WENG, CHI CHEONG v. BARCLAYS CAPITAL ASIA LTD

HCA 741/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 741 OF 2016

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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Introduction

1.  On 6 December 2016, this court handed down decision in respect of the plaintiff’s Notice of Appeal filed on 1 November 2016 (“Decision”). For convenience, I shall adopt the abbreviations in the Decision.

2.  On 3 May 2016, D filed the Set Aside Summons (a) to set aside the WoS pursuant to Order 12 rule 8 of the RHC and further/alternatively to seek a declaration that in the circumstances of the present action and pursuant to section 7 of the LTO the court had no jurisdiction over D in respect of the subject matter of the claim or relief/remedy in the present action, and (b) for an order that costs of these proceedings be summarily assessed and paid by P to D.

3.  At the Master Hearing on 25 October 2016, Master Leong delivered the Oral Decision, and granted the Master Order being (a) the Set Aside Order (ie an order that the WoS be set aside), and (b) the Cost Order (ie an order that costs of the action summarily assessed at $180,000 be to D and paid forthwith by P).

4.  On 1 November 2016, P filed the Notice of Appeal against 2 facets of the Oral Decision: (a) “email is not an accepted way of serving [the WoS]” and (b) legal costs to be paid by P, and P sought an order to be made on appeal that (i) “in the context of [P’s] lawsuit, [service by] email is not different from post” and (ii) a taxing master be assigned to make a final determination on legal costs.

5.  At the Appeal Hearing, P orally made the Appeal Application for leave to appeal against the Set Aside Order out of time, and also orally made the Evidence Application for leave to rely on the New Email Evidence for the purpose of his appeal. Mr Thomas, solicitor for D, and P agreed to deal with the Appeal Application on de bene esse basis, and this court heard submissions on the Appeal Application on such basis at the Appeal Hearing. Mr Thomas and P also agreed for the New Email Evidence to be received on de bene esse basis. By the Decision, I admitted the New Email Evidence for the purpose of the Notice of Appeal, and considered the New Email Evidence for the Appeal Application on de bene esse basis.

6.  By the Decision, I dismissed P’s Notice of Appeal and Appeal Application (“Dismissal Order”), and granted a costs order nisi that P do pay D costs of the appeal (including all costs reserved if any) to be summarily assessed and paid forthwith (“Costs Nisi Order”). D submitted a statement of costs dated 28 November 2016 to claim costs in the sum of $134,662.50 By the Decision, I also granted directions for summary assessment of costs: (a) P do within 14 days from the date of the Decision file with court and serve on D a succinct summary of objections to D’s statement of costs for the appeal of not more than 2 pages, and (b) unless otherwise directed, the summary assessment of costs will be by paper disposal. Pursuant to such directions, P lodged his summary of objections on 15 December 2016.

7.  On 15 December 2016, P filed a summons (“Summons”) for (a) leave to appeal against my “costs-related decisions” made in the Decision being (i) the Dismissal Order insofar as it related to dismissal of P’s Notice of Appeal against the Cost Order and (ii) the Costs Nisi Order (“Leave Application”, and (b) stay of execution of the Costs Order pending the outcome of the Leave Application and (if granted) the appeal. At the hearing of the Summons on 4 January 2016, by consent I granted leave for P to withdraw the Summons and an order that there be no order as to costs of and occasioned by the Summons.

8.  As a result, the Costs Nisi Order had become absolute. The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512 (see paragraph 67 of the Decision). For present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512-514 as follows:

“(2) As in an ordinary taxation, under O.62 r.28(2) of the Rules of the High Court (Cap.4A) (the RHC), in a summary assessment, party-and-party costs were allowed only if they were ‘necessary or proper’ for the attainment of justice or for enforcing or defending the rights of the receiving party. Pursuant to Practice Direction 14.3, the court adopted a broad-brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in O.1A of the RHC, even if there was no challenge to individual items. ......

(3) A summary assessment required a two-stage approach. If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the cost reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable. A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for the litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty. The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary. ......

(6) Since Civil Justice Reform in 2009, taxation of counsel’s fees under a party-and-party taxation was no different from taxation of costs and expenses. The test of ‘necessary or proper’ applied and must take into account the matters set out in para.1(2) of Part II of the First Schedule to O.62 of the RHC, as well as the requirement of reasonable proportionality. Accordingly, paras.62/App/28(5) (p.1172) and 62/App/28A of Hong Kong Civil Procedure 2012 (p.1172), which referred to the previous pre-CJR ‘excessive and unreasonable’ test under the former para.2(5) of Part II of the First Schedule to O.62 of the RHC, should no longer be followed, ......”

9.  P made the following points:

(a) The Master Hearing was a rehearsal for the appeal so preparation would be easier and would require less effort, and P did not even lodge any written submissions.

(b) There was no reason to involve 3 solicitors that increased costs by 300%, especially when Mr Thomas made oral submissions at the Appeal Hearing whilst other 2 solicitors did not.

