FOUR SEAS UNION (HOLDINGS) LTD t/a FOUR SEAS UNION CONSTRUCTION CO v. WONG & FOK (a firm)

HCMP5082/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 5082 OF 2002 (BILL NO. 2)

R U L I N G

Introduction

1.  The protagonists of the piece are Four Seas Union (Holdings) Limited trading as Four Seas Union Construction Company and their erstwhile and seemingly much maligned legal representatives Messrs Wong & Fok (respectively “Four Seas” and “Wong & Fok” for easy reference).  Mr Fai Ka-sun, a director of Four Seas, was the principal character behind Four Seas.  At all material times, Wong & Fok had received instructions from Four Seas from Mr Fai.  Mildly and shortly put, Mr Fai took umbrage over Wong & Fok’s billings and launched proceedings under HCMP 5082 of 2002 for three bills of costs to be taxed on 12 December 2002.  By order dated 21 March 2003, Master Levy ordered, inter alia, taxation of Wong & Fok’s bills of costs dated 7 March 2002, 16 July 2002 and 23 August 2002 subject to Four Seas paying the sum of $180,000 into court within 14 days of the order and granted leave to Wong & Fok to draw up formal bills for the taxation within 28 days of Four Seas’ payment into court.  All this was done.

2.  Four Seas duly filed a list of objections on 20 June 2003, raising a number of preliminary issues which, as it turned out, occupied considerable court time and at great expense to the parties.  There was a plethora of affidavits with lengthy cross-examination spanning over six days that witnessed changes of counsel and solicitors for Four Seas.  Formal hearing began on 10 October 2003 but the evidence did not conclude until 5 July 2005, considerably delaying the taxation process.

3.  To compound what was already an onerous exercise, Four Seas did not appear at the submissions hearing on 24 November 2005, their legal representatives having come off the record in the interim.  Miss Cruden, counsel for Wong & Fok, objected to the court hearing Mr Fai de bene esse.  Had the court acceded to Mr Fai’s plea to be heard, the matter would have been further delayed as he had come along with a stack of documents, some of which were in Chinese which neither Miss Cruden nor the court could have managed without translations.  Timely steps, not taken as it turned out, by Four Seas for leave to be represented by Mr Fai would have avoided this self-inflicted predicament.  I perceived no compelling reason why submissions should not proceed and I so ordered.

4.  When all is said and done, despite the mountain of evidence, the issues falling to be determined were of a very narrow ambit and far from difficult to resolve.  Credibility tested against the written and oral evidence featured prominently.  For reasons which will subsequently be apparent, I found Mr Fai to have been a totally unconvincing witness.

5.  I wholly reject his evidence on matters that were contradicted by the witnesses called by Wong & Fok.  Consistency and palpable truth, so apparent in the case advanced by Wong & Fok, was patently lacking in Four Seas’ version of material events.

The Preliminary Issues

6.  Totalling three in number, they were originally formulated thus:-

(1)   the defendant is required to produce retainer and the agreement with client to prove whether the guideline of the Law Society under Circular No. 01-168(PA) had been complied with;

(2)   the plaintiff submits that he was never advised how the solicitor would impose the service charges;

(3)   the plaintiff submits that he was never advised who would be the counsel to be instructed and how much was the counsel’s fees.

7.  Miss Anita Ma, counsel for Four Seas, latterly replaced by Mrs Audrey Campbell-Moffatt, at the 4 July 2005 hearing recast the preliminary issues as a single dispute in her written opening, namely: “The sole question to be addressed is who should be the actual Paying Party in the disputed Bill of Costs and the respective Quantum as between solicitors and its own clients.”  In light of the wide-ranging matters canvassed in evidence I do not think that Miss Ma was intentionally confining the area of controversy to the question of counsel’s fee of $85,000 under fee note dated 2002 in HCCT 17/2002.  Miss Cruden most fairly did not vigorously pursue the argument that Four Seas should now be so restricted.

8.  Turning then to the three issues previously recounted, I propose to address them in turn.

1st Preliminary Issue

9.  This is a short point meriting little time and attention and can be summarily disposed of.  That Wong & Fok had been instructed and properly retained by Four Seas in September 2001 in HCA 2519 of 2001 (subsequently transferred to the construction list as HCCT 17 of 2002) and in two arbitration proceedings later consolidated against Ho Hon Construction and Engineering Limited is only too plain on the evidence.  One needs only to look at the testimony and evidence of Mr Samuel Wong of Wong & Fok in this regard, but there is ample corroboration from his colleague Miss Lau who appeared as DW2.

