ACHIEVE GOAL HOLDINGS LTD v. ZHONG XIN ORE-MATERIAL HOLDING CO LTD

CACV 6/2019

[2024] HKCA 31

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 6 OF 2019

(ON APPEAL FROM HCA NO 1987 OF 2005)

________________________

BETWEEN

AND
BETWEEN

(By Counterclaim)

________________________

_______________________________________________

TAXATION REVIEW DETERMINATION AND CERTIFICATE

_______________________________________________

1.  This is the application of the 1^st and 2^nd defendants (by counterclaim) (the “Paying Parties”) to review my rulings made in the taxation of the costs of the plaintiffs (by counterclaim) (the “Receiving Parties”) in respect of the bill of costs filed herein on 26 September 2022 (the “Bill”).

2.  This appeal is an appeal by the Receiving Parties from the decision of the Court of First Instance in HCA 1987/2005 (the “CFI Action”). The Court of Appeal (the “CA”) allowed the appeal. In respect of costs, the CA ordered the Paying Parties to pay the costs of the Receiving Parties for the CFI Action partly on party and party basis and partly on indemnity basis. The CA further ordered the Paying Parties to pay the costs of the Receiving Parties for this appeal with certificate for two counsel (the “Costs Order”). As such, the taxation of the Bill was on party and party basis.

3.  I had on 24 August 2023, taxed the bills of costs of the Receiving Parties for the CFI Action and for this appeal (the “Taxation Hearing”). On 7 September 2023, the Paying Parties applied to review certain rulings on counsel fee made by me in the Taxation Hearing for the CFI Action and for this appeal.

4.  On 24 October 2023, I heard the parties’ submissions on the review items in both the CFI Action and this appeal (the “Review Hearing”).

5.  In my taxation review determination and certificate for the CFI Action ([2024] HKCFI 124) (the “CFI Review”) handed down at the same time with this taxation review determination and certificate, I have set out the brief summary of proceedings on the disputes between the parties. I do not propose to repeat the same here.

6.  The Receiving Parties commenced this taxation on 26 September 2022 and filed the Bill.

7.  The Paying Parties filed their list of objections on 14 February 2023 and amended the same on 12 May 2023 (the “Amended LOO”).

8.  I taxed the Bill at the Taxation Hearing.

9.  On 7 September 2023, the Paying Parties applied for review of taxation in respect of the Bill. In the list of objections for review filed on 20 September 2023 (the “Review Objection”), the Paying Parties identified 7 objections, all related to fees of counsel.

10.  Mr Barry Leung, law costs draftsman for the Receiving Parties, confirmed to the court at the Review Hearing that the Receiving Parties would not file answers to the Review Objection.

11.  I heard the parties’ submissions at the Review Hearing. As the Paying Parties in the Review Objection requested me to state in my review certificate the reasons for my decisions on the review items, I issue this determination and certificate setting out my decisions on the review items and the reasons for my decisions.

The Review Items

12.  The Paying Parties sought review on my taxation rulings on items 2 to 4 in section B.1 and items 2 to 5 in section B.2 of section B of the Bill (the “Review Items”).

13.  Items 2 to 4 of section B.1 were fees of Mr Edward Chan SC. Items 2 to 5 of section B.2 were fees of Mr Clark Wang of counsel. The Review Items concern the following works of counsel:

(1) drafting and settling the notice of appeal;

(2) settling the appeal bundles;

(3) attending the appeal hearing; and

(4) drafting and settling the skeleton on costs.

14.  In the Review Objection, the Paying Parties stated their grounds of objection for the Review Items as follows:

“The Master erred in making the amount of deduction as made or not making any deduction, and failing to take or take proper account of the fact that:-

(a) 1^st and 2^nd Defendants (by counterclaim) have previously at different stage of these proceedings instructed 2 other senior counsel and 6 other junior counsel

(b) A total sum of HK$2,174,100 for counsel fees have separately been allowed

(c) The said total sum of HK$2,174,100 is for service rendered during the period from 2006 to 2015

(d) By then, discovery and preparation for trial (including list of documents, witness statements and expert reports) have already been completed

(e) Change of counsel team in 2016 to Mr Edward Chan SC and Mr Clark Wang necessarily means duplication of work and/or wasted costs”

15.  Mr J Chan for the Paying Parties confirmed at the Review Hearing that the main ground of objection for this review was duplication of costs caused by change of counsel.

16.  I am at a loss to understand the Paying Parties’ aforesaid grounds of objection stated in the Review Objection. Mr Wang had been engaged to advise the Receiving Parties in the CFI Action since October 2016. Mr Chan SC had been instructed in the CFI Action since January 2017. Both of them were counsel conducting the trial of the CFI Action in March 2018. I see no logic in the Paying Parties’ aforesaid submissions that involvement of other counsel prior to 2017 would have bearing on counsel fee incurred for this appeal which was not started until 2019.

