FLYING FINANCIAL SERVICES HOLDINGS LTD v. MESSRS. CHIU & PARTNERS

HCMP 130/2022

[2026] HKCFI 2045

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 130 OF 2022

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J U D G M E N T

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A.  INTRODUCTION

1.  This is the hearing of the originating summons (“OS”) of the Plaintiff, Flying Financial Service Holding Limited (“Flying Financial”), under Section 67 of the Legal Practitioners Ordinance (Cap. 159) (“LPO”) for leave to tax 5 bills of costs issued by the Defendant (“Chiu & Partners”).

2.  Chiu & Partners only opposes the taxation of Bill No. 1. The reason is that Flying Financial’s application for taxation was brought more than 12 months after that bill was delivered, but Flying Financial has failed to demonstrate any “special circumstances” justifying an order to tax under s.67(2) of LPO. This will be the focus of this judgment.

3.  In relation to the remaining 4 bills, which were delivered less than 12 months before the present OS, the parties have agreed to proceed with taxation subject to the caveats set out below.

B.  UNDISPUTED FACTS

4.  Flying Financial is a GEM-listed company on the Hong Kong Stock Exchange, and it engaged Chiu & Partners as its legal advisor under 2 retainer agreements dated 15 March 2019 and 25 May 2020 (together, the “Retainer Agreements”).

5.  The Retainer Agreements:

(1)  stipulated that Chiu & Partners would provide specified routine compliance and advisory service (“the Routine Work”), for a fixed annual fee of HK$450,000 per year;

(2)  allowed Chiu & Partners to charge additional fees for written or oral legal advice going beyond the scope of the Agreements and for advice relating to “material and complicated legal issues or complicated circumstances” (“the Additional Work”), at a rate to be mutually agreed between the parties based on time spent by Chiu & Partners on the work done: Clauses 1.3.2 and 2.4.

6.  Flying Financial has paid the fixed annual fees under the two Retainer Agreements but disputes the following 5 bills.

	Bill No	Date	Amount	Paid	Balance
(1)	20-0497A [B/54] (“Bill No. 1”)	09.06.2020	HK$790,755.00	RMB200,000	HK$563,175
(2)	21-0145 [B/62] (“Bill No. 2”);	22.02.2021	HK$602,172.00
(3)	22-0267 [B/66] (“Bill No. 3”);	12.04.2021	HK$225,000.00
(4)	21-0442 [B/67] (“Bill No. 4”); and	09.06.2021	HK$304,859.00
(5)	21-1102 [B/126] (“Bill No. 5”).	31.12.2021	HK$403,745.00

Total: HK$1,695,746

7.  Flying Financial seeks an order to tax the 5 Bills. Its case is that:

(1)  The Retainer Agreements signed by Mr. Zheng Weijing (“Mr Zheng”), its former Chairman and CEO, were without proper board approval. Mr. Zheng was arrested in the PRC in 2020 for illegal deposit taking.

(2)  The fees charged under the 5 Bills beyond the annual retainer fees were unreasonable in lack of particulars on hourly rates, time spent, personnel involved and the work allegedly done. Flying Financial also queries whether some fees were already covered by the annual retainer fees. Flying Financial says that there was no mutual agreement on fees.

8.  Chiu & Partners’ case is that:

(1)  There is no basis for Flying Financial to assert that the Retainer Agreements were without approval of its board. In particular, Chiu & Partners rely on the practice adopted by the parties that the Retainer Agreements were passed by Mr. Chow Chi Wing (former Chief Financial Officer of Flying Financial) to the board for approval.

(2)  As regards the fees charged by Chiu & Partners beyond the annual retainer fees, such fees were mutually agreed by the parties. Chiu & Partners further says that Flying Financial never sought to dispute or question such fees. There are no special circumstances to justify an order for taxation.

9.  By the time of this hearing, the parties have agreed to an order of taxation in respect of Bills No.2 to 5. The only bill in dispute is Bill No. 1, which was issued more than 12 months before Flying Financial issued the OS. The issues are:

(1)  Whether the Retainer Agreements had been authorized by the board of Flying Financial;

(2)  Whether the charges in the Bills were beyond the annual retainer fees under the Retainer Agreements and the parties have not reached agreement on the same;

(3)  Whether Flying Financial has shown that there are special circumstances for Bill No. 1 to be taxed;

(4)  Whether conditions, ie interim payment, should be imposed on granting an order to tax.

10.  Master To has already ordered Flying Financial to pay HK$360,000 into Court in relation to Bill No. 1. That has been complied with on 14 March 2022.

