MA HING YIN CAROLINE v. CROWNCITY ENGINEERING LTD AND OTHERS

HCPI 83/2005

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 83 OF 2005

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R U L I N G

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1.  The plaintiff’s solicitors, Messrs Cheung, Fung & Hui (“CFH”) are required to show cause why a wasted costs order should not be made against them.

The background

2.  This is a fatal accident case.  The deceased was one Ng Siu Cheung Samuel, who was a foreman, working for the 2^nd defendant on the 1^st defendant’s site.  On 4 February 2002, a debris removal pipe fell on him, causing his death.

3.  The deceased left behind him a pregnant wife, San Miu Yi Vickie, who later gave birth to a daughter, Ng Yuen Ching.  He also left his father, Ng Pak Chu and his mother, Wu Mo Sheung, who both live in Puerto Rico, as well as his girl friend, Ma Hing Yin Caroline who is the plaintiff in these proceedings.

4.  It appears that that the deceased had maintained his relationship with the plaintiff for some time.  She says that he had concealed the fact of his marriage from her.  However, the plaintiff maintained a good relationship with the deceased’s parents, and she is the attorney of the deceased’s mother, under a general power of attorney dated 25 November 2002.

5.  Affidavit evidence in the proceedings for striking out, given by the 2^nd defendant’s director Mr Ho shows that he was friendly with the deceased and the deceased’s wife, Madam San.  He says that he gave the deceased employment.  It also appears that Madam San had, in about 2002, accepted compensation under the Employees Compensation Ordinance.

6.  After she obtained the power of attorney, the plaintiff applied for legal aid, and on 24 June 2003 she was granted a legal aid certificate for the purpose of taking proceedings to claim damages for the fatal injuries sustained by the deceased.  The scope of legal aid included the obtaining of Letters of Administration, if required.  The assigned solicitor was Ms Chung Wai Man Rebecca, a partner in the firm of CFH.  The writ, statement of claim and statement of damages were issued on 22 January 2005, shortly before the expiry of the limitation period.

7.  The plaintiff claimed as “the lawful attorney of Wu Mo Sheung, the personal representative of the estate of Ng Shiu Cheung Samuel, deceased”.  In the statement of damages, she claimed pain, suffering and loss of amenity; bereavement; special damages; and dependency for the wife, daughter (by then aged 2 years), father and mother.  She also claimed loss of mandatory provident fund and loss of accumulation of wealth.

8.  By summons dated 5 August 2005, the defendants applied under O.18 r.19 of the Rules of the High Court to strike out those parts of the statement of claim and statement of damages involving allegations and/or claims on the part of the wife, daughter and father, on the various grounds set out in the Rule and also on the ground that the proceedings were issued, commenced and/or proceeded with, without proper authority or instructions from those persons.  By a later summons the defendants also applied, in the alternative, for the entire claim to be struck out, on the ground that the power of attorney could not empower the plaintiff to claim on behalf of the personal representative, so the plaintiff had no power or authority to commence the action.

9.  The matter came before Master Kwan on 19 December 2005 and the whole claim was struck out.  The hearing on costs was adjourned for the Director of Legal Aid to be heard and for CFH to file and serve, if so advised, an affirmation in relation to their personal liability for costs.  The plaintiff appealed, and the appeal came before me on 19 January 2006.

10.  At the hearing of the appeal, counsel for the plaintiff conceded that neither Probate nor Letters of Administration had been issued in favour of the deceased’s mother, Madam Wu.  He conceded that the pleadings as they stood were quite wrong, because neither Madam Wu nor the plaintiff had any authority to commence or maintain any action on behalf of the estate.  The action was liable to be struck out.  But the plaintiff had sought leave to amend, by a summons filed the day before.  The effect of the amendments would be to allow the plaintiff to sue as the lawful attorney of the mother, and the father to sue in his own name.  Only the claim for their partial dependency would remain.

11.  Following argument, the parties agreed and I ordered that that the appeal be allowed to the extent of the amendments, and the plaintiff have leave to amend.  The effect of the amendments is that the action will proceed in the names of Ma Hing Yin, Caroline the lawful attorney of Wu Mo Sheung, and Ng Pak Chu as plaintiffs.  There is an undated letter of authority from Ng Pak Chu giving Ms Ma authority to act for him; this is not a power of attorney but I take it that it is sufficient for her to instruct the solicitors to act directly for Mr Ng.

12.  The defendant’s counsel applied for costs, to be borne by the plaintiff’s solicitors.  After hearing argument, I ordered that the costs of the appeal, including the costs of the hearing on 19 January 2006 be to the defendants, and that all costs incurred and thrown away by the amendments, and the costs of any consequent amendments be to the defendants.  I further ordered that the costs were to be on the common fund basis and payable in any event.

13.  The remaining issue, whether the plaintiff’s solicitors should be liable for the costs personally, or whether the plaintiff, and ultimately the Legal Aid Fund, should be liable for them, was adjourned for the solicitors concerned to show cause.

