SHAON LAL HIRANAND AND OTHERS v. DR HARI NAROOMAL HARILELA AND OTHERS

HCAP 15/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 15 OF 2000

____________

____________

_______________

J U D G M E N T

_______________

1. On 15 August 2001, Yam J ordered the Plaintiffs to pay the costs of the three defendants on indemnity basis with certificate for two counsel. The costs of the 1st and 2nd Defendants were taxed by Master J Wong on 7 May 2002. The Plaintiffs had applied for a review of several items and the review was heard by the Master on 31 July 2002. In a written judgment of 25 September 2002, the Master made a deduction of $10,000 in respect of one item. Save as to that, the Master maintained his original assessment. The Master also ordered the Plaintiffs to pay 90% of the 1st and 2nd Defendants' costs for the review, and fixed such cost at $7,920.

2. The Plaintiffs sought a further review pursuant to O. 62 r. 35 and the matter was heard by me on 15 January 2003. In this review, according to r. 35(4), this court may exercise all such powers and discretion as are vested in the taxing master.

3. In the course of that hearing, it became obvious that a major argument of the Plaintiffs was that there were substantial duplications in term of works done in the Singaporean action and the present action. It was argued that if one took this into account, one should conclude that the fees allowed regarding the services provided by counsel for the 1st and 2nd Defendants were excessive and unreasonable. It seems to me that in order to have a better understanding of this argument, I should examine with regard to each item of costs in dispute the relevant documents filed in the Singaporean action and compare the same with those filed in the present action. Having heard submissions from parties, I exercised my discretion to allow the Plaintiffs to file such documents and gave directions for that purpose on 15 January 2003.

4. My directions on 15 January 2003 were as follows,

"1. Plaintiffs to file and serve within 7 days a list / table setting out particulars of duplication by reference to each item of costs which are the subject matters of this review, the pleadings and affidavits filed in Hong Kong and those filed in Singapore and annexed the primary documents to the list / table if they deem fit to do so.

2. Defendants to file and serve their response thereto within 7 days after they received Plaintiff's list / table.

3. Unless parties request for further hearing within 7 days after the Defendants have filed and served their response, there will be no further hearing and the decision of this court will be handed down in writing."

5. There might have been some misunderstanding on the part of the Plaintiffs and by a letter dated 19 January 2003, they asked for further time to comply with paragraph 1 of my directions. They seemed to labour under the mistaken belief that they needed to reproduce every document filed in the Hong Kong action and the Singaporean action. That was certainly not the intent nor the effect of my directions. It would be a wasteful exercise since the scope of the present taxation review is limited and it is unnecessary for this court to go through each and every document filed in the two actions to come to a fair and just conclusion.

6. To clarify the matter, a short hearing took place on 23 January 2003. At that hearing, I went through each item of costs which forms the subject matter of this taxation review with the Plaintiffs and told them what would be the relevant documents regarding the same. As identified at that hearing, only a few documents needed to be produced and I extended the time for the Plaintiffs to comply with paragraph 1 of my earlier directions to 28 January 2003. The Defendants' time to file and serve their response was also extended.

7. The Plaintiffs filed their additional submissions and documents on 28 January 2003. Some of the documents filed were outside the scope of my directions. More importantly, the Plaintiffs failed to relate the documents they filed to the items of costs in issue. This is unfortunate because that failure reduced the usefulness of the table. Be that as it may, I take those into account in coming to my decision.

8. Needless to say, I also take into account of the response filed by the Defendants. The parties did not request a further hearing.

The proper approach

9. The learned Master referred to the test laid down in EMI Records v Ian Cameron Wallace [1983] 1 Ch 59 concerning taxation of legal costs on indemnity basis. He also referred to the notes at Para. 62/App/28 of Hong Kong Civil Procedure 2002 for taxation of counsel fees. I am satisfied that the correct approach is set out in these authorities. I have also reminded myself of the observations of Megarry VC in EMI Records at p. 71C-73E regarding costs awarded on indemnity basis, in particular what was said at p. 71D to 72B concerning the distinction between including costs which are reasonable and including everything except the unreasonable. Hence, in the application of the guidance set out in Para. 62/App/28, the Defendants shall have the benefit of doubt and if the court is doubtful whether an item is unreasonably incurred or of an unreasonable amount, that item should be allowed.

