CHEN NINGNING v. KING & WOOD (a firm)

HCMP 163/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 163 OF 2012

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D E C I S I O N
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Introduction

1.  This is a hearing of preliminary issues in the originating summons proceedings in which the plaintiff seeks an order to tax bills issued by the defendant to the plaintiff.

2.  The plaintiff commenced these proceedings on 27 January 2012 to seek taxation of four bills of costs of the defendant in relation to work done in HCCW 322/2010 and incidental matters (the “PSG Matter”). The defendant’s aforesaid bills covered the period from 28 September 2010 to 16 May 2011.  The parties had disagreement as to when the retainer of the defendant commenced.  The defendant’s case was that it commenced on 28 September 2010.  The plaintiff contended that it did not commence until 8 October 2010 after she had signed and returned to the defendant the retainer letter.  However, the actual date of commencement of the defendant’s retainer is not one of the preliminary issues before me.  Accordingly, I make no finding on this issue in this decision.

3.  The plaintiff was the sole shareholder and a creditor of a company called “Pioneer Iron & Steel Group Company” (“PSG”). PSG was a company incorporated in the British Virgin Islands (the “BVI”) which had been placed into voluntary liquidation since about late June 2010.

4.  The defendant was at all material times a firm of solicitors practicing in Hong Kong which ceased practice on 1 March 2012 upon its merger with another solicitors firm.

5.  Prior to October 2010, Deacons acted for the plaintiff in respect of the PSG Matter.  On 30 September 2010, the plaintiff met Ms Cindy Wong (“Ms Wong”), a consultant of the defendant at that time, to discuss whether the defendant would act for the plaintiff in the PSG Matter in place of Deacons.

6.  On 6 October 2010, Ms Wong sent a copy of the defendant’s retainer letter (the “Retainer Letter”) to the plaintiff.  The plaintiff signed and returned the Retainer Letter to the defendant on 8 October 2010 without amendment. (See pp 244-249 of the hearing bundles)  The plaintiff’s case was that her retainer with the defendant in respect of the PSG matter was terminated on 16 May 2011. (Para 23 of the points of claim)  The defendant’s pleaded case was that the plaintiff formally transferred instructions from the defendant to Tang & So (“T&S”) on 23 May 2011. (Para 22(4) of the points of defence and counterclaim)  This difference is not one of the preliminary issues and does not affect my determination of the preliminary issues.

7.  By a bill numbered B2010K0242 dated 29 November 2010 (the “1^st Bill”) the defendant charged the plaintiff $3,900,000 as its profit costs and $1,358,373 as disbursements for the period from 28 September 2010 to 6 November 2010.

8.  By a bill numbered B2011D0610 dated 29 April 2011 (the “2^nd Bill”) the defendant charged the plaintiff $5,129,973.50 as disbursements.

9.  By a bill numbered B2011E0098 dated 16 May 2011 (the “3^rd Bill”) the defendant charged the plaintiff $2,200,000 as its profit costs (described as “Agreed Costs”) and $1,438,304 as disbursements covering the period from 7 November 2010 to 16 May 2011.

10.  Ms Wong left the defendant’s employment on 18 May 2011.

11.  On 24 June 2011, the defendant wrote to T&S alleging that there was balance fees payable by the plaintiff to the defendant. (See p 268 of the hearing bundles)  The defendant said that such fees had been written-off by Ms Wong without authority.  The defendant’s pleaded case was that Ms Wong had actual authority to agree with the plaintiff on costs as per the terms of the Retainer Letter but had no actual, apparent or ostensible authority to agree with the plaintiff on behalf of the defendant on matters relating to costs at variance with the terms of the Retainer Letter. (Para 27 of the points of defence and counterclaim)

12.  The plaintiff’s case was that on about 29 December 2011, the plaintiff received a bill numbered B2011E0098(A) and dated 14 June 2011 (the “4^th Bill”) from the defendant charging the plaintiff additional profit costs in the sum of $7,959,975 for the period from 7 November 2010 to 16 May 2011 (ie the same period as covered by the 3^rd Bill). (See pp 270-271 of the hearing bundles)

13.  On 27 January 2012, the plaintiff commenced these proceedings seeking an order to refer the 1^st to 4^th Bills (the “Bills”) to taxation.  The plaintiff filed six affirmations in these proceedings.

14.  On 25 September 2012, the defendant filed its itemized bill of costs in these proceedings pursuant to directions of the court.  The same was revised on 3 July 2013 (the “Revised Taxation Bill”). In the Revised Taxation Bill, the defendant stated that its time costs for the whole retainer period were $20,166,018.33 on top of disbursements of $7,668,277.50.  The plaintiff filed her list of objections herein on 13 November 2012.

15.  On 13 November 2012, the plaintiff took out a summons to seek directions for determination of certain preliminary issues.  By a consent summons dated 23 May 2013, the parties identified five issues to be determined by the court as preliminary issues.

16.  Directions were given on 11 September 2013 for the parties to file and serve pleadings in respect of the preliminary issues. The plaintiff filed her points of claim on 11 October 2013.  The defendant filed its points of defence and counterclaim on 27 November 2013.  The plaintiff filed her points of reply and defence to counterclaim on 10 January 2014.

17.  In the points of claim, the plaintiff pleaded the following matters in paras 6 and 14:

“6. During one or more of the meetings and discussions between late September and early October 2010 and with a view to persuading the Plaintiff to transfer the PSG Matter from Deacons to the Defendant, Ms Wong, acting on behalf or purportedly on behalf of the Defendant, assured the Plaintiff orally and agreed with the Plaintiff that:

6.1 the Defendant would not charge the Plaintiff for these pre-retainer meetings and discussions;

6.2 the Defendant would not charge the Plaintiff for reading in her case or the work that had already been done by Deacons or counsel;

6.3 the Defendant would not charge her for any work to be undertaken by counsel;

6.4 there would be no duplication of time costs in respect of the same or similar work done by different fee earners within the Defendant;

6.5 Ms Wong could delegate her work to junior assistants in order to save the Plaintiff’s costs, but there would be no duplication of time costs.  In particular, Ms Wong would ask one or, if necessary, two assistant solicitors to assist her in relatively simple matters.  The Defendant would charge the Plaintiff for a reasonable amount of time (as opposed to the actual time spent) for the task at the hourly rates of such assistant solicitors and the Defendant would not charge the Plaintiff for Ms Wong’s time spent on coaching or supervising her assistants;

6.6 the Defendant would charge the Plaintiff for what would be reasonable and necessary in light of the above circumstances, and taking into account (1) all the disbursements to be agreed to be borne by the Plaintiff or those to be charged by the Defendant and (2) that certain types of work (including the more complicated ones) would be undertaken by counsel as per the Plaintiff’s request or as recommended by Ms Wong to the Plaintiff; and

6.7 adjustments would be made to the Defendant’s time costs as when needed to reflect the above arrangements

(collectively “Pre-retainer Agreement”).”

“14. Shortly after the 1^st Bill was issued, Ms Wong, acting on behalf or purportedly on behalf of the Defendant, orally represented to the Plaintiff that:

14.1 the 1^st Bill was interim in nature and there would be a series of interim bills to be issued throughout the Plaintiff’s engagement of the Defendant;

14.2 what the Defendant had charged under the interim bills would be taken into account in the final bill of the Defendant, and upward or downward adjustments would be made to the grand total amount charged on the Plaintiff at the end of her engagement of the Defendant; and

14.3 if in the end the Plaintiff was not convinced that she should pay the Defendant for any sum of costs or disbursements, she could exercise her statutory right to assess them in taxation proceedings

(collectively “2^nd Set of Representations”).”

18.  By a consent summons dated 4 April 2014, the parties agreed to vary the preliminary issues to read as follows:

(a) whether the defendant is entitled to rely on the hourly rates as set out in the Retainer Letter (“Issue 1”);

(b) if the answer to the above question is “no”, (i) whether the 1^st to 3^rd Bills (or as the case may be, the 1^st to 4^th Bills) should be taxed on the basis that the hourly rate of the handling solicitor, Ms Wong should be $5,200 or such other rate as the court deems appropriate and reasonable and (ii) what should be the appropriate hourly rates of the other fee earners of the defendant (“Issue 2”);

(c) whether the Pre-retainer Agreement and the 2^nd Set of Representations as described in paras 6 & 14 of the plaintiff’s points of claim filed herein (similar to those described in paras 6(a) & (b) of the 6^th affirmation of the plaintiff filed herein on 26 March 2013) were made between the plaintiff and Ms Wong (“Issue 3”);

(d) if the answer to the preceding question is “yes”, whether the Pre-retainer Agreement and the 2^nd Set of Representations are binding on the defendant, and/or the plaintiff is entitled to rely on the Pre-retainer Agreement and the 2^nd Set of Representations in these taxation proceedings (“Issue 4”);

(e) whether the defendant is entitled to issue the 4^th Bill or whether the 4^th Bill should be struck out (“Issue 5”); and

(f) if the 4^th Bill should be stuck out, whether the plaintiff is entitled to tax the 1^st, 2^nd and 3^rd Bills in these taxation proceedings (“Issue 6”).

19.  By an order dated 10 April 2014, the court ordered the aforesaid six preliminary issues (the “Preliminary Issues”) to be heard before a Master.  Hence, the hearing before me.

20.  The court further directed the parties to exchange witness statements in relation to the Preliminary Issues.

21.  The plaintiff had signed a witness statement dated 3 June 2014 and a supplemental witness statement dated 5 September 2014.

22.  The plaintiff also called Ms Wong as her witness.  Ms Wong was admitted as a solicitor in Hong Kong and in England and Wales in 1991 and 1992 respectively.  She was employed by the defendant as a consultant between 1 July 2009 and 18 May 2011.  She was previously employed by T&S before joining the defendant’s predecessor Arculli Fong & Ng as a partner on 3 November 2006.  Ms Wong signed a witness statement dated 25 June 2014 and a supplemental witness statement dated 11 September 2014.

23.  There was no dispute that Ms Wong was the only person representing the defendant to discuss the terms of engagement with the plaintiff.  Ms Wong left the defendant on 18 May 2011.  She was in litigation with the defendant in HCA 297/2012 in which the defendant claimed against Ms Wong for loss to the defendant caused by Ms Wong’s unauthorized written-off of costs in the plaintiff’s case.  HCA 297/2012 had been adjourned pending the outcome of these proceedings.

24.  The defendant called Mr Yung Yun Sang Simon (“Mr Yung”) and Ms Barbara Chiu (“Ms Chiu”) as its witnesses.  Each of Mr Yung and Ms Chiu signed a witness statement dated 3 July 2014 and a supplemental witness statement dated 28 October 2014.

25.  Mr Yung was the managing partner of the defendant at the material times. He had no personal involvement in the plaintiff’s case.  His evidence was on the internal system of the defendant.

26.  Ms Chiu joined the defendant after Ms Wong had left.  She had no personal knowledge about the plaintiff’s case.  Her evidence was on documents kept at the defendant’s office.

27.  On the first day of the hearing, I granted leave for the parties to serve their aforesaid supplemental witness statements.

28.  I shall deal with the Preliminary Issues below one by one.  The existence or non-existence of the Pre-retainer Agreement and/or the 2^nd Set of Representations is the main area of dispute between the parties for the Preliminary Issues.  I shall first deal with the parties’ disputes on the Pre-retainer Agreement and the 2^nd Set of Representations (ie Issues 3 and 4).  After that I shall deal with the parties’ disputes in respect of the 4^th Bill (ie Issues 5 and 6).  Lastly, I shall deal with the parties’ disputes on hourly rates of the defendant’s fee earners, including that of Ms Wong, for taxation in these proceedings if the same is ordered by the court (ie Issues 1 and 2).

Issue 3 (Whether the Pre-retainer Agreement and the 2^nd Set of Representations were made between the plaintiff and Ms Wong?)

29.  The plaintiff’s case was that both the Pre-retainer Agreement and the 2^nd Set of Representations were made between Ms Wong and her.  The defendant contended the otherwise.  It was not the plaintiff’s case that the Pre-retainer Agreement and the 2^nd Set of Representations were made on the same occasion.  In such case, I shall consider them separately.

The Pre-retainer Agreement

30.  The plaintiff’s pleaded case was that the Pre-retainer Agreement was reached between the plaintiff and Ms Wong during one or more of the meetings and discussions between late September and early October 2010. (See para 6 of the points of claim)

31.  The defendant’s case was that the Pre-retainer Agreement did not exist and the Retainer Letter contained the full terms of the retainer agreement between the plaintiff and the defendant.

32.  Mr Wong SC, representing the defendant, referred to an email dated 6 October 2010 from Ms Wong to the plaintiff (p 356 of the hearing bundles) in which Ms Wong stated that:

“I would appreciate it if you [would] consider the attached Engagement Letter [ie the Retainer Letter], and if you find it in order, signify your consent on the terms of engaging our Hong Kong office by endorsing your signature at the bottom part of the Letter.” (Original emphasis)

33.  On 7 October 2010, Ms Wong sent another email to the plaintiff to follow-up with the signing of the Retainer Letter. (See p 483 of the hearing bundles)

34.  Mr Wong submitted that from the aforesaid emails, it was clear that Ms Wong regarded the Retainer Letter as a significant document containing the terms of the engagement.  He further submitted that the plaintiff after having the opportunity to review and consider the terms of the Retainer Letter for two days, endorsed the Retainer Letter on 8 October 2010 without making any amendment or complaint.  Mr Wong contended that this showed that the plaintiff found the terms of the Retainer Letter “in order” and that both Ms Wong and the plaintiff intended the Retainer Letter to contain the full terms of the engagement.

35.  Mr Wong further referred to a letter dated 18 November 2011 from Ms Wong to the defendant (pp 610-616 of the hearing bundles at pp 611-612), after Ms Wong had left the defendant and this dispute had already emerged, in which Ms Wong stated that:

“10. The engagement by Ms Chen [ie the plaintiff] was governed by a retainer letter signed between Ms Chen and the Firm [ie the defendant] in early October 2010. As is clear from the retainer letter, Ms Chen never agreed to pay whatever sums of costs and disbursements which the Firm would feel free to charge. …”

36.  Mr Wong submitted that there was no mention of any oral agreement and/or representations governing the engagement of the defendant.  Instead, Ms Wong’s aforesaid letter demonstrated that the engagement of the defendant was governed only by the terms of the Retainer Letter.

