WINSTON & STRAWN (A FIRM) v. HANSEN INTERNATIONAL LTD AND ANOTHER

HCA 2402/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2402 OF 2015

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D E C I S I O N

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The application

1.  By summons dated 12 July 2017 the defendants (“Ds”) took out an application for the following:

(a)   Paragraph one: An order that parts of the Statement of Claim be struck out unless the Plaintiff (“P”) do file and serve its Answers to the defendants’ (“Ds’”) Request for Further and Better Particulars dated 1 June 2017 (“June Request”);

(b)   Paragraph two: An order that P do serve its Answer to Ds’ 2^nd Request for Further and Better Particulars filed on 12 July 2017 (“July Request”);

(c)   Paragraph three: An order that Ds be at liberty to make interlocutory applications arising out of the particulars provided by P under P’s Answers filed on 4 July 2017 (“P’s Answers”) and the particulars provided as per paragraphs 1 and 2 of the Summons within 28 days thereafter; and

(d)   Paragraph four: insofar as an unless order made on 11 May 2017 (“May Unless Order”) is applicable, relief be granted to Ds from the sanction imposed and time be extended for making the application at paragraphs 1-3 of the Summons.

2.  The summons is contested and the parties are legally represented.[1]

The respective parties’ cases

3.  In gist, P was previously engaged as the law firm acting for D1 and D2 in a number of legal proceedings.  Ds, however, have failed to pay a total of 16 invoices (“the Invoices”) which amount to HK$10,010,590.80 inclusive of P's fees, Counsel's fees as well as other third party legal fees (“Outstanding Sum”).  P claims against Ds for the Outstanding Sum together with interest.

4.  Ds’ defences are mainly as follows:

(a)   They dispute both liability and quantum of P’s claim and assert that they have already settled and duly paid fair and reasonable charge to P in accordance with their respective agreements with P;

(b)   It is Ds’ case that P has not properly, fairly and/or reasonably billed D1-2 respectively as to actual works done and that the Invoices are unreasonable, excessive, lack particularities and constitute overcharging;

(c)   Ds deny that they are jointly and severally liable as alleged; and

(d)   Ds further deny the assertion that they had always pre-approved the Counsel’s fees and third party legal fees before P incurred those costs as alleged.

The relevant legal principles

5.  There is no dispute between the parties in respect of the relevant legal principles for particulars under O.18, r.12 RHC.  In Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & Others [1994] 2 HKC 264 Bokhary JA (as he then was) said at 269E-270E that the functions of properly particularized pleadings are as follows: -

(a)   To inform the other side of the nature of the case that they have to meet as distinguished from the mode in which that case is to be proved;

(b)   To prevent the other side from being taken by surprise at the trial;

(c)   To enable the other side to know what evidence they ought to be prepared and to prepare for trial;

(d)   To limit the generality of the pleadings, the claim and the evidence;

(e)   To limit and define the issues to be tried, and as to which discovery is required;

(f)    To tie the hands of the party so that he cannot without leave go into any matters not included (although if the opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings).

6.  The modern approach is that the pleadings should be as simple as the facts admit.  See McPhilemy v Times Newspapers Ltd & ors [1999] 3 All ER 775.  As long as the pleadings do convey the nature of the party’s case and state the material facts, they should not attract applications for further and better particulars even though some details that are likely to come forth in discovery or witness statements are not disclosed.  Unless there is some obvious purpose to be served by fighting over the precise terms of a pleading, contests over their terms are to be discouraged.  See Yeung Fu v Guardforce Ltd (unreported, DCPI 213/2004, 3 March 2006 at §§8 & 9 per HHJ M Ng (as she then was)).

