CHENG TANG KAM YUNG v. TANG KAM CHEUNG AND ANOTHER

HCMP 147/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 147 OF 2008

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REASONS FOR REVIEW OF TAXATION

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1.  The Plaintiff commenced taxation proceedings on 24 August 2015 for costs awarded in her favour by two orders of Deputy High Court Judge Leung, one dated 26 August 2013 and the other dated 10 October 2013 (“Costs Orders”). By the Order dated 26 August 2013, the 1^st Defendant was ordered to personally pay the costs of and occasioned by the Plaintiff’s summons taken out on 22 November 2012 for the replacement of the Defendants as the administrators of the estate of Tang Chung Sau (“Estate”). By the Order dated 10 October 2013, the 1^st Defendant was ordered to personally pay the costs of and occasioned by two summonses filed by the 1^st Defendant on 9 September 2013 and 17 September 2013 respectively, with certificate for counsel.

2.  After the handing down of the Judgment by DHCJ Leung on 26 August 2013, the 1^st Defendant filed a notice to act in person.  The summons taken out by the 1^st Defendant on 9 September 2013 was for seeking stay of execution of the judgment made by DHCJ Leung on 26 August 2013 until the final disposal of the appeal (notice of appeal having been filed on 9 September 2013).  The summons taken out by him on 15 September 2013 was for an order that the 1^st and 2^nd Defendants be allowed to have ‘interim capacity’ as the administrator of the Estate to conduct certain sets of litigation until final disposal of the appeal; and to be reimbursed for the reasonable costs and disbursement of the litigation by the Estate.

3.  The 1^st Defendant filed his List of Objections (“Original List”) to the Plaintiff’s Bill of Costs (“Bill”) on 9 November 2015.  The taxation proceedings took place before me on 17 November 2016.  The 1^st Defendant was present at the commencement of the taxation proceedings and he made submissions on the lack of legal basis for the decision that he should pay costs.  Upon informing the 1^st Defendant that the taxing master has no power to challenge the validity of the costs orders, taxation proceeded.  Having dealt with the first two items of objections, the 1^st Defendant left the court room abruptly, saying that he would call the police and that he was not feeling too well as he went.  The rest of the taxation proceedings was conducted in his absence.

4.  On 28 November 2016, the 1^st Defendant filed an application for review of taxation, with the items for which review is sought listed (“Review List”).  They are the seven items of counsel fees in section B of the Bill.  The Plaintiff filed her answers on 9 December 2016.  The hearing of the review took place before me on 18 January 2017.  Written submissions were filed by the 1^st Defendant on 16 January 2017 (“Submissions”), with his arguments set out in 13 paragraphs therein. 

BACKGROUND

5.  The facts of the case leading to the dispute between the parties and the procedural history of the proceedings have been set forth in the Judgments of DHCJ Leung of 26 August 2013 and 10 October 2013.  I will not repeat them here.  As for the appeal against the Order of DHCJ Leung made on 26 August 2013, it was dismissed by the Court of Appeal in CACV 185/2013 on 23 December 2015. 

6.  The 1^st Defendant has also applied to the Court of Appeal for stay of execution of the judgment of DHCJ Leung.  The application was dismissed by Chu JA on 5 December 2013; and by Cheung and Kwan JJA on 27 March 2014, upon appeal of the 1^st Defendant against the decision of Chu JA.  The application of the Defendants for leave to appeal to the Court of Final Appeal was refused by the Court of Appeal on 10 July 2014.

Paragraphs (1) – (12) of the Submissions

7.  According to paragraphs (1) – (4) of the Submissions, Letters of Administration in respect of the Estate were granted on 1 December 2004 and since then, there had been two occasions on which the Estate was transferred to the 2^nd Defendant (deceased) and the 1^st Defendant. The first time was on 17 January 2005, by way of Memorial No. YL1113950 of the Land Registry; while the second time was on 23 August 2008, by way of Memorial No. 07082302410033.  After that, there was no more property held in the name of Tang Chung Sau (“Deceased”) and the administration of the Estate had been completed.  The 1^st Defendant therefore submitted that there was nothing left to be administered at the time the Plaintiff commenced these proceedings in 2008.

8.  In paragraphs (5) – (8) of the Submissions, the 1^st Defendant recited the circumstances of the grant of Letters of Administration and some of the actions that had been taken by the Plaintiff in the litigation. 

9.  In paragraphs (9) and (10) of the Submissions, the 1^st Defendant complained about the variation of the Letters of Administration in an attempt to transfer 14 pieces of land to David Yen Ching Wai, the replacement administrator appointed pursuant to the Order of DHCJ Leung of 10 October 2013 and the fact that the Order of DHCJ Leung had not stipulated the property to be administered by the replacement administrator.  At the hearing, the 1^st Defendant added that the original Letters of Administration granted were a court order and it could not be varied by subsequent conduct.