37.  The defendant’s case was that there was no such pre-retainer oral agreement.

The 2^nd Set of Representations

38.  In respect of the 2^nd Set of Representations, the plaintiff’s pleaded case was that these were oral representations made by Ms Wong acting on behalf or purportedly on behalf of the defendant to the plaintiff shortly after the issue of the 1^st Bill and in reliance on the Pre-retainer Agreement, the 2^nd Set of Representations and the representation in clause 4 of the Retainer Letter that Ms Wong’s prevailing or usual hourly rate was $7,500, the plaintiff allowed the defendant to deduct her payments of money on account to settle the 1^st Bill. (Paras 14 and 15 of the points of claim)

39.  The defendant’s case was that Ms Wong had never made the alleged representations.

40.  Mr Wong referred to the fact that the 1^st Bill was settled by applying the funds on account upon issuance of the 1^st Bill (ie even before the 1^st Bill was received by the plaintiff) to contend that the plaintiff’s case that she relied on the 2^nd Set of Representations to allow Ms Wong to deduct the plaintiff’s costs on account could not be substantiated.

41.  Mr Wong submitted that there was no truth in the plaintiff’s story that there was discussion between the plaintiff and Ms Wong after the plaintiff had received the 1^st Bill or that Ms Wong had made the 2^nd Set of Representations and sought permission from the plaintiff to settle the 1^st Bill.

42.  Mr Wong further submitted that the defendant was entitled, pursuant to the terms of the Retainer Letter, to use the plaintiff’s costs on account to settle the 1^st Bill and the alleged discussion between the plaintiff and Ms Wong and the alleged representations (ie the 2^nd Set of Representations) made by Ms Wong were unnecessary.  He contended that it was not plausible that Ms Wong had made the 2^nd Set of Representations and/or that the plaintiff had ever relied on the 2^nd Set of Representations to allow Ms Wong to settle the 1^st Bill.

Discussion and finding

43.  Mr Wong submitted that to the extent that the Pre-retainer Agreement and/or the 2^nd Set of Representations contradicted or sought to vary the terms contained in the Retainer Letter, the operation of the parol evidence rule would render such evidence inadmissible.

44.  Mr Dawes, representing the plaintiff, submitted that neither the Pre-retainer Agreement nor the 2^nd Set of Representations contradicted the Retainer Letter.  He further submitted that the courts had been prepared to admit extrinsic evidence of terms additional to those contained in the written document if it was shown that the document was not intended to express the entire agreement between the parties.  He contended that the evidence of the plaintiff and Ms Wong showed that the parties all along agreed and intended that the retainer was to be governed partly orally by the Pre-retainer Agreement and partly in writing by the Retainer Letter.  Such agreement was subsequently supplemented by the 2^nd Set of Representations.  He submitted that the parol evidence rule did not apply to this case.

45.  In Gillespie Brothers & Co v Cheney, Eggar & Co [1896] 2 QB 59 Lord Russell CJ stated at 62 that:

“… I will now state why I think that, even although there is a definite written contract made between the parties, it is impossible to exclude from consideration what took place before the contract was made – in other words, their antecedent course of conduct. In the first place, although when the parties arrive at a definite written contract the implication or presumption is very strong that such contract is intended to contain all the terms of their bargain, it is a presumption only, and it is open to either of the parties to allege that there was, in addition to what appears in the written agreement, an antecedent express stipulation not intended by the parties to be excluded, but intended to continue in force with the express written agreement. …”

46.  As DHCJ M Ng pointed out in Chan Chi Ling Elwyn v Richfield Realty Ltd (unrep., HCLA 9/2013, 11 July 2014) that:

“71. If one party alleges that the written document is the final expression of their agreement and the other party denies that it is, the question before the court will be to determine if the written document is or is not the final integrated expression. This is an issue of fact for resolution on the balance of probabilities, and any evidence relevant to this issue must be considered by the court (eg evidence about the transaction and the parties’ agreement, the words used, the background to the transaction and the parties’ common or even subjective intentions, expectations and hope). No agreement, just by existing, even if signed, proves that it is the parties’ final expression: there has to be evidence to show that it is.”

47.  Mr Recorder H Wong SC also stated in Feco Development Corporation v Bonny Forward Company Limited (unrep, HCA 1465/2005, 18 July 2012) that:

“53. As a starting point, I accept Miss Cheung’s submission that she is not prevented by the parol evidence rule to rely on extrinsic evidence to show that the Termination Agreement was intended by the parties as an agreement partly oral and partly in writing. ……

  54. The parol evidence rule only becomes relevant if the Court, after considering the evidence, is satisfied that the parties intended the written document to contain the whole of the contractual bargain between them.  It is only after the Court has come to such conclusion that the parol evidence rule would operate to prevent extrinsic evidence from being admissible to contradict the written document.”

48.  As pointed out by the learned authors of Chitty on Contract (31^st ed) at para 12-098 that “the scope of the parol evidence rule is much narrower than at first sight appears.  It has no application until it is first determined that the terms of the parties’ agreement are wholly contained in the written document.”  The court will have to look at the totality of the evidence to see whether the parties’ bargain was intended to be partly oral and partly in writing so that extrinsic evidence is admissible to prove the oral part of the agreement or the agreement was wholly contained in a written document, the Retainer Letter in this case, so that extrinsic evidence is excluded under the parol evidence rule.  It is too early for the court to exclude extrinsic evidence before the court has the opportunity to consider the totality of the evidence to ascertain the intention of the parties.

49.  Mr Dawes submitted that Ms Wong and the plaintiff were the only individuals taking part in the relevant discussion in respect of the Pre-retainer Agreement and the 2^nd Set of Representations.  None of the defendant’s witnesses had ever met the plaintiff or took part in the relevant conversation.  Accordingly, the defendant was not in any position to dispute the existence of the Pre-retainer Agreement and the 2^nd Set of Representations.

50.  I agree that the defendant’s witnesses were in no position to adduce direct evidence to rebut the evidence of the plaintiff and Ms Wong.  However, this does not mean that the court will have to accept such evidence.  In Tan Kah Eng v Tan Eng Khiam (unrep, HCA 9640/1999, 26 April 2012), Mr Recorder Shieh SC observed at para 28 of the judgment that when only one of the parties was able to give evidence at trial:

“… that does not necessarily mean that the plaintiff’s [the party giving evidence] oral evidence must necessarily be regarded as “uncontradicted” or that I must accepted his oral evidence without further ado. His evidence must still be tested against the usual yardsticks and criterion applied by the Court in assessing credibility namely:

(1) inherently credibility;

(2) contemporaneous documents;

(3) such facts as are undisputed or indisputable.”

51.  When the Tan Kah Eng case went to the Court of Appeal (unrep, CACV 109/2012, 12 September 2014), the Court of Appeal affirmed the aforesaid approach of the learned Recorder.  Barma JA in delivering the Reasons for Judgment for the Court of Appeal stated that:

“12. The Recorder correctly noted that notwithstanding the absence of the defendant as a witness, it would not be appropriate simply to accept the plaintiff’s evidence at face value. Rather, given the dispute between the parties, the plaintiff’s evidence should be tested by reference to its inherent credibility (or lack of it), and its consistency (or otherwise) with contemporaneous documentation and undisputed (or undisputable) facts. …”

52.  I agree with Mr Wong that even though the defendant’s witnesses would not have personal knowledge of the alleged Pre-retainer Agreement or 2^nd Set of Representations, it does not follow that the plaintiff’s evidence has to be regarded as “uncontradicted” or ought to be accepted.  The plaintiff’s evidence must be tested against the usual yardsticks of (1) inherent credibility; (2) contemporaneous documents; and (3) such facts as are undisputed or undisputable.

53.  In Chiu Chi Tong v Lau Chong Sai & anor (unrep, HCA 765/2002, 11 May 2005) Chung J stated at para 28 of his judgment that when assessing the credibility of a witness on a matter which he had testified “regard may be had to a witness’s motive for deliberately not giving truthful testimony.  For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest.”  The plaintiff is of course a party having interest in the outcome of this case.  Ms Wong with her pending litigation with the defendant (see para 23 above) also had interest in the outcome of this case.  When the court considers a particular matter on which only one of the parties and his/her witness are able to give evidence at the hearing, the court shall consider such evidence in the context of other evidence adduced before the court especially contemporaneous documents.

54.  Bearing the above principles in mind, I discuss below the evidence of the parties on the Pre-retainer Agreement and the 2^nd Set of Representations.

The Pre-retainer Agreement

55.  There were seven terms in the Pre-retainer Agreement.  These terms were not included in the Retainer Letter.  The plaintiff’s explanation was that these were common terms.  She had previously retained more than 20 laws firms internationally with similar arrangements without recording the terms in writing.  She expected that a solicitor would adhere to agreements even if they were not in writing and she could take away the file if the defendant refused to comply with the terms of the Pre-retainer Agreement.  Mr Dawes submitted that the plaintiff’s explanation was entirely reasonable and credible.  I find the contrary.

56.  The plaintiff confirmed in her oral evidence that the seven alleged terms of the Pre-retainer Agreement were important to her.  According to the plaintiff’s case, the Pre-retainer Agreement was made during meetings and discussions between late September and early October 2010.  The plaintiff told the court at the hearing that she first met Ms Wong at the Mandarin Oriental Hotel before the National Day of 2010 [ie before 1 October 2010] to discuss the engagement of the defendant.  They reached an understanding as to the Pre-retainer Agreement.  The Pre-retainer Agreement was further discussed and agreed at a meeting on 5 or 6 October 2010, ie before the Retainer Letter was sent to the plaintiff for signing.  However, in Ms Wong’s email sent to the plaintiff at 20:13 hours on 6 October 2010 attaching the Retainer Letter for the plaintiff’s signing, there was no mention of the 5 or 6 October meeting.  It only referred to a meeting with the plaintiff on 30 September 2010.  If there was a meeting on 5 or 6 October 2010 between the plaintiff and Ms Wong discussing terms of the engagement of the defendant, Ms Wong would not have referred to an earlier meeting but missed to refer to the more recent meeting in her email on the very subject sent out on the same day or the day after such meeting.  In fact, such meeting had never been mentioned in emails and other correspondences exchanged between the parties.  Furthermore, the timesheet of Ms Wong did not suggest that she had a meeting with the plaintiff on 5 or 6 October 2010. (See p 1255 of the hearing bundles)  In that timesheet, the meeting held on 30 September 2010 was recorded.

57.  The plaintiff had in her first affirmation filed herein on 28 January 2012 (“P’s First Affirmation”) set out her pre-retainer discussions with Ms Wong as follows:

“7. I had a few meetings and some general discussions with Wong [Ms Wong] between late September 2010 and early October 2010 because Wong wanted to know some background of my case before accepting my instructions, and at that relevant time Wong said the Defendant was considering whether they had conflict to act for me. One of the Defendant’s clients, Standard Chartered Bank (PRC branch) had to check whether it was a creditor of PSG. In early October 2010 Wong told me that the conflict search within the Defendant was finally cleared. (The said bank is not a creditor of PSG.) I recall that Wong said she would not charge me for these meetings and discussions. Furthermore, upon Wong’s representation that she would not charge me for reading in my case (in that I had already incurred some costs in retaining Messrs Deacons to act in relation to the same matter), I instructed the Defendant to be my solicitors in place and stead of Messrs Deacons from 8 October 2010 onwards. I understand that Wong has over 10 years of post-qualification experience in civil litigation and insolvency matters. I appointed Wong to be the solicitor-in-charge of my matters.

8. I met no other partners or senior solicitor of the Defendant. Wong told me that for my matters, she would involve one to two junior solicitors to assist her as she had been very busy with different “VIP” clients and their respective files at that relevant time. I was told that the junior solicitors were about one to two-year qualified. On the other hand, I had indicated my preference to retain external barristers (including Junior and Senior Counsel) to prepare for draft papers and court work and to appear at court hearings. I had therefore specifically requested Wong that there should be no duplication of work and charges on any items of work if she had to involve other solicitors of the Defendant to work on my case. Wong acknowledged my instructions.

9. Apart from the above, I had requested that Wong gave me estimates of the Defendant’s time costs from time to time, as well as quotations of different disbursements including Counsel fees before the same were to be incurred.  Whilst Wong responded that estimates of the Defendant’s costs were by their nature inexact, she had from time to time assured me that she would endeavour to produce timely and economical handling of my matters with the assistance of a number of external barristers. Further, she said that if I ever had any doubts or questions about any lawyers’ fees and disbursements, she would do what could in order to get me satisfactory answers.”

58.  The above was all the plaintiff’s account of the pre-retainer discussions between she and Ms Wong given by the plaintiff in January 2012, ie more than two years earlier than her witness statement dated 3 June 2014 which gave detailed account of the terms of the Pre-retainer Agreement (see para 8 of the plaintiff’s witness statement).  There was no mention of the Pre-retainer Agreement in P’s First Affirmation and some terms of the Pre-retainer Agreement were not mentioned in that affirmation.  I agree with Mr Dawes that a trial was not intended to be a memory test.  However, common sense tells us that one does not have a better and more accurate recollection of events after a further lapse of more than two years.

59.  Mr Wong pointed out that in P’s First Affirmation there was no mention of two of the terms of the Pre-retainer Agreement, namely the term that the defendant would not charge for any work to be undertaken by counsel and the term that adjustments would be made to the defendant’s time costs as and when needed to reflect the above arrangements.  If each of the terms of Pre-retainer Agreement had been confirmed by Ms Wong with the plaintiff one-by-one, there was no credible explanation for the plaintiff missing two out of seven terms in her first affirmation in which she gave her account of the Pre-retainer Agreement.

60.  The Retainer Letter was not provided to the plaintiff at one of her meetings with Ms Wong nor was she asked to sign the Retainer Letter on the spot without having an opportunity to carefully consider the same before signing.  The Retainer Letter was sent to the plaintiff by email after her meetings with Ms Wong.  In such case, when the plaintiff received the Retainer Letter without containing any of the terms of the Pre-retainer Agreement, one would expect the plaintiff to require Ms Wong to amend the Retainer Letter to include the terms of the Pre-retainer Agreement bearing in mind that the plaintiff said that the terms of the Pre-retainer Agreement were important to her and that the plaintiff did not previously know Ms Wong.  The plaintiff had taken two days to consider the Retainer Letter before she endorsed the same.  It is incredible that the plaintiff would have signed the Retainer Letter without requiring terms which she considered as important and had been agreed by Ms Wong to be included in the Retainer Letter.  It is even more incredible that the plaintiff had not even raised the missing of these important terms with Ms Wong in any of her emails or other correspondences exchanged with Ms Wong before she signed the Retainer Letter.

