and the method statement having been agreed by the experts. IKC replied on the same day, reiterating the content of the court’s order dated 2 October 2018 and informed them that the plaintiff will perform the inspection on 14 May 2019 whether or not the defendants’ expert would attend. Solicitors for the 14^th defendant, LL asked on 9 May 2019 to postpone the joint inspection from 14 May 2019 to 20 May 2019 as they would like to have more time for the experts to re-consider the issues. SKLAC again repeated their expert’s view on weather and methodology by letter dated 10 May 2019 and asked to postpone the joint inspection to 20 May 2019. IKC rejected the proposal on the next day and reiterated their concerns on breaching the court order. IKC further informed them by letter dated 10 May 2019 that the plaintiff’s expert would attend the scheduled joint inspection in compliance with the court order whether the experts for the defendants would attend or not. SKLAC wrote back on the same day saying they will only do the inspection on 20 May 2019. The reason for this flurry of correspondence all on 10 May 2019 was due to the intervening public holidays, the next working day would have been 14 May 2019.

11.When the plaintiff turned up with their expert on 14 May 2019, they were first denied access into unit 3J, and when eventually allowed access into 3J after much efforts, they discovered that only a small portion of the unit had been cleared. From the photos, it could be seen that the rest of the unit were covered with mountain-piles of scattered clothing and rubbish that obstructed access to the toilet inside unit 3J. The plaintiff’s expert eventually managed to carry out some water tests. IKC wrote to SKLAC setting out the difficulties encountered by the plaintiff’s expert and informed SKLAC that the 2^nd stage test would be carried out on 20 May 2019, the date originally requested by SKLAC and LL to be the joint inspection date.

12.On 17 May 2019 SKLAC informed IKC that their experts would not attend the inspection on 20 May 2019, due to the same set of reasons: no agreed method statement had been reached between the parties and no satisfactory weather forecast.

13.I pause to note that by now more than 20 letters had been exchanged between the solicitors within a short span of time. One can imagine the legal costs that have been incurred just for trying to agree a date for joint inspection. 

14.Eventually, the plaintiff’s expert carried out examinations and tests on 20 May 2019 and the 14^th defendant’s expert attended on 20 May 2019 simply to “record the inspection in the 3^rd floor lavatory”. The plaintiff’s expert completed his report and circulated to the 14^th defendant’s expert on 11 July 2019.

APPLICATION TO VARY TIME

15.On 18 July 2019, nearly 2 months after the time stipulated for the joint inspection to take place, SKLAC issued a summons on behalf of the Appellants seeking to vary the previous timetable prescribed under the orders dated 2 October 2018 and 11 March 2019. No affirmation in support was filed. Upon the filing of the plaintiff’s affirmation in opposition, the defendants filed the affirmation of Wong Justin Szecheh, a solicitor handling these proceedings. 

16.I note that the 14^th defendant has not taken out any application to vary the time, even up to the day of this appeal. Mr Cheung indicated that they would adhere to any orders that the court makes in this regard. 

DISCUSSION

17.Counsel agree that Order 25 Rule 3 of the Rules of the District Court is the appropriate Rule to consider in the Appellant’s application to extend the time stipulated for: 1) the joint inspection, 2) the lodging of the joint expert report, 3) obtaining Counsel’s advice, 4) the Case Management Summons. Ms Liao (counsel for the Appellants) initially submitted that the rules in relation to general time extension applications would be relevant too, but eventually she agreed that where the rules differ, Order 25 Rule 3 prevails.

18.Mr Sham, counsel for the plaintiff, submitted that whilst generally speaking an appeal against a master’s decision is by way of a re-hearing, where the court is faced with an appeal against a case management decision made by a master, the judge should not ‘lightly interfere with the decision of the master and should only do so for good reason’. This is because a case management decision involves the exercise of discretion by a master. An appellate court would not lightly interfere with such a case management decision unless the decision of the master was found on some errors of principles or was clearly wrong^[1]. The authorities are consistent with §38 of Practice Direction 5.2: “The parties should note that case management decisions are matters within the discretion of the master or the judge making the decision and are generally not susceptible to appeals.”

