ERIC EDWARD HOTUNG v. HO YUEN KI AND OTHERS

HCA 571 OF 2003 & HCMP 2820/2002
& HCMP 4511/2002 (Consolidated)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 571 OF 2003

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(Consolidated by the Order of Deputy High Court Judge To dated 10th April 2003)

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DECISION ON REVIEW OF TAXATION

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Introduction

1.  By this 2^nd Review, the Plaintiff seeks to set aside the compromise reached between the parties in respect of the profits costs of Messrs. Stevenson Wong (“SW”), the subject matter of Part I of the amended bill that has been taxed.  The review was strenuously opposed by the 2^nd Defendant.

Grounds for the Application

2.  Mr. Chain contends that the amount of profits costs claimed in the sum of $1,699,195 on the amended bill was grossly inflated as SW’s actual bills were for a much lower sum of $899,816.46.  Paragraphs 8 and 9 of the 8^th Affirmation of the Plaintiff’s solicitor, Mr. Chan Wai Leung were to that effect.  This material discrepancy had come about through concealment of the true state of affairs by Messrs. Oldham, Li & Nie, the current solicitors for the 2^nd Defendant (“OLN”).  It is therefore said that the Plaintiff was negotiating settlement at a considerable disadvantage and he should not be held to the bargain struck even without considering whether the indemnity principle had been breached.  Mr. Peaker for the 2^nd Defendant refuted all allegations of impropriety.

3.  The compromise was struck at the beginning of October 2007 during the course of taxation.  To place matters in their proper perspective, it is necessary to refer to the redacted letter from the Plaintiff’s solicitors of 3 October 2007 to OLN.  It was issued in response to the offer from OLN and was entitled without prejudice save as to costs.  I set it out in extenso.

“We refer to the resumed taxation hearing before Master de Souze (sic) and your open offer made before the Court on 2 October 2007 that our client shall agree (redacted) as Profit Costs under Part I and II of your client’s Bill of Costs, breakdown of which are as follows:-

		HK$
1.	Part I Profit Costs	Less 30% being
	HK$1,640,434.00	HK$1,148,303.80
	(redacted)

We are instructed by our client that your client’s offer is not acceptable to our client.

Your client’s offer in respect of Part I is unrealistic.  You are reminded that the Court has reduced the hourly rate of the principal handler, Ms. Por by 20% (from HK$4,000.00 to HK$3,200.00)  (redacted)

Our calculation is that for Profit Costs in Part I based on the respective allowed hourly rate for Angus Forsyth (AF) and Catherine Por (CP) of HK$4,000.00 and HK$3,200.00 per hour, the amount for your client’s Part I claims is as follows:-

1.	AF – 1 hour and 43 minutes x $4,000 per hour	$6,867.00
2.	CP – 406 hours and 46 minutes x $3,200 per hour	$1,301,653.00
3.	LE – 15 minutes x $1,200 per hour	$300.00
4.	LC – 3 hours and 4 minutes x $1,000 per hour	$3,067.00
	Total	$1,311,887.00

In the premises, we are instructed to propose to adopt 40% discount and agree Part I Profit Cost in the sum of HK$787,132.20 based on the figure of HK$1,311,887.00.  This together with the taxed disbursements items in Part I being HK$55,061.00 (items 1 to 339) and HK$153,000.00 being Counsel fee make a total proposed agreed costs of HK$995,193.00 under Part 1.

(redacted)

Please be informed that this offer is opened for acceptance until 5:00 p.m. on 5 October 2007.  This offer is made on the basis of 100% liability and subject to our client’s argument on the issues of joint retainers and interest.

The offer is made on calderbank basis and we reserve our right to produce this letter to the Court on arguments on costs.

Yours faithfully,

SIT FUNG KWONG & SUM

4.  As happened SW’s profits costs were indeed agreed at $787,132.20.

5.  It can readily be seen that at the material time, the Plaintiff clearly did not have the true figures of SW’s profits costs in his possession.  He was most certainly mistaken about them.  What information and knowledge he and his lawyers had acquired came from OLN, and from the amended bill itself.  Quite aside from the issue of deliberate concealment now raised against OLN, I am of the considered view that the Plaintiff’s position had been severely hampered and prejudiced through no fault of his own or on the part of his legal representatives when conducting the negotiation for settlement.  For that reason alone, I am prepared to set aside the compromise following the approach adopted in Wong Tak-sing and Anor formerly t/a Tak Shing Hong Textiles (a firm) v Amertex International Ltd [1988] 1 HKLR 98.  Having that portion of the bill re-taxed would not in any way prejudice the 2^nd Defendant.

6.  Mr. Peaker was cross-examined by Mr. Chain in respect of this review on an earlier occasion.  I have re-read the portions of the transcript of that cross-examination and counsel’s submission in that regard.  I am also alive to the fact that OLN had experienced considerable difficulty obtaining papers from SW for the purpose of drafting the bill in question.  And payment records were only produced by Miss Por after SW had been ordered to so do.

7.  In the circumstances of the case, I am unable to find any inappropriate conduct on the part of Mr. Peaker or OLN of the type now being raised against them.  More specifically, the available evidence falls far short of establishing a deliberate concealment of material facts on the part of OLN as submitted.

8.  In sum, I shall allow that part of the bill to be reopened.  The review being successful would entitle the Plaintiff to his costs thereof against the 2^nd Defendant, taxed if not agreed.  There shall be a certificate for counsel.