Wong, Aileen v. Diasqua International Ltd
Read the full judgment text of DCCJ 5387/2020 on BabelCite. This District Court judgment was delivered on 17 May 2024.
1. This is the application of the plaintiff to vary the costs order nisi handed down by this court on 29 December 2023 in relation to (a) the defendant’s application to vary certain expert directions made by Registrar Lui on 7 September 2022 (“Registrar Lui 2022.09.07 Order”) and to revoke a related unless order made by Registrar Soong on 10 March 2023 (“Registrar Soong Order”), and (b) the plaintiff’s Notice of Appeal against the order granted by Master B Mak staying the execution of the said u
Cited by 2 cases · Cites 9 cases
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DCCJ 5387/2020 [2024] HKDC 683 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 5387 OF 2020 —————————— BETWEEN
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—————————— DECISION —————————— 1.This is the application of the plaintiff to vary the costs order nisi handed down by this court on 29 December 2023 in relation to (a) the defendant’s application to vary certain expert directions made by Registrar Lui on 7 September 2022 (“Registrar Lui 2022.09.07 Order”) and to revoke a related unless order made by Registrar Soong on 10 March 2023 (“Registrar Soong Order”), and (b) the plaintiff’s Notice of Appeal against the order granted by Master B Mak staying the execution of the said unless order. 2.As the formal application by way of summons dated 22 January 2024 was issued out of time by ten days, the plaintiff also seeks the required extension of time for the present application. Background 3.This action was commenced in 2020. According to the plaintiff’s case, there have been numerous incidents of water leakage from the defendant’s property (“D’s Property”) down to the plaintiff’s property (“P’s Property”) since 2012. The affected areas were widespread, some are under the internal area of D’s Property while some are under the flat roof, which also forms part of D’s Property. In this action, among other things, the plaintiff seeks damages against the defendant for the damage caused to P’s Property at various locations, including those under the flat roof. 4.Thus, the main issue between the parties is: what was the cause of various incidents of water leakage that occurred, particularly whether water seeped down from D’s Property? Leave was therefore granted to the parties for the engagement of experts to investigate the cause. For this purpose, two experts, Mr Vincent Chung (“Mr Chung”) and Mr Raymond Wu (“Mr Wu”), were engaged by the plaintiff and the defendant respectively. 5.Since 2021, Mr Chung and Mr Wu have been discussing the methodology to be adopted for the water ponding tests to be carried out in D’s Property. 6.By consent of the parties, Registrar Lui 2022.09.07 Order was made, in which it was ordered, inter alia, that the parties do make their respective properties available for inspection and carry out all water leakage tests in the manner as the respective experts deem fit. 7.However, between November 2022 and March 2023, the defendant refused to allow the plaintiff’s expert to conduct water ponding tests in D’s Property. At that time, Mr Chung indicated to Mr Wu that the intended water ponding test would be confined to the flat roof and the internal area of D’s Property where “there is any design requiring water facilities”. 8.As the defendant continued to disallow the carrying out of water ponding tests, the parties failed to file and serve a joint expert report as directed by Registrar Lui. 9.Therefore, at the Case Management Conference before Registrar Soong on 10 March 2023, Registrar Soong Order was made ordering that, “Unless the Defendant cooperates in the examination(s)/inspection(s) of the involved premises by the parties’ experts by allowing the conduct of all necessary tests including water ponding test to the internal area of the Defendant’s premises where there are water using facilities and the flat roof appurtenant thereto, the Defendant shall be debarred from adducing expert evidence at the trial of the action and the leave granted in paragraph 6 of the Order dated 7 September 2022 shall be revoked.” 10.Meanwhile, in February 2023, without informing the court or obtaining the court’s leave, the defendant engaged Mr Y K Chan (“Mr Chan”) and Mr Peter Shum (“Mr Shum”) of M2R Solutions Limited (“M2R”) to conduct an inspection and provide advice in relation to the alleged water leakage occurred in P’s Property. An inspection was then carried out by Mr Y K Chan on 7 February 2023 accordingly. However, a report by Mr Shum made solely based on the visual survey done by Mr Chan earlier was not produced until 23 March 2023, ie after Registrar Soong Order was made. 11.Mr Shum opined that the water ponding test was unnecessary and inappropriate for various reasons. In light of the views expressed by Mr Shum, the defendant took out a summons on 27 March 2023 seeking to vary the parts of Registrar Lui 2022.09.07 Order regarding the water ponding tests and to revoke the unless order made by Registrar Soong (“D’s Summons”). At the same time, the defendant obtained an order from Master B Mak staying the execution of Registrar Soong’s unless order pending the determination of D's Summons. 12.In response, the plaintiff issued a Notice of Appeal (dated 3 May 2023) seeking to set aside the order of Master B Mak granting a stay of execution of the unless order (“P’s Notice of Appeal”). 13.On 25 October 2023, D’s Summons and P’s Notice of Appeal came before this court. A decision was handed down on 29 December 2023, dismissing the defendant’s summons dated 27 March 2023 and lifting the stay of execution dated 20 April 2023 (“Decision”). The following costs order nisi was made therein:
It was further ordered that “Unless any party applies to vary within 14 days, this order nisi shall become absolute without further order of the court.” The 14-day period expired on 12 January 2024. 14.On 12 January 2024, the plaintiff’s solicitors, by way of a letter to the court which was copied to the defendant’s solicitors at the same time, applied to vary the costs order nisi. 15.On 19 January 2024, the court requested the plaintiff to take out a summons for the intended application. 16.The present application was made by summons on 22 January 2024, the following working day after 19 January 2024. The application 17.In the present application, the plaintiff applies for the following:
18.The defendant confirmed (both in its solicitors’ letter dated 15 April 2024 and its counsel’s skeleton submissions) that it has no objection to the EOT Application. The EOT Application 19.Given the facts set out above, in particular, effectively, the same application to vary had been made by way of letter within time, there was no undue delay in taking out a proper application, and the defendant takes no objection to the application, I grant the order to extend the time as sought by the plaintiff. The Variation Application 20.The relevant legal principle governing the award of indemnity costs is well settled. The correct approach to be adopted by the court in the exercise of its discretion to award indemnity costs was summarized by the Court of Final Appeal in Commissioner of Inland Revenue v Poon Cho Ming John (No 2) (2020) 23 HKCFAR 74, at paragraph 4 per Bokhary NPJ, as follows:
21.It was further held by the Court of Appeal in Huge Dragon Corp Ltd v Lung Mun Oasis (IO) [2014] 3 HKLRD 286, at paragraph 13 per Poon J (as he then was), that when an application is devoid of merit or should never have been launched, it would be appropriate to award indemnity costs.
22.Mr Yeung, counsel for the plaintiff, submitted that this court ought to make an indemnity costs order on the grounds that (a) D’s Summons is an oppressive attempt to re-litigate the propriety of the water ponding test and an abuse of process; and (b) in any event, D’s Summons is an unreasonable and unjustified application. Abuse of process 23.On the abuse of process point, Mr Yeung’s argument can be briefly summarized as follows:
24.In reply, Mr Chok, counsel for the defendant, submitted that:
25.On Mr Chok’s first point, I was referred to the relevant parts of the transcript of the Case Management hearing before Registrar Soong. According to the said record, I do not think one can fairly say the issue of the suitability of the water ponding test at D’s Property had been properly raised and argued before the unless order in question was made. I also agree with Mr Chok that when Mr Hunter’s statement “… The suggestion – and we understand that the ponding test is necessary now” is considered in its proper context, what Mr Hunter meant was he understood that the court had adjudicated that water ponding test was necessary. He did not concede as to whether the test was necessary. 26.Regarding Mr Chok’s second point, I accept that Order 38 rule 44 is a specific mechanism provided in RDC to enable a court to review an earlier case management decision relating to expert evidence. The position was made clear by Bharwaney J (as he then was) in Wong Man Kin v Secretary for Justice [2017] 4 HKLRD 412:
27.It is to be noted that, as observed by Bharwaney J, the circumstances in which the earlier expert direction was made would be a relevant consideration in deciding whether sufficient cause has been shown for the purpose of the rule. Most if not all of the facts referred to by Mr Yeung in support of his present argument have been considered by this court in the determination of D’s Summons. Evidently, upon proper consideration of such facts and other relevant facts and circumstances, this court was not satisfied that sufficient cause had been shown. 28.It is, however, another matter to suggest that D’s Summons taken out pursuant to Order 38, rule 44 in the circumstance was an abuse of process for the purpose of costs. In my view, the defendant was entitled to take such course, albeit unsuccessfully. Unreasonable and unjustifiable application 29.It would be appropriate to award indemnity costs against the defendant if its application under Order 38, rule 44 was devoid of merit or should never have been launched, but the defendant nevertheless unreasonably and unjustifiably persisted. The involvement of dishonest and/or underhand conduct on the part of the losing party would also warrant the imposition of indemnity costs. 30.Mr Yeung submitted that the defendant adopted a kitchen sink approach in its application, and a total of ten grounds were raised in support. This court found those grounds to be unmeritorious and unreasonably advanced by the defendant. 31.In opposition, Mr Chok emphasized that the court should avoid the application of hindsight in determining whether the grounds advanced by the defendant in its applications were meritorious or reasonable. He further submits that the ten grounds of the application relied upon by the defendant were either raised by Mr Wu (its expert) or Mr Shum (a professional engineer), and the defendant was not able to form its own view on the propriety or integrity of such opinions. These opinions were, at least from the defendant’s point of view, professionally arguable and not speculative. 32.In determining whether a case is so weak that it should not have been pursued in the first place, Mr Chok referred me to the case of Burgess and another v Lejonvarn [2020] 4 WLR 43, in which the English Court of Appeal held (at para 54) that the correct test is whether a reasonable claimant would have concluded that the claims were so speculative or weak or thin that they should no longer be pursued.
