CACV 58/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 58 OF 1995

(On appeal from HCMP No. 2996 of 1990)

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J U D G M E N T

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1.  There are two appeals against two costs orders by Master Levy.

2.  The first appeal arose out of the taxation by Master Levy of a bill of costs in CACV58/1995.  This bill of costs was taxed on 29 April and 11 May 2009.  The 6th defendant filed a Notice of Review on 25 May 2009 seeking to tax off or reduce the amount of costs for a number of items.

3.  Master Levy conducted the review on 16 December 2009 and ordered the 6th defendant to pay the 15th defendant’s cost of the review at HK$1,867.  The 6th defendant then filed a further Application for Review on 28 December 2009 seeking an order to disallow all or part of the costs of taxation of the bill in CACV58/1995 on the ground of the 15th defendant’s serious neglect, misconduct and delay in lodging a valid bill of costs and the bundles for taxation.  He filed a number of grounds for the application. 

4.  Master Levy conducted the second review on 27 January 2010 and dismissed it.  She also ordered the 6th defendant to pay $750 cost to the 15th defendant for this review. 

5.  The 6th defendant then filed a Notice of Appeal against this order on 1 February 2010.  This is the first appeal to be dealt with.

6.  The second appeal arose out of the taxation by Master Levy of another bill of costs in HCMP2996/1990.  The taxation was concluded on 16 December 2009.  The 6th defendant was unsatisfied and filed a Notice for Review on 28 December 2009.  He also asked for an order that all or part of the costs of taxation of the bill in HCMP2996/1990 be disallowed on the ground of the 15th defendant’s neglect, misconduct and delay in lodging a valid bill of costs and the bundles for taxation.  He filed the same grounds for this application as for the review in CACV58/1995.  He also sought the taxing off or reduction of a number of items of costs.

7.  Master Levy conducted the review on 20 May 2010 and dismissed it.  She also ordered the 6th defendant to pay $46,300 cost to the 15th defendant.  The 6th defendant filed a Notice of Appeal against this order on 31 May 2010.  This is the second appeal.

8.  The 6th defendant advanced the same grounds for both appeals.  He also relied on the grounds advanced before Master Levy.  He seeks not only the disallowance of the whole or part of the costs of taxation of both bills.  He also seeks the disallowance of the whole or part of the costs as taxed in both bills.  He said he had sought the same orders from Master Levy, but the Master did not accede to his request.

9.  He referred to the practice direction which requires the parties to discuss and negotiate a bill before the call-over hearing and assist the Master in assessing the length of hearing.  The receiving party should also lodge with the court a bundle of all documents relating to the items objected to at least two clear days before the substantive taxation hearing.  The documents must be marked with the same item numbers as in the list of objections and must be arranged in the same sequence as they appear in the list of objections. Failure to observe the direction may render the petitioner personally liable for the costs. 

10.  The 6th defendant also relied on Order 62, rule 7(1), rule 22(5), rule 32A, and rule 32C(1) -(3).  They provide as follows:

“Order 62, rule 7(1):

(1) Where in any cause or matter any thing is done or omission is made improperly or unnecessarily by or on behalf of a party, the Court may direct that any costs to that party in respect of it shall not be allowed to him and that any costs occasioned by it to other parties shall be paid by him to them.”

“Order 62, rule 22(5):

(5) On the taxation of a bill of costs, whether or not an order has been made under paragraph (3), the taxing master, if he is satisfied that there has been undue delay in commencing taxation proceedings or in proceeding with the taxation:

(a) may make such order as he thinks fit as to the costs of any application or as to the costs of the taxation;

(b) may disallow any part of the costs to be taxed pursuant to the costs order; and

(c) may, in relation to the taxed costs or any part of those costs, disallow interest or reduce the period for which interest is payable or the rate at which interest is payable.”

“Order 62, rule 32A(1)(b):

(1) A party entitled to payment of any costs to be taxed is also entitled to his costs of the taxation except where:

…

(b) the Court makes some other order in relation to all or part of the costs of the taxation.

(2) In deciding whether to make some other order, the Court shall have regard to the underlying objectives set out in Order 1A, rule 1 and all the circumstances, including:

(a) the conduct of all the parties in relation to the taxation,

(b) the amount, if any, by which the bill of costs has been reduced; and

(c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.”

