MARK RICHARD CHARLTON SUTHERLAND v. CRB (a firm)

CAMP 245/2023, [2024] HKCA 331

On An Intended Appeal From [2022] HKCFI 3382

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 245 OF 2023

(ON AN INTENDED APPEAL FROM HCMP NO 2285 OF 2019)

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JUDGMENT

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  This is Mr Sutherland’s renewed application to the Court of Appeal for an extension of time to appeal against §§3 to 6 and 10 of the order the Hon Madam Justice Au-Yeung dated 4 November 2022 (“the Order”), and a stay of execution of the same pending the determination of the application and of the intended appeal.

2.  Having considered the papers before us, we consider that it is appropriate to deal with the present application on the basis of written submissions only without an oral hearing pursuant to Order 1A, rule 4 and Order 59, rule 14A of the Rules of the High Court (Cap 4A), notwithstanding Mr Sutherland’s request for an oral hearing.

BRIEF BACKGROUND

3.  CRB, a firm of solicitors, acted for Mr Sutherland in Family Court proceedings, FCMC 6134/2017 and FCMC 9098/2018 (“the Family Proceedings”), during various periods between 3 October 2017 to 19 March 2019[1]. Pausing here, it may be noted that FCMC 9098/2018 is the new action number allotted to the proceedings in FCMC 6134/2017 following an amendment to the grounds of divorce in the main suit[2].

4.  CRB delivered a total of 9 bills of costs for services rendered to Mr Sutherland (“the 1^st Bill” to “the 9^th Bill” respectively, and “the Bills” collectively) dated between 31 October 2017 and 30 March 2019.  Mr Sutherland paid the 8^th Bill in the amount of HK$250,000 in full on 14 September 2018, but did not pay any part of the remaining 8 bills.  The total amount outstanding under those 8 bills comes to about HK$1.6 million.

5.  On 21 August 2019, CRB commenced proceedings in the District Court (DCCJ 4528/2019) against Mr Sutherland to recover the outstanding amount.  On 9 November 2020, the District Court action was transferred to the High Court, and now becomes HCA 1895/2020 (“the Writ Action”).

6.  In the meantime, on 12 December 2019, Mr Sutherland commenced proceedings by way of an Originating Summons in the High Court (HCMP 2285/2019) seeking an order that the Bills be taxed.  On 4 November 2022, the Judge gave a written judgment (“the Main Judgment”) on the Originating Summons and made the Order, inter alia, (i) referring the 1^st to 7^th Bills and 9^th Bill to a taxing master for taxation subject to various conditions (§§4 and 5 of the Order), (ii) refusing to refer the 8^th Bill to taxation (§3 of the Order), and (iii) ordering Mr Sutherland to pay, on a nisi basis, the costs of the Originating Summons up to the date of the hearing on 5 May 2022 (§10 of the Order).  The Judge also summarily assessed CRB’s costs in the sum of HK$500,000.

7.  The conditions imposed by the Judge to permit taxation of the 1^st to 7^th Bills and 9^th Bill include payment by Mr Sutherland of (i) the full amount of the 1^st to 7^th Bills to CRB, and (ii) 60% of the amount of the 9^th Bill to CRB and the balance 40% into court, within 21 days of the Order (“the Payment Terms”).  The Order further provides that (i) a failure by Mr Sutherland to comply with the Payment Terms shall bar him from taxation of the relevant bills, and the relevant part of the Originating Summons shall be dismissed with costs to CRB (§6 of the Order), and (ii) CRB shall give credit for all sums received by them or on account of Mr Sutherland and shall refund what CRB may on such taxation appear to have been overpaid (§7 of the Order).

8.  On 18 November 2022, Mr Sutherland issued a summons (“the Costs Summons”) seeking to vary the above-mentioned costs order nisi.  On 25 November 2022, Mr Sutherland issued a further summons (“the Stay Summons”) seeking a stay of execution of the Payment Terms pending the final determination of (i) his counterclaim against CRB in the Writ Action, (ii) his ancillary relief hearing on 15 May 2023 in FCMC 9088/2018, and (iii) the Costs Summons.

9.  The time for Mr Sutherland to appeal the Order expired on 2 December 2022.  On 30 December 2022, Mr Sutherland purported to file a notice of appeal against the Order in the Appeals Registry without having sought or obtained any extension of time to appeal.  On 10 January 2023, the Registrar of Civil Appeals directed Mr Sutherland to make an application in the court below for an extension of time to appeal.  On 20 January 2023, Mr Sutherland took out a summons (“the Leave Summons”) for leave to appeal the Order out of time[3], and a stay of execution of the Payment Terms pending the determination of the Leave Summons and of the appeal.

10.  On 12 April 2023, the Judge gave her decision (“the Costs/Stay Decision”) dismissing the Costs Summons and the Stay Summons.

11.  On 19 May 2023, the Judge gave a decision (“the Leave Decision”) dismissing the Leave Summons.

12.  By a summons dated 5 July 2023 (“the Renewal Summons”) issued in the Court of Appeal, Mr Sutherland renewed his application for an extension of time to appeal.  He also sought a stay of execution of §§3 to 6 and 10 of the Order pending the final determination of the Renewal Summons and of the intended appeal.

