CHINA TOP CONSULTANTS LTD v. PROSPERITY CONSTRUCTION AND DECORATION LTD

HCA6903/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6903 OF 2000

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J U D G M E N T

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1. In this action, the plaintiff claims against the defendant for unpaid service fees totalling $3,204,700 together with accrued interest totalling $652,379 and further interest. The defendant counterclaims for the sum of $2,021,790, said to be money held by the plaintiff as constructive trustee, together with declaratory, accounting and tracing relief.

Background

2. The plaintiff is a company that engages in the provision of professional dispute resolution service including arbitration for construction disputes. The defendant is a company that carries on the business of an interior fit-out and renovation contractor.

3. The directors and shareholders of the plaintiff are and were at the material time Mr Samuel Wong ("Mr Wong") and Miss Sylvia Siu ("Miss Siu"), who are husband and wife. Miss Siu is a practising solicitor with the firm of Messrs Sit Fung Kwong & Shum ("SFKS"). Miss Siu's younger brother, Mr Alfred Siu, was a director of the defendant until 18 December 1999.

4. The plaintiff's claim relates to two arbitration proceedings commenced by the defendant in 1997 and 1998. The first is in respect of the defendant's claim against one Mark Pleasure Investment Limited ("Mark Pleasure") in connection with fitting out and decoration work rendered by the defendant at Emperor Byron Hotel ("the 1st Arbitration"). The second is in respect of the defendant's claim against one Joyce Boutique Limited ("Joyce") over the fitting out and renovation work carried out at the World of Joyce Boutique ("the 2nd Arbitration").

5. In the 1st Arbitration, an award in excess of $24,000,000 together with interest and costs was made in favour of the defendant. The legal costs in respect of the 1st Arbitration was settled between the defendant and Mark Pleasure at $2,516,700. In the 2nd Arbitration, the defendant succeeded in obtaining an award of $7,300,000 million. It is not clear from the materials before the court as to whether the defendant also recovered the legal and arbitration costs for the 2nd Arbitration.

6. It is not in dispute that the defendant had retained the service of Mr Wong in the conduct of the 1st Arbitration. It is the plaintiff's case that the engagement of Mr Wong was contained in a letter dated 10 April 1997 from Mr Wong on behalf of the plaintiff to the defendant for the attention of Mr Alfred Siu ("Mr Siu"). The letter is in these terms :

"We refer to your instruction to our Mr. Samuel Chat Chor Wong to conduct the captioned Arbitration on your behalf as the representative and counsel. The current charge of Mr. Samuel Chat Chor Wong is at the rate of HK$3800.00 per hour or part thereof and all disbursements properly incurred in the execution of his duties will be charged at cost. As time is expended we will invoice you and expect prompt settlement within 14 days of the date thereof. Failure to settle accounts within this prescribed time period may attract interest at the rate of 2% per month at our sole discretion.

Kindly confirm your agreement to the above by signing a copy of this letter and return to us."

On behalf of the defendant, Mr Siu had signed and returned a copy of the letter to the plaintiff.

7. Similarly, in respect of the 2nd Arbitration, the plaintiff had sent a letter dated 24 January 1998 to the defendant, the contents of which are identical to those of the 10 April 1997 letter. Mr Siu had also on behalf of the defendant signed and returned a copy of this letter to the plaintiff.

8. In both the 1st and 2nd Arbitrations, SFKS acted as the solicitors for the defendant. For the 1st Arbitration, Mr Wong acted as the counsel and representative for the defendant. As for the 2nd Arbitration, the defendant was represented by leading counsel.

9. The plaintiff's bills for the service rendered in the 1st Arbitration came to $2,333,390, of which $2,021,790 had been paid, leaving an unpaid balance of $311,600. As for the 2nd Arbitration, the plaintiff has issued a series of five debit notes totalling $2,893,100, none of which has been paid.

