SKK (H.K.) LTD v. STRESS (FAR EAST) LTD

HCCT59/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 59 OF 2004

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R U L I N G

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1.  There are two applications before me this afternoon.  They were both brought by Mr Shaw for the paying party, the Defendant in this case.

2.  The parties fully addressed me on the second application which is the application by Mr Shaw for his client for a review on a single item.  That appears in the table set out on page 4 of the bundle that he has very usefully provided to me.

3.  The reasons for objection read as follows:

“The Master should have required the receiving party to produce the invoices of its solicitors and receipts of payment of legal fees to establish that the hourly rates of JT and BL, because such rates should be no higher than those actually billed by the solicitors and actually paid by the receiving party.”

4.  When the matter first came up for taxation, Mr Shaw had addressed me quite fully on this issue and, essentially, his points made then were no different from those made today, which is that the issue as to the hourly rates of Mr Joseph Tsang (JT) and Miss Lui Pui-wah Becky (BL) can quickly be put to bed if the solicitors for the receiving party had provided a very brief affidavit setting out the hourly rates that have been charged to their clients billed and paid.

5.  The matter was fully canvassed then and I took the view on the last occasion that, accepting that the burden of proof of breach of the indemnity principle rests on the person making it, in that case, the Defendant, the paying party, until sufficient evidence was before the court of a prima facie case of a likely breach of the indemnity principle, the Plaintiff, the receiving party, did not have to rise to the challenge and did not have to produce contrary proof.

6.  On that occasion also, to circumvent the absence of an affidavit, Mr Tsang, for the Plaintiff, as an officer of the court, indicated for the record that he and his colleague, BL, would only charge the Plaintiff client the agreed rate, and the agreed rate was as stated in the Bill of Costs.

7.  The matter then proceeded eventually to taxation and the bill was finally taxed.

8.  On this occasion, one has had the benefit of further argument on this point.  I think it is important to draw a distinction between the burden of proof, on the one hand, and what has normally to be established in taxation.  Mr Shaw is very right to say that he is not, in fact, rehashing the argument that there has been a breach of the indemnity principle.  Whether or not it has been raised on evidence or otherwise, in every case of a bill up for taxation, unless items are agreed, it falls squarely upon the receiving party to demonstrate that items in the bill have been incurred or are properly chargeable, of course, subject to reasonableness and to the scale of costs that applies to the taxation.  In this case, I agree that we are not concerned with the indemnity principle. 

9.  The Plaintiff, the receiving party, was requested in the Reasons for Objection in this review to produce documentation to the court, such as invoices and receipts, to satisfy the court that the agreed rates between the Plaintiff’s solicitors and the Plaintiff were as stated in the Bill of Costs.

10.  I do not consider that the matter can be simply argued on the basis that if there are no invoices and no receipts, then that would be the end of the matter.  In this case, if there were no invoices or bills or receipts in respect of the hourly rates, surely, on the understanding as given by Mr Tsang that there was an agreed rate and that they would charge an agreed rate, there must be some documentation to that effect, be it a letter of confirmation or a telephone note or what have you.

11.  In this case, I am going to accede to the review because it is incumbent on the Plaintiff in every case unless there is agreement to provide proof and, in this case, I will reopen that issue and the Plaintiff will have to supply documentation on the hourly rate.  What documents they have, I do not know.

(Discussion re costs)

12.  I will reserve costs on the review.