MAK'S CONSTRUCTION CO LTD v. SUN FOOK KONG (CIVIL) LTD

HCCT20/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION LIST

ACTION NO. 20 OF 2002

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DECISION ON TAXATION REVIEW

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1. This application for review is of limited ambit. It concerns the hourly rate of Mr Paul Nicholas Barrett, one of the fee earners of Messrs Denton Wilde Sapte, solicitors for the successful Respondent (Receiving Party) following an application for leave to appeal an arbitral award before Ma J. As the outcome is of some considerable importance to Mr Barrett and his firm of solicitors, to claimants involved in construction arbitration and to the construction business in general, and now I am informed the decision will be of some guidance and assistance to alternate dispute resolutions as well, I have decided to publish my ruling in court having heard the parties.

2. Mr Barrett, a non-practicing barrister and qualified Quantity Surveyor, was called to the Bar in the UK in 1998 and in Hong Kong the following year. He has been in the employ of Messrs Denton Wilde Sapte for 3 years. A Fellow of the Chartered Institute of Arbitrators and an accredited mediator and current Chairman of the Chartered Institute of Arbitrators, East Asia Branch, Mr Barrett has had significant exposure to construction disputes in the past 15 years. He brought his expertise and experience to bear in successfully representing his client on his own in an arbitration that ultimately led to the application for leave to appeal against the arbitrator's award. As Mr Barrett had no right of audience in the High Court, in resisting the application for leave to appeal, he instructed Mr Russell Coleman. I have seen his instructions to counsel. It was as detailed and helpful as any counsel would have wished to receive. Mr Barrett's hourly rate was $2,600 per hour. I had taxed it down by $600.

3. Mr Downey, prosecuting the review, contended that Mr Barrett's rate was reasonable and justified, representing as it did, significant and tangible costs saving to lay client, particularly in light of his undoubted experience and standing. On further reflection, I cannot agree more. It most certainly did not increase the overall costs of the litigation before Ma J. Substituting a qualified solicitor of say 5 years' standing would undoubtedly have increased costs, albeit justified if Mr Barrett is removed from the equation. As was, the involvement of Mr Barrett alongside Mr Downey in the application for leave to appeal proved to have been cost effective, necessary, proper and prudent. In the result, lay client was offered experienced representation whilst the costs of the litigation had been kept properly in check. That said, it is important to be mindful that the Review is concerned not with Mr Barrett's advocacy and legal skills in the arbitration but with his involvement as assistant to Mr Downey in the application for leave to appeal.

4. Pursuant to Order 62 of the Rules of the High Court, a taxing master exercises a wide discretion in taxations but being judicial in nature, it is necessarily circumscribed by recognised parameters established by long practice and decisions of the courts. It is solidly based on justice and reason and benevolence or whim has no part to play. On the matter of hourly rates chargeable and rightfully to be payable by the paying party under an order for costs, guidance is readily available from circulars issued from time to time by the Law Society following consultations with the Registrar, High Court. These suggesting hourly rates for solicitors with different seniority and unqualified staff that may be allowed upon taxation are not strictly binding on the taxing master (R v Wilkinson [1980] 1 WLR 396, Wharf Properties & Others [1992] 2 HKLR 273.) They offer a useful starting point which my be adjusted in either direction depending on the responsibility and level of skills demonstrated and whether unusual or excessive reliance upon counsel has occurred. Put shortly, properly exercised, the discretion ensures that amounts no higher than those prescribed by the scale of costs are to be reimbursed following taxation.

5. In the Party and Party Bill of Costs, Mr Barrett's hourly rate was $2,600. I reduced the rate to $2,000 an hour, effectively equating him with a newly qualified solicitor. Though unqualified, it is apparent that Mr Barrett's input and responsibility and the level of legal expertise exercised by him in the leave application had been considerable. This was a factor that I have taken inadequate cognizance of during the taxation and upon review, the matter should be revisited as requested.

6. Mr Chan for the paying party submitted that the hourly rate as taxed down represented an appropriate fee for Mr Barrett and that any upward revision would result in an unjust enrichment. In briefly developing his contentions, Mr Chan argued that Mr Barrett's supervising partner, Mr Downey, had been allowed his full rate without deduction. The application for leave to appeal, confined to matters of law and requiring none of the undoubted and admitted specialist skills of Mr Barrett, was sufficiently concise and straightforward enough to be disposed of in a morning's sitting without the need of Mr Coleman addressing the court. With respect, that is too simplistic a view to have taken of the hearing before Ma J and of the necessary work done in preparation for the hearing. It was further submitted that allowing the full rate now sought on Review would, to an extent, lead to a crossover between duplication of work by Mr Barrett and Mr Downey and their hourly charging rates. I do not find that there is a danger of this occurring as the number of hours performed by both these gentlemen has been suitably adjusted and taxed down during taxation. One needs only refer to the items of work done and for supervision allowed in the bill. Finally, it was suggested that Order 62 only provides for a regime for taxation of bills of solicitors and litigants in person and Mr Barrett was and remains a non-solicitor and essentially an unqualified member of the legal team responding to the appeal.

