黄卫华 v. 郭雅珊

LDPD 2734/2008

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Application No.: LDPD No. 2734 of 2008

BETWEEN

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Coram: Member W K LO

Date of hearing:  15 January 2009

Date of decision: 3 March 2009

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DECISION ON COSTS

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Background

1.The Applicant is the landlord and the Respondent the tenant of the suit premises (“the Premises”).  It is not disputed that the Respondent entered into the tenancy of the Premises with the former landlord, the predecessor in title, for a term of 2 years from 1 May 2007.  By an application dated 20 October 2008 (“the Application”), the Applicant applied to the Tribunal for an order for possession on the ground that the Respondent had failed to pay rent since 1 December 2007.  The Applicant also sought an order for payment of outstanding rents/mesne profits up to the date of recovery of possession and costs. 

2.The Respondent filed a notice of opposition on 27 October 2008 on the following 3 grounds: (i) the Applicant only formally notified the Respondent in October 2008 that the Applicant became the new owner of the Premises upon completion of its sale on 20 November 2007; (ii) the Respondent was unable to contact the Applicant during the period up to October 2008; and (iii) the Premises had structural and serious disrepair problems as a result of which the Respondent suffered from damages but the Respondent could not terminate the tenancy and give back possession of the Premises to the Applicant during the period up to October 2008.

3.HH Judge Wong heard the call-over hearing of the case on 26 November 2008.  At the end, it was ordered that (i) the case be fixed for trial on 25 December 2008; (ii) both parties should file and serve the witness statements and all related documents by 8 December 2008; and (iii) costs be in the cause.

4.On 15 December 2008, the case was heard before HH Judge Wong again.  During the interval between the call-over hearing and 15 December 2008, the parties chose to be represented by lawyers.  The Applicant instructed Messrs. Wat & Co. to act for him on 4 December 2008.  And then on 12 December 2008, the Respondent also instructed Messrs. V. Hau & Chow as the lawyer to represent her.  The Respondent raised the jurisdiction issue as to whether the Tribunal could determine a counter-claim of the Respondent based on repair costs.  After negotiation between the parties, the following consent order was granted: (i) the case be adjourned to 15 January 2009 at 10:30 a.m. for trial at Court 3 (estimated trial for 1 day); both parties shall file and serve the witness statements and all related documents by 29 December 2008; (iii) the Respondent should pay, on or before 29 December 2008, into the Tribunal a sum of $50,000 as security for outstanding rents/mesne profits; (iv) costs reserved.

5.At the end of the hearing on 15 January 2009, I granted the following orders：

（1）By consent of the parties,

（1）Since both parties agreed that the Applicant has on 10 January 2009 taken back vacant possession of the Premises from the Respondent, the Applicant’s application for possession be dismissed;

（2）The Respondent shall pay to the Applicant $96,242 (after deducting the original deposit money) of which $46,242 shall be paid within 21 days, and the balance of $50,000 shall be paid out of the security money of $50,000 that the Respondent paid into the Tribunal on 29 December 2008, but the said sum of $50,000 shall be paid only upon the conclusion of the Small Claims Tribunal’s case (no. SCTC58777/08) or the granting of an order from the Court;

（2）As to the costs order, judgment reserved.

6.On 15 January 2009, the parties could not reach any agreement on the costs order for any part of the proceedings.  The Applicant asked that, following the usual rule of “costs follow the event”, the Tribunal should grant a costs order in favour of the Applicant in respect of the Applicant’s Application including the hearings of 26 November 2008, 15 December 2008 and 15 January 2009.  Firstly, the Applicant submitted that as the Applicant has successfully shown that he had the cause of the action, the Applicant should be entitled for the costs of the Application.  Secondly, for the call-over on 25 November 2008, the Applicant should have the costs, as the costs order was then “costs in the cause”.  Thirdly, for the hearing on 15 December 2008, although the costs order was “cost reserved”, the Applicant said that following the usual rule of “costs follow the event”, the Applicant should still have the costs.  However, the lawyer for Applicant, in reply to the Respondent’s application for a wasted costs order, admitted that as there was mis-understanding between him and the Applicant, he was late on the hearing date of 15 December 2009, from 11:30 a.m. to 12:15 p.m.  Finally, the Applicant submitted that for the hearing of 15 January 2009, although the parties have agreed the granting of the consented orders since the Applicant already took back possession of the Premises and that the Respondent decided not to pursue the matter of counter-claim in the Tribunal but to take out another action in the Small Claims Tribunal, the Applicant should still have the costs on the usual rule that “costs follow the event”.

