Yeung Hock Wai also known as Yeung Hock Wi v. Chan Wai Man, The Administratrix of the Estate of Yeung Hung Hei Patrick, Deceased
Read the full judgment text of HCA 2812/2015 on BabelCite. This High Court CFI judgment was delivered on 29 October 2020.
1. This Court handed down a judgment on 29 July 2020 after a 5 day trial (“ Judgment ”). In this decision, I will continue to adopt the abbreviations in the Judgment, save otherwise indicated below.
Cited by 2 cases · Cites 7 cases
|
HCA 2812/2015 [2020] HKCFI 2742 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2812 OF 2015 ________________________ BETWEEN
AND BETWEEN
(by Original Action and by Order to Carry On dated 19th February 2019) _______________________ AND BETWEEN
AND BETWEEN
(by Counterclaim and by Order to Carry On dated 19th February 2019) _______________________ Before: Hon B Chu J in Chambers (Paper Disposal) Date of Costs Submissions by the Plaintiff (By Original Action) and the 1st to 3rd Defendants (By Counterclaim): 26 August 2020 Date of Costs Submissions by the Defendant (By Original Action) and the Plaintiff (By Counterclaim): 26 August 2020 Date of Submissions on Final Order by the Defendant (By Original Action) and the Plaintiff (By Counterclaim): 26 August 2020 Date of Decision: 29 October 2020 _________________ D E C I S I O N _________________ Introduction 1.This Court handed down a judgment on 29 July 2020 after a 5 day trial (“Judgment”). In this decision, I will continue to adopt the abbreviations in the Judgment, save otherwise indicated below. 2.In this decision, for easy reference, Mrs Yeung (whether in her capacity as executrix of Father’s estate and her personal capacity) and Jeffrey will be referred to collectively as “Ps” and Vivian (in her capacity as administratrix of Patrick’s estate) as “D”. 3.As seen in the Judgment, Father’s and/or Mrs Yeung’s claim (in her capacity as personal representative of Father’s estate) against D over Patrick’s ¼ share in the Properties (“Claim”) was dismissed. D had counterclaimed against Ps for an order for sale of the Properties under the PO (“Counterclaim”), 4.It was submitted by Mr Shieh SC on behalf of Ps during the trial that if this Court were to find against Ps, they would be willing to undertake to buy out Patrick’s interests in the Properties at the value as stated in the latest valuation report and that pursuant to section 6(3) of the PO, such undertaking would preclude the making of an order or sale[1]. This Court then directed the parties to submit an agreed final order incorporating Ps’ undertaking failing which each party was to submit its own draft supported by written submissions of not more than 10 pages for the Court to make a determination on paper the terms of the final order of the Counterclaim (“Final Order”). 5.Unfortunately, the parties were not able to come any agreement regarding the undertaking and the terms of the Final Order and this is a matter which this Court has to determine. 6.Separately, in the Judgment, I have directed the parties to lodge written submissions on costs, for the matter to be dealt with on paper. The Final Order 7.In so far as the Final Order is concerned, although written submissions were lodged on behalf of D by her team of counsel, no formal written submissions were lodged on behalf of Ps, save that their solicitors sent a letter dated 26 August 2020 to the Court setting out their position and brief submissions (“26.08.20 Letter”). 8.Section 6 of the PO states as follows:
9.D had complained that after this Court handed down the Judgment, there had been delay on Ps’ part in setting out the proposed terms of their undertaking under paragraph 6 (3)(a), and that it was D who first came up with a draft order incorporating an undertaking to be given by Ps and it was only in their solicitors’ letter dated 18 August 2020 that they indicated their agreement to buy out D’s share in the Properties with payment to be made within the next 4 months. D’s solicitors replied on 19 August 2020 pointing out that there was no explanation as to why payment could only be made to D in 4 months’ time instead of 1 month proposed by D. It was in the afternoon of 25 August 2020, that Ps’ solicitors gave a proper reply to D’s draft order and undertaking. In this letter, it was stated that Mrs Yeung had been actively looking for ways to obtain sufficient funds to settle the purchase price before committing to a solid time frame and she further set out counter proposals regarding the purchase. A proposed draft order was also attached on behalf of Ps. 10.The letter of 25 August 2020 from Ps’ solicitors was received by D’s solicitors only in the afternoon of that day, which was the day prior to the expiration of the deadline imposed by this Court for the parties to submit an agreed draft Final Order. On 26 August 2020, D’s solicitors wrote to reject Ps’ proposals. Ps’ solicitors then sent a reply letter on 26 August 2020 in which they apologised for the delay in responding to D’s proposed terms of the draft order of 12 August 2020 and provided further explanations as to their draft order sent on 25 August 2020. 11.There was no further response from D’s solicitors. There was no attempt from either party to seek an extension of time from this Court or to try to negotiate further on the terms of the draft order or the undertaking. 12.Pursuant to this Court’s direction, D had lodged an agreed Scott Schedule setting out the disputed issues and each party’s position on the Final Order (“Scott Schedule”). I will deal with these issues hereinbelow.
