GEORGE Y. C. MOK & CO. (a firm) v. NEW LAND PROPERTIES DEVELOPMENT LTD AND ANOTHER

DCCJ 505/2019

[2020] HKDC 240

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 505 OF 2019

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DECISION

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A. INTRODUCTION

1.  In these proceedings, the plaintiff, a firm of solicitors, seeks to recover from the 1^st and 2^nd defendants (purportedly) agreed costs in the sum of HK$600,000 and contractual interest.  The plaintiff’s demand is set out in a bill numbered 0033672 and dated 21 December 2018 issued to the 1^st and 2^nd defendants (“Bill”).  Dr George Yuen Chee Mok (“Dr Mok”) is and was at all material the senior partner of the plaintiff.

2.  The 2^nd defendant is and was at all material times a licensed estate agent and the managing director and sole shareholder of the 1^st defendant.

3.  As pleaded at paragraph 3 of the Statement of Claim, the plaintiff’s claim is premised on an oral agreement made between Dr Mok and the 2^nd defendant (in his own capacity and for and on behalf of the 1^st defendant) on or about 20 November 2017.  Further on at paragraph 6 of the Statement of Claim, the plaintiff advances a contention that the agreed fee was confirmed in a letter dated 1 August 2018 from the 1^st defendant’s former solicitors, Messrs So Lung & Associates to the plaintiff (“So Lung Letter”). 

4.  Whilst the 2^nd defendant accepts at paragraph 5 of the Defence that he had reached an oral agreement with the plaintiff, the defendants otherwise disagree with the plaintiff on a number of factual matters, including (1) whether the 1^st defendant was a party to the agreement, (2) the date of the formation of the agreement and (3) its terms.  However, for the purpose of the present hearing, the defendants accept that both defendants were parties to the agreement.[1]

5.  More fundamentally, the defendants aver at paragraph 6 of the Defence that, in so far as the plaintiff’s claim for agreed fees is premised on an oral agreement, such a claim is bad in law as any such oral agreement is void and unenforceable by virtue of section 56(3) of the Legal Practitioners Ordinance Cap 159 (“LPO”).

6.  There are the following three summonses before the court.

7.  The first in time is the defendants’ summons dated 8 July 2019 (“1^st Summons”) for an order that these proceedings be transferred to the Court of First Instance of the High Court (“Transfer Application”).

8.  By another summons dated 29 August 2019 (“2^nd Summons”), the defendant seeks an order that (1) the Statement of Claim be struck out pursuant to RDC Order 18, rule 19(1)(a) and/or the court’s inherent jurisdiction on the ground that it discloses no reasonable cause of action and the claim be dismissed against either both defendants or the 2^nd defendant (“Strike Out Application”), (2) in the alternative, the claim for accrued interest in the sum of HK$29,750 be struck out on like ground, and (3) in the further alternative, a determination pursuant to RDC Order 14A, rule 1 of the following two questions and the consequential dismissal of the plaintiff’s claim (“Order 14A Application”):-

(1)  as a matter of law, whether as between a solicitor and his client, an agreement for remuneration for non-contentious business under section 56 of the LPO which is not in writing and/or not signed by the client or his agent in that behalf is enforceable and/or can be relied upon by a solicitor against his client (“Question 1”);

(2)  as a matter of construction, whether the So Lung Letter constitutes an agreement “in writing and signed by the person to be bound thereby or his agent in that behalf” within the scope of section 56 of the LPO (“Question 2”).

9.  By consent, Master S H Lee by his Order dated 6 September 2019 directed inter alia, that the 1^st Summons and the 2^nd Summons be heard together.

10.  Following the making of the Master’s Order, by a summons dated 27 September 2019 returnable on the date of the present substantive hearing (ie 27 November 2019), the plaintiff seeks an order for summary judgment on its claim pursuant to RDC Order 14, rule 1 (“Summary Judgment Application”).  The defendants filed their evidence in opposition on 21 November 2019 and the plaintiff its evidence in reply on 25 November 2019.  Despite its lateness, since the Summary Judgment Application did not add an unmanageable dimension to the arguments ventilated at the hearing, I decided to deal with the application and heard the parties’ substantive submissions.

11.  I should point out at the outset that Mr Tommy Cheung (“Mr Cheung”), counsel for the plaintiff, conceded (in my view correctly) at the hearing that the plaintiff’s claim for contractual interest pleaded at paragraph 5 of the Statement of Claim should be struck out.

B.    BACKGROUND

12.  Grand Fair Properties Limited (“Grand Fair”) is and was at all material times the registered owner of the following plots of land (all in DD 95):-

(1)  the Remaining Portion of Section G of Lot No 728 (“Lot No 728”),

(2)  the Remaining Portion of Sub-section 5 of Section A of Lot No 729,

(3)  the Remaining Portion of Sub-section 6 of Section A of Lot No 729,

(4)  Sub-section 4 of Section A of Lot No 730, and

(5)  Sub-section 5 of Section A of Lot No 730 (collectively “5 Land Lots”).

