XCHRX CHAN SHIU WAH v. WU KWOK ON

HCPI 1123/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 1123 OF 1997

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D E C I S I O N

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1. This was an extremely simple running down action. The accident occurred in March 1996. The Writ was issued in October 1997 and served with the Statement of Claim in the same month. It came before me almost one year later for the Pre-Trial Review. My notes made at that time were:

"No Defence to this claim. Contributory negligence nonsense. M/Cyclist not made a Third party."

At that stage the new Practice Direction had only just come into force and it must have been for that reason together with the fact that that the case was set down by me to enter the warned list after early January 1999 that I did not invoke Order 18 Rule 19 and enter judgment for the Plaintiff there and then. I expected the Defendant's insurers would see sense soon and admit liability.

2. The Plaintiff was the pillion passenger on a motor cycle travelling along a main road. The Defendant emerged from a side-road having failed to comply with a "Give-Way" sign in the minor road. Following the collision the Defendant was convicted on his own plea of guilty of driving without due care and attention. The Plaintiff sued the Defendant only, a sensible course. He had to establish only 1% liability against the Defendant to succeed entirely in his claim.

3. The Defence, a poorly drafted document, contained an allegation of contributory negligence against the Plaintiff that he failed to take any or any adequate precautions for his own safety. No substance for this bland assertion was forthcoming. More astonishingly was an assertion of "volenti non fit injuria". No doubt this was advanced on the premise that any person who travels on the back of a motor-cycle in Hong Kong is taking his life in his hands and consenting to being crippled by the negligent driving of countless irresponsible, selfish and unskilled motorists. This allegation of 'volenti' does not make sense.

4. There were also seven allegations of negligence on the part of the motor cyclist, at least half of which were totally unrealistic. However the Defendant did not join the motor-cyclist as a Third party. In the event the Defence was entirely without merit.

5. The action was due to be tried before me on 19 January 1999. On that day neither the Defendant nor his legal representatives appeared. It was relisted the following day. On that day the Defendant submitted to judgment and the parties agreed damages in the sum of $1.5 m. The Defendant was to pay costs.

6. This now comes back to me on an Appeal against the Taxation of Costs Review of Master Judianna Barnes.

7. The Notice of Appeal seeks to identify four items in the Review of the learned Master for further review. I will deal with each of them in the order in which they appear in the Notice. I have had the advantage of a detailed and helpful analysis of each item in the learned Master's written findings.

1. Counsel's fee for settling the Statement of Claim and Statement of Damages ($9,000)

8. The learned Master disallowed this on the original taxation and maintained this on the Review.

9. As I stated earlier this was a very simple action. The pleading called for a straightforward reflection of that. Although it is overlong - there is too much detail concerning the injuries and consequent disabilities given that there is a Statement of Damages settled with it and a very full orthopaedic report served at the same time - it is noneless a concise statement of the essentials.

10. Very, very few solicitors show competence in pleading cases - either as Statements of Claim or as Defences. They seem to direct themselves to complicating the events and the issues in as prolix and indigestible a form as possible. It may be that the length of their pleadings is intended to serve a particular purpose but it is not clear what that is. Many explain that they draw down an omnibus precedent from a computer and try to adjust it to fit the particular case. This is not a pleading. Proper, sensible and effective pleading is a skill or art. I rarely see examples of that.

11. High Court personal injuries actions are conducted when they come to trial, by counsel. Counsel are also trained pleaders - or are expected to be, since that is part of their traditional craft, though it is not, unhappily, always well-demonstrated in personal injury actions. They are required in their advocacy to advance the case on the strength of the pleaded case. If they settle the pleading they are responsible for it and must shoulder the consequences if that pleading is defective. Cases can be won or lost on the pleaded case. Judges like to see a well pleaded case.

12. Solicitors know this. If counsel has settled the pleading, it is part of the solicitors' insurance. Solicitors should be encouraged to instruct counsel to settle pleadings rather than develop a cottage industry. In my judgment counsel should always be instructed to settle the Statement of Claim.

13. I do understand how and why the learned Master came to the conclusion she reached but I would allow a fee for counsel settling the Statement of Claim. In my view it is part of the essential stock-in-trade of the Bar. However, the majority of the work for the Statement of Damages ought to be done by the instructing solicitor. The format and requirements for the documents are quite straightforward. But counsel should be instructed to put the finishing touches to it so as to accord with the pleaded case and to be in a form which she will be expected to present at trial.

14. The nature of the case, which I do not need to repeat, is such that it should not take counsel experienced in personal injury work more than an hour to settle the Statement of Claim. Taken together with the approach to be adopted in respect of the Statement of Damages, the fee to be allowed for both is $6,000. The amount to be taxed off is therefore $3,000.

