Introduction

The Lands Tribunal (“the Tribunal”) had introduced a pilot scheme to streamline the processing of building management cases since 1 January 2008. From 1 January 2008 to 30 June 2009, the scheme was applied to cases with legal representation on both sides. In appropriate cases, with suitable modifications, the Tribunal had also applied some features in the scheme to other cases by specific directions made in the course of proceedings.

The aim of the scheme was to facilitate the more efficient, expeditious and fair disposal of building management cases. Unnecessary hearings would be cut down and in circumstances where directions could fairly be given on paper without any oral hearing, the Tribunal will do so. Unnecessary interlocutory applications would be discouraged and in appropriate cases, costs sanctions would be imposed. The parties were also encouraged to resolve their disputes by way of mediation. These are all in line with the underlying objectives of the Civil Justice Reform implemented on 2 April 2009.

After evaluation and consultation, the Tribunal decides to adopt the measures in the Pilot Scheme, with some modifications, as standard practice. The President of the Tribunal has therefore issued the Direction, LTPD: BM No. 1/2009, to implement the standard practice with effect from 1 July 2009.

This booklet aims to help you to understand what the standard practice is and how it works. It also gives you a brief account of the process of mediation for building management cases in the Lands Tribunal and how to undertake mediation as a means of settlement for disputes relating to building management.

Case Management

The main feature of the standard practice is that the Tribunal will be proactive in case management. It will perform its case management duty and exercise its case management power in accordance with the underlying objectives of the Civil Justice Reform. The underlying objectives are as follows:

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Tribunal;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

(d) to ensure fairness between the parties;

(e) to facilitate the settlement of disputes; and

(f) to ensure that the resources of the Tribunal are distributed fairly.

With effect from 1 July 2009, all building management cases, whether the parties are legally represented or not, will be listed in the normal list for building management cases. The pilot scheme list shall cease to be operative from the effective date. Those cases that have been listed in the pilot scheme list prior to the effective date shall revert back to the normal list automatically. Call-over hearings will be fixed for cases involving litigants acting in persons, but where both parties are legally represented, the case may be fixed for call-over hearing or for trial at the discretion of the Tribunal.

The following procedure will automatically be applied to all building management cases where both parties are legally represented with (a) to (e) to be treated as automatic directions given by the Tribunal:

(a) An applicant shall file and serve the first batch of his evidence, including witness statements, relevant documents and expert reports (if any), at the same time as when he files and serves his Notice of Application;

(b) An applicant shall file and serve at the same time as his Notice of Application a statement on mediation setting out (i) whether he has attempted to resolve the dispute by mediation; (ii) whether he is willing to attempt mediation; and (iii) if he considers the case unsuitable for mediation, brief reasons for that conclusion;

(c) A respondent shall file and serve his first batch of evidence, including witness statements, relevant documents and expert reports (if any), by the time he files and serves his Notice of Opposition;

(d) A respondent shall file and serve at the same time as his Notice of Opposition a statement on mediation setting out (i) whether he is willing to attempt mediation; and (ii) if he considers the case unsuitable for mediation, brief reasons for that conclusion;

(e) Both the applicant and the respondent shall file and serve evidence in reply to the evidence of the opposite side, including supplemental witness statements, all further relevant documents and expert reports (if any), and a checklist as per the Annex attached to the President’s Direction LTPD: BM No. 1/2009 within 14 days of the application to list for hearing;

(f) If a party fails to comply with (a), (b), (c), (d) or (e), the Tribunal shall give further directions on paper for proper preparation of the case;

(g) Unless there is a specific direction by the Tribunal to the contrary, a case where both parties are legally represented will only be listed for hearing when these directions are complied with;

(h) Defaults on the part of a litigant may be sanctioned by unless orders or orders barring him from adducing evidence at the trial without leave and/or adverse costs orders;

(i) Upon review on paper,

i. If the Tribunal is of the view that the case is ready for trial, it may list the case for trial without any call-over hearing;

ii. If the Tribunal is of the view that there are still some outstanding matters which may need to be argued, it may list the case for a call-over hearing at which directions may be given, including a direction for setting down the case for trial;

iii. If the Tribunal is of the view that there are still significant outstanding matters to be attended to or a checklist is incomplete, it may give written directions on paper and defer the listing of a case for hearing until the preparation by the parties reaches a reasonably satisfactory stage.

If the circumstances warrant, the Tribunal may direct further call-over hearings. Such further call-over hearings would however be exceptional.

