啟德花園(彩虹道)業主立案法團 對 WOO TAK YAN 及另一人

LDBM 330/2014-1 & LDBM 13/2015-1
(Heard Together)

[2021] HKLdT 13

IN THE LAND TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 330 OF 2014

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IN THE LAND TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO. 13 OF 2015

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DECISION

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1.  This is the 1^st Respondent’s appeal against a cost order of taxation (“the Cost Order of Taxation”).

2.  On 26 June 2017, Her Honour Judge Kot (as she then was) ruled that the Applicants claim succeeded and the 1^st and 2^nd Respondent shall pay the Applicant’s costs on indemnity basis (“the Cost Order”) on LDBM 330/2014 and LDBM 13/2015 (Hearing Bundle pages 1-2).

3.  The 1^st and 2^nd Respondents made a review application and Her Honour Judge Kot revised only part of the damages award but maintained the Cost Order on 9 August 2017 (“the Reviewed Decision”) (Hearing Bundle pages 3-5).

4.  The 1^st and 2^nd Respondents applied for leave to appeal out of time against the Reviewed Decision but this was dismissed with costs to the Applicant by Her Honour Judge Kot on 10 November 2017 (Hearing Bundle pages 6-7).

5.  The Respondents then applied for leave to appeal against the Reviewed Decision in the Court of Appeal (under CAMP 53/2017 and CAMP 54/2017) which also were dismissed with costs to the Applicant on 7 March 2018 (Hearing Bundle pages 8-11).

6.  On 29 March 2018, the Respondent then applied for leave out of time for the Costs Order and the application was once again dismissed by Her Honour Judge Kot (Hearing Bundle pages 12-13).

7.  The Respondents further applied for leave to appeal against the Cost Order under CAMP 118/2018 and CAMP 119/2018 which were dismissed by the Court of Appeal with cost for the Applicant on 1 April 2019 (Hearing Bundle pages 14-19).

Negotiation and Taxation of Costs relevant to the Cost Order

8.  During all this time, the Applicant had sent the bills to the Respondents around 11 July 2017 and 19 April 2018 (Hearing Bundle pages 132-170 and 171-172).

9.  It was not until 3 April 2019 that the Respondents made the offer for costs (Hearing Bundle page 20). The “without prejudice save as to costs” labelled letter stated:

“…I would propose a sum of $550,000 (all inclusive basis, ie costs and others awarded in all proceedings) for a final and full settlement.”

10.  On 11 April 2019, the Respondents wrote another “without prejudice save as to costs” labelled letter (Hearing Bundle page 21) and offered:

“…$548,858.00 (all inclusive basis ie costs and others awarded in all proceedings, deducting those demanded therein your above letters and be paid duly) for a final and full settlement.”

11.  On 10 May 2019, the solicitors for the Applicant rejected the “all inclusive” offer of $548,858 and counter-offered $738,700 “in full and final settlement of our client’s entitlement under the Relevant Cost Order.” (Hearing Bundle pages 22-23)

12.  On 19 May 2019, the Respondents wrote back, rejecting the Applicant’s counter-offer (being “far exceed the alleged full costs of $638,708.15”) and made a counter-offer of:

“…$575,000 (all inclusive, as proposed before the aggregate of costs and others awarded in all proceedings say leave applications)…” (Hearing Bundle page 24)

13.  On 21 May 2019, the Solicitors of the Applicant rejected the Respondents’ counter-offer and proceeded to taxation (Hearing bundle page 25).

14.  It is of note that Order 62 Rule 22(7) of the Rules of District Court specified that taxation needs to be commenced before the expiry of 2 years from the date of judgment which meant that the deadline in this case would be 26 June 2019.

15.  The respondents did not make any sanctioned payment into court.

16.  In the taxation hearing on 6 December 2019, Master Yeung made the Cost Order of Taxation which was in favour of the Applicant. This is the subject of the current appeal.

17.  On 20 December 2019, the Respondent requested a review of the taxation. On 17 September 2020, Master Yeung made some variations of the taxed costs which amounted to the total of HK$514,385.85 and maintained the Cost Order of Taxation, with no order as to costs for the review hearing.

The 1^st Respondent’s case

18.  The 1^st Respondent confirmed in Court that he was only seeking for this court to dismiss the Cost Order of Taxation and to award the cost of taxation to the Respondents or to make no order as to the costs of taxation.

19.  The 1^st Respondent argued that Master Yeung failed to consider various negotiations as stated above which would have shown that:

a) the Applicant’s behaviour was unreasonable; and

b) that their Calderbank offers had beaten the costs awarded after the taxation review.