13.  In mid 2017, Grand Fair was desirous to sell the 5 Land Lots.  The 2^nd defendant introduced an interested purchaser, namely Baguio Landscaping Services Limited (“Purchaser”).  It is the 2^nd defendant’s evidence that he would only be paid commission upon completion of the sale.  As the contemplated consideration for the sale was substantial, the 2^nd defendant stood to earn substantial commissions (around HK$2 million)[2] if the sale came to fruition.  

14.  It is common ground that Grand Fair thereafter conducted negotiations with the Purchaser.  Grand Fair was represented by Messrs Rene Hout & Co (“Rene Hout”) and the Purchaser by Messrs Robertsons (“Robertsons”).  On 15 September 2017, the Purchaser paid to Grand Fair earnest money in the sum of HK$5,000,000.

15.  By a letter dated 29 September 2017 from Robertsons to Rene Hout, the Purchaser raised four requisitions (“Requisition Letter”).  Of relevance is the second requisition (“Requisition No 2”) in relation to the four plots of land in Lot Nos 729 and 730 (ie except Lot No 728) (“Relevant 4 Land Lots”) in the following terms:-

“According to the Land Registry record, the relevant land grant document relating to the above plots of land is “New Grant No 5667”. However, we note that it is stated in the Remarks of the Land Registry record: “LEASE TERM, ITS DATE OF COMMENCEMENT AND RENT CANNOT BE ASCERTAINED FROM NEW GRANT”…

…

In the premises, please produce to us a certified true copy of “New Grant No 5667” for our perusal.

If it is your client’s case that the “New Grant No 5667” cannot be found, please produce (i) a statutory declaration as to the efforts made by your client to locate such “New Grant No 5667” and (ii) secondary evidence of the contents of the “New Grant No 5667”… for our perusal.” (original emphasis)

16.  According to the 2^nd defendant, since about 2012 or 2013, he had engaged the plaintiff to act as his or the 1^st defendant’s solicitor in various property transactions.  The 2^nd defendant approached the plaintiff for assistance to deal with the Requisition Letter. 

17.  On 7 November 2017,[3] the 1^st defendant issued a cheque in the sum of HK$30,000 to the plaintiff.  On the same day, the plaintiff issued a receipt to the 1^st defendant, expressly noting therein that the payment was in respect of the 5 Land Lots.

18.  On 8 November 2017, the 2^nd defendant forwarded the Requisition Letter by WhatsApp to Dr Mok.  Dr Mok indicated to the 2^nd defendant, again by WhatsApp, that the plaintiff would attempt to deal with Requisition No 2. 

19.  To that end, on 15 November 2017, Dr Mok informed the 2^nd defendant that an authorisation letter from Grand Fair was required before the plaintiff could conduct the further requisite search.  Although the authorisation letter has not been produced in evidence, it appears tolerably clear that the plaintiff did obtain such authorisation from Grand Fair.

20.  It is common ground that there was a meeting between Dr Mok and the 2^nd defendant on 20 November 2017 but what transpired at the meeting is a matter of dispute between the parties.

(1)  On the plaintiff’s part, it contends that an oral agreement was reached with the defendants that they agreed and undertook to pay agreed costs in the sum of HK$600,000 for, essentially, dealing with Requisition No 2 (“Plaintiff’s Alleged Oral Agreement”).

(2)  On the defendants’ part, they contend that the only agreement reached at the meeting on 20 November 2017 was that any payment to the plaintiff was conditional upon the successful completion of the sale of the 5 Land Lots (“Condition Precedent”), and it was only a few days later that a further agreement was reached by which the plaintiff agreed to cap its professional fees at HK$600,000 and any payment of the same would be subject to the Condition Precedent.

21.  According to the 2^nd defendant, on 13 January 2018, Grand Fair informed him that the sale to the Purchaser would not be proceeded with.  Despite this development, it is clear from the 2^nd defendant’s WhatsApp message on the same day to Mr Ho Chi Keung (“Mr Ho”), a director and shareholder of Grand Fair, that the plaintiff would continue to seek to resolve Requisition No 2 such that Grand Fair would be in a better position to assess the value and the problems associated with the 5 Land Lots.

22.  On 11 May 2018:-

(1)  Dr Mok through WhatsApp informed the 2^nd defendant of the following:

“Excellent news for U, we got confirmation from Director of Lands, after 9 months’ hard work. See letter to your customer. Shall work out SDs in 5-15 days’ time. Ok. Very complicated matter. Cheers!”;

(2)  the plaintiff issued a letter to Grand Fair (ie the letter to the 2^nd defendant’s customer referred to in the WhatsApp message) informing Grand Fair of (a) the result of the plaintiff’s enquiries in respect of the Relevant 4 Land Lots and (b) the proposal to prepare a statutory declaration for Grand Fair in order to have the defect in title rectified in due course.

23.  Two statutory declarations, respectively by Dr Mok and Mr Ho, have been produced in evidence.  The one by Dr Mok is signed and dated 5 June 2018 whilst the one by Mr Ho is unsigned. The contents of the two statutory declarations appear to have dealt with Requisition No 2 in the manner stipulated in the Requisition Letter.

