CHEUNG CHI KEUNG v. INCE & CO

HCMP304/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.304 OF 2005

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D E C I S I O N

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1. This is an application by the plaintiff, who appears in person, for an order for taxation pursuant to section 67 of the Legal Practitioners Ordinance, Cap. 159.  The defendant is a Hong Kong firm of solicitors, Ince & Co.

2. Between 3 June 2003 and a date in October 2003, the defendant acted for the plaintiff in an action against the plaintiff’s former employers in a case of wrongful termination of employment.

3. The plaintiff received a bill for services rendered from the defendant in the sum of $290,105.00 on 4 September 2003.  The invoice was dated 27 August 2003.  The bill remains unpaid.

4. By virtue of section 67(2)(i) of Cap. 159, no order for taxation shall be made if 12 months have expired since the delivery of bill unless there are special circumstances.  In the present case, the application for taxation was made on 12 February 2005, over 17 months after the delivery of the bill.  There is therefore only one issue before this court namely, whether the plaintiff has shown that special circumstances exist such as to waive the mandatory prohibition on taxation after the expiry of 12 months.

BACKGROUND

5. The defendant was first instructed on 3 June 2003.  Because the original introduction to the firm was through an established client no money was paid “up front” as would be the usual practice.  A letter of engagement dated 28 June 2003 setting out all the terms of the engagement, including the costs of services rendered from 3 June 2003 was sent to the plaintiff and acknowledged by him by signing the letter and returning it to the defendant.

6. Due to difficulties over the payment of fees, the defendant terminated the engagement in October 2003.  It sent a long fax to the plaintiff dated 3 October 2003 which amounted to a detailed explanation why it was ceasing to act for him.

7. Prior to this fax, the defendant had sent a 4-page letter to the plaintiff dated 30 September 2003 dealing with a number of matters including the question of costs to date.  In that letter, it drew section 67, Cap. 159 to the attention of the plaintiff pointing out to him, in particular, that he could apply for taxation as of right within one month of receipt of the bill and that that one month was due to expire on 4 October 2003.  No such application was made. 

8. Much of 2004 was spent in attempts, mostly initiated by the defendant, to reach a settlement.  On 16 November 2004, over 14 months after delivery of the bill, the defendant commenced proceedings in the District Court to recover the debt.  The plaintiff applied for and was granted an extension of time to file a defence but no defence was, in fact, ever filed.  A default judgment was entered on 19 February 2005.  The plaintiff commenced this application for an order for taxation out of time, on 12 February 2005.  As a result, the default judgment was set aside and stayed pending the outcome of this application.

SPECIAL CIRCUMSTANCES

9. Special circumstances mean special reasons for the passing of 12 months without any application for taxation.  There must be some exceptional circumstances which explain why the deadline was allowed to pass.  The applicable test is a stringent one and the onus is on the applicant to demonstrate that the circumstances which have caused the deadline to pass have been special.  The purpose of the limitation is clearly to protect solicitors who are entitled to payment for services rendered within a reasonable time.

10. In his detailed affidavit and in his written skeleton submissions, the plaintiff advances, in effect, three special circumstances in this case.

(1)     Ignorance

11. Firstly, he submits that he was unaware of the 12-month deadline.  He accepts that mere ignorance of the rule is not, of itself, sufficient to constitute special circumstances.  However, he submits that as a litigant in person, as a layman, the defendant was under a duty to inform him of section 67(2)(i) and thus bring the 12-month limitation to his notice.

12. In answer to this, the defendant makes a number of points.  First, that their letter of 30 September 2003 specifically refers to section 67 of Cap. 159.  It does not recite the whole section and is referred to in order to alert the plaintiff that his right to taxation as of right, namely within one month, is about to expire.  However, section 67 was brought to his notice.  At that time of course, it was not anticipated that, 11 months later, the provisions of section 67(2)(i) would become significant.  Additionally, the defendant points out that the plaintiff should not be regarded as a helpless layman.  He is fluent in English, intelligent and by the content of his correspondence and affirmations, has demonstrated himself to be a person who enthusiastically researches the legal rules and regulations and thus his contention that he was ignorant of section 67(2)(i) should be met with a degree of scepticism.  