APPLICABLE PRINCIPLES

13.  When considering an application for an extension of time to appeal, the Court will take into account, amongst other matters, (i) the length of the delay, (ii) the reasons for the delay, (iii) the merits of the intended appeal, and (iv) the prejudice that may be caused to the other party if an extension of time to appeal is granted, and reach an overall view on whether an extension of time should be granted in the interest of justice. Where the delay is substantial and not wholly excusable, generally the applicant must show a real prospect of success on the merits: Ng Hing Yau v Kong Art Ltd [2023] HKCA 212, §27.

14.  In relation to an appeal against an order of costs made by a judge at first instance, the Court of Appeal’s approach is well established:

“The Court of Appeal will not interfere with the exercise of a judge’s discretion in the award of costs unless it was shown that he failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially (Choy Yee Chun v Bond Star Development Ltd [1997] HKLRD 1327 at 1337A). Further, it is trite that an appeal against the exercise of discretion will not be entertained unless it is shown that the discretion was not exercised at all, or that the judge made some error of law or facts or was in disregard of principle, or that he took into account irrelevant matters, or that the decision was ‘plainly wrong’ or was ‘outside the generous ambit within which a reasonable disagreement is possible’ (Hong Kong Civil Procedure 2018, vol 1, §59/0/54)”.

See Waddington Limited v Chan Chun Hoo Thomas, HCMP 1326/2017 (unreported, 18 October 2017), per Kwan JA (as she then was), at §14.  This high threshold for intervention by the Court of Appeal is relevant when considering whether Mr Sutherland’s intended appeal has a real prospect of success.

THE LENGTH OF DELAY

15.  As earlier mentioned, the time for Mr Sutherland to serve a notice of appeal against the Order expired on 2 December 2022.  It was not until 30 December 2022 that he purported to serve/file a notice of appeal.  The delay was 28 days.  Subsequent to the directions given by the Registrar of Civil Appeals on 10 January 2023, the Leave Summons was eventually filed on 20 January 2023.  The delay up to the date of filing of the Leave Summons was 49 days.  On any view of the matter, the length of the delay on Mr Sutherland’s part is serious and substantial.

THE REASONS FOR DELAY

16.  Mr Sutherland gave various reasons for his delay in his affidavit filed on 5 July 2023, including (i) “Mental Health Issues”, (ii) “Pressure from Family Court Proceedings”, (iii) “Previous Problems with Instructing Costs Counsel”, (iv) “Complexity of the Matter”, (v) “Handing Down of Judgment”, and (vi) “Christmas Holidays”.

(1)  Points (i), (ii) and (vi) were considered by the Judge at §§7 to 9 of the Leave Decision.  We agree with the Judge’s views on those matters.

(2)  In respect of Point (iii), his attempt to put the blame on his former solicitors for (wrongly) advising him that he had no grounds to appeal plainly has no substance, in view of the fact that, according to him, he instructed an English barrister as early as 9 November 2022 (5 days after the Main Judgment) to settle a notice of appeal[4]. The fact that the English barrister delayed in reverting to him cannot be a good excuse for the delay.  Mr Sutherland ought to have kept an eye on the time limit for serving a notice of appeal, and looked for alternative assistance when it became clear that the English barrister whom he initially instructed was unable to produce a notice of appeal in good time.

(3)  In respect of Point (iv), as will be seen below, we do not consider that the intended appeal, based on the grounds advanced by Mr Sutherland, raises any complex issues of law or fact.

(4)  In respect of Point (v), Mr Sutherland’s complaint about the sudden notice of handing down of the judgment has no merits. He received notice of handing down of judgment on 3 November 2022, which superseded the earlier notice of handing down dated 7 June 2022 (which stated that judgment would be handed down on 6 December 2022).  Mr Sutherland knew, or ought to have known, that the 28-day time limit to serve a notice of appeal ran from the date of handing down of judgment, not from any other date.  There was ample time for him to prepare and serve a notice of appeal prior to the expiry of the time limit for appeal on 2 December 2022.

17.  At §6 of his Skeleton Submissions dated 10 November 2023 (revised on 23 November 2023) on behalf of Mr Sutherland, Mr Wing So refers to and relies on the fact that Mr Sutherland was unrepresented at the time when the notice of appeal ought to have been filed.  This submission is most surprising, having regard to the fact that Mr Sutherland was himself an experienced practising lawyer in this jurisdiction.  Mr So further says that although Mr Sutherland used to be a barrister, he has no expertise in costs matters.  We do not consider that it requires an expert on costs matters to know the time limit for serving a notice of appeal.

18.  Mr So next refers to and relies on the fact that “as verified by three pieces of expert opinion and from one of England’s ‘foremost experts in the field of parental alienation’ and a medical doctor, [Mr Sutherland] was suffering from various mental issues caused by the separation of him from his children”.  This submission is devoid of merits.  There is no suggestion that Mr Sutherland was unaware of the time limit for appeal.  As a matter of fact, during the period from 4 November and 2 December 2022, Mr Sutherland, with the assistance of his former solicitors, issued two summonses in the proceedings below, namely, the Costs Summons and the Stay Summons. Plainly, notwithstanding his mental issues, Mr Sutherland was able to actively pursue applications in the proceedings.  We do not accept that he was hampered by his mental issues to serve a notice of appeal within the time limit for appeal.

19.  Mr So also says that Mr Sutherland was handling multiple court proceedings at the same time with a large amount of documentation involved, which made it more difficult for him to keep track of and comply with deadlines.  We consider this to be a poor excuse for Mr Sutherland’s failure to serve a notice of appeal within the time limit for appeal.  Pursuing an appeal against a judgment is a serious matter, while keeping track of the deadline for appeal is a simple one.  If Mr Sutherland had taken the matter seriously, he could and should have served a notice of appeal on or before 2 December 2022.

