CHAN YAT LING v. TANG, WONG & CHOW, a firm

HCMP 843/2021

[2022] HKCFI 991

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 843 OF 2021

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D E C I S I O N

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1.  This is an application by Chan Yat Ling (“the Plaintiff”) by originating summons dated 18 June 2021 for an order against Tang, Wong & Chow (“the Defendant Firm”) that TWC’s bill no 25879 (“the Bill”) and all other paid and/or outstanding interim bills (if any) relating to the Estate of Li Fung Chun, Deceased (“Li”) and the Estate of Chan Kin Man, Deceased (“Chan”) to be disclosed by the Defendant Firm, be referred to the Taxing Master for taxation pursuant to section 67 of the Legal Practitioners Ordinance, Cap 159 (“LPO”).

Background

2.  The Plaintiff was appointed administrator of the estates of his parents (“the estates”), the late Li and Chan who passed away in 2007 and 2008 respectively.

3.  The Plaintiff and his 6 siblings have equal shares in the estates. The Plaintiff entered into Settlement Deeds with 3 of his siblings in 2009 and 2010 pursuant to which his 3 siblings were paid their respective entitlements to the estates.

4.  In May 2011, the rest of the beneficiaries entered into a Deed of Family Arrangement governing the administration of the estates which comprise 3 properties, namely, the Mirador shop, the Excelsior flat and the Waterloo Road property.

5.  Prior to the Plaintiff’s engagement with the Defendant Firm, his solicitors were Messrs Cheung, Chan & Chung (“CC & C”), the handling solicitor being Wong Chi Kit Peter (“Mr Wong”).

6.  In October 2015, when Mr Wong left CC & C and moved to the Defendant Firm on 2 October 2015, the Plaintiff signed an undated authorisation letter which Mr Wong then dated 6 October 2015 and sent the same to CC & C for the purpose of effecting the transfer of the Plaintiff’s files to the Defendant Firm.

7.  Mr Wong did not arrange for the Plaintiff to sign any retainer with the Defendant Firm as by this time he had been providing legal services to the Plaintiff for over 6 years and had trust in him.

8.  Mr Wong continued to provide legal services to the Plaintiff at the Defendant Firm although there may be disagreement between the Plaintiff and Mr Wong over the nature, complexity and scope of legal services provided.

9.  In December 2020, the Plaintiff requested Mr Wong to return certain original documents still in the possession of the Defendant Firm which were required for a property succession application in Macau. The requested items (apart from the original of one document which could not be found but in place thereof a certified copy was provided) were returned at a meeting between the Plaintiff and Mr Wong on 22 January 2021. The Plaintiff signed an acknowledgement of receipt for them.

10.  At that meeting, Mr Wong informed the Plaintiff that he would be issuing final bills in respect of services rendered in the past years in relation to the estates. According to the Plaintiff, a figure of $4 million was mentioned which apparently caught him by surprise. Mr Wong’s version makes no mention of the amount and stated that the Plaintiff did not express any objection.

11.  A further meeting took place on 25 February 2021 when the Plaintiff attended the Defendant Firm to sign a tenancy agreement for the Mirador shop. After the matter was concluded, Mr Wong and the Plaintiff had a further conversation concerning the final bills. Again their versions differ but are not relevant for present purposes.

Events precipitating the present application

12.  The Plaintiff was concerned over the legal fees that Mr Wong would charge and that Mr Wong would use the Plaintiff’s documents as leverage for payment. The Plaintiff therefore sought advice from his present solicitors Messrs Hugill & Ip (“H & I”).

13.  On 14 April 2021, H & I sent a letter to the Defendant Firm (“the 14 April letter”) formally demanding the release of the Plaintiff’s documents that are in the Defendant Firm’s possession within 7 days, failing which legal proceedings would follow[1].

14.  That letter elicited the Defendant Firm’s response on 19 April 2021 (“the 19 April letter”) to the effect that final bills would be completed within 28 days and that the Defendant Firm would exercise their right of lien pending settlement of their legal costs and disbursements.

15.  H & I replied on 23 April 2021 (“the 23 April letter”) reserving the Plaintiff’s rights to dispute the bills on time-bar and other grounds, and stating that “we look forward to receiving your legal bills on or before 17 May 2021”.