Item 4

10. This is in respect of fees charged by junior counsel for perusal of the Writ of Summons, rendering a Note of Advice and drafting a summons for an unless order and other relief together with a supporting affidavit. Counsel charged $25,000 and the Master seems to be of the view that the charge was reasonable although he deducted $10,000 on account of the fact that at that stage there were 5 plaintiffs and the costs should be apportioned accordingly.

11. The argument of duplication has no relevance to this item.

12. At the review, I have the opportunity of perusing the Note of Advice and the relevant summons and supporting affirmation. Bearing in mind the seniority of counsel and the complexity of the matter and the other factors set out under Paragraph (5) in Part III of the Appendix to O. 62, given the tactical importance of the steps advised by counsel and the manner in which the litigation was conducted by the Plaintiff that cast serious imputation against the Defendants, I think it was reasonable for counsel to be instructed for these works and $15,000 cannot be said to be excessive. I do not share the Master's view that the charge should be apportioned. For the purpose of these works, it cannot be suggested that the claims of different plaintiffs required substantially different considerations on the part of the defendants. However, I think $25,000 was a bit excessive. Hence, I would stick to the figure of $15,000 as awarded by the Master. In other words, I came to the same figure, though by a different route.

Item 39

13. This is the fee charged by leading counsel for perusal of papers and advice in a conference that lasted for two hours on 5 April 2000. According to the bill, the conference was for the preparation of the Defence. Senior counsel charged $60,000. The Master only allowed $30,000 on the basis that a conference of 2 hours is excessive. The Master considered that a conference of one hour should be sufficient after taking into account of the conference note kept by the solicitor for the Defendants.

14. I also have the benefit of reading the conference note and there was no record of time engaged in respect of the conference. However, I have no reason to doubt that the conference actually took two hours.

15. The Plaintiffs argued that due to the duplication of works in the Singaporean proceedings and the Hong Kong proceedings, the amount charged by leading counsel cannot be reasonably incurred and/or reasonable in amount.

16. I have compared the Defence filed in the Singaporean proceedings with the Defence filed in this action. Whilst there were cross-references to the Singaporean proceedings in the Defence filed in Hong Kong, I cannot see how it could be suggested that this Defence was a duplication of the Defence filed in the Singaporean action.

17. As in every case with multiple proceedings in different jurisdictions on the same subject matter, lawyers representing the Defendants were obliged to consider the material filed in overseas parallel proceedings in advising their clients and suggesting the steps to take in Hong Kong. It would be quite wrong to suggest because of that, the burden on the lawyers in Hong Kong will be less onerous. In my experience, matters could be more complicated by reason of the existence of parallel proceedings. As pointed out by counsel for the Defendants, there is nothing to suggest that the documents prepared in Singapore were intended for use in the Hong Kong action. Those advising the 1st and 2nd Defendants in Hong Kong were under a duty to consider all the material presented to them afresh and come to their independent view on the merits of the case and advise their clients accordingly. Unless there were very clear and cogent evidence to show that those advising the Defendants in Hong Kong merely acted as a letter box and adopted substantially everything used in the Singaporean proceedings without any independent input by them, the court should be slow to conclude from the existence of parallel proceedings that the contribution by local counsel is unnecessary or their fees were unreasonably incurred.

18. As the learned Master observed, a lot of documents were sent to leading counsel for perusal before the conference and the fee of $60,000 charged by counsel covered such perusal as well. Hence, it does not seem right to me that the Master should simply reduce the fee to $30,000 because only one hour was necessary instead of two hours for the conference. However, in my judgment, the Master was actually adopting a global approach in assessing the quantum. This is apparent from paragraph 13 and the last sentence in paragraph 14 of his judgment on Review of Taxation handed down on 25 September 2002. Out of a total of $78,000 charged by the three fee earners, he knocked off a sum of $38,000, $30,000 of which he chose to deduct under item 39. In effect, the Master was holding that $78,000 was excessive and $40,000 was about right for that conference and its preparation.

19. Although I myself would not approach the matter by the same route, I am of the view that an overall figure of $40,000 for the three fee earners in respect of the conference is neither excessive nor unreasonable in amount. Since there is no application for review in respect of the two other items concerning that conference (viz. items 38 and 40), I would not disturb the sum of $30,000 allowed for this item.

