CHEUNG SHUI HAN v. DR LUK KA LING

CACV 111/2011 & CACV 203/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 111 AND 203 OF 2011

(ON APPEAL FROM HCPI NO. 653 OF 2010)

-------------------------

_______________

JUDGMENT

_______________

Hon Tang VP:

Background

1. The Plaintiff's claim that the Defendant, a gynecologist, had failed to diagnose her breast cancer, has been settled. 

2. The present proceedings concern certain costs order made in interlocutory proceedings.  I will state the relevant background briefly.  On 9 November 2009, when the Plaintiff's claim was almost time-barred, she, acting in person, commenced the present action against the Defendant by issuing a generally endorsed writ.  The Pre-Action Protocol for personal injury actions PD 18.1 was not followed. 

3. The Plaintiff was granted legal aid on 15 July 2010 and Messrs Ip, Kwan & Co ("IK") were assigned as her solicitors.  There was a pre-action letter dated 3 August 2010 in the prescribed form sent to the Defendant by IK in accordance to PD 18.1.  On 2 November 2010, a few days prior to its expiration, the writ was served on the Defendant through her solicitors, Messrs Mayer Brown JSM ("JSM").  The Plaintiff's witness statement and expert medical report on liability and causation were served at the same time.  Unfortunately, the Plaintiff's health was such that hers was a "case of urgency"[1].

4. On 14 December 2010, the Defendant served a defence.  The defence was not accompanied by the Defendant's expert medical report.  The medical report was not available at the time[2].

5. There was correspondence[3] between IK and JSM in which IK demanded JSM to stipulate a time as to when the Defendant would be able to serve the expert report on the Plaintiff.  These letters led to the Plaintiff's summons on 28 December 2010 ("the Plaintiff's summons") which asked:

"1.  the Defendant do within the time to be directed by the Court serve her expert medical report relied on as to liability and causation;".

6. In response, on 3 January 2011, JSM issued a summons ("the Defendant's summons") seeking an adjournment of the entire proceedings due to the Plaintiff's non-compliance of paras 15, 18 and 19 of PD 18.1, as well as an order in the alternative that the Defendant serve her expert report on liability and causation after discovery and exchange of witness statements.

7. Both summonses were initially fixed for hearing on 6 January 2011.  They were adjourned to 2 March 2011 for argument.  On 14 February 2011, the Defendant served the Defendant's expert report, so the summonses had became academic.  However, the parties were unable to agree on costs.  They[4] appeared before Master K Lo on 2 March 2011 to argue costs in relation to both summonses. 

8. At the end of the hearing, Master K Lo ordered that the costs of the Defendant's summons be the Defendant's costs in the cause with legal aid taxation of the Plaintiff's costs in respect of the Defendant's summons.  She made no order as to costs in respect of the Plaintiff's summons and made a no legal aid taxation order ("NLATO") in respect of the Plaintiff's summons.

9. The parties have supplied us with the transcript of Master K Lo's extempore decision.  It is 7 pages long and, for the present purpose, it is sufficient to note she said:

"Considering the case as a whole, I find it reasonable that there be no order as to costs.  As far as the application of the summons by the plaintiff is concerned, I think that summons has been issued prematurely and even though there has been an expert's report on liability served at the later stage I do not find that as coming from the defendant as a result of the issuance of the summons.

I think that would have come in any event, even without issuance of the summons, and therefore the appropriate costs order as far as the first summons is concerned would be no order as to costs and I don't think I should allow any Legal Aid taxation for that."[5]

10. The Plaintiff, who was granted legal aid for the purpose, appealed the learned Master's order.  By a notice of appeal dated 11 March 2011, the Plaintiff appealed against the decision of Master K Lo given on 2 March 2011. 

11. In order to understand the circumstances under which the learned Master made the NLATO, we decided to obtain the full transcript[6] of the hearing before the learned Master.  We also ordered a full transcript[7] of the appeal hearing before Deputy Judge Seagroatt for the same purpose.  The parties were permitted to make written submissions to us which they have done after receipt of the transcripts. 

