Chan Wing Tong v. The Incorporated Owners of Kam Chung Building (Jaffe Road) and Others

HCA 1581/2017

[2023] HKCFI 3261

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1581 OF 2017

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BETWEEN

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DECISION
(On Variation of Costs Order Nisi)

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Introduction

1.On 29 May 2023, this Court handed down a decision on P’s summons issued on 16 February 2023 for joinder of the majority owners of the Kam Chung Building, Jaffe Road, and re-amendment of the statement of claim (“Joinder Summons”). I shall follow the nomenclature and abbreviations in that decision (“Joinder Decision”), unless otherwise indicated herein.

2.I allowed the Joinder Summons but ordered P to pay the IO and the MOs their costs, to be taxed if not agreed, on party and party basis (“Order Nisi”).

3.On 9 June 2023, P issued a summons for a variation of the Order Nisi seeking that (i) Save that P shall pay the IO’s costs of and occasioned by the joinder, there be no further order as to costs between P and IO, and that there be no order as to costs between P and the IO for the hearing on 23 May 2023 (“Hearing”); (ii) costs of the Joinder Summons between P and the MOs be in the cause of P’s claim against the MOs; or alternative to (ii), costs of the Joinder Summons between P and the MOs be reserved (“P’s Variation Summons”).

4.On the same day, ie 9 June 2023, the MOs (D2-D4) issued a summons for (i) the Order Nisi to be varied so as to grant a certificate for two counsel to the MOs; (ii) the Order Nisi be varied, for P to pay the MOs their costs of and occasioned by the Joinder Summons, including but not limited to the costs for the Hearing to be taxed if not agreed on party and party basis, with certificate for two counsel (“MOs’ Variation Summons”).

5.IO (D1) issued a summons on 12 June 2023 to seek a variation of the Order Nisi for P to pay the IO their costs of and occasioned by the Joinder Summons, including but not limited to the costs of the Hearing, to be taxed if not agreed, on party and party basis, with certificate for one counsel (“IO’s Variation Summons”).

Brief procedural history

6.The relevant events leading to the issue of the Joinder Summons has been briefly set out in the Joinder Decision.

7.The present action was commenced by P on 5 July 2017, for adverse possession of the Relevant Part of the Building on the Lot since no later than 1974. Suffice to say, the pleadings have been amended a number of times and eventually in October 2021, the action was set down for trial and dates for the 8 day trial 18-27 July 2023 were fixed upon the certificates for time estimates filed by P and the IO and the pre trial review hearing was fixed on 20 April 2023 (“PTR”).

8.MOs issued the LT Proceedings on 10 May 2022 for an order for a compulsory sale of the Building under Cap 545, the trial of which has since been set down for December 2023 before the Tribunal.

9.In June 2022, P’s solicitors wrote to the MOs’ solicitors upon having notice of the LT Proceedings but in that letter, P only asked whether the MOs would bring the present action to the attention of the Lands Tribunal. All MOs said in response was that they would do so in due course by a witness statement and would keep P informed. In that first letter, P’s solicitors did not clearly raise the Legal Issue, which was not raised until P’s solicitors’ letter to the MOs’ solicitors of 5 December 2022.

10.Having received no satisfactory reply from the MOs, P issued the Joinder Summons on 16 February 2023 and a hearing for 15 minutes was fixed at the same hearing of the PTR. The Joinder Summons was duly served on the IO, which at that time was the only defendant. As notice of the Joinder Summons was given to the MOs, MOs’ solicitors filed a notice to act for the MOs on 12 April 2023.

11.P lodged a speaking note on 14 April 2023 for the PTR regarding directions and proposed orders to be sought for the PTR and the Joinder Summons.

12.IO lodged written submissions on 18 April 2023 regarding the directions to be sought at the PTR.

13.MOs lodged written submissions on 17 April 2023 and supplemental written submissions on 19 April 2023 opposing the joinder.

14.MOs did not attend the PTR which duly took place on 20 April 2023, and due to the IO’s and the MOs’ opposition, the Joinder Summons was adjourned for argument to a substantive hearing to be fixed on the earliest possible date in consultation with counsel’s diaries. The Hearing was then fixed as a result thereof.

The general legal principles

15.P essentially relies on Lessy S.A.R.L v Pacific Star Development Ltd [1996] 2 HKLR 1 in which it was held that in an amendment application, there should be two sets of costs: (1) the 1^st set were costs of and occasioned by the amendment, and (2) the 2^nd set were costs of the substantive hearing, and it was held that on an application to amend, where such application was resisted, the usual order was to order (a) costs of and occasioned by the amendment to the other side in any event, but (b) costs of the substantive hearing to the successful party in the argument.