13. Moreover, he was not without legal advice.  In October 2003 he changed solicitors.  Whilst, during 2004, negotiations were taking place to try to settle the disputed bill he had instructed his new solicitors to represent him in the continuing litigation against his former employers — the very litigation from which the disputed bill arose.  In November 2005, when he appeared in this court to request an adjournment of this application he informed the court that his new solicitors were also advising him in the matter of the undisputed bill (although no Notice to Act had ever been received by the court). 

14. Secondly, from, at the latest, 3 October 2003, the defendant ceased to act for the plaintiff.  Thereafter, there was no duty or obligation to advise the plaintiff.  Their relationship quickly changed from being on the same side in an wrongful dismissal case to being on opposite sides in an unpaid bill case. 

15. Thirdly, it is no coincidence, the defendant submits, that the belated application for an order for taxation comes at the very time a default judgment was awarded in the District Court.  The chronology, it is argued, is a story not of ignorance, but of deliberate delaying tactics.  From October 2003 to November 2004, there were fruitless attempts to negotiate.  From November 2004 to February 2005, the plaintiff sought an extension of time to file a defence which he never did.  From February 2005 to the present time, he has pursued a late application for taxation which has had the effect of staying the District Court judgment.

16. In November 2005, as already mentioned, he applied for an adjournment of these proceedings on wholly spurious grounds.  He stated that his solicitor could not attend such a hearing until March 2006.  He stated he had instructed solicitors on the matter, the same solicitors who took over from the defendant in October 2003, but in the event, no such formal representation ever materialized.  

(2)     Negotiations

17. The plaintiff submits that he consistently tried to agree terms and that it was never his intention to delay matters.  I assume that his argument in this regard is that if, as a layman, he was always acting in good faith then the inadvertent passing of a deadline should not be held against him.

18. In fact, a perusal of the correspondence and a common sense reading of the affirmation evidence show the true position to be the reverse of that contended for by the plaintiff.  I am satisfied that it has consistently been the defendant who has been accommodating, it has been the plaintiff’s conduct which has caused settlement talks to make no progress and it has been the plaintiff who has caused the unacceptable delay which Miss Lau, who appeared for the defendant, described as (perhaps a little dramatically but nonetheless understandably) “a nightmare for my firm”.

(3)     Defendant’s duty

19. The plaintiff claims that in addition to specifically informing the plaintiff of section 67(2)(i) of Cap. 159, the defendant was under a duty to explain each item under dispute in the bill and to explain all “ambiguities” in the bill.

20. This complaint could hardly constitute a ‘special circumstance’.  In any event, I am satisfied that the combined effects of the defendant’s 3-page letter of engagement of 28 June 2003, their 4-page letter of detailed explanation of the situation as it then stood on 30 September 2003 and their 4-page letter of 3 October 2003 bringing their relationship to an end, were sufficient to discharge their obligation in the circumstances.  Further disputes over payment would be for the taxing master.

CONCLUSION

21. In my judgment, all of the above points made by the defendant in answer to the plaintiff are compelling and convince me that the plaintiff has fallen well short of establishing any special circumstances pursuant to section 67(2)(i) of Cap. 159.  Moreover, there is nothing unusual in the bill itself.  It itemizes ordinary dealings between solicitor and client.  Had it been taxed it may well have been trimmed, but that opportunity has been lost.

22. The application for taxation must be dismissed.

COSTS

23. Miss Lau asks for indemnity costs here and below, to be paid forthwith.

24. I make a costs order nisi that the costs of and occasioned by the plaintiff’s summons for an order for taxation be to the defendant to be paid forthwith.  The application for indemnity costs is not granted.