LIU HUI HONG, the person appointed to represent the estate of LI SHIYOU, deceased (by carry on order dated 30 September 2015) AND ANOTHER v. FONG WAI MENG AND OTHERS

HCPI 390/2015

[2021] HKCFI 2817

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 390 OF 2015

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DECISION ON COSTS

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I. INTRODUCTION

1.  On 23 April 2012, Li Shiyou (“Deceased”), then about 46 years old, was working on board a container vessel “Zhong Sheng Hai 3” when he was hit by a container that was being transferred from the wharf to such vessel. He fell to the bottom of a hold of such vessel, and suffered fatal injuries (“Accident”). The Deceased was survived by his mother, his widow (“Widow”) and his son. No expert evidence on liability was adduced, but Ps obtained expert medical reports on causation of death. D1 had given a statement dated 25 April 2012 to the Marine Department in relation to the Accident.

2.  On 17 April 2015, the estate of the Deceased as the 1^st plaintiff (“P1”) and the Widow on behalf of herself and the dependants of the Deceased as the 2^nd plaintiff (“P2”) (collectively, “Ps”) commenced the present action against the 1^st defendant (“D1”), 2^nd defendant (“D2”) and 3^rd defendant (“D3”) (collectively, “Ds”) for loss and damages as a result of their wrongdoings in respect of the Accident. On 30 September 2015, the Widow was appointed to represent P1 for the purpose of the present action.

3.  Notwithstanding lengthy submissions by Ms Chark, solicitor for Ps, for the purpose of the Appeal referred to in paragraph 37 below, there was, in my view, nothing unusual about pursuing Ps’ claim in the present action even though it involved dependants of the Deceased residing in Mainland China, which, as was usual, entailed obtaining grant of letters of administration and consequent carry on order. Also, there did not appear to be complexity as to the quantification of Ps’ claim as the Deceased was said to be the sole breadwinner who supported his own family and his mother. No disability interest was involved.

4.  Ps were legally aided until 10 July 2020,[1] and as aided persons they were represented by their assigned solicitors Brenda Chark & Co (“BCCo”). Ds were represented by their solicitors Ince & Co (“ICo”).

5.  Ps’ claim against Ds was eventually settled. By consent, Bharwaney J on 25 May 2018 granted inter alia the following orders:

6.  Damages claimed in the Statement of Damages filed on 9 November 2015 (“SoD”) amounted to $4,515,238.00, ie more than $3,000,000.00 in excess of the Settlement Sum.

7.  Mr Sakhrani, counsel for Ds, in written submissions for the Appeal (“Appeal Submissions”) said it was unclear whether Ps’ claim for damages was a “try-on”, but bearing in mind a duty to plead responsibly/ proportionately having regard to the evidence to facilitate the underlying objectives of encouraging cost-effectiveness, proportionality and settlement in Order 1A of the Rules of the High Court (“RHC”), it was unclear why Ps in their SoD (on 9 November 2015) pleaded a claim for damages in excess of $4,500,000.00, and then:

8.  The explanations given in Ms Chark’s written submissions in paragraph 7(b)-(c) above were unsupported by affirmation evidence filed for the Variation Summons referred to in paragraph 25 below[2], which summons was the underlying application that led to the Cost Order Absolute referred to in paragraph 35(a) below, and which order in turn gave rise to the Appeal. Such evidential lacuna was a permeating concern for Ms Chark’s Appeal Submissions and Costs Submissions as evident from the discussions below. But this court could hardly give consideration to the aforesaid factual assertions not verified by affirmation but slipped in by way of written submissions when:

There was little point in saying the other side must have known about such matters when Ds had no idea prior to Ms Chark’s Appeal Submissions and/or Costs Submissions that Ps would deploy and rely on such factual assertions and I reiterate (e) above. In any event, the aforesaid factual assertions were matters within Ps’ and not Ds’ knowledge. Nevertheless, the objective fact remained that Ps’ pleaded claim for damages of $4,515,238.00 was eventually settled for $1,400,000.00.

9.  On 23 July 2018, Ps filed the Notice of Commencement of Taxation (“NOCT”) and the Bill of Costs (“Bill”) to tax their costs under the Cost Order. Ps claimed a total sum of $3,480,122.87 in the Bill with breakdown as follows:

In short, the PC as claimed in the Bill was $2,887,199.34 + $15,184.33 + $278,100.00 (see footnote 5 above) = $3,180,483.67 (ie $1,780,483.67 in excess of the Settlement Sum). Mr Sakhrani submitted the claimed PC might be regarded as scandalous/extravagant, but Ms Chark argued it was genuine/justified albeit substantially taxed down by the taxing master (see paragraphs 26(b) and 28 below). For the purpose of the Appeal and the Discontinuation Summons, a key issue was whether Ps were entitled to the claimed Part C Costs being $15,184.33 (PC) + $288,860.00 (DIS but subject to footnote 5 above) = $304,044.33.

10.  On 26 September 2018, Ds filed their List of Objections, which proposed to allow Ps’ Bill in the sum of $749,532.15 with breakdown set out in the table in the above paragraph.

11.  On 21-22 August 2019, Master Kot as taxing master taxed the entire Bill on item-by-item basis (“Taxation Hearing”). Ms Chark appeared on behalf of Ps, and Mr Yu, law costs draftsman (“LCD”), appeared on the instructions of ICo on behalf of Ds.

12.  For Part A and Part B of the Bill, the taxed/allowed amounts on item-by-item basis were Ps’ finalised cost entitlement under the Cost Order, but, as was usual, the taxed/allowed amounts could not be immediately ascertained at the Taxation Hearing. Instead, Ds (paying parties) and Ps (receiving parties) were to compute, agree and clarify the taxed/allowed amounts after such hearing, so the taxation process was yet to complete.

13.  I should mention 2 matters before I turn to Part C of the Bill. First, the Cost Order did not decide the incidence/entitlement of costs of the taxation, which cost issue was for Master Kot as taxing master to deal with in the course of the taxation. Secondly, Order 62 rule 32A of the RHC provides as follows:

“(1)  A party entitled to payment of any costs to be taxed is also entitled to his costs of the taxation except where –

(a)  any Ordinance, any of these rules or any relevant practice direction provides otherwise; or

(b)  the Court makes some other order in relation to all or part of the costs of the taxation.

(2)  In deciding whether to make some other order, the Court shall have regard to the underlying objectives set out in Order 1A, rule 1 and all the circumstances, including –

(a)  the conduct of all the parties in relation to the taxation;

(b)  the amount, if any, by which the bill of costs has been reduced; and

(c)  whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.”

Such provision raises a rebuttable presumption that the receiving party is entitled to his costs of the taxation (“Presumption”) unless some provision to the contrary is in existence, or the court makes a different order in relation to all/part of his costs.[6]

14.  Turning to Part C of the Bill, pending computing/agreeing the itemised amounts as taxed/allowed for the Part A and Part B Costs, Ds at the Taxation Hearing would not have known whether in due course they would need to make application to rebut the Presumption for the reason that, say, the taxed/allowed outcome of the Bill (then yet to be computed/agreed) failed to better any Calderbank offer by Ds.[7] So at the Taxation Hearing, (a) Master Kot as taxing master proceeded on the premise of the Presumption to provisionally tax the Part C Costs on item-by-item basis by allowing, reducing or disallowing all items of the PC/DIS in Part C of the Bill,[8] but (b) she did not hear (and the Presumption made it unnecessary for her to hear) submissions on the incidence/entitlement of costs of the taxation, ie whether Ps (receiving parties) or Ds (paying parties) were entitled to all/part of those costs. The consequential issues (if any) would come only after the Taxation Hearing.

15.  In Chan Cherk Wang v Tony Kan & Co (a firm),[9] DHCJ Au-Yeung (as she then was) explained such taxation process as follow:

“42.  Anyone familiar with taxation will know that after the taxation hearing, the exact amount which a paying party has to bear is yet to be computed.  In an appropriate case, an experienced solicitor or law costs draftsman will ask the taxing master for an order nisi that the costs be taxed and allowed as he/she has ruled.  After calculation of the quantum of costs, the parties may then come back to argue consequential issues (like sanctioned offers).” (my emphasis)

16.  To facilitate the parties and the court to deal with the “consequential issues (like sanctioned offers)” referred to in Chan Cherk Wang above, paragraph 38 of Practice Direction 14.3 (“PD14.3”) provides as follows:

“38.  At the end of taxation, unless the taxing Master otherwise directs, the following directions shall automatically apply:

(1)  The parties shall within 7 days endeavor to agree the amount allowed on taxation.

(2)  Failing agreement, the parties shall be at liberty to apply in writing to the Court for clarification and such application shall be dealt with by the taxing Master without a hearing unless otherwise directed.

(3)  If agreement is reached or the taxing Master’s clarification is obtained, the amount agreed or ascertained is deemed to be accurate and correct. Based on such amount the taxing fees for which the paying party shall reimburse the receiving party shall be calculated and the receiving party shall prepare and submit the allocator to the Court for approval and issue.

(4)  A summary of the allowed amount (see pages 12-13 of Appendix B) shall be submitted to the Court in duplicate together with the allocator.”

Appendix B to PD14.3 is the specimen format for a taxation bill of costs. Page 12 of Appendix B is a summary of the PC/DIS as claimed and as taxed/allowed under part A (PC), part B (DIS being CF and ODIS) and part C (costs of taxation) with grand total amounts (“After Taxation Summary”). Page 13 of Appendix B sets out as follows (“After Taxation Information”):

“(To be filled in only after the Taxation when the summary is submitted with the draft allocatur.)
Has a sanctioned offer or sanctioned payment* under Order 62A ever been made?		Yes	No
By whom?	Plf	Dft
Has it ever been beaten?	Yes	No
Does any of the following sanctions apply to this taxation?
● disallowance of interest on costs	Yes	No
● interest on costs above judgment rate?	Yes	No
● cost on indemnity basis?	Yes	No
* Delete as appropriate”

The After Taxation Summary/Information should be found at the end of the Bill if it followed the specimen format (but such Bill was not disclosed to this court for the purpose of the Appeal and/or the Discontinuation Summons, which matter I will return to below). Nevertheless, the After Taxation Summary/Information at the end of the Bill would not have been completed at the time of the Taxation Hearing when the amounts for the Part A and Part B Costs as taxed/allowed and the Part C Costs as provisionally taxed/allowed by Master Kot were still pending computation and agreement.

17.  Computation/agreement of the taxed/allowed and/or provisionally taxed/allowed amounts of the PC/DIS in a taxation bill after a taxation hearing usually reveals whether there are or are not any “consequential issues” as referred to in Chan Yerk Wang:

18.  The taxation process will only come to an end upon the taxing master’s final certification by issuing/sealing an allocatur as to the taxed/allowed amounts for part A and part B of the taxation bill (and, where applicable, those in part C of the Bill or part thereof) as well as the taxing fee.

19.  So in relation to the Bill at the Taxation Hearing, after taxing/allowing on item-by-item basis the amounts for the Part A and Part B Costs under the Cost Order, and provisionally taxing/allowing on item-by-item basis the amounts for the Part C Costs under the Presumption, there was the following exchange between the bar and the bench (“Exchange”):[10]

“Mr YU: But before we leave, Master, I would like to ask for a costs order nisi in respect of the cost of taxation.

COURT: Why should I make a costs order nisi?

MR YU: Now, because …

COURT: I’ve heard parties on all the items already.

MR YU: But because we have an offer to the other side …

COURT: I see.

MR YU: At this moment, nobody knows whether the order[11] [sic] can be beaten or not.

COURT: I see.

MR YU: We need some time make calculation. Then if we are able to beat the offer again, we will ask the court to decide on the costs of taxation and then ask the cost for our part. Costs nisi …

COURT: I see.

MS CHARK:  I have no objection in this regard. It’s proper, Master, thank you.

MR YU: Only regarding the costs of taxation, not the whole bill.

COURT: Yes, okay. So costs of taxation should be a costs order nisi and I give the usual directions. Thank you for your assistance.”

20.  It appeared from the Exchange, as was usual and commonplace at the end of inter partes taxation hearings (see Chan Cherk Wang in paragraph 15 above), that the term “costs order nisi” was adopted by Mr Yu and Master Kot (to which Ms Chark had no objection) to refer to the itemised taxed/allowed amounts of the Part C Costs premised on the Presumption to reflect that such taxed/allowed amounts were provisional and not yet finalised.

21.  As explained in paragraphs 11-18 above, the taxation process did not come to an end at the Taxation Hearing, and Ps (receiving parties) and Ds (paying parties) proceeded to compute and agree the amounts as taxed/allowed on item-by-item basis for Part A and Part B of the Bill so that Ds could sensibly consider whether there would be “consequential issues”, eg whether Ds would apply to rebut the Presumption in the manner explained in paragraph 17(b) above. The “usual directions” referred to by Master Kot in the Exchange were those in paragraph 38 of PD14.3 (see paragraph 16 above). Pending computing the amounts as taxed/allowed by Master Kot for the Part A and Part B Costs and (on provisional/presumed basis) for the Part C Costs, and pending lodging with court the finalised After Taxation Summary (which form should be at the end of the Bill[12] and which should summarise the PC/DIS as claimed and as allowed) and the finalised After Taxation Information[13] (which should disclose any Calderbank offer, whether it had ever been beaten, and whether “sanction” issues would arise), Master Kot as taxing master would not have known whether there would be “consequential issues”, so she could not yet give final certification of the taxation.

22.  Shortly after the Taxation Hearing, Ms Chark and Mr Yu computed the amounts taxed/allowed by Master Kot for the PC/DIS in Part A and Part B of the Bill and provisionally taxed/allowed by her for the PC/DIS in Part C of the Bill, and they eventually agreed on the amounts as allowed:

23.  As seen in paragraphs 26(b) and 28 below, Master Kot taxed off or disallowed $3,480,122.87 - $1,284,275.70 = $2,195,847.17 being about 63% of the PC/DIS claimed in the Bill, and (a) only taxed/allowed $1,284,275.70 being about 37% of the PC/DIS claimed in the Bill to be paid by Ds (paying parties) to Ps (receiving parties), which taxed/allowed amounts included (b) the provisionally taxed/allowed amount of $140,027.60 for the Part C Costs (ie a reduction of $304,044.33 - $140,027.60 = $164,016.73 or about 54% of the PC/DIS as claimed in Part C of the Bill) based on the Presumption (“Cost Order Nisi”) (collectively, “Kot 1^st Order”).

24.  For the computed/agreed amounts as taxed/allowed for the Part A and Part B Costs, they were the final taxed outcome since no application was made to Master Kot as taxing master to review her taxation decisions in relation thereto under Order 62 rule 33-35 of the RHC (see paragraphs 76-78 below). As for the Part C Costs, the Cost Order Nisi was referred to as a “costs order nisi” (see paragraphs 19-20 above) to show the taxed/allowed itemised amounts of costs of the taxation were subject to Ds possibly coming back to argue “consequential issues”, eg the effect of any Calderbank offer on the Presumption. This was what happened here.

25.  On 4 September 2019, Ds filed/served a summons said to be pursuant to Order 62 rule 32A, Order 52 rule 5 and Order 42 rule 5B of the RHC for variation of the Kot 1^st Order (“Variation Summons”), which essentially asked for the Costs Order Nisi to be varied as follows:

26.  Ps’ Variation Summons was premised on 2 bases:

27.  On 6 September 2019, BCCo lodged with court a draft allocatur (“Draft Allocatur”) accompanied by completed After Taxation Summary and After Taxation Information.

28.  The completed After Taxation Summary showed the amounts as claimed in the Bill and the amounts as taxed down by Master Kot at the Taxation Hearing for Part A Costs (the PC reduced by $2,887,199.34 - $904,138.00 = $1,983,061.37 or about 69%), Part B Costs (the CF reduced by $240,000.00 - $210,000.00 = $30,000,00 (about 12.5%) and the ODIS reduced by $48,879.20 - $30,110.10 = $18,769.10 (about 38%) or overall reduction of about 17% being ($30,000.00 + $18,769.10) ÷ ($240,000.00 + $48,879.20) and Part C Costs (reduced by $304,044.33 - $140,027.60 = $164,016.73 or about 54%) (see paragraph 26(b) above). Thus, out of the total claimed PC, DIS and costs of the taxation of $3,480,122.87, Master Kot allowed $1,284,275.70 (reduced by $2,195,847.17 or about 63%) exclusive of taxing fee and interest (see paragraph 23 above). On such premise, the Draft Allocatur proposed to certify that the Bill had been taxed on party-and-party basis before Master Kot at the Taxation Hearing pursuant to the Cost Order and allowed in the sum of $1,284,275.70 (PC, DIS and costs of the taxation) + $27,343.00 being taxing fee.

29.  The completed After Taxation Summary stated inter alia that:

30.  On 11 September 2019, Master Kot raised requisitions with BCCo over the Draft Allocatur for evidence to show Ds as paying parties had agreed to the calculations and the amounts allowed on taxation shown in the Draft Allocatur pursuant to paragraph 38(1) of PD14.3.

31.  On 12 September 2019, BCCo replied to disclose Mr Yu’s email dated 4 September 2019 enclosing (a) Mr Yu’s signed schedule of calculations (see paragraph 22(g) above) and (b) Ms Chark’s reply by email on the same day that attached the Agreed Schedule of Calculations (see paragraph 22(h) above).

32.  On the same day, ICo wrote to BCCo referring to BCCo’s letter in the above paragraph and noting BCCo had submitted the Draft Allocatur for approval and sealing. ICo then went on to say as follows in such letter:

“…… As the costs order nisi made by Master A Kot dated 21 August 2019 [ie the Cost Order Nisi] had not been made absolute pending the decision on [Ds’] application for variation of the Order Nisi by way of Summons filed on 4 September 2019, you shall not apply for sealing of the Allocatur.

Please therefore withhold sealing the allocatur pending the result of the Ds’ said application for variation of Master A Kot’s cost order nisi dated 21 August 2019.”     

To date, the Allocatur had not been sealed and/or filed.

33.  On 17 September 2019, BCCo wrote to inform Master Kot that Ps would consent to the alternative relief in the Variation Summons, ie Ps’ costs of the taxation as from 28 June 2019 shall be disallowed and Ds’ costs of taxation as from 28 June 2019 shall be paid by Ps to be summarily assessed, subject to dispute over the quantum of such costs (see paragraph 25(b) above). But the main relief in the Variation Summons (see paragraph 25(a) above) remained in dispute.

34.  On 2 October and 14 November 2019, Ds filed the affirmations of their solicitor Lam Sze Kei Karen to support the Variation Summons (“Lam 1^st and 2^nd Affs”). On 10 October 2019, Ps filed the 2^nd affirmation of their solicitor Ms Chark to oppose the Variation Summons (“Chark 2^nd Aff”).