24.  Dr Ho did not sign his statutory declaration, apparently because by early June at the latest, the 2^nd defendant had informed the plaintiff that Grand Fair was not prepared to pay the plaintiff’s fees.  By an email dated 4 June 2018 from Dr Mok to the 2^nd defendant, the plaintiff enquired “whether [it] should issue [its] bill directly to you for settlement, pursuant to your previous agreement/ undertaking.”

25.  Correspondence ensued thereafter in respect of the plaintiff’s fees.  Where, as here, the plaintiff’s case is premised on an oral agreement, such post-agreement correspondence is admissible to ascertain the terms of that agreement (see Chitty on Contracts, 33^rd Ed, paragraph 13-136).

(1)  In the plaintiff’s letter dated 15 June 2018 to the 1^st defendant, the plaintiff stated that “to avoid costly and unpleasant legal proceedings, please put forward your or the above owner’s reasonable offer for the settlement of our losses, ie professional fees and expenses on time-charge basis as previously agreed, within the next 10 days from the date hereof.” (emphasis added)

(2)  The So Lung Letter was issued in response to the plaintiff’s letter dated 15 June 2018 asserting the any payment of the plaintiff’s fees was subject to the Condition Precedent.

(3)  The plaintiff issued a letter dated 2 August 2018 in response to the So Lung Letter denying that payment of the plaintiff’s fees was subject to the Condition Precedent.  The letter further stated that the 1^st defendant had “offered/ agreed/ undertook to pay all our fees and expenses up to HK$600,000…  We then accepted your client’s offer…” (emphasis added)

The letters mention above are collectively referred to as “Relevant Correspondence”.

26.  It may be seen from the above summary that it is far from clear that the Relevant Correspondence supports the Plaintiff’s Alleged Oral Agreement, namely an agreement for agreed fees.

27.  On 21 December 2018, the plaintiff issued the Bill to the defendants.  The Bill was issued in respect of the 4 Relevant Land Lots and for professional services rendered during the period 3 August 2017 and 11 May 2018 (namely the date when Dr Mok informed the 2^nd defendant of the “good news” set out at paragraph 22 above) at the agreed costs of HK$600,000.  The Bill further claimed accrued interest of 8.5% since 11 May 2018 in the sum of HK$29,750.

28.  I note that there is an anomaly in the Bill as the period stated therein does not cover the two statutory declarations made in June 2018.

C.    THE APPLICATIONS

29.  I propose to deal with the various applications in the following order: (1) the Order 14A Application, (2) the Strike Out Application, (3) the Summary Judgment Application and (4) the Transfer Application. 

30.  From the parties’ respective submissions, it appears clear that the Transfer Application is only relevant if the plaintiff’s claim is not summarily determined (either for or against the plaintiff).

31.  The reason for dealing with the Order 14A Application first is as follows. 

32.  It appears from the defendants’ Skeleton Argument that they recognise that the Order 14A Application is “wider” than the Strike Out Application.  Whilst the defendants have invited the court to resolve Question 2 (namely whether the So Lung Letter constitutes an agreement in writing for the purpose of section 56(3) of the LPO) by reference to the Relevant Correspondence (and the plaintiff does not contend that I should not do so), it is inappropriate for me to consider such evidence in the Strike Out Application, which is one pursued only on the ground that the Statement of Claim discloses no reasonable cause of action.

D.   THE ORDER 14A APPLICATION

33.  The plaintiff does not dispute that Question 1 and Question 2 are apt for determination under RDC Order 14A. 

D1. Question 1

34.  It is the defendants’ position that the plaintiff’s Alleged Oral Agreement is unenforceable by virtue of sections 2 and 56 of the LPO.

35.  Section 2 of the LPO defines “non-contentious business” as including “any business connected with sales, purchases, leases, mortgages and other matters of conveyancing”.

36.  There is no dispute between the parties that the Bill was issued in respect of non-contentious business.

37.  Section 56 of the LPO provides as follows:-

“(1) Whether or not any rules made under section 74 are in force, a solicitor and his client may, either before or after or in the course of the transaction of any non-contentious business by the solicitor, make an agreement as to the remuneration of the solicitor in respect thereof.

(2) The agreement may provide for the remuneration of the solicitor by a gross sum, or by commission or percentage or by salary, or otherwise, and it may be made on the terms that the amount of the remuneration therein stipulated for either shall or shall not include all or any disbursements made by the solicitor in respect of searches, plans, travelling, stamps, fees or other matters.

(3) The agreement shall be in writing and signed by the person to be bound thereby or his agent in that behalf.

(4) The agreement may be sued and recovered on or set aside in the like manner and on the like grounds as an agreement not relating to the remuneration of a solicitor:

Provided that if on any taxation of costs the agreement is relied on by the solicitor and objected to by the client as unfair or unreasonable, the taxing officer may inquire into the facts and certify them to the Court, and if on that certificate it appears just to the Court that the agreement should be cancelled, or the amount payable thereunder reduced, the Court may order the agreement to be cancelled, or the amount payable thereunder to be reduced, and may give such consequential directions as it thinks fit.”

