ERIC CHAN & CO v. WONG KWOK WANG, WARREN

HCMP 174/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 174 OF 2012

(ON AN INTENDED APPEAL FROM DCCJ NO. 1155 OF 2008)

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J U D G M E N T
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Hon Chu JA (giving the Judgment of the Court):

1.  This is the defendant’s application for leave to appeal against the judgment of HH Judge Chow given on 4 October 2011 entering judgment on liability for the plaintiff against the defendant. The defendant’s application to the trial judge for leave to appeal was dismissed on 16 January 2012.

2.  The plaintiff opposes the application.

DCCJ 1155 of 2008

3.  The full background leading to the plaintiff’s claim against the defendant in DCCJ 1155 of 2008 had been set out in the Judgment dated 4 October 2011. I will not repeat them here.

4.  In a nutshell, the plaintiff claims against the defendant for fees and disbursements in respect of legal services rendered to the defendant in a High Court action (HCMP 2483/2004).  The High Court action was commenced by the defendant against the firm of solicitors (“HP”) who acted for him in a criminal case (HCCC 321/2003) for the determination or taxation of the legal fees that he was liable to pay to HP.

5.  The defendant denies being liable to pay the plaintiff.  His defence, as appeared by the pleading, is that the services or assistance of the plaintiff in HCMP 2483/2004 were rendered free of charge.

6.  The trial judge found in favour of the plaintiff, holding that the defendant was bound by the terms of two retainers and was liable to pay the plaintiff for services rendered.  The gist of his judgment is succinctly set out in paragraph 18 of the Judgment, which reads:

“In conclusion, I simply do not find that the Plaintiff made any assurance to the Defendant as alleged by him. I find that the evidence of the Plaintiff is supported by ample documentary evidence. His evidence is credible. The Defendant is not an honest witness. His evidence contradicts the documentary evidence adduced in court. The documentary evidence reveals what actually happened. I reject his evidence in so far as it contradicts those of the Plaintiff. Accordingly I enter judgment in favour of the Plaintiff. I order that the Plaintiff’s bill of costs delivered to Messrs. Tong & Tsoi under the Plaintiff’s cover letter dated 4.7.2007 be referred to the taxation master for determination of its reasonableness, in light of the Defendant’s list of objections filed on 10.3.2011 and re-filed on 18.5.2011. The hearing of the trial be adjourned sine dine, with liberty to restore by either party, for disposal of issues not yet determined.”

Principles applicable to application for leave to appeal

7.  Section 63A(2) of the District Court Ordinance, Cap. 336, provides:

“Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that—

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

8.  The burden is on the applying party to satisfy the court that the intended appeal fulfills the requirements of s. 63A such that leave to appeal should be given.

The intended appeal

9.  The defendant raises the following grounds in his draft Notice of Appeal:

(1)  The trial judge was wrong to allow the plaintiff to charge $4000 as hourly rate.

(2)  The trial judge failed to have regard to the fact that the defendant had no interest in commencing HCMP 2483/2004 against HP and that there was no evidence on what sort of assistance or services were provided by the plaintiff before the defendant entered into the two retainers.

(3)  The trial judge should have considered the presumption of undue influence, which applied by reason of the solicitor-client relationship between the plaintiff and the defendant.

(4)  The trial judge failed to take into account the plaintiff’s failure to advise the defendant that the plaintiff had a conflict of interest.

(5)  The trial judge was wrong to order the plaintiff’s bill be referred to the taxing master for determination, as opposed to taxation, which was not the relief sought in the Statement of Claim.

10.  In his written submission in support of the leave application, however, the defendant has raised additional arguments based on the Hong Kong Solicitors’ Guide to Professional Conduct.  This is unsatisfactory.  He should have set out all the grounds in the draft Grounds of Appeal.  In any event, even if there had been breach of the professional code, it does not necessarily afford the defendant a defence to the claim.

Discussions

11.  The thrust of the defendant’s contentions in this leave application is that he himself had no interest in the outcome of HCMP 2843/2004 and the taxation of HP’s costs was entirely a dispute between solicitors and counsel.  Further, he was already represented by a firm of solicitors (“TT”) in HCMP 2843/2004; the plaintiff was not the solicitor on record and he appeared as a probable witness and not a solicitor.  There was no agreement to pay the plaintiff $4,000 per hour.  If the defendant were liable to pay for the plaintiff’s services, he would be paying two sets of legal fees.  He complains that it is unreasonable and unjustifiable to allow the plaintiff to charge for services provided when the ramifications had not been fully explained to him.  He also complains that Mr Eric Chan had a conflict of interest because as HP’s former employee, he would be entitled to 50% of the taxed costs of HP.

12.  It is evident from the Judgment that the trial judge was keenly aware of the circumstances surrounding the institution of HCMP 2843/2004 as well as the defendant’s case.  He had considered the defendant’s core contentions that the taxation of HP’s costs had nothing to do with him and he merely lent his name to the plaintiff.  After analyzing the evidence, including the contemporaneous correspondence, the trial judge rejected the defendant’s evidence as incredible and rejected the defence case that he had no interest in the taxation proceedings.  The trial judge found that the defendant had his own reasons for commencing the taxation proceedings against HP.  These are findings of facts, which an appellate court will not intervene, unless shown to be plainly wrong: Ting Kwok Keung v. Tam Dick Yuen & Ors (2002) 5 HKCFAR 336 at paras. 41 & 42.  The defendant’s submissions have failed to show the trial judge was plainly wrong.

