LAM CHI TAT, ANTHONY AND ANOTHER v. KAM YEE WAI, ANDREW

CACV 139/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 139 OF 2012

(ON APPEAL FROM DCCJ NO. 1545 OF 2009)

________________________

BETWEEN

________________________

____________

JUDGMENT

_____________

Hon Fok JA:

1.  I agree with the Judgment of Lam JA, which I have had the benefit of reading in draft, and I endorse his observations in paragraph 63 below regarding the time and costs expended on this litigation.

Hon Lam JA:

2.  The parties to this dispute used to be partners practising as solicitors in a firm called MK Lam & Co [“the Firm”].  The Defendant [“Kam”] retired from the firm as from 15 March 2005 pursuant to a Deed of Settlement dated 25 February 2005 [“the Deed”].   The Plaintiffs are the remaining partners.  Unfortunately, the parties disagreed about Kam’s liability with regard to the Firm’s contributions to the Law Society’s Professional Indemnity Scheme [“PIS”].  After a trial which lasted for 6 days, the judge held in her judgment of 13 March 2012 that Kam was liable to contribute in the total sum of $85,850.39.  Kam appeals against that holding.

3.  The calculation for the $85,850.39 was set out by the judge at para 65 of her judgment.

“For indemnity year 2005/06

GFI of the firm for the accounting year ended 31.12.04 = $9,991,614.

GFI earned by D’s group = $5,965,642

S Factor (Amount payable by the firm under the Rules) = $212,000

Contribution payable by D = $212,000/9,991,614 x 5,965,642 = $126,577.76 (A)

Less

Refund from Essar = $70,000

Refund to be receivable by D = $70,000/9,991,614 x 5,965,642 = $41,794.54 (B)

For indemnity year 2006/07

GFI of the firm for the accounting year ended 31.12.05 = $5,192,663

GFI earned by D’s group = $1,281,948

Amount payable by the firm under the Rules = $142,000

Contribution by D = $142,000/5,192,663 x 1,281,948 = $35,056.50 (C)

Less

Refund from Essar = $14,144

Refund to be receivable by D = $14,144/5,192,663 x 1,281,948 = $3,491.83 (D)

Therefore, the defendant is liable for: $(A-B) + (C-D) + (11,002.5 – 41,500).  The plaintiffs’ total claim comes to: $84,783.22 + $31,564.67 + $11,002.50 - $41,500 = $85,850.39.”

4.  Under the PIS, the indemnity period for each year runs from 1 October to 30 September. In other words, as far as the maintenance of the PIS coverage for the indemnity year 2005-06 is concerned, it is for the period from 1 October 2005 to 30 September 2006.  Likewise, for the indemnity year 2006-07, it runs from 1 October 2006 to 30 September 2007. As mentioned, Kam ceased to be a partner of the Firm since 15 March 2005.  Thus, he was not a partner during these periods.

5.  It is accepted by Mr Ho SC (who did not appear in the court below but appeared with Ms M Wong for the Plaintiffs in this appeal) that Kam is not liable under the Solicitors (Professional Indemnity) Rules [“the Rules”] Cap 159M to pay contributions for the Firm in respect of these periods.  However, he contended that Kam had undertaken a liability to pay his share of the contributions by reason of the indemnity given by him under Clause 7 of the Deed.

6.  As stated in the calculation of the judge, the contribution for indemnity year 2005-06 was based on the gross fee income [“GFI”] of the Firm for the accounting year ended 31 December 2004 and that for indemnity year 2006-07 was based on the GFI for the accounting year ended 31 December 2005.  In essence, counsel’s submission was that as Kam was a partner of the Firm during those two accounting years and his earnings did contribute to the GFI of the Firm, the liability of the Firm to pay such contributions is a liability arising from Kam’s professional practice while acting as a partner of the Firm.

7.  Before I examine the validity of this proposition, I would need to analyse at some length the nature of the liability of a solicitor to contribute to the fund established under the PIS.

The PIS contribution

8.  The PIS was established under the Rules. The Law Society was authorized to establish and maintain a fund which is to be managed and administered by the Hong Kong Solicitors Indemnity Fund Limited [“the Company”].  Every solicitor practising in Hong Kong is required to have indemnity coverage by the PIS, see Rule 6.  PIS provides coverage in respect of “any civil liability whatsoever incurred in connection with” the practice of a solicitor, see Rule 10.