Applicable legal principles

17.  Order 62 rule 28 of the Rules of the High Court (the “RHC”) provides that on a party and party taxation, there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed.

18.  Paragraph 2(5) of Part II of the First Schedule of order 62 of the RHC further provides that:

“The amount of fees to be allowed to counsel is in the discretion of the taxing master who shall, in exercising his discretion, have regard to all relevant circumstances and in particular to matters set out in paragraph 1(2).”

19.  Paragraph 1(2) in the same Part II provides that:

“In exercising his discretion under this paragraph or under rule 32(2) in relation to any item, the taxing master shall have regard to all relevant circumstances, and in particular to -

(a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved;

(b) the skill, specialized knowledge and responsibility required of, and the time and labour expended by, the solicitor or counsel;

(c) the number and importance of the documents (however brief) prepared or perused;

(d) the place and circumstances in which the business involved is transacted;

(e) the importance of the cause or matter to the client;

(f) where money or property is involved, its amount or value;

(g) any other fees and allowances payable to the solicitor or counsel in respect of other items in the same cause or matter, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question.”

20.  The above principles have been reiterated by the CA in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.

21.  In Re Wing Fai Construction Co Ltd (2012) 15 HKCFAR 657, Chan PJ stated at §47 that: “It cannot be suggested that counsel’s fees on appeal should be less simply on the ground that the trial was conducted by him. His task on appeal is different from that at the trial.” Although these remarks were made in a taxation on indemnity basis, I am of the view that they also apply as a matter of principle to party and party taxation.

22.  I have pointed out the complexity of this case in the CFI Review. I shall set out below other circumstances relevant for determination of counsel fee for this appeal and my rulings on the Review Items.

Notice of appeal (items 2 of B.1 and B.2)

23.  Item 2 in section B.2 of the Bill was fee charged by Mr Clark Wang of counsel for drafting the notice of appeal. Mr Wang charged $100,000 for drafting the notice of appeal.

24.  In the Amended LOO, the Paying Parties submitted that: “The Notice of Appeal was settled by SC and counsel’s fee is excessive. Suggest allowing $50,000.”

25.  Item 2 in section B.1 of the Bill was fee charged by Mr Chan SC for settling the notice of appeal. Mr Chan SC charged $250,000 for settling the notice of appeal.

26.  In the Amended LOO, the Paying Parties submitted that: “The Notice of Appeal was prepared by counsel Mr Clark Wang who was called in 2007. For settlement purpose, SC’s fee is totally excessive. Suggest allowing $100,000.”

27.  At the Taxation Hearing, I allowed both items in full.

28.  The notice of appeal set out 21 grounds of appeal in details. The document consists of 30 pages. The CA grouped the aforesaid grounds of appeal into the following four issues:

(1) construction of a joint venture agreement made between the 2^nd plaintiff (by counterclaim) and the 2^nd defendant (by counterclaim) (the “JV Agreement”);

(2) whether the 2^nd defendant (by counterclaim) was in breach of its obligations in the JV Agreement, and whether the JV Agreement was terminated by the 2^nd plaintiff (by counterclaim) on 22 June 2005 or by the 2^nd defendant (by counterclaim) on 10 October 2006;

(3) consequences of breach of contract and termination; and

(4) whether the CFI Action had been settled by a written agreement purportedly made between the 2^nd plaintiff (by counterclaim) and the 2^nd defendant (by counterclaim) dated 20 May 2009.

29.  After hearing the parties’ submissions for a whole day (from 10:00 am to 4:27 pm) on 17 December 2019, the CA handed down a judgment of 55 pages on 17 January 2020 allowing the appeal.

30.  I have set out the complexity of the issues in dispute for the CFI Action in the CFI Review. I need not repeat the same here. To prepare the notice of appeal, counsel had to consider carefully the very detailed 158-page judgment handed down in the CFI Action. Counsel would have to revisit the voluminous evidence revealed in the 11-day trial, the voluminous documents of more than 5,600 pages disclosed in the CFI Action, and the lengthy submissions of over 430 pages made by the parties for the trial in the CFI Action, in the perspective of the appeal which was very different from conducting the trial.

31.  After reconsidering my rulings on these items made at the Taxation Hearing, I maintain the view that the amounts allowed for these items were properly incurred. I disallow the review for these items.

Appeal bundles (item 3 of B.2)

32.  Item 3 in section B.2 of the Bill was Mr Wang’s fee for settling the appeal bundles. Mr Wang charged $40,000 for the work. In the Amended LOO, the Paying Parties submitted that: “Counsel’s fee is excessive. Suggest allowing $5,000.”