The agreed issues in dispute for the trial

7.  In view of the arguments between the parties, especially Ds’ complaint that P had not complied with O.18, r.12(7) RHC, I consider that it is necessary to bring the parties to the basics of this rule by reference to its purpose, that is to say, the practical purpose of it, as Ma J (as he then was) said in Wing Hang Bank Ltd v Crystal Jet International Ltd [2005] 2 HKLRD 795 at 799: “… (2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues.”  I had therefore requested the respective parties to set out their agreed issues of dispute.  Ultimately, every step of preparation is geared to a fair trial for the resolution of their disputes.  The parties have submitted their agreed issues of dispute:

“As to alleged joint and several liability

1. Whether the 1st Defendant (“D1”) and the 2nd Defendant (“D2”) are jointly and severally liable to the Plaintiff (“P”) for the settlement of the invoices claimed by P against D1 and D2 (“Ds”) herein (“Invoices”). (See SOC§27,Prayer; ADefence§11,19), including:-

(a) Whether there was any understanding between all parties that D1 and D2 were jointly and severally liable for the settlement of the Invoices. (See SOC§27; ADefence§11)

(b) Whether D1 was at all material times the alter ego of D2 for the purpose of the Agreements. (See SOC§10; ADefence§4)

(c) Whether D2 had asked her husband to make the payment for the legal fees incurred by both Ds on different occasions, and whether D2’s husband had agreed to pay on behalf of D2 (See Amended Reply §6; P’s Answer to FBP(answer to request 1)).

As to terms of contract

2. Whether the P’s claim against D1 and D2 for the Invoices is affected by any alleged implied terms including:-

(a) Whether there is an implied term in the written agreement between P and D1 (“D1 Agreement”) and the written agreement between P and D2 (“D2 Agreement”) (collectively, “the Agreements”) that P’s charges must be fair and reasonable and that P must not overcharge D1 and D2. (See ADefence§8(a)).

(b) Whether there is an implied term in the D1 Agreement and the D2 Agreement and/or whether P has a duty as solicitors to properly particularize the Invoices including inter alia to identify all the work/time entries and allocate them to each of the actions (referred to in paragraph 19 of the SOC) so as to give Ds a clear breakdown of the works done and whether or not D2 had accepted the method of billing (See ASOC§25; ADefence§9; AReply§5).

As to performance of contract

3. Whether the alleged works in the Invoices

(a) were done under the instructions of D1 and/or D2,

(b) had in fact been carried out, and

(c) fall within the scope of the Agreements.

(See ADefence§8(c),12(c); AReply§4,7)

4. In respect of the works in the Invoices that had been carried out under the instructions of D1 and/or D2 and fall within the scope of the Agreements,

(a) whether or not P has properly, fairly and/or reasonably billed D1 and D2 respectively as to actual works done,

(b) whether or not that the Invoices are unreasonable, excessive, lack particularities and constitute overcharging, and

(c) whether or not Ds had always pre-approved the Counsel’s fees and third party legal fees before P incurred those costs

(See ADefence§8(b),12(c), 30, 32; ADefence§13-14; AReply§3,7, P’s Answer to FBP(answer to request 2))

5.   Whether D1 and/or D2 has already settled and duly paid fair and reasonable charge to P in accordance with the Agreements (See ADefence§12(b); AReply§7).”

8.  In light of the above issues of dispute, I shall now consider Ds’ complaints against P in its answers to the June Requests.

Paragraph one

9.  Ds complain that the answers to the requests under paragraph 25 of the Statement of Claim are not giving the full answers.  They expect P to give the straight answers of “yes” or “no” or “in the manner” etc.  Having considered the answers objectively, it is clear that P is providing the answers to the questions as to whether D2 accepted the method of billing by setting out the dealings between P and D2 and D1 for the past period.  P has set out its case against Ds so far as particulars of its pleaded case are concerned.  The answers have served the purpose of making known to Ds P’s case against them.

10.  Ds then complain that the answers were given not strictly in accordance with O.18, r.12(7), that is the answers should be given to each of the requests.  This rule is obviously to serve the purpose of saving argument over which item of the request was not answered.  However, one must not apply the rule mechanistically.  When one is dealing with the form, one must apply common sense to the form so as to serve the purpose as set out in the authorities above.