7.On the other hand, the Respondent submitted that the Tribunal should exercise discretion to grant a cost order in favour of the Respondent for the entire proceedings.  Alternatively, the Respondent submitted, the Tribunal should at least grant a cost order in favour of the Respondent in respect of the hearing on 15 January 2009 because the hearing could well be avoided if the Respondent’s reasonable proposal of “no order as to costs” were accepted by the Applicant before the hearing. Finally, the Respondent agreed not to apply for a certificate for counsel even if the Tribunal grants a cost order in favour of the Respondent.

8.The case for was adjourned for deliberation.  This written decision set down my reasons for the costs order.

The grounds raised by the Respondent

9.The Respondent produced a detailed written submission for the hearing of 15 January 2009.  The Respondent submitted that the following reasons supported the Respondent’s case that she should not bear any cost arising from the Application and the resulting proceedings:

(a)    The rental arrears solely arose from the disappearance of the Applicant for nearly one year;

(b)   The Respondent was technically not in default of payment of rent, but only unable to fulfill her obligation to pay due to inability to contact the Applicant;

(c)   The Respondent has always agreed to pay rent for her occupation of the Premises;

(d)   The legal costs was incurred by the Respondent because the Applicant chose to engage legal representation after the first hearing, in a case which could well be handled by the lay clients in person;

(e)    The Respondent has always been prepared to settle all arrears in rents subject to resolution of her counterclaim for repair costs which she was clearly entitled to claim under the express term of the lease;

(f)     At all material times, the Applicant made no attempt to verify the Respondent’s claims even after relevant receipts, photos and written statements were filed.

(g)   At no point of time did the Applicant indicate any willingness to accept payment (equivalent to the Respondent’s counterclaim) be paid into court such that the Respondent’s interest could be protected until 13 January 2009, bearing in mind that the Respondent had already expressed her concern over the Applicant’s status as being a PRC resident having no right of abode or residential address in Hong Kong:

(h)   Had the Applicant taken a sensible approach and paid regard to the Court of Appeal decision in CACV223/2007, the present proceedings could well be avoided, or to say the least aborted at an earlier stage;

(i)      In any case, the Applicant only put the Respondent to strict proof of her counterclaim, as indicated by her lawyer at the hearing of 15 December 2008, and thus legal representation was entirely unwarranted; and finally,

(j)      There had been wasted costs incurred by the Respondent for her lawyer’s failure to attend the hearing of 15 December 2008 on time.

10.In particular, the Respondent submitted that although the Respondent had recently chosen to file an application against the Applicant in the Small Claims Tribunal, that did not mean that the Respondent conceded that there was no jurisdiction for the Tribunal to determine the counter-claim by the Respondent for repair costs and other damages should the Respondent choose to insist on the issues being tried in the Tribunal.  Therefore, although the Respondent decided to take out the separate action in the Small Claims Tribunal and to reach settlement with the Applicant on the 2 consent orders granted by the Tribunal on 15 January 2009, this was solely because the Respondent wished to save legal costs for both parties.

11.Regarding the consent orders that the parties managed to agree, the Respondent further submitted that the Applicant only indicated their agreement to the consent order, in particular, the Applicant’s agreement that $50,000 be kept by the Court as “payment-in” pending outcome of the Small Claim’s application, just before the commencement of the hearing on 15 January 2009.  Otherwise, the costs incurred on 15 January 2009 could have been avoided should the Applicant agreed this earlier

The grounds put up by the Applicant

12.On the other hand, the Applicant submitted the following:

(a)   Although the Tribunal has the discretion on costs, there was no reason that the usual rule of “costs follow the event” should not apply in the present case;

(b)  There was no dispute from the Respondent that she had not paid any rent to the Applicant for the months after 1 December 2007 and therefore, the Applicant had the cause of action when filing the Application on 20 October 2008;

(c)  The excuse that the Respondent could not contact the Applicant no longer existed after 10 October 2008 but that the Respondent still failed to pay any rent, neither to the Applicant nor to the Court (not until 15 December 2008 when it was consented by both parties that the Respondent should pay by 29 December 2008 into the Court $50,000 as security money);

(d)  Either party has the right to have legal representation at any stage of the proceedings regardless of the complexity of the case;

(e)   The Applicant submitted that according to the last written offer dated 13 January 2009 from the Respondent, unless the Applicant agreed with the Respondent that there should be no order as to costs for the whole proceedings, the parties could not avoid coming to the Tribunal for the hearing of 15 January 2009.  However, since the Applicant did not agree with the Respondent’s position on costs, the hearing of 15 January 2009 could not have been avoided whether or not the parties could agree earlier or not the 2 consent orders finally agreed and granted by the Tribunal on 15 January 2009.  And unless the Tribunal decided in favour of the Respondents for all the costs up to but excluding 15 January 2009, the Applicant should not be penalized for failing to reach with the Respondent the 2 consent orders earlier after receiving the offer dated 13 January 2009 from the Respondent.

