LAU YUE KUI, THE ADMINISTRATOR OF THE ESTATE OF LAU WAI CHAU, DECEASED AND OTHERS v. PHILIP CHAN & CO (a firm)

HCMP 593/2007

[2021] HKCFI 3903

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT MISCELLANEOUS PROCEEDING NO 593 OF 2007

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BETWEEN

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D E C I S I O N

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Background

1.  On 11 September 2020, I handed down my decision on the taxation of Bill No 1 and Bill No 2.

2.  Then the 2^nd to 6^th Plaintiffs (“P2-6s”) took out an Inter-partes Summons dated 25 September 2020 to review my decision on taxation (“the Review Application”).

3.  At the hearing of the Review Application on 12 October 2020, I gave various directions for the Review Application and ordered it to be determined by way of paper disposal.

4.  Thereafter the parties issued various summonses in relation to the Review Application which require my determination before the disposal of the Review Application.

5.  All these subsequent summonses were heard by me on 10 February 2021, whereby I gave various orders and directions as agreed by the parties.

6.  As a result, the remaining matters that required my determination are as follows: -

(1) P2-6s’ summons dated 2 November 2020 for leave to amend their summons dated 25 September 2020 for the Review Application (“the Amendment Summons”);

(2) P2-6s’ summons dated 23 November 2020 for leave to file and serve the 13^th Affirmation of Li Siu Fung (“P2-6s’ Evidence Summons”); and

(3) The respondent’s summons dated 9 February 2021 for leave to file and serve the 10^th Affirmation of Chan Wing Hung (“R’s Evidence Summons”).

7.  I shall deal with these summonses in turn as discussed below.

The Amendment Summons

8.  In the Amendment Summons, P2-6s seek to introduce various new grounds for the Review Application. The respondent does not oppose to Grounds 2 to 9 and 12 of the amended grounds of review and leaves these matters to my discretion and consideration. The respondent opposes to Grounds 1, 10, 11 and 13 to 21 (which shall be discussed below).

9.  In addition to costs of and occasioned by the amendments, the respondent asks for costs incurred in the preparation of its Answers to Objections to be taxed on an indemnity basis.

10.  First of all, the respondent raises the general objection that the Amended Grounds of Review are not set out in a form that is usually known to a court exercising its powers of taxation, as it is not set out clearly as to which specific items or parts of items are objected to.

11.  However, as I have already decided that Bill No 1 should be assessed using a global approach rather than an item-by-item approach and Bill No 2 is a gross sum bill, it would be nonsensical to put forward grounds of objection on an item-by-item basis. Thus, I do not find it objectionable at all for the grounds to be presented in such a form as in the proposed Amended Grounds of Review.

12.  The respondent then raises specific objections to each of the objected grounds. I do not think that it is necessary for me to repeat all the objections raised by the respondent or to deal with all the counter-arguments submitted by P2-6s, but to give just a short summary of their respective positions.

13.  For Ground 1, the respondent contends that it seeks to review an issue decided in my decision for the preliminary issues. P2-6s submits that I did not determine the applicable burden of proof in the preliminary issues.

14.  For Ground 10, the respondent submits that the question of procedural fairness falls outside a master’s purview and it is an attempt at discovery which P2-6s are precluded from doing so in light of their past conduct and unfairness. P2-6s submits that they are not seeking discovery of documents at all, but to raise that it was procedurally unfair for the respondent to refer to and rely upon voluminous documents in the taxation bundles which were not made available to them.

15.  For Ground 11, the respondent contends that it is a naked attempt to re-introduce a point that P2-6s had conceded at the taxation hearing and the new objection of duplication was not contained in the List of Objections. P2-6s submits that they need not rely only upon points included in the original List of Objections or points directed towards specific items, and since review is a de novo procedure, the matter should be assessed as if it were being heard for the first time.

16.  For Ground 13, the respondent submits that as no objection was ever raised in relation to Bill No 2 on complexity of work, it exceeds the confines of a taxation review. P2-6s submits that their case is that the tasks within the scope of the retainer were not complex and this factor should be taken into account when assessing the reasonableness of the fees.

