張新霖 v. 黎錦文及另十一人

CACV252/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 252 OF 2004

(ON APPEAL FROM HCA 4389/2003)

______________________

______________________

___________________________________

DECISION ON REVIEW OF TAXATION

___________________________________

Introduction

1. By Appointment For Review Of Taxation dated and filed on 30 December 2005, the Defendants sought to review my decision refusing senior counsel’s disbursements and the associated profits costs.  The application was couched in these terms:

The Learned Master erred in principle to exclude Counsel Certificate for Mr. Anthony Neoh, S.C. whilst two counsel certificates were awarded.
The learned Master is invited to re-consider the position in light of the following grounds:-
1.	As the Learned Master finds the appeal is important to the Defendants, it is justified to retain Mr. Anthony Neoh, S.C. in the appeal hearing on behalf of the Defendants taking into account the expertise of Mr. Anthony Neoh, S.C in dispute of members in incorporation.
2.	No question of taxation on the costs incurred for Mr. William Leung of Counsel as his Brief is on complimentary basis (Order 62 rule 28(2)).

2. The review was vigorously opposed with Mr. Derry Wong of counsel for the Plaintiff (“Mr. Wong”) seeking outright dismissal of the application for alleged fraud practised on the court.  This was a most serious allegation requiring close scrutiny in due course.

Background

3. The suit concerns the Tsung Tsin Association, a company limited by guarantee to manage and deal with the assets of an unincorporated body of the same name founded in 1921 by certain civic-minded Hakka citizens and alleged improprieties in the election of the association’s executive and supervisory committee.  The Plaintiff sought and failed to obtain summary judgment under O.14 r. 1 against the Defendants before Chung J, who in granting unconditional leave to defend with costs to the Defendants to be paid forthwith, found triable issues clearly warranting adjudication.  Mr. K. M. Chong, counsel (“Mr. Chong”) appearing with his then pupil, Mr. William Leung (“Mr. Leung”) was not called upon to respond to Mr. Wong’s submission.

4. The Plaintiff appealed and was no more successful before the Court of Appeal comprising Cheung and Tang JJA.  At the hearing on 4 March 2005, Mr. Wong once more appeared on his own for the Plaintiff whilst the Defendants fielded three counsel, Mr. Leung (on complimentary brief and by then a practicing barrister in his own right), Mr. Chong and Mr. Anthony Neoh, SC (“Mr. Neoh”).  In dismissing the appeal, the court felt it unnecessary to draw upon counsel for the defence although Mr. Neoh had briefly addressed the court on costs, urging an order for indemnity costs to be made.  In this he was not successful.  Tang JA, in giving the written reasons for the court for rejecting the appeal, ordered the Plaintiff to pay the Defendants’ costs of the appeal forthwith, taxed if not agreed.

5.  The resulting bill of costs sought, inter alia, recovery of disbursements for Mr. Chong and Mr. Neoh and the associated profit costs.  Mr. Leung whose appearance had been gratis, did not feature in it.  A preliminary issue was taken at the commencement of taxation, namely whether the Defendants should be indemnified for two counsel, and if so, which two of the three counsel.  In the result, I ruled it was necessary or proper for Mr. Leung and Mr. Chong to have been engaged on the interlocutory appeal.  It was quite another matter as concerned Mr. Neoh.  His instruction was neither necessary nor proper, and a luxury given the narrow ambit of the appeal.

The Review

6. There can be no quarrel on a taxation review, that any items under scrutiny may be revisited afresh in light of the existing and/or additional evidence: O. 62 r.34(2).

7. In written submissions dated 18 February 2006, Mr. Yeung, solicitor for the Defendants summarized the case for review thus:

3.	The learned Master gave Certificate for two Counsel in respect of the Appeal hearing in this action.  The characteristic of this appeal hearing are:-
	(a)	the Defendants are in their capacities as trustees (being the election committee members) for the Tsung Tsin Association (a worldwide organization).  Insofar as the Defendants’ positions are concerned, the decision of Court of Appeal on the O.14 appeal hearing might be detrimental to the Association in the event that the Court of Appeal allows the Plaintiff’s appeal and the decision of the Court of Appeal is final.  It was therefore justified for the Defendants to employ leading Counsel in the appeal hearing;
	(b)	Mr. Anthony Neoh, S.C. has special expertise in the Companies law and knowledge in the administration and management of the incorporation;
	(b)	(sic, sub-para(c)) the Defendants have three Counsel on record to represent them at the appeal hearing, namely Mr. Anthony Neoh, S.C., Mr. K.M. Chong and Mr. William Leung;
	(c)	Counsel Mr. K.M. Chong was the counsel for the Defendants at the O.14 hearing at the court below.
	(d)	Counsel Mr. William Leung was instructed on behalf of the Defendants on Complimentary basis as he was the pupil of Counsel Mr. K.M Chong;
…
5.	It is submitted that the Court only has jurisdiction to tax on the Bill of Costs if it forms part of costs of and incidental to the proceedings. (see: Order 62/2/2)  The court therefore has no jurisdiction to award costs to those items which do not form part of the costs of and incidental to the Bill of Costs submitted to the Court for taxation.  In the premises, the Court has no jurisdiction to award costs to Counsel Mr. William Leung if no costs have been incurred and included in the bill of costs of the Defendant submitted for taxation.  It is submitted that insofar as the taxation process is concerned, the presence of Counsel Mr. William Leung can be ignored.

