KONEW FINANCE LTD v. LEUNG KWOK KIN JOSEPH t/a JOSEPH LEUNG & ASSOCIATES

HCMP 1019/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1019 OF 2009

----------------------

----------------------

----------------------

D E C I S I O N

----------------------

1.  This is an application for taxing a solicitor-client bill.  The Plaintiff has agreed to pay a sum of $62,666 in full and final settlement of the Defendant’s costs in 3 sets of underlying actions in the District Court.  The only issue is one of costs of the present proceedings.  The Plaintiff seeks costs of $30,000.  The Defendant contends that there should be no order as to costs.

Background

2.  The Plaintiff (“Konew”) was a money lender and mortgagee who wanted to take action against a borrower (“the Borrower”).  The Defendant (“the Solicitors”) was instructed in the matter.  Three sets of underlying proceedings followed:

(i)    A writ action in the District Court taken out by the Solicitors on behalf of Konew to seek money judgment under Order 83A against the Borrower based on a loan agreement.  Subsequently, a charging order nisi was also obtained but the charging order absolute was not registered.

(ii)  An originating summons taken out by the Solicitors on behalf of Konew to recover possession under Order 88 against the Borrower based on a mortgage executed by him.

(iii)    A writ action taken out by the Solicitors in the District Court against Konew for payment of a bill for over $125,000 (“the Bill”) in respect of those 2 sets of proceedings which the Plaintiff did not pay.

Konew then took out the present originating summons to tax the Bill.

The Plaintiff’s Case

3.  Konew alleged that the Solicitors should have combined the first 2 actions.  As mortgagee, Konew simply did not have to apply for a charging order.  Costs of one set of proceedings was wasted.  In addition, The Solicitors committed a number of errors in the 2 sets of actions.  For example, since Konew was a money-lender, an action should have proceeded by way of writ but the Solicitors took out an originating summons.  Further, the originating summons made wrong references to the previous writ action, leading to amendments.  The Solicitors billed Konew for these errors.  Although the costs for the first 2 underlying actions have been settled, Konew submits that the Solicitors should bear the costs of Konew’s investigation and contest in the present case.

The Defendant’s Case

4.  On the other hand, the Solicitors claimed that they knew that the Court would not allow having a mortgage action alone where the Plaintiff was a money lender but would require the action to be taken out under both Order 83A and Order 88.  Notwithstanding they had advised on the procedure and risks to Konew’s officers the express instructions and pattern of litigation had been to have 2 separate actions for Order 83A and Order 88 for against the Borrower and other borrowers.  Konew did not want litigation but just wanted the borrowers to continue their repayment.  Therefore an action could be repeatedly commenced and withheld.  This had been the pattern for the past 10 years but there was no written record of the advice given to Konew.  It was only until 2007 when Konew set up its own legal department that it combined proceedings for Order 83A and Order 88 into one.

5.  To the allegations of the Solicitors, Konew says that its officers were laymen and relied on the Solicitors for the correct procedure to use.  The wasteful litigation procedure was only discovered recently.

Analyses

6.  I have considered all the affirmations and the submission of the parties.  The Solicitors’ version, if true, will involve findings of oppressive conduct against the Borrower and abuse of process by Konew and/or the Solicitors.  The contest between the parties is one that cannot be resolved on affirmation alone but that the deponents ought to attend to be cross-examined.  This is thus not a clear case where the Court can say that a particular party has a strong prima facie case.  I consider that it is appropriate not to make any order as to costs.

7.  As a side note, if I am wrong in my decision, I consider that $30,000 sought by Konew as costs for these proceedings to be a reasonable amount.  Mr. Cheng for Konew sought an hourly rate of $5,000 and a total of 15 hours spent on preparing 2 affirmations and considering the Solicitors’ 2 affirmations.  The hourly rate is of course too high on a party and party basis but the spending of 15 hours can in no way be regarded as unreasonable. 

Conclusion

8.  I order as follows:

(i)  By consent, the Plaintiff do pay $62,666 to the Defendant in full and final settlement of costs in relation to the 3 sets of underlying proceedings.

(ii)    There be no order as to costs (including the costs for attendance on 29 September 2009) for these proceedings.