NG TUNG v. VICTOR CHAN & CO, SOLICITORS

HCMP 2000/2024

[2026] HKCFI 2720

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2000 OF 2024

____________

____________

____________

_____________

D E C I S I O N

_____________

A. INTRODUCTION

1.  The Defendant (“D”) was the firm of solicitors acting for the Plaintiff (“P”) in 2 sets of proceedings, namely, HCA 1682/2021 and HCA 2531/2021 (“HCA Proceedings”) and DCCJ 3574/2023 (formerly HCA 556/2020) (“DCCJ Proceedings”) (together “Proceedings”).

2.  By Originating Summons dated 10 October 2024 (“OS”), P seeks orders to have four of D’s bills delivered in the Proceedings (“4 Bills”) taxed.

3.  On 17 October 2025, a Master (“Master”)made the following orders (“Master’s Order”):

(1)  The OS be stayed pending the determination of a negligence action in HCA 1012/2025 (“Negligence Action”) taken out by P against D and P’s trial counsel in the HCA Proceedings (“Trial Counsel”) with respect to their conduct of the HCA Proceedings; and

(2)  D shall pay 50% of the costs of the application including the hearing below with certificate for counsel, summarily assessed at HK$28,000 and payable forthwith.

4.  Following the Master’s Order, D lodged an appeal (“Appeal”)by way of a Notice of Appeal dated 23 October 2025 (“NoA”).

5.  At the hearing of the Appeal before this Court, P was represented by Mr Ben C H Poon and D was represented by Mr Donald Ting, both of counsel.  I have considered their submissions both orally and in writing.  At the end of the hearing, I reserved my decision.

6.  This is my decision.

B.  RELEVANT BACKGROUND

7.  The factual and procedural background of the present matter is not seriously disputed.  For the present purposes, I set out the following points which are relevant to the context to this dispute. These points are largely taken from Mr Ting’s skeleton submissions, which Mr Poon does not dispute.

8.  The HCA Proceedings and the DCCJ Proceedings concern P’s adverse possession claims against the respective counterparties in each case.  Those proceedings concern different plots of lands and different counterparties.  

9.  D acted for P in the Proceedings from March 2023 to February 2024. At the time when D were engaged, the HCA Proceedings had already been set down for a 9-day trial.

10.  The trial of the HCA Proceedings commenced on 9 January 2024. Trial Counsel was instructed to represent P at the trial.

11.  On 11 January 2024, the HCA Trial was settled.  Tomlin orders were made (“Settlement”).

12.  P then changed his mind regarding the Settlement.

13.  On 14 February 2024, D terminated its retainers in both the Proceedings upon P’s default in settling D’s bills and breakdown of trust.  

14.  At issue are the 4 Bills delivered by D to P between 20 October 2023 and 20 February 2024 totalling HK$1,978,320.  3 of them were delivered in the context of the HCA Proceedings (“HCA 1^st Bill”, “HCA 2^nd Bill”and“HCA 3^rd Bill”;collectively “HCA Bills”) and 1 of them was delivered in the context of the DCCJ Proceedings (“DCCJ Bill”).  

15.  In relation to the 4 Bills:

(1)  It is not disputed that the 4 Bills were issued pursuant to the respective retainers and delivered to P in accordance with the Legal Practitioners Ordinance (Cap. 159) (“LPO”); and

(2)  P had paid a total of HK$1,250,000.  On D’s case, this leaves an outstanding balance of HK$703,320 unpaid (“D’s Claimed Outstanding Balance”). As summarised by Mr Ting, D’s position on the 4 Bills is as follows:  

Bill	Amount as per Bill (HK$)	Outstanding balance (HK$)
HCA 1st Bill	$406,200	$21,280
HCA 2nd Bill	$1,174,640	$334,560
HCA 3rd Bill	$66,400	$66,400
DCCJ Bill	$331,080	$281,080
Total:	$1,978,320	$703,320

16.  On 6 May 2024, D commenced an action in DCCJ 2421/2024 to recover D’s Claimed Outstanding Balance (“Bills Action”).  

17.  On 10 October 2024, P took out the OS.  P filed a supporting affirmation on 10 December 2024.  P made a number of points including, inter alia, the following:  

(1)  The 4 Bills were unreasonable and excessive.

