The Incorporated Owners of Wing Fai Building v. Chan Yun Choi and Another

LDBM 29/2020

[2024] HKLdT 4

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO.29 OF 2020

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DECISION ON COSTS

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1.This application was tried before me in April and May 2023. On 17 November 2023, I handed down my judgment (the Judgment)[1] whereby I ordered that: -

(1)  IO’s claim against the 2 Rs for damages in sum of $214,000 for increased costs of waterproofing works be dismissed; and

(2)  Mandatory injunction be granted that the 2 Rs do within 60 days remove Alterations A & B (including reinstating Former Door A at Point A and restoring former wall at Point B) in line with 18/F plan of Approved Plans of the Building[2].

2.In addition, I made a costs order nisi in the Judgment that 30% of IO’s costs of this application, including 30% of all reserved costs and 30% of IO’s costs of this trial together with certificate of counsel, be paid by 2 Rs to IO to be taxed at District Court scale if not agreed (CO Nisi)[3].

The Application

3.On 30 November 2023, the 2 Rs took out an interlocutory application to vary CO Nisi (the Application) and offered 3 alternative costs orders in lieu (the 3 Alternatives).

4.IO opposed all the 3 Alternatives and sought to make CO Nisi absolute.

5.Pursuant to my directions, R1 have filed and served his 2 affirmations on 6 and 13 December 2023 in support of (and Mr Ng Ka Ki on behalf of IO has filed an affirmation on 11 December 2023 opposing) the Application.

6.Trial counsels for the 2 Rs (i.e. Mr Ng) and for the IO (i.e. Ms Tse) appeared at the hearing of the Application and they have lodged their respective skeleton submissions in advance of the said hearing.

The Judgment

7.The subject matters in dispute are 6 building works that had been carried out at 18/F and roof of the Building. They fall within two groups: -

(1)  the 3 UBWs i.e. Item 1 (or Reduced Item 1), Item 2 and Item 3 at 18/F and roof of the Building (these 3 works were grouped together because they were subject matter of the 8/2019 Order and the 11/2020 Order issued by BD, as the case may be); and

(2)  the 3 Alterations i.e. Alteration A, Alteration B and Alteration C made to 18/F common parts of the Building at Point A, Point B and Point C respectively.

8.IO began this application in May 2020, after the 2 Rs have failed, inter alia, to accede to IO’s Letter before Action in February 2020. In prayer of its Form 29, IO sought the following reliefs:

(1)  Declaration that the 2 Rs are in breach of DMC, BMO and BO for allowing illegal structures to be erected to the Building;

(2)  Injunction restraining the 2 Rs from erecting illegal structures on FR on 18/F, and roof, of the Building without prior consent;

(3)  Injunction restraining the 2 Rs from obstructing or occupying the common parts of the Buildings including access to the Machine Room and common walls of the Building;

(4)  Order that the 2 Rs at their own costs remove (i) Item 1, Item 2 & Item 3; (ii) Alteration A; (iii) Alteration B; and (iv) Alteration C;

(5)  Order that the 2 Rs do at their costs reinstate those parts of the Building affected by the 3 UBWs in accordance with Approved Plans;

(6)  Order that the 2 Rs do provide IO uninterrupted access to Rs’ Premises for carrying out tests or remedial works for water seepage of the Building;

(7)  Further or alternatively, order that IO be granted, at the expenses of the 2 Rs, the right to enter into 18/F FR and roof of the Building to carry out necessary works including removal of the 3 UBWs and reinstatement of damaged parts of the Building as identified in (4) above in accordance with Approved Plans; and

(8)  Damages to be assessed (Relief 1 to Relief 8 as the case may be).

9.Before trial, the 2 Rs had, either by their amendments made to Form 7 in September 2021 or by R1’s admissions made in his witness statement filed on 28 January 2022, disclosed that they had removed:

(1)  Item 2 in about June 2020;

(2)  Reduced Item 1 in about August 2021;

(3)  Item 3 in about September 2021; and

(4)  Alteration C[4] (R1 said in the box that it was done in 2021).

10.Because of the above pre-trial developments, Ms Tse at her opening speech made it clear that (and she also confirmed in her closing submissions[5]) that IO only sought:

(1)  order that the 2 Rs do at their own costs remove Alterations A and B (i.e. Relief 4(ii) & (iii)) or, alternatively, that IO be allowed access to Rs’ Premises for the said purpose (similar but not identical to Relief 7); and

(2)  damages in sum of $214,000 representing IO’s increased costs of carrying out waterproofing works to roof of the Building (i.e. Relief 8).

11.On parties’ respective case[6], 8 issues[7] have been resolved in the Judgment in the manners as follows: -

(1)  Whether or not the 2 Rs had installed, permitted or adopted the 3 UBWs? The 2 Rs have, I found, permitted/or adopted the 3 UBWs (inclusive of Reduced Item 1)[8].

