MAN GEORGINA TING TING v. GEORGE Y C MOK & CO (a firm)

HCMP 318/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 318 OF 2016

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J U D G M E M T

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INTRODUCTION

1.  The central issue that I have to decide in this judgment is whether the plaintiff and the defendant made a complete and legally binding agreement in or about February 2015 in relation to the fees payable by the plaintiff to the defendant for legal services rendered or to be rendered by the defendant in respect of the estate (“the Estate”) of Man Wan Kam, deceased (“the Deceased”).

Background facts

2.  The Deceased and his former wife (the Mother) divorced many years ago.  They had 1 daughter (the plaintiff, “Georgina”) and 2 sons (“Michael” and “Bobby”) (collectively “the Children”).  Georgina, Michael and Bobby and their mother have been living in the United States for many years.

3.  Mr George Mok (“Mr Mok”) is a practising solicitor in Hong Kong and a principal of Messrs George Y C Mok & Co (“the Firm”).  He is also an old friend of the Mother.

4.  The Deceased, domiciled in Hong Kong, died intestate in China on 22 June 2013, leaving the Children as the only beneficiaries entitled to share in his estate in Hong Kong.

5.  Shortly after the death of the Deceased, the Mother contacted Mr Mok in about September 2013 to seek his assistance in relation to the Estate of the Deceased, including applying for letters of administration thereof.

6.  On 13 September 2013, the Firm sent a retainer letter (“the September 2013 Letter”) to the Children in relation to the Estate of the Deceased.  The September 2013 Letter did not set out the scope of work or services to be carried out or rendered by the Firm.  In relation to “Professional Charges”, it stated that the Firm’s charge would be determined by a number of factors including the complexity, difficulty or novelty of the matter, the time spent, skill, specialized knowledge, responsibility and the sum of moneys involved, etc, and that the Firm would normally charge its client on a minimum time spent, having regard to the above factors in determining its professional charges.  There was no mention of the hourly rate(s) that might be charged by the Firm or its fee earner(s).

7.  The September 2013 Letter was not signed by the Children.

8.  In an email dated 18 September 2013 from Mr Mok to Georgina, Mr Mok stated that if she did not want to incur her own money on the Deceased’s estate, he could agree to charge a “contingency fee” up to 25-35% of the Deceased’s estate, which it was said might be worth more than HK$10 million.

9.  On or about 30 October 2013, Mr Mok sent to Georgina (i) a draft agreement as to professional fees, and (ii) a draft power of attorney, both dated 1 November 2013.

(1) The draft agreement, to be entered into by the Firm as “the Legal Advisers” and the Children as “the Clients”:-

(a) set out the scope of work to be carried out by the Firm, including the finding of the whereabouts of the assets, the lands and properties and the title deeds and documents belonging to the Deceased in Hong Kong, the checking of the title thereof, the making of an application for the grant of letters of administration of the Estate of the Deceased, and the subsequent distribution of the Estate to the beneficiaries (including the preparation of all necessary documents and powers of attorney, the retention of experts and other assistance necessary for the proper conduct of the matters);

(b) provided that the Clients agreed to pay to the Legal Advisers (i) a non-refundable initial deposit of HK$10,000, and (ii) an additional fee of 20% of the total net amount of the Estate of the Deceased, inclusive of the Legal Advisers’ disbursements and taxes, etc incurred on behalf of the Clients, but excluding counsel’s or other professional experts’ fees;

(c) provided that the parties agreed to keep the existence and nature of the agreement confidential and not to use or disclose the same to any third party without the prior written consent of the other party; and

(d) provided that the agreement was irrevocable by the Clients and was personal to the parties.

(2) The draft power of attorney, to be executed by the Children, authorised the Firm to (inter alia) find the whereabouts of the lands and properties and the title deeds and documents belonging to the Deceased, apply for letters of administration of the Estate of the Deceased, and generally act in relation to the Estate of the Deceased.

10.  By an email from Georgina to Mr Mok dated 6 November 2013 and sent on 7 November 2013, Georgina raised various queries in relation to the draft agreement, including the expected legal fees, costs and share of the Estate of each of the stated parties.  She also mentioned that Michael and Bobby did not wish to make any claim on the Estate of the Deceased, and she would be the only person who would make a claim on the Estate.