9.  The fund is to be maintained by contributions from solicitors in accordance with the provisions of Schedule 1 of the Rules.  Paragraph 1 of Schedule 1 provides that every principal (viz every partner in a firm, see the definition of “principal” in Rule 2) in a practice shall be responsible for the payment of contributions (including adjustment thereto) in respect of that practice.  Thus, in respect of the Firm, the Rules imposed a liability on each and every current partner to pay the contribution in respect of the Firm.

10.  The corollary of that is that a retired partner is not responsible for contribution of the firm notwithstanding that an initial contribution is to be calculated by reference to the account of the preceding period when he was still a partner.  Paragraph 1 of Schedule 1 imposes the obligation to make contributions on “every principal in Practice”.  A retired partner is no longer a principal in that firm and has no obligation under Paragraph 1 of Schedule 1 to make any contribution.

11.  As mentioned, Mr Ho correctly accepted that Kam would not be liable under the Rules for the contribution of the Firm for the indemnity periods of 2005-06 and 2006-07.        

12.  It is true that under Rule 10(1) a former partner[1] may be indemnified under the PIS if a claim is filed in respect of a cause of action arising from acts or omissions whilst he had been a partner.  However, that is because by the very nature of a solicitor’s potential liability, one could not know when a claim would be filed.  The PIS is a group scheme under which all solicitors who have ever practised have to have coverage.  There is no correlation between an indemnity period and the date when the liability of the solicitor was incurred.  The coverage is provided for losses “whensoever occurring arising from any claim first made against the indemnified during the period of indemnity”, see Rule 10(1).  

13.  In other words, there is no causal nexus between the contribution for that particular indemnity period and the accrual of the third party claim.  Likewise, the reference to the period of indemnity[2] in Rule 10(1) in the coverage cannot be determinative of whether a retired partner would have coverage.  The object of the scheme is that every solicitor would have coverage in respect of claims in connection with his or her practice as a solicitor, see Rule 6.  Thus, a retired partner or solicitor who is not covered under Rule 10(1) would be covered under Rule 10(2).

14.  Mr Ho submitted Rule 10(2) covers a solicitor who ceased practising altogether or cases where the former practice has ceased to exist, as such no coverage would be provided under Rule 10(1).  That may well be right.  But it does not follow from this proposition that those who paid for the coverage for retired partners where a firm continued to exist under Rule 10(1) confer a gratuitous benefit on such retired partners.  

15.  It is inherent in the nature of such a scheme that those who pay to maintain the fund must incidentally provide coverage to those who have retired from their firm. Otherwise, every retired solicitor (and maybe even the personal representative of his estate after he passed away) would have to continue to pay contribution to the scheme as no-one can safely pinpoint a fixed point in time that a third party claim could not be brought against him in respect of acts or omissions many years in the past. Though Mr Ho is correct in pointing out that such third party claims are generally subject to limitation periods under the Limitation Ordinance Cap 347, a solicitor cannot assume that no claim would be brought against him or her after he or she has ceased to practise for more than six years. There are cases where a cause of action does not accrue many years after a transaction has been handled by a solicitor.  There are cases where limitation periods can be extended.  There are even cases where fraud is alleged and limitation periods may not be applicable.  Even if it is a case covered by a limitation period, the limitation point might have to be litigated and costs would be incurred.  Legal costs for defending or resisting a claim is part of the coverage, see Rule 11(1)(c).  

16.  Thus, even in cases where a firm ceased to exist, a former partner would still be covered by the scheme under Rule 10(2) without imposing any obligation to pay contribution on him.   

