THE JOINT AND SEVERAL TRUSTEE OF THE PROPERTY OF SO CHING WAN v. ASSEN LTD (NOW IN LIQUIDATION) AND OTHERS

HCB 4475/2002

[2024] HKCFI 851

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4475 OF 2002

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JUDGMENT

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1.  This is a review of a taxation review conducted by Master Lai. The costs orders that were the subject of the taxation arose from a judgment dated 6 June 2019 of Deputy High Court Judge William Wong SC ([2019] HKCFI 1491). The judgment concerned an amended summons that (if allowed) would have required the 2^nd to 4^th Respondents to answer certain questions and provide related documents. Deputy Judge Wong dismissed the amended summons. He ordered the Applicant to pay the 2^nd to 4^th Respondents’ costs on a party-and-party basis with certificate for two counsel. The Applicant appealed. The Court of Appeal dismissed the appeal as “totally without merits” on 29 December 2020 ([2021] 3 HKC 5).

2.  The facts underlying the taxation before Master Lai have been set out in detail in Deputy Judge Wong’s and the Court of Appeal’s judgments. I will not repeat them here.

3.  The Applicant’s grounds of complaint in this review focus on four matters:

(1)  Three counsel appeared at the hearing before Deputy Judge Wong. The most junior (Ms Sakinah Sat) appeared on a complimentary basis, as evidenced by her brief which was placed before Master Lai. The Applicant says that the certificate for two counsel only covered the briefs of senior counsel (Mr Anson Wong SC) and Ms Sat. In other words, the Applicant claims the benefit of the complimentary brief. But Master Lai instead allowed the briefs of senior counsel (HK$360,000) and senior junior counsel (Mr Alan Kwong) (HK$130,000) in full.

(2)  The Applicant says that the solicitors’ hourly rates applied by Master Lai did not reflect solicitors’ hourly rates as approved by the Chief Justice from time to time.

(3)  The 2^nd to 4^th Respondents’ solicitors are said to have charged too many hours. The solicitors billed HK$1,731,209 in fees. Master Lai taxed the amount down by HK$979,906 to HK$751,303 (43.40%). According to Mr Chu (appearing for the Applicant), the amended summons was not complicated, even taking account that the Applicant (then acting in person) addressed numerous questions to the 2^nd to 4^th Respondents’ solicitors before the amended summons was heard. If one assumes an average hourly rate of HK$5,500 (reflecting the fact that 81.8% of the work was done by a senior solicitor), then the taxed down amount of HK$751,303 is equivalent to about 136 billing hours. That (Mr Chu submits) is excessive for a simple application of the sort that was before Deputy Judge Wong.

(4)  Regardless of the outcome of Complaint (1), the amounts charged by senior and senior junior counsel were excessive and should not have been allowed in full. At most, Master Lai should only have allowed HK$280,000 and HK$100,000 respectively for the two counsel.

4.  Before examining the Applicant complaints, I should deal with the Applicant’s discovery application.

5.  On 15 July 2022, the Applicant issued a summons seeking disclosure of: (1) the timesheets and time-recording details of the 2^nd to 4^th Respondents’ solicitors; (2) all documentary evidence of the 2^nd to 4^th Respondents' agreement to pay the costs and disbursements incurred by their solicitors; and (3) all documentary evidence showing payment by the 2^nd to 4^th Respondents of such costs and disbursements. Master Lai dismissed the Applicants’ discovery summons on 18 July 2022. The Applicant issued a Notice of Appeal on 9 February 2024, seeking leave to appeal out of time against Master Lai’s dismissal of the Applicant’s discovery summons.

6.  Having heard Mr. Chu, I dismissed the application for leave to appeal out of time. In my view, there was no justification for the extreme lateness of the appeal (some 1.5 years out of time). The Applicant claims not to have known about the possibility of appeal against the Master’s decision. But ignorance of the law is not an excuse. In any event, the Applicant is an experienced insolvency practitioner. He would have known about the possibility of appeal. The Applicant vaguely ascribes the delay to COVID-19. But there is only so much that one can blame on COVID-19. The court was in operation throughout 2023, so it is difficult to see how COVID-19 can excuse the delay here.

7.  Nor did I see how the wide-ranging discovery sought could be of any assistance to this review of taxation. The discovery summons was essentially a fishing exercise. The discovery would not be pertinent to Complaints (1) and (2) Complaint (1) is a question of legal principle, namely, should the Applicant have the benefit of the complimentary brief. It does not hinge on the disclosure of further documents. Complaint (2) is a matter of comparing the hourly rates applied by Master Lai with the hourly rates approved by the Chief Justice.　　Discovery of documents will not help on that comparison. Complaints (3) and (4) are a matter of evaluating whether the hours charged by solicitors and the briefs charged by counsel were excessive given the nature of the application before Deputy Judge Wong. Discovery will not assist in either exercise.