2. Counsel's fee for settling witness statements and Revised Statement of Damages

15. I have elsewhere and some time ago made clear the position regarding counsel settling witness statements. I regard it as an abdication of a solicitor's responsibility in the conduct of personal injury litigation for counsel to be instructed to do this basic, essential task. It is not counsel's work and I cannot stress this too strongly. If solicitors are not competent enough to take statements from Plaintiffs and witnesses - this was one of the simplest cases in that regard - then they are not competent to handle personal injury cases. There is a great difference between counsel settling a witness' statement and advising that it is deficient or ambiguous and requires amplification or clarification. In the latter circumstance he should either advise in writing to that effect or ask for a conference if the matter is more complicated.

16. The Revised Statement of Damages is the responsibility of solicitors. This was not a complicated case on damages. The item was properly disallowed. There was no justification for instructing counsel on these aspects.

3. Counsel's fee for attending the Pre-Trial Review

17. The learned Master rightly concluded that it was proper for counsel to be instructed. Equally properly in my view she reduced the fee on a party and party basis. For all the Defendant's posturing on liability there can have been no issue on this. It was a case of how much the Defendant would have to pay in damages. I had allowed one day for the length of trial. The learned Master reduced the fee to $6,000. In my view she was right. Had this case been subject to the current Practice Direction and Guidance it is unlikely that any fee would have been allowed in this case.

4. Costs of the Review by the Master

18. The Master took the view that no order for costs was appropriate. She had discretion in respect of costs. She adopted in my respectful view, a wholly fair and pragmatic approach. Her decision cannot be faulted.

5. The costs of this appeal

19. The Plaintiff has succeeded on only one issue and that was limited, in terms of the fee allowed. However there was an important issue of principle involved. Against that the appeal on the other three issues had no real basis. The Defendant should never have taken the point on counsel's fee for settling the Statement of Claim in principle. I think that is the item which has been the generating factor in this appeal. It certainly occupied half one time. The exercise was complicated by the fact that the Plaintiff's solicitors profit costs were agreed before taxation. Effectively the taxation was solely concerned with counsel's fees so the learned Master's hands were tied. There will be no order for the costs of this appeal.

Generally

20. I have been tempted to add a few points for future guidance but they are made in the context of this case. Having said, that many running down actions are similar to this one.

Counsel's fee for advice on liability, quantum and evidence (Pre-action)

21. In my view the learned Master took a generous view. There was no justification for asking for an Advice on liability. Counsel's one line must have been "The Plaintiff must succeed". It was certainly premature to advise on evidence. It was arguably premature even to advise on quantum. I have come to the overall conclusion that a competent solicitor ought not to have asked for an Advice from counsel before the action was commenced. Since it was a fairly straightforward action which ought to have proceeded on damages only, competent solicitors ought to have been able to deal with this themselves. I would therefore not have allowed this fee and the learned Master's initial view was the correct one.

Counsel's conference fee of $3,000

22. It was quite unnecessary for there to be any amendment to the Statement of Damages. These changes could have been dealt with in due course. There was in any event a Revised Statement of Damages. But I would have regarded one conference with counsel relating to any of the difficulties in assessing damages to have been justified. I would have allowed this as a party and party item.

Counsel's brief fees of $90,000

23. This was a one day case. It was effectively damages only. It did not justify counsel of 10-15 years seniority. The learned Master rightly reduced the brief fee. I would have made a bigger reduction, not on the base that counsel of such ability and seniority does not justify such a fee, but this case did not justify such experienced and able counsel, and therefore, on a party and party basis the Defendant should not be expected to pay such a fee.

Solicitors and the agreement of counsel's fees

24. I have had to consider before, (see - Cheng Ma Choi v. Tai Fong Textile Finishing Work Ltd H.C.P.I. 563 of 1995) the question of the solicitor's responsibility for counsel's fees. They are responsible for the payment of the agreed fees of counsel whom they instruct. There are essentially two circumstances in which that liability arises. One is where the fee is agreed at the time of instruction, counsel carries out what he is instructed to do competently and no dispute as to his performance arises. The solicitor is then liable for the fee agreed. The fact that instructions are sent to counsel for him to advise or settle a pleading implicitly states that his proper fee for so doing will be met by those solicitors, whether or not he is in possession of funds from the client.

25. The other is where counsel agrees to accept such fee as is allowed on taxation after the conclusion of the case. It is my understanding that this applies in legally aided cases. Miss Lee, on behalf of the Director of Legal Aid, confirms that solicitors are expected to meet themselves any fee for work done by counsel on their instructions which those solicitors are unable to recover on taxation of costs against the other side, and which it is not appropriate to charge the client. This is of course a situation different from that where a fee is reduced.