35.  The substantive hearing for the Variation Summons was scheduled to be heard by Master Kot on 11 February 2020. Such hearing was generally adjourned due to public health considerations, and it was re-fixed and heard by Master Kot on 17 June 2020 (“Variation Hearing”). On 26 June 2020, Master Kot delivered her oral reasons for decision (“Kot Reasons”) and granted the following order (“Kot 2^nd Order”):

36.  The Cost Order Absolute meant the amounts of the Part C Costs as provisionally taxed/allowed by Master Kot on item-by-item basis at the Taxation Hearing ($140,027.60) premised on the Presumption were disallowed altogether. This was borne out in the Notice of Appeal referred to in the paragraph below which stated that by the Cost Order Absolute “[Ps’] costs of taxation of HK$140,027.60 assessed at the end of the 2-day taxation hearing on 21 August 2020 be disallowed”.

37.  On 10 July 2020, Ps filed her Notice of Appeal against the Cost Order Absolute (“Notice of Appeal”) pursuant to Order 58 rule 1 of the RHC for the following reliefs (“Appeal”):

38.  As alluded to in paragraph 4 above, on 14 July 2020 the DLA filed Notice of Discharge to advise that the legal aid certificate issued to the Widow had been discharged on 10 July 2020, ie the very day Ps lodged the Notice of Appeal.[16] No fresh legal aid certificate was issued thereafter, so Ps were not aided persons for the purpose of the Appeal.[17]

39.  At the Appeal Hearing referred to in paragraph 42 below, Ms Chark suggested otherwise based on an alleged oral conversation with someone at the Legal Aid Department (“LAD”). Further, Ms Chark in her Costs Submissions alluded to disclosure to Ds on 12 January 2021 of a letter to the DLA dated 22 July 2020 recapping Ps’ decision to withdraw their application for appeal against the DLA’s decision to discharge the legal aid certificate after Ps had been advised that the DLA would only release the balance of the Settlement Sum after the issue of Ds’ claim for costs was disposed of. But Ps did not file affirmation evidence for the Discontinuation Summons, and the above factual matters in Ms Chark’s oral/written submissions were not verified by affirmation evidence. I am unable to give consideration to these matters (see paragraph 8 above).

40.  Strangely, BCCo (who were no longer assigned solicitors but claimed to continue to act for Ps for the Appeal) did not file Notice to Act in the present action for half a year after discharge of Ps’ legal aid certificate. It was only upon enquiry by this court through my clerk that on 7 January 2021 BCCo filed Notice to Act on behalf of Ps.

41.  Mr Sakhrani in his Appeal Submissions claimed Master Kot erred in not allowing Ds 100% of their costs of the Variation Summons when at the Taxation Hearing Master Kot (a) commented on how badly/ improperly the Bill was prepared and the Taxation Hearing was argued by Ps / BCCo, which made the taxation exercise a difficult and costly affair for Ds, but (b) did not criticise Ds at all. But Ds did not seek to review the Kot 2^nd Order as to costs of the Variation Summons in paragraph 35(b) above under Order 62 rules 33-34 of the RHC. Even if (a) such cost order could be properly challenged by the appeal procedure under Order 58 rule 1 of the RHC (which I disagree), and (b) a formal cross-appeal was not required, Ds should have alerted Ps had they wished to seek an order different to that made by Master Kot and different to that sought by Ps as the appellants.[18] There was no suggestion that Ds had done so prior to Mr Sakhrani’s Appeal Submissions that were lodged shortly before the Appeal Hearing, which raised query over the vitality of such complaint. But these concerns fell away as a result of the Discontinuation Summons and dismissal of the Appeal (see paragraph 43 below), and the remaining disputes were confined to costs of the Appeal and the Discontinuation Summons.

42.  The hearing of the Appeal came before this court on 13 January 2021 (“Appeal Hearing”). Ms Chark appeared for Ps, and Mr Sakhrani appeared for Ds. After hearing submissions, this court reserved its decision on the Appeal to be handed down.

43.  On 18 March 2021, Ps filed a summons to seek the following reliefs (“Discontinuation Summons”):

44.  In respect of paragraph 43(b) and (e) above, this court is at a loss to understand how an order could or should be granted for Ds’ costs of the Appeal and the Discontinuation Summons to be paid out of the Settlement Sum that (a) had been paid by Ds to the DLA on behalf of Ps under section 19A of Legal Aid Ordinance Cap 91 (“LAO”) and (b) was subject to the DLA’s first charge under section 18A of the LAO, especially when there was no evidence that the DLA (i) had given consent to such course of action, and/or (ii) had been invited to address on such relief given the DLA’s interest in the Settlement Sum by way of his first charge.

45.  In any event, on inter partes costs, it was for the court to determine the incidence/entitlement to costs between the parties (which Ps by the Discontinuation Summons conceded to be in Ds’ favour), the basis of taxation/assessment (eg whether on party-and-party or indemnity basis), and the quantum of costs (ie the amount of costs as taxed or assessed). How Ds would recover taxed/assessed costs in their favour was a matter for them by way of enforcement of the relevant cost order. Likewise, it was for Ps (who were no longer aided persons for the Appeal and the Discontinuation Summons) to consider how to satisfy such taxed/ assessed costs for which they were liable to pay. It was not for this court in making an inter partes cost order to dictate that such costs should be satisfied from which of Ps’ funds.

46.  Ms Chark submitted that “[in] order to speed up the release of the [balance of the Settlement Sum] to Ps which is the objective of the Discontinuation Summons, the Discontinuation Summons expressly provides that Ds’ costs be paid out of the Settlement Sum so that Ps need not first fork out any cash to settle Ds’ costs before receiving the Balance from the LAD”. In my view, such submissions reflected a misunderstanding of the provisions of the LAO (as explained in the paragraph below) that juxtaposed an inter partes cost order as between Ps and Ds, and the statutory arrangements between Ps and the DLA over Ps’ monies (ie the Settlement Sum) that were subject to the DLA’s first charge.

47.  Section 19(1) of the LAO provides that a court may make an order against an aided person in the same manner and to the same extent as it may make an order for costs against any other person (ie inter partes cost order), but such an order may only be enforced against the aided person and the DLA as permitted by section 16C. Section 16C(1) of the LAO sets out the manner/extent of liability of an aided person and the DLA for costs “subject to section 18A” (ie subject to the DLA’s first charge). I cannot see how the Settlement Sum being paid to the DLA under section 19A of the LAO and subject of the DLA’s first charge under section 18A of the LAO could be utilised to pay costs to Ds on Ps’ application without, at the very least, either the consent of the DLA or the DLA having opportunity to address on such relief, and it would be wrong for this court in making any inter partes cost order to override the statutory effect of the DLA’s first charge, which, it was thought, BCCo as former assigned solicitors had to bear in mind in their own obligations to the DLA. I disagree this court should give any direction for payment of Ds’ costs out of the Settlement Sum.

48.  The Discontinuation Summons was returnable before this court on 31 March 2021 (“Discontinuation Hearing”). After hearing from Ms Chark and Mr Sakhrani, I granted inter alia the following order (“Dismissal Order”):

49.  Despite enquiry by this court, neither Ps nor Ds filed affirmation evidence to support or oppose the Discontinuation Summons on the issue of costs. On 7 April 2021, Mr Sakhrani lodged his written submissions. On 26 April 2021, BCCo lodged their written submissions.

50.  Mr Sakhrani asked for Ds’ costs of and incidental to the Appeal and the Discontinuation Summons on indemnity basis on the grounds that the Appeal was flawed and that it had been dismissed, so there was no reason for Ds’ costs to be paid on party-and-party basis otherwise Ds would suffer loss even when the Appeal was put to an end by the court on Ps’ own application. Ds also asked for a wasted costs order against BCCo such that BCCo rather than Ps should bear Ds’ costs of the Appeal and the Discontinuation Summons. Mr Sakhrani further submitted that taxation rather than summary assessment of Ds’ costs would be appropriate “as a lot of work has gone into preparing for and attending the Appeal and [the Discontinuation Summons] and dealing with multiple issues unnecessarily raised by [Ps], including their long and winding written submissions for the Appeal[19] and various letters to the Court”.

51.  On the other hand, Ms Chark submitted Ds were not entitled to indemnity costs on the grounds that the Appeal was not outside the realm of usual hostile litigation[20] or its commencement/prosecution was not unreasonable and not in a manner as to affront the court,[21] and that the Discontinuation Summons was made to obtain earlier receipt of the balance of the Settlement Sum (but, again, there was no affirmation evidence before this court as to why Ps chose to discontinue the Appeal, and the suggestion that it was made to obtain earlier receipt of the balance of the Settlement Sum was an assertion made by way of submissions - see paragraph 8 above, which discussions were applicable mutatis mutandis). Ms Chark also submitted there was no affirmation evidence to show Ds had incurred “substantial costs” to justify taxation rather than summary assessment of costs, especially as the only new documents for the Appeal would be the transcripts of the Taxation Hearing and the Variation Hearing, Ps’ 2 without prejudice offers to Ds, and inter-solicitors’ correspondence on the preparation of the hearing bundles. Ms Chark further reminded it had been held that there was no justification for taxation as opposed to summary assessment of costs merely on questions of quantum of costs.[22] Not unexpectedly, Ms Chark opposed any wasted costs order against BCCo.

52.  In summary, there was no dispute Ds were entitled to their costs of and occasioned by the Appeal and the Discontinuation Summons, but the parties disagreed over:

II.  COST ORDER NISI, VARIATION SUMMONS AND COST ORDER ABSOLUTE

53.  On the issue of costs of the Appeal and the Discontinuation Summons, it would be useful to start with a proper understanding of the nature/ambit of the Costs Order Nisi, the Variation Summons, and the Costs Order Absolute that underlied the Appeal and the Discontinuation Summons.

54.  I repeat paragraphs 11-22 above in which I have explained the nature of item-by-item taxation of the Bill at the Taxation Hearing, and how the Costs Order Nisi came about. Although Master Kot referred to “costs order nisi” in the Exchange (see paragraphs 19-20 above), and the Kot 2^nd Order described the Costs Order Nisi as such (see paragraph 35 above), Master Kot did not hear submissions on and/or did not decide the incidence/entitlement of costs of the taxation at the Taxation Hearing. Rather, it was on the premise of the Presumption that Master Kot as taxing master allowed, reduced and/or disallowed the Part C Costs on item-by-item basis resulting in the provisionally allowed amount of $140,027.60. Thereafter, upon computing and agreeing the itemised amounts of the Bill as allowed by Master Kot at the Taxation Hearing, the final taxed outcome for each of the Part A and Part B Costs and the overall final taxed outcome for the Bill (including the provisional taxed outcome of the Part C Costs) failed to beat Ds’ Final Offer (see paragraph 26(b) above), and Ds filed the Variation Summons to seek the reliefs in paragraph 25 above.

55.  Plainly, Ds’ Variation Summons was made under Order 62 rules 5 and 32A of the RHC to (a) rebut the Presumption, and (b) ask for costs of the taxation in Ds’ favour by reason of the factors in Order 62 rule 32A(2) of the RHC (see paragraph 13 above) and in Order 62 rule 5(1)-(2) of the RHC, which provides as follows:

“(1)    The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account –

(aa)    the underlying objectives set out in Order 1A, rule 1;

……

(d)  any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e)  the conduct of all the parties;

(f)  whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g)  any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2)  For the purpose of paragraph (1)(e), the conduct of the parties includes –

(a)  whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b)  the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c)  whether a claimant who has succeeded in his claim in whole or in part, exaggerated his claim; and

(d)  conduct before, as well as during, the proceedings.”

56.  Given the nature of the Costs Order Nisi as explained above and the provisions in Order 42 rule 5B of the RHC (see paragraph below), I am not persuaded the Costs Order Nisi was a costs order nisi made under Order 42 rule 5B of the RHC that would be subject to possible subsequent application under Order 42 rule 5B(6) of the RHC for variation into a costs order absolute.[23]

57.  Order 42 rule 5B of the RHC provides that where (a) the judgment/order or (b) the judgment/order and the reasons therefor is/are not pronounced on the day of the hearing, “the Court may state that the judgment or order or the judgment or order and the reasons therefor, as the case may be, will be recorded in writing” (my emphasis). Order 42 rule 5B(3)-(4) of the RHC goes on to provide inter alia that:

“(3)   Where a date has been fixed for delivery of a written decision or of written reasons notice shall be given to the parties ……

(4)  Where it has been announced that a judgment or order and reasons therefor or the reasons for a judgment or order previously pronounced will be recorded in writing, the Court may on the date fixed, instead of reading in full the judgment or order and reasons therefor or the reasons, as the case may be, supply copies thereof ……

(5)  Where the judgment or order and reasons therefor or the reasons are given at a later date and, being recorded in writing, are not read in full, the Court shall – ……” (my emphasis)

Order 42 rule 5B(6) of the RHC then provides that “[where] a written decision is given pursuant to this rule the Court may make therein an order nisi as to costs and, unless an application has been made to vary that order, that order shall become absolute 14 days after the decision is pronounced” (my emphasis).

58.  It appears from the above that a cost order nisi under Order 42 rule 5B of the RHC is to be made where written decision or written reasons for decision are to be handed down (whether by reading such written decision in full or by supplying copy thereof to the parties) at a later date. But at the Taxation Hearing, Master Kot proceeded to provisionally tax the Part C Costs on the premise of the Presumption, and orally determined/allowed the amounts of such costs on item-by-item basis without reserving her decision or her reasons for decision to be handed down at a later date. In my view, the Cost Order Nisi orally made at the Taxation Hearing was not a costs order nisi under Order 42 rule 5B of the RHC, but was cast as such merely to reflect the provisional nature of the item-by-item taxation/allowance of the Part C Costs pending application to rebut the Presumption (if any).

59.  At the time when the Cost Order Nisi was granted at the Taxation Hearing, the taxation process was still afoot pending compliance with the “usual directions” in paragraph 38 of PD14.3 (including lodging with the court the After Taxation Summary, the After Taxation Information (which would disclose any open/Calderbank offer) and the Draft Allocutur). Quite unlike a cost order nisi under Order 42 rule 5B of the RHC, the Cost Order Nisi was not even drawn up, sealed and/or filed. After all, Ps (receiving parties) and Ds (paying parties) knew Ps’ entitlement to the provisionally taxed/allowed costs of the taxation might be put asunder if Ds successfully applied to rebut the Presumption (see paragraphs 16-17 and 54-55 above). Thus, if there were no “consequential issues”, the court order that mattered would be the Allocatur, but if there were “consequential issues” that might upset the Cost Order Nisi, the court orders that mattered would be the Cost Order Absolute and/or the Allocatur.

60.  Likewise, for the above reasons, the Variation Summons was not an application under Order 42 rule 5B(6) of the RHC to vary a costs order nisi made under Order 42 rule 5B of the RHC. Rather, Master Kot was called upon to determine afresh the incidence/entitlement of costs of the taxation upon Ds’ application to rebut the Presumption, and the reliefs Ds sought would have the effect of inter alia disallowing all or part of the Part C Costs as provisionally taxed/allowed by Master Kot at the Taxation Hearing. Indeed, this was how the taxing master understood the nature of the Variation Summons for she said at the beginning of the Kot Reasons as follows:

“This is an application by the defendant paying party by way of [the Variation Summons] dated 4 September 2019 for variation of the [Cost Order Nisi] made on 21 August 2019, which granted to [Ps] costs of taxation and assessed at $140,027.60. Instead, [Ds are] asking for [Ps] costs of taxation to be disallowed and costs of taxation be to [Ds], or alternatively costs of taxation as from 28 June 2019 be to [Ds].”

61.  In my view, the Cost Order Absolute was described as a cost order absolute essentially to distinguish it from the Cost Order Nisi, which had the effect of (a) disallowing altogether all amounts of the Part C Costs as provisionally taxed/allowed on item-by-item basis at the Taxation Hearing, and (b) requiring the taxing master to determine the quantum of Ds’ costs of the taxation. Importantly, as a result of the Variation Summons and the Cost Order Absolute, the Cost Order Nisi was extinguished and superseded by the Cost Order Absolute upon rebuttal of the Presumption, so there was only 1 effective cost order for costs of the taxation by the time Ps filed their Notice of Appeal on 10 July 2020.

III.  NATURE/AMBIT OF THE NOTICE OF APPEAL

62.  In this Part III, I shall assume that the appeal procedure under Order 58 rule 1 of the RHC adopted by the Notice of Appeal was correct/proper (“Assumed Procedure”) (which I disagree and which subject I will return to in Part IV below) such that the court would deal with the Appeal on the principles discussed in paragraphs 73-75 below.

63.  I note at the outset that a judge dealing with an appeal under Order 58 rule 1 of the RHC would not have the powers given to a judge under Order 62 rule 35 of the RHC on further review of taxation from a taxation decision of a taxing master on review under Order 62 rules 33-34 of the RHC (see paragraphs 76-81 below). Under Order 62 rule 35(6) of the RHC, on an application for further review of taxation, the judge “may make such order as the circumstances require, and in particular may order the taxing master’s certificate to be amended, or except where the dispute as to items under review is as to amount only, order the item to be remitted to the same or another taxing master for taxation” (see paragraph 78 above). This was important because (a) a judge has no primary jurisdiction to tax costs, which jurisdiction is reserved to the taxing masters (see Order 62 rule 12 of the RHC), and (b) once the judge on further review of taxation resolves disputed matters of principle, he/she can make order as appropriate in relation to the subject taxation decision or, where necessary and/or appropriate, remit the matter to the taxing master for taxation on the basis as resolved by the him/her (see Chan Yerk Wang in paragraphs 96-99 below[24]). A judge dealing with an appeal under Order 58 rule 1 of the RHC has no such powers, and is left to consider whether or not the master’s exercise of discretion on costs could be supported on the principles discussed in paragraphs 74-75 below, and to decide whether or not (i) the master’s decision on costs should be upheld or set aside, and (ii) the order prayed for by the appellant should be granted.

64.  Turning to the Notice of Appeal, with (a) the Costs Order Nisi extinguished and superseded by the Costs Order Absolute (see paragraph 61 above), and (b) the Notice of Appeal asking to set aside the Costs Order Absolute (see paragraph 37 above), it appeared Ps were asking this court to grant the following cost order in relation to costs of the taxation if they were successful on the Appeal: (i) Ps’ costs of taxation from 28 June 2019 in the sum of $26,150 be disallowed, and (ii) Ds’ costs of taxation from 28 June 2019 in the sum of $28,800 be paid by Ps. In my view, 2 concerns arose from such reliefs that Ds sought in the Notice of Appeal, especially when no application was made at the Appeal Hearing to amend the Notice of Appeal.

65.  First, Ps’ Notice of Appeal did not ask for any express or “positive” cost order to be made in Ps’ favour if they were successful in setting aside the Kot 2^nd Order under the Appeal, ie an order (a) for Ds to pay Ps’ costs of the taxation up to 27 June 2019, and (b) for the amount of such costs to be determined, taxed and/or allowed (see the Assumed Relief in paragraph 68 below).

