Oriental Moon Ltd v. Golden Sino Link Ltd and Others

CAMP 10/2023, [2023] HKCA 608

On Appeal From [2022] HKLdT 60

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 10 OF 2023

(ON AN INTENDED APPEAL FROM LDCS NO 32000 OF 2019)

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BETWEEN

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J U D G M E N T

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Hon Au JA (giving the Judgment of the Court):

A.  INTRODUCTION

1.On 10 January 2023, the 1^st and 4^th respondents (collectively “the Appeal Respondents”)  filed a summons (“the Summons”)  with the Court of Appeal seeking leave to appeal against the order for compulsory sale (“the Compulsory Sale Order”)  made by the Lands Tribunal[1] (“the Tribunal”)  in a judgment handed down on 21 November 2022 (“the Judgment”)[2] in respect of a lot in Wan Chai (“the Lot”)  under the Land (Compulsory Sale for Redevelopment)  Ordinance, Cap 545 (“the Ordinance”).  The address of the building on the Lot (“the Building”)  was Nos 19 - 21 Wood Road and Nos 22 - 30 Wing Cheung Street (formerly known as No 8 Wood Road), Wan Chai, Hong Kong.  In the Summons, the Appeal Respondents also sought a stay of execution of the Judgment pending appeal.

2.To properly understand this judgment, it is necessary to put the matters in context by setting out the procedural history relating to the present application.

3.The Appeal Respondents first applied for leave to appeal and stay of execution before the Tribunal, which was refused in a decision handed down on 9 January 2023 (“the Leave Decision”)[3]. The Tribunal found that all the proposed grounds of appeal were not reasonably arguable.

4.On the next day, by the Summons, the Appeal Respondents renewed their applications for leave to appeal and for stay of execution (“the Applications”)  to this court.

5.However, on 11 January 2023, pursuant to the Compulsory Sale Order, the Lot was sold in a public auction held in the afternoon.

6.Thus, on 12 January 2023, the Appeal Respondents’ Solicitors (“HYL”)[4] wrote to the Registrar of Civil Appeals (“RCA”)  asking for the dismissal of the Summons with no order as to costs in light of the fact that the Lot was already sold.  By a letter of the same date of its Solicitors, the applicant objected to the proposed costs order and instead asked for the costs of the Summons, as the applicant had already retained counsel on an urgent basis to oppose the Summons, which included a stay of execution application.

7.On 13 January 2023, the RCA directed the Appeal Respondents to lodge written submissions in opposition to the applicant’s proposed costs order.  These directions were later superseded by another set of directions dated 26 January 2023, effectively giving the Appeal Respondents and the applicant the opportunity to lodge written submissions concerning costs for the dismissal of the Summons.

8.However, on 2 February 2023, HYL wrote to the RCA indicating a further change of stance.  It was now stated that:

(1)  The 4^th respondent decided to withdraw her application to dismiss the Summons, and would continue with her application for leave to appeal under the Summons (as there was no longer any question for a stay of execution after the sale of the Lot);

(2)  The 1^st respondent however would continue to seek the dismissal of its own renewed application for leave to appeal under the Summons.

9.On 6 February 2023, the RCA directed the applicant to file an affidavit (if any)  and statement in opposition to the 4^th respondent’s leave application, and that the 4^th respondent and the applicant be at liberty to lodge their respective updated statements of costs and submissions related to the issue of costs between the applicant and the 4^th respondent.

10.Later noting that the 1^st respondent had not filed any written submissions concerning the costs of its application for the dismissal of the Summons, on 22 March 2023, the RCA further made the directions that the 1^st respondent do confirm its intention to rely on any written submissions in opposition to the costs order sought by the applicant and to file such written submissions on or before 6 April 2023.  The 1^st respondent filed its written submissions on 24 March 2023.

11.There are now before us (a)  a written submissions of the Appeal Respondents for leave to appeal lodged on 10 January 2023 in support of the Summons; (b)  the applicant’s written submissions on costs against the Appeal Respondents dated 3 February 2023 (“A’s Costs Submissions Against the Appeal Respondents”); (c)  a statement of opposition by the applicant dated 13 February 2023 in relation to the 4^th respondent’s leave to appeal application (“the Written Opposition Statement”); (d)  a written submissions on costs by the 4^th respondent dated 13 February 2023; and (e)  a written submissions on costs by the 1^st respondent dated 24 March 2023.  The applicant has also prepared two statements of costs respectively dated 3 February 2023 and 13 February 2023.

