THE EDUCATIONAL GROUP (HK) LTD v. DEACONS

HCMP 2138/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2138 OF 2008

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D E C I S I O N

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1. The taxation hearing came before me on the day when the Civil Justice Reform took effect.  I bear in mind the Rules of High Court as amended.

Facts of the Case

2. The Plaintiff was a former client of the Defendant.  Mr. Richardson of the Defendant did some notarial work for him in December 2006.  In February 2007 the Plaintiff had some disputes with Hong Kong Export Credit Insurance Corporation (“ECIC”) relating to claims under the policy issued by it.  He instructed Mr. Richardson to handle the case for him.

3. A meeting was arranged in late February.  Instructions were given and the matter was handled by Mr. Richardson personally up to a point when, according to the Plaintiff, “Mr. Richardson suggested that someone other than himself was needed to ensure that the initial letter to ECIC would be ‘properly prepared’.”  The Plaintiff agreed to the arrangement and the case was passed to Mr. Richard Hudson who thereafter handled the matter and had correspondence with Johnson, Stokes & Master, solicitors for ECIC.  After receipt of the two bills, the subject matter of this taxation, on 11 October 2007 the Plaintiff by an e-mail informed the Defendant that he would handle the matter directly with ECIC.  On the same day Mr. Hudson acknowledged receipt.

4. According to the evidence filed, five invoices have been issued by the Defendant during the relevant period: 3 related to the underlying subject (claims against ECIC) and 2 to certain notarization work.  The particulars are set out as follows:

	Date	Invoice No.	Amount	Status
(1)	18 May 2007	1189341	$14,492	Paid
(2)	14 September 2007	1206889	$1,039	Paid
(3)	17 September 2007	1207019	$2,024	Paid
(4)	27 September 2007	1208151	$62,151	Outstanding
(5)	30 October 2007	1213101	$6,725	Outstanding

5. Invoices (2) and (3) are related to the notarial work performed by Mr. Richardson and are not connected with the underlying matter covered by the last two bills (4) and (5) which are the subject bills.  They are relatively short bills and for relatively small sums: $62,151 and $6,725 consisting of 23 items and 6 items respectively, all of which are opposed by the Plaintiff.  I was told that the Plaintiff had commenced proceeding in the District Court which was stayed pending the outcome of the present taxation proceeding.

6. The issues are clearly framed in the List of Objections which can be broadly summarized as follows:

1. The hourly rate of Mr. John Richardson

2. The extra costs incurred for the transfer of file from Mr. John Richardson to Mr. Richard Hudson

3. Work done after the retainer had ceased

4. The time claimed in a number of items was excessive

Hourly Rate

7. Two solicitors were involved in handling the underlying matter one after another: Mr. John Richardson and Mr. Richard Hudson.  Mr. Richardson was first qualified in England and Wales in 1977 and then in Hong Kong in 1978 claiming a charge-out rate of $6,000 per hour while Mr. Richard Hudson qualified in England and Wales in 1997 and in Hong Kong in 1998 claiming $4,400 per hour.  The work was performed in 2007.  Their experiences or standings in the profession at that time were 30 years and 10 years respectively.

8. The Plaintiff does not object to Mr. Hudson’s charge-out rate of $4,400 but finds that Mr. Richardson’s is exceptionally high and excessive.

9. I have tried to find among the papers submitted whether there is any retainer or agreement in writing as to fee or the basis for the charge but I find none.  Mr. Shaw, a partner of the Defendant, submits that there is an agreement implied from the fact that the Plaintiff had on 6 July 2007 paid the 1^st invoice no. 1189341 dated 18 May 2007.  He says that together with the invoice, 7 sheets of paper known as “the proforma report” were sent to the Plaintiff on the day when the invoice was issued.  He concludes that since the Plaintiff paid the bill he should have had notice of Mr. Richardson’s charge-out rate of $6,000.

