XCHRX SAFE STEEL FURNITURE FACTORY LTD v. LAMEX TRADING COMPANY LTD

HCA12172/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.12172 OF 1996

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D E C I S I O N

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1. This is an application by the defendant to review the Decision of Deputy Judge Barnes sitting as a taxing master on 27 November 2000.

2. By a Writ of Summons issued on 25 October 1996, the plaintiff claimed against the defendant for damages for breach of contract. The case turned on the construction of a written agreement between the parties. The trial was split into two parts by consent. At the trial on liability which lasted for three days before Cheung J, as he then was, the defendant instructed senior counsel to conduct the case. The learned Judge dismissed the plaintiff's claim with costs. He did not, however, award certificate for two counsel.

3. The taxation on the bill of costs was heard by Deputy Judge Barnes sitting as a taxing master on 21 July 2000. The Deputy Judge disallowed all 17 items involving the fees of senior counsel. The defendant objected to the decision and lodged a review. In her written decision which was handed down on 27 November 2000, the Deputy Judge affirmed her decision to disallow the 17 items. The defendant seeks to review the decision of the Deputy Judge under Order 62, rule 35 of the Rules of High Court and for an order from this court to allow the 17 items set out in their Summons dated 3 March 2001 in full.

4. There being no certificate for two counsel ordered by Cheung J at the trial, the Deputy Judge has a discretion at the taxation hearing whether to allow fees for two counsel. The Deputy Judge correctly stated the principles applicable at page 3 of her Decision. It would be useful to repeat them here again.

5. Order 62, rule 28(2) states :

"...... costs to which this rule applies shall be taxed on the party-and-party basis and as a taxation on that basis, there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed."

Order 62 First Schedule Part II paragraph (HK)(5) states :

"Every fee paid to counsel shall be allowed in full on taxation, unless the taxing master is satisfied that the same is excessive and unreasonable, in which event the taxing master shall exercise his discretion having regard to all the relevant circumstances and in particular to matters set out in paragraph 1(2)."

6. Counsel for the defendant conceded at the review before the Deputy Judge that the defendant was not able to show it was necessary to engage a senior counsel to appear at the trial. However, it was submitted that it was proper for the defendant to have done so. Mr Chan, who did not appear in the review below, submitted that the test of propriety should be whether the applicants had acted reasonably in instructing leading counsel to appear at the trial. The Deputy Judge rejected a similar argument at the review hearing. In my view, she must have been correct for nowhere in the provisions under Order 62, rule 28(2) does the word "reasonable" appear. She was also correct in declining to follow the English case of the R. v. Dudley Magistrates' Court ex p Power City Stores Ltd and Another [1990] when the case bears no direct relevance to the Hong Kong provisions.

7. On the issue of propriety, the Deputy Judge followed the case of Xinyuan Trading Co. Ltd v. NPH Petrochemical Limited, HCA No. 18159/1998 and CACV No. 267/1998, a decision by Master Jeremy Poon on a review of taxation.

8. In that decision, Master Poon performed a detailed analysis of the existing rules and distinguished them from their English counterpart. He expressly addressed the issue whether it was proper to instruct senior counsel after abolition of the two counsel rule.

9. He identified nine factors which in his view could assist a taxing master in determining whether to allow the fees of senior counsel in the absence of a certificate for two counsel. Although the factors listed are not exhaustive, in my view they must all be considered to be highly relevant.

10. In her written Decision, the Deputy Judge appeared to have considered all nine factors identified by Master Poon and she concluded by stating at page 13 of her Decision :

"...... for the reasons I have given I am not convinced that it was proper for the defendant to have instructed a senior counsel, let alone a senior counsel with a junior."

11. At pages 11 and 12 of the Decision, Master Barnes set out her reasons for coming to her conclusion as she did. She took the view that the degree of complexity of the case did not warrant the defendant instructing senior counsel to appear at the trial. One must not lose sight, however, that with the benefit of the representation by senior counsel, the defendant had decided not to call any evidence so that the length of the trial was cut short substantially. Court time and costs were saved. The expertise of senior counsel had contributed significantly to the swift resolution of the case. It is doubtful that the same could be said if less experienced counsel was instructed to appear alone. That said, Master Barnes' decision that it was not proper to instruct senior counsel at the trial can hardly be supported.

12. Her decision to disallow the fee items in relation to senior counsel but instead to increase the fees for junior counsel is rather surprising. The junior counsel who appeared at the trial had about four years' experience at the time of the review. The Deputy Judges order to award brief and refresher fees in the scale of a senior junior seems to me to be entirely arbitrary as it does nothing to address the situation under consideration. One cannot increase the competence of the junior counsel whose fees were being taxed by a notional award. I would therefore allow this application and make the following order :

(i) the Deputy Judge's order to disallow the 17 items in the Bill of Costs as particularised in the Defendant's summons dated 3 March is set aside;

(ii) the order allowing the brief and refresher fees of junior counsel at HK$80,000 and HK$25,000 per day respectively is set aside;

(iii) the defendant is to obtain an appointment before me for taxation of the 17 items as particularised;

(iv) the cost order of the review dated 27 November 2000 made by the Deputy Judge in favour of the plaintiff is set aside; and

(v) the defendant is entitled to the cost of and occasioned by the review before the Deputy Judge and the application before me. Such costs are to be taxed if not agreed.