LDCS7000/2022

LDCS7000/2022

A A LDCS 7000/2022 B [2025] HKLdT 41 B C IN THE LANDS TRIBUNAL OF THE C HONG KONG SPECIAL ADMINISTRATIVE REGION D D LAND COMPULSORY SALE MAIN APPLICATION NO 7000 OF 2022 E _________________ E F F BETWEEN G WINLAND PROPERTY HOLDING 1st Applicant G LIMITED H H (永倫興業有限公司) I WINDLAND CENTRE LIMITED 2nd Applicant I (永倫中心有限公司) J J rd WINLAND CULTURE LIMITED 3 Applicant K (永倫文化有限公司) K and L L CHANG SAI HO (蔣世浩) formerly st 1 Respondent M known as LAW WAI KUN (羅維根) M VOLANT RICH LIMITED 2nd Respondent N N KANCO DEVELOPMENT LIMITED 3rd Respondent O (奇高發展有限公司) O ____________________ P P Before: Master D To in Chambers Q Q Date of Taxation Hearing: 18 June 2025 R Date of Handing Down Reasons for Decision on Preliminary Issue of R Undue Delay: 25 July 2025 S S T T U U V V  - 2 - A A REASONS FOR DECISION B B (Preliminary Issue of Undue Delay) C C D Introduction D 1. Under paragraph 7 of the Judgment of the Lands Tribunal E E dated 28 March 2024 (“the Judgment”), the Applicants are ordered to pay F F the Respondents the costs of the proceedings (“the Costs Order”). G G 2. On 5 November 2024, more than 7 months after the Costs H Order, the 1st Respondent (“the Receiving Party”) commenced taxation H proceedings by filing the Notice of Commencement of Taxation and the I I Bill of Costs (“the Bill of Costs”). J J 3. On 6 January 2025, the 1st to 3rd Applicants (“the Paying K K Party”) filed their List of Objections to the Bill of Costs. They raised L therein a preliminary issue of undue delay, asking the Court to disallow L interest or part of the taxed costs in accordance with Order 62 rule 22(5) of M M Rules of the High Court (“RHC”). N N 4. Pursuant to Order 62 rule 22(1) RHC, if within 3 months after O O the completion date, the Receiving Party has not agreed the amount of costs P with the Paying Party, he shall commence taxation proceedings pursuant to P Order 62 rule 21 RHC. Q Q R 5. Order 62 rule 22(5) RHC provides that R S S “….. the taxing master, if he is satisfied that there has been undue delay in commencing taxation proceedings or in proceeding with T the taxation – (a) may make such order as he thinks fir as to the T costs of any application or as to the costs of the taxation; (b) may U U V V  - 3 - A A disallow any part of the costs to be taxed pursuant to the costs B order; and (c) may, in relation to the taxed costs or any part of B those costs, disallow interest or reduce the period for which interest is payable or the rate at which interest is payable.” C C 6. The Paying Party’s complaint was that the Receiving party D D should have commenced taxation proceedings on or before 27 June 2024, E i.e. within 3 months of 28 March 2024 when the Costs Order was made. E There was undue delay of more than 4 months from 28 June 2024 to F F 4 November 2024, so the Receiving Party should be deprived of interest G on the taxed costs for such period. G H H 7. First of all, taking 28 March 2024 as the completion date is I not correct. Since the Costs Order was an order nisi, according to Order I 62 rule 22(9)(a)(ii) RHC, the completion date should be the date on which J J the Costs Order is made absolute, i.e. 11 April 2024. Therefore, the delay K in commencing taxation proceedings is less than 4 months from 11 July K 2024 to 4 November 2024. L L M 8. At the taxation hearing on 18 June 2025, the Bill of Costs was M taxed. There is no application within the prescribed time limit under N N Order 62 rule 33 RHC to review my determination in respect of the taxed O costs. Regarding the preliminary issue of undue delay, I ruled in favor of O the Receiving Party that there was no undue delay to attract sanction under P P Order 62 rule 22(5) RHC, with reasons I now give. Q Q Duty on Both Parties R R S 9. In most if not all cases when the paying party raises the issue S of undue delay, the receiving party will seek to rely on the case of T T Commissioner of Inland Revenue v Li & Fung (Trading) Ltd [2014] 4 HKC U U V V  - 4 - A A 61 as a shield. In it, Master Levy ruled that while the receiving party bore B B the ultimate responsibility of commencing taxation without delay, the C paying party is also required to further the underlying objectives of Order C 1A rule 3 RHC and to resort to the protection accorded under Order 62 rule D D 22(3) RHC i.e. to compel a receiving party to commence taxation. If the E paying party does not, and chose to take a passive approach, he cannot later E take advantage of the receiving party’s delay. F F G 10. The Receiving Party in addition to his primary argument that G the delay is not undue, also advanced the above argument that the complete H H inaction on the part of the Paying Party disentitled them of the relief under I Order 62 rule 22(5) RHC. I J J 11. I am of the view that the Paying Party’s inaction alone cannot K be the Receiving Party’s shield to escape sanction for undue delay if any. K While the duty is on both parties, if the Paying Party under inaction cannot L L reap the benefit of delay, neither can the Receiving Party take advantage of M the Paying