MESSRS BAKER & MCKENZIE v. HENNEX INDUSTRIES LTD AND OTHERS

DCMP 809/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 809 OF 2014

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IN THE MATTER OF an application by Messrs Baker & McKenzie for interpleader relief against the claims of Kingdom Power Development Limited, Sheen Wealth Industrial Limited (Purchaser) and Hennex Industries Limited (1st Vendor) and Make Sales Enterprise Limited (2nd Vendor) for the stakeholder money in the sum of HK$233,300 pursuant to the Provisional Agreement For Sale and Purchase dated 22 October 2010 in relation to the sale and purchase of Shops Nos 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10 all on the Ground Floor and the Entire First Floor and Offices Nos 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16 all on the Second Floor and the External Walls of the First Floor and the Second Floor of Tonnochy Towers, Nos 250-274 Jaffe Road, No 5 Tonnochy Road and No 4 Stewart Road, Hong Kong (“Properties”)

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BETWEEN
	Messrs Baker & Mckenzie	Applicant
and
	Hennex Industries Limited	1st Claimant
	Make Sales Enterprise Limited	2nd Claimant
	Sheen Wealth Industries Limited	3rd Claimant
	Kingdom Power Development Limited	4th Claimant

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Before: Deputy District Judge J Chow in Chambers (Open to public)

Date of Hearing: 28 October 2014

Date of Decision: 31 October 2014

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DECISION

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INTRODUCTION

1. The subject matter of the interpleader proceedings is a disputed sum of $193,800.

2. Subsequent to my judgment handed down on 20 August 2014, (“the Judgment”), the 3^rd and 4^th claimants took out a summons on 25 September 2014 for an order to amend the Judgment pursuant to Order 20 rule 11 of the Rules of District Court, Cap 336H.  The summons has two parts, amendments on (i) arithmetical error; and (ii) costs.

3. Order 20 rule 11 of the Rules of the District Court reads:-

“Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without an appeal.”

1^st Application

4. The 1^st part of the summons concerns an amendment to the release of the disputed sum paid into court to both the 1^st and 2^nd claimants; and the 3^rd and 4^th claimants.  The amendment arises from an error in paragraph 15 of the Judgment, “the 1^st and 2^nd claimants agreed to pay a further sum of $40,000 to the 3^rd and 4^th claimants”.  The sum of $40,000 does not form part of the disputed sum because it was agreed in the direction hearing on 5 May 2014 that such sum be released by the applicant to the 1^st and 2^nd claimants.  

5. The 1^st and 2^nd claimants conceded, and I agree the amendment is premised on a purely arithmetical error.  No prejudice will be caused to either party, an order of amendment should be granted.  I  order paragraph 32(i) and (ii) of the Judgment be amended as:-

(i) Part of the disputed sum of $160,500 paid into court be released to the 1^st and 2^nd claimants; and

(ii) The remaining of the disputed sum of $33,000 paid into court be released to the 3^rd and 4^th claimants forthwith.

2^nd Application

6. The 3^rd and 4^th claimants seek to amend the costs order of the interpleader proceedings in the 2^nd part of the summons.

7. I ordered costs to follow the event in paragraph 27 of the Judgment. The costs order appeared in paragraph 32(iii) and (iv) :-

(i) Costs of the interpleader proceedings to be paid by the 3^rd and 4^th claimants jointly and severally to the 1^st and 2^nd claimants, be summarily assessed at $69,670.

(ii) Costs of the applicant be paid by the 3^rd and 4^th claimants jointly and severally, to the 1^st and 2^nd claimants in sum of $33,884.

8. The 3^rd and 4^th claimants now seek to amend the above-mentioned to:-

(i) There be no order as to costs of the interpleader proceedings between the 1^st and 2^nd claimants and the 3^rd and 4^th claimants; and

(ii) The costs of the applicant in the sum of $33,884 be respectively paid by the 1^st and 2^nd claimants in sum of $16,942 and paid by the 3^rd and 4^th claimants in the sum of $16,942 forthwith.

