MAN FONG HANG v. MAN PING NAM

HCA 7935/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7935 OF 1998

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J U D G M E N T

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1.  This is a taxation matter.  After the substantive hearing, the parties came back to me and asked me to make further ruling.  The taxation hearing of the bill of costs submitted by the Plaintiff against the 1^st Defendant and 2^nd Defendant has a long history.  It commenced on 2^nd November 2004 and the last hearing was on 6^th January 2006.

2. Before the lunch break on the last day, I indicated that if the taxation progressed at that speed, it might take another day.  I asked parties whether they could agree more or even worked out a settlement in accordance with the tenor of my rulings on items that I had taxed.  In the afternoon they informed me that certain agreement or understanding had been reached.  Details were not yet finalised.  I recorded the agreement by announcing it as set out below:

(a)   I have taxed the different items as shown on the bill.

(b)   The parties will agree among themselves the figures of the “untaxed items”.

(c)   The parties will agree and calculate the final figures of the different items of the whole bill including:

(i)   the items that have been covered by the interim allocatur (with deletion of the parts which I allowed to delete in the review);

(ii)  the items that I have taxed on 5^th January & 6^th January 2006; and

(iii) the untaxed items that will have been agreed but not yet recorded.

(iv) If the parties could not agree on any of the items or figures, liberty to apply.

(v)  If the parties could agree upon all the figures, allocatur be issued.

(vi)  By consent the parties undertake not to appeal against the decision made by the Registrar in the review;

(vii) The costs of the review be to the Defendant assessed in the sum of $10,000 which could be used to set off the allowed costs of the Plaintiff under the bill.

3. I was essentially told at the hearing the whole bill including the untaxed items could be agreed.

4. Subsequent to that, the Plaintiff raised 11 additional items amounting to $254,000 to ask the Defendants to consider.  The Defendants insisted that they thought the agreement was in full and final settlement of all the Plaintiff’s claim for costs and refused to consider the additional items.

5. Both parties came to me and asked me to adjudicate on the matter.  I asked the parties to frame and agree upon what are the issues that they want me to adjudicate.  After a short adjournment, I was told that the parties had only one issue before me, that is: “whether the Plaintiff is able to add to the taxation bill the items as set out in exhibit “AY-1” referred to in the affirmation of Amy Kim Mi Yuen filed on 7^th March 2006 in support of this application.”

6. The documents that parties agreed to rely on as evidence are the following:

(a)   The bill submitted for taxation with item 2225 agreed in the sum of $7,200 and item 2227 $4,133.

(b)   The Affirmation of Amy Kim Mi Yuen filed on 7^th March 2006 with exhibits.

(c)   Letter dated 14^th February 2006 from Messrs. Baker & McKenzie to the Registrar enclosing a list of items to be included.

(d)   Letter dated 16^th February 2006 from Messrs. Peter Mo & Co. to the Registrar enclosing a copy letter of 11^th February 2006 to Messrs. Baker & McKenzie.

(e)   Letter dated 20^th February 2006 from Messrs. Baker & McKenzie to the Registrar.

(f)   Copy letter dated 24^th February 2006 from Messrs. Baker & McKenzie to Messrs. Peter Mo & Co.

7. I told the parties that I would not allow further evidence to be adduced for the purpose of hearing that issue.  My decision could be either (a)  in the negative, that may bring the matter to an end or (b)  in the positive, that the items should be included in the bill which has to be taxed unless otherwise agreed and in such case I will give directions.  Both agreed to the arrangement.

8. Mr. Poon for the Plaintiff invited me to examine the different items submitted: they are items that could not have anticipated when the bill was filed with the Court for taxation.  To a certain extent, I agree but some I do not, for example, collating bundles (item 220(d)) and preparation for substantive hearing (item 226(a)).  Do those additional items overlap with the items on the bill?  I do not wish to comment at this stage.