(2)  Were the 2 Rs in breach of BO, BMO or the DMC for the 3 UBWs as alleged? The 3 UBWs (inclusive of Reduced Item 1) were, I ruled, made in breach of the DMC, for which the 2 Rs are liable[9].

(3)  If so, did such breach by the 2 Rs cause IO to delay carrying out waterproofing works to roof of the Building and to incur increased costs? IO had, I found, demanded the 2 Rs to remove the 3 UBWs at Rs’ Premises to allow waterproofing works to go ahead but the 2 Rs had refused[10]. The 2 Rs had delayed removing Reduced Item 1, Item 2 and Item 3 in defiant with the 8/2019 Order and the 10/2020 Order[11]. Their refusal over Reduced Item 1 was a cause of IO’s inability to complete all waterproofing works[12]. However, for non-disclosure of material tender documents, IO has failed to prove that it had incurred increased costs to carry out the said works due to the said refusal[13].

(4)  If so, what is the proper amount of damages payable by the 2 Rs to IO for the said breach in (3)? Had IO proved causation on issue (3) above, this Tribunal would have assessed IO to have incurred increased waterproofing costs in sum of $35,326[14].

(5)  Whether or not the 2 Rs had made or adopted the 3 Alterations? The 2 Rs have, I found, adopted the 3 Alterations[15].

(6)  Were the 2 Rs in breach of BO, BMO or the DMC for the 3 Alterations as alleged? The 3 Alterations, which were likely made by predecessor(s) of the 2 Rs after making of the DMC, were, I ruled, in breach of BMO and the 2 Rs are liable for them under BMO (and also in deemed breach of the DMC)[16].

(7)  If so, could IO acquiesce, and had IO acquiesced, over Alterations A & B as alleged? I found that such defence of acquiescence raised by the 2 Rs to Alterations A & B fails[17].

(8)  If no, whether or not injunction/order now sought by IO over Alterations A & B should be granted against the 2 Rs? I found it just and appropriate to grant injunction against the 2 Rs to remove Alterations A & B[18].

The variations sought in the Application

12.In all the 3 Alternatives, the 2 Rs seek to recover their costs[19] from IO to different extent, but all in 3 alternative taxation basis i.e. indemnity basis, common fund basis or party and party basis.

13.In so far the 2 Rs agree to pay costs to IO in First Alternative below, they offered to pay only party and party costs.

14.The 3 Alternatives proposed by the 2 Rs in the Application are as follows: -

(1)  IO pays the 2 Rs i) all costs of Ben and (ii) 70% costs of the application while the 2 Rs pay IO 30% costs of the application except that there be no costs order regarding Honby’s costs (First Alternative)[20];

(2)  IO pays the 2 Rs i) all costs of Ben and (ii) 70% costs of the application while there be no costs order regarding Alteration Claim (Second Alternative); and

(3)  IO pays the 2 Rs all costs of Ben while there be no costs order regarding the application (Third Alternative).

Applicable rules

15.S.12(1) of Lands Tribunal Ordinance (LTO)[21] provides that the costs of and incidental to all proceedings in the Tribunal are in the discretion of the Tribunal, and the Tribunal has full power to determine by whom and to what extent the costs are to be paid. Under s.12(7) of LTO, Order 62 of the Rules of the High Court (RHC)[22] applies, with the necessary modifications, to the award, taxation and recovery of costs in the Tribunal.

16.O.62 r.3(2), RHC, provides that, if the Court sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears that in the circumstances of the case some other order should be made as to the whole or any part of the costs.

17.O.62 r.5(1), RHC, provides that, the Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account —

(aa)  the underlying objectives;

(b)  any payment of money into court and the amount of such payment;

(d)  any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e)  the conduct of all the parties[23];

(f)  whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g)  any admissible offer to settle made by a party, which is drawn to the Court’s attention.

18.O.62 r.7(1), RHC, further provides that where anything is done or omission is made improperly or unnecessarily by or on behalf of a party, the Court may direct that any costs to that party in respect of it shall not be allowed to him and that any costs occasioned by it to other parties shall be paid by him to them.

19.Under O. 22, r. 2(1), RHC, a party to an action containing a money claim or a non-money claim or both arising from any cause or causes of action may make an offer to settle the whole claim, a part of it or any issue arising from it in accordance with this Order.

20.Under O. 22, r. 2(4), RHC, nothing in this Order prevents a party from making an offer to settle in whatever way he chooses, but if that offer is not made in accordance with this Order, it does not have the consequences specified in this Order, unless the Court so orders.

