SPRINGBOK SHIPPING (HK) LTD AND OTHERS v. CLAYTON WONG & CO

IN THE COURT OF APPEAL

1997, No. 142
(Civil)

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J U D G M E N T

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Mortimer, V.-P.:

1. This is an appeal by a firm of solicitors (Clayton Wong) against an order for taxation of bills for costs made by V. Bokhary J on 25 June 1997. She allowed an appeal against the master's dismissal of an originating summons taken out by eight former clients who were the plaintiffs in the action.

The facts

2. Very briefly the facts are that Clayton Wong represented the eight clients in bankruptcy proceedings. There are 12 bills involved. Those bills were rendered between 21 March 1996 and 31 January 1997. The first five presented were paid out of monies held on account by Clayton Wong but the last seven were paid by cheque from new solicitors on 13 February 1997. The last seven bills were paid following an appearance in court, which is not relevant to these proceedings, but the bills were paid accompanied by a letter in which the plaintiffs' new solicitors said:

"Please note that we reserve all the respondents' rights in relation to your fees."

That followed considerable correspondence and communication between Clayton Wong and the new solicitors concerning the fees and the payment of them. The strange circumstance is that early in the correspondence on 9 January 1997 Clayton Wong wrote to the new solicitors, saying that they would be prepared to accept an undertaking for the payment of the fees from the new solicitors if necessary after taxation. So the two firms each contemplated taxation of the fees but never agreed as to how that should be brought about.

The decision below

3. The matter came before the judge. Taxation was applied for under s.67 of the Legal Practitioners Ordinance Cap. 159 which reads:

"(1) On the application, made within 1 month of the delivery of a solicitor's bill, of the party chargeable therewith the Court shall, without requiring any sum to be paid into court, order that the bill shall be taxed and that no action shall be commenced thereon until the taxation is completed.

(2) If no such application is made within the period mentioned in subsection (1), then, on the application either of the solicitor or of the party chargeable with the bill, the Court may, upon such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order -

(a) that the bill shall be taxed;

(b) that, until the taxation is completed, no action shall be commenced on the bill, and any action already commenced be stayed:

Provided that -

(i) if 12 months have expired from the delivery of the bill, or if the bill has been paid, or if a verdict has been obtained or a writ of inquiry executed in an action for the recovery of the cost covered thereby, no order shall be made on the application of the party chargeable with the bill except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the Court may think fit;

(ii) if the bill has been paid, no order under this subsection shall be made where the application for the order is made after the expiration of 12 months from the date of payment of the bill."

The judge held that here there were special circumstances upon which she should order a taxation. That relates to the proviso in the section relating to bills for costs which have been paid.

The issue

4. The parties agree that the only issue in the case is whether the judge was right when she found that there were special circumstances upon which she ought to order taxation so that she could then exercise her discretion to do so.

5. The basis of her decision was:

"First of all, there is cogent evidence, well worthy the attention of a Taxing Master, of overcharging by something in the region of 35 per cent.

Secondly, looking at the bills of cost, they are very lacking in particularity, and really do cry out for the attention of a Taxing Master."

Mainly based upon those two matters, she ordered the taxation.

6. However, that was not the only reason she gave. She also considered the reservation of rights at the time of the payment on 13 February 1997 to which I have referred. On that she said:

"...The Plaintiffs also rely on what they put forward as a reservation of their rights to taxation which reservation they made in the letter of 13 February this year."

A little later,

"Taking things in context, I view what was written on behalf of the Plaintiffs as an adequate reservation of their right to taxation. As it happens, I would be in favour of the Plaintiffs even without such reservation. For completeness sake, however, I should say that I am of the view that the fact of such reservation is something on which the Plaintiffs could place some reliance if they have to."

As I read her judgment, she relied mainly upon the first two matters - the overcharging and the lack of particularity in the bills - but also relied upon the reservation of rights as a third special circumstance.

The appellant's case

7. Mr Bell for Clayton Wong, submits that there was no basis in evidence for the judge to make a finding of special reasons and therefore she was wrong in making the order she made. He has helpfully invited our attention to authority on the question what are "special reasons".

8. He relied first upon in Re Norman (1886) 16 QBD 673. Lopes LJ adopts the words of Bowen LJ in In re Boycott:

" 'Special circumstances, I think, are those which appear to the judge so special and exceptional as to justify taxation. I think no court has a right to limit the discretion of another Court, though it may lay down principles which are useful as a guide in the exercise of its own discretion. It seems to me to be the true view of the statute, that there must be special circumstances making the payment differ from an ordinary payment, and that the judge thereupon has a discretion as to whether they are sufficient to authorise taxation.' That is entirely in accordance with my view, and expresses what I desire to convey."

The particular facts of the case perhaps do not carry the matter further.

9. On the question whether the reservation of a right to taxation, if there be one here, is a special circumstance, he cited Sanders v Issacs [1971]1 All ER 755. Goff J (as he then was) said at 760E:

"I do not consider it necessary in this case for me to decide whether the reservation is alone a sufficient circumstance. There is clearly some conflict of judicial authority and it may be that it is alone enough, but, as I say, I do not think it necessary for me to decide that, because I am satisfied on all the authorities, first, that the reservation is, in any event a highly important factor to be weighted with the others, and secondly, that so weighed special circumstances have been abundantly made out in this case."