13.  The trial judge also referred to the two retainers dated 23 October 2004 and 4 August 2005, both of which were signed by the defendant, and held that the defendant was bound by them.  The trial judge further rejected the defendant’s evidence that Eric Chan had assured him that the legal costs would not be borne by him.  The defendant does not appear to dispute that Eric Chan had rendered assistance to him and TT in the taxation proceedings against HP.  On the contrary, he admitted to agreeing to Eric Chan assisting the solicitor from TT.  In these circumstances, it is no defence to say that the plaintiff was not the solicitor on record in HCMP 2843/2004.  Nor does it matter that the defendant was represented by TT and had to pay TT’s fees.  The complaint that he had not been explained the ramifications of being liable to pay two sets of fees is also irrelevant.  It would be plain from the retainers that he had signed that apart from the fees of TT, he also had to pay the fees of the plaintiff.

14.  As for the $4,000 hourly rate charged by the plaintiff, this was not pleaded in the Amended Defence.  It is therefore not a point open to the defendant to take at the trial or on appeal. In any event, the 1^st retainer expressly set out the hourly rate of $4,000.  The defendant’s evidence that Eric Chan told him it was put in the retainer for the sole purpose of recovering costs from HP was not accepted by the trial judge.  The trial judge further noted that while he initially denied that the plaintiff had produced a new retainer concerning the $4,000 hourly rate for him to sign, he subsequently retracted from this and became equivocal, saying it could or could not have happened.

15.  Concerning the argument that Eric Chan failed to advise the defendant that he had a conflict of interest because he was entitled to 50% of fees collected by HP, it is not clear what relevance it has in light of the defendant’s defence that the plaintiff provided the assistance free of charge.  Further, as the plaintiff points out in the submission in opposition to the leave application, in assisting the defendant in the taxation proceedings against HP, Eric Chan was going against his own interest instead of promoting his interest.

16.  The defendant argues that a presumption of undue influence arose by reason of the solicitor-client relationship between Eric Chan or the plaintiff and him.  This was neither pleaded nor argued by the defendant’s counsel at the trial. It is not open to the defendant to raise this argument on appeal.

17.  The defendant refers to the decision on the plaintiff’s unsuccessful Order 14 application and the comments that had been passed on the plaintiff’s case by another judge.  It is to be remembered that at the interlocutory stage, the case was assessed solely on the basis of affidavits.  Comments made at the interlocutory stage are not necessarily indicative of the final outcome of the case, by which stage the court would have seen the witnesses and heard their oral evidence.

18.  There is also a suggestion in the defendant’s draft Grounds of Appeal and written submissions about recent discovery of new documents.  It is a reference to two bills of costs issued in 2004 by HP and in 2005 by another firm of solicitors who acted for the defendant in HCCC 321/2003.  The latter bill was drawn up by the law costs draftsman on behalf of the defendant.  The defendant claims to have discovered them during inspection of documents that took place at the plaintiff’s office after the Judgment was handed down.  The defendant says that these bills show that Eric Chan had manipulated the fees and also generated unnecessary costs for his personal benefits.  The plaintiff points out in the submissions opposing the leave application that these bills are not new documents in that they have either been provided to the defendant personally or to his previous solicitors, TT. In any case, we fail to see any relevance between these bills and the disputes between the parties and/or the intended appeal.

19.  Turning to the final ground that the trial judge was wrong in referring the matter to the taxing master for determination of the amount instead of for taxation, there is no merit in it.  The defendant merely defends the plaintiff’s claim, but has not sought to have the plaintiff’s fees taxed under section 67(2) of the Legal Practitioners Ordinance, Cap. 159: See Hong Kong Civil Procedure 2012, vol. 1 para. 62/App/60 and Oldham Li & Nie Solicitors v. Wong Lin Choi also known as Clara Chan (unreported) CACV 319/2005, 1 March 2006, paras. 39 & 41. The trial judge could not be faulted for referring the dispute on the quantum to the taxing master for determination.

Result

20.  For the reasons above, the defendant has failed to show that the intended appeal has a reasonable prospect of success or that there is some other reason in the interests of justice that the appeal should be heard.  The application for leave to appeal is therefore dismissed.

21.  In light of the lack of merits of the intended appeal, there is also an order pursuant to Order 59 rule 2A(8) Rules of the High Court, Cap. 4A that the defendant may not make a request under rule 2A(7) for the leave application to be reconsidered at an oral hearing inter partes.

22.  Applying the normal cause of costs follow event, we order that the defendant pays the plaintiff the costs of the application for leave to appeal.  For the purpose of gross sum assessment of costs, the plaintiff shall within 14 days from the date of this Judgment submit to the court and serve on the defendant a statement of costs.  The defendant may within 14 days thereafter submit to the court and serve on the plaintiff a statement of objections, if any.  The parties are reminded to take note of Practice Direction 14.3.