RICH TREND LTD v. WONG, HUI & CO, SOLICITORS (a firm)

HCMP 63/2021

[2021] HKCFI 3471

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 63 OF 2021

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J U D G M E N T

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INTRODUCTION

1.  This is the substantive hearing of the originating summons filed by the plaintiff on 15 January 2021 seeking leave to tax legal bills delivered by the defendant law firm pursuant to section 67 of the Legal Practitioners Ordinance, Cap 159.

2.  Before today’s hearing, the leave sought is narrowed down to two bills:

(1)  The “Interim Fee Note 7” dated 19 August 2020 covering works done from 4 January 2019 to 27 July 2020.  The amount billed was $1,535,110.  After applying the costs on account then held by the defendant towards the billed amount, there was a credit balance on account in the sum of $171,293.

(2)  The “Final Bill” dated 11 September 2020 covering works done from 28 July 2020 to 28 August 2020.  The amount billed was $2,047,220.  After applying the costs on account then held in the above sum of $171,293, the outstanding amount due from the plaintiff was $1,875,927. 

3.  The plaintiff did not pay the Final Bill.  On 7 December 2020, the defendant commenced an action in the District Court under DCCJ 6554/2020 claiming that sum together with interest.

4.  The present originating summons was taken out just over one month later in January this year.

5.  There were two call-over hearings on 6 May 2021 and 29 June 2021.

6.  At the second call-over hearing, by agreement of the parties, I ordered that the stay of the District Court action (previously agreed by the parties)  do continue until the determination of the originating summons, or, if leave for taxation is granted, the completion of the taxation.

7.  Further, at that call-over hearing, the defendant indicated to the court that it would oppose taxation of Fee Note 7 but it would not oppose taxation of the Final Bill but would ask the court to impose a condition that the plaintiff should pay the counsel fees (which amounted to $1,060,000)  to the defendant pending taxation.

8.  At today’s hearing, the defendant, represented by Mr Ian Chau, counsel, maintains the same primary position.

9.  The stance of the plaintiff, represented by Mr Andrew Mak appearing with Mr Albert Chan, is that unconditional leave should be granted for the taxation of both Fee Note 7 and the Final Bill.

10.  The plaintiff has filed two affirmations made by Mr Siu Kai Ming.  Siu has been the plaintiff’s sole director since 28 July 2020.  Kingsway Inc has been the plaintiff’s sole shareholder since the same date.

11.  The defendant has filed affirmations made by Mr David Wong and Ms Claire Mak, who are the two fee-earners featuring in the bills in question.  The defendant also relies on the affirmation of Mr Anthony Chan.  Chan was a director of the plaintiff prior to 28 July 2020.  Before that date, Top Keen Enterprises Limited was its sole shareholder.  According to Chan, he was the person who liaised with and gave instructions to the defendant on behalf of the plaintiff since about 2010 and up to July and August 2020.

FACTUAL BACKGROUND

12.  The plaintiff was the 2^nd defendant in HCMP 1716/2012 (“the Action”).  The Action concerned the ownership of a piece of land in Sai Kung situated at Lot 775 in DD 216.  The plaintiff in the Action was the registered owner and sought possession.  The plaintiff (in these proceedings)  resisted the claim based on, among other things, estoppel and counterclaimed beneficial ownership based on resulting trust and/or constructive trust.  And, alternatively, it claimed adverse possession.

13.  On 31 January 2013, the defendant filed a notice to act for the plaintiff in the Action.

14.  The trial took place in July and August 2020.  It lasted for a total of 9 days.  The court heard evidence from 29 July to 7 August and then closing submissions were made on 26 and 27 August.

15.  In the Action, the defendant delivered a total of seven interim fee notes and one final bill.  Interim Fee Notes 1 to 6 covered the earlier stages of the Action and were all settled.  (In the present originating summons, the plaintiff applied for leave to tax these six bills as well.  But it is no longer pursuing that.)

16.  Fee Note 7 was issued on 19 August 2020, that is during the time after evidence in the Action was closed but before closing submissions took place. The Final Bill was issued on 11 September 2020, that is about two weeks after the trial was concluded.