11.  Mr Mok responded to Georgina’s email on 8 November 2013.

12.  In a further email to Mr Mok dated 30 November 2013 and sent on 2 December 2013, Georgina proposed various changes to the draft agreement and power of attorney, including (i) an agreed percentage on the net recovery for each class of assets to serve as an “all-inclusive” payment for all fees and expenses to be charged or incurred by the Firm, including any external professional and consultant charges, (ii) agreed percentages for the distribution of the proceeds of various classes of assets, (iii) a right on the part of Michael, Bobby and Georgina to revoke the power of attorney, and (iv) deletion of the confidentiality arrangement.

13.  In that email, Georgina proposed that Mr Mok (or his firm) would receive the following distribution percentages:-

(1) the Deceased’s China Apartment – 50%;

(2) the Deceased’s Hong Kong Apartment – 20%;

(3) land held under the Deceased’s name(s) – 18%;

(4) land held under the Deceased’s name and his siblings and other relatives – 20%; and

(5) bank accounts – 15%.

14.  Mr Mok replied to Georgina by email on 2 December 2013, dealing with some of the issues raised by Georgina.  In particular, Mr Mok maintained the irrevocability of the power of attorney and the confidentiality arrangement.

15.  Georgina followed up with some further queries and proposals in an email to Mr Mok dated 8 December 2013.  She made it clear that she wished to agree a percentage of the proceeds of the Estate recovered to serve as the “total costs and payment due” and that she would not be billed “upfront” or “in increments”.  She also requested Mr Mok to prepare a new agreement as soon as possible.

16.  Subsequently, Mr Mok prepared (i) a 2^nd draft agreement as to professional fees, and (ii) a 2^nd draft power of attorney, both dated 1 November 2013. It is not necessary, for the purpose of this judgment, to recite in detail the terms of those documents, save to point out that the 2^nd draft agreement provided for (i) a substantial revision of the Firm’s fees (as compared to the previous draft agreement), a part of which was to be paid to a nominee company called Landqueen Services Limited, and (ii) the irrevocability of the agreement and the confidentiality arrangement were maintained.

17.  Georgina responded by email on 16 January 2014.  She raised some queries regarding the fees to be charged by the Firm and others (in particular whether any additional fees would be charged or incurred should outside consultants be engaged), and asked Mr Mok to clarify whether the Firm would be handling the sale and distribution of that portion of the Estate of the Deceased proposed to be given to an uncle (Hing Sang).  Georgina also asked Mr Mok to explain why the agreement, including the appointment of the Firm to act on her behalf in relation to the Estate of the Deceased, should be irrevocable.

18.  Mr Mok answered Georgina’s queries by email dated 17 January 2014.  Mr Mok maintained the irrevocability of the agreement to be entered into.  He also asked Georgina to sign the draft agreement and power of attorney if she wished his firm to act for her.

19.  There was further exchange of emails between Georgina and Mr Mok which it is not necessary to recite in detail in this judgment, suffice it to point out that (i) Georgina remained concerned about the irrevocability of the agreement (see her email dated 9 February 2014), and (ii) Mr Mok proposed in an email dated 11 February 2014 that his firm would only apply for the grant of letters of administration of the Estate of the Deceased on her behalf, leaving the sale and distribution of the Estate to be dealt with later.

20.  On 29 April 2014, the Firm sent a further retainer letter to Georgina.  In relation to professional charges, it was stated that:-

“on the above Estate, you have kindly agreed with us on our professional costs and expenses as per your email message dated 2^nd December, 2013 to us.”

21.  The aforesaid retainer letter was not signed by Georgina.

22.  In her email to Mr Mok dated 4 July 2014, Georgina requested that the percentages proposed in her email of 2 December 2013 be incorporated into the retainer letter directly “for us to review”, stating that the percentages were based upon completion of the “entire estate processing”.  In addition, she asked for an estimate of any extra legal charges or fees in respect of “External Costs/Charges”.

