WEIR & ASSOCIATES (a firm) v. MELISSA MOWBRAY-D’ARBELA

HCSA 35/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO. 35 OF 2004

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL CLAIM

NO. 8496 OF 2003)

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J U D G M E N T

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Facts

1.  This appeal concerns the requirement under section 66 of the Legal Practitioners Ordinance (Cap. 159) that a solicitor must have first delivered a bill to his client before he can sue for his outstanding fees.

2.  In the proceedings in the Small Claims Tribunal, the Claimant, a firm of solicitors, sued the Defendant for outstanding fees.  The claim was defended on three principal grounds, namely that the Defendant was not the client; she only represented a limited company known as Interactive Audience Measurement Asia Limited (“IAMA”) (since in liquidation), of which she was a director, in giving instructions to the solicitors; that there was an agreement to cap the legal fees at HK$5,000; and that the work rendered by the solicitors was substandard.  There was also an issue on interest.

3.  In support of their claim, the solicitors relied on a bill dated 21 June 2001.  The bill was addressed to “Maven International, Suite 83, 76 MacDonnell Road, Central, Hong Kong.  Attn: Ms Melissa Mowbray-d’Arbela [i.e. the Defendant], Managing Director”.  It was sent to the address stated in the bill, which was that of the Defendant.

4.  The trial before the tribunal was fought on the issues outlined above.  Evidence was heard and arguments were presented in relation to the issues.

5.  Yet the adjudicator did not decide the case on those issues.  Instead he dismissed the solicitors’ claim on the sole basis that the bill did not comply with the requirement under section 66(2) of the Ordinance, in that the bill was addressed to Maven International, not the Defendant personally; as no bill was delivered to the Defendant, no action could be brought by the solicitors against the Defendant personally for the fees charged under the bill.

6.  There was a review hearing, but the adjudicator maintained his original decision.

7.  Dissatisfied with the outcome, the Claimant now appeals to this Court.

Section 66 of Cap. 159 

8.  Section 66 of the Ordinance reads as follows:

“	(1)	Subject to the provisions of this Ordinance, no action shall be brought to recover any costs due to a solicitor until 1 month after a bill thereof has been delivered in accordance with the requirements of this section:
		Provided that, if there is probable cause for believing that the party chargeable with the costs is about to quit Hong Kong, or become a bankrupt, or to enter into a voluntary arrangement with his creditors within the meaning of the Bankruptcy Ordinance (Cap 6), or to do any other act which would tend to prevent or delay the solicitor obtaining payment, the Court may, notwithstanding that 1 month has not expired from the delivery of the bill, order that the solicitor be at liberty to commence an action to recover his costs and may order those costs to be taxed.
	(2)	The said requirements are as follows —
		(a)	the bill must be signed by the solicitor, or if the costs are due to a firm by one of the partners of that firm, either in his own name or in the name of the firm, or be enclosed in, or accompanied by, a letter which is so signed and refers to the bill; and
		(b)	the bill must be delivered to the party to be charged therewith, either personally or by being sent to him by post to, or left for him at, his place of business, dwelling house or last known place of abode,
		and where a bill is proved to have been delivered in compliance with those requirements, it shall not be necessary in the first instance for the solicitor to prove the contents of the bill and it shall be presumed, until the contrary is shown, to be a bill bona fide complying with this Ordinance.”

9.  On the face of it, the section only requires the delivery of the bill “to the party to be charged therewith”.  It does not state specifically that the name of the party to be charged with the bill must appear on the face of the bill itself (or indeed anywhere else).

10.  However, the case law has construed the provisions to mean that the person to be charged with the bill (to whom the bill must be delivered) should be named.  The position has been explained in Halsbury’s Laws of England (4^th ed.), vol. 44(1), para. 197 as follows:

“Name of person to be charged.  The bill of costs must clearly show the person who is to be charged otherwise he will not be liable upon it.  It is immaterial whether his name appears on the face of the bill or is contained in some writing connected with the bill, for instance the envelope in which it was sent or the letter accompanying it.”

11.  Taylor v. Hodgson (1845) 3 Dow & L 115 is an authority for the proposition that the name of the person to be charged may be contained in a letter accompanying the bill.

Has the Defendant been named as the person to be charged with the bill?

12.  As mentioned above, the bill itself was addressed to Maven International for the attention of the Defendant as its managing director.  Maven International, according to the evidence, was closely related to the Defendant, and was apparently regarded by the solicitors as the Defendant’s company. 