(2)  D had agreed to accept $1,200,000 as D’s fees in the HCA Proceedings up to the conclusion of the trial (“Alleged Flat Fee Arrangement”).

(3)  Whilst there was negligence and/or undue pressure by P’s legal team in the HCA Trial (“Negligence Issue”), the OS “is not concerned with the quality of the advice” and the “professional negligence matters in conducting [the HCA Trial]… is not directly concerned with the present taxation proceedings”.  

18.  The OS first came before the Master on 24 February 2025.  It was adjourned to 27 March 2025.  On that day, the Master directed P to issue a fresh writ for the Negligence Action by 15 May 2025 and to include in that writ the preliminary issue of the Alleged Flat Fee Arrangement (“Preliminary Issue”).  

19.  On 23 May 2025, P issued a generally indorsed writ in the Negligence Action against D and Trial Counsel.  No relief was sought as to the Preliminary Issue.   

20.  On 8 July 2025, P served his Statement of Claim in the Negligence Action.  

21.  The OS returned before the Master on 10 July 2025 and the Master adjourned the OS to 17 October 2025 for substantive arguments.   

22.  Substantial arguments took place on 17 October 2025.  At the end of the hearing, the Master made the Master’s Order.  The Master stayed the OS pending the Negligence Action.  The Master took into account the following main considerations:

(1)  The Negligence Action cannot be said to be plainly bad, or amounts to spurious or savory attempts to postpone payment.

(2)  It would not be cost-effective to single out the Preliminary Issue for a Judge’s determination first because it is very likely that the Judge will not make an order for the taxation of the 4 Bills before the Negligence Action is determined.

(3)  It would also not be cost-effective to refer the DCCJ Bill only to taxation because the amount involved is not substantial.

23.  On 23 October 2025, D lodged the NoA.

C.  RELEVANT LEGAL PRINCIPLES

24.  The principles regarding an appeal against a Master’s decision to a Judge in Chambers are well-established:

(1)  The appeal is conducted by way of actual rehearing of the application which led to the order under appeal.  This Court is in no way bound by the Master’s decision, nor is it fettered by the Master’s exercise of discretion.  Fresh points which were not raised or taken before the Master can be taken before a Judge: Hong Kong Civil Procedure 2026 §§58/1/2 and 58/1/5. 

(2)  In addition, I observe that a Judge does not lightly intervene a master’s case management decision, unless there are good reasons to do so: Peking University Resources (Holdings) Company Limited v Peking University Resources Group Co., Ltd & Ors [2025] HKCFI 2642 at §6(2) per DHCJ Alan Kwong.

25.  It is not disputed that an application for solicitor-client taxation involves 2 stages:

(1)  The first stage concerns the making of an order to tax (“Stage 1”), which usually deals with issues of liability.

(2)  The second stage concerns the taxation itself before the taxing master (“Stage 2”), which usually deals with issues of quantum.

See: Sutherland v CRB (a firm) [2023] 1 HKLRD 1 (“Sutherland (CFI)”) at §60 per Q Au-Yeung J.  

26.  Issues of liability include, inter alia, whether there is a cap on fees and any vitiating factors that would have affected the right of the solicitor to recover fees, ie negligence.  Whether a master or a judge should deal with the issues depends on the nature of the issues and there is no hard and fast rule.  In general, a master can deal with issues that can be summarily disposed of and the more substantial issues involving multi-factual and legal disputes, discovery and cross-examination of witnesses should be handled by a judge.  In the case of issues involving negligence, it may even be necessary to hive off the issues to a writ action or stay the OS pending disposal of the writ action: Sutherland (CFI) at §§71-72 per Q Au-Yeung J.

27.  Dealing with issues in Stage 1 may delay the process of recovery of legal fees.  Until the taxation is completed, no action shall be commenced on the bill and any action already commenced would be stayed: section 67(2) of LPO.  The court concerned should thus exercise proper case management to ensure expeditious disposal of the OS and/or a writ action and prevent abuse by a party: Sutherland (CFI) at §74 per Q Au-Yeung J.

28.  As to the implication of a claim in professional negligence on the issue of fees:

(1)  A claim in professional negligence may have the effect of depriving the solicitor of “some or all his costs in relation to the relevant proceedings”: Sutherland (CFI) at §47 per Q Au-Yeung J.