61.  Furthermore, one of the terms of the Pre-retainer Agreement was that the defendant would not charge the plaintiff for the pre-retainer meetings and discussions, ie for the period before 8 October 2010 when the Retainer Letter was signed.  However, the 1^st Bill expressly stated that it covered the period from 28 September 2010 to 6 November 2010.  The works charged under the 1^st Bill were set out in Schedule 2 of the 1^st Bill which included work items for the periods from “26 Sep – 2 Oct 2010” and “3 Oct – 9 Oct 2010” (see p 255 of the hearing bundles).  Clearly, the plaintiff was charged for the pre-Retainer Letter period starting from 26 September 2010.

62.  Another term of the Pre-retainer Agreement was that the defendant would not charge the plaintiff for reading in her case.  This was not an usual term.  Solicitors will usually charge for reading in the client’s case.  In a big or complex case, such costs can be substantial.  However, if a solicitor wishes to persuade the client to transfer the case from another firm to him/her, the solicitor may make such concession.  I shall expect that if the solicitor has made such concession, the solicitor will include such term in the retainer letter, when the solicitor prepares the same, to remind the client that he/she has made such concession.  This term was not included in the Retainer Letter and in fact was contradicted by the 1^st Bill which showed that the defendant did charge for perusal of documents received from Deacons in the period from 3 September to 9 October 2010 when the defendant included “perusal of documents from Deacons (4 box files of correspondence + 1 box file of court documents)” as work charged by the 1^st Bill (see p 255 of the hearing bundles).

63.  Mr Dawes contended that the fact that pre-retainer correspondences and reading-in were listed in Schedule 2 of the 1^st Bill did not mean that time costs had actually been charged in respect of such activities.  It could well have been a record of what Ms Wong did, but it did not necessarily mean that she had charged the plaintiff for such work.  Mr Dawes’ contention is far from convincing.  It is plainly inconsistent with the express wording of the 1^st Bill which clearly stated that these works were charged.  The 1^st Bill expressly stated that (p 253 of the hearing bundles):

“TO OUR PROFESSIONAL CHARGES for work done in relation to the above matters [the PSG Matter] during the period from 28 September 2010 to 6 November 2010 including but not limited to all those items mentioned in the following Schedule 2…….” (Original underline but emphasis added)

64.  The plaintiff had put $5,000,000 as costs on account to the defendant in October 2010 after signing the Retainer Letter. The plaintiff was by no means an unimportant client to Ms Wong.  The 1^st Bill was the first bill issued by Ms Wong to this new client who had engaged Ms Wong to provide services expected to generate costs to the defendant in the region of millions of dollars with $3.9 million profit costs (excluding disbursements) already generated in less than two months.  If there was the Pre-retainer Agreement, it is difficult to imagine Ms Wong issuing her very first bill to such important new client containing express description patently contravening the terms of the Pre-retainer Agreement.

65.  When the plaintiff was under cross-examination, the plaintiff acknowledged that there was inconsistency between the Pre-retainer Agreement and the 1^st Bill.  The plaintiff said that she did raise that with Ms Wong but Ms Wong assured her that she had not been overcharged.

66.  Mr Wong rightly pointed out that such exchanges between the plaintiff and Ms Wong were not mentioned in the plaintiff’s six affirmations and her witness statement and supplemental witness statement.  They were also not mentioned in the witness statement or supplemental witness statement of Ms Wong.

67.  In the plaintiff’s witness statement, the plaintiff stated in para 23 that:

“23. In reliance on the Pre-retainer Agreement and the 2^nd Set of Representations, I allowed the Defendant to deduct my payments of money on account to settle the 1^st Bill, without going through in detail of what was stated on the bill to be the professional services rendered by the Defendant and without paying attention to the number of billable hours or the hourly rates of different fee earners.” (Emphasis added)

68.  The plaintiff’s evidence stated in para 23 of her witness statement did not sit comfortably with her evidence stated in para 20 of her witness statement when she stated that “I was rather taken aback and concerned when I saw the amounts on the 1^st Bill”.  When a successful business woman with experience in retaining lawyers to work for her and her companies received such bill charging her $3.9 million as time costs which had taken her aback, she would certainly check the alleged work done stated on the bill before she confronted her lawyer with the amount charged against her. Yet, the plaintiff’s evidence in her witness statement was that she had not gone through in detail of what was stated on the bill to be the professional services rendered by the defendant and without paying attention to the number of billable hours or the hourly rates charged to her.  This is incredible.

69.  If the plaintiff had raised this inconsistency between the 1^st Bill and the Pre-retainer Agreement with Ms Wong when the plaintiff received the 1^st Bill, one would expect the plaintiff to require Ms Wong to confirm the Pre-retainer Agreement in writing or the plaintiff would recap the Pre-retainer Agreement in her email to Ms Wong bearing in mind that: (1) the Pre-retainer Agreement contained what the plaintiff described as “important” terms; (2) Ms Wong had breached these “important” terms in the very first bill issued to the plaintiff; and (3) this was the first time the plaintiff engaged Ms Wong who the plaintiff did not know before this engagement.

70.  The plaintiff in her oral evidence said that each seven terms of the Pre-retainer Agreement was confirmed by Ms Wong with her one-by-one.  However, this was contradicted by Ms Wong’s oral evidence when she said that such confirmation was not necessary.

71.  Mr Dawes submitted that Ms Wong’s evidence was that the Pre-retainer Agreement merely contained standard terms of engagement, and it was not her practice to record such agreement in writing as there was no need to “state the obvious”.  However, Ms Wong did not tell this court what were the “non-standard” terms contained in the Retainer Agreement.

72.  When the parties had disputes in June 2011 on whether the defendant was entitled to require the plaintiff to return documents removed from the defendant’s office upon Ms Wong’s leaving, T&S in a letter dated 20 June 2011 (pp 1345-1347 of the hearing bundles) referred to a prior agreement on costs made between Ms Wong on behalf of the defendant and the plaintiff that the amount shown on the 3^rd Bill represented the agreed costs and disbursements incurred to the defendant in the PSG Matter before Ms Wong left the defendant.  There was no mention of the Pre-retainer Agreement or the 2^nd Set of Representations.

73.  In further letters from T&S to the defendant dated 29 June 2011, 21 November 2011 and 4 January 2012 (pp 1349-1365 of the hearing bundles), T&S claimed that there was a global fee arrangement reached between Ms Wong on behalf of the defendant and the plaintiff on a global figure of around $14 million as the total costs of the work and services (inclusive of disbursements) rendered by the defendant to the plaintiff for the PSG Matter.  Again, there was no mention of the Pre-retainer Agreement or the 2^nd Set of Representations.  If the Pre-retainer Agreement or the 2^nd Set of Representations existed, there was no reason why T&S did not refer to such matters in their pre-action correspondences with the defendant.

74.  Mr Dawes referred to the evidence of Mr Yung of the defendant when Mr Yung agreed that other than the term on not charging for supervision of junior associates, other terms of the Pre-retainer Agreement were not surprising.  Mr Yung also agreed that it was commonplace for solicitors to make upward and downward adjustments in the final amount.  The fact that the terms of the Pre-retainer Agreement were common terms for retainer of a solicitors’ firm or that some acts of the parties matched with some of the alleged terms does not necessarily mean that these terms had been expressly discussed and agreed by the plaintiff and Ms Wong in this case. These facts are relevant when the court considers whether the Pre-retainer Agreement was inherently improbable.  However, such facts have to be considered together with other factors and evidence.

75.  In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439 at 481D-F, Stock JA stated that:

“… and I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exits, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. …”

76.  Although in the Esquire (Electronics) Ltd case the court was dealing with a situation where the trial took place long after the occurrence of the events, ie 17 years and more, and was concerning with the accuracy of the memory of the witnesses after such delay, the aforesaid comments of Stock JA equally apply to situation when the court is dealing with a party’s evidence to which the other party is not in a position to adduce direct evidence to contradict as in the case before me.

77.  The alleged Pre-retainer Agreement was not supported by any documents.  It was not referred to even in email exchanges between the plaintiff and Ms Wong during the whole period when the defendant was engaged by the plaintiff and three bills of substantial sums (together about $14 million) had been rendered by the defendant to the plaintiff and settled by the plaintiff.  Even after the defendant issued the 1^st Bill charging for works which according to the Pre-retainer Agreement were not chargeable, the plaintiff still did not put the Pre-retainer Agreement on records in writing.  It was not mentioned in the pre-action correspondences sent by T&S to the defendant.  It was also not mentioned by Ms Wong when Ms Wong replying to the defendant’s demand for recovery of undercharged fees on the plaintiff’s case.  If there was the Pre-retainer Agreement, Ms Wong would surely have referred to it to explain that she had not undercharged the plaintiff.

78.  On the other hand, the existence of the Pre-retainer Agreement was contradicted by contemporaneous documents and the plaintiff’s evidence on this subject is incredible.  I reject the plaintiff’s evidence and find that the alleged Pre-retainer Agreement did not exist.

79.  It might be possible that the plaintiff and Ms Wong had in their pre-retainer discussions touched on these matters but these matters did not find their way into the retainer agreement between the plaintiff and the defendant to become contractual terms for the defendant’s engagement by way of express agreement.

The 2^nd Set of Representations

80.  According to the plaintiff, the 2^nd Set of Representations was made by Ms Wong to the plaintiff when the plaintiff raised her concerns about the costs charged by the defendant under the 1^st Bill.  The plaintiff’s case is that Ms Wong had made the 2^nd Set of Representations and the plaintiff relied, inter alia, on the 2^nd Set of Representations to allow Ms Wong to deduct the plaintiff’s costs on account to settle the 1^st Bill.

81.  Mr Wong submitted that this could not be true as the plaintiff had paid $5 million of costs on account to the defendant in October 2010 and the 1^st Bill was settled by applying the costs on account.  Accordingly, when the plaintiff received the 1^st Bill, that bill had already been settled and it could not be true that the plaintiff relied on the 2^nd Set of Representations to allow Ms Wong to apply the plaintiff’s costs on account to settle the 1^st Bill.

82.  In P’s First Affirmation, the plaintiff stated that after her pre-retainer discussion, she had the following in mind:

“10. In any event, since I have had experience in retaining lawyers to work for me and my companies in the past few years, I know that I have a statutory right to assess all the costs and disbursements of the Defendant in court if such matters cannot be resolved amicably.”

83.  As the plaintiff was fully aware of her statutory right to taxation before she engaged the defendant, she would not have placed any reliance on the alleged representation on her statutory right to taxation to let the defendant to deduct her payments of money on account to settle the 1^st Bill.

84.  According to the plaintiff’s evidence, she was surprised about the substantial fees charged under the 1^st Bill when she received the same.  She raised her concern with Ms Wong and the latter represented to her that the 1^st Bill was somehow inflated to serve as a “buffer” in case the plaintiff had any difficulties in paying for her fees in future.  The plaintiff said that Ms Wong further assured her that adjustments could later be made to the final bill.

85.  Ms Wong also gave evidence to collaborate the aforesaid “buffer” theory.

86.  This “buffer” theory was not supported by any contemporaneous documents.  There was no written correspondence between the plaintiff and Ms Wong whether by letter, fax or email to record the alleged conversation, not to say content of the discussion.

87.  As Mr Wong pointed out, in fact this “buffer” theory was contradicted by the contemporaneous evidence adduced before the court.  According to the bill guide to the 1^st Bill, the time spent by the defendant’s fee earner on the PSG Matter for the period covered by the 1^st Bill was 1,065.15 hours and the total time incurred by Ms Wong was 403.83 hours. (See p 1117 of the hearing bundles).  However, Schedule 1 of the 1^st Bill showed that the defendant had only charged for 901.50 hours of its fee earners’ time and only 220 hours of Ms Wong’s time was charged. (See p 254 of the hearing bundles)  Hence, instead of inflating the time costs of the 1^st Bill to create a “buffer”, Ms Wong had written-down the defendant’s fee earners’ time costs in the 1^st Bill.  The bill guide in respect of the 1^st Bill showed that Ms Wong had written-down the time costs of the defendant from over $4.4 million to $3.9 million.

88.  If the plaintiff had raised with Ms Wong her concern on the amount of profit costs charged to her in the 1^st Bill after the plaintiff received the 1^st Bill and Ms Wong had made some representations to address the plaintiff’s concern or to pacify the plaintiff, it would not be part of such representations that there might be “upward or downward” (emphasis added) adjustments made to the grand total amount charged on the plaintiff.  If the alleged conversation existed after the plaintiff received the 1^st Bill and Ms Wong had represented to the plaintiff that there might still be “upward” adjustment in the final bill after the defendant took into account its interim bill, the plaintiff would properly have terminated the retainer of the defendant immediately after that conversation.

89.  Although I accept that the alleged terms of the 2^nd Set of Representations are not unusual to be made by a solicitor to his/her client, I do not accept that Ms Wong did make the 2^nd Set of Representations in this case as alleged by the plaintiff.

Conclusion on alleged oral agreement

90.  As I have found that the parties had not entered the Pre-retainer Agreement as alleged and that Ms Wong had not made the 2^nd Set of Representations as alleged, the parties could not have intended the agreement governing their contractual relation to be partly oral and partly in writing.  I find that the agreement between the plaintiff and the defendant was wholly contained in the written Retainer Letter.  Extrinsic evidence to contradict, vary, add to or subtract from the terms of the Retainer Letter is inadmissible in this case.

Issue 4 (Whether the Pre-retainer Agreement and the 2^nd Set of Representations are binding on the defendant?  Whether the plaintiff is entitled to rely on the Pre-retainer Agreement and the 2^nd Set of Representations in these taxation proceedings?)