19.Ms Liao submitted that Mr Sham’s submission cannot be right. She relies on the last sentence in §25/1A/14 of Hong Kong Civil Procedure 2020: “However, it seems that a judge may exercise the case management discretion afresh in the usual way on appeal from a master (O.58 r.1).”  She distinguishes between i) an appeal from a master to a Judge and ii) an appeal from a Judge to the Court of Appeal, and says that the principle that an appellate court is reluctant to interfere with judges on matters of case management unless a judge is clearly wrong only applies to when the Court of Appeal hears appeals. I see no basis to draw that distinction. Indeed, cases such as Wan Shui Ha Alice v Ng Wing Yan^[2] and X v Dr Hung Cheung Tsui & Anor^[3]  (a Court of First Instance decision which binds me) show that the principle had been applied to appeals against case management decisions by masters. Ms Liao urged me to depart from these cases but I do not see any basis to do so.

20.I agree with Mr Sham that the approach submitted by him is the approach the court should take in the present application.

21.Ms Liao devoted considerable content in her skeleton submissions in trying to persuade the court that Dr Lau’s insistence on agreeing on the method statement and the inspection being carried out on a day with nice weather was reasonable, and indeed essential for the joint report to be of assistance to the court.

22.The court should not be asked, and indeed is not equipped at this stage to rule on which of the methodologies adopted by the different experts is to be preferred. In 皇河實業有限公司 v Wan Chiu Yuen and Chan Mei Wah^[4], HH Judge Leung (as he then was) had said at §14-17:-

“14. It is desirable that the experts agree on the appropriate test and methodology. But if they cannot, they cannot. It is not disagreement between the parties, but their experts.

15. In case of experts’ disagreement, the court’s concern is that the experts explain their competing views. It becomes part of the court’s consideration in determining which expert’s opinion is to be preferred. …

16. For the purpose of the present application, numerous affirmations have been filed by the parties as well as their respective experts. By asking the court to rule on the experts’ difference as per their affirmations; and to direct a test or methodology to be adopted for the purpose of preparing the expert reports, the parties are effectively carving out part of the experts’ opinion for interlocutory determination prior to trial.

17. The determination of the difference in the expert opinion at this juncture is particularly undesirable, because in view of the results of the test to be carried out and the expert reports to be compiled, it may turn out that the experts would need to be called at the trial.”

23.I respectfully agree and adopt the comments of the learned Judge. However, whilst the court does not adjudicate which of the methodologies propounded by the experts is to be preferred, it does decide on whether the conduct of the parties leading to the application to extend time was reasonable or acceptable.

24.Essentially, Wong Justin Szecheh (one of the solicitors handling the file) for the Appellants said in his affirmation that they had refused to attend the joint inspection upon their expert, Dr Lau’s advice. There was no explanation as to the lateness of the application nor the reason why they followed the advice of the expert.

25.I take exception to this attitude. Legal advisors should be the ones who have the conduct of litigation. Solicitors should have the expertise to advise their clients what is the proper course to take in litigation. Dr Lau may be an expert, but he is an expert not in the legal field. Whether parties ought to comply with a time limit prescribed by a court order would lie outside Dr Lau’s expertise. Legal advisors cannot and should not shirk from the responsibility of advising their clients how the case should be conducted, and when necessary, informing the expert of their view. Unless lay client or experts deliberately and unreasonably ignore or go against the advice rendered by their legal advisors, the ultimate responsibility of giving advice in taking certain steps in the course of litigation must rest with the legal advisors. I do not see from the affirmation of Mr Wong that this was the case. Upon receipt of their expert’s advice, SKLAC must have (or should have) considered if it was appropriate that the Appellants should follow that advice, in view of a time limit imposed by a court order.

26.In the present circumstances, I am of the view that despite Dr Lau’s advice, it was unreasonable for the Appellants not to have adhered to the court’s timetable, for the following reasons:-

(1) There is no rule that experts must adopt the same method statement in a joint expert report. I can appreciate it would be desirable for them to do so as it will narrow down the issues in dispute that need to be decided by the court, but I am not aware of any authority (as confirmed by Ms Liao) which stipulates that it is essential for experts to agree on methodology before a joint expert report can be compiled.

(2) Paragraph 6(i) of the Order of Mr Registrar Ho dated 2 October 2018 already envisaged the possibility of the experts adopting different parameters – this supports the argument that the Registrar did not deem it essential for the experts to agree on the method statement before doing the joint inspection or the joint expert report. This paragraph was also repeatedly quoted by IKC in their opposition to the Appellant’s insistence on agreeing the Method Statement before a joint inspection could take place;

(3) IKC had repeatedly in their correspondence pointed out their intention to adhere to the time limit stipulated in the court orders to SKLAC and LL, despite their insistence to agree on the Method Statement. It was clear after the first 2 rounds of exchange of correspondence that the experts could not agree on the methodology. Under those circumstances, if the Appellants were of the view that due to the advice of their expert (which they have decided to follow), there was a possibility that they could not proceed and thus the timetable set by the court could not be adhered to, they ought to have sought directions from the court as soon as possible. They had not done so before the deadline, in fact they had only sought an extension two months after the deadline had passed. Up until now there is no explanation on why there was a 2-month delay.

