LAU LEUNG WA AND ANOTHER v. LAU YUE KUI AND ANOTHER

HCAP 10/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 10 OF 2001

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DECISION ON COSTS

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1.  The trial of this action took place on 4 to 8 and 11 to 15 July and 24 and 25 August 2005.  In a Judgment handed down on 10 March 2006 (“the Judgment”), I dismissed the plaintiffs’ claims sought in the writ and made a costs order nisi pursuant to RHC Ord. 42 r. 5B(6) that the costs of this action be paid by the plaintiffs to the defendants to be taxed if not agreed.  The Judgment spans over some 37 pages and contains more than 100 paragraphs, dealing with various issues raised by the pleadings.

2.  By way of a summons dated 24 March 2006, the plaintiffs seek to vary that costs order nisi to the following effect:-

“The costs of this action up to and including 4 July 2005 be paid by the defendants to the plaintiffs but the costs of this action thereafter be paid by the plaintiffs to the defendants, to be taxed if not agreed”: para. 8, plaintiff’s submissions on costs.

3.  The parties consented to that application to be dealt with in the manner set out in the consent summons dated 12 April 2006.  Essentially, respective written submissions were to be lodged with court and served according to different prescribed time limits.  If no party applies for a hearing within 7 days after the plaintiff’s reply submissions, the application is to be determined on the basis of their written submissions.

4.  The agreed steps were undertaken by the parties.  The plaintiffs’ reply submissions were lodged with court on 5 June 2006.  No application for a hearing has been made up to today.

5.  It appears undisputed that the usual rule regarding costs in civil litigation is that costs should follow the event: Ord. 62 r. 3(2).  It also appears the plaintiffs accept that the rule can only be departed from where there are special circumstances to justify a departure: para. 8, plaintiff’s submissions on costs.

6.  The relief sought in the Amended Statement of Claim dated 25 April 2005 was:-

(a) as against D1:-

(1) he be removed as the administrator of the estate;

(2) the plaintiffs be appointed as co-administrators of the estate;

(3) an account of the estate be rendered;

(4) damages for mal-administration of the estate, including damages for breach of fiduciary duty and duty of due diligence;

(5) a declaration that he is not entitled to any remuneration as the administrator of the estate;

(6) a declaration that the continued engagement of D2 as the solicitors for the estate is incompatible with the best interest of the estate;

(7) a taxation of D2’s costs for work which D2 might have performed in relation to the estate be procured forthwith (but see also sub-para. (c)(1) below);

(b) as against D2:-

(1) damages for (i) breach of fiduciary duty and negligence, and (ii) breach of trust as a constructive trustee;

(2) an account of the trust properties received by him to be rendered;

(c) as against both defendants:-

(1) the 3 fee agreements entered into between them be set aside;

(2) costs of this action;

(3) interest on any sum found due.

Save that the claim against D2 for breach of the professional duty of reasonable care and skill was abandoned at trial, all other claims for relief were pursued to the end.

7.  This application is based in short on the following facts.  D1 did not indicate his willingness to seek the taxation of D2’s costs payable under one of the fee agreements (called “the Nov 95 agreement” in the Judgment) until 29 April 2005.  It was only 4 days before the trial commenced that D1 agreed to D2’s offer to render a bill in relation to another of the fee agreements (called “the Nov 94 agreement” in the Judgment).  An itemized bill in relation to the Nov 95 agreement was only produced on the first day of trial (see para. 4 and 5, plaintiff’s submissions on costs).

8.  By virtue of the above facts, so the plaintiffs contend in their submissions on costs, the special circumstances which justify this application are:-

“It is clear that the Court is much impressed by the fact ‘no excessive fees can be charged under the said fee agreements’ … in reality the consideration that the fees in question can be taxed only becomes relevant when [the defendants] had taken substantive steps towards taxation” (para. 3);

“But for the bringing of this Action, fees which would otherwise be payable, if not already paid, in accordance with the tenor of [the] said fee agreements would not now be examined by the taxing master.  But the offer of taxation … only came from the Defendants so close to the trial” (para. 7).

