CHIN LING INVESTMENT LTD v. THE GENERAL OF THE SALVATION ARMY

HCA 1/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1 OF 2012

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BETWEEN

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DECISION ON ASSESSMENT OF COSTS

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1.  The costs to be assessed are (a) the plaintiff’s costs of the defendant’s summons dated 21 January 2013, and (b) the defendant’s costs of the plaintiff’s summons dated 15 January 2013. The 2 summonses were heard by me on 25 January 2013 (“Hearing”). At the Hearing, I also ordered that for the avoidance of doubt, ⅓ of the time spent on the Hearing be apportioned for the defendant’s summons. Various affirmations were filed by the parties for the purpose of the 2 summonses.

2.  At the Hearing, I directed for summary assessment of the above costs orders.  I also rejected the defendant’s application for costs on an indemnity basis, so both parties’ costs are awarded on party and party basis.  As such, only costs that are necessary or proper for the attainment of justice or for enforcing or defending the taxing party’s rights will be allowed (see Order 62 rule 28(2) of the Rules of the High Court).

I.  DEFENDANT’S COSTS

3.  General information  There is no dispute that the hourly rates of HK$4,000.00 (ALM – partner) and HK$2,500.00 (DOL – associate) are appropriate. I do not agree with the suggestion by the plaintiff’s solicitors that the whole of DOL’s time should be disallowed for reason of duplication.  In my view, it is eminently sensible for a partner to delegate appropriate tasks to an associate and only assume a supervisory role over such tasks in order to keep costs to a level that is necessary or proper.  However, I accept that duplication of work which is not necessary or proper under party and party taxation should be disallowed.

4.  Item B1 Photocopy charges should be reduced to HK$1,500.00 at HK$1.00 per page.

5.  Item C1  The defendant’s affirmations in respect of the plaintiff’s summons were made by ALM.  It is sufficient for her to take instructions from the client.  I disallow DOL’s time for 1 hour and allow this item at HK$8,000.00.

6.  Item C3 The defendant claims for attendance on counsel by ALM for 2 hours 30 minutes and by DOL for 30 minutes.  The plaintiff’s solicitors suggest that such attendance should be reduced to 1½ hours for ALM.  In my view, give the flurry of affirmations filed quite close to the Hearing, it is necessary or proper for the defendant’s legal team to work closely to update on developments and to respond to the same.  However, I envisage some less complicated tasks can be delegated to DOL.  In the circumstances, I allow 2 hours for ALM at HK$8,000.00 and 30 minutes at HK$1,250.00 for DOL in the total amount of HK$9,250.00.

7.  Item D1  The defendant claims $36,000.00 (9 hours by ALM) and HK$26,250.00 (10 hours 30 minutes by DOL) for preparation of documents.  The plaintiff’s solicitors suggest allowing 4 hours’ work by ALM.  First, I bear in mind that any time spent on preparation of documents for the purpose of the defendant’s summons must be discounted.  Secondly, since the affirmations are made by ALM, the bulk of the work should be done by her.  DOL should at best help in collating the exhibits and other less complicated tasks.  I do not see the necessity or propriety of DOL incurring 10 hours 30 minutes, which I consider excessive.  Bearing in mind the above considerations, I allow in respect of the plaintiff’s summons 6 hours by ALM at HK$24,000.00 and 3 hours by DOL at HK$7,500.00 on party and party basis in the total amount of HK$31,500.00.

8.  Items D2 and D3  The plaintiff’s solicitors object to 2 hours  30 minutes spent by DOL on perusal of documents and 3 hours spent by him on preparation for the Hearing.  In light of my ruling on Item D4 below, I disallow the time spent by DOL on preparation for the Hearing.  I find it appropriate for DOL to spend time to peruse the documents to enable him to carry out the less complicated tasks under Item D1.  But the time claimed for is excessive and I reduce DOL’s time to 1 hour 30 minutes at HK$3,750.00.