11.  From the answers, P is telling Ds what transpired during the period from September 2014 to July 2015.  Those transactions are mixtures partly in writing by the bills, partly orally as P had approached D2 to settle P’s invoices and also partly by conduct as Ds had raised no objections to the bills. Further details are the evidence.  Challenge on the substance or their credibility will be for cross-examination of the witnesses at the trial. If the answers were given in the way as requested by Ds, they may appear to be repetitive and redundant, sometimes truncated or misleading, which is contrary to the purpose they should serve.  To require the other party to comply with the way of the requests as framed, knowing such consequences verges upon playing games in the legal proceedings.  The Court of Final Appeal in Wing Fai Construction Company Limited (in Compulsory Liquidation v. Yip Kwong Robert & Others (2014) 14 HKCFAR 935 at §34 had deprecated such conduct.

12.  For the reasons above, I find that Ds’ complaints above are unfounded.  This paragraph fails.

Paragraph two

13.  This is for particulars on paragraph 6 of the Amended Reply, the rests are follow-up requests consequent upon Ds’ complaints against P for its answers to their June Requests.  The requests for paragraph 6 are for the evidence of the conducts which P says constitute Ds’ joint liability. Evidence is not allowed to be pleaded in the pleadings.  For the reasons above, it is not necessary for P to supply further particulars for the rests of the requests.  This paragraph fails too.

Paragraph three

14.  This paragraph is, in my view, unnecessary because the present application arises out of the June particulars, which were given after Master Ho’s Order.  As such, it is a continuation of the previous interlocutory application for the June Request. I consider that Master Ho’s Order has no effect if the previous interlocutory application were appealed to the Court of First Instance.  To take this technical point in the interpretation of the Court’s Order, in my opinion, is an example of playing games too.  As I understand it, P is not taking this point now.

Paragraph four

15.  This is a rather peculiar application.  Master A. Ho had made an unless order on 11 May 2017.  The purpose of this Order is clear.  It imposes a finality on the interlocutory applications to be taken out by Ds.  For case management, this kind of orders are common.  The Court has to ensure that the parties have complied with all the directions of the court for case management and that there should be no outstanding interlocutory applications pending or to be taken out, which will disrupt the trial, before leave is granted to the plaintiff to set the matter down for trial.  Very often, the parties would, even at the stage of setting down, say that subject to counsel’s advice, there may be interlocutory applications to be taken out.  Such uncertainty will make case management for the parties for a fair trial very difficult.

16.  At the stage of Case Management Conference, the parties should have obtained counsel’s advice on evidence and the general preparation for the trial.  There is simply no reason to allow any party to reserve the position of making further interlocutory applications without telling the court what they are.  The court will therefore impose a deadline, within which all interlocutory applications must be taken out.  This order must be obeyed by the respective parties.  However, the court always has the discretion to vary its order if there are special or exceptional circumstances not envisaged at the time of the making of the unless order.  It will be for the applicant who takes out the application for leave to take out further interlocutory application despite the unless order to convince the court that leave should be given.

17.  Since there are no further particulars to be ordered by this Court, there is no reason to vary Master Ho’s unless order.

18.  This paragraph fails.

19.  Except for paragraph 3, which is unnecessary, Ds’ summon is dismissed.

Costs and order

20.  As to the costs of this application, including the costs for the call-over and the hearing today, P asks for costs on an indemnity basis.  Ds have no objection to the costs to the P.  They argue that the costs should not be on an indemnity basis.  They also agree to counsel’s certificate for this hearing.  I do not consider appropriate to order costs on an indemnity basis for this application. P was almost arguing over the unless order itself.  The costs will be assessed summarily under O.62, r.9A RHC at $55,000 to be paid by Ds to P within 14 days from the date hereof.

21.  The Court shall make an order in terms as follows:

(a)   Except for paragraph 3, for which no order is to be made, Ds’ summons is dismissed;

(b)   Costs of this application be as per paragraph 20 above.