16.  By letter dated 20 May 2021 (“the 20 May letter”), the Defendant Firm sent to H & I on behalf of their client (a) the pro-forma bill for the services rendered by CC & C which was awaiting their final approval and verification (“the pro forma bill”); and (b) the Bill.

17.  The 20 May letter went on, inter alia, to require settlement of the Bill within 14 days, failing which legal proceedings would be commenced against the Plaintiff. It also requested H & I’s confirmation that they have “instructions to accept service on behalf of your client, otherwise court documents will be served on him directly”.

18.  The Bill contained a description of 70 items of work/services rendered by Mr Wong with a single time entry of 86 hours 30 minutes without any breakdown of time.

19.  The pro forma bill, like the Bill, contained a single time entry of 752 hours 16 minutes on 1076 items of work without any breakdown of time.

20.  H & I replied on 26 May 2021 (“the 26 May letter”) stating (at §2) that “this letter should not be construed as our client’s acceptance of the delivery of your legal bills to our client pursuant to s. 66 (2) (b) of the Legal Practitioners Ordinance, Cap. 159”. It sought a breakdown of time spent on each item of work.

21.  H & I sent a chaser letter on 8 June 2021 repeating their earlier request for a breakdown of time spent.

22.  The Plaintiff then issued this originating summons on 18 June 2021 seeking an order for the commencement of taxation against the Bill.

23.  On 21 June 2021, H & I informed the Defendant Firm of the commencement of taxation proceedings to preserve the Plaintiff’s right of taxation within one month from the date of the Bill. H & I again did not admit delivery of the Bill.

Delivery of the Bill

24.  The sole issue that arises is whether there has been “delivery” of the Bill within section 67 (1) of the LPO. It is the Defendant Firm’s case that the Bill has not been validly delivered.

25.  Section 67 (1) of the LPO provides as follows:

“(1) On the application, made within 1 month of the delivery of a solicitor’s bill ... of the party chargeable therewith the Court shall, without requiring any sum to be paid into court, order that the bill shall be taxed and that no action shall be commenced thereon until the taxation is completed.”

26.  The term “delivery” is not defined in section 67. However, section 66 (which governs an action by a solicitor to recover costs) prohibits a solicitor from bringing an action to recover costs due until one month after a bill has been delivered. Section 66 (2) (b) provides that

“the bill must be delivered to the party to be charged therewith, either personally or by being sent to him by post to, or left for him at, his place of business, dwelling house or last known place of abode”.

27.  Mr Geoffrey Yeung, counsel for the Defendant Firm submitted that sections 66 and 67 of the LPO should be construed together and the term “delivery” used in both sections should bear the same meaning.

28.  While he accepts that a person can appoint another person as an agent to accept service on him, Mr Yeung submitted that the correspondence between H & I and the Defendant Firm shows that H & I did not have authority to receive that Bill on the Plaintiff’s behalf, at least before the commencement of these proceedings.

29.  The court was referred to Parvez v Mooney Everett Solicitors Ltd [2018] 1 Costs LO 125, a case where the client contended that the bill included in certain internal files passed from her former solicitors to her new solicitors constituted a bill delivered for the purposes of sections 69 - 70 of the Solicitors Act 1974 which is the parallel English provision for sections 66 - 67 of the LPO. The argument was that in circumstances where a solicitor fails to deliver the bill but the bill otherwise comes into the possession of the client, the client may elect to treat it as having been delivered.

30.  Parvez offers no assistance on the issue of H & I’s authority to receive the Bill on the Plaintiff’s behalf. For present purposes, its relevance lies in §56 where the court accepted that Kingstons v Reiss [2014] EWCA Civ 172 is authority for the proposition that “a document is not a bill of costs unless it is sent by the solicitor to the client as a demand or claim of the sum therein stated to be due”.

31.  The question therefore is whether 20 May letter and the Bill were sent by the Defendant Firm to the Plaintiff (and/or the Plaintiff’s agent) as a claim or demand stated therein.

32.  Leaving aside for the moment H & I’s capacity/authority as recipient, the focus for the proposition in Kingstons is the intention of the Defendant Firm in sending the same.