12.It is worthy to note that, as revealed in A’s Costs Submissions Against the Appeal Respondents and the statement of costs dated 3 February 2023, the applicant’s counsel (Mr Patrick Fung, SC, leading Mr Michael Lok[5])  in fact had prepared a 7-page written submission dated 10 January 2023 (“the Unused Written Submission”)  in anticipation of any urgent hearing to be held of the Summons, including the stay of execution application.  The written submission was never lodged as there was no hearing. However, in support of the statement of costs and the submissions, the applicant has provided the court with a copy of the Unused Written Submission.

13.In the premises, in substance, we have to deal with two matters in this judgment:

(1)  The 4^th respondent’s leave to appeal application and costs; and

(2)  The costs between the 1^st respondent and the applicant relating to the 1^st respondent’s application for dismissal of its part of the Summons.

14.Having considered all the submissions provided by the parties, we consider it appropriate to determine the leave to appeal application and the costs issues on paper pursuant to Order 59, rule 2A(5)(a)  of the Rules of the High Court (Cap 4A)  (“the RHC”).

B.   BACKGROUND AND THE JUDGMENT

15.An occupation permit was granted for the Building on 7 January 1961 and it was thus over 60 years old by the time the order for sale application came to be heard before the Tribunal.  The 1^st respondent owned Shop 2, G/F while the 4^th respondent owned Flat B, 1/F of the Building.  There was no lift service for the Building and a single common staircase provided access to the six floors within.

16.The applicant and all the respondents in the court below prepared an Agreed List of issues for Trial:

(1)  the Tribunal shall determine the market value (commonly termed the Existing Use Value (“EUV”)  of “each property on the lot”)  according to Part 1 of Schedule 1 to the Ordinance, the relevant date of valuation being 30 August 2019.

(2)  the Tribunal shall decide whether to make the compulsory sale order which depends on whether:

(a)  the redevelopment of the Lot is justified due to the age or state of repair of the Building according to section 4(2)(a)  of the Ordinance; and

(b)  the applicant has taken reasonable steps to acquire all the undivided shares of the Lot on terms that are fair and reasonable in accordance with section 4(2)(b)  of the Ordinance.

(3)  if the Tribunal makes an order for sale, the Tribunal shall determine the redevelopment value (“RDV”)  of the Lot for the purpose of setting the reserve price of the public auction according to clause 2 of Schedule 2 to the Ordinance.

17.The Tribunal assessed the EUV of the relevant units after inspecting the Building and considering the expert evidence ([72] of the Judgment). The 4^th respondent does not seek to dispute the EUV in the intended appeal.

18.The Tribunal accepted the evidence of the expert called by the respondents (Professor Chan)  that the Building was safe and sound.  However, the Tribunal noted that the protection of the passive layer of the concrete cover had been lost and thus the rebars were susceptible to corrosion.  Both experts also agreed that most rebars for slabs and beams were suffering from part to moderate corrosion.  The weakness in the concrete cover was not reversible but Professor Chan suggested that anti-carbonation paint could be applied to the whole building to prevent further damage to the structure of the Building.  He further opined that with proper repair and maintenance work, the proper functioning of the structural elements of the Building could continue for many decades.

19.The Tribunal however doubted the practicality and effectiveness of Professor Chan’s suggestion for using anti-carbonation paint for following reasons:

(1)  The lack of precedent of such paint being applied to an entire building;

(2)  The lack of precedent of using anti-carbonation coating in any refurbishment project approved by the URA[6];

(3)  The significant costs of the application of paint and the other proposed works to remedy the cracks on the external walls, which was partly due to the lack of lift access in the Building;

(4)  The difficulty of applying the paint in an external environment when the primer has to be allowed to dry for a minimum of two hours (at 20ºC)  before continuing; and

(5)  The degree of nuisance that would be caused to the tenants inside the Building by the proposed works.

20.The Tribunal further noted that the fire safety of the Building was constrained by the single common staircase.  Although measures could be implemented to enhance fire safety, those were found to be “compromising measures”.  It also expressed doubt as to whether the owners of the units of the Building could be expected to share the significant renovation costs (at [124] of the Judgment)  or if it would be “good value for money” (at [231] of the Judgment).

