JOSEPH LEUNG & ASSOCIATES (a firm) v. OR FO CHUNG

DCCJ 4738/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4738 OF 2013

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DECISION

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Introduction

1.  On a summons dated 12 March 2014 (“the Summons”) taken out by Joseph Leung & Associates (“JLA”) for further and better particulars of the defence filed by Or Fo Chung (“Or”), a master made an order on 22 May 2014 that JLA do withdraw the Summons and there be no order as to costs of the application (“the Costs Order”). This is an appeal of Or against the Costs Order by his notice of appeal dated 29 May 2014.

2.  At this hearing, Mr Leung representing his firm asks for an adjournment so that the transcript of the hearing before the Master, hence the reasons for the Costs Order, could be made available to me. The Master indeed set out his reasons for the Costs Order in the record of the hearing in the following terms (“the Reasons”):

“(1) P’s request is necessary if the question is when D will file the application for taxation but P fails to ask the proper question … necessary for saving costs as proceedings would be stayed once the taxation begins.

(2) D fails to reply to P’s request dated 27 February 2014 resulting in P’s taking out the summons dated 12 March 2014

(3) So both parties are at fault.”

3.  Both Mr Leung and Mr Wong, counsel for Or, appeared before the Master. They confirm to this court that the Master did give the Reasons orally before the Costs Order was made. In the circumstances, I do not find that the transcript is necessary for the purpose of this appeal and in my view an adjournment would only generate further unnecessary costs.

Background facts leading to the Summons

4.  To understand my decision, the relevant background facts are outlined as follows. JLA, a firm of solicitors, commenced these proceedings by their Writ dated 3 December 2013 against Or, who was their former client, to recover outstanding legal costs in the sum of HK$101,606.00.

5.  Or acting in person filed his homemade defence in the Chinese language dated 7 January 2014. In a nutshell, Or does not dispute he engaged JLA but he finds the legal costs excessive and unreasonable. He indicates that he will apply for taxation in the High Court and hopes that this action can be dealt with together with his intended taxation proceedings.

6.  On 27 February 2014, JLA issued a document entitled “ Request for Further and Better Particulars of the Defence filed on 7 January 2014” (“the Request”) and filed the same with the court. JAL also sent a copy of the Request to Or under a covering letter dated 27 February 2014. In the covering letter, JLA asked Or to give the particulars requested for within 7 days from the date thereof and if Or failed to do so, an application would be made to the court without further notice.

7.  The Request was made in respect of Or’s allegation in paragraph 2 of the Defence: “the Defendant will apply to the High Court for taxation”. JLA wanted the following particulars of the allegation:

“(i) State whether application for taxation by way of Originating Summons has been commenced in High Court;

(ii) If the answer to the above paragraph(i) is affirmative, please state the date of issuance of Originating Summons, the court number of the Originating Summons and the date of the hearing of the Originating Summons;

(iii) If Originating Summons has been issued, please state whether the Originating Summons has been served to the Plaintiff;

(iv) If the answer to the above paragraph (iii) is affirmative, please state the date of service of the Originating Summons to the Plaintiff and the address of the such service (sic).”

8.  Absent any response to the Request, JLA took out the Summons with the Request annexed thereto. The return day of the Summons fell on 24 March 2014. Messrs Ho & Associates (“HA”), former solicitors for Or, wrote to JLA on 21 March 2014 (“the Reply Letter”) after receipt of the Summons. HA filed a Notice to Act on 20 March 2014. In the Reply Letter, HA complained about the propriety of the Request and contended that Or could not have pleaded those matters which were yet to take place. In any event, HA informed JLA that Or had not yet commenced his application for taxation by way of Originating Summons in the High Court. On that basis, HA suggested that the Summons be withdrawn and no demand for costs was made.

9.  JLA wrote back on the following day. They agreed that given the answer of Or, further arguments on the Summons would serve no purpose save the issue of costs. JLA proposed that Or pay them HK$3,500 being their costs and disbursement up to the date of their letter within 5 days. Otherwise, they would proceed with the Summons.

10.  Again there was no reply from Or. On 24 March 2014, the Master dealt with the Summons and gave directions as to filing of evidence were given.

11.  Mr Leung filed an affirmation dated 7 April 2014 pursuant to the directions. There, he explained that more than one and half month after the filing of the Defence, he had not received any notice of taxation proceedings commenced by Or despite his indication in the Defence. JLA wanted to avoid duplication of taxation proceedings in case JLA decided to commence the same by themselves. Thus, JLA found the Request necessary.

12.  At the hearing, Mr Wong argued against the Summons whilst Mr Leung was of the view that no further argument was necessary given the answer in the Reply Letter. On that basis, the Master ordered that the Summons be discontinued and made the Costs Order with the Reasons given.

13.  The position of the defence is that Or should be entitled to costs of the Summons since he successfully resisted an order be made in terms of the Summons and so costs should follow the event. On the other hand, Mr Leung is happy with the Costs Order.