21.O.22 r.3(1), RHC, provides that an offer by a defendant to settle the whole or part of a claim or an issue arising from the claim does not have the consequences specified in this Order unless it is made by way of a sanctioned offer or a sanctioned payment or both. O.22 r.3(2), RHC, further provides that where an offer by a defendant involves a payment of money to the plaintiff, the offer must be made by way of a sanctioned payment.

Discussion of 2 Rs’ Submissions

Costs to follow event of “Waterproofing Claim”

22.Mr Ng first submitted that the 2 Rs are the winners of Relief 8 (which he called in his skeleton as “Waterproofing Claim”). Costs should, he submitted, follow the event for the Waterproofing Claim such that IO should pay the 2 Rs 70% costs of the application under First & Second Alternatives.

23.CO Nisi, Mr Ng argued, meant that costs does not follow the event for the Waterproofing Claim and that the 2 Rs would be unfairly held liable to pay 30% of Honby’s costs (which costs are said to be solely related to Waterproofing Claim which has been dismissed).

24.There is nothing, Mr Ng argued, to displace the general rule of costs following the event for the Waterproofing Claim. There is nothing to suggest that the 2 Rs had raised issues or made allegations “improperly” or “unreasonably”.

25.I do not agree with Mr Ng’s submissions above.

26.For the following reasons, IO has, I think, emerged after trial as the only winner of these proceedings.

(1)  There is only IO’s claim that was tried and the 2 Rs raised no counterclaim. There is thus only one event i.e. IO’s claim.

(2)  IO had, I think, substantially obtained most reliefs it claimed against the 2 Rs in Form 29.

(i)  In terms of subject matters in dispute, IO had obtained mandatory injunctions in the Judgment for the 2 Rs to remove Alterations A & B i.e. Relief (4)(ii) & (iii).

(ii)  Prior to trial, the 2 Rs had removed Reduced Item 1, Item 2 and Item 3 sought by IO as Relief 4(i) and Relief 5 to Form 29. Notwithstanding the 8/2019 Order and the 10/2020 Order, I think these proceedings still played their part (or exerted its pressure) in causing the 2 Rs to remove these 3 items in line with the said 2 orders. While not admitting their liability, the 2 Rs also removed Alteration C (i.e. Relief 4(iv)) before trial as demanded by IO in Form 29[24].

(iii)  Had the 2 Rs not removed on their own Alteration C, Reduced Item 1, Item 2 and Item 3 before trial, on my findings and ruling on issues (1), (2), (5) and (6) after trial, I would have likely also acceded to IO’s demands for their removal in the Judgment.

(iv)  Hence, IO had, I think, effectively prevailed on all 6 building works in dispute by commencing this application.

(v)  In terms of relief claimed in Form 29, except for Relief 8, which was dismissed, IO had, I think, obtained after trial its “major” relief sought before trial[25] i.e. Relief 4 and Relief 5. For the remaining relief like Relief 6, they are, I think, of relatively minor importance. Relief 1, 2 and 3 are, I think, ancillary. Relief 7 is, one thinks, sought mainly as an alternative.

(3)  In terms of issues(s) in dispute, IO had, I think, prevailed on as many as 6 out of 8 issues resolved in the Judgment. For issue (3), except for the sub-issue of causation, IO had also prevailed on its other sub-issues. Issue (4) is the only issue where the 2 Rs prevailed as this Tribunal preferred quantum opinion of Ben to those given by Honby.

27.Hence, it is, in my views, wrong for Mr Ng to submit that the 2 Rs are the successful parties for the alleged event of Relief 8 and for costs to follow this alleged event.

28.Applying the general rule of costs following the event to this case, the correct starting point is, I think, that the 2 Rs should pay IO (the successful party) all the costs of these proceedings.

29.As a matter of established principles, the above general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or costs of the proceedings he may be deprived of the whole or part of his costs. This is the 3^rd principle stated in In re Elgindata Ltd (No.2)[26] referred to in Lam Po Yee & Another v Dr Chan Yee Shing[27] cited by Mr Ng.

30.Hence, this Tribunal took, I think, the correct view in the Judgment that IO should still be awarded the costs of these proceedings though it failed on the sub-issue of causation in issue (3) and failed to get Relief 8 (i.e. damages for alleged increased waterproofing costs). At the same time, IO should (as this Tribunal had, I think, rightly decided in the Judgment) be deprived of costs for its failure to prove this discrete Relief 8 that was tried on top of Alterations A & B (whose time spent was roughly estimated by this Tribunal at 30%)[28].

31.Though the 2 Rs will be required under CO Nisi to pay 30% of Honby’s costs, that is, I think, entirely a result of 2 Rs’ liability to pay IO 30% costs of IO for these proceedings. Mr Ng in his skeleton did not challenge the rough estimate made by this Tribunal of 30% time being spent on the 3 Alterations. On that basis, there is, I think, nothing unfair about the 2 Rs paying 30% of Honby’s costs either. In any event, this Tribunal had also relied on factual evidence given by Honby (and by Ben) in arriving at the background facts and in deciding issues other than issue (4)[29]. Honby’s costs are thus not “solely” related to Relief 8 as submitted by Mr Ng.

