DOLLARWELL INVESTMENTS LTD v. DONALD KOO HOI YAN

HCA12307/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12307 OF 1995

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D E C I S I O N

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Background

1.  This is a review of taxation, both on principal and quantum.  The bill I taxed was marked Bill No. 1.

2.  Miss Chin, solicitor for the paying party seeking the review on Bill No. 1, in very broad outline contended that the Bill arising out of a loan action should have been taxed on the same basis as the bill in the Investment action, HCMP3533 of 1995, which bill was taxed by another master, Mrs Levy, earlier.  The parties in both actions were the same, except their roles were reversed.  As both suits bore a common connection in regard to evidence, documents and facts, it was said both taxations ought to have been treated fairly and equally.  To that end, the approach and ruling of Mrs Levy on the bill in the Investment action should have served as a basis for the taxation of Bill No. 1 before me. 

3.  It can be seen at once that that was the very attitude and stance of the receiving party in this action and the paying party in the Investment action when the bill in the Investment action came before Mrs Levy for taxation.  An adjournment then sought so that both bills could be taxed together, or one after the other, by the same taxing master was strenuously opposed.

4.  To put matters in their proper perspective, Bill No. 1 had not been finalised at that stage, so the Investment Bill went ahead.  Mr Yu for the receiving party in the instant case contended that the paying party cannot have it both ways.  They must have foreseen the likelihood of inconsistency occurring if both bills were to be dealt with separately on different occasions by different taxing masters.  As they did not apply to have Bill No. 1 returned before Master Levy, which they could well have done, their complaints, it was said, were unjustified. 

5.  Both parties wholly accept that I retain a completely unfettered discretion when dealing with Bill No. 1.  I fail to see how Mrs Levy’s taxation approach could have provided a yardstick for me.  The file in the Investment action was not even before me, nor were her reasons for allowing or disallowing any items of disputed costs and disbursements in that bill.  Even if such material had been forthcoming, I would not have been bound by her decision, being a court of concurrent jurisdiction.  Further, I had to examine each and every item in contention and make an independent assessment based on the documentation placed before me for Bill No. 1, which was in fact done.

6.  Where there were overlapping issues in both suits - and this was conceded by Mr Yu - a suitable apportionment of 50 per cent had been made to the relevant items in Bill No. 1.  Miss Chin has accepted that although the affidavits in both actions contained largely similar information or paragraphs in the main, there were nonetheless about four paragraphs unique to each suit in the affidavits.  The actions had not been consolidated for trial and, clearly, some distinct issues peculiar to each remained for ventilation.

7.  Consistency in taxing the two different bills in those circumstances, though always desirable and therefore the bills ought to have been dealt with by the same taxing master, seems to me to be difficult, if not well nigh impossible to achieve, even with the best intention.  That said, I have taken, and will continue to take on board for present purposes, the paying party’s submissions as to the approach adopted for similar items by Mrs Levy, wherever feasible.

8.  With these observations, I turn to address the specific areas of complaint.

Hourly Rate for Mark Side (MS) for Period B

9.  Period B ranged from 1997 to 2001.  The hourly rate for MS at $3,500 per hour was criticised as unduly generous.  $3,000 was urged upon review for the following reasons.  It was submitted that the proceedings had lain dormant to 1997 and that MS’s participation had been over mechanical items only, thus calling for, by implication, less skill when a more junior solicitor or clerk would have served.  Further, the rate allowed had been disproportionate to that allowed for their own solicitor, Mr Henry Wai, with greater post-qualification experience in the Investment action.

10.  A taxing master, in the exercise of his discretion, strives to determine an appropriate hourly rate that is both fair and reasonable, having regard to all the circumstances of the case before him.  The Law Society’s published hourly rates for solicitors offer a useful starting point.  From there, one would have to consider, inter alia, the level of skill and expertise that has been exercised by a solicitor whose hourly rate comes under scrutiny, the complexity of the litigation and whether there has been excessive reliance on counsel or insufficient delegation of less important or routine work to subordinate staff.

