INTERNATIONAL INSTITUTE OF PROFESSIONAL DEVELOPMENT LTD v. FRANCES IP & CO (A FIRM)

HCMP 1836/2022

[2024] HKCFI 2763

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1836 OF 2022

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BETWEEN

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DECISION

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Introduction

1.  This is a review of my taxation.

2.  Frances Ip & Co. (“the Firm”) acted for International Institute of Professional Development Limited (“the Company”) in a High Court action under HCA 1664 of 2019 (“the Action”). The Firm issued two bills respectively dated 16 September 2022 (“the First Bill”) and 29 September 2022 (“the Second Bill”) to the Company.

3.  By the First Bill, the Firm asks for HK$127,473. By the Second Bill, the Firm asks for HK$9,647.

4.  By way of background, the Firm replaced Messrs. Wong & Lawyers to be the solicitors for the Company in the Action by a written retainer signed by the Firm on 26 June 2022 and by the Company on 11 July 2022 (“the Retainer”).

5.  By an Originating Summons dated 9 November 2022 (“the OS”), the Company applies for referral of the two Bills to taxation by a taxing master.

6.  By an order of Master Matthew Leung dated 14 February 2023, the Firm was ordered to file and serve a detailed bill of costs (“the Bill of Costs”). The Firm did so on 11 April 2023 and the amount stated in the Bill of Costs is HK$239,490.

7.  The taxation hearing was fixed before this court on 17 January 2024 (“the Hearing”). At the Hearing, the Company was represented by Mr Wu whereas the Firm was represented by Mr Ho. Both Mr Wu and Mr Ho are experienced law costs draftsmen. After hearing the parties, this court taxed the Bill of Costs down to HK$191,844.67.

8.  At the Hearing, Mr Ho made it clear that the Firm would not charge more than the amount stated in the First and Second Bills.

9.  On 31 January 2024, the Company issued a notice for an appointment for review of taxation. At the review hearing, Mr Liu appeared for the Company and Ms Yau appeared for the Firm.

The Issues

10.  The dispute is about Items 1 to 36 of the Bill of Costs (collectively “the Disputed Items”). To comply with Order 62 rule 33(3) of the Rules of the High Court (“the RHC”), the Company filed its written objections dated 31 January 2024 (“the Written Objections”).

11.  The Written Objections contain the grounds on which the Company says that this court erred in allowing the Disputed Items. It is said that this court failed to take proper account of 8 matters which I now set out as follows (without any editing save the adoption of the abbreviations in this Decision):

(a) Preliminary issues in relation to a Retainer agreement dated 27 June 2021 (sic) whereas the Retainer agreement was signed and sent to the Firm on 11 July 2022.

(b) Before the beginning of the Hearing, Mr Ho produced chains of emails from 15 November 2021 to 28 January 2022 to make Mr Wu believe that work done for the Disputed Items was conducted during engagement services.

(c) The Firm’s observations (or consultation) stated in its email to the Company dated 28 January 2022 regarding the Action is a result of Wellington Legal seeking an order from the Court, so any costs prior to 16 June 2022 was not related to the engagement. It is different from the Company’s instructions for service rendered by the Firm in the First Bill.

(d) The Firm was instructed by the Company in another matter (HCCW374/2020 between 12 October 2021 to 16 June 2022). The Company requested the Firm to give office bill of 1^st job (HCCW 374/2020 matter before the Company engaged the Firm on the 2^nd job (the Action).

(e) Furthermore, the Firm’s First Bill clearly shows that it covers the work carried out from 11 July 2022 to 15 September 2022.

(f) The Firm’s Bill of Costs is only to assist the taxation and it is still the original Bills delivered to the Company which are being taxed.

(g) The Firm (Solicitor) is bound by the Bills which they have delivered to the Company (its client) whereas the Firm’s Bill of Costs cannot remedy any defects or omissions in the Bills or increase the amount claimed.

(h) In addition, the total sum ($87,776.33) of the Disputed Items as claimed in the Bill of Costs is disproportionate to the Bills total of $137,120.

