XCHRX DE WONG AU, EDITH v. KHO SIN TEK, HENRY AND ANOTHER

HCAP12/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO.12 OF 2000

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J U D G M E N T

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1. This is an appeal brought by Henry Kho Sin Tek ("Henry Kho"), the 1st defendant in the original action and also the 2nd defendant in the counterclaim against Oscar Wong Lai Yin ("Oscar Wong"), the 2nd defendant in the original action and the plaintiff in the counterclaim.

2. This appeal was brought against the order of the master made on 28 May 2001 whereby the master ordered that Oscar Wong be given the costs of a summons issued by him dated 24 April 2001 to debar Henry Kho from adducing expert evidence. The master also ordered that there be no order for costs of the hearing of that day, i.e. 28 May.

3. The matter came before the master is as follows. This is a probate action where Edith Wong, the wife of the deceased and Oscar Wong, a nephew of the deceased, were contesting the appointment of Henry Kho as the administrator of the estate on the basis that Henry Kho was not the adopted son of the deceased. The central issue in the action would be whether under Chinese law and custom, Henry Kho, a nephew of the deceased, was an adopted son. Experts report was ordered to be exchanged by the order of the court made on 7 November 2000. The order provided for the exchange of the experts report on 23 March 2001. Therefore, a very generous time was given for the exchange of these important reports.

4. By a consent summons of 23 March 2001, time for the exchange of the reports was extended by 14 days, to 6 April 2001. On 10 April 2001, because Henry Kho's side was unable to exchange by the time agreed of 6 April 2001, Master Chan ordered a seven days' extension for the exchange, extending time to 21 April 2001 which was a Saturday. At the hearing there was a contest, as I understand it, of how much time should be granted and the form of the order. Oscar Wong's side pressing for an unless order as a result of the procrastination of Henry Kho's side with the exchange of the reports. An unless order however was not made.

5. The report of Henry Kho's side was prepared by the well-known professor Anthony Richard Dicks, who apparently had signed the report on 10 or 11 April and from London had faxed to the Henry Kho's solicitors his report on 11 April. Professor Dicks then mailed the report and because of the Easter holidays, apparently the original report was not received by Henry Kho's solicitors office until the morning of 21 April. That was, of course, a Saturday and that was the time when the reports were to be exchanged.

6. Mr Henry Leung, who is the assistant solicitor in charge of this matter on behalf of Henry Kho's side, was engaged in court that day. He unfortunately did not make arrangement for the exchange to take place as soon as the report was received from London. There was, apparently, the day before the 21st, on 20 April, some exchange between the solicitors of the two parties. The ideas suggested by Henry Kho's side was that there should be a fax exchange, that is give to the other side a fax copy of the report and with the original to be given later. The day proposed was the fax exchange on 21 April and the original to be given on 28 April. The problem, however, was that the Oscar Wong's side insisted that the contents of original must correspond exactly with the contents of the fax report. It seems to me and to any reasonable person that this is a perfectly reasonable condition for the new arrangement (fax followed by original) to be agreed to substitute for the previous order of exchange on 21 April. But Henry Kho's side did not agree to that. And the order therefore of exchange on 21 April still stands. There was a suggestion in the course of the hearing and on affidavit, that there was an oral agreement between the clerks that there was to be, instead of a fax exchange, just a simple exchange to take place of the original on 28 April namely, just an extension of time of one week. As I would indicate later, it seems to me that all the circumstances cannot possibly point to this being the case. Notwithstanding that the order made was not complied with by Henry Kho's side, what happened however was, upon the receipt of the original on 21 April and upon Mr Leung saying he came back to the office that Saturday afternoon at 1:30 p.m, on Monday morning, instead of informing the other side that the original has arrived and exchange could take place immediately, Kho's side did not do any immediate exchange.

7. There was further correspondence which led to, on 24 April, Oscar Wong's side issuing the summons to debar the other side from using expert evidence at the trial. That was served on the morning of 25 April. There was an appointment made either on 24 April or early on 25 April, for exchange of reports to take place on 25 April at 3 p.m. Exchange of the original expert reports did take place on 25 April at 3 p.m. So, the primary aspect of relief of Oscar Wong's summons was therefore spent after the exchange took place at 3 p.m on 25 April. The costs side of that summons, however, was not resolved and this is what led to this unpleasant and costly proliferation of work leading to the making of the order by the master on 28 May and thereafter leading to the appeal to me today.

