SO KEUNG YIP & SIN (A FIRM) v. GOLD HORN INTERNATIONAL ENTERPRISES GROUP LTD AND ANOTHER

HCA 1027/2019
HCA 1639/2019
HCMP 1164/2019
[2020] HKCFI 1418

HCA 1027/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1027 OF 2019

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HCA 1639/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1639 OF 2019

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HCMP 1164/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1164 OF 2019

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(Heard together)

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REASONS FOR DECISION

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1.  The three sets of proceedings relate to disputes on unpaid legal fees between Messrs So Keung Yip & Sin (“the Firm”) and its former clients, Gold Horn International Enterprises Group Ltd (“Gold Horn”), Golden Hero International Development Ltd (“Golden Hero”) and Mr Poon Sum (“Mr Poon”) (collectively “the Former Clients”). At the hearing on 19 June 2020, I granted the Firm summary judgment on liability against the Former Clients, and made orders imposing conditions for the disputed bills to proceed to taxation proceedings to be taken out by the Former Clients, and other ancillary orders. I now give the reasons for my decision.

A.   THE RELEVANT BACKGROUND

2.  According to the Firm:

(1)  Mr Poon is a director of both Gold Horn and Golden Hero and ultimately controls both corporate vehicles;

(2)  Gold Horn and Mr Poon are liable for a total sum of HK$4,596,810,35 being the costs of services rendered by the Firm to them pursuant to two retainers both dated 27 November 2017, and the Firm had issued 3 bills in June 2018 and January 2019 totalling HK$4,596,810,35 pursuant to the retainers;

(3)  Golden Hero and Mr Poon are liable for a total sum of HK$932,463.78 being the costs of services rendered by the Firm to them pursuant to a retainer dated 27 November 2017, and the Firm had issued 2 bills in June 2018 and January 2019 totalling HK$932,463.78 pursuant to the retainer;

(4)  the above bills had been delivered to the Former Clients in compliance with section 66 of the Legal Practitioners Ordinance (Cap 159);

(5)  despite repeated demands, the Former Clients have failed to pay to the Firm the outstanding fees under the bills or any part thereof.

3.  In June 2019, the Firm commenced proceedings against the Former Clients in HCA 1027/2019 to recover HK$4,596,810.35 and in DCCJ 3026/2019 to recover HK$932,463.78.

4.  In July 2019, the Firm took out summary judgment applications against the Former Clients.

5.  In August 2019, the Former Clients commenced proceedings in HCMP 1164/2019 for an order that all the bills issued by the Firm to the Former Clients be subjected to taxation.

6.  In September 2019, the Former Clients’ Originating Summons was ordered to be heard together with the Firm’s summary judgment applications and the Firm’s action in DCCJ 3026/2019 was transferred to the High Court (and became HCA 1639/2019).

B.   THE FORMER CLIENTS’ POSITIONS

7.  In the various affirmations filed on behalf of the Former Clients, it has been alleged that the legal fees of the Firm would only be paid and settled “after the completion of QT [defined by the deponent to mean ‘Qualifying Transaction’ in the context of listing on the TSX Venture Exchange in Canada]” and that a representative of the Former Clients had impressed upon the Firm that “[the Firm] should not expect payment of their legal fees before the completion of the QT”.  In these circumstances, the Former Clients contend that the Firm’s bills are not payable.

8.  Further, the Former Clients have also alleged on affidavit that the legal fees charged by the Firm are “disproportionate”, “on the high side”, and “excessive”.  They therefore wish the bills to be subjected to taxation.

9.  At the hearing on 19 June 2020, Mr Poon appeared in person.  No leave had been obtained by Mr Poon to represent Gold Horn or Golden Hero, and the two companies were therefore treated as being absent at the hearing.  Mr Poon made brief oral submissions in his personal capacity as a defendant in HCA 1027/2019 and HCA 1639/2019 and as a plaintiff in HCMP 1164/2019.  He made three points to contend that he is not liable for summary judgment.  First, he said he only represents the two companies and did not understand why he has become a defendant to be responsible for the legal fees.  Second, he said that the Firm’s legal fees would only be payable “after QT”.  Third, he said that the Firm’s bills are too expensive.  The allegation that Mr Poon is not personally responsible for the Firm’s bills had not previously been mentioned and was advanced for the first time during the hearing.  It is also right to record that no written submissions were filed by any of the Former Clients to resist the Firm’s applications for summary judgment or to support their own HCMP proceedings prior to the substantive hearing.

C.   DISCUSSION ON THE FORMER CLIENTS’ POSITIONS

10.  The legal principles on summary judgment are well-established.  In these applications for summary judgment, the Court would need to determine whether the contentions put forward by the Former Clients give rise to any issues that ought to be tried at a trial, or whether they amount to an arguable defence to the Firm’s claims for unpaid legal fees.