9. Mr Leung, solicitors for the 3^rd and 4^th claimants submitted, the amendment of costs order falls squarely within the ambit of Order 20 rule 11 of the Rules of District Court.  The reason being, the 3^rd and 4^th claimants are partially successful in the interpleader proceedings only, when the court has ordered costs to follow the event, the proper costs order should be no order as to costs between the parties.  Secondly, the applicant’s costs previously assessed at $33,884 shall be borne equally by both the 1^st and 2^nd claimants; and the 3^rd and 4^th claimants.

10. Mr Leung relied on Man Ping Nam v Man Fong Hang (2007) 10 HKCFR 140.  The plaintiff in that case succeeded in a sum of compensation.  The defendant in that case paid the judgment sum to the plaintiff with interest.  The defendant appealed to the Court of Appeal and the appeal was unanimously allowed.  The Court of Appeal judgment ordered judgment for the plaintiff be set aside, nevertheless, without an express order for repayment of the judgment sum with interest by the plaintiff to the defendant.  The plaintiff refused to repay the monies, the defendant applied for relief to amend the order under “slip rule”.  Riberio PJ ordered the plaintiff to repay the monies to the defendants, with interest.  The following principles are enunciated:-

“10. Even if an Order as drawn up is ambiguous, it is well settled that the court (at all levels) has an inherent or implied discretionary power to clarify the original order if the court’s intention appearing from the body of the judgment is manifest. As Lord Penzance stated in Lawrie v Lees (1881) 7 App Cas 19 at 34-35:

“I cannot doubt that under the original powers of the Court, quite independent of any order that is made under the Judicature Act, every Court has the power to vary its own orders which are drawn up mechanically in the registry or in the office of the Court - to vary them in such a way as to carry out its own meaning, and where language has been used which is doubtful, to make it plain.  I think that power is inherent in every Court.”

See also the cases cited in Hong Kong Civil Procedure 2007 at 20/11/1:

“11. In the absence of any prejudice to the other party (in which event discretionary considerations may come into play), it matters not that an application for such clarification is made after the Court’s order has been sealed since it operates to make plain what the Court has in fact already decided.  It does not involve the Court acting when functus officio.” [emphasis added]

11. I am not satisfied the 2^nd part of the summons, to amend of the costs order in paragraphs 32 (iii) and (iv) of the Judgment qualifies clarification of an ambiguous judgment.  The “slip rule” is inapplicable.  It was ordered costs to follow the event.  It is trite law that costs are in the discretion of the court.  The amendment of the 1^st part of the summons, in paragraphs 32(i) and (ii) of the Judgment only relates to correction of figures without disturbing the body of the Judgment, I am of the view that the 3^rd and 4^th claimants’ application to amend the costs orders is in effect asking the court to re-decide or to re-exercise discretion on costs in the interpleader application.  Such application falls outside the ambit of the “slip rule” principle.

Conclusion

12. I grant an order in terms of paragraphs 1.1 and 1.2 of the summons.  Paragraphs 1.3 and 1.4 of the summons be dismissed.

13. The 3^rd and 4^th claimants ask for no order as to costs of this summons.  As the 3^rd and 4^th claimants are unsuccessful in the 2^nd part of the application only, I order the 3^rd and 4^th claimants to pay half of the 1^st and 2^nd claimants’ costs of this summons, to be taxed if not agreed.

14. I thank solicitors for the 1^st – 4^th claimants’ assistance.

	( J Chow )
	Deputy District Judge

Mr Peter Fu, of Messrs. Chong, Fu & Co, for 1^st and 2^nd claimants.

Mr Thomas TS Leung of Messrs. Tong Kan & Co, for the 3^rd and 4^th claimants.