17.  Having regard to the objects of the PIS, one must take a global view in considering who are paying for whose coverage.  Notwithstanding that the payment of the contribution for a particular year by a firm may bring about coverage for its former partners in respect of transactions handled in the past, I do not think one can really say that the current partners are paying for the coverage of the former partners.  If no-one pays, the former partners would still be covered by Rule 10(2). So they would have coverage anyway. In my judgment, the correct view is that the current partners, like all other solicitors who are still practising (and that can include the former partners who have joined another firm as partners), are paying their contributions to maintain the fund for the purpose of the group scheme.  Given the time lapse between the handling of a transaction and the lodging of a claim, it is inevitable that a retired solicitor would enjoy the benefit of coverage after he ceased practice without any payment of contribution.  Every solicitor can have the opportunity of enjoying that advantage.  But in the meantime, when he or she is practising, it must be accepted that there are some retired members of the profession who do not have to contribute.  

18.  And the obligation to contribute arises from the fact that they are the principals of a Practice, see Rule 6 and Paragraph 1 of Schedule 1. In order to maintain the fund under the PIS, the Rules adopt the policy that obligation to contribute falls on such persons and exempts those retired from contributing.

19.  Paragraph 2 of Schedule 1 set out how contributions from each firm is to be calculated. In a nutshell, contribution is payable in respect of each indemnity period calculated by a formula set out at para 2(1)(a)(i). For present purposes, it is important to note,

(a)  Contribution is calculated by reference to an indemnity period[3];

(b)  One element in the formula for the calculation of contribution for each period is the gross fee income of the firm.

20.  That sub-paragraph also sets out how the gross fee income is to be determined,

“the gross fee income of the firm shall be determined by the particulars contained in the gross fee income certificate[4] produced under rule 8(1)(a) plus a factor to be applied the Company to this figure to compensate for the historical basis of the gross fee income calculation … and shall be subject to adjustment as provided in sub-subparagraph (b)(iv)”.

21.  The Rules take into account the fact that contribution is collected in advance (see para 2(4) in Schedule 1) and the time needed for the certification of account which is essential to the production of the figure of gross fee income of a firm for a particular accounting period.  Under rule 8(1)(a)(i), the deadline for production of certificate of gross fee income was 15 August in each year.  The obligation was to produce such a certificate (signed by a certified public accountant) in respect of the gross fee income for the preceding accounting year.  An accounting year does not necessarily coincide with the indemnity period.  Since the initial contribution was based on the certificate for the preceding accounting year, there would be subsequent adjustment envisaged by para 2(1)(a)(i) in Schedule 1.

22.  The adjustment would be made when the certificate was produced for the next accounting year. Under para 2(1)(b)(iv),

“(iv) Upon receipt by the Company of the certificate of gross fee income and information pursuant to rule 8(1) to enable the Company to assess the contribution for the next period of indemnity, the Company will also, based on such information and the other information referred to in sub-subparagraph (b)(iii), calculate and adjust the contribution for the preceding indemnity period in accordance with the formula for calculating the contribution for such preceding indemnity period. Any difference in the amount of the assessed contribution paid for the preceding indemnity period and the contribution established by such calculation shall be met by a further payment by the firm, or in the event of the firm being dissolved prior to payment, by the principals of the firm immediately prior to such dissolution to the Company, or, notwithstanding paragraph 4, by a refund to the firm or such principals by the Company, as the case may be.”

23.  Therefore the ultimate amount payable by way of contribution is the adjusted contribution. As provided in this sub-paragraph, a retiring partner, despite the dissolution of the firm, shall be liable for additional contribution payable upon adjustment.

24.  From the documents placed before us, we can see that adjustments were actually made with regard to the initial contributions by reference to the calculations set out in the certificates of the next accounting years. Take the contribution for 2005-6 as an example, initially it was calculated by reference to the GFI for the accounting year ended 31 Dec 2004, viz $9,991,614. In the next year, that contribution was adjusted by reference to the GFI for the accounting year ended 31 Dec 2005, viz $5,192,663. By reason of that, there was an adjustment of $81,700 given to the Firm reflected in the calculation summary attached to the debit note for 2006-07 of which $70,000 was attributable to this change in GFI in the two accounting years.

25.  Likewise, there was adjustment for the contribution for the indemnity period 2006-07.  The initial contribution was calculated by reference to a GFI of $5,192,663 (the figure for the accounting year ended on 31 Dec 2005).  It was subsequently adjusted by reference to the GFI for the accounting year ended on 31 Dec 2006, viz.$4,843,028.