33.  At the Taxation Hearing, I allowed $20,000.

34.  In this appeal, there were nine appeal bundles consisted of more than 2,400 pages of documents and a transcript bundle consisting 420 pages. A core bundle of important documents consisting 827 pages had also been prepared. As pointed out in §30 above, at the trial in the lower court, more than 5,600 pages of documents had been produced to the trial court. Mr Wang had to go through these voluminous documents to identify the relevant documents for this appeal.

35.  Paragraph 38 of Practice Direction 4.1 (“PD 4.1”) provides that: “Parties must ensure that only documents necessary for determination of the issues before the Court [ie the CA] are included in the appeal bundle. … … Appeal bundles put together by indiscriminate reproduction of trial or hearing bundles used in the court below will be returned with costs sanction on the responsible party or parties.”

36.  PD 4.1 also makes specific provisions on preparation of core bundle as follow:

“40. The core bundle must include the judgment under appeal, the notice of appeal, the order appealed against, any other order (if relevant) made in the court below, the respondent’s notice (if any) and also those documents put in evidence in the court below which are central to the appeal. Only documents and materials which are necessary to satisfy the above test should be included.” (Emphasis added)

“47. Only documents, affidavits, exhibits or part of an exhibit, which were in evidence in the court below and are relevant to any issue in the appeal are to be included.” (Emphasis added)

37.  For the transcript bundle, PD 4.1 also provides at §46 that: “Parties should include in the bundle only such extracts of the transcript which are relevant to the issue in the appeal.”

38.  The CA has set strict requirements for preparation of appeal bundles. It is proper or necessary to have Mr Wang being counsel drafting the notice of appeal and one of the counsel attending the appeal hearing to settle the appeal bundles especially the core bundle and the transcript bundle.

39.  In view of the number of documents involved, I allowed $20,000 as Mr Wang’s fee for this item at the Taxation Hearing. I am of the view that the amount allowed for this item in the Taxation Hearing was proper and not excessive. I maintain my aforesaid ruling in this review.

Brief fee for attending appeal hearing (item 3 of B.1 and item 4 of B.2)

40.  Item 3 of section B.1 of the Bill was for the brief fee of Mr Chan SC for attending the appeal hearing. Mr Chan SC charged $1,500,000 for his brief fee.

41.  In the Amended LOO, the Paying Parties submitted that: “The preparation for the hearing was assisted by counsel Mr Clark Wang who was called in 2007. SC’s fee is totally excessive. Suggest allowing $400,000.”

42.  I allowed $1,000,000 for this item at the Taxation Hearing.

43.  Item 4 of section B.2 of the Bill was for the brief fee of Mr Wang for attending the appeal hearing. Mr Wang charged $500,000 for his brief fee.

44.  In the Amended LOO, the Paying Parties submitted that: “Led by prominent senior counsel. Counsel’s fee is excessive. Suggest allowing $150,000.”

45.  I allowed $400,000 as Mr Wang’s brief fee at the Taxation Hearing.

46.  Both parties were represented by senior counsel and junior counsel at the appeal hearing. In fact, the Paying Parties had instructed two senior counsel leading one junior counsel to attend the appeal hearing. The submissions of the Receiving Parties for the appeal hearing consisted of 15 pages referring to 27 authorities whereas the submissions of the Paying Parties consisted of 15 pages referring to 21 authorities. Counsel for the Receiving Parties had also prepared a reply note of 6 pages with 6 additional authorities. Skeleton argument of 15 pages is the maximum length the CA will usually allowed in an appeal. (See §63 of PD 4.1.) Senior counsel for both parties found it necessary to prepare skeleton arguments to the maximum length for this appeal.

47.  Together, the parties referred to 54 authorities in their submissions. Hearing for this appeal lasted for a whole day and the CA handed down a 55-page judgment one month after the hearing. (See §29 above.) In the Costs Order, the Court of Appeal specifically granted certificate for two counsel. All the above are indicators of the complexity of this appeal.

48.  The factors which I have considered in relation to the notice of appeal as stated in §19 above are also relevant when I consider the brief fee of counsel.

49.  Both Mr Chan SC and Mr Wang were trial counsel at the lower court. As such, they should be acquainted with the background of this case. Although the task of counsel on appeal is different from that at the trial, their previous involvement in the trial of the CFI Action is still a relevant factor in considering the brief fee for them to attend the appeal.

50.  There is no dispute that Mr Chan SC is a very experienced senior counsel having been called to the bar in 1975 and to the inner bar in 1989. I was of the view that allowing a brief fee in the sum of $1,000,000 to him for this appeal was proper bearing in mind the complexity of the issues for the appeal and the large number of documents involved.