91.  As I have found that both the Pre-retainer Agreement and the 2^nd Set of Representations did not exist, it is not necessary for me to deal with Issue 4.  However, if I were wrong in that any of the Pre-retainer Agreement or the 2^nd Set of Representations did exist, the defendant conceded for the purpose of these proceedings that Ms Wong had the authority to bind the defendant.

92.  Mr Wong submitted that in any event the 2^nd Set of Representations had no contractual effect as it was not supported by consideration.  I do not agree.  If the 2^nd Set of Representations was made in the circumstances as alleged, there was certainly consideration for the same including continuing to engage the defendant and not to take immediate action to tax the 1^st Bill, just to cite a few.

93.  If the Pre-retainer Agreement and/or the 2^nd Set of Representations had been made as alleged, I am of the view that they had the effect of supplementing the Retainer Letter in governing the contractual relation between the parties at the material times.

Issue 5 (Whether the defendant is entitled to issue the 4^th Bill?  Whether the 4^th Bill should be struck out?)

94.  There are two questions for Issue 5, ie (1) whether the defendant was entitled to issue the 4^th Bill; and (2) whether the 4^th Bill should be struck out. To certain extent, they are two sides of the same coin but not exactly.

Whether the defendant was entitled to issue the 4^th Bill

95.  The defendant’s case was that in the period covered by the 3^rd Bill (ie from 7 November 2010 to 16 May 2011) the defendant’s fee earners had incurred no less than $10,159,975 as time costs. (See p 272 of the hearing bundles) However, the 3^rd Bill only charged $2,200,000 as “Agreed Costs” for the defendant’s fee earners’ time costs.  The defendant said that Ms Wong had undercharged the plaintiff for about $8 million.

96.  Mr Wong submitted that the writing-off or waiver of solicitors’ fees would not extinguish the client’s contractual liability to pay the balance of the outstanding costs, or preclude the solicitors from claiming costs for the works done.  He referred to Ashia Centur Ltd v Barker Gillette LLP [2011] 4 Costs LR 576 in which the court held that the solicitors were not precluded from claiming costs for work done after a certain agreed date, notwithstanding that they had previously agreed not to charge for the work in question.  The court found in that case that there was no consideration provided for the solicitor’s waiver, nor was there any representation from which it would be inequitable to allow the solicitor to resile from.  In that case, the alleged waiver was contained in a letter dated 2 July 2007 from the solicitors to the client.  The solicitors sent a pro-forma invoice to the client under cover of a letter dated 20 August 2007.  The client’s case was that the solicitors had included in the pro-forma invoice costs which the solicitors agreed in the 2 July 2007 letter not to charge.  The Taxing Master held that while the solicitors’ intentions as articulated in their letter of 2 July 2007 might be somewhat ambiguous, their letter of 20 August 2007 made clear what they would not be charging for. Tugendhat J found at the appeal that:

“19. … There is nothing by way of evidence of what, if anything, the client did following receipt of the letter of July 2 up to and including receipt of the letter of August 20, which, it is common ground, sets out the solicitors’ position in terms which, according to the client, are entirely different.

20. This simple fact is conclusive of this appeal.  There is no possible basis for impugning the Master’s findings that there was no consideration.  A promise does not become contractually binding simply because the making of the promise is potentially advantageous to the promisor.  The promisee must do or refrain from doing something.  There must be acceptance expressly or by implication.  There is simply nothing at all to which Mr Mallalieu [the client’s counsel] can point which might represent acceptance, a promise, forbearance or any reliance by the client on the letter of 2 July 2007.” 

97.  In the case before me, it is clear that the plaintiff had accepted the amount of “Agreed Costs” proposed by Ms Wong to her in May 2011 and in reliance on the agreement paid the “Agreed Costs” in June 2011 without seeking taxation before the payment.  There was a clear forbearance in this case.  The Ashia Centur Ltd case does not assist the defendant.

98.  Mr Wong further referred to Slatter v Ronaldsons [2002] 2 Costs LR 267 when the court held that the contractual liability to repay the balance of the solicitor’s bill survived the “writing-off” of the outstanding costs, and that the claimant had not acted to his detriment entitling him to raise an estoppel claim.  In that case Mr Justice Patten stated that:

“15. I am not satisfied, on that basis [the client being told that the bills concerned had been written off and that the VAT had been reclaimed], that any form of estoppel arises in this case.  It seems to me that the phrase “written off”, in an accounting context, means no more than that the sums in question are treated as bad debts and discounted in the firm’s accounts for the purposes of calculating its profitability, or otherwise, in the relevant accounting year.  That is a self-contained internal exercise for accounting and fiscal purposes, which has got nothing to do with the question of the state of the contract between the firm of solicitors and their client.  For an estoppel of the kind that is relied on to arise it would, in my judgment, be necessary for Ronaldsons [the solicitors] to have authorised Mr Barrand [the solicitors’ then employee] to have informed Mr Slatter [the client] that the firm not only had written the relevant amounts off, but had no intention of seeking repayment of those sums at any future date.  As unequivocal representation of that kind would, I think, on the well established principles in such cases as Central Properties v High Trees House, be sufficient to found an equity in favour of Mr Slatter, provided there was evidence that he had relied upon that representation to his detriment. …”

99.  The plaintiff’s case was that the defendant was estopped from issuing the 4^th Bill and the 4^th Bill should be struck out.  The plaintiff pleaded at paras 19 to 21 of the points of claim that the defendant represented to the plaintiff that the 3^rd Bill was the final bill issued by the defendant to the plaintiff and the plaintiff would not be required to pay any further costs in respect of the PSG Matter and that Ms Wong’s prevailing or usual hourly rate at the time was $9,500.

100.  Mr Wong pointed out that the hourly rate of Ms Wong at $9,500 stated on the 3^rd Bill was a clerical error which was accepted by Ms Wong in her witness statement and that the fee charged under the 3^rd Bill were calculated based on Ms Wong’s internal rate of $5,200 but not $9,500.

101.  Mr Dawes submitted that the conditions for an estoppel by representation were satisfied in this case.  He submitted that the words “Bill of costs & disbursements (Final)” stated on the 3^rd Bill constituted a clear and unequivocal representation by the defendant that the 3^rd Bill was the final bill to be issued by the defendant and the plaintiff would not be required to pay any further costs in respect of the PSG Matter.  He contended that in making such representations, the defendant (acting through Ms Wong) intended or knew that it was likely to be acted upon and in reliance on such representations, the plaintiff acted to her detriment by paying the 3^rd Bill in full without any further negotiations and not exercising her statutory right to tax the 1^st, 2^nd and 3^rd Bills forthwith.  He submitted that it was inequitable for the defendant to revoke the aforesaid representations by issuing the 4^th Bill to demand further time costs.

102.  An estoppel by representation arises if the following elements were made out (see para 9.02 of Wilken and Ghaly, The Law of Waiver, Variation and Estoppel (3^rd ed)):

(a) A makes a false representation of fact to B;

(b) in making the representation, A intended or knew that it was likely to be acted upon;

(c) B, believing the representation, acts to its detriment in reliance on the representation;

(d) A subsequently seeks to deny the truth of the representation; and

(e) no defence to the estoppel can be raised by A.

103.  Mr Wong contended that the 3^rd Bill could not be construed as giving rise to a clear and unequivocal representation that the 3^rd Bill was the final bill to be issued by the defendant to the plaintiff and the plaintiff would not be required to pay any further costs in respect of the PSG Matter.

104.  Mr Wong referred to para 15 of the judgment of Patten J in the Slatter case (supra) to submit that an unequivocal representation in this context would require the solicitors to have informed the client that the firm not only had written the relevant amounts off, but had no intention of seeking repayment of those sums at any future date.  He contended that the defendant in this case had never made such unequivocal representation to the plaintiff.

105.  The 3^rd Bill clearly stated in its heading that it was a final bill.  Mr Wong contended that it was a far stretch for the plaintiff to argue that the word “final” could clearly and unequivocally be read as representing that the plaintiff would not be required to pay further costs regarding the PSG Matter and that it was not sufficiently clear that the word “final” necessarily meant that no further bills would be issued.  With respect, I disagree.  A final bill is a final bill.  It is final at least in respect of the period covered by the bill concerned. When the defendant described the 3^rd Bill as “Bill of costs & disbursements (Final)”, it had made a clear and unequivocal representation to the plaintiff that the defendant would issue no further bill on the PSG Matter to the plaintiff in respect of the period from 7 November 2010 to 16 May 2011.  I do not accept Mr Wong’s aforesaid contention.

106.  Mr Wong further submitted that even if the court found that the defendant had made the aforesaid representation, the plaintiff did not act in detrimental reliance on the alleged representation.  He contended that the act of the plaintiff settling the 3^rd Bill in full and not exercising her statutory right to tax the 1^st, 2^nd and 3^rd Bills did not amount to a detriment recognised in law.  He submitted that the plaintiff was under an existing obligation to pay for the work done under the 3^rd Bill, and as such the settling of the 3^rd Bill could not amount to a detriment.  Furthermore, the plaintiff was not deprived of her right to tax the 1^st, 2^nd and 3^rd Bills by settling the 3^rd Bill and she was seeking to tax those bills in these proceedings.  Mr Wong said that the plaintiff suffered no detriment as she would be able to recover for any excessive payment should these proceedings result in any reduction of the amounts claimed under the four bills.  He further said that according to a letter dated 21 November 2011 sent by the plaintiff’s solicitors, the plaintiff initially had no intention to tax the 1^st, 2^nd and 3^rd Bills. (See pp 1354-1356 of the hearing bundles)

107.  In para 64 of her witness statement, the plaintiff stated that:

“64. Had I known that Ms Wong’s prevailing and usual hourly rate was only HK$5,200 or that the Defendant reserved its right (if any) to issue further bills of costs in respect of the PSG Matter, I would not have paid and would have immediately applied for taxation of all the bills issued by the Defendant thus far. …”

108.  I agree that the plaintiff was under an existing obligation to pay for work done by the defendant for the plaintiff in the PSG Matter.  However, this does not mean that the plaintiff was obliged to pay the amount charged by the 3^rd Bill.  The plaintiff was entitled to have the fees payable by her to the defendant to be determined by taxation before she would pay the same.  The plaintiff settled the 3^rd Bill in full without having the same taxed first.  The plaintiff acted to her detriment as she might have paid excessive fees to the defendant.

109.  Mr Wong referred to Tankrederei Ahrenkeil G.m.b.H v Frahuil S.A. (the “Multitank Holsatia”) [1988] 2 Lloyd’s Rep 486 when the court found that the payment of the arbitrators’ fees by the claimant pursuant to the other party’s implied representation that the arbitration was abandoned was insufficient to found a plea in estoppel as such act did not amount to act to the claimant’s detriment so as to found an estoppel because if the arbitration were to proceed these fees could be made the subject of an award in the claimant’s favour if the claimant succeeded on the merits.

110.  Mr Wong submitted that the plaintiff suffered no detriment in paying the costs charged under the 1^st to 3^rd Bills without exercising her right to taxation before payment as the plaintiff would be able to recover for any excessive payment should these proceedings result in any reduction of the amounts claimed under the Bills.

111.  With respect, I do not agree.  Even if the plaintiff might subsequently recover excessive fees paid, she had already been out of pocket for a substantial sum of about $1.8 million for a considerable period of time which might not be adequately compensated by interest.  Furthermore, she had put herself in a more difficult position to seek taxation after settlement of the 3^rd Bill as she would have to prove exceptional circumstances which “is a stringent test requiring cogent evidence” (per Master de Souza in Wong Kar Gee Mimi v Hogan Lovells (a firm) [2012] 5 HKLRD 348 at para 28).  The Legal Practitioners Ordinance (Cap 159) (the”LPO”) has created various regimes for taxation of solicitor-and-client costs. (See para 140 below)  If the plaintiff did not pay the 3^rd Bill but proceeded to taxation within one month, she would be in the First Regime as discussed below.  Even if she failed to commence taxation within one month but did that within 12 months, she would still be in the Second Regime.  However, after settling the 3^rd Bill, the plaintiff put herself into the Third Regime.  This is clearly distinguishable from payment of the arbitrators’ fees in the “Multitank Holsatia” case (supra) when the court found that the paying party might recover the fees if the arbitration were to proceed and the paying party succeeded on the merits.

112.  The plaintiff initially did not intend to tax the 1^st, 2^nd and 3^rd Bills was in the context of those bills having been agreed to covered all costs payable by the plaintiff to the defendant on the PSG Matter.  The plaintiff’s decision not to exercise her statutory right of taxation was also to the plaintiff’s detriment.

113.  Evidence adduced showed that the plaintiff did act to her detriment as she had settled the “Agreed Costs” without having the same to be taxed before settlement which gave rise to a plea of estoppel.  The plaintiff relied on the defendant’s representations through Ms Wong that the 3^rd Bill was the final bill and the “Agreed Costs” were the only remaining costs the plaintiff was liable to pay under the Retainer Letter to settle the 3^rd Bill.

114.  The case before me is not a case about “a self-contained internal exercise for accounting and fiscal purposes” but an agreement to the amount of costs to be charged under the contract reached between the solicitors and their client.  The defendant had conceded for the purpose of these proceedings that Ms Wong had the authority to bind the defendant in respect of fees agreement with the plaintiff.  In such case, Ms Wong was authorized to agree with the plaintiff on the amount of total costs to be paid by the plaintiff in the PSG Matter.  I am of the view that the agreement for the agreed costs together with the presentation of the 3^rd Bill as a final bill stipulating the costs charged as agreed costs amounted to an unequivocal representation that after paying the agreed costs charged in the 3^rd Bill which was “final”, the defendant had no intention of seeking payment of further costs on the PSG Matter from the plaintiff and the plaintiff had relied upon that representation to pay the agreed costs without seeking taxation to her detriment.  An estoppel of the kind discussed by Mr Justice Patten arose in this case.  The Slatter case works against the defendant.

115.  Mr Dawes further referred me to Chin Yuk Lun Francis v Messrs Lo & Lo (a firm) (unrep, HCMP 1142/2005, 7 July 2006) when the court held that “final” in the context of a solicitor’s bill of costs meant finality, ie it would not be changed and it implied self containment.  It was final in respect of a certain stage defined in the retainer, whether by event or by time.