38.  Section 56 of the LPO is materially similar to section 57 of the UK Solicitors Act 1957 and the Solicitors Act 1932 (“1932 Act”).

39.  Counsel for the defendants (Mr Benny Lo (“Mr Lo”) together with Mr Jack Chan) rely on three cases, namely Re A Solicitor [1956] 1 QB 155, the first instance decision in Super Strategy Investments Ltd & Anor v Kao Lee & Yip (a firm) [2008] 5 HKC 71 and the Court of Appeal judgment in Super Strategy.[4]

40.  Mr Lo refers to what Pearson J said in Re A Solicitor at page 166:-

“I think the scheme of that is perfectly plain. Under subsection (7) of section 56 [of the 1932 Act] the scale must be applied subject to the provisions of section 57, and the effect of subsection (3) of section 57 is that an agreement between a solicitor and his client with regard to the amount of charges must be in writing in order to have the effect which is referred to in section 57, that is to say, in order to displace the scale. The scale in the present case under consideration was not displaced, because no agreement in writing was made.”

41.  At paragraph 69 of the first instance decision in Super Strategy, Saunders J said:-

“I am satisfied that Mr Sussex is right. I proceed on the assumption that the Agreed Fee agreement was made as contended by the solicitors, and having regard to my finding that the work undertaken pursuant to that agreement was non-contentious business. The absence of a record of the agreement in writing, and the signature of the plaintiffs, being the persons to be bound by the agreement, or their agent in that behalf, provides a complete answer to any claim that may be made by the solicitors to recover any sum due pursuant to the agreement….”

42.  Further, at paragraph 13 of the Court of Appeal judgment in Super Strategy, Rogers JA said:-

“There is no dispute between the parties that under the provisions of section 56(3) of the Ordinance a solicitor may only rely upon an agreement made with the client as to fees in respect of non-contentious business if that agreement was made in writing. It is clear beyond doubt on the present evidence that there was no such written agreement upon which the defendant firm could rely. In those circumstances work which the defendant did as solicitors in relation to the sale of the 10 flats clearly came within the definition of non-contentious business under section 2(1) of the Ordinance. It is therefore the plaintiffs’ case that the court has jurisdiction under section 65(1) to order the delivery by the defendant firm of a bill of costs. In my view that submission is correct and it is inevitable that if the defendant firm wishes to charge in relation to the work as solicitors that was carried out when the 10 flats were sold the court may order the delivery of a bill of costs which would be subject to taxation.”

43.  Mr Cheung disagrees and argues that a solicitor can claim against his client for agreed fees even when there is no written retainer in non-contentious civil matters.  As I understand Mr Cheung, his arguments are three-fold.

44.  First, Mr Cheung, by reference to inter alia Rule 5D of the Solicitors’ Practice Rules Cap 159H, contends that it is only in criminal matters (and not, as here, in non-contentious civil matters) that it is essential for retainers to be in writing.  He further says that the foregoing is illustrated at various paragraphs of The Hong Kong Solicitors’ Guide to Professional Conduct (“Solicitors’ Guide”), namely paragraph 4.01 Commentary 16, paragraph 5.01 Commentary 8, and paragraph 5.12 Commentary 7.

45.  Secondly, Mr Cheung seeks to distinguish the present case from Re A Solicitor and Super Strategy. 

46.  Thirdly, Mr Cheung relies on Clare v Joseph [1901] 2 KB 369 in support of the proposition that, under common law, an oral agreement between a solicitor and his client is enforceable when the agreement is favourable to the client and may even be enforced when favourable to the solicitor if the court is satisfied that the agreement was fairly made.

47.  For the reasons set out in the following subsections, I disagree with Mr Cheung.

D1a.  Retainers v Fee Agreements

48.  As I understand Mr Cheung, his reliance on the Solicitors’ Guide is predominantly on the issue of practice rather than the law.  However, even from the perspective of the Solicitors’ Guide (and therefore as a matter of practice), in my view, Mr Cheung’s argument has conflated retainers with fee agreements. 

49.  The various commentaries of the Solicitors’ Guide relied on by Mr Cheung refer to retainers:-

(1)  Commentary 16 of paragraph 4.01: “In matters other than criminal litigation, it would be advisable for a solicitor to draft and prepare a retainer letter identifying the scope of service to be provided and the costs to be charged in order to avoid any potential dispute with the client and the client should sign the letter in confirmation”;

(2)  Commentary 8 of paragraph 5.01: “Save in the case of retainers in criminal matters, which must be in writing under Rule 5D of the Solicitors’ Practice Rules…, in civil matters it is advisable for a solicitor to enter into a written retainer with his clients…”;

(3)  Commentary 7 of paragraph 5.12: “It is good practice for a solicitor to obtain confirmation of the scope of the retainer in writing from his client at the outset in order to prevent or resolve quickly any dispute over the scope of responsibilities taken up by the solicitor”.

