RODERICK MILLER v. THE LAW SOCIETY OF HONG KONG

CACV 529/2018

[2025] HKCA 545

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 529 OF 2018

(ON APPEAL FROM THE ORDER OF THE SOLICITORS’

DISCIPLINARY TRIBUNAL OF 2^ND OCTOBER 2018)

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BETWEEN

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D E C I S I O N

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Hon Queeny Au-Yeung J (giving the Decision of the Court):

Introduction

1.  By a Judgment dated 29 July 2024, this Court adjourned the questions of:

(1) Summary assessment or reasonable contribution to the costs of the SDT proceedings, including the costs of the Law Society in its investigation of the 10 Complaints and costs of the Clerk to the SDT [§95(3), Judgment];

(2) Summary assessment of the costs of the appeal (including costs reserved as regards leave to adduce fresh evidence) [§95(4), Judgment]; and

(3) Payment by instalments [§95(5)(f), Judgment].

Question 1 – Summary Assessment or Reasonable Contribution to Costs of SDT Proceedings

2.  Under section 10(2)(e) of the Legal Practitioners Ordinance, Cap 159, the SDT has power to order “payment by any party of the costs of and incidental to the proceedings of the Tribunal and the costs of any prior inquiry or investigation in relation to the matters before the Tribunal, to be taxed by a Master of the High Court on a full indemnity basis, or payment of any amount that the Tribunal considers is a reasonable contribution towards those costs.”

3.  Taxation is more appropriate for a case with lots of documents, interlocutory proceedings and a trial with witnesses. For a case that is less complex and documents are not voluminous, taking a broad-brush approach in ordering reasonable contribution will be costs and time saving and meets the ends of justice. This is especially so when the proceedings before the SDT ended up with admission to the charges and mitigation, instead of a full blown trial.

4.  The SDT must take into account the nature and seriousness of the conduct found to be proved, the circumstances of the breach and other relevant circumstances when deciding the quantum of costs: A Solicitor v The Law Society of Hong Kong & Secretary for Justice (intervener) (2003) 6 HKCFAR 570, §93, Chan PJ. Those circumstances include the conduct of the parties and impecuniosity of the solicitor concerned: A Solicitor v The Law Society of Hong Kong [2006] 2 HKC 40, §§122-124, Woo VP.

5.  Whilst penalty and costs are not logically related, consideration should be given to the combined effect of the penalty and costs on the person who is subjected to the burden of paying both in connection with his financial capability and the appropriateness of the amounts: A Solicitor v The Law Society of Hong Kong, §130, Woo VP.

6.  A distinction should be drawn between penalty and costs. The former is paid to the General Revenue: s.10(2)(c) of LPO, in practice, through the Law Society. The latter is to be paid to the Law Society. The question of “reasonable contribution” does not apply to fines.

7.  In this case, the Law Society seeks party-and-party costs in the sum of $1,014,316.78. It refers to the case of A Solicitor v The Law Society of Hong Kong, CACV 182/2014, §63, as a comparable precedent. In that case, the solicitor admitted the charges. The costs put forward by the Law Society of over $1 million (to be taxed on indemnity basis) were found not likely to be completely disproportionate to the level of total fines of $130,000 so as to attract interference by the Court of Appeal.

8.  In our view, a comparison to other cases on the quantum of costs is of little assistance, as the complexity and length of time for investigation, experience of the investigators, seriousness of the charges and complexity and length of proceedings can differ from case to case. In CACV 182/2014, the charges of the solicitor were more serious and a fine was only one of the sanctions imposed.

9.  In the present case, 10 charges were investigated over 3 years (Judgment, §72), covering conduct which spanned over 5 years (Judgment, §71). There were 4 hearings before the SDT. The fee earners (each with over 10 years of post-qualification experience) of the firm acting on behalf of the Law Society charged only $3,500 and $2,750 per hour respectively, much below the usual scale for party-and-party costs applied by the courts. Although the Director of Compliance was not a solicitor qualified in Hong Kong, there was nothing to suggest that the hourly rates charged by her was not consistent with her ability and responsibility over this case. There is however, a need to reduce the costs in item D4, as there was no need for cross-examination since Mr Miller had admitted the charges.

10.  Mr Miller complains that the indemnity certificate at the end of the costs statement of the Law Society is non-compliant with PD 14.3, §10, because (a) the costs of investigation of the Law Society and (b) the clerk to the SDT are not costs incurred by the Law Society to its solicitors and items (a) and (b) are not covered by separate indemnity certificates.

11.  We do not think this complaint is justified. The PD simply does not require an indemnity certificate for items (a) and (b).

12.  Taking into account all these circumstances and on a broad-brush approach, the costs of the Law Society are assessed at $800,000.

13.  Should Mr Miller be required to pay only a reasonable contribution to such costs?

14.  In his allegedly impoverished situation, Mr Miller was able to instruct lawyers for this appeal and his costs statement claims over $3 million. Further, he incurred a debt to Fettes College in the spring and summer of 2020 – 2 years after SDT imposed a fine and costs order on him. During those 2 years, he had been employed by Chan & Ho at least since 24 October 2018, but he has never paid a single cent towards the penalty and costs. That was despite his stance all along that he has to pay something, although by instalments.

15.  We will come back to this question of reasonable contribution after considering Question 2 as part of his means.

Question 2 – Summary Assessment of the Costs of the Appeal

16.  The costs statement of Mr Miller covers drafting of the notice of appeal, supplementary notice of appeal, the application for filing of further evidence on appeal, directions regarding witnesses and discovery and an appeal of one day involving the taking of live evidence.

