LAM ROGERIO SOU FUNG v. TAN SOON GIN GEORGE

HCA2576 & 2545/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2576 OF 2005

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DECISION
ON ASSESSMENT OF COSTS

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I. Introduction

1.  This is the assessment of: (1) the costs payable in HCA2576/2005 by the defendant by counterclaim (“Tan”) to the plaintiff by counterclaim (“Lam”) on Tan’s application for stay of execution pending appeal; and (2) the costs payable in HCA2545/2005 by Tan as the plaintiff in the Issue to Lam the defendant in the Issue on Lam’s application for payment out.  The gross sum costs orders were made on 26 July 2011and the parties were directed to provide statement of costs and objections thereto and a reply (if any).  Lam’s solicitors had filed an “Estimation of Costs”, to which Tan’s solicitors had filed a List of Objections.  Thereafter Lam’s solicitors had filed a Reply. 

II.    General

2.  Two general matters should be mentioned at the outset. 

3.  The first is that the two Estimations of Costs, especially the one filed in HCA2576/2005, had not followed the format prescribed in Practice Direction 14.3 (see paragraph 7 and Annex A).  On the other hand, the two Lists of Objections represent a departure from the spirit of gross sum assessment in that it challenges each and every item of costs (except one item of disbursement in HCA2576/2005 and one item of preparation for hearing in HCA2545/2005).  The parties are reminded of the need to comply fully with the Practice Direction and the potential consequences of non-compliance as set out in paragraph 15 thereof as well as the importance of taking a constructive approach when dealing with gross sum assessments of costs.

4.  The second matter is that the assessment of Lam’s costs is on party-and-party basis, such that costs will only be allowed where they are necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed: Order 62 rule 28(2) of Rules of the High Court, Cap.4A.

III.   HCA2576/2005

5.  I turn now to the items of costs in HCA2576/2005.  The total costs claimed by Lam on Tan’s application for stay of execution are HK$767,750.  The proceedings on the application lasted for 12 weeks (i.e. 5 May to 26 July 2011). 

(A)      Solicitors’ professional costs

6.  Hourly rate: The main fee earner (HH) has 48 years’ post-qualification experience.  The hourly rate of $4,000 is justified.  As to the other fee earner (LWWQ), she has 4 year’s post-qualification experience. Having regard to the heavy involvement of counsel and that she is working with a very experienced primary fee earner, I consider the appropriate hourly rate to be $2,200.

7.  Items 1 and 2: These two items relate to communications with Tan’s solicitors. 18 letters were exchanged and 3 telephone calls were made.  HH charges 2 hours and LWWQ charges 45 minutes. I do not agree the time used is excessive.

8.  Items 3 to 5:  These three items relate to communications with client, involving 61 letters, 10 telephone conversations and 3 conferences.  A total of 12 hours 30 minutes was incurred by HH.  For proceedings that lasted for 12 weeks, this is prima facie excessive on party-and-party costs.

9.  Lam’s solicitors explained the volume of letters and emails on the basis that there was some urgency in the preparation of the first affidavit in opposition in that the adjourned hearing was directed to be fixed on an early date and also because a week before the adjourned hearing, Tan filed an additional affidavit raising a number of factual matters, necessitating the taking of urgent instructions and giving rise of over 20 emails. It was also explained that the three conferences were for the purposes of preparing the two affidavits in opposition and taking instructions on retaining counsel and matters relating to the conduct of the proceedings. 

10.  I accept on the basis of the explanations provided that there are good reasons for more communication with client. Nevertheless, the time incurred remains on the high side on party-and-party taxation.  For the written and telephone communications (8.5 hours claimed), I allow 4.5 hours.  As to the conferences (4 hours claimed), I allow 3 hours.  For the items for communications with client, a total of 7.5 hours is allowed.