10. The Plaintiff denies that he has ever received “the proforma report”.  Mr. Morley, solicitor for the Plaintiff, comments that the proforma report looked more like an internal document of the firm rather than a formal document for client’s perusal.  I agree with Mr. Morley’s observation: the document appears to me a print-out generated from computer by a certain person called “jole” requesting for issue of a formal bill.  At page 3, there was the signature of Mr. Richardson.  Some of information contained in the document was not easily understood by an outsider who received it.  I doubt very much the document was sent to the Plaintiff.

11. Another reason given by Mr. Morley is that in the District Court proceeding commenced by the Defendant covering the same two bills Mr. Shaw by another affidavit did exhibit the same invoice with fewer pages of attachment.  Mr. Shaw explained the discrepancy was due to the fact that the bill was sent by the secretary or the billing clerk.  He had no control of it.  He claimed that it was the practice of his firm that the 7-page proforma report was sent.  I doubt there was such practice.  First, it was not mentioned in his affidavit.  Nor did the person who sent the bill give evidence by affidavit or otherwise to verify the fact.

12. The Plaintiff’s evidence is very clear and unshaken.  He said in paragraph 25 and 26 of his affirmation:

“ 25.   Prior to Mr. Richardson’s transferal of the Plaintiff’s matter to Mr. Hudson, Mr. Richardson never informed the Plaintiff of Mr. Richardson’s hourly rate in any way.  In particular, invoice no. 1189341 dated 18 May 2007 did not indicate Mr. Richardson’s hourly rate.

26.   When Mr. Hudson took over the Plaintiff’s file, Mr. Hudson informed me at the meeting on 27 August 2007 between Mr. Hudson, my wife and me that the maximum cost of preparing and sending a letter to ECIC would be $6,000.  Mr. Hudson also informed me that his hourly legal charge for any future job would be $4,400.”

13. He said that he was not aware of Mr. Richardson’s hourly rate while Mr. Hudson expressly told him and his wife that the hourly rate of Mr. Hudson was $4,400, to which he agreed.

14. In my judgment it is quite an unusual practice for a large solicitor firm like the Defendant that there was no written retainer and the client was not expressly told of the hourly rate before taking on the work.  The solicitor firm had to rely on an agreement implied from payment.

15. According to the Guide to Professional Conduct Volume 1 Chapter 4 section 4.03:

“4.03  PROVIDE DETAILS OF FEES

If no fee has been agreed or estimate given, a solicitor should tell his client how the fee will be calculated, for example, whether on the basis of an hourly rate plus any mark-up, a percentage of the value of the transaction or a combination of both, or any other proposed basis.  The solicitor should tell his client what other reasonably foreseeable payments he may have to make either to his solicitor or to a third party and the stages at which they are likely to be required.”

16. It is quite clear Mr. Richardson had not followed that Guide.  He had not done what he should have done according to the professional Guide.

17. From the facts before me, on balance of probabilities I come to the conclusion that there was no agreement as to the hourly rate.  I have to assess what is reasonable.

18. Mr. Shaw submits that we have to consider it against the background in 2007 when the work was done.  The general economic situation looked very promising at that time.  That a solicitor of Mr. Richardson’s standing with 30 years’ experience charging $6,000 per hour practising commercial law in one of the largest firm in Hong Kong was not something unusual.

19. I do not know Mr. Richardson personally.  From the proforma report I understand that he practised commercial law.  I have no doubt that he charged at that rate when he did commercial work which was his expertise.

20. But, I have to consider whether he should charge such rate for the kind of work that he undertook and whether it was reasonable for him to do so.

21. Before making decision I have to remind myself of the basic principle and presumptions contained in Order 62 rule 29 which applies to solicitor and client taxation:

(a)   all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred (rule 29(1)).

(b)   all costs incurred with the express or implied approval of the client shall be conclusively presumed to have been reasonably incurred and, where the amount thereof has been expressly or impliedly approved by the client, to have been reasonable in amount (rule 29(2)).

22. From the correspondence contained in the hearing bundle, I have no difficulty in finding that the work, to which the costs related had at least been impliedly approved by the Plaintiff.  The question is whether the amount had been expressly or impliedly approved by the Plaintiff.

