Lee Yuen Yau v. Fairview Park Prorerty Management Limited

HCSA000004/1987

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Small claims Appeal No. 4 of 1987

(APPEAL FROM TSUEN WAN SMALL CLAIM NO. 947/86)

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BETWEEN

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Coram: Hon. Liu J. in Court.

Date of hearing: 3rd day of April, 1987.

Date of delivery of judgment: 3rd day of April, 1987.

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JUDGMENT

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1. The Respondent/Claimant is a management company of certain property of which the Appellant/Defendant has throughout been one of the owners. Divers actions were taken by the Appellant, and they were complained of by the Respondent management company as breaches of the Deed of Mutual Covenants concerning the property in question. I am told that some complaints were found by the Adjudicator to have been substantiated, and some not. In respect to those complaints found in favour of the Respondent management company, the legal fees incurred in the sum of $2,610 were sought to be recovered.

2. The management company had consulted solicitors, but the matters under complaint had been put an end to without admission in the course of negotiation or, in any event, before the institution of proceedings before the Small Claims Tribunal. Nevertheless, because of the legal expenditure, the management company took the Appellant to the Small Claims Tribunal. The Adjudicator found in favour of the Appellant on the 16th May, last year. After his decision, the Adjudicator had second thought and, I am told, on the 23rd May, he gave notice of his intention to review his decision given in favour of the Appellant. On the 10th June, the Adjudicator set aside his decision and proceeded to implement his intention to review by giving directions. Before the Adjudicator sat in review, the Appellant took the management company to a judge on appeal.  It is unnecessary for me to go into the judgmert of Mr. Justice Hooper, who found in favour of the Appellant, at least on one material aspect. The learned Judge concluded that the Adjudicator had acted prematurely  in overturning his own previous decision before the determination of the intended review. The appeal was allowed and proceedings were restored and transmitted back to the Adjudicator who, I am told, on the 21st January, this year, held a full review of his decision and came down in favour of the management company.

3. The Adjudicator's decision in the review was exclusively linked to the contractual relationship between the management company and the Appellant under the relevant Deed of Mutual Covenants. The parties before me are content so to limit themselves. Various provisions have been drawn to my attention, only one of which deserves to be taken into serious consideration. Paragraph 1(k) of the Third Schedule to the Deed of Mutual Covenants reads as follows :-

4. The Adjudicator held that the said legal fees incurred by the management company were and formed part of the damages envisaged by paragraph 1(k) of the Third Schedule to the Deed of Mutual Covenants. This appeal falls to be decided on this short point. Mr. Wong, counsel for the Appellant, submitted that there is no substance in any of the references made to the other provisions in the Deed of Mutual Covenants. I agree. Judgment was accordingly given for $2,610 together with $300 collection charge and $308 costs.

5. Counsel for the Appellant drew my attention to the ratio decidendi in Ross v. Caunters, [1979] 3 A.E.R.580. The position may be, I believe, neatly stated thus : Expenditure incurred in contemplation of the resolution of a dispute between parties in or out of Court is not damages arising or flowing from any alleged wrong in that very dispute. Legal fees incurred by the management company in respect to the matters that are said to have been found in favour of the management company cannot be, in my judgment, damages or damages envisaged by paragraph 1(k) of the Third Schedule to the Deed of Mutual Covenants.

6. That would be sufficient, in my view, to dispose of the entire conflict between the Appellant and the management company. In addition to the award of $2,610, by way of damages under paragraph 1(k) of the Third Schedule to the Deed of Mutual Covenants, the management company was also awarded a collection charge of $300 pursuant to the provisions of that Deed, and costs to the extent of $308 under Section 24 of the Small Claims Tribunal Ordinance. Obviously, the latter two sums would stand or fall with the legal fees claimed by the management company and awarded against the Appellant by way of damages under paragraph 1(k) of Third Schedule to the Deed of Mutual Covenants. It is clear, in my judgment, that legal expenditure so incurred by the management company is not recoverable in law as damages under that paragraph 1(k). Consequently, the collection charge and costs awarded by the Adjudicator cannot stand.

7. It remains for me to order that the appeal be allowed, the decision of the Adjudicator be reversed, the award be set aside and costs of this appeal be costed against the management company in favour of the Appellant.

Representation:

Mr. Horace Wong instructed by M/S. J.S.M. for the Appellant/Defendant.

Mr. David Yam instructed by M/S. Y.K. Fung & Co. for the Respondent/ Claimant.