50.  In respect of fee agreements, they are dealt with specifically by paragraph 4.02 of the Solicitors’ Guide (to which Mr Cheung did not refer).  The following commentaries are relevant:-

(1)  Commentary 2: “Sections 56 and 58-62 of the [LPO] make provision for agreements on fees in non-contentious and contentious business respectively.  The effect of such provisions is to restrict a client’s right to challenge a bill, subject to safeguards”;

(2)  Commentary 3: “Section 56 of the [LPO] requires an agreement as to remuneration in non-contentious matters to be in writing and signed by the person bound by it or his agent…”

51.  Where, as here, the Solicitors’ Guide itself makes reference to section 56 of the LPO, the real issue is whether that section, as a matter of law, renders the plaintiff’s Alleged Oral Agreement unenforceable.

D1b.  Re A Solicitors and Super Strategy distinguishable?

52.  Mr Cheung attempts to distinguish Re A Solicitors on the basis that that is a case in which the solicitors intended to displace the general rule, ie the authorised scale. In the present case, Mr Cheung contends that the plaintiff does not have to rely on any provision of the LPO to displace a rule.

53.  I do not agree. Section 56(1) of the LPO makes reference to rules made under section 74. Section 74(5) provides:-

“So long as any rules made under this section are in operation, taxation of bills of costs of solicitors in respect of non-contentious business shall, subject to the provisions of section 5, be regulated by such rules.”

54.  The Solicitors (General) Costs Rules Cap 159G (“Solicitors Costs Rules”) were made pursuant to Section 74 of the LPO. 

55.  Re A Solicitors is a case concerning conveyancing transactions to which scale costs for conveyancing were applicable.  Under the Solicitors Costs Rules, provisions are made for scale costs for conveyancing transactions in, for example, Schedules 1 and 2 thereof.

56.  Rule 5 of the Solicitors Costs Rules provides as follows:-

“In the case of any non-contentious business to which neither Schedule 1 or 2 nor any other rules apply or in the event of a solicitor making an election under rule 3(5), costs shall be such sum as may be fair and reasonable, having regard to all the circumstances of the case and, in particular, to –

(a) the complexity of the matter or the difficulty or novelty of the questions raised;

(b) the skill, labour, specialized knowledge and responsibility involved on the part of the solicitor;

(c) the number and importance of the documents prepared or perused without regard to length;

(d) the place where and circumstances in which the business or any part thereof is transacted;

(e) the time expended by the solicitor;

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

(g) the importance of the matter to the client.”

57.  The parties did not address me on whether in Schedule 1, Schedule 2 or Rule 5 is applicable to the work carried out by the plaintiff as the plaintiff was not engaged in a conveyancing transaction.  However, irrespective of which of the foregoing provisions is applicable, the plaintiff here is seeking to displace the Solicitors Costs Rules. 

58.  I therefore do not see how the present case is distinguishable from Re A Solicitors.

59.  Mr Cheung then seeks to distinguish Super Strategy on the basis that, unlike that case, there is here no application by the defendants for an order that the plaintiff deliver a bill of costs under section 65 of the LPO.  I am again unable to see how that is a correct reading of Super Strategy.

60.  It is true that the plaintiff in Super Strategy sought primarily an order that the defendant do deliver a bill of  costs pursuant to section 65 of the LPO.  However, at paragraph 66 of the first instance decision, it is recorded that the plaintiff also sought a declaration that save and except such costs and disbursements set out in the bill of costs to be delivered by the defendant, the defendant was not entitled to demand, recover, claim, or sue for any costs or disbursements due or allegedly due from the plaintiffs to the defendant.

61.  The reason for the plaintiff seeking the declaration is set out at paragraph 67 of the first instance decision in Super Strategy:

“Mr Sussex submitted that this declaration could be made without the court needing to proceed to find whether or not there was any such agreement. That was, he said, because even if there was an agreement, the requirement that agreement for an agreed fee, in this case 0.65% of the purchase price, permitted in respect of non-contentious business by s 56(1) LPO, to be in writing and signed by the plaintiffs pursuant to s 56(3) LPO, simply could not be met. That he says must be a complete answer to any claim for the Agreed Fee.”

62.  Saunders J agreed with Mr Sussex’s submissions and I have already set out paragraph 69 of the first instance decision in Super Strategy at paragraph 41 above.

63.  I therefore also do not accept Mr Cheung’s submissions that Super Strategy is distinguishable from the present case on this further basis.

D1c.  Clare v Joseph

64.  It must be pointed out at the outset that Clare is a case concerned with contentious business and section 4 of the Attorneys and Solicitors Act 1870 (“1870 Act”).  Section 4 of the 1870 Act is worded differently from section 57 of the 1937 Act (and therefore section 56 of the LPO).  Section 4 of the 1870 Act provides as follows:-

“An attorney or solicitor may make an agreement in writing with his client respecting the amount and manner of payment for the whole or any part of any past or future services, fees, charges, or disbursements in respect of the business done or to be done by such attorney or solicitor, whether as an attorney or solicitor or as an advocate or conveyancer, either by a gross sum, or by commission or percentage or by salary or otherwise, and either at the same or at a greater or at a less rate as or than the rate at which he would otherwise be entitled to be remunerated…”

65.  In Clare, the plaintiff client sought to enforce an oral agreement as to costs against the defendant solicitor.  The defendant solicitor argued that section 4 of the 1870 Act prohibited or rendered unenforceable verbal agreements affecting his remuneration as all agreements as to which must be in writing.