10.  The 1^st Defendant submitted in paragraphs (11) and (12) of the Submissions that the costs of the Plaintiff in the present proceedings should be paid out of the Estate or by the relevant parties (the 1^st Defendant has not specified who such relevant parties would be) and he himself should not be the paying party.  Further, since the Order of DHCJ Leung did not specify the property to be administered, the Plaintiff should recover her costs from the owner or the administrator of the property which required administration instead of from him or the 2^nd Defendant.

11.  The points set out in paragraphs (1) – (12) of the Submissions have not been raised in the Original List or the Review List. Furthermore, they are not relevant to taxation and relate only to the dissatisfaction of the 1^st Defendant with the orders of DHCJ Leung.  The appeals of the 1^st Defendant have already been concluded and the Costs Orders still stand.  The 1^st Defendant cannot seek to have these matters re-adjudicated.  In any event, as indicated to the 1^st Defendant at the hearing on 17 November 2015, I have no power to challenge the validity of the Costs Orders.  What I am tasked to deal with is simply the taxation of costs pursuant to the Costs Orders. 

Paragraph (13) of the Submissions

12.  The 1^st Defendant complained of the excessiveness and unreasonableness of the fees of the counsel of the Plaintiff in paragraph (13) of the Submissions.  Further details can be found in the Review List filed by the 1^st Defendant.  They will be dealt with in one go in the discussions below.

General principles

13.  As noted in paragraph 2(5) in Part II of the First Schedule to Order 62:

“(5) The amount of fees to be allowed to counsel is in the discretion of the taxing master who shall, in exercising his discretion, have regard to all relevant circumstances and in particular to the matters set out in paragraph 1(2).”

14.  The matters set out in paragraph 1(2) of Part II of the said First Schedule are:

“(a) the complexity of the item or of the cause or matter in which it arises and the difficulty or novelty of the questions involved;

(b) the skill, specialized knowledge and responsibility required of, and the time and labour expended by, the solicitor or counsel;

(c) the number and importance of the documents (however brief) prepared or perused;

(d) the place and circumstances in which the business involved is transacted;

(e) the importance of the cause or matter to the client;

(f) where money or property is involved, its amount or value;

(g) any other fees and allowances payable to the solicitor or counsel in respect of other items in the same cause or matter; but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question.”

REVIEW

15.  In respect of all seven items of counsel fees now under review, the 1^st Defendant expressed his view at the hearing that there was no need for counsel to be involved, especially with the 1^st Defendant acting in person.  This issue was not raised in the Original List or the Review List.  The only challenges in those lists were on quantum and not on liability.

16.  Before taking out the two summonses filed on 9 and 17 September 2013, the 1^st Defendant was actually represented by lawyers.  For the hearing on 26 June 2013 which eventually resulted in the making of the Order dated 26 August 2013, counsel was instructed to appear on behalf of the 1^st and 2^nd Defendants.

17.  With the Order dated 10 October 2013, certificate for counsel was granted.  There can be no dispute on liability.  In respect of the Order dated 23 August 2013, there was no certificate for counsel, but that does not preclude counsel fees from being allowed.  In paragraph 2(3) of Part II of the First Schedule to Order 62, it is stated :

“(3) No costs shall be allowed in respect of counsel appearing before a master in chambers, or of more counsel than one appearing before a master in open court or a judge or the Court of Appeal, unless the master or judge or the Court of Appeal, as the case may be, has certified the attendance as being proper in the circumstances of the case.”

18.  Only one counsel appeared on behalf of the Plaintiff at the hearings before DHCJ Leung, the principle stipulated in the above paragraph 2(3) of not allowing counsel fees is thus not applicable. 

19.  The seven items of counsel fees involve work other than appearing at hearing in court.  Although not strictly necessary for me to deal with the submission of the 1^st Defendant in this regard because the point was not raised in the Original List or the Review List, I would state that I find those other matters to warrant the involvement of counsel, having regard to the factors listed in paragraph 1(2) of Part II of the First Schedule to Order 62.  In particular, in view of the substantial size of the Estate, that there had been another litigation in which the rights of one Tang Ieng Kit and his mother were considered, the futile past attempts of the Plaintiff in getting accounts in relation to the administration of the Estate from the Defendants, that this proceedings has been dragged on for a very long period of time, and the importance of the matter to the Plaintiff, I have no hesitation in finding the involvement of counsel to be justified.