16.The Lessy case was later considered by the then Deputy Judge Andrew Cheung in Man Fong Hang v Man Ping Nam [2002] 4 HKC 538, which concerned a contested application for leave to file supplemental expert evidence. It was held[1], amongst other things, that as general and non-exhaustive guidance regarding the 1^st set of costs, the court must firstly look at the reasons prompting the application and all other relevant matters before deciding on the most appropriate order; as regards the 2^nd set of costs, the court should also take into account all relevant factors; a party on the receiving end of the application must decide before the hearing whether to resist it, and any attempt to have a “try-on” must be discouraged, but however, if there was a reasonable ground for resisting the application, then even if the application was eventually successful, the court could still award the second set of costs to the resisting party.

17.The Lessy case and the Man Fong Hang case were both pre CJR decisions.

18.As summarised by To J in Melvin Waxman v Li Fei Yu, HCA 1972/2012, [2013]6 HKC,424 at [19]:

“Summing up on the post-CJR position, I think the court has much wider discretion as to costs in interlocutory proceedings. Unlike other proceedings, the general rule of costs following the events do not apply. The court is entitled to take into account all the circumstances of the case, including those set out in [Order 62 rule 5], to make such order as it thinks fit. In the exercise of its discretion, the court may take the issue-based approach or may take into account merit of the parties’ case or the possible outcome of the action. The circumstances of interlocutory proceedings are so numerous that it is impossible to make any general rule. Costs to follow the event and costs be to the successful party’s costs in the cause are obvious options.”

19.In fact, in Asgain Company Ltd v Cheng Ka Yan, HCMP 1019/2017, unreported, 31 August 2017 (not cited by the parties to the Court in the present proceedings), a case concerning an application to serve a notice of appeal out of time after leave had been granted, Lam VP, as he then was, in giving the judgment of the court, had said at [20]:

“Lessy SARL v Pacific Star Development Ltd [1996] 2 HKLR 1 and Man Fong Hang v Man Ping Nam [2002] 4 HKC 538 are simply instances where the court, in the exercise of its discretion on costs, took account of the unreasonable conduct of the litigation by a party. Thus, notwithstanding that the nature of relief is a matter of indulgence, if the opposition to such indulgence is unreasonably made, the party who unsuccessfully opposed could be ordered to bear some of the costs. Put in another way, if the court is of the view that the application should not have been opposed based on matters already known to the opposing party, the costs attributable to the unsuccessful opposition were actually caused by the opposition rather than the party seeking indulgence. In that event, there is no reason in principle why the court could not consider ordering costs against the unsuccessful opposing party.”

20.In the present case, it is P who came to the Court to seek an indulgence from this Court, and the question is whether it was reasonable for the IO and/or MOs to oppose the Joinder Summons.

In relation to the IO

21.Insofar as the IO is concerned, P accepts that he is to pay the IO the 1^st set of costs but that as the IO opposed the application and lost, the 2^nd set of costs, ie of the Hearing, should have been to P. However, P is content to accept no order as to costs in relation to the Hearing given that P had to incur costs anyway at the Hearing due to MO’s opposition to the Joinder Summons. P says he had made his stance clear and his suggested time table had made it clear that the joinder would not affect the trial.

22.In paragraph 13 of P’s speaking note for the PTR, P had pointed out that the trial was then still 3 months away, and that there should have been ample time for the MOs prepare for the argument of the Legal Issue, which is a single point of law, and which they had ample notice of. P also referred to paragraphs 4 and 5 of their submissions of 19 May 2023 for the Hearing, in which he indicated that he accepted that there should be no adjournment of the trial and that the trial should proceed as scheduled. P had proposed a draft order for the directions in the event that the Joinder Summons was to be allowed.

23.First of all, as set out earlier, notwithstanding that P had notice of the LT Proceedings in June 2023, the Legal Issue was not clearly raised by P until December 2023, and then it took another two months before P issued the Joinder Summons. Further, it was not clear why the Joinder Summons could not have been fixed earlier than the PTR as it was only a 15 minute hearing. P could have sought indications from both the IO and the MOs after the issue of the Joinder Summons as to whether they would oppose, and if so, to attempt to fix an earlier substantive hearing for argument.

24.Second, insofar the Court can see, prior to the PTR, there was no proposed timetable for filing of pleadings etc by the MOs in the event that the Court were to allow the joinder. Although it was indicated at the PTR that the joinder should not derail the trial, P’s proposed timetable was only contained in a draft order lodged about 3 or 4 days prior to the Hearing.