21.Given all the above, at [130] of the Judgment, it concluded that redevelopment of the Building is justified due to the age and state of repair.

22.The Tribunal also considered the three rounds of offer to purchase their unit made by the applicant to each of all the respondents and accepted that the applicant had taken reasonable steps to acquire all the undivided shares in the Lot on terms that were fair and reasonable.

23.The Tribunal therefore ruled that the conditions under section 4(2)  of the Ordinance had been satisfied and made on order for sale.  After extensive evaluation of expert evidence, the reserve price was set at $300 million.

C.  LEAVE TO APPEAL APPLICATION

24.On 16 December 2022, the Appeal Respondents applied for leave to appeal against the Judgment and for stay of execution before the Tribunal.  The Appeal Respondents advanced four grounds of appeal before the Tribunal, which were largely similar to the grounds advanced before us.  On 9 January 2023, the Tribunal handed down a decision dismissing both applications with costs to the applicant.

25.On 10 January 2023, the Appeal Respondents renewed their application before this court.  In the draft Notice of Appeal and the submissions dated 10 January 2023, the Appeal Respondents advanced the following grounds of appeal:

(1)  The Tribunal erred in law in ruling that redevelopment of the Lot was justified due to the “age” and “state of repair” of the Building without taking into consideration all relevant factors and circumstances or in taking irrelevant matters into consideration.  The Appeal Respondents submitted that the Tribunal ought not to have rejected Professor Chan’s suggestion to use anti-carbonation paint to prevent further corrosion on the structural elements and that:

(a)  it failed to have proper regard to the need to protect the respondents’ right over their properties when considering the prejudice to the applicant;

(b)  it “missed” Professor Chan’s evidence who actually proposed epoxy paint to be applied; and

(c)  it was wrong to rule out the use of Dekguard E2000[7] without contrary evidence on its effectiveness.

(2)  the Tribunal erred in law in adhering rigidly to modern standards on structural and fire safety matters, without regard to the extent to which the Building actually fell short of those standards.  It erred in relying “rigidly” on the codes of practice for modern composite buildings and viewed practical remedial measures as “only compromising measures”.

(3)  the Tribunal failed to consider the witness statement relied on by the respondents stating that the Building was in a reasonable tenantable condition, that the structure of the Building had never been an issue and that the respondents were prepared to spend and had spent money to rectify defects.  It ignored the respondents’ rights and responsibilities as a “tenant” in the Building and the “subjective element of tenantability”.

(4)  the Tribunal erred in law in finding that the applicant had taken reasonable steps to acquire the shares of the respondents in the Lot.  When the Lot is redeveloped with an adjacent lot, there will be an increase in plot ratio to the adjacent lot.  An equitable way to apportion the RDV of the merged site should be the EUV of the merged site, instead of allocation by relative area.

26.In the draft Notice of Appeal, the Appeal Respondents sought to set aside the Judgment and dismiss the applicant’s application for an order for compulsory sale of the Lot.

D.  DISCUSSION

D1.  Legal principles

27.The principles for granting leave to appeal are set out in sections 11 and 11AA of the Lands Tribunal Ordinance, Cap 17.  Section 11AA(1)  provides that subject to subsection (2), no appeal may be made under section 11(2)  unless leave to appeal has been granted by the Tribunal or the Court of Appeal.  Under section 11AA(6), leave to appeal shall not be granted unless the court is satisfied that (a)  the appeal has a reasonable prospect of success; or (b)  there is some other reason in the interests of justice why the appeal should be heard.  A reasonable prospect of success means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: KNM v HTF (unreported, HCMP 288/2011, 7 September 2011, Hartmann and Fok JJA)  at [9].

28.Section 11(2)  provides that subject to section 11AA and the provisions of any Ordinance relating to appeals from the Tribunal, any party to proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law.

29.In Chan Shiu Chong [2019] HKCA 758, this court (differently constituted)  held that the Tribunal is entitled to set out the main thrust of its decision in a judgment, without having to set out, discuss and then reject, each and every contention raised.  Unless there are plainly obvious errors in respect of material factors which the Tribunal failed to take into account, it is not open to applicants to ask the Court of Appeal to re-hear all the arguments they had advanced before the Tribunal by dressing up the omission of the Tribunal to address each such argument as an error of law ([27]).