23. It is not the Defendant case that the Defendant had an express agreement as to the amount.  As I have earlier ruled that the Plaintiff had no knowledge of the charge-out rate of Mr. Richardson, neither can I imply that there was such approval.  Under such circumstances, the presumption under rule 29 cannot be invoked to assist the Defendant for the reason that there was no approval of costs express or implied.

24. It leaves behind the basic principle I have to consider: all costs shall be allowed except in so far as they are unreasonable.  In assessing whether the costs are reasonable, I have to consider the seven factors set out paragraph 1(2) of Part II of the First Schedule:

“(2)    In exercising his discretion under this paragraph or under rule 32(2) in relation to any item, the taxing master shall have regard to all relevant circumstances, and in particular to –

(a)    the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved;

(b)   the skill, specialized knowledge and responsibility required of, and the time and labour expended by, the solicitor or counsel;

(c)    the number and importance of the documents (however brief) prepared or perused;

(d)   the place and circumstances in which the business involved is transacted;

(e)    the importance of the cause or matter to the client;

(f)    where money or property is involved, its amount or value;

(g)    any other fees and allowances payable to the solicitor or counsel in respect of other items in the same cause or matter, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question.”

25. From the correspondence found in the taxation bundle, I find that it is not a particularly difficult claim against ECIC.  From the evidence before me, I find Mr. Richardson gave relatively simple preliminary advice without much research.  There does not seem to have any particular urgency.  However, I must say that Mr. Richardson had discharged his duty very effectively and efficiently.  For such kind of work, I think the hourly rate of $6,000 is unreasonably high and I do not allow $6,000.  As the Plaintiff had agreed a rate of $4,400 for Mr. Hudson to do the work, I think the reasonable hourly rate for that type of work under such circumstances is $4,400.

Extra Costs for the Transfer (items 10, 11, 12, 13, 14 and 15)

26. This objection is best expressed in the Plaintiff’s own words found in the letter of 18 December 2007 to Mr. Hudson:

“ 6. On 3 August 2007 Mr. Richardson informed me that he cannot give me more legal consultancy and he said that he will transfer the file of The Educational Group (HK) Ltd. to you.  Mr. Richardson never mentioned to me that I have to pay any fees for transferring the file of The Educational Group (HK) Ltd. to you, therefore I am not accepting your charges for receiving my file from Mr. Richardson and for studying it as I already paid the fees of studying my file as per the bill no. 1189341.

  7. Mr. Richardson informed me that I need to have a meeting with you but he didn’t inform me that I have to pay any fees for this meeting, as per the bill no. 1189341 I already paid to Mr. Richardson for my first meeting with him in which I handed over to him the file and gave him a full explanation about my documents.  Also you charged me 4200HK$ on 25 July 2007 for the second meeting with Mr. Richardson I also consider this amount is also high and I am not accepting the charge of this meeting.”

27. The Plaintiff raised several facts that have not been challenged:

(a)   Mr. Richardson did not mention that the transfer would incur extra costs;

(b)   He had already paid for Mr. Richardson studying his file;

(c)   He had also paid for the meeting of briefing Mr. Richardson about the case.

He concluded that he should not pay the costs of Mr. Hudson for doing such work.  This is understandable: from a layman’s point of view he instructed Messrs. Deacons to do the work and the transfer was an internal matter.  He should not be charged extra for it.

28. He did not understand that he was dealing with professionals who charged for the time spent.  If counsel were briefed instead of passing the file to a litigation partner, counsel would definitely charge for all the work done by Mr. Hudson in understanding the case.

29. Can I apply this analogy to the present case?  I refer to Order 62 rule 29(3) which states:

“(3)    For the purposes of paragraph (1), any costs which in the circumstances of the case are of an unusual nature and such that they would not be allowed on a taxation of costs in a case to which rule 28(2) applies, shall, unless the solicitor expressly informed his client before they were incurred that they might not be so allowed, be presumed, until the contrary is shown, to have been unreasonably incurred.”