(2)  On the other hand, a negligent solicitor is only precluded from recovering his costs when the solicitor’s service is useless or valueless in the sense that there is a total or partial failure of consideration: Shaw v Leigh Day [2018] PNLR 2 at §§99-100.  

(3)  As observed by the learned authors of Jackson & Powell on Professional Liability (9^th edn) at §3-014:

“… The approach which is adopted in most cases, and which, it is submitted, is correct, is that where the defendant’s negligence renders the services provided valueless, the defendant is not entitled to recover (or to retain) any remuneration for the work in question. In any other case, where the defendant has substantially (albeit negligently) performed the work, the defendant is entitled to be paid the normal remuneration and the client must rely upon a remedy in damages...”

29.  In Hong Lee & Co. (a firm) v Sun Wai Chun (unrep, HCMP 5857/1999, 10.5.2000), DHCJ Chu (as she then was) held at p6 that:

“…There is no inflexible rule that, where a client disputes his liability to pay his solicitors, the taxation can or should only take place after the liability issue has been resolved. Each case will have to depend on its own facts.”

30.  Where the application to tax a bill is made more than 1 month after its delivery, the court has a wide discretion to impose any terms as it thinks fit under section 67(2) of LPO.  In particular, the Court may impose a condition for the payment of the whole or part the bill to the solicitor and/or into court when ordering a taxation, subject to appropriate terms as to repayment depending on the result of the taxation: Sutherland v CRB (a firm) [2024] HKCA 331 at §43(3) per Chow JA.

D.  ISSUES FOR DETERMINATION

31.  Having considered the parties’ submissions, I am of the view that the issues between the parties are as follows:

(1)  Whether the taxation of the DCCJ Bill should be stayed pending the final determination of the Negligence Action (“Issue 1”)?

(2)  Whether the HCA Bills should be stayed pending the final determination of the Negligence Action (“Issue 2”)?

(3)  If the taxation should not be stayed, whether terms (including a condition for interim payment) should be imposed (“Issue 3”)?

E.  ANALYSIS

E1.  Issue 1: Should the taxation of the DCCJ Bill be stayed pending the final determination of the Negligence Action?

32.  I first consider whether the taxation of the DCCJ Bill should be stayed pending the final determination of the Negligence Action.

33.  Mr Ting submitted that:

(1)  The Preliminary Issue and the Negligence Issue only relate to the HCA Proceedings.  They have no impact on the DCCJ Proceedings.

(2)  The only real connection between the HCA Bills and the DCCJ Bill is that they were issued by the same firm to the same client (ie P) and they were sought to be taxed by P under the same OS. 

(3)  It is not any party’s contention that there would be any overlapping issues or even overlapping documents in the taxation of the HCA Bills and the DCCJ Bill respectively. 

(4)  P’s only challenge to the DCCJ Bill is whether the charges are unreasonable or excessive. 

(5)  The DCCJ Bill, which was issued on 14 February 2024, has remained almost completely unpaid.

(6)  It is clearly desirable and fair that taxation for the DCCJ Bill should proceed as soon as possible so that D would be paid its fees for the DCCJ Proceedings.

34.  On the other hand, Mr Poon submitted that:  

(1)  The amount in the DCCJ Bill is relatively low compared to the total amount of the alleged outstanding fees.

(2)  Whether the items within the DCCJ Bill are unreasonable or unusual is hotly contested.

(3)  Given that the DCCJ Bill is hotly contested, it is foreseeable that both P and D would need to expend considerable and disproportionate costs on the taxing of the DCCJ Bill alone.

(4)  It would not be cost-effective to tax the DCCJ Bill individually.

35.  At the hearing below, the Master held that because the amount involved in the DCCJ Bill is not substantial, it would not be cost-effective to order separate taxation.

36.  With respect, I consider that the Master erred in considering that a “separate” taxation would lead to an increase in costs:

(1)  The fact is that P and D could not agree between themselves as to the amount payable under the DCCJ Bill.  Their dispute over the DCCJ Bill will have to be resolved by the Court through a solicitors-client taxation.

(2)  Inevitably, costs would have to be incurred in the taxation process. The Court’s resources would also need to be expended in resolving the parties’ arguments.