27.Having said that, I am of the view that such unreasonableness of the attitude taken by the Appellants and the 14^th defendant may not be determinative of the merits of the present appeal. This is because the Court of Appeal had in the case of Chan Cheung Ming Jacky v Siu Sin Man (Formerly Known as Siu Kit Ling)^[5] laid down principles concerning the case management function of the court.

28.In that case, the Court of Appeal was concerned with an appeal against the trial judge’s refusal to allow a very late application (one day before the trial) to issue a subpoena. Although that case concerned a case in the Family Court, the comments made by Lam VP therein about how the court fulfils its case management functions stem from general civil case:-

“19. Since 1997, the role of the court in case management has assumed a greater prominence in our administration of civil justice. Even before CJR, in L v L (unrep., HCMC 1/2003, [2005] HKEC 1851) (20 April 2005), the court considered the application for leave to issue subpoena from a case management angle when such application was made after the evidence had been closed. In that case, the court conducted a balancing exercise before allowing the case to be reopened and granted leave for the issue of subpoena. Various factors were considered: the potential disruption to the trial, the prejudice that the other party may suffer, the explanation for the late application, the significance of the new evidence, the overall justice of the matter.

20. Under CJR, O. 1A and 1B were added to our rules (both the Rules of the High Court (Cap. 4A) as well as the Rules of the District Court). Order 1A r. 2 provides that whenever the court exercises its power under the rules (and that would include the power to grant leave to issue a subpoena), it must seek to give effect to the underlying objectives set out in r.1. Order 1A r.2(2) is also important:

In giving effect to the underlying objectives of these Rules, the Court shall always recognize that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.

…

27. The second caveat we have is about the comment of Poon J at [6] of his judgment on the possibility of an application being dismissed on the basis of delay alone. Whilst we would not rule out this possibility entirely, one must always bear in mind O. 1A r. 2(2). As with the exercise of other kinds of discretion, the exercise of case management power must be with reference to the facts and circumstances of the case before the court. There is no place for the application of a mechanical rule that the court will invariably refuse an application simply because a party is guilty of serious delay without any good explanation. The court must conduct an overall balancing exercise.

28. Further, we need to emphasise this: case management by the court does not mean that the judge will dictate the evidence to be adduced. Even in the context of family proceedings, our system is still primarily operated on an adversarial basis. In general, subject to the questions of admissibility and relevance, each party in the proceedings is at liberty to call whatever evidence he or she considers necessary provided that procedural requirements are complied with. Thus, in respect of an application for leave to issue a subpoena made in good time, the approach of Mortimer V-P should prevail. However, in respect of a late application, the court will have to examine all the relevant circumstances and the significance of the intended evidence to be adduced is one factor to be taken into account.

…

37. This Court has repeatedly stated that we will not interfere with case management decision unless the lower court has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task. In these circumstances, is there any ground for this Court to interfere with the Judge's refusal of leave by way of his exercise of case management power?

38. With respect to the Judge, we are of the view that his refusal of leave is clearly wrong in the circumstances of this case. Of the four reasons he gave, the first and fourth reasons appeared to be the principal reasons and they boil down to the question of delay. Whilst he was entitled to be critical of the delay on the part of the applicant in making this application, he was incorrect in effectively making the unexplained delay as determinative of the outcome without considering other relevant factors.  With respect, it is not helpful to start with a premise (as the Judge did) that “eleventh hour application is unlikely to be considered by the court unless in very exceptional circumstances”. Such a premise has a tendency of clouding the court's judgment in respect of other relevant considerations.

43. In our judgment, the Judge’s exercise of discretion was flawed and this Court should intervene. Assessing the position afresh, we are of the view that in this instance the overall justice of the matter points to leave being granted for the subpoena to be issued.”

29.Applying the above principles to the present case:-

(1) the complaints against the unreasonable stance taken by the Appellants and the 14^th defendant essentially boil down to delay, and I am mindful of not letting the unreasonable stance of the defendants and the unexplained delay become determinative of the outcome without considering other relevant factors;

(2) the only milestone date that will be upset is a case management conference fixed for 13 December 2019, and trial dates have not yet been fixed;

(3) in a water leakage dispute case, the court depends heavily on the respective experts’ views and opinions as to the cause of the leakage. It can be envisaged that if the trial were to proceed only on the plaintiff’s expert report, the defendants would still enlist the help of their own experts behind the scene to challenge the plaintiff’s expert in cross-examination. In this scenario, the court may well be deprived of the full picture in terms of the expert evidence, and cross-examination of the defendants’ expert.