9.  The plaintiffs also say the following in their reply submission on costs:-

“The Court could not have reached [the conclusion set out in para. 3, plaintiffs’ submissions on costs (quoted above)] if [the defendants had not proceeded with taxation belatedly]” (para. 2);

“[If the defendants had not proceeded with taxation], the Court would in all probability … [have ordered a bill to be delivered] … ” (para. 5 and 6);

“[The defendants proceeded with taxation not as] a routine or innocuous exercise … ” (para. 7);

“[For the purpose of this application] … the Plaintiffs accept that on the construction of s. 56 [Legal Practitioners Ordinance (Cap. 159)] , they are wrong … [and they] cannot complain that they be penalized on costs for maintaining that understanding despite the tactical positions taken by the Defendants at the beginning of trial.  But they should not be penalized in relation to the period before that… the Court should bear in mind … First, D2 stated on record for the first time at trial that he had not received a single cent in respect of the fees payable … Second, … the rest of the issues did not really take up any significant portion of the Court’s time and attention.  They stood and fell together with the main claim” (para. 9 and 10).

10.  In brief, I agree with the defendants’ submissions on costs and disagree with those of the plaintiffs.  I will elaborate on some of the matters below.

11.  The plaintiffs’ arguments (summarised above) are premised on a distorted view of their pleaded case (which they maintained and attempted to establish at trial) as well as an erroneous interpretation of the Judgment.

12.  The relief sought in their pleading has been set out above.  The causes of action have been summarised in the Judgment:-

“3. The plaintiffs' principal claim against D1 in this action is based in short on his alleged:-

(a) breach of fiduciary duty as an administrator (in equity);

(b) breach of duty of reasonable diligence (in tort);

(c) negligence (in tort).

4. Apart from the principal claim, the plaintiffs also seek to remove D1 as an administrator and to bar him from later claiming remuneration for his work done in that capacity.

5. The plaintiffs’ claim against D2 in this action is based essentially on his alleged:-

(1)   beach of professional duty of reasonable care and skill (in tort);

(2)   breach of duty of loyalty and fidelity (in equity);

(3)   knowing assistance in the breach of D1’s duties of administrator (in equity).

The plaintiffs no longer pursue the cause of action set out in sub-para (1) above at the time of trial”.

The Judgment also said:-

“113.  The plaintiffs also argue that, because of the delay in proposing taxation of the fees, the defendants are disentitled from claiming taxation should be the preferred remedy.

114.  The argument is difficult to comprehend.  First, this is not a case where the plaintiffs have agreed to taxation of the fees upon the remedy being proposed by the defence.  The claim that the fees payable are gross and manifestly excessive is maintained throughout, despite the proposal to tax having been made.  In pursuing that claim, it is part of the plaintiffs; arguments that taxation is unavailable as a matter of law and, in any event, the remedy is inadequate (for the reasons set out above).

115.  Second, delay in proposing taxation of fees has not been put forth as a breach of duty either in equity or in tort”.

13.  The above passages are not quoted for the purpose of showing that they represent the whole of my reasons for dismissing the plaintiffs’ claims.  Quite on the contrary, they demonstrate that those claims (and the issues raised by the parties’ pleadings) were quite different in nature (and much wider in scope) from what the plaintiffs now seek to present in their submissions on costs.

14.  Even the taxation referred to in the plaintiffs’ submissions on costs was not that sought by them at trial.  The former was one under s. 56, Cap. 159; the latter was a taxation of costs after the fee agreements have been set aside by the court (see the relevant paragraphs in the Judgment).

15.  By virtue of the above matters, I do not find any valid reason to depart from the usual rule.  This application is dismissed.  There will accordingly be a costs order absolute in terms of the earlier costs order nisi.

16.  There is no apparent reason to depart from the usual rule that costs should follow the event.  There will also be a costs order nisi that the costs of this application are also to be paid by the plaintiffs to the defendants to be taxed if not agreed.