30. If counsel is briefed, I have no doubt the solicitor will explain to his client that extra costs will be incurred for counsel service.  Did Mr. Richardson expressly tell the Plaintiff that the Plaintiff had to pay the extra costs of reading the papers by Mr. Hudson and also those costs of Mr. Hudson having some internal communications and meetings with Mr. Richardson as well as the Plaintiff?

31. I find no evidence that the Plaintiff was told of this.  The nearest I can find is an extract taken from Mr. Richardson’s letter of 1 August 2007 (as set out in the Plaintiff’s e-mail of 2 August 2007) where Mr. Richardson gave the following comment on whether legal proceeding should be taken:

“Any litigation therefore would be not free of risk and should you proceed with litigation and you lost, you would be liable to meet part of the legal expenses of the ECIC in defending the claim.

If after considering this you feel that you would like to consider the possibility of legal proceedings, I would like to introduce you to one of our litigation partners who I would suggest should be the person to prepare the initial letter to the ECIC so that it is properly prepared in relation to the eventual litigation which might arise.  Please let me know if you would like me to introduce you to this person.”

32. Obviously, there was no mention about costs.  The passage can be construed to mean that Mr. Richardson had left something unfinished, viz. writing the demand letter and he would recommend that the letter better be written by a litigation partner of his firm.

33. At the end of that e-mail, the Plaintiff said:

“Finally, I agreed with you that it is necessary to meet one of your litigation partners to prepare the initial letters to ECIC for the 3 cases mentioned here above also to discuss with him/her more details on AI Hadaf case.  I kindly ask you to send me the name and details of your litigation partner and if it’s possible to me him/her tomorrow the 3^rd of Aug. or on Monday the 6^th.”

34. Hence, on 27 August 2007 a meeting was held between the Plaintiff and Mr. Hudson while Mr. Richardson was present.  It lasted for 1½ hours.  I have had the chance of reading the attendance record kept in the form of a hand-written note.  The 3 claims against ECIC were discussed.  Of course, there was some reflection what had happened.

35. I find that the discussion was mainly about the recent development.  In my judgment this meeting was necessary and it was not purely briefing Mr. Hudson.  By that time Mr. Hudson should have been well familiar with the case.  I allow the costs of this item 15 to the extent of 1 hour 24 minutes.  The other sub-item in item 15 of 6 minutes for discussing with Mr. Richardson I will not allow for the same reasons set out in the following paragraphs in dealing items 10 to 14.

36. First, I would like to repeat Order 62 rule 29(3) which has been referred to in paragraph 29 above.

37. According to that rule, the costs will be regarded as unusual nature if they would not be allowed on a taxation of costs in a case to which rule 28(2) applies.  Rule 28(2) taxation means a taxation on party and party basis.

38. I cannot say that obtaining the assistance of another solicitor is something of an unusual nature.  This happens everyday in a solicitor firm.  However, the fees of two fee-earners are not allowed for both solicitors doing the same piece of work in a party and party taxation unless it is very complicated.

39. The costs claimed by Mr. Hudson under items 10 to 14 are for internal communication between him and Mr. Richardson.  The latter has not claimed for the work done in briefing Mr. Hudson.  However, I find force in the Plaintiff’s argument that he had already briefed Mr. Richardson and paid for it.  He should not be asked to pay again for briefing the same firm.

40. The crucial point is he did not realize that he was asking a specialist to do the job – a person specialized in litigation.  The solicitor needed to read the papers and to be briefed on the facts of the case.

41. In a party-and-party taxation taxing masters usually do not allow costs for briefing counsel to write a letter of demand before action except the case involves difficult points of law or very complicated factual issues.

42. I have the chance of reading the letter written by Mr. Hudson and I do not consider it merits briefing counsel or a specialist in preparing the letter of demand.  In a party-and-party taxation I would not allow the costs for briefing counsel or specialist in writing the letter.

43. In the present case, I find that rule 29(3) applies: the Plaintiff had to be told that he would incur extra costs for engaging a specialist in the same firm; otherwise, he would feel aggrieved, as he is now that he had to pay more for one solicitor handing over the file to another within the same firm.  I cannot say that he is wrong in forming a view that he instructed the firm and not an individual person.