17.  For Ground 14, the respondent contends that the review procedure is not an appeal and as such a ground criticising the master for insufficient reasons is not an objection. P2-6s however argues that the respondent’s arguments are based on the incorrect premise that P2-6s are only entitled to rely on points set out in the List of Objections, and it was impossible for them to raise such a ground of objection until after the taxation decision was handed down.

18.  For Ground 15, the respondent argues that it is in effect an objection asking for the disallowance of the entire Bill No 2. P2-6s submits that they are not suggesting that the entirety of the fees set out in Bill No 2 should be disregarded.

19.  For Grounds 16-21 (which concern interest), the respondent opposes them on the ground that interest is not a reviewable item under 62, r 33-34, as it is not an item arising from the bills delivered but a statutory right of the respondent. P2-6s have the concern with the point in time at which interest should have started to run, and submits that it is clearly within the scope of taxation review.

20.  Looking at the arguments raised by the parties, it is clear to me that they are issues that should be properly argued at the substantive Review Application. It is not right for me to decide all these issues on merits at this stage when I am considering an application for amendment.

21.  In fact, I cannot come to a definite conclusion that P2-6s’ arguments on these grounds are bound to fail. On the other hand, I am not saying that P2-6s will definitely succeed on these issues. As submitted by P2-6s, at this stage I should consider whether these amendments ought to be made for the purpose of determining the real issues between the parties, and leave should be readily granted to amend unless the new grounds are bound to fail (see Hsu Ming Chi v Lam Shu Chit, HCCL 8/2013).

22.  Since I cannot come to the conclusion that P2-6s are bound to fail on their grounds, I should grant leave to amend.

23.  As to the respondent’s contentions that taxation review is a rehearing and not a hearing de novo and that P2-6s cannot rely on grounds that were not raised at the taxation hearing, the respondent is clearly wrong. It is stated clearly in Order 62, r 34(2) that “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 the item…”. It means that the taxing master can deal with the items afresh. I do not see any real difference between a rehearing and a hearing de novo in the present context, as in the Review Application I can deal with the items afresh.

24.  The respondent suggests that it is an abuse of process and there is issue estoppel when P2-6s try to reopen the same issues, but these matters can be argued at the substantive Review Application. The purpose of allowing the amendments is to identify the controversy between the parties and the merits can be decided later.

25.  On the other hand, the respondent also suggests that if it is a fresh objection being introduced for the first time, the court should consider whether or not this would generate any unfairness and prejudice against the respondent in that either the court has no evidence on this issue to make a determination on review, or would have to recall the respondent to give evidence once again to make such determination. This is exactly what Order 62, r 34(2) provides – the court can receive further evidence on review. Thus, no unfairness or prejudice can be asserted.

26.  In the premises, I am of the view that leave should be given to P2-6s to amend the summons dated 25 September 2020 for the Review Application.

27.  As to the costs for the Amendment Summons, as accepted by P2-6s, the respondent should have costs of and occasioned by the Amendment Summons.

28.  The respondent in fact seeks costs thrown away on an indemnity basis for the preparation of the respondent’s Answers to Objections. I do not see any basis for the respondent to claim costs on an indemnity basis or for costs thrown away, as I do not find any abuse of the proceedings on the part of P2-6s in making the amendment application. Whether there is any costs thrown away, it can be covered by the order for costs of and occasioned by the Amendment Summons.

29.  Thus, for reasons aforesaid, I grant orders in terms of the Amendment Summons. As this case is a complicated case and both sides appear with 2 counsel, I further order that the respondent’s costs shall include a certificate for two counsel.

P2-6s’ Evidence Summons

30.  P2-6s apply for leave to adduce the 13^th Affirmation of Li Siu Fung, who is the solicitor with the care and conduct of these proceedings on behalf of P2-6s. The Affirmation is a short document setting out the facts as to how the respondent relied upon documents in the taxation bundles lodged with the court which were not made available to P2-6s. This evidence is relevant to Ground 10 of the Amended Grounds of Review.

