YEUNG SHU AND ANOTHER v. MESSRS ALFRED LAU & CO. (a firm)

CACV 253/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 253 OF 1999

(ON APPEAL FROM HCA 3759/1990)

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J U D G M E N T

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Hon Ribeiro J:

1. The action which has led to this appeal was an action by the Plaintiffs against the Defendant firm of solicitors for negligence involving a failure to register a sale and purchase agreement.

2. There was initially, on 31 January 1996, the trial before Keith J of a preliminary issue as to whether the action was time-barred. It was held that while the Plaintiffs' contractual cause of action was time-barred, their cause of action in tort remained valid.

3. Accordingly the matter proceeded to the full trial, again before Keith J, beginning on 9 October 1996. The Defendant firm was found liable and an order for costs on a party and party basis was made against it.

4. Throughout, the Plaintiff was legally-aided and represented by counsel.

5. On 20 November 1998, the Defendant's application for a review of taxation was determined by Master Kwan. Dissatisfied with the taxation in relation to several items, the Defendants sought a further review of the taxation before Yam J who dealt with this on 9 June this year. He dismissed the application and the Defendant now appeals to this court.

6. The taxation is challenged in relation to six items. These six items raise two questions of principle.

7. The first two items (which are referred to as items 2 and 21 in the Notice of Appeal) involve the expense of the Plaintiffs issuing a subpoena for the attendance at the trial of its own expert witness and the question is whether these expenses should have been allowed in the taxation in the absence of evidence of any unwillingness in the part of the witness to attend at the trial. The Defendant argues that it should not have been made to bear such costs.

8. Yam J thought that the arguments on this point were evenly balanced. However, he decided that the award of costs for this item should be upheld because it is a common experience that a voluntary witness may fail to attend when required and that a subpoena therefore benefits the Defendant as well as the Plaintiffs in helping to ensure that there is no adjournment, particularly where the witness is crucial to the continuation of the hearing.

9. In a party and party taxation, by virtue of Order 62 rule 28(2), costs are to be allowed if they "were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed". As I read it, the effect of Yam J's decision is that, in the circumstances, he considered such costs to be "proper" although possibly not "necessary". All questions of costs are pre-eminently a matter within the discretion of the judge and the taxing master. Assessing whether a particular expense is "proper" necessarily involves the exercise of discretion and, while other judges may have taken a different view on this particular item, I am not persuaded that Yam J's decision can be said to have involved an erroneous exercise of his discretion.

10. The next four items (which are referred to in the Notice of Appeal as items 16 to 19 inclusive) concern the following fees charged by counsel, as itemised in counsel's fee notes. It is necessary to place them chronologically in the context of the two substantive hearings before Keith J as follows.

5 September 1994, (Item 16) Perusal of papers, research, drafting affidavit and note, engaged for a total of 15 hours, charging $27,000.00, taxed down to $18,000.00 by the Master.

4 March 1995, (Item 17) Advice by letter, drafting chronology, engaged 3 hours, charging $6,600.00, taxed down to $5,000.00 by the Master.

Then came the hearing before Keith J on the preliminary issue for which counsel charged $80,000.00 to include 4 days' preparation plus 1 day in court. That day being 31 January 1996.

(Item 18) follows and this was incurred on 24 April 1996 and covered two matters. First, there was advice on the telephone, engaged 1/2 hour, charging a total of $2,500.00 which also covered 1/2 hour of telephone advice on 15 July 1996. The sum of $2,500.00 was taxed down to $2,000.00 by the Master.

Then came (Item 19) on 28 August 1996 when counsel submitted a fee note for advice by fax and consideration of the expert report on 28 August and covering also work in September 1996, together taking one hour and charging $2,500.00, that sum being taxed down to $1,800.00 by the Master.

That takes us to the brief for the trial which commenced on 9 October 1996 and the fee note rendered was for a brief fee of $60,000.00 which was to include 2 days' preparation plus the first day in court.

11. Miss Jennifer Tsui, appearing for the Defendant, argued that Items 16 to 19 should not be allowed as all such work ought to have been covered by the brief fees charged.

