S. T. INTERNATIONAL CO LTD v. GENERAL NICE RESOURCES (HONG KONG) LTD

DCCJ 4192 of 2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL JURISDICTION

ACTION NO. 4192 OF 2007

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DECISION

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A.    Introduction

1.  This hearing is held to consider summary assessment of the costs of the action after the Parties have settled the whole action on the 1^st day of the trial pursuant to Order 62, rule 9A of the Rules of the District Court (“RDC”).

2.   Before this hearing, the Parties have filed their respective statement of costs and the grounds of objection.

B.  GENERAL APPROACH ON SUMMARY ASSESSMENT

3.  It is apparent that the idea of having summary assessment is to save time and costs that may be incurred on full taxation.  The judges seized with the matters are also familiar with the background leading to the cost orders.  This is conducive to decide what will be the reasonable amount of costs to be allowed:    Star Rainbow v Lin Pai Ching & others HCA 2410/09 dated 2^nd March 2010 as per Chu J.

4.  According to the Practice Direction 14.3, paragraphs 13 and 14, it is expounded that:-

“A broad-brush approach will be taken by the Court in the summary assessment  procedure.  The Court will not embark on a mini-taxation.  Prolixity in contents of a statement of costs is therefore not acceptable.  Costs for gathering information and drafting of these statements will generally not be granted.

Although the Court may allow the full amount claimed by the receiving party, it will, so far as possible, ensure that the final figure is not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in Order 1A.  The Court will retain this responsibility notwithstanding the absence of challenge to individual items in the make-up of the figure sought.  The fact that the paying party is not disputing the amount of costs can however be taken as some indication that the amount is proportionate and reasonable.  The Court will therefore intervene only if satisfied the costs are so disproportionate that it is right to do so.”

5.  Examples of broad and pragmatic approach on summary assessment of costs can be found in Chun Sun Kong v Sky Architectural CACV 86/2009 dated 20^th October 2009 and the case of Cheng Oi Kuen HCMP 671/2009 dated 29^th April 2009 in which the Court took into account the amount or value of the claim and the complexity of the arguments in assessing costs summarily.

C.  DISCUSSION

6.  In my view, the above exposition will not prevent a Judge, in appropriate cases, from considering the factors that a taxing master would have considered during full taxation under Order 62, rule 37, Schedule 1 Part II of the RDC:-

1. Discretionary costs

(2) In exercising his discretion in relation to any item, the taxing master shall have regard to all relevant circumstances, and in particular to-

(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, the solicitor or 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 the solicitor or 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.

7.  It must also be noted that upon the implementation of the Civil Justice Reform and with the introduction of the new sub-paragraph under the same Schedule as extracted hereunder, the test or consideration of counsel’s fee is no longer whether it is unreasonable and excessive,  the above 7 factors are also relevant:-

2. Fees to counsel

(5) The amount of fees to be allowed to counsel is in the discretion of the taxing master who shall, in exercising his discretion, have regard to all relevant circumstances and in particular to the matters set out in paragraph 1(2).

8.  With the above mechanisms in mind, the approach is one of broad-brush and the ultimate question is whether the final figure is proportionate and reasonable having regard to the nature of the case.  If necessary, the above 7 factors may be relevant to adjudicate on a disputed item or matter involving a substantial amount.  In relation to tedious items with insignificant amount, broad–brush approach seems to be more desirable.

9.  From the statement of cost, the Plaintiff, who is a receiving party, asked for a total sum of HK$289,092.67 for the costs and disbursement, including counsel’s fees.  In contrast, the Defendant, the paying party submitted that the reasonable amount should be HK$138,718.50 according to their grounds of objection.

10.  In gist, the Defendant contended that (i) this case is straightforward and should have handled by a solicitors of 3 to 4 years’ post-qualification, hence the reasonable hourly rate for the handling solicitors (“Tam”) should be $1,650, instead of $2,600 as provided under the Law Society Circular 00-393(PA) dated 11 December 2000; (ii) the hourly rate of a less senior solicitors (“Liu”) should have charged $1,500, the suggested amount of $1,650 is excessive; (iii) with the involvement of counsel at an early stage of the proceedings, the total hours claimed by Tam and Liu are excessive.  Mr. Cheung, solicitors for the Defendant submitted that 50% shall be deducted from the total hours claimed; (iv) the case was settled on the 1^st day of the trial, hence the counsel’s refresher in the sum of HK$12,000 shall be taxed off.

11.  Firstly, I agree that the counsel’s refresher in the sum of HK$12,000 shall be deducted because it cannot be charged when the court is not sitting: Hong Kong Civil Procedure 2010 edition, Vol. 1, para. 62/App/32.  

12.  Secondly, I am of the view that a more senior solicitor supervising a junior solicitor in litigation is usual and reasonable.  Further, in light of the nature of the case, I do not agree that this case should have been handled by a solicitor of having 3 to 4 years of post admission experience.  It is proper for a solicitor of more than 10 years of post admission experience to take charge of this case and delegate appropriate litigation works to Liu.  However, on the question of hours claimed, Tam claimed a total of about 53 hours.  Liu claimed a total of about 41 hours.  I am of the view that a reasonable and prudent solicitor of that seniority would not have spent so many hours having regard to the nature of the case.   A reasonable and prudent solicitor would have spent about 60% of the time claimed by Tam and Liu, that is 32 hours for Tam and 25 hours for Liu respectively.  This has taken into account the 7 factors and the professional works involved in respect of the amendment of pleadings.  By way of calculation, the respective deduction should be HK$54,600 ((53-32) x $2600) and HK$26,400 ((41-25) x $1,650).

13.  Thirdly, on the question of hourly rate for Tam and Liu, having regard to the nature of the case, I am of the view that the respective hourly rate of HK$2,600 and $1,650 is reasonable and it is within the spectrum as propounded in the said circular.  It seems to me that other charges are reasonable and necessary.

14.  In a nutshell, the total deduction from the original figure of HK$289,092.67 should be HK$93,000.  The cost of this taxation hearing should be allowed as if it was a 30-minutes’ hearing and the usual amount on a District Court scale should be $1,500.  To round up the figure, the net amount should be HK$197,500.  This amount is reasonable and proportionate to the nature of the case and the fact that the case was settled on the 1^st day of the trial.

D.  CONCLUSION

15.  As a result, I order that notwithstanding any costs orders to the contrary or cost reserved, the costs of the action assessed summarily in the sum of HK$197,500 be paid by the Defendant to the Plaintiff within 14 days from the date hereof.