THE INCORPORATED OWNERS OF CHAMPION COURT v. PANG PING FAN PETER AND ANOTHER

CACV 317/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 317 OF 2006

(ON APPEAL FROM DCCJ NO. 55 of 2005)

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BETWEEN

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REASONS FOR DECISION

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A.  Introduction

1.  This is the Defendants’ appeal against Master Lai’s Order dated 26 August 2011 in granting a Charging Order Absolute in favour of the Plaintiff (“the IO”).  The Charging Order is based on an allocatur (“the Allocatur”) dated 23 June 2011 in relation to the IO’s costs under CACV 317/2006.

2.  After hearing the 2^nd Defendant (who also represented the 1^st Defendant at this hearing), I dismissed the appeal with reasons to follow.

3.  I now give my reasons.

B.  Brief background

4.  In 2005, the IO sued the Defendants as owners of a flat (“the Flat”) at Champion Court for breach of the terms of the Deed of Mutual Covenant relating to certain illegal structures.   The action was DCCJ 55/2005.  After trial, District Judge W Wong held in favour of the IO and ordered the Defendants to remove the illegal structures and further ordered costs against them^[1].

5.  The Defendants appealed the learned District Judge’s judgment to the Court of Appeal under CACV 317/2006.  The appeal was eventually dismissed by the Court of Appeal with costs (“the Appeal Costs”) against the Defendants^[2].

6.  The taxation of the Appeal Costs went before Master Levy.  The Defendants raised preliminary objections to the taxation, on the basis that there had been a breach of what they called the “indemnity principle” by the IO. It was also part of the Defendants’ complaints that there existed a contingency fee arrangement between the IO and the IO’s solicitors and also that there were procedural irregularities in the IO’s authorization to instruct the solicitors to bring the litigations.

7.  In May 2009, Master Levy decided against the Defendants (“Master Levy’s Decision”) on the preliminary objections.  They appealed Master Levy’s Decision to the Court of First Instance (“CFI”).  The appeal was heard by Deputy High Court Judge Mayo in January 2010.

8.  By a judgment (“Judge Mayo’s Judgment”) dated 5 January 2010, Deputy High Court Judge Mayo dismissed the Defendants’ said appeal and ordered costs against the Defendants.

9.  The Defendants’ applications for leave to appeal against Judge Mayo’s Judgment to the Court of Appeal were refused firstly by Rogers VP^[3], and later by Tang VP with Le Pichon JA^[4]. In both judgments refusing leave, the learned judges were of the clear view that Judge Mayo’s Judgment was correct and there was no reasonable prospect of success in the Defendants’ intended appeal^[5]. In the judgment of Tang VP and Le Pichon JA, the Court of Appeal was even of the view that the application for leave to appeal was so devoid of merit that they further ordered[6] that the Defendants might not request that determination to be reconsidered at an inter partes oral hearing.

10.  The taxation of the Appeal Costs thus proceeded.   As mentioned above, the Allocatur was granted by Master Ng on 15 June 2011 allowing the sum of HK$199,608.50.

11.  As the Defendants did not pay this sum, on 23 June 2011, the IO proceeded to apply for a charging order against the Flat based on this sum under the Allocatur.   On 30 June 2011, Master Hui granted a charging order nisi and required the Defendants to appear before Master Lai on 26 August 2011 to show cause why the order should not be made absolute.

12.  After hearing the 2^nd Defendant on 26 August 2011, Master Lai made the Charging Order Absolute.

C.  This Appeal

13.  In this appeal, the Defendants raise two grounds of appeal:

(1)  First, the 2^nd Defendant said she was not given sufficient time to present the Defendants’ case (i.e., the 2^nd ground below) in detail before Master Lai.