17.  For completeness, I should add that judgment in the Action was handed down on 16 December 2020: [2020] HKCFI 3094.  In gist, the plaintiff was the winner.  The court declared that it was the beneficial owner of the land in question and, alternatively, it had acquired a possessory tittle to the land.

18.  Returning to the present proceedings, the slightly unusual feature here which forms the background leading to the taxation dispute is the change of ownership in the plaintiff on 28 July 2020, just one day before the trial in the Action commenced.

19.  As noted above, prior to 28 July 2020, the plaintiff was wholly owned by Top Keen and was under the management of Chan.  Chan was the plaintiff’s primary point of contact with the defendant.  As from 28 July 2020, Kingsway has been the plaintiff’s sole shareholder and Siu has been its sole director.

20.  The background to this is that on 3 July 2020, Top Keen and Kingsway entered into an agreement for sale and purchase in respect of the entire issued share capital of the plaintiff (“the SPA”).  Only a short extract of the SPA showing clauses 9.1(a)  and (b)  is exhibited as evidence.  I should pause here to note that the plaintiff was itself not a party to the SPA.  Completion took place on 28 July 2020.

21.  In clause 9.1(a), Top Keen disclosed to Kingsway the ongoing litigation in the Action.  They agreed that Top Keen, as vendor, shall be responsible for all the legal costs and expenses incurred by the plaintiff up to but exclusive of the completion date. 

22.  Clause 9.1(b)  dealt with any payment that had been paid by the plaintiff to its solicitors as costs in advance or on account before completion.  The parties agreed that if such advance payment exceeds the actual amount of legal fees and expenses incurred prior to completion, the excess shall be paid back to Top Keen by Kingsway.

23.  The defendant places heavy reliance on the above provisions in opposing taxation of Fee Note 7, which covers works done by the defendant up to 27 July 2020, that is the day immediately before completion.  I shall therefore reproduce the provisions in full below.

“9 VENDOR’S DISCLOSURE

9.1 The Vendor hereby discloses and the Purchaser hereby acknowledges its understanding and accepts as follows:-

(a)  The Company is one of the defendants in the legal proceedings in the High Court under HCMP No.1716/2012 (“Proceedings”), which concerns one of the Property (Group B), namely Lot No.775 in Demarcation District No.216. The Proceedings are ongoing and may not be fully disposed of before Completion. The Vendor shall be responsible for all the legal costs (including solicitors’ costs and counsel fees)  and expenses incurred by the Company in respect of the Proceedings up to but exclusive of the Completion Date. For the avoidance of doubt, the Vendor shall not be responsible for any damages, claims, demand, compensation and losses incurred by or awarded against the Company as a result of the Proceedings, including but not limited to any judgment made by the Court against the Company. As from and inclusive of the Completion Date, the Purchaser shall be responsible for all the damages, claims, demand, compensation, loss, costs (including solicitors’ costs and counsel fees)  and any other expenses incurred by the Company in respect of the Proceedings. This clause shall survive completion of the sale and purchase.

(b)  Where legal costs and expenses are paid by the Company before the Completion Date as deposit of costs in advance/on account (“Advance Payment”)  to its representing solicitors and counsel in preparation or anticipation of work and matters to be conducted in respect of the Proceedings on or after Completion Date, the Purchaser shall procure the Company’s representing solicitors and counsel to provide, within 30 days from the Completion Date, written advice on their respective professional charges, fees and expenses calculated up to but exclusive of the Completion Date. If the Advance Payment exceeds the amount of such professional charges, fees and expenses, the excess shall be reimbursed and paid by the Purchaser to the Vendor within 14 days.” (underline added)

24.  Notwithstanding the signing of the SPA in early July and completion on 28 July, just one day before the trial commenced, the evidence before me shows that the defendant had not been told about it until 14 August 2020.  Both Chan and David Wong deposed to that effect in their affirmations.  This is also supported by text messages exchanged at the time. 

25.  In fact, while in his first affirmation Siu stated that the defendant was at all material time aware of the sale and completion of the shares, he effectively retracted that in his reply affirmation after seeing the evidence of Chan and David Wong.  Siu stated in his reply affirmation that he had orally requested Chan not to disclose the sale to the defendant without his prior approval, he told Chan on 1 August 2020 to notify the defendant of the sale only after the conclusion of the Action and in the end, on 14 August 2020, he informed Chan that the defendant could be told about the sale.