(3)  However, as fairly conceded by Mr Poon at the hearing, there is no overlap between the DCCJ Bill and the HCA Bills.  As such, whether heard together or not, the time and costs incurred in the taxation of the DCCJ Bill will have to be incurred on top of any time and costs incurred for the taxation of the HCA Bills.

(4)  Even if the HCA Bills and the DCCJ Bill are taxed together, it is likely that the parties will make separate arguments in relation to the DCCJ Bill.

(5)  To this end, it is unlikely that there would be much savings of the Court’s resources by deferring the taxation of the DCCJ Bill to a later date. 

(6)  There is hence no reason for bundling up the taxation of the DCCJ Bill and the HCA Bills.

37.  Indeed, the retainer relationship between P and D in the DCCJ Proceedings was not even mentioned in the Statement of Claim filed by P in the Negligence Action.  By omitting reference to the retainer for the DCCJ Proceedings, P’s own position must be that the said retainer was not subject to the Negligence Issue.

38.  Mr Poon submitted at the hearing that even if the DCCJ Bill were to be taxed now, D could still not recover such fees payable to them because D’s Bills Action is concerned with all 4 Bills.  He submitted that unless all 4 Bills have been taxed, D cannot recover them.  I do not agree with Mr Poon for the following reasons:

(1)  To begin with, D’s cause of action (if any) under the DCCJ Bill is a separate cause of action from D’s cause of action (if any) under the HCA Bills.

(2)  Once the taxation of the DCCJ Bill is completed, D may proceed to obtain summary judgment on the DCCJ Bill in the Bills Action. 

(3)  It is not for this Court to decide whether or not D will necessarily succeed in obtaining summary judgment against P.  I will not preclude P’s defence, if any, to be raised in the Bills Action.  However, the above analysis suggests that D would derive an actual benefit in terms of having the dispute over the DCCJ Bill resolved earlier rather than later.

39.  I also take into account the fact that the DCCJ Bill was issued on 14 February 2024, which was more than 2 years ago.  On D’s case, a significant portion of the DCCJ Bill remains unpaid.  There would be prejudice to D if the taxation process were to be deferred.

40.  In my view, the fact that P has since succeeded in his claim in the DCCJ Proceedings is equally important.  In this regard:

(1)  By the judgment handed down on 2 February 2026, P had been awarded costs against the counterparties.  

(2)  On 23 February 2026,P’s current solicitors even requested D to supply a bill of costs “with regard to work done while [D] represented [P] for … forwarding to the solicitors [for counterparties in the DCCJ Proceedings] for their consideration”. 

(3)  An overriding principle in taxation inter partes is the indemnity principle. Under this principle, the costs recoverable by the receiving party is limited to those which he is liable to pay his own solicitor on the date of the costs order, subject to the limitation that they were reasonably incurred and were reasonable in amount: Incorporated Owners of Yan’s Tower v Ho Kwai Yee [2010] 1 HKLRD 930 at §13, per Cheung JA. 

(4)  In view of the fact that P is seeking costs against the counterparties in the DCCJ Proceedings, there is benefit for both P and D to have their dispute over the DCCJ Bill promptly resolved.

41.  Considering all matters in the round, in particular the matters set out in §40 above (which were not before the Master), I am persuaded that there are good reasons to depart from the Master’s Order in respect of the DCCJ Bill.  I am of the view that it would not be just to stay the taxation of the DCCJ Bill pending the final determination of the Negligence Action.

E2. Issue 2: Should taxation of the HCA Bills be stayed pending the final determination of the Negligence Action?

42.  I now consider whether the HCA Bills should have been stayed pending the final determination of the Negligence Action.

43.  The HCA Bills may be said to stand on a different footing from the DCCJ Bill because the Negligence Action covers D’s conduct of the HCA Proceedings.

44.  Mr Poon submitted that the Negligence Action may affect P’s liability to pay the HCA Bills in part or at all and also that the Negligence Action is not unmeritorious.  

45.  On the other hand, Mr Ting submitted that the Negligence Action is bound to fail for the following reasons:

(1)  First, the Court is only concerned with the appropriate standard of care having been exercised without the benefit of hindsight.  Where counsel is properly instructed, a solicitor is not liable if he acts in accordance with counsel’s advice even if it turned out to be wrong.  A solicitor’s duty only requires him to record reservations or reject counsel’s advice when it is “obviously or glaringly wrong”.  Looking at the indisputable contemporaneous records, there was no basis for such a finding to be made.  