10. Bearing in mind those principles - which I find of great help - it seems to me that the special circumstances which must be found by a judge must be something which are out of the ordinary. There must be something which is serious and which justifies not only an ordinary taxation but a special one. I turn first to the reservation.

11. For my part, it seems to me that the words used in the letter accompanying the cheque of 13 February 1996 do amount to a reservation - a reservation of the right which the clients had at the time before the cheque was paid - to ask for a taxation. The reservation of right is, therefore, in this case a matter of considerable importance. The letter followed discussions between the two firms of solicitors - the appellants in this case and the new firm - which was directed to those fees, and threats by the appellants to sue for them. There can be no other view of that letter, it seems to me, other than it is a reservation of right and a specific one at that.

12. Had that matter stood alone, for my part, I would have found the case a difficult one to decide. Fortunately, it does not stand alone. The question is then, was there evidence in front of the judge upon which she could decide that there was evidence of overcharging such as not to require an ordinary taxation but to require a special one? I am bound to say that, for my part, I might have decided the case the other way had I been sitting at first instance. But we must review what the judge said and whether there was evidence in front of her which justified the conclusion to which she came. I have no doubt, having seen the evidence, but there was evidence upon which she could reach that conclusion even though Mr Bell has been able to point out that many of the generalities - in an inadequate affidavit - have not been clearly made out. The best example which Mr Whitehead was able to put forward of an overcharge related to a relatively small sum of $2,000 odd in relation to a letter drafted by counsel.

13. Similarly, the bills of costs were held by the judge to lack particularity. I confess that perhaps I also might have decided that the other way had I been sitting below. But I was not. And there was evidence before the judge upon which she could make that finding. She did so. For my part, I would not interfere.

14. I bear in mind that the reservation relates only to the last seven of the bills - the earlier five, having been paid out of monies on account - but even so, I would dismiss the appeal in relation to all the bills.

Godfrey, J.A.:

15. I have come to the same conclusion, and so would also dismiss this appeal.

16. The law, in the interest of finality, does not in general favour claims to re-open settled accounts. In particular, it does not favour a claim by a client to re-open a solicitors' account which the client has already paid; but it will do so if "special circumstances" are shown.

17. Where a solicitor's account has been settled, but subject to an express reservation to have a taxation of the solicitors' bill, that is a "special circumstance", of very considerable importance. For my part, I find it difficult to imagine circumstances in which, in the face of such an express reservation, the client should be refused a taxation, though I dare say there may be cases in which that result might follow.

18. In our case, both parties seem to have been contemplating the possibility of a taxation at the time when the letter of 13 February 1997 was written by Mr. Pilkington of the client's new solicitors, Messrs. Clyde & Co. And the sentence in that letter :

"Please note that we reserve all the Respondents' rights in this matter in relation to your fees."

seems to me to be unambiguous, although terse. The "rights" mentioned could only have been rights to claim a taxation of the fees in question. That, on its true construction, was surely what Mr. Pilkington was attempting to reserve. Although the statement may be criticised, I suppose, as self-serving, it is worth pointing out that Mr. Pilkington expressly says so. In his affidavit in relation to this point, he says :

"I specifically reserved all of the Plaintiffs' rights in relation to fees in my letter to the Defendant of 13th February 1997, in order to preserve the Plaintiffs' rights as they then existed in respect of taxation."

19. He goes on to say :

"..... the right I was seeking to reserve on behalf of all the Plaintiffs was the right under the Legal Practitioners Ordinance to tax all of the Defendants' bills ....."

20. He concludes by saying :

"I believe that such a reservation of rights amounts to a special circumstance itself."

21. As to this last, I agree with him.

22. I would therefore support the judge's decision upon this ground.

23. I have found more difficulty with the judge's own reasoning, in which this reservation seems to have played only a minor part, her main reasons being the allegations of over-charging and want of particularity in the solicitors' bills. But it was the judge's conclusion that there was sufficient material before her on these other points to justify the order for taxation which she made and I am not disposed to hold otherwise. Accordingly, I think she was right to order a taxation, not only in relation to the 7 bills to which Mr. Pilkington's letter of 13 February 1997 related, but in relation to all the bills in question.

24. As I have said, for my part, I also would dismiss this appeal.

Yeung, J.:

25. I agree with the reasons given by Mortimer, V-P and Godfrey, J.A. and I, too, would dismiss the appeal. I would only add that the payment of the 7 bills on the 13th February 1997 in the light of the content of the accompanying letter was a conditional payment, conditional upon the reservation of the Plaintiffs' right to refer those bills for taxation. The Defendant by accepting the payment was also accepting the condition. The Defendant cannot now complain against the order referring the bills for taxation. The aforesaid, in my view, constitutes sufficient special circumstances, to justify taxation of the 7 bills in question.

Mortimer, V.-P.:

26. The appeal is dismissed. Costs will follow the event and the costs of the appeal be to the respondents.