13.D’s position is that a party seeking a sale of his/her property under the PO is not compellable to part with his/her share even if the other party offers an undertaking to buy it. 14.Mr Lam SC had referred this Court to what was held by Lord Blackburn in Pitt v Jones (1880) 5 App Case 651, in relation to the construction of the equivalent provisions in the Partition Act 1868, namely :
15.As pointed out by Mr Lam, Lord Blackburn held earlier at pg 590 that the party declining the undertaking would not be prevented from pressing for a sale under the other sections of the statute if he could bring himself within them. 16.As further submitted by Mr Lam, Pitt v Jones was followed in Hong Kong in Golden Bay Investment Ltd v Cheung Kam Moon [1992] 2 HKC 478[3] and also in Ma Wei Hua v Ngai Man HCMP 172/1998 (unrep, 14 March 1998)[4]. 17.There were no further/reply written submissions made on behalf of Ps on this issue in the 26.08.20 Letter. Having considered the above authorities, I accept Mr Lam’s submissions that D, being the party seeking a sale of her (or Patrick’s) property under the PO is not compellable to part with the property even if the other party offers an undertaking to buy it. Part B: Difference in terms of the undertaking proposed 18.D proposes that Ps to pay to D a sum of HKD 7,225,000 to purchase D’s ¼ share in the Tokwawan Property and a sum of HKD 15,850,000 to purchase D’s ¼ share in the Sunderland Property. There is no issue regarding D’s proposed purchase price. The 4 main areas of dispute are :
19.Ps proposed that the purchase be by 31 December 2020, ie in about 4 months’ time from their solicitors’ letter of 18 August 2020, whereas D had proposed 1 month. 20.D had complained that Mrs Yeung did not bother to explain in the letter of 25 August 2020 why 4 months would be required to “obtain funds”. In the letter dated 26 August 2020, Ps’ solicitors did try to explain that Mrs Yeung did not have sufficient cash flow to settle the purchase price of over HKD 23m within one month and that her request was reasonable and practicable. Even though Ps may be more well-off than D, this does not necessarily mean that they are cash rich. Although there was delay in Mrs Yeung’s explanation, that she needed more than a month to raise cash was not unreasonable. 21.D’s attitude was also not a realistic one. Even if this Court were to make an immediate order for sale, time would have to be given to Ps to deliver up vacant possession, and further the Tokwawan Property may be subject to tenancy/tenancies. Any auction house would need time to prepare for a public auction and to market the Properties properly. Even for a sale by private treaties, estate agents may need time to prepare marketing material, in particular of the Sunderland Property, which is a spacious house. Realistically, all this may take more than a month, and in any event, there is no guarantee that the reserved price would be reached during the first attempt to auction, or that there will be offers received within a month of the Properties being marketed. 22.In my view, to save costs and time, the parties should have continued to negotiate and as said earlier, they could have sought an extension of time from this Court to allow them to do so. By way of negotiation, for example, the parties could have signed a formal agreement for sale and purchase first with the payment of a deposit and in accordance with all the usual terms of a formal agreement for sale and purchase, and then completion to take place later; alternatively, Mrs Yeung and Jeffrey could first purchase D’s share in the Tokwawan Property, which involved a lesser sum. There are various options, and I find both sides’ positions in relation to the Final Order and the undertaking to be rather inflexible. 23.In any event, I do not find the time sought by Mrs Yeung was unreasonable in the circumstances. 24.As for the time of the assignment, in my view, the proposal ought to follow the normal conveyancing practice and procedure, which according to this Court’s understanding, would be that the solicitors for the purchaser to send the purchase price together with the assignment executed by the purchaser over to the solicitors for the seller who will undertake to hold the purchase price as stakeholders and to only release the same to the seller upon the seller having executed the assignment. In this respect, I am of the view that what was proposed by Ps would be more aligned with the normal conveyancing practice and procedure. 