CHENG, YEUNG & Co, SOLICITORS v. CHAN CHIN

DCCJ226/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 226 OF 2004

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Reasons for Judgment

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1. On 28 June 2004 I gave judgment in favour of the plaintiff for $295,468.10 or such lesser sum as may be found on taxation, and the costs of the action including the costs of the Order 14 application, to be taxed if not agreed with certificate for counsel. I now give reasons.

2. The plaintiff is a firm of solicitors. The defendant was its client. In about May 2001 the defendant was investigated by the ICAC. He engaged the plaintiff to act for him by an engagement letter dated 14 May 2001, and paid $50,000.00 on account of costs.

3. On 20 December 2001, the plaintiff issued its first interim bill for services rendered from 9 May to 15 December 2001, amounting to $85,495.00 minus costs paid on account, so that the final figure came to $35,495.00. On 31 December 2001 the defendant paid the plaintiff a further $200,000.00 whereof $35,495.00 was used to settle the first interim bill. The remainder was held on account of further costs.

4. On 19 April 2002, the defendant further engaged the plaintiff to act for him in District Court Criminal Case No. 7 of 2002 which had been brought as a result of the ICAC investigation. The plaintiff wrote a letter to the defendant, which the latter signed by way of acceptance, in the following terms:

We write further to our letter dated 14th May 2001 and refer to the trial to be heard on 22nd - 26th July 2002 and are pleased to act for you in this matter, subject to your agreement to the basis and with terms as specified hereinbelow.

We write to confirm that the solicitors handling this matter are our Senior Partner, Mr Benny Yeung and our Partner, Mr Wesley Ip, whose hourly rates are HK$4,200.00 and HK$3,500.00 respectively. Our charges for work done for attending legal visit, preparation, perusal of documentation and consideration of the case and court attendance will be charged on a timely basis at the said rates.

According to your instructions, Mr. Lawrence Lok of Senior Counsel, whose brief fee is HK$160,000.00 with refresher of $60,000.00 and Mr Alex Ng of Junior Counsel, whose brief fee is $HK30,000.00 with refresher of HK$8,000.00 are retained to appear and defend the above charge on your behalf at the trial returnable on 22nd - 26th July 2002. It is expected that the total costs, inclusive of counsel's fee, our preparation work will be about HK$900,000.00 for a 5-days-trial. Extra costs and expenses may be incurred should the trial over-run, adjourned, refixed or part heard for whatever reasons or otherwise.

We shall also have the right to issue interim bill and request for sufficient costs on account from time to time as we deem necessary for services to be rendered in relation to the above matter.

Kindly sign on the attached copy to acknowledge your acceptance of the foregoing terms.

In this regard, we shall be grateful if you would put in funds of HK$900,000.00 being costs on account for anticipated works to be done in respect of the above matter as soon as possible.

We thank you for your instructions in the above matter.

5. The plaintiff paid a further $800,000.00 on account of costs on 4 May 2002.

6. On 3 July 2002 the plaintiff issued a second interim bill for work done from 19 December 2001 to 25 June 2002 in the sum of $316,610.00. Taking into account the costs of $1,000,000.00 already paid, and deducting therefrom the amounts of the two interim bills, it showed a final figure held on account of costs as being $647,895.00.

7. The case went to trial, and ran for the five days estimated. It was adjourned for verdict and sentence to the sixth day, when the defendant was sentenced to a term of imprisonment. Both counsel were in attendance on all six days. On 6 August 2002, according to the plaintiff's partner Mr Ip, his senior partner Mr Yeung obtained a Power of Attorney from the defendant in prison, authorising the defendant to receive his bail money of $100,000.00 and apply it towards settlement of legal costs and expenses. Then on 22 August 2002 the plaintiff issued its 3rd interim bill for work done from 28 June 2002 to 31 August 2002. This amounted to $1,043,364.10 including counsel's fees. Taking into account the sum of $647,895.00, the payment sought was $395,468.10. This, minus the bail money which the plaintiff also applied in part settlement of its costs, is the sum sued for.