13.It is appropriate to set out below what were covered in the offer letter dated 13 January 2009 from the Respondent：

(a)   The Respondent agreed that the outstanding rental was $96,242.00

(b)  The Respondent instructed that the parties had agreed at the delivery of vacant possession of the Premises (on 10 January 2009) that the outstanding rental was not payable until the conclusion of the proceedings.

(c)  The Respondent confirmed that the Respondent’s counterclaim would not be proceeded in the Tribunal.

(d)  The Applicant was asked to confirm by 5 p.m. on 13 January 2009 that, apart from the issue of costs, whether the Respondent’s settlement proposal was agreeable by the Applicant.  In particular, the Respondent repeated her position to impose a condition that “the sum paid into the Court should not be released… pending the resolution of the Small Claims proceedings.”

(e)   Regarding the issue of costs, the Respondent would strenuously oppose the Applicant’s claim.

14.After considering the wordings of the offer letter from the Respondent for the complete settlement of the matter prior to the hearing of 15 January 2009, I agree with the Applicant that the hearing could not have been avoided simply because the parties could not agree on the costs of the proceedings up to the exchange of the said letter of 13 January 2009.  In the circumstances, the parties would in any event still have to come to the Tribunal to argue on their remaining dispute, i.e. the costs of this case.  Actually, that was the only issue disputed in the hearing of 15 January 2009 as it took the parties a short period of time to hand in a draft consent order agreed by lawyers for both parties.  The Applicant should not be held responsible for coming to the Tribunal to determine the issue on costs.

15.After consideration of submission by both parties, I decide the following:

(1) The Applicant has shown that they have the cause of action when making the Application, and that the Respondent was reminded that there were outstanding rents before the Applicant took out the Application.  The Respondent admitted non-payment of rents.  Although the Respondent submitted that they were entitled to deduct the repairing costs incurred by the Respondent on behalf of the Applicant, it was not the Respondent’s case that such deductions exceeded the total amount of outstanding rents/mesne profits from 1 December 2007.  Yet the Respondent has not paid the difference to the Applicant or paid into the Court.  Therefore, on the usual rule of “costs follow the event”, the Applicant shall be entitled the costs unless there are special circumstances that suggest otherwise.

(2) That the Applicant chose to have legal representation at any time could not be a reason for awarding costs to either party.

(3) I agree with the Applicant that the Applicant shall be entitled for the costs of call-over hearing as the costs order was cost in the cause.

(4) For the hearing of 15 December 2008, I decide that there shall be no order as to costs.  I understood that the parties were invited by the Bench to make submissions on the Tribunal’s jurisdiction to determine the Respondent’s counter-claim based on repair costs.  However, after having heard the brief submissions made by the Respondent, Mr. Chan for the Applicant indicated that he needed time to prepare his submissions and invited the Tribunal to adjoin the matter for argument.  With no objection by the Respondent, the matter was adjourned to 15 January 2009, with the issues raised by the Respondent be heard as preliminary issues before trial, with one day reserved.  However, the trial was not needed because the parties then agreed to the granting of the above said consented orders (see paragraph 5 above).  In the circumstances, I decide that the proper costs order for the hearing of 15 December 2008 is “no order as to costs.”

(5) Finally, for the hearing of 15 January 2008, I agree with the Applicant that the Applicant shall be entitled costs.

Orders

(1). The Respondent shall pay costs to the Applicant in relation to the Application, the hearing of 26 November 2008, and 15 January 2009, at District Court scale, to be taxed if not agreed.

(2) There shall be no order as to costs for the hearing of 15 December 2009. 

The Applicant: represented by Mr. Chan Yin Chun of Messrs Wat & Co., Solicitors

The Respondent: represented by Ms. Gekko Lan, instructed by Messrs. V. Hau & Chow, Solicitors