CHUNG SIU KONG AND OTHERS v. KITTY SO & TONG SOLICITORS (a firm)

HCA496/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 496 OF 2010

____________________

BETWEEN

____________________

______________________________________

DECISION ON APPLICATION
FOR LEAVE TO APPEAL AGAINST COSTS

______________________________________

1.  This is an application for leave to appeal against a Decision on Costs rendered by this Court on 24 June 2010. 

2.  That decision speaks for itself, and relates to the costs of hearings held in this Court on 12 and 15 April 2010. It sets out the history of the matter and I shall not repeat it. 

3.  There is, however, a little more background to this than first meets the eye. 

4.  A letter from the Defendant, which is the firm of Kitty So & Tong Solicitors, dated 11 June 2010, addressed to this Court, noted that: 

“Subsequent to the hearing on 15 April 2010, the parties were involved in further disputes and the same Plaintiff have commenced another High Court action being HCA643/10 against our firm. This 2nd action was resolved but the question of costs was argued before the Honourable Mr Justice Suffiad on 14 May 2010, a ruling was handed down on 27 May 2010.

In giving his ruling, the Honourable Mr Justice Suffiad accepted our counsel’s statement as to what happened in the afternoon of 15 April 2010; the Plaintiffs are now seeking leave to appeal and raised an issue as to what happen on 15 April 2010.

We therefore write to seek His Lordship’s consent to release the transcript of the hearing in the afternoon of 15 April 2010, the Plaintiffs having indicated that they have no objection.”

5.  This Court then had (and indeed continues to have) no idea of the real scope of the further dispute before Suffiad J. Neverthelessthe transcript request was granted by this Court on 22 June.

6.  However, this was not the end of this correspondence.

7.  On 2 July, the Court received another letter of that date from the Defendant’s solicitor; paragraphs 2 and 3 of which read as follows:

“We have yet to receive the transcript for the hearing in the afternoon on 14 April 2010....”

[this is obviously an incorrect reference to 15 April 2010],

“...while we are considering whether to seek leave to appeal on the ruling, we are advised by counsel but he would...”

I think they mean “that” -

“...he would prefer to read the transcript lest we are mistaken on precisely what was said; in addition, for completeness sake, we would also not want to be mistaken about what was said at the 1st hearing on 12 April 2010, before making a decision whether to seek leave to appeal. We shall therefore be grateful if we can respectfully ask for the Court’s consent to also allow us to have the transcript of the hearing on 12 April 2010 on our undertaking to pay the costs thereof.

Pending receipt of both sets of transcripts (the latter if permissions was given) we shall also be grateful if the Court will consider granting an extension of time for us to apply for leave to appeal until, say 3 days after we receive the transcript.”

I should note that theheadingto this letter was “High Court Action No. 496 of 2010” which is this case.

8.  In accordance with this request, this Court granted an extension of time for leave to appeal.

9.  On 19 July 2010, two further things happened:-

First, a summons of that date seeking leave to appeal against the original costs ruling of this Court handed down on 24 June 2010; and second,anotherletter of that date which, in material part, reads:-

“We write to inform His Lordship that the parties attended before the Honourable Mr Justice Suffiad under HCA643/10 today on the hearing of the Plaintiffs’ application for leave to appeal against the order for costs made by the Honourable Mr Justice Suffiad.

After discussion counsel for both parties took the view that given the parties’ attitude, the costs implication on the application for leave (which may take 2 applications in each case), the fact that the issues involved are matters of right and wrong and not only discretion, plus the fact that to a certain extent it reflects on the Defendant’s professional reputation; subject to the Court’s agreement, both parties agreed that the other should have leave to appeal and the 2 appeals can conveniently be heard by the Court of Appeal together.

