WONG CHI PING v. FUNG WONG NG & LAM

HCMP1487/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.1487 OF 2010

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J U D G M E N T

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1.  This is an appeal from an order of Master Lai by which he granted the plaintiff’s application for a Bill of Costs be referred to a Taxing Master for taxation. The plaintiff was a former client of the defendants who are a Hong Kong firm of solicitors.

2.  Pursuant to section 67(2) of the Legal Practitioner Ordinance, Cap.159, a Bill of Costs that is more than 12 months old may only be referred to a Taxing Master if ‘special circumstances’ are shown to exist.  As per Mortimer VP in Clayton Wong & Co. v Springbok Shipping (HK) Ltd [1997] 2 HKC at page 713 ‘special circumstances’ mean “something out of the ordinary and serious enough to justify a special taxation”.  It was noted also in To Kan Chi v Miller Peart (a firm) [2007] 3 HKC 585 that what had to be justified was a ‘special’ taxation not merely an ordinary one.

Background

3.  The key, largely undisputed, facts in this case are as follows.  The plaintiff had instructed the defendants in relation to, inter alia, Mareva injunction proceedings against particular persons who were also defendants in a criminal trial in the District Court facing allegation of fraud.  The criminal trial was concluded in 2008 with guilty verdicts against both defendants.

4.  The plaintiff had first engaged the defendants in August 2005.  A standard retainer letter was signed by the plaintiff.  Between August 2005 and May 2006 the defendant issued three costs on account invoices which the plaintiff paid for with five different cheques on diverse days.  Up to May 2006 the plaintiff had paid $216,900 as “costs on account”.  A perusal of these Bills shows that most of these early payments were for counsel’s fees.  Only about $60,000 was for the defendant’s profit costs.

5.  The plaintiff did not receive another Bill until 2 September 2008.  This Bill was for $510,885 of which $494,626 was profit costs and $11,700 counsel’s fees.  This is the Bill which is the subject matter of this summons.

6.  Two weeks earlier the plaintiff had changed his solicitors and upon receipt of the Bill on 2 September telephoned the defendants indicating that he considered it to be excessive and “disagreed” with it and sought a more detailed breakdown.  (It should be noted in passing that the Bill was already fairly “detailed”.  It covered six pages and contained approximately 130 items).

7.  The plaintiff did not pay the Bill and did not apply for taxation either within the one-month provision or the 12‑month provision within section 67, Cap.159.  Neither did the defendant.

8.  On 18 May 2010 the defendant commenced a District Court action for their unpaid fees.  They applied for summary judgment.  In the course of that hearing the plaintiff was given 21 days in which to take out a summons for taxation on the ground of special circumstances.  20 days later he did so, this summons.

9.  It was taken out 23 months after receipt of the disputed Bill.

Special circumstances

10.  Mr Earnest Cheung, counsel for the plaintiff, concedes that there has been delay on the part of the plaintiff.

11.  It seems to me that there is no adequate excuse or explanation for the delay.  The 12‑month period is itself a generously long time within which a party may go to taxation.  This plaintiff has let a further 11 months pass and has only taken out the summons upon a Master’s suggestion that he undertakes to do so within a specified time.  Had that not happened he presumably would have continued to defend, albeit on quantum only, the District Court action for the unpaid fees.

12.  In support of the submission that ‘special circumstances’ exist in this case, Mr Cheung makes four points.  First, that the defendant had breached the retainer agreement primarily by failing to send Bills at regular intervals and thereby keep the plaintiff informed of the progress of his case.  Secondly, that the Bill is excessive and thus he has been overcharged.  He submits that if he went to taxation it would probably be reduced.  Thirdly, the Bill lacks particularization (such as dates on which particular tasks were undertaken) and fourthly that he was not advised as to his rights to taxation.

13.  It should be noted at the outset that the first three of these points do not explain the delay.  If they amount to ‘special circumstances’ they were ‘special’ when the Bill was first submitted.  Moreover, as already noted, the fourth point has little or no merit as the plaintiff has been legally represented by a different firm from before the presentation of the disputed Bill.

Breach of retainer agreement?

14.  The main complaint here is that requests for costs on account and ‘progress reports’ were not regularly made.

15.  The chronology shows that not a great deal happened between late 2006 and the conclusion of the criminal trial in 2008, a period of about two years.  The civil proceedings for which the plaintiff had engaged the defendant were largely awaiting the conclusion of the criminal proceedings during this period.  As for ‘progress’ there was little to report.  As for ‘costs’ they had largely already been incurred.  Much of the Bill for $510,885 related to work done in 2006 and before.  In a sense the plaintiff was fortunate in that he was not requested to pay until 2008 for work done in 2005/6.  

16.  Moreover, it was clear from early Bills upon which ‘costs on account’ of $216,900 were paid, that they related to counsel’s fees.

17.  I do not agree that the allegations of breach of the retainer agreement could constitute ‘special circumstances’ in this case.

Overcharging?

18.  Mr Cheung has analyzed the Bill in some details.  He refers to possible duplication of work, possible wasteful work, possible items of work charged for but not done and so on.

19.  Whereas a taxing Master would consider each item, this court in its appellate function should take a more overall view.

20.  I consider the Bill to be sufficiently detailed.  Further particulars are not required.

21.  As to its quantum it does not seem to me to be so unreasonable as to merit special consideration.  It seems to be the sort of ordinary Bill which if subjected to taxation might in the ordinary course of events be reduced.  Maybe be a taxing Master would disallow some items or reduce the number of hours spent in some categories of work.  If so, 10%‑20% might be discounted.

22.  However, that is the “ordinary” approach for an application for taxation within time.  The fact that it might have been reduced in the ordinary course of events does not seem to me to be a “special” circumstances requiring a ‘special’ taxation.

23.  It would, in my judgment, set a bad precedent if a party could do nothing and pay nothing for two years, allow himself to be sued for the fees (and still pay or offer to pay nothing) and then claim “special circumstances” because he believed the Bill was excessive.  In a nutshell, the plaintiff, as a result of being persuaded to do so by Master Lo, is asking for an opportunity to reduce a Bill for work done about five years ago.  In reality, the plaintiff finds himself where he is today not because of any circumstances which are out of the ordinary but because of his own deliberate disregard of his obligation to pay properly incurred professional fees. 

24.  I allow this appeal with costs here and below to the defendants to be taxed if not agreed.