17.  The breakdown of the costs in his costs statement is as follows:

(1) A total of $1,542,800 for Mr Chan Ho;

(2) A total of $1,229,600 for Mr Miller;

(3) A total of $318,000 for counsel; and

(4) A total of $62,421 for manual work and other disbursements (including 2 hours’ costs of Mr Firmin; witness expense for Mr Miller himself and his costs of travel and 30 days’ accommodation in Hong Kong).

18.  Mr Miller stated in §6 of his affidavit of means that he has no other assets “[excluding the amount of unliquidated costs potentially owed to Chan & Ho under [his] Costs Statement…], instead of listing his costs in §8 of his affidavit as a “debt” owed by him. The Law Society queries if the indemnity principle has been breached; and that absent evidence that Mr Miller has already paid those costs or have a non-contingent liability to pay each part of those costs, the costs claimed ought to be disallowed.

19.  Mr Miller did not file any submission in reply or affidavit in reply by the due date of 28 March 2025 and we have dismissed his application for extension of time. The Law Society’s query remains unanswered. Mr Miller’s own description of his costs as “unliquidated” adds weight to the query. As between Mr Miller and the firm Chan & Ho, cost should have been crystallized when the costs statement was served on the Law Society.

20.  In any case, there are several problems in principle with Mr Miller’s costs statement:

(1) There were 2 fee earners, ie Mr Miller himself and Mr Charles Ho, each charging $5,800 per hour. Mr Miller was entitled to use his own firm to represent him in the appeal. However, the interlocutory applications and the appeal were not complex. Mr Miller himself had personal knowledge of the facts except those coming from Mr Firmin. Mr Miller could have done most of the work, assisted by a hypothetical newly qualified solicitor and a legal executive on administrative and manual work. Accordingly, Mr Chan Ho’s and the bulk of Mr Miller’s costs are not recoverable and certainly not at the rate of $5,800 per hour.

(2) Costs of the legal executive at $2,000 per hour should be $1,300 instead.

(3) For the hearing of the appeal on 5 March 2024, Mr Miller is claiming costs as the only solicitor of his firm attending. Since he had to appear as a solicitor anyway and he was a party, he could not charge anything in relation to his own expenses as a witness (ie air ticket and accommodation costs).

(4) The hearing time on 5 March 2024 was about 4.5 hours.

(5) At the direction of the Court, Chan & Ho produced the brief to Mr McGowan and the latter’s fee note on 15 May 2025. They only disclosed counsel fees of $250,000, instead of $318,000 as claimed. The Court will only allow counsel fees of $250,000 but not the excess, which is in breach of the indemnity principle.

(6) The Court has directed Chan & Ho to produce the fee note of Mr Firmin for his witness expenses. Chan & Ho has now confirmed by their letter dated 15 May 2025 that Mr Firmin has decided not to claim for his expenses.

21.  Considering paragraphs 18-20, the only costs that Mr Miller can recover is $2,241 for manual work, court fee for setting down of $1,080, photocopying fees of $35,000 and counsel fees of $250,000 That makes a total of $288,321.

Question 3 – Payment by Instalments

22.  Although it was due to his own fault that Mr Miller is not able to recover the bulk of the costs of the appeal, his impecuniosity cannot be ignored. His affidavit of means discloses minimal bank balance, no regular income and that his last source of income ceased at the end of 2024. He owes debts (excluding penalty and costs in this case) in the sum of about $340,000. He is aged 63 and expects a working life of another 7 years.

23.  It is also fair to say that the Law Society knew that Mr Miller was impecunious and that was why they had applied for security for costs of this appeal against him. His impecuniosity could be partly related to the delay of the SDT in coming to a decision, excessive length of time in imposing conditions on his practicing certificate and the necessity of this appeal.

24.  There is no suggestion that Mr Miller’s financial situation will improve over time. In the premises, we consider that a contribution of 50% towards the Law Society’s costs (ie $400,000) would be reasonable. This would not be too high as to be burdensome and not too low as to be of no effect as a punishment. Such costs should be set off against $288,321 of his costs of appeal. Adding the penalty, he will have to pay $361,679 in total.

25.  The Law Society is content for the penalty and costs to be paid by 3 instalments in 6 months. We consider this unrealistic.

26.  On the other hand, Mr Miller suggests payment by instalments of $2,500 over a maximum of 7 years, totalling $210,000, with any balance remaining after that to be indefinitely deferred. The 1^st instalment should be deferred for 6 months from the date of this Decision to enable him to develop a new client base. We consider this impractical as $2,500 per month may only barely cover judgment interest.

27.  We would order Mr Miller to pay $4,000 per month to the Law Society, to be split between fines and costs until full payment. The first instalment is to commence on 2 August 2025.

Conclusion

28.  Pursuant to §95(3) of the Judgment, Mr Miller is to pay reasonable contribution towards costs of the Law Society in the sum of $400,000.

29.  Pursuant to §95(4) of the Judgment, the Law Society is to pay costs of $288,321 to Mr Miller for the appeal.

30.  The penalty of $250,000 and the costs (after set off) of $111,679 are to be paid by Mr Miller by monthly instalments of $4,000 to the Law Society, to be split between the penalty and costs until full payment. The first instalment is to be due on 2 August 2025.