Chan Wai Hung v. The Incorporated Owners of Tung Lo Court

DCCJ 4396/2019

[2023] HKDC 1644

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4396 OF 2019

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D E C I S I O N

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1.On 20 July 2023, I handed down the judgment in this action (“Judgment”)[1] in which I ordered, among other things, on a nisi basis, that:-

(1)  the defendant shall pay interest on the mesne profits for its possession and use of Lot 51 in the basement car park of Tung Lo Court at 1% above the prevailing Hong Kong dollar prime lending rate from 1 October 2013 to the date of judgment; and

(2)  the defendant shall pay half of the plaintiff’s costs of the action, with certificate for counsel, to be taxed if not agreed.

2.By summons dated 17 August 2023, the defendant applied for:-

(1)  an additional judgment, or alternatively, leave to appeal in respect of my order of pre-judgment interest; and

(2)  an extension of time for the parties to apply to vary the costs order nisi in the Judgment within 14 days of the order to be made.

The defendant’s application for an additional judgment

3.I shall first deal with the defendant’s application for an additional judgment.

4.It is well established that the court has power to amend or correct clerical errors or errors arising from accidental slip omission under the “slip rule”. Apart from the “slip rule”, the court also has inherent jurisdiction, before the sealing of an order or judgment, to vary its own orders so as to carry out its own meaning and to make its meaning plain: see Sun Jianqiang v Trans-Island Limousine Service Ltd [2004] 1 HKC 533, §§25-29, per Woo JA; Liu Weiguang v Li Keng Ko [2020] HKDC 357, §§6-11; Ng Cheuk Hang v Wams Design Ltd [2022] 1 HKLRD 587, §12.

5.As Woo JA stated in Sun Jianqiang (supra), §§25 and 28:-

(1)  The court’s jurisdiction to reconsider its judgment before its order had been perfected could only be exercised in a case which raised considerations, in the interests of justice, which were out of ordinary, extraordinary or exceptional.

(2)  It would necessarily be in an exceptional case that strong reasons were shown for reconsideration.

(3)  Examples of strong reasons included a plain mistake on the part of the court, a failure of the parties to draw to the court’s attention a fact or point of law that was plainly relevant, or discovery of new facts subsequent to the judgment being given.

6.In the present case, the defendant contends that although the general practice in Hong Kong has been to award interest at the rate of prime plus 1% to reflect the theoretical cost of the plaintiff borrowing the sums withheld, such practice can be displaced if its application would be substantially unfair to either party. The onus is on the losing party to show sufficient reason why the usual practice should not be applied in a particular case, citing Komala Deccof v Pertamina [1984] HKLR 219, 222B, per Cons JA.

7.According to the defendant, there is substantial unfairness in adopting the rate of prime plus 1% herein because it fails to take into account the fact that the mesne profits were accumulated periodically and gradually over a period of almost 10 years. The defendant argues that pre-judgment interest should be awarded at half of the judgment rate, or at prime plus 1% for half of the pre-judgment period.

8.First, I note that, despite the defendant’s acknowledgement that the onus rests upon the losing party to show sufficient reason why the usual practice should not be applied in a particular case, the defendant did not raise any submission, whether during the trial, or within the 14-day period after the Judgment was handed down and before the order nisi as to pre-judgment interest was made absolute, that prime plus 1% does not provide for an appropriate rate of interest for the pre-judgment period in the circumstances of the present case.

9.The first time the defendant raised the issue of pre-judgment interest was in its solicitors’ letter dated 10 August 2023, viz. 7 days after the order nisi was made absolute. An application for an additional judgment was only taken out on 17 August 2023, viz. 14 days after the order nisi was made absolute. Nonetheless, in the supporting affirmation filed on behalf of the defendant, no explanation has been given by the defendant as to why this issue was not raised earlier.