The law

14.  The High Court’s wasted costs jurisdiction is regulated by O.62 r.8 of the Rules of the High Court, which provides :

“Subject to the following provisions of this rule, where in any proceedings costs are incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default, the Court may make against any solicitor whom it considers to be responsible whether personally or through a servant or agent an order:

(a) disallowing the costs as between the solicitor and his client; and

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

(c) directing the solicitor personally to indemnify such other parties against costs payable by them.”

By sub-rule (2) of Rule 8, before any order can be made, the solicitor must be given a reasonable opportunity to appear before the court and show cause why the order should not be made.

15.  The law and the procedure were considered in detail by the Court of Final Appeal in Ma So So v Chin Yuk Lun & Anor. [2004] 3 HKLRD 294.  At paragraph 6, Li CJ set out the approach to be taken by the court, as follows :

“In considering the exercise of the jurisdiction under this rule, the court should approach the matter by dealing with the following questions:

(1) Whether the solicitor was responsible for (i) acting improperly or without reasonable cause or (ii) for undue delay or any other misconduct or default in any proceedings.

(2) Whether such conduct of the solicitor caused costs to be incurred or wasted.  This is a question of causation.  The causal link between the solicitor’s conduct and the extent of costs incurred or wasted must be established.

(3) Whether the court should exercise its discretion to make an order.”

16.  His Lordship later stressed the discretionary nature of the jurisdiction and said that the discretion operated at two distinct stages, the first being the stage at which the court is invited to call on the solicitor to show cause.  At that stage the court has to take into account the strength of the prima facie case against the solicitor, before deciding whether to proceed.  If the solicitor is required to show cause, but cannot, the court is still not bound to make the order though it must give sustainable reasons if it does not.  See paragraphs 13 to 18.  The burden of proof remains throughout on the applicant to satisfy the court that an order should be made, though where the court calls on the solicitor cause, having satisfied itself that there is a strong prima facie case, the burden may shift to the solicitor; paragraph 23.  As to procedure, the solicitor should be informed of the conduct complained of, how such conduct caused costs to be incurred or wasted and all other circumstances relied on; paragraph 21.

The first stage – prima facie case

17.  It was clear in the instant case that there was a strong prima facie case against the solicitors.  It was conceded that the neither Madam Wu nor the plaintiff had any authority to commence or maintain any action on behalf of the estate.  I do not think there can be any doubt that a solicitor who institutes and continues proceedings without authority acts improperly or without reasonable cause.  It has been held that where a solicitor purports to act for a party without authority he will generally be personally liable to pay the other party’s costs.  See Yonge v Toynbee, [1910] KB 215, cited by HH Judge P Cheung, as he then was, in Chun Fai Garment Factory v Seaguide Import & Export Ltd [1992] HKDCLR 31.

18.  After considering the section of Li CJ’s judgment Ma So So headed “Procedure” at paragraphs 19 to 22 and on the application of Mr Packwood, the partner appearing for Messrs Cheung, Fung & Hui, I formulated the complaint against the solicitors, and the costs concerned, in this way :

“The allegation made against the solicitors is that they should not have raised the action in the name of Ma Hing Yin Caroline, the lawful attorney of Wu Mo Sheung, the personal representative of the estate of Ng Siu Cheung Samuel, deceased, because:

1.    Wu Mo Sheung was not the personal representative, and

2.    Neither she nor Ma Hing Yin Caroline had any authority to claim on behalf of the wife and daughter of Ng Siu Cheung Samuel, deceased.

The costs concerned are the costs of the application to the Master to strike out, the appeal against the Master’s decision, and the costs of and occasioned by the amendments.”

The second stage – showing cause

19.  The explanation of Ms Chung, the assigned solicitor, as it appears in her affirmation is, in brief, that once she had been assigned to act for the plaintiff under the legal aid certificate, she had difficulty in obtaining instructions, in particular on the question of Letters of Administration.  She had advised the plaintiff that she needed another Power of Attorney as the existing one was insufficient for the purpose of applying for Letters of Administration.  She says that as the time limit was approaching, she tried to contact the plaintiff, who did not return her calls.  The firm could only issue the writ on 22 January 1995.

20.  Ms Chung goes on to say that she included the claims for the wife, daughter and parents even though Madam Ma had not applied for Letters of Administration.  She had, however, been advised on 1 November 2004 by Messrs W K To & Co. (“WKT”), the defendants’ solicitors, that the wife and daughter would make no common law claim.  She had told the plaintiff of this.  The plaintiff said that she would ask the wife and confirm the position.

21.  Ms Chung continues :

“In the circumstances, it was thought appropriate to commence proceedings by the AP (assisted person) in the capacity of the attorney on behalf of the Deceased’s mother as personal representative of the Deceased’s estate.  It was expected that San, who had substantial claims both on her behalf and on behalf of her infant daughter would co-operate and Letters of Administration could be obtained by the AP to regularise the position.”