10.  In my considered view, the 1st preliminary issue is a non-point.  As Miss Cruden rightly contended, the Law Society Circular No. 01-168(PA) is a red-herring, totally irrelevant to the taxation proceedings as a matter of law and not binding upon Wong & Fok.  So much for that.

 2nd Preliminary Issue

11.  The evidence disclosed that Mr Fai was actively involved in retaining and giving instructions on behalf of Four Seas to Wong & Fok from time to time.  Mr Wong’s evidence was he had initially spoken to Mr Fai in September 2001, when Mr Fai telephoned him seeking legal assistance from Wong & Fok in regard to HCA 2519 of 2001 (HCCT 17 of 2002) and arbitration proceedings on a HAD contract against Ho Hon Construction & Engineering Company Limited.  On 29 September 2001, a meeting between Mr Wong and Mr Fai took place at the offices of Wong & Fok.  I am satisfied to find that Mr Wong fully apprised Mr Fai that he would be delegating work to Miss Lau and another junior colleague, Miss So, and retaining a supervisory role for himself for which he would be charging at the reduced rate of $2,500 per hour.  Mr Fai was also advised that other solicitors handling the actual work would be charging rates allowed for solicitors on taxation in High Court matters.  That Wong & Fok would be billing on time basis at appropriate rates was abundantly clear to Mr Fai and therefore to Four Seas.

12.  It is significant that Mr Fai admitted in evidence that he had been advised how Four Seas would be charged.  There can be no controversy, even on his own testimony, that Wong & Fok charged on a time basis for services rendered.  In his first two affirmations, respectively dated 18 December 2002 and 21 February 2003, and in his written complaint to the Law Society there was never any allegation that he had not been told the basis on which Four Seas would have to pay for legal services to be provided by Wong & Fok.

13.  Mr Fai alleged in his third affirmation dated 6 October 2003 that his repeated query to Mr Wong about how Wong & Fok would be charging for their services went wholly unanswered.  He said he was merely told by Mr Wong not to be concerned as Wong & Fok would not overcharge.

14.  I find Mr Fai’s allegation on the second issue totally without merit and substance.  Four Seas have failed, and have failed abysmally, in making good their complaints in this regard.

3rd Preliminary Issue

15.  Mr Fai’s allegation that he and Four Seas had never been properly advised as to counsel Peter Clayton’s involvement and the basis upon which counsel would be charging is even less convincing.  It is wholly unsubstantiated on contemporary documentation such as attendance notes and letters passing between the parties and between counsel and Wong & Fok and copied to Four Seas.  Mr Fai painted a picture that morphed over time.

16.  Mr Fai admitted that he has had some experience instructing counsel on previous occasions.  As Miss Cruden submitted, Four Seas would have settled counsel’s fees and should therefore have been aware that counsel charged a brief and for attending and giving advice in conference and in writing and for perusal of papers.

17.  Mr Fai’s letter of complaint to the Law Society dated 16 October 2002 is quite telling.  I propose only to read out so much thereof as would highlight the proper basis for rejecting Mr Fai’s testimony.  He wrote:

“With regard to ... arbitration proceedings ... Mr Samuel Wong suggested that a counsel be instructed to act for Four Seas.  I agreed to that arrangement.

In May (2002) Mr Wong said he had chosen Mr Peter Clayton to be counsel for Four Seas in these two cases.  I asked Mr Wong at a meeting the counsel fee involved.  Mr Wong told me that, ‘Don’t you worry about a thing, he will not overcharge you’.  As the letter only mentioned the counsel fee for Mr Peter Clayton to attend court hearing but not the charges for perusal of documents or giving advice, I was very concerned about it and therefore I asked repeatedly.  Mr Wong answered that ‘Joe Fai, don’t worry, Peter Clayton charges very reasonable and very low.  Perusal of papers is free of charge.  Let him peruse the papers first and see what his advice is.  We may decide thereafter whether to instruct him or not.’  Therefore, I believed that at that time counsel Peter Clayton would not charge Four Seas for perusal of papers or giving legal advice.

In late May Four Seas received the legal advice of Mr Peter Clayton in these proceedings by fax from Wong & Fok.  As I did not quite understand the content thereof, I called Miss Yvonne Lau and Miss Phyllis So respectively requesting to have meeting with counsel...

I immediately requested Wong & Fok to arrange a meeting with counsel to explain his advice regarding the cases.  Wong & Fok finally fixed the dates of the meeting for the two cases one month-odd after I had made my request.