26.  Therefore, as far as the contribution for 2006-07 is concerned, even though its initial contribution was fixed by reference to the GFI of the Firm in the accounting year ended on 31 December 2005 (a portion of such income was generated by Kam as he had been a partner up to 15 March 2005), it was subsequently adjusted by reference to the GFI of 2006 (for which Kam had played no part).

27.  This example highlights the lack of causal connection between the formula for the calculation of the initial contribution and the actual raison d’etre of the contribution.  Bearing in mind the analysis above with regard to the overall working of the scheme and its objectives, the formula for calculation (be it the one for initial contribution or the final contribution) is simply a convenient means to work out how much a firm has to contribute to the fund in order to maintain the PIS.  It has to be a rough and ready formula. Thus, it does not matter that the accounting period does not coincide with the indemnity period.  Neither does it matter that the GFI for a particular year may include earnings from a partner who has already left the firm by the time the contribution is payable (and is therefore not payable by him or her under the Rules).      

The Deed of Settlement

28.  Irrespective of the position as between the Company and the solicitor, partners and former partners of a firm are at liberty to agree amongst themselves how the liability to pay contribution shall be shared. However, in the absence of any express provisions, the position would be governed by the Partnership Ordinance [“PO”] Cap 38 and subject to special agreement between them, the liability should be shared amongst them equally, see Sections 11, 19 and 26 of the PO.  And this sharing would be in respect of “all debts and obligations of the firm incurred while he is a partner”, see s 11 of the PO.  As we have seen, contribution by a firm for an indemnity period after he ceases to be a partner would not come within the scope of that.

29.  In this appeal, both Kam and the remaining partners relied on some provisions in the Deed, in particular Clause 7.  That clause reads,

“7. The Retired Partner, the Retiring Partner and the Continuing Partners discharge each other from all liabilities in respect of the Partnership, save those expressly set out in this Deed, provided that in respect of third party claims and causes of action against the Partnership, each of the Retired, Retiring and Continuing Partners, for the period up to 30^th September 2004 in respect of the Retired Partner and up to the Retirement Date in respect of the Retiring and Continuing Partners, gives to the other an indemnity for such third party claims or causes of action arising from their respective professional practice while acting as a partner of the Partnership. For the avoidance of doubt, it is agreed that the Retiring Partner shall be solely responsible for all liabilities and shall be solely entitled to enjoy the benefits of the lease of Room 505 Melbourne Plaza and the Continuing Partners shall jointly and severally be solely responsible for the all liabilities and shall be entitled to the benefits of the lease of Room 501-504A Melbourne Plaza.”

30.  Mr Ho’s submission was that the Company’s demand for contribution regarding 2005/06 and 2006/07 were third party claims against the Firm that comes within the scope of the expression “third party claims … arising from [Kam’s] professional practice while acting as a partner of [the Firm]”.  He also contended that the phrase in the middle of Clause 7 with regard to the qualification as to time limit[5] should be put at the end of the clause so that it should be construed as referring to the date the claim can be said to have arisen instead of the date of the lodging of the claim.

31.  On the meaning of “arising from”, Mr Ho referred to the dictionary meaning set out in the Oxford Dictionary of English and stressed that these were words of wide purport. Counsel stressed the following dictionary meanings of the words,

“come into being: originate; occur as a result of …”.

32.  Counsel also invited the court to bear in mind that under the Deed, Kam transferred the goodwill of the Firm to the remaining partners and he should therefore know that the contribution for the subsequent periods would be calculated by reference to GFIs to which Kam’s earnings were included.  Kam also knew that the coverage for the Firm under the PIS would cover his own liability whilst he was practising as a partner of the Firm.

33.  There was a reference in the judgment of the judge[6] to a case in 2007, High Court Action No 16 of 2007, in which claims were advanced against the Firm for work done and handled by Kam whilst he was a partner.   Mr Ho submitted that Kam could have claimed indemnity from the PIS in respect of those claims although he chose to handle that piece of litigation by his new firm.  That illustrated the benefit Kam could derive from the continuous payment of contributions by the Firm.

34.  Counsel therefore submitted that it was within the contemplation of Kam that he should pay a share of the contributions for 2005-06 and 2006-07 on account of the inclusion of his earnings in the GFI for 2005, based on which the contributions were calculated.