12. As Deputy Judge Seagroatt was told on the hearing of the appeal from the learned Master the appeal concerned 3 orders[8]:

(1)  the order that there be no order as to costs in the Plaintiff's summons;

(2)  the NLATO in relation to the Plaintiff's summons; and

(3)  the order that the costs in the Defendant's summons be the Defendant's costs in the cause.

13. The appeal[9] was dismissed by Deputy Judge Seagroatt with costs.  The learned Deputy Judge also made a wasted costs order ("WCO") against IK.

14. There are two appeals before us.  CACV 111/2011 is IK's appeal against the WCO made by Deputy Judge Seagroatt on 31 May 2011.  CACV 203/2011 is the Plaintiff's appeal against the learned Deputy Judge's order dismissing her appeal from Master K Lo including the NLATO against IK[10].

NLATO

15. NLATO has a long history.  Denning LJ (as he then was) explained in Wozniak v Wozniak [1953] P 179 at 185:

"The only way in which the judge can express immediately his disapproval of the application is, in a proper case, to say that the solicitor for the legally assisted person, who took out the misconceived application, should not have his costs against the fund. …"

16. That is, notwithstanding that in Hong Kong, as in England, the relevant legal aid legislation provides for taxation of an aided person's costs. 

17. Merriman P said in Saltmarsh v Saltmarsh [1952] All ER 6 at 7,

"… It is now plain beyond any doubt, and it is expressly admitted on behalf of the wife, that the jurisdiction of the court over the question of costs, whether under R.S.C. Ord. 65, r. 11, or under the inherent jurisdiction of the court, is in no way impaired either by the Legal Aid and Advice Act, 1949, or by the regulations which have been made under it."

18. Section 20 of the Legal Aid Ordinance (Cap 91) provides that the Director of Legal Aid ("DLA") shall pay

"… to counsel and solicitor acting for an aided person such fees and costs for so acting as may be prescribed."

Section 20A(1) provides for taxation "as between solicitor and client" on a common fund basis and that the DLA is entitled to attend such taxation.  (Section 20A(2)).

19. Regulation 15(1) and (2) of the Legal Aid Regulations (Cap 91A) ("LAR") provide that when the court makes a relevant order, it shall direct that the costs of any aided person shall be taxed.  It is through such taxation that the amount of the fees that shall be paid to an aided person's solicitor can be determined by Regulation 5 of the Legal Aid (Scale of Fees) Regulations ("LASFR") (Cap 91C).

20. Ms Audrey Eu, SC (leading Mr Tony Ko), for the appellants in both appeals, submitted that, thus, legal aid taxation is mandatory and that the court cannot order that there be no legal aid taxation.

21. Ms Eu relied on Ridehalgh v Horsfield [1994] Ch 205, a decision of the English Court of Appeal, a leading authority on WCOs, as authority also that legal aid taxation is mandatory even where the result of the taxation is that the taxed costs would not be payable to the solicitor.  This is what Sir Thomas Bingham MR (as he then was) said in the judgment of the court:

"It is apparent from regulation 107 of the Civil Legal Aid (General) Regulations 1989 that a judge has no power to forbid legal aid taxation. Regulation 107(1) states that costs 'shall be taxed in accordance with any direction or order given' and regulation 107(3)(b) states that a final judgment decree or order 'shall include a direction … that the costs … be taxed on the standard basis.' By virtue of regulation 107(4) if such a direction is not given 'the costs … shall be taxed on the standard basis.' It follows that taxation of a legally assisted persons costs is mandatory and must take place after final judgment whether or not the judge orders it.

However, a judge does have power, under section 51(6) of the Supreme Court Act 1981 and regulation 109(1), to order that, on taxation, wasted costs shall be disallowed or reduced after notice has been given by the taxing officer to the solicitor or counsel enabling him to be heard.

