CHEN HONGQING v. THE PERSONS WHOSE NAMES ARE SET OUT IN THE SECOND COLUMN OF THE SCHEDULE TO THE RE AMENDED WRIT OF SUMMONS FILED ON 26 MARCH 2018 AND OTHERS

HCA 2648/2017
and HCA 1282/2017
(Heard together)

[2021] HKCFI 2988

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2648 OF 2017

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ACTION NO 1282 OF 2017

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(Heard together)

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D E C I S I O N
O N  C O S T S
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A.  THE LEAVE & DIRECTIONS DECISION, AND THE COSTS ORDER NISI

1.  This is my decision on costs in respect of the Leave & Directions Decision I handed down on 23 June 2021 (the “Leave & Directions Decision”).

2.  I refer to the costs order nisi I made at §56 of the Leave & Directions Decision.

3.  Parties have filed 3 sets of submissions, one each for the NOA Summons, the SHDs Directions Summons, and the CHQ Costs Extension Summons (which set itself comprises 4 sub‑sets).

4.  I will deal with them in turn.

5.  Whilst I need to deal with them in turn, I say this at the outset.  The various applications that have been before this Court share common factual background.  They are not entirely distinct from one another.  Whilst it cannot be pinpointed with total accuracy which parts of the costs incurred and spent on the preparation of one application might be useful in the preparation of another application, their inter‑related nature should be borne in mind when assessing the reasonableness or otherwise of the costs claimed.   

B.  THE NOA SUMMONS

B.1.  THE SHDS

6.  In the Statement of Costs of 20 July 2021, the SHDs claim HK$1,012,111.

7.  In his Written Objection of 10 August 2021, Chen HQ proposed that HK626,685 be allowed.  One of the main objections relates to the overlapping nature of the 3 Summonses being heard together, so that some of the costs and fees (and in particular counsel’s fee) should be apportioned by allowing only 66%.

8.  In their Reply of 24 August 2021, SHDs in principle agree to the proposed apportionment.  On that basis, together with some other agreed items, they claim HK$700,161.

9.  The differences between the parties are narrow.

10.  I agree that the costs claimed for some of the communications and professional work involve duplication.

11.  Adopting a broad‑brush approach, I summarily assess the costs at HK$680,000.

B.2.  JINAN GROUP

12.  In its Statement of Costs of 21 July 2021, Jinan Group claims HK$1,424,506.87.  The fee for leading counsel is HK$720,000.

13.  In his Written Objection of 10 August 2021, Chen HQ proposes that HK$622,424 be allowed.  He objects principally to certain duplication of work, and the amount of counsel’s fees claimed.  He suggests similarly an apportionment due to the overlapping nature of the summons heard together.

14.  In its Reply of 20 August 2021, Jinan Group submits that the matters are complicated, that the stake is high, and that the overall costs claimed are not disproportionate.  On the issue of apportionment, Jinan Group submits that as its submissions were substantially confined to the NOA Summons, a percentage of at least 80% is suggested.

15.  I agree that the overall costs of HK$1,424,506.87 are far too high.

16.  I agree that there has been duplication of work.

17.  I agree that there should be some apportionment given the overlapping nature of the summonses.  I note on the other hand Jinan Group’s bigger involvement in the NOA Summons.  I adopt the percentage of 80%.

18.  I agree that leading counsel’s fee of HK$720,000 is on the high side.  I allow HK$520,000 suggested by Chen HQ, at a level similar to the fees charged by leading counsel for the SHDs.  After apportionment, I allow HK$416,000.

19.  Chen HQ does not dispute the fee claimed by junior counsel, which I allow, after apportionment, at HK$216,000.

20.  Overall, and adopting a broad‑brush approach, I summarily assess Jinan Group’s costs at HK$900,000.

C.  THE SHDS DIRECTIONS SUMMONS

21.  By his Statement of Costs of 21 July 2021, Chen HQ claims costs in the sum of HK$195,883, being 1/3 of HK$587,650.

22.  In their Written Objection of 11 August 2021, the SHDs propose that HK$152,276 be allowed (being 1/3 of HK$456,830). It is suggested principally that the hourly rates are excessive, and that the time claimed on various items is also excessive, bearing in mind in particular that 2 counsel have been engaged.

23.  No Reply has been filed.

24.  Adopting a broad‑brush approach, I summarily assess 1/3 of Chen HQ’s total costs at HK$160,000.

D.     CHQ COSTS EXTENSION SUMMONS

25.  Four sets of submissions have been filed.  I deal with them in turn.

D.1.  THE ASI DISCHARGE SUMMONS

26.  In the Statement of Costs of 13 September 2019, the ASI Defendants claim HK$831,360.

27.  Chen HQ has filed no objection.

28.  I am of the view that the costs claimed are reasonable.  I summarily assess the costs at HK$831,000.

D.2.  THE SHDS JURISDICTION SUMMONS

29.  By their Statement of Costs of 13 September 2019, the SHDs claim HK$2,621,850.

30.  By his Written Objection of 21 July 2021, Chen HQ proposes that HK$1,818,370 be allowed.  The time claimed to have spent on various work is said to be excessive.  Counsel’s fees are also said to be excessive.

31.  SHDs filed their Reply on 11 August 2021.  They do not accept that the time spent on the disputed items is excessive.  They refer to and rely on the complexity of the matter, and the sheer volume of the affirmations prepared.  They maintain that counsel’s fees are not excessive. They are however prepared to make some concessions.  They now claim HK$2,392,250.

