HIGH AMBITION INVESTMENTS LTD AND ANOTHER v. FOEBE CHAN

HCMP 2178/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. HCMP 2178 of 2005

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REVIEW of TAXATION

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1. The plaintiffs took out this Originating Summons action for orders for (a) Discovery, and (b) Disclosure of Information against the Defendant (“Foebe”).  In the words of Mr Poon, (the solicitor who appeared for the plaintiffs) this action against Foebe was essentially a “Norwich Pharmacal” application.

2. This action is a piece of “satellite litigation”, a spin off from HCA 2732/2004.  The plaintiffs alleged that around July 2002, the plaintiffs handed over some 39,000,000 shares of “Cedar”, a Hong Kong listed company to the Defendant Foebe Chan and one Chan Yuen Tung, to be sold on the Hong Kong Stock Exchange.

3. The plaintiffs’ case against the defendant Foebe was that she and her putative lover Chan Yuen Tung had sold the “Cedar” shares for $27.3 million but failed to pay any of the proceeds back to the plaintiffs.  In the circumstances, information was sought by the plaintiffs as to “the money trail”.  The plaintiffs sought information as to the identity of the buyers of the shares, the whereabouts of the proceeds of sale and so on.  It can be seen from the documents filed that Foebe strenuously denied any wrong doing.

4. On 4 November 2005, Master Ho adjourned the matter to be heard by a Judge, on a date to be fixed with an estimate of half an hour.

5. At that hearing fixed before Deputy Judge Gill on 22 December 2005, the plaintiffs sought leave to amend the Originating Summons by adding a Rider.  The defendant instructed Mr Leo Remedios of Counsel to appear in addition to Mr Frederick Chan.  In other words, the defendant had two counsels appearing for her on that day.

6. Subsequent to the hearing on 22 December 2005, the plaintiffs discontinued their claim against the defendant, and the plaintiffs were ordered on the 4^th of January 2006 to pay costs in the following terms:

“

2.

The 1st and 2nd Plaintiffs shall pay the costs of the Originating Summons herein (including the costs reserved by Master Ho on 4th November 2005 and the Honourable Deputy High Court Judge Gill on 22nd December 2005) to the Defendant, such costs shall be taxed if not agreed.”

7. The Defendant’s Bill was taxed by me on 18 April 2007.  Item 20 of the Bill, in relation to the brief fee of Mr Remedios of counsel to attend on 22 December 2005 was allowed in full.

8. Thereafter the plaintiffs sought a Review of Taxation solely in relation to Item 20 of the Bill.

9. Item 20 of the Bill states:

“	Attending Court with Mr Leo Remedios, Leading Counsel and Mr Frederick Chan of Counsel before Deputy High Court Judge Gill on 22nd December 2005 for hearing of the adjourned Originating Summons (CPS-30 minutes).”

10. The fees claimed for the attendance by Mr Remedios was $120,000.  The fees claimed for the attendance by Mr F Chan was $30,000.

11. At the Review, the main objection of the paying party was that Deputy Judge Gill had not granted a certificate for 2 counsels for the hearing on 22 December 2005.  It was argued that the absence of a certificate should indicate to the taxing master that the Court was of the view that costs for more than one counsel should not be allowed.

12. I queried whether there was any authority to the effect that the taxing master has no jurisdiction to allow the costs of 2 counsels in the absence of a certificate for 2 counsels.  Or, alternatively, whether there was any authority to the effect that in the absence of a certificate for 2 counsels, the taxing master would be wrong to allow for the costs of 2 counsels.  The solicitor for the plaintiff Mr Poon conceded that he had no such authority.

13. At the adjourned hearing Mr Poon informed me that he was unable to find an authority to the effect that in the absence of a certificate for 2 counsels, the taxing master would be wrong to allow for the costs of 2 counsel.

14. The support for the receiving party’s case on the necessity of a criminal barrister in addition to the civil barrister is found in Foebe’s affirmations. In short, the supporting evidence was that: (a) the plaintiffs had made their complaint to the Commercial Crimes Bureau; (b) the police had already asked Foebe to “assist” in their enquiries; (c) a cautioned statement had been taken from her; (d) Foebe believed herself to be a suspect and under investigation by the police; (e) Foebe’s lawyers had advised her that there was a real and serious risk that criminal proceedings may be instituted against her; (f) in the circumstances Foebe believed that anything said by her in this civil action might incriminate her in the criminal investigations. In the circumstances it was decided that Mr Frederick Chan be present to protect Foebe’s interests in the civil action and Mr Remedios be present to protect Foebe’s interests in relation to any criminal proceedings that might be instituted.

