ERIC CHAN & CO (a firm) v. WONG KWOK WANG WARREN

HCMP 961 /2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 961 OF 2013

(ON AN INTENDED APPEAL FROM NO. DCCJ 1155 OF 2008)

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D E C I S I O N

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Hon Barma JA (giving the Decision of the Court):

1.  This was an application by the plaintiff, a firm of solicitors practising in Hong Kong, for leave to appeal against certain aspects of what was described as an Assessment of Damages by Master I Wong of the District Court, dated 21 December 2012, by which the Master assessed the reasonableness of a bill rendered by the plaintiff to the defendant, its former client. We shall deal with the application on the papers.

2.  The background to the Master’s decision is as follows:-

(1)   In December 2002, the defendant was arrested by the ICAC and charged with 13 counts of conspiring to solicit advantages.  He retained Au Yeung, Cheng, Ho & Tin as his solicitors.  The solicitor handling the case was Mr Eric Chan (“Mr Chan”), the principal of the plaintiff firm.

(2)   In 2003, Mr Chan left Au Yeung, Cheng, Ho & Tin and joined Huen & Partners.  In December 2003, the defendant transferred his instructions to Huen & Partners so that Mr Chan could continue to act for him.

(3)   On 21 October 2004, Mr Chan’s employment with Huen & Partners was summarily terminated and he rejoined Au Yeung, Cheng, Ho & Tin.  A few days earlier, on 15 October 2004, just before his trial was due to begin, the defendant had transferred his instructions to that firm, no doubt in anticipation of Mr Chan rejoining it.  However, the defendant had paid some HK$710,000 to Huen & Partners as costs on account.  On 18 October 2004, Huen & Partners issued a fee note for some HK$700,000.  Mr Chan advised the defendant to challenge that bill, and the defendant retained Au Yeung, Cheng, Ho & Tin (by whom Mr Chan was by then employed) for that purpose.  Taxation proceedings in respect of Huen & Partners’ bill were then commenced in November 2004.

(4)   In July 2005, by which time the defendant had been convicted and sentenced to a term of imprisonment, Mr Chan left Au Yeung, Cheng, Ho & Tin, and commenced his own practice in the form of the plaintiff firm. The defendant thereupon transferred his instructions in relation to the taxation proceedings to the plaintiff.  However, the propriety of the plaintiff acting for the defendant in the taxation proceedings was challenged by Huen & Partners, on the grounds that Mr Chan (who was the principal of the plaintiff) had been employed by them and had, at that time, been responsible for the handling of the defendant’s case.  As a result, another firm of solicitors, Tong & Tsoi, were instructed to deal with the taxation.  However, the plaintiff was also verbally retained to assist Tong & Tsoi, apparently on the basis that Mr Chan was (unsurprisingly, since he was the handling solicitor throughout) well familiar with the criminal proceedings at all stages.

(5)   The proceedings below related to whether, and if so, how much the plaintiff should be paid for services rendered by Mr Chan in respect of the taxation.  Au Yeung, Cheng, Ho & Tin having assigned to the plaintiff their claim in respect of the period during which they had been instructed, the claim covered the whole of Mr Chan’s involvement in the taxation proceedings – from the beginning (when he was employed by Au Yeung, Cheng, Ho & Tin), through the period when the plaintiff was on the record, up to and including such assistance as was provided by Mr Chan to Tong & Tsoi.  A bill claiming payment of some HK$711,511 was rendered by the plaintiff under cover of a letter to Tong & Tsoi dated 4 July 2007.

(6)  The plaintiff’s claim was resisted, both as to liability and as to the amount claimed. However, after a trial lasting some seven days, H.H. Judge Chow gave judgment in favour of the plaintiff on the issue of liability on 4 October 2011.  However, so far as quantum was concerned, he directed that the plaintiff’s bill referred to in the previous sub-paragraph should be referred to the taxation master for determination of its reasonableness.  Thus, the matter came before Master Wong, who was faced with the plaintiff’s bill, and various objections to it raised by the defendant.  Shortly before the hearing, the plaintiff made certain concessions which had the effect of reducing the amount which it sought, as being the reasonable amount to be charged for the services it had provided, to HK$673,221.  After a six day hearing, in a detailed judgment, Master Wong dealt with all of the defendant’s objections, and concluded that the appropriate amount at which the plaintiff’s bill should be assessed was HK$505,488.  This, in other words, was the amount which the Master considered to be reasonable for the plaintiff to charge for the work undertaken in relation to the taxation proceedings.

