CHEUNG HING v. WONG CHOR CHEUNG AND OTHERS

HCA 925/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 925 of 2010

__________________

__________________

__________________

D E C I S I O N

__________________

Introduction

1.  This is a review of taxation.

Background

2.  The plaintiff and the 1^st defendant were friends since schooldays.  In 1991, they agreed to jointly invest a landed property at the Peak (the “property”) and held it by the 3^rd defendant.

3.  From about 2008 onwards, parties’ relationship turned sour and a number of different litigations started.  Among them, under HCA 336/2008, in March 2010, by consent, parties agreed for a sale of the property.  However, the plaintiff later found that the 1^st and 3^rd defendants purported to sell it to the 2^nd defendant without his prior knowledge and consent as well as at a gross undervalue at 15 million only.

4.  By the present proceedings, the plaintiff sought to, inter alia, set aside the sale, restrain any sale without his prior approval, and ask for damages.  On 7 April 2014, the trial judge found the sale a sham and granted judgment to the plaintiff.  He was also awarded costs on an indemnity basis with a certificate for 2 counsel.

5.  The defendants took up the matter in CACV 100/2014 and CACV 101/2014.  However, they failed to pay the security of costs as ordered by the Court of Appeal, and as such, both appeals were dismissed on 6 and 28 January 2015 respectively.

6.  Pursuant to the costs order made in the lower court, 3 bills (bill nos 1 to 3) were filed by the plaintiff against the defendants.  All 3 bills were taxed by me for 2 days in August 2015.

7.  It appears that the paying parties have not made any payment.

8.  Anyway, the 1^st and 3^rd defendants (hereinafter called the “paying parties”) sought to review some of the items in bill no 1.  Parties appeared before me on 8 April 2016 for the substantive argument.  Mr Stephen Lau, LCD represented the paying parties and the plaintiff (thereinafter called the “receiving party”) appeared in person.

9.  Mr Lau started to inform that there was no taxation bundle.  He questioned if the review should continue.  The receiving party replied that the taxation bundle had been returned to his former solicitors.  They discarded them.  He contacted the solicitors acting for the paying parties and made enquiries, but in vain.  The receiving party said that he would not be able to produce the relevant documents even though the hearing was adjourned.  Upon discussed with parties further, I decided that the review should continue because adjournment of it would only lead to further time and costs spent.  This court would rely on the available documents within the court file, rulings at the original taxation and submissions from parties.  At the end, the burden of producing the documents to justify the items in review still lied on the receiving party.

10.  Upon hearing from the parties, I adjourned the decision to be handed down.  Here it is.

Discussions

11.  To start with the review, I ask myself to bear in mind that the trial judge ordered costs to the receiving party on an indemnity basis. Under rule 28 (4A) of the Rules of the High Court (Cap 4A), it says that:

“… all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing master may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party…”

12.  By the review application, the paying parties sought to revisit 28 items, 25 of them were said to be “Time unreasonably excessive” and the remaining 3, “Parties had agreed a global deduction … for [the items]”.

13.  The receiving party disagreed.  He argued that “Time reasonably necessary” and “Parties had not agreed a global deduction … for [the items].”  He also mentioned that:

“I had sent my Summary (calculations) of taxation to the Defendants… There is no reply… The Plaintiff’s Bill of Costs (Bill No.1) were taxed and allowed at HK$1,662,568.54 inclusive of taxing fee whilst the costs claimed were HK$2,375,900.00. Excluding the taxing fee of HK$38,259.00, the costs allowed are HK$1,624,309.54 only, being 68% of the costs claimed. Considering on indemnity basis, such allowance has shown much mercy to the Defendants…”

14.  At the hearing of the review, Mr. Lau withdrew 7 items[1] out of the said 28 items under the review, leaving 21 to be decided by me.  They could be classified under 7 headings.

(I)  Pre-action conference (item 4)

15.  Before the commencement of the present action, the receiving party spent 3 occasions to meet his legal advisers, 2 short ones (20 minutes each) with the solicitor only, and a long one (1 hour 15 minutes) with both the solicitor and counsel. At the taxation, I taxed off both of the short ones and allowed the long one in full.