“Order 62, rule 32C(1):

(1) The Court may make an order under this rule where:

(a) a party or his legal representative, in connection with a summary assessment or taxation of costs, fails to comply with a rule, practice direction or an order of the Court; or

(b) it appears to the Court that the conduct of a party or his legal representative, before or during the proceedings which gave rise to the summary assessment or taxation, was unreasonable or improper;

(2) For the purpose of paragraph (1), the conduct of a party or his legal representative does not include any conduct before the commencement of the action;

(3) Where paragraph (1) applies, the Court may:

(a) by order disallow all or part of the costs being summarily assessed or taxed; or

(b) order the party at fault or his legal representative, to pay costs that he has caused any other party to incur.”

11.  The costs in HCMP2996/1990 were ordered by Deputy High Court Judge To (as he then was) on 4 May 2007.  They were for the third party proceedings brought by the 6th defendant against the 15th defendant in HCMP2996.  The order required the 6th defendant to pay the costs to be taxed to the 15th defendant. 

12.  The order further provided that the estate of Kwan Kai Ming, deceased should pay the 15th defendant those costs, but the 15th defendant should repay the same to the estate to the extent that he could recover the same from the 6th defendant.  Hence, the estate of Kwan Kai Ming, deceased was liable to pay such costs on behalf of the 6th defendant, but the liability was not personal to the estate.

13.  The 6th defendant’s first ground of appeal is that the estate of Kwan Kai Ming was involved in the taxation and should have taken part therein. The 15th defendant disagreed with that proposition.  The 15th defendant in fact had written to the solicitors for the estate, who indicated that they did not want to take part therein.  The 6th defendant said that three days had been spent in arguing over this matter, and he put the blame of the wastage of the three days on the 15th defendant. 

14.  I think the estate was at liberty not to take part in the taxation as the liability to pay such costs was ultimately that of the 6th defendant.  The 15th defendant also disputed that the time spent on arguing this issue was three days.  The 15th defendant said that the time spent on it was minimal.  I am of the view that if time has indeed been spent on arguing this matter, then it was the 6th defendant who caused the wastage, and he should be blamed for this.  There is nothing in this ground of appeal as the estate was at liberty not to be involved in the taxation of costs which was the 6th defendant’s personal liability to pay. 

15.  The 6th defendant’s second ground is that the 15th defendant’s solicitors had been late in sending him the bill in CACV58/1995 and that necessitated the adjournment of the call-over hearing from 30 September 2008 to 25 November 2008.  The fact of the matter, however, is not as alleged by the 6th defendant.  The bill in HCMP2996/1990 had been sent to the 6th defendant in August 2008.  That bill had 435 pages.  The 6th defendant had not filed any list of objection up to the call-over hearing on 30 September 2008.  Master Ho therefore adjourned the call-over to 25 November 2008 and ordered the 6th defendant to file his list of objections on 18 November 2008.  The Master also ordered the 6th defendant to pay $500 costs to the 15th defendant for the adjournment.  The bill in CACV58/1995 was indeed not sent to the 6th defendant on or before the call-over on 30 September.  That was a relatively short bill of 42 pages, and its then unavailability did not contribute to the adjournment.  Hence, this ground is also of no merit. 

16.  The third ground is that the taxation hearing took 15 days, running from 12 May 2009 to 16 December 2009.  There were several lengthy adjournments to suit the court’s diary and the parties’ convenience.  I do not think there is sufficient material before me to show who should be blamed for the long gaps of adjournment.  However, the large number of days used for the exercise is partly caused by the 6th defendant and partly caused by the 15th defendant.  The 6th defendant had demanded to go through most of the underlying documents.  He admitted that he wanted to go through the underlying document for the sake of prudence and about half of the 40 to 50 lever arch files had been considered for this purpose.  The solicitors for the 15th defendant, however, said that there were much more than half of the documents that had, in fact, been considered in the taxation process.

17.  I also find that part of the reasons for the long duration of taxation is because of the law costs draftsman of the 15th defendant had on some occasions encountered difficulty in locating and producing the relevant underlying documents for the court’s perusal.  Some time had also been wasted for the taxation of some unwarranted items that should not have been included in the bill and they were subsequently taxed off or withdrawn. 