10.In my view, the defendant’s delay in applying for an additional judgment militates against any argument that there was a plain mistake in the Judgment. If there were any plain mistake as to the pre-judgment interest, one would have expected the defendant to raise it immediately upon noticing it, and in any event, within the 14-day period before the order nisi as to pre-judgment interest was made absolute.

11.Secondly, viewing the matter substantively, I am not satisfied that the defendant has demonstrated any strong reasons for an additional judgment as to the pre-judgment interest to be made.

(1)  In The Hong Kong Polytechnic University v Rehabaid Society [2023] HKCA 956, the Court of Appeal made an order (at §65(3)-(4)) that mesne profits from 1 June 2016 until delivery of vacant possession be paid by the defendant to the plaintiff, and that pre-judgment interest be paid on such mesne profits up to the date of assessment at the rate of prime plus 1%.

(2)  In Ho Kueng and Others v Lau Yuet Hing [2023] HKCFI 6, Ng J held (at §§142 and 148(2)) that the amount of mesne profits payable by the defendant to the plaintiff from 1 November 2016 up to the first day of trial was $941,550, and that the defendant shall forthwith pay to the plaintiffs mesne profits together with interest at the rate of prime plus 1% from 1 November 2016 to judgment and thereafter at judgment rate until full payment.

(3)  In Tang Lui Leo v Wong Elaine [2020] HKCFI 3087, Deputy High Court Judge Burns SC held (at §§79 and 81) that the plaintiff shall pay mesne profits to the defendant in respect of the plaintiff’s occupation and alleged trespass of the property from 1 August 2012, and that interest on mesne profits should accrue at 1% over HSBC best lending rate from 1 August 2012 to the date of judgment and thereafter at judgment rate.

12.In the light of the above comparable cases, in which the higher courts invariably allowed pre-judgment interest on mesne profits at the rate of prime plus 1% over the entire period of alleged trespass, it cannot be reasonably argued that this court erred in its order of pre-judgment interest rate and period.

13.Thirdly, during the hearing, Mr Cheung, counsel for the defendant, has acknowledged that this court did not commit any error by ordering pre-judgment interest at the rate of prime plus 1% over the entire period of trespass. Nonetheless, the defendant asks the court to exercise its discretion as to interest afresh. No reasons have been given by the defendant as to why this court should reconsider its judgment in the absence of any identifiable error.

14.In any event, in the light of the authorities as stated at §11 above, I do not consider that there was any plain mistake in my order of pre-judgment interest, or that there is any other strong reason, which gives rise to an exceptional case for the court to exercise its jurisdiction to make an additional judgment.

15.I would therefore dismiss the defendant’s application for an additional judgment as to the pre-judgment interest.

The defendant’s application for leave to appeal

16.It is common ground that no leave to appeal should be granted unless the appeal has a reasonable prospect of success or there is some other reason in the interests of justice that the appeal should be heard: see section 63A(2) of the District Court Ordinance (Cap 336); SMSE v KL [2009] 4 HKLRD 125, §17.

17.In its sole proposed ground of appeal, the defendant takes issue with my order of pre-judgment interest, and claims that this court erred in adopting the rate of prime plus 1%.

18.There is no dispute between the parties that interest is a matter for the discretion of the trial judge: see Komala Deccof (supra), 223. Generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible: cf. Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887, §31, per Kwan JA (as she then was). As explained at §§11-12 above, my order on the rate and period of pre-judgment interest payable on mesne profits is in line with the comparable decisions by the higher courts, and cannot be said to be outside the generous ambit within which a reasonable disagreement is possible.

19.Further, as stated above, the defendant’s stance at the hearing is that this court did not commit any error of law or fact by ordering pre-judgment interest on mesne profits at the rate of prime plus 1% over the entire period of trespass.

20.For the above reasons, I am not satisfied that the sole proposed ground of appeal put forward by the defendant has any reasonable prospect of success. The defendant has not advanced any argument on the “interest of justice” limb. I would therefore dismiss the defendant’s leave to appeal application.