12. In support, she relied upon the decision of Hobhouse J in Loveday v. Renton and Another (No. 2) [1992] 3 All ER 184 at p. 190 where the learned judge stated: -

"In assessing a brief fee it is always relevant to take into account what work that fee, together with the refreshers, has to cover. The brief fee covers all the work done by way of preparation for representation at the trial and attendance on the first day of the trial."

13. Miss Tsui sought to extend this principle to cover virtually all advisory work, even done some 2 years before the trial, equating such work with preparation for the trial itself, covered by the brief. With respect, in my judgment, the case does not go nearly so far. It does not mean that where counsel is duly instructed to perform other work which is "necessary or proper" within the meaning of Order 62 rule 28(2) such work cannot be claimed as a separate and discrete item of costs. As Hobhouse J also observed at p. 190: -

"..... in heavy litigation, particularly where there is a team of barristers and experts, additional work is involved in ensuring that the client is properly represented and his case fully developed beyond simply appearing in court."

14. The Loveday case was primarily concerned with the costs of counsel working between the time when the court rose after hearing the evidence and the time when the court reconvened for final submissions, much work having been done on the preparation of those final submissions in the interim. It was held that such work was obviously necessary or proper but that brief fees should normally be negotiated to cover such amounts or, if that has not been done, that additional specific instructions should be delivered to cover that work. Such work was described as essentially an incident of the advocacy involved in the brief.

15. In the present case, counsel's fees for Items 16 and 17 were, in my view, plainly separate and discrete from the brief fee. They involved work done many months before the trial of the preliminary issue and the full trial. At that stage, it would not have been clear whether the matter was to go to trial at all. Such work, if done properly at an early stage is important for establishing the future direction and conduct of the case for the benefit of the party concerned. It was therefore quite necessary or proper to instruct counsel to advise at that stage and for a properly itemised fee note to be presented for such work. There was no apparent duplication with the itemised work covered by the brief fee relating to the trial either of the preliminary issue or of the full trial.

16. As my Lord Chan CJHC indicated, to have the rule otherwise would cause practical difficulties where the parties choose to change counsel in the course of the case.

17. Items 18 and 19 are small amounts incurred after Keith J had held that the cause of action in tort survived and prior to the full trial. They are, in my view, again separate and discrete from the itemised coverage of the brief fee for the full trial. There appears to be no basis for suggesting that they are fees which fall outside the scope of a party-and-party taxation.

18. I would therefore dismiss the appeal.

Hon Chan CJHC:

19. I agree. I would add a few words on the case of Loveday v. Renton and another (No.2) [1992] 3 All ER 184 on which counsel relied heavily.

20. As I understand it, inLoveday v. Renton and another (No.2), the court gave guidance on how to assess counsel's brief fee. Hobhouse J, sitting with a Master and an Assessor, held, amongst other things, that

(1) in assessing what is a reasonable brief fee, it is always relevant to take into account what work that fee, together with any refreshers, has to cover;

(2) Counsel's brief fee would cover all work done by way of preparation for representation at the trial and attendance on the first day of the trial;

(3) in the normal case, counsel is not entitled to be remunerated separately for work done which is necessary for and incidental to the proper representation of the client at the trial unless there is a separate agreement to that effect.

21. What is work necessary and incidental to the preparation for representation at the trial, and hence not chargeable separately, depends on the circumstances of the case. There may well be circumstances in which counsel is entitled to be remunerated for work which is done upon proper instruction and which is quite separate from the preparation for representation at the trial.

22. It would seem from the analysis of my Lord Ribeiro J that the items in question relating to counsel's fees were separately chargeable since such work was done necessarily and upon proper instruction.

Hon Wong JA:

23. I agree that the appeal should be dismissed for the reasons given by Mr Justice Ribeiro and the Chief Judge.

24. I have only one observation to make. In my view, expenses incurred on a subpoena to secure the attendance of a party's own expert witness are not, strictly speaking, necessary costs and should be discouraged.

Hon Chan CJHC:

25. The appeal is dismissed with costs to the plaintiff.

(Submissions on quantum)

Hon Chan CJHC:

26. The 1st defendant do pay to the plaintiff costs of this appeal fixed at $50,000.