CHAN SAU MUI AND ANOTHER v. TO CHEONG LAM

HCA 7415/1995

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7415 OF 1995

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R U L I N G

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1.  The Defendant has presented Bill No.1 in this action pursuant to the Order of Master de Souza given on 25 May 2001.  By the Order, the action herein has been dismissed with costs of the action including the costs of the application awarded to the Defendant to be taxed if not agreed.  Two Bills have been presented to this Court for taxation.  I have completed taxation of Bill No.1 with 2 outstanding matters.

2.  As there had been adjournments in the progress of taxation, some costs has been reserved.  I have directed the parties to put in written application and the same shall be disposed of on paper.  And on the last day of hearing, there has been argument on an interesting point on the hourly rate for Mr. Miller, the handling solicitor for the Defendant.

3.  Mr. Miller claims his hourly rate at 2 stages.  At stage 1, he claims his hourly rate at $3,200 per hour.  And at stage 2, he claims his hourly rate at $4,000 per hour.  On the last hearing, Mr. Lau, law costs draftsman for the Plaintiff, has no objection to Mr. Miller charging $3,200 per hour but he challenged the increase.  He requests the Defendant to present the retainer agreement with his solicitors for my examination to confirm the agreement of increasing the hourly rate from $3,200 to $4,000 per hour, and the matter has been adjourned to today.

4.  Today, Mr. Fisher provides me with a written submission and an affidavit of Mr. Miller.  He starts by questioning the basis of the Plaintiff to request for inspection of the retainer agreement by the taxing master.

5.  I believe the matter in issue is whether there is an agreement for Mr. Miller to increase his hourly rate from $3,200 to $4,000.  It is not an unreasonable request for the Plaintiff to ask the Defendant to adduce evidence.  And when the evidence involves client’s privilege, a simple solution is to produce the retainer agreement for inspection by the taxing master in order for him to satisfy that there is an agreement for the increased hourly rate.  And the Defendant could waive the privilege in that limited aspect to support his claim.

6.  But because of the affidavit filed by Mr. Miller, any argument on when the retainer agreement may be inspected is academic.  According to the affidavit of Mr. Miller, he has no written retainer agreement with the Defendant.  The agreement was oral and he recalled that about $145,000 and counsel fees had been paid by the Defendant by May 2001.  Mr. Miller said there was no special agreement as to remuneration between his firm and the Defendant.  He said he believes the fees chargeable by his firm would be what is reasonable from time to time assessed on a solicitor and own claim basis.  And after presenting his invoice, the Defendant accepted his charges.

7.  Mr. Fisher refers me to the invoice issued by the firm to the Defendant which has been acknowledged and agreed to by the Defendant.  The Defendant has agreed to the revised hourly rate of $4,000 and he invited me to allow such amount as the reasonable hourly rate for Mr. Miller.

8.  Mr. Fisher also refers me to the case of Lam Lai Wah Susanna v Pacific Century Insurance Company Limited (formerly known as Top Glory Insurance Company (Bermuda) Limited) CACV 385 of 2002.  Mr. Fisher refers to paragraph 10 of the judgment which read as follows: -

“In determining whether a claiming party (“the winning party”) can recover costs against the other party (“the losing party”), the steps for consideration can be summarized as follows: -

(1) The first question to be asked is: - did the winning party employ the solicitors in the action? In answering this question, it matters not that the solicitors were chosen or appointed for the winning party by a third party on his behalf, so long as they acted for him with his knowledge and assent.

(2) If the answer is “Yes”, it is presumed that the winning party had a prime facie obligation to remunerate the solicitors, because that would be the ordinary basis on which a professional person is employed to represent a party.

(3)       It is for the losing party to rebut that presumption.  The presumption is not rebutted simply by evidence that a third party had also undertaken to pay the solicitors’ costs.  However, the presumption would be rebutted if there is evidence of an agreement made by the solicitors with the winning party, or with the third party, that under no circumstances would the winning party be liable to them for the costs of the litigation incurred on his behalf.”

9.  Mr. Fisher submits that it cannot be disputed, and in fact it has not been disputed by Mr. Lau that the Defendant did engage Mr. Miller as the solicitors for the Defendant.  Accordingly, the Defendant would have a prime facie obligation to remunerate Mr. Miller.  And he submitted that it is not unreasonable for Mr. Miller to charge what would be allowed on a solicitor and own client taxation when there is no express agreement on the hourly rate.

10.  Mr. Fisher refers me to the relevant circular of the Law Society, setting out the average charging rate of solicitors with different years of experience. This circular has been referred to in taxation before taxing master when assessing the hourly rate of the handling solicitors.  Before April 1995, the average hourly rate of solicitors with experience of 10 years or more is $3,200.  And since 1995, the average hourly rate has been increased to $4,000 per hour.  Mr. Fisher submits that since Mr. Miller is entitled to charge a reasonable amount, it is not unreasonable for him to charge the Defendant at $4,000 per hour since 1995.

11.  The main argument by Mr. Lau is the Defendant fails to prove that there is an agreement to increase the hourly rate of Mr. Miller and on indemnity principle, the Plaintiff is not liability to pay any costs assessed at the higher rate of $4,000.

12.  I am not handling a solicitor and own client taxation.  I am to determine if the hourly claimed exceed the agreed hourly rate between the Defendant and Mr. Miller.  I agree with Mr. Fisher that the Defendant has a prime facie obligation to pay Mr. Miller for his service.  The oral retainer agreement between Mr. Miller and the Defendant is reached before 1995.  While no hourly rate has been agreed, and if the reasonable rate is to be the chargeable rate, it must be assessed at the time when the retainer agreement was first entered.

13.  If the rate as suggested by the Law Society is relevant to the assessment, it must be the average rate at the time of the retainer, i.e. $3,200 per hour.  And in fact, in the invoice presented to the Defendant, $3,200 is the hourly rate adopted initially. 

14.  The Law Society has revised the average hourly rate of the solicitor in its circular, this is in fact the conclusion of their statistic, and information provided to the then Registrar of the High Court for taxation purpose.  I do not think Mr. Miller is suggesting that because of the revision, all charging rate between solicitor and client would automatically be revised. It remains a matter of agreement.

15.  I do accept that given the retainer agreement would be a continuing contract, it does not prevent the solicitors from coming back to his client and seeking his agreement to increase his hourly rate and failing which he made terminate the service.  But there has to be an agreement.

16.  The burden rest on the Defendant to prove why the rate has been increased in 1995.  It may be varied by agreement, but we do not have any agreement.  What Mr. Miller said is he is entitled to charge what is reasonable.  If he is suggesting that the rate is variable in accordance with the average hourly rate published by the Law Society from time to time, this is not a usual provision, and there is no evidence that the Defendant has ever agreed to such arrangement or term of contract.

17.  The Defendant fails to prove that there is an agreement for increase of the hourly rate for Mr. Miller.  His agreement to pay, as appears from the acknowledge of the invoice, is given after service is provided and is not supported by any consideration.

18.  Having considered all matters, I disallow the increased hourly rate claimed by Mr. Miller as the Defendant fails to prove that he is contractual bound to pay the higher rate.  By the indemnity principle, the paying party should not be ordered to pay more than the Defendant’s contractual liability. The hourly rate of Mr. Miller is taxed at $3,200 for the whole period.

19.  Some time is spent on this argument and I see no reason why the Plaintiff should not have costs.  I give an order nisi that they have costs of and occasioned by this argument, which order to become absolute within 14 days from today.  On being absolute, the Plaintiff shall put in a statement of costs for my summary assessment.