DCMP 809/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 809 OF 2014

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

IN THE MATTER OF an application by Messrs Baker & McKenzie for interpleader relief against the claims of Kingdom Power Development Limited, Sheen Wealth Industrial Limited (Purchaser) and Hennex Industries Limited (1st Vendor) and Make Sales Enterprise Limited (2nd Vendor) for the stakeholder money in the sum of HK$233,300 pursuant to the Provisional Agreement For Sale and Purchase dated 22 October 2010 in relation to the sale and purchase of Shops Nos 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10 all on the Ground Floor and the Entire first Floor and Offices Nos 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16 all on the Second Floor and the External Walls of the First Floor and the Second Floor of Tonnochy Towers, Nos 250-274 Jaffe Road, No 5 Tonnochy Road and No 4 Stewart Road, Hong Kong (‘the Properties”)

BETWEEN
	Messrs Baker & Mckenzie	Applicant
and
	Hennex Industries Limited	1st Claimant
	Make Sales Enterprise Limited	2nd Claimant
	Sheen Wealth Industrial Limited	3rd Claimant
	Kingdom Power Development Limited	4th Claimant
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Before:  Deputy District Judge J Chow in Chambers (open to public)

Date of Hearing:  5 May 2014, 2 July 2014 and 18 August 2014

Date of Judgment:  20 August 2014

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JUDGMENT

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The Application

1. The applicant seeks interpleader relief pursuant to Order 17 rule (1) of the Rules of the District Court.  The subject involved is the stakeholder money of $233,300, in relation to a sale and purchase of the Properties.

The Background

2. The 1^st and 2^nd claimants are vendors.  The 4^th claimant is the purchaser and the 3^rd claimant is the nominee.  The applicant is the solicitors for the 3^rd claimant. On 22 October 2010, the 1^st and 2^nd claimants and the 4^th claimants entered into a provisional sale and purchase agreement for purchase of the Properties in sum of $435,000,000 (“the PS&P Agreement”).

3. The Properties were subject to two superseding orders issued by the Buildings Authority (“the Superseding Orders”). The 1^st order and the 2^nd order concerned the units on the 1^st floor and offices on the 2^nd floor respectively.

4. It was stated the 1^st order, memorial number 0704110190315  (undated in exhibit “RL-1”)  ,

“It has been brought to my attention that the following building works have been carried out in or at the above premises: (i) Structure attached to the external wall at the front’ (ii) Metal rack attached to the external wall at the rear.

2. For the said building works, (a) the building works at item (i) and (ii) above has been carried out without having first obtained from the approval of building plans and consent for the commencement of such building works required by section 14 of the Buildings Ordnance.

3. In exercising the powers vested in me under section 24(1) of the Buildings Ordinance, I hereby order you to: - (a) demolish the said building works described under item (i) and (ii) above; and (b) to reinstate the parts of the building so affected by building works under item (i) and (ii) above in accordance with the plans approved by the Building Authority.

5. It was stated in the 2^nd order, memorial number 0704110190322 dated 16^th March 2007,

“It has been brought to my attention that the following building works have been carried out in or at the above premises: (i) Structure attached to the external wall at the front’ (ii) Air-conditioner duct and cooling tower supported frame attached to the external wall at the rear.

2. For the said building works, (a) the building works at item (i) and (ii) above has been carried out without having first obtained from the approval of building plans and consent for the commencement of such building works required by section 14 of the Buildings Ordnance.

3. In exercising the powers vested in me under section 24(1) of the Buildings Ordinance, I hereby order you to: - (a) demolish the said building works described under item (i) and (ii) above; and (b) to reinstate the parts of the building so affected by building works under item (i) and (ii) above in accordance with the plans approved by the Building Authority.”