26.  It was after being informed of the sale that the defendant, on 19 August 2020, issued Fee Note 7.  It will be recalled that the bill covered works done up to 27 July 2020, ie just one day before the completion.

27.  It is against the above background relating to the change of ownership in the plaintiff that the defendant now puts forward his primary case that the plaintiff has no locus to refer Fee Note 7 to taxation and hence no leave should be granted for that purpose in these proceedings.

THE DEFENDANT’S PRIMARY ARGUMENT: THE PLAINTIFF HAS NO LOCUS

28.  The defendant contends that an “express trust” was created under clause 9 of the SPA to the effect that the costs on account in the sum of $171,293 held with the defendant just before the completion on 28 July 2020 is held by the plaintiff on trust in favour of Top Keen.  As such, the plaintiff is only a bare trustee of that sum.

29.  Mr Chau develops his argument in his written submissions as follows:

“In this case an express trust in favour of Top Keen was intended and should be inferred:

(1)  The clear intention of Cl. 9 is that the Costs on Account be applied solely for a specified purpose, i.e. to discharge Top Keen’s obligation to pay P’s outstanding legal costs and expenses up to and including 27 July 2020 … The costs on account were not intended to be used for any other purpose, as demonstrated by the stipulations in Cl. 9 that the surplus was to be returned to Top Keen, and the short 30-day period for obtaining advice as to outstanding fees up to and including 27 July 2020, and 14-day period for returning the surplus to Top Keen.

(2)  The monies were in a separate fund, i.e. the client account with D.”

30.  Mr Chau also draws support from the fact that Top Keen was then the sole shareholder of the plaintiff.  He submits that a declaration of trust by the plaintiff should be inferred by the conduct of Top Keen, the plaintiff’s sole shareholder, of entering into the SPA and agreeing to clause 9 and proceeding to completion on that basis.

31.  It follows, Mr Chau submits, that the plaintiff has no beneficial interest in the costs on account and insofar as Fee Note 7 is concerned, as the amount billed there is settled with the original costs on account, the plaintiff should not be treated as the “party chargeable” under section 67(2)  of the Legal Practitioners Ordinance.

32.  Alternatively, even if Top Keen is not the beneficial owner of the costs on account as no trust can be inferred and the SPA creates only contractual rights, the plaintiff has no interest in the taxation.  This is because it would still be Top Keen who is entitled to the costs on account under clause 9.1 of the SPA.  As such, the plaintiff has no interest in it and its position is not affected whether or not Fee Note 7 is to be taxed down.  The plaintiff therefore has no locus to seek leave to tax Fee Note 7.

33.  The above basically summarises the primary ground raised by the defendant to oppose taxation of Fee Note 7.  These contentions do not apply to the Final Bill.

THE FOUR REGIMES UNDER SECTION 67 OF THE LEGAL PRACTITIONERS ORDINANCE

34.  Section 67 provides as follows:

“67. Taxation of bills on application of party chargeable or solicitor or foreign lawyer

(1)  On the application, made within 1 month of the delivery of a solicitor’s bill or a foreign lawyer’s bill, of the party chargeable therewith the Court shall, without requiring any sum to be paid into court, order that the bill shall be taxed and that no action shall be commenced thereon until the taxation is completed.

(2)  If no such application is made with in the period mentioned in subsection (1), then, on the application of the solicitor or the foreign lawyer, or of the party chargeable with the bill, the Court may, upon such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order—

(a)  that the bill shall be taxed;

(b)  that, until the taxation is completed, no action shall be commenced on the bill, and any action already commenced be stayed:

Provided that—

(i)  if 12 months have expired from the delivery of the bill, or if the bill has been paid, or if a verdict has been obtained or a writ of inquiry executed in an action for the recovery of the costs covered thereby, no order shall be made on the application of the party chargeable with the bill except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the Court may think fit;

(ii)  if the bill has been paid, no order under this subsection shall be made where the application for the order is made after the expiration of 12 months from the date of payment of the bill.

(3)  Every order for the taxation of a bill shall require the taxing officer to tax not only the bill but also the costs of taxation and to certify what is due to or by the solicitor in respect of the bill and in respect of the costs of the taxation.