The parties therefore duly informed the Honourable Mr Justice Suffiad of their position and the Honourable Mr Justice Suffiad stated that he shared the view.  As a result and by consent, leave to appeal was granted to the Plaintiffs.  In the premises, we shall be grateful if the Honourable Mr Justice Stone would consider granting leave to the Defendant to appeal by consent and excuse the parties’ attendance on 5 August 2010.”

10.  This Court declined to grant its consenton the papersandindicated that itwished to hear argument,which now has taken place.  Mr Chain has appeared for the Defendant’s solicitor,but there has been no representative present on behalf of the Plaintiffs.

11.  I respectfully venture to suggest that it is notappropriate forthe parties to‘cobble together’an agreed application for leave to appeal against costs.  In my view, to grant such application in that manner, on an “on the nod” basis, effectively is to abrogate the necessary‘filtering’function of the first instance tribunal which is seized with the issue of the grant of leave,andparticularly on thequestionof costs,which of course is, and always has been, wholly discretionary.  It seems to me that the Court of Appeal has enough to do without having to referee insignificant disputes.  Be that as it may, this Court having denied the consent sought, the application today, as I have said, is unopposed, although in itself that fact does not make me any more amenable to the request.

12.  Notwithstanding Mr Chain’s arguments which are, as usual, persuasive, I am unconvinced that this is a suitable case in which to grant leave to appeal.  In my view, the Defendant must go to the Court of Appeal to appeal against this refusal of leave to appeal against the issue of costs. 

13.  It strikes me that in some ways this matter is analogous to the “or otherwise” provision in the Court of Final Appeal Ordinance.  The Court of Appeal rarely, if ever, grants leave under the “or otherwise” provision,and leaves it to the superior court to decide whether or not they will wish to entertain the matter.

14.  Whilst I appreciate that there is, by consent, an appealnowpending against the costs ruling of Suffiad J, I emphasise once again that I have no idea of the parameters of that dispute.

15.  If and in so far as the Court of Appeal may take the view that an appeal on costs,in what wasthefirst instalment of the dispute between these parties,should also be entertained in addition to the appeal against the ruling of Suffiad J, so be it. 

16.  For my own part, however, I have little hesitation in declining this application. This Court heard the first instalment of the dispute between the parties,which ultimately was resolved by a sensible (and if I may say so, wholly obvious) expedient, andthereafterthe Court reflected at length on the costs implications before handing down itswrittenruling on 24 June.

17.  With respect, in no sense do I consider that this ruling is incorrect, or that it is wrong in principle, or that I have taken something into account that I should not have, or that I have not taken something into account that I should have, and whether in these circumstances the application should lie is, in my view, entirely a matter for the Court of Appeal.

18.  In the premises, myOrder is as follows.  The application by summons dated 19 July for leave to appeal is dismissed with costs, to be taxed if not agreed.

HCA 496/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 496 OF 2010

----------------------

BETWEEN

----------------------

----------------------------------

DECISION ON COSTS

----------------------------------

The application for injunctive relief

1.  On 12 and 15 April 2010 this court, sitting in its capacity as Duty Judge, heard a summons, ex parte on notice, wherein the plaintiffs, which brought suit in their capacity as six of eight duly appointed representatives of the Owners of Kai Tak Mansion, against the defendant solicitors firm for urgent injunctive relief.

2.  The background details of the dispute are relatively brief.

3.  The Owners of the building, numbering some 302, had entered into a Joint Sale Agreement to effect the sale of Kai Tak Mansion by way of public tender, and the Owners’ representatives had been given rights and powers to give instructions to the defendant firm regarding all matters incidental to the tender.

4.  Clause 4(a) of the Agreement gave the power to the representatives to discuss with and to give instructions to the defendant regarding all matters incidental to the tender.

5.  I was informed that 302 of some 328 owners of Kai Tak Mansion had signed onto the Joint Sale Agreement, and each of the owners had executed an irrevocable Power of Attorney in favour of the elected representatives.

