CHAN OI KWAN, one of the beneficiaries of the Estate of CHAN YUEN, deceased v CHAN FU WING, he administrator of the Estate of CHAN YUEN, deceased

HCMP 2211/2019

[2022] HKCFI 3603

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2211 OF 2019

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DECISION

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1.  By Summons dated 8 June 2022 (“Summons”), the Plaintiff seeks leave to appeal the Order made on 26 May 2022 whereby costs of the trial of the Plaintiff’s Originating Summons in this matter were summarily assessed at HK$800,000. I handed down reasons for decisions on costs on 27 June 2022 (“Costs Decision”) [2022] HKCFI 1933. This decision should be considered together with those reasons.

2.  The hearing of the Summons was originally listed before me on 6 September 2022.  The skeleton submissions for the Plaintiff, acting by counsel, were only served on the Court and the Defendant the day before. The Defendant did not have time to consider the relevant arguments and whether he wished to instruct counsel.  The matter was thus adjourned, with costs consequences for the Plaintiff, to allow the Defendant to consider his position.  The parties eventually agreed that the application should be disposed of on paper, and directions were given accordingly.

3.  There is no great dispute between the parties as to the principles to be applied:

(1)  Leave to appeal will not be granted unless the court is satisfied that the intended appeal has a “reasonable prospect of success”.  That means a prospect that is more than “fanciful” but without having to be “probable”.  

(2)  The Court of Appeal will not interfere with the exercise of a judge’s discretion in the award of costs unless it is shown that he failed to exercise the discretion, or exercised it upon a false principle, or did not exercise it judicially.  An appeal against the exercise of discretion will not be entertained unless it is shown that the discretion was not exercised at all, or that the judge made some error of law or facts or that the decision was “plainly wrong” or was “outside the generous ambit within which a reasonable disagreement is possible”.

(Waddington Ltd v Chan Chun Hoo Thomas & ors, HCMP 1326/2017, 18 October 2017, §§3-4, per Kwan JA (as she then was); Poon Shu Fan v Wong Tin Yan & Anor [2012] 5 HKLRD 512 (CA) at §10).

4.  The key points made by the Plaintiff in support of her application are as follows.

5.  First, it is submitted that I erred in law in allowing a global sum that was disproportionate and unreasonable. In support of this, the Plaintiff refers to the case of Poon Shu Fan at §§14-18, which in turn refers to the English Civil Procedure Rules at 44.3(5). I note the following passage from Poon Shu Fan:

“15. Whilst there are obvious differences between our post Civil Justice Reform rules and the English rules under the Woolf’s Reform, the approach in England, as explained by Lord Woolf CJ in Lownds v Home Office [2002] 1 WLR 2450, nonetheless provides valuable guidance in this area. In paragraph 31, Lord Woolf spelt out a two‑stage approach:

“          In other words what is required is a two‑stage approach.  There has to be a global approach and an item by item approach.  The global approach will indicate whether the total sum claimed is or appears to be disproportionate having particular regard to the considerations which CPR r 44.5(3) states are relevant.  If the costs as a whole are not disproportionate according to that test then all that is normally required is that each item should have been reasonably incurred and the cost for that item should be reasonable.  If on the other hand the costs as a whole appear disproportionate then the court will want to be satisfied that the work in relation to each item was necessary and, if necessary, that the cost of the item is reasonable.  If, because of lack of planning or due to other causes, the global costs are disproportionately high, then the requirement that the costs should be proportionate means that no more should be payable than would have been payable if the litigation had been conducted in a proportionate manner.  This [in] turn means that reasonable costs will only be recovered for the items which were necessary if the litigation had been conducted in a proportionate manner.”

16. The judge then went on to emphasise that “a sensible standard of necessity” has to be adopted (para 37) :

“  Although we emphasise the need, when costs are disproportionate, to determine what was necessary, we also emphasise that a sensible standard of necessity has to be adopted.  This is a standard which takes fully into account the need to make allowances for the different judgments which those responsible for litigation can sensibly come to as to what is required.  The danger of setting too high a standard with the benefit of hindsight has to be avoided.  While the threshold required to meet necessity is higher than that of reasonableness, it is still a standard that a competent practitioner should be able to achieve without undue difficulty.  When a practitioner incurs expenses which are reasonable but not necessary, he may be able to recover his fees and disbursements from his client, but extra expenses which results from conducting litigation in a disproportionate manner cannot be recovered from the other party.”

17. The judge then explained how the conduct of the paying party may affect what is and what is not necessary (para 38) :

“ In deciding what is necessary the conduct of the other party is highly relevant. The other party by co‑operation can reduce costs, by being unco‑operative he can increase costs. If he is uncooperative that may render necessary costs which would otherwise be unnecessary and that he should pay the costs for the expense which he has made necessary is perfectly acceptable. Access to justice would be impeded if lawyers felt they could not afford to do what is necessary to conduct the litigation. Giving appropriate weight to the requirements of proportionality and reasonableness will not make the conduct of litigation uneconomic if on the assessment there is allowed a reasonable sum for the work carried out which was necessary.””

6.  It was the Plaintiff’s position that the global sum claimed by the Defendant (of HK$1,351,649) was disproportionate at the outset, and therefore, that a stricter test of reasonableness and necessity should have been applied rather than the usual test of reasonableness.  It was further submitted that I had not followed the two-stage test set out in Poon Shu Fan.