D2.  Merits of the leave application

D2.1  The application is academic

30.First, it must be noted that, in the draft Notice of Appeal, the only relief sought by (now)  the 4^th respondent is to set aside the Compulsory Sale Order made by Member Pang and dismiss the applicant’s application for such an order.  It is thus immediately clear that, now that the Lot has already been sold, the intended appeal will serve no useful purpose and is purely academic as the court will in no event set aside the Compulsory Sale Order.  The leave application thus similarly, and indeed a fortiori, serves no useful purpose and is plainly academic.

31.It is trite that the court generally will not deal with an appeal the issues of which have become academic unless exceptional circumstances are shown[8]. There are no such exceptional circumstances in the present case, in particular when all the proposed grounds of appeal, as explained below, are fact sensitive and specific to this particular case.

32.On this basis alone, the leave application shall be dismissed.

D2.2  The merits of the proposed grounds of appeal

33.Second and in any event, we also find that none of the proposed grounds of appeal has any merits.

34.In our view, Chan Shiu Chong is completely apposite to the proposed grounds of appeal advanced by the 4^th respondent.  Although those grounds are couched as errors of law, they are in fact challenges to the finding of facts by the Tribunal, which are not valid grounds of appeal under section 11(2)  of the Lands Tribunal Ordinance.  The intended appeal ought also to be dismissed for this reason alone.  Further, for the reasons given below, none of the factual challenges advanced by the 4^th respondent has any merits.

35.Ground 1 concerns the Tribunal’s treatment of Professor Chan’s suggestion to use anti-carbonation paint.  The Tribunal had dealt with this issue extensively by considering its costs and benefits, the relevant precedents and the potential to cause nuisance to the tenants of the Building.  See: [124] - [130] of the Judgment.  The Tribunal was plainly entitled to take these matters into consideration and we do not accept that it had overlooked any material evidence favourable to the respondents or at all.

36.In relation to the contentions under this ground that the Tribunal had failed to take into account relevant matters such as Professor Chan’s suggestion to also use epoxy paint and the respondents’ interest, and that it was plainly wrong in ruling out the use of Dekguard E2000 without contrary evidence on its effectiveness, they are also without merits.  As explained by the Tribunal at the Leave Decision at [31] - [35] as follows:

“31.  I did note that Professor Chan recommended the application of anti-carbonation paints to prevent the further worsening of the corrosion. However, Professor Chan admitted that he only had experience in applying similar anti-carbonation paint once to a canopy of an industrial building some 20 years ago instead of to a whole building. ‘He also explained that in many refurbishment projects that he came across, the degree of carbonation was seldom checked and therefore, it is not common to apply this anti-carbonation paint.’

32.  In §91 of the Judgment, ie the paragraph that followed, I in fact agreed ‘that the application of anti-carbonation paint can reduce the possibility of rusting and resume the protection to the reinforcement bars of the Building.’ But I did not ‘agree that nuisance to residents due to the application of anti-carbonation paint should be minimal as suggested by Professor Chan. These many units are currently vacant because the applicant owns them and is now applying for compulsory sale order. Otherwise, the currently vacant units would have been let out and occupied. Why should the applicant’s interest be prejudiced wholly owing to the prospective scheme?’

33.  With respect, Mr Tsui’s emphasis on the last sentence above is taking the words out of the context. What I stated in the Judgment is that if the applicant’s units were occupied, the nuisance to the residents due to the application of anti-carbonation paint would not be minimal as suggested by Professor Chan.

34.  In §92 of the Judgment, I explained that water may permeate into the concrete and pass to the structural elements by hydrostatic pressure, water vapor gradient or capillary action etc if the anti-carbonation paint or epoxy paint over it be not applied to the external concrete wall surfaces. In any event, it had not been the respondent’s case that epoxy paint is as effective as anti-carbonation paint.

35.  As a summary, at §§124 & 125 of the Judgment, I explained that there was paucity of evidence to support the application of the anti-carbonation paint despite what the catalogue stated. Details of the refurbishment project say for South Court were unknown. Anti-carbonation coating had never been applied in any refurbishment project approved by the URA. While Professor Chan or Mr Tsui criticized Mr C M Wong for not having studied the effectiveness of the anti-carbonation coating, they could not explain why the many other qualified professionals except Professor Chan had not taken into account of it in refurbishment projects if the anti-carbonation paint be so effective. Even Professor Chan himself had the experience of such application once to a canopy of an industrial building some 20 years ago instead of to a whole building. Based on the above, the Tribunal was entitled to agree with Mr C M Wong’s concern about whether such anti-carbonation coating can be applied extensively and effectively on the outside of the Building, ie to provide ‘an unbroken coating’ subject to extensive weathering. I cannot agree that the Tribunal must accept the evidence of Professor Chan in preference to that of Mr C M Wong.”

