CAPCOM CO LTD AND ANOTHER v. NG KING KUEN

HCA 2488/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2488 OF 2006

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BETWEEN

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TAXATION REVIEW

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Introduction

1.   This is a review of taxation.

Background

2.   The 1^st and 2^nd Plaintiffs said that they were copyright owners of a number of video game strategy guidebooks in Japan and Hong Kong respectively. In 2006, they commenced various actions in the District Court against a number of local newspaper stall operators/owners for selling some guidebooks relating to 2 games called “新鬼武者” and “Monster Hunter 2”.

3.   The District Court proceedings were later transferred to the High Court. Then, in June 2007, the Listing Master ordered, inter alia, that all actions were to be tried by a bilingual Judge for 8 days.

4.   The Judge held 3 pre-trial reviews (“PTRs”) in late 2007 and early 2008. He further heard the trials in March 2007. At the beginning of the trials, the Plaintiffs abandoned their causes of action in copyright and trademark, but pursued only passing off. Further, 5 cases were settled by the parties, leaving 8 actions to be decided.

5.   The Judge dealt with the remaining 8 actions in 2 days and handed down his Judgment on 27 March 2008 wherein he dismissed the Plaintiffs’ claims. The Judge found that the Plaintiff had failed to establish reputation attaching to the guidebooks. Further, even if such reputation could be made out, it did not belong to the Plaintiffs.

6.   The Defendants were awarded costs on party-and-party basis, to be taxed, if not agreed. Thereafter, 8 similar bills were filed with this Court. Provisional taxation was done but the Plaintiffs were not satisfied with the result and prayed for formal taxation. At the subsequent call-over hearings, Madam Registrar Au-Yeung directed, among others, that the 8 bills were to be taxed by one Master. HCA 2488/2006 would be done first, and parties would thereafter apply the result to the remaining 7 bills.

7.   The 8 bills came before me on 5 March 2009. Taxation was done and the Plaintiff later applied to review 6 rulings made by me, all touching on counsel fees under the Bills.

8.   At the call-over hearing of the Review, I granted leave to the Defendants for issuance of Interim Certificate. I also granted leave to the Plaintiffs to file and serve new evidence they intended to rely upon at the Review, but they eventually decided not to do so.

Ruling

9.   I heard the Review on 15 July 2009. Mr. A. Cheung of LCD represented the Defendants and Mr. M. Wong of LCD acted for the Plaintiffs. Upon hearing from them, I reserved my decisions to be handed down. I now do so.

General Principles

10.   In assessing Counsel fees, I ask myself to bear in mind of the relevant principles from the White Book 2009 at pages 1010 to 1014, in particular the followings general principles.

“(5) Every fee paid to counsel shall be allowed in full on taxation, unless the taxing master is satisfied that the same is excessive and unreasonable, in which event the taxing master shall exercise his discretion having regard to all the relevant circumstances and in particular to the matters set out in paragraph 1(2). They are:

(a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved;

(b) the skill, specialized knowledge and responsibility required of, and the time and labour expended by, counsel;

(c) the number and importance of the documents (however brief) prepared or perused;

(d) the place and circumstances in which the business involved is transacted;

(e) the importance of the cause or matter to the client;

(f) where money or property is involved, its amount or value;

(g) any other fees and allowances payable to counsel in respect of other items in the same cause or matter, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question.”

11.   With the principles in mind, I now turn to the 6 counsel’s fees under review.

Drafting Defence

12.   Counsel was instructed to prepare 15 Defences. His fee note showed the followings:

	$
Perusal of papers	37,500
Conference	12,500
Settled of defence	75,000
	125,000

So, about $8,300 was charged for each of the Defences.

13.   Counsel was called to bar in 2000. When he was asked to do the Defences, he had more than 6 years post qualification experience. He charged at an hourly rate of about $2,500. I took the view that it was very reasonable in the circumstances, especially when the same was compared to the hourly rate at about $3,000 for a solicitor of similar experience (Law Society Circular 06-634(PA) dated 31 October 1996). Having said that, when the papers and various draft Defences were produced to me, I noted that only demand letters, writs, BR records and other miscellaneous documents were sent to Counsel. Further, the Defences were drafted in 2 main types, namely (a) denial of having sold the guidebooks and (b) admission of having sold the guidebooks but non-admission of any intent. Solicitors were also asked to complete the 15 Defences by filing of the particulars of each Defendant.