25.As for legal costs and disbursements of and incidental to the preparation of each of the assignments, in my view it is reasonable for each side to bear their respective legal costs and disbursements, save for stamp duty. Since usually it is the purchaser who pays the stamp duty on a sale and purchase transaction, Ps should pay all the stamp duties involved in the transactions. 26.As for the consequence of non-compliance with the undertaking, in this respect, I am of the view that there should be an automatic and self-executory order for sale pursuant to section 6 (1) of PO to take effect if no undertaking or purchase can be agreed. Part C: Difference in terms of the order for sale under section 6(1) of PO 27.Ps have not made any proposals in relation to an order for sale. In light of what has been said above under Part A and Part B, I am of the view that the parties should be given further time to consider whether a draft order and undertaking can be reached. In this respect, I will allow them a further 14 days from the date of this decision to come to an agreement as to the terms of the proposed purchase, failing which there shall be an order for sale in terms of the draft order submitted on behalf of D. Costs The parties’ respective position on costs 28.It is acknowledged by Ps that there is no good reason to depart from the general rule that costs should follow the event and it is accepted that D’s involvement in the action has only been in her capacity as the administratrix of Patrick’s estate. It is submitted on behalf of Ps that the appropriate costs order should be as follows:
29.D seeks the following costs orders:
30.It was submitted on behalf of D that for the purpose of the costs orders, no distinction should be drawn between the Claim and the Counterclaim although only Mrs Yeung representing Father’s estate was the plaintiff in the action whereas she as Father’s personal representative and in her own personal capacity as well as Jeffrey were the defendants in the Counterclaim. There were no contrary submissions on behalf of Ps. 31.The main issue is thus the level of costs. The Calderbank Letter 32.On 16 May 2016, D’s solicitors sent a letter marked “Calderbank Offer” (“Calderbank Letter”) to the Father’s solicitors proposing essentially the following:
33.It was stated in the Calderbank Letter that D sincerely hoped that Ps would approach the matter in a realistic and constructive manner. 34.Ps’ solicitors replied the next day, ie 17 May 2016, stating that D’s offer in the Calderbank Letter was rejected by Ps without hesitation. The letter then went on to say that solely for the purpose of reaching an amicable settlement before incurring further costs, Ps proposed:
35.Ps’ reply letter was stated to be “without prejudice save as to costs” and “Sanctioned Offer” under Order 22 of the Rules of the High Court, Cap 4A and that D could accept the “Sanctioned Offer” without leave of Court not later than 28 days after the “Sanctioned Offer” was made and that after expiry of 28 days, D could only accept if the parties agreed on the liability of costs or the Court granted leave to accept it. 36.There was no further response from D. The parties’ respective submissions 37.Mr Lung submitted on behalf of Ps that the Calderbank Letter is only one of the many factors to be taken into account in this Court’s exercise of discretion on costs. 38.Mr Lung further submitted, amongst other things, that the trial was only a run-of-the-mill case where one of the parties was effectively disbelieved and lost and that, amongst other things:
39.On the other hand, it was argued on behalf of D, amongst other things, that :
40.D further relied on the Calderbank Letter. The applicable legal principles 41.Earlier this year, the Court of Final Appeal reaffirmed in Commission of Inland Revenue v Poon Cho Ming John (No 2) [2020] HKCFA 2; (2020) 23 HKCFAR 74; FACV 1/2019 (13 January 2020)[5] the correct approach to the exercise of discretion on whether and when to order indemnity costs and reiterated those propositions from the CFA’s judgement in Town Planning Board v Society for Protection of the Harbour Ltd ( No 2) (2004) 7 HKCFAR 114[6], at paras 14-18:
4. With particular reference to indemnity costs but relevantly also to common fund costs, the following propositions emerge from this Court’s judgment in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114 at paras 14-18:- (a) In certain circumstances, costs may be awarded on a more generous than usual basis of taxation so as to achieve a fairer result. (b) It is for the receiving party to show that the case has some special or unusual feature. (c) Such features are not confined to an ulterior motive, an improper purpose, deception or underhand conduct on the part of the paying party. (d) Neither the attributes of the parties nor the character of the proceedings are irrelevant to the question of whether a more generous than usual basis of taxation should be ordered. (e) The discretion to order a more generous than usual basis of taxation is not to be fettered or circumscribed beyond the requirement that such taxation be ordered only when it is appropriate to do so. (f) As to that, the grounds on which a more generous than usual basis of taxation is to be ordered must be connected with the case. That extends to – but no further than to – any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation.” 42.There is no dispute on the approach set out above, and it is for D to show that the case has some “special or unusual feature”. Discussion The Calderbank Letter 43.The Calderbank Letter was sent less than 6 months after the writ was issued and shortly after pleadings were closed, and before mediation took place. 44.There were a couple of typing errors in the Calderbank Letter, namely (i) there was clearly a typing error in item 3 of the Calderbank Letter and the word “other” should have read “order”, and (ii) the figure in item 2(a) of HKD 4,569,375 was clearly a miscalculation. 45.In light of what was proposed in item 3, that there be no order as to costs in the action including both the Claim and the Counterclaim, it was accepted by Ps that the “Exclusionary Rule” in Order 62 rule 5(1)(d) of RHC did not apply, since the Calderbank Letter disapplied the prescribed costs consequences under Order 22, and hence it was incapable of forming the subject matter of a sanctioned offer: Choi Tak Man v Chan Yuk Lan Didi [2017] 5 HKLRD 619 at paragraphs 4, 14-15. As accepted by Mr Lung, this Court is therefore entitled to take the Calderbank Letter into account when deciding on the question of costs. 46.As further pointed out by Mr Lung, in Choi Tak Man, Deputy High Court Judge Anson Wong SC had said that whilst he agreed that a party who failed to do better than an offer which he had rejected might justify the court awarding costs against him on a higher scale, he was unable to accept that the court must always do so. 47.As seen in Choi Tak Man, at the end of the day, the existence of a settlement offer is just one of the many factors that the court can take into account in the exercise of its discretion on costs under Order 62 rule 5. 48.In fact, as pointed out by the Deputy Judge in Choi Tak Man, the plaintiff in Leung Lai Kwan v Lo Kai Wing [2015] 3 HKLRD 152 was ordered to pay indemnity costs and he then applied for leave to appeal against the costs order, and Lam VP in dealing with the leave application had observed that although the trial judge awarded costs on indemnity basis against the plaintiff, he did so primarily due to the plaintiff propounding false evidence given at the trial rather than on the basis that the plaintiff failed to do better than an offer previously rejected by him. 49.Anyway, as submitted by Mr Lung, and which I accept, there is no general rule that a party who fails to do better than an offer previously rejected by him must always be liable for costs on a higher scale, and that the existence of a settlement offer is only one of the many factors to be taken into account in the exercise of the Court’s discretion on costs. 50.Further, apart from stamp duty and costs, I do not see that D had really made any concessionary proposal in the Calderbank Letter. What she proposed was on the basis that she were to succeed entirely in defending the Claim, namely Patrick was entitled to retain his ¼ share in the Properties, and her proposed valuation for the buy-out was based on 25% of the then market value of the Properties. In so far as I can see, there was no concession as to either the percentage or the buy-out value. Equally, what was proposed by Father and/or Ps in their reply indicated that there was also no concession on their part either and they had stated that D’s offer was rejected without hesitation. Their proposal was on the basis that Father/Ps were to succeed entirely in the Claim, in that D was to procure at her own costs the vesting of Patrick’s ¼ share in the Properties in favour of Father. 51.In my view, to facilitate the settlement of disputes, any party making proposals ought to reflect the concessions that party is prepared to make, if one is indeed interested in an early resolution of the dispute. There is no point in merely putting forward a settlement based on one being entirely the successful party. 