Chang Lan Sheng v Attorney General

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

CIVIL APPEAL NO. 33 OF 1967

(On appeal from Original Jurisdiction Action No.1382 of 1965)

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

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

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

DECISION
(Re: Costs)

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

Rigby, S.P.J.:

1. I regret that I should take a different view to the other members of the court.

2. In his original action the plaintiff claimed, inter alia, a declaration that the rental value of the land in question had not been fixed as required under the terms and provisions of the Crown lease. After a very lengthy hearing before the learned trial judge he gave judgment in favour of the plaintiff in the terms of that declaration. Upon appeal, this court has reversed that decision. It is, I think, necessary to remind oneself very briefly what were the basic facts of the case.

3. In January, 1948, the plaintiff, for a sum of $80,000, purchased by way of assignment the residue of a 75-year Crown lease from the then lessee, a Madam Chu De Yau. That lease was due to expire on the 23rd of June 1963 so that the lease had about 15 1/2 years to run. It is not in dispute that at the time of entering into that lease with the Crown Madam Chu paid a premium of $1,238.38. The lease contained an option to renew ".... for a further term of 75 years without payment of any fine or premium therefor .... at such rent as shall be fairly and impartially fixed by (the Director of Public Works) as the fair and reasonable rental value of the grant at the date of such renewal".

4. The Crown rental was increased from time to time during the time Madam Chu held the tenancy but it is, I think, correct to say that at all material times the plaintiff was in possession as tenant, the rental paid by him was $76 per annum. In February 1963 the plaintiff exercised his option to renew, the lease itself being due to expire in June 1963. However, it was not until December 1964 that the plaintiff was informed that the rent in respect of the new lease was being increased from $76 per annum to $60,764 per annum. Bearing in mind, first, that the lease expired on the 23rd of June 1963 and that it was therefore essential that the plaintiff should exercise his right of option - assuming he wished to renew the lease - before that date and, secondly, that he was not informed until the 2nd December 1964 that the rental had been fixed at $60,764 per annum, it seems to me hardly surprising that the plaintiff resisted what he considered to be an exorbitant increase in the rental of the land, that he considered that a very substantial part of this vastly increased new rental was, in reality, the imposition of a premium decapitalized over the term of years and therefore in breach of the express provision contained in the proviso that no premium should be imposed on the exercise of the option to renew, and that he was accordingly constrained to institute these proceedings. There is the further factor, to which Mr. Bernacchi has referred, that in February 1963 at the time he exercised his option to renew, the plaintiff had pulled down the building already existing on the land and his plan for a new ten-storey building had already been approved. It is at least open to argument in the plaintiff's favour that he would, or might, not have embarked on such an extensive new building project if he had been informed within a reasonable time of exercising his option - and not some 18 months later - what the rental was going to be.

5. It was, I think, admitted in the course of the argument before us that there were a very large number of Crown leases now falling due for renewal at the option of the lessee, each containing a clause for the manner of fixing the new rental - in the event of the option to renew being exercised - in terms precisely the same as the clause under consideration in this case, and that the basis for fixing the new rental value adopted in this case by the Director of Public Works - if that in fact was the correct basis - involved very great financial value and importance to the Crown. In short, Mr. Bernacchi submitted that although this was not a test case in the strict sense of the word in which that expression was used in the case of Healey & Oths. v. Waddington and Sons Ltd. and Oths.⁽¹⁾, it was a case the outcome of which, in so far as the basis of assessment adopted by the Director of Public Works in relation to the common form clause dealing with rental value on a renewed lease, was tested and determined by a court and the decision was, therefore, of the greatest possible importance to the Crown. It involved a novel point of complexity and great importance. For myself, I would have agreed with these arguments, and subject to what I am about to say, I would have thought this a proper case in which to make no order for costs. However, Mr. Leonard, Crown Counsel, has submitted that the plaintiff's case was presented with a great deal of unnecessary prolixity. Even a superficial view of the voluminous record in the trial court does, in my view, amply support that contention.

6. In the result, the order that I would have thought it right to make, and which I would myself have made, would be that the Crown should be entitled to its costs, both here and in the court below, save on such issue of the case as was directed to a consideration of the proper construction of the proviso to the lease and a consideration of whether the rent as fixed by the Director of Public Works in accordance with the proviso was a fair and reasonable rent. As to that issue in the case - which was, in effect, the main issue - I would myself have made no order, both here and in the court below, so that each side should bear its own costs in relation to this issue.

Representation:

(1) (1954) 1 A.E.R. 861

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

CIVIL APPEAL NO. 33 OF 1967

(On appeal from Original Jurisdiction Action No.1382 of 1965)

Coram: Blair-Kerr J

Date of Judgment: 5 October 1968

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

RULING

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

Blair-Kerr J:

7. We were told by counsel that the Crown had paid the respondent his costs in the court below, but that the understanding between the parties was that such costs would be refunded to the Crown in the event of the appellant being successful provided this court directed that the costs should be refunded. The appellant now asks for an order for:-

Mr. Bernacchi for the respondent does not dispute that his client is bound to refund the costs of the proceedings in the court below; but he submits that the court should make no order as regards the costs of this appeal or in regard to the appellant's costs in the court below.

8. It is not in dispute that the court has complete discretion in the matter of costs. On the other hand, it is equally clear that the court's discretion must be exercised judicially, and that the normal rule of practice is that costs follow the event. At page 794 of the (1967) Supreme Court Practice there is a list of cases in which successful appellants, for one reason or another, have been awarded only the costs of the appeal but not costs in the court below, or no costs in either court, or only part of the costs.

9. The respondent does not suggest that the cases cited are authorities for his proposition that the successful appellant in this case should be deprived of his costs of the appeal and in the Court below; nor does he suggest that there was any agreement between the parties and other potential litigants that this should be treated as a test case. Nevertheless, he submits that having regard to the fact that there are a large number of Crown leases in Hong Kong which contain a proviso for renewal framed in precisely the same terms as the proviso in the respondent's lease, his client should be regarded by this court as a sort of "guinea pig" who has fought the battle single-handed not only on behalf of himself but on behalf of all the other Crown lessees who would also have wished to maintain that the "rental value of the ground" should be taken as being synonymous with "zone Crown rent"; and that having regard to the overall financial implications, the Crown was far more interested in obtaining a favourable decision in this matter than the respondent was. Mr. Bernacchi further submitted that whatever the position might be as between citizen and citizen, the same principles should not apply in cases where the Crown is a party and the point involved is a novel one of much general importance and of some difficulty.

10. I find myself quite unable to accede to the suggestion that the Crown should be treated differently from any other litigant in these courts. The modern approach to the question of costs in proceedings to which the Crown is a party is clearly set out in the Supreme Court Practice 1967 at p.801 in these words:-

"The ordinary rule used to be that the Crown neither paid nor received costs (Rowland v. Air Council [1923] W.N.72), but now, having regard to the Crown Proceedings Act 1947, and in particular to section 24(2) of that Act (Pt.9,B) the ordinary rules as to liability for costs apply to proceedings to which the Crown is a party."

...