Party’s inaction. M N N 12. In order to reflect the respective accountability for undue O delay and inaction, the practice of some taxing masters is to apportion the O blame and disallow half of the interest of the taxed costs for the relevant P P period. How discretion is to be exercised will depend on the facts of each Q case. Q R R Relevant Events in Chronological Order S S 13. The delay for the period from 11 July 2024 to 4 November T 2024 will be considered against the following events in chronological order. T U U V V  - 5 - A A 11 April 2024 Completion date B B C 10 July 2024 the 3-month period under Order 62 rule 22(1) C expired D D E 16 July 2024 Receiving Party initiated settlement negotiation E by providing Paying Party with an estimate of F F costs. There was no response from Paying G Party G H H August 2024 Receiving Party instructed Law Costs Draftsman I (“LCD”) to prepare bill of costs I J 17 October 2024 Receiving Party provided Paying Party with J copy draft bill of costs with a view to negotiate K K for settlement. There was no response from L Paying Party L M M 5 November 2024 commencement of taxation proceedings N N 14. The Receiving Party has neither negotiated costs nor O O commenced taxation within the required period of 3 months under Order P 62 rule 22(1) RHC. P Q Q The 3-month Requirement R R 15. The 3-month period after the completion date was to enable S S parties to have time to actively negotiate for settlement, and when there T T U U V V  - 6 - A A was no prospect of agreement, to start preparing the bill of costs timely B B such that it would be ready for filing before the 3-month period expires. C C 16. Noticeably, practitioners taking the 3-month requirement D D light-heartedly has somehow become the norm in conducting taxation E proceedings. Many solicitors for the receiving party are slack and loose E during the 3-month period without taking active steps. Some even think F F that there is a 2-year period to commence taxation proceedings; this is of G course misconceived. The 2-year limitation under Order 62 rule 22(7) G RHC is a time bar provision; it operates differently from the 3-month H H requirement. I I 17. In order to strictly comply with the 3-month requirement, J J solicitors for the receiving party should discipline themselves by devising K and following a timetable, ensuring that all necessary tasks are addressed K at appropriate times. What should the timetable be like? L L M 18. I am of the view that the following timetable (subject to M necessary modifications and adjustments) is definitely achievable within N N the 3-month period, as long as solicitors for the receiving party act in all O diligence and with utmost sincerity to observe the rules. O P P (a) Within 7 days of the completion date, provide the paying party Q with an estimate of costs to initiate negotiation; Q (b) There being no response or no settlement reached within 14 R R days thereafter, immediately proceed to instruct Law Costs S Draftsman to prepare the bill of costs, to be ready within 28 S days; T T U U V V  - 7 - A A (c) Within 7 days thereafter, the draft bill of costs be approved by B B instructing solicitors and copy of the same be provided to the C paying party; C (d) There being no response or no settlement reached within 21 D D days thereafter, proceed immediately to prepare the Notice of E Commencement of Taxation and finalize the draft bill of costs E in order that taxation proceedings is commenced under Order F F 62 rule 21 RHC within the next 7 days. G G 19. Two points have to be emphasized. First, the need to H accommodate LCD’s workload or personal engagement does not justify H delay in commencing taxation proceedings. I note that it is not I I uncommon LCDs take months to prepare the bill of costs; probably J because they have an over-whelming amount of tasks at one time, hence J sitting on the papers causing the delay. If this is permitted to continue, K K the purpose of the 3-month requirement can hardly be achieved. To L regulate the existing practice, if the intended LCD upon instructions is L unable to commit himself/herself to finish preparing the bill of costs within M M 28 days, another available LCD ought to be instructed. N N 20. I regard 28 days reasonable and more than sufficient for LCD O O to prepare the bill of costs. P P (a) Firstly, before the CJR the time previously allowed for Q Q commencing taxation was only one month from the R completion date. The change to three months was to enable R parties to have time to actively negotiate for settlement; it was S never meant for giving LCDs more time to prepare the bill of S costs. T T U U V V  - 8 - A A (b) Further, as evident from the usual claim for LCD’s costs in B B preparing a bill of costs, even for a bill that is considerably C complicated, it rarely requires more than 80 hours of work. C D 21. Second, on-going settlement negotiation does not ipso facto D justify delay of commencement of taxation proceedings although one of E E the underlying objectives under Order 1A rule 1(e) RHC is to facilitate