7.  This is not the occasion on which to expand upon my reasoning in the Costs Decision.  I would, however, point out that for the reasons I have set out in the Costs Decision, I considered the sum assessed to be a reasonable and proportionate one overall (see in particular §§8-10 of the Costs Decision).  Further, I also considered the costs on an item-by-item basis, and in that context had commented on items which I considered were required (and by implication, necessary) (§§6-7 and §9 of the Costs Decision).

8.  I would further note that the claimed sum of HK$1,351,649 had been substantially reduced to HK$800,000 (i.e. over 40% reduction on the original costs).

9.  In the circumstances, I do not consider that the discretion so exercised was exercised in an erroneous manner.

10.  Second, it was submitted that I erred in law in failing to apply the proper approach for summary assessment of costs, in that I failed to consider the reasonableness of each item.  This ground of the application applied to my approach towards Items C, D1 and D2.  Item C was the costs of communications (attendance on the client and the other side, as well as on counsel), and Items D1 and D2 were in relation to preparation of and perusal of documents.

11.  The complaint was pitched in terms that the costs of HK$600,000 allowed “chiefly reflect the costs of production of two affirmations [of the Defendant]”, which were “two rather simple documents” (§17 of the Plaintiff’s Skeleton).  I am afraid I cannot agree with this line of argument for a number of reasons.

12.  In this regard, the approach which I took was to consider each item as presented by both sides, and then come to a determination on what I considered to be a reasonable sum. This too should be apparent from the Costs Decision.

13.  I disagree with the Plaintiff that the items complained of (viz. C and D1 and D2) were chiefly or even primarily in relation to the two affirmations of the Defendant.  Particularly where Item C is concerned, this involved the conduct of the whole litigation, which was commenced in November 2019, and only heard in November 2021, a period of two years.  Over that period, there would have been instructions taken, legal advice given, liaison required with counsel, various communications between solicitors, and the like.  The work involved goes well beyond simply producing two affirmations in answer to the claim.

14.  Furthermore, the costs in relation to Items D1 and D2 must be seen in context of the very modest sum of costs charged by counsel on drafting (Item E1 – HK$10,000).  Again, as I have already stated in the Costs Decision, this meant that the bulk of the work fell on the solicitors’ shoulders.  I would add that if counsel of 11 years’ call had been responsible for such drafting, I would anticipate that the costs could well be commensurate if not higher.

15.  Finally, I note that I had already substantially reduced the costs in relation to Item D (from a total of HK$857,653 to HK$378,000). Insofar as Items D1 and D2 were concerned, the level of reduction was from HK$665,253 to HK$300,000 (i.e. over 50%).  This took into account the unsatisfactory presentation of the claimed sum, which did not provide a breakdown on who had performed which tasks.

16.  In addition to the above, various other points were made by the Plaintiff, including the following, which I briefly address (§3 of the Summons):

(1)  It is said I failed to take into account sufficiently or at all the nature and simplicity of the substantive dispute.  I had in fact weighed this in the process (as illustrated by §9(2) of the Costs Decision).

(2)  Reference was also made to the fees charged by the solicitors in comparison to that charged by counsel.  As I have already noted, the fees charged by counsel were very modest considering his level of seniority.  If the argument is that the solicitors ought to have been charging in a manner equally as economical, then I cannot accept such argument.  Simply because solicitors are able to secure counsel at an economical rate, does not mean that they are not entitled to charge a reasonable sum for their own work, and that they must match this rate by being equally “modest” themselves.  Indeed, it is reasonable to expect that they will need to bear more of the work and spend more time liaising with counsel to get counsel up to speed, which is what I had assumed had occurred in the present case. (Reference may also be made to Sinocare Group Limited v Doron Biran & Ors [2012] HKCFI 125 at §5).

(3)  Reference was further made to the lack of utility and relevance of the majority of the exhibits filed by the Defendant to the dispute at hand.  These included medical receipts and a collection of photos of the Defendant with the Deceased. Even if they were not specifically cross examined upon at trial, I would disagree that these were entirely irrelevant.  One of the Plaintiff’s key allegations was that she had a good relationship with the Deceased whereas the Defendant did not.  A considerable amount of evidence concerned, for instance, who had been responsible for taking the Deceased to his medical appointments and taking care of his daily needs (an issue raised by the Plaintiff).  This formed the background against which the issues in dispute were considered (viz. the Deceased’s underlying intention in the transfer of the Tai Tam Road Property, a property of considerable worth).

17.  In the circumstances, I decline the Plaintiff’s application for leave to appeal.  Costs of this application will be borne by the Plaintiff, to be taxed if not agreed.

18.  Finally, as mentioned at paragraph 2 above, the Plaintiff is to bear the costs of the hearing on 6 September 2022. The hearing itself was fixed for 30 minutes.  For this purpose, the Defendant’s solicitors had prepared a set of skeleton submissions (in answer to the Summons, without the benefit of having seen the Plaintiff’s counsel’s skeleton).  Much of the preparation would have been helpful and used in the submissions eventually filed for the paper determination, which were submitted by the firm itself and not counsel.  Taking these matters into account, the costs of the hearing on 6 September 2022 which the Plaintiff is to pay to the Defendant are assessed on a gross sum basis at HK$15,000.

19.  I thank counsel Mr Wing So and Ms Jasmine Chau of the Defendant’s solicitors for their assistance.