66.  Order 62 rule 3(1) of the RHC provides that “…… no party shall be entitled to recover any costs of or incidental to any proceedings from any other party to the proceedings except under an order of the court”. In the absence of any request for an express or “positive” cost order requiring Ds to pay Ps’ costs of taxation up to 27 June 2019, even if the Kot 2^nd Order were set aside on the Appeal and this court granted the reliefs in paragraphs 37(a)-(d) and 64(i)-(ii) above, Ps would not have been entitled to their costs of the taxation up to 27 June 2019. In such circumstances, the practical effect of the reliefs sought in paragraphs 37(a)-(d) and 64(i)-(ii) above upon setting aside the Kot 2^nd Order (including the Cost Order Absolute) would be the same as the Cost Order Absolute insofar Ps’ costs of the taxation were concerned, ie Ps had no express or “positive” cost order entitling them to their costs of the taxation up to 27 June 2019, and Ps’ costs of taxation from 28 June 2019 onwards would be disallowed. The only difference would be in relation to Ds’ costs of the taxation because if the Appeal was allowed, Ps would not have to pay Ds’ costs of the taxation up to 27 June 2019.

67.  Ms Chark in her Appeal Submissions indicated it was Ps’ intention to seek the Assumed Relief, ie their costs of the taxation up to 27 June 2019, but Ms Chark did not apply to amend the Notice of Appeal, and instead she submitted that if the Appeal were allowed and the Kot 2^nd Order / Cost Order Absolute be set aside, the Cost Order Nisi that granted costs of the taxation in Ps’ favour under the Presumption (but only up to 27 June 2019) would be revived. But the reliefs sought in the Notice of Appeal (see paragraphs 37(a)-(d) and 64(i)-(ii) above) do not mirror the Cost Order Nisi, and Ms Chark had not explained how a partial revival of the Cost Order Nisi could be achieved. In my view, any dissatisfaction with the Cost Order Absolute, if supported and justified, would have to be given effect to by a fresh order on costs to be made in the Appeal and not by reverting to the Cost Order Nisi that had been superseded.

68.  Secondly, on the assumptions that the Assumed Procedure was proper/correct and that by the Notice of Appeal Ps actually sought an express or “positive” cost order for Ps’ costs of taxation up to 27 June 2019 in the sum of $113,877.60 (ie $140,027.60 being Ps’ Part C Costs as allowed by Master Kot under the Cost Order Nisi less $26,150.00 being the amount of Ps’ costs of the taxation as from 28 June 2019 as claimed in the Notice of Appeal) (“Assumed Relief”), there was still difficulty with the Assumed Relief when Ps only placed the Agreed Schedule of Calculations but not the Bill nor Ds’ List of Objections before this court for the Appeal. When this court raised query at the Appeal Hearing, Ms Chark insisted the latter documents were unnecessary since Ps would not challenge Master Kot’s taxation decisions in taxing/allowing $140,027.60 for the Part C Costs. Indeed, Ms Chark in her Costs Submissions reiterated that “[the] Appeal was to set aside the [Kot 2^nd Order] solely on the costs of taxation [ie Costs Order Absolute] without asking this Court to review the Taxing Master’s decision on her assessment of the [PC] incurred in the main proceedings”.

69.  But I cannot see how such submissions would aid Ps’ application for the Assumed Relief on the Appeal when Master Kot as taxing master (a) provisionally allowed $140,027.60 under the Cost Order Nisi by taxing all items of the Part C Costs on item-by-item basis, and (b) disallowed all items of Ps’ costs of the taxation so provisionally taxed/ allowed under the Cost Order Absolute. Both Ms Chark and Mr Sakhrani confirmed at the Appeal Hearing that in Master Kot’s provisional item-by-item taxation of the Part C Costs at the Taxation Hearing, she did not separately allow amounts for such costs for the period up to 27 June 2019 and for the period on/after 28 June 2019. In short, Master Kot did not tax/allow Ps’ Part C Costs (provisionally or otherwise) for the period on/after 28 June 2019 at $26,150. By not placing the Bill (and/or Ds’ List of Objections) before this court, it was unknown whether there were any identifiable items of the PC/DIS pertaining to the periods on/before and after 27 June 2019. It was also not known how Ps’ costs of the taxation from 28 June 2019 onwards were $26,150 as Ps would have me accept, and the court could not have granted the Assumed Relief on the Appeal (even on the basis of the assumptions in paragraph 68 above which I disagree) premised as it were on Ps’ unexplained assertion in the Notice of Appeal that $26,150 would be their costs of the taxation from 28 June 2019 onwards.

70.  In the circumstances, quite apart from Ds’ primary objection that Ps adopted the wrong procedure for the Appeal (see Part IV below), I see difficulty for Ps to contend that the Appeal could be pursued to a favourable outcome, which would be relevant in considering the question of the basis for taxation/assessment of costs of the Appeal and the Discontinuation Summons, which costs Ps conceded were payable to Ds.

IV.  PROCEDURE ADOPTED FOR THE APPEAL

71.  As alluded to in paragraph 62 above, Ps chose to appeal against the Cost Order Absolute by the Notice of Appeal pursuant to Order 58 of the RHC. But Ds suggested the Assumed Procedure was wrong and impermissible, and further suggested Ps should have proceeded under the review regime pursuant to Order 62 rules 33-35 of the RHC.

72.  A key question at the Appeal Hearing was whether Ps must proceed under Order 62 rule 33(1)(a) of the RHC for review of the Cost Order Absolute before Master Kot first before pursuing further review of taxation (but not appeal) before a judge in chambers under order 62 rule 35 of the RHC, or whether Ps were at liberty to appeal directly to a judge in chambers against the Kot 2^nd Order (including the Cost Order Absolute) under Order 58 rule 1 of the RHC.

(a) Appeal regime under Order 58 of the RHC

73.  Order 58 rule 1(1) of the RHC provides as follows:

“…… an appeal shall lie to a judge in chambers from any judgment, order or decision of a master, irrespective of whether the judgment, order or decision was given or made on the basis of written submissions only or after hearing.”

74.  An appeal from the master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time. The judge will give the weight it deserves to the previous decision of the master; but he is in no way bound by it.[25] But in respect of an appeal against a cost order made by a master, Hong Kong Civil Procedure 2021 Vol 1 paragraph 58/1/6 at page 1182 states as follows:

“In general, a judge in chambers will not allow an appeal from a master’s costs order unless it is unreasonable or the master erred in law …… see also Paul Y-ITC Construction Ltd v. Kin Shing Co. Ltd [1999] 1 H.K.C. 511 at 515 per Sakhrani J.: “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.””

75.  In Chen Ningning v King & Wood (a firm), K Yeung J explained the applicable principles for appeal against a master’s cost order as follows:[26]

“59.  In Hoddle v CCF Construction Ltd [1992] 2 All ER 550, Morland J observed at 550h‑551b observed that:

“In my judgment it would be highly undesirable as a matter of general principle that a judge in the position that I am in today should intervene and make different orders as to costs from that made by a master, unless it can be shown by the appellant that the master demonstrably erred in the exercise of his discretion in the order that he made.  If it can be shown that the master took into account matters that he should not have taken into account or failed to take into account matters that he should have taken into account, in those circumstances the judge in chambers would be entitled to vary the order made by the master, but in my judgment it would not be in the interests of justice if judges in chambers entered into detailed examination of all the matters that were before the master in order to decide whether they would have come to the same decision as the master. Generally speaking, in my judgment, judges in chambers should not allow appeals against costs orders by masters, unless it can be shown that the order made was unreasonable or erred in law or, as I have indicated, either failed to take into account proper matters or took into account matters that should not have been taken into account.”

60.  Hoddle was applied in Man Fong Hang v Man Ping Nam and Ors, HCA 7935/1998 (unrep, 26 September 2002) per Deputy Judge A Cheung (as he then was) at §16.

61.  In Gee Fung Yin v Gee Fung Kuen,HCA 1940/2015 (unrep, 28 April 2017), Wilson Chan J observed at §18 that it is not the correct approach on an appeal on costs to re‑run the arguments made before the Master.

62.  In Chan Shun Kei v Hong Kong Construction (Hong Kong) Ltd,CACV 192/2014 (unrep, 7 March 2016), Lam V‑P observed in §22 that:

“It must be stated at the outset that this court should acknowledge that costs is very much a matter of discretion of the judge and we should be circumspect in interfering with the same.  The established approach is that this court will only interfere when it is satisfied that the decision of the judge is either wrong in principle or plainly wrong, see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419. The rationale for this approach was explained by Woo JA (as he then was) in Ho Shu Kwong.  The trial judge is the best person to exercise the discretion on costs because he is most familiar with the conduct of the case at the trial and the impact of the success and failure on each issue canvassed before him. In a way it is like an appeal against findings of fact.  As explained in numerous judgments (see e.g. China Gold Finance Ltd v CIL Holdings Ltd CACV 11 of 2015, 27 November 2015), an appellate court is institutionally disadvantaged from re-assessing a decision of this nature as if it is hearing the matter in the first instance. Thus, this court should examine whether a primary judge committed any palpable error in the exercise of the discretion on costs. In the absence of such an error, the mere fact that the appellate judges might have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the decision of the primary judge.”

63.  While Chan Shun Kei was an appeal against a costs order made by a judge after trial, the circumspection explained by the Court of Appeal is in my view equally applicable to the present appeal where the Master has undertaken the Trial of the Preliminary Issues, which for all practical purposes resembles a trial.”

(b)  Review regime under Order 62 of the RHC

76.  The taxation review regime is governed by Order 62 rules 33-35 of the RHC. Order 62 rule 33 of the RHC provides as follows:

“(1)    Any party to any taxation proceedings who is dissatisfied with the allowance or disallowance in whole or in part of any item by a taxing master, or with the amount allowed by a taxing master in respect of any item –

(a)  may apply to the taxing master to review his decision in respect of that item; and

(b)  may not apply to a judge for an order to review the decision until after its review by the taxing master.

(2)  An application under this rule for review of a taxing master’s decision may be made at any time within 14 days after the conclusion of the taxation in which that decision was made or such shorter period as may be fixed by the taxing master:

Provided that no application under this rule for review of a decision in respect of any item may be made after the signing of the taxing master’s final certificate dealing with that item.

(3A)  If an applicant fails to comply with paragraph (3), the taxing master may dismiss the application.

(3)  Every applicant for review under this rule must at the time of making his application deliver to the taxing master objections in writing specifying by a list the items or parts of items the allowance or disallowance of which or the amount allowed in respect of which, is objected to and stating concisely the nature and grounds of the objection in each case, and must deliver a copy of the objections to each other party (if any) who attended on the taxation of those items or to whom the taxing master directs that a copy of the objections shall be delivered.

(4)  A party to whom a copy of the objections is delivered under this rule may, within 14 days after delivery of the copy to him or such shorter period as may be fixed by the taxing master, deliver to the taxing master answers in writing to the objections stating concisely the grounds on which he will oppose the objections, and shall at the same time deliver a copy of the answers to the party applying for review and to each other party (if any) to whom a copy of the objections has been delivered and to whom a taxing master directs that a copy of the answers shall be delivered.

(5)  An application under this rule for review of the taxing master’s decision in respect of any item shall not prejudice the power of the taxing master under rule 17 to issue an interim certificate in respect of items his decision as to which is not objected to.” (my emphasis)

77.  Order 62 rule 34 of the RHC provides as follows:

“(1)    A review under rule 33 shall be carried out by the taxing master to whom the taxation was originally assigned.

(2)  On reviewing any decision in respect of any item, a taxing master may receive further evidence and may exercise all the powers which he might exercise on an original taxation in respect of that item, including the power to award costs of and incidental to the proceedings before him; and any costs awarded by him to any party may be taxed by him and may be added to or deducted from any other sum payable to or by that party in respect of costs.

(3)  On a hearing of a review under rule 33 a party to whom a copy of objections was delivered under paragraph (4) of that rule shall be entitled to be heard in respect of any item to which the objections relate notwithstanding that he did not deliver written answers to the objections under that paragraph.

(4)  A taxing master who has reviewed a decision in respect of any item shall issue his certificate accordingly and, if requested to do so by any party to the proceedings before him, shall state in his certificate or otherwise in writing by reference to the objections to that decision the reasons for his decision on the review, and any special facts or circumstances relevant to it. A request under this paragraph must be made within 14 days after the review or such shorter period as may be fixed by the taxing master.”

78.  Order 62 rule 35 of the RHC provides as follows:

“(1)    Any party who is dissatisfied with the decision of a taxing master to allow or disallow any item in whole or in part on review under rule 34, or with the amount allowed in respect of any item by a taxing master on any such review, may apply to a judge for an order to review the taxation as to that item or part of any item if, but only if, one of the parties to the proceedings before the taxing master requested that officer in accordance with rule 34(4) to state the reasons for his decision in respect of that item or part on the review.

(2)  An application under this rule for review of a taxing master’s decision in respect of any item may be made at any time within 14 days after the taxing master’s certificate in respect of that item is signed, or such longer time as the taxing master at the time when he signs the certificate, or the Court at any time, may allow.

(3)  An application under this rule shall be made by summons and shall, except where the judge thinks fit to adjourn into court, be heard in chambers.

(4)  Unless the judge otherwise directs, no further evidence shall be received on the hearing of an application under this rule, and no ground of objection shall be raised which was not raised on the review by the taxing master but, save as aforesaid, on the hearing of any such application the judge may exercise all such powers and discretion as are vested in the taxing master in relation to the subject-matter of the application.

……

(6)  On an application under this rule the judge may make such order as the circumstances require, and in particular may order the taxing master’s certificate to be amended or, except where the dispute as to the item under review is as to amount only, order the item to be remitted to the same or another taxing master for taxation.

(7)  In this rule “Judge” means “a judge in person.”

79.  A dissatisfied party can review a taxing master’s decision (a) in allowing or disallowing in whole or in part any item in the taxation bill, and/or (b) as to the amount allowed in respect of any item in the taxation bill. Such review by the taxing master is not limited to dealing with the quantum of the PC/DIS allowed, but also covers the incidence/ entitlement of items of PC/DIS claimed in the taxation bill (ie “the allowance or disallowance in whole or in part of any item” in the taxation bill “by a taxing master”). In the specimen form of a taxation bill of costs at Appendix B of PD14.3, items of the PC/DIS for costs of the taxation are included in part C of such taxation bill of costs, so questions of incidence/entitlement and quantum of the allowed or disallowed items of the receiving party’s costs of the taxation in part C of the taxation bill comes within the review regime.

80.  The time limit for making an application to review a taxing master’s taxation decision is 14 days after the “conclusion of the taxation” or such shorter period as may be fixed by the taxing master, but such application may not be made after signing of the taxing master’s final certificate (ie the allocatur).[27] But pending a review, the taxing master can issue an interim certificate in respect of the items of PC/DIS that are not objected to and not the subject matter of the review by the taxing master. In the present case, Master Kot as taxing master had not yet signed the final certificate or the Allocatur.

81.  Further, it is clear from Order 62 rule 33(1)(b) of the RHC that a party may not apply to a judge to review a relevant taxation decision of the taxing master until after review by the taxing master.[28] Whilst a judge may review the taxation decision made on review by a taxing master to allow or disallow any item of the taxation bill in whole or in part, or the amount allowed in respect of any item, there are several pre-conditions, eg (a) one of the parties has asked the taxing master to state the reasons for his decision in respect of that item or part thereof on review, and (b) the taxing master’s certificate in respect of that item has been signed.

82.  Before turning to the authorities, I note also from the discussion in Part III above that the comparative features of the review regime (Order 62 rules 33-35 of the RHC) and the appeal regime (Order 58 rule 1 of the RHC) in respect of the subject matter of the Appeal easily demonstrated why the former was suited to deal with challenges against taxation decisions by the taxing master on costs of the taxation.

(c)  Authorities

83.  Turning to the authorities, I start with the early decision in 2000 by P Cheung J (as he then was) in Lam Chi Sheung v Kin Wah Engineering Company & anor.[29] Like the present case, it was a personal injury case. The aided plaintiff negotiated with the defendants on costs via solicitors’ correspondence, but eventually the plaintiff’s solicitors threatened to proceed to taxation unless a reasonable offer was received. The defendants’ solicitors made a further offer, but by that time instructions had been sent to the LCD to prepare the taxation bill which was later filed. In the meantime, the defendants’ solicitors made a Calderbank offer to settle the plaintiff’s PC/DIS in the action.  The defendants delivered their list of objections, and the master taxed the plaintiff’s taxation bill,[30] which taxed PC/DIS were unable to beat the Calderbank offer globally and as to PC. Subsequently, the master heard arguments on costs of the taxation,[31] and eventually ordered such costs to the plaintiff.[32] The defendants asked for review (presumably under Order 62 rule 33 of the RHC), and after hearing arguments the master refused their application and made no order as to costs of the review. The defendants applied to a judge for review of the taxing master’s certificate that had been sealed (presumably under Order 62 rule 35 of the RHC), and asked for the following reliefs: (a) items 370-419 of the taxation bill (ie costs of the taxation) be taxed off, (b) costs of the taxation and review hearings be paid by the plaintiff to the defendants, (c) the taxing fee be paid by the plaintiff, and (d) costs of the review before the judge be paid to the defendants.

84.  Bearing in mind that (a) the plaintiff’s solicitors made genuine attempts to resolve the question of costs but recognition should be given to the offer made by the defendants, and (b) the difference in value between the PC ($277,446.00) and the DIS ($141,529.00) as claimed was not that high and the plaintiff was unable to beat the Calderbank offer on the PC but was able to beat such offer on the DIS, it was held that the appropriate order was for each party should bear his own costs of the taxation/review before the master. The master had already made no order as to costs for the review. As for costs of the taxation, it was held that the plaintiff was entitled to items 370-399 of the taxation bill which were incurred before the Calderbank offer (in amounts allowed by the master), but was only entitled to half of the taxed amounts for items 400-419. The plaintiff was also to recover half of the taxing fee from the defendants. Further, each party had to bear his own costs of the review before the judge.

85.  In my view, this case was procedurally similar to the present action, ie the item-by-item taxation of the taxation bill that included taxation of the receiving party’s costs of the taxation (equivalent to the Cost Order Nisi in the present action) was followed by computation of the amounts of the PC/DIS as allowed with interest, which amounts were evaluated against the defendant’s earlier Calderbank offer (equivalent to the Ds’ Final Offer in the present action except that Ds’ Final Offer had beaten the taxed outcome for both Part A Costs (PC) and Part B (DIS) Costs), which led the paying party to come back to argue consequential issues and the taxing master to decide afresh the incidence/entitlement to costs of the taxation (ie equivalent to the Cost Order Absolute made pursuant to the Variation Summons in the present action). The significant takeaway from Lam Chi Sheung was that the dissatisfied party should (a) review the master’s taxation decision on incidence/entitlement of costs of the taxation that inter alia maintained (or disallowed) provisioinally taxed/allowed items of costs of the taxation in the taxation bill (under Order 62 rules 33-34 of the RHC), and/or (b) take the matter to the judge for further review of taxation only after review by the taxing master (under Order 62 rule 35 of the RHC).