10. Prior to late 1998, the majority shareholding in the defendant was controlled by Mr Siu and his family trust. In mid December 1998, the defendant underwent a major corporate restructuring that involved a phased dilution and disposal of shareholdings of the company through which the present shareholders obtained majority control of the defendant. New directors were eventually appointed and Mr Siu resigned as a director of the defendant.

The action

11. On 11 July 2000, the plaintiff commenced these proceedings claiming the unpaid service fees. In the Amended Defence, the defendant admits that the sums claimed by the plaintiff had not been paid. The defendant, however denies liability for payment on the basis that Miss Siu had acted in breach of her fiduciary duties as the solicitor for the defendant, and that the plaintiff is not entitled to benefit from Miss Siu's breaches. On the basis that the plaintiff received the payments of the earlier debit notes as constructive trustee, the defendant counterclaims for the return of the fees it had paid to the plaintiff under the 1st Arbitration, totalling $2,021,790. The defendant further seeks to set-off the plaintiff's claim against its counterclaim.

12. On 6 November 2002, Master Lung granted leave for the action to be set down for trial. After two extensions of time for setting down was granted by Master Lung, the action was finally set down for trial on 17 March 2003. On 1 April 2003, the trial date was fixed for 4 August 2003. On 27 June 2003, the defendant's then solicitors applied to cease to act for the defendant. At the pretrial review on 4 July 2003, the defendant appeared by its director and applied to vacate the trial date to enable new firm of solicitors to be engaged and to prepare the case. The application was refused. On the second pretrial review on 25 July 2003, the defendant was represented by solicitors and counsel. It was put to the judge that liability was admitted but the quantum was disputed. On that basis, the court was asked to enter judgment on liability. In the end, the judge ordered that judgment be entered for the plaintiff on liability with quantum to be assessed. The judge further ordered that conditional upon the defendant paying $1,000,000 into court by 1 August 2003, the trial date of 4 August 2003 would be vacated. On 1 August 2003, the defendant's new solicitors applied and was granted leave to cease acting for the defendant. The defendant applied on 1 August 2003 to Master Wolley for leave to be represented by Mr Ko Chung Ting Peter. The application was refused on the ground that Mr Ko is not a director of the defendant. Mr Ko is a director of the holding company of the defendant. The defendant did not make the payment in as ordered by Deputy Judge Gill. The trial therefore proceeds as scheduled on 4 August 2003.

13. Mr Ko was present in court when the trial commenced. He handed in a letter dated 2 August 2003 from the defendant signed by a Mr Gao. It was said that the defendant's directors are Mainland residents and had not been able to obtain visas for coming to Hong Kong. Mr Ko further stated that the defendant was financially unable to afford legal representation.

14. Order 5, rule 6(3)(a) of Rules of High Court provides :

"An application by a body corporate for leave to be represented by one of its directors shall be made ex parte to a Registrar and supported by an affidavit, made by the director and filed with the application, stating and verifying the reasons why leave should be given for the body corporate to be represented by the director, and in particular setting out such facts and matters as demonstrate that the body corporate could not, for lack of resources or for other good reasons, otherwise be heard in the proceedings."

Plainly only the Registrar or a Master of the High Court has power to grant leave for a corporate litigant to be represented by its director : see Kone Elevator (HK) Ltd v. Senfield Limited (unreported), CACV216 of 2002, 24 February 2003. This court does not have jurisdiction to grant leave for the defendant to appear and to conduct the trial by a director. Additionally, Order 5, rules 2(b) and 3(a) mandate that leave can only be granted to a director of a corporate litigant. Mr Ko, not being a director of the defendant, cannot be authorized to represent the defendant. Master Wolley's refusal to grant leave is clearly correct. In any case, there is no right of appeal against that order. In the circumstances, the defendant can only be regarded as being absent at the trial.