18.  The 6th defendant alleged that of the 4,288 items in the bill in HCMP2996/1990, some 2,821 items were withdrawn.  Of the withdrawn items or events, 1,684 of them had already been taxed before the withdrawal. However, the number of withdrawn items in a list produced by the 6th defendant is only 1,785 instead of 2,821.  The number of items allegedly taxed before they were withdrawn is also at about 1,700.  The 15th defendant disputes this list. 

19.  I understand that Master Levy, in awarding the costs of taxation to the 15th defendant, had taken off five hours of the time spent by the 15th defendant’s law costs draftsman and 1.5 hours spent by his solicitor.  The 6th defendant has not shown why the deduction of costs of taxation by Master Levy was not enough to reflect the loss of time occasioned by the 15th defendant’s law costs draftsman and his solicitor.

20.  The 6th defendant also alleged that the bundles of underlying documents were not ready when taxation was under way.  He at one time even alleged that there was no bundle of documents available for the taxation of the bill in CACV58/1995, and that taxation was done without any bundle of document.  However, that taxation was done on 29 April and 15 May 2009, and it could not have been done without the underlying documents. 

21.  The 6th defendant later retracted his words and instead alleged that he did not treat the bundle of documents supplied by the 15th defendant as proper bundles as they were just documents and not properly arranged and without chronology or list of key documents.  I do not agree with this allegation.  Chronology and list of key documents are not always required.  For complicated matters they are useful to guide the parties along, but I cannot say that the bundles are not bundles if they are not accompanied by a chronology and a list of key documents. 

22.  The 15th defendant’s solicitors also said that the bundles of underlying documents were available before the commencement of the taxation of CACV58/1995.  Regarding HCMP2996/1990, the documents were made available as the taxation proceeded, but there was no interruption of taxation that was caused by the slow supply of documents. 

23.  I am not in a position to make any finding on this dispute.  In any case, the third party proceedings in HCMP2996/1990 was long drawn out and had taken many years to conclude.  Hence, it is a relatively complicated matter and the bill is also very long. 

24.  I do not think there is sufficient evidence for me to find fault with the 15th defendant to the extent that I should disallow any part of the costs as taxed, or to further reduce the cost of taxation which have already been reduced by Master Levy.  I think the conduct of the 15th defendant in the taxation might not be said to be up to an untarnished standard.  However, it is not every error or incapacity that will attract the heavy penalty of having the taxed costs or part of them to be disallowed.  The 6th defendant has also not shown why the reduction of costs of taxation by Master Levy was not an appropriate and sufficient measure to reflect the inadequacy of the 15th defendant. 

25.  I also refer to the grounds of the 6th defendant as advanced before the Master.  He complained that many items should not have been included.  He also said that there were items relating to certain criminal proceedings brought against the 15th defendant which were later withdrawn.  There were also items for unrelated issues that had already been taxed previously.  There were even items that the 15th defendant had been ordered to, and had indeed paid to the 6th defendant.  The 6th defendant admitted that there were these errors and inadequacies, and these items had either been taxed off or withdrawn, and many of them were withdrawn before taxation.

26.  Again the 6th defendant has not shown in any concrete fashion the amount of wastage generated by these errors.  I am not persuaded that the Master had erred in not acceding to the 6th defendant’s request to disallow part or whole of the costs as taxed, or the cost of taxation as already reduced.  I therefore dismiss both appeals. 

27.  I now hear the parties on costs.

(Discussion re costs)

28.  I order the 6th defendant to pay the costs of the appeals to the 15th defendant, and I summarily assess the costs as follows.  I accept that the solicitor for the 15th defendant has spent 2.5 hours in the perusal of documents, conference with the 15th defendant and correspondence.  I also accept that he has spent 3 hours in preparing his written submissions in opposition and that the hearing of yesterday and day before yesterday, together with the time spent for delivery of decision today, totalled 8.5 hours.  Hence the total time spent is 14 hours.  I adopt the rate of $2,500 per hour.  The total amount of costs as summarily assessed is $35,000.  I order the 6th defendant to pay this sum to the 15th defendant.