9. Mr. Poon also submitted that it is a common practice to add these items at the end of the taxation hearing.  I must say my view is different.  The common practice is that the law costs draftsman anticipates certain items that will be incurred and they build them into the bill but without figures.  If, as in this case due to unexpected lengthy taxation hearing, they are not included, the law costs draftsman of the receiving party will remind the Court as well as the other side that such items will be raised and be dealt with at the end of hearing.

10. I share Mr. Cheung’s concern that there is unending assessment if the parties are not frank and candid, and put all the cards on the table.  In this case the Plaintiff had not anticipated that there were so many hearings and directions.  It is understandable that these items have not been included in the bill.  However, the Plaintiff should on the last day of hearing raise these items or at least put the other side on notice that there are such sums to be charged.  The Plaintiff has not done so.

11.  From the evidence before me, the first time that the Defendants learnt about it was in the letter dated 13^th January 2006 from the Plaintiff’s solicitors to Mr. Cheung, the law costs draftsman for the Defendants.  The letter mentioned the additional items and asked the Defendants to agree the figures after concession was given.

12. My understanding of the agreement as reflected in my record set out in paragraph 2 above is that the parties will agree among themselves the figures of “untaxed items”.  Does the term “untaxed items” go as far as to include the additional items?

13. I was not privy to the conversation at the time of the negotiation.  One thing I am sure after reading the correspondence is that no one mentioned about the additional items.  As no one had mentioned them, it is difficult to say that “the untaxed items” covers the additional items.

14. Mr. Cheung argued that the agreement reached on that day was meant to be a full and final settlement.  This might be the intention of the Defendants when they reached an agreement with the Plaintiff on the formula.  Had this intention been conveyed to the Plaintiff at that time?  I do not know it.  Unfortunately, Ms. Yuen at that time for the Plaintiff did not alert Mr. Cheung about the forthcoming additional items.

15. Another point Mr. Cheung raised is that the claims set out in the list of additional items had already been included in items 2225 and 2227 and agreed in the sums of $7,200 and $41,333 respectively.  Item 2225 is for reviewing files and preparing bundle for taxation hearing.  I cannot say the agreed sum of $7,200 or the original claim of $12,000 (calculated from the agreed sum) is low.  As to the other item 2227, for attending taxation hearing, the agreed sum of $41,333 looks reasonable: it represents over 40 hours of the court attendance by the law costs draftsman.  Surely, Mr. Cheung who appeared before me throughout was aware that Mr. Poon was present at the beginning of the taxation hearing and addressed me.  Whether I would allow his costs for attendance is another matter.

16. Mr. Poon submitted that the additional items were properly incurred and some were incurred in compliance with the Court’s direction.  I could only say that they were actually incurred.  Everyone should be aware of them.  Whether they were properly incurred for the purpose taxation on a party and party basis is a matter for taxation.

17. I am not asked to decide whether the agreement reached on the last day of the hearing is meant for full and final settlement of all the claims for costs by the Plaintiff.  I leave that open.  I find that the additional items were actually incurred by the Plaintiff.  On the basis that I make no finding on whether the agreement reached is meant for full and settlement, in normal circumstances the additional items should be added.  Accordingly, I rule that the Plaintiff is able to add to the taxation bill the items as set out in the exhibit “AY-1”.

18. I give the following directions for taxation of those items:

(a)   within 14 days upon receipt of this decision the Defendants file and serve a list of objections to those additional items;

(b)   I set the matter down for taxation with an estimated time of 30 minutes.

19. As to costs, it is my finding that the Plaintiff’s law costs draftsman should have alerted and brought to the Defendant’s attention of these additional items but she had not done so.  Had it been done this hearing would not have been necessary.  Although I have made a ruling in favour of the Plaintiff on the issue framed, I consider it right to depart from the usual rule that costs follow the event.  I make costs order nisi under Order 42 rule 5B(6):

(a)   That each party pays its own costs in respect of the application;

and    (b)   That this order shall become absolute 14 days after this judgment is handed down.