11.  No doubt Mrs Levy in taxing the bill in the Investment action would have been alive to these considerations in determining the rate appropriate for Mr Henry Wai.  I am not privy, however, to how she evaluated the various factors that fell to be considered and weighed by her.  So a straightforward comparison of hourly rate is of little, if any, relevance or assistance to me.

12.  I accept that MS did much of his chargeable work in Period B.  He was admitted in 1992.  This suit commenced in 1995 and was discontinued in 2001.  For Period B, MS’s experience would have been between 5 and 9 years.  The published guideline on hourly rates for solicitors with 5 to 6 years’ experience is $3,000 per hour, with 7 to 8 years’ experience, $3,500 per hour and over 10 years, $4,000 per hour.

13.  This was not a simple piece of litigation and there had been no unnecessary or excessive reliance on or use of counsel.  I still hold this view.  The suit was important for the litigants on both sides.  Having looked at the Bill again, I do not accept that MS’s involvement was routine or of an insignificant nature.  In Period B, he had chalked up 47 hours 5 minutes.  By comparison, in the period prior to Period B, he had only billed for 6 hours 9 minutes of work.

14.  I consider the allowed rate neither excessive nor unreasonable.  It stands upon review.

Counsel’s Fees and Involvement

15.  As a general submission applicable to all instances of involvement of counsel, Miss Chin contended that there must have been a degree of overlap or duplication because of the number of barristers instructed.  Whether their advice was warranted was called into question.  Miss Chin suggested adopting a global approach to all counsel’s fees, an approach raising some practical difficulty in my view, not least because different circumstances might have obtained when counsel was briefed.  I shall, of course, remain alert to the fact that four separate counsel were involved between December 1995 and July 1998.

Item 10

16.  This item concerned the fees paid to Mr Charles Falconer QC in the amount of $10,500, representing half his charges following a 50 per cent apportionment.  Mr Falconer was instructed to advise generally and on merits and tactics for both action, hence the apportionment.  Miss Chin submitted that the charge was unreasonable and excessive, given that the fee paid to Mr C Y Li, junior counsel, for consultation in the Investment action on 1 March 1996 amounted to $1,655 only.

17.  Comparison of this nature is illusory and offers no help at all.  It is the necessity, substance and timing of the advice (which I have read) that need to be scrutinised.  I remain satisfied that Mr Falconer’s advice was clearly warranted and justified, even though he had been brought in soon after the issue of the writ in this action.  Given his undoubted experience and expertise and the complexity of the litigation, his fee was nowhere near excessive or unreasonable.

18.  Having looked at the advice subsequently rendered by the ensuing counsel, I was and am still satisfied to hold that there had been no overlapping work performed by any of them.  In coming to this conclusion, I have reminded myself of the considerations pertinent to counsel’s fees:  O.62/App/28.  Item 10 was necessary or proper and the quantum was reasonable.  This aspect of the review fails.

Items 48 to 51, 60 and 61

19.  The mechanical preparation of instructions to Mr Michael Thomas QC for his advice refers.  It totalled $610.50 for one set of instruction, although Mr Thomas and his junior, Mr Anderson Chow, rendered advice at a conference on 17 May 1996.  The claim for senior counsel’s fees was withdrawn as the settled fee note, having been misplaced, could not be produced at the taxation.  The attendance note was, however, available for perusal.  It is clear that counsel’s advice had been specifically sought and obtained on the merits and tactics of both suits rather than generally.  The advice was significant and important to lay client and wholly justified at the time it was obtained.  The exercise did not duplicate Mr Falconer’s role. 

20.  Items 48 to 51 stand as they were necessarily or properly incurred.

21.  The two related items challenged are 60 and 61, respectively, AF’s charge and Mr Anderson Chow’s fees for attendance at this joint conference. 