11.  Items 6 to 8: These three items relate to communications with counsel, involving 38 letters, 12 telephone calls and one conference. HH incurred 8 hours on these communications.  Apart from the matters mentioned in the preceding paragraph, the volume of communications was also explained on the basis that it was only 10 days before the substantive hearing that Tan’s solicitors indicated they would rely on the transcript of the trial, necessitating a number of discussions with counsel.  Notwithstanding the explanations, 6 hours on written and telephone communications with counsel is on the high side on party-and-party basis. I allow 3 hours.  The 2 hours on conference is allowed in full.  The total time allowed for the three items on communications with counsel is 5 hours.     

12.  Items 9, 10 and 12: These items are for perusing the summons for stay of execution and the two supporting affidavits.  HH incurred 3 hours and 15 minutes. In my view, the time incurred on the summons (15 minutes) and the first supporting affidavit (1.5 hours) is on the high side. I will reduce them to 1 hour. The time for perusing the 2^nd affidavit (1.5 hours) is allowed in full.  The total time allowed for the three items on perusal of documents is 2.5 hours.

13.  Items 11 and 13: These two items are for drafting the two affidavits in opposition.  HH incurred 4 hours and 3 hours on them. The two affidavits were also considered and settled by counsel, incurring $5,250 and $15,000 counsel fees.  In effect, the respective costs of drafting the two affidavits alone come to $21,250 and $27,000.  Although there was urgency in their preparations, that had been accounted for by allowing more time on communications with counsel and client.  I am of the view that the costs for the drafting of the affidavits are excessive.  I allow 2.5 hour and 1.5 hours respectively. The total time allowed on the two items for drafting documents is 4 hours.

14.  Items 14 to 16: These items are for approving the indices of the hearing bundles, preparing for Lam’s own counsel the hearing bundles and the submissions and authorities of Tan’s counsel.  A total of 3 hours 30 minutes was incurred by LWWQ.  On the indices of the hearing bundles, it was pointed out that due to minor disagreement over the documents to be incurred, some time was spent on checking the contents of the disputed documents and also the transcript.  Despite that, I consider 1 hour is too long. I allow 30 minutes. 

15.  In relation to the other two items, Tan took the stance that they should be disallowed in total. It is said that either the work was not necessary or it was not possible for time to be incurred on such work.  In reply, it was pointed out that because Tan’s solicitors only served one set of hearing bundles and one copy of their counsel’s submissions and authorities on Lam’s solicitors, LWWQ had to incur time to prepare copies for Lam’s counsel. 

16.  I accept that the work is both proper and necessary. Indeed, I am surprised that the objections were made in the first place when Tan’s solicitors ought to know that it must be necessary and proper for Lam’s counsel to be provided with the hearing bundles and their opponent’s submissions and authorities. Items 15 and 16 are therefore allowed.

17.  Items 17 and 18: These items relate to the perusal of counsel’s submissions and authorities.  HH incurred 2 hours for each of them. In light of HH’s close involvement throughout the proceedings and the instruction of senior leading and junior counsel, I consider 1 hour for each item is a reasonable time.  A total of 2 hours is allowed for the two items on perusal of submissions and authorities.

18.  Hearing and attendance: LWWQ claimed 15 minutes for attending before the Listing Officer to fix the date for the substantive hearing.  Tan’s solicitor also attended the appointment.  Plainly, both sides regarded it as an important step in the proceeding.  Hence, although listing appointments are usually attended by unqualified clerks, I accept in this case, the attendance by LWWQ is justified.  The item is allowed in full.

19.  For the hearing on 18 May 2011, HH claimed 30 minutes for the preparation work.  As it is a direction hearing and HH had already incurred time on reading the summons and supporting affidavit as well as drafting the first affidavit in opposition, he was familiar with the matter. 15 minutes will be a reasonable time for preparing the hearing.  As to the hearing, it lasted for 1 hour, so the time allowed for HH’s attendance is 1 hour.

20.  In respect of the substantive hearing on 26 July 2011, the 30 minutes claimed by HH is not unreasonable and it is allowed.  As to attendance at the hearing, HH claimed 2 hours.  Tan asked to check against the time recorded by the court.  The hearing in fact lasted for 2.5 hours.  Accordingly, HH is allowed 2.5 hours for his attendance. 