20.  It is not necessary to deal with other minor points raised in Mr So’s Skeleton Submissions dated 10 November 2023 or Reply Submissions dated 1 December 2023, which we have considered.  We are not persuaded by Mr So that Mr Sutherland has provided any good explanation for his delay.  In our view, Mr Sutherland’s delay in serving a notice of appeal in the present case is inexcusable.

MERITS OF THE INTENDED APPEAL

21.  In Mr Sutherland’s draft Revised Notice of Appeal (“the draft RNoA”), he raises 3 intended grounds of appeal:

(1)  Ground 1 – the “Natural Break” Ground;

(2)  Ground 2 – the “Conditions” Ground; and

(3)  Ground 3 – the “Costs” Ground.

22.  Before we consider the merits of these intended grounds of appeal, it may be noted that in his draft RNoA, Mr Sutherland seeks the following relief:

(1)  §81(3) to (6) of the Main Judgment (corresponding to §§3 to 6 of the Order) be replaced with an order that the 1^st to 9^th Bills be referred to a taxing master for taxation, with such taxation being adjourned until after the determination or resolution of the counterclaim in the Writ Action; and

(2)  §82 of the Main Judgment (corresponding to §10 of the Order) be replaced with an order that “save as provided for above, [CRB] is to pay [Mr Sutherland’s] costs of the Originating Summons, such costs to be taxed in default of agreement”.

23.  It can be seen that the principal order sought by Mr Sutherland in his intended appeal, leaving aside the question of costs for the time being, is for an order for taxation of the 1^st to 9^th Bills without being subject to the Payment Terms, with such taxation being deferred until after the determination or resolution of his counterclaim against CRB in the Writ Action.  The order now sought by Mr Sutherland is a departure from his stance at the hearing before the Judge on 5 May 2022, when he asked for an order that the Originating Summons (instead of the taxation) be stayed until after the disposal of the Writ Action[5]. Be that as it may, the Judge in fact ordered that the taxation of the 1^st to 7^th Bills and 9^th Bill be stayed pending the disposal of the Writ Action[6].  There is no cross-appeal by CRB against the stay imposed by the Judge.  Hence, the main issues dividing the parties are: (i) whether the 8^th Bill should be referred to taxation, and (ii) whether Mr Sutherland should be required to satisfy the Payment Terms as a pre-condition for taxation of the Bills.

(i)  Ground 1 - the Natural Break Ground

24.  We shall first consider §2(a) of the draft RNoA relating to Mr Sutherland’s contention that in finding that there was a natural break[7], the Judge erred in failing to take into account, or otherwise accord sufficient weight, to “the fact that [Mr Sutherland] continued to instruct [CRB] and continued to receive legal services from [CRB] as demonstrated by the [9^th Bill]”.

25.  The right of a client to seek taxation of his solicitor’s bill is governed by s 67 of the Legal Practitioners Ordinance, Cap 159 (“the Ordinance”), which, so far as material, 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 within 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.”

In what follows, unless the context indicates otherwise, reference to “Section” or “s” shall be to the Ordinance.

26.  At §26 of the Main Judgment, the Judge gives the following summary of the effect of s 67 –

“(1) Within one month of the delivery of the solicitor’s bill, the client may apply to have the bill taxed as of right, and no term will be imposed: s.67(1);

(2) If the bill has been delivered for more than one month but less than 12 months, either the solicitor or the client may apply for taxation and the court may give an order to tax and impose any terms as it may think fit except terms as to the costs of the taxation: s.67(2); for cases falling within this category, subject to any terms that may be imposed, the Court will generally be inclined to order taxation …

(3) If 12 months or more have elapsed since the delivery of the bill or if the bill has been paid, no order to tax shall be made on the application of the client except in special circumstances and the court may impose any terms including terms as regards the costs of the taxation: [Proviso (i)].

(4) If the bill has been paid, no order to tax will be made if the application is made more than 12 months from the date of payment: [Proviso (ii)].”

27.  Where a series of bills have been issued by a solicitor to a client, it is necessary to consider whether the earlier bills preceding the last (or final) one are (i) “interim” bills, or (ii) “separate”/“final” bills.  For this purpose: (a) interim bills refer to requests for payment of money on account, while a final bill is one for the total amount of professional costs and disbursements together with any increase or reduction on the interim bills and giving credit for all payments received as a result of previous interim bills (see Tianjin Textiles (Hong Kong) Limited v S K Wong & Co (a firm), HCMP 2019/2011 (23 August 2012), at §10, quoting §§62/App/61 and 62 of Hong Kong Civil Procedure 2012, Vol 1, at pp 1177-1178); and (b) a bill delivered at a natural break in a litigation is regarded as a separate/final bill.  