30.Neither the case of Chan Cheung Ming Jacky nor the principles set out therein were brought to the attention of the Learned Master or discussed at the last application, and as a result, the Learned Master’s exercise of discretion was flawed. Assessing the position afresh I would allow an extension of the original deadlines.

31.For these reasons, I would allow the appeal.

PERIOD OF EXTENSION

32.By now, it would have been nearly a year past the original deadline for the production of a joint expert report on 27 November 2018. There should not be any further delay to the exercise. Having sought confirmations from the parties, the following Orders were made:-

Orders:-

(1) The water leakage experts of all parties do conduct a 1^st joint inspection of the subject premises on the 7 November 2019 and a 2^nd inspection of the subject premises on 14 November 2019. During these 2 joint inspections, all experts are required to carry out all relevant tests that are necessary for the preparation of a joint expert report. Unless each expert attends these joint inspections on 7 November 2019 and 14 November 2019, they are debarred from seeking further joint inspections of the subject premises for the preparation of the joint expert report. The 15^th defendant do make unit 3J of Yen Ying Building available on these two dates for inspection.

(2) Each expert is to prepare and exchange his own draft report on or before 30 November 2019 with the other two experts. Unless each expert exchanges his draft report on or before 30 November 2019, he is debarred from taking part in the preparation of the joint expert report and the corresponding party/parties is/are debarred from expert evidence being adduced in the trial.

(3) The experts are to have a without prejudice meeting on or before 6 December 2019 for the purposes of preparing a joint expert report. Unless each expert attends the without prejudice meeting on or before 6 December 2019, he is debarred from taking part in the preparation of the joint expert report and the corresponding party is debarred from having expert evidence adduced in the trial.

(4) The experts are to prepare a joint expert report to be filed into court on or before 17 December 2019.

(5) Parties are to seek and obtain counsel’s advice on or before 2 January 2020.

(6) The CMC originally listed for 13 December 2019 before Master S H Lee be vacated.

(7) The CMC will instead take place on 3 January 2020 at 10:30 am in Court 18.

(8) All other directions contained in paragraphs 2-10, 12-13 in the Order of Master S H Lee dated 24 September 2019 shall stand.

(9) The joint expert report shall address, amongst other things:-

(i) if different methodologies are used, the reason why such respective methodology is used.

(ii) the issues on which the experts have reached a common opinion and in respect of each such issue what the common opinion is.

(iii) Where the experts fail to agree on certain issues, what those issues are and the basis of their respective opinion on such issues.

(iv) Where possible give reasons for the issues the experts disagree upon.

COSTS

33.Ms Liao asked for costs as she says they have won the appeal and that the plaintiff unreasonably objected to their application below. As seen from the history of the events herein, I do not agree that the plaintiff was unreasonable in resisting the application to extend time. Further, the Appellants are seeking an indulgence from the court to extend time, and I see no basis why they should not be responsible for the costs of the application. I also see no reason why the Appellants should not bear the costs of the wasted report done by the plaintiff’s expert. As the 14^th defendant took the same stance (except for the two hearings), I believe it is fair that their position on costs should be the same as that of the Appellants (except for costs of the two hearings). Thus, I made the following costs order nisi:-

(1) Costs of the application by summons dated 18 July 2019 be borne by the 1^st to 3^rd, 6^th to 15^th defendants except that there will be no order as to costs in relation to the application against the 14^th defendant in relation to the hearing on 29 August 2019 and the hearing today, with certificate for counsel, to be taxed if not agreed.

(2) Costs of the wasted expert report prepared by the plaintiff’s expert to be borne by the 1^st to 3^rd, 6^th to 15^th defendants on an indemnity basis, to be paid forthwith.

(3) There be no order as to costs in relation to the appeal.

Mr Walker Sham, instructed by Ip, Kwan & Co, for the plaintiff

Ms Tara Liao, instructed by S. K. Lam, Alfred Chan & Co, for the 1^st to 3^rd defendants, the 6^th to 13^th defendants and the 15^th defendant

The 4^th defendant was excused from attending the hearing

The legal representatives of the 5^th defendant was excused from attending the hearing

Mr Tommy Cheung, instructed by Lo & Lo, for the 14^th defendant