9.  Item D4  The plaintiff’s solicitors object to DOL’s time for attending the Hearing.  I agree this should be disallowed since ALM was in attendance throughout the Hearing.  Since she is the partner in charge, her presence is sufficient to assist counsel and/or protect the interests of the defendant.  The hearing time is actually from 10:27 am to 1:13 pm and 3:35 pm to 5:08 pm.  But bearing in mind that the parties were in court since 10:00 am on Summons Day, the total time for the Hearing should be about 5 hours.  I therefore agree that the time allowed for ALM should be reduced to 3.33 hours at HK$13,320.00 in view of my order that only ⅔ of the time spent on the Hearing be apportioned for the defendant’s summons.  Indeed, the defendant’s solicitors should have made such reduction when they certified that the statement of costs did not exceed the defendant’s entitlement to costs in respect of the plaintiff’s summons.

10.  Item D5  The plaintiff’s solicitors suggest that I should disallow 30 minutes of ALM’s time for general care and conduct.  Given that I accept delegation of certain tasks by ALM to DOL is appropriate, this item should be allowed.

11.  Item E  First of all, counsel was instructed to attend the Hearing which involved both summonses.  Since the defendant is only entitled to recover costs of the plaintiff’s summons, counsel’s brief fee for dealing with the defendant’s summons must be discounted.  I consider it appropriate to discount any appropriate brief fee by notional counsel suitable for attending the Hearing by ⅓.  Secondly, on the quantum of counsel’s brief fee, the plaintiff’s solicitors suggest HK$30,000.00.  The defendant’s counsel was called to the Hong Kong bar in 1997.  He was previously involved in an earlier injunction application sought by the plaintiff in this action, and is therefore familiar with the background facts.  Given such history, it is not unreasonable for the defendant to retain counsel who is already familiar with the case.  Whilst I acknowledge that counsel’s brief fee is on the high side, I also bear in mind the limited time he has to work with (eg the relevant affirmations were filed within a small window of time from 21 to 24 January 2013) and the amount of papers and work involved.  In all the circumstances, I consider that appropriate counsel’s brief fee for the plaintiff’s summons (and excluding the defendant’s summons) is HK$100,000.00.

II.  PLAINTIFF’S COSTS

12.  Item A4  The plaintiff claims for an hourly rate of HK$4,000.00 for WKM.  The defendant’s solicitors suggest that such rate is excessive in view of the nature of the application and counsel’s involvement.  I disagree and consider the rate proposed by the plaintiff to be appropriate given the nature of the proceedings and the length of WKM’s post-qualification years.

13.  Items B1 and B2  The plaintiff claims 2 hours of work by WKM for attending the client and 1 hour for him for attending the other side.  The defendant’s solicitors suggest that since the factual background of the defendant’s summons is similar to the plaintiff’s summons, time allowed for WKM should be discounted.  Nevertheless, the application under the defendant’s summons raises an issue independent of the plaintiff’s summons, and the facts and considerations particular to such application have to be marshaled in response to such application.  In dealing with the matter of costs fairly for both parties, the court will look at the work done and consider what is necessary or proper for the purpose of the particular application being the subject matter of the costs order in question.  Next, the defendant’s solicitors suggest that because the plaintiff’s shareholders and directors are professionals and have close relationship to the plaintiff’s solicitors, the time required to take instructions should accordingly be reduced.  However, these matters do not lessen the duty of the plaintiff’s solicitors to take proper instructions in discharge of their duty as solicitors.  In the circumstances, dealing with the matter on a broad brush basis, I allow 1 hour of WKM’s time at HK$4,000.00 for Item B1 and 45 minutes of WKM’s time at HK$3,000.00 for Item B2.

14.  Item B3  The plaintiff claims for 1 hour of WKM’s time for attendance on counsel.  The defendant’s solicitors suggest that since the skeleton submissions of the plaintiff’s counsel do not touch upon the defendant’s summons, time allowed under this item should be reduced to 18 minutes.  How counsel presents the plaintiff’s case in his discretion does not necessarily mean little or no work has been done by the instructing solicitors.  I find it appropriate to allow 45 minutes of WKM’s time at HK$3,000.00 under this item.