(2)  Second, Mr Ting referred me to the procedural history of this case.  He submitted that given P’s repeated change of tack, the Negligence Action is nothing but P’s opportunistic attempt and convenient excuse to delay payment of the HCA Bills.  

46.  Whilst Mr Ting had made various criticisms on P’s case in the Negligence Action (which I have duly considered), I am not satisfied that the Negligence Action is bound to fail for the following reasons:

(1)  Whilst P may be criticised for commencing the Negligence Action late - more than 16 months after the Settlement was reached despite having had earlier opportunities to do so, I do not think that this is sufficient to infer abuse in the sense of P making “spurious, unsavoury, scandalous and cynical attempts to postpone payment”: Sutherland (CFI) at §56 per Q Au-Yeung J.

(2)  As to merits, this Court is not seized of the Negligence Action.  It would not be fair for me to prejudge this matter by holding that the Negligence Action is bound to fail without having sufficient materials before me.

(3)  Although the threshold for establishing negligence is high (in the sense that it is not sufficient for P to merely demonstrate that the result was unfavourable to him, or to apply any hindsight to the case), this Court cannot resolve factual issues between the parties.  In this case, there are factual intricacies in relation to the circumstances and context leading to the advice being given. 

(4)  If D considers the Negligence Action bound to fail, D may make appropriate applications thereunder to seek early determination.  However, based on the evidence adduced before me, D has not (yet) done so.

47.  Nonetheless, the question before me is whether or not the OS should be deferred pending the final determination of the Negligence Action. The fact that the Negligence Action will take its own course, although relevant, does not necessarily mean that the OS should be deferred until its resolution.

48.  Mr Ting submitted and I agree that P is not advancing localised and individualised negligence claims in respect of certain individual items of the HCA Bills.  In this regard, whether or not an issue of negligence is wholesale or contained is a matter of degree: Gibson, Dunn & Crutcher (a firm) v Sunshine Success Global Inc [2026] 1 HKLRD 83 at §74 per Q Au-Yeung J.  In a case of “wholesale” allegation of negligence, the client is usually left to advance his claims in a separate civil action: Gibson, Dunn & Crutcher at §§70-71 per Q Au-Yeung J.  In my view, this is a factor that counts in favour of not staying the OS.

49.  I also accept Mr Ting’s submission that the Negligence Action cannot determine the OS:

(1)  Mr Poon submitted that under D’s retainer for the HCA Proceedings, if D failed to deliver the bargain agreed between P and D, there could still be a total failure of consideration, and D could not recover costs of the HCA Proceedings.  

(2)  In support of his point, Mr Poon relied upon Gartell & Son (a firm) v Yeovil Town Football & Athletic Club Ltd[2016] EWCA 62 at §32.  In that case, the respondent was a football club which engaged the appellant to improve its pitch.  The appellant sued the respondent for payment of the work done.  In response, the respondent declined to pay as the work had not been done satisfactorily.  

(3)  I do not consider that Gartell assists Mr Poon for the following reasons:

(a)  First, Gartell concerns a different situation from the present case involving solicitors having done work for a client.  In fact, Mr Ting drew my attention to the commentary of the learned authors in Goff & Jones on Unjust Enrichment (10^th edn) at §13-19, which suggests that whilst the decision in Gartell was correct on its facts, it should not be taken as laying down a general proposition that “whenever a contracting party falls below the standard of reasonable care a claim for failure of basis may arise”. Otherwise, this “would incorrectly conflate failure of basis with breach of contract when the correct position is that only some breaches of contract amount to failures in the basis for transferring a benefit”.  

(b)  Second, I have considered D’s retainer letter for the HCA Proceedings (“Retainer Letter”).  The Retainer Letter did not provide that it was a “one whole contract” such that D would only be entitled to be paid after conclusion of the whole case. To the contrary, §6 of the Retainer Letter contemplated D’s issuance of interim bills and that P had to pay them within 7 days of issuance (“中期帳單須於發出日後七天內支付”).  This is inconsistent with Mr Poon’s submissions that D could only receive payment upon conclusion of the whole case.