28.  The distinction between an interim bill and a separate/final bill is important in the context of solicitor and own client taxation because, for the purpose of s 67, time does not begin to run until the last bill in the series or the final account is delivered.  The rationale for drawing this distinction was explained by Deputy High Court Judge To in Chin Yuk Lun Francis and Another v Messrs Lo & Lo (a firm), HCMP 1142/2005 (unreported, 7 July 2006):

“[10] A retainer is normally an entire contract under which a solicitor is to do certain work for his client. In the absence of a contrary agreement, the solicitor is not entitled to be paid until the work has been completed or the retainer has been terminated. Thus, in a litigation which extends over a considerable period of time, the burden of financing the client’s litigation falls upon the solicitor. To mitigate this harshness, the principle of natural break was evolved under which the solicitor becomes entitled to bill his client when a natural break occurs in the course of protracted proceedings even though the matter for which he was retained has not been brought to a conclusion. Thus the question arises whether a number of bills issued in respect of a litigation are separate bills or whether they are a series of bills which together form one bill. If they are separate bills, the client has to demand taxation within a month of delivery of each of the bills on him. If they are a series which together formed one bill, his right to demand taxation on all the bills in the series is preserved as long as he demands taxation within a month of delivery of the final account, i.e. the last bill of the series. Or, if he demands taxation within twelve months of delivery of the final account, the court may, in the exercise of its discretion, order taxation subject to terms. This concept of treating a series of bills as a single bill was evolved for the purpose of overcoming statutory time-bars for taxation. In course of time, another practice has also developed under which the solicitor’s right to demand interim payment is written into the retainer. Thus, the approach nowadays is to look first at the retainer to see if the solicitor has the contractual right under the retainer to issue separate bills prior to conclusion of the matter for which he was retained. If he has no, he may only issue final bills at natural breaks in the matter.

[11] If there is authority in the retainer for rendering bills prior to conclusion of the litigation, then it is a matter of construction of the retainer whether the bills, by whatever term they are called, though usually they are called ‘interim bills’, is a final bill or just a mere statement of how things were going on…

[12] Thus, in my view, ‘final’ in the context of a solicitor’s bill of costs does not mean ‘last’. It means finality, i.e. it will not be changed and it implies self containment. It is final in respect of a certain stage defined in the retainer, whether by event or by time. As a matter of construction of contract, it is possible to arrive at a construction authorising the issue of a number of periodical final accounts under a retainer, but the court should lean against such an interpretation.

[13] If there is no authority under the retainer for the solicitor to issue final bills before the conclusion of the matter, then he would have to rely on the authority to issue final bills at natural breaks.  If a number of bills have been issued, and the solicitor asserts that any one of those bills is a final bill, he has the burden of proving that bill is a separate and final bill and not one of a series of bills…”

29.  Deputy High Court Judge To also discussed the concept of “natural break” in Chin Yuk Lun Francis:

“[16] … In the absence of any contractual provision in the retainer giving the solicitor the power to issue final bills, he has to prove that the bill was rendered at a natural break in the litigation. There is an absence of authority as to what constitutes a natural break. In Romer & Haslam, Bowen LJ said such breaks could not and need not be defined. I certainly would not try to attempt to do what the distinguished judge did not do, but there are some features in such a break which could be identified. I think a natural break is not synonymous with the conclusion of a distinct and separate matter. A litigation involves many distinct and identifiable stages: pre-trial interlocutory stage, the trial itself, enforcement, execution and of course taxation of the successful party’s costs. It is never difficult for a solicitor to split up a litigation into separate and distinct matters or stages. He can even treat each interlocutory application, such as an Order 14 application or an interlocutory injunction as a separate and distinct matter. However, in reality when a client embarks on a litigation, he relies on his solicitor for the conduct of the litigation. A lay client has no idea about the niceties of distinct and separate matters or stages and the number of matters involved. He consults his solicitor and gives instructions to him as and when the need arises. He is more concerned if the litigation is on-going and if there are steps to be taken or if the litigation is going to be dormant. Usually, a client considers the litigation as just one matter starting with his first instruction to his solicitor and ending with his obtaining the fruits of the litigation or a confirmation that he has no right to enforce. In the absence of an agreement to the contrary or special circumstances, it cannot be right to treat these separate component matters of a litigation as distinct matters and to treat the conclusion of each of these distinct and separate matters as a natural break to entitle a solicitor to issue a final bill. In my view, the conclusion of a distinct and separate matter is but one feature of a natural break and not the sole determining feature.

[17] In my judgment, to constitute a natural break there must be either (1) a physical break in the litigation process of such a duration as would entitle a solicitor to say to his client that the matter is going to be inactive for an indefinite period or for a foreseeably long period that it is appropriate to square or finalise the account for the time being or (2) a break in the nexus between one component matter and another in the litigation.  Thus, the conclusion of a distinct and separate matter in a litigation by itself is not a natural break.  It may well mark the natural beginning of another distinct and separate matter.  The conclusion of a distinct and separate matter in a litigation only makes a break natural if there is a break…”

30.  A summary of the principles for determining whether a bill is interim or final for the purposes of solicitor and own client taxation was given by Deputy High Court Judge Le Pichon at §14 of her judgment in Li Shu Chung v Stevenson, Wong & Co (a firm) [2018] HKCFI 2372:

“(a) A retainer is normally an entire contract and in the absence of an agreement of the contrary the solicitor is not entitled to be paid until the work has been completed or that retainer terminated with the effect that the solicitor bore the burden of financing the client’s litigation.

(b) The natural break principle was evolved to mitigate this harshness. It entitled the solicitor to bill his client should a natural break occur in protracted litigation.

(c) The concept of treating a series of bills as a single bill was evolved for the purpose of overcoming statutory time-bars for taxation. At the same time, the practice of writing into the retainer the solicitor’s right to demand interim payment was developed.

(d) If the retainer allows the rendering of bills prior to conclusion of the matter, whether such a bill is final (in the sense that it will not be changed and implies self-containment) or interim (in the sense of a statement to show how things were going on) is a matter of construction. The court should lean against an interpretation that authorises the issuance of a number of periodical final accounts.