15.  Item C1  Whilst the plaintiff’s summons, the 4^th affirmation of Wong Mun Yee dated 22 January 2013 and WKM’s affirmation dated 24 January 2013 were settled by counsel, it is plain that WKM has to prepare initial drafts of such affirmations.  But the plaintiff is only entitled to costs in respect of the defendant’s summons.  I consider it appropriate to allow 30 minutes of WKM’s time at HK$2,000.00 for this item.

16.  Item C2  The plaintiff claims for 3 hours of work by WKM for perusal of documents.  The defendant’s solicitors say that the factual background of the defendant’s summons is part and parcel of the plaintiff’s summons. I refer to and repeat my discussion on such contention in paragraph 13 above. The defendant’s solicitors also suggest that perusal of submissions is mainly counsel’s work. Whilst counsel is involved, I accept that it is necessary or proper for instructing solicitors to consider the submissions (albeit not in as much depth as counsel) to properly advise their client and to assist counsel.  On a broad brush basis, I consider that 1 hour of WKM’s time at HK$4,000.00 should be allowed for this item.

17.  Item C3  The plaintiff claims 2 hours by WKM for preparation for the Hearing.  The defendant’s solicitors say it is excessive and should be reduced to 15 minutes.  In my view, the appropriate time for such item is 40 minutes of WKM’s time at HK$2,667.00.

18.  Item C4  The time for the Hearing apportioned for the defendant’s summons should be 5 hours x ⅓ (1.67 hours) at HK$6,680.00.

19.  Item D  I find counsel’s brief fee at HK$45,000.00 inclusive of settling the summons and affirmations appropriate and reasonable.  I therefore allow counsel’s fees at HK$45,000.00 x ⅓ = HK$15,000.00.

III.  CONCLUSION

20.  The total costs of the defendant on their statement of costs are assessed at HK$187,900.00 (being HK$1,500.00 (B1) + HK$580.00 (B2) + HK$8,000.00 (C1) + HK$2,000.00 (C2) + HK$9,250.00 (C3) + HK$31,500.00 (D1) + HK$11,750.00 (D2) + HK$8,000.00 (D3) + HK$13,320.00 (D4) + HK$2,000.00 (D5) + HK$100,000.00 (E)).

21.  The total costs of the plaintiff on their statement of costs are assessed at HK$40,347.00 (being HK$4,000.00 (B1) + HK$3,000.00 (B2) + HK$3,000.00 (B3) + HK$2,000.00 (C1) + HK$4,000.00 (C2) + HK$2,667.00 (C3) + HK$6,680.00 (C4) + HK$15,000.00 (D)).

22.  After set-off in respect of the aforesaid costs, the plaintiff shall forthwith pay net costs in the sum of HK$147,553.00 to the defendant.

23.  After I made the costs orders at the Hearing, the defendant’s solicitors wrote to the court on ex parte basis (albeit on notice) on 1 February 2013.  They refer to 3 witness statements served by the plaintiff after the Hearing with a view to raise questions on the bona fides of the plaintiff’s actions which they say “is obviously relevant to the exercise of discretion on costs by the Court in respect of the injunction hearing on 25 January 2013”.

24.  In my view, this is misconceived.  The court has already made the relevant costs orders at the Hearing, and the only remaining task is to assess the quantum of the costs already awarded pursuant to the costs orders.  Assessment of costs on party and party basis is done on the basis set out in paragraph 2 above.  There is no room for revisiting the discretion that has already been exercised by the court in making the costs orders at the Hearing on 25 January 2013 whether on the bona fides of the plaintiff on matters after the making of the costs orders or otherwise, and certainly not on the basis of ex parte correspondence to the court by the parties.

25.  Regrettably, the letter by the defendant’s solicitors dated 1 February 2013 has excited a letter to the court by the plaintiff’s solicitors dated 4 February 2013 that attempts to give an explanation for the 3 witness statements and a further letter by the defendant’s solicitors dated 4 February 2013 to the court enclosing a thick bundle of the 3 witness statements, and even inviting the court to read them.  As explained above, these are quite irrelevant to the exercise of summary assessment of costs pursuant to the costs orders made at the Hearing on 25 January 2013.  I therefore order that there be no order as to costs of and occasioned by these 3 letters.