the F settlement of disputes. F G G 22. If there is genuine intention to settle, the commencement of H taxation proceedings would not affect parties’ attempt to further their H negotiation thereafter. In case parties are very close to reaching a I I settlement when the 3-month period is about to expire, for the purpose of J saving costs, it is practical that a joint application be made to the court for J extension of time to commence taxation. K K L 23. As discussed above, it is high time we straightened and L regulated the pervading bad habit of delay in the conduct of taxation M M proceedings. N N The Alleged Undue Delay O O P 24. To attract sanction of Order 62 rule 22(5) RHC, there has to P be undue delay, a delay which is unwarranted, inordinate and unjustifiable. Q Q Whether a delay can be reasonably explained will depend on the R circumstances of each case. R S S 25. In the present case, the Receiving Party failed to initiate T settlement negotiations nor prepare the bill of costs before 11 July 2024. T Explanation is as follows. By the Judgment, the Lands Tribunal adjudged U U V V  - 9 - A A inter alia that the subject Lot be sold by way of public auction for the B B purposes of redevelopment of the Lot, on the particulars and conditions of C sale “substantially the same as those in the draft Particulars and Conditions C of Sale” initialed and approved by the Tribunal. Therefore, there was the D D paragraph 6 in the Judgment expressly giving parties liberty to apply to the E Tribunal for further directions. E F F 26. The Receiving Party submitted that the public auction was G scheduled to take place on 14 May 2024, after the Judgment parties were G actively engaged in discussion concerning the draft Particulars and H H Conditions of Sale. Matters transpired that they had to seek further I directions from the Lands Tribunal concerning the conditions of sale. It I is submitted that it is justifiable the Receiving Party withheld J J commencement of taxation proceedings because the seeking of further K directions from the Lands Tribunal may impact on the ultimate scope of K the Costs Order. L L M 27. The Paying Party submitted that notwithstanding parties had M to seek further directions from the Lands Tribunal, the Receiving Party N N should have commenced taxation proceedings without delay. The Paying O Party argued that seeking further directions from the Lands Tribunal would O not have any bearing on setting off parties’ liability for costs; but it does P P not dispute that there is possible impact on the ultimate scope of the Costs Q Order. Q R R 28. Having considered parties’ argument in light of the relevant S background, I am persuaded that the Receiving Party did not lie idly. S When the public auction was pressing, there was an imminent need to T T finalize the particulars and conditions of sale. I accept that it is excusable U U V V  - 10 - A A to focus the effort thereon and withhold commencement of taxation B B proceedings for the time being. Further, it is practical to wait until further C directions of the court were sought, because it may impact on the ultimate C scope of the Costs Order. D D E 29. Notwithstanding that inaction during the 3-month period is E reasonably explained as above, justification is still required as to why F F taxation proceedings were only commenced on 5 November 2024 and not G earlier. G H H 30. LCD was instructed in August 2024. There is no I explanation why it was not until 17 October 2024 the Paying Party was I provided with a copy draft bill of costs. Although it is unclear to me J J whether there was delay on the part of the LCD, it is clear that the draft bill K of costs could and should have been made available for the Paying Party K much earlier, noting that the claim for LCD’s costs in preparing the bill is L L 35 hours. M M 31. The Receiving Party submitted that the Paying Party was the N N one who caused or contributed to the delay. Much time was spent in O waiting for the Paying Party’s response to the estimate of costs provided O on 16 July 2024 and the draft bill of costs provided on 17 October 2024. P P However, there was no response at all. Q Q 32. Worse still, there was no explanation of the neglect or refusal R R to respond. This attitude of the solicitors of the Paying Party is wholly S unacceptable, instead they pointed fingers and placed blame on the S Receiving Party. T T U U V V  - 11 - A A 33. Having considered matters in the round, I do not think the B B Receiving Party’s delay is inordinate or inexcusable, although the progress C between August and October 2024 could have been expedited. I find that C there was no undue delay to attract sanction under Order 62 rule 22(5) RHC. D D E E (D To) F F Master of the High Court G G H H I I J J K K L L M M N N O O P Mr Barry Leung, Law Costs Draftsman, instructed by Messrs So, Lung & P Associates, solicitors for the 1st Respondent/Receiving Party Q Q Mr Jimmy Tzu, Law Costs Draftsman, instructed by Messrs Lo & Lo, R solicitors for the 1st to 3rd Applicants/Paying Party R S S T T U U V V