66.  The English Court of Appeal found for the plaintiff.  In so doing, the English Court of Appeal observed as follows:-

(1)  agreements as to costs were often made before 1870 and upon the application of the client, they were considered and examined by the courts and were not infrequently held to be binding both on the solicitor and the client and the inquiry was always directed to the question whether the agreement was fair and reasonable (at page 372);

(2)  section 4 of the 1870 Act was the opening section of Part 1 which extended to section 15 (at page 375);

(3)  section 4 was a purely an enabling, and not a disabling, section and before 1870 the court had full power to investigate into the propriety of a fee agreement and the specific provisions of section 4 did not in substance alter the law affecting them (at page 376);

(4)  section 15 provided where an agreement was made in accordance with section 4 and had not been set aside, the ordinary provisions as to delivery and taxation of a duly signed bill of costs were no longer to have effect (at page 377);

(5)  if either a solicitor or client wanted the privileges which Part 1 of the 1870 Act gave him, he must comply with the requirements of section 4 (at page 377);

(6)  the plaintiff was not seeking any benefits under Part 1 of the 1870 Act since his position was that the defendant had agreed to do certain work for him for less than the ordinary remuneration (at page 377);

(7)  before 1870, the law would have held the defendant to his agreement and Part 1 of the 1870 Act did not affect his status (at page 377);

(8)  the effect of section 4 was that whether the solicitor was to have remuneration at a greater or a lesser rate than the ordinary rate, an agreement between him and his client to that effect must be in writing if the solicitor set it up but not when it was set up by the client (at pages 378-379).

67.  As accepted by Mr Cheung, Clare was considered in Re A Solicitor.  Mr Cheung, however, submits that Re A Solicitor left it open whether Clare still remains good law.

68.  I do not accept Mr Cheung’s argument.

69.  Re A Solicitor was an appeal from a taxing master.  The taxing master refused to give effect to an oral agreement for the solicitor charging fees at less than the scaled costs in relation to non-contentious conveyancing business.

70.  In finding for the solicitor, the master observed as follows:

(1)  the case of Clare was decided by the English Court of Appeal on the basis that (a) the common law made a distinction between agreements favourable to the client and those unfavourable and (b) section 4 of the 1870 Act was not intended by the legislature to apply to an agreement which was favourable to the client (at page 157);

(2)  the subject matter of Clare related solely to contentious business (at page 157);

(3)  as at the date of Clare (decided in 1907), the legislature had separated contentious and non-contentious business so that the 1870 Act applied only to contentious business and non-contentious costs were governed by section 8 of the Solicitors Remuneration Act 1881 (“1881 Act”) (at page 158);

(4)  the separation of the two classes of business had been maintained in the 1932 Act (at page 158);

(5)  the wording of section 57 of the 1932 Act (materially identical to section 56 of the LPO) was clear and required of a solicitor and his client who desired to make an agreement as to the remuneration of the solicitor in non-contentious business that the agreement should be in writing and signed by the persons to be bound thereby.

71.  Two points merit mention.

72.  First, as noted by Deputy Judge A Cheung (as he then was) in Mong Man Wai v HH Lau & Co [2003] 4 HKC 587 at paragraph 29, the origin of the requirement under section 56(3) of the LPO can be traced to (at least) section 8 of the 1881 Act.

73.  Secondly, as mentioned in Re A Solicitors at page 161, section 9 of the 1881 Act provided that the 1870 Act “shall not apply to any business to which this Act relates”.

74.  It is therefore clear that Clare is only a case concerned with contentious business and has no bearing on the present case, which is concerned with non-contentious business. To put matters beyond doubt, I refer to what Pearson J said in Re A Solicitor at page 167:-

“There remains section 59 [of the 1932 Act], dealing with contentious business with which I am not concerned in this case. As this was merely a consolidating Act, and as the provisions of section 59 and the following sections are rather similar to those of the Act of 1870, it may be that the decisions in [Clare] still hold good, or there may be some argument to the contrary. I do not have in this case to decide that. Even though it may be right to say that those decisions still hold good…. I agree with the argument that Mr Wainstead puts forward, that, in spite of that, effect must be given to the plain works and the unmistakable meaning of the provisions of sections 56 and 57 [materially similar to sections 56 and 74 of the LPO]. It follows, therefore, that I agree with the master’s answers and also with the reasons given by him…”

75.  I have therefore concluded that Mr Cheung’s reliance on Clare is misplaced.

76.  For all the above reasons, I answer Question 1 in favour of the defendants, namely that as a matter of law, under section 56 of the LPO, an agreement for remuneration for non-contentious business which is not in writing and/or not signed by the client or his agent in that behalf is unenforceable and/or cannot be relied upon by a solicitor against his client.