(c)  Third, it seems uncommercial and unrealistic that if a solicitor had provided valuable service in, say, the preparation of the trial bundles, or giving advice before the trial, but was somewhat negligent during the trial process, that would render the entire services provided to the client valueless, such that there would be a total failure of consideration.

(4)  In the circumstances, I find that even if D was negligent in the settlement process (which is what P alleges in the Negligence Action), it is unlikely that D would be deprived from its remuneration in toto.  As such, even if P succeeds in the Negligence Action, P may only obtain an award of damages assessed, against which P may set off the outstanding balance found to be due on the HCA Bills.

(5)  In order to resolve the set-off issue, the HCA Bills would have to be taxed in any event.

50.  The Negligence Action is still at its early stages with pleadings having recently been closed.  I do not consider likely that the Negligence Action, if proceeded to a full blown trial, would conclude in one or two years’ time. I accept Mr Ting’s submission that it would be unfair and counterproductive for the taxation of the HCA Bills to be held in abeyance for such a protracted period of time.

51.  Further, one of the key issues to be resolved in the OS would be what was passed verbally in 4 telephone calls between D’s handling solicitor and P on 4 October 2023, and in particular, whether the Alleged Flat Fee Arrangement was made between D’s handling solicitor and P.  The parties’ oral testimonies will be significant.  It is likely that witnesses will each offer conflicting accounts of events.  As memory tends to fade with the passage of time, a protracted and indefinite postponement of the trial for the Preliminary Issue would be prejudicial to the just resolution of the dispute. 

52.  Overall, I consider that there are good reasons to depart from the Master’s order in respect of the HCA Bills.  In my view, the balance of fairness and convenience tilts in favour of not ordering a stay of taxation of the HCA Bills, despite the Negligence Action.

E3. Issue 3: Should terms be ordered?

53.  In view of my conclusion set out above, I have to consider whether it is appropriate to impose conditions for payment of the whole or part of the 4 Bills to D and/or into Court when ordering the taxation, subject to appropriate terms as to repayment depending on the result of the taxation. 

54.  In deciding whether to exercise its discretion to grant interim payment, the court will consider the following factors:

(1)  Interim payment represents a closer approximation to justice where the receiving party is likely to recover some costs, but time is needed to work out the amount.

(2)  Interim payment reduces the incentive for the paying party to delay the proceedings.

(3)  The consideration of hardship is not relevant in the exercise of discretion, but whether the grant of interim payment would stifle the paying party’s ability to participate in the proceedings may be a factor in assessing quantum and the method and time of payment.

(4)  The approach to assessing the quantum of the interim payment is to use a “rough and ready” approach to ensure a close approximation of justice.

See Lau Yue Kui v Philip Chan & Co (A Firm) (unrep, CACV 75/2014, 29 September 2014) at §28, per Cheung JA.

55.  Mr Ting submitted that:

(1)  The OS was instigated merely as a tactic to delay having to pay the 4 Bills.

(2)  Looking at P’s itemised objections, P does not challenge the disbursements but only D’s profit costs. 

(3)  In respect of D’s profit costs, significant discounts have already been given to P both in the form of discounted hourly rates and discounted number of hours.  After taking into account the discounts and waivers, the actual unchallenged profit costs are as follows:

Bill	Total Profit costs		Total of challenged items (C)	Unchallenged profit costs (A) – (C)
	Itemised Bill (A)	Gross sum Bill (B)
HCA 1st Bill	$434,404	$304,200	$331,200	$103,204
HCA 2nd Bill	$575,669.30	$332,000	$260,600	$315,069.30
HCA 3rd Bill	$87,306	$66,200	$29,000	$58,306
DCCJ Bill	$379,063.20	$259,580	$265,031	$114,032.20

(4)  The Preliminary Issue only relates to the HCA 1^st Bill and the HCA 2^nd Bill (ie work charged up to the conclusion of the HCA Trial).  In view of the fact that the Preliminary Issue remains to be tried and the circumspection that the Court should employ in assessing P’s objections, the outstanding balances of the HCA 1^st and 2^nd Bills should be paid into court.