86.  On further review of taxation before the judge, the judge can set aside the cost order absolute, and “make such order as the circumstances require” (see Order 62 rule 35 of the RHC in paragraph 78 above), so P Cheung J (as he then was ) in Lam Chi Sheung was able to decide afresh the incidence and quantum of costs of the taxation and to come to the view that certain items of costs of taxation in the taxation bill should be allowed in full or in half (based on amounts as allowed by the taxing master). That necessarily meant the taxation bill was before the learned judge (as he then was) for him to identify which items were incurred before the Calderbank offer and which were not. But on an appeal under Order 58 rule 1 of the RHC, the judge (who had no powers of primary taxation) would be handicapped, and could not have granted such order.

87.  In CFK v LLL,[33] the petitioner was ordered to pay the aided respondent’s costs in divorce proceedings being stayed, and the petitioner failed in his appeals against the stay and cost order. The respondent commenced taxation proceedings, and the hearing of the taxation was adjourned to a date to be fixed. Subsequently, the petitioner was ordered to pay costs of his failed application to set aside such adjournment order (“1^st order”) and his failed review of the 1^st order (“2^nd order”). Eventually, the respondent’s costs for staying the divorce proceedings were taxed after argument (“Taxation Decision”), and a sealed copy of the allocatur (which should have included the receiving party’s taxed entitlement to costs of the taxation) was served on the petitioner. The petitioner applied inter alia (a) to set aside the allocatur and to appeal against what he perceived as the irregular Taxation Decision (out of time), and (b) to appeal against the 1^st and 2^nd orders. The District Court judge dismissed such application with costs to the respondent.

88.  On appeal by the petitioner, Cheung JA held that the proper procedure for challenge against the Taxation Decision was laid down in Order 62 rules 33-35 of the Rules of the District Court,[34] so the petitioner should first apply for review to the taxing master, and if further dissatisfied with the taxing master’s decision on review, he might apply to a District Court judge to further review the taxation, and there was no general right of appeal against an allocatur. It was said “[the] review mechanism clearly has a purpose to serve. Taxation of costs may involve numerous items and various amounts of costs. They should clearly be dealt with by the taxing master and the District Judge who may review the taxation with assessors. ……” (page 193), and Cheung JA went on to say at page 194 as follows:

“18.  In the present case, the petitioner’s challenge to the taxation clearly comes within the review mechanism. Matters relating to the authority of Bough & Co to represent [the aided respondent], whether Bough & Co had filed a proper bill of costs (the petitioner alleged that the bill of costs he received was a photocopy and did not have the signature or address of Bough & Co, whereas the original bill filed in court contained these particulars) and the quantifications of the items clearly were matters suitable for review. ……”

89.  In a short decision on costs, Sakhrani J in Tang Woung Shiu alia Tang, Henry (suing for himself and on behalf of Tang Woung Chiu, Davies, Tang Johnson, Tang Wai Ting, Samson and Tang Wai Tat) v Tang Kun Yeung as registered managers of Tang Man Fat Tso reiterated that in the absence of an application to the taxing master for review under Order 62 rule 33 of the RHC and when there was no review by the taxing master under Order 62 rule 34 of the RHC, the plaintiff’s application to a judge to review was “misconceived” and “should never have been taken out”, so costs were ordered against the plaintiff on indemnity basis.[35]

90.  In A Solicitor v The Law Society of Hong Kong,[36] a solicitor failed in his appeal to the Court of Appeal against an order requiring him to pay costs of disciplinary proceedings, and he was ordered to pay costs of the appeal. The taxation bill for the respondent’s costs of the appeal was taxed as drawn in the absence of any list of objections. Subsequently, the solicitor urged the taxing master to withhold approving/sealing the allocatur as failure to appear on his behalf at the taxation hearing was a misunderstanding, and he in fact wished to object to the taxation bill. The solicitor’s correspondence to the taxing master indicated an intention to apply for review of the taxation, but no formal application was taken out, so the taxing master sealed the allocatur. Subsequently, the solicitor (who by then was unrepresented) filed a summons for leave to review the master’s taxation decision under Order 62 rule 33 of the RHC out of time, but the taxing master dismissed the application with costs. The solicitor appealed to a judge pursuant to Order 58 of the RHC, and did not seek review by a judge pursuant to Order 65 rule 35 of the RHC.

91.  Saw J noted that no formal application for review of the taxing master’s taxation decision (ie the taxation bill was taxed as drawn in the absence of any list of objections) was made under Order 62 rule 33 of the RHC (a) within the prescribed time (paragraph 20) and (b) before the allocatur was sealed (paragraph 24), but he held that the taxing master erred in thinking (b) above was a fatal defect when Order 62 rule 16 of the RHC gave him power to extend time for filing application for review and, if necessary, to set aside the allocatur to overcome the proviso in Order 62 rule 33(2) of the RHC (paragraph 26). The appeal was therefore allowed, the allocatur was set aside, the solicitor was given time to file/ serve list of objections, and the relevant taxation bill was directed to be taxed together with the respondent’s 3 other bills of taxation (paragraph 27).

92.  In my view, although the appeal in A Solicitor was made under Order 58 of the RHC, it was distinguishable and was so distinguished by DHCJ Au-Yeung (as she then was) in Chan Yerk Wang (see paragraphs 96-99 below). The learned deputy judge (as she then was) pointed out that the paying party in A Solicitor failed to file list of objections and was absent at the taxation hearing, but Order 62 rule 33(1) of the RHC clearly referred to a party’s dissatisfaction with the “allowance or disallowance” of any “taxed” item, which implied that the subject items must have been ones in dispute at the taxation hearing (see paragraph 25 of Chan Yerk Wang), so the absence of such dispute took the solicitor’s application to the judge outside the review regime. But here, Ds filed detailed list of objections and the Bill was taxed according to the list of objections with submissions from both parties. Anyway, Saw J in A Solicitor also emphasised that “[powers] to review given to judges, …… or masters are designed in part to provide a simple means to remedy or revisit decisions without recourse to the full appellate process” (paragraph 22).

93.  In China Property Development (Holdings) Limited v Mandecly Limited & ors,[37] certain costs were ordered in favour of the plaintiff, and those costs were taxed by the taxing master and subsequently reviewed by him under Order 62 rule 33 of the RHC (with written decision handed down). The plaintiff applied by summons for review of taxation by a judge under Order 62 rule 35(1) of the RHC, and 12 items appeared in the schedule of objections attached to the review summons. It was claimed that the master erred in disallowing 7 items as a matter of principle, in reducing 2 items as to quantum, and in disallowing the remainder items on both grounds.

94.  I note from the above that review by a taxing master under Order 62 rule 33 of the RHC is not limited to quantum issues (ie the amounts allowed, disallowed or reduced in respect of the items of PC/DIS in the taxation bill), but can also extend to entitlement as to costs. In China Property Development (Holdings) Limited, the taxing master on review of taxation (as upheld by Chung J on further review of taxation) dealt with the issue as to whether certain costs claimed by the plaintiff came within the ambit of the cost order as being “necessary or proper” costs (ie the basis for taxing party-and-party costs) for the purpose of the proceedings (paragraph 32). And on the quantum issues, Chung J summarised the legal principles applicable in a review by the judge as follows:

“35.  They can summed up as follows.  The starting point is:-

“… the court will not generally interfere with the decision of a taxing master on a question relating to fact or to the amount of costs …”:

Halsbury’s Laws of Hong Kong (2006 Reissue) Vol. 5(2), para. 90.1275.1.  The exceptions are:-

(a)  some question of principle is involved;

(b)  the taxing master has not had reasonably sufficient material before him;

(c)  he has taken into account irrelevant matters;

(d)  he has not taken into account relevant matters; or

(e)  he has acted upon a wrong principle or adopted the wrong approach.

It has also been said a judge may review a taxing master’s decision where he has given incorrect reasons.  But this is likely to be a different way of stating sub-para. (c) to (e) above: Halsbury, Vol. 5(2), para. 90.1275.1, especially n. 7.”

95.  In Leong Yuet Wah & anor v Wong Wei Lin (also known as Mrs Loh Wong Wei Lin) & ors,[38] under Order 58 of the RHC the respondent appealed against the decision by the taxing master to tax off entirely 2 items in the respondents’ taxation bill. Poon J (as he then was) held that the respondent “should first apply for a review to the taxing master under rules 33 and 34 and if necessary for a further review of the taxing master’s decision made on review under rule 35 to a judge in chambers” (paragraph 3), and underlined this approach by saying that:

“5.  …… Order 62, rule 2(4) provides that the powers and discretion of the court as to costs shall be exercised subject to and in accordance with Order 62. The powers and discretion as to costs covered by that rule must include the powers and discretion exercisable by a taxing master on review of his own decision on taxation and the court on review of the master’s decision.  It follows that a party who wishes to challenge a decision made by the taxing master must follow the specific review mechanism in rules 33 to 35.  He cannot avail himself of his general right to appeal to a judge in chambers under Order 58.

……

9.  …… there exists a very good reason for the review mechanism.  When the matter is brought before the master again on review, he can revisit his decision with the benefit of further submissions.  If persuaded, he may change his mind.  If that happens, the reviewing party will achieve what he wants there and then.  If the master confirms his decision and the reviewing party brings the matter further, the master will have to give full reasons for his decision made on review, which will be placed before the judge when the matter goes before him.  When the review mechanism is not followed, the taxing master will be deprived of the opportunity of re-considering his decision and the court, his full reasons for the decision that he made on review.  ……”

96.  Chan Yerk Wang concerned taxation of costs between solicitors and ex-client. The bills were taxed according to the list of objections, and the ex-client filed application for review. The taxing master refused to review any of the items in the bill not objected to at the taxation, and the ex-client applied to DHCJ Au-Yeung (as she then was) for review. The issue was whether the ex-client’s application to the learned judge for review was out of time. The learned judge usefully reviewed the review procedure in Order 62 rules 33-35 of the RHC.

97.  On the time limit issue, DHCJ Au-Yeung (as she then was) explained that to apply for review before a judge, one of the parties (not necessarily the appellant) must have requested the taxing master for written reasons for his decision on the review before him (see Order 62 rule 35(1) of the RHC) within 14 days of the review or such shorter period as may be fixed by the taxing master (see Order 62 rule 34(4) of the RHC), and the application must be taken out within 14 days after the taxing master signed the allocatur (which the taxing master must do) (see Order 62 rule 35(2) of the RHC) (paragraphs 10-12). In that case, the ex-client failed to request the taxing master to state her reasons within time, but after consideration DHCJ Au-Yeung (as she then was) on further review of taxation extended time for the ex-client to request for the master’s reasons (paragraph 14).

98.  As to whether the ex-client should be allowed to argue new grounds on review before the taxing master, DHCJ Au-Yueng (as she then was) upheld the taxing master’s decision to distinguish A Solicitor (see paragraph 92 above). In Chan Yerk Wang, the ex-client filed detailed list of objections and the bill was taxed according to the list of objections in the presence of the ex-client (who could supplement/clarify her objections) at the taxation hearing (paragraph 26), which was a far cry from the situation in A Solicitor.

99.  Of more interest for the present purpose were the following observations by DHCJ Au-Yeung (as she then was) on the review procedure:

“41.  The New Grounds …… did not appear in the list of objections but the in affirmations.  They were not objections to specific item(s) allowed or disallowed.  They applied to the whole amount allowed on taxation [ie “that the Defendant had pitched the fees at unrealistically low level for the purpose of keeping alive the retainer”, which “if established, do show a case of professional misconduct” and “the Court may have regard to the cost estimates she was given and allow the solicitor to recover only the amount of the estimates plus a margin of a certain percentage …… [that] can have substantial impact on the quantum of taxed costs” – see paragraph 39].

42.  Anyone familiar with taxation will know that after the taxation hearing, the exact amount which a paying party has to bear is yet to be computed.  In an appropriate case, an experienced solicitor or law costs draftsman will ask the taxing master for an order nisi that the costs be taxed and allowed as he/she has ruled.  After calculation of the quantum of costs, the parties may then come back to argue consequential issues (like sanctioned offers).

43.  In the present case, the Plaintiff, being a litigant in person would hardly have known immediately at the taxation whether or not the taxed amount would be above or below the $1,912,000 which she had paid to enable her to decide whether or not, or how, to pursue the New Grounds. It was thus understandable that she raised it only on review before the Master.

44.  Exercising the discretion afresh, I would thus allow the Plaintiff to review the New Grounds.

45.  However, unlike In the Matter of Greater Beijing Expressway, HCCW 399/1999, 12.5.2004, Barma J, I am unable to proceed further.  In that case, although new grounds were raised before the judge, the opposing party could deal with them and no real prejudice would be caused.  The judge permitted the new grounds to be argued (at para 9).  Those new grounds concerned matters like quantum of counsel’s brief, counsel’s fees for settling an affidavit and a letter, reasonableness of time spent by solicitors in doing certain pieces of work and delay between the making of the costs order and the issuance of the bill of costs.  Those involved, principally, arguments on law and its application.

46.  Here, there are factual disputes to be resolved, e.g. whether estimates of costs have been explained to the Plaintiff, whether she relied on the estimates if she believed the costs would not exceed $300,000, why did she pay so much costs on account etc. The best course is to remit the matter to Master Levy for taxation pursuant to Order 62, rule 35(6).”

It was clear from the above that the review procedure whether before a judge or before the taxing master would cover both issues of entitlement and quantum of costs.

100.  Mr Sakhrani raised issue as to (a) whether a review of taxation by a judge under Order 65 rule 35 of the RHC was a hearing de novo or (b) whether the judge would only interfere with the decision of the taxing master if he had made an error of law, or taken into account irrelevant matters, or failed to take into account relevant matters. This arose because there was some suggestion that the observations by DHCJ Au-Yeung (as she then was) in paragraph 29 of her judgment in Chan Cherk Wang citing Tung Ka Hung v Wan Kin Chung Daniel & ors[39] leaned towards (a) above. In my view, this was not an issue that should concern this court since the Appeal was not any review of taxation before a judge, but for completeness, I find the subsequent authorities clearly showed the issue had been put to rest in favour of the position in (b) above (see detailed analysis by Bharwaney J in Chan Yin Na v Union Medical Centre Limited[40] and by the Court of Appeal in Lam and Lai Solicitors v Ho Chun Yan Albert[41] – see paragraphs 102 and 108-109 below).

101.  Chan Yin Na concerned an application for review of taxation before a judge pursuant to Order 65 rule 35 of the RHC (paragraph 1), and 1 of the disputes concerned item 1211 of the taxation bill being part of costs of the taxation. It was said that “[at] the completion of the taxation, the learned master allowed the costs of taxation in the usual way”, but a day later the receiving party’s solicitors informed the taxing master that they had omitted to bring to his attention senior counsel’s fees for assisting in the taxation and in preparing submissions with detailed tables. After considering written submissions by both parties, the taxing master allowed a sum for this item, and on review of this item he confirmed the assessment, which taxation decision was upheld on further review of taxation before the judge (paragraphs 66-67). However, Bharwaney J observed (a) it was quite exceptional for counsel to be involved in such matter, and (b) had there been a cross summons for further review by the defendants on this item, he would have been easily persuaded to disallow such item which had been allowed by the taxing master on taxation and on review. In my view, the taxation procedure adopted in Chan Yin Na clearly showed that issues both as to entitlement and quantum as to costs of the taxation raised after provisional item-by-item taxation “in the usual way” at the taxation hearing came within the ambit of the review procedure before the master and hence before the judge.

102.  In Chan Yin Na, there were challenges on other items of the PC/DIS on further review of taxation before Bharwaney J who emphasised that on review before a judge in chambers of a quantitative assessment by the taxing master, the judge would be unlikely to interfere with such quantitative assessment unless the assessment appeared to him to be clearly and plainly wrong (paragraph 42). The learned judge said the judge was more likely to interfere with a qualitative assessment of the taxing master if he came to the view that the taxing master was plainly wrong in allowing or disallowing a particular item of costs (paragraphs 44-45).

103.  In Tin Wan Tung v Wong See Yin & ors,[42] the defendants inter alia filed notice of appeal to a judge in chambers to appeal against “all costs order and orders of the costs of the taxation review applications” made by the taxing master pursuant to certain cost orders made by L Chan J. It appeared that the taxing master conducted a taxation review and rendered a decision on review (paragraph 33(1)), but the taxation before the taxing master took a lot of effort, time and costs as the defendants challenged each and every item of the taxation bills (paragraph 6). In the appeal against the taxing master’s review decision, the defendants again adopted a wholesale approach of effectively challenging each and every item (paragraph 7).

104.  The defendants’ appeal was brought under Order 58 of the RHC “as if it were an ordinary appeal against a master’s decision”. Wilson Chan J found such appeal “misconceived from the beginning” (paragraph 9) when the review procedure under Order 62 rules 33-35 of the RHC “must be exhausted ……”, citing the observations by Cheung JA in CFK in support (paragraph 10). The learned judge noted that as the challenge to the taxation brought by the defendants clearly came within the review mechanism, there was no room to challenge these matters under the inherent jurisdiction of the court, citing the observations by Cheung JA in CFK and by Poon J (as he then was) in Leong Yuet Wah in support (paragraphs 11-13).

105.  The learned judge went on to explain why the appeal under Order 58 of the RHC could not be treated and heard as a review:

“14.  If the defendants are permitted to proceed in this case with the Taxation Appeal, the Taxing Master will be deprived of a second review of her decision pursuant to Order 62, rule 35 of the RHC before any appeal.  Moreover, under this review procedure, the judge in chambers is only required to consider the reasons for the Taxing Master’s decision on her review and not required to conduct a taxation de novo [see: Chan Yin Na v Union Medical Centre Ltd [2011] 5 HKC 158, at paragraph 26].

15.  For the reasons stated above, I agree with the plaintiffs that the Taxation Appeal is wholly inappropriate and should accordingly be dismissed.

C.    CAN THE TAXATION APPEAL BE HEARD AS A REVIEW

C1.    The scope of the Taxation Appeal is beyond Ord 62, r 35 RHC

16.  First of all, I agree that even if the court does decide to hear the Taxation Appeal, then it should proceed under the rules and procedures set out in Order 62, rule 35 of the RHC (instead of Order 58).

17.  With reference to Order 62, rule 35(1) specifically, the defendants have wrongly adopted a “wholesale” approach in the Taxation Appeal.  In particular: –

(1)  The defendants can only apply to “review the taxation as to that item or part of an item”, which means that the defendants should only be permitted to ask the judge to review the items reviewed by the Taxing Master in her decision.  Therefore, paragraphs 1 and 2 of the Appeal Notice are not within the scope of review by the judge.