Applicable legal principles

14.  In Paul Y-ITC Construction Ltd v Kin Shing Co Ltd [1999] 1 HKC 511, Sakhrani J set out the legal principles relating to an appeal as to costs as follows:

“As this is an appeal as to costs only from the discretion of the master, such application should not be allowed unless it can be shown that the order made by the master was unreasonable or erred in law ie, if he either failed to take into account proper matters or took into account matters that should not have been taken into account. (Hoddle v CCF Construction Ltd [1992] 2 All ER 550. See also Lessy SARL v Pacific Star Development Ltd & Anor [1996] 2 HKC 326 and China Venturetechnco International Co Ltd v New Century Chain Development (t/a Century Chain Property Agency) [1996] 2 HKC 68). The Court of Appeal in China Venturetechnco International Co Ltd v New Century Chain Development Co Ltd (CA20/96, unreported) in their judgment dared 3 July 1996 considered that this was the correct test.”

15.  The Summons was governed by Order 18 r.12(3), Rules of the District Court. Order 18 r.12(3B) provides that no order (for particulars of pleadings) shall be made unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs: see also Hong Kong Civil Procedure 2014 Vol.1 §18/12/66.

16.  Lastly, a party chargeable with a solicitor’s bill can apply for the bill to be taxed and the Court may, upon such terms it thinks fit, order until the taxation is completed, any action already commenced be stayed: section 67(2)(b) of the Legal Practitioners Ordinance, Cap. 159 (“the LPO”).

Analysis

17.  In my view, the fundamental question in this appeal is the reasonableness of the Request and hence the Summons. In the Defence, it is abundantly clear that Or merely challenges the quantum of costs payable. Or indicates his intention to apply to have his bill taxed in the High Court. I do not see why JLA requires further particulars to understand/meet the defence case.

18.  Of course, particulars can be sought to save costs when those particulars sought can help to confine the issues between the parties and unnecessary disputes can be avoided as a result. The Request does not serve this function here.

19.  In my judgment, a request for further and better particulars should not be made for the purpose of ascertaining the legal position of and/or future steps to be taken by the opponent when the pleading in question contains sufficient particulars to make one’s case clear.

20.  I cannot accept the explanation given by Mr Leung in his affirmation. I assume JLA has already delivered their bill to Or prior to the commencement of these proceedings. Any application of Or to have the bill taxed in the High Court must necessarily involve JLA and JLA cannot be ignorant of his application. There is no reason to assume that Or may inexplicably fail to serve on JLA those documents relating to his application so that JLA would be in the dark about his taxation application in the High Court throughout. I do not accept the assertion that JLA may commence taxation proceedings under section 67(2) of the LPO in the absence of their knowledge of Or’s similar application. There is also no reason why JLA will not confirm with Or as to whether his application already been made before they actually commence such proceedings. In the event of duplicity of proceedings caused by Or’s non-response, no doubt Or would have to bear the consequences and an adverse costs order against him would be inevitable.

21.  Therefore, I am not convinced that there is any costs to be avoided by the provision of the details of Or’s intended taxation application. In any event, I do not accept that the Request is necessary to save costs in this action.

22.  I then turn to the Reasons. I appreciate that the mere fact that I have a different view of the Summons does not justify any interference with the Master’s exercise of his discretion.

23.  Obviously the Master was convinced of the necessity of the Request albeit the wrong question was posed and so Or was also to blame when he failed to reply to the Request. Hence the conclusion that both parties were at fault was reached. For the necessity of the Request, apparently the Master did not accept Mr Leung’s explanation but had in mind that the present action would be stayed once the taxation proceedings started.

24.  In my judgment, the Master erred in thinking that there would be an automatic stay of the present proceedings upon the commencement of the taxation proceedings in the High Court. Or’s intended application to have his bill taxed in the High Court may not be entertained in the first place and a stay may or may not be ordered even if his intended application is granted.

25.  Moreover, as said, there is purely speculative to suggest that Or would hide his application for taxation from JLA. His intended application in any event cannot be granted on an ex-parte basis. The parties would certainly be aware of the outcome of his intended application including any order for a stay of the present proceedings. The Master did not appear to have considered all these matters fully or at all when he formed the view that there would be a stay of the present proceedings after the commencement of the taxation proceedings.

26.  Further, more importantly, however relevant the information sought to be extracted from Or by the Request, JLA should not invoke Order 18 r.12(3) when the Defence sufficiently serves its purpose and function and is not wanting in particulars.

27.  In the premises, I am convinced that the Master did not exercise his discretion correctly and I should look at the matter afresh on the question of costs. I accept Mr Wong’s submission that the Request should not have been made at all. By the latest when Or indicated his position by the Reply Letter, that should be the end of the matter. JLA should have withdrawn the Summons with no order as to costs. Unfortunately, this dispute has been blown out of proportion. 

Conclusion and Orders

28.  For the foregoing reasons, I find the Summons misconceived in the first place. The Costs Order cannot be affirmed. I allow Or’s appeal and order that costs of and occasioned by the Summons be borne by JLA. So be the costs of this appeal. Much as I am appreciative of Mr Wong’s good effort, given the simplicity of this matter, I decided against the grant of certificate for counsel.

29.  By summary assessment, the total costs payable to Or stands at HK$6,000. I order the said sum be paid forthwith by JLA to Or.