23.  In Mr Mok’s email to Georgina dated 9 July 2014, he stated (inter alia) the following:-

“As mentioned to you in the past, we have accepted your agreement as to legal costs etc., as set out in your email message dated 1^st November 2013 to us, in order to assist you or your Mum to deal with or sort out your late father’s estate. To avoid any further exchange of messages on legal cost etc., we would like to make it clear to you that we would, as confirmed in the past, accept your agreement as to costs as aforesaid, i.e. we would get our share or entitlement on the property (proceeds of sale) if and only if the property can be obtained and sold. In other words, all the legal costs and other expenses of obtaining and/or selling the property should be deducted first from the proceeds of sale, before distribution according to your agreed formula.”

24.  On 2 February 2015, there was a meeting between Mr Mok and the Mother.  At that meeting, an agreement was apparently reached between them on the fees payable to the Firm by reference to various “Distribution Percentages”, as follows:-

(1) the Deceased’s China Apartment – 0%;

(2) the Deceased’s Hong Kong Apartment – 20%;

(3) land held under the Deceased’s name(s) – 20%;

(4) land held under the Deceased’s name and his siblings and other relatives – 20%; and

(5) bank accounts – 15%.

25.  The aforesaid agreement was evidenced by certain handwritten amendments marked on a reproduced version of Georgina’s previous email sent to Mr Mok on 2 December 2013, and the amendments were signed or initialled by the Mother and Mr Mok respectively (“the Mok Summary”).

26.  Although there was an apparent agreement on the fees payable to the Firm as recorded in the Mok Summary, it is significant that, in the same document, the following was stated:-

“To keep costs simple and manageable, we propose an agreed percentage to be applied to the net assets recovered and sold. The amount will serve as total payment of all fees, services and expenses for you and your law firm and will include any external additional professional or consultant charges. No further or future billing will be applied as the percentage is all-inclusive.”

27.  On 25 February 2015, Georgina sent a further email to Mr Mok stating, inter alia, the following:-

“… Mother showed me the initialled edits to the original summary document that was emailed to you on November 1, 2013. I wanted to express that I agree to these amendments made on February 2^nd, 2015. Please see the attached ‘Mok Summary’ file of these changes that were signed by your good self and mother in front of her two friends.”

Pausing here, the reference to the “original summary document” was, I understand, a reference to Georgina’s aforesaid email sent to Mr Mok on 2 December 2013.

28.  On 17 March 2015, letters of administration of the Estate of the Deceased was granted to Georgina, it being common ground that Michael and Bobby had renounced their interests in the Estate of the Deceased, including the right to apply for letters of administration thereof.

29.  On 10 April 2015, the Firm issued a Bill No 0029329 (“the Bill”) to Georgina for “professional services rendered in connection with [the Estate of the Deceased] during the period from 5 September 2013 to 9 April 2015, including all subsequent and incidental telephone calls, attendances, conferences and meeting with all concerned parties and the application to the Probate Registry of the High Court for the necessary Grant of Letters of Administration in Hong Kong, as well as the subsequent distribution of the above Estate to the relevant parties agreed by you”.

30.  In the Bill, it was stated that “[the Firm’s] normal costs on probate scale fees and time charge basis would be well over” HK$500,000.  However:-

“As you have agreed to pay only about HK$258,000.00 (i.e. 15% of the money on the above Deceased’s bank accounts, we shall have to write off the balance in due course.)”

31.  In respect of the Bill, Mr Mok also sent an email to Georgina dated 10 April 2015 stating the following:-

“In accordance with your and your mother’s previous instructions to us, we shall apply to both the Bank of China and Hang Seng Bank for the release of the moneys on your later father’s accounts which are stated on the enclosed Grant, i.e. about HK$1,722,910 totally …

Since there are further expenses to be incurred before your late father’s landed properties in Hong Kong can be vested [in] you and our nominee company, we shall have to retain a sum of about HK$200,000 from your share of the bank accounts (i.e. your 85%), before we are in a position to deal with those properties.  As stated, we would not charge you legal costs, except the disbursements, registration fees and the stamp duty etc. on the vesting deeds etc.”

