HO PUI LAN v. SHAM YICK CHUN GARY t/a SHAM & Co., SOLICITORS

HCMP 707/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 707 OF 2014

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   HCMP 712/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 712 OF 2014

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J U D G M E N T

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Introduction

1. Madam Ho instituted these two sets of proceedings against her former solicitors Messrs. Sham & Co. (“Sham”) and in each set of these proceedings Madam Ho took out a summons for an unless order. Her applications came before a master on 3 June 2014 and the master acceded to neither of them in the end. As to costs, the master ordered that Sham do forthwith pay Madam Ho costs in the sum of HK$200 for each of the two summonses (“the Summonses”) after summary assessment (“the Costs Orders”). This is Madam Ho’s appeal against the Costs Orders.

2. In her two Notices of Appeal, Madam Ho, however, does not state what the appropriate costs orders should be. She merely asks for an order that the Costs Orders be set aside. In the skeleton submissions of Mr Law, counsel for Madam Ho (not appearing before the master), it is suggested that the new costs orders should be in the following terms:

“The costs of the applications in HCMP707 and 712/2014 both dated 28 May 2014 be to the Plaintiff to be taxed if not agreed”, or at such amount as the Court deems fit and just.”

3. This morning, Mr Law informed this court that those instructing him had prepared two skeleton bills for the hearing before the master (“the Hearing”) and the costs they now ask for amount to HK$11,600. Thus, Madam Ho, by this appeal, asks to recover from Sham an additional sum of HK$11,200 for her legal costs.

4. On the other hand, Mr Chan appearing for Sham confirms that Sham are happy with the Costs Orders. The central question in this appeal is the quantum of costs to which Madam Ho should be entitled on the Summonses.

5. The legal principles relating to an appeal as to costs are neatly summarized by Sakhrani J in Paul Y-ITC Construction Ltd v Kin Shing Co Ltd [1999] 1 HKC 511 as follows (p.515A-C):

“As this is an appeal as to costs only from the discretion of the master, such application should not be allowed unless it can be shown that the order made by the master was unreasonable or erred in law i.e., if he either failed to take into account proper matters or took into account matters that should not have been taken into account.”

Background Facts

6. The dispute arose from the two orders of Master Ho dated 13 May 2014 (“the Orders”) made in each set of the proceedings whereby Sham were ordered to file and serve an itemized bill for taxation within 14 days from the date of the Orders. The deadline was hence 27 May 2014.

7. Sham did try to file their itemized bills (“the Bills”) in the afternoon of 27 May 2014 but, for unknown reason, allegedly the High Court Registry refused to file them. Despite the unsuccessful attempt to file the Bills, Sham anyhow served the Bills on Madam Ho at about 5:00 p.m. on 27 May 2014 and they were marked “to be filed on 28 May 2014”.

8. Madam Ho’s solicitors, Messrs Joseph Leung & Associates (“JLA”) sent a letter to Sham on 28 May 2014 (“the Letter”) and asked to be served a copy of the Bills filed before 3:00 p.m., or else they would assume that Sham had failed to file the Bills to comply with the Orders and should apply for an unless order by way of summons and seek costs against Sham forthwith.

9. Sham’s solicitors wrote back on the same day. In the letter (“the Reply Letter”), they explained that the High Court Registry refused to accept the filing of the Bills on the ground that they were only sought to be filed after 1:00 p.m. (though it was a Tuesday). They further made it clear that “for conservation and environmental purpose”, they did not find it appropriate to serve the same bills on them again.

10. JLA were not convinced that the High Court Registry did refuse the filing of the Bills within the office hours. They suspected that Sham merely did not manage to file the Bills in time. Hence they took out the Summonses at about 4:00 p.m. on 28 May 2014 whereby they apply for an unless order in each case to the effect that unless Sham do file and serve the Bill within 3 days fro the date of the unless order, Sham be debarred from claiming their legal costs and disbursements against Madam Ho.

11. To oppose these applications, Sham filed an affirmation of their clerk to confirm that they had made a failed attempt to file the Bills at 3:00 p.m. on 27 May 2014 and that the Bills were eventually filed in the afternoon of 28 May 2014 at about 3:30 p.m..

12. Unfortunately, the parties did nothing to put an end to the dispute and still required the Hearing before the master to determine the applications.

13. By way of background, as informed by Mr Law, at present JLA handle more than twenty cases against Sham. In all such cases including the present proceedings, the plaintiffs therein were first the clients of JLA in respect of their personal injuries claims. The current employees of Sham including Mr Chan were then solicitors/legal executives of JLA handling their claims on behalf of JLA. These clients afterwards terminated their respective retainers with JLA and instructed Sham to handle their claims in their stead. They now instructed JLA again to sue Sham mainly about the quantum of legal costs Sham charged them. In addition, JLA have personally instituted a High Court action against Sham under HCA 1250/2013.

Master’s reasons

14. The transcript of the Hearing is made available to this court.  There, the explanation for the Costs Orders can be discerned. The master very rightly found that the Hearing could have been avoided if the parties had been more co-operative. The master found that Sham should bear the costs of the Summonses because whilst it might not be necessary to serve the Bills on JLA again after they were filed, Sham had failed to confirm with JLA that they had already filed the Bills on 28 May 2014.  

15. However, the master found that Madam Ho should not be allowed to recover her full costs for two reasons. Firstly, he opined that the Summonses were taken prematurely and before doing so, JLA should have further liaised with Sham to see whether they had actually filed the Bills on 28 May 2014.