33.In that regard, both Mr Yeung and Mr Chok accepted that an objective test should be adopted. 34.Coming back to the ten grounds of applications relied upon by the defendant, this court did not reject them because the views of the plaintiff’s expert were preferred over that of Mr Wu or Mr Shum, they were rejected because they were non-sensical, unsustainable, irrelevant or not supported by fact, which the defendant ought to be aware of. I further hold that the aforesaid would have been apparent to a reasonable claimant. 35.Merit of the grounds aside, the following facts and conduct on the part of the defendant further demonstrate that D’s application was unreasonable and should not have been pursued:
36.In view of the above facts, I also hold that the defendant unreasonably pursued its application for a stay dated 19 April 2023. 37.This is, therefore, an appropriate case where an indemnity costs order should be awarded to the plaintiff. Should the costs of D’s Summons and P’s Notice of Appeal be paid forthwith 38.The principles governing the exercise of the court’s discretion as to whether the costs of interlocutory applications should be paid forthwith are not controversial. Both parties referred to the judgment of Lam J (as he then was) in the case of Midland Business Management Ltd v Lo Man Kui (No 2) [2011] 2 HKLRD 667 for guidance:
39.Thus, for the present purpose, the relevant considerations include:
40.Mr Yeung invited this court to order immediate payment of costs as D’s Summons was an unnecessary and disproportionate application. 41.Mr Chok recognized the above as being the correct approach. He merely highlighted that, after all, the issue of costs remains a matter of discretion for the presiding judge. He also submitted that some of the evidence prepared by the plaintiff in opposition to the application might be reused at trial, which he suggested is a factor against ordering an immediate payment of costs. 42.While some of the information contained in the Affirmation of Wong, Marc would be relevant and will probably find its way into the plaintiff’s witness statements in future, this appears to represent only a small part of the plaintiff’s costs in resisting D’s Summons or the overall costs of the action. 43.Regarding Mr Chung’s opinion on the coverage and suitability of the water ponding test prepared by the plaintiff for D’s Summons, it will unlikely be re-used at trial as the water ponding test will have been performed by then, and the issue of whether such test is necessary or appropriate will unlikely feature itself at trial. 44.As to the probable impact of the court’s decision in this respect on the parties’ cash flow, there is no evidence to point to one way or another. 45.In my view, under CJR, if the interlocutory application in question was unwarranted, unreasonable and should not have been launched, this must weigh more heavily over the other relevant factors in favour of ordering immediate payment of costs against the paying party. 46.As I have held that D’s Summons was unmeritorious, unreasonable and should not have been pursued in the first place, the plaintiff’s costs of D’s Summons and P’s Notice of Appeal should be paid forthwith by the defendant. Conclusion and Order 47.I therefore order that:
48.Regarding the costs of the present application (including the hearing on 19 April 2024), I do not see why it should not follow the event. I hereby make an order nisi that the costs of the plaintiff’s summons dated 22 January 2024 (including the costs of the hearing on 19 April 2024) be to the plaintiff payable forthwith. 49.Regarding the quantum of the plaintiff’s costs for the summons, the plaintiff has prepared a Statement of Costs for summary assessment with a total sum of $115,687. Guided by the principles set out in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512, paragraphs 10 to 18, the plaintiff’s costs are summarily assessed at a total sum of $60,000. In the summary assessment, I have further taken into account of the following: (a) the improper procedure initially adopted by the plaintiff, which has necessitated additional co-ordination work, and (b) the plaintiff instructs a different counsel to handle the present application, which would inevitably involve some degree of duplication of work. 50.Unless any party applies by way of summons to vary within 14 days, this order nisi (including the assessed costs) shall become absolute without further order of the court.
Mr Joshua Yeung, instructed by Chak & Associates LLP, for the Plaintiff Mr Brian Chok, instructed by Jal N Karbhari & Co, for the Defendant |
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