32.To order IO (the only successful party, in my views, to these proceedings) to pay the 2 Rs (the losing parties) 70% costs of these proceedings for the above failure of IO on discrete Relief 8 as Mr Ng suggested in the First & Second Alternatives when IO was not alleged to be guilty of any improper or unnecessary act or omission[30] would, I think, be contrary to established principles: see authorities considered in Lam Po Yee & Another, supra[31], and the 4^th principle stated in In re Elgindata Ltd (No.2)[32].

33.Having regard to the entirety of the Judgment, applying the general rule of costs following the event relied by Mr Ng to this case, CO Nisi should, in my views, be made absolute.

34.Mr Ng in his skeleton submissions relied on Lok J’s costs decision on counterclaim in Herman Budihardjo & Others v Hadi Gunawan & Others[33] to support his submissions in this section. However, Lok J in that case did not purport to lay down any general principles as to costs. The costs order made in that case was no doubt the result of the exercise of the unfettered discretion of his lordship in the special circumstances of that case.

35.In the different circumstances of this application highlighted in this section, including its history, my rulings and orders in the Judgment, I remain of the same view in the Judgment that it is appropriate to exercise my costs discretion by way of CO Nisi.

Genuine attempts to settle this application by the 2 Rs

36.Secondly, Mr Ng submitted that the 2 Rs had made genuine attempts to settle this application. The 2 Rs had written to make settlement offers to IO as early as on 21 August 2020. In their offers, they had given the Undertaking to IO, proposed not to obstruct IO in removing the 3 Alterations and also offered to make payment as much as $180,000 in damages and costs to IO.

37.Mr Ng stressed that, judging from IO’s written offer, IO was also amendable to itself carrying out reinstatement works regarding the 3 Alterations as the 2 Rs suggested. Had IO not insisted on demanding as much as $380,000 by way of damages and costs, this application would, he argued, not have come to trial.

38.In particular, Mr Ng drew to the attention of this Tribunal that the 2 Rs had, on 11 May 2022, properly made a sanctioned offer (and sanctioned payment of $70,000) in accordance with O.22, RHC, to IO, which, however, did not accept the same. This offer and payment is, Mr Ng added, another genuine attempt to settle this application on the part of the 2 Rs.

39.I cannot agree with Mr Ng either.

40.Regarding the 8 settlement offers by letters from the 2 Rs to IO referred to at para 9 and 10 of Mr Ng’s skeleton[34], against the background or history of this case highlighted below and in light of the Judgment, it was not, I think, unreasonable for IO to decline them there and then.

(1)  As Ms Tse has rightly pointed out, the Undertaking given (or continued) by the 2 Rs in several of these offers simply gave no deadline by which they would remove the 3 UBWs latest.

(i)  At the commencement of this application in May 2020, the 2 Rs had already not compiled with the 8/2019 Order issued by BD regarding the 3 UBWs, including BD’s deadline for their removal.

(ii)  Neither did the 2 Rs respond to IO by May 2020 to IO’s demands for their removal made also as early as in December 2019[35].

(iii)  The 2 Rs had persistently delayed removing Reduced Item 1, Item 2 and Item 3 for substantial periods in defiant with the 8/2019 Order and the 11/2020 Order[36].

(2)  In the Undertaking, the 2 Rs also gave, I note, no specific undertaking to remove the 3 Alterations at 18/F common parts of the Building (not to mention that deadline was also nowhere found).

(i)  The 2 Rs merely undertook in the Undertaking to comply with the DMC terms in so far they related to Rs’ Premises, including allowing IO’s workers to carry out works and tests at Rs’ Premises that are required under the DMC. The 3 Alterations at 18/F common parts of the Building are not involved at all.

(ii)  Moreover, the 2 Rs further argued, among others, as part of their case in Form 7 and at trial that Alterations A & B were made by the Developer before making of the DMC, such that they could not be in breach of the DMC[37].

(3)  IO had, I think, apparently achieved better or obtained more by continuing this application than withdrawing it in August or September 2020 as the 2 Rs had suggested or offered.

(i)  Reduced Item 1, Item 3, Alteration C were, one notes, removed by the 2 Rs afterwards.

(ii)  In addition, IO managed to obtain after trial mandatory injunction to require the 2 Rs to remove Alterations A & B by continuing this application rather than discontinuing/withdrawing it as they had offered or suggested in November 2021 or March 2022.