The issues

15. The crux of the defendant's defence appears at paragraph 13, which reads :

"Save that the Defendant admits that the sum of HK$311,600.00 and the sum of HK$2,893,100.00 have not been paid to the Plaintiff, paragraph 16 of the Statement of Claim is denied. The Defendant denies liability to the Plaintiff for the said sums by reason of the matters pleaded in paragraphs 17 to 23 below."

16. Paragraphs 17 to 23 of the Defence reads :

"17. At all times material hereto Sylvia Siu was :

(a) a solicitor of the High Court of Hong Kong;

(b) a consultant in the firm of Sit, Fung, Kwong & Shum, the solicitors representing the Defendant in the 1st Arbitration and the 2nd Arbitration;

(c) the solicitor, alternatively a solicitor, having conduct of the 1st Arbitration and the 2nd Arbitration on behalf of the Defendant;

(d) married to Samuel Wong;

(e) resident at 5th Floor, 36 Belleview Drive, Repulse Bay, Hong Kong being the registered office of the Plaintiff.

18. By reason of the relationship of solicitor and client existing between Sylvia Siu and the Defendant, there existed a fiduciary relationship between Sylvia Siu and the Defendant of trust and confidence, whereby Sylvia Siu owed fiduciary duties to the Defendant :-

(a) not to place herself, or to cause or permit herself to be placed, in a position of conflict between her own interests and the interests of the Defendant;

(b) not to benefit or profit, directly or indirectly, from her relationship with the Defendant; and

(c) not to use her position as the Defendant's solicitor, or opportunities arising as a result thereof, to her own or to a third party's advantage;

except with the Defendant's informed consent.

19. At all material times :-

(a) Samuel Wong acted, and caused or permitted himself to be held out by the Plaintiff, further or in the alternative by Sylvia Siu, as the sole representative of the Plaintiff;

(b) The Plaintiff, Samuel Wong and Sylvia Siu and each of them failed to disclose to the Defendant the matters pleaded in paragraphs 2 and 17(d) and (e) above;

(c) The Defendant was not advised of the desirability, availability or cost of using an alternative to the Plaintiff, in the 1st or 2nd Arbitrations;

(d) Samuel Wong had no, alternatively no reasonable, prior experience acting as Counsel or as a representative in arbitrations of the size or complexity of the 1st, further or in the alternative, the 2nd, Arbitration;

(e) The fees charged by the Plaintiff for the services performed or to be performed by Samuel Wong on behalf of the Defendant were unreasonable and/or excessive in the circumstances. Further the Defendant received no or no reasonable advice on the reasonableness of the Plaintiff's hourly rates, or the Plaintiff's overall charges.

PARTICULARS

The Plaintiff charged HK$3,800.00 per hour spent in the 1st and 2nd Arbitrations by Samuel Wong.

19A. In breach of the fiduciary duties owed by Sylvia Siu to the Defendant and in the circumstances pleaded in paragraph 18 above, Sylvia Siu :-

(a) caused or permitted the Defendant to sue and to continue to use the Plaintiff, further or alternatively Samuel Wong, as its Counsel and representative in the 1st and 2nd Arbitrations;

(b) caused or permitted the Defendant to pay to the Plaintiff the sum of HK$2,021,790.00 as pleaded in the Statement of Claim, thereby benefitting herself and her husband, Samuel Wong, as shareholders of the Plaintiff;

(c) caused or permitted the Plaintiff to seek payment of additional sums from the Defendant of HK$311,600.00; HK$2,893,100.00; HK$60,511.00; and HK$591,868.00;

(d) caused or permitted the Plaintiff to commence this Action against the Defendant with resultant damage to the Defendant's reputation, thereby causing the Defendant expense;

(e) failed to recommend Counsel or a representative, such as a barrister or solicitor, in the 1st and 2nd Arbitrations, as an alternative to the Plaintiff further, or alternatively Samuel Wong; and

(f) failed to disclose the matters pleaded in paragraphs 2; 17(d) and (e); and 18(d) and (e).