44. For the above reasons I do not allow items 10 to 14 of bill (4).

Costs Incurred under Items (4) and (5) of Bill (5)

45. On 11 October 2007, the Plaintiff by e-mail informed Mr. Hudson:

“Regarding AI Maktaba Stores claim I would like to inform you that I will handle the matter directly with ECIC.  Please do not send any letters of reply or reply to ECIC or JSM in relation to this matter/case.”

46. On the same day Mr. Hudson acknowledged receipt and said

“Thank you for your e-mail.  I note what you say and will do no further work in relation to the matter as instructed.”

47. Consequent to that, further development took place: Mr. Hudson received a letter from Messrs. Johnson, Stokes & Master (“JSM”) for ECIC in the afternoon of the same day in which JSM complained that the Plaintiff wrote direct to ECIC, their client.  Mr. Hudson immediately replied to JSM explaining and informing that the Defendant had ceased to act for the Plaintiff.

48. I find the costs incurred are legitimate and reasonable.  It is very honourable on the part of the Defendant, though it is entitled to the costs under the two items, that the Defendant waived them as shown in the discount.

Items relating to Objections based on Excessiveness and Unresonableness

49. We have to consider each and every of the individual items.  I find the objections by the Plaintiff are difficult to sustain except the items concerning disbursements under both bills which will be explained in the later paragraphs.

50. The items that are being regarded as excessive and unreasonable, and that I have not dealt with are set out in the following tables:

Bill (4) (i.e. Invoice 1208151)

Items	Description	Time Claimed	Objections &Suggested Time
1	Considering Email	0.3 hour	10 minutes
2	Meeting Tarek Hamaway	0.7 hour	30 minutes
3	Review papers and drafting e-mail	1.5 hours	(a)  previous work done charged and paid(b)  20 minutes
4	Research	1 hour	(a)  authorized work(b)  20 minutes
5	Discussion with Clark and Hudson and email Hamaway	0.3 hour	(a)  internal discussion without Plaintiff’s consent(b)  5 minutes
6	Email HamawayDraft letter to ECIC	0.3 hour	10 minutes
7	Email Hamaway	0.1 hour	5 minutes
8	Email HamawayDraft letter to ECIC	0.3 hour	10 minutes
9	Email HamawayLetter to ECIC	0.2 hour	7 minutes
10 to 15	(I have dealt with in this Decision)
16	E-mail exchange with client	0.1 hour	5 minutes
17	Draft letter to ECIC and e-mails to + from client	1.4 hours	1 hour
18	Review of e-mails from client; e-mail in response + setting further draft of letter ECIC	0.9 hour	(a)  reviewing not chargeable(b)  without prior knowledge consent or authority(c)  30 minutes
19	E-mails to + from client and settling and sending letter to ECIC	0.4 hour	(a)  reviewing not chargeable(b)  without prior knowledge consent or authority(c)  15 minutes
20	E-mail to client and reviewing his correspondence with ECIC	0.1 hour	(a)  reviewing not chargeable(b)  without prior knowledge consent or authority(c)  5 minutes
21	E-mail exchange with client and letter from JSM	0.2 hour	8 minutes
22	E-mail exchange with client and letter to JSM	0.2 hour	10 minutes

Bill (5): Invoice No. 1213101

Items	Description	Time Claimed	Objections &Suggested Time
1	Telecon with client	0.2 hour	5 minutes
2	E-mail exchange with client; letter to JSM; telecom with client; further e-mail to client	0.6 hour	20 minutes
3	Letter from JSM and e-mail to client re same (0.5); telecom with client (0.2)	0.7 hour	30 minutes

Items 3, 18, 19 and 20 in Bill (4)

51. They are challenged not only on ground of excessiveness but also on two other grounds:

(a)  reviewing not chargeable; and

(b) unauthorized without Plaintiff’s knowledge, consent and/or authority.

52. Taxing masters usually do not allow reviewing files for the sake of reviewing.  Very often solicitors charge the fees for perusal when they receive certain documents.  As to reviewing the file before taking some action, e.g. writing a letter in reply we often disallow it because the solicitor in charge of the file should be familiar with the case.