14.   I therefore taxed off almost half of the Counsel’s time charged and allowed only:

	$
Perusal of papers	18,750
Conference	12,500
Settled of defence	37,500
	68,750

Therefore, I allowed only $4,583 for each of the 15 Defences.

15.   At the review, the Paying Party repeated his arguments having made at the original taxation and suggested that Counsel’s fee was excessive and on the high side, but I am afraid that he has been unable to convince me to change my mind.

PTRs

16.   On 3 different dates, 20 December 2007, 30 January 2008 and 25 February 2008, Counsel were briefed to attend 3 PTRs before the Judge to make sure all cases were ready for trial. On each occasion, half an hour was reserved. A number of matters were dismissed, including time summonses, factual disputes, witnesses, trial bundles and warning given by the Court to the parties. By that time, 13 cases were left for trial. Counsel asked for $10,000 for attendance on each occasion. I took the view that it probably would be a bit more than reasonable. 3 hours’ work, including 2 for review of papers and preparation, together 1 for discussion with instructing solicitors and hearing appeared to be proper in the circumstances. I therefore taxed off the items by $2,500 on each of them and allowed only $7,500. The net result would be $577 for each of the 13 cases.

17.   At the Review, the Paying Party maintained that it was still excessive and I respectfully disagree and stick to my views at the original taxation.

Brief and Refresher for Trial

18.   13 cases were fixed for hearing of 8 days. Bundles consisting pleadings, witness statements, documents, affirmations and exhibits were prepared. There were 15 witnesses to be called at the hearing, two for the Plaintiff and 13 for each of the Defendants. At the beginning of the Trial on 3 March 2009, the Plaintiff abandoned 2 causes of action, leaving passing off to be pursued. Further, 5 out of the 13 cases were settled on the 1^st day of the Trial.

19.   The Plaintiffs called their 2 witnesses and the Defendants, 1 only, after consideration. The Judge then directed parties to lodge and serve their Final Submissions within the next 2 days on 4 and 5 March 2009. Thereafter, parties came back before the Court on 6 March 2009 for clarifications, discussions and submissions on costs.

20.   13 Defendants sought assistance from 2 Counsel and they charged the followings.

		$	$
Leading Counsel	- Brief		70,000
	- Refresher		35,000
			105,000
Junior Counsel	- Brief	25,000
	- Refresher	10,000	35,000
			140,000

21.   At the taxation, I taxed off all the fee of the Junior Counsel. On 6 March 2009, Leading Counsel did ask for Certificate for Counsel but the Judge did not see fit to grant the same. Further, I was referred to the jobs undertaken by Counsel for the hearing, including the Plaintiffs’ 3 courses of action, 5 bundles of documents and relevant authorities thereof, 15 witnesses for examinations, as well as the time to prepare the submissions and those to read and understand the same done by the Plaintiffs’ Counsel. I did not deduct anything from the Brief and Refresher of the leading Counsel because I did not consider them unreasonable in the circumstances. If one took out 5 hours from the usual court hearing for each day, it would leave about 32 hours for Counsel to equip himself for the 13 cases. By that calculation, it only took about 2.5 hours for each case.

22.   At the Review, the Paying Party reiterated that such fee was excessive and on the high side. With respect, it did not help them and I remain of the same view that the Leader’s Brief and Refresher are not unreasonable, after a review of the factors as particularized in paragraph 10 hereinabove.

Conclusion

23.   In the end, the Review is dismissed. As to costs, I see no reason why costs should not follow event. To wrap up the whole taxation, I allow the followings to the Receiving Party.

Hearing:	22 April 2009 (45 minutes by LCD)	1200
	15 July 2009 (1 hour by LCD)	1600
Preparation:	LCD (2 hours)	3,200
	Solicitor (0.5 hour at 3,600)	1,800
Miscellaneous		500
		8,300

Such costs order nisi will become absolute within 14 days from the date hereof.