12.  At the Hearing, Mr Liu basically raises three objections without any references to the Written Objections. First, the Company contends that the Disputed Items should be taxed off in its entirety on the ground that (1) the Firm was bound by the Bills, which are detailed bills and the Firm is not allowed to inflate the Bills by including any additional items in the Bill of Costs (“the Inclusion Objection”) and in any event the Firm did not render such duties in the Disputed Items (“the No-Service Objection”). As a further alternative, the Company contends that the Disputed Items should be taxed off significantly because the hours allegedly spent by the Firm are unreasonably long (“the Excessive Objection”).

The Inclusion Objection

13.  The First Bill expressly covers the period from 11 July 2022 to 15 September 2022 and consists of more than a hundred of items of services rendered to the Company. The Second Bill covers the period from 15 September 2022 to 29 September 2022 and is composed of 10 items of services rendered to the Company.

14.  Mr Liu submits that the Bills are detailed bills within the meaning of section 63(a) of the Legal Practitioners Ordinance, Cap. 159. Mr Liu says that the Bills are binding on the Firm and the Bill of Costs ordered by the master was merely to assist proper assessment of the Bills. The Firm cannot include any additional items including the Disputed Items in the Bill of Costs. In this regard, Mr Liu relies on Friston on Costs (4^th Edition) §§35.87 -35.89; Rezvi and Rezvi v Brown Cooper (a firm) [1997] Costs LR109 and Slade (t/a Richard Slade and Company) v Boodia and Anor. [2018] EWCA Civ 2667.

15.  I am unable to accept that the Disputed Items are wholly extraneous to the Bills though they are not expressly included. The perusal of various documents covered by the Disputed Items must be essential to all the services specified in the Retainer and the Bills issued subsequently. Without perusal of all the documents already in existence before the Retainer, no responsible solicitor could start working for his clients in the Action.

16.  On the other hand, Ms Yau submits that the Bills are gross sum bills and they are not in a form capable of taxation. Therefore, the Bill of Costs was ordered to be filed to assist taxation of the Bills. Ms Yau accepts that it was the Bills that was the subject matter of taxation and not the items in the Bill of Costs.

17.  Ms Yau submits that the relevant question is whether the Disputed Items are proper items of solicitor/own client costs. If so, they should be considered in determining the reasonableness of the professional costs of the Firm.

18.  Ms Yau relies on Hampton Winter & Glynn (a firm) v Janys Campbell (HCA 2176/1996, unreported) which was quoted in extenso by Master de Souza in Chan Boon Ning John v Oldham, Li & Nie, Solicitors (HCMP 2166/2005, unreported, 12.8.2008). Unfortunately, neither Mr Liu nor Ms Yau could manage to locate a copy of the decision of Hampton Winter & Glynn (a firm) and we could only refer to the quotation by Master de Souza in Chan Boon Ning John.

19.  In Hampton Winter & Glynn (a firm), Master Chu (as she then was), after finding that the original bill was a gross sum bill, said this,

“Hence, strictly speaking, it is not a question of allowing or disallowing any item under the subsequent bill, but rather whether certain items therein should or should not be taken into account in determining the reasonableness of the original bill. In my view, any item in the subsequent bill, so long as it is a proper item for solicitor/own client costs, should be taken into account. If, at the end of the day, the total amount the items in the subsequent bill taken into account by the taxing master exceeds the amount claimed in the original bill, then the original bill should be upheld in its entirety. On the contrary, if it is of a lesser amount, then the original bill should be reduced or taxed down to the lesser amount.”

20.  Ms Yau points out that Mr Ho at the Hearing already confirmed unequivocally that the Firm only sought to recover the amount of the Bills and not the amount stated in the Bill of Costs.

21.  In my view, the Bills are detailed bills and not gross sum bills. They contain detailed breakdown of the services rendered and time spent thereon. But this categorisation has little significance. It is common ground that the subject matter of taxation is the Bills and not the Bill of Costs.

22.  The Inclusion Objection was raised in “The Plaintiff’s List of Objections to the Defendant’s Bill of Costs” (“the LOO”). In relation to some of the Disputed Items, it was pointed out that the Firm did not make such claims in the Bills. However, at the outset of the Hearing, Mr Wu expressly abandoned this objection and submitted that he only pursued the first issue being the time differences between the Bill of Costs and the Bills.