Unnecessary and disproportionate interlocutory applications should not be made and would not be entertained. Insofar as possible, litigants should also deal with interlocutory matters by consent summons. Unnecessary or unreasonable interlocutory applications will normally be met with adverse costs consequences including gross sum assessments and orders for immediate payment of costs.

Once fixed, trial dates should not be vacated without good and cogent reasons. Late filing of evidence or late amendments that could result in adjournment of trial will not be allowed lightly.

Lawyers advising parties in building management cases should advise their clients of the costs implications of litigation and the Tribunal’s attitude towards costs, in particular the consideration in making attempts to resolve their differences by mediation, before or after they issued proceedings in the Tribunal.

The Tribunal may apply some of the above features to cases involving litigants in person and give appropriate directions as it sees fit.

The Tribunal may, on the application of one or more of the parties or of its own motion, stay the proceedings or any part thereof for the purpose of mediation for such period and on such terms as it thinks fit. Where the Tribunal stays the proceedings, the parties must promptly inform the Tribunal if a settlement is reached and the parties should take the necessary steps to conclude the legal proceedings formally.

Mediation For Whom?

If you encounter building management disputes, such as water leakage, apportionment of management fees and maintenance charges, or appointment of management committee, the disputes may have to be resolved in courts, including the Lands Tribunal. However, having litigation in courts means that one party will win and the other will lose at the end, and often after considerable time and costs have been incurred.

Mediation provides an alternative mechanism to resolve disputes. It gives supportive and practical steps for the disputing parties to reach a settlement that is responsive to their needs and acceptable to both sides. The end result is often a win-win situation and the parties can save much time and costs when settlement is achieved. It also assists in maintaining harmony among owners in the same building or estate.

Experiences worldwide have shown that mediation facilitates a very high settlement rate and most people are satisfied with the outcome of mediation. Since the parties will only agree to what they voluntarily accept and the agreements reached in mediation are binding on the parties, the chances of having appeals are also minimal.

Thus, mediation is for those who would like to have their disputes resolved in an amicable manner rather than by way of the confrontational approach in litigation. It is also for those who would like to have an outcome that is acceptable to them, rather than forced on them.

Of course, not every case is suitable for mediation. For example, where there is a genuine dispute requiring the court to give declaratory relief, the parties may still need to go for litigation.

What is Mediation?

Mediation is an alternative dispute resolution process designed to help parties in dispute to reach their own mutually acceptable agreements so as to resolve their differences. It is a voluntary process in which a trained and impartial third person, the mediator, can assist the parties to communicate and negotiate issues in a confidential setting. During the process, each party to the dispute has a chance to put his case and to hear what the other has to say. The mediator’s job is not to make a decision for the parties, but to assist the parties to explore the strengths and weaknesses of their own cases and to identify possible solutions, so as to facilitate them to reach a settlement agreement. The mediator is skilled in unlocking negotiations that have become deadlocked and in keeping everyone focused on finding a solution.

In a mediation session, the mediator will help you to:

• Discuss and decide what matters are in dispute;
• Explore each party’s real needs and interests;
• Expand settlement options and assess the most suitable solution;
• Draw up the settlement agreement in detail, setting out how the parties have agreed to resolve each matter in dispute.

Other observations about mediation include:

• As aforesaid, mediation may not be suitable for every case. You may be invited to attend a preliminary meeting in which the mediator will assess whether mediation is suitable for your particular circumstances, or your legal advisor may be able to assist you to decide.
• The parties may seek legal advice at any stage of the mediation.
• Both parties have the right to terminate the mediation at any time.
• Both parties must appreciate that what the other party says in a mediation session is without prejudice and therefore cannot be used in any legal proceedings.
• An agreement drafted in the mediation session and signed by both parties is legally binding as a matter of contract. A mediation settlement agreement is not enforceable as an arbitral award, judgment or order of court, but the innocent party may sue upon the agreement in the event that the other party is in breach of its terms.

What are the Advantages of Mediation?

The advantages are many and include the following:

• You may avoid the tension and conflict in the adversarial litigation system.
• You may save some time and money in not having to contest the matters in Court.
• You make your own decisions and reach agreements with which you and the other party may be more willing and ready to comply.
• The settlement terms can be kept private and confidential.
• Mediation can improve your ability to continue and may improve your relationships with the other party or parties involved in the dispute.
• The settlement terms can go beyond the legal remedies of damages and injunctions to which the courts are limited.