…”

35.  The effect is as follows:

(1)  Within one month of the delivery of a bill, the client can ask for the bill to be taxed by the court.  No leave is required.  He does so as of right. Meanwhile the solicitor may not bring an action on the bill. 

(2)  If the client does not exercise his right within the one-month period, the court has a discretion to grant leave for the bill to be taxed and may impose a condition (except in relation to costs of taxation). 

(3)  But where the client applies after 12 months from the delivery of the bill or where he has already paid the bill, he will have to show special circumstances why taxation should be ordered.  The court may impose a condition when granting leave.

(4)  There is a final caveat that if the bill has been paid, no order would be made if the application is made 12 months after the date of payment.

36.  The above four scenarios are sometimes referred to in cases as the first, second, third and fourth regimes respectively.  See, eg, Re Miller Peart [2007] 3 HKLRD 125 at para 64 and Lee Chi Enterprises Company Limited v KC Ho & Fong (a firm) HCMP 61/2007, 13 September 2007 at para 4.  I shall adopt this terminology below.

37.  Here, there is no dispute that the Final Bill falls within the second regime.  Both the plaintiff and the defendant agree that it should be referred to taxation.  The only difference dividing the parties is whether interim payment should be made pending taxation and, if so, how much.

38.  As regards Fee Note 7, the plaintiff contends that it too falls within the second regime.

39.  On the other hand, the defendant contends that it comes under the third regime, with reasoning as follows:

(1)  Top Keen was the beneficial owner of the costs on account held with the defendant prior to completion.

(2)  In any event, under clause 9 of the SPA, Top Keen is the party who is contractually liable for Fee Note 7.

(3)  Chan has deposed in his affirmation that he accepts Fee Note 7 on behalf of Top Keen and he considers its contents to be reasonable.

(4)  As shown on the face of Fee Note 7, the billed amount was settled by deducting the sum from the costs on account held with the defendant.

(5)  Hence, Top Keen must have also agreed to the deduction as Chan agrees to the bill as a whole.

(6)  The agreed deduction by Top Keen amounts to the bill being “paid” under the third regime: see section 67(2)(i).

40.  Accordingly, the defendant argues that the plaintiff has to show special circumstances why taxation should be allowed out of time.

41.  I am of the view that Fee Note 7 comes within the second regime, as contended by the plaintiff.

42.  As I will explain below, I reject the “no locus” argument relied on by the defendant.  I reject the submission that Top Keen is the beneficial owner of the costs on account shown in Fee Note 7.  I agree with the plaintiff’s contention that the plaintiff is the person liable to pay Fee Note 7.  The costs on account held by the defendant are costs held on account of the plaintiff, not Top Keen.  Hence, the plaintiff, not Top Keen, is “the party chargeable with the bill” for the purpose of section 67(2).

43.  In light of this ruling, Top Keen’s agreement to deduct the costs on account to settle Fee Note 7 is simply irrelevant.  It is Top Keen’s agreement, not the plaintiff’s.  There is no evidence that when Fee Note 7 was issued in August 2020, the plaintiff, under the new management of Siu, had been notified of the deduction, let alone having authorised it.  In the circumstances, the plaintiff cannot be regarded as having “paid” the bill merely by reason of the defendant’s unilateral deduction as recorded in Fee Note 7, for the purpose of section 67.  This is the case even though from the defendant’s perspective, it had considered the bill to have been paid by reason of its appropriating the relevant sum from the costs on account.

44.  I think that should be the right conclusion.

45.  Where a solicitor delivers a bill to a client and the bill records that some costs on account are applied to settle the billed amount, the client cannot be said to have “paid” the bill under section 67 upon the delivery of the bill if he has not been notified of the deduction and has not authorised it in advance.

46.  The rationale underlying the statutory regime is that the client is given one month to consider the bill and consider whether to invoke the taxation mechanism without the need to seek leave to do so (ie the first regime).

47.  In the above circumstances, if the client is considered as having “paid” the bill as soon as the bill is delivered when he does not even have knowledge of the deduction, the first regime would be bypassed and his statutory right to tax taken away, all that arising out of the unilateral act of the solicitor. That cannot be the intention of the legislation.