8. At the appellate hearing, the factual reality was that the Defendants had been represented by three counsel and instructing solicitors.  According to exh. P1, Mr. Leung commenced full practice after the original hearing before Chung J on 17 September 2004.  The mere fact that he was instructed on a complimentary basis did not of itself warrant his attendance to be totally ignored for the purpose of taxation.  According to Mr. Chong, his former pupil master, Mr. Leung was brought in for the opportunity to further his experience in civil litigation.  This was most laudable.  No doubt, Mr. Leung would have continued to and did assist with the appeal preparation.  His role was no longer confined to deviling, observing and learning when he appeared as a fully-fledged member of the team on 4 March 2005.

9. On this party and party taxation, the successful Defendants are entitled to no more than an indemnity for their costs that were necessarily or properly incurred in resisting the appeal: Smith v Buller (1875) L.R. 19 E.Q. 475; Hong Kong Civil Procedure para. 62/App/6.  Whilst Mr. Leung’s participation did not in any way increase the Defendants’ costs, they would have benefited from his continued engagement on their behalf by way of his preparation and appearance as second junior at the hearing.  With Mr. Neoh’s instructions, that brought the number of counsel to three.  It would rail against commonsense to suggest that the Defendants had but two barristers to represent them in the interlocutory appeal simply because Mr. Leung did not charge.

10. Mr. Wong submitted that it would be most extraordinary for a litigant to be represented by three counsel and be indemnified on a party and party taxation.  He referred to Kuwait Airways Corp. v Iraqi Airways Co. & Anr [1999] CLC 31 to make good his point.  In that case, the court granted a certificate for three counsel.  At issue were the costs incurred in engaging a third counsel, an International law professor and expert to assist leading counsel in a complex, somewhat lengthy piece of litigation of great commercial and international significance involving very large sums of money.  None of those special factors, however, featured in the instant case.

11. This was but a relatively simple O.14 appeal that was readily dismissed at the end of the hearing albeit, with written reasons latterly supplied.  Essentially very similar arguments had been rehearsed when the written submissions at both levels of adjudication were examined.  The appellate court had no difficulty in finding triable issues justifying the matter to proceed to trial as did Chung J at the original hearing.  There were no complex or difficult issues of law with significance reaching beyond the case itself.  The appeal did not call for any particular skill, specialized knowledge or expertise so as to require the involvement of a company law practitioner of Mr. Neoh’s expense, caliber and standing.  It was clearly a luxury that the Defendants would have to foot themselves if they wanted to bring in the big guns against Mr. Wong arguing the appeal and at first instance on his own: Smith v Buller, supra; Xinyuan Trading Co. Ltd v NPH Petrochemical Limited, HCA 18159 of 1998, a decision of Master Poon as he then was).

12. When the issue of certificate for two counsel was initially canvassed, I ruled that the attendance of two advocates was justified as the case was clearly of great importance to the Defendants in the exercise of my discretion.  That was why I allowed for Mr. Chong, a most experience senior junior to be assisted on the appeal by Mr. Leung.  Had Mr. Leung been issued with a brief other than a complimentary one, I would have assessed the cost of his involvement and proceeded to tax it in the usual way.  In the result, there being no charge for his role, I proceeded to tax the disbursements and profit costs relating to Mr. Chong and to attribute certain items of mechanical preparation such as items 4(e), 7(a), 17(a), etc on the bill of costs to Mr. Leung as the identical profit costs items were disallowed for Mr. Neoh.  Following submissions on review, I remain of the view that the approach adopted provided a fair assessment of the bill of costs.

13. If I were mistaken in wholly writing off Mr. Neoh’s participation, I would have considered that Mr. Neoh’s brief of $400,000 excessive and unreasonable in the circumstances of the case.  I would have taxed it down to $200,000. 

14. Mr. Wong submitted that the Defendants’ solicitors have been disingenuous to the point of being fraudulent in pushing for Mr. Neoh and Mr. Chong to be covered by the two-counsel certificate.  He was critical of the fact that Mr. Yeung had stated in his written submissions that “Counsel Mr. William Leung was instructed on behalf of the Defendants on Complimentary basis as he was the pupil of Counsel Mr. K. M. Chong” (Mr. Wong’s emphasis).  Whilst I consider that the wording was somewhat ambiguous, possibly misleading as suggesting that Mr. Leung was pupil to Mr. Chong when the appeal was heard, a fact that was plainly incorrect on the evidence, Mr. Yeung has offered a satisfactory and adequate riposte in his oral submission.  There was plainly no intention to mislead the court.  No subterfuge of the kind meriting further investigation has occurred.  That should draw this complaint to a close.

15. In sum, for the reasons stated above, I conclude that the review is unmeritorious.  It stands dismissed with costs including the costs reserved in relation thereto to the Plaintiff in any event, taxed if not agreed, with certificate for counsel.  The order shall be nisi in the first instance with liberty to apply within 14 days hereof.