(2)  In fact, paragraph 4 of the Appeal Notice should not be considered either, as the defendants are asking the judge to review the costs of the taxation review, and not the Taxing Master’s decision “to allow or to disallow any item in whole or in part on review under rule 34, or with the amount allowed in respect of any item by a taxing master on any such review”.

(3)  Thus, only paragraph 3 of the Appeal Notice is proper and may be considered, as the defendants are not entitled to “appeal” the other items.

18.  This is further supported by the fact that under Order 62, rule 35(1) of the RHC, the defendants may apply to a judge to review each item “if, but only if, one of the parties to the proceedings before the taxing Master requested that officer in accordance with rule 34(4) to state the reasons for his decision in respect of that item or part on the review” (emphasis supplied).

19.  Thus, the defendants are required to request the Taxing Master to state the reasons for her decision in respect of the items they want to review.  Without the specific reasons for each item, the defendants are unable to properly set out their grounds of “review”, effectively forcing the judge to rehear the arguments heard by the Taxing Master, contrary to the position that this court is not required to conduct a taxation de novo.

20.  The Taxing Master was obviously aware of this problem, as she expressed her concerns at paragraph 97 of her Decision: –

“97.  It is also noted that the defendants here seek a blanket review of all items taxed, including those items withdrawn by the plaintiffs and also of those items where the rulings accord with what the defendants seek for in their list of objections.  That sort of conduct illustrates the attitude of the defendants in the taxation proceedings and taxation review applications.”

21.  The defendants have not made such request to the Taxing Master for her specific reasoning, and I agree that the Taxation Appeal should be dismissed on this ground alone.

C2.    The Appeal Notice does not state the ground of “review”

22.  When reviewing the Taxing Master’s review, this court should consider the reasons for the Taxing Master’s decision, to ascertain whether or not the Taxing Master: –

(1)  erred in principle;

(2)  took into account irrelevant matters; or

(3)  failed to take into account relevant matters.

[see: Practice Note 62/35A of the Hong Kong Civil Procedure 2017; Chan Yin Na v Union Medical Centre Ltd, Supra, paragraph 26]

23.  It is up to the defendants to (i) point out to the court and (ii) satisfy the court where and in what way the Taxing Master erred in principle, took into account irrelevant matters and/or failed to take into account relevant matters.

24.  It is unacceptable for the defendants not to state any grounds in the Appeal Notice. In the Appeal Notice, the defendants have not begun to state clearly or at all where and in what way the Taxing Master erred in principle, took into account irrelevant matters and/or failed to take into account relevant matters.

26.  It is only in the 1^st defendant’s 15^th Affirmation dated 1 February 2016 where he began to state his grounds of appeal.  However, those grounds are simply a regurgitation of the defendants’ previous objections.  In effect, the defendants are seeking this court to reconsider the costs orders item by item, which is not the proper purpose of a review under Order 62, rule 35 of the RHC.

27.  In the premises, I agree with the plaintiffs that the Taxation Appeal is plainly incompetent and should be dismissed.”

106.  The learned judge held that the appeal, which did not follow proper procedure and which was without merit (ie using a wholesale approach without specifying the exact items under appeal and the proper grounds of appeal), should be dismissed at the very outset (paragraph 34), and the defendants were ordered to pay costs of the applications to the plaintiffs forthwith to be taxed on indemnity basis if not agreed (paragraph 35).

107.  In Lam and Lai Solicitors, the plaintiffs, who were solicitors for the defendant in certain legal proceedings, brought taxation proceedings against the defendant. The taxing master taxed the plaintiffs’ bill of costs. On his review of taxation pursuant to Order 62 rules 33-34 of the RHC, the defendant listed 64 items he objected to and the nature/ grounds therefor. The taxing master dismissed the review by his decision, and the defendant applied for further review before a deputy judge who treated the application as one for review under Order 62 rule 35 of the RHC. The deputy judge found the master had erred in principle in rejecting the review for the 64 items, but nevertheless taxed down the bill for certain costs on the basis that the defendant had never given approval to the plaintiffs to deploy and charge for 2 partners in handling his case when 1 senior counsel and 2 junior counsel had been instructed (paragraph 16). The plaintiffs appealed to restore the master’s decision on review.

108.  On reviewing the authorities, the Court of Appeal confirmed the approach in Chan Yin Na and held that on review of a taxing master’s certificate under Order 62 rule 35 of the RHC, a judge should not conduct a taxation de novo and/or interfere with the taxing master’s discretion, save in limited circumstances, ie if the decision was shown to have been arrived at under a mistake of law, or in disregard of principles, or under a palpable misapprehension of the facts, or plainly in reliance on irrelevant matters, or to be such as to fall outside the generous ambit within which reasonable disagreement was possible (pages 135-137). Kwan JA stated the approach to be adopted on further review before a judge as follows (pages 136-137):

“29.  …… I wish to state clearly that in my view the decision in Chan Yin Na 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.

The approach in this appeal

……

31.  Mr Bernard Man, SC, who appeared with Mr Byron Chiu for the plaintiff on appeal, submitted that the focus should first be trained on the decision of the taxing master, who was the primary decision maker.  Applying the approach of Chan Yin Na to that decision, the question one should ask is whether there is any ground that would justify an interference with the master’s decision.  In other words, whether the judge was right to conclude that in rejecting the review for the 64 items, the master has erred in principle, has taken into account irrelevant matters, or failed to take into account relevant matters.

32.  I think that is correct.  On our scrutiny of the master’s decision, if there is no ground to interfere with his decision, the judge’s decision must be set aside and the master’s decision restored.  If, however, the judge is correct in holding that the master has erred for one reason or other, the judge would be entitled to exercise his discretion in the taxation afresh.  It would then be for this court to examine if there is any basis to interfere with the fresh exercise of discretion by the judge, applying the familiar orthodox principles as mentioned in Poon Shu Fan v Wong Tin Yan and Chan Man Pan v Fu Fung Yan Cafornia.”

It was held in that case there were sufficient grounds for the deputy judge to interfere with the master’s decision as the latter erred in principle in certain findings, so the Court of Appeal exercised the taxation discretion afresh (pages 144).

109.  Lam VP also reiterated that “…… by the time the matter comes to a judge for review, there has already been a first review by the taxing master himself. The statutory scheme in Order 62 clearly envisages that the taxing master would be the primary decision maker in taxation proceedings” (page 131). Lam VP explained the review mechanism as follows (pages 131-132):

“6.  In a taxation hearing before a taxing master, all the working papers of the solicitor involved would be placed before him and he would examine the papers in some detail in connection with any disputed item in a taxation.  Assisted by law costs draftsmen, the taxing master can use his expertise in taxation in assessing such materials. The process is akin to one of weighing the evidence at a trial. By the nature of things, this process is not to be repeated before a judge and counsel appearing before him who generally would not have the experience of a taxing master or law costs draftsman in such matters.  Like a finding of facts by a judge, a taxing master’s reasons for decision cannot always capture all the minute nuances in his assessment process in coming to a particular finding on a disputed item. In that respect, the observation of Lord Hoffmann in Biogen Inc v Medeva plc [1997] RPC 1 at 45 on finding of facts is equally applicable,

“The need for appellate caution in reversing the trial judge’s evaluation of the facts[43] is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance… which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation.”

7.  Further, a full blown re‑examination of a taxation decision as in the case of a rehearing on appeal from a master to a judge in respect of a procedural or interlocutory decision is not in line with modern litigation ethos as enshrined in our Civil Justice Reform.  It is not the practice of the court to list a review before a judge for the same length as the taxation before the taxing master. Expensive and lengthy taxation processes (including review and appeal) is another form of satellite litigation which should be avoided if the utility is not high. Given the relatively lesser experience of a judge in taxation matters, the following justification for appellate constraint given by Lord Neuberger in In re B (a Child) [2013] 1 WLR 1911 on appeal against finding of facts are also apposite in the present context,

“This can also be justified on grounds of policy (party should put forward their best case on the facts at trial and not regard the potential to appeal as a second chance), cost (appeals can be expensive), delay (appeals on fact often take a long time to get on), and practicality (in many cases, it is very hard to ascertain the facts with confidence, so a second, different, opinion is no more likely to be right than the first).”

8.  Hence, with the proper recognition of the regime for the taxation process and necessary limitations in a review by a judge, the old approach is, in my judgment, fully warranted.

……

11.  It is to be noted that taxation is to be conducted by “taxing master”.  Hence, a decision by a taxing master does not fall within a decision by a master in respect of which appeal can be brought under Order 58 to a judge.  The approach of Evans v Bartlam [1937] AC 473 at 478 is appropriate for an Order 58 appeal.  But it is not appropriate for a review under Order 62 Rule 35.”

(d)  Review regime under Order 62 of the RHC

110.  Taxation of costs is a creature of statute. As explained by Poon J (as he then was) in Leong Yuet Wah & anor, the powers and discretion of the court as to costs shall be exercised subject to Order 62 of the RHC, and such statutory powers and discretion must include those exercisable by (a) the taxing master in making taxation decisions during the taxation process, including those on review of his own taxation decisions under Order 62 rules 33-34 of the RHC, and (b) the judge on further review of the taxing master’s taxation decisions made on review under Order 62 rule 35 of the RHC.

111.  The taxation decisions of the taxing master that came within the ambit of Order 62 of the RHC (which would necessarily include decisions by the taxing master on review of his primary taxation decisions under Order 62 rules 33-34 of the RHC) were not limited to the matters of quantum of any or all item(s) of the PC/DIS in a taxation bill, but also covered matters of entitlement of all or part of such item(s) of the PC/DIS.

112.  In my view, this is borne out by Order 62 rule 33(1) of the RHC and supported by the above authorities. First, on review of taxation by the taxing master, Order 62 rule 33(1) of the RHC drew a distinction between (a) “the allowance or disallowance in whole or in part of any item of a taxing master”, and (b) “the amount allowed by a taxing master in respect of any item”. Plainly, (b) above referred to the matter of quantum of any item of the PC/DIS in a taxation bill, so (a) above necessarily referred to a different subject matter, which, in my view, referred to the matter of entitlement to any particular item of the PC/DIS claimed in the taxation bill (ie the allowance or disallowance in whole or in part of any item) (see also paragraphs 76 and79 above).

113.  Secondly, the scope/ambit of review by the taxing master under Order 62 rules 33-34 of the RHC as explained in the above paragraph (which also covered the matter of entitlement to costs) was borne out by the following:

114.  The usefulness of the review regime had been emphasised by the courts, eg that the taxation of costs often dealt with numerous items and various amounts of the PC/DIS which matters were better suited to be dealt with by the taxing master who as primary decision-maker (and assisted by the LCD) would examine the relevant items and would use his expertise in taxation to assess the materials (see paragraphs 88 and 108-109 above), that there should be an opportunity for the taxing master to review his taxation decision with the benefit of further submissions which procedure provided a simple means to remedy or revisit taxation decisions without recourse to full appellate process (see paragraphs 92, 95 and 105 above), and that there was benefit to the judge (who would not have the experience of the taxing master or the LCD) of having the master’s full reasons on further review without a hearing de novo (see paragraphs 95, 100, 102 and 108-109 above). The rationale for the review procedure has been explained by Lam VP (as he then was) in paragraph 109 above, which I emphasise but not repeat here. In contrast, the unsuitability of the appeal procedure under Order 58 rule 1 of the RHC to deal with challenge against taxation decisions had been highlighted in Part III and the authorities discussed above, which I refer to but not repeat here.

(e)  Discussion

115.  Ms Chark submitted that the appropriate procedure for challenging the Cost Order Absolute was not by way of the review regime under Order 62 of the RHC first by Master Kot and then by a judge, but by way of appeal to a judge in chambers under Order 58 rule 1 of the RHC for the following reasons, which I disagree:

116.  In my view, none of the above grounds altered the fact that the Costs Order Absolute that disallowed all items of the Part C Costs in the Bill as provisionally taxed/allowed by Master Kot and that awarded costs of the taxation in D’s favour was a clear taxation decision as to entitlement, and any challenge to such taxation decision must be the subject of review by the taxing master before further review could be made to a judge in chambers. After all, as explained by the Court of Appeal in Lam and Lai Solicitors, the primary decision-maker in taxation under Order 62 of the RHC was the taxing master.

117.  Ms Chark argued that although Ds raised various grounds in support of the Variation Summons summarised in (a)-(e) below, Master Kot did not find (b)-(e) below[44] sufficient to support the primary relief in the Variation Summons and only relied on (a) below to justify such primary relief, which meant that in the context of the Appeal under Order 58 rule 1 of the RHC that only challenged the Cost Order Absolute by disputing Master Kot’s finding in relation to (a) below but not her findings in relation to (b)-(e) below, this court in dealing with the Appeal would only be concerned with Master Kot’s exercise of discretion to rely on (a) below:

118.  I am unable to see how such argument would take Ps’ objection as to Master Kot’s rejection of their entitlement to costs of the taxation (ie Part C Costs) outside the review regime under Order 62 rules 33-35 of the RHC as explained above. On the contrary, I find such challenge to be well within the ambit/scope of the review regime, which would have been the proper course to be followed.

119.  Ms Chark further submitted Ps’ adoption of the appeal regime to challenge the Cost Order Absolute is appropriate as this court was merely called upon “to determine whether the Master was unreasonable and/or erred in law or failed to take into account improper matters or took into account proper matters that should not have been taken into account when the Master made the [Cost Order Absolute] allowing [the primary relief of the Variation Summons – see paragraph 35(a) above], namely disallowing Ps’ costs of taxation and allowing Ds’ costs of taxation as from 28 July 2018”.

120.  I disagree. As discussed above, Master Kot as taxing master should not be deprived of the opportunity to re-consider her taxation decision against specific objections with the benefit of further submissions by the parties, and this court on further review (not appeal) should have the benefit of Master Kot’s full reasons in writing upon review before her to re-consider the dissatisfied party’s specific objections that must be precisely identified in the relevant summons for further review. The approach of the judge on appeal as advocated by Ms Chark in the above paragraph would not take the matter further since even on the further review of taxation before a judge, it would not be a hearing de novo and the judge would not interfere with the taxing master’s taxation decision except on limited grounds as explained in paragraphs 100, 102 and 108-109 above, ie unless the taxation decision was plainly wrong.

121.  Ms Chark then relied on Singh Gorinder Bal v Chan Nga Kai[45] to say that the proper procedure to be adopted to challenge the Kot 2^nd Order (including the Costs Order Absolute) was an appeal to a judge in chambers under Order 58 rule 1 of the RHC. In that case, the action was stayed by consent after the parties reached settlement following interlocutory judgment on liability in favour of the aided plaintiff with costs on party-and-party basis. The defendant made a Calderbank offer on costs, but it was rejected as “unrealistic”. The defendant increased his offer twice (the latter was made on 30 June 2019), but they were rejected. Later on 27 July 2011, the defendant reduced his offer on the ground that the plaintiff’s medical expenses were over-stated. The plaintiff made 2 further offers, but there was no settlement. The matter proceeded to taxation, and a cost order nisi was granted for the defendant to pay the plaintiff’s costs of the taxation and the taxing fee. The defendant sought variation of such cost order so that the plaintiff should pay the defendant’s PC/DIS incurred in the taxation proceedings after 30 June 2010 and also pay the taxing fee. The taxing master dismissed the application, and ordered the defendant to pay costs of that application. The defendant appealed.

122.  Mr Recorder A Chow SC (as he then was) held that courts regularly took into consideration any relevant Calderbank offer when determining questions relating to costs of taxation proceedings so the defendant’s offers on 30 June 2010 and 27 July 2011 would be taken into account when considering costs of the taxation.[46] It transpired that the plaintiff had beaten the 27 July 2011 offer by a very small amount ($558.50), but not the earlier offer on 30 June 2010. Although the earlier offer would not necessarily be disregarded, as a matter of principle it was the last offer in a series of reducing offers that would be relevant for considering whether the receiving party had beaten the Calderbank offer. That said, whether a plaintiff had or had not beaten a Calderbank offer was not determinative as it was only a matter which the court might take into account when considering the question of costs, and other matters (eg the parties’ respective conduct, whether the offer had been beaten in all or only some of the constituents of the offer and by how much, etc) were also relevant in the overall exercise of the court’s discretion on costs (page 419). In that case, Mr Recorder A Chow SC (as he then was) allowed the appeal after taking in account various factors,[47] and ordered the defendant to pay the plaintiff’s costs of the taxation up to 30 June 2010 (excluding the taxing fee), the plaintiff to pay the defendant’s costs of the taxation after 30 June 2010, the plaintiff to pay costs of the defendant’s application to the taxing master and of the appeal to be summarily assessed (page 420).

123.  Singh Gorinder Bal is not binding on this court, especially in light of the subsequent guidance by the Court of Appeal on the applicability and/or operation of the review regime under Order 62 of the RHC in Lam and Lai Solicitors. More importantly, neither party in Singh Gorinder Bal brought the review regime under Order 62 rules 33-35 of the RHC to the attention of Mr Recorder A Chow SC (as he then was), and there was no discussion at all in his judgment on review regime. Although the learned judge cited Lam Chi Sheung (the parties in that case followed the review regime even though the taxing master granted a cost order nisi on costs of the taxation followed by a cost order absolute after argument), it was to address the point whether the taxing fee should be taken into account when considering whether a Calderbank offer had been beaten (pages 417-418). The parties did not bring the procedural approach adopted in Lam Chi Sheung for challenging a cost order absolute on costs of the taxation to the attention of Mr Recorder A Chow SC (as he then was).

124.  Both Lam Chi Sheung and Singh Gorinder Bal concerned settlement of personal injury claims in which the aided plaintiffs were awarded costs. Although the parties negotiated on costs payable to the aided plaintiffs with to and fro offers (including Calderbank offers by the defendants as paying parties), there was no settlement and item-by-item taxation was done for the plaintiffs’ taxation bills including provisional taxation of the items for costs of the taxation (ie cost orders nisi). Later, arguments were heard on the defendants’ application to vary the cost orders nisi with a view to have the plaintiffs pay the defendants’ costs of the taxation in whole or in part. In both cases, the taxing master refused the defendants’ application and ordered costs of the taxation to the plaintiff. Thus, the procedural background for both cases were quite similar.

125.  In Singh Gorinder Bal the defendants appealed against the taxing master’s decision under Order 58 of the RHC, but in Lam Chi Sheung the defendants asked for a review and when the taxing master refused their application under review, they took the matter on further review to a judge. In the latter case, P Cheung J (as he then was) had no criticism against the review procedure. The weight of the authorities thereafter was in line with such approach, which principles culminated in the guidance by the Court of Appeal in Lam and Lai Solicitors. As Lam VP (as he then was) said in Lam and Lai Solicitors, “…… taxation is to be conducted by the “taxing master”. Hence, a decision by a taxing master does not fall within a decision by a master in respect of which appeal can be brought under Order 58 to a judge ……” (see paragraph 109 above). In my view, Singh Gorinder Bal must be distinguished on the basis that the learned judge had not been referred to Order 62 rules 33-35 of the RHC, otherwise I am persuaded he would have found the appeal before him incompetent. I am not persuaded that in the present context the appeal procedure under Order 58 of the RHC could be harnessed to circumvent the review procedure under Order 62 rules 33-35 of the RHC.

