AUDREY CHOW SECURITIES LTD v. YUNG LUNG BIU ALBERT AND OTHERS

HCA 147/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 147 OF 1998

_________________________

_____________

RULING

_____________

INTRODUCTION

1.  The amount of costs to be allowed to a successful litigant in person (“LIP”) is governed by O.62 r.28A.Sub-rules (2) and (3) provide:

“  (2) The amount allowed in respect of any item shall be such sum as the taxing master thinks fit not exceeding, except in the case of a disbursement, two-thirds of the sum which in the opinion of the taxing master would have been allowed in respect of that item if the litigant had been represented by a solicitor.

(3) Where in the opinion of the taxing master the litigant has not suffered any pecuniary loss in doing any work to which the costs relate, he shall not be allowed in respect of the time reasonably spent by him on the work more than $200 an hour.”

2.  Mr. Yung was a LIP for the most part of the present action that commenced in January 1998.The Plaintiff, a stocks and securities trading company, claimed against Mr. Yung of having allegedly made false representations in connection with some securities transactions conducted with the Plaintiff.The action was discontinued against him by a consent order dated 24 October 2007, and he was awarded costs of the action.

3.  In his Bill of Costs to be taxed, Mr. Yung claims an hourly rate of $2,600, which is two-thirds of $4,000 – the reference hourly rate for a solicitor of seniority of 10 years or above.

4.  The Plaintiff, the paying party, contends that Mr. Yung should only be entitled to $200 an hour in accordance with r.28A(3).

GROUNDS FOR CLAIMING TWO-THIRDS

5.  As Mr. Yung was acting in person, I told him that – in order to enable him to claim an hourly rate of above the usual $200 for a LIP – he would need to file evidence to prove pecuniary loss.Consequently Mr. Yung filed one affirmation and one affidavit to prove his alleged pecuniary loss.Two further affidavits were subsequently filed without leave (and leave was only given at the hearing).

6.  After the hearing was concluded, before the handing down of my Ruling, Mr. Yung (quite improperly I must say) sent a letter to me enclosing a list of his working hours with reference to his bill of costs and a witness statement of Chow Bai Wah Emily, a witness of the Plaintiff in this action.

7.  Mr. Yung in his 1^st Affirmation deposed that he was a self-employed investment adviser, and exhibited records from the Inland Revenue Department to prove that he had suffered pecuniary loss when handling the proceedings as a LIP.His personal income during the relevant years is:

Year	Annual taxable income($)
1997/1998	2,219,261
1998/1999	129,329
1999/2000	407,752
2000/2001	163,354
2001/2002	20,385

GROUNDS OF OPPOSITION

8.  The Plaintiff filed an affirmation of Nicholas Lock (which I also granted leave at the hearing), and was represented by Miss Chan.The contentions can be summarised as follows:

(i)  The proceedings involved other defendants.During the material period during which pecuniary loss was alleged, the proceedings mainly involved other defendants.

(ii)  There was no correlation between the decline in income and the proceedings.

(iii)  The total hours Mr. Yung had allegedly spent (which are calculated according to his bill of costs) only constitute a small percentage of his total working hours (assuming an average of 14 hours a day work of20 days a month)[1].

(iv)  Alternatively, Mr. Yung’s hourly rate (according to the total hours he worked and his income reported for the year 1997/1998) is, at the most, only $661 per hour[2].

DISCUSSION

(A)  LEGAL PRINCIPLES

9.  Although Mr. Yung conducted the case as a LIP, he was able to refer to me two Hong Kong authorities in support of his arguments: R A Stegemann v Time Enterprises Publications Limited[3] , andAu Wing Lun v Tam Mei Kam & ors.[4]

10.  Miss Chan has submitted 4 cases, one of which is the Chinese judgment of the Court of Appeal of 霍兆榮對廉政公署.[5]

11.  I have considered the authorities of both parties, but take the view that the most relevant authority for the purpose of this determination is the Court of Appeal decision of霍兆榮.In it the Justices of the Appeal discussed at length (see p4E – p8C) the origin and principles of the UK’s equivalent of our r.28A with reference to the three English decisions of Mainwaring v Goldtech Investments Ltd. [1997] 1All ER 467, Buckland v Watts [1970] 1QB27 and Hart v Aga Khan Foundation (UK) [1984] 1All ER 239.

12.  The Hong Kong Court of Appeal has adopted and applied the principles laid down in these English authorities.Hence, in the instant determination, I should also follow and apply the principles expounded in the Court of Appeal decision.

13.  According to the principles established by the authorities in paragraph 11 above , Mr. Yung will bear the burden of proof in establishing his pecuniary loss by his affidavit evidence (see Mainwaring at 467 h-j).

(B)  EVIDENCE ADDUCED

14.  Since Mr. Yung was acting in person, I am prepared to take into account the attachments to the letter he sent (albeit improperly) to me after the hearing. As Mr. Yung has also enclosed a witness statement of this case for my reference, I would therefore also read the pleadings and witness statements in the case file in order to assist me to have a better understanding of this case as well as to ensure no relevant materials would be omitted from my deliberation.

(a)  Source of Income

15.  Regarding Mr. Yung’s income, according to his affidavit evidence, it was from his engagement as a “self-employed licensed broker in dealing with Securities, Commodities Forex as well as asset management accredit to Sincere Securities Limited (D7), Celestial Commodities Limited and Hong Kong Forex Investment Limited respectively.” (Mr. Yung’s 1^st Affirmation, para. 3).

(b)  Working Hours

16.  So far as his working hours are concerned, Mr. Yung said that he “might as well working nearly around the clock.” (see Mr. Yung’s 2^nd affidavit, para.4).