…

Accordingly the appropriate procedure, in a legally-aided case, if a judge properly concludes that a wasted costs order is appropriate, is for him to order legal aid taxation, to send, if he wishes, a copy of his judgment to the taxing officer and to direct under section 51(6) that wasted solicitors costs after a particular date be disallowed and consideration be given to whether counsel's fees be disallowed or paid by the Legal Aid Board."  At 245

22. Ms Eu submitted and I agree the NLATO has deprived IK of their costs. It was in effect a WCO.  Ms Eu submitted that in a proper case and after due observance of procedural fairness for a WCO, the court should nevertheless order legal aid taxation but might at the same time direct that the legal representative should be deprived of the taxed costs.

23. It is necessary to understand the context in which the dictum relied on by Ms Eu was made.  There, the County Court Judge had ordered that there be no legal aid taxation of the solicitors' costs after 1 November 1992.  But as counsel was not at fault, the Court of Appeal noted that if there should be no taxation counsel "could not be paid by the Legal Aid Board".  I do not read the judgment as requiring solicitors' costs to be taxed even though as a result of what was in effect a WCO no costs would be payable to the solicitor.  If that is not so, one must ask why should the costs of such futile taxation be incurred.  And, if incurred, who should bear them.  Taxation of costs is not spontaneous, it requires preparation and effort.  I cannot conceive of a situation, where, notwithstanding an order which deprives a solicitor of taxed costs, the solicitor should nevertheless prepare a bill for taxation in respect of the same costs.  That would be a futile exercise. 

24. We are concerned with substance and not form.  As I have said I agree with Ms Eu that an order that there be no legal aid taxation is the equivalent of the making of a WCO.  Provided that the requirements for the making of a WCO are observed, I believe an order or direction that there be no legal aid taxation is unobjectionable.  I do not read any of the legal aid provisions as forbidding a NLATO, or requiring a futile legal aid taxation.[11]

Procedural Fairness

25. WCOs are governed by the following provisions of section 52A of the High Court Ordinance (Cap 4):

"(4) In any civil proceedings before it, the Court of Appeal or the Court of First Instance may, in accordance with rules of court, by order disallow, or order the legal representative concerned to meet, the whole or any part of any wasted costs.

(5) When determining whether or not to make an order under subsection (4), the Court of Appeal or the Court of First instance shall, in addition to all other relevant circumstances, take into account the interest that there be fearless advocacy under the adversarial system of justice.

(6) In subsection (4), 'wasted costs' (虛耗訟費) means any costs incurred by a party as a result of—

(a) an improper or unreasonable act or omission; or

(b) any undue delay or other misconduct or default,

on the part of any legal representative, whether personally or through an employee or agent of the legal representative.

(7) In this section, 'legal representative' (法律代表), in relation to a party to any proceedings, means a counsel or solicitor conducting litigation on behalf of the party."

26. The relevant rule of court is Order 62 rules 8 to 8E.

27. In Ma So So v Chin Yuk Lun & Anor (2004) 7 HKCFAR 300 at para 79, Ribeiro PJ underlined the importance of procedural fairness in such proceedings when he said:

"As the Chief Justice has emphasised, the type of cases which can appropriately be dealt with by the summary procedure under O.62, r.8 are necessarily limited. But where, at the first stage of an application, the court does decide to allow the matter to proceed, having taken into account the relevant discretionary considerations, it should give directions aimed at ensuring procedural fairness for both the solicitor and the complainant. It is in particular necessary to ensure that the requirements of natural justice are satisfied."

28. Practice Direction 14.5 sets out the guidance given by the Court of Final Appeal in Ma So So.  There, the procedure and procedural safeguards in relation to the making of a WCO have been comprehensively and clearly set out.  I commend that before a WCO is made, one should remind oneself of the provisions of section 52A, and the relevant rules of court and practice direction.

The learned Master's NLATO

29. The 2 March 2011 transcript shows that that the question of a WCO arose in the course of the submission of Mr Leong of JSM.  He said[12]:

"... It's totally unnecessary, and I'm minded, Master … that if, Master, you are with me, I'm also aware of the fact that the plaintiff has cancer, and as fellow human beings we have sympathy for that. If Master were to award costs to us, I do not think that this should come out from the plaintiff.