26. If upon taxation in a non-legally aided case, case where counsel's fee has been agreed, it has been reduced or disallowed altogether it remains a matter of professional obligation for the solicitor to pay the fee which he has agreed, and incurred, unless he is able to renegotiate that fee. A solicitor is not entitled to adopt the stance that since it has been reduced upon taxation or taxed off altogether that he is relieved of his liability. Solicitors who conduct personal injury litigation, and thereby hold themselves out to be skilled in such work must also be taken to know what level of fees is appropriate for any given service by counsel, whether it be a settling of a simple Statement of Claim, or an advice in a complex action in which liability is in dispute. However, it is essential to ascertain the level of fee in advance unless the "tariff" is commonly understood.

27. Where counsel has agreed to accept whatever fee is allowed on taxation then he is so bound by that agreement. Where however the fee has been disallowed altogether, and there is no questioning the competence of counsel or no other dispute in relation to that work, he is entitled to be paid a reasonable fee for such work by the solicitor concerned. I assume that there exists some machinery established by the Bar and the Law Society to determine such fee if the solicitor and counsel concerned have not been able to agree the fee themselves. If there is no such machinery then there ought to be and it seems to me that the two branches of the profession are perpetuating a problem if they do not apply their minds to this issue.

28. If the rhetorical question is asked by solicitors "out of what do we pay these counsel's fees which have been disallowed or reduced?", the simple answer is that they are to be paid out of the taxed profit costs of the action, which in this case are, on any view, at least substantial. In this case the Defendant's solicitors agreed the Plaintiff's solicitors costs in the sum of just over $200,000. That is an astonishingly high figure seeing how simple this case was, how little work had to be done, and the extent to which counsel's services were used. They are certainly not to be charged to the client who has no legal skill or experience with which to influence the decision to instruct counsel in respect of a matter which the taxing officer considered to be unreasonable.

29. In the course of his submissions, Mr Sarony SC referred to the circular 27/97 from the Law Society dated 20 January 1997, which appeared to change unilaterally the understanding or principle underlying a solicitor's obligation in respect of payment of counsel's fees. The context in which Mr Sarony raised this was that where counsel's fees were taxed off or reduced in a taxation of costs to be paid by the Defendants, there was no means whereby counsel could recover fees due to him or her for work properly carried out. Before I examine that situation it is necessary to repeat that if that be the situation, it is nonetheless not a consideration for Taxing Masters and other Judges to take into account in deciding what fees are properly allowable and for which a defendant must pay.

30. The circular in question, issued, I understand, without any consultation with the Bar states:

"In the absence of reasonable excuse a solicitor is personally liable as a matter of professional conduct for the payment of a barrister's proper fees. Failure to obtain funds on account of a barrister's fees shall not of itself constitute reasonable excuse."

I find nothing problematic in such a statement, and this is wholly consistent with the position as I have understood it to be and as I have expressed earlier.

31. The mere fact that counsel's fees is taxed off or reduced is not, and can never be a reasonable excuse for solicitors to refuse to meet such a fee. If however the taxing officer were to tax off or reduce a fee on the basis that the work was not properly carried out e.g. a Statement of Claim was a wholly inadequate document, or manifestly drafted or settled on a wholly erroneous basis, in respect of facts or law, so as to render the fee claimed not a proper one, then that would constitute a reasonable excuse for the solicitor not paying the fee. This is in line with the approach of the Department of Legal Aid as explained to me by Miss Lee.

32. Whether or not the solicitor takes the precaution of obtaining funds on account from the client to meet counsel's fees is really for the solicitor to decide. Obviously in legally aided cases this does not apply. In other cases, unless there is some funding body behind the party to the action, prudence will dictate that the solicitor should obtain funds for the client. When counsel is instructed to settle a document, advise or is briefed it is implicit that he will be paid the agreed or a proper fee because the solicitor has funds to meet it. If there is any doubt about this so as to put payment of the fee on a contingent basis i.e. only if it is recovered from the other side on taxation, then that must be stated, in my view, when instructions or the brief is delivered. It is not for counsel to have to require the solicitor to sign an undertaking or confirmation. That I anticipate from the practical point of view is unworkable. Counsel will consider himself or herself under a professional obligation to do the work promptly e.g. where the end of the limitation period is near. To have to go to the extent of requiring the solicitors to sign a letter of undertaking to pay proper fees - as was deemed necessary by the Bar Association in 1996 no doubt for good reason - is demeaning and professionally destructive, and wholly unnecessary if the solicitors' professional body has made the position unequivocally clear.

33. It is not for the court to be an arbiter in respect of the conflicts or agreements of the two branches of the profession in this regard. The principles which I have stated are time-honoured. If they are not observed the seeds of internecine conflict will germinate and produce an unacceptable state of affairs, for which taxing Masters and Judges can not provide any solution.