8. It seems to me that the correct analysis must be whether it was reasonable for Oscar Wong's side not only to issue that summons on 24 April but to serve it on 25 April in the morning. It seems to me having regard to the history of the matter and the constant delay in the exchange of the original reports which is vital in this case, that Oscar Wong was totally reasonable and justified in issuing and serving the summons on 24 and 25 April. So even though when the major part of the relief sought in the summons was spent by the exchange in the afternoon of 25 April, Oscar Wong ought to be given the costs of his application. What he had sought from the other side initially was costs was of a small amount because the work involved in issuing and serving that summons could not have been very substantial on 25 or 26 April. What unfortunately happened was that, instead of agreeing to pay the costs, Henry Kho's side filed an affidavit on 8 May 2001, the day before the return date of the summons which is on 9 May. This was their response to the letter dated 4 May from Oscar Wong's solicitors, proposing to withdraw the summons but with a costs order in his favour. On 9 May, at the called over of the summons, the hearing was adjourned to a day to be fixed.

9. At that stage, probably the costs incurred by Oscar Wong's side is still relatively modest probably in terms of maybe less than $1,000 because he had not yet filed his affidavit. But the parties did not take the sensible step and Henry Kho's side wrote, by letter of the same day, 9 May, to have hearing date fixed. There was on 16 May, an open letter from the solicitors for Oscar Wong to the solicitors for Henry Kho offering that the summons be withdrawn with no order as to costs. So this was a concession. The solicitors say, let's drop hands. That in the circumstances for one side to waive his costs of what he regarded as due to him and propose that the fight be stopped with an order of no costs is a generous offer that ought to have been accepted but it was not because the response from the other side was to reject it by the letter of 19 May. This, then, led to the hearing before Master Wong on 28 May and with Oscar Wong's side filing his affidavit on 26 May. So, this is the chronology or account of the history of the matter. As I put it to Mr Leung in the course of the hearing, if it is agreed that the service and the issue of the summons on 25 April morning and 24 April was reasonable, then what followed could only be regarded as reasonable costs incurred by Oscar Wong's side.

10. It seems to me that this whole unfortunate history came about as a result of, perhaps, two major factors. One, the constant delay and procrastination of Henry Kho's side in complying with the order of the court in exchanging the original reports on time which created the mistrust of Oscar Wong's side and therefore requiring them to take steps to protect his interests; and secondly, the unreasonable attitude of Henry Kho's side in demanding to have the costs of the summons be paid to them and in not even accepting the generous offer of the other side when the other side proposed to drop hands. In my judgment, the master was correct in deciding that the costs of the summons be to Oscar Wong, but the master was wrong in ordering that there will be no costs of the hearing of that day to Oscar Wong's side.

11. In my judgment, the whole of the costs from 24 April up to today should be borne by Henry Kho's side. Therefore the order of the master should be varied accordingly. I will now hear the parties as to the question of assessing the costs by way of gross sum assessment.

Costs

12. This is my decision on the gross sum assessment of the costs ordered by me in my earlier judgment. Pursuant to Order 62, rule 9(4)(b), I order that the costs incurred by Oscar Wong's side be paid by Henry Kho from the date of the issue of the summons on 24 April until today, the date of the hearing of the appeal. A two page document in the form of a summary of the costs of Oscar Wong was submitted to the court and Mr Chan, counsel for Oscar Wong and Mr Leung, solicitor for Henry Kho had made submissions to me. It seems to me that in a case such as this, it is reasonable for Oscar Wong's side to engage a senior solicitor, a partner in the form of Mr Fong, whose unit charge at $4,000 per hour is the norm for a solicitor of 19 years standing.

13. Mr Fong was throughout involved in the dispute and for costs from 24 April onwards. The suggestion was made by Mr Leung that Mr Fong with his seniority should not be involved with the costs dispute and that someone more junior in the firm such as Miss Clara Hung could have been engaged with that work. I disagree. It seems to me that Mr Fong who was handling this matter throughout should not be expected to leave the case when the dispute over costs arose and handed over to a junior solicitor assistant. Having regard to the way the matter developed, the very large amount of estate, somewhat $75 million, and the unusual nature of the dispute, it seems to me that in relation to the hearing or the costs incurred of the summons up to this appeal so far as Mr Fong is concerned is reasonable.

14. There was attendance before the master by Miss Clara Hung because Mr Fong had a public function to perform and could not attend the court so the lower cost of $4,000 of Clara Hung was also reasonable. So far as counsel's costs of $22,500 is concerned, I regard that also as reasonably incurred having regard to the unusual nature of the case and the size of the claim and the interest required to be protected by Oscar Wong. I allow in whole the costs of $42,500 of the bill on page one. In terms of the hearing before me today, there is really no serious dispute. The total costs come to be $26,000 with the very gracious reduction of counsel's fees by Mr Chan charging only $10,000 for today.

15. There were some suggestions that the figures put before the court are party to party basis, and therefore it should be to tax down even on a gross sum assessment. In my view, looking at the figures and having regard to the nature of the case, it seems to me that the total figures are quite reasonable. I therefore order that Henry Kho should pay to Oscar Wong the total sum by way of costs accessed on gross sum assessment basis of $68,500 and that such costs be paid forthwith.