C.  LEGAL PRINCIPLES

11.  There are two stages to proceedings for taxation of a solicitor-client bill. Stage 1 is the determination of the issue of liability and the making of an order to tax. Stage 2 is the taxation which determines the quantum of costs: Sutherland v CRB (a firm) [2023] 1 HKLRD 1, §§60-75.

12.  Insofar as section 67(2) of the LPO is concerned, there are four scenarios:

(1)  Within one month of the delivery of the solicitors’ bill, the client may apply to have the bill taxed by the Court as of right. No leave is required and no condition will be imposed: s.67(1) (“Scenario (1)”).

(2)  If the bill has been delivered for more than one month but less than 12 months, the Court, upon the application of either the solicitors or the client, may make an order for the bill to be taxed, and may impose terms which it thinks fit when doing so (save that the terms must not be in relation to the costs of the taxation): s.67(2) (“Scenario (2)”). In such a case, the Court would incline to make an order for taxation, even though the Court still retains a general discretion to refuse taxation.

(3)  If 12 months or more have elapsed since the delivery of the bill or if the bill has been paid, no order to tax shall be made on the application of the client except in special circumstances, and the Court may impose any terms of condition without limitation (i.e. the terms may be in relation to the costs of the taxation): s.67(2), proviso (i) (“Scenario (3)”).

(4)  If the bill has been paid, no order to tax can be made if the application for an order of taxation is made more than 12 months from the date of payment: s.67(2), proviso (ii) (“Scenario (4)”).

See 麥家榮 v 鍾氏律師事務所 [2023] HKCFI 1041 at §§42, 71.

13.  Bill No. 1 falls within Scenario (3), whereas the other Bills fall within Scenario (2).

14.  For Scenario (2), the Court will usually only refuse taxation if the application is an abuse of process or not bona fide. The more important consideration in these cases are the terms of the order to tax so that solicitor are not being delayed in getting the fruit of their labour. See Simmons & Simmons Solicitors v Thomas Joseph Dillion JR HCA 2784/2003 (unrep., 14 February 2006) at §25, DHCJ To.

15.  With regard to Scenario (3), the principles have recently been summarized by DHCJ Le Pichon in Tse Yun Lam Aries v C & T Legal LLP [2025] HKCFI 2342, §§29-34. In essence:

(1)  “Special circumstances” in proviso 1 is a very flexible concept that depends on the Court's assessment of the facts and circumstances of the particular case. The discretion is a wide one. They are those which are out of the ordinary, something serious to justify not only an ordinary taxation but a special one. They are not capable of precise definition or exhaustive enumeration.

(2)  The discretion to extend the limitation is a wide one and a liberal interpretation should be given to the words “special circumstances”.

(3)  Each case will depend on its own facts;

(4)  Overcharging and false charging are well-established special circumstances; this can take the form of possible duplication of work, possible wasteful work, possible items of work charged for but not done and so on.

(5)  Lack of particularity in the bill also constitutes a special circumstance.

(6)  However, for a bill subject to the "ordinary" approach of a taxation within time, 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. The fact that it might have been reduced in the ordinary course of events does not seem to be a "special" circumstance requiring a “special” taxation.

16.  It is not necessary for overcharging to reach a “gross” level before special circumstances arise. Where, based on a first stage review of the bills, there is “real prospect” for the complainant to establish criticisms of duplicated and excessive charging, for example entries lacking particulars, substantial charges for relatively simple tasks, and considerable hours billed for vague categories such as “internal communications” where there is scope for argument, that threshold of “special circumstances” will have been fulfilled: Withers at §17.

D.  Whether the Retainer Agreements had been authorized by the board of Flying Financial

17.  Mr Zheng was arrested for suspected illegal deposit taking in Mainland China on 7 December 2020. He resigned from his positions in Flying Financial on 26 March 2021. Prior to his resignation, Mr Zheng had signed the Retainer Agreements on behalf of Flying Financial.

18.  Flying Financial alleges that Mr Zheng did not obtain board approval and hence lacked authority in so signing. The lack of board minutes approving the Retainer Agreements was affirmed by Mr Leung Man Kit (“Mr Leung”) (one of the Executive Directors of Flying Financial) and Mr Billy Chow (the Company Secretary).

19.  Flying Financial submits that (a) Mr Zheng’s lack of authority constitutes a special circumstance justifying taxation; and (b) the Retainer Agreements were ultra vires and unenforceable, with the effect that the bills should be taxed on a different basis by a taxing master.