22.  I see no reason why these two items, previously reduced by 50 per cent each, should be disturbed in any way for the reasons given above.

Item 90

23.  This was a profit costs item in respect of a pre-hearing conference with Mr Thomas.  I have examined the attendance note.  It was a necessary or proper expenditure incurred for the purpose of discussing submissions and relevant authorities. 

24.  There is no reason to disallow or alter the quantum which I have previously reduced by 15 minutes, having heard Miss Chin.  The fact that there were no similar conferences in the Investment action was quite beside the point, in my view.  It remains wholly justified in this case. 

Item 102

25.  Miss Chin’s complaint targeted quantum only.  She submitted that counsel’s fees of $20,000 for drafting the defence was inordinately expensive as the pleading was simple and he was by then fully familiar with lay client’s case.  $12,000 was said to have been adequate recompense.  Counsel, Mr Chow, admitted in 1987, had by then 10 years’ experience.  Whilst it is true he had previously settled and drafted earlier affirmations, the defence was an important set of pleadings.  It would only be right that some allowance be given for counsel to go through the documentation to remind himself of all the salient issues that needed to be covered. 

26.  The charge I allowed was reasonable.  It remains so in my opinion.

Items 189 to 192 and 194

27.  These relate to mechanical preparations of instructions to Mr Wong Yan-lung, of counsel, for advice on a range of issues and not, as Miss Chin contended, merely on specific discovery.  Had the instructing solicitor resorted to counsel only for specific discovery, an area clearly falling within the competence and province of solicitors, these items would have been disallowed in the first place. 

28.  These various items under review were necessary or proper and the quantum raised no issue in my considered opinion.  The allowance stands.

29.  Item 194 concerns the fee paid to Mr Wong for his advice.  His advice covered four areas, specific discovery included.  Following apportionment of his fee, I deducted $2,500 from the balance, which remains reasonable for the advice rendered.  Mr Wong’s involvement was necessary and proper. 

30.  There was no duplication of advice previously given by other counsel.  I perceive no reason to disturb the allowance.  The review of these several items therefore fails.

Item 221

31.  This item was the brief paid to Mr Wong to attend a contested hearing of three summonses for specific discovery.  Fifty per cent of his brief apportioned to this suit amounted to $25,000.  Opposing counsel was paid $20,000 or $5,000 less.  Miss Chin therefore submitted that Mr Wong’s brief should be similarly reduced as both counsel were admitted in the same year.  I fail to see any substance in this argument.  What the Plaintiff in the Investment action chose to pay counsel was a matter entirely for it and can have no bearing on the exercise of my discretion.  What is, however, pertinent is whether the brief paid was reasonable in light of counsel’s experience and the work performed.  Mr Wong had 12 years’ call at the time.  From the taxation bundle, I was aware that he had spent time preparing a skeleton argument, a list of authorities and a chronology, apart from general preparation for the hearing. 

32.  The amount allowed was entirely reasonable and not excessive.  It remains payable.

(D) Drafting Items

Item (D)a

33.  Miss Chin considered the time allowed of 3 hours for RM’s drafting of the instructions to and collating documents for senior counsel to be excessive.  I had previously deducted 30 minutes as I agreed that collating of documents was a task for more junior staff.  The instructions were detailed, spanning both sets of proceedings. 

34.  I remain of the view that the reduced allowance of 3 hours is not excessive, given the substance of the instructions which I had perused.  As Mr Yu, LCD for the receiving party rightly contended, Mrs Levy’s ruling on a similar item in the Investment action can hardly be a yardstick.  One has not had the benefit of reading the other set of instructions or knowing the reasons for the allowance in that case.