(B)   Counsel fees

21.  JC’s fees: I do not agree that the fees charged for conference ($5,250) and settling the 5^th affirmation of Lam ($5,250) and the brief fee for the hearing on 18 May 2011 ($15,000) is excessive.  They are allowed in full.

22.  MS’s fees: MS was called to the UK Bar in 1969 and has practised in Hong Kong for about 10 years.  He was not the trial counsel.  He was only instructed to appear on Tan’s application for stay of execution and Lam’s application for payment out, which stood or fell with the former.  The hearing was listed for 2 hours.  As noted above, shortly before the hearing, Tan put in an additional affidavit raising new factual matters and also sought to refer to large parts of the transcript of the trial, leading to urgent and heavy preparations by Lam’s counsel, including reading the over 460 pages of transcript.  Further, it is plain that the applications carried great importance for both sides.  There is a certificate for two counsel.  In these circumstances, a substantial brief for leading counsel is to be expected.  However, the brief fee of MS ($450,000) is on the high side for party-and-party taxation.  I allow it at $400,000.

23.  JW’s fees:  Although there was urgency in the preparation of the 6^th affirmation of Lam, the fees for settling it ($15,000) is on the high side. I will only allow $7,500. As for the brief fee ($100,000), having regard to the matters mentioned in the preceding paragraph and JW’ seniority, I do not regard it to be excessive as to warrant a reduction.

(C)   Summary

24.  The total costs of Lam on Tan’s application for stay of execution are assessed and allowed at HK$651,800.  The breakdown is as follows:

Items	Time allowed	Costs allowed
A. Solicitors’ costs 1 & 2 3 to 5 6 to 8 9, 10 & 12 11 & 13 14 to 16 17 & 18 Hearing & attendance	HH  2 hrs LWWQ  45 min HH 7 hrs 30 min HH  5 hrs HH  2 hrs 30 min HH  4 hrs LWWQ   3 hrs HH  2 hrs  HH  4 hrs 15 min LWWQ     15 min      Sub-total: HH   27 hrs 15 min   @ $4,000/hr LWWQ 4 hrs   @ $2,200/hr	$109,000   $    8,800 $117,800
B. Disbursements	JC’s fees MS’s fees JW’s fees Photocopying & miscellaneous charges      Sub-total:	$  25,500 $400,000 $107,500 $     1,000 $ 534,000
Total	A. + B.	$ 651,800

IV.   HCA2545/2005

25.  The total costs claimed by Lam on his application for payment out are HK$28,333.  The duration of the proceedings on the application is similar to that of Tan’s application for stay of execution in HCA2576/2005.  However, because the determination of the application much depended on the outcome of Tan’s application for stay, the work involved is much less.  

(A)       Solicitors’ professional fees 

26.  Hourly rate: For the reasons set out in paragraph 6 above, the hourly rate of HH is allowed at $4,000 as claimed.  It is not necessary to deal with the objection to the hourly rate of LWWQ as she has not claimed any time for the payment out application.

27.  Time incurred: The total time incurred by HH is 3 hours 20 minutes. They relate to communications with Tan’s solicitors, client, counsel and court, drafting the summons for payment out and preparing for the hearing. Other than the time for drafting the summons, which I will reduce to 15 minutes, the other items are in my view not excessive. The total time allowed is 3 hours 5 minutes. 

(B)   Counsel fee

28.  The hearing of the summons for payment out was initially returnable on 19 May 2011.  At the hearing of Tan’s summons for stay of execution on 18 May 2011, on my suggestion and with agreement of the parties, the summons for payment out was brought forward for hearing and directions for the substantive hearing were made.  By then, Lam’s solicitors had already delivered brief to counsel.  On party-and-party taxation, unused brief is normally not allowed or will not be allowed in full.  Further, the two summonses are closely related and the same counsel had been paid a full brief fee for the hearing of the application for stay on 18 May 2011.  In the circumstances, counsel fee is only allowed at $5,000.

(C)   Summary

29.  The total amount of costs allowed on Tan’s application for payment is HK$17,333 (3 hours 5 minutes x $4,000 + $5,000=$17,333).