48.  To sum up, I rule that Fee Note 7 comes under the second regime.

DISCUSSION

49.  In my view, the court should exercise its discretion to grant leave to the plaintiff to tax Fee Note 7.

The “no locus” argument

50.  I reject the defendant’s “no locus” argument for the following reasons.

51.  First, in the Action, the defendant was the solicitors acting for the plaintiff.  The plaintiff was the defendant’s client.  All the bills, including Fee Note 7 and the Final Bill, were addressed to the plaintiff.  Prima facie, the plaintiff is the party chargeable with the bill.

52.  Second, the plaintiff is not a party to the SPA.  I have been shown only the title page, clauses 9.1(a)  and (b)  and the execution page of the SPA.  From what I have seen, clause 9.1 is a contractual provision governing certain aspects of the rights and obligations of Top Keen, as vendor, and Kingsway, as purchaser, concerning the sale of the shares in the plaintiff.  The intention seems plain enough.  In light of the completion which would take place when the Action would not yet be concluded and when legal costs and expenses were being incurred on a continuing basis, the two parties agreed to a mechanism under which the completion date would be a cut-off date and costs incurred pre-completion would be the responsibility of Top Keen and costs incurred post-completion would be the responsibility of Kingsway.  These were contractual arrangements as between these two parties.

53.  Mr Chau’s argument that clause 9 operates to create a trust with the plaintiff being the trustee and Top Keen being the beneficiary is misconceived.  It is not supported by any wording in clause 9 itself.  Insofar as Mr Chau relies on the underlined wording in clauses 9.1(a)  and (b)  (see the extract in para 23 above)  in support, the wording simply does not have that effect.  Any rights and obligations created there are solely as between Top Keen and Kingsway, as the plaintiff is not a party to the agreement itself.

54.  Furthermore, there is nothing in clause 9.1 to suggest that Top Keen was entering into the SPA in any capacity other than in its own right.  There is nothing which suggests that Top Keen was signing the SPA for and on behalf of the plaintiff as well, such that the plaintiff would be bound by the clause with the result that its ownership in the costs on account just before completion would be divested from it and would vest in Top Keen beneficially.

55.  Apart from the express wording in clause 9.1, the only matter relied on by Mr Chau is the fact that Top Keen was then the sole shareholder of the plaintiff.  As rightly submitted by Mr Mak, the plaintiff, as a company, is a separate and distinct entity from its shareholders: Salomon v A Salomon & Co [1897] AC 22.  The act of Top Keen cannot be simply equated as the act of the plaintiff in the present circumstances.

56.  Mr Chau has cited extensive authorities seeking to demonstrate that a trust can arise by conduct.  It is not necessary to deal with them.  Each case must turn on its own facts.

57.  For the above reasons, I reject the defendant’s contention that by operation of clause 9.1 of the SPA and by reason of it being the plaintiff’s sole shareholder, Top Keen became the beneficial owner of the costs on account held pre-completion. 

58.  It is true that as between Top Keen and Kingsway, economically speaking, the former has the benefit of such costs on account as Kingsway is under an obligation to reimburse Top Keen with such an amount.  But it does not follow that the plaintiff has no interest in the taxation.  It is the party to whom the defendant had delivered the bill.  The fact that its present sole shareholder has a contractual liability to pay Top Keen an amount equal to the costs on account does not detract from the plaintiff’s liability to pay the bill.  It certainly has an interest in the taxation.  I reject the defendant’s submission to the contrary.

59.  Lastly, on the “no locus” argument, Mr Mak points out that this argument is inconsistent with the defendant subsequently applying the costs on account remaining as at 28 July 2020 to partially settle the Final Bill.  The Final Bill covers works done post-completion and has nothing to do with Top Keen.  If the “no locus” argument is correct, the defendant would have been wrong in using Top Keen’s money to settle the plaintiff’s bill.  I agree with that observation.  At today’s hearing, Mr Chau accepts that the partial settlement is an error.

Discretion under the second regime

60.  For cases falling under the second regime, it has been commented that subject to any terms that may be imposed, the court will generally be inclined to order taxation: Lee Chi Enterprises at para 21.

61.  I consider that by analogy with cases on time extension, when exercising its discretion whether to allow belated taxation after the statutory one-month period, it is appropriate for the court to take into account factors such as the length of the delay in seeking taxation, the reasons for the delay, any prejudice that may be suffered by the solicitor if leave is granted and the prospect of the client’s success in the intended taxation.

