LOK WAI YEE v. MAN KOON HUNG

HCA 1181/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1181 OF 2014

________________________

________________________

__________________________________________________________

DECISION ON SUMMARY ASSESSMENT OF COSTS

__________________________________________________________

1.  On the day of trial on 25 May 2016, I granted leave for the defendant (“D”) to amend his Defence and to file/serve his witness statement, and I also vacated the trial. I further granted consequential case management directions so that the action could progress quickly towards another trial, including assigning the case management to a docketed master, and directing that any eventual re-fixing of fresh trial date(s) shall be made in consultation with counsel’s diaries. I also ordered D to pay the plaintiff (“P”) (a) costs of D’s summons filed on 19 May 2016 (“Summons”) and costs thrown away by the adjournment of the trial to be summarily assessed if not agreed between the parties, and (b) costs occasioned by the Summons to be taxed if not agreed (“Costs Order”). On 30 May 2016, I handed down written reasons for decision (“Reasons”). For convenience, I shall adopt the abbreviations in the Reasons.

2.  P has lodged her statement of costs dated 30 May 2016 in respect of the costs order in paragraph 1(a) above.  D has lodged his summary of objections dated 6 June 2016.  I now proceed to deal with the summary assessment of costs.

3.  The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.  For present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512‑514 as follows:

“(2) As in an ordinary taxation, under O.62 r.28(2) of the Rules of the High Court (Cap.4A) (the RHC), in a summary assessment, party-and-party costs were allowed only if they were ‘necessary or proper’ for the attainment of justice or for enforcing or defending the rights of the receiving party. Pursuant to Practice Direction 14.3, the court adopted a broad‑brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in O.1A of the RHC, even if there was no challenge to individual items. ……

(3) A summary assessment required a two-stage approach. If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the cost reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable. A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for the litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty. The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary. ……

(6) Since Civil Justice Reform in 2009, taxation of counsel’s fees under a party-and-party taxation was no different from taxation of costs and expenses. The test of ‘necessary or proper’ applied and must take into account the matters set out in para.1(2) of Part II of the First Schedule to O.62 of the RHC, as well as the requirement of reasonable proportionality. Accordingly, paras.62/App/28(5) (p.1172) and 62/App/28A of Hong Kong Civil Procedure 2012 (p.1172), which referred to the previous pre-CJR ‘excessive and unreasonable’ test under the former para.2(5) of Part II of the First Schedule to O.62 of the RHC, should no longer be followed, ……”

4.  Here, P seeks a total sum of $236,050 comprising $106,050 for solicitors’ profit costs and disbursements, and $130,000 for counsel’s fees (of which $90,000 is counsel’s brief fee for the trial[1] and $40,000 is counsel’s brief fee for opposing the Summons[2]).

5.  I propose to adopt a broad-brush approach and not deal with each and every item of P’s statement of costs since it is not the purpose of a summary assessment of costs to carry out a mini-taxation.  Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the trial and Summons, relevant affirmation, skeleton submissions and list of authorities, what transpired at the Hearing, the involvement of counsel in this matter, the matters noted in the paragraphs below and considering all circumstances, the overall costs claimed by P under her statement of costs appear to be somewhat on the high side on party-and-party basis. I make the following general observations.

6.  First, the costs in question are assessed on party-and-party basis such that only costs that are necessary / proper and reasonable will be allowed. However, there is no merit in the suggestion by D to apply District Court scale based on his belief that P’s eventual claim will not exceed District Court jurisdiction after adjustment in view of D’s Amended Defence. No application was made in the Summons or orally at the Hearing for application of District Court scale to the Costs Order. Pending P’s revised pleadings and further witness evidence in response, it is plainly uncertain whether P’s claim will necessarily fall within District Court jurisdiction.

7.  Secondly, P’s statement of costs does not identify the number of fee earners although the plural “fee earners” adopted suggested there were more than 1 fee earner. I assume it was 1 solicitor and 1 litigation clerk.  An hourly rate of $3,600/hour for the handling solicitor qualified in 2010 for the purpose of the present action (especially when counsel was involved and D did not file any witness statement and/or make any significant discovery) is plainly excessive. I allow $3,100/hour as the notional solicitor fee earner’s rate.