20.  One point stressed by the 1^st Defendant at the hearing was that the submissions he made were made on behalf of himself and not on behalf of Cheung Yuk Ying, his deceased mother.  Given that the Costs Orders awarded costs against the 1^st Defendant personally, this point is of no assistance to him.

Items 1, 3 and 4 of Section B

21.  Counsel charged $20,000 for perusing and considering documents on 11 June 2013 under item 1; $16,000 for a conference with lay client and preparation on 24 June 2013 under item 3; and $16,000 for perusing and considering further documents and conference with instructing solicitors on 25 June 2013 under item 4.  At the taxation hearing on 17 November 2016, I dealt with items 1, 3 and 4 globally and allowed the sum of $40,000 for the three items.  In both the Original List and the Review List, the 1^st Defendant proposed a reduction of $5,000 for item 1; $6,000 for item 3; and $6,000 for item 4.  At the hearing, the 1^st Defendant revised his request for a deduction to $6,000 for item 1, $10,000 for item 3; and $10,000 for item 4. 

22.  According to the Review List, the reasons for objecting to the fees charged under item 1 are that the documents considered had not been listed and the fees were excessive.  In the taxation bundle, an index of the documents perused and considered by counsel under item 1 can be found.  There are a total of 679 pages, comprising of pleadings, summonses, orders, affirmations and the exhibits.  According to Mr J Chan, counsel was called to the Bar in 2004 and he was charging at an hourly rate of $4,000 per hour.  This means that counsel charged 5 hours for perusal of the documents under this item.  The rate charged by counsel is similar to that usually allowed for solicitors with 10 years’ post qualification experience; hence I do not find it to be excessive or unreasonable.  I also do not find the time spent by counsel in going through the voluminous documents to be excessive. 

23.  The reason of objection in respect of item 3, as stated in the Review List, is that the conference was only for one hour.  The description of that item includes preparation for the conference and so counsel was charging for such preparation as well.  It would appear that what the 1^st Defendant is objecting to is only the time for preparation.  In any event, I find a pre-hearing conference with counsel to be necessary and proper.

24.  A note relating to the meeting with counsel under item 3 is included in the taxation bundle and it records the meeting to have been held for an hour.  Also included are the financial statements of the Estate for 5 years that were sent by the Defendants’ solicitors to the Plaintiff’s solicitors under cover of their letter of 22 June 2013.  These are the documents that counsel had to go through for preparing for the conference.  So, according to the aforesaid charging rate, counsel spent one hour on the conference and three hours for preparation. 

25.  The financial statements from the Defendants’ solicitors only arrived a few days before the hearing on 26 June 2013.  It is necessary and proper for counsel to address any issues and concerns that might be raised by the production of such financial statements at the conference and to consider any need for adjustment of the strategies on the part of the Plaintiff.  No doubt counsel had to go through the figures and other information in the financial statements in detail on an urgent basis so that he could provide appropriate advice to client.  It would also be necessary for counsel to take instructions for the purpose.  I find the charges for the perusal of the documents in preparation for the conference to be necessary and proper.

26.  As for item 4, the objections noted in the Review List are the conference lasted for only one hour, the documents considered had not been listed and the fees charged were excessive.  As in the case of item 3, the charges covered not only a one hour conference, but also time for perusing and considering further documents. 

27.  According to the attendance note of the conference held on 25 June 2013, discussions related to the proposal for the appointment of professional administrators and some latest documents adduced by the solicitors of the 1^st Defendant (44 pages).  However, only the proposal can be found in the taxation bundle.  I will therefore only allow time for the perusal of the proposal and the summons taken out by the Plaintiff for leave to file an affirmation in support for adducing the proposal.

28.  The proposal was dated 24 June 2013 and some of the other documents, such as the Consent to Act of the proposed administrators and the affidavits of fitness were dated 25 June 2013. With the hearing due to take place on the following day, the conference was necessary and proper and records show that it lasted for an hour.

29.  Counsel again charged 3 hours for the perusal of documents.  Taking into account only the proposal, the summons for adducing the proposal and the draft affirmation of the Plaintiff, I find the time charged for such perusal a bit on the high side and 1 hour and 45 minutes would be more appropriate.

30.  Apart from the excessive perusal time charged under item 4, there would likely be some duplicate of time charged for the two conferences (one charged under item 3 and one charged under item 4) which were held shortly one after the other.  Having further considered the matter, I think a deduction of 15 minutes should be made.  I would therefore revise the deduction for the three items to $6,000.

Items 2 and 5 of Section B

31.  Counsel charged $28,000 for drafting skeleton submissions for the hearing on 26 June 2013 under item 2 and $20,000 for the brief to appear before DCHJ Leung on that date under item 5.  At the taxation hearing on 17 November 2016, I dealt with items 2 and 5 together and allowed the sum of $45,000.  In both the Original List and the Review List, the 1^st Defendant proposed a reduction of $8,000 for item 2 and $5,000 for item 5.  At the hearing, the 1^st Defendant requested a deduction of $20,000 for item 2 and $15,000 for item 5. 