(f)  Impact on costs

126.  Here, Ps had not sought any review of the Costs Order Absolute from Master Kot as taxing master, which in my view was what Ps procedurally should have done since the review procedure covers matters of entitlement and quantum of costs of the taxation. As seen in Tang Woung Shiu alia Tang, Henry (suing for himself and on behalf of Tang Woung Chiu, Davies, Tang Johnson, Tang Wai Ting, Samson and Tang Wai Tat), Leong Yuet Wah & anor and Tin Wan Tung (see paragraphs 89, 95 and 103-106 above), it was only upon such review before the taxing master that Ps could apply to a judge in chambers for further review of the master’s taxation decision on review.

127.  Following upon Ms Chark’s submissions in paragraph 115(d) above, there was a half-hearted suggestion that Master Kot as taxing master “had already reviewed her decision on the costs of taxation pursuant to the Variation Summons”. I disagree for the following reasons (especially in light of Ms Chark’s concession that there was no review before Master Kot – see paragraph below):

128.  In any event, I am not persuaded the Appeal could have been heard as a review when the rules and procedures for Order 62 rule 35 of the RHC had not been complied with, eg there was no master’s certificate, and the application for further review was made by the Notice of Appeal and not made by summons that should have clearly stated where and in what way Master Kot as taxing master erred in her decision on review of taxation. More importantly, as confirmed by Ms Chark at the Appeal Hearing, Ps did not seek and there was no review of taxation under Order 62 rules 33-34 of the RHC by Master Kot as taxing master in respect of the Cost Order Absolute that inter alia disallowed all items of the PC/DIS provisionally allowed under Part C of the Taxation Bill (bearing in mind that further review of taxation before a judge could only be made after review by the taxing master – see Order 62 rule 33(1)(b) of the RHC – and only in respect of items reviewed by the taxing master in her decision). In my view, Ps adopted the wrong procedure (ie an appeal against the Kot 2^nd Order under Order 58 of the RHC) for the Appeal which rendered it incompetent. As Mr Sakhrani submitted and as explained by Poon J (as he then was) in Leong Yuet Wah & anor (see paragraph 95 above), Order 62 of the RHC was the go to provision in the RHC concerning taxation of costs, and yet Ps did not consider its relevance and/or applicability. The Appeal was procedurally flawed, and its dismissal was inevitable.

129.  By the Discontinuation Summons, Ps rightly conceded to pay Ds’ costs of the Appeal and the Discontinuation Summons. In my view and for all of the above reasons, Ps should pay such costs on indemnity basis for bringing an incompetent application to court (see the costs order made by Sakhrani J in Tang Woung Shiu alia Tang, Henry (suing for himself and on behalf of Tang Woung Chiu, Davies, Tang Johnson, Tang Wai Ting, Samson and Tang Wai Tat) and by Wilson Chan J in Tin Wan Tung in paragraphs 89 and 106 above).

130.  Ms Chark submitted that “the Appeal was not outside the realm of usual hostile litigation” and that the Appeal “could not be said to have been commenced or prosecuted in such a manner as to constitute to be an affront to the court” (see paragraph 51 above), so Ds’ costs should not be awarded on indemnity basis. I reiterate the general principles in granting costs on indemnity basis, which I have summarised in Wong Shu Keung v Li Sing Ming[48] and in Heung Wing Yan v Hangway Housing Management Limited & ors,[49] and I adopt such principles without repeating them here. As explained in such authorities and as recognised by Ms Chark in her Costs Submissions, there is an infinite variety of situations which can come before the courts and which the courts may consider appropriate to make an order for indemnity costs. In my view, bringing an incompetent and unsalvageable application before the court is plainly a circumstance that takes the conduct of legal proceedings so out of the norm as to justify an award of costs on indemnity basis.

131.  In light of the above conclusions, it is unnecessary for me to go into the merits of the Appeal (even assuming that it could be heard as a review of taxation, which I disagree). But since Ds applied for a wasted costs order against BCCo, I find it appropriate to briefly canvass the matter of merits of the Appeal on the assumption that it was competent on the basis of the Assumed Procedure and the Assumed Relief (which I do not agree).

V.  APPEAL

(a)  Kot Reasons

132.  As alluded to in paragraph 117 above, Ds raised various grounds in the Lam 1^st/2^nd Affs for the purpose of the Variation Summons, but the Kot Reasons showed Master Kot granted the Kot 2^nd Order (and the Costs Order Absolute thereunder) essentially on the ground that the amounts of the itemised PC/DIS claimed in the Bill were substantially reduced (ie taxed down/off) (see paragraph 117 above and paragraph 134 below), and discounted the other grounds as being insufficient to deprive Ps of all their costs of the taxation and/or to require Ps to pay all of Ds’ costs of the taxation (see paragraph 117 above).

133.  Since there was no “cross-appeal” by Ds, who for the purpose of the Appeal did not say they wished for a decision on costs of the taxation different from the Cost Order Absolute granted by Master Kot, and further since Ms Chark confirmed at the Appeal Hearing that Ps’ sole challenge on the Appeal was against Master Kot’s reliance on the substantial reduction to P’s Bill in coming to the Kot 2^nd Order (which Ps considered to be erroneous) (see paragraph 117 above), I propose to consider the reasonableness for Ps to have brought the Appeal on the basis of such sole challenge.[50]

134.  According to the Kot Reasons, Master Kot noted Ps claimed a sum of $3,480,122.97 for the PC/DIS in Part A, Part B and Part C of the Bill (exclusive of interest and taxing fee), which was eventually taxed down to $1,285,238.50, ie an overall reduction of about 63%, and stated her reasons and conclusion as follows:

“…… [Ds] relies on the case of Manova International Ltd v Giga Technology Co Ltd & anor HCA733/2009, unreported, dated 25 February 2010, and submitted that such an inflation of costs is a basis for disallowing all costs for taxation in this case.

The reduction of the taxed costs compared to the original claim cannot be said to be not substantial. The only inference to be drawn must be that the costs claimed in the bill of costs were entirely disproportionate to the work done and unreasonable, making it more difficult for the parties to settle. Had [Ps] been reasonable in her claim and formulated a more realistic bill of costs, the taxation hearing can certainly be avoided. Such unreasonable conduct of [Ps] in inflating the bill of costs and the amount by which the bill of costs has been reduced is something this court should consider under Order 62, rule 32(a). I agree with [Ds] that [Ps] should be deprived of the costs of taxation based on this consideration.

So having considered the submissions, I find the conduct of [Ps] in inflating the bill of costs and the substantial reduction of the bill on taxation is substantiated and [Ps] should be deprived of the costs of the taxation.

So I make an order that the [Costs Order Nisi] be varied to costs of taxation be to [Ds]. I shall conduct a summary assessment on the costs of taxation for [Ds].”

135.  The above reasoning in the Kot Reasons raised 3 points: (a) there was substantial reduction of the claimed PC/DIS in the Bill, (b) such substantial reduction showed the claimed amounts in the Bill were unreasonably disproportional to the work done, and (c) the inflation of the Bill made it more difficult to settle but taxation could have been avoided had there been a more realistic bill of costs.

(b)  Substantial reduction

136.  The amount by which a taxation bill of costs has been reduced is plainly a pertinent consideration on the issue of entitlement to costs of the taxation (see Order 62 rule 32A(2)(b) – see paragraph 13 above). As to paragraph 135(a)-(b) above, there could not have been any dispute that there was substantial reduction of the Bill, especially as Ps would not for the purpose of the Appeal dispute the amounts allowed/ disallowed by Master Kot. Focusing first on Part A and Part B of the Bill which comprised the PC and the DIS incurred for the present action, 91% of the claimed amounts in Part A and Part B of the Bill[51] were PC (Part A), and 9% were DIS (Part B),[52] a situation quite different from Lam Chi Sheung where in terms of value the difference between the PC and the DIS in the taxation bill were not that high, which consideration P Cheung J (as he then was) took into account to consider that each party should bear his own costs of the taxation and review. Further, the reduction for the Part A and Part B Costs upon taxation were about 69% (Part A) and about 17% for (Part B) (see paragraph 28 above). Given that the bulk (91%) of the claimed amounts in Part A and Part B of the Bill was the PC that were substantially taxed down/off (69%), I find Master Kot did not err in coming to the view that the costs claimed in the Bill was “unreasonable” and “disproportionate to the work done”. Nevertheless, such view must have been expressed purely on the basis of party-and-party taxation since (Master Kot did not refer to and on the face of the evidence before the court) there was nothing to show any breach of the indemnity principle.

137.  For Part C of the Bill, 91% of the claimed amounts were alleged DIS for reviewing files, drafting the Bill and drafting the NOCT, but such “disbursements” transpired to be BCCo’s PC (ie professional work done by BCCo) as no LCD was engaged (see footnote 5 above). This claimed item was allowed by Master Kot at the rate of notional LCD in the amount of $90,000.00, ie a reduction of about 68%.[53] Part C Costs in the Bill were reduced by an overall 54% (see paragraph 28 above), so the bulk of the reduction was for the PC. Again, I find Master Kot did not err in coming to the view that the PC/DIS claimed in Part C of the Bill was “unreasonable” and “disproportionate to the work done”, the bulk of which professional work she considered on party-and-party basis ought to have been done by notional LCD. But that said, I also reiterate that such view must have been expressed purely on the basis of party-and-party taxation (since Master Kot did not refer to and on the face of the evidence before the court) there was nothing to show any breach of the indemnity principle.

138.  Ms Chark in her Appeal Submissions recognised the Bill was “substantially higher than the amount allowed under the [Cost Order Nisi]” and might “have incorrectly included some of the time on the common fund”, but she contended it was prepared upon the records of BBCo. Ms Chark also submitted that “Ps have produced evidence proving that Ps actual time costs were substantially higher than that itemised in the Bill of Costs”. In my view, such argument would not assist Ps because there was no evidence of complaint of breach of the indemnity principle. Rather, the complaint was that the Bill was “unreasonable” and “disproportionate to the work done” on party-and-party basis since the taxation was on such basis. Whether BBCo had records to show what was actually incurred as between solicitor and own client was neither here nor there. The Bill should have been properly prepared on the party-and-party basis of “necessary or proper” costs. As explained by Bharwaney J in Chan Yin Na, “[counsel] and senior counsel acting under a legal aid assignment must conduct their business efficiently. Barristers who render a Rolls-Royce service on a legal aid assignment understand and must understand that they might not be allowed fees, on a party and party taxation, that are commensurate with work they have performed” (paragraph 42). In my view, the same observation would apply with equal force to assigned solicitors, and party-and-party taxation bills should be prepared with the aforesaid admonition in mind. Indeed, I would further venture that apart from fees for Rolls-Royce service, on party-and-party basis of taxation, professional fee-earners were expected to have reasonable level of professional skill and knowledge, and unwarranted time spent on perusal, drafting and research due to inexperience and/or other unforced factors should have no place in party-and-party taxation bills.

139.  I am not persuaded that Master Kot erred in her findings in paragraph 135(a)-(b) above, especially when, according to Ms Chark’s Costs Submissions, “[the] Appeal was to set aside the [Kot 2^nd Order that included the Cost Order Absolute] solely on the costs of taxation without asking the court to review that the Taxing Master’s decision on her assessment of the Profit Costs incurred in the main proceedings”. As Mr Sakhrani noted, Master Kot when dealing with item 12 of Part C of the Bill (ie the PC for attending the Taxation Hearing[54]) at the Taxation Hearing observed that “I think the [Bill], most items have been unreasonably inflated …… which we spent so much time on it. Secondly, the bundles also badly prepared. We’ve spent so much time in trying to dig out all the documents. ……”[55] Again, I see this observation as one expressed on the basis of party-and-party taxation without any criticism of breach of the indemnity principle.

140.  Ms Chark argued that “[while] the bundles for the taxation hearing were unsatisfactory because the incoming correspondences were filed separately from the outgoing correspondences rather than in chronological order and some records of phone calls were inadequate, the Taxing Master already substantially taxed down Ps’ costs of taxation”. I am not persuaded such argument provided a sufficient answer to Ds’ concerns. Master Kot was keenly aware she had substantially taxed down the Part C Costs by the Cost Order Nisi, and she did not err in law in failing to take into account such relevant consideration. Indeed, it was for the very reason that the Bill was substantially taxed down (which, according to the Kot Reasons, reflected that the Bill was unreasonable and disproportionate in the party-and-party sense and hence a hindrance to early settlement) that Master Kot exercised her discretion on costs to disallow Ps’ costs of the taxation.

141.  Ms Chark in her Costs Submissions sought to blame BCCo’s substantial PC as claimed in Part A of the Bill on Ds’ conduct of the litigation as follows:

“6.  It was Ds who chose to press for supplemental witness statements in support of Ds speculations raised in their witness statements on the cause of death which was not pleaded in the Defence, for medical reports purporting to support such speculation, filed the Notice of Ceasing to Act for D3 whose sole shareholder was D1’s wife (after filing the Statement of Truth verifying the Defence on behalf of D3 and filing 3 witness statements by D1 and 2 employees of D3) and then filed the Notice to Act for D3 after Ps incurred the costs to obtain an order to restore D3, asked for late extensive specific discovery to challenge, inter alia, the identities of the vendors of Ps home at the PTR which was over a year after the action had been set down for trial, served the Mediation Response 20 months after receiving the Mediation Notice rather than within 14 days pursuant to PD31 that resulted in the mediation only held 2 weeks before the 8-day trial from 01.06.18.”

Similar assertions could be found in Ms Chark’s Appeal Submissions. But these factual matters were not found in the Chark 2^nd Aff being the affirmation evidence deployed by Ps for the Appeal, and Ms Chark’s written submissions did not identify where such underlying evidence could be found to have been placed before the court. If it were said that they might be gleaned from the transcript of the Taxation and Variation Hearings, Ms Chark had not assisted the court by pointing out the relevant parts of such transcript.

142.  In any event, those matters would not avail Ps:

(c)  Difficulty to settle

143.  Settlement offers As for paragraph 135(c) above, ie whether the inflation of the Bill made it more difficult to settle or, to put in another way, whether taxation could have been avoided had there been a more realistic taxation bill, there had been a number of offers to and fro by Ps and Ds prior to the Taxation Hearing:

144.  There was no dispute Ps failed to better Ds’ Final Offer, but Mr Sakhrani fairly accepted the margin between the Cost Order Nisi and Ds’ Final Offer was narrow. Since Ps conceded Ds should have costs of the taxation after the date of Ds’ Final Offer for the purpose of the Appeal, I find Ps’ reliance on the de minimus rule in relation to the narrow margin would not take their case further on the issue of the basis of taxation/ assessment. The court has an overall broad discretion as to costs, and it was apparent from the Kot Reasons that Master Kot as taxing master had considered the impact of a broad range of factors that might impact on the incidence/entitlement of costs of the taxation (see paragraph 117 and footnote 45 above). The key question was whether Master Kot had been unreasonable or had erred in regarding the disproportionate Bill as precluding early settlement of the taxation and justifying disallowance of Ps’ costs of taxation when she had fairly considered and found Ds’ other contentions as insufficient for such conclusion.

145.  Manova International Limited  It is perhaps an appropriate juncture to consider the authority cited by Ds and referred to by Master Kot in the Kot Reasons, ie Manova International Limited v Giga Technology Company Limited. [63] In that case, in the course of negotiations for settlement of the action, the plaintiff’s solicitors sent a letter to defendant in June 2009 stating the “estimated amount of legal costs and disbursements” incurred to date was $120,000.00 (“June letter”). Less than 2 weeks later, the action was settled by consent summons with costs to the plaintiff to be taxed. Taxation commenced in November 2009 when the plaintiff filed a bill for $272,464.00 excluding costs of the taxation. 4 weeks after the taxation bill was filed, the defendants made their 1^st sanctioned payment for $85,932.00 and filed their list of objections, followed by a 2^nd sanctioned payment “topping up the amount to $127,000, all inclusive” on 11 December 2009. Then 3 weeks later (on 2 January 2010), the plaintiffs proposed to settle the costs at $165,788 exclusive of interest. The bill was taxed at an oral hearing, and the plaintiff failed to beat the 2^nd sanctioned payment.

146.  After holding that the defendants (paying parties) were entitled to costs on indemnity basis from 12 December 2009 as well as interest sanctions under Order 62A rule 19 of the RHC (which assumed the plaintiff (receiving party) would have costs for the taxation) (paragraph 14), Madam Registrar Au-Yeung (as she then was) went on to consider whether all costs of the taxation should be disallowed by reason of the plaintiffs’ (a) failure to settle at an earlier stage, (b) failure to seek summary assessment under the Consent Summons and (c) inflation of costs under Order 65 rule 5(c) of the RHC (paragraphs 15-16). Whilst the learned registrar (as she then was) did not hold (a)-(b) above against the plaintiffs (paragraphs 17-22), she found in favour of the defendants on (c) above. The learned registrar (as she then was) noted that the June letter would have led a reasonable reader to think that the amount of costs incurred by the plaintiff up till then were about $120,000.00, and no justification was given for “more than doubling the costs in 5 months’ time when the substantive steps were only the taking out of the Consent Summons and some correspondence”. The learned registrar (as she then was) held this gave an impression of inflation of costs and of charging an amount entirely disproportionate to the work done in the party-and-party sense, which made settlement even more difficult and which required more costs (ie costs of the taxation) to be incurred to test how genuine the bill was. The learned registrar (as she then was) observed as follows:

“26.  I find what the receiving party to have done in this case to be unreasonable and the costs claimed were disproportionate to the work involved.  Had they claimed the amount of $120,000 or thereabouts, with reasonable adjustments for work done after June, the taxation might have been easily disposed of.  ……

……

29.  …… Additionally, for acting unreasonably and claiming disproportionate costs thereby necessitating a taxation, the receiving party should be deprived of all costs of taxation incurred even before the 2^nd sanctioned payment was made and some of the interest.”

On such basis, the plaintiff’s costs of the taxation in the taxation bill were disallowed, leaving the defendants to bear their own costs for preparing the list of objections since their 1^st sanctioned payment remained beaten (paragraphs 26-27 and 30).

147.  Ds’ case  Mr Sakhrani submitted the PC/DIS claimed in the Bill were grossly exaggerated (with about ⅔ of the claimed amounts disallowed), especially as Ps’ initial offer was for $1,600,000.00 months before the Bill was even filed, when in fact Ps ought to have claimed “necessary or proper” party-and-party costs. It was said Master Kot had carefully considered the taxation proceedings in the present action in light of Manova International Limited that was cited to her, and she had not erred in coming to her view on costs of the taxation as she did. Mr Sakhrani reminded that the arguments in Ms Chark’s Appeal Submissions were already before Master Kot for the Variation Summons, and that Ps had not begun to show how the taxing master was unreasonable or had erred in law (when the discretion as to costs was not to be exercised de novo before the judge).