D2. Question 2

77.  In contending that the So Lung Letter does not constitute an agreement within section 56(3) of the LPO, Mr Lo referred me to Chamberlain v Boodle & King [1982] 1 WLR 1443.  Denning MR said at 1445D-E:-

“It seems to me than an agreement in writing can be contained in letters. But the letters ought at least to be signed by the client if he is to be deprived by the agreement of his right to tax. Further the agreement must be sufficiently specific…”

78.  Chamberlain was a case concerned with contentious business but was applied in the context of non-contentious business in ETC Environmental Technology v Alvan Liu and Partners, HCMP 1061 of 2004, 7 July 2004.  At paragraph 17, Tang J (as he then was) said:-

“In Chamberlain v. Boodle & King [1982] 3 All ER 188 which concerns contentious business (but which I believe to be applicable by analogy), the headnotes of the report state :

"(a) An agreement by letter could only amount to a contentious business agreement if it was specific in its terms and signed by the client. The defendants' letter to the plaintiff and his reply could not constitute such an agreement because the defendants' letter was imprecise as to the amount for which the plaintiff might expect to be liable ..."

79.  In the present case, as set out in Section B above, the So Lung Letter was only part of the Relevant Correspondence.  I have already summarised the Relevant Correspondence at paragraph 25 above.  The Relevant Correspondence, read as a whole, do not show that there was an agreement for agreed fees in the terms contended by the plaintiff.

80.  Further, I accept Mr Lo’s submission that it is not even the plaintiff’s own pleaded case that the So Lung Letter constituted an agreement in writing within the meaning of section 56(3) of the LPO.

81.  I therefore answer Question 2 in favour of the defendants, namely that as a matter of construction, the So Lung Letter does not constitute an agreement in writing within the scope of section 56(3) of the LPO.

D3. Conclusion of the Order 14A Application

82.  It is the defendants’ case that if Questions 1 and 2 are determined in their favour, the plaintiff’s claim ought to be dismissed.  Mr Cheung does not submit to the contrary. 

83.  For the reasons set out in this Section D, I have determined both Questions 1 and 2 in favour of the defendants. I do not see any reason why the plaintiff’s claim should not therefore be dismissed.

E.    THE STRIKE OUT APPLICATION

84.  Mr Cheung reminds me that in an application to strike out the Statement of Claim pursuant to RDC Order, 18 rule 19(1)(a), disputed facts are to be taken in favour of the plaintiff and an order to strike out should only be made in plain and obvious cases.

85.  As pointed out above, I cannot consider the Relevant Correspondence in the Strike Out Application.  I am therefore bound to proceed on the basis of averments pleaded at paragraph 6 of the Statement of Claim, namely that by the So Lung Letter (although only issued only behalf the 1^st defendant), both defendants allegedly confirmed the amount of the agreed costs was HK$600,000.

86.  Mr Cheung further reminds me that an agreement in writing for the purpose of section 56(3) may be made either before or after or in the course of the transaction of the non-contentious business pursuant to section 56(1) of the LPO. 

87.  Therefore, the fact that the So Lung Letter was issued well after the completion of the plaintiff’s work in relation to the Requisition No 2 does not preclude the So Lung Letter from constituting the relevant agreement in writing.

88.  However, it seems to me that Mr Cheung cannot overcome the hurdle that the So Lung Letter is pleaded to be issued by the 1^st defendant’s solicitors.  As such, the So Lung Letter is not signed by the 2^nd defendant or his agent in that behalf. Apart from asserting (erroneously and contrary to the plaintiff’s own pleaded case) that Messrs So Lung & Associates were also the 2^nd defendant’s solicitors, no submission was made by Mr Cheung as to how the So Lung Letter could constitute the requisite agreement in writing viz the 2^nd defendant.

89.  For the above reasons, subject to Mr Cheung’s concession that the claim for contractual interest pleaded at paragraph 5 of the Statement of Claim should be struck out against both defendants, the Strike Out Application can only succeed in respect of the 2^nd defendant.

F.    THE SUMMARY JUDGMENT APPLICATION

90.  In the light of my conclusions in respect of the Order 14A Application, it follows that the Summary Judgment Application (which was taken out belatedly) must be dismissed. 

91.  Even if I were wrong on the Order 14A Application, I would still have dismissed the Summary Judgment Application.  The Relevant Correspondence, which as noted above reveals a triable issue on the terms of the plaintiff’s Alleged Oral Agreement, was adduced into evidence by the 2^nd defendant’s 2^nd Affirmation dated 29 August 2019 and filed well before the Summary Judgment Application.  It must therefore have been obvious to the plaintiff that there are triable issues in respect of the terms of the agreement between the parties, not least as to whether any payment of the plaintiff’s fees was subject to the Condition Precedent (which defence is pleaded in the Defence and Counterclaim filed even earlier).

G.   THE TRANSFER APPLICATION

92.  In the light of my conclusions on the Order 14A Application, the Transfer Application has become otiose.  However, in the event that the Transfer Application becomes relevant should this matter proceed further, based on the authority of Oldham Li & Nie, Solicitors v Wong Lin Chooi [2006] 2 HKC 397 referred to by Mr Lo, I would have transferred the present action to the Court of First Instance.