Who are the Mediators?

There is no strict requirement of who can be a mediator, but usually mediators come from various professional backgrounds and have undergone mediation training. They may have qualifications in law, management, architecture, engineering, surveying or any other fields, but such qualifications are not the pre-requisites. It is more important for mediators to have proper mediation training so that they know how to conduct the mediation process and to assist the parties to reach their own settlement terms during the process.

As a rule of thumb, mediators:

• Do not provide legal advice. You will be encouraged to consult your lawyer for such advice;
• Do not take sides with either party;
• Do not make decisions for you, but help you to assess the feasibility of the decisions you make.

How do I Find One?

There are various organizations in Hong Kong maintaining their respective lists of mediators. Each organization has its own requirements to enlist a person in its list of mediators, but the persons enlisted are usually trained to meet defined requirements covering knowledge and skills in negotiation and dispute resolution. They may also be required to abide by an Ethical and Professional Code of Practice of their respective organizations. You may approach the Building Management Mediation Co-ordinator’s Office in the Lands Tribunal (see below) if you need information as to where to find a mediator to resolve your building management disputes.

Does Mediation Take a Long Time?

It depends on the complexity and number of issues you need to settle. The degree of the parties’ cooperation and readiness to participate in the mediation sessions also count. If issues are less complicated and the process goes smoothly, it may only take 2 or 3 mediation sessions of a day or less each for you to reach agreement. All in all, mediation is generally a far more expeditious form of dispute resolution when compared to arbitration and litigation. This is of enormous benefit to all the parties especially in relation to costs.

Confidentiality

Mediators are required to observe confidentiality in respect of all matters disclosed in the mediation session. When the parties agree to take part in mediation, they will usually be required by the mediator to sign a Mediation Agreement (i.e. an agreement to mediate) that all negotiations undertaken pursuant to the mediation are to be privileged and conducted on a without prejudice basis.

Ways to seek Information Session on Mediation Service

• Contact the Building Management Mediation Co-ordinator's Office

Room 206 - Room 208, 2/F, Lands Tribunal Building,
38, Gascoigne Road,
Kowloon.
Tel. 2170 3858
Fax 2782 5780

• Make your request at the Lands Tribunal Registry

G/F, Lands Tribunal Building,
38, Gascoigne Road,
Kowloon.
Tel. 2170 3861
Fax 2384 4901

• Consult your lawyer or other advisers

What’s next?

Arrangements will be made for any parties who are interested in seeking mediation or have approached the Mediation Co-ordinator to attend an information session on mediation. After the information session, the Mediation Co-ordinator will conduct a pre-mediation consultation with the parties and give the information on mediation service available for the parties to consider and apply for such service.

The Mediation Co-ordinator will provide the parties seeking mediation a list of mediators who have indicated their willingness to participate in mediation, from which the parties may choose their mediator. The Mediation Co-ordinator will report to the Presiding Officer as to whether the parties seeking mediation have attended an information session and whether the parties are willing to take part in mediation.

Please note that a party’s application for information session or mediation will not lead to an automatic stay of the legal proceedings, but is subject to the Presiding Officer’s direction in this regard.

Do I Need to Pay for the Mediation Service?

Information sessions and pre-mediation consultations with the Mediation Co-ordinator are free of charge. Some mediators, but not all, may provide mediation service free of charge. If a party wants to receive the service of a particular mediator, he will have to check whether the mediator concerned will charge for the service or not.

Costs implication

Under the terms of the President’s Direction LTPD: BM No. 1/2009, parties and those advising them in Building Management cases should explore mediation before they decide to litigate. Mediation can start before any litigation or at any stage during the process of litigation or as directed by the Tribunal.

Parties to building management disputes are encouraged to use mediation as an efficient and cost-effective means to resolve their differences. To achieve this purpose, the Presiding Officer in charge of the case will give appropriate directions for the conduct of cases.

Although mediation is a voluntary process and without prejudice to the parties’ contentions in the underlying action, in cases where parties unreasonably refuse or fail to attempt mediation, adverse costs order may be made against such parties.

Nevertheless, where a party has engaged in mediation up to the minimum level of expected participation agreed by the parties beforehand or as determined by the Tribunal, or has a reasonable explanation for non-participation, he shall not suffer any adverse costs order.

In determining whether a party has acted unreasonably in refusing to proceed with mediation, the Tribunal shall take into account all relevant circumstances, but not what happened during the actual process of the mediation.