35.  Essentially, that was the line of argument accepted by the judge in her judgment at paras 48 to 56. The judge also referred to Clause 17(ii) of the Deed which required audited account of the Firm to be prepared up to 15 March 2005 and concluded at para 55,

“It is not opened to the defendant who admitted the tax liability, to argue the Deed had settled all liabilities of the parties.”

36.  That should be read together with what the judge recorded as the submission of counsel for the remaining partners below at the end of para 43 of the judgment,

“The defendant conceded at the beginning of the trial his liability for profits tax on the gross fee income he earned in 2004/2005; by the same token, he should be liable to pay his portion of contributions under the Professional Indemnity Scheme arising from his practice in the Partnership.”

37.  Insofar as the judge (and counsel) placed the liability for profit tax (for income earned during the time when Kam was a partner) and the contributions to the PIS for 2005-06 and 2006-07 on the same footing, I must respectfully disagree. As explained above, the contributions for 2005-06 and 2006-07 were accrued after Kam had ceased to be a partner of the Firm.  The Firm was obliged to pay such contributions, not because of the practice of Kam whilst he was a partner, but because of the continuation of the practice after he ceased to be a partner.  The Rules do not impose any obligation on Kam to pay such contributions.  The concession by Kam with regard to tax liabilities has no bearing on the question whether he should be liable for these contributions.

38.  Having regard to the analysis as to the PIS in the preceding section, I must also reject the argument that because Kam could have derived coverage from the continued payment of contributions by the Firm he should have paid a share in such contributions. As I said, it is inherent in a scheme of this nature that there would be some former partners benefitting from coverage provided by the scheme even though they would not have to pay any further contribution after leaving their former practices. Further, taking a global view, such former partners should not be regarded as having a free-ride for such coverage.  He or she had been paying contributions when other former partners enjoyed similar coverage.  Thus, the proper analysis is that such former partners had paid their dues under the PIS for post-cessation coverage.

39.  The judge also referred to Clause 12 of the Deed at para 51 of her judgment. That clause reads,

“The Continuing Partners shall on or before the Retirement Date make the following refund and Retiring Partner:

(1)   The deposit of HK$40,000.00 now held by the Land Registry.

(2)   Such amounts of professional insurance premium as may be refunded to the Partnership by the Solicitors’ Indemnity Fund arising from the retirement of Retired Partner and Retiring Partner and the termination of employment of Messrs. Clement Fan and Peter Tung with the Partnership on 30^th September 2004.”

40.  After referring to that clause, the judge said at para 51,

“Clause 12(2) referred to the insurance premium to be refunded by the Solicitors Indemnity Fund arising from the retirement of the retired partner, the retiring partner and the two assistant solicitors. It is a specified anticipated refund of contributions calculated on a pro rata basis. It is a different case with the contributions for the year 2005/2006 which involved the calculation of the total gross fee income of the continuing partners for the year of indemnity 2004/2005 including the income of the defendant for the period prior to his retirement. Consequently, it is not surprising if the Deed made no specific reference to the calculation of contributions to PIS in 2005/2006 when the gross fee earnings of the plaintiffs for the remainder of the year had not been ascertained. Clause 6 dealt with the Partnership’s office bank account, fees and other payments received or receivable and Partnership assets and files only. There was no reference to Partnership liabilities in clause 6, they were dealt with in clause 7. The inference is, clause 7 was intended to cover liabilities including the indemnity contributions under the PIS scheme which conferred a complete protection to all the partners in the Partnership including the defendant for the period while they were partners.”

41.  With respect, it is difficult to see how the absence of any reference to contributions for 2005-06 in Clause 12 can lead to an inference that Clause 7 intended to provide such an indemnity. I have already explained why it is not possible to say simply because an outgoing partner shall continue to enjoy coverage, it must be intended that he should continue to share in the contribution payable by the Firm.  To be fair to the judge, it does not appear that there had been in-depth submissions on the nature of the PIS before her.

42.  It also follows from what I have said that the continuation of the Firm in practice and the transfer of goodwill have no significance in terms of the construction of Clause 7.