(e) In determining whether a bill is a separate bill or one of a series of bills, the court has to ask 2 questions: the 1^st Question - whether the solicitor has the power to send it in as a final bill; and the 2^nd Question - whether the bill has been delivered as a final bill. The burden of proof is on the solicitor.

(f) In determining the 1^st Question,

(i)  absent any contractual provision entitling the issuance of the final bills, the solicitor can only do so at a natural break in the litigation;

(ii) a natural break is not synonymous with the conclusion of a distinct and separate matter; the matter should be considered from the perspective of the lay client.

(g) The 2^nd Question is a question of fact involving 2 elements: the solicitor has to deliver the bill intending to be a final bill and it is also intended and understood by the client to be a final bill.  It has to be answered by looking at the intention of the solicitor and client, their conduct, the reaction of the client upon receipt of the bill in the form the bill took.”

31.  In the present case, the Judge found that[8]:

(1)  The 1^st to 6^th Bills were interim bills.

(2)  The 7^th Bill dated 26 April 2018 was a final bill, because there was a natural break when Mr Sutherland filed a notice to act in person in the Family Proceedings dated 13 April 2018.

(3)  Likewise, the 8^th Bill dated 5 September 2018 was a final bill, because there was a natural break when Mr Sutherland filed a notice to act in person dated 22 August 2018 in the Family Proceedings.

(4)  The 9^th Bill dated 30 March 2019 was a final bill as the solicitor-client relationship between CRB and Mr Sutherland had ceased by March 2019[9] before it was issued.

Pausing here, it may be noted that subsequent to the aforesaid notices to act in person, (i) on 29 August 2018, CRB filed a notice to act for Mr Sutherland in the Family Proceedings, and (ii) on 11 September 2018, Mr Sutherland filed notices to act in person in the Family Proceedings[10].

32.  Mr Sutherland does not dispute the Judge’s findings mentioned in §31(1) and (4) above.  He disputes, however, the Judge’s findings that there were “natural breaks” on 13 April 2018 and 22 August 2018 when he filed notices to act in person in the Family Proceedings.

33.  In the ordinary course of things, when a client files a notice to act in person in on-going legal proceedings, he is informing the court, the opposite party and his own solicitors that, from that point onwards, his solicitors cease to have any authority to, and no longer, act for him in relation to the legal proceedings, and he would be acting on his own behalf in those proceedings.  It seems to us that, subject to any agreement to the contrary or special circumstances pointing otherwise, the filing of a notice to act in person would prima facie involve the notion that the solicitors’ involvement in the legal proceedings would come to an end, thereby giving rise to a natural break of the solicitor-client relationship in relation to the legal proceedings. 

34.  The critical question in the present case is whether there were special circumstances which would indicate or show that the filing of the notices to act in person by Mr Sutherland on 13 April 2018 and 22 August 2018 did not give rise to a natural break in the litigation.

35.  The 7^th Bill dated 26 April 2018 related to CRB’s work and services rendered to Mr Sutherland for the period from 2 April 2018 to 13 April 2018.  The end date was the same date on which Mr Sutherland filed a notice to act in person in the Family Proceedings. The last item of “Professional Charges” in that bill was dated 13 April 2018, and referred to, inter alia, the notice to act in person.

36.  The 8^th Bill dated 5 September 2018 related to CRB’s work and services rendered to Mr Sutherland (including disbursements and counsel’s fee) for the period from 23 August 2018 to 31 August 2018, notwithstanding the fact that on 22 August 2018, Mr Sutherland filed a notice to act in person in the Family Proceedings.  The 8^th Bill apparently related to a specific hearing on 31 August 2018 which was attended by counsel on behalf of Mr Sutherland[11].

37.  The 9^th Bill dated 30 March 2019 related to CRB’s work and services rendered to Mr Sutherland for the period from 14 April 2018 to 19 March 2019.  In CRB’s covering email to Mr Sutherland dated 1 April 2019, it was stated that the period of 23 August 2018 to 31 August 2018 was covered by the 8^th Bill.

38.  The contents of the 7^th to 9^th Bills would indicate that CRB continued to carry out work and services relating to the Family Proceedings for Mr Sutherland between 14 April 2018 and 19 March 2019 even though there were a few (i) notices to act in person filed by Mr Sutherland, and (ii) notices to act for Mr Sutherland filed by CRB, in those proceedings during that period of time.  There is some force in Mr Sutherland’s argument that, notwithstanding the notices to act in person dated 13 April 2018 and 22 August 2018, there was no natural break in the Family Proceedings as between CRB and Mr Sutherland, so that the 7^th and 8^th Bills should both be regarded as interim bills.

39.  In our view, §2(a) of the draft RNoA is reasonably arguable and has a real prospect of success.  Having reached this view, we do not propose to further consider the other arguments raised in §§1, 2 and 3 of the draft RNoA, save to mention our provisional view that the validity of those other arguments are doubtful.  Mr Sutherland should carefully review whether he wishes to pursue them bearing in mind the possibility of adverse costs order being made against him for pursuing unnecessary and/or unmeritorious grounds of appeal regardless of the final outcome of the appeal.