51.  Mr Wang of counsel was called to bar in 2007. He had about 12 years’ experience when the appeal came before the CA in December 2019. Bearing in mind that Mr Wang was led by Mr Chan SC in the appeal hearing, I was of the view that allowing $400,000 as brief fee for Mr Wang to attend the appeal was proper and not excessive.

52.  Having reconsidered the amounts of brief fee allowed to Mr Chan SC and Mr Wang at the Taxation Hearing and taking into account the complexity of the appeal issues and the number of documents involved as discussed above, I maintain my rulings made on these items at the Taxation Hearing and disallow the review of these items.

Skeleton on costs (item 4 of B.1 and item 5 of B.2)

53.  Item 4 of section B.1 of the Bill was fee charged by Mr Chan SC for settling submissions on costs. Mr Chan SC charged $50,000 for settling the submissions.

54.  In the Amended LOO, the Paying Parties submitted that: “It is improper and unnecessary that the Submissions on Costs be settled by SC. Counsel Mr Clark Wang is competent to prepare such Submissions. For settlement purpose, SC’s fee is totally excessive. Suggest allowing $15,000.”

55.  I allow this item in full at the Taxation Hearing

56.  Item 5 of section B.2 of the Bill was fee charged by Mr Wang for preparing skeleton on costs and documents for variation of court order. Mr Wang charged $60,000 as his fee.

57.  In the Amended LOO, the Paying Parties submitted that: “The Skeleton on Costs and documents for variation of court order were settled by SC and the counsel’s fee is excessive. Suggest allowing $20,000.”

58.  I allow $40,000 at the Taxation Hearing for this item.

59.  In the judgment handed down on 17 January 2020, the CA directed the parties to serve submissions relating to costs for the trial in the lower court. The CA directed that the costs issue for the lower court proceedings would be dealt with on paper. As such, the written submissions would be the only opportunity for the parties to state their respective cases. There would not be opportunities for the parties to elaborate further their arguments by oral submissions at an oral hearing. The CA had also restricted the submissions to not more than five pages. The submissions had to be concise and precise but at the same time cover all the points. This is not an easy but a challenging task.

60.  The Receiving Parties submitted submissions on costs as directed by the CA. The submissions were drafted by Mr Wang and settled by Mr Chan SC.

61.  After considering the submissions of the parties, the CA on 18 March 2020 handed down a judgment on costs for proceedings in the lower court (the “Costs Judgment”) setting aside the costs order made by the lower court and granted fresh costs order for the proceedings in the lower court in terms more favourable to the Receiving Parties. In the Costs Judgment, the CA granted certificate for two counsel.

62.  As the CA saw fit to grant certificate for two counsel for the costs submissions, I see no merits in the Paying Parties’ aforesaid contention that: “It is improper and unnecessary that the Submissions on Costs be settled by SC.” It is noted that the costs submissions of the Paying Parties were also prepared by Mr Victor Dawes SC together with Mr James Man of counsel. It lies ill for the Paying Parties to contend that the Receiving Parties should not have engaged senior counsel in preparing the costs submissions.

63.  I have reconsidered the amounts of fee allowed at the Taxation Hearing for these items and maintain the view that such amounts are proper and not excessive. I disallow the review for these items.

Conclusion and costs

64.  For reasons set out above, I maintain my rulings made on the Review Items at the Taxation Hearing and dismiss this review application of the Paying Parties.

65.  Costs shall follow events. The Paying Parties shall bear the costs for this review application. I shall assess such costs by summary assessment.

66.  As the review of the Bill was dealt with together with review of another bill of the Receiving Parties filed in the CFI Action, I direct that the costs incurred by the parties for the aforesaid review applications shall be split equally between the two actions.

67.  To conclude, I dismiss the Paying Parties’ review application in respect of the Bill and make a costs order nisi ordering the Paying Parties to pay 50% of the Receiving Parties’ costs for this review application to be assessed by summary assessment.

68.  The aforesaid costs order nisi shall become absolute after 14 days from the date of this determination and certificate unless application to vary the same shall be received from either party within this 14-day period.

69.  I direct the Receiving Parties to submit to the court their statement of costs for this review application within 7 days after the aforesaid costs order nisi shall become absolute with copy to the Paying Parties. The Paying Parties shall submit to the court their comments (if any) to the Receiving Parties’ aforesaid statement of costs within 7 days thereafter with copy to the Receiving Parties.

70.  The summary assessment will be dealt with by the court on paper.

Certificate

71.  I certify that review of all the Review Items failed for the reasons set out above.