Discussion

20.  Firstly, I do not find the behaviour of the Applicant during the negotiation of the costs unreasonable: the judgment including the Cost Order was given on 26 June 2017, and the relevant bills have been sent to the respondents on around 11 July 2017 and 19 April 2018, and yet the respondents did not make any offer until 3 April 2019, almost right on the time limitation for taxation.

21.  Further, I accept the Applicant’s submission that “an order for costs to be taxed is…a judgment debt” thus “the interest on the taxed costs…commenced on the date of judgment…until actual payment” at judgment rate (Caltex Oil Hong Kong v Director of Buildings and Lands [1994] HKDCLR 31). If the Court has any discretion as an exception to this, the long delay on the part of the Respondents to enter negotiation, not to mention the numerous unsuccessful applications made, spoke against the exercise of such discretion.

22.  Negotiation tactics is an art of bargaining so the court would be very careful not to cast any judgment on such unless there is overtly unreasonable or oppressive behaviour, for example, giving hugely inflated counter-offers.

23.  The counter-offer made by the Applicant was above their bill but this needed to be taken into account the interests on the costs (caused by the delay on the part of the Respondents), that the order was for taxation on an indemnity basis, and the fact that the respondents had reduced their initial offer during the negotiation. Overall, I find this to be mere negotiation tactics which was not unreasonable.

24.  Regarding the second argument advanced by the 1^st respondent (which is the more important argument), I found that the Respondents’ Calderbank offers at various times failed to beat the reviewed taxed costs.

25.  First of all, it is clear from the plain reading of each of the Respondents’ Calderbank offer letter that they intended the counter-offer to be a “full and final settlement” to cover the costs of all proceedings including the various later applications (“the aggregate of costs and other awards in proceedings say leave applications”).

26.  Thus, the Calderbank offers would include the Applicant’s costs of the Respondents’ various later applications which amounted to HK$12,684.00.

27.  The Respondents made their first Calderbank offer on 3 April 2019.

28.  The calculation of interest was based on the judgment rate of 8% per annum from 26 June 2017 to 31 December 2018 (554 days), then at 8.088% until 31 March 2019 (90 days), then at 8.125% until 2 April 2019 for the first Calderbank offer (2 days) and until 18 May 2019 for the final Calderbank offer (48 days).

29.  On 2 April 2014, the costs of LDBM 330/2016 (based on the eventual reviewed taxed costs) would be: Profit Costs HK$116,969.34, Disbursement HK$146,934.50, and Interest at HK$37,424.97. The costs of LDBM 13/2015 would be: Profit Costs HK$94,818.67, Disbursement HK$145,671, and Interest at HK$34,104.54. If these sums are added to HK$12,684.00, the total costs would be HK$588,607.02.

30.  Therefore, the Calderbank offer of HK$550,000 on 3 April 2019 (and, needless to say, the reduced Calderbank offer of HK$548,858.00 on 11 April 2019) failed to beat the Applicant’s cost at this stage.

31.  The Respondents made their final Calderbank offer of HK$575,000 on 19 May 2014.

32.  A similar calculation will bring the Applicant costs on 18 May 2014 at HK$593,771.87. The Respondents’ final Calderbank offer also failed to beat this.

33.  During the hearing, the 1^st Respondent produced a copy of two bank transfers which appeared to show that he had paid HK$5,000 and HK$1,142 on 12 April 2019. He claimed that these were paid to the Applicant and would have, at least partially, paid the Applicant’s awarded costs in the later applications.

34.  One may criticise the 1^st Respondent for the late production of such evidence (and that fact that these were copies) which meant that those representing the Applicant would not have time to seek instructions. Nevertheless, even if this court accepts such evidence, the purported payments were made after the first Calderbank Offer so would not affect that, and even if one deduct HK$6,142 from our calculation of costs on 18 May 2014 (which now come to HK$587,629.81), this would still beat the final Calderbank offer of HK$575,000.

35.  The 1^st Respondent’s appeal must therefore fail.

Conclusion

36.  I would therefore make the following order:

a)  The 1^st Respondent’s appeal application be dismissed;

b)  There be an order nisi for the costs of the application be paid by the 1^st Respondent to the Applicant. If no agreement can be made within 28 days of this judgment, the Applicant shall lodge and serve a summary bills of costs and the 1^st Respondent shall lodge and serve a summary list of objections 28 days thereafter, and the costs shall be assessed summarily on paper.