116.  In the Chin Yuk Lun Francis case, the court was concerned with the distinction between a bill as a separate bill and as one of a series of bills.  Our concern is whether the 3^rd Bill was a final bill or one of a series of bills ended with the 4^th Bill.  In the judgment of DHCJ To (as he then was) in the Chin Yuk Lun Francis case there was a thorough discussion of what would constitute a final bill.  His Lordship referred to the following passage in the judgment of Cohen J in the Canadian case of De Cotiis v Owen Bird [1998] 51 BCLR (3d) 272 for the meaning of the word “final” in the context of a solicitor’s bill of costs when Cohen J said:

“16. Some support for the interpretation advanced by the defendants, namely that a “final” account need not be the “last” account, or that there may be more than one “final” account, may be found in the case law on the taxation of solicitors’ bills. In this context, a “final account” has been defined as an account which has two features; it will not be changed, and it covers all professional services performed within a certain time: Architectural Institute of BC v McAlpine, Roberts & Co (1982), 37 BCLR 332 at 335 (CA). This definition was also cited with approval in Robertson, Ward, Suderman & Bowes v BC Transit (1987), 19 BCLR (2d) 1 at 8 (CA).

17. In this manner, “final” is not necessarily synonymous with “last” in reference to a lawyer’s bill, and accounts which are rendered periodically may nonetheless be final accounts. This is so under circumstances such as those in Ray, Wolfe, Connell, Lightbody & Reynolds v Henry Electric Ltd and Union Electric Supply Co (1982), 37 BCLR 203 (CA), where at p 208 Craig JA, Bull JA concurring, concluded that:

each account rendered by the respondent in this case, although periodic, related to all the professional services performed within the stipulated period and that each account was final in the true sense of the word.

Nevertheless, while it is not unheard of for the court to construe periodic accounts as final bills, it has been said that courts “should lean against” doing so: BC Transit at p 9. The appropriate question to ask is “whether, having regard to the dealings of the parties and the circumstances, it can be concluded that the parties intended the accounts in question to be the law firm’s final account for the work they represented”: BC Transit at p 10.”

117.  The 3^rd Bill was issued at a time when the defendant’s retainer was going to be terminated.  The 3^rd Bill stated that it covered the period from 7 November 2010 to 16 May 2011 and was “final”.  The amount of the fees had been agreed by the parties.  In the circumstances, other than concluding that the parties intended the 3^rd Bill to be the defendant’s final account for their services to the plaintiff on the PSG Matter, I see no other reasonable alternative.

118.  As stated by DHCJ To in para 12 of his judgment in the Chin Yuk Lun Francis case, “final” in the context of a solicitor’s bill of costs meant finality, ie it would not be changed and it implied self containment.  To determine whether a bill had been delivered as a final bill, his Lordship stated in his judgment that:

“18. … There are two elements here. The solicitor has to deliver the bill intending it to be a final bill and it is also intended and understood by the client to be a final bill. This question has to be answered by looking at the intention of the solicitor and the client, their conduct, the reaction of the client upon receipt of the bill and the form the bill took. …”

119.  The 3^rd Bill was labelled as “final”. It meant that it was final at least in respect of the period from 7 November 2010 to 16 May 2011 and would not be changed.  When Ms Wong sent the 3^rd Bill to the plaintiff, both parties understood and intended the 3^rd Bill to be final.  The plaintiff duly settled the substantial outstanding sum of more than $1.7 million under the 3^rd Bill without seeking taxation believing that it was the final bill of the defendant for the PSG Matter.  The defendant conceded for the purpose of these proceedings that Ms Wong had authority to bind the defendant on fees agreement with the plaintiff.  The defendant was not entitled to issue the 4^th Bill in respect of the same period of time covered by the 3^rd Bill on the PSG Matter.

Whether the 4^th Bill should be struck out

120.  Mr Wong further submitted that the plaintiff was in any event estopped and/or precluded from seeking to strike out the 4^th Bill.  He argued that by commencing these proceedings to tax the Bills, the plaintiff had treated the 3^rd Bill as an “interim” bill and was precluded from contending that the 3^rd Bill should be held to be the “final” bill under the doctrine of election.  Mr Wong said that in reliance on the plaintiff’s representation that the 3^rd Bill was an “interim” bill and/or that the plaintiff would tax all the four bills of the defendant, the defendant had acted and/or refrained to act to its detriment.  The detriments referred to by Mr Wong were that (1) the defendant had incurred substantial time and costs in preparing for the taxation of all the four bills in these taxation proceedings; (2) the defendant had agreed with Ms Wong in HCA 297/2012 to adjourn the proceedings until the determination of these taxation proceedings; (3) the defendant had refrained from commencing or prosecuting any action against the plaintiff in respect of the outstanding amount under the 4^th Bill pending the outcome of these taxation proceedings; and (4) the defendant had further refrained from taking any issue and/or challenging the plaintiff’s entitlement to tax the 1^st, 2^nd and 3^rd Bills in these taxation proceedings.

121.  Mr Dawes submitted that the plaintiff had not made any representation that she accepted the 4^th Bill as the final bill and/or that she would pay to the defendant the amount claimed under the 4^th Bill.  The defendant had all along referred to the 4^th Bill as “a draft note of fees” not as “a bill” until the hearing before DHCJ M Ng on 5 June 2013.  The 4^th Bill did not contain any details or breakdown of the alleged outstanding costs.  Even if the plaintiff had commenced these proceedings on the understanding (or misunderstanding) as to the nature of the 3^rd Bill and the 4^th Bill, such conduct on the part of the plaintiff was not and could not be a representation on the part of the plaintiff as to nature of the Bills and no reliance could legitimately be placed by the defendant on such understanding (or misunderstanding) of the plaintiff as it was the defendant who issued the Bills to the plaintiff and the defendant should be fully aware of the true nature of each of the Bills.  He submitted that it lied ill in the mouth of the defendant to say that it had “detrimentally relied upon” such alleged representation by the plaintiff.

122.  Mr Dawes further submitted that at the time when the plaintiff commenced these taxation proceedings, she was not aware of her right to claim that the defendant was estopped from issuing the 4^th Bill.  There could be no waiver without knowledge of the right alleged to be forgone. (See Wilken & Ghaly at para 4.45)

123.  The plaintiff had all along been legally represented from the first issue of the 4^th Bill to the commencement of these proceedings.  She should have been duly and properly advised on her legal position in respect of the 4^th Bill and these proceedings.  I do not accept Mr Dawes’s contention that at the time when the plaintiff commenced these taxation proceedings, she was not aware of her right to claim that the defendant was estopped from issuing the 4^th Bill.

124.  Mr Dawes further submitted that it could not be said that the defendant had suffered any detriment as the defendant had been actively pursuing the amount under the 4^th Bill and disputing the plaintiff’s entitlement to taxation.  In such case, the defendant would have to prepare for the taxation of the Bills in any event.  Mr Dawes submitted that the plaintiff was not a party to the proceedings between the defendant and Ms Wong (ie HCA 297/2012).  Any decision on the defendant’s part relating to conduct of that action was not relevant to the plaintiff.

125.  Mr Dawes submitted that the plaintiff applied for taxation of the Bills on the basis that Ms Wong had no authority over costs and billing matters as asserted by the defendant in its letter dated 17 June 2011. (See pp 275-276 of the hearing bundles)  If that was established, it followed that Ms Wong also had no authority to sign the Retainer Letter or agree with the plaintiff on the hourly rates to be charged by the defendant’s fee earners or issue any interim bills to the plaintiff.  In such case, the Bills should be taxed without reference to any of the fee agreements or representations made between the plaintiff and Ms Wong.

126.  Mr Dawes said that only on the 4^th day of this hearing of the Preliminary Issues, the defendant changed its stance and conceded that, for the purpose of these proceedings, Ms Wong had ostensible authority to enter into the Pre-retainer Agreement (if made), to make the 2^nd Set of Representations (if made), and to issue the 1^st to 3^rd Bills.  He contended that had the defendant adopted such position from the beginning, the plaintiff would have applied to strike out the 4^th Bill in the first place.

127.  In Spencer Bower, The Law Relating to Estoppel by Representation (4^th ed) the learned editors stated in para XIII.3.1 that:

“… In order establish that a party is bound by an election, the party relying on that election must first establish that the electing party has made an equivocal representation of his decision to choose one course of action over another and communicated that decision to the other party. …”

128.  I note that in the originating summons, the plaintiff had described the 1^st, 2^nd and 3^rd Bills as “Interim Bills”.  However, these taxation proceedings were caused by the defendant asserting that Ms Wong had no authority to issue the 3^rd Bill as the final bill.  The plaintiff’s act in commencing these proceedings was logical response to such assertion.  If Ms Wong had no authority to issue the 3^rd Bill as the final bill and the defendant had issued a further bill (or a draft note of fees as the defendant called it), the plaintiff had to seek taxation for all of the defendant’s bills.  This had been expressly stated in the letter dated 21 November 2011 sent by T&S to the defendant when T&S stated that: “if you [the defendant] maintained that your Bill dated 16 May 2011 [the 3^rd Bill] was not final and hence the Further Bill [the 4^th Bill] was to be delivered to us, our client [the plaintiff] shall exercise her right to tax all your bills immediately.” (See pp 1354-1356 of the hearing bundles at p 1356)

129.  In P’s First Affirmation, the plaintiff stated that:

“23. I have sought legal advice and verily believe that in circumstances where Wong [Ms Wong] had no authority (as the Defendant have asserted), she would not have the authority to agree on behalf of the Defendant with me on the fees for my matters and accordingly the Defendant was not bound by what Wong purported to have agreed with me. In the circumstances, I have instructed Messrs Tang & So to inform the Defendant that I shall exercise my right under Section 67 of the Legal Practitioners Ordinance to tax all their bills. …”

130.  An element of waiver is an unequivocal representation by the representor either by words or conduct that he/she will forgo certain rights and to establish an estoppel by representation, fairly stringent clarity requirements are imposed. (See paras 4.45 and 9.32 of Wilken and Ghaly)  Whether relying on election, waiver or estoppel by representation, the defendant has to show clear and unequivocal representation made by the plaintiff.

131.  In commencing these taxation proceedings in the circumstances of this case, I do not see that the plaintiff had made an unequivocal representation to the defendant that she would forgo her right to challenge the validity of the 4^th Bill on the ground that Ms Wong had authority to bind the defendant to the agreement set out in the 3^rd Bill.

132.  These proceedings were commenced in response to the defendant’s assertion that Ms Wong had no authority to agree with the plaintiff on the fees.  If the defendant’s aforesaid assertion was correct, all fee agreements entered into by Ms Wong with the plaintiff and the 1^st to 3^rd Bills issued by the defendant to the plaintiff would be of no legal effect.  The plaintiff would have no alternative but to resort to taxation to determine her obligations under the law for the defendant’s fees.  These proceedings were brought on the basis that Ms Wong had no authority to bind the defendant to the fee agreement evidenced by the 3^rd Bill as asserted by the defendant.  The plaintiff made no representation that she accepted the defendant’s aforesaid assertion or that she would not challenge such assertion or the validity of the 4^th Bill on the ground that the fee agreement evidenced by the 3^rd Bill was binding on the defendant.

133.  Considering these proceedings in the context of the pre-action correspondences between the parties and the whole circumstances of this case, I do not agree that the plaintiff had made an election which would stop her from challenging the 4^th Bill or the plaintiff had otherwise been estopped from so doing by waiver or estoppel by representation.

134.  The plaintiff had not unequivocally represented to the defendant that she accepted the 3^rd Bill as only interim bill or that she agreed to the defendant issuing the 4^th Bill to her. She did nothing to induce the defendant to act to its detriment if the defendant did so act.  It was the defendant’s aforesaid assertion which caused these taxation proceedings.  If the defendant suffered any detriment, it was the author of its own misfortune.

135.  I find that the plaintiff is not estopped from seeking to strike out the 4^th Bill.  As I have also found that the defendant was not entitled to issue the 4^th Bill, the same shall be struck out.

Issue 6 (Whether the plaintiff is entitled to tax the 1^st, 2^nd and 3^rd Bills in these taxation proceedings?)

136.  If the defendant was not entitled to issue the 4^th Bill or the 4^th Bill should be struck out, is the plaintiff entitled to tax the 1^st, 2^nd and 3^rd Bill?

137.  The plaintiff sought to tax the 1^st, 2^nd and 3^rd Bills pursuant to section 67 of the LPO on the basis that there were special circumstances justifying taxation despite the fact that the 1^st to 3^rd Bills had already been fully settled.

138.  Section 67(1) and (2) of the LPO provides that:

“(1) On the application, made within 1 month of the delivery of a solicitor’s bill or a foreign lawyer’s bill, of the party chargeable therewith the Court shall, without requiring any sum to be paid into court, order that the bill shall be taxed and that no action shall be commenced thereon until the taxation is completed.

(2) If no such application is made within the period mentioned in subsection (1), then, on the application of the solicitor or the foreign lawyer or of the party chargeable with the bill, the Court may, upon such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order –

(a) that the bill shall be taxed;

(b) that, until the taxation is completed, no action shall be commenced on the bill, and any action already commenced be stayed:

Provided that –

(i) if 12 months have expired from the delivery of the bill, or if the bill has been paid, or if a verdict has been obtained or a writ of inquiry executed in an action for the recovery of the costs covered thereby, no order shall be made on the application of the party chargeable with the bill except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the Court may think fit;

(ii)  if the bill has been paid, no order under this subsection shall be made where the application for the order is made after the expiration of 12 months from the date of payment of the bill.”

139.  Mr Wong relied on section 67(1) and (2) of the LPO to submit that the plaintiff should not be permitted to tax the 1^st, 2^nd and 3^rd Bills.

140.  As pointed out in the Wong Kar Gee Mimi case (supra), Section 67(1) and (2) of the LPO had created three regimes:

“25. There is consensus on the authority of Re Miller Peart [2007] 3 HKLRD 125, followed in Re KC Ho & Fong (unrep., HCMP 61/2007, [2007] HKEC 1687) that s 67(1) and 67(2) of the LPO have created three regimes:

First Regime

Where the application for taxation of bills is made within one month since delivery of the solicitor’s bill, the client may apply to have the bill taxed as of right, and no term or condition will be imposed: s 67(1) of the LPO.

Second Regime

If the client fails to apply for taxation within one month since the delivery of the bill, either the solicitor or the client may apply for taxation and the court may so order and impose any terms as it may think fit except terms as to the costs of the taxation: s 67(2) of the LPO.

