CHAN BOON NING JOHN v. OLDHAM, LI & NIE, SOLICITORS

HCMP2166/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

NO. 2166 OF 2005

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DECISION  ON  REVIEW  OF  TAXATION

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1.  This is an application for review by the Defendant, the former solicitors of the Plaintiff, Oldham, Li & Nie, Solicitors (“OLN”).

2. The application is based on three areas, being:

   (i)  that I had erred in ordering that items which appeared in the itemised bill of costs pursuant to my order and not appearing in the original ten bills presented to the Plaintiff should be expunged from consideration;

   (ii) that there has been no finding of fact concerning the Defendants’ overcharging of their client.  The matter should be left to the trial judge, which Ms Cheuk, a solicitor of OLN, contends would be the eventual tribunal in the District Court, because proceedings have been stayed pending taxation in this case; and

   (iii) that the court should not have issued a certificate for counsel in this case.

   I take those matters in the reverse order.

Certificate for Counsel

3. It is a matter of discretion of the taxing master to award or refuse a certificate for counsel where an application has been specifically brought by counsel following the end of argument.  The grant or refusal of such a certificate is not dependent on the success or otherwise of the application.  It very much depends on the matter which has been brought and argued.

4. I considered that the matters falling certainly within the first and second areas of review in the order in which they were advanced by Ms Cheuk would benefit from the attendance of counsel.  The fact that the Defendants had received no prior warning that counsel would be brought in by the Plaintiff to argue those matters before me on the last occasion is neither here nor there.

5. I considered then, and I still consider now, subject to argument whether counsel’s certificate is appropriate for today’s hearing, that the certificate was certainly apt on the last occasion.  I see no reason to tamper with that order.

6. Moving backwards, and dealing with the argument concerning the 25% discount that I hold should apply to all the bills, Mr Ling very appropriately referred me to paragraph 22 of my ruling dated 12 May 2007.  It reads:

“The Plaintiff also said that there was an agreement between him and the Defendant that all charges should be discounted by 25%.”

7. The evidence in point appears in his second affirmation filed in the District Court proceedings:  (see bundle A, page 106, paragraph 6).  I accept his evidence in this regard.  Failure to reflect the substantial discount of 25% translates, in my judgment, to excessive overcharging.  There was clearly a finding of fact in the taxation on one of the primary issues, and that still stands.

8. In paragraph 20 I have also dealt with the matter:

“However, when one scrutinises the bills, as counsel for the Plaintiff did at some length in submissions, one cannot but fail to notice a striking absence of particularity.  There were demonstrated instances of duplicated charges (particulars of which are in the Plaintiff’s third affirmation in the District Court) and overcharging in respect of filing fees where time charge was applied.”

9. There is no matter in this regard that should be left to the trial judge in the District Court.  I have ruled for the purpose of this taxation that there had been instances of overcharging.  There was a finding of fact, and unless it is overturned, it must obtain for present purposes.  That argument therefore fails.

10. Finally, one has to deal with the issue of whether or not the ten office bills presented to the Plaintiff for payment can be enlarged upon by the itemised bill of costs that I ordered should be presented for the purpose of taxation and which the Defendant duly did.

11. On 10 July 2008, in coming to the decision that the Defendant was not entitled to enlarge upon those ten bills, I had referred in paragraph 4 to the Hong Kong Civil Procedure 62/App/66 in paragraph 4 of the ruling.  I refer again to that passage in the White Book:

“Breakdown - The breakdown or details delivered is only to assist the taxation and it is still the original gross sum bill delivered to client which is being taxed.  What is being upheld or reduced upon taxation is the original gross sum bill (Cook on Costs (2nd ed., p.92)).  A solicitor is bound by the bill which he has delivered to his client.  Except by consent or order of the court made upon application, the bill may not be amended so as to strike out or add items or to correct the narrative.  Accordingly, where it is the gross sum bill which is ordered to be taxed, the breakdown of details supplied cannot remedy any defects or omissions in the gross sum bill or increase the amount claimed.”

