CHAN SHUN KEI t/a CHAN SHUN KEI CONSTRUCTION WORKS v. HONG KONG CONSTRUCTION (HONG KONG) LTD

HCMP 2302/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2302OF 2014

(ON AN INTENDED APPEAL FROM HCCT NO. 2 of 2011)

________________________

________________________

_______________

DECISION

_______________

Hon Lam VP (giving the Decision of the Court):

1.  We have read the submissions of the parties and noted the position of the Director of Legal Aid. As between the plaintiff and the defendant, we consider it is appropriate to make an order for costs up to 12 December 2014 on indemnity basis. The costs after that hearing would be ordered on party-to-party basis.

2.  In the latest statement of costs of the defendant, the defendant asks for $400,317.  In the context of this leave application, having regards to its nature and complexity, the court regards the quantum for the items charged by the solicitors as unreasonably high.  To start with, there is no justification for engaging three fees earners for such a simple application.  Charging $164,770 for preparation of documents and $73,710 for perusal of documents (bearing in mind the documents that needed to be prepared by the defendant in this application) in the present context is mind-boggling.  Also the charge of $51,060 for communications is unreasonably excessive.  Though we gave costs on an indemnity basis for costs up to 12 December 2014, there is substantial room for taxing down the costs as set out in the defendant’s statement of costs.

3.  Bearing in mind that after the initial stage the works were mostly done by counsel (whose fees we shall allow in full), we would only give $35,000 for preparation of documents (taking into account the statement pursuant to Order 59 Rule 2A(4) was prepared by the solicitor), $15,000 for perusal and $20,000 for communications.

4.  As regards preparation for hearing, we shall only allow the costs of one solicitor and that should include the supervision of the conduct of the proceedings by the partner.  Further, the 8.2 hours’ preparation by one solicitor and another 2.1 hours by a partner for the hearing are unreasonably excessive.  For items D3 and D4, we would allow $14,000 only. For item D5, we would only allow the attendance by one solicitor at $3,800.

5.  The court therefore fixes the costs of the defendant in this application at $149,917.

6.  As between the plaintiff and its legal advisers, though as things presently stand the legal aid charge might have already exceeded the sums recovered pursuant to the judgment of Deputy Judge Burrell, the picture might be different if the plaintiff were to succeed on the costs appeal.  The plaintiff should be duly advised in that respect.

7.  In any event, the liability of the Director (thus the public fund) for the costs (both as to costs of the defendant and the plaintiff’s own costs) is dependent upon whether the court exercises its power under Order 62 Rule 8 against the solicitor.

8.  At the moment, solicitor for the plaintiff asks that the costs of the defendant and the plaintiff’s own costs in relation to this unmeritorious application for leave to appeal be borne by the Director.

9.  Having considered the submissions so far, we are minded to hold a second stage hearing vis-à-vis the solicitor (but not the counsel concerned) pursuant to PD14.5.  That hearing will only be a matter between the solicitor, the plaintiff and the Director (if he wishes to be heard) and will be confined to whether an order should be made against the plaintiff’s solicitor under Order 62 Rule 8(2)(a) and (b)(i).  The defendant should not be involved.

10.  At the hearing, the court will ask the solicitor to address, amongst other issues, the following question:

“ Notwithstanding the authorities relied upon by counsel and solicitor as to the possibility of applying for a clarification of the costs order made by Deputy Judge Burrell, in view of the availability of avenue to correct whatever mistakes in that costs order in the appeal on costs (for which leave had been granted), how would it advance the resolution of the dispute as to costs by lodging a further application for leave to appeal without regards to the uncertainty as to the outcome of that course and the potential attendant costs implications flowing therefrom, and the adverse ruling on the application by M Chan J. and how can that be consistent with the underlying objectives in Order 1A Rule 1 and the solicitor’s duty under Order 1A Rule 3?”

11.  The matter shall be set down for a hearing of two hours to be listed before Lam VP and Poon J.  Notice of the hearing will be given to the plaintiff, solicitors for the plaintiff and the Director of Legal Aid.  Consideration should be given on whether the plaintiff should have separate representation in view of the potential conflict of interest as identified at paragraph 6 above.  As the defendant is not involved in the matter, attendance of the defendant is not expected.

12.  In the meantime, if solicitor of the plaintiff, the Director and the plaintiff can come to an agreement of some form (including undertakings from the solicitor), parties can submit the same for the court’s consideration.

13.  A copy of this decision will be sent to the Director of Legal Aid for his attention.