16.  Mr Lau said that 1 hour 15 minutes were still excessive because the solicitor and counsel had been involved in the disputes for a long time.  They were familiar with the matter.  The receiving party disagreed and said that the facts of the case were complicated. Each action targeted at different reliefs. The present proceedings were commenced within short time to deal with the hidden sham transaction conducted secretly by the defendants at his back.

17.  I had more or less the same argument before me at the original taxation. Although I cannot revisit the conference notes again, Mr Lau has not been able to persuade me to accept that one pre-action conference of 1 hour and 15 minutes was unreasonably excessive.

(II)  Considering Counsel’s draft letter and note of advice (items 33 and 34)

18.  In late June 2010, the receiving party sought interim injunction against all the defendants to freeze the conveyance transaction.  He applied ex-parte with notice to the other sides.  In the end, he got an interim injunction against the 2^nd defendant. The 1^st and 3^rd defendants undertook not to proceed with the conveyance transaction for the time being.

19.  The matter was then adjourned shortly to be heard in July to see if the injunction should continue or not.  The then solicitors for the receiving party sought advices from counsel who wrote notes and draft letters to the paying parties.  It ended up with a consent summons reached by parties so that the injunctions were continued to preserve the status quo.

20.  On 13 July 2010, Counsel provided a short note and draft letter.  He charged $10,000 for 2 hours of work.  The solicitor considered them for 20 minutes each.  At the taxation, I read the documents and took the view that, given the seniority of counsel, he should have spent 1 hour only and so, deducted it by half.  As to the fees of solicitors, I agreed that they were both reasonably incurred and in reasonable amount.  They were allowed in full.  In the present review, Mr Lau repeated that they were unreasonably excessive.  I am not persuaded.

(III)  Communications (items 44, 45 and 46)

21.  At the taxation, parties reported orally to me that some items were agreed through negotiation.  They were then recorded by me on the bill accordingly.

22.  At the review, Mr Lau informed me that he and the then LCD acting for the receiving party had in fact agreed more items. However, he just forgot to report them at the taxation and as such, he sought to “resort” to them.  Mr Lau produced to me a copy of schedule showing all items agreed.  The receiving party disagreed.  He told me that the schedule was not signed.  At the taxation, Mr Lau only informed him that he would agree to a number of items on the schedule.  He agreed only to those items reported to the court.  He also produced to me a copy of the same schedule, but with markings of “ticks” on them.  He said that they were ticked by Mr Lau.

23.  Upon consideration, I have decided to refuse to review the 3 items on the ground sought by Mr Lau.  On balance, I am not satisfied that parties have agreed on those items.

(a)  Neither of the schedules produced by the parties has been signed.

(b)  As a matter of usual practice, to save time and costs, parties usually submit to the court schedule(s) of agreed items for record. However, at the present taxation, parties did orally inform me of the items agreed, one by one, so that they were marked individually on the bill for record.

(c)  Regarding items 44, 45 and 46, they were not only taxed by me at the taxation. I did invite both parties and they did kindly agree that this court could adopt a broad brush approach. Hence, having read the correspondence and telephone notes at the taxation, I decided that 10%, 15% and 10% were to be taxed off from them respectively.

(IV)  Time spent by the solicitor (items 62, 63, 64, 75, 80, 144 and 171)

24.  Throughout the proceedings, the then solicitors acting for the receiving party from time to time spent effort in pleadings, affidavits, and so forth.  At the taxation, when the paying parties challenged the reasonableness of the time spent by the solicitors, I looked at documents and allowed the item(s) in full, taxed off some of them entirely or to the extent that I considered reasonable in the circumstances.

25.  At the review, Mr Lau sought to challenge 7 items which I had allowed in full.  I therefore went to the court file and revisited them.  They are:

(a)  The plaintiff’s skeleton of argument on 7 December 2010 (30 min),

(b)  The Defence of the 1^st and 3^rd defendant (1 hour),

(c)  The Defence of the 2^nd defendant (1 hour),

(d)  The Answer to Request for further and better particulars of the Defence of the 1^st and 3^rd defendant (1 hour),

(e)  The Plaintiff’s mediation notice (20 min),

(f)  The 4^th affirmation of Cheung Hing (including review of documents, considering exhibits and counsel’s draft) (6 hours), and

(g)  The 2^nd affirmation of Wong Chor Mei Phyllis (2 hours).