13.  It is, in my judgment, quite open to the tribunal to find that when the bill was first issued, on the face of the bill, the person to be charged with the bill was Maven International, rather than the Defendant.  However, that was not the end of the matter.  After the bill was sent in June 2001, no payment was received.  On 27 September 2001, a fax addressed to the Defendant personally was sent by the solicitors, attaching a copy of the bill, no doubt as a reminder.  Then on 29 January 2002, the solicitors sent a letter on the following terms to the Defendant personally, “c/o Maven International”:

“29^th January 2002

Ms. Melissa Mowbray-d’Arbela

c/o Maven International

53-55 Hollywood Road

Hong Kong

Dear Madam,

Re: Invoice No. 9143/01

We refer to the above invoice which remains outstanding despite our several reminders.

As our invoice was rendered in June last year for services rendered in May 2001, it is well over due.  Unless the same is settled forthwith, we shall have no alternative but to issue legal proceedings against you to recover the same in the event of which you will be liable for court costs and interest in addition to the principal due.

We await hearing from you.

Yours faithfully.

[Signed]

Weir & Associates

Accounts Department”

14.  There is no dispute that enclosed with the letter was a copy of the bill.

15.  It is clear from this letter that the solicitors were treating the Defendant as the person charged with the bill.  The letter was sent to the Defendant.  It threatened legal proceedings against the Defendant personally for the outstanding fees under the bill.

16.  In my judgment, this letter put it beyond doubt that at least as from the date of the letter, the solicitors regarded the Defendant as the person charged with the bill.  As I say, a copy of the bill was enclosed with the letter.  Although the addressee of the bill, as set out in the bill itself, had not been amended, but there can be no doubt, when reading the letter and the enclosed copy bill together, that the solicitors were (as from the date of the letter) charging the Defendant personally with the bill.  Identity of the party to be charged was plain and clear.

17.  As mentioned above, it is not necessary for the name of the party to be charged to be set out in the bill itself.  It may be contained in a covering letter.  In Taylor v. Hodgson, supra, no name whatsoever appeared on the face of the bill, yet the court found that the bill and the covering letter must be both read together, and when that was done, the identity of the party to be charged was clear.

18.  I find no material distinction between that case and the present case. 

19.  That it was the intention of the solicitors, at least as from 29 January 2002 (if not earlier) to charge the Defendant (rather than Maven International) with the bill can also be easily seen from the subsequent correspondence between the parties, which eventually led to the commencement of proceedings.

20.  In fact, the Defendant herself had no difficulty in comprehending the Claimant’s claim against her.  Her defence below was not that it was Maven International, not her, that was charged with the bill for the outstanding fees; her defence was that it was IAMA (which she represented in instructing the solicitors for the work in question), to which the solicitors should look for payment of their fees. 

21.  The adjudicator was, with respect, wrong in thinking that the letter of 29 January 2002 was a mere covering letter that could be disregarded.

22.  In the circumstances, the bill had been delivered to the Defendant, as the person to be charged therewith, by virtue of and under the cover of the letter of 29 January 2002.  The same was done by post.  The requirement under the section has thus been satisfied.

23.  The adjudicator was wrong in dismissing the solicitors’ claim, without consideration of the merits of the case, on that technical ground based on section 66.

In any event, merits should be considered

24.  In any event, there is a complete answer to the adjudicator’s point of non-compliance with section 66.  In other words, in case I am wrong and there has been non-compliance with the requirement under section 66(2), that is not the end of the matter.  In Zuliani v. Veira [1994] 1 WLR 1149, an appeal from the Eastern Caribbean Court of Appeal to the Privy Council, the solicitor failed to comply with some statutory provisions that were, for all practical purposes, equivalent to our section 66(2).  Amongst other things, the solicitor delivered the bill to the three defendants jointly in respect of all the items which it covered whereas their liabilities were several.  The delivery was therefore not valid and strictly speaking, there was no delivery to any of the defendants at all of a bill.  The judge however found that the technical objection was “wholly without merit” (at page 1154C/D).  He dealt with the substance of the claim and found in favour of the solicitor.  The judge’s decision was upheld on appeal, and the Privy Council upheld the decision of the appellate court.  Lord Nolan, giving the judgment of the Privy Council, dealt with the point at page 1154F to H as follows:

“Was the judge then precluded by the statutory provisions set out above from dealing with the matter as he did?  In common with the Court of Appeal, their Lordships are satisfied that he was not, but that on the contrary he dealt with the matter in an entirely correct and appropriate way.  The statutory provisions are of the greatest importance.  They must be strictly enforced in the interests of justice both to solicitors and to their clients.  But it by no means follows that an action brought on a bill which fails to satisfy one or more of the statutory requirements or which contains erroneous items must necessarily be dismissed without consideration of the merits.  It has long been established that a court, confronted with a defective bill, is entitled to look into all the circumstances of the case and in appropriate cases to allow the solicitor to withdraw the bill and to deliver a fresh one: see, for example, Chappell v. Mehta [1981] 1 All E.R. 349, 351-352 and the cases there cited per Lawton L.J.  That is what the judge in the present case did.  Mr Newman complained that the plaintiff had made no application to withdraw his bill, nor delivered fresh bills to the defendants at the time of the judgment.  That is hardly surprising, since the objection to the defects in the original bill had only been raised at the door of the court.”

25.  If I may say so with respect, that is a most sensible and robust approach.  In a case where the technical breach of the requirements under section 66 does not lead to any injustice or prejudice to the party to be charged, it is difficult to see why the court must dismiss the solicitors’ action (who would no doubt following the dismissal, issue a new bill in compliance with the section, and if the same should still remain unpaid, start a new action), but cannot look at the merits of the case and decide the real controversy between the parties.  The requirements of the section may be satisfied by, as the Privy Council has pointed out, directing the solicitors to withdraw the bill and to deliver a fresh one, without dismissing their action.

26.  In the present case, if the adjudicator had been correct in concluding that the bill did not satisfy the requirement of the section, he was not bound to dismiss the solicitors’ claim.  He ought to consider the merits of the claim.  This was particularly so in the present case as the adjudicator had actually heard the parties on the merits during the trial, and he could have pronounced judgment on the substantive issues argued before him – having first, where appropriate, directed the solicitors to withdraw their bill and deliver a fresh one in compliance with section 66(2).

27.  Like what happened in Zuliani, given that (ex hypothesi) the bill had been addressed to the wrong party, strictly and technically speaking, no bill had been delivered to the Defendant.  But it is apparent from what happened subsequently, as I have outlined above, that the solicitors were throughout (at least since 29 January 2002) intending to charge the Defendant personally with the bill, and the Defendant has had no illusion about it.  In those circumstances, what was involved (ex hypothesi) was a mere technical failure to comply with the requirements under section 66(2).  To her credit (as opposed to the defendants in Zuliani), the Defendant did not rely on the confusion between Maven International and herself as a defence to the solicitors’ claim at the trial.  In those circumstances, there was really no reason why the adjudicator should not have considered the merits of the claim, and dealt with it accordingly, instead of rejecting the solicitors’ claim on a technicality.

28.  So for that reason also, in my judgment, the adjudicator has come to the wrong conclusion in dismissing the Claimant’s claim without considering the merits of the case.

Other grounds of appeal

29.  Having come to such a conclusion, I need not deal with the further grounds relied on by the solicitors in this appeal.  Suffice it to say that I do not accept the complaint that the adjudicator raised the issue of compliance with section 66(2) of his own motion and decided the case on that ground alone without affording the Claimant an opportunity to be heard.  It is true that the issue was never raised at trial and only surfaced in the adjudicator’s judgment.  He had heard no submission on it, and the parties had not been made aware of the point.  However, the deficiency in procedure has been cured, in my judgment, by the review hearing, which was of course held after the reason for his decision had been made known by the adjudicator to the parties.  At the review hearing, it was open to the Claimant to apply to adduce further evidence relating to the issue in question, and in any event, the Claimant was at full liberty to address the adjudicator on the question of compliance with section 66. 

30.  In short, I only base my decision on the two reasons given above.

Outcome

31.  I make the following order:

(1)   the appeal be allowed;

(2)   the orders made by the adjudicator on 9 March 2004 and 4 June 2004 be set aside; and

(3)   the claim be remitted to the Small Claims Tribunal for re-trial before another adjudicator.

32.  I also make a costs order nisi that the Defendant pay to the Claimant the costs of this appeal (including the costs of the transcripts), to be taxed if not agreed.  As for the costs below, I order that they be in the cause of the re-trial.  Unless either party should apply to vary the costs order nisi within 14 days after this judgment is handed down, upon the expiry of the 14 days’ period, the same shall become absolute.

33.  I thank counsel for their assistance.