20. The Defendant had no knowledge of the matters pleaded in paragraphs 2; 17(d) and (e); and 18(d) and (e); above and did not freely or informedly consent to the matters therein.

21. The Plaintiff had knowledge of the matters pleaded in paragraphs 2, 18, 19 and 20 above.

PARTICULARS

The Plaintiff is imputed with the knowledge of its directors and shareholders, Sylvia Siu and Samuel Wong.

22. By reason of the matters pleaded in paragraphs 2; 17(d) and (e); 18(d) and (e); 19; 20 and 21 above :

(a) the Plaintiff was knowingly concerned in and party to a breach of fiduciary duty;

(b) the Plaintiff is liable to account to the Defendant for sums received from the Defendant by reason thereof;

(c) the Plaintiff is not entitled to benefit from the aforesaid breaches of fiduciary duty in which it was knowingly concerned and is not entitled to the sums sued for in this Action; and

(d) the sum of HK$2,021,790.00 paid by the Defendant to the Plaintiff is held by the Plaintiff as constructive trustee for the benefit of the Defendant.

23. If, which is denied, the Defendant is found liable to the Plaintiff in this Action, the Defendant will set off in extinction or diminution thereof sums owed by the Plaintiff to the Defendant pursuant to the Counterclaim herein."

17. In the Counterclaim, the defendant repeats the Defence. In paragraph 26, it was pleaded that :

"By reason of the matters pleaded in paragraphs 1 to 24 above, the Plaintiff is liable to the Defendant in the sum of HK$2,021,790.00, in the alternative the sum of HK$2,021,790.00 under deduction of an allowance for the work and skill expended by the Plaintiff, alternatively Samuel Wong, in the 1st and 2nd Arbitrations."

18. Plainly on the pleadings, the defendant does not dispute that services had been rendered by the plaintiff. The defendant accepts that the amount and the interest claimed have not been paid. The case is defended on the sole basis that Miss Siu had acted in breach of fiduciary duty such that there is no liability to pay. As for the Counterclaim, it rests on the premises that the plaintiff has received and hold the service fees paid under the 1st Arbitration as constructive trustee.

19. There are thus three issues for determination:

(1) Whether Miss Siu had acted in breach of her fiduciary duty as a solicitor of the defendant?

(2) If the answer to (1) is in the affirmative, whether the defendant is relieved from the liability to pay for the services rendered under the 1st and 2nd Arbitration by reason of the said breach?

(3) If the answer to (1) is in the affirmative, whether the plaintiff becomes a constructive trustee in respect of the service fees received for the 1st Arbitration?

The second and third issues, which form the basis of the defence and the counterclaim respectively, will not arise if the court were to find against the defendant on the first issue.

The judgment of 25 July 2003

20. It is apparent from an analysis of the pleadings that the amount of the fees charged by the plaintiff is only a subsidiary issue. It was pleaded under paragraph 19(e) of the Amended Defence and Counterclaim that the hourly rate of Mr Wong was excessive. Paragraph 19(f) pleads that Miss Siu acted in breach of her fiduciary duties by failing to disclose, inter alia, that the fees charged by the plaintiff for the services of Mr Wong were unreasonable and/or excessive. The essence of the plea is therefore that Miss Siu had failed to make disclosure of the fact that Mr Wong's fees were excessive and/or unreasonable. It is not the defendant's case that it did not pay the fees charged because Mr Wong's fees were excessive. Neither is the defendant counterclaiming for overpayment. In the circumstances it is incorrect for counsel to have suggested at the pretrial review that the defendant admitted liability but disputed quantum. Quantum is not an issue that falls to be determined in the action. There is no legal and juridical basis for the judgment on liability with quantum to be assessed entered on 25 July 2003.