12. That exhortation applies with equal force to the circumstances of this case.  In applying that particular rule, and despite having the court’s attention drawn to the decision of Master Chu, as she then was, in Hampton Winter & Glynn (a firm) v Janys Campbell HCA No. A2176/1996, I held that the Defendant was essentially stuck with the ten office bills and all additional items purportedly appearing in the detailed bill of costs should be ignored for taxation purposes.

13. Ms Cheuk once more refers to the decision of Master Chu in the Hampton Winter & Glynn case.  She contends that the ten office bills were really gross sum bills and that, following the decision and the reasoning adopted by Master Chu, the court should allow the detailed itemised bill to be taxed in its form, since all that the court is concerned with is to determine on taxation of the itemised bill whether the ten bills are  reasonable and proper.

14. In any event, it is said on the last occasion, although not repeated today, that solicitors are claiming no more than what was claimed in the original ten bills, and so it matters not that the itemised bill contains additional items, thereby enhancing the overall professional costs and disbursements.

15.  Mr Ling is correct to say that the bills presented to the Plaintiff - for example, and I have turned up before me one dated 23 October 2003, bearing invoice No. 777 of 2003 - are not gross sum bills.  The sample referred to has a fairly detailed description of the work done. The same could be said of the remaining nine bills.  In the bill that I have turned up, there is a statement that cheques should be made payable to Oldham, Li & Nie, Solicitors, and the amount due under that particular bill is $12,769.  Very much the same appears in the remaining bills.

16.  I had ordered that a detailed bill be provided to assist in the taxation.  Although I agree that there are descriptions of the professional charges in each of those bills, I took the view then, and it is an opinion I currently still hold, that it would be quite difficult if not impossible to actually tax the bills based on such descriptions alone.

17. On reflection, I consider that there is some merit in what Ms Cheuk is advancing this morning.  Perhaps I should read tranches from the decision of Master Chu, as they appear not only helpful, but seem to indicate that the bills in the present case are in no different a position:

“This is an application by the Defendant for review of taxation. 

In this action, the Plaintiff claims against the Defendant the amount of 14 bills of costs delivered by the Plaintiff to the Defendant covering disbursements and professional fees incurred in relation to a divorce suit filed by the Defendant. 

Upon the Defendant’s application, Mr Registrar Betts ordered that the bills of cost be taxed.  After the first of the 14 bills was taxed by me, and before the taxation on the other bills was resumed, the Defendant applied to review the taxation of the first bill, raising five objections. 

I shall deal with the last objection first, since this is a general point covering the entire bill and may also have a bearing on the taxation of the other bills.

Objection No. 5

The first bill in question is an office bill delivered on 13.8.1993 (“the Original Bill”).  The first 11 pages gave a narrative of the work undertaken up to 12 .8.1993 and gave the amount of $287,010 as the professional costs payable.  The last page set out the disbursement items in the amount of $78,591.  The Original Bill was also accompanied by an “Interim Matter Report”, which is a computer printout of the recorded time spent on the divorce suit.

After the appointment to Tax was taken out, the Plaintiff filed with the court a bill which was cast in the form generally adopted for taxation (“the Subsequent Bill”).  The total professional costs came up to $304,268.33, with the figure for disbursement remained the same.  At the taxation, the Plaintiff complained that the Subsequent Bill had included items which were not in the Original Bill.”

   And I digress here.  This is exactly what Mr Ling, on behalf of the client, has also argued.

“These relate to mechanical preparation of documents, some conferences, telephone attendance and letters written and received, and also general care and conduct.  On behalf of the Defendant, it was argued at the taxation that all these items should be disallowed since they were not on the Original Bill.