25.In any event, the trial dates were originally fixed in accordance with time estimates provided by P and IO without any input from the MOs. P should not expect the IO to simply agree to fit into a very tight timetable or schedule for the trial in order to accommodate P’s late application. In my view, the IO was justified in their concern over the lateness of the application, the possibility of the length of the trial being affected with the addition of the MOs and their separate legal team, and the additional costs involved if the joinder was to be allowed. I do not find their opposition to the joinder unreasonable.

In relation to the MOs

26.As for the MOs, P submits that usually an application for joinder will not be served on the proposed additional defendants (because they were not yet parties) but in the present case, given the background, the papers were sent to the MOs’ solicitors and they then appeared to oppose the Joinder Summons.

27.P submits that MOs being “new” parties had not incurred any additional costs by reason of the joinder, and by choosing to appear at an earlier stage before the joinder was granted, instead of applying to disallow the joinder afterwards, MOs would have incurred more or less the same costs and the costs implication should be the same[2]. P therefore argues that the costs between P and MOs should be costs in the cause of P’s claims against them, or reserved so that an overall order can be made after judgment.

28.It is submitted on behalf of the MOs amongst other things that since 2017, P had purposely chosen not to register the writ in this action against the Lot or any part of it, and that the Legal Issue was only clearly raised in December 2022, and that Joinder Decision was on 29 May 2023, some 1 ½ months before the first day of trial. It is submitted that on behalf of the MOs that in light of the very late joinder, the MOs were forced to play “catch up”[3].

29.As mentioned in paragraph 7 of the Joinder Decision, P’s solicitors had written to the MOs’ solicitors on 5 December 2022 to enquire whether the MOs would agree that an order for sale under Cap 545 would not bind P in the event P’s claim for adverse possession herein was to succeed. This was followed by a further letter sent on 6 December 2022 seeking the Confirmation from the MOs, which was not provided by the MOs.

30.It is clear that by then the MOs were fully aware of the Legal Issue raised by P, and notwithstanding this, as mentioned in paragraph 10 of the Joinder Decision, at a call over hearing on 29 March 2023 in the LT Proceedings, MOs’ representative submitted that even if P’s claim herein were to succeed, it would be at most only an incumbrance. Although by then, P had already issued the Joinder Summons, MOs’ stance did not assist to allay P’s concern.

31.MOs had lodged two written submissions (respectively 13 and 3 pages in length) prior to the PTR, to oppose the Joinder Summons on the ground that the joinder was wrong, premature and wholly unnecessary. Then, a further 29 page 2^nd supplemental written submissions were lodged on behalf of the MOs for the Hearing on the ground that P’s application was unnecessary, pre-mature, misconceived and erroneous.

32.Suffice to say, substantial costs and time were incurred by MOs’ opposition to the joinder, and they were in the end unsuccessful. However, this would not mean that P would ultimately succeed with his argument on the Legal Issue. Ultimately, this Court was of the view that to give effect to the underlying objectives of the CJR, and to avoid multiple applications, this Court allowed the Joinder Summons so that the Legal Issue could be canvassed at the same time of the trial.

33.Having considered all the circumstances, I am persuaded that a reasonable costs order should be costs in the cause of P’s claim against the MOs.

Conclusion

34.In light of all said above, I am prepared to vary the Order Nisi, as follows:

(1) In relation to the IO,

(a) P shall pay the IO their costs of and occasioned by the Joinder Summons, including but not limited to the costs of the Hearing, to be taxed if not agreed, on party and party basis, with certificate for one counsel;

(b) P shall pay the IO costs of paragraph 1 of P’s Variation Summons and the IO’s Variation Summons, to be taxed if not agreed, on party and party basis, with certificate for one counsel.

(2) In relation to the MOs,

(a) MOs’ costs of and occasioned by the Joinder Summons, including but not limited to the costs of the Hearing to be costs in the cause of P’s claim against the MOs;

(b) As P has succeeded in paragraph 2 of P’s Variation Summons, and the MOs have failed in the MOs’ Variation Summons, I order the MOs to pay P’s costs of and occasioned by the Variation Summonses, to be taxed if not agreed, but with certificate for one counsel, as the matter does not include complicated legal arguments.

Mr Benjamin Chain and Mr Kevin Poon, instructed by Kitty So & Tong, for the Plaintiff

Mr Vincent Wan, instructed by Lau, Chan & Ko for the 1^st Defendant

Ms Verna Lui, instructed by Lo & Lo, for the 2^nd to 4^th Defendants