(4)  The undertaking by the 2 Rs in their letters dated 20 April and 3 May 2022 to comply [within reasonable time] any order of the authorities over Alterations A & B “should there be an order made by BD or by other relevant departments” over them is, I would say, meaningless. It ignored the long delay incurred by then and allowed the 2 Rs to avoid making such removal if no government department makes such an order (when IO’s separate complaint against the 2 Rs is breach of the DMC and BMO on their part).

(5)  While the 2 Rs had, in their offer dated 3 May 2022 and in their sanctioned offer dated 11 May 2022, “undertook not to obstruct” IO to remove Alterations A & B at IO’s own expenses, though IO was then amenable to the said proposal by the 2 Rs, IO had, as conceded by Mr Ng, managed to beat this proposal by obtaining after trial mandatory injunction to require them to remove Alterations A & B,.

(6)  Given that IO took out this application in order to remove the 3 UBWs and the 3 Alterations[38], unless the 2 Rs took concrete action to remove them or gave concrete undertaking to remove them by concrete deadline, it was, one thinks, unlikely for the same to come to an end with IO simply taking money from the 2 Rs by way of damages and costs (despite such monetary offer was increased by the 2 Rs from $10,000 to $180,000 over time[39]).

41.Had it been reasonable for IO to accept undertaking of the 2 Rs given in May 2022 not to obstruct IO’s removal of Alterations A & B at IO’s own expenses, IO had, I think, reasonably proceeded with this application up to such stage and IO should be entitled to costs until then[40]. Such undertaking offered by the 2 Rs does not, I think, justify this Tribunal to order costs against IO from day one or to make no order as to costs regarding the 3 Alterations (or the application) as suggested in all the 3 Alternatives.

42.It is true that IO had, as Mr Ng quoted at para 9 of his skeleton, in its offer dated 6 June 2022 demanded, among others, that the 2 Rs pay it as much as $380,000 by way of damages for increased costs of waterproofing works and costs of this application.

43.Assuming the above monetary demand by IO was then unreasonable[41], it remains, I think, most doubtful if the 2 parties could, and would, have agreed on a reduced figure to settle all these proceedings. Looking at parties’ correspondences, the highest sum that the 2 Rs were prepared to offer (and had offered) was only $180,000. The difference between the two sides was substantial.

44.Under CO Nisi, IO has already paid, I think, a heavy price of being deprived of 70% of its costs of this application for not settling this application, proceeding with a costly and lengthy trial, and failing to get Relief 8 in the end.

45.Be that IO might have made unreasonable settlement offer(s), it does not follow from the same that the 2 Rs had made reasonable offers to settle this application as Mr Ng had submitted. Oy my analysis in this section, the 2 Rs had, I think, failed to do so to justify any of the 3 Alternatives.

Conducts of IO including material non-disclosure

46.Thirdly, Mr Ng asked this Tribunal to consider the following conducts of IO in exercising its discretion on costs.

47.IO had, Mr Ng argued, in breach of Deputy District Judge (DDJ) Roy Yu’s order dated 4 August 2022, failed to make disclosure of tender documents, without which the 2 Rs cannot have a fair trial. Engaging quantum experts against backdrop of such non-disclosure, it was said, wasted parties’ time and resources, as parties’ experts could not give fully informed opinions. Had such omission not been elicited from Mr Lam by way of cross-examination, this Tribunal might well, it was argued, have been misled to order damages in sum of $35,326 against the 2 Rs on the Waterproofing Claim.

48.Another conduct of IO that Mr Ng complained of is that IO had exaggerated the amount of costs incurred by it in making its offers to the 2 Rs. Mr Ng cited IO’s offers by way of letter dated 9 December 2021 (asking for costs of $280,000) and letter dated 6 April 2022 (asking for costs of $400,000) as examples.

49.Hence, the 2 Rs should, Mr Ng submitted, be entitled to their costs on the Waterproofing Claim (and at a higher basis than party and party basis) in view of IO’s conducts above (including material non-disclosures) and their genuine attempts to settle the case.

50.Further, for the same reasons above, the 2 Rs should, Mr Ng submitted, be awarded their costs on a basis other than usual party and party basis. These are, he submitted at the hearing of the Application, “special and unusual” features in this case that justify higher basis of taxation. The manner IO had conducted this litigation, said Mr Ng, was “not satisfactory” at all.

51.Mr Ng’s submissions above cannot, I think, succeed either.

52.In the Judgment, I never found IO in breach of DDJ Roy Yu’s order dated 4 August 2022, which required IO to “exchange all quotations/contracts of waterproofing works of the Building intended to be relied upon by parties for the purpose of their respective expert reports (italics supplied)”. Had IO not so intended to do with their non-disclosed tender documents, IO could not, one thinks, have breached the said order. Indeed, the 2 Rs had not taken any interlocutory application before trial claiming of such breach. Mr Ng never cross-examined Mr Lam at trial complaining of such breach. Nor did he complain of such breach in his written closing submissions.

