WADDINGTON LTD v. CHAN CHUN HOO THOMAS AND OTHERS

HCMP 1454/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1454OF 2013

(On an intended Appeal from HCA No. 3291 of 2003)

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BETWEEN

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DECISION ON COSTS

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Hon Lam JA (giving the Decision on Costs of the Court):

1.  In our Decision of 17 July 2013 refusing leave to appeal, we made an order that the Plaintiff shall pay the costs of the 1^st Defendant and we provisionally fixed the costs at $20,000.

2.  On 24 July 2013, solicitors for the 1^st Defendant applied for a variation as to the quantum of costs.  In the statement of costs for summary assessment filed on 24 July 2013, the 1^st Defendant sought a total sum of $167,229.34 of which $112,500 were counsel fees in respect of two counsel.  The 1^st Defendant also put in a skeleton submission in which he sought costs on indemnity basis given the vexatious nature of the Plaintiff’s application for leave and the disruptive effect it had on the preparation for trial.

3.  Directions were given for the costs application to be dealt with on paper.  In accordance with such directions but outside the time limit prescribed in the directions, the Plaintiff lodged its List of Objections to the Statement of Costs.  In short, the Plaintiff said the costs claimed by the 1^st Defendant were excessive and there were duplication of works.  The Plaintiff also said that there was no need to engage two counsel to deal with the application for leave.  The Plaintiff said the appropriate quantum is $19,162.67.

4.  The 1^st Defendant put in a Reply on 7 August 2013.  In it, the 1^st Defendant reiterated that he should have costs on indemnity basis, citing Li Xiao Yun v China Gas Holdings Ltd CACV 38 of 2013, 11 March 2013, para 18.  The Reply also refuted the suggestion that the costs claimed by the 1^st Defendant were excessive.  It was further said that in view of the number of interlocutory applications taken out by the Plaintiff and the proximity in time between this application and the trial of the main action, it was not unreasonable to engage two counsel.

5.  It has to be reiterated that the exercise of the power of summary assessment of costs is not a process of mini-taxation, see Practice Direction 14.3 para 13.  In the present context, this court has the power to do a summary assessment under O 62 r 9(4)(b) and it is an assessment “in lieu of taxed costs”.  Para 14 of the Practice Direction should also be noted:

“Although the Court may allow the full amount claimed by the receiving party, it will, so far as possible, ensure that the final figure is not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in Order 1A. The Court will retain this responsibility notwithstanding the absence of challenge to individual items in the make-up of the figure sought. …”

6.  The principles set out in Order 62 Rule 3, 5 and 6 are equally applicable to summary assessment as in taxed costs.

7.  In Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512, the Chief Judge explained how the concept of proportionality is to be applied in a summary assessment in a case where costs is awarded on party-to-party basis at paras 12 to 18.  In particular, reference was made to the underlying objectives in Order 1A rule 1.  The construction of the rules providing the basis of taxation must be informed by such underlying objectives, in particular the promotion of a sense of reasonable proportion and procedural economy in the conduct of proceedings.  The same consideration applies even if costs were awarded on indemnity basis.

8.  In the present context, taking into account the vexatious nature of the application and the disruptive effect the application for leave on the preparation of the main trial, we consider it is appropriate to give the 1^st Defendant costs on indemnity basis.  That means that all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party.  In a summary assessment, this must be applied with a broad brush approach.

9.  Even taking the circumstances calling for award of costs on indemnity basis into account, we are firmly of the view that it is unreasonable for the 1^st Defendant to engage two counsel in resisting leave to appeal.  As it should be apparent from our Decision of 17 July, this is a relatively simple and straightforward application.  The judgment below and the transcript of the hearing below speak for themselves. The application does not involve any complicated law point. Nor does it require any detailed examination of a complicated factual matrix.  But for the impendency of the trial, we doubt whether it is necessary to involve counsel at all. In the present case, having regard to the exceptional circumstances and the Li Xiao Yun factor, we would allow the costs of one counsel.  But the level of fees charged by counsel is also disproportionately high having regards to counsel’s previous involvement in the matter and the lack of complexity in this application.  We would only allow a sum of $40,000 for counsel fees.

10.  Further, we are of the view that the amount charged and the time spent by the solicitors is unreasonable and wholly disproportionate to a matter of this nature.

11.  Having considered the respective figures put forward by the parties, we assess the costs of the 1^st Defendant (including the costs pertaining to the argument on costs) at $70,000.

12.  We take this opportunity to remind practitioners that whenever leave to appeal is refused on papers, this court usually deals with costs of an application for leave to appeal by way of summary assessment. Therefore, solicitors representing a party opposing leave should lodge with the court a statement of costs in accordance with PD 14.3 paras 7 and 8 when they file their statement of opposition pursuant to O 59 r 2A(4).  This practice had previously been brought to the attention of the professions by a letter from the Chief Judge on 10 August 2012.  The penultimate paragraph of that letter reads:

“Also as from 3 September 2012, represented parties must submit to the Registry at the same time they lodge their skeleton submissions a statement of costs for the purposes of summary assessment of costs irrespective of whether they intend to seek summary assessment. If an oral hearing is directed, the parties must lodge with the court not later than 2 days before the hearing a supplemental statement of costs covering the costs of the hearing. Experience has shown that in most applications for leave, summary assessment of costs is appropriate. Early submission of statements of costs will therefore facilitate the more efficient disposal of applications for leave.”