Items 42 and 43

20. These are counsel fees for a further conference on 11 April 2000 for preparation of defence due to the fact that further documents were supplied. Leading counsel charged $15,000 whilst junior counsel charged $10,000. The conference lasted for 1.5 hours.

21. The Master again took a global approach and considered the quantum allowed for the three fee earners together. His conclusion was that 1.5 hour was a bit unreasonable and "for convenience sake" he simply taxed off the fees charged by the solicitor in the sum of $4,500 and left counsel fees intact. The global result is out of a total sum of $29,500 charged in the bill, the sum allowed by the Master was $25,000.

22. There is no need for me to repeat what I have said above concerning the duplication argument. Having considered conference note and the letters to counsel listing the further documents sent to counsel, I am of the view that the fees of $15,000 and $10,000 were still excessive even taking into account of $4,500 being taxed off on account of solicitor's fee. But for the total disallowance of $4,500, I would allow $12,000 and $8,000 for these two items. In the light of the disallowance of $4,500, I would adjust the sums to $13,000 (for item 42) and $8,500 (for item 43) respectively.

Item 62

23. This relates to the charge of junior counsel for settling four affidavits/affirmations. Counsel charged $25,000. The Master allowed $20,000. As shown in the correspondence between solicitor and counsel placed before me, the two affirmations of testamentary scripts were drafted by solicitor whilst the two other affidavits were based on affidavits filed in the Singaporean proceedings. Separate fees were charged and allowed to the solicitor for their works in these regards (see items 22, 23, 27 and 28 at p. 44 and 45 of the Bill).

24. From the material placed before me, I can see that the input by counsel in respect of these documents were not substantial. Quite apart from the question of duplication, a charge of $20,000 is still excessive. Whilst it is not unreasonable to instruct counsel to settle these documents, having regard to the length of the documents and input by counsel, I would only allow $8,000 for this item.

Items 64 and 65

25. Junior counsel charged $5,000 for a conference on 22 May 2000 which lasted for one hour and $15,000 for drafting a letter concerning the transfer of the action to the Probate List. Those were necessitated by certain queries raised by a Master regarding the application for transfer.

26. The duplication point has no relevance to these items. The Plaintiffs argued that the conference was not necessary. However, the test is not one of necessity. The question is whether the fees incurred with regard to the conference was unreasonably incurred. As the Master quite rightly pointed out in paragraph 16 of his judgment, the legal point in issue was raised by a Master and it was not unreasonable for the 1st and 2nd Defendants to seek advice from counsel on the same. It is not unreasonable for advice to be given in a conference. Counsel would probably charge more if a note of advice is rendered.

27. In the circumstances, it is also not unreasonable for counsel to be instructed to draft the letter.

28. Concerning the quantum, having the benefit of reading the conference note and the draft letter, I think the fees charged are a bit excessive. I would allow a sum of $4,000 for the conference and $8,000 for drafting the letter.

Items 85 and 86

29. These are counsel fees in respect of the summons for striking out and the affirmation in support. Junior counsel charged $5,000 for drafting the summons and $50,000 for drafting the affirmation. Leading counsel charged $5,000 for settling the summons and $15,000 for settling the affirmation. The Master allowed both items.

30. The Plaintiffs argued that the fees were excessive. They also referred to the duplication between that affirmation and an affirmation filed in the Singaporean proceedings.

31. I have compared the two affirmations. Whilst there was a reference to the affirmation filed in Singapore in the draft prepared by counsel and some of the matters referred to in the Hong Kong affirmation had been mentioned in the earlier affirmation filed in Singapore, the affirmation in Hong Kong cannot be described as a duplicate of the affirmation filed in Singapore. The Hong Kong affirmation is clearly an independent piece of work and it cannot even be described as an adaptation or modification of the affirmation filed in Singapore. I reiterate what I said in Paragraph 17 above.

32. Whilst I appreciate that junior counsel may need to peruse a lot of documents before drafting the affirmation in question and the summons and affirmation were important documents for the application, I am of the view that the fees charged were excessive. One has to bear in mind that counsel has been instructed from the very beginning and a lot of documents have been perused previously in connection with other items charged by counsel. Given the complexity of the matter and the importance of the works for client as well as seniority of counsel, I would allow $35,000 in respect of the drafting of the summons and affirmation by junior counsel.