Several days later, I was very surprised to receive counsel’s fee note for the first meeting.  I then kept on ringing Mr Samuel Wong for an explanation of the counsel fee for perusal of papers and giving legal advice.

Mr Wong said (such things against the truth) over the phone, ‘Joe Fai, you have known from the beginning that you have to pay counsel fee when you instruct counsel.’  I was surprised to hear that and said, ‘You said that counsel only charged for attending court but would not charge for the perusal of papers.  You also agreed to that?’

It was previously mentioned that counsel would not charge for perusal of papers and would charge only after Four Seas formally engaged him.

On the 24 August 2002 ... meeting ... at first Mr Samuel Wong kept on saying that it was difficult for them to be lawyers because even though their clients did not pay counsel fee he had to settle the fee himself.  Otherwise he would be disciplined and be disqualified by the Law Society of Hong Kong...

In addition, he said his charge-out rate allowed by the High Court was HK$3,900 per hour and he now only charged us HK$2,500 per hour, which was a big discount to us.  The terms were favourable to us and he could not make any further deduction to the legal fees.  I reiterated that we did not want a fee discount deduction.  We just wanted to know why such had happened and demanded an explanation from him.  He at that time said angrily that we could lodge a complaint to the Law Society against him if we were dissatisfied with anything.

I said we had settled all previous bills of cost.  It was not our intention not to settle these two bills.  However, as the charges for these two bills were unclear and unreasonable, we just wanted to clarify if they were reasonable before we paid...  Eventually, he only promised to send a letter to counsel Peter Clayton inviting him to provide a breakdown of his fees.  Thereafter, we only received a list in respect of counsel’s fees without any concrete content.  He also failed to follow our instructions to make further inquiry with counsel for the calculation of the charges on the list.”

18.   I find it wholly unbelievable that Mr Fai actually believed that Mr Clayton would not charge for reading copious documents and for advising in conference and in writing.  Mr Fai, as a witness, was thoroughly discredited.  He would have the court believe different things at different times.

19.  Miss Cruden adroitly summarised the various glaring inconsistencies at paragraph 41 of her written submissions.  There she submitted that the plaintiff, that is, Four Seas through Mr Fai, had changed its stance from an allegation that it did not know that counsel would charge for perusal of papers to an allegation that Mr Wong positively asserted perusal of the plaintiff’s papers by Mr Clayton was free.  She also pointed out that the plaintiff had once said that the plaintiff only agreed to pay for one conference and that the plaintiff wanted a conference, and then latterly arguing and alleging that the plaintiff did not, in fact, require a conference.  It was even said by Mr Fai, as pointed out by Miss Cruden, that Mr Fai attended the conference, but it was really for the benefit of Mr Clayton and not for the plaintiff.  All this I find to be supported by the breadth of the evidence.  Miss Cruden’s submission is entirely justified.

20.  In conclusion, I find that Mr Fai for Four Seas has failed to demonstrate any basis for the complaints set out in the 3rd preliminary issue.  Four Seas having failed to demonstrate that there were merits in any of the arguments in the preliminary issues, I find that Wong & Fok has succeeded on all counts.

21.  In passing, I note that Wong & Fok have settled all counsel’s fees.  I also am reminded that Mr Fai on behalf of Four Seas has settled some of the bills issued by Wong & Fok.  There has never been any complaint that can be justified on the evidence that Wong & Fok has not rendered proper legal advice and services to Four Seas.

22.  What remains ultimately to be looked at is the quantum aspect of those individual items billed for services rendered by Wong & Fok.  The taxation has been delayed sufficiently long and it should now come on.  In dismissing Four Seas various complaints I order that Wong & Fok shall have their costs on the preliminary issue, taxed if not agreed, against Four Seas.

23.  There have been numerous hearings as a result of the failed preliminary issues raised by Four Seas  in consequence of which there have been a number of reserved costs orders as well.  Wong & Fok shall have those reserved costs.

24.  Counsel attended on both sides throughout, at least until the closing stages of this part of the proceedings.  I certify the matter fit for attendance of counsel.

25.  Miss Cruden asked that the costs engendered by the preliminary issues should be dealt with separately from the costs in the three bills of costs.  I agree and I so order

(Discussion on Costs)

26.  These costs shall be taxed following completion of the taxation of the 3 bills.

Representation:

Plaintiff, in person, absent

Ms Y Ma of Messrs Wong & Fok,  Respondent, in person