(5)  As for the HCA 3^rd Bill and the DCCJ Bill, they are unencumbered by the Preliminary Issue.  As those 2 bills have remained wholly unsettled for over 2 years, there should be an interim payment of 80% of the outstanding balance.

56.  On the other hand, Mr Poon submitted that:

(1)  The calculation of unchallenged profit costs for the DCCJ Bill should be based on “the total of one minus total of challenged items in the itemised DCCJ bill, subtracted by the total amount per the itemised DCCJ bill”. 

(2)  Similar calculation should be adopted for the HCA Bills.

(3)  Further, for the DCCJ Bill, P would provide an undertaking that, for any amount of costs under the DCCJ Bill recovered from the counterparties in the DCCJ Proceedings, P would pay such recovered costs to D as payment of the DCCJ Bill (“Proposed Undertaking”).  Although Mr Poon accepted that this may be slightly unfavourable to D in the sense that D would need to wait for the inter partes taxation to first complete, he submitted that, on balance of consideration, this is a fair result.

57.  On the facts of the present case, I am satisfied that I should exercise my discretion to make an order for interim payment.  In particular, I take into account the following matters:

(1)  P has not yet fully settled the 4 Bills for over 2 years.  D had received a certain portion of the fees, but not the rest. It would inevitably take further time until the taxation proceedings are completed.  It is only fair that interim payment should be ordered as a condition for taxation.

(2)  D is a firm of solicitors in Hong Kong.  Even if there was excess payment, there is no suggestion that D will be unable to return the differences.

(3)  The DCCJ Bill is rather discrete in the sense that it is not subject to the Negligence Action.

(4)  P had succeeded in the DCCJ Proceedings and is now seeking to recover the costs against the counterparties.

(5)  Mr Poon’s Proposed Undertaking is insufficient because:

(a)  First, the Proposed Undertaking only requires P to pay D any costs recovered from the counterparties in the DCCJ Proceedings.  However, there is no guarantee that the amount recovered (if any) will match the amount properly due under the DCCJ Bill.  The inter partes taxation may result in a reduced recovery, leaving D unpaid for some of its legal services.

(b)  Second, D is not a party to the inter partes taxation and has no control over its process.  D may have to wait a considerable period for the taxation process to complete before it can recover its costs in the DCCJ Proceedings.

58.  As to the quantum of interim payment, having considered Mr Poon’s challenges and the considerations set out in §57 above, I consider that a sum of HK$120,000 should be paid by P to D within 28 days of this decision.  In view of what I have already ordered, I do not consider it fair to require P to pay any additional amounts into court pending taxation.

F.  DISPOSITION

59.  For the above reasons, I allow D’s appeal, set aside the Master’s Order and make the following orders:

(1)  Within 28 days of this Order, P do pay D a sum of HK$120,000 as interim payment on account of P’s liability to D on the 4 Bills (if any).

(2)  Upon making the interim payment, the 4 Bills be referred to a taxing master to be taxed and the Preliminary Issue be set down for trial before a Judge with one day reserved.

(3)  D do give credit for all sums received by them from or on account for P and shall refund what D may on such taxation appear to have been overpaid.

(4)  The taxing master do tax the costs of the references and certify what shall be found due to or from either party in respect of the 4 Bills and the costs of the reference to be charged according to the event of taxation.

(5)  Save and except the Negligence Action, D does not commence or prosecute any cause or matter touching the demand pending the reference, and any action already commenced be stayed until the completion of the taxation; and upon payment by P of what (if anything) may appear to be due to D, D do deliver up to the P or as P may direct all deeds, books, papers and writings in D’s possession, custody or power belonging to P.

(6)  Failure to comply with the terms in §59(1) above shall bar P from:

(a)  taxation of the relevant 4 Bill(s) and that part of the OS shall be dismissed with costs to D; and

(b)  raising the Preliminary Issue in the Bills Action, the Negligence Action and/or any subsequent proceedings on any or all of the 4 Bills.

(7)  There be liberty to apply.

60.  There is no reason why costs should not follow the event.  I therefore make a costs order nisi that the costs of this Appeal (including the hearing before me) and the costs of and incidental to the hearing before the Master on 17 October 2025 be paid by P to D, with certificate for counsel, to be taxed if not agreed.  The costs order nisi shall become absolute 14 days from the date of handing down this decision.