62.  In the present case, I consider that the following matters are material considerations that should go into the weighing exercise when exercising my discretion.

63.  The present application for leave was taken out almost five months after Fee Note 7 was delivered.  The plaintiff was therefore “out of time” by about four months.  It is not the most serious kind of delay under the second regime.  But it is also not to be lightly disregarded.

64.  There does not appear to be any good reason justifying the late application.  Siu has not sought to explain why the plaintiff did not refer Fee Note 7 to taxation within the one-month period after the bill was delivered.

65.  The delay of four months and the lack of explanation are factors that weigh against the plaintiff.  On the other hand, it does not appear to be the case that if leave is granted now, the defendant would suffer any prejudice. After all, the Final Bill will go to taxation.

66.  Lastly, the plaintiff has raised a number of comments or criticisms on Fee Note 7.  I consider that some of the comments are validly made such that it is fair and just to have the bill taxed or that there is a prospect that the bill may be taxed down.  There are others that do not seem to be made out on the evidence.  I will focus below on the material ones.

67.  First, there is a dispute over the hourly rates of David Wong and Claire Mak.  I agree with the plaintiff that this dispute should be left to the taxing master to resolve and the decision would have an impact on the quantum to be allowed on the bill.

68.  The plaintiff’s case is that on 8 January 2020, the defendant provided the plaintiff with a budget for the trial.  The budget stated that the hourly rates of David Wong and Claire Mak were $9,000 and $5,000 respectively.  The budget was prepared on that basis.  Subsequently, on 9 June 2020, the defendant provided the plaintiff with a revised budget, which again was prepared based on the hourly rates of $9,000 (for David Wong)  and $5,000 (for Claire Mak). However, the amounts due under Fee Note 7 and the Final Bill were calculated on the basis of hourly rates of $9,600 (for David Wong)  and $6,000 (for Claire Mak).

69.  The plaintiff contends that the uplift in the hourly rates in the two bills was contrary to the very basis upon which the plaintiff had engaged the defendant for the trial.  According to the plaintiff’s calculation, the uplift has resulted in additional sums of about $88,000 and $91,000 being charged in Fee Note 7 and the Final Bill respectively.

70.  On this issue, the defendant’s case is that the $9,600 / $6,000 hourly rates were effective since January 2018, as evidenced in Interim Fee Note 6 issued in February 2019.  The references to the hourly rates of $9,000 / $5,000 in the budget and the revised budget were believed to be a clerical slip on the part of Claire Mak and/or her secretary.

71.  The dispute resolves around whether the effective hourly rates were $9,600 / $6,000 since January 2018 and whether the lower rates inserted in the budget and the revised budget were an inadvertent mistake.  This is a factual dispute.  I am of the view that it is a matter that should be properly resolved.

72.  Second, the plaintiff complains that Fee Note 7 (and the Final Bill)  are completely lacking in particulars.  Mr Mak submits that after listing the works purportedly done by the defendant, the bills simply assert the total number of hours used by David Wong and Claire Mak respectively.  There is no breakdown showing the amount of time spent on any particular piece of work.  There is also no indication as to which fee-earner had completed the work.

73.  Fee Note 7 and the Final Bill are 20 pages and 8 pages long respectively.  As drafted, in my view, they do provide information on the works done and the information is structured in an organised way.  The dates of correspondence and conferences and the parties involved are set out.

74.  On the whole, I do not agree with the plaintiff’s observation that the bills are completely lacking in particulars.  However, the observation that there is no breakdown showing the amount of time and which fee-earner was involved for any particular piece of work is a valid one.  As such, there would be some difficulty if the plaintiff wishes to undertake a detailed analysis on whether the time spent on any individual item of work is reasonable and justifiable or not.  Given the overall amounts involved are not insubstantial, the plaintiff should be allowed to receive a more detailed breakdown.

75.  Third, the plaintiff complains that Fee Note 7 and the Final Bill on their face show the existence of duplicated works.

76.  On this, I do not think the complaint is made out.  The examples cited by the plaintiff include duplicate dates set out in the correspondence section.  For example, the same date appears twice under that section.