C1.   Mr Poon’s Liability under the Bills

11.  By an engagement letter dated 1 November 2017 to both Golden Hero and Mr Poon, the Firm confirmed the scope of its work, the basis upon which the Firm would act for the recipients of the letter, and the Firm’s standard billing procedures and practices.  At the end of the letter, Mr Poon signed as director of Golden Hero and in his personal capacity to confirm the Firm’s appointment as legal advisers of Golden Hero and Mr Poon.  It was further acknowledged by Golden Hero and Mr Poon that they would be “jointly and severally responsible for all the fees and disbursements incurred by [the Firm] in acting for [them] in the captioned matter and all other liabilities incurred therein and under this engagement letter”.

12.  There are two similar engagement letters in the evidence from the Firm to Gold Horn and Mr Poon also dated 27 November 2017. Again, both Gold Horn and Mr Poon accepted in writing that each of them would be jointly and severally responsible for the Firm’s fees and disbursements in acting for them in relation to Gold Horn and in relation to the acquisitions (“the Acquisitions”) by Gold Horn of a property in Yuen Long from Cherub Limited (“Cherub”) and of 60% shareholding in Cherub.

13.  It seemed to me clear from the above that Mr Poon has accepted that he would personally be responsible for the Firm’s fees and disbursements incurred in relation to the matters covered by the various engagement letters jointly and severally with the relevant company.  The relevant final bills were also addressed to the relevant company and Mr Poon. 

14.  Moreover, if it has been Mr Poon’s genuine position that he should not be personally responsible for any of the Firm’s bills, I found it inexplicable why this matter was neither raised on behalf of Mr Poon in the contemporaneous documents nor in the affidavit evidence.

15.  In these circumstances, I did not regard Mr Poon’s contention that he is not personally responsible for the Firm’s legal fees as constituting a triable issue or an arguable defence.

C2.    Allegation that the Legal Fees would be Paid “after QT”

16.  It appears to be common ground that the Former Clients intended to seek approval of the TSX Venture Exchange in Canada (“TSXV”) for the Acquisitions to be a qualifying transaction (“QT”) so that Gold Horn would become eligible for listing on the TSXV (“the TSXV Listing”). The Former Clients contend that the Firm’s legal fees would only be paid after the completion of QT. 

17.  As pointed out by the Firm, the Former Clients’ usage of the term “QT” is unclear.  In certain places in their affidavit evidence, the Former Clients would use the term “QT” to refer to the Acquisitions (which have been completed).  In other places, the term was used to refer to the TSXV Listing.  Even if it is the Former Clients’ contention that the Firm’s legal fees would only be paid after the completion of the TSXV Listing, I was unable to accept, for the following reasons, that such a contention would constitute a triable issue or arguable defence.

18.  First, the Former Clients have not in their affidavit evidence set out full particulars to support an oral agreement between the Firm and the Former Clients that the Firm’s legal fees would not be paid until after the Acquisitions or the completion of the TSXV Listing.

19.  Further, the Former Clients’ contention is contradicted by the express terms of the relevant retainers, namely that the Firm’s bills are due and payable upon presentation, and that the bills are payable even if the Former Clients do not proceed with their requested actions or do not implement the Firm’s work product or recommendations. 

20.  Moreover, the Former Clients’ contention is also contradicted by the contemporaneous documents and events that took place from August 2018 when the bills became payable.  The evidence suggests that the Former Clients understood that legal fees would need to be paid and even apologised for the delay in settling the fees.

21.  Indeed, the Former Clients’ commencement of the HCMP proceedings in August 2019 to have the Firm’s bills to be subjected to taxation would in itself suggest that the Former Clients would only dispute the quantum, but not the liability, of the various bills issued by the Firm.

22.  Accordingly, I was not satisfied that the Former Clients’ contention that the Firm’s bills would only be paid after “QT” would amount to a triable issue or give rise to any arguable defence.

C3.   Allegation that the Legal Fees are “Disproportionate” and “Excessive”

23.  In their affidavit evidence, the Former Clients referred to the Firm’s bills as “disproportionate”, “on the high side” and “excessive”, without giving particulars of the extent of the alleged excessiveness. 

24.  The Firm has adduced evidence to show that during the time from June 2018 to June 2019 when the Firm chased for settlement of the bills, it was only mentioned once (by Michael Tai in a WhatsApp message on 25 July 2018) on behalf of the Former Clients that the Firm’s billing was “expensive”. Kenneth Keung of the Firm immediately replied to that message on the same day to say, amongst other things, that “[jumping] to the conclusion that it is expensive because billing is over HK$4 million simply ignored the substantial services rendered by us nearly every day over a period of 5 months”.  The WhatsApp reply from Michael Tai also on the same day was “Update u asap”.  If the Former Clients truly considered the Firm’s bills as excessive or disproportionate as they now allege, it is inexplicable why no issue was taken by them with the Firm’s WhatsApp reply on 25 July 2018. 

25.  There was also evidence that Michael Tai offered to deliver cheque(s) from Mr Poon to pay for the Firm’s bills.

26.  In any event, an allegation that the Firm’s legal fees are excessive could not in my view constitute a triable issue or arguable defence to resist summary judgment on liability.   

D.   DISPOSITION

27.  For the reasons given above, I was not satisfied that the Former Clients have raised any triable issues or arguable defence as to their liability to the Firm’s bills.  I therefore ordered that summary judgment on liability be entered on the Firm’s claims against the Former Clients. 

