C.L. CHOW & MACKSION CHAN, SOLICITORS (a firm) v. CHAN PUI FAT AND OTHERS

HCA 2461/2017

[2022] HKCFI 15

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2461 OF 2017

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BETWEEN

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DECISION ON COSTS

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1.  After a trial of the 4 Preliminary Issues herein, a judgment was handed down on 25 October 2021 (the “Judgment”), in which I reserved costs at the joint request of the parties and directed written submissions to be exchanged within 14 days (i.e. by 8 November 2021).

2.  The Plaintiff duly lodged their submission on 8 November 2021. Meanwhile, the Defendants applied for and was granted extension of time to 15 November 2021. As a result of the staggered lodging of submissions, the Plaintiff was granted leave to put in a reply. In the end, the Plaintiff did not see fit to do so which is of course a matter for them.

3.  In brief, 4 Issues were identified in the Judgment (at para. 33), namely (1) the “Agreement” as alleged by the Defendants; (2) the HK$200,000 costs on account paid by the Defendants but not accounted for by the Plaintiff; (3) the hourly rate of Eric Chow as a legal clerk or Assistant Solicitor; and (4) whether the brief of Tony Chow as a junior counsel to John Yan SC had been agreed by Chan Pui Fat (“Chan”).

4.  I accept Mr Chain’s Submission that, in essence, the Plaintiff succeeded on Issue (1) and also Issue (4) in that Chan had agreed to retain Tony Chow as junior counsel but that brief fee had not been agreed. Issue (4) still needed to be decided as one of the Preliminary Issues herein although Chan took the stance that the Defendants were liable to pay reasonable fee of Tony Chow to be assessed.

5.  The Defendants however succeeded on 2 discrete issues (i.e. Issues 2 and 3). Mr Jerome Liu (together with Mr Keith Cheung) contended that the Defendants should also be regarded as having succeeded on another issue, namely, that there was no agreement between the Plaintiff and the Defendants that the hourly rate of Mr Chow Cheuk Lap (“Mr Chow”) of the Plaintiff was fixed at HK$5,000. With respect, I am of the view that such “issue” is part and partial of the findings under Issue (1).

6.  It is trite that costs is a matter of discretion of the Court and costs should follow the event as a starting position to the effect that the burden is shifted to the unsuccessful party to show why some different approach should be adopted (see Kwan JA in Hung Fung Enterprise Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679 (at para 100).

7.  In the exercise of the Court’s discretion, Lam VP (as the learned PJ then was) embarked on an admirable exposition of the law and distilled the approach of the Court to a catalogue of 7 factors (see Lam VP in YBL v LWC (No.2) [2017] 2 HKLRD 783, at para 10). I would gratefully and respectfully adopt the same approach and, in particular, consider the following two factors:

“(6) Rule 5(2) [of RHC O.65] highlights some conduct which the court may take into account including whether it is reasonable for a party to take an issue, the manner in which the matter was pursued or defended, the extent of success, and conduct before, as well as during the proceedings;

(7) If a successful party has brought the litigation upon himself or has done some wrongful act in the course of the transaction, he could be deprived of his costs.”

8.  Mr Liu also relied on the case of Bamrah v Gempride Ltd [2018] 1 WLR 1545 wherein the claimant was herself a solicitor practising as a sole proprietor, who was injured in an accident. In the claim against the defendant, she was represented by her own firm, essentially doing all the work herself for the better part of the action. The action was disposed of by the claimant accepting a sanctioned offer, which entitled her to have her costs taxed.

9.  However, the claimant had inflated the hourly rate in the bill prepared by a Law Cost Draftsman, which was certified by her and rendered to the defendant. It constituted a breach of the indemnity principle in that the hourly rate claimed was over and above her actual liability towards to her firm. Upon finding by the taxing master, inter alia, that the claimant was guilty of “unreasonable and improper conduct” under Civil Procedure Rule 44.11(1)(b), only the costs as a litigant in person was allowed. The appeal of the claimant was allowed by Judge Mitchell but was reversed by the English Court of Appeal. That said, an order was made only disallowing ½ of the profit costs claimed by the claimant (Hickinbottom, LJ at para. 164 and Davis LJ at para. 186).

10.  Mr Liu has identified a number of paragraphs in the Judgment (paras. 58, 89, 90, 104, 133 and 149) wherein I have commented on the conduct and shortcomings of Mr Chow in terms of client care in the conduct of the underlying action on behalf of the Defendants. This is however in the context of assessing the credibility of Mr Chow vis-à-vis that of Mr Chan, pertinent particularly to Issue (1) on which the Plaintiff has succeeded. By far, this is the main thrust of the trial.

11.  I have also made clear in the Judgment that this is not the taxation proceedings (at paras 107, 124 and 147) nor is it a disciplinary proceedings against Mr Chow (at paras 110 & 147) and that the remedies, if any, arising from Mr Chan’s complaints as to misconduct of Mr Chow should lie elsewhere (paragraph 149). To this extent, the case of Bamrah (supra) is distinguishable.

12.  While the conduct or shortcoming of Mr Chow has contributed to or precipitated the dispute herein, I have decided Issue (1) against the Defendants primarily on the rule and practice pertinent to “costs on account” in retaining a solicitor. The Defendants have singularly failed to establish the “Agreement” as pleaded in the Defence, which to a large extent was attributable to their self-induced misconception by adopting a rather esoteric or contrived view of the arrangement. The trial herein could not have been avoided given that the alleged “Agreement”, if established, would have relieved the Defendants from any further liability towards the profit costs and disbursements incurred by the Plaintiff in the conduct of the underlying action.

13.  In light of the foregoing background, it cannot be said that the Plaintiff has brought the litigation upon themselves. I am of the view that a fair and reasonable way to deal with costs is to apportion costs according to the outcome of the trial of the 4 issues.

14.  It is beyond dispute that most of time was spent on Issue (1) in respect of which the Plaintiff was successful. The Defendants succeeded on the two minor discrete issues (Issues (2) and (3)) and Issue (4) was a bit of a draw.

15.  In all circumstances, I consider that a fair order is that the Defendants should bear 50% of the Plaintiff’s costs of the trial of preliminary issues (including all interlocutory proceedings purely and solely referrable to the preliminary issues), to be taxed if not agreed. I so order.

16.  There by liberty to apply in respect of any outstanding costs in the action herein.

17.  For the avoidance of doubt, save as to the determination of the 4 Issues, nothing herein shall be construed to fetter the discretion of the learned Taxing Master in the pending taxation proceedings, whether pertinent to matters of taxation or costs attendant upon the taxation proceedings.

18.  It remains for me to thank counsel on both sides for their able assistance.