Ng Yui Tong v. Taikoo Shing (Management) Ltd

LDBM 59/2014

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 59 OF 2014

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Before: Deputy Judge KOT, Presiding Officer, Lands Tribunal

Date of Hearing: 23 September 2014

Date of Decision: 6 October 2014

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D E C I S I O N

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1.This is the application by the respondent under O.18 r.19 RHC to strike out the Notice of Application (“NOA”) filed by the applicant in this case on the ground that:

(a) it is scandalous, frivolous or vexatious; and/or

(b) it is otherwise an abuse of process of the Tribunal.

2.Alternatively, the respondent is asking for this case to be transferred to the High Court and to be consolidated with High Court Action No. 1383 of 2013 (“the HCA”) under section 8A of the Lands Tribunal Ordinance.

Undisputed Facts

3.The applicant is the owner of a flat at Fu Shan Mansion of Taikoo Shing (“the Estate”). The respondent is the Manager of the Estate.

4.On 26 July 2013, the applicant issued the Writ of Summons in the HCA (which is amended on 31 July 2013) against the respondent alleging, inter alia, that :

(a) the respondent had, since 2006 organised certain activities (“the Activities”) for the Estate which are not necessary or requisite for the management of the Estate (§5);

(b) the respondent’s conduct in organising the Activities is wrongful and in breach of Clause 7(a) and 8(a) of the Deed of Mutual Covenant of the Estate (“DMC”) (§6-7);

(c) the Activities do not serve the common interest or benefit of all the owners of the Estate and the respondent does not have lawful authority to organise and hold the Activities (§8);

(d) the respondent is not entitled to withdraw, use or seek reimbursement of any expenditure incurred by the Activities from the management fund of the Estate (§9); and

(e) in light of the Activities wrongfully held by the respondent, it obtained an unjustifiable gain and profit by receiving remuneration and management fee (§11).

5.The orders sought by the applicant in the HCA are :

(a) An injunction restraining the respondent from organising or holding the Activities;

(b) a declaration that the Activities are not necessary, requisite or reasonably incidental to the management of the Estate and the respondent shall not pay for or subsidize the Activities out of the management fund of the Estate;

(c) damages;

(d) an order that an independent auditor do examine the accounts of the respondent relating to the Activities and application of the management fund;

(e) an order for discovery of the profits and gains made by the respondent in respect of the Activities, and a refund by the respondent for all profits obtained; and

(f) an order for the respondent to pay and refund all expenditure incurred for the Activities.

6.On 6 March 2014, the applicant issued the NOA in this case alleging that :

(a) fresh flowers were being procured on a weekly basis by the respondent and displayed at the ground floor lobby of each tower of Stage III since about 2004 until 31 December 2013(§5) (“the Flowers”);

(b) the provision of Flowers are not necessary or requisite for the management of the Estate and in breach of Clause 7(a) and 8(a) of the DMC (§5-7);

(c) the Flowers did not serve the common interest or benefit of all the owners nor had the respondent got the lawful authority in providing the same (§8);

(d) the respondent is not entitled to withdraw, use or seek reimbursement of any expenditure incurred for the Flowers out of the management fund of the Estate (§9);

(e) in light of the Flowers wrongfully provided by the respondent, it obtained an unjustifiable gain and profit by receiving remuneration and management supervision fee  (§11-12);

(f) at the Owner’s Meeting held on 19 November 2013 (“the Nov 19 OM”), it is resolved that Flowers are not to be displayed in each Tower commencing from 1 January 2014 and the total expenditure of the same should be excluded from the 2014 Budget of Stage III (“2014 Budget”) (§13);

(g) despite written request by the applicant, the respondent failed and refused to revise the 2014 Budget and demanded interest and collection charge for the unpaid amount of the Flowers from the applicant (§14-15).

7.The orders sought by the applicant in the NOA (§16-18) are :

(a) a declaration that the Flowers are not necessary, requisite or reasonably incidental to the management of the Estate;

(b) damages;

(c) an order that the respondent do account for and refund all expenditure incurred for the Flowers since 1 January 2014.

8.By a summons dated 28 March 2014, the respondent asked for the NOA to be struck out, or alternatively this case be transferred to the High Court to be consolidated with the HCA since both the NOA and HCA involved the same issue, i.e. whether the Activities and the Flowers are in breach of the DMC.