31.  There is no dispute that Order 62, r 34(2) allows the court to receive further evidence and may exercise all the powers which it may exercise on an original taxation in review proceedings.

32.  Since I allow the amendment including the new Ground 10 as aforesaid, P2-6s should be granted leave to adduce further evidence in support of that ground.

33.  There is no reason to suggest that the application was made late or delayed, as P2-6s could only consider adducing such evidence after the decision on taxation was handed down.

34.  I agree that the contents of Mr Li’s 13^th Affirmation are not related to the reasonableness of each of the items within Bill No 2, but concern whether P2-6s were unfairly prejudiced when they were not allowed access to documents within the taxation bundles. Thus, such evidence should be adduced for the court to deal with this issue. The respondent’s suggestion that the witness would then be recalled and cross-examined as to the reasonableness of each item should not happen.

35.  If the respondent wants to argue that it is trite as a matter of practice, and legal requirement, for all taxation bundles to be filed in court and that P2-6s would not see all the bundles, that can be argued at the Review Application, but I do not think that P2-6s should be disallowed to adduce evidence to show that they actually did not have the opportunity to have access to the documents.

36.  Thus, I allow the 13^th Affirmation of Li Siu Fung to go in as evidence.

37.  As to the costs of the summons, I agree that it should be in the cause of the Review Application. There is no basis for the respondent to ask for costs at this stage, as P2-6s are entitled to make such an application to adduce further evidence.

38.  I therefore grant orders in terms of P2-6s’ Evidence Summons.

R’s Evidence Summons

39.  In R’s Evidence Summons, the respondent seek leave to file and serve the 10^th Affirmation of Chan Wing Hung. As this summons was filed and served only one day before the hearing, time for filing and serving need to be abridged.

40.  P2-6s have no objection to the respondent’s application. Thus, the 10^th Affirmation of Chan Wing Hung can be adduced as evidence.

41.  However, in response to the 10^th Affirmation of Chan Wing Hung, P2-6s filed the 1^st Affirmation of Lau Yue Sum without leave of the court. This is a short document providing further background information in relation to the execution and implement of the Sale and Purchase Agreement dated 1 June 1999 between P2-6s and a third party purchaser.

42.  This Sale and Purchase Agreement was raised in the 10^th Affirmation of Chan Wing Hung. So, in all fairest, P2-6s should be allowed to provide further information in respect of the same. Even though no leave was obtained by P2-6s before, I will grant the retrospective leave now.

43.  The respondent asks for costs for R’s Evidence Summons and also wasted costs in respect of P2-6s’ filing of the 1^st Affirmation of Lau Yue Sum. I see no reason to award costs against P2-6s at this stage when the respondent is seeking leave to adduce further evidence and P2-6s are entitled to file and serve reply evidence. The costs should be in the cause of the Review Application as well.

44.  Thus, I grant orders in terms of paragraphs 1 and 2 of R’s Evidence Summons, but as to paragraph 3 thereof, it should be changed to read as “Costs of this Summons including the costs in relation to the 1^st Affirmation of Lau Yue Sum be in the cause of the 2^nd to 6^th Plaintiffs’ Summons dated 25 September 2020”.

45.  I note that P2-6s have suggested that the respondent be given leave to file further evidence in reply. However, I think it is a matter for the respondent to decide later on, and if necessary, the respondent can issue another summons to deal with that matter later. Thus, I will not give such leave at this stage.

Conclusion

46.  In sum, my decisions are as follows:-

(1) Orders in terms of the Inter-Partes Summons dated 2 November 2020, and the Respondent do have a certificate for two counsel;

(2) Orders in terms of the Summons dated 23 November 2020; and

(3) Orders in terms of paragraphs 1 and 2 of the Summons dated 9 February 2021; P2-6s do have retrospective leave to file and serve the 1^st Affirmation of Lau Yue Sum on 3 March 2021; and costs of the Summons dated 9 February 2021 including the costs in relation to the 1^st Affirmation of Lau Yue Sum be in the cause of the 2^nd to 6^th Plaintiffs’ Summons dated 25 September 2020.