LEE CHOI HO v. MESSRS. COLLIN NG & CO., SOLICITORS

HCMP 777/2021

[2024] HKCFI 3732

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 777 OF 2021

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D E C I S I O N

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1.  This decision was originally scheduled to be handed down to incorporate what this court has explained by way of written direction to the parties, and upon which the parties eventually reached settlement of their dispute. Academic and overdue this may have become by now, worth mentioning for future purpose it remains, I believe.

These originating proceedings

2.  The defendant is the former firm of solicitors acting for the plaintiff in his matrimonial proceedings. For work done in those proceedings, the defendant had issued to the plaintiff various bills of costs, which the latter disputed.

3.  By her originating summons (“OS”), the plaintiff sought an order that the defendant’s bills of costs in question be referred to taxation pursuant to section 67 of the Legal Practitioners’ Ordinance, Cap 159 and O106 of the Rules of the High Court, Cap 4A (“RHC”).

4.  Pursuant to Practice Direction (“PD”) 14.2 §3(5), the OS was first fixed before the master. After rounds of affirmations in support and opposition filed by the parties, the master adjourned the OS for argument before a judge. Further affirmation was filed by the plaintiff afterwards. The argument was fixed to be heard before this court on 2 December 2021.

5.  Prior to the hearing, this court received the skeleton submission of counsel for the plaintiff, who gathered from the parties’ contentions as per their affirmations the following issues to be adjudicated by the court:

(1)  whether the bills were interim or final;

(2)  at what time the bills were delivered by the defendant to the plaintiff;

(3)  if the bills were deemed to be final and delivered 12 months prior to the OS, whether the plaintiff had demonstrated special circumstances to justify the reference of the bills to taxation;

(4)  whether the defendant should provide a breakdown of the bills;

(5)  whether the court should impose conditions if an order for taxation was made.

6.  In respect of (3) above, the plaintiff referred to the various disputed areas of the bills in question.

7.  Whilst the defendant had lodged its written submissions prior to the hearing, it decided to consent to the plaintiff’s application. By consent summons filed on 1 December 2021, the parties asked for an order referring the defendant’s bills in question to taxation and thus vacating the hearing scheduled on the following day before this court as mentioned. Pursuant to that, this court made the order on 1 December 2021 (“the 1/12/2021 Order”). The originating proceedings were thus disposed of.

Taxation proceedings

8.  The court record shows that there had been rounds of further applications and directions before the taxation hearing finally commenced before the taxing master (“the Taxing Master”) at the end of December 2022. Essentially, various disputes were raised during the taxation hearing, which caused the Taxing Master to adjourn the hearing for the parties to consider resolution by agreement. That failed, the matter returned to the Taxing Master.

9.  The matter last went before the Taxing Master on 27 April 2023. At the end of the hearing, the Taxing Master directed the parties to fix a 30-minute direction hearing before a judge, and to lodge a narrative statement prior to the direction hearing (“the Taxing Master’s Order”). The Taxing Master’s Order was made apparently on the basis that the disputed issues were considered to be too various or substantial, which should have been, and then should be, placed before a judge for adjudication before the taxation hearing could resume. In doing so, reference was made to the case of Mark Sutherland v CRB [2022] HKCFI 3382 to demonstrate the proper procedures to be followed where there are substantial factual disputes in solicitor-client costs.

10.  In Mark Sutherland, the court was faced with the lay client’s application for reference of her former solicitors’ bills for previous contentious litigation to taxation, which the solicitors opposed. The following core matters in dispute which the court in Mark Sutherland had to adjudicate for the purpose of the client’s application were set out in §5 of the judgment:

(1)  Whether, if any, were the terms of the retainer;

(2)  Were the bills interim or final bills;

(3)  Was the solicitor negligent in handling the contentious matters;

(4)  Should an order to tax be made;

(5)  Should there be stay of the originating proceedings pending resolution of lay client’s writ action against the solicitor for professional negligence.

11.  The court proceeded to adjudicate the above disputed core matters, and it was in the context of the last core disputed matter (ie (5) above) that the court discussed the 2-stage procedure of an application for order to refer a solicitor-client bill to taxation. Essentially stage 1 determines the issue of liability and stage 2 determines the quantum of costs.

12.  The court in Mark Sutherland continued to discuss (§§62 – 74 of the judgment) the proper practice to be adopted by the parties for the purpose of stage 1 of the application. The court discussed the question of whether a master or a judge should deal with the issues in dispute (§§72 – 73 of the judgment). That was in the context of the master being faced with the issues at stage 1, namely whether or not the master can summarily dispose of them (as he/she has the power under PD 14.2) or should direct the argument to be fixed before a judge.

13.  As mentioned, the master in the present case decided to adjourn the substantive argument for the purpose of the substantive relief sought in these proceedings to a judge, namely this court, back in December 2021. The parties eventually decided to dispose of that by consent. Hence the 1/12/2021 Order.

14.  Indeed, the court in Mark Sutherland specifically (at §64 of the judgment) advised against the parties just seeking an order to taxation by consent and finding out only at stage 2 that there are in fact issues involving substantial factual investigation that could not be resolved by the taxing master in the taxation hearing. To prevent that, the court suggested the necessary information ought to be placed before the master at stage 1 for ascertaining the real issues. Hence the reference to the filing and service of a narrative statement and a list of objections before the master for such purpose at that stage (§§66 – 70 of the judgment).