21. Mr Chan, who did not appear at the pretrial view, accepted this when I raised the point at the commencement of the trial. He agreed that the judgment entered on 25 July 2003 ought to be set aside. The judgment is accordingly set aside with no order as to costs. The trial proceeds on the basis that it is a full trial but not a trial on quantum.

The evidence

22. The plaintiff calls two witnesses, being Mr Wong and Mr Siu. They adopt as their evidence their respective witness statements and also affirmations they had previously made for the purpose of the plaintiff's application for summary judgment.

23. In summary, Mr Wong's evidence is that he has been a member of the Chartered Institute of Arbitrators since 1991 and became a Fellow of the Institute in 1992. In 1997, he was admitted as a Fellow of the Hong Kong Institute of Arbitrators. Before the 1st and 2nd Arbitrations, Mr Siu was well aware that Mr Wong practised as an arbitration consultant particularly in the field of construction disputes. Mr Siu was also aware that Mr Wong and Miss Siu are the only directors and shareholders of the plaintiff. According to Mr Wong, it was Mr Siu who approached him in April 1997, requesting him to act as the defendant's representative and consultant for the claim against Mark Pleasure. It was agreed that Mr Wong's services would be rendered through the plaintiff. Their agreement was reduced into writing in the form of the letter dated 10 April 1997, which had been signed by Mr Siu on behalf of the defendant. Mr Wong says that as the 1st Arbitration progressed, the paper work became so voluminous that he suggested that SFKS be brought in to assist him, to which the defendant agreed.

24. As for the 2nd Arbitration, Mr Wong's evidence is that Mr Siu approached him in January 1998 to deal with the defendant's claim against Joyce. They reached an agreement which was reduced into the letter dated 24 January 1998 countersigned by Mr Siu on behalf of the defendant. The defendant was represented by SFKS and leading counsel, and an award was made after an 11 days' hearing.

25. Mr Wong says that in about April 1999, he was introduced by Mr Siu to Mr Gareth Tang of the defendant. The defendant was already undergoing restructuring and Mr Tang is part of the new management. It is Mr Wong's evidence that on that occasion, Miss Siu was also present and they were introduced to Mr Tang as the sister and brother-in-law of Mr Siu. Mr Wong further says that Mr Tang had expressed his support for and appreciation of the services rendered by him. Mr Tang is said to have also promised prompt payments of the service fees both on that occasion and at a subsequent telephone conversation on 3 September 1999. Despite that, the defendant did not settle the outstanding balance of the fees for the 1st Arbitration. Neither had it paid for the fees of the 2nd Arbitration.

26. Mr Wong points out that when the defendant agreed to retain SFKS in the course of the 1st Arbitration, the defendant had its own in-house counsel who would be in a position to advise on the choice of legal adviser or representation. Apart from the 1st and 2nd Arbitrations, the defendant had subsequently also engaged the services of the plaintiff and himself on no less than 10 other construction disputes. As to the level of his hourly charge, Mr Wong says that $3,800 was the rate agreed between the plaintiff and the defendant and it was less than the rate he charged for some other clients. Mr Wong further points out that his fees were included as part of the defendant's legal costs of the 1st Arbitration recovered from Mark Pleasure. Mr Wong gives an account of the respective roles of himself, the plaintiff, SFKS and counsel in the 2nd Arbitration, pointing out that there had been no duplication in the work done.

27. The other witness, Mr Siu, substantially confirms Mr Wong's evidence on how the defendant came to engage the plaintiff for the 1st and 2nd Arbitrations and the agreement reached between the parties on the terms of the engagement. Mr Siu also confirms that he knew that Mr Wong practised as a construction dispute consultant through the corporate vehicle of the plaintiff. He also understood at the time that the plaintiff was owned and controlled by Mr Wong and Miss Siu. He explains that he approached Mr Wong for assistance because he had confidence in his experience and ability. He considered the hourly rate quoted by Mr Wong to be acceptable based on his personal knowledge of the hourly rates of counsel.