53.It is true to say that parties’ quantum experts had not be been fully informed due to the said non-disclosure. However, such costs paid by the parties for (and such time taken at trial on) their opinion have not, I think, been wasted as this Tribunal did prefer Ben’s opinion to that of Honby on issue (4) and assess damages at $35,326 as alleged by the 2 Rs had IO proven causation on issue (3).

54.The parties cannot, one thinks, predict my ruling on issue (3) with certainty before trial. Had IO proven issue (3), including causation thereof, after trial, the 2 Rs could have, one thinks, nothing to argue that their costs incurred on Ben have been wasted. In that event, Ben’s opinion would have saved them from paying more damages to IO.

55.In so far this Tribunal also relied on factual evidence given by parties’ quantum experts in arriving at the background facts and in deciding issues other than issue (4), their efforts (and costs for their effort) have definitely not been wasted as well.

56.It is also true to say that, had not for Mr Ng’s skillful cross-examination to expose such non-disclosure at trial (which, I believe, was conducted fairly) this Tribunal might well have been satisfied on causation and ordered damages of $35,326 against the 2 Rs. But Mr Ng never submitted that IO had deliberately, or willfully, failed to make the said disclosure. Importantly, this Tribunal has not so found either in the Judgment. Indeed, this Tribunal did not know of the reason, if any, for such non-disclosure at trial, as Mr Ng had never cross-examined Mr Lam for the same[42].

57.In our adversarial system, it is not uncommon for a party to fail to prove after trial (after cross-examination of his/her witness(es) by the opponent) one issue or another for want of producing sufficient evidence like documents. This application is, I think, one such instance[43]. I am afraid there is nothing special or wrongful about IO’s non-disclosure of tender documents at this trial.

58.Moving to the amount of costs sought by IO during parties’ negotiation, armed with a costs breakdown (totaling $371,766 for IO’s costs and disbursement from 11 February 2020 to 4 May 2022) supplied by IO’s solicitors in a letter on 4 May 2022, Mr Ng submitted that it was “highly likely” that the sum of $280,000 sought by IO as its costs in its offer dated 9 December 2021 was “overstated”. Moreover, there was, he argued, “no basis” for IO’s solicitors to have asked for costs as much as $400,000 in IO’s offer dated 6 April 2022.

59.I do not think this Tribunal can fairly decide now that IO’s solicitors had made “inflated” costs offers to settle on 9 December 2021 and on 6 April 2022 as Mr Ng suggested above.

(1)  IO’s solicitors had only given to solicitors for the 2 Rs a “rough” costs breakdown in its letter 4 May 2022 marked “without prejudice” during parties’ negotiation.

(2)  The 2 sums sought by way of costs for IO by IO’s solicitors were not, so to speak, outrageous to the extreme that one can jump to an easy conclusion. Even for IO’s costs offer of $400,000 dated 6 April 2022, its difference in dollar term with that of $371,766 in the said “rough” breakdown up to 4 May 2022 is as small as $28,234 for a time difference of less than 1 month between the two.

(3)  At this stage, this Tribunal simply does not have detailed or sufficient information on costs incurred (or works done) by IO’s solicitors up to dates of these 2 costs offers to decide on the proper amount then payable by IO to its solicitors.

(4)  There are formal and sophisticated taxation procedures down the line to tax IO’s bills of costs if the need arises.

60.In any event, assuming, but without deciding, that the above 2 costs offers by IO were “inflated”, solicitors for the 2 Rs should well be aware that their clients, if ordered to pay costs, are ordinarily liable to pay costs on a party and party basis no matter what IO’s solicitors might well have charged IO for their service. If necessary, this Tribunal would repeat [44] herein.

61.Hence, the 2 Rs have not, I think, proven such alleged IO’s misconducts they have complained of. In any event, Mr Ng characterized IO’s conduct of this litigation in his skeleton submissions at no higher than “unsatisfactory”. Overall, this Tribunal can find no ground, or no sufficient ground, in his submissions to order costs against IO on the Waterproofing Claim in the First & Second Alternatives.

62.Neither is there, I think, any alleged “special” or “unusual” feature in this case as submitted by Mr Ng to justify making costs order against IO on a taxation basis higher than the usual party and party basis: Libertarian Investments Ltd v Thomas Alexej Hall, unreported, FACV 14/2012, 11 March 2014, para 6, per Ribeiro PJ, and Commissioner of Inland Revenue v Poon Cho Ming John (No.2) (2020) 23 HKCFAR 74, 78, per Bokhary NPJ.