53. In the present case, the way the bills are prepared is different from the usual practice: there are no separate items for perusal of documents.  When Mr. Richardson or Mr. Hudson did some work, an item for reviewing certain documents was inserted, e.g. drafting e-mail (item 3 of Bill (4)) and e-mail in response and setting further draft (item 18).  I believe that reviewing of documents in these bills means perusal of documents.  I treat the reviewing of documents as perusal of documents.

54. The second point of objection is without prior knowledge, consent or authority the Defendant before action was taken.  I do not find any merit in this objection.  Not every act taken by solicitors requires express approval.  As long as he did the work he was expected to do in this type of cases, there must be implied consent.

55. I have ruled that “reviewing” documents in the present case has the meaning of perusing the documents or for the purpose taking further action.  I do not see any reason or necessity for the solicitor to inform his client first and to obtain the client’s consent or authority before reading the document.  The consent and authority must be implied.

56. I allow the time for items 3, 18, 19 and 20 of Bill (4).

Item 4

57. This item was opposed for the reason that the research work was not authorized.  The Plaintiff’s objection must be right if the other side were an insurance company.  However, ECIC is not an ordinary corporate: one has to investigate and consider its legal status and capacity in issuing the policies under dispute.  It is a statutory body formed under Chapter 1115 of the Laws of Hong Kong.  I find item 4 “research” was within the ordinary course of the business of the solicitor who handled the case.  I allow this one-hour research.

Item 5

58. The Plaintiff objected to this item for the reason that it was an internal discussion Mr. Richardson had with Mr. Clark and Mr. Hudson respectively.  There is no fixed rule that internal discussion must be disallowed.  We have to see for what purpose the discussion took place.

59. In this case, the reason for the discussion was that Mr. Richardson wanted to seek assistance from a partner in the litigation department.  He had internal communication with Mr. Clark or most probably with Mr. Hudson as well.  Unfortunately, he was told that they were going on holidays for 3 weeks and 2 weeks respectively.  This kind of internal communication and consultation was not something I would allow.  I delete the costs for this item.

Items 1, 2, 6, 7, 8, 9, 16, 17, 21 and 22 of Bill (4) and Items 1, 2 and 3 of Bill (5)

60. The objections to these items are based purely on the ground of excessiveness.  These items were not challenged on the ground that the costs were unreasonably incurred.  Neither did the Plaintiff state any ground why it considers that they were excessive.

61. I have considered each item; even if the claims had to be taxed on a party-and-party basis, I would have allowed the time spent for them all.  I allow all these items.

62. For most of the items, the Plaintiff objected on the ground of excessiveness and gave no reason.  Take the example of items 16 and 18 of Bill (4), the Defendant claimed 0.1 hour (i.e. 6 minutes) and the Plaintiff suggested 5 minutes.  I do not know how one can find a difference of only one minute as excessive.  It appears to me that the Plaintiff’s objection was made for the sake of objecting.  Such tactics should never be allowed: it wasted the time of taxing master in reading the documents relating to those items.

Disbursements

63. The disbursement items as set out in the two bills are totally incomprehensible: they are given to us in the following manner:

Bill No. (4): Invoice No. 1208151  

Document production	411.00
Miscellaneous Costs	100.00

Bill No. (5): Invoice No. 1213101

Document production	75.00
Miscellaneous Costs	50.00

64. The objections to these disbursements in both bills are the same:

(a)   Subject to reasonable costs incurred/quantum excessive and to be quantified; and

(b)   Subject to documentary proof that these are reasonable costs.

65. In other words, the Plaintiff requires the Defendant to specify what they are, to produce evidence to support such expenses and to show that they are reasonable.

66. For the disbursement items in each bill, I was given a covering page called “Cost Recap Summary by Cost Code” and also another set of documents called “Billed Recap of Cost Detail”.