28. Mr Siu says that he consented to Mr Wong's suggestion to engage a firm of solicitors to assist with the 1st Arbitration because of the volume of paper work involved. At that time, the defendant had been retaining the services of two firms of solicitors, of which SFKS was one. He decided to engage SFKS for the 1st Arbitration for he believed that his sister would not charge the defendant unfairly. The defendant was also advised by its in-house counsel. Mr Siu says that he was satisfied with the services provided by Mr Wong through the plaintiff. It is Mr Siu's evidence that after the defendant had undergone restructuring, he had explained to the new management team the roles of the plaintiff and SFKS and the relationship between Mr Wong, Miss Siu, the plaintiff and SFKS. Mr Siu says that the defendant continued to seek the services of Mr Wong in connection with the 1st and 2nd Arbitrations. The new management had been kept informed of the progress of the arbitrations and had participated in meetings relating to the two arbitrations. After Mr Gareth Tang was appointed a director of the defendant, Mr Siu introduced him to Mr Wong, telling him that Mr Wong was the husband of Miss Siu, who was a consultant of SFKS.

The defence

29. The defendant's defence to the claim is premised solely on the alleged breach of fiduciary duties of Miss Siu. Before dealing with the merits of the specific breaches alleged, it is important to examine the fiduciary duties that are pleaded under paragraph 18 of the Amended Defence and counterclaim. Clearly the defendant acknowledges that the duties pleaded are not absolute. By pleading that Miss Siu cannot do the things particularised under paragraphs 18(a) to (c) "except with the defendant's informed consent", the defendant accepts that Miss Siu may so act with the informed consent of the defendant. Informed consent means consent given in the knowledge that there is a conflict between the parties and that as a result the fiduciary may be disabled from disclosing to each party the full knowledge which he possesses as to the transaction or may be disabled from giving advice to one party which conflicts with the interests of the other : Clark Boyce v. Mouat [1994] 1 AC 428, 435, applied in Nishimatsu-Costain-China Harbour Joint Venture v. Ip Kwan & Co. (a firm) [2000] 2 HKC 445, 471.

30. Accordingly, the knowledge of the defendant as to the relationship between Miss Siu and Mr Wong and of their interests in the plaintiff is of pivotal importance. Clearly, Mr Siu, being the brother of Miss Siu, must have known that Miss Siu is married to Mr Wong. It is also Mr Siu's evidence that he was fully aware of Mr Wong and Miss Siu's interests in the plaintiff. Not only did he not see a problem with this, but he also considered there were advantages to the defendant in retaining the plaintiff. That being the case, the very foundation of the defendant's case of breach of fiduciary duties is missing. Thus, even if there is evidence that Miss Siu had placed herself in a position of conflict, had benefited from her position as the defendant's solicitors and had made use of that position to the advantage of herself or of the plaintiff, Miss Siu is not in breach of any fiduciary duties because she had the informed consent of the defendant.

31. I turn now to deal with the merits of the breaches alleged. The breach is said to consist of :

(1) causing or permitting the defendant to engage the services of the plaintiff and/or Mr Wong in the 1st and 2nd Arbitrations;

(2) causing or permitting the defendant to pay to the plaintiff part of the service fees for the 1st Arbitration;

(3) causing or permitting the plaintiff to seek payment of the outstanding service fees for the 1st Arbitration;

(4) causing or permitting the plaintiff to bring these proceedings against the defendant thereby damaging the defendant's reputation and causing the defendant to incur expenses;

(5) failing to recommend to the defendant other counsel or representative as an alternative to Mr Wong and/or the plaintiff for the purposes of the 1st and 2nd Arbitrations; and

(6) failing to disclose to the defendant that :

(a) Miss Siu and Mr Wong are shareholders and directors of the plaintiff,

(b) Miss Siu and Mr Wong are husband and wife and reside at the address that the plaintiff uses as its registered address,

(c) Mr Wong did not have any or much experience in dealing with arbitrations of the size or complexity of the 1st and 2nd Arbitrations, and

(d) the fees charged by the plaintiff for the hourly rate of Mr Wong were unreasonable and/or excessive.