Item (D)b

35.  This was a challenge on quantum.  It was submitted that 1 hour only should have been allowed.  The claim was for 3 hours of RM’s time.  Having considered the length and contents of the instructions to Mr Chow, I reduced the time charge by 20 minutes.  Miss Chin argued that the prior instructions to senior counsel should have afforded the basis for these instructions, and counsel’s familiarity with the suit obviated the need for detailed instructions to him.  Accordingly, the task ought to have been readily and quickly accomplished by RM.  Counsel was instructed to draft the defence, an important set of proceedings.  It is only right that all salient issues were comprehensively set out in the instructions, as was the case here. 

36.  Having reviewed the instructions, the reduced time allowed was fully justified and reasonable.

Item (D)c

37.  Drafting of the first affirmation of the Defendant claimed at 6 hours of RM’s time was reduced by 75 minutes to 4 hours and 45 minutes.  As the pleading bore striking similarity to the Plaintiff’s first affirmation under the Investment action in the majority of the paragraphs, a suggested allowance of 3 hours 30 minutes was urged by Miss Chin.  Having revisited the documentation in question, I agree with Miss Chin that inadequate discount had been given to reflect the overlapping nature of the two sets of documents. 

38.  The review on this item succeeds and the time allowed will be as submitted by Miss Chin, i.e. 3 hours 30 minutes.

Item (D)g

39.  I have previously refused the review in respect of the small related item of mechanical preparation of instructions to Mr Thomas QC.  I see no substance in the argument that the drafting of those instructions should be entirely discounted.  They were necessary and proper and RM’s allowed time was fair and reasonable. 

40.  My original allowance remains valid.

Evidence and Discovery

Item (E)5(i), (ii) and (iii)

41.  These were respectively preparation of notes on discovery of a table summarising monies at bank and of notes on key documents.  In my view, these tasks were necessary or proper for the preparation of the suit.  The time charges were not excessive in any way considering what had to be undertaken.  There was no duplication of the work undertaken by MS or AC as was contended.  Further, it was more cost effective for AC to have been tasked with the work in 5(i).

42.  The review of the several items is refused.

Item (F)3b

43.  Perusal and consideration of the written advice of Mr Wong of counsel by JH was proper and necessary.  The reduced allowance of 35 minutes which I ordered was wholly justified and reasonable.  It remains so in my view.

Item (H)1, 2, 3 (Attending Legal Research and Reviewing Documents)

44.  I propose to deal with all three sub-items together as Miss Chin’s objections generally applied to them equally.  I agree with Mr Yu’s submission that the legal researches undertaken and the subsequent consideration of precedents were not on general law for which no allowance would have been made.  There was, in my view, no duplication in the researches made by MS and AC.  Clearly, there had been an efficient delegation of work to AC, a more junior solicitor with lower time charge.  TS was plainly tasked to review banking documentation, a laborious exercise, and I fail to see how duplication of effort could have been suggested.  All three fee earners were engaged on work that was either necessary or proper for the attainment of justice and to defend the rights of their client.  I have hitherto significantly reduced the time charges for all three solicitors. 

45.  The allowance in each case was reasonable and fair, given what had to be done by each of them.  I see no reason to depart from this conclusion.

Item 273 (LCD’s Fee for Drafting Bill of Costs)

46.  With the benefit of further submissions, I agree with Miss Chin’s contention that allowing the item in full was overly generous.  Although I wholly accept that Mr Yu has had to go through copious arch-lever files and consult with instructing solicitor from time to time, prior to finalising the Bill of Costs, 60 hours does seem over the top.  These proceedings did not end in trial but much work had been done and many documents resulted which Mr Yu had to examine and consider. 

47.  I will allow 40 hours on review.

Item 274

48.  Three hours was allowed for MS’s approval of the Bill of Costs, when according to Miss Chin, an hour should have sufficed.  She drew support from the fact that only 4 hours had been allowed for a similar item in the Investment action where the Bill of Costs ran to a greater number of pages and the fact that common issues, such as apportionment and consideration of documents, had been resolved.  Upon taxation, this item was reduced by an hour.  Three hours was a reasonable allowance for approving this Bill of Costs.  It was a comprehensive and detailed bill warranting close scrutiny by MS. 