6. In the PS&P Agreement, the 1^st and 2^nd claimants warranted to make good the Superseding Orders by carrying out necessary works, or to reimburse the 3^rd and 4^th claimants at a reasonable costs to comply with the same. It was particularly stated in Clause 1 of the Rider,

“The Vendor hereby warrants that they have completed the necessary works to comply with the Superseding Orders Memorial Nos. 07041101190315 and 07041101190322. Two respective Letters of Compliance discharging the said Orders have to be issued and duly registered in the Land Registry before completion of the sale and purchase of the Property. If the two Letters of Compliance shall not have been issued and registered in the Land Registry before the completion date, then the Vendor shall reimburse the Purchaser a reasonable cost of completing the necessary works to comply with the said two Superseding Orders and registering the two Letters of Compliance and a sum of $300,000.00 shall be deducted from the balance of the purchase price on completion and be held by the Purchaser’s Solicitors towards payment of such cost. Any excess shall be returned to the Vendor of if there is any deficiency, the Vendor shall reimburse the balance of the said sum. This clause survive completion. (emphasis added)”

7. The 1^st and 2^nd claimants did not make good the Superseding Orders at time of completion. On 26^th January 2011, a sum of $300,500 was deducted from the balance of the purchase price and was deposited with the applicant, out of which $300,000 was stakeholder money and the additional $500 was meant to settle the fees for obtaining certified copies from the Land Registry.  Parties agreed this $500 does not form part of the stakeholder money.

8. On 3^rd March 2011, prior to the commencement of such works, Mr. Lo Tsui Shan Rico of the 3^rd claimant, arranged a site inspection with Mr. Yue Kin Wing of the Buildings Department. It was the 3^rd claimant’s understanding apart from those particularly stated in the Superseding Orders, the asbestos structure and the signage attached on the external wall also formed part of the unauthorized structures, which have to be demolished.

9. The 3^rd claimant requested for a number of quotations from various building contractors: (i) 順銘建築有限公司; (ii) Kenji Engineering Co. Ltd (“Kenji”) and (iii) 展輝建築公司. The 3^rd claimant appointed Kenji because it has quoted the lowest price in its quotation dated 13 April 2011 (“the Quotation”). The costs of works were agreed at $260,000.

10. After completion of the works, the Buildings Department issued two Letters of Compliance both dated 22^nd June 2011 with Memorial Nos. 11071501290013 and 11071501290029.

The Dispute

11. The 3^rd claimant claimed $262,000 and an extra $4,089.09 as administrative costs as costs for completing the necessary works.  

12. The 1^st and 2^nd claimants disputed the sum of the works on the ground that the removal of the asbestos structure and the signage attached on the external wall did not form part of the unauthorized structures in the Superseding Orders (“the Disputed Works”).  The 1^st and 2^nd claimant refused to settle the costs of such works. To have a better understanding of the 1^st and 2^nd claimants’ stance, the particulars of the  Quotation are as follows:

(i)	Item 1 – scaffolding :	$ 35,000
(ii)	Items 2 – 4: works in compliance
	of the Superseding Orders :	$ 55,000
(iii)	Items 5 – 6: Disputed Works:	$160,000
(iv)	Item 7 – insurance:	$ 10,000
(v)	TOTAL :	$260,000
		======

13. The 1^st and 2^nd claimant submitted, as they are only liable for $55,000 (items 2 – 4 only) as opposed to the aggregate sum of $215,000 (items 2 – 6); they should bear the same proportion of the works in items 1 and 7[1]. The aggregate sum payable should be $66,700. Notwithstanding ongoing dispute, the sum of $66,700 was released to the 4^th claimant on or about 9 September 2013.

14. Negotiation between parties to dispose of the remaining stakeholder money was unfruitful.  The applicant seeks interpleader relief in an originating summons filed on 28 March 2014.

15. The originating summons was returnable on 5^th May 2014 for directions. I am given to understand the 3^rd claimant agreed to waive the administrative costs $4,089.09. Parties further agreed (i) the 1^st and 2^nd claimants agreed to pay a further sum of $40,000 to the 3^rd and 4^th claimants; and (ii) the disputed sum was only $193,800[2]. 