43.  The remaining point is that the contributions were calculated by reference to the GFIs which included Kam’s earnings. In this respect, as Mr Tsui submitted, the judge erred in para 34 of her judgment in suggesting that it was not disputed that the calculations were based on audited accounts prepared pursuant to Clause 17(ii) of the Deed. But that was not the real point.  The real point, as relied upon by Mr Ho, was that the initial contribution for 2006-07 was based on the account for the year up to 31 December 2005 and that the initial contribution for 2005-06 was based on the account for the year up to 31 December 2004 and the final contribution for that year was based on the account for the year up to 31 December 2005.  It cannot be denied that Kam’s earnings were included in these accounts.  Mr Ho submitted that this is enough to make the liability for such contributions to be characterized as “arising from [Kam’s] professional practice while acting as a partner of [the Firm]”.

44.  Notwithstanding the skilful submission of Mr Ho, I am not persuaded that this is correct. In my judgment, what gave rise to the liability to pay the contributions were (i) the obligation imposed on the principals of the Firm by the Rules; (ii) the continuation of the practice of the Firm from October 2005 to September 2006 and from October 2006 to September 2007; and (iii) the capacity of the remaining partners as partners of the Firm as at 31 September 2005 and 31 September 2006.

45.  Whilst the GFI for preceding years were used as the benchmarks in the formula for the calculation of the contributions, they were no more than reference figures for working out the amounts of contributions, which as explained above, have no bearing on the scope of the coverage.  There is no causal nexus between those figures and the underlying factual matrix giving rise to the obligation to pay the contributions.

46.  The point can likewise be illustrated in this way: if the formula of the calculation of the contribution were to include a figure by reference to the rate of inflation in Hong Kong, can it seriously be suggested that the liability to pay the contributions was arising from inflation in Hong Kong?

47.  In my view, the liability to pay the contributions under the PIS for 2005-06 and 2006-07 does not arise from Kam’s professional practice while acting as a partner of the Firm.  As such, they do not come within the scope of the indemnity given by him under Clause 7.

48.  This conclusion can also be reached by the application of the temporal limit of the claims in Clause 7.  As mentioned, with regard to Kam, the reference point is “the retirement date”.  Whilst I agree with Mr Ho that the temporal limit should refer to the date of accrual of the claims as opposed to the date of the bringing of the claims, I do not agree that there should be any re-positioning of the phrase.  The indemnity given at the latter part of Clause 7 is in respect of “such third party claims” and it refers to the third party claims accrued before Kam retired. Plainly, the claims by the Company for contributions for 2005-06 and 2006-07 did not accrue prior to 15 March 2005 when Kam retired.

49.  Hence, the claim of the Plaintiffs based on Clause 7 cannot succeed and the judge erred in her construction of Clause 7 to hold otherwise.

The restitution claims

50.  The judge also upheld the Plaintiffs’ claims on the basis of restitution. She found that Kam had obtained a benefit under the PIS and the Plaintiffs did not pay the contributions as a mere volunteer.  She referred to Goff & Jones, The Laws of Restitution 7^th Edn paras 1-079 and 1-081.  She regarded that benefit was conferred by the Plaintiffs by compulsion of law and therefore it was not a case where the Plaintiffs were acting only in their own self-interest.

51.  Based on my above analysis with regard to the operation of the PIS, I do not think it is correct to say that the benefit of the coverage under it obtained by Kam was conferred by the Plaintiffs.  The benefit was actually conferred upon Kam by the scheme as a whole.  As explained, it would not be right to focus solely on Rule 10(1) and the payment of contributions by the Plaintiffs for 2005-06 and 2006-07.  Even if the Plaintiffs did not continue with the partnership and no payment was made, Kam could still have coverage under Rule 10(2).

52.  On this ground alone, the claim for restitution must fail.

53.  In my view, the judge also erred in holding that the Plaintiffs did not act voluntarily in paying the contributions.  Though the obligation to pay contributions is imposed by the Rules, the Plaintiffs did act voluntarily in choosing to continue with the practice of the Firm.  Subject to what had been said at para 51, even assuming that the benefit can be said to be conferred by the Plaintiffs, the case falls squarely within the principle set out in the last sentence of Goff & Jones, The Laws of Restitution 7^th Edn para 1-081,

“We prefer to describe the limiting principle as denying restitution in cases where the claimant conferred the benefit on the defendant while acting voluntarily in his own self-interest.”