(ii)  Ground 2 - Conditions Ground

40.  This ground concerns the Payment Terms imposed by the Judge.  Mr Sutherland argues that the Judge erred in imposing them in the following aspects:

(1)  the Judge wrongly held that (a) Mr Sutherland had delayed in issuing the Originating Summons by more than 12 months since the delivery of the “bill”, and (b) there had been a delay of 3 to 5 years when in fact the delay was, even on the Judge’s analysis, only 19 months (§4(a) of the draft RNoA);

(2)  the Judge wrongly found that Mr Sutherland had re-instructed CRB when in fact they had been continually instructed throughout (§4(b) of the draft RNoA);

(3)  the Judge wrongly expressed a view about the merits of a matter she was not seised of (namely, Mr Sutherland’s counterclaim in negligence in the Writ Action) and in respect of which she could not properly express any view (§4(c) of the draft RNoA);

(4)  the Judge wrongly failed to take into account and give sufficient weight to a relevant factor, namely, the fact that if Mr Sutherland’s counterclaim in negligence were to succeed, CRB’s entitlement to fees would be negated or diminished (§4(d) of the draft RNoA).

41.  In respect of §4(a) and (b) of the draft RNoA, we consider that the issues of whether (i) Mr Sutherland had delayed in issuing the Originating Summons by more than 12 months in relation to the 1^st to 8^th bills, and (ii) Mr Sutherland re-instructed CRB after the 7^th and 8^th Bills, or continually instructed CRB throughout, should be fully ventilated at the hearing of the appeal.

42.  With the exception of §4(a) and (b) of the draft RNoA, none of the other complaints raised in §4 is reasonably arguable:

(1)  In respect of §4(c) of the draft RNoA, the Judge considered that the only special circumstance that Mr Sutherland could rely on to justify an order for taxation under proviso (i) to s 67(2)(b) of the Legal Practitioners Ordinance (Cap 159) was his counterclaim in negligence against CRB in the Writ Action[12]. When considering whether he had succeeded in showing the existence of special circumstance in this case, the Judge was entitled to form a view on the merits of the counterclaim based on the materials before her, even though such view must necessarily be a provisional one.  It cannot seriously be argued that the Judge was obliged to adopt a blinkered approach and assume that the counterclaim would definitely succeed.  As a matter of fact, the Judge declined to make any definitive finding on the issue of negligence raised by Mr Sutherland against CRB in the Writ Action[13], although she plainly had some doubts about the validity of the counterclaim[14], and took those matters into account in deciding to refer the 1^st to 7^th Bills to taxation subject to full payment of those bills by Mr Sutherland in the meantime[15].  In our view, it is not reasonably arguable that the Judge erred in principle or approach, or her decision to impose the said payment condition is plainly wrong.

(2)  Mr Sutherland’s complaint in §4(d) of the draft RNoA has no substance.  The Judge took into account the possibility that his counterclaim against CRB in the Writ Action might succeed.  She also took into account that there was “no suggestion that CRB will not be in a position to repay if the negligence claim is established”, and made an order that “CRB do give credit for all sums received by them from or on account for Mr Sutherland and shall refund what CRB may on such taxation appear to have been overpaid”.  The Judge’s approach cannot be faulted.

43.  Under Ground 2, Mr Sutherland also argues that the Payment Terms that were imposed were beyond the ambit of the conditions that were reasonably available to the Judge.  We do not consider this argument to be reasonably arguable:

(1)  Section 67(1) provides that where an application is made within 1 month of the delivery of a bill by a 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)  The above provision should be contrasted with s 67(2), which provides that where no such application is made within the period mentioned in subsection (1), subject to provisos (i) and (ii), the court may, “upon such terms, if any, as it thinks fit (not being terms as to the costs of the taxation)”, order that the bill be taxed and that, until the taxation is completed, no action shall be commenced on the bill, and any action already commenced by stayed.

(3)  It is clear that, where the application to tax a bill is made more than 1 month after its delivery, the court has a wide discretion to impose any terms as it thinks fit when making an order for taxation of the bill under subsection (2).  The conditions that may be imposed plainly include an order that a sum be paid into court, that being a condition which is expressly excluded where the relevant application is made within 1 month of the delivery of the bill under subsection (1).  We can see no good reason why the court may not impose a condition for the payment of the whole or part the bill to the solicitor and/or into court when ordering a taxation under subsection (2), subject to appropriate terms as to repayment depending on the result of the taxation.

(4)  In To Kan Chi v Miller Peart (a firm) [2007] 3 HKLRD 125, Recorder Jat SC ordered the client to pay HK$10 million (being a portion of the outstanding amount in the sum of HK$33.3 million) as interim payment on account of the solicitors’ costs under s 67(2) of the Ordinance.  At §107 of his judgment, the Recorder stated as follows –

“… In my judgment, the jurisdiction conferred under section 67(2) is wide enough to enable the court to impose as a term for ordering a special taxation the making of an interim payment in such amount as the court may consider just. I do not see any reason in principle why the court should not have such power in view of the wide wording of section 67(2). Nor do I see any conceptual difficulty in ordering an interim payment to be made. Just like the case of a claimant whom the court thinks is likely to recover substantial damages, or one in favour of whom a judgment has been entered with damages to be assessed, if the court considers that a solicitor is likely to recover a substantial amount after taxation, why should the court be powerless to impose such a term in an appropriate case when section 67(2) gives the court a wide jurisdiction to impose whatever terms the court thinks fit? The same rationale for making an interim payment must apply in all these cases.”

At §114, the Recorder further observed that “[t]here is no dispute over the court’s jurisdiction to order payment into court”, although he declined to make such order on the facts of that case.