6.  One of the terms of the Joint Sale Agreement permitted the representatives to accept a private offer for the building at any time prior to the tender closing date if the offer reached the reserve price of $1.5 billion, and was otherwise in accordance with the terms of the tender.

7.  There is no need for immediate purposes to depose to greater detail; suffice to say that a private offer was received from an entity known as WSH Ltd to purchase at the sum of $1.5 billion, and that by 31 March 2003, the closing date for tenders, only one tender had been received.

8.  However, by this time it had been realized that there was a latent defect in the title of Owners to be conveyed through the tender, and thus there would be no point for the representatives of owners to purport to accept any such tender because there was no legal way in which the sale could be completed.

9.  Accordingly, the owners’ representatives concentrated on the private offer by WSH Ltd, the latter specifically having requested, as a negotiating condition, that the existing ‑ and only ‑ tender not be opened.

10.  Accordingly the plaintiffs decided not to open the tender, and to request its return unopened from the defendant firm (which held the document), a decision which was communicated to the defendant on 31 March 2010, and repeated in a written resolution of the representatives, acting through the six plaintiffs, dated 10 April 2010, and sent to the defendant on the following day.

11.  Nevertheless the defendant firm declined to act on the instructions as thus given by the representatives, and indicated that they intended to accede to the request of some individual owners to open the sole existing tender, insisting that it was the right of those owners so to request.

12.  Hence this application for injunctive relief came before this court on an urgent basis, two hearings taking place, on Monday 12 April and Thursday 15 April 2010, with leading and junior counsel (Mr Alan Leong SC and Mr Alfred Cheng) representing the plaintiffs, and senior junior counsel (Mr Benjamin Chain) representing the defendant solicitors’ firm.

13.  In a nutshell, Mr Leong SC was asking for an Order of this court that the tender in question, which had been stipulated by the private offeror be not opened, should be returned unopened by the defendant firm to the plaintiffs.

Resolution of the dispute

14.  Upon the defendant’s undertaking that, absent agreement of the plaintiffs, the defendant would not open the tender until further order, the initial hearing was adjourned for argument three days later.

15.  However, the essential bone of contention between the parties, namely whether the plaintiffs legitimately could demand from the defendant the return of the tender unopened, was an issue which remained undecided by the court.

16.  That which actually happened was the termination of the retainer of the defendant firm to act as the solicitors for all owners who were signatories to the Agreement signed on 27 March 2009 in relation to the joint sale of No’s 53, 53A, 55, and 55A of Kai Tak Mansions, and as a consequence of such termination the court ordered that the defendant forthwith do deliver up the tender submitted by the sole tenderer regarding the sale of Kai Tak Mansions; in fact, on this order being made the tender was handed over in court by the defendant’s representatives to those acting for the plaintiff.

17.  The matter in issue thus having been resolved, absent substantive decision on the legal merit of the respective substantive arguments concerning the obligation of the defendant firm to return the tender unopened, the sole question remaining was that of the costs of the action and of the application.

18.  In this regard the court ordered that the costs issue be determined after receiving written submissions from either side.

Written costs’ submissions

19.  Consequent upon such order, the court received written submissions on behalf of the defendants under cover of a letter from the defendant firm, Kitty So & Tong, dated 27 April 2010, and from the plaintiff under cover of a letter dated 28 April 2010 from those instructing counsel for the plaintiffs, Anthony Siu & Co.

20.  By consent between the parties, further submissions in response were received from both sides, in each event under cover of a letter dated 30 April 2010.

21.  The respective positions as taken by the parties were not unexpected.  The plaintiffs say that costs should follow the event in that they had achieved what they wanted, and had there not been an application to court for return of the tender, the defendant firm still would have refused to give it up.

22.  The defendant firm disagrees.  The defendant maintains that the firm represented not just the elected representatives, but all 302 owners, and that when there were differences between the owners (with a minority wishing to open the tender) the defendant firm could not act on the desire that it be that the private offer be accepted ‑ and the tender returned unopened as had been requested ‑ without the sanction of the majority unless the representatives were acting within the scope of their authority under the Joint Sale Agreement.  Hence the defendant firm asked for its costs, maintaining that its stance was not unreasonable in the prevailing circumstances.