(C )  BURDEN OF PROOF DISCHARGED?

17.  The above, by and large, is all the evidence there is in support of his application. Has Mr. Yung adduced sufficient evidence to discharge the burden?

18.  The brief evidence shows that - notwithstanding ample opportunity having been given to him to file affidavit evidence to prove pecuniary loss- Mr. Yung has in fact given only piecemeal information of his earnings.

19.  First, there is no information as to how his income from his work as a licensed broker was calculated.I do not know whether his remunerations from his self-employed business were profit-based, commission-based or otherwise.

20.  Second, the nature of the self-employed business is deficient of particulars.There is no evidence as to the size of his business: whether he was the only person working in the business or whether he had employees working for him. 

21.  Third, Mr. Yung, apart from stating that he could “work round the clock”, has failed to state how many hours he usually worked, and his normal working time.

22.  Fourth, Mr. Yung has not explained at all whether the time he had had spent in doing work in connection with the proceedings would have otherwise been used to earn an income.

23.  The serious deficiency of particulars, in my view, is fatal to Mr. Yung’s application.It is because he has the burden of proving pecuniary loss by affidavit evidence.The consequence of the inadequacy of evidence means that Mr. Yung has not proved firstly whether the reduction of income as shown from the Inland Revenue documents was due to the amount of time taken from him for generating profits or earning an income or due to anyother reasons (not disclose).As indicated above, I have considered all the documents in this case, and I note in fact a witness statement of Mr. Yung dated 10 July 2000, in which he said, “As a result of all such malicious defamation, my income is adversely affected … (para. 14, emphasis is added).

24.  I will be disinclined to draw any adverse inference from this statement.However, it somehow tends to show a likelihood that his reduction of income might have been due to circumstances unrelated to his spending time in dealing with the proceedings.

25.  Furthermore, in paragraph 1 of the same witness statement, Mr. Yung also said,

“I am a registered securities dealer representative and am one of the many sales representative of the 7^th Defendant.Yung & Partners renamed as Yung & Co. since 21 January1997 is a sole proprietorship owned by me for tax reporting purpose.  I have never engaged through Yung & Co, or Yung & Partner in any business including the trading and broking in stocks and securities on the Hong Kong Stock Exchange at all…”

26.  The passage in the statement seems to show that Mr. Yung’s sole-proprietor business (though it is not clear if it is the same business referred to in the statement) might also be for tax purpose only.The very scanty information that Mr. Yung has given in relation to his self-employed business as well as a lack of evidence concerning his working hours and the time during which he prepared for the proceedings has greatly undermined his case.

27.  I have further taken account of the further clarification Mr. Yung has attempted to make in his reply submission to Miss Chan’s criticism of his evidence concerning working hours. He submitted that since he was a self-employed investment adviser, his time would have been spent time indefinitely on matters such as watching the shares market during trading hours, socializing and networking by dinning with clients after trading hours.

28.  The explanation, in my view, tends to fuzz rather than clarify. It is still not clear if the activities such as studying the market or socializing would have enabled Mr. Yung to earn an income or not.Further, I am also not provided with any evidence as to whether his time having spent on working for the case had taken him away from engaging those activities.

29.  In the circumstances, since there is no evidence on when and how he had used his time in doing work for the litigation, it is probable that Mr. Yung might have used his leisure time in preparing the proceedings, which would have- according to the principles established in霍兆榮- disentitled to a higher hourly rate of two-thirds of what would have been allowed to a solicitor for doing that work.

30.  As a matter of fact, I am of the view that the table (see Annexure A) prepared by Miss Chan for the Plaintiff further highlights the problem Mr. Yung faces.Although the calculations in the table are only rough estimates, I agree with Miss Chan’s contention that the rough percentages of the amount of time Mr. Yung would have spent in the litigation (as shown in the table) do not appear to correlate with the reduction of the amount of Mr. Yung’s annual incomes reported to the Inland Revenue.

CONCLUSION

31.  For the reasons above, I find that Mr. Yung has failed to discharge the burden of proof in establishing that he has, due to the time he spent on the litigation as LIP, suffered pecuniary loss.

32.  Hence, he should only be allowed $200 an hour as provided in r.28A(3) for the reasonable time he spent (which amount will be assessed in the taxation).

COSTS ORDERS & DIRECTIONS

33.  As the Plaintiff has succeeded in its opposition to Mr. Yung’s claim for costs under r.28A(2), I order that Mr. Yung shall pay the Plaintiff’s costs occasioned by the preliminary argument.The costs order shall be nisi, and become absolute within 14 days of the handing down of the Ruling unless an application is made to vary the costs order nisi.

34.  In order to avoid satellite taxation proceedings, I further direct the cost awarded to the Plaintiff be summarily assessed in lieu of taxed costs.

35.  Upon the costs order becoming absolute, and should the costs not be agreed, the Plaintiff shall fix a hearing before me for summary assessment of costs with ½ hour reserved.The Plaintiff is to lodge and serve a statement of costs 7 days before the hearing for summary assessment of costs, and Mr. Yung shall likewise file and serve his list of objections 3 days before the hearing.

36.  The parties shall, within 14 days of this Ruling, fix a date for taxation with 1 day reserved.As I have already disposed of the preliminary objection regarding Mr. Yung’s hourly rate, the taxation hearing can be heard by any Master.

Annexure A

*  Calculated on the basis the 1^st Defendant worked 14 hours a day, 20 days a month.That means the 1^st Defendant’s annual working time amounted to 3,360 hours in total.