Trial over the 3 Alterations could have been avoided

63.Mr Ng next complained that IO had not mentioned of the 3 Alterations in IO’s Letter before Action sent to the 2 Rs. Had the same been included, costs on the 3 Alterations could, Mr Ng argued, have been avoided, especially in light of willingness of the 2 Rs to allow IO access to Rs’ Premises to carry out reinstatement works regarding the 3 Alterations.

64.In another attempt to avoid litigation on the 3 Alterations, the 2 Rs, Mr Ng stressed, wrote to IO on 14 September 2020 to seek various information on them such that they could be advised to take necessary action. But IO did not provide the information sought in its letter dated 15 September 2020.

65.Against the background of willingness of the 2 Rs to provide access of Rs’ Premises to IO to do reinstatement works regarding the 3 Alterations, Mr Ng further criticized IO of not informing the 2 Rs quantum of costs incurred by IO until very late stage.

66.Had IO not insisted on damages and costs as much as $380,000, not made un-pleaded further request in relation to cat ladder, the claim over the 3 Alterations could, Mr Ng argued, been settled. Hence, it is, he argued, appropriate for this Tribunal to make no order as to costs on them as suggested in the Second Alternative.

67.To start with, on a proper reading of the entirety of IO’s Letter before Action, I have already found in the Judgment that the said letter included IO’s complaint of the 3 Alterations made to 18/F “common parts” of the Building[44].

68.Had the 3 Alterations not been included in IO’s Letter before Action in February 2020 and appeared for the first time 3 months later in IO’s application filed in May 2020, for my observations in this section, I do not think such short delay matters much in terms of settlement of IO’s claim over the 3 Alterations.

69.Judging from letters written by solicitors for the 2 Rs (and from Form 7 filed on their behalf) until March 2022, the 2 Rs at first took a denial stance regarding the 3 Alterations.

(1)  For example, in their letter dated 28 August 2020, contrary to my ultimate rulings on issues (5) to (8) in the Judgment, the 2 Rs denied “adopting” the 3 Alterations in “breach” of the DMC and asserted “acquiescence” on the part of IO.

(2)  Up until, at least, March 2022, the 2 Rs in their negotiation with IO demanded IO to “withdraw/discontinue” these proceedings and made no offer at all of taking any concrete action over the 3 Alterations.

70.Claiming that they could not advise the 2 Rs taking necessary action without such confirmation, solicitors for the 2 Rs instead on 28 August 2020 (and 14 September 2020) requested IO to provide them: i) IO’s record as to when and by whom the 3 Alterations were made; ii) professional confirmation whether the walls/doors in questions belonged to IO; iii) professional confirmation that they are structural alteration in breach of the DMC; and iv) whether their removal are necessary and in the interest of IO (the Request).

71.As solicitors for IO rightly pointed out in their letter dated 15 September 2020, it was, I agree, entirely for the 2 Rs to decide for themselves whether to seek from professional or otherwise the said information in the Request if they require the same for any reason for IO’s claim regarding the 3 Alterations (which claim has, I think, been properly set out by IO in Form 29[45]).

72.One notes that, in the absence of IO’s confirmation to the Request, the 2 Rs nonetheless removed on their own Alteration C in 2021 without, they say, admission of liability. Judging from that, there is, I think, no substance at all in the allegation in [70] that the 2 Rs could not take the necessary action without confirmation from IO.

73.Had the 2 Rs been interested to settle on the 3 Alterations earlier or at all with IO as is now suggested by Mr Ng, this Tribunal sees no reason why they could not have removed Alterations A & B without admission of liability before trial as they did with Alteration C. After all, in the Judgment, I found it appropriate to grant mandatory injunction to require them to do so in the future despite closing submissions from Mr Ng to the contrary on issues (5) to (8).

74.As the correspondences show, the 2 Rs did not make their first offer regarding the 3 Alterations until as late as on 20 April 2022 (and repeated in their sanctioned offer dated 11 May 2022) but it was, I think, a “meaningless” offer: see [40(4)] above.

75.At the same time, due to trial preparation, the costs of both parties have increased considerably over time. To put the record straight, the 2 Rs did not ask for costs breakdown from IO’s solicitors in the early correspondences. Absent such breakdown from IO before 4 May 2022, solicitors for the 2 Rs had no difficulty making costs offers to IO starting from zero (i.e. no order as to costs) in August 2020 and raising the offer figure slowly over time (it increased at most to only $180,000 in full settlement, inclusive of costs, on 3 May 2022).

76.Moreover, absent costs breakdown from IO, there was, one thinks, nothing to prevent the 2 Rs offering (or agreeing) to pay IO’s costs at such sum to be taxed if not agreed (as they did by making their sanctioned offer to IO on 11 May 2022).

77.It is true that solicitors for the 2 Rs did suggest on 3 May 2022 (and repeated in their sanctioned offer dated 11 May 2022) that the 2 Rs undertook, as an alternative to their “meaningless” offers, not to obstruct IO from carrying out necessary works at IO’s own expenses regarding the 3 Alterations.