32.  In my view, the costs claimed for perusal of documents, preparing and attending hearings, and general care and conduct are on the high side.  I regard counsel’s fees as being reasonable.

33.  Adopting a broad‑brush approach, I summarily assess the costs at HK$2,200,000.

D.3.  THE JINAN GROUP JURISDICTION SUMMONS

34.  By its Statement of Costs of 13 September 2019, Jinan Group claims costs in the total sum of HK$5,531,131.50, which includes:

(a)  Communication etc in the total sum of HK$671,750.50 (Section C);

(b)  Professional Work in the total sum of HK$2,175,993 (Section D); and

(c)  External Counsel fees in the total sum of HK$2,522,500.

35.  By his Written Objection of 21 July 2021, Chen HQ proposes that HK$1,779,350 be allowed.  The time claimed to have spent on various work is said to be excessive.  Counsel’s fees are also said to be excessive.

36.  In its Reply of 12 August 2021, Jinan Group relies principally on the complexity of the matter and the amount of materials involved.  No concession has been made.

37.  In my view:

(a)  the total amount of HK$5,531,131.50 is grossly excessive;

(b)  the hourly rates charged by the fee earners are far too high (nearly double the Solicitors’ Hourly Rates for party and party taxation in respect of 2 of them).  The suggested complexity of the case in my view does not justify that;

(c)  the costs for Communication involve duplication, and the amount is excessive;

(d)  the total costs for Professional Work, and in particular:

(i)   more than HK$900,000 for preparation of documents is grossly excessive;

(ii)  nearly HK$1,000,000 for perusal of documents is grossly excessive;

The amount is not justified even after the complexity of the matter has been factored in;

(e)  counsel’s fees (HK$1,845,500 for leading counsel and HK$677,000 for junior counsel) are too high.  I regard HK$900,000 and HK$350,000 respectively as being reasonable.

38.  Adopting a broad‑brush approach, I summarily assess the costs at HK$2,200,000.

E.  THE RECEIVERSHIP SUMMONS

E.1.  CLAIM BY SHDS

39.  By their Statement of Costs of 13 September 2019, the SHDs claim HK$2,301,900, comprising, inter alia, Professional Work in the total sum of HK$794,300, counsel’s fees in the total sum of HK$682,000 (HK$300,000 for leading counsel and HK$382,000 for junior counsel called in 2011), and HK$700,800 for Mainland legal advice.

40.  By his Written Objection of 21 July 2021, Chen HQ proposes that HK$1,025,600 be allowed.  The time spent on the Professional Work is said to be excessive.  Leading counsel’s fee is agreed.  The fees for junior counsel is proposed to be HK$150,000.  The costs for the Mainland legal advice are suggested to be HK$150,000.

41.  In their Reply of 11 August 2021, the SHDs rely on the complexity of the matters.  They maintain that the time spent is not excessive.  They however make some concessions.  They maintain that counsel’s fees are reasonable.  They counter‑propose HK$650,000 for the Mainland legal advice.

42.  In my view:

(a)  costs in excess of HK$660,000 for perusal of documents and preparing for and attending hearings (as part of the Professional Work) are too high;

(b)  junior counsel’s fees being higher that those charged by the leader, with no explanation given for the apparent anomaly, is unreasonable.  In my view, HK$200,000 for junior counsel is the reasonable amount;

(c)  the costs claimed for the Mainland legal advice is too high.

43.  Adopting a broad‑brush approach, I summarily assess the costs at HK$1,450,000.

E.2.  CLAIM BY JINAN GROUP

44.  By its Statement of Costs of 13 September 2019, Jinan Group claims costs in the total sum of HK$3,533,019.50, which includes:

(a)  Communication etc in the total sum of HK$655,178 (Section C);

(b)  Professional Work in the total sum of HK$1,281,367 (Section D); and

(c)  External Counsel fees in the total sum of HK$1,490,900 (which includes HK$1,0455,500 for leading counsel (E2) and HK$345,400 for junior (E3)).

45.  By his Written Objection of 21 July 2021, Chen HQ proposes that HK$1,332,410.50 be allowed.  The time claimed to have been spent on various work is said to be excessive.  Duplication of work is suggested.  Counsel’s fees are also said to be excessive.

46.  In its Reply of 12 August 2021, Jinan Group again relies principally on the complexity of the matter and the amount of materials involved.  No concession has been made.

47.  In my view:

(a)  the total amount of HK$3,533,019.50 is grossly excessive;

(b)  the hourly rates charged by the fee earners are far too high.  The suggested complexity of the case in my view does not justify that;

(c)  the costs for Communication involve duplication, and the amount is excessive;

(d)  the total costs for Professional Work, and in particular:

(i)   more than HK$500,000 for preparation of documents is grossly excessive;

(ii)  nearly HK$500,000 for perusal of documents is grossly excessive;

The amount is not justified even after the complexity of the matter has been factored in;

(e)  counsel’s fees are too high.  I regard HK$500,000 and HK$200,000 respectively for leading counsel (E2) and junior counsel (E3) as being reasonable.

48.  Adopting a broad‑brush approach, I summarily assess the costs at HK$1,800,000.

F.  CONCLUSION 

49.  I make the above summary assessments accordingly.

50.  I make no further costs order in respect of the above assessments.