I had rejected the argument.  Firstly, I considered that the subsequent bill was to aid in assessing the reasonableness or otherwise of the total amount of professional costs under the Original Bill such that so long as the additional items are proper items as between solicitors and own client, they should be taken into account.  Secondly, I was of the view that the Original Bill, being the first of the series of office bills delivered to the Defendant, is in the nature of an interim bill; hence it should be permissible to make adjustments to it.

In the written Reasons for Objections, it was stated that the bill was a final bill and nothing could be added to it, so that all the additional items should be disallowed.  At the review hearing, reference was made to section 63 of the Legal Practitioners Ordinance, Cap. 159, which provides that where a gross sum bill is being referred to taxation, the client may request for a detailed bill be delivered and the detailed bill so delivered will replace the gross sum bill.  Since the Defendant had not made such a request, and, relying further on the case of Carlton v Theodore Goddard & Co [1973] 2 All ER 5.5, it was submitted that, despite the order for taxation, the original bill had not been replaced by the subsequent bill, and remained to be the bill to be taxed.  It was argued that therefore the additional items in the subsequent bill should be disallowed completely.

In answer, the Plaintiff argued that it did not seek to replace the Original Bill by the Subsequent Bill, thereby recovering more than what was claimed in the Original Bill.  Reliance was placed on a passage in Cook on Costs (2nd ed., p.92) which reads as follows:

‘Where the bill delivered is a gross sum bill which has not been replaced by a detailed bill, the taxing officer may nevertheless, for the purpose of the taxation, direct the solicitor to provide a detailed breakdown of his bill showing how the gross sum is calculated or justified.  It is to be appreciated that such a breakdown is for the purposes of the taxation only, and that it is still the original gross sum bill delivered to the client which is being taxed and which, at the end of the taxation, will be either upheld or reduced.  Accordingly, although the detailed breakdown may quite properly justify a figure considerably higher than the amount of the gross sum bill, it is of assistance only in considering the reasonableness of the gross sum bill and is of no relevance to the question of whether or not a fifth has been taxed off the gross sum bill.’

In my view, this passage sums up the situation here.  The Defendant has argued that the original bill was not a gross sum bill but a detailed bill, albeit not in a form for taxation.  I do not agree.  The narrative in the original bill, however lengthy it may be, did not show the basis for the calculation of the total professional costs set out.  The computer printout attached is in essence an aggregate of the time spent and recorded, and did not add much details to the bill itself.  The original bill did not provide a detailed breakdown of the value of the work performed by the solicitors, and as such it can only be a gross sum bill.

It is beyond dispute that the original bill is not in a form capable of being taxed.  The Subsequent Bill would have been ordered by a taxing master had the Plaintiff not taken the initiative of drawing and filing it.  It seems to me to be common ground between the parties that the Subsequent Bill is not the subject matter of taxation.  The reference to it in the course of taxation was solely to enable the proper assessment of the Original Bill; particularly the value of the service of the solicitors, in deciding whether the professional costs was justified or otherwise.  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 of 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.”

18. I make no apologies for quoting in extenso from Master Chu’s decision.

19. Although the Plaintiff, when presented with the ten bills, was expected to make payment, there was a quibble over the charging, and the matter had ultimately to proceed to taxation. 

20. In this case, on reflection, I see very little difference if any in the instant case.  In other words, there is very little difference in substance between the ten bills in this case and the 14 bills that came before Master Chu.  Therefore, applying the reasoning adopted by Master Chu, I consider that a similar result should obtain in this case.

21. I had fallen into error when I previously ordered that items in excess of the original ten bills appearing in the itemised bill should be totally discounted from consideration.

22. Those matters of course have to be reactivated, and one would have to reconsider them afresh and arguments heard before a decision is made as to whether or not they should be acceded to, either in whole or in part.  That is a matter obviously to be left to another day.

23. On this first and primary point, and having dealt with it last, I hold that Ms Cheuk has succeeded.

(Discussion re costs)

24. I will order no order for costs.  I think both of you have succeeded in some aspects, and a fair order would be no order for costs, and I so order.