20.  With respect, this argument can hardly stand in the light of the following circumstances.

21.  Firstly, Mr Zheng was the Chairman and CEO at the time the Retainer Agreements were signed. No evidence, such as the memorandum or articles of association, or service contract of Mr Zheng, have been produced to show that board approval was needed for him to enter into retainer agreements.

22.  Secondly, Mr Zheng must have apparent authority to enter into the Retainer Agreements. Chiu & Partners’ evidence is that they would pass the Retainer Agreements to the former CFO, Mr Chow Chi Wing, who would then return the agreements to Chiu & Partners once they had been signed by Mr Zheng. Chiu & Partners relied on the same. Flying Financial does not dispute these. There was no indication from Flying Financial or Mr Chow Chi Wing that Mr Zheng lacked the authority to sign the Retainer Agreements. Flying Financial had thus, by word or conduct (via Mr Chow Chi Wing) represented that Mr Zheng had authority to sign the Retainer Agreements on its behalf. There is no contradictory evidence from Flying Financial. There was nothing before Mr Zheng’s arrest which would have raised suspicion on part of Chiu & Partners that this was not the case. In fact Mr Zheng also signed the prior retainer agreement dated 1 March 2018.

23.  Thirdly, persons contracting with a company and dealing in good faith may assume that acts within its constitution and powers have been properly and duly performed and are not bound to inquire whether acts of internal management have been regular: East Asia Co Ltd v PT Satria Tirtatama Energindo [2020] 2 All ER 294, §§62-64. Mr Leung’s affirmation has not suggested that Chiu & Partners knew or could have known of the lack of board approval, or that they were put on inquiry.

24.  Fourthly, Flying Financial was aware of the lack of authority by 25 February 2022, at the latest, when Mr Leung filed his affirmation referring to the lack of board minutes. Nothing was done to set aside the Retainer Agreements. Mr Leung’s position on affirmation is that the unusual and suspicious circumstances prompted the current Board of Directors to exercise “extra caution to scrutinize the Retainer Agreements and consider whether they are reasonable, justified and of benefit” to Flying Financial. Even now, the submission of Mr Sunny Chan, counsel for Flying Financial, is that the Bill No. 1 should be taxed on a different basis only. These are not suggestions that Flying Financial has no liability to pay.

25.  Fifthly, the allegations of Mr Zheng’s suspected taking of illegal deposits or embezzlement of company funds are irrelevant to the present application. Despite investigations, there is no suggestion that these allegations had anything to do with the fees already received by Chiu & Partners.

26.  For the reasons given, I am therefore not satisfied that Mr Zheng’s lack of authority argument is tenable or constitutes a “special circumstance” justifying taxation of the Bill No. 1.

E.  CHARGES BEYOND ANNUAL RETAINER FEES AND LACK OF AGREEMENT ON ADDITIONAL WORK

27.  There is no evidence of an agreement entered into between the parties, pursuant to Clauses 1.3.2 and 2.4 of the Retainer Agreements, regarding the fees for Additional Work. Mr Yau, counsel for Chiu & Partners, has to rely on a “reasonable conclusion” based on Clauses 1.3.2 and 2.4 of the Retainer Agreements and the fact that Flying Financial has not denied that it has received services for the Additional Work, to submit that Flying Financial had agreed with Chiu & Partners on the fees payable.

28.  I am unable to find an agreement on fees for Additional Work. A lump sum as high as HK$299,725 was charged for Additional Work without any breakdown in Bill No. 1. (Another example can be seen from Bill No. 2, wherein a lump sum of HK$116,050 was charged for work done in relation to a share transfer agreement, with bare descriptions of “meetings with your company, numerous telephone discussions and email communications; receiving and perusing relationship background information”.) Obviously, Chiu & Partners have to justify that Additional Work was done and that the charges were proper, whether according to established hourly rates or on quantum meruit basis.

F.  SPECIAL CIRCUMSTANCES TO JUSTIFY AN ORDER TO TAX

29.  A bill of costs for non-contentious business must contain a summarized statement of the work done, sufficient to tell the client what it is for which he is asked to pay. A bare account for “professional services” between certain dates, or for “work done in connection with your matrimonial affairs” would not do. The nature of the work must be stated, such as, advising on such and such a matter, instructing counsel to do so and so, drafting such and such a document, and so forth. See Re a Solicitor (Taxation of Costs) [1955] 2 QB 252 at p. 272, Lord Denning.