37.We entirely agree with these observations and adopt the same herein.

38.Ground 1 therefore has no merit.

39.Ground 2 is effectively an attempt to re-run the same arguments concerning structural and fire safety raised by the respondents before the Tribunal.  The Tribunal considered the arguments advanced by the respondents ([100], [114] - [115] of Judgment)  and dismissed those arguments after careful evaluation, with full regard to the conditions and constraints of the Building.  There was nothing to suggest that the Tribunal adhered “rigidly” (as the respondents alleged)  to modern standards.  Ground 2 is also without merit.

40.Ground 3 complains that the Tribunal overlooked the respondents’ evidence that the Building was tenantable and that the respondents were willing to spend money to rectify defects.  This complaint is factually incorrect.  The Tribunal had thoroughly dealt with the safety issues at [104] - [118] of the Judgment and the alleged willingness to pay for repair on the part of the respondents at [94] and [232] of the Judgment.  Further, the concept of “dwelling tenantability” advanced in paragraph 15 of Mr Wilfred Tsui’s written submissions for the 4^th respondent is incomprehensible and in any event does not appear to relate to any of the issues before the Tribunal.  This ground is devoid of merit.

41.Ground 4 proposes “an equitable way to apportion the RDV” of the merged site.  As counsel for the applicant pointed out, for the 4^th respondent to succeed, it must be shown that the applicant’s offer fell outside of a band of what represented a fair and reasonable assessment of the value of the respondents’ interest ([33] & [36] of Capital Well Ltd v Bond Star Development Ltd (2005)  8 HKCFAR 578).  It is not enough for the 4^th respondent to simply point to a different basis for valuation, as they did under Ground 4.  We therefore do not accept that Ground 4 has any merit.

42.As none of the proposed grounds of appeal has any merit, we in any event would not give leave to appeal or allow the application for stay of execution.

43.The Summons is therefore dismissed for being academic and in any event lack of any merits.  As the application is wholly without merit, we further order pursuant to Order 59, rule 2A(8)  that no party may under rule 2A(7)  request the determination to the considered at an oral hearing inter partes.

E.  COSTS

44.Costs of the Summons should follow the event.  As the Summons is dismissed against the 1^st respondent upon its own application, and against the 4^th respondent on merits, the applicant shall have costs of the Summons.  However, in light of the procedural history of the Summons as summarized in [4] - [9] above, there are two sets of costs that fall to be considered:

(1)  The first set is related to the applicant’s costs up to the lodging of A’s Costs Submissions Against the Appeal Respondents on 3 February 2023 after they had applied for the dismissal of the Summons (“the 1^st Set of Costs”);

(2)  The second is the applicant’s costs incurred after 3 February 2023 in relation to the 4^th respondent’s continued leave to appeal application under the Summons (“the 2^nd Set of Costs”).

E1.   The 1^st Set of Costs

45.In relation to the 1^st Set of Costs, the applicant asks for the costs to be taxed on an indemnity basis.  It is the applicant’s contention that the Appeal Respondents’ issue and conduct of the Summons up to 12 January 2023 were clearly tactics employed for the purpose of forcing or pressurizing the applicant to settle with them on terms more favourable than what they were entitled under the Judgment.  Such conduct should not be condoned and is relevant to the court’s consideration for imposing an indemnity costs pursuant to the underlying objectives under Order 1A, rule 1 and Order 62, rule 5(1)(aa)  of the RHC.

46.In support, the applicant relies on the following context and conduct of the Appeal Respondents up to their own application to dismiss the Summons:

(1)  The public auction was scheduled to take place on Wednesday, 11 January 2023, at 3:00pm.

(2)  The Appeal Respondents subsequently made an application to the Tribunal for leave to appeal and for a stay of execution of the Judgment.

(3)  On Monday, 9 January 2023, at 4:00pm, the Tribunal handed down its Decision dismissing the said application.