(2)  Secondly, under s. 14(1) of the High Court Ordinance (Cap 4) (“HCO”), the Defendants should have as of right to appeal against Judge Mayo’s Judgment to the Court of Appeal.  Their earlier unsuccessful applications for leave to appeal to the Court of Appeal were made under a mistaken impression that they had to obtain leave.   As such, they should still be entitled to appeal to the Court of Appeal against Judge Mayo’s Judgment, and if successful (which they believe it would as there were clearly the breach of the indemnity principle and the contingency fee arrangement by the IO), the Allocatur would then be set aside.   As a result, the Charging Order Absolute should not be made now.

14.  There are no merits in these appeal grounds.

15.  In relation to the first one, whether or not the 2^nd Defendant had been given sufficient time at the hearing before the learned Master to present her case is irrelevant to this appeal, as I am hearing this de novo, and I have clarified with the 2^nd Defendant about her case as to why the Charging Order should not be made.  In any event, other than a bare allegation, I have not seen any concrete evidence (such as a transcript of the hearing) to show that the 2^nd Defendant had not been given sufficient time to make her submissions before the learned Master.

16.  In relation to the 2^nd ground, I also reject it for the following reasons.

17.  First, s. 14 of the HCO provides that an appeal shall lie as of right to the Court of Appeal from every judgment or order of the CFI in any civil matter.  But this section is provided to be subject to, inter alia, s. 14AA of the HCO.

18.  S. 14AA of the HCO provides that no appeal lies to the Court of Appeal from an interlocutory judgment or order of the CFI unless leave to appeal has been granted by the CFI or the Court of Appeal.

19.  Judge Mayo’s Judgment was one dealing with an appeal from Master Levy’s Decision.  The said judgment and decision related to the ruling of the Defendants’ preliminary objections raised in the taxation of the Appeal Costs. These are interlocutory matters and thus Judge Mayo’s Judgment is an interlocutory judgment or order of the CFI.  As such, leave to appeal to the Court of Appeal is required under s. 14AA of the HCO.    The Defendants therefore do not have a right to appeal to the Court of Appeal as submitted.

20.  Secondly, and in any event, as mentioned above, the Court of Appeal (in refusing leave) had expressed the clear view that the Defendants’ case on the breach of indemnity principle and contingency fee clearly had no merits, and Judge Mayo’s Judgment was correct.  In the circumstances, even if (which I do not agree for the above reasons) the Defendants were allowed to appeal against Judge Mayo’s Judgment again, there is no reasonable chance that it would be successful.  I therefore see no merits in the Defendants’ allegation that they would succeed in  appealing against Judge Mayo’s Judgment and be able to set aside the Allocatur.

D.  Conclusion

21.  For all these reasons, I dismiss the Defendants’ appeal with costs to the IO, to be taxed if not agreed.

CACV 317/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 317 OF 2006

(ON APPEAL FROM DCCJ NO. 55 of 2005)

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J U D G M E N T

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1.  This is an appeal from an order of Master Levy on a taxation.  The Master ordered inter alia that the “preliminary issue on the breach of indemnity principle” be adjourned for directions.

2.  At the adjourned hearing on 15 May last year, she held that there had been no breach of the “indemnity principle”.  It is against this order that the Appellants are appealing.

3.  The background to this litigation is rather unfortunate.

4.  The Incorporated Owners sued the Appellants in the District Court in respect of the breach of the terms of the Deed of Mutual Covenant relating to the flat owned by the Appellants at Champion Court.

5.  The case was heard by District Judge Wesley Wong who held in favour of the Incorporated Owners and he ordered that costs be to them.

6.  The Appellants appealed against the court’s decision.

7.  The Court of Appeal dismissed the appeal and also ordered that costs should be paid by the Appellants.

8.  Master Levy was seized with the taxation of the Bill of Costs before the Court of Appeal.

9.  The main issue which was before the Master was whether the Incorporated Owners had authority to give instructions to the solicitors who represented them in this litigation.