15.  However, in the present case, the consent of the parties in disposal of the originating proceedings came only after the parties have already filed their respective affirmations setting out their dispute and contentions for the purpose of the substantive argument. Reason for their consent aside, that was vis-à-vis the parties their informed consent with legal advice serving to dispose of the substantive dispute, including that in respect of liability for the defendant’s bills in question and the plaintiff’s entitlement to the order for taxation of those bills.

16.  In other words, the disputed issues in these proceedings identified by the affirmations filed and summarized by counsel in their written submission back in December 2021 to have been standing in the way of the plaintiff’s entitlement to the substantive relief (ie order for taxation of the bills in question) were no longer taken by the parties. That formed the premise for the 1/12/2021 Order. As such, the inadequacy in attending to the dispute between the parties as explained by the court in Mark Sutherland was not supposed to be happening since the order. This differs from what caused the court’s discussion in respect of stage 1 of the procedure in Mark Sutherland.

17.  Pursuant to the 1/12/2021 Order, taxation proceedings followed. The Taxing Master has jurisdiction to adjudicate issues including the terms and extent of the retainer or whether any work falls outside the scope of the retainer. If necessary, the Taxing Master has the power under O62, r14 of the RHC to take evidence on oath by way of cross examination on affidavit: see Hong Kong Civil Procedure 2024 §62/14/1.

18.  Notwithstanding the above, the parties somehow brought about further rounds of applications and affirmation evidence since January 2022, including substantial amendments to the defendant’s bills in question and the plaintiff’s objections. These were new developments giving rise to dispute exceeding those identified before this court back in December 2021. Judging from the terms of the Taxing Master’s Order (§2 thereof), it seems that the intention behind her order was to allow the parties to revert to argument for stage 1 of the taxation procedure, which should therefore be a matter before the judge.

This court’s direction to the parties

19.  Upon the attention of this court being drawn to the above, this court gave written direction to the parties on 12 June 2023. Whilst they were bound by the Taxing Master’s Order, the parties were given notice of the expectation of this court for assistance in respect of the following issues if and when the matter was fixed before this court:

(1)  as far as compliance with the Taxing Master’s Order would amount to reversion of the matter to the judge, the issue of jurisdiction of the judge, in view of the currently binding 1/12/2021 Order in disposal of the application for all the substantive relief sought in these proceedings (except for costs);

(2)  as far as compliance with the Taxing Master’s Order would amount to singling out issues in stage 2 of the taxation procedure for the determination by a judge, the issue of jurisdiction of the judge and/or justification.

20.  The parties did fix a direction hearing before this court on 14 September 2023. By then, they had also lodged a narrative statement of the disputed issues between the parties as of then as well as counsel’s written submissions pursuant to the Taxing Master’s Order.

21.  However, at the hearing on 14 September 2023, the parties informed this court that they again came to a settlement. This court was also presented with a Tomlin Order setting out the settlement terms for payment and stay of these originating proceedings save for the purpose of carrying the terms of the settlement into effect.

22.  This court was puzzled by the form of the order mentioned above. The substantive relief sought by the plaintiff in these proceedings was for an order that the disputed bills be referred to taxation so that the Taxing Master would certify the quantum due. The proceedings had been disposed by the 1/12/2021 Order, which remained binding. The remaining issue was only the costs of the originating summons, which was reserved pending the outcome of the taxation proceedings (§4 of the 1/12/2021 Order). If anything, the parties could only be taken by their latest settlement to agree not to proceed with the re-opening of these proceedings (and for such purpose, setting aside of the 1/12/2021 Order). In the circumstances, what the parties should have done was to settle the pending taxation proceedings before the Taxing Master. Eventually, the parties informed this court by letter dated 17 November 2023 that the taxation proceedings were settled and notice of discontinuance of these proceedings was filed by the plaintiff the day before.

Points to note

23.  In line with the spirit of Mark Sutherland discussed above, it rests upon the parties to put forward their contentions in respect of the dispute over the solicitors’ bills of costs by way of affirmations and the narrative statement (referred to by the court in Mark Sutherland) when the matter is brought before the master in the first instance. It should be on such informed basis that the matter, if necessary, is adjourned to the judge for substantive argument and adjudication. If necessary, further case management directions may also be given by the judge so seizing of the matter.

24.  Where an order for taxation is made, be that by consent or after argument, the substantive application in the originating proceedings is disposed of in terms as ordered by the judge. Any contention and dispute which should have been raised before the judge for substantive adjudication is not expected to be raised only or again in the taxation proceedings, let alone arising out of further contentions and evidence advanced only subsequent to the order for taxation by the judge.

25.  In taxation proceedings, the taxing master has jurisdiction to adjudicate issues including the terms and extent of the retainer or whether any work falls outside the scope of the retainer. If necessary, the taxing master has the power under O62, r14 as mentioned to take evidence on oath by way of cross examination on affidavit. There is therefore no question of singling out any disputed issues in the taxation proceedings, simply on the basis that they could not be resolved on affirmations and should therefore revert to the judge for adjudication after the order for taxation has been made.

26.  In the event that dispute before the taxing master is somehow allowed to develop into such nature and scale warranting the consideration of whether the order for taxation manages to stand, the parties should apply to the judge for setting aside of the order for taxation and re-opening of their dispute for adjudication by the judge. I can only understand what was allowed to develop in the present case came to fall into this category. The parties should not expect the taxing master to simply direct the matter or any part of it to revert to the judge in such circumstances.