16. The applicant was directed to pay the agreed disputed sum into court. The applicant’s attendance was excused in further hearings.

The Issues

17. As agreed between the parties, the issues of this application are (i) whether items 1, 5, 6 and 7 of the Quotation were reasonably necessary to comply with the Superseding Orders; and (ii) whether apportionment of items 1 and 7 is justified.

The 1^st and 2^nd claimants’ submissions

18. Mr Lam, counsel for the 1^st and 2^nd claimants submitted, they are liable for costs of works referred to demolish and reinstate the parts of building so affected of (i) structure attached to the external wall at the front on the 1^st and 2^nd floor of the Properties; (ii) metal rack attached to the external wall of the rear and (iii) air-conditioner duct and cooling tower supported frame attached to the external wall at the rear part of the building in accordance with the plan attached to the Superseding Orders[3] (items 2 – 4).  The asbestos ceilings and signage facing Stewart Road and Tonnochy Road are not within the ambit of the Superseding Orders (items 5 – 6). An apportioned amount of items 1 and 7 is appropriate.

The 3^rd and 4^th claimants’ submissions

19. Mr Ko, counsel for the 3^rd and 4^th claimants submitted, there is nothing in the evidence that items 5 and 6 fall outside the ambit of the Superseding Orders. He further suggested the court shall not rely on the alleged representations of Mr Yue on 3March 2011. Mr Ko further cited authorities on interpretation on contracts[4].

Analysis

20. The true construction of the works required for compliance of the Superseding Orders rests with the works expressly defined in the Superseding Orders themselves. I agree with Mr Lam that items 2 – 4 are within the ambit of the Superseding Orders. Clear reference of the location of the area concerned has been made in the plans attached. To the contrary, the Disputed Works (items 5 and 6), structures facing Stewart Road and Tonnochy Road,  were not mentioned.

21. The arguments raised by Mr Ko are misconceived. Firstly, The New China Hong Kong Group Ltd (in liquidation) case is distinguishable, it is unnecessary for me to analyze in detail because  that case concerns interpretation of contracts between contracting parties, which is not our case here. The 1^st and 2^nd claimants are not the contracting parties of the Quotation.

22. Secondly, the conduct of the 3^rd and 4^th claimants are relevant. The 3^rd and 4^th claimants said Mr Yue Kin Wing of the Buildings Department orally represented to them that the Disputed Works were required to be demolished at time of the site inspection on 3^rd March 2011. The 1^st and 2^nd claimants were not present at time of the site inspection and the Disputed Works were unknown to them. The 1^st and 2^nd claimants then clarified with the Buildings Department of the alleged oral representation. In a letter dated 26^th September 2013 issued by the Buildings Department, it expressly stated, amongst other things,

“In this respect, please note that his department has no record showing that our staff had so informed / told Sheen [the 3^rd claimant] or their representative as alleged by Sheen [the 3^rd claimant]. Nevertheless, please note that it is the responsibility of the owners to maintain their premises in a safe and sound condition and free from UBW and it is always this department’s advice to owners to remove any UBW at their premises voluntarily. (emphasis added)”

23. This provides a clear indication that the Disputed Works are  not a prerequisite for compliance of the Superseding Orders. The Buildings Department did not specifically ask the 3^rd and 4^th claimants to carry them out. I must say, the 3^rd and 4^th claimants are out of caution to arrange a site inspection with Mr Yue, unfortunately, the oral representation has not been reduced in writing, and no consent was obtained from the 1^st and 2^nd claimant. In this regard, the 3^rd and 4^th claimants are not entitled to rely on Mr Yue’s oral representation to justify the Disputed Works form part of the necessary works in compliance of the Superseding Orders.