33. Regarding the settling of the documents by leading counsel, I have some doubts as to whether it is reasonable to engage leading counsel given the seniority of the junior counsel involved. However, bearing in mind that costs was awarded to the Defendants on indemnity basis and the importance of these documents in the whole piece of litigation, I would not say that the involvement of leading counsel was unreasonable. Because of the seniority of junior counsel, leading counsel should be able to rely substantially on his drafting. In the circumstances, $20,000 seems to me to be a bit excessive and I would allow $15,000 under item 86.

Items 123 and 125

34. The Master considered these two items together with items 121, 122, 124 and 126. Those were works in respect of the preparation of the response to the affirmation filed by the Plaintiffs. Of the six items, the Master disallowed three items and allowed the remaining three. In terms of quantum, the items disallowed run up to $18,000 whilst the items allowed were $75,000. The works included advice in conference (2 hours), drafting a letter of advice and drafting and settling affidavit in reply.

35. The Plaintiffs again argued that there was duplication of works. However, they were unable to pinpoint a specific affidavit as the Singaporean equivalent to the affidavit of the 1st Defendant, the subject matter of item 125. For the same reasons given previously, I do not think the duplication point is valid.

36. However, since the quantum has been put into issue at the review before the Master, I have to ask whether the disallowance by the Master sufficiently reflected the degree of excessiveness in terms of fees charged by counsel. In so doing, I have to bear in mind that the Master dealt with the six items globally and costs were awarded on indemnity basis.

37. Having read the affidavit drafted by counsel and the letter of advice together with the conference note, whilst I cannot say it would be unreasonable to involve leading and junior counsel in the exercise, I think the fees allowed (even on the basis that it was for all 6 items) were still excessive and should be reduced.

38. Since there is no review in respect of item 126 (under which a sum of $15,000 was allowed), I can only adjust the fees for items 123 and 125. I would leave item 123 intact at $10,000 but reduce item 125 to $30,000.

Items 202 and 203

39. These are the brief fees of counsel for appearing at the striking out application. Leading counsel charged $280,000 whilst junior counsel charged $150,000. The Master allowed the full amount charged by leading counsel but reduced the fee of junior counsel to $100,000.

40. The Plaintiffs challenged these items by relying on the fact that they have filed a Notice to Act in Person on 29 June 2001 before the hearing. In my view, that makes no difference. The hearing was to take place on 4 July 2001. By 29 June 2001, Brief to Counsel have been delivered for quite some time. Given the importance of the application and the complexity of the matter, the 1st and 2nd Defendants could not be criticized for engaging two counsel. In fact, Yam J awarded costs to the 1st and 2nd Defendant with certificate for two counsel.

41. The Plaintiffs also alluded to the similarities in the skeleton arguments and list of authorities used by counsel in the Hong Kong action with those deployed in the Singaporean proceedings. Again for reasons already given, the point is misconceived.

42. I do not think the sum allowed by the Master in respect of the brief for junior counsel is excessive. However, the same cannot be said with regard to the Brief fee for leading counsel. Leading counsel has been involved in the matter all along and he was assisted by a very capable junior. Bearing in mind that the cost is taxed on indemnity basis, the complexity of the matter and seniority and skill of counsel, I would allow 5 hours for attending the hearing and 4 days' preparation (20 hours) at an hourly rate of $7,500. The figure is therefore $187,500. Hence, the fee allowed under item 202 is $187,500 and that under item 203 is $100,000.

Results

43. To sum up, my decisions in this review are as follows,

(a) item 4	:	$ 15,000
(b) item 39	:	$ 30,000
(c) item 42	:	$ 13,000
(d) item 43	:	$ 8,500
(e) item 62	:	$ 8,000
(f) item 64	:	$ 4,000
(g) item 65	:	$ 8,000
(h) item 85	:	$ 35,000
(i) item 86	:	$ 15,000
(j) item 123	:	$ 10,000
(k) item 125	:	$ 30,000
(l) item 202	:	$ 187,500
(m) item 203	:	$ 100,000

44. The Plaintiffs are partly successful in the review. However, they failed on their main argument, viz. the duplication point. The hearing on 23 January 2003 was occasioned by that argument. In the circumstances, taking a global view of the matter, I make an order nisi that each party bears his own costs in respect of the review before me and I would not disturb the order as to costs made by the Master.