Decision on Costs 

23.  The court has reflected on this issue.

24.  Sadly, it appears that the resolution of this dispute which seemed to have been achieved ‑ with the tender document itself being handed over from defendant to plaintiffs in the face of the court ‑ is not yet over.

25.  In this connection I have had drawn to my attention a further dispute, in HCA 643 of 2010, which involved an alleged delay by the defendant in the return of title deeds, and which in turn appears to have been resolved prior to the hearing of the relevant summons, but which is the subject of a written decision as to costs rendered by Suffiad J dated 14 May 2010.

26.  In this latter context, this court now has received a letter from the defendant firm, Kitty So & Tong, requesting a transcript as to that which occurred before this court on the afternoon of 15 April 2010.

27.  So, putting it at its lowest there is obviously a degree of bad feeling/lack of co-operation ongoing between these parties.

28.  For my part I was at a loss to understand why, in the particular case with which this court directly was concerned, and wherein counsel of experience were involved on both sides, that at the hearing on 15 April 2010 it had taken the suggestion of the court itself that the solicitors for the plaintiff ‑ who apparently represented all but one of the owners of the building involved – should move to resolve the then-existing dispute as to the return of the unopened tender by the simple (and obvious) device of termination of the defendant firm’s retainer.

29.  This in fact was what occurred, and was a course which Mr Chain, for the defendant firm, termed the ‘Alternative Course’; he made it clear that whilst the defendant accepted that its retainer had been validly terminated ‑ which in turn led to the handing over of the unopened tender ‑ he maintained that whilst the retainer had remained in place in the circumstances the defendant firm legitimately had required a direction from all owners as to how to deal with the tender, and not merely instructions in this regard from the appointed owners’ representatives.

30.  In the event, the merit of this substantive issue was not argued out, since the dispute otherwise practically had been resolved.  In fact, Mr Chain went so far as to say that, notwithstanding the potential for legal argument on the facts as they stood, he was at a loss to understand why the so-called ‘Alternative approach’ in terms of termination of the retainer had not been adopted at the outset, thus saving costs all round, and that accordingly there had been no necessity for the plaintiffs to issue proceedings and to come to court for ex parte on notice injunctive relief.

31.  For his part Mr Leong SC maintained that for all practical purposes in the present case the representatives were the owners, and that the defendant’s argument distinguishing between termination of the retainer on the one hand and the representatives’ instructions as to the return of the unopened tender on the other constituted a distinction without a difference, and a self-serving one at that.

32.  After due consideration, and after weighing all the arguments, both oral and written, I have come to the conclusion that at bottom all this was much ado about relatively little, and that had the defendant firm been in any real doubt about its position in declining, as instructed, to return the tender unopened, it easily could have sought a direction from the court and thus, in effect, ‘covered its back’.

33.  In the event this course did not materialize, there has eventuated a first class inter partes row – which in truth did not require a great deal of ingenuity to settle – for which someone must pay, in part at least.

34.  Accordingly, in all the circumstances and in the exercise of my discretion, in my judgment an appropriate order for costs should be that the plaintiffs do have 50% of the costs of this application for injunctive relief ‑ which, as earlier noted, extended over two hearing days.

35.  I so order.

36.  Such costs are to be taxed if not agreed.  I decline to make an order certifying the matter as fit for 2 counsel.

Mr Alan KK Leong & Mr Alfred CP Cheng, instructed by Messrs Anthony Siu & Co, for the plaintiffs

Mr Benjamin Chain, instructed by Messrs Kitty So & Tong, for the defendant

Appeal by the defendant to Court of Appeal allowed by Court of Appeal. Please refer to CACV157/2010 dated 6 January 2011