(4)  On Tuesday, 10 January 2023, at about 2:30pm, HYL served on Messrs Lo and Lo (“Lo & Lo”), the Solicitors for the applicant, the Summons which had the date and time of hearing left blank seeking leave to appeal against the Judgment and a stay of execution of the Judgment pending appeal, without any cover letter.

(5)  In view of the fact that the public auction was scheduled to take place on the next day, 11 January 2023, at 3:00pm, it was reasonable for the applicant to anticipate that the application for stay would have to be dealt with before the public auction was to take place.  Indeed, when previously inviting the Tribunal to determine the said leave to appeal and stay application on an urgent basis, HYL in their letter dated 22 December 2022 submitted that “[O]n the ground that if a stay of execution is not granted, even if the 1^st and 4^th Respondents’ success [sic] in the appeal, it would be rendered nugatory”.  Hence, the applicant expected that the renewed application for stay was intended by the Appeal Respondents to be dealt with on an urgent basis, certainly before 3:00pm on 11 January 2023, after they served the Summons on Lo & Lo in the afternoon of 10 January 2023.

(6)  As counsel originally dealing with the case was then abroad, Mr Fung SC and Mr Lok were thus immediately instructed by the applicant to deal with Summons on the basis that they would have to prepare the submission in opposition and to attend court at very short notice.  In view of the urgency of the matter and large amount at stake, namely, $300 million, it was thought reasonable and necessary that senior counsel should be instructed.

(7)  By the morning of Wednesday, 11 January 2023, counsel had prepared the 7-page Unused Written Submission together with a List of Authorities containing 10 authorities in opposition to the Summons. Counsel were also instructed to stand by the whole day and be prepared to attend court at any moment.

(8)  Counsel had quoted their fees for all the preparations and for the attendance in court as follows: (a)  Mr Fung SC ($500,000); and (b)  Mr Lok ($200,000).

(9)  On the same morning, at 9:41am, Lo & Lo sent a letter by fax to HYL inquiring what the position about the Summons was and putting them on notice that a counsel team had been retained who had completed their submission to the Court of Appeal to resist the Summons and that an order for indemnity costs would be sought against their clients.

(10)  On the same day, at 12:15pm, HYL responded by a letter by fax and said that they were still “awaiting further instructions from clients as to the future conduct of the Summons”.  Notably, HYL did not indicate that it was not their intention to have the Summons heard urgently by the Court of Appeal.  In other words, the “holding reply” did not alleviate the applicant’s concern as to the need to prepare for an urgent hearing of the Summons before the scheduled public auction in the afternoon of the same day.

(11)  At 12:16pm, on the same day, a letter marked “Without Prejudice Save as to Costs” was sent by fax from HYL to Lo & Lo offering terms of settlement with the applicant which terms were more favourable to the Appeal Respondents than were provided for under the Judgment.  Such offer was not accepted by the applicant.  Again, there was no suggestion that the Summons was not being pursued on an urgent basis.  In the circumstances, Counsel for the applicant remained on standby to go to court at any moment.

(12)  The public auction then duly took place as scheduled.

(13)  On 12 January 2023, HYL sent their letter to the court asking for the Summons to be dismissed with no order as to costs.

47.Based on the above context and conduct of the Appeal Respondents, the applicant submits that an indemnity costs order against the Appeal Respondents is justified for the following reasons:

(1)  The Appeal Respondents should pay for all the costs incurred by the applicant on an indemnity basis because such costs (which are reasonable in all the circumstances)  have been wasted as a result of the conduct of the Appeal Respondents (which all along flies in the face of the Underlying Objectives in Order 1A of the RHC, particularly in failing to alleviate the applicant’s concern as to the potential need to attend court on an urgent basis).  This is sufficient to warrant taxation on an indemnity basis.

(2)  Worse still, bearing in mind the procedural history, particularly the equivocal “holding reply” and the “without prejudice” offer issued consecutively by HYL on 11 January 2023 at 12:15pm - 12:16pm, the Summons was obviously a ploy to apply pressure on the applicant and to induce or force the applicant to settle with the Appeal Respondents.  Such conduct clearly amounts to an abuse of the court’s process.