I think this is entirely the fault of the handling solicitor, and I am minded, if, with the discretion of the court, of course, that the costs should be on indemnity basis against my friend in person.  I don't think that a patient with cancer should be burdened with this costs.  It's entirely unfair. And this is my submission, Master."

30. Presumably, the learned Master regarded that as an oral application[13] that a WCO be made.  One should guard against the use of such application as a means of intimidation[14].  However, there is no evidence that JSM's application was employed for such purpose.

31. In a proper case, of course, the court itself can take the initiative. But the court must not make a WCO out of sympathy for a legally aided client. As Aldous J said in Filmlab Systems International Ltd and Another v Pennington and others [1994] 4 All ER 673, the test to be applied has to be the same whether the legal representative was acting for a legally aided or paying client. 

32. Importantly, Order 62 rule 8B provides that the court shall consider whether to make a WCO in 2 stages.  Because of its importance I will set out in full its provision:

"(1) The Court shall consider whether to make a wasted costs order in 2 stages-

(a)  in the first stage, the Court must be satisfied that-

(i)  it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and

(ii)  the wasted costs proceedings are justified notwithstanding the likely costs involved; and

(b)  in the second stage (even if the Court is satisfied under sub-paragraph (a)), the Court shall consider, after giving the legal representative an opportunity to give reasons why the Court should not make a wasted costs order, whether it is appropriate to make the order in accordance with rule 8.

(2)  On an application for a wasted costs order, the Court may proceed to the second stage described in paragraph (1)(b) without first adjourning the hearing if it is satisfied that the legal representative has already had a reasonable opportunity to give reasons why the Court should not make a wasted costs order. In other cases the Court shall adjourn the hearing before proceeding to the second stage.

(3)  On an application for a wasted costs order, any evidence in support must identify-

(a)  what the legal representative is alleged to have done or failed to do; and

(b)  the costs that he may be ordered to pay or which are sought against him."

33. It is clear from the transcripts that the learned Master had at no stage intimated to IK her intention to make a WCO (whether in the form of a NLATO or otherwise) before she actually made the order.  Ms Kwan was not given an opportunity to address the learned Master before the NLATO was made.  With respect to the learned Master, she had overlooked the importance of procedural fairness.

34. It follows that in my view the NLATO should not have been made.  The important procedural safeguards so clearly set out in the Rules or the Practice Directions had not been observed[15].

35. Had IK appealed from the NLATO made by the learned Master, their appeal should have succeeded.  However, IK did not appeal.  Instead, the Plaintiff appealed against the NLATO and I will need to return to this.

The Costs Order

36. I have said above that the Plaintiff's appeal from Master K Lo concerned 3 orders, and they have to be considered separately.  I will now deal with the appeal against the other 2 costs orders before returning to the NLATO. 

37. An appeal from a master's costs order is not by way of a re‑hearing and

"In general, a judge in chambers will not allow an appeal from a master’s costs order unless it is unreasonable or the master erred in law." Hong Kong Civil Procedure 2012, Vol. 1, para. 58/1/6.

38. In para 5 above, I mentioned correspondence between IK and JSM which led to the Plaintiff's summons.  It is now necessary to consider the correspondence in some detail.

39. The first letter was IK's letter of 14 December 2010.  I regret to say that it is aggressive in tone.  It reads:

"We refer to your client's Defence filed and served on 14.12.2010.

We also refer to paragraph 67 of the Practice Directions 18.1.  Please confirm if your client is relying on any expert medical report as to liability and causation.  If yes, please could you serve the expert report in compliance with the said Practice Directions.

If we do not hear from you within 10 days of this letter in relation to your client's position on her expert evidence, the matter will be referred to Court for direction on discovery of your client's expert report.

We look forward to hearing from you within the stated time."

40. Also, the letter proceeded upon a misreading of para 67 of PD 18.1[16], which as Deputy Judge Seagroatt had repeatedly tried to explain to Ms Kwan, did not prescribe that the defence must be accompanied by an expert report.  It provided (for the present purpose) that the expert report, if available, and insofar as it is practicable, should be served with the Defence.  Since there is no dispute that it was not available[17], para 67 had no application.