8.  I move to considering the Applicant’s complaints. I am conscious that when so doing, my role is constrained. In Lam & Lai Solicitors v Ho Chu Yau Albert [2018] 2 HKLRD 127, the Court of Appeal (Lam VP, Kwan and Yuen JJA) contrasted two lines of approach to a judge’s review of a taxation of costs:

“23. The first line is to the effect that a review of taxation by a judge ... is not a hearing de novo, and the judge should only interfere with the decision of the taxing master in limited circumstances: if it is shown to have been arrived at under a mistake of law, or in disregard of principles, or under a palpable misapprehension as to the facts, or plainly in reliance on irrelevant matters, or to be such as to fall outside the generous ambit within which reasonable disagreement is possible ...

24. The other line of cases is to the effect that the approach should be no different from an interlocutory appeal against a discretionary order ... Hence, the judge on a review of taxation is in no way fettered by the previous exercise of the master’s discretion and is entitled to exercise it as though it came before him for the first time. The judge will give the weight it deserves to the decision of the master but is in no way bound by it ....”

9.  The Court of Appeal came down firmly in favour of the first approach:

“29. Insofar as there is any confusion as to the appropriate approach, I wish to state clearly that in my view the decision in [Chan Yin Na v Union Medical Centre Ltd [2011] 5 HKC 158] is correct. As Bharwaney J rightly stated in [26], the parties to taxation already enjoy a right of review before the taxing master under O.62 rr.33 and 34, in which the master may “exercise all the powers he might exercise on an original taxation”. In applying for a second review before the judge, the aggrieved party must first request the master to state the reasons for his decision in respect of that item or part and any special facts or circumstances relevant to it. The taxing master is the primary decision maker under the statutory mechanism. The relevant provisions in O.62 rr.34(2), (4) and 35(1) support the conclusion that the judge, in the second review of the matters of complaint, does not conduct a taxation de novo and should not interfere with the taxation decision, which is essentially a matter for the discretion of the master, save on limited grounds.”

10.  I am bound by the Court of Appeal’s decision. Thus, my views on the correctness or otherwise of the amounts allowed or disallowed by Master Lai are not relevant. What must be shown is that Master Lai erred on the law, disregarded operative principles, misapprehended the facts, or plainly relied on irrelevant matters. That means that an applicant has a high threshold to meet on a judge’s review of a master’s taxation.

11.  On Complaint (1), I am unable to find any fault of law or principle in Master Lai’s approach on his review. He stated:

“272. In this case, the learned Deputy Judge granted certificate for two counsel to the Receiving Parties in the Costs Order. The Receiving Parties had instructed a Senior Counsel and two junior counsel. Mr Frost, the law costs draftsman for the Receiving Parties, informed the court that the brief for Ms Sat was a complimentary brief. The Receiving Parties had produced the brief sent to Ms Sat for the 27 May 2019 hearing confirming that it was a complimentary brief.

273. As certificate for two counsel had been granted to the Receiving Parties, the Receiving Parties were entitled to claim the fee of two counsel. At the hearing of 27 May 2019, the Receiving Parties instructed Mr Wong SC, Mr Kwong and Ms Sat to attend the hearing. The Receiving Parties claimed the fees of Mr Wong SC and Mr Kwong.”

12.  It is common practice for very junior counsel to be instructed to appear in court on a complimentary basis. This enables very junior counsel to work with experienced counsel; to gain experience working with other counsel in court; and to see how experienced counsel deal with questions that arise during court proceedings. This does not mean that, if a certificate for two counsel is granted, a master should treat the certificate as covering the very junior counsel’s complimentary charge, rather than the fees of the senior junior counsel briefed.

13.  It is convenient to deal with Complaint (4) at this juncture.

14.  In assessing whether to allow the fees of senior counsel and senior junior counsel in full, Master Lai said:

“274. In Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512, the Court of Appeal pointed out in §31 of the judgment that after the Civil Justice Reform, in determining the amounts of fee allowed for counsel, the court should have regard to all the relevant circumstances and in particular to the following matters:

(a) the complexity of the matter and the difficulty or novelty of the questions involved;

(b) the skill, specialized knowledge and responsibility required of, and the time and labour expended by, counsel;

(c) the number and importance of the documents prepared or perused;

(d) the place and circumstances in which the business involved is transacted;

(e) the importance of the matter to the client;

(f) where money or property is involved, its amount or value; and

(g) any other fees and allowances payable to counsel in respect of other items in the same cause or matter, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question.