32.  Georgina replied by email dated 3 May 2015 stating, inter alia, the following:-

“I discussed with my family your April 10^th, 2015 email which includes the March 17, 2015 Letters of Administration Schedule of Assets & Liabilities, along with your billing statements. We have decided that we wish you to finish processing only our late father’s bank accounts and to cease work regarding all other assets (land and property).

We agree to pay 15% from our late father’s bank accounts as your total compensation (post fees and services). The remaining 85% (my share), I will need to discuss with my accountant how best to process…”

33.  Georgina confirmed in an email dated 27 May 2015 that she wished Mr Mok to only process the Deceased’s bank accounts but did not wish him to continue or pursue work in relation to the lands or other properties belonging to the Estate of the Deceased.

34.  In reply, Mr Mok stated in an email to Georgina dated 27 May 2015 that he would prepare a “Deed of Family Arrangement for you, Michael and Bobby to execute, in order to regulate the entire Estate, including the Flat in China and the farm lands in Hong Kong”.  He went on to state the following:

“As you have (also your Mum has) agreed with us that such farm lands etc. be split into 80% to you and 20% to our nominee after the Grant of L/A, please let us know your real intention, i.e. whether you would like to give up your 80%, in order to save legal costs and stamp duty etc. on the Assignments or transfer documents.”

35.  Georgina responded on 8 June 2015 reiterating that she would like Mr Mok to only process the Deceased’s bank accounts and that, as previously agreed, 15% of the estate bank account proceeds would serve as his total payment for his service charges.  She added that she “no longer need [Mr Mok] to process and handle [the Deceased’s] properties, buildings and land in HK and China.”

36.  By an email dated 9 June 2015, Mr Mok asked Georgina whether she would compensate the Firm for its nominee’s “20% share of the properties and farmlands in Hong Kong” if she did not intend to deal with those landed properties belonging to the Estate of the Deceased.

37.  There were further emails and letters exchanged between the parties, but their differences were not resolved.

38.  On 12 February 2016, Georgina issued the originating summons herein.  In its amended form, she seeks (inter alia) a declaration that she and the Firm did not enter into any agreement under Section 58 of the Legal Practitioners Ordinance, Cap 159 (“the Ordinance”).

NO COMPLETE AND LEGALLY BINDING AGREEMENT ON FEES

39.  In respect of the issue of whether the parties had reached a complete and binding agreement on the fees payable to the Firm for legal services rendered or to be rendered by the Firm in relation to the Estate of the Deceased, Georgina’s position was clearly set out in a letter sent by her solicitors, Messrs Wilkinson & Grist, to the Firm dated 11 November 2015, as follows:-

“3. In response to the proposed fees agreements previously sent to our client, our client on 2^nd December 2013 wrote an e-mail to your Mr. George Mok to comment on the same. However, this and the subsequent correspondence between your Mr. George Mok and our client regarding the same did not conclude and constitute any valid and enforceable agreement…

4. Although our client’s mother and your Mr. George Mok on 2^nd February 2015 agreed to revise the distribution percentage as set out in our client’s e-mail to your Mr. George Mok dated 2^nd December 2013, this does not constitute any valid and enforceable agreement or amendment to any prior agreement.  It merely reflects that the parties were in the course of negotiating the terms and conditions of the proposed fee agreement.  Other terms and conditions were not discussed, finalized and agreed, including but not limited to the provision regarding your legal fees and expenses in the event that the retainer is terminated before the entire estate has been dealt with.”

40.  On the other hand, Mr Mok and the Firm’s position can be seen from a letter to Messrs Wilkinson & Grist dated 24 October 2015, in which it was stated (inter alia) that:-

(1) there was a binding agreement as to the Firm’s costs and expenses on 2 December 2013 (“the original agreement”);

(2) the original agreement was amended on 2 February 2015 with the agreement of Georgina’s mother/lawful agent “when the parties signed the revised agreement then and there” (ie the Mok Summary) (“the new agreement”); and

(3) on or about 26 February 2015, Georgina delivered a copy of the new agreement for confirmation purposes “when she re-confirmed in her e-mail that she had agreed to, and accepted all the amendments made on 2^nd February 2015 by her mother/lawful agent”.