24. Having said that, I do not agree the 1^st and 2^nd claimants are only responsible for an apportioned amount of items 1 and 7, namely costs of scaffolding and insurance premium. I fail to see there are evidence by either party that such costs would be different had items 5 and 6 not formed part of the works. It is expected costs of erecting the scaffoldings and insurance premium have to be paid in any event, and needless to say, they are necessary.  The 1^st and 2^nd claimants should be responsible for the entire amount of items 1 and 7.

25. To conclude, the reasonable costs of completing the necessary works in discharging the Superseding Orders as follows:

(i)	Item 1, costs of erecting scaffoldings	$ 35,000
(ii)	Item 2 – 4, costs with reference to the	$ 55,000
	two Superseding Orders
(iii)	Item 7, costs of insurance premium	$ 10,000
		$100,000
		======

Costs

26. On 5 May 2014, I made an order that the applicant’s costs shall be in the cause of the interpleader proceedings and I have assessed costs of the applicant in sum of $33,884[5]. The same amount has been released to the applicant pursuant to an order of payment out on 15July 2014.

27. Costs should follow the event, the 3^rd and 4^th claimants shall pay the costs of the 1^st and 2^nd claimants.

28. Counsels for both parties agreed to assess costs of this interpleader proceedings summarily. The 1^st and 2^nd claimants submitted their statement on costs. I further heard submissions accordingly.

29. The 1^st and 2^nd claimants’ costs be allowed as per their statement on costs save and except the following:

(i)	2 hours be taxed off from Item C1;
(ii)	1 hour be taxed off from Item C3;
(iii)	1 hour be taxed off from Item D1;
(iv)	4.5 hours be taxed off from Item D2;
(v)	Item D3 be taxed off;
(vi)	1 hour be taxed off from Item D4.

30. The costs of the 1^st and 2^nd claimants be assessed at $69,670.

Orders

31. Pursuant to Clause 1 of the Rider in the PS&P Agreement,  the 1^st and 2^nd claimants are obliged to pay items 1 – 4; and 7 of the Quotation, i.e. ($35,000 + $15,000 + $35,000 + $5,000 + $10,000) $100,000.

32. Taking into account the 1^st and 2^nd claimants have already released $106,700 (ie $66,700 + $40,000) from the original stakeholder money to the 3^rd and 4^th claimant, I make the following the orders:

(i) The remaining of the disputed sum of $159,916[6] be released to the 1^st and 2^nd claimants forthwith.

(ii) The 3^rd and 4^th claimants do jointly and severally reimburse $6,700 to the 1^st and 2^nd claimants forthwith.

(iii) Costs of the interpleader proceedings be paid by 3^rd and 4^th claimants jointly and severally to the 1^st and 2^nd claimants, be summarily assessed at $69,670.

(iv) Costs of the applicant be paid by the 3^rd and 4^th claimants jointly and severally, to the 1^st and 2^nd claimants in sum of $33,884.

	( J Chow )
	Deputy District Judge

Mr Gary Lam Chin Ching instructed by Chong, Fu & Co for the 1^st and 2^nd claimants

Mr Tony Ko instructed by Tony Kan & Co for the 3^rd and 4^th claimants

[1] $55,000 / $215,000 = 0.26

($35,000 + $10,000) x 0.26 = $11,700

Total sum suggested by the 1^st and 2^nd claimant: $55,000 + $17,000 = $66,700

[2] $300,500 - $66,700 - $40,000 = $193,800

[3] The structures attached to the front referred to those facing Jaffe Road; the metal rack was meant to be those facing Stewart Road.

[4]The New China Hong Kong Group Ltd (in liquidation) v. AIG Asian Infrastructure Fund  LP, CACV 24/2008, 12 Feb 2009.

[5] See written decision dated 17 June 2014.