32.  According to the Review List, the 1^st Defendant finds the fees charged excessive since the submissions were only a few pages long.  There were 8 pages in the skeleton submissions prepared by counsel and the list of authorities had 6 items.  The length of the skeleton submissions is however not necessarily an accurate measure of the reasonableness of counsel’s fees.  What counts more are the factual and legal issues involved and the applicable legal principles which all have to be addressed in the skeleton submissions.

33.  As for the brief fee, the 1^st Defendant complained in the Review List that the amount was excessive since the solicitor had already charged $13,000 under item 25.2 of Section A of the Bill for attending court with counsel and so there was duplication.  Solicitors and counsel do charge separately and they have different roles to play.  The hearing on 26 June 2013 was fixed for two hours but it lasted for more than three hours.

34.  I dealt with the two items together because brief fee usually covers skeleton arguments.  Noting that the only challenge from the 1^st Defendant was on quantum, I taxed off $3,000 from the sum of the two items at the taxation hearing.  The seniority of the counsel engaged is appropriate and proper.  Bearing in mind the matters listed in paragraph 1(2) of Part II of the First Schedule to Order 62, a total charge of $45,000 for the two items is also appropriate and proper.  I do not see any basis to change my assessment.

Item 6 of Section B

35.  Counsel charged $20,000 for perusing and considering documents and a conference with client on 12 September 2013.  I taxed off $2,000 from this item.  The 1^st Defendant asked for a deduction of $5,000 in both the Original List and the Review List, but increased that to $15,000 at the hearing.  He complained about the excessiveness of the fees, that the conference was only for an hour and the documents considered had not been listed.

36.  The taxation bundle has the documents considered by counsel in it.  They relate to the summons taken out by the 1^st Defendant on 9 September 2013 for stay of execution of the judgment of DHCJ Leung given on 26 August 2013.  The conference lasted, according to the attendance note in the bundle, for an hour and I find the time spent appropriate and proper. 

37.  This means that counsel charged 4 hours for the perusal of the documents.  The documents are the summons and the supporting affirmation of the 1^st Defendant with exhibits.  The 1^st Defendant was apparently dissatisfied with the decision of DHCJ Leung and was trying to retain his control over the Estate.  The considerations mentioned in paragraph 19 above equally apply here.  That said, the affirmation is not a particularly difficult document.  Allowing 2½ hours as perusal time would be more appropriate.  Upon review, the amount to be allowed for this item is revised to $14,000.

Item 7 of Section B

38.  This is the brief of $30,000 for appearing before DHCJ Leung on 10 October 2013 for the two summonses taken out by the 1^st Defendant on 9 and 17 September 2013.  The 1^st Defendant suggested a deduction of $10,000 in the Original List and the Review List and orally revised this upward to $20,000 at the hearing.  As in the case with item 5, the 1^st Defendant pointed to the profit costs of the solicitors charged under item 39.2 of Section A of the Bill and complained of duplication.  For the reasons stated above, there is no basis to raise such an objection.

39.  Another complaint of the 1^st Defendant is that the hearing lasted for 50 minutes.  I note that the two summonses were listed for 3 minutes’ hearing only.  That might be the reason why DHCJ Leung specifically granted a certificate for counsel.  Apparently, the estimate of the 1^st Defendant about the hearing time was not accurate when he took out the summonses.  From the documents found in the taxation bundle, it can be seen that counsel prepared skeleton arguments as well as supplemental submissions.  I do not find the brief fee for counsel to deal with the two summonses to be excessive or unreasonable, bearing in mind the particular matters of concern in the present case.  This item is to be allowed in full.

40.  In conclusion, the sum allowed for items 1, 3 and 4 of Section B is to be revised upward from $40,000 to $45,000, and the sum allowed for item 6 of Section B is to be revised downward from $18,000 to $14,000. There is no change for the other items.

COSTS OF THE REVIEW

41.  Although there have been revisions in respect of the costs allowed for some of the items, the 1^st Defendant is over all in a worse off position.  I therefore order, on a nisi basis, that costs of the review be paid by the 1^st Defendant personally to the Plaintiff and to be summarily assessed, if not agreed.  Unless an application for variation of the costs order nisi is filed within 14 days from the date hereof, the Plaintiff shall file and serve her statement of costs within 21 days from the date hereof and the 1^st Defendant shall file and serve his list of objections within 7 days thereafter.  Summary assessment will be by way of paper disposal.