WONG PAK SUM v. HONG KONG FURNITURE & DECORATION TRADE ASSOCIATION LTD

HCMP 2946/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2946 OF 2013

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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1. On 9 October 2014, I dismissed the plaintiff’s summons filed on 24 September 2014 (“3^rd Summons”) for production by the defendant of various documents as set out in the 3^rd Summons (see paragraph 35 of my Reasons for Decision and Judgment handed down on 17 October 2014 (“Reasons/Judgment”)). I reserved my reasons for the dismissal of the 3^rd Summons, and I also reserved the issue of costs.

2. By the Reasons/Judgment, I handed down my reasons for dismissal of the 3^rd Summons and granted a costs order nisi that costs of the 3^rd Summons (including all costs reserved, if any) be paid by the plaintiff to the defendant to be summarily assessed and paid forthwith (“1^st Costs Order Nisi”).

3. By the Reasons/Judgment, I also dismissed the plaintiff’s appeal against the order of Master C Chow dated 7 August 2014 (“Master Chow Order”).  Master C Chow by the Master Chow Order dismissed the plaintiff’s summons to dismiss the defendant’s Application to Set Down a Bill for taxation and/or the taxation proceedings before her (“2^nd Summons”).  By the Reasons/Judgment, I also granted a costs order nisi that the plaintiff do pay the defendant costs of the appeal (including all costs reserved, if any) on indemnity basis to be summarily assessed and paid forthwith (“2^nd Costs Order Nisi”).

4. On 15 December 2014, I dismissed the plaintiff’s summons for variation of the 1^st and 2^nd Costs Orders Nisi to the effect that each party shall pay their own costs (“Costs Summons”), and ordered the 1^st and 2^nd Costs Orders Nisi to be made absolute (“1^st and 2^nd Costs Orders”).  I also awarded costs of and occasioned by the Costs Summons in favour of the defendant against the plaintiff (“3^rd Costs Order”).  I also gave directions for the 1^st, 2^nd and 3^rd Costs Orders to be summarily assessed.  On 18 December 2014, I handed down reasons for the 1^st, 2^nd and 3^rd Costs Orders (“Costs Reasons”).

5. For convenience, I shall adopt the abbreviations in the Reasons/Judgment and in the Costs Reasons.

6. On 4 November and 10 December 2014, the defendant filed their three statements of costs.  On 25 December 2014, the plaintiff filed his three lists of objections.

7. 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, ……”

8. Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the 2^nd, 3^rd and Costs Summonses, relevant affirmations, skeleton submissions and list of authorities, what transpired at the hearing for the 3^rd Summons, Appeal and Costs Summons, and considering all the circumstances, I make the following general observations. 

9. First, costs for the 1^st and 3^rd Costs Orders are assessed on party-and-party basis such that only costs that are necessary and reasonable will be allowed.  Costs for the 2^nd Costs Order are assessed on indemnity basis such that all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred.

10. Secondly, I do not agree that manual work by LC including filing/serving documents should be on a time-cost basis.  The relevant guidance for costs in respect of such work is in the Scale of Costs in Part 1 of the First Schedule of Order 62 of the RHC).[1] Travelling expenses are not a chargeable item of disbursement (independent of the overall claim for profit costs) on inter partes assessment/taxation of costs.  Further, paragraph 13 of the Practice Directions 14.3 provides that “[costs] for gathering information and drafting of these statements [of costs for summary assessment] will generally not be granted”.

11. Thirdly, the time costs for LC to prepare, say, hearing bundles and court orders do not require significant time. 

12. Fourthly, I am not persuaded there is any need for significant care and conduct by PC since the bulk of the solicitors’ professional work appears to be have been done by him.  Since counsel has been involved, I am wholly unconvinced that the defendant’s solicitors would need to incur significant time on research for the 3^rd Summons and for the Appeal, and indeed, any primary research in respect of the Appeal would have been done for the hearing of the 2^nd Summons before Master C Chow.  Likewise for the Costs Summons, I am unconvinced there is any need for general care and conduct by NS when the bulk of the solicitors’ work for the Costs Summons was done by him, and the relevant law is rather straightforward and evident from Hong Kong Civil Procedure 2015.  Further, given the seniority of the solicitors involved, the court has to bear in mind the propriety and proportionality of time spent by them on the relevant items of work.

13. Fifthly, in view of the nature and contents of the Yim 4^th Aff insofar as it relates the 3^rd Summons, I am not convinced it is necessary for counsel to settle the same given that it is prepared by a senior solicitor PC.  Likewise, it is unreasonable for counsel to settle the Yim 4^th Aff insofar as it relates to the Appeal.

14. Sixthly, I see no reason for the defendant’s solicitors to involve a second assistant solicitor NS in respect of the 3^rd Summons and the Appeal.  Further, although the 3^rd Summons does raise issues as canvassed in the Reasons/Judgment, and the Appeal was by way of rehearing, the factual background is not very complicated, and the time incurred for attending the client, the plaintiff, counsel and court, for preparing and perusing documents, and for preparing for the hearings on 9 and 13 October 2014 is excessive (for the 3^rd Summons) or to a certain extent unreasonable (for the Appeal). 

15. But that said, it is not correct for the plaintiff to say he did not submit any fresh documents for the 3^rd Summons and/or the Appeal.  In fact, he filed the Plf 5^th Aff in support of the 3^rd Summons and the Plf 4^th Aff in support of the Appeal whereupon the defendant filed the Yim 4^th Aff in opposition.  The plaintiff also lodged his written skeleton submissions.  Further, the defendant’s solicitors would have to inform their client about the 3^rd Summons and the Appeal, and to advise them of the merits thereof, to seek their instructions to oppose the applications, and to advise on the ramifications.  The defendant’s solicitors would have to report to the client on the results of the applications.  There would be necessary liaison with counsel as well. 

16. But neither the 3^rd Summons nor the Appeal requires the defendant’s solicitors to take substantial factual instructions from the client.  The history should be well familiar to and fresh in the minds of the defendant’s solicitors who were then handling the taxation proceedings and had just dealt with the 2^nd Summons before Master C Chow.

17. Seventhly, the 3^rd Summons was heard very shortly before the Appeal.  Since counsel has been briefed to appear for the defendant at both hearings, I cannot lose sight of the fact the two applications share a common background, which necessarily reflect on the extent of the efforts required of counsel and also on his brief fee.  Moreover, since the matter falls within a small compass, a fairly junior notional counsel would have been appropriate although I bear in mind that counsel’s brief fee for the Appeal is to be assessed on indemnity rather than party‑and‑party basis. 

18. Eighthly, in respect of the Costs Summons, there was a change of handling solicitor from PC to NS.  Any duplication of work for that purpose should be discounted.  On such basis, I am not persuaded that the preparation of documents by NS would have required four hours given the short point on costs that was involved.  Realistic though not excessive time should be allowed for preparing, perusing and considering documents. 

19. In making summary assessment of costs, I should approach the matter on a broad-brush basis and it is inappropriate to carry out any mini-taxation. Taking into account the above considerations including the consideration of proportionality, I assess costs for the 1^st, 2^nd and 3^rd Costs Orders at $30,000, $40,000 and $10,000 respectively.