[6] ($193,800 - $33,884)

DCMP 809/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 809 OF 2014

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

IN THE MATTER OF an application by Messrs Baker & McKenzie for interpleader relief against the claims of Kingdom Power Development Limited, Sheen Wealth Industrial Limited (Purchaser) and Hennex Industries Limited (1st Vendor) and Make Sales Enterprise Limited (2nd Vendor) for the stakeholder money in the sum of HK$233,300 pursuant to the Provisional Agreement For Sale and Purchase dated 22 October 2010 in relation to the sale and purchase of Shops Nos 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10 all on the Ground Floor and the Entire first Floor and Offices Nos 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16 all on the Second Floor and the External Walls of the First Floor and the Second Floor of Tonnochy Towers, Nos 250-274 Jaffe Road, No 5 Tonnochy Road and No 4 Steward Road, Hong Kong

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BETWEEN
	Messrs Baker & Mckenzie	Applicant
and
	Hennex Industries Limited	1st Claimant
	Make Sales Enterprise Limited	2nd Claimant
	Sheen Wealth Industrial Limited	3rd Claimant
	Kingdom Power Development Limited	4th Claimant
----------------------------------

Before: Deputy District Judge J Chow in Chambers (open to public)

Date of Hearing: 5 May 2014

Date of Decision: 17 June 2014

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DECISION

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1.  This is a summary assessment on costs by way of paper disposal.

Background

2.  The applicant took out an inter pleader application for the stakeholder money in relation to a sale and purchase of shops Nos 1 – 10 and all Ground Floor and the Entire Floor and Offices Nos 1 – 16 on the 2^nd Floor and the External Walls of the First Floor and Second Floor of Tonnochy Towers, Nos 250 – 274, Jaffe Road, Wanchai, Hong Kong (“the Properties”).

3.  The 1^st and 2^nd claimants were vendors.  The 4^th claimant was the purchaser and the 3^rd claimant was a nominee.  The applicant is the solicitors for the 3^rd claimant.

4.  At time of the sale and purchase of the Properties, it was discovered two building orders were issued by the Buildings Authority.  In the Provisional Sale and Purchase Agreement dated 22^nd October 2010, the 1^st and 2^nd claimants warranted to make good the said building orders by carrying out necessary works, or to reimburse the 3^rd and 4^th claimants at a reasonable costs to comply with the same.

5.  By consent, parties agreed $300,000 shall be deducted from the balance price as stakeholder money.  On 26^th January 2011, a sum of $300,500 was deducted from the balance of the purchase price and was deposited with the Applicant. The additional $500 was meant to settle the fees for obtaining certified copies from the Land Registry.  Parties agreed this $500 does not form part of the stakeholder money.

6.  The 1^st and 2^nd claimants did not carry out the necessary works, the 3^th claimant appointed Kenji Engineering Co Limited to complete the necessary works at a total cost of $260,000.  The 3^rd claimant further demanded a sum of $4,089.09 as administrative costs for carrying out the same.

7.  The 1^st and 2^nd claimants disputed the sum of the works.  They agree to pay $66,700 only and such sum was released to the 4^th applicant on or about 9 September 2013.

8.  Negotiation between parties to dispose of the remaining stakeholder money was unsuccessful.  The applicant took out an interpleader application by way of an originating summons on 28 March 2014 for disposal of the stakeholder money.  The originating summons was returnable on 5 May 2014 for further directions.

9.  I am given to understand the 3^rd claimant agreed to waive the administrative costs $4,089.09.

10.  Parties agreed in the directions hearing that (i) the 1^st and 2^nd claimants agreed to pay a further sum of $40,000 to the 3^rd and 4^th claimants; and (ii) the disputed sum was $193,800[1].  

11.  The applicant is directed to pay the agreed disputed sum into court.

12.  The costs of the applicant be assessed summarily by way of paper disposal.  The applicant filed a statement on costs on 19 May 2014; the 1^st and 2^nd applicants filed an opposition on 29 May 2014.  The 3^rd and 4^th applicants filed an opposition on 3^rd June 2013. Further requisition was raised on 6^th June 2014 to the applicant and was answered on 16^th June 2014.