148.  Ps’ case  Apart from saying in her Appeal Submissions that “the factual scenario in this case is completely different from Manova” and for the purpose of the Variation Summons the onus was on Ds to justify disallowing Ps’ costs of the taxation, Ms Chark had not elaborated on why the approach adopted by the taxing master in following Manova International Limited in setting the court’s face against inflated party-and-party taxation bills that were disproportionate to the work done and that would hinder disposal of the taxation was plainly wrong and/or inappropriate. I bear in mind on appeal (and/or review) it was for Ps to show Master Kot had erred in her exercise of discretion on costs in granting the Cost Order Absolute.

149.  Rather, Ms Chark urged that (a) the conduct of both parties should be taken into account under Order 5(1)(e) of the RHC, (b) the Appeal was not hopeless when Master Kot dismissed 4 out of 5 grounds in support of the Variation Summons (see paragraph 117 above), (c) Ps had made very practical successive offers that were close to the Cost Order Nisi, and (d) the amounts itemised in the Bill were clearly not the cause for which the parties did not reach settlement prior to the Taxation Hearing. Ms Chark’s Appeal Submissions also reminded that Master Kot considered Ds’ various criticisms of Ps’ conduct of the taxation and Ps’ offers to settle the taxation, but the taxing master did not find them sufficient to support Ds’ contention that Ps be deprived of all costs of the taxation.

150.  Discussion  As regards Mr Sakhrani’s complaint about the disproportionate PC/DIS in the Bill (see paragraph 147 above), I repeat the discussion in paragraphs 136-142 above. Interestingly, in May/June 2018 (ie about 1-2 months before the Bill was filed), Ps offered to settle their entitlement to PC/DIS under the Cost Order in lieu of taxation for $1,600,000.00 and/or $1,630,000.00 (see paragraph 143 above). By then, all Part A and Part B Costs had been incurred, and Ps were entitled to have those costs as taxed under the Cost Order. So it was rather surprising, to say the least, that the Bill filed shortly thereafter in July 2018 claimed a double sum of $3,176,078.54 for such PC/DIS. It is even more surprising that even before Ds filed their list of objections and/or made any offer, Ps initiated reduction of their offer to $800,000.00 (about half of the original offer) and/or $900,000.00 in August 2018. There was no evidence to show why Ps’ offers were pitched at those levels. Such significant disparity with the claimed amounts in the Bill could not be brushed aside by suggestion (if any) of seeking early settlement by way of a substantially reduced offer. After all, assigned solicitors were obliged in their duty to the aided person and also to the DLA to recover costs in favour of the aided person, especially where property has been recovered for the aided person giving rise to the DLA’s first charge. In my view, the significant disparity of these initial offers by Ps when viewed against the billed amounts as well as the obligation of assigned solicitors plainly gave an impression of inflation in the party-and-party sense that were disproportionate to the work done. This supported the finding of Master Kot (who had the benefit of reviewing the entire Bill against the primary taxation materials and submissions by the parties in the course of the Taxation Hearing) that the Bill was substantially more than necessary or proper costs recoverable under party-and-party taxation. I accept that in practical reality it made settlement more difficult as Ds understandably had to incur more costs to test and assess how genuine the Bill was. In my view, Master Kot was correct to regard the disproportional billed amounts of PC/DIS and the substantial reduction of the billed PC/DIS on taxation as pertinent considerations for her exercise of discretion in determining the incidence/entitlement of costs of the taxation.

151.  As regards Ms Chark’s reminder that the conduct of both parties should be taken into account under Order 62 rule 5(1)(e) of the RHC (see paragraph 149(a) above), I refer to the discussion on Ds’ conduct of the litigation in paragraphs 141-142 above, which I adopt but do not repeat here. Ms Chark also submitted the Appeal was not hopeless when 4 out of 5 grounds in support of the Variation Summons were dismissed (see paragraph 149(b) above). But, according to Ms Chark, the Appeal was brought on Ps’ sole challenge over Master Kot’s reliance on the over-statement (in the party-and-party sense) and eventual substantial reduction to P’s Bill to disallow Ps’ costs of the taxation (see paragraph 117 above). As evident from the Kot Reasons, Master Kot had carefully considered various factors and came to the view the other factors were inadequate to disallow all Ps’ costs of the taxation. In my view, it could not be said the taxing master failed to take into account relevant considerations and/or she took into account irrelevant considerations. The reasonableness of the Appeal (under the Assumed Procedure) would turn on whether the taxing master’s exercise of discretion was plainly wrong in having considered and debated the merits of these various factors, and I am persuaded there was little room for Ps to argue that Master Kot had erred.

152.  As regards the successive offers by Ps, Ms Chark submitted that (a) “Ps’ efforts in exploring settlement can hardly be regarded as being unreasonable or had prevented the parties from settling Ps’ Costs that would justify in ordering Ps to absorb all of their costs of taxation for the Entire Period”, (b) “[the] Taxing Master erred in ordering Ps to pay for Ds costs of taxation from 23.07.18 when Ds only did better by [Ds’ Final Offer] served on 28.06.19 especially when Ds only paid $900,000 to the LAD on 21.11.18 with the balance of the [Ds’ Final Offer] not being backed by any cash payment into Court or to the LAD. The [Cost Order Absolute] gave Ds a wholly unjustified windfall ……” (see paragraph 149(c)-(d) above).

153.  At the outset, I am not persuaded Ds should be criticised for not paying the balance of Ds’ Final Offer into court or to the LAD when Order 62A of the RHC was not applicable and Ds did not seek the statutory sanctions thereunder. The absence of full payment of Ds’ Final Offer would not diminish the relevance and vitality of such Calderbank offer (see Singh Gorinder Bal at pages 416-417), bearing in mind that Order 62 rule 5(1)(d) of the RHC[64] provides that the court in exercising its discretion on costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account “any written offer which is expressed to be “without prejudice save as to costs” [ie a Calderbank offer] and which relates to any issue in the proceedings” without requiring such offer to be fortified by actual payment to the receiving party or to the court  (see also the Calderbank offers, say, in Lam Chi Sheung in paragraphs 83-86 above, in Singh Gorinder Bal in paragraphs 121-122 above, and in Wong Wai Chun & anor v Lewin[65] in paragraphs 156-159 below which were not accompanied by payment into court, or to the LAD or to receiving party). In fact, the usual reason for a paying party to make payment to the LAD or the receiving party on account of the taxed PC/DIS pending taxation hearing was not for fortifying any Calderbank offer, but rather it was for reducing liability for interest on taxed costs that ran not from the sealing of the allocator but from the making of the relevant cost order.

154.  Ms Chark’s arguments in paragraph 152 above focused on the fact Ds’ Final Offer (that had beaten the Cost Order Nisi) was made on 28 June 2019 which, according to Ms Chark, meant Ds by the Cost Order Absolute enjoyed a windfall in (a) not having to pay Ps’ costs of the taxation prior to such date, and (b) recovering Ds’ costs of the taxation prior to such date.

155.  I first turn to Lam Chi Sheung. Cheung J (as he then was) noted the taxed DIS had beaten the defendant’s Calderbank offer on the DIS, but the plaintiff failed to beat such Calderbank offer on the PC and globally, and came to the view that the appropriate order was for each party to bear his own costs of the taxation and review before the master upon taking into account the negotiations for settlement and the fact that the value difference between the claimed PC and the claimed DIS in the taxation bill was not that high, so that looking at things in the round each party was successful in 1 category of costs as compared with the defendant’s Calderbank offer. But I bear in mind that in that case there was no suggestion the taxation bill was inflated, unreasonable and/or disproportionate to work done in the party-and-party sense. After all, the reduction on taxation of the billed PC and the billed DIS were 37%[66] and 9%[67] respectively, which was a far cry from the reduction upon taxation in respect of the PC and the DIS as claimed in the Bill of 69% and 17% respectively (see paragraph 28 above) that invited Master Kot’s observation that the Bill was “unreasonably inflated” in the party-and- party sense. I also bear in mind that the PC rather than the DIS in the Bill was more substantially reduced, but unlike the taxation bill in Lam Chi Sheung, the bulk of the billed amounts for Part A and Part B in the Bill was PC (91% – Party A Costs) rather than DIS (9% – Party B Costs) (see paragraph 136 above), and Ps failed to beat Ds’ Final Offer on both PC and DIS. In my view, these considerations distinguish the present situation from Lam Chi Sheung, and the over-statement in Parts A and B of the Bill was necessarily a relevant factor which Master Kot properly took into account in deciding whether or not to disallow all of Ps’ costs of the taxation.

156.  In Wong Wai Chun (which was cited by Ms Chark), judgment was entered for the plaintiffs with the defendant ordered to bear 43% of the plaintiffs’ costs. The plaintiffs claimed $92,765.49 for the PC and $666.00 for the DIS. In a Calderbank letter, the defendant offered to pay $25,000.00 for the plaintiff’s PC and DIS. The total amount allowed on taxation was $57,897.00 and the costs recoverable by the plaintiffs against the defendant were $24,896.00, ie the plaintiffs failed to beat the defendant’s offer by a small margin. The plaintiffs (receiving parties) were ordered to bear the defendant’s (paying party’s) costs of the taxation, including costs of attending the taxation hearing. The plaintiffs sought a review of the cost order, arguing they should be entitled to (a) costs of the taxation (including interest on the taxed costs) from the date of the judgment to the date of the Calderbank letter, or (b) the taxing fees, or (c) both. In that case, it was held that on proper reading the defendant’s Calderbank letter covered the PC and the DIS but was exclusive of interest, so the Calderbank offer was not beaten and the plaintiffs (receiving parties) had to bear the costs of the taxation (page 275).

157.  I note that here Ps, like the plaintiffs in Wong Wai Chun, failed to beat the Ds’ Final Offer by a narrow margin. Further, like the total amount claimed in the taxation bill in Wong Wai Chun ($94,431.49) which Master Poon (as he then was) said “is highly disproportional to the matters in issue” (page 277), the amounts claimed in the Bill were found by Master Kot to be over-stated and disproportionate to the work done in the party-and-party sense. Although Master Kot did not refer to Wong Wai Chun, the decision in that case by Master Poon (as he then was), ie the plaintiffs (receiving parties) should bear the costs of the taxation when the amounts claimed in the taxation bill was disproportional and when such taxation bill was substantially taxed down, would suggest that Master Kot did not err in law and was not plainly wrong in the exercise of her discretion on costs of the taxation such that it could reasonably be impugned on appeal (or, more appropriately, on review).

158.  Further, the obiter comments of Master Poon (as he then was) were also of interest. The learned master (as he then was) said that if the defendant’s Calderbank letter on costs were intended to include interest on taxed costs payable from the date of judgment, the taxed costs would exceed the defendant’s Calderbank offer by a meagre margin of $783.68 (page 278), but the court retained an overall broad judicial discretion as to costs,[68] so bearing in mind (a) the total claimed amounts in the taxation bill were highly disproportional to the matters in issue, (b) the defendant’s offer was very reasonable and substantially similar to the taxed amount, and (c) the amount of interest awarded was insignificant when compared to the costs claimed/allowed, “the de minimus principle should apply in the present case, having regard to all the circumstances” (ie even though the defendant’s Calderbank offer was beaten by a narrow margin as a result of including interest, it was de minimus and insignificant). It was further said that “[the] plaintiffs ought to have accepted the offer and avoided the taxation”, and that “it was unreasonable for the plaintiffs to have refused the offer” (pages 277-278).

159.  From the above, it was quite plain that in appropriate circumstances a taxing master could fairly take into account the fact that the taxation bill was “disproportional to the matters in issue” (which factor was also relevant here) to overcome a receiving party’s meagre gain of a few hundred dollars above the paying party’s offer by proceeding to taxation (which factor was not even relevant here as it was the way around, ie Ps failed to beat Ds’ Final Offer by a few hundred dollars) to disallow the receiving party’s costs of the taxation and to allow the paying party’s costs of the taxation. I am not persuaded Master Kot could be faulted as being plainly wrong in the approach she adopted when (a) she concluded that the Bill was over-stated in the party-and-party sense, (b) she knew Ps failed to beat Ds’ Final Offer albeit by a narrow margin, and (c) she carefully debated various other factors as well before she gave weight to (a)-(b) above.

160.  In Singh Gorinder Bal, the plaintiff had beaten the defendant’s Calderbank offer by a few hundred dollars ($558.50), but this was one factor to be looked into together with other factors and not determinative on the matter of costs of the taxation (see paragraph 122 above). Mr Recorder A Chow SC (as he then was) took into account various matters (see footnote 48 above), including that (a) the PC was allowed at 37% of the claimed amounts, (b) the taxed PC/DIS exceeded the defendant’s last offer in July 2010 ($334,000.00) by only $558.50, but failed to beat the defendant’s earlier offer in June 2010 ($340,000.00), (c) the plaintiff should have accepted the defendant’s earlier offer in June 2010, and (d) both the June/July 2010 offers were very close to the amount allowed and nothing of real value was achieved by continuing with the taxation proceedings after offer in June 2010. So even though the plaintiff had beaten the defendant’s last offer (which the defendant recognised as having to pay the plaintiff’s costs of the taxation up to the offer in June 2010), the plaintiff had to pay the defendant’s costs of the taxation after 30 June 2010 and costs of the application for variation of the costs order nisi and the appeal.

161.  In my view, Singh Gorinder Bal was factually different as Ps had actually beaten Ds’ Final Offer. Whilst it was accepted that a Calderbank offer (especially when the offer was more or less than the taxed costs by a narrow margin) would not necessarily dictate the incidence of costs of the taxation, there were other relevant considerations, including the amount of the PC/DIS allowed/disallowed on taxation and whether the billed amounts were disproportional in the party-and-party sense. Here, Ps not only failed to beat Ds’ Final Offer globally, they failed to beat both the PC (Part A) and the DIS (Part B) claimed in the Bill. Moreover, the claimed amounts in the Bill were reduced overall by about 63% (see paragraph 23 above) with even more significant reduction of 69% for PC (Part A Costs) (see paragraph 28 above).

162.  Taking all of the above matters into account, I am not persuaded there was arguable basis to challenge Master Kot’s exercise of discretion on costs of the taxation by the Cost Order Absolute that it was plainly wrong as being unreasonable and/or as having erred by taking into account factors she should not have considered or failing to take into account any factor she should have considered. The discretion of the judge is not to be exercised de novo, and even on the assumed basis of the Assumed Procedure/Relief, Ps were correct to seek leave to discontinue the Appeal which was eventually dismissed.

163.  Finally, Ms Chark in her Costs Submissions referred to various offers for Ds’ costs of taxation for costs of the Variation Summons, and/or for settling the Variation Summons:

“8.  After the Variation Summons was served on 04.09.19, Ps offered to pay Ds $57,725 on 11.09.19 which was increased to $77,631 on 18.09.19, to $83,031 on 27.09.19, to $86,034.30 on 29.10.19, to $94,376 on 21.01.20 to settle Ds’ claim for their costs of taxation and the Variation Summons. 

……

10.  On 23.10.20, Ps offered to pay Ds $114,376, namely $20,000 more than the offer made on 21.01.20, to settle both the Variation Summons and the Appeal. This offer was revised to HK$34,376 on 27.10.20, after taking into account Ps costs of the Variation Summons if the Appeal was allowed. None of the offers served on Ds since 11.09.19 asked Ds to pay a single penny to Ps solicitors. All offers were made to reduce the amount of Ds costs claimed against Ps.”

But, again, none of these offers by correspondence were placed before this court whether by affirmation (when Ps had opportunity to do so had they wished to adduce affirmation evidence for the Discontinuation Summons) or by agreement with Ds, and Ds had not been given opportunity to address on these matters. I cannot see how I could consider these matters without the primary evidence.

164.  For all of the above reasons, the Appeal was incompetent, and had no merits even on the basis of the Assumed Procedure/Relief. In my view, Ps would have to pay Ds’ costs of the Appeal and the Discontinuation Summons (with all costs reserved if any) on indemnity basis.

VI.  WASTED COST ORDER?

165.  Section 52A of the High Court Ordinance Cap 4 (“HCO”) provides inter alia that:

“(4)  In any civil proceedings before it, …… the Court of First Instance may, in accordance with rules of court, by order disallow, or order the legal representative concerned to meet, the whole or any part of any wasted costs.

(5)  When determining whether or not to make an order under subsection (4), …… the Court of First Instance shall, in addition to all other relevant circumstances, take into account the interest that there be fearless advocacy under the adversarial system of justice.

(6)  In subsection (4), wasted costs means any costs incurred by a party as a result of –

(a)  an improper or unreasonable act or omission; or

(b)  any undue delay or other misconduct or default, on the part of any legal representative, whether personally or through an employee or agent of the legal representative.

(7)  In this section, legal representative, in relation to a party to any proceedings, means a …… solicitor conducting litigation on behalf of the party.”

166.  Order 62 rule 8 of the RHC provides as follows:

“(1)  The Court may make a wasted costs order against a legal representative, only if –

(a)  the legal representative, whether personally or through his employee or agent, has caused a party to incur wasted costs as defined in section 52A(6) of the [HCO]; and

(b)  it is just in all the circumstances to order the legal representative to compensate the party for the whole or part of these costs.

(2)  A wasted costs order may –

(a)  disallow the costs as between the legal representative and his client; and

(b)  direct the legal representative to –

(i)   repay to his client costs which the client has been ordered to pay to other parties to the proceedings; or

(ii)  indemnify other parties against costs incurred by them.

(3)  The Court shall give the legal representative a reasonable opportunity to attend a hearing to give reasons why it should not make the order.

……”

167.  Paragraph 14 of Practice Direction 14.5 (“PD14.5”) states that although the application may be made orally at a hearing, it should normally be commenced by inter partes summons in proceedings in which wasted costs are alleged to have been incurred. Paragraph 13 of PD14.5 further states that procedural issues arise at 3 points; (a) when an application is initially made by a party (see Order 62 rule 8A of the RHC), (b) at the first stage when the court decides whether the proceedings should proceed further (see Order 62 rule 8B(1)(a) of the RHC), and (c) at the second stage hearing when the court proceeds to a substantive assessment of the application (see Order 62 rule 8B(1)(b) of the RHC).

168.  Order 62 rule 8B of the RHC provides as follows:

“(1)  The Court shall consider whether to make a wasted costs order in 2 stages –

(a)  in the first stage, the Court must be satisfied that -

(i)    it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and

(ii)  the wasted costs proceedings are justified notwithstanding the likely costs involved; and

(b)  in the second satge (even if the Court is satisfied under sub-paragraph (a)), the Court shall consider, after giving the legal representative an opportunity to give reasons why the Court should not make a wasted costs order, whether it is appropriate to make the order in accordance with rule 8.