22.  This is echoed in the affidavit of Mr Packwood, the partner who represented the solicitors before me.  The plaintiff has also filed an affirmation in which she says, in effect, that she was too busy in her job, which involved a lot of work on the Mainland, to spend much time dealing with the claim.  She also refers to difficulties in communication caused by the ill-health of the deceased’s mother, Madam Wu.

23.  It is, however, clear from the correspondence exhibited to the affirmations filed for the appeal that WKT had been raising the questions of the plaintiff s authority to act on behalf of all the dependants, and not just the parents, both with CFH and with the Legal Aid Department since June 2004.

24.  It is also clear from a letter dated 2 October 2005 from Madam San to CFH that she had never instructed them, or the Legal Aid Department, to include her claim, that she did not wish to proceed with any claim as the wife of the deceased, and that such claim should be withdrawn immediately.  What her position was earlier is unknown.  CFA did not directly ask Madam San for instructions; it appears that they left that to the plaintiff, though they did write to ask Madam San for documents.  There does not seem to have been anything to indicate to them that Madam San would co-operate, as they say they expected; and in the normal way one would hardly expect a widow to co-operate with her deceased husband’s girl-friend in pursuing her own claim and that of her daughter.

25.  Another point raised by counsel for the defendants in the appeal proceedings is that in any event, the Power of Attorney, being a general power, could not apply to functions which the donor had as a trustee or personal representative.  Ms Chung knew this, and so advised the plaintiff.  This is obviously right, and it follows that even if the plaintiff had managed to procure Madam Wu to obtain a grant, she would not have had the proper authority to instruct the solicitors to proceed until a fresh Power of Attorney had been executed.  If the plaintiff had in some way procured the co-operation of Madam San and herself obtained a grant, which is what Ms Chung says was expected, the action could not have been raised in the form in which it was raised; it would have had to be issued in respect of the estate claims, in the plaintiff’s own name, as personal representative.

26.  If there was no grant, and incidentally this could have been established by reference to the Probate Registry, the proper course would have been, not to sue as personal representative or as the attorney of a personal representative in respect of the claims of the estate but to apply to the court for an order under O.15 r.15 for appointment to represent the estate for the purposes of the proceedings.

27.  It is argued that through caution or generosity, CFH did not want to abandon the wife and infant daughter, who was not born when the father was killed.  Ms Chung was anxious to preserve the position of that claim.  All that was necessary was to inform the Official Solicitor of what had happened to the daughter’s claim.  In seeking to preserve these claims, the solicitors did not act improperly or unreasonable, even thought they may have been misguided.

28.  With respect, I cannot agree with this.  I accept that the motives which impelled the solicitors to issue proceedings in the form in which they were issued were not improper, and indeed the solicitors no doubt acted with the good intention of preserving the claims against limitation, in the hope that the proper authority could be sorted out later.  However, no matter how good the intention may have been, the course taken was not the only possible course, and I can only regard the issue and prosecution of proceedings without authority as acts done without reasonable cause.

29.  In the circumstances I have outlined, where the solicitors knew all along that authority was in question, I cannot see that reliance on their good intentions is enough to show cause why they should not pay the costs.  So far as my residual discretion refused to make the order is concerned, I take into account that the plaintiff is legally aided and so the costs have been incurred, not only wrongly, but against public funds.

What costs?

30.  As indicated, I have already ordered that ordered that the costs of the appeal, including the costs of the hearing on 19 January 2006 be to the defendants, and that all costs incurred and thrown away by the amendments, and the costs of any consequent amendments be to the defendants.

31.  CFH accepted by letter dated 17 October 2005 to WKT that the only persons claiming relief against the defendant were the deceased’s parents.  They also suggested that they file a revised statement of damages, and a consent summons vacating the hearing before the Master, and transferring the proceedings to the District Court.  It was therefore argued, at the further hearing on 7 April 2006, that if those proposals had been accepted, there would have been no hearing before the Master, and no appeal; the plaintiff should therefore have the costs of those hearings, or else there should be no order as to costs.

32.  WKT’s reply of 20 October 2005 to CFH’s proposal for vacation was non-committal, though it appears that they did in ask for proposals in respect of costs thrown away, prior to the hearing before the Master.  In any event, there was no agreement.

33.  Leaving aside the fact that I had already, on 19 January 2006, made the orders in respect of the extent and basis of the costs to be paid, and only left open the question of who should pay them, I cannot see that WKT ought to have agreed to CFH’s proposal in the absence of any agreement as to the costs thrown away.

34.  I will therefore simply order that the costs awarded in favour of the defendants by my order of 19 January 2006 are to be paid by CFH.  The costs of the hearing before the Master have not yet been dealt with, so I order that they also are to be paid by CFH in any event, on the common fund basis, and with certificate for counsel.

35.  As to the costs of the further hearing on 7 April 2006 these also are to be paid to the defendants by CFH in any event, and to be taxed on the common fund basis.  Because this ruling is to be handed down, and because I said as much to the parties at the hearing, I will, ex abundante cautela, make the order nisi in respect of these costs only.