SUZANNE RUTH HENDERSON v. SCOTT HENDERSON

HCMP 1780/2013

[2019] HKCFI 299

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1780 OF 2013

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D E C I S I O N

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1.  Ms Henderson issued an originating summons for an injunction under section 21M of the High Court Ordinance to aid her enforcement of support payments against Mr Henderson (“the OS”). She successfully obtained an interim injunction, which was finally discharged by a judgment dated 14 April 2016. Mr Henderson was granted costs of the OS and the discharge application (“the Costs Order”). In view of the chequered history of the litigation and with a view to minimizing legal costs of each party after the divorce, I have ordered summary assessment of Mr Henderson’s costs.

2.  In concession to some points made by Ms Henderson in her written submission, Mr Henderson has amended his statement of costs on 14 November 2018 (“the Costs Statement”), which is now attached to Mr Marwah’s submission.  The amount of costs claimed is reduced.

3.  Ms Henderson disputes liability for costs on the following grounds:

(1)  For the period whilst Mr Henderson was represented by HWG, the costs orders were in her favour;

(2)  The court’s decisions were erroneous and Mr Henderson owed her support payments and costs;

(3)  Mr Henderson has delayed in this application, thereby causing her loss;

(4)  Ms Henderson has made offers to settle; and

(5)  The hourly rates claimed were excessive.

Legal principles on summary assessment

4.  Under Order 62, rules 9(4) and 9A(1)(a) of the Rules of the High Court respectively, the court may direct that, instead of taxed costs, a party shall be entitled to a sum of money summarily assessed in lieu of taxed costs. This applies to both non-interlocutory and interlocutory costs.

5.  In summary assessment, the court will take a global approach, which will indicate if the total sum claimed is or appears disproportionate.  If the costs as a whole are not disproportionate, then all that is required is that each item of cost should be reasonably incurred.  Where the costs as a whole appear disproportionate, the court will need to be satisfied that each item was necessary.  In this regard, a sensible standard of necessity must be adopted. This requires the need to take into account the different judgments of those responsible for litigation as to what costs can be reduced or, if they are uncooperative, costs may be increased.  In this context, it is acceptable for the paying party to have to pay for otherwise unnecessary expenses made necessary by their uncooperativeness.  Hong Kong Civil Procedure 2019, Vol 1, §62/9/10.

6.  Although summary assessment is not mini-taxation, the usual solicitors’ hourly rates would apply as for a taxation.  The court considers the same factors as a taxing master would when deciding whether to allow or disallow a set of costs.

Ground 1: For the period whilst Mr Henderson was represented by HWG, the costs orders were in Ms Henderson’s favour

7.  Mr Henderson claims for all costs incurred (though discounted) during the period whilst he was legally represented by HWG.  I agree with Ms Henderson that it is a wrong approach because most of the costs orders during that period were in her favour. 

8.  Regrettably, the wrong approach has caused this court to take longer than usual to come to this decision because I had to go through the whole court file to compile the table of costs orders summarized in Annex 1. All the costs orders covered by the Costs Order have been highlighted.  It is those costs that I shall summarily assess.

9.  Costs orders in folio nos. 15, 50, 61, 62, 76, 82 and 89 were made whilst Mr Henderson was represented by HWG.  For those costs reserved (including counsel fees), they should be awarded to Mr Henderson as part of the costs under the Costs Order. 

10.  Costs orders in folio nos. 112 and 130 were made after HWG came off the record.  Costs reserved under folio no. 112 should follow the Costs Order in folio no. 130 and be to Mr Henderson.  I had regard to the preamble to the Costs Order to ascertain what affidavits had been used for the relevant hearing.  For those affidavits filed before HWG came off the record, I would only award Mr Henderson perusal costs.  For those filed by Mr Henderson afterwards, I award him drafting costs; for those filed by Ms Henderson afterwards, I award him perusal costs.  On top of these, Mr Henderson will be awarded costs for photocopying, travelling, postage, service, correspondence and communication, preparation of submission, consideration of Ms Henderson’s submission and attendances in court.