Respondent’s Contention

9.It is the submission of Mr. Hunsworth that both the NOA and the HCA involved the same issue, this is a classic case of 2 different tribunals having before them the same issue to decide with the consequential undesirable risk of the 2 tribunals coming to different conclusions as well as a waste of costs and court’s time. The issue of proceedings in this Tribunal seeking the same relief as in the HCA is a classic example of abusing the process of the court.  The proper course is for all the allegations in respect of the respondent’s conduct under the same DMC provisions to be dealt with in a single action by one court.  Since the applicant had turned down the suggestion of transferring the HCA to the Lands Tribunal for disposal, this Tribunal should strike out the NOA and for the applicant to seek leave in the HCA to amend his claim to add the issue about the Flowers to the list of the respondent’s alleged irregular and wrongful Activities.

10.An alternative but less desirable course is for this case to be transferred to the High Court for both actions to be heard by the same judge there.  But this involved a fresh application in the High Court for consolidation of the 2 actions and also faced with the difficulty of having parallel pleadings side by side.

Applicant’s Reply

11.The applicant confirmed in his submission at this hearing that the cause of action in the NOA is the same as that of the HCA, i.e. whether the respondent had acted in breach of the DMC by providing the Flowers and the Activities and whether they are unrelated to the management of the Estate.  The mentioning about the Nov 19 OM in the NOA is just evidence in support of the claim and it is never his intention to maintain a separate claim based on the failure of the respondent to act in accordance with the resolution passed at the Nov 19 OM.

12.The applicant explained that he had taken out the NOA at this Tribunal resulting in 2 different courts dealing with the same cause of action because he can’t afford financially for the claim in the NOA to be dealt with at the High Court as well.  And it is also his contention that the claim in the NOA involved a simple case and did not require a high court judge or counsel to be engaged.

13.In the course of this hearing, the possibility of transferring the HCA to this Tribunal had been canvassed with the applicant who had turned down the suggestion.

Legal Principles

14.O.18 r.19 RHC is the basis for the striking out application.  Mr. Hunsworth for the respondent is relying on 2 limbs in O.18 r.19, i.e. frivolous or vexatious and abuse of process.

15.The legal principles of striking out has been succinctly stated in the Hong Kong Civil Procedure 2014 and the relevant provisions are copied below :

(a) it is only in plain and obvious cases that the court should exercise its summary powers to strike out (§18/19/4);

(b) it is for the party seeking to strike out to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail (§18/19/4);

(c) the object of the rule is to stop cases which ought not to be launched – cases which are obviously frivolous or vexatious or obviously unsustainable.  The expression “frivolous or vexatious” includes proceedings which are an abuse of the process (§18/19/8);

(d) the rule which required parties to litigation to advance their whole case at one time and prevented them from returning to the court to advance matters which might have been raised in earlier proceedings did not apply to a claim which could not have been dealt with on the first occasion (§18/19/8);

(e) the term “abuse of the process of the Court” connotes that the process of the court must be used bona fide and properly and must not be abused.  The court will prevent the improper use of its machinery, and will, in a proper case, summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation (§18/19/10);

(f) it may be an abuse of procedure to litigate matters which have, or could have, been decided in earlier proceedings. The basic rule is that, where a matter becomes the subject of adjudication, the court requires the parties to put forward their whole case and will not (except under special circumstances) permit them later to reopen matters which might have been brought forward as part of already concluded litigation (§18/19/11);

(g) res judicata for this purpose is not confined to issues which the court was actually asked to decide in the original litigation; it also covers issues or facts which are so clearly part of the subject-matter of the original litigation and so clearly could have been raised then that it would be an abuse of process to allow new proceedings to be started in respect of them (§18/19/11);

(h) a party in a subsequent action can apply to have that second action struck out against him as an abuse of process, where it could have properly been joined into the original action but was not (§18/19/11);

(i) where a plaintiff brought a second action on matters which constituted a separate and distinct cause of action not going to the “root” of her original claim, the court refused to strike out the plaintiff’s claim as an abuse (§18/19/11).

16.Wigram V.C. had said the followings in the well-known case of Henderson v Henderson (1843) 3 Hare 100 :

“…where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.” (at 115)

17.This principle was approved by the Privy Council in an appeal from Hong Kong in the case of Yat Tung Investment Co Ltd v Dao Heng Bank Ltd and another [1975] A.C. 581.  Lord Kilbrandon at page 590 held that :

“But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.”