93.  At paragraph 7 of Oldham, Woo VP stated as follows:-

“The way to deal with this apparent conundrum is obvious. As all parties were well aware, the taxation of the bills is within the jurisdiction of the Court of First Instance, and in particular, the taxing masters of that court possess the required expertise. The judge should either on his own motion have had the matter transferred to the Court of First Instance or acceded to the application of the defendant for the transfer, so that all the disputes between the parties can be conveniently resolved. Although the claim is within the District Court’s monetary jurisdiction, this cannot be a valid reason for refusing to transfer the case to the Court of First Instance for it to deal with the matter as a whole, especially where the District Court lacks jurisdiction to deal with the disputed quantum, an integral part of the claim.”

94.  Further on at paragraph 42, Barma JA said:-

“I turn next to the question of whether the action should be transferred to the High Court. As I have concluded that the defendant should be given unconditional leave to defend, it remains for consideration whether the action should proceed in the District Court, or in the High Court. While a trial in the District Court would be likely to involve somewhat lower costs, it should also be borne in mind that taxing masters of the High Court are well-experienced in dealing with solicitor and client taxations. In all of the circumstances, while it would be possible for the action to proceed as to liability in the District Court, with the question of the appropriate court for quantification of the claim if liability were established left over for later determination, I think on balance that it would be preferable for the whole matter to be dealt with in a single court, and I would therefore make an order transferring the matter to the High Court, notwithstanding that the amount claimed does fall within the District Court’s jurisdiction.”

95.  Mr Cheung did not address Oldham in his written material.  Instead, Mr Cheung makes two points in his oral submissions.

96.  First, it is said that as the Court of First Instance does not have jurisdiction to tax an “agreed fee”.  I have no hesitation in rejecting this submission as it is predicated upon that the Transfer Application is considered in the light of a finding of an agreed fee arrangement in favour of the plaintiff.  However, if the plaintiff’s claim is not summarily determined thereby rendering the Transfer Application a “live” application, I have some difficulty in fathoming a scenario where the court will proceed on the basis of an agreed fee arrangement in favour of the plaintiff when determining the Transfer Application.

97.  Secondly, Mr Cheung submits that there is no application for the Bill to be taxed to pursuant to section 67 of the LPO.  However, as Woo VP said at paragraph 7 of Oldham:-

“The defendant cannot be blamed for not having taken out an application in the Court of First Instance in accordance with section 67.  The plaintiff started the action in the District Court, which was obviously the plaintiff’s choice.  The writ in this action was issued by the plaintiff on 24 September 2004, well over one month after the delivery to the defendant of the bills dated respectively 12 January 2004 and 30 April 2004, and the time for the defendant to apply to the Court of First Instance for taxation under section 67(1) had already expired.  Thenceforth, the defendant was able to rely on section 67(2) to make an application to the Court of First Instance to have the costs taxed. However, that would be tantamount to her admitting liability for the costs so taxed.  After the lapse of 12 months from the respective dates of the two bills, she was confronted with the situation either to apply for taxation pursuant to section 67(2) by showing “special circumstances” required under proviso (i) to that subsection, which may need strong arguments to establish, or alternatively to resist the plaintiff’s claim in the District Court.  In such circumstances, I do not consider that the defendant could be fairly criticised for taking the second alternative instead invoking section 67(2) in the Court of First Instance.”

98.  For the above reasons, were I required to make an order in respect of the Transfer Application, I would have ordered that the present action be transferred to the Court of First Instance.

H.   CONCLUSION

99.  For the above reasons, I make the following orders.

(1)  The Order 14A Application is acceded to and the plaintiff’s claim is dismissed. 

(2)  The 2^nd Summons pursues the Order 14A Application and the Strike Out Application in the alternative.  I therefore make no order on the Strike Out Application.  For the avoidance of doubt, had I been required to make an order on the Strike Out Application, I would have ordered that the Statement of Claim be struck out against the 2^nd defendant and the claim for contractual interest pleaded at paragraph 5 be struck out against the against the 1^st defendant.

(3)  The Summary Judgment Application is dismissed.

(4)  No order is made on the Transfer Application.

100.  I also make a costs order nisi that the costs of the plaintiff claim, including the costs of and occasioned by 1^st Summons and the Summary Judgment Application and 70% of the costs of and occasioned by the 2^nd Summons (including costs reserved) be paid by the plaintiff to the defendants to be taxed if not agreed with a certificate for counsel.  The reduction of the defendants’ costs entitlement in respect of the 2^nd Summons is to reflect the fact that, had it been necessary, I would not have allowed the Strike Out Application against the 1^st defendant (except that part of the Statement of Claim relating to contractual interest).

101.  I note that, pursuant to paragraph 11 of the Master’s order dated 6 September 2019, the case management summons has been adjourned sine die with liberty to any party to restore with notice given to all other parties.  I leave it to the parties to restore the case management summons in respect of the remaining counterclaim by the defendants, including the taking out of any considered application for transfer in the light of the quantum counterclaimed ($30,000).

102.  I thank all counsel for their assistance.