11.  Costs in relation to folio nos. 129 onwards are related to the present summary assessment which I will come to below.

Ground 2: The court’s decisions were erroneous and Mr Henderson owed Ms Henderson support payments and costs

12.  Ms Henderson’s affidavits and submission contained a lot of comments as regards this court’s decisions.  She also complained that Mr Henderson owed her a lot of costs and support payments.  Those comments and complaints fell outside the scope of this summary assessment and were disregarded.

13.  Further and without disrespect, Ms Henderson obviously had a misconception of what costs order nisi meant in the judgment leading to the Costs Order.  She erroneously thought that the judgment could be withdrawn, reconsidered or that further evidence should be given.  In fact, costs order nisi was a provisional order to decide who should bear costs and either party could have applied to vary it within the statutory time frame, ie 14 days of the handing down of a judgment: Order 42, rule 5B(6), Rules of the High Court.  She had not applied to vary the Costs Order within time.  It is not now open to her to submit that Mr Henderson has lost his claim to costs.

Ground 3: Mr Henderson has delayed in this application, causing Ms Henderson loss

14.  Ms Henderson submits that there has been delay in summary assessment since the Costs Order in 2016 to this day and that has caused her financial loss.

15.  This court was aware that summary assessment had to be done as soon as possible after a matter was disposed of and that further costs should not be incurred on taxation to reduce the parties’ funds.  However, the letter of this court dated 27 April 2016 already noted that Mr Henderson was still in prison for contempt of court when the costs order nisi (which led to the Costs Order) was made.  This court recognized that Mr Henderson might have difficulty sorting out documents to be able to present a statement of costs for the relevant proceedings for the purpose of summary assessment.  Whilst in prison, Mr Henderson’s current wife contacted Withers in Hong Kong to represent him.  Mr Henderson has explained his delay in his 12^th affidavit filed on 7 June 2017. 

16.  Mr Henderson had promptly applied for bail and obtained funds to seek his release from prison.  After release from prison, he had to make arrangements to return to work.  He also had to take steps and incur more costs to defreeze his funds in HSBC and Citibank accounts because Ms Henderson would not agree to uplift the Mareva injunction despite the court’s dismissal of her originating summons.  Those accounts were only freed in November 2016.  It was after he was able to gain funds in his bank accounts that he was able to pay HWG. 

17.  Mr Henderson then promptly instructed Withers to handle the aftermath of the discharge of the injunction, applied for an order of summary assessment and prepared for summary assessment.  Withers was not involved in the substantive proceedings and had to read up the papers.  In my view, neither Mr Henderson nor Withers have delayed the process of the summary assessment.  I accept Mr Henderson’s explanation for delay.

18.  If there had been delay, I am not satisfied that it had caused prejudice to Ms Henderson and Ms Henderson could not point to any.  In fact, summary assessment saves costs and time and is to her advantage.

19.  In any case, delay would not reduce Ms Henderson’s liability for costs. It would, at best, only reduce the period for which she needs to bear interest on those costs.  In this case, I am not satisfied that there are reasons to reduce those interests.

Ground 4: Ms Henderson has made offers to settle

20.  There have been previous offers to settle made by Ms Henderson’s lawyers, principally from Canada.  There was one offer to settle dated 10 March 2017 from Dawn Wyland (lawyer in Canada) which purported to settle also the Hong Kong proceedings including costs.  However, that offer made clear that it was subject to drafting up of formal settlement documents and that has never been done. 

21.  There was another without prejudice offer dated 31 March 2017 from Epstein Cole (a foreign lawyer) but there was no acceptance.

22.  There being no agreement on settlement of costs, I can see no reason to reduce either the amount of costs or interest that Ms Henderson should bear.

Ground 5: Hourly rates claimed were excessive

23.  All the relevant proceedings under the Costs Order were taken up to 2016 and some of the steps taken concerning the issue of summary assessment were carried out before the new set of solicitors’ hourly rates on party-and-party taxation came into effect on 1 January 2018.  Steps taken post-2018 concerned summary assessment only and were not complex. 