32. As a starting point, it must be borne in mind that the burden is on the defendant to prove that Miss Siu had acted in breach of fiduciary duties she owed as a solicitor to the defendant. In this connection, it is important that SFKS and Miss Siu did not become the defendant's legal representative in the 1st Arbitration until after Mr Wong and the plaintiff had been retained by the defendant to conduct the arbitration. The first alleged breach of duty is therefore completely devoid of factual support in the context of the 1st Arbitration. Even in the case of the 2nd Arbitration, the evidence before the court is that it was on Mr Siu's initiative that Mr Wong and the plaintiff were retained. Miss Siu and/or SFKS had no role to play in the events leading to the decision to engage Mr Wong and the plaintiff.

33. Similarly, there is no evidence before the court to show that Miss Siu had in any way caused the defendant to settle the debit notes issued by the plaintiff. On the contrary, Mr Siu had testified that the payments were paid because the defendant was satisfied with the services provided. Additionally, it is difficult to understand how Miss Siu can be said to have permitted the defendant to pay for the debit notes.

34. As to the 3rd and 4th alleged breaches, it is again difficult to apprehend how the pursuit of the outstanding service fees and these proceedings can amount to instances of breach of fiduciary duties owed by a solicitor to her client. In the absence of any allegation that there is no legitimate basis for the service fees to arise, a fiduciary is not prevented by law to claim and, if necessary, to institute proceedings to recover payment for services rendered. These pleas are bad as a matter of law.

35. On the alleged breach of failure to recommend alternative choices of counsel or representative, it is unsupported by the evidence before the court. Given Mr Siu's and Mr Wong's evidence that, for both the 1st and 2nd Arbitrations, it was Mr Siu's initiative to approach Mr Wong and to retain the plaintiff, there is no room for the alleged breach. This is particularly so for the 1st Arbitration in that SFKS and Miss Siu only became the defendant's solicitors after Mr Wong and the plaintiff were retained as the defendant's representative in the arbitration.

36. Likewise the 6th alleged breach of failure to make relevant disclosure is not borne out by the facts of the case. The relevant time for making disclosure must be when the plaintiff and Mr Wong were appointed. In the case of the 1st Arbitration, Miss Siu did not become the solicitor of the defendant in the arbitration until after the defendant had agreed to appoint the plaintiff and Mr Wong. In the case of the 2nd Arbitration, the evidence shows that Mr Siu was fully aware of the relationship between Mr Wong and Miss Siu and their interest in the plaintiff. As to the experience and hourly rate charged by Mr Wong, the objective evidence shows Mr Wong to be well-qualified for arbitration work before he was approached by Mr Siu. There is also no evidence to substantiate the allegations that he did not have the relevant experience and/or that his charging rate was unreasonable or excessive.

37. In short, the defence case of breach of fiduciary duties is neither supported by the evidence before the court nor sustainable as a matter of law. The defence must fail.

The counterclaim

38. With the plea of breach of fiduciary duties not made out, the defendant's case of the plaintiff holding the service fees received as a constructive trustee has no leg to stand on. If follows that the counterclaim must also fail.

Conclusion

39. For the reasons aforesaid, there will be judgment for the plaintiff on the claim for :

(a) $311,600,

(b) $2,893,100,

(c) accrued interest on (a) and(b) at $60,511 and $591,868 respectively, and

(d) further interest on (a) and (b) from 1 June 2000 to the date of judgment at 2% per month and thereafter at judgment rate until payment.

I further order that the counterclaim be dismissed. There is no reason to depart from the usual rule of costs follow events. There is therefore an order that the costs of this action, including all costs reserved, be to the plaintiff against the defendant, to be taxed if not agreed.