49.  I consider the allowance justified and reasonable.  The allowance was not in any way excessive or unwarranted, whatever Mrs Levy had seen fit to do in the Investment action for a comparable item.

Item 280 (MS’s Perusal of the List of Objections)

50.  The Plaintiff’s list of objections running to 27 pages raised such matters as delay and whether what had been done in the Investment action taxation should apply in the instant case. 

51.  I fail to see how the claim now reduced to 1 hour 42 minutes of MS’s time can be said to be excessive or unreasonable.  The review of this item utterly fails.

Item 285a

52.  Fourteen hours were claimed by Mr Yu for preparation of taxation bundles, reviewing of documents and preparation for the taxation itself.  I allowed 12 hours which Miss Chin contends was still excessive, relative to the 35 hours allowed to the LCD in the Investment action.  There is some substance in the complaint as many more bundles of documents had to be prepared in the other action. 

53.  I allow the review of this item and the allowance will accordingly be reduced to 8 hours.

Delay

54.  The appointment to tax the Bill of Costs in this loan action was filed belatedly on 2 August 2004.  The suit was discontinued considerably earlier on 28 November 2001 by consent with costs to be taxed to the Defendant.  The Investment action, on the other hand, forged ahead and was tried over 4 days, beginning on 11 December 2002. 

55.  At the taxation hearing, I held that there was no undue delay in proceeding to taxation for the period from November 2001 to August 2003 (“the first period”) but found there was such inexcusable dilatoriness from 6 August 2003 to 2 August 2004 (“the second period”).  I ordered abatement of interest on the amount eventually allowed for the second period, a course that was plainly not opened to me under O.62. 

56.  Having reviewed the papers with the benefit of further submissions, I agree with Miss Chin that preparation of the Bill of Costs in the loan action should have begun much earlier and independently of the Investment action.  Even accepting that there were many common documents in both suits, there was no excuse for the total lack of action in preparing the Bill of Costs expeditiously for lodging and to have it taxed.  Files and documents could and should have been retrieved or copied by Mr Yu and preparation of the Bill of Costs commenced much earlier than was the case.  I can see no impediment or obstacle to such a course being taken.  No plausible or reasonable explanation acceptable to me has been advanced.  As transpired, assembling of the documentation for the Bill of Costs began late and proceeded at a most leisurely pace.  MS’s affidavit indicated that the Bill would be ready by the end of February 2004, yet another 5 months went by before it was finally filed on 2 August 2004.  It was clear that the defence had wanted to hold back and have the bills in both actions taxed at the same time, a request that did not find favour with Master Levy.

57.  Upon review, I find that there was undue and inexcusable delay over both periods.  As for the first period, it would be fair, given the need for retrieval of documents and files, to allow for 4 months from the date of the costs order to prepare and complete the Bill of Costs.  Accordingly, by the end of March 2002, the Bill should have been ready for lodging.  Thereafter, from April 2002, the delay was wholly unjustified and inexcusable, such delay continuing unabated till the filing of the Bill of Costs on 2 August 2004.  In sum, the period of inordinate delay amounted to 28 months.  One can well appreciate the prejudice to the paying party as interest on taxed costs would have run from the date of the order.

58.  A number of authorities were cited.  They were Attorney General v Commodore Electronics Limited [1994] 1 HKC 660, Pauls Agriculture Limited v Smith & Ors [1993] 3 All.ER 122; HCA006086 of 1994.

59.  I consider that a global reduction of 30 per cent of the taxed costs entirely warranted to meet the justice of the case, and to reflect the court’s disapproval.   I so order.

Costs of the Review

60.  The paying party, having succeeded to some extent on the review, particularly on the substantial argument of delay, I order that they shall have the costs of the review, nisi in the first instance, with liberty to apply to both parties within 14 days hereof.