67. The 1^st document is in a table form, which I reproduce in the case of bill (4) i.e. Invoice 1208151:

“Cost Recap Summary by CostCode [1208151 – 27/09/2007]

Client: -

CostCode	WorkedAmount	BilledAmount	Description
G18	411.00	411.00	Network Printing- Monochrome
Z9	100.00	100.00	Miscellaneous Costs
TOTAL	511.00	511.00

68. In the case of Bill (5): Invoice No. 1213101:

“Cost Recap Summary by CostCode [1213101 – 30/10/2007]

Client: -

CostCode	WorkedAmount	BilledAmount	Description
G18	75.00	75.00	Network Printing- Monochrome
Z9	50.00	50.00	Miscellaneous Costs
TOTAL	125.00	125.00

69. I do not understand, as I was not informed, what the Cost Codes “G18” and “Z9” stand for.  The Descriptions “Network Printing – Monochrome” and “Miscellaneous Costs” appear to be supported by the second set of documents I have referred to earlier as “Bill Recap of Cost Detail.”

70. That second document seems to me to be a record of printout made by the person in charge of the file.  For the sake of illustration I take part of the record relating to 27 September 2007, 28 September 2007 and part of 3 October 2007.

71. I have not been given any explanation.  I try to understand what they are.  I believe it was the costs of operating the machine.  Such costs should be administrative overhead costs and are not chargeable to client.

72. Even if I were wrong, there are two legal principles I wish to rely on:

(a)   The relationship between the parties is a fiduciary one: the Defendant has to account to the Plaintiff for every cent it spends; and

(b)   In taxation, when we come to disbursement, the claimant has to produce evidence to support every item and explain what it is.  For example, the 3^rd item “Miscellaneous Costs” gives us no clue what the expenditure is and how it is actually spent.

73. I dismiss all the claims for disbursements in both bills.

Conclusion

74. I have dealt with all the items of the two bills.  For the sake of ease of reference I have prepared a cross reference table between each item and the paragraph I have made my ruling as appendix.  It is for both parties to follow Paragraph 3 of Practice Direction 14.3 to do the calculation and agree the amount.

Costs of the Taxation

75. In respect of the costs of the taxation including the hearing and all costs reserved.  I make an order nisi that I follow the general rule of section 67(5) of the Legal Practitioners Ordinance (Cap 159) that the costs of the taxation shall be paid according to the event of the taxation, that if one-sixth of the total amount of the two bills is taxed off, the Defendant shall pay the costs and that in any event the costs of the taxation are to be assessed by me unless otherwise agreed.

Reflection

76. On reflection after doing this taxation I ask myself: for these relatively small amounts should court resources be used in such a way?  I do not know how much time the parties have used in preparation.  For myself I use more than 10 hours for going through the taxation bundle very quickly and preparing for the hearing and writing this decision.  Is it right to waste court time like this?  Can the dispute be resolved in other ways, not on strict legal basis?

77. The case has been blown out of proportion: it wastes everybody’s time and effort for the difference on relatively small amounts.  The two bills have now become the subject matter of two proceedings: one in District Court and this section 67 proceeding.  The number of hours wasted by two senior solicitors and the supporting law costs draftsmen must be many.  Is it worthwhile?  The public may get a wrong impression that the legal profession is generating costs for itself.

78. The primary purposes of the Civil Justice Reform as set out in the underlying objectives are:

“ (a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

(d) to ensure fairness between the parties;

(e) to facilitate the settlement of disputes; and

(f)  to ensure that the resources of the Court are distributed fairly.”

This case is not in line with them.

79. Out of good intention I must warn practitioners that the court will strictly uphold the spirit of Civil Justice Reform and will impose sanctions in appropriate cases.

Appendix

Bill (4): Invoice No. 1208151

Item Number	Paragraph Number
1	61
2	61
3	56
4	57
5	58
6	61
7	61
8	61
9	61
10	44
11	44
12	44
13	44
14	44
15	35
16	61
17	61
18	56
19	56
20	56
21	61
22	61
23	73

Bill (5): Invoice No. 1213101

Item Number	Paragraph Number
1	61
2	61
3	61
4	48
5	48
6	73