Third Regime

  If twelve months or more have lapsed since the delivery of the bill or if the bill has been paid, the client must demonstrate special circumstances to justify his application for taxation and the court may impose any terms including terms as to the costs of the taxation: s 67(2)(b)(i) of the LPO.”

141.  Mr Wong submitted that if the 4^th Bill was struck out, the 3^rd Bill would be the final bill.  The 3^rd Bill was issued and delivered on about 16 May 2011 and was fully settled on about 22 June 2011.  The plaintiff’s application to tax the 1^st, 2^nd and 3^rd Bills would fall in the Third Regime and the plaintiff had to show “special circumstances” which justified the plaintiff’s aforesaid application.

142.  In Ding Xiaohong & Ors v King & Wood (a firm) [2013] 2 HKC 245, DHCJ Lok (as he then was) summarised the relevant principles concerning “special circumstances” as follows:

“32. As regards what constitute special circumstances, the following legal principles are relevant:

(i) they are something out of the ordinary, something serious to justify not only an ordinary taxation but a special one (see: Re Miller Peart [2007] 3 HKC 585, [2007] 3 HKLRD 125 at §65, per Recorder Jat SC);

(ii) the discretion to extend the limitation is a wide one and a liberal interpretation should be given to the words ‘special circumstances’ (see: Re Solicitors [1984] HKC 346 at 349I, per Mayo J);

(iii) each case will depend on its own facts (see: Re Miller Peart, supra, at §85);

(iv) overcharging and false charging are well-established special circumstances (see: Re Miller Peart, supra, at §86, Re Solicitors, supra, at 349D-I, Wang Yeoh Yu Ruth v Chan Victoria [1988] 1 HKC 687 at 690I-691E, In Re Norman (1886) QBD 673 at 676 and Re A Solicitor [1961] 1 Ch 491); and

(v) lack of particularity in the bill also constitutes a special circumstance (see: Springbok Shipping (HK) Ltd v Clayton Wong & Co [1997] 3 HKC 710, [1998] 1 HKLRD 225 at 227E-F).”

143.  In South Horizons International Petroleum Ltd v Crump & Co [2002] 2 HKLRD 187 Mayo VP stated that:

“21. The test for establishing that special circumstances are applicable would appear to be stringent one. Mortimer VP had this to say at p 713H in Clayton Wong & Co v Springbok Shipping (HK) Ltd [1997] 3 HKC 710, [1998] 1 HKLRD 225 at p 228:

  Bearing in mind those principles – which I find of great help – it seems to me that the special circumstances which must be found by a judge must be something which is out of the ordinary.  There must be something which is serious and which justifies not only an ordinary taxation but a special one.”

144.  Mr Wong submitted that the plaintiff’s position had always been that taxation of the 1^st, 2^nd and 3^rd Bill would not be necessary if there was not the 4^th Bill.  This was confirmed in the letter of T&S dated 21 November 2011 and by the plaintiff during her cross-examination.  The plaintiff had also confirmed that she did not dispute disbursement items charged in the defendant’s bills and the 2^nd Bill was only concerned with disbursement items.

145.  Mr Dawes referred to the following matters as special circumstances justifying the plaintiff’s application for an order of taxation in respect of the 1^st, 2^nd and 3^rd Bills:

(a) the plaintiff settled the 1^st, 2^nd and 3^rd Bills without protest because she was acting in reliance on the Pre-retainer Agreement and the 2^nd Set of Representations;

(b) the plaintiff did not know that the correct prevailing or usual hourly rate for Ms Wong in respect of the PSG Matter was only $5,200 instead of $7,500 until her legal representatives had a chance to study the bill guide attached to the 4^th Bill;

(c) as the correct prevailing or usual hourly rate of Ms Wong for the PSG Matter was $5,200, there was gross overcharging or false charging on the part of the defendant in respect of the 1^st and 3^rd Bills (the 2^nd Bill being for disbursements only);

(d) by stating an hourly rate that was substantially higher than Ms Wong’s actual prevailing or usual hourly rate without any or any proper justification, the agreement contained in the Retainer Letter or the hourly rate of Ms Wong at $7,500 as set out in the Retainer Letter was unfair and unreasonable pursuant to section 60(2) of the LPO;

(e) Ms Wong admitted in cross-examination that the number of hours charged under the 1^st Bill was inflated by more than 100 hours.  There was no evidence that the subsequent adjustments made by Ms Wong were reasonable and sufficient to offset the gross exaggeration in the 1^st Bill;

(f) the defendant relied on Ms Wong’s timesheets to justify the reasonableness of its fees.  However, the timesheets were prepared by Ms Wong’s secretary and sometimes Ms Wong even told her secretary to fill in whatever figure she liked.  According to Ms Wong, the timesheets were prepared for internal purpose, and they did not reflect her time spent accurately;

(g) the 3^rd Bill did not contain any breakdown or particularity of the work done in the relevant billing period; and

(h) the plaintiff did not make express reservation of her right to tax because Ms Wong had repeatedly assured the plaintiff of her right to taxation when the plaintiff settled the bills.

146.  As I have found that there was no Pre-retainer Agreement between the plaintiff and the defendant as alleged and that there was no specific representations alleged as the 2^nd Set of Representations being made, argument on special circumstances relying on the Pre-retainer Agreement and the 2^nd Set of Representations falls away.

147.  The hourly rate of Ms Wong stated in the bill guide of the defendant was $5,200.  Mr Yung had explained this hourly rate of Ms Wong in his witness statement as follows:

“17. As in most of the law firms in Hong Kong, each of the partners, consultants and associates of K&W [the defendant] (collectively referred to as “Fee Earners”) was given an internal hourly rate, which was reflective of and may change in accordance with the post-qualification experience of each individual fee earner.

18. The said internal hourly rates were adopted in K&W’s internal accounting system (“Internal Accounting System”) and served as a guideline of the respective hourly rates that may be applied by the Fee Earners.

19. The said internal hourly rates, however, are not binding in nature.  This is because they cover a wide range of cases, starting from simple contractual matters to high power international commercial litigations.  The Fee Earners could decide whether there were any particular circumstances in each case that required or justified the adoption of some other figures as their hourly rates.  The adjustment of their applicable hourly rates for a particular case would depend on a wide range of factors, such as the nature of the case, its complexity, its urgency and also the rates charged by comparable law firms for that particular case.  Hence, the said internal hourly rates cannot be regarded as any kind of yardstick.

20. Hence, for example, Cindy Wong [Ms Wong] was provided by K&W with an internal hourly rate of HK$5,200 as an internal guideline.  Her work-in-progress in the Internal Accounting System was calculated based on the said default internal hourly rate.  Nonetheless, depending on the complexity, urgency, individual circumstances and scale of each case, Cindy Wong could agree with the clients for K&W to charge its fees at other hourly rates, as in the present case at HK$7,500.”

148.  Mr Yung referred to other cases previously handled by Ms Wong at the defendant when her hourly rates charged (without discount) ranged from $6,500 to $9,500. (See pp 1217 and 1372(2-54) of the hearing bundles)  Ms Wong in her supplemental witness statement referred to other cases previously handled by her when her effective hourly rates (after discount) ranged between $3,464 and $5,225. (See p 354 of the hearing bundles) The evidence clearly showed that Ms Wong’s hourly charging rate varied.  It could be higher or lower than $5,200.  I accept Mr Yung’s evidence and find that the hourly rate of $5,200 for Ms Wong as shown in the bill guide was only the hourly rate of Ms Wong for the defendant’s internal reference.  There was nothing call the “correct prevailing or usual hourly rate for Ms Wong in respect of the PSG Matter” as contended by Mr Dawes in paras 64 and 65 of his closing submissions.  The argument on special circumstances relying on this so called “correct prevailing or usual hourly rate for Ms Wong in respect of the PSG Matter” cannot take off the ground.

149.  Mr Wong further submitted that the plaintiff had failed to show that there were special circumstances which would justify an order for taxation of the 1^st, 2^nd and 3^rd Bills as the hourly rate charged by Ms Wong in these Bills were lower than the hourly rate agreed in the Retainer Letter and without the 4^th Bill, a substantial billable costs of Ms Wong chargeable under the 3^rd Bill (78.3%) had been written-off.  There was no room for the plaintiff’s argument of “gross overcharging”. 

150.  Ms Wong in her oral evidence said that she had inflated her charges in the 1^st Bill and that her timesheets kept at the defendant did not accurately record the time spent by her on the PSG Matter.  I have found that her “buffer” theory was not support by the contemporaneous document being the bill guide for the 1^st Bill. (See paras 84-87 above).  When Ms Wong issued the 1^st Bill, she had written-off some of the profit costs of the defendant’s fee earners (including profit costs of herself) calculated according to the time records on the bill guide which in turn were based on timesheets submitted by the fee earners, including those submitted by Ms Wong.  In her instructions to the account department of the defendant marked on the relevant bill guide, Ms Wong expressly instructed the defendant’s account department that: “For period up to & incl 6 Nov, please write off All unbilled time costs as marked.  Also, pls make sure time costs from 7 Nov remain undisturbed.” (Original underline but emphasis added) (See p 1117 of the hearing bundles)  It can be seen that Ms Wong did rely on the time recorded on the timesheets and showed on the bill guide when she issued bills to her clients.  Otherwise, she would not have bothered to ask the defendant’s account department to “make sure” that the time records after 7 November 2010 remained undisturbed.  I do not find that Ms Wong’s evidence on how she took the timesheets records when she issued bills credible. Such incredible evidence cannot help to establish special circumstances to support an application for taxation in the Third Regime.

151.  Even if one accepts Ms Wong’s evidence that the time records of the defendant were unreliable, it was also Ms Wong’s evidence that when she issued bills to her clients, she would review the file and charge for what she had actually done.  Her evidence was that when she issued the 3^rd Bill, she had considered the works done by her and other fee earners in the PSG Matter and the fees previously charged before she decided on the final amount to be charged.  If the “buffer” theory were to be accepted, any inflated charges in the 1^st Bill would have been taken into account and compensated in the charges proposed by Ms Wong for the 3^rd Bill.  Ms Wong was the one who had been in charge of the PSG Matter at the defendant.  She knew better than anyone how much work had been done by her and the other fee earners of the defendant in the PSG Matter.  The plaintiff also accepted the final figure proposed by Ms Wong and duly settled the same on 22 June 2011.  Both Ms Wong and the plaintiff agreed that the total fees charged by the defendant in the 1^st and 3^rd Bills were reasonable charges for the PSG Matter.  I see no merits for the plaintiff now to put forward overcharging as a special circumstance to justify an “out of the ordinary” taxation.

152.  The 3^rd Bill did not contain any breakdown or particularity of the work done because Ms Wong had already agreed with the plaintiff on the amount to be charged before she issued the 3^rd Bill to the plaintiff.  I do not see this as a special circumstance justifying an order for taxation under the Third Regime.

153.  The plaintiff admitted that from her previous experience in retaining lawyers to work for her and her companies, she knew that she had a statutory right to taxation. (See para 10 of the plaintiff’s witness statement)  If the plaintiff wished to reserve her right to tax the defendant’s costs charged to her, she would not have agreed with Ms Wong for the costs for the 3^rd Bill and she would not have made the further substantial payment of about $1.8 million to settle the 3^rd Bill in about one month’s time without applying for taxation, a right she all along fully aware of.  Evidence adduced before me did not show that the plaintiff had reserved or intended to reserve her right to taxation prior to the defendant’s alleging that there was further fees payable after the 3^rd Bill. T&S had repeatedly asserted on behalf of the plaintiff that there were agreements between the plaintiff and the defendant (through Ms Wong) for full and final settlement of the defendant’s costs and disbursements for the whole engagement of the defendant.  In their letter dated 21 November 2011 (p 1356 of the hearing bundles), T&C stated that:

“Nevertheless, if you [the defendant] confirm that upon the issue of your Bill dated 16 May 2011 [ie the 3^rd Bill] (followed by our client’s full payment on 22 June 2011), there is already full and final settlement of all your costs and disbursements for the said engagement, then we will advise our client that the taxation of your said bills is not necessary.”

154.  I find that the plaintiff had not expressly or impliedly or even had the intention to reserve her right to taxation when she settled the 3^rd Bill on 22 June 2011.

155.  As the 1^st, 2^nd and 3^rd Bills had been fully settled and I do not accept that there are special circumstances justifying an order for taxation, I find that if the 4^th Bill is struck out, the plaintiff is not entitled to tax the 1^st, 2^nd and 3^rd Bills in these taxation proceedings.

Issue 1 (Whether the defendant is entitled to rely on the hourly rates as set out in the Retainer Letter?)

156.  If any of the Bills is going to be taxed, whether the defendant is entitled to rely on the hourly rates as set out in the Retainer Letter?

157.  As I have found that the defendant was not entitled to issue the 4^th Bill and the plaintiff was not entitled to tax the 1^st, 2^nd and 3^rd Bills, it would not be necessary for me to deal with this Issue 1.  However, as my determination on Issue 6 above is also premised on the agreed hourly rates set out in the Retainer Letter being binding on the plaintiff, I shall set out below the reasons for this finding of mine.

158.  Mr Dawes submitted that Clause 4 of the Retainer Letter was a representation by the defendant that Ms Wong’s prevailing or usual hourly rate was $7,500.  He further submitted that such representation was misrepresentation and the Retainer Letter was liable to be set aside.

159.  Mr Wong submitted that the Retainer Letter contained the mutually agreed terms of the retainer agreement in relation to the PSG Matter.  The terms set out therein including the hourly rates of the defendant’s fee earners should be adopted as they were mutually agreed terms between the parties.  There was no evidence to suggest that there was any further agreement with respect to the agreed hourly rates of the defendant’s fee earners, or that the agreed hourly rates had been subsequently varied.

160.  Mr Wong submitted that the defendant had mistakenly used the defendant’s internal hourly rate for Ms Wong in calculating the amount charged for Ms Wong’s work in the PSG Matter in the Bills.  However, the defendant would still be entitled to rely on the contractually agreed hourly rate of Ms Wong to justify the amounts charged in the Bills which were gross sum bills.  Mr Wong said that the defendant did not in these proceedings seek to claim any sum over and above the amounts claimed under the Bills.