33.  The answer is clear: in the 20 May letter, the Bill was prefaced by the following words: “we now present to you on behalf of your client”. There could not be a clearer statement of intention. Indeed, the purpose of sending the 20 May letter and the Bill was to put into action what the Defendant Firm had intimated in their letter of 19 April that they would be doing. The demand for payment could not be more direct and, for good measure, reinforced by threats of legal proceedings if unpaid within 14 days.

34.  As to H & I’s authority to accept delivery of the Bill, the Defendant Firm submitted that legal representatives do not necessarily have authority to accept service of legal proceedings on their client’s behalf. As a general statement it is unexceptionable. However, context is all-important.

35.  The 23 April letter was part of a series of letters exchanged between H & I and the Defendant Firm relating to the Plaintiff’s documents remaining in the Defendant Firm’s possession and the Defendant Firm’s intention to send final bills to the Plaintiff. That the 23 April letter was sent on behalf of the Plaintiff is beyond dispute.

36.  As I understand the submission, the Defendant Firm accepts that H & I had authority to act for the Plaintiff in relation to the demand for the return of the Plaintiff’s documents but not in relation to accepting delivery of the Bill. The distinction drawn appears to be somewhat pedantic.

37.  First of all, the matters are inter-related in that the Defendant Firm had made clear their intention to exercise their right of lien on the documents. Second, H & I’s letter of 23 April responded to both matters and in relation to the legal bills, H & I stated that “we look forward to receiving your legal bills …”.

38.  Implicit in that statement is H & I’s authority to receive them. It is inconceivable that H & I would have so stated absent requisite authority. Moreover, H & I never returned the Bill on the basis that they did not have authority to receive them. Put another way, a month after its delivery the Defendant Firm could have commenced proceedings to recover their costs pursuant to section 66 of the LPO.

39.  Much has been made of H & I’s statement in the 26 May letter that it “should not be construed as our client’s acceptance of the delivery of [the Defendant Firm’s] legal bills[2] to [the Plaintiff] pursuant to s. 66 (2) (b) of the [LPO]”. The Defendant Firm submitted that the statement amounted to a retraction of H & I’s position on their authority to receive the Bill.

40.  The penultimate paragraph of the 20 May letter requested H & I to “revert and confirm that your firm has instructions to accept service on behalf of your client, otherwise court documents will be served on him directly”.

41.  In this connection, it is to be noted that two paragraphs earlier in the same letter, the Defendant Firm gave notice that legal proceedings would be commenced if the Bill was not settled within 14 days of receipt. When read together, the request referred to in §40 was made in the context of legal proceedings to enforce payment rather than H & I’s authority to accept delivery of the Bill. The Bill is not a ‘court document’.

42.  When so analysed, it is not a statement that H & I had no authority to receive the Bill. It is akin to a party making ‘no admission’ and reserving its position.

43.  In my view, the Bill was validly delivered by the 20 May letter and subsequent correspondence (such as the 26 May letter) cannot alter that fact.

Conclusion

44.  It should be mentioned that in §102 of Mr Wong’s opposing affirmation, it was proposed that if this court were not minded to dismiss the taxation proceedings it should order that they shall also include the CC & C Bill. Counsel for the Defendant Firm has confirmed that the alternative order is no longer pursued.

45.  In the circumstances, there is to be an order in terms of the originating summons.

46.  In so far as the costs of this application is concerned, there is good reason that the normal order of costs following the event should be varied. In my view, it is most unfortunate that H & I’s opening shot was unnecessarily confrontational and aggressive. That was compounded by the unfortunate phraseology it used in the 26 May letter and repeated in the 21 June letter engendering a great deal of debate and uncertainty.

47.  All that could have been avoided had a more even-tempered approach been adopted to resolve the matter. For this reason, I consider it appropriate that there be an order nisi that the Plaintiff be awarded 50% of his costs with certificate for counsel, such costs to be summarily assessed and payable forthwith.

48.  As the Plaintiff’s statement of costs has been served, it is directed that the Defendant Firm lodge its objections within 14 days of this Decision and Plaintiff lodge its reply (if any) within 7 days thereafter.