52.Having said this, D did make a first move to try to settle the matter at an early stage of the proceedings. I accept that Ps’ attitude in rejecting “without hesitation” what was proposed by D was in my view not helpful, nor conducive or facilitative to any further settlement proposals. This is particularly when Father and/or Ps had indicated in their Mediation Certificates that they preferred to have the claim settled by way of active without prejudice negotiation. On the other hand, as seen below, D had also said she had no objection to first attempt to settle by active without prejudice negotiation but there was no evidence of any further negotiation other than D’s Calderbank Letter and Ps’ reply. The only further attempt to negotiate after the Calderbank Letter was mediation. Mediation attempt 53.The writ in this action was issued by Father on 1 December 2015. It was accompanied with a Mediation Certificate filed on the same date. In this, although Father indicated that he was willing to attempt mediation with a view to settle the proceedings, as said earlier, what he stated was “… for the purpose of saving costs, the Plaintiff prefers to have the claim to be settled by way of active without prejudice negotiation with the Defendant at this stage”. 54.In the Mediation Certificate filed on 18 January 2016 by D, she stated that she was willing to attempt mediation and further indicated that she had no objection to firstly attempt to settle by active without prejudice negotiation but as there was the Counterclaim involving other defendants, she took the view the parties should wait until they had filed their defence to the Counterclaim. 55.Subsequently, D issued the Mediation Notice on 12 May 2016 and applied for mediation. In the Mediation Certificate filed on 16 May 2016 by Ps, they repeated what Father had stated in the Mediation Certificate, that they preferred to have the claim to settled by way of active without prejudice negotiation. 56.It was on the same day, ie 16 May 2016, that D instructed her solicitors to send the Calderbank Letter. 57.Notwithstanding the rejection of D’s proposals in the Calderbank Letter on 17 May 2016, Ps did later file their Mediation Response on 18 August 2016, and eventually on 6 December 2016, the parties jointly filed a Mediation Minute and they agreed to attempt mediation by the agreed mediator. According to the Report on Mediation, mediation did take place on 12 December 2016, which ended without any agreement being reached. 58.Thus, although D’s proposals in the Calderbank Letter were rejected, there was an effort to attend mediation by Ps as well as D. Thereafter, there was no further evidence of any further attempt to negotiate and no further Calderbank proposals. The Calderbank Letter has to be seen in the above light. Other matters 59.Although the dispute over Father’s signature on the Reference Letter had resulted in unnecessary costs, any expert costs incurred by D would be recoverable as disbursements, whether the costs awarded are on a higher level or not. 60.Although Mrs Yeung had refused to allow the surveyor to enter the Properties for the preparation of proper valuation reports, D could have applied to the Court for further directions in this respect. In any event, there was no sufficient evidence that any interior inspection would have had a significant effect on the valuations. 61.Having considered the Calderbank Letter, the above and all those other matters put forward by Mr Lam, I have come to the view that this is no more than a run of the mill dispute between family members. I do not find that there are some special or unusual features in this case to justify an award of costs on a higher scale. As I have said, in fact, I find both Ps and D have adopted a rather inflexible attitude in their dispute. Conclusion on Costs 62.In light of the above said, I order that Ps do pay D’s costs of this action, including the costs of the Claim and the Counterclaim, all costs reserved, on a party and party basis, to be taxed if not agreed, with a certificate for two counsel. As for the submissions on the Final Order and costs, as neither has succeeded completely, I order there be no order as to costs. D’s own costs, in so far that they are not recovered from Ps, be paid out of Patrick’s estate.
Mr Vincent Lung, instructed by Li & Lai, for the plaintiff (Original Action) and the 1st to 3rd defendants (Counterclaim) Mr Paul Lam SC, Ms Maria So and Ms Astina Au, instructed by Tang & So, for the defendant (Original Action) and the plaintiff (Counterclaim) |
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under HCA 2812/2015