15. It had been put to me at the taxation hearing that Mr Remedios was instructed for his expertise in criminal law, because Mr Frederick Chan was not experienced in criminal law.  It was submitted that Mr Remedios was instructed to be present at the hearing before Deputy Judge Gill to preserve Foebe’s rights under the rules against self incrimination.  This contention has never been challenged by the paying party.

16. I now turn to the relevant law, having set out the respective arguments.

17. The extent to which Costs on a party and party basis is allowed is found in O62 r28(2), where it provides “Subject to the following provisions of this rule, costs to which this rule applies shall be taxed on the party basis, and on a taxation on that basis there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed.” (emphasis mine)

18. By taking out this action against Foebe under the Norwich Pharmacal principles, the plaintiffs were clearly indicating that the purpose of the action was to discover how Foebe had “facilitated” the wrongs done to the plaintiffs, See 15/4/6 at page 217 of Hong Kong Civil Procedure 2007.  The case of Easy Garment Factory Ltd v Attorney General [1980] HKLR 18 would also be relevant.  It was held in that case that the Postmaster General’s duty to provide full information to assist the plaintiff in enforcing its rights was heavier than any small degree of confidentiality applying to the information.

19. The principles of disclosure under Norwich Pharmacal apply to information as well as the identity of wrongdoers, see the discussion by the Court of Appeal in Philip Lawrence Choy v Nissei Sangyo America Ltd [1992] 2 HKLR 177.

20. It is obvious from the authorities above that Foebe would have been under a considerable duty of disclosure to the plaintiffs.  It was not simply that Foebe could insist on her “right of silence” at the substantive hearing of the Originating Summons.  Having taken out an action solely for disclosure of documents against Foebe, it would be inconceivable that the plaintiffs would allow Foebe to remain silent upon every single question posed to her without demur.

21. On this issue of the right of silence, all the matters raised for consideration in respect of 2 counsels appearing listed in the case of Xin Juan Trading Co Ltd v NPH Petrochemical Ltd (HCA 18159 of 1998) were considered.

22. In addition to considering the matters listed in the Xin Juan Trading case, I also noted that it was the intention of the Defendant (Foebe) that the substantive argument on the Originating Summons be heard by Deputy Judge Gill on 22 December 2005.  This option to have the substantive argument heard that day is provided for by Practice Direction 5.8/2 paragraph (a), which states:

“	PD 5.8/2
	(a)	The hearing of an originating summons on the date fixed under O28r2 shall be a first hearing before a judge sitting in chambers at which directions as to the further conduct of the proceedings will be given, but nothing herein shall affect the court’s power to dispose of an originating summons at such hearing under O28r4 should the nature of the case so require.
	(b)	……
	(c)	……”

23. Therefore it might have been possible for the substantive argument on the Originating Summons to be heard by Deputy Judge Gill on 22 December 2005.  Had it been viable for the substantive argument on the Originating Summons to be heard by the Judge on that date, I would not have been inclined to review my decision.

24. However, after the Application for Review was heard, I perused the notes of proceedings of 22 December 2005 prepared by the judge’s clerk.  I noticed that the plaintiff’s counsel had complained to Deputy Judge Gill that the defendant had not given any notice at all to the plaintiff’s solicitors that the defendant had intended to have the substantive argument heard on the 22^nd December.  As he had not been given the requisite notice, the plaintiff’s counsel was not prepared and not willing for Deputy Judge Gill to hear the substantive argument on the Originating Summons on that day.

25. At the taxation hearing I was not aware that Foebe’s solicitor had not given the requisite or any notice to the plaintiff’s solicitors that they were applying for the substantive argument to be heard on 22 December 2005.

26. Looked at anew in the light of the fact that no prior notice had been given to the plaintiff’s solicitors that the defendant was going to (a) argue the substantive issue on 22 December 2005; and (b) instruct Mr Remedios to be present at that time to protect Foebe’s interests at the substantive hearing of the Originating Summons, I now find it appropriate to review my decision on that item of costs.  In the circumstances now known to me, it would be inappropriate in a taxation on party and party basis to allow the $120,000 claimed as costs for Mr Remedios to attend on 22 December 2005, since Mr Remedios was instructed to attend that day on the mere possibility of a full argument of the Originating Summons.

Conclusion

27. The ruling to allow Item 20 of the Bill in full is reversed on Review for the reasons given above.

Costs of the Review

28. In my view, taking into consideration all the circumstances, the appropriate order should be no order as to costs of the review.  This order nisi relating to the costs of the Review shall be made absolute unless an application is made within 14 days of the date of the handing down of these Reasons.