(5)  In Baker & McKenzie v Grande Holdings Ltd [2011] 3 HKC 510, which concerned an application by the plaintiff (solicitors) for taxation of various bills rendered to the defendant (former client) under s 67(2) of the Ordinance, Au-Yeung J quoted with approval the judgment of Recorder Jat SC in To Kan Chi and ordered the defendant to pay 50% of the profit costs of the solicitors as interim payment, and referred the bills to a taxing master for taxation.

(6)  In Gao Haiyan v C L Chow & Macksion Chan (a firm) [2019] 3 HKLRD 306, Deputy High Court Judge Simon Leung referred 2 bills to taxation under s 67 of the Ordinance subject to the client paying 70% of the outstanding balance under the bills and 20% into court.

(7)  We do not accept Mr So’s submission that the Payment Terms amount to an “order for security”.  It is also nothing to the point to say that the Judge cited no authority for the statement that “[t]here is no principle that a solicitor will not be allowed the entirety of her costs on taxation”[16].  We do not see that any authority is required to support this self-evident proposition.

(8)  As to the question of whether the Judge was correct to impose the Payment Terms in the present case, that was an exercise of discretion by the Judge.  We have already rejected Mr Sutherland’s specific complaints under §4 of the Draft RNoA (save in respect of §4(a) and (b) thereof).  There is no basis to disturb the Judge’s exercise of discretion if she was correct to find that the 7^th and 8^th Bills were final bills.

(9)  In all, Mr Sutherland’s contention that the Payment Terms that were imposed went beyond the ambit of the conditions that were reasonably available to the Judge is plainly untenable.

(iii)  Ground 3 - the Costs Ground

44.  This ground relates to the costs order made by the Judge.  Mr Sutherland argues that:

(1)  the Judge erred in law and in fact to order him to pay the costs of the Originating Summons when (a) in substance, it was he rather than CRB who was the winner; and (b) she was wrong to find that he was “grossly out of the 12-month period” in seeking an order to tax the Bills (§5 of the draft RNoA); and

(2)  as evidenced by the Costs/Stay Decision, the Leave Decision and the transcript of the hearing on 5 May 2022 (leading to the Main Judgment), the Judge further erred in (a) suggesting that Mr Sutherland had “disavowed his own OS at the hearing”, and (b) failing to take into account of the fact that CRB did not seek taxation throughout the process (§6 of the draft RNoA).

45.  None of the above complaints raised by Mr Sutherland is reasonably arguable:

(1)  Although in his Originating Summons, Mr Sutherland sought an order that the Bills be taxed, at the hearing before the Judge on 5 May 2022, he asked for an order that the proceedings in the Originating Summons be stayed until after the disposal of the Writ Action instead of an order for taxation of the Bills[17]. That application was opposed by CRB, and refused by the Judge.  The Judge also made findings in the Main Judgment which were favourable to CRB, including (i) the hourly rates set out in the unsigned Retainer had been accepted by Mr Sutherland by conduct[18], and (ii) in any event, CRB would be entitled to recover costs on a quantum meruit basis, and the hourly rates set out in the unsigned Retainer were appropriate for such an award[19].  While the Judge did make an order for the taxation of the 1^st to 7^th Bills and 9^th Bills, she imposed conditions, including the Payment Terms, for the referral to taxation which were favourable to CRB.  As for the 8^th Bill, the Judge refused to make any order for its taxation.  In all the circumstances, it was plainly open to the Judge to take the view that CRB was in substance the winner in the proceedings before her.

(2)  As noted by the Judge, the Originating Summons was issued about 20 months after the delivery of the 7^th Bill (and more than 20 months in respect of the prior interim bills, ie the 1^st to 6^th Bills[20]).  In relation to the 8^th Bill, the Originating Summons was issued more than 15 months after its delivery.  Under proviso (i) to s 67(2)(b) of the Legal Practitioners Ordinance (Cap 159), “if 12 months have expired from the delivery of the bill …, no order [for taxation] shall be made on the application of the party chargeable with the bill except in special circumstances …”.  If the Judge is correct that the 7^th and 8^th Bills are final bills, the Judge’s observation that Mr Sutherland was “grossly out of the 12-month period”[21] for applying to tax those bills cannot be faulted.  On the other hand, if Mr Sutherland succeeds under the “Natural Break” Ground (in other words, the 7^th and 8^th Bills are interim bills only), the question of the costs of the proceedings below will have to be considered afresh.

(3)  In the Costs/Stay Decision, the Judge made an observation that Mr Sutherland had “disavowed his own OS at the hearing”[22]. Having regard to the fact that at the hearing before the Judge on 5 May 2022, Mr Sutherland no longer sought any order for the taxation of the Bills, and asked instead for the proceedings in the Originating Summons to be stayed until after the disposal of the Writ Action[23], the Judge’s observation was justified.

(4)  The fact that CRB did not ask for taxation of any of the Bills was something which the Judge was plainly aware of.  This matter has, however, no significant impact on the reasons given by the Judge for making an award of costs in favour of CRB.  It is not reasonably arguable that the Judge’s omission to take this matter into account made her decision on costs plainly wrong, or provides a sufficient basis for this Court to intervene in the costs order made by the Judge.

46.  For the avoidance of doubt, we wish to make it clear that the above discussion concerning the merits of Ground 3 is on the basis that it is a ground for a costs-appeal only.  If Mr Sutherland succeeds in setting aside or varying the Order in part on appeal, the costs below will be open for argument in the Court of Appeal.

47.  In all, save in relation to §§1, 2, 3[24] and 4(a) and (b) of the draft RNoA, none of the other intended grounds of appeal is reasonably arguable, or has a real prospect of success.

