The Incorporated Owners of Estoril Court v. Cheer Rich Enterprises Ltd

LDBM 41/2010

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 41 OF 2010

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BETWEEN

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Coram: Deputy Judge YU, Presiding Officer of the Lands Tribunal

Dates of Hearing: 19^th June 2012

Date of Handing Down of Decision: 2^nd August 2012

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DECISION

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Background

1.This is the Summons by the Respondent to vary my cost order nisi given herein after trial.  My judgment has been handed down on 17 May 2012 when I dismissed the Counterclaim of the Respondent and order the Respondent to pay the cost of the Applicant of this Action (including both the Application and the Counterclaim).

2.These proceedings have been commenced by the Applicant for various reliefs against the Respondent including injunctions against the Respondent that it shall reinstate an opening made to the floor slab of the Respondent’s Roof, and to remove a swimming pool built on the Roof.   Just before the trial, the Respondent gave an undertaking to the Applicant and hence the Applicant has achieved the purpose of these proceedings.  And by consent, the Application is discontinued with costs to be determined by this Court after the trial.

3.The matter for the trial is the Counterclaim of the Respondent.  The Respondent claims that the Applicant has trespassed onto the Respondent’s Roof.  This is also settled between the parties just before trial.  The Respondent claims in the Grounds of Opposition that the Applicant has unjustly or unfairly selected the Respondent for the enforcement action.  There are other co-owners who have committed acts in breach of the DMC, which are more serious.  The Applicant has not taken any action against these owners.

4.By the Counterclaim, the Respondent seeks, inter alia, an order that the Applicant be compelled to take enforcement action against various owners to purge their respective breach of the DMC.  And there is a major dispute as to whether the Applicant has wrongfully allowed certain reserved spaces in the car park floors be converted into car-parking spaces by individual owners.  There are further complaints that the Applicant has wrongfully converted common areas into storage areas.  I do not intend to repeat all the issues in dispute which has been set out in my judgment.

5.The trial is on the unsettled part of the Counterclaim.  Before the closing submission, the parties reached some further settlement when the Applicant undertakes to take enforcement action against the Roof A/B Breaches, Roof C Breaches and the Backdoor Gates Breaches (“the Concession” which definition I borrow from the Affirmation of Mr. Ng Chung Wai I hereinafter referred).  No order is required for these matters.

6.And after trial, I dismissed the rest of Counterclaim except the injunction for action to remove a vehicle at reserved space no.45A and/or the adjacent common area.  On the question of cost, as the Applicant is successful with the Application, I see no reason why the Applicant should not be entitled to the costs of the Application.  The main issue then before me is whether the Respondent should be entitled to some costs of the Counterclaim and which should be set off against the cost of the Action.

7.When the Court heard a claim with a counterclaim, and a plaintiff is successful with the claim but failed in the counterclaim, the usual order is the plaintiff should have the costs of the claim and should pay the cost of the counterclaim.  This may not be a simple task for the taxing master as there has to be apportionment between the costs of the action and cost of the counterclaim in many items on the taxing bill.  It is not uncommon these days when the trial judge would take into account the entitlement to costs in both claim and counterclaim, and would allow the claimant a certain percentage of the whole action that reflect the element of set off between the 2 set of costs.  That is what I have done in my judgment and I believe the Respondent and the Applicant have no objection to my approach.

8.What the Respondent argues is that I have failed to give sufficient weight to the Concession which was only given after hearing all the evidence.  The Respondent relies on the Affirmation of its solicitor, Mr. Ng Chung Wai, filed herein on 30 May 2012.  Mr. Ng who appears today tries to give a mathematic analysis in his affirmation on legal costs spent in preparing for the issues covered by the Concession.  He also gives a breakdown of the Court’s time spent in examination of witnesses relating to the Concession.  In conclusion, he submits that 30% of the costs of the Action (including both the Application and the Counterclaim) should be apportioned to the Concession.

9.Further in support, Mr. Ng submits that the Applicant’s submission on the legal argument on when this Tribunal should grant an injunction compelling an incorporated owner to take action against a co-owner is rejected by this Tribunal.  Mr. Ng submits that much time is wasted on this issue and justifies this Tribunal from giving a greater deduction to reflect the costs that the Respondent is entitled.

10.The Respondent refers to Order 62 rule 5 of the Rules of the District Court, and submits that the Tribunal should take into account the conduct of the parties in determining the question cost.  Mr. Ng makes particular reference to –

O 62 r.5(2)(a)

“whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;”

O.62 r.5 (2)(b)

“the manner in which a party has pursued or defended his case or a particular allegation or issue;”

11.Mr. Ng further relies on the Elgindata principle (iii) as stated in Re Elgindata Ltd (No. 2) [1992] 1 WLR 1207 which states that:-

“The general rule [that costs shall follow events] does not cease to apply simply because the successful party raised issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs.”

12.Mr. Ng submits that there is significant increase in costs relating to the issues in the Concession and I should revise my award of costs to the Applicant to 70% of the costs of the whole action.

13.Mr. But, counsel for the Applicant submits that “the approach of meticulously counting the number of pages and/or the time spent is over-simplistic and wrong as it fails to properly reflect the substance and reality of the entire litigation.”  I agree.  The suggested approach of Mr. Ng is that of taxation.  The whole purpose of a board bush approach in setting off the 2 set of costs is to save the time and difficulty of taxation, and the costs of taxation.  And as the trial judge, I am in the best position to do the assessment.

14.And for the costs of a counterclaim, we are concern only with such costs additional to the costs that has been incurred in the defence.  The issues in the Concession are related also to the defence that the Applicant has unjustly or unfairly selected the Respondent for the enforcement action.  The costs of these issues are substantial costs of the Application.  Hence the suggestion of a 30% apportionment is not justified in any event.