(7)   Dissatisfied with this outcome, the plaintiff sought leave to appeal from the Master.  The grounds of appeal that were to be relied upon fell into two parts – first, certain points of principle in respect of which the Master was said to have erred in the approach that he took to the assessment, and second specific complaints as to the amounts awarded by the Master in relation to particular parts or items of the bill.  On 22 April 2013, Master Wong awarded an additional HK$2,733 in respect of one set of items under the slip rule, and gave leave to appeal limited to two groups of items only, involving disallowed costs of some $15,334.  He rejected all the other complaints, involving disallowed costs of some HK$80,333 in total in respect of some eight groups of items.  He also rejected the complaints as to the approach he had taken.  An appeal (CACV 92/2013) has been brought by the plaintiff in relation to the two groups of items for which leave to appeal was given, and the plaintiff now seeks leave from this court to appeal in respect of the general approach of the Master, and in relation to the eight groups of items for which leave was refused.

3.  We will deal first with the broader complaints as to the approach taken by the Master (Grounds 1 to 5).  As to these:-

(1)   Grounds 1, 2 and 3 focus on a complaint by the plaintiff that the Master misapprehended the nature of his task, and treated the matter before him as an assessment of damages rather than (as he should have done) an exercise involving the assessment of the reasonableness of the bill rendered by the plaintiff, given that the plaintiff’s claim was not one for damages, but was in the nature of a claim for reasonable remuneration for work done, or a quantum meruit.  Although it does appear that the Master seems to have taken the view that he had jurisdiction only to conduct an “assessment of damages” (and so titled his decision), rather than an assessment of the reasonableness of the bill, it is clear from the Master’s judgment of 21 December 2012 by which he quantified what he considered to be the reasonable amount of the plaintiff’s bill that he approached the exercise in precisely the same way as he would have done had he labelled it more appropriately.  For our part, we are quite unable to see how the inapt description of the exercise as an assessment of damages impacted in the slightest on the substantive exercise being undertaken by the Master.  We therefore do not see that there is any prospect of a different result being reached in relation to the overall outcome by reason of these points, and do not consider that it would be appropriate to give leave to appeal in relation to these proposed grounds of appeal.

(2)   Ground 4 involves a complaint that the Master failed to apply the correct basis of assessment, in that he simply asked himself whether the amount billed was reasonable or unreasonable, rather than proceeding as if it were a solicitor and own client taxation, where the assumption is that the charges are reasonable unless clearly excessive or extravagant.  We do not think that there is any merit in this ground either.  The Master was not involved in a solicitor and own client taxation (or any other sort of taxation).  Rather, he was concerned to assess the reasonable quantum of the plaintiff’s charges, in the context of what the plaintiff describes as a claim on the basis of quantum meruit. This is therefore also not a ground on which leave to appeal should be given.

(3)   Ground 5 does not add anything to Grounds 1 to 4, being simply an assertion that because of the alleged errors identified in the earlier grounds, the Master’s assessment was to be regarded as void or voidable.  As we find no merit in the earlier grounds, this ground, too, fails to provide a viable basis for leave to appeal to be granted.

4.  We turn to deal briefly with the remaining grounds of appeal (Grounds 6 to 13).  Each of these seeks to complain about the amount of the reduction made by the Master in relation to particular items or groups of items in the plaintiff’s bill or the disallowance of an item.

5.  Grounds 6 to 8 relate to the amount to be allowed in respect of correspondence.  It is suggested that the Master went beyond the extent of the challenge to these items by the defendant, and reduced the amount claimed by too much.  It is also said that there is an element of inconsistency in the approach taken by the Master. Grounds 9 and 10 relate to the assessment of the amount of time attributable to attendance at hearings.  Ground 11 relates to the costs attributable to a visit to the defendant while he was in prison, and whether it was properly something that should be charged for.  Grounds 12 and 13 relate to the amount to be allowed in respect of certain items of work that had been done.

6.  Each of these grounds is an appeal against the Master’s finding of fact as to what was the reasonable amount to be allowed for the work done under each of these items, and is not therefore something which, in the absence of some clear error on the Master’s part, provides fertile ground for an appeal.  Having carefully considered the plaintiff’s submissions, and the Master’s judgment and reasons for refusing leave, we are quite unable to see any realistic prospect of success in relation to any of them, such that leave to appeal should be granted.  At the end of the day, the Master was engaged on the task of assessing the reasonableness of the bill rendered by the plaintiff, a task that is quintessentially an exercise in fact-finding, in respect of which we are not persuaded that he fell into error.

7.  For the foregoing reasons, we are not satisfied that the plaintiff’s proposed appeal has any reasonable prospect of success, and therefore refuse leave to appeal, with costs to the defendant.  As we are satisfied that the proposed appeal is wholly devoid of merit, we also order pursuant to Order 59 rule 2A(8) that the plaintiff is precluded from applying for reconsideration of the application at an oral hearing.