28.  The Firm indicated that it would not take issue with its bills going to taxation to determine the amount payable by the Former Clients.  However, the Firm submitted that the following conditions should be imposed on the Former Clients for the various bills to be taxed.

(1)  In relation to the Gold Horn bills:

(a)  Gold Horn and Mr Poon should make an interim payment of HK$3,677,448.28 (80% balance of the Gold Horn bills) to the Firm within 14 days; and

(b)  Gold Horn and Mr Poon should make a payment into Court of HK$919,362.07 (20% balance of the Gold Horn bills) within 14 days.

(c)  Gold Horn and Mr Poon should take out taxation proceedings in respect of the Gold Horn bills within 7 days of making payments in compliance with paragraphs (1)(a) and (b) above.

(d)  If Gold Horn and Mr Poon fail to comply with paragraphs (1)(a), (b) and (c) above,

(i)  the Gold Horn bills should be barred from taxation;

(ii)  any and all sums paid to the Firm as interim payment by Gold Horn and Mr Poon under paragraph (1)(a) above should become final; and

(iii)  any and all sums paid into Court by Gold Horn and Mr Poon under paragraph (1)(b) above should be paid out to the Firm forthwith.

(2)  In relation to the Golden Hero bills:

(a)  Golden Hero and Mr Poon should make an interim payment of HK$745,971.02 (80% balance of the Golden Hero bills) to the Firm within 14 days; and

(b)  Golden Hero and Mr Poon should make a payment into Court of HK$186,492.76 (20% balance of the Golden Hero bills) within 14 days.

(c)  Golden Hero and Mr Poon should take out taxation proceedings in respect of the Golden Hero bills within 7 days of making payments in compliance with paragraphs (2)(a) and (b) above.

(d)  If Golden Hero and Mr Poon fail to comply with paragraphs (2)(a), (b) and (c) above,

(i)  the Golden Hero bills should be barred from taxation;

(ii)  any and all sums paid to the Firm as interim payment by Golden Hero and Mr Poon under paragraph (2)(a) above should become final; and

(iii)  any and all sums paid into Court by Golden Hero and Mr Poon under paragraph (2)(b) above should be paid out to the Firm forthwith.

29.  Section 67 of the Legal Practitioners Ordinance (Cap 159) relevantly provides:

“(1) On the application, made within 1 month of the delivery of a solicitor’s bill or a foreign lawyer’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 with in the period mentioned in subsection (1), then, on the application of the solicitor or the foreign lawyer, 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…”

30.  The Former Clients took out HCMP 1164/2019 on 8 August 2019 to seek taxation of the Firm’s bills, and that was done more than one month after the delivery of the relevant bills by the Firm to the Former Clients.  In view of the circumstances leading to the Former Clients’ issuance of the HCMP 1164/2019 (including the matters mentioned in Sections C2 and C3 above), I considered it appropriate and just to impose conditions to be complied by the Former Clients before the relevant bills are to be taxed.  In particular, given the absence of cogent reasons from the Former Clients as to why each of them should not be liable for the amount stated in each of the relevant bills, I considered it fair and reasonable, in the circumstances of this case, to order that, (1) 80% of the disputed bills should be paid by the Former Clients directly to the Firm and (2) 20% thereof to be paid into court, before taxation.  It was also appropriate in my view to order the Former Clients to take out taxation proceedings within a short timeframe and to spell out the consequences of the failure to do so, and the consequences of any failure to comply with the conditions imposed by the Court.

31.  Accordingly, I imposed all the conditions sought by the Firm as set out in paragraph 28 above.  At the hearing, I also made some orders regarding interest and other ancillary orders, which do not need to be repeated in these Reasons.

32.  As to costs, I ordered that the costs of HCA 1027/2019 and HCA 1639/2019 be paid by the Former Clients to the Firm forthwith, to be taxed if not agreed.  After the hearing, the Court was informed by the Firm that there are various reserved costs orders in HCA 1027/2019 and HCA 1639/2019.  I consider that such reserved costs should also be borne by the Former Clients.  Accordingly, as far as the costs in HCA 1027/2019 and HCA 1639/2019 are concerned, I order that the costs of HCA 1027/2019 and HCA 1639/2019 (including all reserved costs) be paid by the Former Clients to the Firm forthwith, to be taxed if not agreed.

33.  As for the costs in HCMP 1164/2019, I was shown at the hearing some without prejudice save as to costs correspondence between the Firm and the Former Clients’ former solicitors.  In such correspondence, the Firm offered that certain orders be made by consent in order to avoid the substantive hearing, but the offer was rejected on behalf of the Former Clients.  The orders that I made at the end of the hearing on 19 June 2020 were substantially the same as those offered by the Firm in the without prejudice save as to costs correspondence.  Accordingly, in relation to the costs in HCMP 1164/2019, I ordered that (1) the costs of and incidental to the hearing on 19 June 2020 be paid to the Firm by the Former Clients[1] forthwith, to be taxed if not agreed and (2) save as aforesaid, there be no order as to costs.