……

(3)  On an application for a wasted costs order, any evidence in support must identify –

(a)  what the legal representative is alleged to have done or failed to do; and

(b)  the costs that he may be ordered to pat and which are sought against him.”

169.  Turning first to the initial application made by a party under paragraph 13(1) of PD14.5 (see paragraph 167(a) above), PD14.5 gave the following guidance:

“15.  The application should be served by the applicant on the legal representative against whom an order is sought, any person represented by that legal representative and any other person as may be directed by the Court (see Order 62, rule 8A(3)).

16.  The summons, which seeks an order that the legal representative show cause under Order 62, rule 8(3), should be accompanied by particulars clearly specifying the conduct of which complaint is made, that is, the particulars must identify precisely what the legal representative is alleged to have done or failed to do.

17.  The particulars to the summons should also state precisely what wasted costs are alleged to have been caused by such acts or omissions of the legal representative and how much of such costs are being claimed by the applicant.

18.  The less clear the complaint is and / or the more complicated and wide-ranging the particulars are, the less likely it will be that the Court will be prepared to allow the matter to proceed to the second stage hearing.

20.  Where such evidence or material is already before the Court, they should not be exhibited to the affidavit. But, where some evidence or material crucial to the application is not already before the Court, the affidavit should exhibit the same.

21.  The legal representative need not file any evidence, but is free to do so if it is desired to place some important item of evidence before the Court for the purposes of its decision at the first stage hearing.

22.  Since the particulars and any affidavit should make the case against the legal representative clear, there usually should be no need for any preliminary directions hearing before the first stage hearing. If the complaint is unclear or plainly unsustainable, objection can be taken or directions sought at the first stage hearing itself.”

170.  Mr Sakhrani at the Discontinuation Hearing orally applied for a wasted costs order against BCCo to pay Ds’ costs of the Appeal and the Discontinuation Summons (which costs have now been determined by this court to be payable in favour of Ds on indemnity basis and to be summarily assessed at explained in Part IX below). Nevertheless, the fact Ds made the application for wasted costs orally and not by summons would not relieve them as applicants from the need to specifically spell out the conduct of which complaint was made, ie what precisely BBCo was alleged to have done or failed to do, and what wasted costs were alleged to have been caused by such acts or omissions of BBCo and how much of such costs were being claimed by Ds. On these matters, I would have to turn to Mr Sakhrani’s Costs Submissions (see paragraph 172 below), bearing in mind the admonition that “the less clear the complaint is and/or the more complicated and wide-ranging the particulars are”, the less likely the court would be prepared to allow the matter to proceed further, ie calling upon BBCo to “show cause” (see also Order 62 rule (1)(a) of the RHC).

171.  A number of relevant principles (albeit not exhaustive) can be distilled from the useful discussion in Hong Kong Civil Procedure 2021:

172.  What then were the precise allegations by Ds against BBCo for wasted costs? The following was elicited from Mr Sakhrani’s Costs Submissions:

173.  I should start by saying that a number of the above grounds (see, eg, (c) and (h) above) complained that BBCo had not filed evidence to clarify and give explanation for their conduct. But it was clear the boot was on the other foot as it was for the applicant for a wasted costs order to show it was a clear case to invoke the wasted costs jurisdiction and to require the legal representatives to “show cause”. Moreover, a number of the complaints (see, eg, (f), (h) and (i) above) concerned privileged matters, which client privilege was not for BBCo to waive. The principles discussed above (see, eg, paragraph 171(h) above) warned against drawing inference of impropriety and/or negligence from non-waiver of privilege. I am not persuaded Ds had even begun to show a clear case that Ps had not given informed authority for commencement and/or pursuit of the Appeal.

174.  I note the Appeal and the Discontinuation Summons were not covered by any legal aid certificate for Ps, so BBCo acted for Ps on private basis for those applications. But I do not see why BBCo should have sought a fresh legal aid certificate when a legal aid certificate was issued to an aided person (not legal representatives). There was no evidence before this court as to whether or not Ps had appealed against discharge of the legal aid certificate (although Ms Chark alluded to this in her submissions), applied for fresh legal certificate and/or decided against either step. There was no obligation on the part of former assigned solicitors, and Mr Sakhrani had not pointed to any, to cause a former aided person to re-apply for fresh legal aid certificate for the purpose of letting the LAD make sure the former aided person understood the further litigation steps taken or about to be taken on private basis by his private lawyers. I find (g) above to be quite insufficient for requiring BBCo to “show cause” in relation to Ds’ application for a wasted costs order against them.

175.  Mr Sakhrani referred me to the observations of Bharwaney J in Lai Sin Yan Elsie v Tata Communications (Hong Kong) Ltd which stated that assigned lawyers had a professional duty to promptly inform the DLA when they came to the view that the aided person did not have reasonable grounds to pursue his/her claim and/or to continue to receive legal aid, and they might otherwise be met with wasted costs by failing to perform their duty and putting the DLA at risk of having to pay indemnity costs out of the public fund.[71] Here, the issue of wasted costs only concerned costs of the Appeal and the Discontinuation Summons in respect of which Ps were no longer aided persons, which meant liability for such costs would be met by Ps and not by the DLA out of the public funds or to be recouped from the DLA’s first charge.

176.  In respect of (a) above, I am unable to see how it could support a case for wasted costs order. As Mr Sakhrani rightly recognised, assigned solicitors were only allowed fees on taxation. Whatever complaints Ds had in respect of BBCo’s unreasonable inflation of the claimed amounts in the Bill, they had been taxed down and reduced by Master Kot as taxing master. Mr Sakhrani had not suggested (and it was certainly not clear and precise before this court) that any reduced/ disallowed item had been transferred to common fund costs between BBCo as assigned solicitors and Ps as aided persons for common fund taxation. In the absence of such transfer, BBCo would not be able to recover any of the disallowed PC/DIS of the Bill. But even if any of the disallowed PC/DIS were so transferred, they would be subject to the scrutiny of the taxing master on common fund taxation, and excesses would have been disallowed. If it transpired that as between Ps and BBCo any of the latter’s common fund PC/DIS was unjustified (and client privilege not being an issue as between them), it was open for Ps/DLA to seek wasted costs against BBCo. But I am unable to see how BBCo should be visited with inter partes wasted costs for the very reason in (a) above which Master Kot had already taken into account in reducing the Bill (ie BCCo’s claimed PC/DIS).

177.  What was left of Ds’ contentions were the repeated complaints by Ds against the Appeal, ie the Notice of Appeal was defective, wrong procedure was adopted for the Appeal, the substantive application under the Appeal had no merits, and the Appeal was abandoned 2 months later (see, eg, (c), (d), (e) and (i) above). Whilst I can see that the Appeal could have been much better prepared and more careful evaluation could have been given to the procedural/substantive aspects of the application (which matters were canvassed at the Appeal Hearing) so as to obviate the Appeal and the Discontinuation Summons, the question here was not whether BBCo’s conduct of the Appeal and its abandonment had been inadequate, but whether there was clear basis that the Appeal was not merely a hopeless case but an abuse of process and breach of solicitors’ duty to the court so as to invoke the wasted costs jurisdiction to require BBCo to “show cause”.

178.  On the discussion/analysis above, I have come to the view that Ps should have adopted the review regime in Order 62 rules 33-35 of the RHC and not the appeal regime under Order 58 rule 1 of the RHC. But fairness required me to point out Singh Gorinder Bal cited by Ms Chark did adopt the appeal procedure. I distinguished such authority after careful consideration the relevant rules and the abundant guidance in other authorities (including that that fell from the Court of Appeal), which exercise BBCo should have carried out too, but I could hardly say BBCo’s procedural error in embarking on the Appeal on behalf of Ps was tantamount to misconduct and/or abuse of process. As for the substantive merits, whilst I recognised (as Ms Chark did) the high hurdle for displacing a master’s exercise of discretion on costs, and I eventually considered that the Cost Order Absolute ought to be upheld for the reasons given above, I am not persuaded there was enough to raise a prima facie case of poor conduct akin to misconduct or abuse of process by BBCo. It was true that Master Kot found the Bill inflated and disproportionate in the sense that such taxation bill was over-stated beyond what was necessary or proper for the purpose of party-and-party taxation, but there was no suggestion (and there was no evidence placed before me) of any breach of the indemnity principle. Whatever might have been the motivation for the Discontinuation Summons, it was far better to bring to the Appeal to an earlier rather than later end with the risk of incurring more time and costs. In any event, Ds were compensated for being embroiled in the Appeal and the Discontinuation Summons by being awarded costs of and occasioned such legal procedures on indemnity basis. I also bear in mind that whilst the courts may make wasted costs order against legal representatives on its own motion, Wilson Chan J in Tin Wan Tung, Registrar Au-Yeung (as she then was) in Manova International Limited and Master Poon (as he then was) in Wong Wai Chun did not require the plaintiffs’ solicitors to “show cause” why a wasted costs order should not have been made against them.

179.  It was next said that Ds had incurred and would continue to incur fees for the Appeal and the Discontinuation Summons (and hence financial loss) with no consequence to BBCo who would have benefited from the Appeal if successful (see (b), (e) and (k) above).

180.  Mr Sakhrani referred me to So Kam v Guildford Ltd[72] in which a motorcycle ridden by P came into collision with a taxi owned by the 1^st defendant and driven by the 2^nd defendant who had hired the taxi from the 1^st defendant. HHJ Andrew Li dismissed the action with costs in favour of the defendants and directed the plaintiff’s solicitors to show cause why a wasted cost order should not be made against them. In that case, the plaintiff was not legally aided, and the evidence at the trial showed there was insufficient evidence to commence the present action. He only paid a negligible amount to his solicitors for disbursements, and went through the whole trial with the financial assistance of his solicitors, so it was obvious the defendants “will never be able to recover their costs of the proceedings, including the costs of the trial,” from the plaintiff (page 334). It was said that in such context it was incumbent on the solicitors to make careful enquiry and satisfy themselves that an honest case existed or that there was at least an arguable cause of action or defence, and the solicitors could not blindly pursue a hopeless case on behalf of his client when the primary evidence does not even support the case he has pleaded on behalf of his client, “otherwise, at the end of the day, it is the general public who will end up paying for the successful party’s legal costs by paying higher premiums” (page 338). On such basis, the learned judge held “there must be a case to make solicitors who decide to pursue a hopeless case on behalf of a litigant to pay for the costs of the successful defendant when it is apparent that the plaintiff is not in a position to pay those costs as [the plaintiff] in this case: See : Re Labour Buildings Limited (勞工大廈股份有限公司) (the Company) (CACV37/2010, [2010] HKEC 624, 26 April 2010), per Rogers V-P, [7]-[8]” (page 339).

181.  Next, Re Labour Buildings Ltd first came before Harris J,[73] and the headnote of his judgment summarised the facts as follows:

“In July 2009, C, a company, agreed to buy a property (the Property). On 17 December 2009, Rs, the mortgagee, executed an assignment of the Property (the Assignment) as the court-appointed receivers of the Property and C’s appointed attorney pursuant to a debenture an authorisation of the Court. On the same day, P presented a petition to wind up C on the grounds of insolvency. C then sought an order that the Assignment was void. Rs applied for an order to validate the Assignment under s.182 of the Companies Ordinance.”

Harris J granted a validation order, but held it would not prevent a subsequent challenge to a transaction for a reason unconnected with the presentation of the petition or the granting of a winding up order against C.

182.  A notice of appeal was filed on behalf of C, but there was every reason to believe that C had no funds at all. In the appeal case,[74] Rogers VP said there was no call upon the solicitors to file that notice of appeal as (a) an appeal was a separate matter from the proceedings in the court below, and (b) it was the solicitors’ responsibility to see where the costs were coming from, not only for his own costs but also costs of the other party should the appeal fail (paragraph 2). When the appeal was set down with date of hearing fixed and later notified, C’s solicitors asked for an adjournment, but the 2^nd request for adjournment was refused. When the appeal was heard, no counsel appeared because C’s solicitors informed the counsel they approached that “they may not get paid because [C] was in the process of being wound up” (paragraph 5). Further, C’s solicitors confessed they “had no idea where any funds for the appeal would come from. It was purely speculative that funds might be available from another source or another which, of course, it would be impossible to identify” (paragraph 4). Rogers VP held it was a hopeless appeal from the start, and the perfunctory notice of appeal that raised no real ground at all kept up the façade (right until the hearing) that it was an appeal that would go ahead when C’s solicitors “well knew it was not going ahead and costs could clearly have been saved, even if the appeal were abandoned towards the end”. In those circumstances, C’s solicitors acted improperly in the conduct of the appeal and should bear the costs of it because C was not in a position to pay those costs, which costs were summarily assessed.

183.  Mr Sahkrani also relied on the observations of Zervos J (as he then was) in Li Ming Tak v Hong Kong Airport Services Limited,[75] albeit in a different context. In that case, the learned judge awarded damages in the sum of $325,000.00 for the plaintiff’s claim for damages for personal injuries, and granted a cost order nisi that costs of the action be to the plaintiff to be taxed if not agreed. Zervos J (as he then was) had debated whether he should not make such nisi order requiring the defendant to pay costs of the action since he found the plaintiff to have exaggerated his claim. “A fraudulent or an exaggerated personal injury claim will not be tolerated and any attempt to deceive the court by falsely stating or overstating the suffering caused can have serious deleterious consequences to the claim and the claimant. A claimant is obliged to make a true and honest claim and where someone is found to have acted dishonestly or knowingly made a false statement or claim, the court may not make an award to the plaintiff; or if an award is made, refuse costs and/or reduce interest to the plaintiff; or require the plaintiff to show cause why he or she should not be dealt with for contempt of court. See Summers v Fairclough Homes Ltd [2012] 1 WLR 2004” (paragraph 122).

184.  I am not persuaded that these authorities took Ds’ case much further for they were factually quite different. In all these authorities, not only was the relevant party’s case weak or even hopeless, there were findings by the court or admissions by the relevant solicitors of prima facie impropriety in, say, putting forward on behalf of their clients less than honest claims when they knew their clients had no funds to support the litigation or to deal with costs upon failure, and/or helping their clients to keep up a façade of proceeding with the legal procedures well knowing they would not go ahead. In Li Ming Tak, the scenario under discussion was fraudulent/dishonest claims that were knowingly and falsely exaggerated.

185.  But the situation here as between Ps and Ds was quite different. Whilst Master Kot had found inflation and exaggeration of the amounts in the Bill, that was a criticism in the party-and-party sense that they were substantially in excess of what was expected to be necessary or proper in a party-and-party taxation bill, which plainly invited the substantial reduction by Master Kot at the Taxation Hearing as well as her disallowance of Ps’ costs of the taxation and her allowance of Ds’ costs of the taxation at the Variation Hearing (as upheld by this court upon granting the Dismissal Order), but there was no suggestion or evidence that BBCo was in breach of the indemnity principle. In the absence of evidence, findings and/or waiver of privilege, there was insufficient clear material put forward by Ds to show any abuse that BBCo knowingly filedpursued the unsustainable Appeal which would not be financially supported if lost (when the Settlement Sum was still available and not released to Ps pending resolution of the DLA’s first charge), and/or to infer that BBCo commenced the Appeal without Ps’ authorisation or informed authorisation.

186.  I am not persuaded that on Ds’ contentions put before this court I should allow the matter to go further and call upon BBCo to “show cause” under the wasted costs jurisdiction. In the circumstances, I need not deal with Ms Chark’s Costs Submissions that complained against Ds’ motive to incur substantial costs for the Appeal and the Discontinuation Summons firstly in order to recoup such costs from the Settlement Sum, and lately from BBCo.

187.  But that said, the court does not smile kindly on disproportional solicitors’ PC/DIS that may have adverse impact on the client or DLA who may have to pay such costs and any adverse cost order. As between BBCo and Ps/DLA (in contra-distinction to the position between BBCo and Ds), the existence of the Settlement Sum and the non-breach of the indemnity principle would not provide sufficient answer for (a) BBCo as Ps’ solicitors and former assigned solicitors owed duty of care to Ps as the client and DLA, and (b) there would be no client privilege that would prevent looking seriously into the matter of proper authorisation and the litigation/financial risk of embarking upon and abandoning the incompetent Appeal.

188.  In the circumstances, it is only appropriate for opportunity to be given to Ps and the DLA to consider their position and to see if the wasted cost jurisdiction (whether in relation to BBCo’s PC/DIS but also in relation to indemnity for adverse costs) needs to be invoked. I am perturbed that Ms Chark’s Appeal Submissions stated that “the time costs recorded in the [Bill] were in fact substantially less than the time costs incurred by Ps”, and the DLA is urged to ensure tight scrutiny over common fund costs as between BBCo and Ps/DLA, and, independently from BBCo, to keep Ps informed. There had been some allusion in Ms Chark’s Costs Submissions about BBCo having waived certain claims for costs against Ps, but such assertions were unclear and require more scrutiny from the DLA.

VII.  TAXATION OR SUMMARY ASSESSMENT

189.  Mr Sakhrani urged that Ds’ costs be taxed and not summarily assessed because a lot of work had gone into (a) preparing for and attending the Appeal and the Discontinuation Summons, and (b) dealing with multiple issues unnecessarily raised by Ps in the Appeal and various letters to the court (see paragraph 50 above).

190.  I note that no further affidavit evidence was filed for the Appeal and the Discontinuation Summons, and that Ds had instructed counsel to prepare the Appeal/Costs Submissions and to appear on their behalf at the Appeal and Discontinuation Hearings. It would have been counsel who would have major carriage for attending to preparation for such appeal/summons and hearings, and consideration of counsel’s brief fees should not pose difficulty for this court who was seized of the relevant legal procedures and was well aware (perhaps more so than any taxing master) of the length and substance of Ms Chark’s Appeal Submissions. In my view, much time and costs for the parties as well as the court’s resources could be saved if the costs of the Appeal and the Discontinuation Summons could be summarily assessed in lieu of taxation. Given the nature of the applications, I am not convinced that full-fledged taxation by a taxing master instead of summary assessment of costs by this court would bring further benefit to the parties.

VIII.  CONCLUSION

191.  I therefore grant the following order:

192.  The reason the DLA Report should be made in mid-November 2021 was to enable this court to first deal with the summary assessment of costs in relation to the costs in paragraph 191(a) above. Parties should note that if the matter of summary assessment is not completed by 15 November 2021, this court will put aside and not read the DLA Report until the summary assessment is completed.

193.  As for costs of the argument on the issue of costs of the Appeal and the Discontinuation Summons, Ds succeeded in seeking indemnity basis of taxation/assessment, but Ps succeeded in resisting Ds’ application for taxation of costs (as opposed to summary assessment) and in resisting Ds’ application for wasted costs. Thus, the cost order in paragraph 191(c) above is appropriate.