LEE CHI YUEN ARCTIC v. LAU SIU MING AND OTHERS

HCMP 778/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 778 OF 2016

____________

____________

____________

_____________________________________________________________________

DECISION ON SUMMARY ASSESSMENT OF COSTS

_____________________________________________________________________

1.  On 6 May 2016, I handed down my Decision ("Decision") and ordered that the Interim Injunction[1] to restrain the 1^st and 2^nd defendants ("D1" and "D2") from acting on, implementing or carrying into effect the Alleged Resolution[2] during the Alleged Meeting[3] be continued until judgment in the present proceedings or until further order.

2.  By my Decision, I also granted a costs order nisi that (a) there be no order as to costs between the plaintiff ("P") and D2, and (b) D1 do pay P costs of the Summons[4] (including all costs reserved if any) to be summarily assessed ("Costs Order Nisi").  Such Costs Order Nisi had been made absolute since there was no application to vary the same within 14 days from the date of my Decision.  For convenience, I shall adopt the abbreviations in my Decision

3.  P had lodged his statement of costs dated 13 May 2016 in respect of the costs order in paragraph 2(b) above.  D1 had lodged his summary of objections dated 1 June 2016.  I proceed to deal with the summary assessment of costs.

4.  The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.  For present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512-514 as follows:

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

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

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

5.  Here, P sought a total sum of $225,500 comprising $150,500 for solicitors' profit costs and disbursements, and $75,000 for counsel's fees (of which $30,000 was counsel's brief fee for the call-over hearing on 8 April 2016 (including preparation), and $45,000 was counsel's brief fee for the Hearing on 29 April 2016 (including preparation)).

6.  Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the Summons, relevant affirmations, skeleton submissions and list of authorities, what transpired at the Hearing, and considering all the circumstances, I make the following general observations.

7.  First, the costs in question are assessed on party-and-party basis such that only costs that are necessary / proper and reasonable will be allowed. 

8.  Secondly, given the nature of the Summons which was rather straightforward in light of the clear provisions in the CO and in the Articles, it could not be said that the issues raised by the Summons whether factually or legally were of any great complexity. Further, efforts to delve into the factual background to these proceedings have been largely aided by the written decision by Au-Yeung J dated 1 November 2013 in the 2013 Action and the written decision by G Lam J dated 24 March 2016 in HCLA2/2016.  The principles for seeking interlocutory injunction are also trite.  In the circumstances, I find the hourly rate for the notional partner-in-charge should be $4,000 and not $4,500.  However, I am satisfied the hourly rate sought for MS is not disproportionate and unreasonable for assessment of costs on party and party basis.  As for WW, I only allow an hourly rate of $2,200/hour.

9.  Thirdly, there is some force in D1's contention that this is not necessary or proper on party and party basis to involve 3 solicitor fee-earners with inevitably increased supervision, reporting and/or possible duplication, and it is a factor I shall take into account in the assessment of costs.  Given GY's and counsel's involvement, I am persuaded a more junior solicitor to assist on the essential work would be sufficient.  However, D1's suggestion to limit costs to GY's charges is wrong in principle because even if less than 3 fee-earners were involved the requisite professional work and communications with others would still have to be done by the fee-earners.  Anyway, it is not inappropriate to have a partner-in-charge to work with a more junior solicitor, so that fees for general work done by the more junior fee-earner can be contained with focused supervisory input by the partner. 

10.  Fourthly, I am persuaded that the time taken for preparation and perusal of documents in this matter is rather on the high side for party and party taxation.  As for preparation for hearing by the solicitor fee-earners, given their involvement in the conduct of the proceedings all along and also the involvement of counsel, 1.5 hours per hearing are also rather on the high side.  Likewise, I am not persuaded legal research would require 3.5 hours.

11.  Fifthly, I disagree with D1's suggestion that Part C on communications should be disallowed.  Attendance on client, the other side, counsel and court are part of the necessary work in the conduct of the present proceedings for which P is entitled to recovery of costs under party and party basis.

12.  Sixthly, as for manual work, D1 disputed copying charges at $1.00/page and proposed $0.5/page.  However, item 1A of Part I of the First Schedule in Order 62 of the Rules of the High Court provides that copying of document per page of whatever size is $1.00.  I agree with D1 that he should not pay for service of documents on D2.

13.  Seventhly, D1 proposed that counsel's brief fee should be charged on hourly rate basis.  I disagree as it is proper for counsel's brief fee to be in a lump sum.  I accept that counsel's fees sought are reasonable and proper.

14.  I propose to adopt a broad-brush approach and not deal with each and every item of the statement of costs since it is not the purpose of a summary assessment of costs to carry out a mini-taxation.  I bear in mind the two-stage approach required for summary assessment. Having considered the nature and scope of the Summons, the affirmations filed, the skeleton submissions, what transpired at the Hearing, the involvement of counsel in this matter, the matters noted in the above paragraphs, and considering all the circumstances, the overall costs claimed by P under his statement of costs appear to be somewhat on the high side on party and party basis.  Upon considering the items of costs claimed to see whether or not they are "necessary and its costs reasonable" on the sensible standard of necessity as explained by the Court of Appeal, the total costs of P on his statement of costs are assessed at $170,000 to be paid by D1.

15.  D1 in his statement of objections to P's statement of costs made submissions on the method of payment of the assessed costs, and gave information on his financial condition and his inability to make forthwith payment.  He proposed to pay costs by deduction or set-off against his interest in D2 to be valued by independent accountants.  In my view, it is inappropriate in a summary assessment of costs (ie determination of the quantum of costs payable) to deal with unilateral application for stay of execution.  It is also not the occasion to consider the question of enforcement of the order for costs.  It is for D1 to consider and (if thought fit) to take out appropriate application.

16.  My clerk will inform D1 that if he so requires, a court translator will be arranged to verbally translate this decision into the punti language for him at the High Court Building at a mutually convenient date and time.