48.In our view, given the common ground that a public auction was to be held in the afternoon of 11 January 2023, when the Appeal Respondents issued the Summons on 10 January 2023, which included an application for stay of execution pending appeal (premised on the obvious basis that if the Lot was sold, the intended appeal would be rendered nugatory[9]), it must be plain that if they had any genuine intention in pursuing the stay application and the intended appeal, they should proceed with it immediately and expeditiously, as otherwise, it would render the stay application wholly redundant and the leave to appeal application academic.

49.Hence, the fact that the Appeal Respondents did not pursue the stay application by taking any steps asking the court to hear it urgently, coupled with HYL’s holding reply to the applicant’s inquiry as to whether they were to proceed with the stay application on an urgent basis as highlighted above, does show that there was no genuine or serious intention on the part of the Appeal Respondents to pursue the Applications by issuing the Summons in the first place.  This is an abuse of process.  It also supports the applicant’s contention that the issue of the Summons was only a tactical measure employed by the Appeal Respondents for the main purpose of putting undue pressure on the applicant to settle with the Appeal Respondents on more favourable terms.

50.Further, this plainly infringes the underlying principles under Order 1A, rule 1 of the RHC requiring litigations to be conducted, among others, in a costs effective way and in a way to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings.

51.For these reasons, we agree that the applicant’s costs incurred up to 3 February 2023, which include the costs of preparing the Unused Written Submission dated 10 January 2023 and A’s Costs Submissions Against the Appeal Respondents dated 3 February 2023, shall be paid by the Appeal Respondents on an indemnity basis.

52.On the other hand, we do not agree that all these costs are wasted as submitted by the applicant.  This is so as all the preparations by counsel for preparing the Unused Written Submission, which addressed the merits of the leave to application, could be used again by counsel for preparing the subsequent Written Opposition Statement against the 4^th respondent’s continued application for leave to appeal.

53.In relation to the 1^st Set of Costs, in its statement of costs dated 3 February 2023, the applicant seeks a total sum of $599,540 which includes (a)  counsel’s fees of $560,000 ($400,000 + $160,000[10])  for preparing the Unused Written Submission on urgent basis and for attendance in court for an urgent application; and (b)  $39,540 for professional fees of solicitors and related disbursements.

54.As explained above, the costs incurred by counsel for preparing the Unused Written Submission are not wasted.  It would thus be unreasonable for the 1^st respondent to bear all of it on an indemnity basis, in particular when the applicant also claims against the 4^th respondent for the costs of counsel incurred for preparing the Written Opposition Statement under the 2^nd Set of Costs (see below).

55.Taking everything in the round, and the consideration set out in [52] above, it is fair and just to reduce counsel’s total costs under the 1^st Set of Costs from $560,000 to $400,000.  Hence, the applicant’s total costs summarily assessed on an indemnity basis is $439,540, rounded up to $440,000, which shall be paid by the Appeal Respondents jointly.

E2.   The 2^nd Set of Costs

56.In relation to the 2^nd Set of Costs against the 4^th respondent, the applicant also relies on its Written Submissions on Costs.  See paragraph 12 of the Written Opposition Statement.

57.In this respect, as explained at [30] - [31] above, given that the Lot has already been sold, this continued application for leave to appeal serves no useful purpose and is entirely academic.

58.Further, we have further concluded above that the proposed grounds of appeal are also plainly without merits.  When this is considered together with the academic nature of the leave application, we also find it an abuse of process by the 4^th respondent to continue the leave application after the Lot was already sold.  We therefore find it just in these circumstances to impose an indemnity costs order against the 4^th respondent in relation to the 2^nd Set of Costs.

59.The applicant seeks a total sum of $293,610, which includes $280,000 counsel’s fees ($200,000 + $80,000)  for preparing the Written Opposition Statement, and $13,610 for Solicitor’s costs and disbursement.  We find the total sum to be reasonable in all the circumstances, and will summarily assess it on an indemnity basis to be $290,000, which shall be paid by the 4^th respondent to the applicant.

F.  DISPOSITION

60.We dismiss the Summons and make the following costs orders:

(1)  The Appeal Respondents shall jointly pay the applicant’s costs in the sum of $440,000; and

(2)  The 4^th respondent shall further pay the applicant’s costs in the sum of $290,000.

Mr Wilfred Tsui, instructed by HY Leung & Co LLP, for the 1^st and 4^th respondents

Mr Patrick Fung SC and Mr Michael Lok, instructed by Lo & Lo, for the applicant