8. The defendant's case is primarily that the terms of the letter of 19 April 2002 amounted to an agreement that the costs of the trial would be fixed at $900,000.00 and that figure could only be increased if the trial were to over-run. It did not over-run; the hearing on the sixth day, for verdict and sentence, only took an hour. So the amount claimed by the plaintiff in its 2nd and 3rd interim bills is $459,974.10 in excess of the agreed fee.

9. The defendant also, in the draft Defence and Counterclaim exhibited to his affirmation, counterclaims for $164,505.00 which he says is the sum due to him, on the basis that that the costs of the trial and preparation therefor should be no more than $900,000.00 and taking into account the total of the payments made by him on account plus the bail money. He says that when he paid the $800,000.00 he did not know how much the plaintiff was holding, or that there was a balance of $64,505.00 in his favour after his earlier payments on account. If he had known he would have paid only enough to bring the balance up to $900,000.00.

10. The defendant also says with regard to the Power of Attorney that he cannot remember if he signed it in the prison on 6 August 2002, but if he did, he signed it under a mistake of fact because it is written in English and was not properly translated to him.

11. I will not set out the principles governing the application of Order 14 at any length; they are well known. The defendant must show that there is a triable issue. The test is whether his assertions are believable. As Bokhary JA, as he then was, put it in Re Safe Rich Industries Limited, Civil Appeal No.81 of 1994, unreported, 3rd November 1994 :-

"The test at the summary stage is indeed as simple as whether the defendant's assertions are believable. But it must be recognised - because failure to recognise it would create a debt-dodgers' charter - that whether the defendant's assertions are believable is a question to be answered not by taking those assertions in isolation but rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute."

12. I do not see that, by any stretch of the imagination, the letter of 19 April 2002 can be interpreted as a fixed fee agreement or a fixed fee agreement with a provision for increase if certain conditions are met. The letter sets out, as did the previous letter, the basis on which the plaintiff would charge. What binds the parties are the charging rates set out. The figure of $900,000.00 is merely the figure expected for the anticipated works to be done up to and including the trial.

13. As to the Power of Attorney this bears to have been interpreted to and signed by the defendant. There are no particular requirements for the execution of a Power of Attorney so long as it is in the statutory form. It was suggested that the interpreter should have been sworn, as is necessary under the Oaths and Declarations Ordinance, Cap 11 but I cannot see that that Ordinance has any application to powers of attorney. The defendant admits that the plaintiff's senior partner visited him in prison but says that he cannot remember if he was given the Power of Attorney or if he signed it; but if he did sign it, he was not made aware of the contents since it was written in English which he does not read or write. Now it is well known to all who sit or practice in the criminal courts that once an accused person is convicted and sentenced to prison, the question of disposal of the bail money arises. If the accused person is represented his lawyer will want it, in payment or part payment of fees. If he is not, he or his family (from whom he may have borrowed the money) will want it back. There is no suggestion that the question of disposal of bail money was never discussed. The defendant's name is written on the Power of Attorney in Chinese and the figure of $100,000.00 appears. Only a very few people in Hong Kong cannot read Arabic numerals especially when there is a dollar sign in front of them. In the circumstances his story is simply incredible.

14. Other points were raised, such as whether the sums held on account as at 31 December 2001 were to be used for work done before the defence was actually prepared in the District Court criminal case and whether the plaintiff's evidence about the complexity of the case and the work actually done are relevant. It is also argued that the figure of $900,000.00 being an estimate should be adhered to, more or less. Ultimately I think these points depend on the letter being interpreted as an agreement for a fixed fee, which in my view it was not.

15. It is said that there are factual issues which must be tried. But a factual issue does not become triable merely by being advanced. It must be capable of being believed. Overall it seems to me that the defendant's defence, when viewed against the background of the contemporaneous documents, is simply incredible. Therefore the plaintiff must have judgment.

16. However the question of taxation remains. The defendant has issued an Originating Summons in the Court of First Instance, seeking taxation of the plaintiff's bills. It was argued that the he could not seek taxation because his defence as pleaded in the draft Defence and Counterclaim is not that the charges were excessive per se, but rather that they are in excess of an agreed limit. However it seems to me that since any client is entitled to have his solicitor's bill taxed, the defendant must be entitled to that also.