18.In the case of Chiu Hsiung and another v Wang Chao Huang and others HCA1974/2009 21 October 2013, Hon Anthony Chan J expressed the view that :

“ it is an abuse of process for the 1^st defendant to have (i) put the court in an invidious position of possibly making inconsistent findings” (at §23).

Discussion

19.It is not in dispute that the NOA and the HCA involved the same parties and the same cause of action.  The applicant also agreed that both the Flowers and the Activities can be considered as under the same umbrella, ie involving the common question as to whether they are related to the management of the Estate under the same clause of the DMC which is the crux of both of his claims. 

20.The applicant had once suggested that the Flowers and the Activities are different in nature in the sense that the Flowers involved service provided whilst the Activities are activities so they should be dealt with in separate courts.  The applicant had included 7 different kinds of activities in the HCA, they are dragon boat race, anniversary dinner, activities for the aged, summer activities, tours as well as festive decorations (§5).  Though they are named as activities, festive decorations are not an activity as such.  The provision of Flowers can be considered similar to the festive decorations with something displayed for the appreciation of the residents.  If the applicant can classify the festive decorations as an activity, why would the Flowers not fall within the same category?  I found the argument by the applicant that the Activities alleged in the HCA are different in nature from the service of providing the Flowers in the NOA is unfounded.

21.Given the fact that the HCA and the NOA involved the common issue between the same parties, even though the Flowers and Activities may not be identical, the root cause of the claims is the same and the majority of the consequential issues are the same.  If the HCA and the NOA are being heard at 2 different courts, there might be the risk of inconsistent findings which should be avoided.

22.The applicant had rendered no explanation as to why the claim concerning the Flowers in the NOA cannot be raised in the HCA since the cause of action in the NOA is already in existence when the HCA is being issued.  The applicant’s concern about costs and his financial means should be a reason for the claim of Flowers to be included in the HCA rather than a justification for the issuance of the NOA.  If the applicant is concerned about costs, this is more the reason for the HCA and the NOA to be dealt with by the same court.  A duplication of proceedings would create the inevitability of increased costs.  And compared to having 2 litigation in action, the adding of the allegation of Flowers to the HCA and for all to be dealt with by 1 court should be more costs effective.

23.Since the resolution at the Nov 19 OM is confirmed not to be the basis of his claim in the NOA, the mere fact that the Nov 19 OM comes after the issuance of the HCA is neither here nor there.  The claim concerning the Flowers turns on whether the provision of the same is related to the management of the Estate and in breach of the DMC.  Should the court find this against the respondent, it must follow that the respondent had to account for the expenses spent on this, from 2006 onwards and it would be for the applicant to elect the period of time which he is asking for an account of the expenditure. 

24.The fact that the HCA and the NOA involved the same parties, the existence of common issues, the risk of inconsistent findings and the inevitability of increase costs are important features to be considered in this application.  Applying the legal principles to the present case, the complaint about the Flowers, like the Activities, run from 2006 and can be included in the HCA and without any explanation, the applicant had not included the claim concerning Flowers in the HCA but elected to take out the NOA again.  The NOA ought not to be launched. By so doing, the parties have to face the risk of inconsistent findings as well as increased costs for 2 separate proceedings.  The bringing of 2 different actions in 2 different courts by the applicant and the unreasonable refusal by the applicant to have both cases to be heard in 1 court, this is no doubt a plain and obvious case of an abuse of process.

Strike Out or Transfer

25.Having found that it is an abuse of process for the applicant to take out the NOA at this Tribunal, the NOA should be struck out.  There is nothing preventing the applicant to seek leave from the High Court for a further amendment of the Statement of Claim in the HCA to include the allegation of the Flowers in it. Mr Hunsworth had already indicated in this hearing that the respondent will not object to such an application.  The applicant would not be deprived of his right to pursue with the claim concerning the Flowers.

26.Alternatively this Tribunal may consider transferring this case to the High Court for disposal.  But I don’t think this should be a right move.  Not only that whether the High Court would entertain an application for consolidation is an unknown fact, the most important consideration is that this Tribunal may be a more appropriate venue for the issues between the parties to be disposed of.  Parties should seriously consider making an application before the High Court for the case to be transferred to this Tribunal instead.

The Order

27.It is ordered that :

(a) the Notice of Application be struck out and case be dismissed;

(b) the application by the respondent to transfer this case to the High Court be dismissed;

(c) costs of this application be to the respondent, to be taxed if not agreed on party and party basis, at District Court scale.  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.

The applicant appearing in person

Mr N D Hunsworth, of Mayer Brown JSM, for the respondent