8.  Thirdly, I agree the trial bundles should be re-used and, where necessary, updated for the eventual trial. The cost of the trial bundle does not come within the ambit of costs thrown away. However, there would be some photocopying costs that were wasted by reason of the Summons and adjournment of the trial, and I allow 300 pages, ie $300 for item B1, and $750 for item B2.

9.  Fourthly, P’s stance in respect of item B1 permeates her statement of costs in that she appears to have assumed that all or most costs associated with bringing on the trial at the Hearing would be costs thrown away. That is not correct. If, however, she has indeed limited herself to costs of the Summons and costs thrown away by the vacated trial, then the costs as claimed are excessive on party-and-party basis.

10.  Fifthly, I do not find it necessary and/or proper for the solicitor fee earner to attend on client for 6.5 hours for the Summons and costs thrown away by the vacated trial. For the vacated trial, I accept a pre-trial conference might be wasted in that another pre-trial conference would be necessitated by the eventual fresh trial, but I do not believe such pre-trial conference should exceed 2 hours given the fact that P must have been well familiar with her own claim and witness statement, and D has not filed any witness statement for the purpose of trial. As for the Summons, I am not persuaded that client input would have been significant for opposing it (as evidenced by Ms Lau’s written submissions). I allow 4 hours for attendance on client for item C1. I allow 30 minutes on attendance on other side and 1 hour on attendance on counsel for items C2 and C3 given the last minute nature of the Summons which would have excited some activity, but the Summons is not complicated albeit late. In summary, I allow 5.5 hours x $3,100 = $17,050.

11.  Sixthly, I allow 20 minutes by the litigation clerk (ie $200) for item D1, which I consider reasonable. As for item D2, the trial bundles should be re-used, and hence costs for preparation of the trial bundles would not be costs thrown away.  As for item D3 and item D4, I find 9 hours of time spent excessive.  As for item D3, I cannot see how perusal of the identified documents would require 6 hours by the handling solicitor. After all, the Notice to Act by D’s solicitors is a simple and standard document, Ms Lau’s narrative opening submissions were just 9 pages (and I do not see any need for the handling solicitor to study the annexed schedules in any great detail given counsel’s involvement), and Ms Lau’s list of authorities only comprised 4 cases.  As for item D4, I am again persuaded that perusal of the Summons-related documents would not have required 3 hours by the handling solicitor, especially when the relevant costs were for opposing the Summons (but excluding costs occasioned by the Summons), Hence, I allow 4 hours, ie $12,400, for items D3 and D4.  As for item D5, the Hearing lasted from 10:07am to 12:40pm, ie about 2.6 hours. I allow 2.6 hours x $3,100 = $8,060. Travelling expenses are not chargeable item of disbursement (independent of the overall claim for profit costs) on inter partes assessment/taxation of costs. 

12.  Seventhly, in view of my direction for re-fixing of fresh trial date(s) in consultation with counsel’s diaries, it is inappropriate for D to bear counsel’s brief fee for costs thrown away. On a consideration of what is necessary and/or proper under the prism of reasonableness, I find it appropriate to grant a slightly higher refresher fee for counsel to take into account the costs of the wasted pre-trial conference and also future vicissitudes, I therefore allow $50,000 for item E1. As for item E2, I find the brief fee of $40,000 excessive. The opposition was a straightforward matter given the admitted lateness of the application by way of the Summons, and Ms Lau’s familiarity with the present action. Further, I have not been aided by Ms Lau’s submissions and research on relief against sanction for unless orders which were irrelevant to the Chow Order. I allow item E2 at $28,000.

13.  Eighthly, I disallow item F since travelling expenses are not allowed under party-and-party assessment of costs.

14.  Upon considering the items of costs claimed to see whether or not they are “necessary and its costs reasonable” on the sensible standard of necessity as explained by the Court of Appeal, the total costs of P on his statement of costs are assessed at $116,760[3] to be paid by D within 7 days.