23.  From the transcript of the Hearing (“the Transcript”), it can be seen that Mr Wu made these submissions on behalf of the Company,

“Master, I think I would like to keep the first paragraph of the preliminary issue only, which show the difference of the time.

Yes, and let’s move on to the quantum, item by item. From bill number item 1 to 37, it is the time, it’s the documents, it’s the period where the previous solicitors handled the case. So that’s why the defendant’s solicitor, Frances Ip & Co, is now required to go through those documents. And of course, I have found there are certain duplication of the time as claimed. So let me start from objection number two. That is item 3 of the bill.”

24.  Mr Andy Kwok who is the sole shareholder and director of the Company, in his 3^rd Affirmation dated 6 June 2024, stated that after reading the Transcript, he believes that the Company did not make any concession as to the Disputed Items at all and there is no issue of estoppel or concession. He further stated that in this review hearing, the court is entitled to consider everything afresh including new evidence.

25.  Mr Kwok does not explain the basis of such statements in his affirmation. Mr Liu does not provide any authorities to support this contention.

26.  It is noteworthy that there is no evidence to support the serious allegation in the Written Objections that Mr Wu was misled by Mr Ho into believing that the work covered by the Disputed Items was done during the currency of the Retainer. Mr Kwok has not said anything about this allegation in his 3^rd affirmation.

27.  In all fairness to Mr Liu, he made no submission on this unfounded allegation at the Hearing.

28.  Ms Yau submits that the well-established Henderson v Henderson principle applies here. She draws to my attention to the following dicta of Popplewell J in ORB a.r.l. & Ors. v Ruhan & Ors [2016] EWHC 850 (Comm) at §82,

“But the principle is well established, and often applied, in relation to contested interlocutory hearings. It is that if a point is open to a party on an interlocutory application and is not pursued, then the applicant cannot take the point at a subsequent interlocutory hearing in relation to the same or similar relief, absent a significant and a material change of circumstances or his becoming aware of facts which he did not know and could not reasonably have discovered at the time of the first hearing. It is based on the principle that a party must bring forward in argument all points reasonably available to him at the first opportunity; and that to allow him to take them serially in subsequent applications would permit abuse and obstruct the efficacy of the judicial process by undermining the necessary finality of unappealed interlocutory decisions.”

29.  In the context of a review hearing by a master under Order 62 rule 33, RHC, Chan Yerk Wang v Tony Kan & Co. [2011] HKEC 1016 should be of relevance. There, DHCJ Au Yeung (as she then was) dealt with a review of taxation done by Master Levy and one of the issues was whether the plaintiff was permitted to raise in a review objections that were never raised at the taxation.

30.  Master Levy at the review hearing under Order 62 rule 33 of the RHC held that the plaintiff was not entitled to review any items to which she had never heard objection at the taxation hearing. The plaintiff had filed a long list of objections and the bill was taxed in her presence. Mastert Levy observed that Order 62 rule 33(3) was not engaged and so she dismissed the review. In coming to this conclusion, Master Levy distinguished her case from A Solicitor v Law Society of Hong Kong [2007] 4 HKC 165 in which Saw J allowed the appeal of a paying party who had never filed a list of objections and was absent from the hearing.

31.  The learned deputy judge held that Rule 33(1) clearly refers to a party’s dissatisfaction with the “allowance or disallowance” of any “taxed” item and so the necessary implication is that those items must have been the subject of dispute at the taxation hearing (at §25). The learned deputy judge also found that Master Levy had correctly distinguished A Solicitor’s case (at §26).

32.  In the present case, the Company was represented throughout. The factual basis of the Inclusion Objection was set out in the LOO but eventually Mr Wu did not pursue such an objection and instead asked the court to tax down the Disputed Items.

33.  The Company gives no explanation for the present change of position. Mr Kwok simply believes that it is somehow entitled to raise any issues in the present review.

34.  In A Solicitor, at §22, Saw J observed that powers to review given to judges, magistrates or masters are designed in part to provide a simple means to remedy or revisit decisions without recourse to the full appellate process. I agree that a review under Order 62 rule 33 serves this purpose.