41. JSM replied on 15 December 2010 as follows:

"We refer to your letter dated 14 December 2010.

As usual, the Defendant would finalise and serve the expert report in support of the Defence after the exchange of witness statements so that our expert could see each parties' version of events.  Further, and as usual, we would not oppose to the Plaintiff seeking leave to serve a Supplemental Expert Report in reply."

42. IK replied on 16 December 2010

"We refer to your letter dated 15.12.2010.

We do not agree that what you have said is an usual practice at all.  If so, the Practice Directions would not have prescribed that the expert report be served together with the Defence.

Our client's witness statement was served together with the proceedings on you.  Therefore, your expert has sight of our client's witness statement.  Dr. Luk of your client has given full proof of her evidence, for she has already submitted her case as to what had happened in relation to the consultations of our client at the time of the enquiry made by the Medical Council of Hong Kong.  If witness statements are what is required by your expert to finalise his/her opinion, he/she has already been provided what is needed.

We would like to deal with the matter in a constructive manner.  Whilst we are not asking you to serve your client's expert report immediately now, we ask that it should be served within 28 days (which, judging from the fact that you and your client have been involved in this matter for a long time) is a very reasonable time allowance.

Should we not hear from you within 10 days of this letter that your client's expert report be ready for service within 28 days, we have standing instructions to apply to Court for direction, with costs.

Our client's rights to refer to the Court copy of this letter at the time of the application are reserved."

43. On 21 December 2010, JSM replied:

"We refer to your letter dated 16 December 2010.

We see no basis why we should abide to what you see as the way we should handle our case.

We have already stated our position, and we will serve our expert report when it is finalized and ready.

If you apply to Court for directions, we will be delighted to be given the opportunity to present to the Court your esteemed firm's handling of the case in the Pre-Action Protocol stage and to hear your explanation of how you have been abiding to the requirement of 'constructive communication'. We would like to see how the Court will view such behavior, especially in light of the Civil Justice Reform.

There is no purpose in further corresponding with you on this matter except to be provoked to inflate the costs of the claim unnecessarily, which a more cynical lawyer would suspect was exactly your purpose."

44. That was followed by the Plaintiff's summons on 28 December 2010.  Ms Kwan told the learned Deputy Judge that she was dissatisfied with the open-ended nature of JSM's reply of 21 December 2010[18].

45. I find it difficult to understand how it could be said that the learned Master's order that there be no order as to costs regarding the Plaintiff's summons fell outside the proper limits of her discretion. 

46. The learned Master was of the view that the Plaintiff's summons was issued prematurely[19].

47. The learned Deputy Judge said in para 8 of his judgment of 31 May 2011:

"8.  Master Lo gave a reasoned decision a transcript of which is in the bundle.  She took a dim view of the plaintiff’s solicitors’ attitude and correspondence. She criticized their taking out of a summons as premature.  Quite properly she said that the defendant should have been given time to investigate and that that was in accordance with the requirements of the Practice Direction.  I agree entirely.  Since her reasons are set out fully I do not need to repeat them 'in extenso'.  Her costs orders reflected these views.  They were in effect that the plaintiff’s solicitors should have no costs on their summons."

48. With respect, I agree.  Nor should the tone of the correspondence which led to the issue of the Plaintiff's summons be disregarded.

49. The learned Master described IK's letters as "outright unfriendly and it in my view affects the subsequent conduct of the parties; not in the interests of their client".[20] The learned Deputy Judge said in his judgment dated 31 May 2011 at para 9 that he agreed with the learned Master.  With respect, I also agree.  Moreover, I note that when granting leave to appeal Hartmann JA described the correspondence on the part of IK as "ill-tempered"[21].