77.  But there is nothing inherently implausible for multiple letters or emails to be sent or received on any one same date.  In fact, in the evidence, the defendant is able to point to different emails sent on the same date.  The plaintiff also complains that there appears to be a series of duplicated work when liaising with two counsel.  Again, it is not immediately apparent from the bills themselves that the liaison with two counsel involve unjustified duplicated works.

78.  On the whole, in the exercise of my discretion, the starting point is that a client is entitled as of right to have the bill taxed within one month of delivery of the bill.  In the present case, the application was taken out four months after the permitted period but well within the 12 months under the second regime.  While the plaintiff has put forward no good reason for the delay, as explained above, there are sufficient reasons to refer Fee Note 7 to taxation.  Accordingly, I will grant leave for Fee Note 7 to be taxed.

Condition

79.  The remaining issue is whether the condition of interim payment as proposed by the defendant should be imposed pending taxation of Fee Note 7 and the Final Bill.

80.  As discussed above, there is no evidence at this stage which points to the defendant charging duplicated works.  It is true that the amounts billed under Fee Note 7 and the Final Bill represent a considerable overrun of legal costs from what was estimated in the budget prepared in January 2020.  But it would appear that there were some last minute summonses which were dealt with in June 2020.

81.  On the whole, while there may be some adjustment to the amounts billed under Fee Note 7 and the Final Bill in the taxation, it is anticipated that the defendant would receive a portion of the billed amounts.  In such circumstances, it is a proper exercise of the court’s discretion to order interim payment of a lesser amount which he will almost certainly collect.  This would be “a closer approximation to justice”.  When assessing the proper quantum, the court would adopt a “rough and ready” approach: Lau Yue Kui v Philip Chan & Co (a firm) CACV 75/2014, 29 December 2014 at para 28. 

82.  In the present case, I order that a sum of $1,060,000 be paid to the defendant as a condition of the taxation.  The sum is to reflect that counsel were briefed to attend the trial with the agreement of the plaintiff, the defendant had already settled the counsel fees and the related expenses would likely be allowed.

CONCLUSION

83.  For the above reasons, I make the following orders:

(1)  Subject to para (5)  below, the Final Bill and Fee Note 7 be referred to taxation by the taxing master.  The defendant do upon such taxation give credit for all the sums of money received from or on account of the plaintiff, and refund within 21 days of service of such order what the plaintiff may on such taxation appear to have overpaid;

(2)  The taxing master do tax the costs of the reference and certify what shall be found due to or from either party in respect of the aforesaid bills, and the costs of the reference to be paid according to the event of the taxation;

(3)  The defendant do not prosecute any actions based on the aforesaid bills, including DCCJ 6554/2020, until the aforesaid taxation is completed or the lapse of the leave, whichever is applicable;

(4)  Upon payment by the plaintiff of what may appear to be due to the defendant, the defendant do deliver up to the plaintiff or as it may direct, all deeds, books, papers and writings in the defendant’s possession, custody or power, belonging to the plaintiff; and

(5)  The leave granted in para (1)  be subject to the condition that the plaintiff do pay to the defendant the sum of $1,060,000 within 21 days from today. If the condition is not complied with, the leave shall lapse forthwith.

84.  I also replace para 5 of the order which I made on 29 June 2021 by the following:

“The parties do procure the stay of the action in DCCJ 6354/2020 do continue until the completion of taxation or further order of the court.”

[Submissions on costs]

85.  The plaintiff did not commence taxation of both Fee Note 7 and the Final Bill within the one-month statutory period.  That is why it had to commence the present originating summons proceedings.  Further, it maintained its stance that all the fee notes, including Interim Fee Notes 1 to 6, should be taxed until just before the second call-over hearing. 

86.  On the two major issues, the plaintiff has succeeded in getting leave to tax Fee Note 7 and the defendant has succeeded in getting the interim payment in the amount it has asked for.

87.  Hence, I would order as follows:

(1)  Costs of the originating summons, including all reserved costs, up to and including the second call-over hearing on 29 June 2021 be to the defendant, to be taxed if not agreed.

(2)  Costs incurred after that be costs in the cause of the taxation.

(3)  There be a certificate for one counsel only, which in the case of the plaintiff would be the senior co-counsel.