15.Mr. But has no disagreement with the Elgindata Rule (iii).  He refers to the judgment of Kwan J (as she then was) given in Active Base Limited v. Roderick John Sutton & Others HCCW 470 of 2005, (unreported, 17 October 2008), when Kwan J has summarized some authorities to further elaborate on the operation of the principle–

(1)The party seeking to displace the general rule that costs should follow the event bears the burden of showing that the circumstances justify the exceptional course of such displacement (Mariner International Hotels Limited v. Atlas Limited (No. 2) [2007] 4 HKLRD 194 at 199, paragraph 18).

(2)The court has a discretion to exercise whether to deprive a party of all or part of his costs in respect of those issues on which he has failed.  It would be wrong to read principle (iii) in Elgindata as laying down a rule, instead of a discretion.  The court has to exercise its discretion to achieve a just result having regard to the circumstances of the case (Hong Kong Kam Lan Koon Limited v. Realray Investment Limited (No. 4) [2005] 4 HKC 162 at 166I to 167A, paragraph 14).

(3)Where the party who has been successful overall has failed on one or more issues, particularly where such issues have occupied a significant amount of hearing time or led to the incurring of significant expense, the court may in its discretion order a reduction in the award of the costs to him.  An issue for this purpose must be something so distinct and separate in itself that the decision of it constitutes an “event” (Seepersad v. Persad [2004] UKPC 19 at paragraph 24).

(4)It is not the case that lack of success in any specific argument of itself attracts a costs sanction (Rabobank, Hong Kong Branch v. Bank of China, HCCL No. 56 of 2001, 23 July 2004,Stone J, paragraph 17).  It is only if it is possible to isolate an issue in the case in that it can properly be said it is unnecessarily pursued as having no bearing on the real questions in the suit that it would be proper to deprive the successful party of all costs of that issue, otherwise a more general assessment should be made (Elgindata, supra. at 1218D to E).  So unless discrete points can safely be isolated and can be shown to have led to a wastage of time and costs, the practice of the court is not to engage in any “filleting” of cases according to the success or failure of the disparate issues which, when taken cumulatively, constitute the dispute to be judged (Akai Holdings Limited (in liquidation) v. Thanakharn Kasikorn Thai Chamkat (Mahachon) (also known as Kasikornbank Public Limited Company) HCCL No. 59 of 2004, 31 July 2008,Stone J, paragraphs 28 to 31).

16.And Mr. But relies in particular on the passages marked in bold letters above.  I agree with the observation of Kwan J.  While I do not accept the legal submission of the Applicant on when this Tribunal should exercise the discretion to grant an injunction compelling an incorporated owners to take enforcement action, it is not an isolated point and I do not believe there should be any costs sanction against the Applicant on this issue.

17.Mr. But makes detail submission on costs of the Application which I do not have to repeat. As I said in my judgment and hereinabove, the Applicant succeed in the Application and as a starting point, it should have the costs of the Application.

18.As a starting point, Mr. Ng is not denying that the main contested issues in the Counterclaim have been dismissed and the Applicant is the successful party in the whole Action.  The burden is on his client to justify a departure from the usual rule of cost to follow the event.  Thus he relies on Principle (iii).

19.Mr. But submits that the main issue in dispute is relating to the reserved spaces, the driver waiting rooms, café area and storage area.  And these issues would affect all the owners in the Estate.  And these involve complex factual matrix and point of law.  And the Applicant succeed in defend the Counterclaim on all these issues.  I agree.

20.Mr. But further submits that the issue in the Concession is relatively straight forward.  It is not in dispute that the co-owners have been in breach of the DMC and the issue is whether the Applicant has taken all reasonable or sufficient action to enforce the DMC.

21.And Mr. But also submits that the issues under the Concession fell squarely into and are intertwined with the issues of the Application.  In refuting the Respondent’s Grounds of Opposition, the Applicant has to go through all the evidence of the infringing owners pleaded in the Respondent’s Grounds of Opposition including those evidence related to the issues in the Concession.  Referring back to Active Base’s case, Mr. But submits that the issues concede under the Concession overlap substantially with the Application and these issues could not be taken as isolated or distinct issues to be filleted by the Court or treated as an independent event.

22.Mr. But submits that I need not review my order of costs.

23.Having hearing all the argument, there is one point that I should re-visit.  According to Order 62 rule 5, this Tribunal shall take into account the conduct of the parties in exercising its discretion on costs.  The argument on all issues in this action has been well prepared and there seems to be no reason why the Concession could only be made after hearing the evidence.  Mr. But also accepts that the issues in the Concession turn on whether the Applicant has taken sufficient enforcement action and this is not a matter that turns on evidence.  To that, some of the costs and the Court’s time have been unnecessarily wasted on these issues. 

24.In exercising my discretion as to costs, and balancing all the matter, I would revise my earlier order to allow the Applicant to have 95% of the costs of the Action (including both the Application and the Counterclaim) to be taxed at District Court Scale, if not agreed. 

25.I have allowed certificate for counsel for the trial and I would retain the order.  Mr. But said it is not clear if I mean certificate for one counsel or two.  I thought it is clear that certificate for counsel mean certificate for one counsel.  There is no application for 2 counsels and I am not convinced that we need 2 counsels for the Applicant.

26.Finally, on the question of costs of this application, I believe the fair order is no order as to costs of this application.

Mr Adrian BUT instructed by M/S Lo & Lo for the Applicant

Mr Michael C.W. NG of M/S Liu, Chan & Lam for the Respondents