54.  The same point is made at  Goff & Jones para 4-53,

“… the defendant’s enrichment is not unjust because a claimant who chooses to pursue a course of action for his own purposes that he knows must incidentally benefit the defendant, intends that outcome although it is not his primary motivation.”

55.  Therefore, the Plaintiffs’ claims regarding the contributions for 2005-06 and 2006-07 cannot succeed by way of restitution either.

The other points canvassed in the appeal

56.  Having reached these conclusions, I do not find it necessary to deal with the grounds relied upon by Mr Tsui at length.  Suffice to say that I do not find the other grounds put forward by him to be germane to the real issues canvassed above.

Disposition

57.  I propose to allow the appeal and set aside the judge’s judgment on the contributions for 2005-06 and 2006-07.

58.  In respect of costs of the appeal, it should be apparent from my reasons for allowing the appeal that the success of Kam in the appeal was based on points raised by the court[7] instead of the grounds raised by Mr Tsui. Bearing in mind that the other grounds canvassed by Mr Tsui did not advance Kam’s case any further, a fair order for costs is that each party shall bear his/their own costs of the appeal.

59.  In respect of the costs below, it is pertinent to have regard to the history of the matter in the court below. On the first day of the trial the other claims of the Plaintiffs were conceded.  Thus, the contributions for 2005-06 and 2006-07 were the only live issues at the trial. The trial took six days. We were told by Ms Wong (counsel who appeared for the Plaintiffs at the court below) that the first day was spent on some arguments on the admissibility of some parts of a witness statement of the Plaintiffs’ witness with about one hour spent on the examination in chief of that witness.  For the second and third day, 1.5 days were spent on the cross-examination of that witness by defence counsel.  There was also a short argument on admissibility of Bundle D. The fourth day was taken up by the examination in chief of Kam. The cross-examination of Kam by Ms Wong took about 3 hours on the fifth day.  The sixth day was taken up by closing submissions.

60.  I must say I find it wholly disproportionate for so much time to be spent on these claims, particularly bearing in mind that the quantum is only $85,850.39.  The resolution of the claims ultimately rested upon a proper understanding of the PIS and the construction of Clause 7. It is hard to understand why the evidence should take up 4 days.  In a post-CJR trial, it is also difficult to understand why there should be lengthy examination in chief.  Given that it is primarily a short point of construction, as shown in what had been discussed above, I do not find what is set out in the evidence as to events in the past to be of much assistance.  Based on what we have been told by Ms Wong as regards the use of time at the trial (to which Mr Tsui and those instructing him did not disagree), the defence team appears to be more culpable in terms of the length of the trial.

61.  Though Kam is ultimately successful in relation to the claims on contributions for 2005-06 and 2006-07, the Plaintiffs were successful in respect of some other claims conceded on the first day of trial.

62.  Taking all matters into consideration, I think a fair order is to give Kam 25% of the costs of the action in the court below.  Such costs are to be taxed if not agreed.

63.  Lastly, I wish to say it is a matter of regret that a claim of this nature and quantum should take up so much time and resources for final resolution, not only the time and resources of the parties but also the time and resources of the court which could better be spent on other cases.  We were told that the estimated costs incurred by the Plaintiffs in this appeal are over $500,000 whilst those incurred by Kam are over $200,000.  Since there had been a trial of 6 days, the costs spent in the court below would be equally substantial, if not more.  How the parties can find it worth their while to spend so much on claims of $85,850.39 is really beyond me. Bearing in mind that these parties are solicitors by profession, I can only express the hope that they could be more sensible in advising their own clients in their litigation practices. Otherwise, they would not be acting in accordance with their professional duties under Order 1A rule 3 and they should take steps to re-align themselves to the spirit of the CJR.

The Hon Barma JA:

64.  I agree with the Judgment of Lam JA.

Hon Fok JA:

65.  Accordingly, the appeal is allowed and we make the orders indicated in paragraphs 57, 58 and 62 above.