24.  I agree with Ms Henderson that the hourly rates claimed were excessive. Accordingly, I apply the pre-2018 solicitors’ hourly rates throughout.  This means, by way of example, that the hourly rate for a solicitor with over 10 years’ post-qualification experience (like Ms Sharon Ser) will be granted only $4,000 per hour. 

25.  For the period when he acted in person, Mr Henderson was entitled to costs of HK$200 per hour: Order 62, rule 28A(3) of the Rules of the High Court; plus disbursements.

Quantum of costs

26.  I shall deal with only matters of principle under each section of the costs statement before making a broad brush assessment of quantum.

Section A – hourly rates of fee earners

27.  This has been dealt with under Ground 5 above.

Sections B to D – Manual Work, Communications and Professional Work

28.  Mr Marwah has confirmed that such costs are not claimed.

Section E – Preparation of summary assessment application including court attendance

29.  Normally, costs for preparation of a costs statement is not allowed: PD 14.3, §13.  However, this summary assessment covered a long period and was specially ordered to reduce the costs of taxation for someone who had for some time acted in person, won on some steps and lost on some. 

30.  Withers, who had not handled the matter, had to read up in order to help Mr Henderson to prepare for this summary assessment.  For that, perusal costs would be allowed.  In addition, affidavits have been filed to deal with matters raised by Ms Henderson.

31.  The amount of $323,241 claimed ought to be discounted because of the excessive hourly rates and the wrong approach described in paragraph 7 above.

32.  On the other hand, Withers have already waived costs under Sections B to D. 

33.  Making proper discount and taking the waiver into account, I assess costs under Section E in the sum of $180,000.  This amount would include the costs reserved on 30 June 2017 when the court adjourned the direction on whether there should be taxation or summary assessment (folio 136).

Section F – Counsel’s Fees

34.  In respect of Mr Azan Marwah’s fees, 2 of the fee notes related to HCMP 2016/2014 and were irrelevant to the present proceedings.  The fee note in P1/232 concerned a matter not pursued or covered by the Costs Order.  I award full costs of $12,000 only on one fee note in respect of these proceedings for summary assessment.

35.  As for Mr Paul HM Leung, he was instructed by HWG to appear before DHCJ Hartmann, DHCJ Sakhrani, A Chan J, DHCJ B Chu (as she then was) and myself.  His fees are recoverable under folios 15, 50, 61, 62 and 89 of Annex A. Accordingly, I award Mr Paul HM Leung’s fees to the extent of $70,000.

Section G – HWG’s Fees

36.  HWG represented Mr Henderson from about the time the Mareva injunction (obtained ex parte) was served on him to deal with various interlocutory applications until December 2014, shortly after this court refused to give leave to appeal. 

37.  I accept that Mr Henderson had incurred the sum of $2,592,529.38 with HWG.  HWG gave him a generous discount and he ended up paying $1,069,166.23 (inclusive of counsel’s fees of $366,000).

38.  Mr Henderson is entitled to recover HWG’s costs under folios 15, 50, 61, 62, 76, 82, 89 in Annex 1.  Save for folio 50 and 89, the rest of the folios concern very procedural steps and no substantive arguments.  For these identified folios where costs were reserved, they should form part of the costs in the cause and be to Mr Henderson. 

39.  In addition, Mr Henderson would be entitled to recover some costs for legal advice, conferences and correspondence regarding discharge and care of the whole proceedings whilst HWG was on record.  

40.  There was no filing fee involved in those proceedings where Mr Henderson got costs orders in his favour.  However, I allow the costs of transcript, search fee, disbursements and time for correspondence with Ms Henderson’s side and with the court. 

41.  Overall, I assess the amount for HWG’s costs to be $200,000.

Other costs

42.  For the period while Mr Henderson was acting in person, under paragraph 10 above, I award costs at $200 per hour in the total sum of $40,000.

Conclusion

43.  I order Ms Henderson to pay costs of HK$502,000 to Mr Henderson, together with interest at judgment rate from 14 April 2016 to the date of payment.

44.  I thank counsel for his assistance.

Annex 1 Table of Costs Orders

Note: All costs order nisi have become absolute.