CHAN KWONG MAN AND ANOTHER v. THE SECRETARY FOR TRANSPORT

LDMR 36/2000

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

Miscellaneous Reference Application No. LDMR 36 of 2000

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D E C I S I O N

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1. On 21st February, 2003 the Applicants in these 2 cases took out similar interlocutory applications for determining/assessing/taxing the applicants' professional costs/remuneration under section 10(2)(e)(ii) of the Lands Resumption Ordinance, Cap.124. On 18th July, 2003 when this Tribunal heard the 2 applications together, the parties invited us to make a preliminary decision as to whether the professional costs/remunerations were to be determined on time basis or on the basis of one fee scale.

The law

2. Section 10(2)(e)(ii) of the Ordinance provides that the Tribunal shall determine the compensation (if any) under subsection (1) on the basis of the amount of any costs or remuneration mention in sections 6(2A) and 8(4). Section 6(2A) reads: -

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Where, ..............., an offer of compensation is made in a claim for compensation is submitted to or by any person under this section, such offer may provide for the payment by the Authority to that person of, or such claim may include a claim for, any costs or remuneration reasonably incurred or paid by him in employing persons to act in a professional capacity in connection with such offer or claim.

(Underlines provided)

Section 8(4) reads: -

“Ａ claim submitted by a person under subsection (1), .....may include a claim for any costs or remuneration reasonably incurred or paid by that person in employing persons to act in a professional capacity in connection with such claim."

(Underlines provided)

3. Section 6(2A) applies to those people to whom an offer of compensation has been made, or on whom a notice has been served, whereas section 8(4) applies to a person who has not been offered in writing compensation, or who has not been served with a notice.

4. The Applicants' claims are of two different nature. The first are the professional costs made pursuant to section 10(2)(e)(ii) in relation to the claim made to the Government before the commencement of the Lands Tribunal proceedings. The second are the claims for expert fees involved in the Lands Tribunal proceedings. The Respondent does not dispute that these expert fees should be charged on time basis.

5. Regarding the Applicants' claims for professional costs under section 10(2)(e)(ii), the Applicants instructed 5 persons and fees/costs were charged on time basis. The Respondent submitted that, although the Applicants are claiming fees for various professionals, the total should be "one fee" based upon the Scale 10 of the RICS/HKIS Scale of Charge and applying a discount factor in light of the circumstances of the present cases.

6. The Respondent raised 6 grounds of objection. But this Tribunal decides that only the following grounds are relevant in the determination of this issue:－

"(e) ...................

The fees/costs claimed by the Applicants are entirely out of proportion to the compensation claims. In LDMR36/00, the claim for professional fees is over $230,000, while the compensation is just $120,000 and legal costs of $433,868.17 have been paid by the Government to the Applicants. In LDMR37/00, the claim for professional fees is also over $230,000, while the compensation is just $150,000 and costs of $505,283.17 have been paid by the Government to the Applicant.

...............

(f) Charging the fees/costs on time basis, as proposed by the Applicants, are out of line with the norm and practice in resumption compensation cases. Practitioners invariably submitted claims for professional fees/costs to the Government on the said "one fee" basis. There is no reason why the "one fee" basis is not acceptable in the present two cases, particularly when the Applicants' fee claims based on time charge are entirely disproportionate to the compensation sums."

7. Regarding ground (e) the issue is not whether the fees/costs claimed are out of proportion to the compensation sums. The test to be applied is the test of "reasonableness". The fees/costs claimed are not necessarily commensurate with the compensation sums. It is the amount of work reasonably utilized that matters, and this in turn depends on the experience of the professionals involved. If the professionals have more experience, less time is required to be utilized, and less fees/cost will be involved.

8. The Respondent submitted that Scale 10.1(b) of the HKIS Scale of Charges applies in these cases. The particulars of this Scale 10.1(b) are set out in the affirmation of Chan Tat Shing Jeremy as follows: －

'For disturbance and for loss of tenant's profit rent:
In respect of "each separate claim"－

5%	On the first $500,000 of the total compensation
plus 2.5%	On the next $500,000 of the total compensation
plus 1%	On the next $5,000,000 of the total compensation
plus 0.75%	On the next $10,000,000 of the total compensation
plus 0.5%	On any residue of the total compensation
(Minimum fee is $17,500)

9. The legal costs paid by the Government far exceed the compensation sums. It must be that such legal costs are reasonable amounts paid to the Applicants. If such legal costs had been paid on a one fee scale, the Applicants would have received much less than what they ought to have received. This ground (e) is therefore not a good reason for applying the one fee scale. On the reverse it shows that the "one fee scale" could create injustice.

10. As for ground (f), the Respondent has not demonstrated how the "reasonableness test" under s.10(e)(ii) could be applied to the present 2 claims by using the one fee scale. When applying this test the Tribunal will take into account all the relevant factors, which invariably include the amount of time spent on the work, and the experience of the professionals involved. But the one fee scale does not disclose any such information for the Tribunal to consider. Consequently, the Tribunal cannot make a finding as to whether the "reasonableness test" has been satisfied. On the other hand, if the fees are charged on time basis, the Tribunal is able to apply the "reasonableness test" to the facts of the case. Obviously this is the more desirable method of determining professionable costs/fees. We therefore decide that the claims for professional costs/fees are to be decided on time basis.

Costs

11. We order that the costs involved in the determination of this preliminary issue be to the Applicants to be taxed, if not agreed, on District Court scale.