35.  I am too aware that rule 34(2) provides that at a review hearing, the court can receive further evidence without fulfilling the Ladd v Marshall conditions: Kung Wong Sau Hin v C.P. Lin & Co. [1988] 2 HKLRD 209 per Fuad JA at p.212B.

36.  However, in my view, it is still an abuse of process to raise a new issue at the review hearing under Order 62 rule 33 when a decision was expressly made not to raise that issue at the taxation hearing. If this is permissible, there is always a second bite at the cherry for the parties. A review hearing would only serve to be a hearing de novo by the same taxing master and a floodgate will be opened. This cannot be the raison d’être of a review hearing under Order 62 rule 33.

37.  This is another reason why the Inclusion Objection must be rejected.

The No-Service Objection

38.  In the LOO, as one of the preliminary issues, it was asserted that it was very likely that the Firm did not actually spend the time claimed in perusal of documents.

39.  Mr Wu expressly indicated that he only pursued the first preliminary issue only and abandoned the rest including this objection. He did not argue that the Firm did not render the services under the Disputed Items at all.

40.  This objection is not included in the Written Objections.

41.  By the same token, I cannot accept that the Company could raise this objection now when Mr Wu opted not to pursue it at the Hearing.

42.  I have read the 2^nd Affirmation of Tam Ip Fong Sin dated 18 April 2024. Madam Tam Ip is the principal of the Firm. She explained that on 7 July 2022, the Firm received from Mr Kwok a court note dated 6 July 2022 demanding the parties to file and serve their respectively timetabling questionnaires and a mediation certificate on or before 20 July 2022. To comply with the court note, the Firm started immediately reading the documents even before the Company had returned the duly signed written retainer. Madam Tam Ip further explained after the Firm received from the Company the signed retainer on 11 July 2022, she perused the court documents stated in the Disputed Items after the Retainer was signed.

43.  Mr Kwok is unable to adduce rebuttal evidence to support his challenge. I have no hesitation in preferring the evidence of Madam Tam Ip and I accept as a fact that the Firm carried out the work or provided the services covered by the Disputed Items after the Retainer was made. The Non-Service Objection is devoid of substance and must be rejected.

The Excessive Objection

44.  In the Written Objections, there is only a sweeping statement that the taxed costs of the Disputed Items in the amount of HK$87,776.33 is disproportionate to the total amount stated in the Bills in the sum of HK$137,120. There is no specific complaint about any particular items being excessive.

45.  In his affirmation, Mr Kwok claims that he caused the documents in the Action to be sent to the Firm for preliminary advice on a complimentary basis between 15 November 2021 and 29 January 2022. He was impressed by the advice given by the Firm contained in an email dated 28 January 2022 and so he decided to instruct the Firm to take over the Action from the former solicitors of the Company by the Retainer.

46.  On this evidence, Mr Liu submits that the Firm should have acquired a sound knowledge and firm grasp of the facts in the Action by the end of January 2022 and there is no reason why the Firm had to peruse or consider the papers again during the currency of the retainer and spent 1,341 minutes perusing or considering the papers for a second or third time.

47.  Mr Liu submits that if this court finds it to be reasonable for the Firm to spend so much time to review the papers in July 2022 again, a signal will be sent to the practitioners that such reviews are permissible and chargeable every half a year during the retainer.

48.  I find no merit in these submissions. Even if the Firm perused the papers for the purpose of giving complimentary advice from November 2021 to January 2022, it does not mean that the Firm could be absolved from the professional duty to read all the papers afresh for the purpose of the Retainer.

49.  Of course the Firm had to read the papers for the purpose of any pre-retainer advice. The intensity of such reading should, however, be a far from that for the purpose of a professional retainer. I cannot believe any responsible and professional legal practitioner would afford not to review all the papers for the retainer. As stated above, there is simply no evidence that the Firm did not do so.

50.  I fail to understand how such a finding would mean that solicitors could regularly charge their clients for reviewing papers bi-annually. Every case depends on its own facts. Even on the facts of the present case, the Firm did not do so during the Retainer.