161.  Mr Wong further submitted that if the plaintiff relied on misrepresentation on Ms Wong’s hourly rate to “set aside” the Retainer Letter, the plaintiff would be seeking rescission of the contract ab initio and/or damages.  It did not allow the plaintiff to rewrite or negate specific terms of the contract in question.  Mr Wong contended that this was not permissible as a matter of law.

162.  Mr Wong further contended that the plaintiff’s claim of misrepresentation could not even get off the ground as the hourly rate of Ms Wong stated in the Retainer Letter was a contractual term but not a representation.  Mr Wong submitted that if the hourly rate of Ms Wong at $7,500 was a representation, it was not a misrepresentation as Ms Wong in her evidence confirmed that the hourly rate of $5,200 in the bill guide was for internal purposes.  He further submitted that there was no basis for the plaintiff to rely on the bill guide to suggest that Ms Wong’s “prevailing or usual hourly rate” was $5,200.

163.  Mr Wong further submitted that if Ms Wong’s hourly rate at $7,500 was a false representation, the plaintiff was not induced by such representation, which was less favourable than the alleged actual hourly rate of Ms Wong (ie $5,200), to enter into the retainer agreement.  Even if there was misrepresentation, it was not actionable.

164.  Mr Wong submitted that the plaintiff did not claim rescission or avoidance ab initio of the Retainer Letter and in para 4.3 of the points of reply the plaintiff sought to rely on terms of the Retainer Letter.  Mr Wong submitted that where a party in litigation admitted certain contractual obligations or sought orders which were only consistent with the contract remaining on foot, this would constitute affirmation of the contract and would operate as a bar to rescission.  In such case, the plaintiff could not rely on the ground of misrepresentation to set aside the Retainer Letter, or displace the hourly rates of the defendant’s fee earners set out in the Retainer Letter.

165.  Clause 4 of the Retainer Letter relating to the charging rate of Ms Wong and the defendant’s other fee earners read as follows:

“Our solicitor in charge will be Ms Wong Pui Fun Cindy (“Cindy Wong”).

The hourly rate of Ms Cindy Wong is HK$7,700.

In the interest of saving your costs, we may delegate part of the works which are mechanical in nature or less complicated to (i) our junior solicitor(s), (ii) trainee solicitor(s) and/or (iii) legal executives/clerks.  They will be under our close supervision in the course of discharging their duties.  The respective hourly rates of our junior solicitors, trainee solicitors, legal executives/clerks are (i) within the range between HK$3,500 – HK$4,500 and (ii) HK$2,500 and (iii) HK$1,000.

We reserve the right to review or increase the above-said hourly rates from time to time and will inform you of any changes to them as soon as practicable.”

166.  I agree with Mr Wong that clause 4 of the Retainer Letter was not a representation but a term of the contract.  If there was no representation, there was no misrepresentation.

167.  I have previously found that the rate of $5,200 was for the defendant’s internal reference, it was not the “prevailing or usual hourly rate” of Ms Wong.  Ms Wong had actually been charging her clients at the range of $3,464 to $7,980 per hour (after discount). (See pp 353-354 of the hearing bundles)  If clause 4 amounted to a representation or if there was an implied representation as contended by Mr Dawes, there was no misrepresentation as the charging rate stated in the Retainer Letter fell within Ms Wong’s actual charging range even after discount. 

168.  I have found that the hourly rate of Ms Wong could be higher or lower than $5,200. (See para 148 above)  There was no misrepresentation in respect of Ms Wong’s hourly rate stated in the Retainer Letter.  I do not propose to deal with in detail the plaintiff’s contention relying on this alleged misrepresentation in respect of the hourly rate of Ms Wong.  I agree with Mr Wong that if the plaintiff relied on misrepresentation as a cause of action, the plaintiff may only seek rescission of the contract concerned but not to reopen a particular term in the contract.  However, the plaintiff may rely on the fact of misrepresentation (if established) to support her contention that the retainer agreement was unfair or unreasonable which may trigger the operation of section 60 of the LPO which is one of the grounds relied on by the plaintiff to reopen the hourly rates of the defendant’s fee earners in taxation of the 1^st to 3^rd Bills if the court shall direct the same.

169.  Section 60 of the LPO provides that:

“(1) No action shall be brought upon any such agreement as is referred to in section 58 [which provides for solicitor to make agreement with client for the solicitor’s remuneration], but the court may, on the application of any person who is a party to, or the representative of a party to, the agreement, or who is, or who is alleged to be, liable to pay, or who is or claims to be entitled to be paid, the costs due or alleged to be due in respect of the business to which the agreement relates, enforce or set aside the agreement and determine every question as to the validity or effect thereof.

(2) On any such application the court –

(a) if it is of opinion that the agreement is in all respects fair and reasonable, may enforce it;

(b) if it is of opinion that the agreement is in any respect unfair or unreasonable, may declare it void and may order it to be given up to be cancelled and may order the costs covered thereby to be taxed as if the agreement had never been made;

(c) in any case, may make such order as to the costs of the application as it may think fit.

(3) If the business covered by any such agreement is business done, or to be done, in any event, the amount payable under the agreement shall not be received by the solicitor until the agreement has been examined and allowed by a taxing officer of the court, and, if the taxing officer is of opinion that the agreement is unfair or unreasonable, he may require the opinion of the court to be taken thereon and the court may reduced the amount payable thereunder, or order the agreement to be cancelled and the costs covered thereby to be taxed as if the agreement had never been made.

(4) When the amount agreed for under any such agreement has been paid by or on behalf of the client or by any person entitled to do so, the person making the payment may at any time within 12 months after payment apply to the court and the court, if it appears to it that the special circumstances of the case require the agreement to be reopened, may, on such terms as may be just, reopen the agreement and may order the costs covered thereby to be taxed and the whole or any part of the amount received by the solicitor to be repaid by him.

(5) …”

170.  I note that these proceedings are not proceedings commenced pursuant to section 60 of the LPO.  The originating summons only referred to section 67 of the LPO.  I do not think that the plaintiff may seek an order for taxation in these proceedings relying on section 60 of the LPO.  I will nonetheless consider the parties’ submissions on section 60 of the LPO on the assumption that the plaintiff may obtain leave from the court to amend the originating summons for her to rely on section 60 of the LPO in these proceedings but I have to make it absolutely clear that I make no ruling in this decision on such possible application.

171.  Mr Wong referred to Re Stuart, Ex p Cathcart [1893] 2 QB 201 to submit that the retainer agreement and the hourly rates were not “unfair and unreasonable” for the purpose of the LPO.  In Re Stuart Lord Esher MR stated at pp 204-205 that:

“… With regards to the fairness of such an agreement [an agreement between a solicitor and his client], it appears to me that this refers to the mode of obtaining the agreement, and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness. But the agreement must also be reasonable, and in determining whether it is so the matters covered by the expression “fair” cannot be re-introduced. As to this part of the requirements of the statute, I am of opinion that the meaning is that when an agreement is challenged the solicitor must not only satisfy the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the Court that the terms of that agreement are reasonable. If in the opinion of the Court they are not reasonable, having regard to the kind of work which the solicitor has to do under the agreement, the Court are bound to say that the solicitor, as an officer of the Court, has no right to an unreasonable payment for the work which he has done, and ought not to have made an agreement for remuneration in such a manner.”

172.  Mr Wong submitted that “fairness” referred to the mode of obtaining the agreement.  If a solicitor made an agreement with a client who fully understood and appreciated that agreement, the requirement as to fairness would be satisfied.  There was no indication from the available evidence that the plaintiff had failed to fully understand or appreciate the terms of the Retainer Letter.  The plaintiff’s evidence was that she had much experience in engaging and instructing lawyers in multiple jurisdictions and that she had queried Ms Wong’s hourly rate of $7,500 but agreed to accept the same after hearing Ms Wong’s explanation.  Mr Wong submitted that the plaintiff accepted the Retainer Letter with full understanding and appreciation of its terms.

173.  Mr Wong further submitted that “reasonableness” referred to the reasonableness of the terms of the agreement, having regard to the kind of work which the solicitor had to do under the agreement.  He contended that the hourly rates set out in the Retainer Letter were justified in light of the nature and the scope of the PSG Matter which was complex and difficult.  A massive team of lawyers and professional (including one London Queen’s Counsel, five local Senior Counsel, five local junior counsel, three BVI law firms and three local law firms) was engaged by the plaintiff for the PSG Matter.  The plaintiff also asked for the fullest attention of the handling solicitor as the PSG Matter was important to her.  This was the reason for the plaintiff to move the case from Deacons to the defendant as she thought that Deacons had failed to pay sufficient attention to her case.  The PSG Matter also involved court hearings and applications in both Hong Kong and the BVI.

174.  Mr Wong submitted that whether or not the court applications, hearings and/or judgments had taken place during the defendant’s retainer was irrelevant.  They were within the scope of the PSG Matter and could properly highlight the level of complexity and difficulty of the PSG Matter.

175.  He contended that the hourly rates charged by other fee earners of the defendant in the PSG Matter at the range of $3,500 to $4,500 as agreed in the Retainer Letter were also reasonable in view of the complexity and difficulty of the PSG Matter.

176.  Mr Wong submitted that the PSG Matter involved many urgent applications and/or matters which required immediate attention by the plaintiff’s legal representatives.  Mr Wong referred to various email exchanges between the plaintiff and Ms Wong at the material times when the words “urgent”, “urgently” and “extreme urgency” were used to demonstrate that both the plaintiff and Ms Wong regarded that a number of aspects of the PSG Matter were urgent in nature and frequently required immediate action to be taken.  With such urgency, he contended that the hourly rates agreed in the Retainer Letter were not “unreasonable” under section 60(1) and/or (2) of the LPO.

177.  Mr Wong pointed out that Ms Wong’s charging rates for other cases of the defendant ranged from $6,500 to &9,500 and that even after giving discount in those cases Ms Wong’s actual charging rates remained in the range of $4,000 to $7,980. (See p 353 of the hearing bundles)  Mr Wong submitted that Ms Wong’s hourly rate of $7,500 agreed in the Retainer Letter was well within that range.

178.  Mr Wong submitted that the difficulty, urgency or complexity of the PSG matter was not independent ground for challenging the hourly rates mutually agreed under the Retainer Letter.  They were merely factors to be taken into account for considering whether the Retainer Letter and/or the hourly rates set out therein were “unfair and unreasonable”.  He submitted that the plaintiff had failed to show that the Retainer Letter or the hourly rates therein was “unfair” or “unreasonable” under section 60(1) and/or (2) of the LPO.

179.  Mr Dawes submitted that: “The PSG Matter, although an important litigation to [the plaintiff] personally, was not urgent, complex or difficult”. (See para 4 of the plaintiff’s closing submissions)  He referred to various senior, junior counsel and professional agents were engaged in the PSG Matter to show that the difficult and complex works were handled by others and not by Ms Wong.  Mr Dawes also referred to Ms Wong being supported by the corporate restructuring and insolvency division of Ernst & Young Transactions Limited.

180.  Mr Dawes referred to Dollarwell Investments Limited v Donald Koo Hoi Yan (unrep, HCA 12307/1995, 6 October 2005) to submit that whether a particular hourly rate of a solicitor is fair and reasonable had to be considered in light of the nature of his/her work and the level of her involvement in the retainer.  Dollarwell Investments Limited was a part-and-party taxation case, the Taxing Master had to determine the hourly rate of the receiving party’s handling solicitor in the context of party-and-party taxation.  The case before me is in the context of solicitor-and-client taxation.  The principles governing these two types of taxation are different.  On a party-and-party taxation only costs which were necessary or proper for the proceedings concerned shall be allowed. (See Order 62, rule 28(2) of the Rules of the High Court (the “RHC”)).  Whereas on solicitor-and-client taxation, all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred. (See Order 62, rule 29(1) of the RHC)  It is not for the court to determine the hourly rates of the fee earners of the receiving party in a solicitor-and-client taxation.  Such rates are determined by the contractual terms unless the court exercises its statutory power under section 60 of the LPO to declare an unfair or unreasonable agreement void or to reopen the agreement.  The contractually agreed hourly rates of the receiving party’s fee earners are only one of the factors to be taken into account when the court considers whether the retain agreement of a solicitor is unfair or unreasonable.  The court has to be cautious in applying ruling in party-and-party taxation to solicitor-and-client taxation when the underlying taxation principles are fundamentally different.  Having said that, I agree that the nature of work and the level of involvement of the solicitors are relevant in considering whether the agreed hourly rates will contribute to render the retainer agreement unfair or unreasonable but they are considered in different perspective and would attract less weight than in a party-and-party taxation.

181.  Mr Dawes further referred me to David John Kennedy v Kelly Cheung & Another (unrep, FAMV 33/2008, 12 October 2012) to contend that the Court of Final Appeal only allowed $5,000 as hourly rate for a solicitor admitted in New Zealand in 1999 and in Hong Kong in 2002 who had played a very significant role in that case which included acting as quasi junior counsel to assist senior counsel and London Silk and drafting submissions.  The David John Kennedy case was on taxation on indemnity basis.  Although principles governing taxation on indemnity basis are close to those governing taxation on solicitor-and-client taxation, the court has to determine the hourly rate of the handling solicitors at taxation on indemnity basis.  As pointed out above, the hourly rates of the solicitors in a solicitor-and-client taxation are fixed by the contractual terms unless and until the retainer agreement is declared void or reopened by the court.  The factors to be considered for determining the hourly rate of the handling solicitor on an indemnity taxation and for determining whether the agreed hourly rate of the solicitor engaged will render the retainer agreement void on a solicitor-and-client taxation are not the same.  The factors referred to by Mr Yung in his evidence are some of them. (See para 147 above)  Other factors such as the extent of personal attention required by the client, the availability of the solicitor and the quality of supporting services provided may also affect the hourly rate charged by a solicitor to his/her client.  Even the location of the solicitor’s office may affect the hourly rate charged by the solicitor to his client.  A solicitor has to take into account his/her overheads to determine his/her hourly rate to be charged to his/her client. The ruling of the court on the hourly rate of a different solicitor in a different case and in different context is of very limited assistance to this court    

182.  If the PSG Matter was not “difficult, urgent and complex”, I fail to see why “various senior, junior counsel and professional agents” as well as different fields of professionals had to be engaged and why the plaintiff would agree to pay the substantial fees of these “various senior counsel, junior counsel and professional agents” and different professionals.  In an email dated 6 October 2010 sent by Ms Wong to the plaintiff (p 480 of the hearing bundles), Ms Wong told the plaintiff that:

“I am aware that it will be very costly to engage a few Counsel (including Senior Counsel and London Silk) to work on your present case. However, in light of the magnitude of the case, what could be at stake and in your best personal interests, I think it is worth spending these professional fees.”