10.  Ms Ng for the Appellants contended that the minutes of the meeting when approval was given for the Incorporated Owners to proceed against the Appellants had not been signed by any of the members of the Committee.

11.  As the constitution of the Committee is not immutable practical difficulties were encountered in rectifying this situation.  However, a decision was eventually made to hold a further meeting to ratify the decision of the earlier meeting.  This was done.

12.  Ms Ng also complained that it could be inferred from all of the surrounding circumstances and documentation that a contingency agreement in respect of the costs had been entered into between the Incorporated Owners and their legal advisors.

13.  At the hearing before me, I invited Ms Ng to refer me to any available evidence to support this contention.  She was unable to do so.

14.  It is not entirely clear to me what the so called “indemnity principle” embraced.

15.  What is clear is that the Incorporated Owners gave instructions to their solicitors to prosecute this litigation.  They did so and won the case in the District Court and the decision of the Judge was upheld by the Court of Appeal.

16.  The important matter to bear in mind is that the Taxing Master was bound by the mandate contained in the Order which was the subject of the taxation.

17.  Any issue relating to the authority of the Incorporated Owners to instruct their lawyers should have been raised at the commencement of the proceedings.  It is quite wrong that it should have been ventilated at such a late stage.

18.  The consequence of all of this is that the appeal is dismissed.

19.  The taxation can accordingly now be proceeded with.

20.  The costs of this appeal will be to the Incorporated Owners.

1st and 2nd defendants leave to appeal to Court of Appeal refused. Please refer to HCMP172/2010 dated 5 March 2010

CACV 317/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 317 OF 2006

(On Appeal from DCCJ No. 55 of 2005)

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J U D G M E N T

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Hon. Yuen JA (giving the judgment of the court):

1.  This is an application by the 2^nd Defendant for leave to appeal to the Court of Final Appeal from our judgment given on 23 May 2008 dismissing the appeal lodged by the 2^nd Defendant and the 1^st Defendant (her joint tenant) from a judgment of Deputy District Judge W. Wong ordering them to remove illegal structures in their premises and to rectify them to their original state and condition, and dismissing the Defendants’ counterclaim.

2.  At the hearing of the appeal in November 2007, the 2^nd Defendant produced a document signed by the 1^st Defendant authorizing her to act on his behalf at the appeal: see para. 2 of our judgment.  No similar document has been produced for this application and the 2^nd Defendant stated that she was acting on her own behalf solely.

3.  The 2^nd Defendants has first submitted that she is entitled to leave as of right under s.22(1)(a) Hong Kong Court of Final Appeal Ordinance Cap. 484 because the premises have been let at $60,000 (excluding rates and management fees) and there is still a period of 22.5 months unexpired on the tenancy agreement.  That is all that has been put forward.  Although arithmetically the rental for that period exceeds $1,000,000, the rental is not the “matter in dispute” on the appeal, and in the absence of other evidence it does not mean that the appeal involved a claim or question to or respecting property amounting to or of the value of $1,000,000.

4.  As for s.22(1)(b) HKCFAO, all that the 2^nd Defendant has done is to have set out parts of this court’s judgment with which she disagrees.  That is not sufficient as the appeal has to involve a question of great general or public importance.  None has been raised.  Nor can we see anything under the “or otherwise” ground.

5.  Accordingly this application for leave must be dismissed.

6.  As a matter of completeness, I would add that as far as the iron staircase is concerned (see para. 21 of our judgment), the Defendants had not included in their counterclaim a demand that the court order the iron staircase to be dismantled or moved.  Not surprisingly, the judge at first instance did not deal with it.  Although the Defendants did include such a demand for the first time in the orders they sought on appeal, the staircase was not mentioned in their grounds of appeal.  As a result, we did not consider it appropriate to make any order in this respect.

7.  We would therefore order that the application be dismissed.  As the parties have agreed that costs should follow the event, we would order that the costs of the application be paid by the 2^nd Defendant to the Plaintiff.