7. Each case necessarily turns on its own facts. In pursuing the Review, Mr Downey argued that Order 62 rule 28A offered a suitable parallel. Under that provision, a litigant in person may in appropriate circumstances be awarded taxed costs that would have been allowed were he to have been represented by solicitors, subject to a one-third discount (save on disbursements), no doubt to reflect the absence of office overheads and the element of profit costs. The contention goes that as an unrepresented person is capable of achieving a higher level of taxed costs, it follows that a non-qualified person acting in a representative capacity for a lay client should somehow be entitled to a similar benefit, provided the overall expense of litigation is not increased.

8. The submission, though attractive, is essentially flawed. It fails to adequately address the very obvious and real distinction existing between Mr Barrett, an unqualified legal representative on the one hand, and a lay client who acts as both advocate and litigant in a cause on the other. A blurring of the different roles undertaken can only lead to uncertainty and difficulties in taxation. Further, one should not lose sight of the purpose of Order 62 rule 28A. It is there to furnish a proper and separate basis on which to tax the costs of litigants in person. I therefore find little assistance in the analogy urged upon me.

9. Mr Downey's remaining argument has greater substance and persuasion. He complained that it was grossly unfair to have equated Mr Barrett with an inexperienced but qualified solicitor and to have totally disregarded, as the taxing down suggested, the very crucial multi-disciplined role discharged by him. In this regard, reference was made to Piper Double Glazing Ltd v D C Contracts [1994] 1 WLR 777.

10. In assessing the appropriate hourly rate for Mr Barrett, it is just and proper to have regard to the complexity or otherwise of the litigation, the level of responsibility undertaken, and whether specialist skills have been demonstrated by him. That is the approach taken on a bill touching upon a qualified solicitor's costs. In my considered view, where Mr Barrett is concerned, the starting point should be no different. I am entitled to have regard to his expertise in the matter of valuations in this construction dispute.

11. It is patent that on the application for leave to appeal, his role was pivotal. It was at least as important as that of Mr Downey, his supervising partner. Mr Barrett was the one instructing counsel. I wholly accept that it was necessary for his counsel, Mr Coleman, to fully comprehend the reasons for the arbitral award. Mr Barrett was centrally placed to discharge such a function as he had conducted the advocacy before the arbitrator. As pointed out, valuation with which Mr Barrett with his vast experience as a qualified quantity surveyor and advocate in construction arbitration was only too familiar, was an issue common to both the leave application and the arbitration. That it was necessary and crucial for counsel to come up to speed expeditiously seems only too obvious. That the appeal was disposed of equally expeditiously was no indication that the issue before Ma J was a simple one. I am satisfied that Mr Coleman's written submissions had a significant role to play.

12. The paying party took no objection to Mr Barrett's engagement in the appellate process. This is hardly surprising given the very high-powered teams assembled for both sets of litigation by the appellant. Whilst the costs engendered by the opposing side are not relevant to the current exercise, they offer at least some indication of the complexity of the issue involved and the importance to lay clients.

13. Granting the full hourly rate sought will produce but an additional insignificant sum of about $36,000 for work done by Mr Barrett largely in the run up to the appeal. However, as pointed out, it is very much a matter of principle to lay client who, it is submitted, should not be out of pocket save for sound and valid reasons. I entirely agree. By taking Mr Barrett on to the team in lieu of a more expensive qualified solicitor with some years of admission behind him (a justified step), lay client has been offered sterling legal representation at significantly reduced costs. It was a very economical way of responding to the appeal. That is most laudable as any legal system worth its salt should strive for an efficient, just and costs-effective administration of justice.

14. On this Party and Party Bill, on further reflection, it is entirely right and proper to have allowed Mr Barrett's hourly rate as billed. The Review being competent, I must accede to it in full as urged.

(Discussion re costs)

15. The Receiving Party shall have the costs of the application for review, which costs shall include today's hearing. To avoid further costs and time in having a taxation, I fix those costs at $4,000 per hour x 13 hours, i.e., $52,000.