50. I can understand and share IK's natural concern for the Plaintiff since her case was one of urgency.  One is naturally sympathetic.  But that cannot be allowed to override the right of the Defendant to properly defend herself.  Her reputation was at stake, and it was not her fault that the Plaintiff had not commenced proceedings earlier.  Nor, as explained by Deputy Judge Seagroatt in the course of the submission, was the attitude of JSM unreasonable.  They had in effect said they would serve the expert report as soon as they obtained it. The learned Deputy Judge with his great experience in this field, has rightly pointed out in the course of the hearing that:

"… there can be tragic developments and, of course, the plaintiff is in a difficult position that's not helped – in fact it has exacerbated if her lawyers take a strident aggressive tone.  And that practice direction, amongst other things, is intended to help parties not to take an aggressive, antagonistic stance."[22]

51. I will not refer to the substantial correspondence which followed.  They do not in any way throw doubt on the correctness of the learned Master's decision.  With respect, the correspondence when viewed as a whole, make it easy to understand why the learned Master saw fit to make the NLATO. 

52. I turn to the Defendant's summons, the content of which has been referred to in para 6 above.  It is obvious that the Defendant's summons was served in response to the Plaintiff's summons.  The learned Deputy Judge said at para 10 of his judgment:

"In practice since the two summonses were heard together and the defendant’s report had already been served the extra costs would be minimal and the defendant had succeeded in holding the position.  The real bone of contention had been the plaintiff’s summons.  The Master’s decision fell well within her discretion in a situation where she was trying to achieve a sensible solution in relation to the costs, — it is sometimes impossible to disentangle one application from another as far as costs are concerned — and I am sure that she made the right decision.  She has most decidedly not erred in law nor in the proper exercise of her discretion."

53. With respect, I agree.

54. Whilst one might just as readily have ordered that there be no order as to costs in relation to the Defendant's summons as well, when viewed in the round, I can see no basis upon which an appeal tribunal could possibly set aside this order.

55. I return to the appeal from the learned Master's NLATO.  When the learned Deputy Judge dismissed the Plaintiff's appeal from the learned Master, he said:

"1.  … The appeal is quite without merit and has nothing to do with the plaintiff’s interests. …"

56. I must agree that the NLATO was not the concern of the Plaintiff. Indeed, there was a potential conflict of interest.  I believe the learned Deputy Judge was entitled to dismiss the entirety of the Plaintiff's appeal; in relation to the other 2 costs orders, because they were unmeritorious; in relation to the NLATO because that was not the concern of the Plaintiff.  Indeed, the NLATO appeal was likely to be against the interest of the Plaintiff, since costs would be a first charge on any damages recovered.  In this context, I should mention that I disagree with Ms Kwan's submissions before Deputy Judge Seagroatt that she could be paid the relevant costs under Regulation 10(4) of LAR notwithstanding the NLATO[23].

CACV 203/2011

57. For the above reasons, I must dismiss the Plaintiff's appeal.

CACV 111/2011

58. The learned Deputy Judge said at the conclusion of the hearing on 26 May 2011:

"The appeal is dismissed.  I should deliver my reasons later, very shortly, not today, because I need to incorporate some detail.  I will also entertain on the day of delivery of my decision the question of costs of the appeal.  If you are contemplating an application for wasted costs order, then I direct that you give a short written notice of the basis of it to the Plaintiff's solicitors.  I can raise it of my own motion but it will be better, I think, if any further discussion we'll leave until after I have delivered the decision and then we can discuss the question of costs, and it will be listed for that purpose as well."[24]

59. By letter dated 30 May 2011, the Defendant gave notice that they intended to make an oral application at the resumed hearing for a WCO in respect of the costs of the appeal from the learned Master.  The letters set out the reasons why the Defendant contended that it was a suitable case for a WCO.

60. When the court resumed on 31 May 2011 and after the learned Deputy Judge had delivered his reasons, he turned to the question of a WCO against IK in respect of the appeal.  The transcript at page 65 is relevant:

"MS KWAN: If your Lordship is to make an order against me, I should be given a chance to be heard.

COURT:  But you have been.  I gave you on the 26th when I gave the decision.  I said I wished to hear from you.  You've mentioned this morning asking for leave to file affidavits.

MS KWAN:  Yes.