The defendant’s application for time extension to vary the costs order nisi

21.In Ma Wan Farming v Chief Executive in Council and Anor [1998] 2 HKLRD 314, 316I-J and 317L, the Court of Appeal held that the court may grant an extension of time for the parties to apply to vary a costs order nisi after the expiry of the 14-day period prescribed in the equivalent of Order 42, rule 5B(3) of the Rules of the District Court (Cap 336H) (“RDC”).

22.In Pak Sai Ming v J V Fitness Limited, DCEC 494 of 2014 (10 February 2017), §14, HH Judge Alex Lee (as he then was) held that, in order to succeed on an application for extension of time, the applicant has to show, among other things, that there are justifiable reasons for not making the application within time and that there are merits in changing the order. Besides, the court needs to consider whether the extension would cause any prejudice to the other party. The considerations in Order 2, rule 5 of the RDC should also be relevant.

23.According to the defendant’s submissions, its application for time extension is made in view of its first and second Calderbank offers. For the present purposes, it is only relevant to consider the defendant’s second Calderbank offer dated 14 April 2023, in which the defendant offered to settle these proceedings on the following terms:-

(1)  The defendant would not dispute the plaintiff’s claim in respect of Lot 51.

(2)  The plaintiff would forego his claim on the Pathway.

(3)  On a without prejudice basis, the defendant do pay the plaintiff a lump sum of HK$600,000.

(4)  There be no order as to costs.

24.The defendant’s application for time extension hinges on its argument that the pre-judgment interest, if calculated at half of the judgment rate, would render the plaintiff failing to obtain a judgment better than HK$600,000 under the second Calderbank offer.

25.According to Appendix 2 to the defendant’s skeleton submissions, if pre-judgment interest were calculated at half of the judgment rate as it contends, the sum total of mesne profits and interest thereon for the pre-judgment period would be HK$544,224.18, which is HK$55,000 odd short of the lump sum of HK$600,000 offered by the defendant in the second Calderbank offer.

26.It is, however, pertinent to note that the lump sum of HK$600,000 was intended to cover both the plaintiff’s claims for damages and costs. In the Judgment, I awarded the plaintiff half of the costs of these proceedings with certificate for counsel. It is common ground that such costs would most probably exceed HK$55,000 odd. Therefore, even taking the defendant’s case at its highest, its second Calderbank offer still falls short of the sum total of the damages and costs I awarded to the plaintiff, and on such basis, the second Calderbank offer would not assist the defendant’s position on costs.

27.For the above reasons, the defendant has not demonstrated that it has any valid basis to apply for a variation of the costs order nisi on the ground of the second Calderbank offer.

28.Further, I note that the defendant’s application for time extension was made out of time for 2 weeks. The defendant first raised this issue in its solicitors’ letter dated 10 August 2023, and yet an application for extension of time was only made 7 days later on 17 August 2023. In my view, the fact that the parties were then in negotiation would not have prevented the defendant from making an application to vary the costs order nisi within the 14-day period.

29.I am also alive to the public interest of having finality in this matter. Since the defendant has not demonstrated any reasonable arguments on costs, it would not be fair to the plaintiff if the parties were allowed to re-open the issue of costs.

30.In the premises, I would dismiss the defendant’s application for time extension to vary the costs order nisi.

Disposition

31.For the above reasons, the defendant’s summons dated 17 August 2023 is dismissed.

[Submissions on costs]

32.Having considered counsel’s submissions and all the circumstances of this case, I am of the view that this is not an appropriate case for indemnity costs to be ordered against the defendant. I would order that the defendant do pay the plaintiff’s costs of the summons, including the costs of this hearing, with certificate for counsel, to be taxed on the party and party basis if not agreed. The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.

33.I thank counsel for their assistance.

Mr Stanley C K Siu, instructed by Cheung & Liu, assigned by the Director of Legal Aid, for the plaintiff

Mr Y L Cheung, instructed by Tang, Wong & Chow, for the defendant