275. In these proceedings, there were mixed issues of facts and law raised by the Amended Summons including: whether the Amended Summons was to enforce the 2016 Order or a fresh application; if it was a fresh application under section 29 of the Ordinance whether the essential conditions for making a section 29 order had been satisfied; how the discretionary power conferred to the court under section 29 of the Ordinance should be exercised; and whether the order sought in the Amended Summons was within the ambit of section 29 of the Ordinance.

276. The application by the Amended Summons was also found to be oppressive by the learned Deputy Judge as the applicant intended to bring contempt proceedings against the Receiving Parties and by the application required them to prove the case against themselves on oath prior to the contempt proceedings being brought.

277. Mr Tang also made serious accusation against the 2^nd respondent in the application. The Court of Appeal noted the following stance of Mr Tang in §6.14 of the CA Judgment:

‘In his 5^th affirmation the applicant continued his allegation that the 2^nd respondent had been ‘cooking the books of and producing false accounts of Assen’. He referred to the ‘artificial valuation’ and ‘manipulation of an opaque auction’. He said there is clear evidence of ‘outright lies’ of the 2^nd respondent. He claimed the valuation reports obtained by the 2^nd respondent were procured to support the assertion that the value of shares in Assen is nil to support the pre-packaged auction sale at 9.2 million. The applicant used the words ‘Acts of perjury and contempt of Court’ in dealing with the conduct of the 2^nd respondent.’

278. Furthermore, in these proceedings, the Receiving Parties were required to deal with an application which the Court of Appeal had described as follows in §7.13 of the CA Judgment:

‘The Judge described the original summary as being convoluted, incomprehensible, lacking in focus and more in the nature of Mr Tang’s personal comments. Although the summary has since been trimmed, my view is that the Judge’s comment on this summary is still valid.’

279. In the circumstances of this case, I am of the view that it was proper or necessary for the Receiving Parties to instruct Senior Counsel to represent them in this matter. I am of the further view that the brief fee charged by the counsel, including the Senior Counsel, and claimed by the Receiving Parties under in these items were proper. I allowed them in full at the Taxation.

15.  I am unable to say that Master Lai somehow erred in his apprehension of facts or took account of irrelevant matters in reaching his conclusion on counsel’s fees. Given the Applicant’s allegations of fraud and the “convoluted,” “incomprehensible,” and unfocussed nature of the Applicant’s submissions, Master Lai was entitled to conclude as he did.

16.  On Complaint (2), Mr Chu accepted at the hearing before me that there was little difference between the hourly rates allowed by the Master and the hourly rates approved by the Chief Justice. It does not seem to me that Complaint (2) is a ground for interference with the Master’s decision.

17.  On Complaint (3), Mr Chu contends (on the Applicant’s instructions) that 70 hours of billable time would have been more apposite. Mr Chu notes that four fee earners were involved on behalf of the 2^nd to 4^th Respondents. In addition, a trainee solicitor and a paralegal also worked on the case. Mr Chu says that is just too many fee earners. There will inevitably have been duplication of work. Mr Chu suggests that, given the amended summons was not complicated, 136 hours can hardly be justified. He submits that Master Lai erred in conducting the taxation item by item, without stepping back at the end and taking a reality check. Master Lai should (he says) have asked whether the overall taxed down bill amount for solicitors’ fees (that HK$751,303) was proportionate and reasonable given the subject matter of the amended summons.

18.  I personally am somewhat surprised at the number of hours involved. But, as I have noted, that cannot be a basis for my intervention. It is plain from Master Lai’s Determination that he considered a range of factors in finding as he did on how much to allow of solicitors’ fees. See, for instance, paragraphs [23]-[26], [32]-[33], [36]-[42], [44], [63]-[65], as well as Master Lai’s ensuing item by item review. I cannot substitute assessments as to what I would have thought reasonable in place of the evaluations which Master Lai conducted. He in fact taxed solicitors’ fees down by 43.4%. Mr Chu says that was not enough. But absent an error in principle or law or some glaring misapprehension of the facts (none of which I can find), I am not in a position to disturb Master Lai’s taxation.

19.  It follows that the Applicant fails on this review of Master Lai’s taxation. The review is dismissed.

20.  I shall now hear the parties on costs and consequential orders.