51.  Mr Liu then relies on the 4 broad complaints set out in paragraphs 8 and 9 of the 3^rd Affirmation of Mr Kwok to make good the Excessive Objection.

52.  Paragraph 8 merely reiterates the contention that there is no need to peruse the court documents after the written advice was given on 28 January 2022. I have dealt with this.

53.  Paragraph 9 repeats the allegation that the Firm had acquired a good understanding of the Action and an in-depth and all-round written advice was rendered.

54.  The only new matters in paragraph 9(a) is that the Firm did not have to peruse the draft statement of claim and the draft reply together with their statements of truth when their finalised versions were already filed.

55.  My view is that the Firm had to peruse all the documents passed to it by the Company and could not afford to miss any one of them as its prudent and professional solicitors. At the Hearing, I considered the amount of time spent on these documents and came to the conclusion that the time spent was reasonable. For the Statement of Claim and its draft (12 pages), together with the Writ of Summons, the Firm spent 105 minutes on these documents. I do not think that it is unreasonable.

56.  For the Statements of Truth taking up 2 minutes, Mr Wu said nothing about this at the Hearing and in any event I find it reasonable.

57.  By paragraph 9(b), Mr Kwok repeats his challenge to the necessity of perusal of certain court documents after the written advice. I hold that of course the Firm had to read those documents and the time spent was reasonable.

58.  By paragraph 9(c), Mr Kwok challenges the necessity of consideration of the Company’s list of documents for 8 hours and consideration of the draft list of documents dated 26 July 2020 for an hour.

59.  The Company’s list of documents includes 639 pages of documents and I find it necessary to go through such documents carefully and 8 hours is within the bounds of reasonableness.

60.  For the draft list, I agree that the Firm had to go through the 160 pages of documents and an hour is reasonable.

61.  Paragraph 9(d) concerns the costs relating to a hearing on 20 August 2020. The hearing was for the application of further and better particulars (“the Application”) and the Application was disposed of in May 2020. In the Bill of Costs, the Firm charges 45 minutes for perusing the hearing bundle (Item 24), 2 hours for perusing the defendant’s submissions including a statement of costs (Item 25) and 2 hours for relevant documents relating to the defendant’s submissions (Item 26) and an hour for perusing the Company’s submissions (Item 28).

62.  Again, Mr Kwok believes that the Firm should know about the Application sufficiently even before the Retainer and in any event, the Application was already a fait accompli and the Firm did not need to read those documents.

63.  In the LOO, it was suggested that all these costs should be taxed off.

64.  For the same reason, I believe that it was necessary for the Firm to review those documents relating to the Application. And the number of hours claimed appears to be reasonable to me.

65.  Apart from the foregoing objections, Mr Liu has attached to his written submissions a table setting out his comments on the Disputed Items. No oral submissions was made on those other items at the hearing.

66.  For Items 12 and 15, I do not accept that it was unreasonable for the Firm to have spent altogether 55 minutes on the summons together with the Company’s written request for further and better particulars.

67.  For all other items, I note that some were actually agreed by Mr Wu at the Hearing such as Items 18 and 20 and some were not objected to at all.

68.  In any event, I have gone through all the items and I find that it was necessary for the Firm to review such documents. The time spent is reasonable in all the circumstances.

69.  For completeness, I have to express my disagreement with Ms Yau’s submission that this review is premature. It is true that this court has not made any costs order on the final amount in that no allocatur has been issued, taxation has been concluded and the Company should be entitled to make this application for a review.

70.  That concludes my review of taxation and I have sufficiently explained my rulings though I have not dealt with all the submissions of counsel.

Conclusion and orders

71.  For the reasons given above, none of the Objections is valid and there is no room for any downward adjustment for the taxed amount. The review is unsuccessful.

72.  Costs should follow the event. I make an order nisi that costs of and occasioned by the review be paid by the Company to the Firm, to be taxed if not agreed with certificate for counsel. Summary assessment is appropriate and I direct that the Firm do file and serve its statement of costs within 14 days from the date of this Decision and the Company do file and serve its lists of objections within 14 days thereafter. Summary assessment will be carried out on paper without a hearing.

73.  Lastly, I thank Ms Yau and Mr Liu for their assistance in this matter.