183.  In para 54 of her witness statement, the plaintiff stated that :

“Since most (if not all) of the relatively complex and difficult pieces of work were already undertaken by experienced senior and junior counsel and professional agents, the work undertaken by Ms Wong, as the solicitor-in-charge, was mainly in the nature of coordinating the various external professionals and supervising or coaching her assistants at the Defendant on mechanical, simple or straightforward matters. In my view, the nature of work undertaken by Ms Wong was not as complex or difficult as the Defendant now alleges.”

184.  If the services required from the defendant were so “mechanical, simple and straightforward”, the plaintiff would not have changed her legal representation from Deacons to the defendant which in the words of the plaintiff “was a local firm and its litigation department was less established as compared to Deacons.” (See para 12 of the plaintiff’s witness statement)  The plaintiff also would not have agreed to the hourly rate of Ms Wong at $7,500 as the plaintiff “have had experience in retaining lawyers to work for [her] and [her] companies in the past few years” (see para 10 of the plaintiff’s witness statement).  The plaintiff knew the market rates of lawyers at the material times and she knew the market rates of lawyers who were capable of handling the PSG Matter for her at the material times as she was represented by Deacons before the defendant was engaged and she “had already incurred some costs in retaining Deacons to act in relation to the same matter.” (See para 7 of the plaintiff’s witness statement)

185.  Mr Dawes referred to Ms Wong’s advice to the plaintiff on purchase of debts and on a recusal application and submitted that Ms Wong was only repeating or summarizing advices of others.  He further contended that if there were at times urgent incident, most (if not all) of them had been handled by experienced senior and/or junior counsel and professional agents and the work required of Ms Wong was usually coordination with different professionals.

186.  Mr Dawes seemed to think that when counsel and other professionals were engaged, the solicitor would only need to act as messenger or post box.  He overlooked the fact that there was division of labour between different professionals.  The solicitor has his/her role to play even when counsel or other professionals are engaged.  If the plaintiff only required a messenger or an interpreter, she would not have agreed to the charges proposed by Ms Wong when they met in October 2010.  The plaintiff being an experienced and successful business woman knew what she was looking for and with her previous experience in engaging lawyers in different jurisdictions including Hong Kong, she knew the price for the services she required.  She was far from a greenhorn liable to be manipulated by others.

187.  Mr Dawes further submitted that whilst the PSG Matter involved litigation in Hong Kong and the BVI, the main battlefield remained in the BVI and professional agents were engaged to handle the BVI aspect of the litigation.  Mr Dawes said that Ms Wong only went to the BVI and spent 2.5 days for a hearing of a “friendly” creditor’s application, but she was not required to have any substantive involvement in the matter and she was on a watching brief.

188.  If the PSG Matter was not “difficult and complex”, the plaintiff would not have agreed to have Ms Wong went to the BVI to observe the hearing there knowing that she would be charged $7,500 per hour on top of paying for the airfare and the accommodation.  The plaintiff not only agreed to have Ms Wong to go to the BVI but also to bring an assistant with her.  The plaintiff is an experienced business woman.  I do not accept that she would agree for her lawyers to incur substantial costs on matters of no or minimal importance especially when she already had her legal advisors and representatives in the BVI.

189.  Mr Dawes further referred to the number of summonses, court documents and affirmations prepared during the 7-month retainer of the defendant to contend that the PSG Matter was not “difficult or complex”.  With respect, I cannot agree to his contention.  The PSG Matter had been dragged on for years.  To pinpoint work done in a particular period to demonstrate the complicity of the matter which had gone on for years would be taken the matter out of context.  The fact that the hearings in the PSG Matter took place before or after the retainer period of the defendant would not make the PSG Matter less complex when it was handled by the defendant.  Litigation is an on-going process.  It will not get complex only on the day of hearing.

190.  Ms Chiu in her witness statement referred to various applications made to the Hong Kong and the BVI courts in 2010.  These had been summarised by Harris J in his decision dated 6 March 2013 given in HCCW 322/2010 (ie the winding-up petition against PSG in Hong Kong) as follows:

“3. … On 3 August 2010 they [the BVI Liquidators of PSG] presented a Petition to this Court for the winding up of the Company [PSG] in Hong Kong in order to be able to avail themselves of the investigatory powers of a Hong Kong liquidator. … On 3 September 2010, 6 creditors with connections with Ms Chen [the plaintiff herein] indicated that they would oppose the Petition and on the following day Ms Chen filed an application to the BVI Court to terminate the [BVI] liquidation. The Petition came on before me on 6 September 2010 and I made directions for filing of evidence as to the background to the winding up and adjourned the Petition to 10 September 2010. On 10 September 2010 I was informed by counsel for Ms Chen that she had filed an interim application for a stay of the liquidation in the BVI, which was to be heard before Mr Justice Bannister on 15 September 2010, pending determination of the application on 10 October 2010. I adjourned the Petition pending determination of the interim application and gave leave for the Petition to be relisted before me on an urgent basis having indicated that if the BVI Court did not grant an interim stay I would probably wind up the Company.

4. Ms Chen’s application for an interim stay in the BVI failed. Bannister J indicated that the affairs of the Company cried out for investigation and that the presentation of the Petition in Hong Kong was clearly a proper course for the BVI liquidators to take. He refused leave to appeal and applications by Ms Chen and the opposing creditors for a stay pending appeal.

5. The Petition came on for a 3^rd time before me on 21 September 2010.  Given my previous indication my initial view was to order that the Company be wound up.  However, I was told by counsel for the opposing creditors that they had just filed a summons to strike out the Petition in Hong Kong and were themselves making various applications in the BVI including challenging the appointment of the BVI liquidators and their authority to instigate proceedings in Hong Kong.  It also transpired that Ms Chen had issued on 16 September 2010, but not served, a summons to strike out the Petition.  It was submitted that I could not properly wind up the Company until such time as the strike out applications had been heard.  I made it clear that I felt that to wait until the hearing of the Petition before informing the Petitioners and the Court of the strike-out applications smacked of an ambush and that I was unhappy with this tactic.”  

191.  This was a case where there were on-going legal proceedings in Hong Kong and the BVI at the same time when the defendant was engaged in late September or early October 2010.  The applications made in Hong Kong and the BVI were not separate and unrelated applications.  The applications in the BVI would impact on the Hong Kong proceedings.  They required planning and strategic consideration at global level.  The defendant was retained by the plaintiff in the middle of these on-going applications in multiple jurisdictions.

192.  Furthermore, during the retainer of the defendant, the Hong Kong court had on 21 September 2010 appointed provisional liquidators for PSG in Hong Kong.  The provisional liquidators took out applications for examination of various parties including the plaintiff under section 221 of the then Companies Ordinance (Cap 32).  The plaintiff opposed to these applications.  These were obviously important matters to the plaintiff.  She had in her various emails asked Ms Wong to attend to this matter urgently. Although the examination order against the plaintiff was not granted until 16 June 2011, ie about one month after termination of the defendant’s retainer, the fight had already started when the case was in the hands of the defendant. The plaintiff had subsequently attempted twice to take the provisional liquidators to the Court of Appeal on the examination order without success.

193.  On top of the aforesaid applications, there was also an abandoned intended recusal application in respect of Harris J in the Hong Kong winding-up proceedings in October 2010.  In handling this case, the defendant had to deal with not only the procedural and legal aspects of the various applications in different jurisdictions but also the strategic aspects of the cases.  I am unable to agree that the PSG Matter was not “difficult or complex” when it was handled by the defendant.

194.  Mr Dawes further contended that the PSG Matter was not urgent as no applications were made during the retainer period of the defendant.  Urgency of a matter was not solely reflected by urgent applications made to the court. A decision not to take out an application may also be an urgent matter as demonstrated by the abandoned intended recusal application.  The various emails referred to by Mr Wong when both Ms Wong and the plaintiff used the word “urgent” or “urgently” were also illustrative. (See pp 483, 485-493 and 495 of the hearing bundles) 

195.  Mr Dawes further contended that Ms Wong had in cross-examination confirmed that the rate of $7,500 was put down as a buffer for potential discount and there was no intention on Ms Wong’s part to charge the plaintiff an effective rate of $7,500.  There are many factors affecting the charging rate quoted by a solicitor to his/her client.  Difficulty, complicity and urgency are some but not all of them.  Buffer for potential discount can be one of the factors.  The fact that this factor has been included does not per se render the charging rate quoted unreasonable or unfair.  Nor will it affect its nature as a contractual binding term.  In fact, this contention of Mr Dawes was contradicted by the 1^st Bill issued by Ms Wong to the plaintiff when Ms Wong clearly set out in Schedule 1 of the 1^st Bill that she charged the plaintiff at $7,500 per hour. (See p 254 of the hearing bundles)  It was also contradicted by Ms Wong’s evidence that her charging rate varied in different cases.

196.  The plaintiff agreed to engage the defendant with Ms Wong’s hourly rate set at $7,500 as she “considered that Ms Wong (qualified in October 1991) had the necessary legal knowledge and experience in insolvency and liquidation work” and “but for Ms Wong, I [the plaintiff] would not have retained the Defendant”. (See para 12 of the plaintiff’s witness statement)  The plaintiff agreed to the hourly rate of Ms Wong with knowledge of the then market rates of lawyers in Hong Kong especially of lawyers capable of handling the PSG Matter and after careful consideration of Ms Wong’s qualification and experience.  In the words of Mustill J: “From a practical point of view the agreement of the client is the strongest evidence that the fee is reasonable”. (Walton v Egan [1982] QB 1232 at 1238C)

197.  In respect of charging rates of other fee earners concerned of the defendant, namely Brian Au-Yeung, Cynthia Tsang and David Wong, they had one to four years’ experience at the material times and charged at the rates of $3,500 to $3,800.  Mr Dawes submitted that their hourly rates were grossly excessive in light of their experience and the nature of work undertaken by them.

198.  The other fee earners of the defendant charged in line with their internal reference rates. (See pp 1250-1258 of the hearing bundles)  I do not see that their charging rates were “grossly excessive”.  I reject Mr Dawes’s said contention.

199.  In the circumstances of this case, I do not see how the hourly rates for Ms Wong and other fee earners of the defendant agreed by the plaintiff in the Retainer Letter may be considered as unfair or unreasonable.

200.  In the premise, I do not agree that the Retainer Letter was unfair and unreasonable which warranted the intervention of the court under section 60 of the LPO.  I find that the defendant is entitled to rely on the hourly rates of its fee earners as set out in the Retainer Letter in the taxation of the Bills if the same is ordered by the court.

Issue 2 (What should be the appropriate hourly rates of Ms Wong and other fee earners of the defendant in the taxation of the Bills?)

201.  If the defendant is not entitled to rely on the hourly rates as set out in the Retainer Letter, what should be the appropriate hourly rates for the defendant’s fee earners, including that of Ms Wong, to be adopted in a taxation of the defendant’s bills for the PSG Matter?

202.  In view of my ruling in Issue 1, there is no need for me to deal with Issue 2.

Conclusion and costs

203.  I set out below my rulings on the Preliminary Issues:

(a)	Issue 1:	whether the defendant is entitled to rely on the hourly rates as set out in the Retainer Letter.
	Ruling:	Yes.
(b)	Issue 2:	if the answer to the above question is no, (i) whether the 1st to 3rd Bills (or as the case may be, the 1st to 4th Bills) should be taxed on the basis that the hourly rate of the handling solicitors, Ms Wong should be $5,200 or such other rate as the court deems appropriate and reasonable and (ii) what should be the appropriate hourly rates of the other fee earners of the defendant.
	Ruling:	Not Applicable.
(c)	Issue 3:	whether the Pre-retainer Agreement and the 2nd Set of Representations were made between the plaintiff and Ms Wong.
	Ruling:	No.
(d)	Issue 4:	if the answer to the preceding question is “yes”, whether the Pre-retainer Agreement and the 2nd Set of Representations are binding on the defendant, and/or the plaintiff is entitled to rely on the Pre-retainer Agreement and the 2nd Set of Representations in these taxation proceedings.
	Ruling:	Not Applicable.
(e)	Issue 5:	whether the defendant is entitled to issue the 4th Bill or whether the 4th Bill should be struck out.
	Ruling:	The defendant is not entitled to issue the 4th Bill and the 4th Bill should be struck out.
(f)	Issue 6:	if the 4th Bill should be stuck out, whether the plaintiff is entitled to tax the 1st, 2nd and 3rd Bills in these taxation proceedings.
	Ruling:	No.

204.  Out of the six Preliminary Issues the plaintiff only succeeded on Issue 5 and the defendant had conceded on Issue 4.  I am of the view that the plaintiff shall bear part of the defendant’s costs for the application relating to determination of the Preliminary Issues.  The plaintiff is not liable to the defendant’s costs for Issues 4 and 5.  Instead, the plaintiff is entitled to recover costs on these two Issues from the defendant. After taking into consideration the time spent on Issues 4 and 5 at the hearing, I am of the view that a fair costs order is for the plaintiff to bear 50% of the defendant’s costs for the application relating to determination of the Preliminary Issues.  As the application involved some legal issues which warrant involvement of counsel and both parties are represented by two counsel at the hearing, I grant counsel certificate for two counsel.

205.  I make a costs order nisi that the plaintiff to pay 50% of the defendant’s costs for the application relating to determination of the Preliminary Issues, including costs previously reserved in relation to the application, with certificate for two counsel, to be taxed if not agreed.

206.  The aforesaid costs order nisi shall become absolute after 14 days from the date of this decision unless application to vary the same is received from either party within this 14-day period.

207.  In accordance with my above rulings, the remaining issues for these proceedings are having the 4^th Bill formally struck out and determination of costs for these proceedings.  The parties shall take out appropriate applications to deal with these remaining issues and to conclude these proceedings.