COURT:  I can't see how any affirmation or the content of any affirmation or affidavit could possibly assist in this case.  All it would be would (sic) a proliferation of paperwork and, in any event, it's late.  Having given you the indication on the 26th and told you in totally clear terms that I would expect any argument as to costs here and today, no point in coming along and saying, 'Well, I now want to file affirmations to deal with it.'  It is so clear-cut."

61. The learned Deputy Judge then proceeded to make a WCO against IK in respect of the Defendant's costs and the Plaintiff's own costs and said:

"13.  When I gave my short decision on 26 May and indicated that a full judgment would be delivered later, I made it clear that the Court, of its own volition, had the power to raise the matter of a wasted costs order and would do so, and the reason I dealt with it then in that way was to give the parties an opportunity to prepare anything that either of them wanted to say in relation to it.  So it should come as no surprise to Miss Kwan today.  Nonetheless, she has made an application for leave to file an affidavit or affirmation in respect of the question of wasted costs. 

14.  I cannot see how any affirmation or affidavit could possibly be of assistance.  All the matters are clearly set out in the documentation which was considered by the Master and all the papers that were put before me and the preparation of affidavits or affirmations would be a waste of time and a waste of paper and utterly useless.  So I reject that application.

15.  I have now heard argument on the question of the wasted costs under Order 62, rule 8(A) and (B) and Miss Kwan has had the opportunity, which I indicated then on the 26^th, of putting forward any cogent evidence or argument as to why I should not make such a wasted costs order.  In my view, nothing has changed the picture.  There was no justification for this appeal and I have already set out the position fully. 

16.  I make a wasted costs order in favour of the defendant’s solicitors against the plaintiff’s solicitors, such costs to be taxed if not agreed.

17.  There will be no order for a Legal Aid taxation either.  This means that the plaintiff’s solicitors should not have their costs out of public funds. …"

62. Ms Eu submitted the learned Deputy Judge should not have made a WCO against IK without complying with Order 62 rule 8.  With respect, I agree.

63. Prior to the hearing of the appeal, we have asked IK to put in evidence what she might have relied on had she been given an opportunity to do so by Deputy Judge Seagroatt.  She has filed an affirmation which has had exhibited to it documents in an sealed envelope which contained privileged material.  The privilege, of course, belongs to the Plaintiff and not to IK.  She had not sought the agreement of the Plaintiff to waive  her privilege because she did not think it right to put the Plaintiff in the position where she may have to incur costs in order to obtain advice on whether or not she should waive such privilege.  We were told that the Plaintiff was present in court.  Naturally we did not ask the Plaintiff whether she would be prepared to waive privilege.

64. In all the circumstances, and with respect to the learned Deputy Judge, I do not believe that the matter should have been disposed of so summarily.  I am unable to agree that no affirmation or evidence could help.  Furthermore, IK were also entitled to consider whether they should be represented in any wasted costs proceedings.  We have been told and it is obvious that a WCO could have (indeed has had) an adverse impact on IK's practice. 

65. Nor can I agree with Mr Paul Lam for the Defendant that the letter of 30 May 2011 giving notice of an oral application for a WCO is a sufficient answer. At best that letter has satisfied the requirement of the initial application[25].

66. IK are entitled to the full protection of Order 62 rule 8.  It follows that in my view we must allow the appeal by IK.

Further Remarks

67. Before concluding this judgment I wish to make it clear that there may be cases when legal representatives would not wish to avail themselves of the procedure under Order 62 rule 8.  An obvious example is a case where a legal representative fails to attend a hearing due to an oversight.  In such cases, the legal representatives may well offer to pay the costs of the other side personally and that in respect of their own clients, they will waive the relevant fees, and if such clients are on legal aid, they would not seek to tax the relevant costs.  I do not wish to cast any doubt on the sense and propriety of resolving the matter in this way.

Disposition

68. CACV 203/2011 is dismissed and CACV 111/2011 is allowed.  On costs, we make a cost order nisi that there be no order as to costs in relation to each of the appeals.  Subject to the parties' submissions to the contrary, we believe that is the fairest order in all the circumstances.

Hon Yuen JA:

69. I agree with the judgment of Tang VP.

Hon Fok JA:

70. I also agree with the judgment of Tang VP.