16. Secondly, the master took into account all the circumstances of the matter including Madam Ho’s failure to avoid the Hearing. The master found certain deductions were called for from the standard costs of HK$800 (for both Summonses as they were treated as a single application only). The master finally assessed the costs summarily at HK$400 in total meaning he had made a 50% deduction from the standard costs.

Discussion

17. Given the fact that Sham’s liability to pay Madam Ho her costs is not in issue, the first question should be whether the master was correct to adopt the standard costs of HK$800 as the starting point. Mr Law submits that the applications were complicated and should not be treated as an ordinary application for an unless order.

18. I am unable to accept this submission. They were very simple applications based on the single inconvertible fact that the Bills were not filed on 27 May 2014. I fail to see any complications.

19. Next I have to consider whether the master was right in making the deductions. Mr Law argues that the Summonses were issued at the right time so as to confirm (a) whether Sham had actually filed the Bills on 28 May 2014 and if so, (2) whether the Bills served on them on 27 May 2014 were identical to the Bills filed on 28 May 2014. Mr Law submits that these were genuine concerns of JLA at the time when the Summonses were taken out.

20. I am not convinced. It was already marked on the Bills that they would be filed on 28 May 2014 and there was no basis to suspect that Sham would not do so after serving them on JLA on 27 May 2014. Further, in the Letter, JLA did not question the genuineness of the assertion of Sham marked on the Bills. The confusion on the part of JLA stated in the Letter only related to the fact that the Bills were not filed in accordance with the Orders despite their service. There is no reason to assume that the Bills were not filed on 28 May 2014 unless Sham served on them another copy of the Bills before 3:00 p.m. on 28 May 2014 as demanded in the Letter.

21. Such an assumption is even more untenable in light of the Reply Letter.  In the Reply Letter, there is nothing to show that Sham decided not to file the Bills as they had so indicated to JLA in the backsheets of the Bills already served. I accept that they did not confirm that they would do the filing in the Reply Letter but this alone does not suggest that their previous promise to file the Bills was to be retracted. In the Reply Letter, Sham merely pointed out that they found it unnecessary to serve the same documents on JLA for environmental reasons.  

22. In my view, JLA should have at the very least waited until the end of 28 May 2014 and made enquires with Sham to see whether they had filed the Bills before taking out the Summonses. I agree with the master that the Summonses were issued prematurely even if they had to be issued in the first place.

23. On the other hand, I agree that Sham should have informed JLA that the Bills were finally filed in the afternoon of 28 May 2014. After all, the filing was late for whatever reasons and Sham required JLA’s favour to file the Bills after the deadline. It is not just a matter of professional courtesy that Sham should have asked for JLA’s consent to their late filing. After receiving the Summons, Sham should have immediately informed JLA to avoid further costs to be incurred. It is a pity that Sham appeared to think that they could file a document out of time as of right.

24. As regards the purported concern that the Bills subsequently filed might differ from the copy previously served on JLA, I cannot accept its validity.  First, this concern did not feature in the Letter. Nor could that be found in the supporting affirmation. I cannot see any reason why Sham would file a different copy of the Bills, either.

25. Indeed, Mr Leung of JLA confirmed to the master that if Sham had confirmed to them that they had filed the Bills and that the Bills filed were the same documents, there was no need to serve the Bills on them again. Sham already indicated in the Reply Letter that they would not serve the same documents. I do not see why they had to make the latter confirmation.

26. In summary, the position of the parties when the Summonses were issued was that the Bills were not filed on 27 May 2014 pursuant to the Orders; Sham had indicated that they would be filed on 28 May 2014 and no further service was necessary. JLA did not know whether Sham had kept their promise to file the Bills on 28 May 2014 and if so whether the Bills so filed contained the same contents as those served on them on 27 May 2014.

27. In light of this, I must say I have an even dimmer view of the propriety of the Summonses. That said, if the Summonses were to be taken out at all, JLA should have made proper enquires with Sham beforehand. On this basis, I agree with the master that there were valid reasons to make the deductions.

28. Mr Law informs this court that the confirmation that Sham had filed the Bills was only made in one of the affirmations of Sham served on them in the afternoon of 30 May 2014. The next business day was 3 June 2014 and the Hearing started at 9:58 a.m.. In the circumstances, JLA could have done little to avoid the Hearing.

29. If JLA had made some effort to ascertain from Sham as to whether the Bills were filed both before and after the Summonses, I would have had more sympathy with JLA. Indeed JLA did not have to wait until the opposition affirmations. In the absence of any such effort, I agree with the master that the deductions were justified on account of Madam Ho’s failure to avoid the Hearing.

Conclusion and orders

30. For the reasons given above, I conclude that there is no valid reason for this court to interfere with the master’s exercise of his discretion in making the Costs Orders. I dismiss the appeal accordingly.

31. I have invited parties to make preliminary submissions on costs. There is no argument that costs should follow the event. I make an order nisi that Madam Ho should pay Sham costs of the appeal. I allow the hourly rate of Mr Chan (HK$4,000) and I believe two hours (including the hearing time) should suffice. I hence come up with the figure of HK$8,000 by way of summary assessment. This is the sum which I order that Madam Ho should pay Sham forthwith as costs.

Postscripts

32. It strikes me that in this dispute the parties have failed to apply a modicum of common sense. The animosity between the parties or, to be precise, between JLA and Sham, is just too obvious. It is regrettable that professional courtesy has been neglected and professional judgment has been impaired. The dispute has been blown way out of proportion as a result. JLA and Sham should bear in mind that they are officers of the court and they should act in the spirits of the CJR no matter how bitter their litigations are.

33. It remains for me to thank Mr Law for his able assistance.