(c) The costs of non-hearing professional work were also increased by 300% due to the involvement of 3 solicitors.

(d) Excessive printing was unjustified as original hearing bundles were used, and extra bundle of authorities used in the court below was unnecessary.

P suggested that the appeal could have been handled by GLM alone and she would only need to incur 2-3 hours’ work at about $10,000 based on her hourly rate.

10.  I propose to adopt a broad-brush approach and not deal with each and every item of D’s statement of costs since it is not the purpose of a summary assessment of costs to carry out a mini-taxation. Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the Notice of Appeal and Appeal Application, the Set Aside Summons, relevant affirmations, skeleton submissions and list of authorities, what transpired at the Appeal Hearing, the non-involvement of counsel in this matter, the matters noted in the paragraphs below and considering all circumstances, the overall costs claimed by D under its statement of costs appear to be somewhat on the high side on party-and-party basis. I make the following general observations.

11.  First, the costs are assessed on party-and-party basis such that only costs that are necessary/proper and reasonable will be allowed. However, such criterion was not to be considered on the basis, as P suggested, whether he himself as a non-solicitor could deal with the matter, but what was considered appropriate for suitable notional professional fee-earner(s) to handle the appeal.

12.  Secondly, I agree the hearing and authorities bundles for the Master Hearing could be re-used. But it must not be forgotten that there was a new Section C for the hearing bundle and additional authorities for the Appeal Hearing. There would also have to be copies for correspondence and written submissions. A reasonable assessment would be 150 pages per set at $1 per page[1] for 3 sets in respect of additions to the hearing/authorities bundle and skeleton submissions (for court, P and D) as well as further copies of other documents. Thus, Item B1 should be reduced.

13.  Thirdly, D claimed for time-cost by LC for 5 court attendances at 2.5 hours. However, costs for collecting/filing/lodging documents are not assessed on hourly rate basis. According to Part I of the First Schedule of Order 62 of the RHC, the cost of each attendance for unqualified staff to file and serve documents is $110. Thus, Item B2 should be reduced.

14.  Fourthly, the hourly rates of the fee-earners as claimed were reasonable and appropriate. But in respect of Items C1-3, I agree the appeal was more focused and much groundwork had been done for the purpose of the Set Aside Summons. But that said, there were aspects of the appeal that required particular attention (as evident from D’s skeleton submissions and additional authorities), and there were necessarily communications with the client to inform them of developments in the litigation, to advise them on the strategy in response to the appeal, to take/confirm instructions and to report on the outcome. There were also necessary communications with D not least the New Email Evidence which became the focus of the Appeal Application. However, I do not see the need for 3 professional fee-earners to spend 6 hours altogether for attendance on the court. Further, given the more limited scope of the appeal, there should be reasonable delegation of work to the junior fee-earner JF with supervision by the partner Mr Thomas. I am persuaded that Mr Thomas should be involved as he appeared on behalf of D at the Master Hearing, and it was reasonable for him to handle and appear at the Appeal Hearing with the assistance of a junior fee-earner. But I am not persuaded Item C would require 3 professional fee-earners. Thus, Item C should also be reduced.

15.  Fifthly, as regards Items D1-3, whilst I accept time would be required to prepare skeleton submissions, peruse the Notice of Appeal, and prepare/peruse correspondence with client, P and court, I find it unnecessary for “P” to be involved. Given the history of the Master Hearing, I am persuaded such tasks could be attended to by the junior fee-earner JF with supervision by the partner Mr Thomas. As alluded to above, I consider it reasonable and appropriate for Mr Thomas to appear at the Appeal Hearing with the assistance of JF (but not 3 professional fee-earners). On party-and-party basis, it was also unnecessary for “P” to be involved in the preparation for the Appeal Hearing or for JF to spend 3 hours since she was in an assistive role. As for attendance at the appeal hearing itself, the court notes the Appeal Hearing took place from 9:57am to 10:31am (ie 34 minutes). Costs for attendance of hearing should be assessed accordingly.

16.  Sixthly, I do not agree the involvement of 3 professional fee-earners meant, as P suggested, party-and-party costs were increased by 300%. It was plain from D’s statement of costs that each professional fee-earner incurred different time-costs which meant they did not triplicate every task. I have assessed the items of costs as above albeit on a broad-brush basis.

17.  Upon considering the items of costs claimed to see whether or not they were “necessary and its costs reasonable” on the sensible standard as explained by the Court of Appeal, the total costs of D on the statement of costs are assessed at $58,000. Lest it be suggested that the scale of reduction by this assessment in respect of costs claimed by D was different/more than the reduction by Master Leong in respect of D’s claimed costs in the court below (and as upheld by this court), it must be remembered that the context was wholly different and Master Leong’s assessment concerned not only the costs of the Set Aside Summons (for which more work was required than for the appeal) as well as costs of the action.