41.  Their position is further explained in paragraph 25 of Mr Tony Ko’s Skeleton Submissions dated 11 October 2016, as follows:-

“the evidence is clear that P and D had reached a binding agreement that (1) D’s fees should be paid out of the estate of P’s father so as to limit any out-of-pocket expenses of P and (2) D’s fees should be calculated as a percentage of the different assets comprising the estate as set out in P’s email to D dated 2 December 2013 and subsequently amended on 2 February 2015 (the ‘Mok Summary’). P’s position that no binding agreement was reached because of the lack of agreement on other terms is untenable. The parties have clearly agreed on how D was to be remunerated. The fact that some other terms were not agreed upon did not mean that D was not retained or there was no binding agreement as to fee.”

42.  At the hearing on 12 October 2016, Georgina gave oral evidence and was cross-examined by Mr Ko on her two affirmations filed herein on 12 February 2016 and 25 April 2016 respectively.  On the other hand, Mr Ken To on behalf of Georgina confirmed that Mr Mok’s two affirmations could be admitted as evidence without cross-examination.

43.  In her affirmations (the contents of which she confirmed in court) and in her oral evidence, Georgina maintained that no valid and binding agreement on the Firm’s fees had ever been finalised or concluded.  I accept Georgina’s evidence on this point, which I consider to be clearly borne out and supported by the contemporaneous documentary evidence summarised above, and reject Mr Mok’s evidence to the contrary.

44.  In particular, although the parties did, apparently, “agree” on the fees payable to the Firm in February 2015, there were a number of outstanding issues which the parties, objectively speaking, did not appear to have reached any agreement or consensus, including:-

(1) what was the precise scope of the work or services which the Firm was instructed to carry out or provide, in particular whether the Firm was instructed only to apply for letters of administration of the Estate of the Deceased on behalf of Georgina or was instructed also to collect, realise and distribute the Estate (or some part(s) thereof);

(2) whether the Firm’s retainer was irrevocable;

(3) whether the “fees” as agreed were inclusive or exclusive of external professional charges; and

(4) whether Georgina was bound to maintain confidentiality as regards the existence and nature of the agreement between the parties.

45.  The issues mentioned in (1) and (2) above are of particular significance in the context of the present discussion.  It seems clear that the parties’ agreement on the “distribution percentages” as stated in the Mok Summary was premised on the assumption that the Firm would be responsible not only for obtaining a grant of letters of administration of the Estate of the Deceased for Georgina, but also for collecting, realising and distributing the Estate (in other words, the actual administration of the Estate).  If Georgina was entitled to revoke the Firm’s retainer at any time, or if there was no definite commitment on her part to instruct the Firm to carry out the administration of the Estate, the “agreed” distribution percentages would, in my view, be quite meaningless.

46.  On the totality of the evidence before me, I have reached a clear conclusion that there was no complete and legally binding agreement entered into by Georgina and the Firm in February 2015 (or at any other time) on the fees payable to the Firm for legal services rendered or to be rendered by the Firm in respect of the Estate of the Deceased.  This conclusion does not mean, of course, that Georgina does not have to pay any fees to the Firm for services rendered by the Firm at her request or upon her instruction, only that those fees are not to be calculated upon the distribution percentages as set out in the Mok Summary.

disposition

47.  In the Amended Originating Summons, Georgina seeks, in addition to a declaration that the parties did not enter into any fee agreement under Section 58 of the Ordinance, other relief, including (i) an order that the Firm shall render and deliver a final bill, (ii) taxation of such bill, (iii) payment into court of part of the moneys belonging to the Estate of the Deceased held by the Firm as reasonable provision for the Firm’s costs and the balance to Georgina, and (iv) delivery to Georgina of the original Letters of Administration and other papers, title deeds and documents belonging to the Estate of the Deceased.

48.  In view of the limited issues identified in the respective lists of issues of the parties, the question of relief was not fully argued at the hearing.  In the circumstances, I shall invite the parties to agree on the exact form of the relief to be incorporated in the sealed order or judgment.  In the event of disagreement, the parties shall have liberty to restore this matter for a further hearing (with one hour reserved).

49.  Finally, I make an order nisi that Georgina shall have the costs of this action, to be taxed if not agreed.