PREJUDICE

48.  CRB’s application for summary judgment in the Writ Action has recently been refused by Cheng J ([2023] HKCFI 2984).  Further, under the Order, the 1^st to 7^th and 9^th Bills cannot be taxed prior to the disposal of Mr Sutherland’s counterclaim in the Writ Action.  We do not see any significant prejudice that CRB may suffer if the Court grants an extension of time to Mr Sutherland to appeal, save in relation to the question of costs.

49.  Taking into account all the matters mentioned above and looking at the situation on an overall basis, we are prepared to grant Mr Sutherland an extension of time to serve and file a notice of appeal against §§3 to 6 and 10 of the Order, limited to the grounds raised in §§1, 2, 3 and 4(a) and (b) of the draft RNoA.

STAY OF EXECUTION PENDING APPEAL

50.  In so far as Mr Sutherland’s application for a stay of execution pending appeal is concerned, although we have come to the conclusion that the appeal is reasonably arguable with a real prospect of success (to the limited extent mentioned above), we do not consider the merits of the appeal to be so strong that a stay should be granted based on consideration of the merits of the appeal alone.

51.  The Order made by the Judge is not a money judgment.  No taxation of the Bills will take place prior to the disposal of Mr Sutherland’s counterclaim in the Writ Action.  The refusal of the application will not render Mr Sutherland’s appeal nugatory.  We also do not see any other good or sufficient reason to grant a stay of execution pending appeal.  We are not prepared to exercise our discretion to grant a stay of execution of §§3 to 6 and 10 of the Order pending appeal in the present case.

DISPOSITION

52.  An extension of time for Mr Sutherland to serve and file a notice of appeal against §§3 to 6 and 10 of the Order, limited to the grounds raised in §§1, 2, 3 and 4(a) and (b) of the draft RNoA, is granted.

53.  In relation to the question of costs, Mr Sutherland is seeking an indulgence from the Court to extend the time for him to pursue an appeal.  The Court has come to the view that Mr Sutherand’s delay is serious and substantial, and inexcusable   Further, the Court grants the extension of time sought in respect of only some of the intended grounds of appeal raised in the draft RNoA, and has refused Mr Sutherland’s application for a stay of execution pending appeal.  In all the circumstances, we order Mr Sutherland to pay CRB 50% of the costs of the Renewal Summons, with the balance 50% being costs in the cause of the appeal.  Mr Sutherland shall have leave to file and serve a statement of objections (limited to 2 pages) to CRB’s statement of costs dated 24 November 2023 within 14 days from the date of this judgment.  Subject to such further directions as may be given, the Court will assess CRB’s costs summarily without further notice to the parties after the expiry of the 14-day period from the date of this judgment.

54.  The above order as to costs is an order nisi, which shall become absolute unless an application is made to vary the same within 14 days from the date of this judgment.  In the event that an application is made to vary the costs order nisi, the application shall be dealt with on paper, and further .directions (including the length of skeleton submissions) will be given by the Court for any such application.

[1] See §28 of the Main Judgment.

[2] See §2 of the Judgment of Deputy District Judge A Ching in FCMC 9098/2018 dated 25 June 2019 ([2019] HKFC 163).

[3] Strictly speaking, what Mr Sutherland needed was not leave to appeal, but an extension of time to appeal.  However, nothing turns on this distinction for the purpose of the present discussion.

[4] See §27 of Mr Sutherland’s Affidavit filed on 5 July 2023.

[5] See §§4 and 77 of the Main Judgment.

[6] See §§78 to 80 of the Main Judgment.

[7] The word “no” in §2(a) of the draft RNoA, which states that “[i]n so finding that there was no ‘natural break’… ” is obviously a typo, and should be replaced by “a”.

[8] See §§45-46 of the Main Judgment.

[9] At §45 of the Main Judgment, it is stated that the solicitor-client relationship ceased on 11 September 2019.  The date “11 September 2019” is obviously a mistake, having regard to the fact that CRB commenced proceedings in the District Court (DCCJ 4529/2019) against Mr Sutherland on 21 August 2019 seeking payment of the outstanding Bills.  At §28 of the Main Judgment, the Judge referred to the evidence of CRB that the firm acted for Mr Sutherland at various periods between 3 October 2017 and 19 March 2019 (see §3 of the Affidavit of Jain Ruskin Brown filed on 29 November 2021).  At §3 of the Decision of Cheng J in HCA 1895/2020 dated 20 November 2023 ([2023] HKCFI 2984), it is also stated that CRB acted for Mr Sutherland in Family Court proceedings from about October 2017 to March 2019.

[10] See §4 of the Affidavit of Jain Ruskin Brown filed on 29 November 2021.

[11] See §3(h) of Mr Sutherland’s original “Notice of Appeal” dated 29 December 2022, and the 8^th Bill.

[12] See §54 of the Main Judgment.

[13] See §50 of the Main Judgment.

[14] See §§55-56 of the Main Judgment.

[15] See §57 of the Main Judgment.

[16] See §23 of the Leave Decision.

[17] See §4 of the Main Judgment.

[18] See §36 of the Main Judgment.

[19] See §37 of the Main Judgment.

[20] See §52 of the Main Judgment.

[21] See §82 of the Main Judgment.

[22] See §7 of the Costs/Stay Decision.

[23] See §§4 and 77 of the Main Judgment.

[24] Subject to the observations in §39 above.