26.  Mr Lau adduced no new evidence.  He raised no new argument.  He has not persuaded me to change my mind.

(V) Conferences with client (items 191 and 192)

27.  On 17 December 2013, parties went before the court for PTR.  Upon hearing from parties, the judge ordered, inter alia, the trial dates in March 2014 be stood and a time table for parties to submit bundles skeletons, and so forth.

28.  However, in late February 2014, solicitors for the paying parties sought to vacate the trial dates.  After argument, the application was refused by the court on 3 March 2014.

29.  During such period, the receiving party met his then solicitors on 2 occasions, 21 February 2014 and 4 March 2014 respectively.  At the taxation, I read the conference notes and made no deduction to both items.

30.  At the review, Mr Lau maintained that they were excessive as they had been other conferences and items of services having been levied by the solicitors.  Even though the receiving party could no longer produce the conference notes to me again, I remain of the same view that the time spent on the 2 conferences is reasonable in light of the development of the case.  Even if I were in doubt (which is not the case), it is to be ruled in favor of the receiving party.

(VI)  Fees for the leading counsel (B.1 1, 2, 4, 11 and 16)

31.  Assistance from the leading counsel was sought herein from the outset of the proceedings till the trial.  In the present case, the leader was called to bar in 1996 and became a senior counsel from 2012.  Over the years from 2010 to 2014, his hourly rates increased from $5,000 to $6,000 and then, $7,000.

32.  As usual, at the taxation, I looked at work done by counsel and allowed some of the item(s) in full, taxed off some of them entirely or to the extent that I considered reasonable in the circumstances.

33.  Mr Lau sought to review:

(a)  Drafting and revising Statement of Claim as well as 2 Notes ($40,000),

(b)  Drafting and revising summons and affirmation of Cheung Hing ($40,000),

(c)  Note of advice and settling 2 draft letters to solicitors of the paying parties ($4,000),

(d)  Drafting note and Request for further and better particulars of the Defence of the 1^st and 3^rd defendants ($8,000), and

(e)  Drafting 2 notes and settling the 4^th affirmation of Cheung Hing and Submissions of the plaintiff ($7,000).

34.  It was said again that counsel had been involved in other related proceedings.  He should have spent less time.  The tasks were simple and within the competence of the solicitors. Counsel only took silk from 2012.

35.  I reviewed the pleadings and affidavit evidence in the court file. I did not have the opportunity to go through the notes of advice again.  I remain of the same view as in the taxation that the fees were incurred reasonably and in reasonable amount.

(VII)  Fees for the junior counsel (B.1 29)

36.  In the present case, the junior counsel was called to bar in 2011.  He charged at an hourly rate of $3,000 throughout the proceedings.  He was only involved in the later part of the proceedings from about the PTR.

37.  The brief fee of the junior counsel, in the sum of $50,000, included pre-trial conference, perusal of papers, opening submissions and all other preparatory works. I allowed it in full.  He further asked for refresher of $20,000.  I also made no deduction.  However, he made 2 extra items of preparation of closing submissions.  They cost a total of $30,000.  I taxed off them entirely because I took the view that it was something which ought to be covered by the said brief fee.

38.  However, the junior counsel did ask for a separate charge of $12,000 which I allowed in full.  They were fees for perusal of further documents, conference to oppose 3 summonses taken out by the paying parties.  I did so because they were something unusual, something not reasonably foreseeable at the time when the junior decided to take up the case. It has been by now trite law that the “preliminary issue” of locus of the plaintiff to sue must be resolved as soon as possible within the proceedings.  Extra time and effort were spent by junior counsel and I see reasonable for him to be remunerated more. 3 hours of his work was also within the reasonable range.

39.  I am not persuaded by Mr Lau for repeating the same arguments at the taxation and my view over the sum of $12,000 remains the same.

Conclusion

40.  To conclude, the entire review is dismissed.

Costs

41.  I had the benefit of parties’ submissions regarding costs at the hearing of the review.  Having ruled in favor of the receiving party in all items in dispute, I see no reason why cost should not follow the event.  There will be an order that the paying party do pay costs of the review, including the hearing before me on 8 April 2016 and costs reserved, summarily assessed at $1,200 (6 hours of work and preparation by the receiving party who acted in person at the hourly rate of $200).

Interpretation

42.  To assist the receiving party to fully understand the decision herein, arrangement will be made with the court interpreter when the same is handed down.