78.Judging from, inter alia, letter dated 6 June 2022 from IO’s solicitors, it is also true that IO was, as Mr Ng submitted, then amendable to settlement along similar lines to Relief 7 (as IO also made offers to the 2 Rs including such term of its carrying out demolition and reinstatement works with the 2 Rs providing unimpeded access) and proposing to the 2 Rs other terms such as its erection of a cat ladder leading to WC Tank on the roof of the Building not found in Form 29.

79.But, against parties’ substantial difference over monetary figure at [43], on which I have entertained doubt if they could overcome it among themselves, regarding the crucial disposal of the 3 Alterations, in light of, inter alia, their past delaying history over the same and the 3 UBWs, the 2 Rs simply did not, I think, go far enough on this point in around mid-2022 in their attempt to settle this entire application with IO[46]. Indeed, the 2 Rs never went far enough on this point before trial because this was as far as they went.

80.As things turned out, IO beat the above offer from the 2 Rs by prevailing on issues (5) to (8) and obtaining its mandatory injunction over Alterations A & B in the Judgment. IO became the successful party on this discrete clam over the 3 Alterations.

81.Looking at the above history, and result, of IO’s claim over the 3 Alterations, I do not agree with Mr Ng’s criticism of IO in this section. I do not agree with him that trial over the 3 Alterations could have been avoided as he submitted. It is, I think, no more than his speculation after the event. I cannot agree with him that there should be no order as to costs over the 3 Alterations as was suggested in the Second Alternative.

Costs of quantum experts wasted due to non-disclosure

82.In any event, experts’ costs, said Mr Ng, had been wasted due to IO’s non-disclosure of tender documents and thus IO should be held responsible for such wasted cost of parties’ experts, not to mention that this Tribunal had preferred Ben’s opinions on quantum to those given by Honby, thus making the 2 Rs the winners on this issue.

83.The highest offer of $180,000 inclusive of costs made by the 2 Rs, Mr Ng stressed, greatly exceeded the quantum of the Waterproofing Claim of $35,326 as assessed by this Tribunal. This is another reason why the 2 Rs should be awarded their costs of Ben while IO should be disallowed their (even 30%) costs of Honby.

84.For the above reasons, Mr Ng further submitted that the costs of Ben incurred by the 2 Rs should be awarded to them on a higher basis than party and party basis.

85.For reasons below, I also disagree with all the above submissions of Mr Ng.

(1)  As I have held above, I do not accept that parties’ expert costs have been wasted, especially those incurred by the 2 Rs on Ben. There has been no evidence, or finding, of misconduct against IO regarding non-disclosure of tender documents. There is nothing special or unusual in this case about IO’s non-disclosure.

(2)  Among 8 issues resolved in the Judgment, the 2 Rs have only prevailed on issue (4). IO has plainly emerged as the only successful party to this application. On established principles, IO should be awarded its costs of these proceedings, though it could be deprived of appropriate portion thereof to reflect its failure over discrete issue (and that has already been done under CO Nisi). There is no good reason to order IO to pay the 2 Rs their costs of these proceedings or any part thereof like those incurred on Ben.

(3)  Before trial, the 2 Rs have not made any reasonable offer to settle all these proceedings with IO (which could have saved them from incurring the costs of Ben).

86.Hence, there is, I think, no good reason to make any special costs order regarding costs of Ben, or those of Honby, as suggested in all the 3 Alternatives, let alone on a higher basis of taxation.

Conclusion

87.None of the grounds advanced by the 2 Rs (and none of the submissions of Mr Ng) persuades me to vary CO Nisi in any way suggested in the Application. I remain of the same view in the Judgment that it is still the appropriate costs order to make in all the circumstances of these proceedings.

Disposition of the Application

88.I therefore dismiss the Application and make the CO Nisi absolute.

Costs of the Application

89.Both Mr Ng and Ms Tse agreed at the hearing that the costs of the Application should follow its event. On my order above, IO is, I think, without doubt the only successful party to the Application.

90.I therefore order that the costs of the Application, including all reserved costs of the Application and the costs of its hearing on 19 December 2023 together with certificate for counsel, be paid by the 2 Rs to IO to be taxed on District Court scale if not agreed.

91.I also order that solicitors for IO do draft, file and serve on the 2 Rs all orders made on the Application. Absent any draft lodged for approval by solicitors for IO within 14 days of this decision, court clerk do draft, file and serve them on the parties[47].

92.Finally, I thank Mr Ng and Ms Tse for their submissions.

Ms Tse Rui Teng Tania, instructed by K. B. Chau & Co., for the Applicant

Mr Kurt C.Y. Ng, instructed by M. L. Tam & Co., for the 1^st and 2^nd Respondents