30.  Bill No. 1 clearly segregated the fees for retainer work and Additional Work. The latter amounted to HK$340,755.

31.  In respect of the Additional Work, there are some obvious queries:

(1)  It was not clear who the fee earners were. In the time sheets showing particulars to Bill No. 1, eg there was a reference to a fee earner, Charmaine Cheung, whose name and hourly rate did not appear on the list of fee earners dated 24 April 2018. For work under Jason Yip, it was not clear who the responsible person “kcy” was (B295).

(2)  The items did not specify the time spent, in particular for “numerous telephone calls and emails”.

(3)  There were items of work that may arguably fall within the scope of the retainer fees, eg "multiple phone discussions, emails" in relation to requisitions from SFC in Bill No. 1. Another example can be found in Bill No. 2, wherein HK$14,025 were charged for requisitions from SFC concerning financial report ending 31 December 2019 (年報咨詢函).

32.  The matters in Sections E and F above raise a real prospect of Flying Financial showing duplication with the annual retainer fees, over-charging and lack of particulars. The amount involved does not involve only 10-20% that might be discounted on taxation but is substantial. These constitute special circumstances. The matters raised are suitable for the taxing master who will have access to documentary proof from Chiu & Partners to decide if retainer work or Additional Work was done, who did it and for how long. Taxation of the Bill No. 1 is justified and I so order.

G.  INTERIM PAYMENT

33.  Chiu & Partners seeks payment of the unpaid annual retainer fees (HK$682,528) and interim payments amounting to 80% of the fees to be taxed under all 5 Bills from Flying Financial pending taxation. Chiu & Partners also seeks immediate release of the interim payment of HK$360,000 already paid into court.

34.  The Court has “unfettered discretion” under s.67(2) of LPO to grant interim payment: Baker & McKenzie v Grande Holdings Ltd [2013] 1 HKLRD 63, §7, Yuen JA.

35.  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 (unrep., CACV 75/2014, 29 December 2014) at §28, Cheung JA.)

36.  Bill No. 1 was issued 5 years ago. Flying Financial’s Zhang Gongjun messaged Mr Chiu of Chiu & Partners on 24 January 2022 to apologize for the late payment (of various bills), stating that control over expenditure was tight and investors agreed to pay when the company resumed listing. Then Flying Financial stalled these proceedings for nearly 2 years until Chiu & Partners filed a Notice of Intention to Proceed on 15 April 2024. Much indulgence had been granted by Chiu & Partners. To prevent further delay, an interim payment order is appropriate.

37.  This is a plain case that Chiu & Partners would receive some costs after taxation. There is no evidence that the interim payment would stifle Flying Financial’s ability to participate in the taxation proceedings.

38.  In respect of the amount representing retainer fees (HK$682,528), there is no defence. Flying Financial should pay Chiu & Partners forthwith.

39.  As for the rest, the amount to be taxed is HK$1,013,218. There is already a sum of HK$360,000 that Flying Financial has paid into Court. Another HK$340,000 should be paid into Court pending taxation. The total of HK$ 700,000 (about 70% of the amount to be taxed) should be put into an interest bearing account.

H.  ORDER AND CONCLUSION

40.  In respect of Bill No.1, I find that Mr Zheng did have apparent, if not actual, authority to sign the Retainer Agreements even though there were no board minutes to give any approval to his act. The Company is thus liable to pay Bill No. 1 forthwith insofar as it concerns payments of annual retainer fees under the Retainer Agreements.

41.  There are special circumstances to justify taxation of Bill No. 1, namely, lack of agreement concerning the Additional Work, that some items may have been covered by the Retainer Agreements and hence there may have been duplication or overcharging. The description of those Additional Work also lacks particulars on who did what and time spent. I therefore give an order to tax this Bill.

42.  The 4 other Bills should go to taxation, by consent.

43.  In conclusion, I make the following orders:

(1)  There be leave to Flying Financial to tax Bills No. 1 to 5;

(2)  Flying Financial do pay HK$682,528 to Chiu & Partners for unpaid retainer fees;

(3)  Flying Financial do pay into Court an interim payment of HK$340,000 within 28 days as a condition to taxation, failing which Chiu & Partners will be entitled to full payment under the Bills without a need for taxation;

(4)  Upon making the interim payment, Flying Financial shall file the Notice of Commencement of taxation within 28 days.

44.  On a nisi basis, costs of the OS should follow the event and be to Flying Financial, summarily assessed at HK$250,000.

45.  Solicitor-client taxation often poses problems for the Court as practitioners do not make clear distinction between matters for the judge and matters for the taxing master. In the present case, the one-page statement of facts set out succinctly each party’s case. That, together with the List of Agreed Issues helpfully guided the Court in understanding the Bills and the issues involved. The hearing was focused.

46.  I thank counsel for their assistance.