SUMMARY ASSESSMENT

Part A: Hourly Rate

13.  The applicant submitted the fee earners’ rate at $2,600 and the rate of litigation clerk at $650.  Named fee earners are Anthony Poon (admitted in 1981) and Roberta Chan (admitted in 2004).  

14.  The 1^st and 2^nd applicants opposed their involvement because (i) the supporting affirmation was deposed by Yu Hang Sang Pricilla; and (ii) this is a straightforward application which could be done by a more junior solicitor at an hour rate of $2,200. The 1^st and 2^nd claimants did not comment on the rate of the litigation clerk. The 3^rd and 4^th claimants submitted a reasonable competent solicitor of 5 years of PQE with an hourly rate in the range of $2,100 - $2,350 is appropriate.

15.  It is the applicant’s choice to name their fee earners, there is no hard fast rule that a senior solicitor could not handle a case without complexity, only that the time spent should be considerably lower than that of a junior solicitor.  I accept $2,600 as the hourly rate of the fee earners.

Part B: Manual Work

16.  The 1^st – 4^th claimants have no objection to the sum $1,384.  

Part C: Communication including conference, telephone calls and letters

17.  The costs included internal communication of the applicant and attendance on the solicitors of the other parties. The applicant spent 4.8 hours.  

18.  The 1^st and 2^nd claimants suggested 1.3 hours.  The 3^rd and 4^th claimants suggested 1.1 hours.

19.  I agree with the 1^st – 4^th claimants that the fees charged by the applicant are on the high side.  Nevertheless, having the benefit to learn the background of this application, the time spent by the applicant should not fall as low as 1.1 hours.  I shall tax off 1.5 hours from 4.8 hours, ie 3.3 hours be allowed.

Part D: Professional Work

20.  The applicant claimed 15 hours, in particular, 13.2 hours for perusal and preparation of documents, research; and 1.8 hours for preparing and attending hearing on 5 May 2014.  

21.  The 1^st and 2^nd applicants suggested 5.5 hours; the 3^rd and 4^th claimant suggested 5.6 hours.

22.  Bearing in mind this is a straightforward application, I agree the time of perusal, preparing documents and research is excessive. I also note the time for attending the hearing on 5 May 2014 was only 50 minutes.

23.  For perusal, preparation and research, I tax off 5 hours, ie allow 8.2 hours.

24.  For preparation and attending hearing on 5 May 2014, I tax off 0.8 hour, ie allow 1 hour.

Disbursement

25.  The applicant seeks $500 for costs of obtaining certified copies. The 1^st and 2^nd claimants opposed on the ground that no certified copies can be found in this application. The 3^rd – 4^th claimants agreed to this sum.

26.  I recall parties have set aside a sum of $500 specifically for disbursement of obtaining certified true copies. The applicant clarified in an answer to my requisition that it has not obtained certified true copies of the two discharge orders from the Land Registry up to the commencement of this application, the sum of $500 was never utilized. The Applicant applies to withdraw the claim of $500 under this head.

Conclusion

27.  The applicant’s costs be summarily assessed at $33,884[2].

28.  The following directions given on 5^th May 2014 do stand:

(i) The assessed costs of the Applicant shall be paid out from the disputed sum forthwith;

(ii) The assessed costs of the Applicant shall be in the cause of the interpleader proceedings.

 

	(J Chow)
	Deputy District Judge

Miss Roberta Chan, of Baker & McKenzie, for the Applicant

Mr Gary Lam Chin Ching, instructed by Chong, Fu & Co, for the 1^st and 2^nd claimants

Mr Thomas S T Leung, of Tony Kan & Co, for the 3^rd and 4^th claimants

[1] $300,500 - $66,700 - $40,000 = $193,800

[2] Part A: Hour rate: $2,600; Part B: $1,384; Part C: $2,600 x 3.3 hours = $8,580; Part D: $2,600 x 9.2 hours = $23,920; Part E: withdrawn. Total: $33,884.