CHRIS AU v. STEVE YOON SOO KIM

HCA 1285/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1285 OF 2014

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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1.  On 25 November 2016, I handed down my Decision (“Appeal Decision”) and dismissed the plaintiff’s appeal against the order of Registrar Lung dated 22 April 2016.[1] By my Appeal Decision, I also granted a costs order nisi that the plaintiff do forthwith pay the defendant’s costs of and occasioned by the appeal to be summarily assessed (“Costs Order Nisi”). Such Costs Order Nisi had been made absolute since there was no application to vary the same within 14 days from the date of my Appeal Decision. For convenience, I shall adopt the abbreviations in my Appeal Decision.

2.  D lodged his Statement of Costs on 28 July 2016. By my Appeal Decision, I gave directions for P to lodge/serve list of objections within 14 days.

3.  The proper approach to summary assessment of costs had been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan[2]. For the present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512-514 as follows:

“(2) As in an ordinary taxation, under O.62 r.28(2) of the Rules of the High Court (Cap.4A) (the RHC), in a summary assessment, party‑and‑party costs were allowed only if they were ‘necessary or proper’ for the attainment of justice or for enforcing or defending the rights of the receiving party. Pursuant to Practice Direction 14.3, the court adopted a broad‑brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in O.1A of the RHC, even if there was no challenge to individual items. ......

(3) A summary assessment required a two-stage approach. If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the cost reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable. A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for the litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty. The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary. ......

(6) Since Civil Justice Reform in 2009, taxation of counsel’s fees under a party-and-party taxation was no different from taxation of costs and expenses.  The test of ‘necessary or proper’ applied and must take into account the matters set out in para.1(2) of Part II of the First Schedule to O.62 of the RHC, as well as the requirement of reasonable proportionality.  Accordingly, paras.62/App/28(5) (p.1172) and 62/App/28A of Hong Kong Civil Procedure 2012 (p.1172), which referred to the previous pre-CJR ‘excessive and unreasonable’ test under the former para.2(5) of Part II of the First Schedule to O.62 of the RHC, should no longer be followed, ......”

4.  Here, D sought a total sum of HK$238,084 comprising solicitors’ profit costs and disbursements of HK$138,084 and counsel’s brief fee of HK$100,000.

5.  For the purpose of the summary assessment herein, I shall adopt a broad-brush approach pursuant to paragraph 13 of Practice Direction 14.3 as it is inappropriate to conduct any mini-taxation. Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the Appeal and Summons, relevant affirmations, skeleton submissions and list of authorities, what transpired at the Appeal Hearing, the involvement of counsel in this matter, and the matters noted below, and taking into account all the circumstances, the overall costs claimed by D under his Statement of Costs appeared to be somewhat on the high side on party-and-party basis. I make the following general observations.

6.  First, the costs in question are assessed on party-and-party basis such that only costs that are necessary/proper and reasonable will be allowed.

7.  Secondly, I am satisfied the hourly rates sought by D were not disproportionate or unreasonable for assessment of costs on party-and-party basis. D claimed the hourly rates for EY (partner admitted in England and Wales in 2001 and in Hong Kong in 2006), VL (assistant solicitor admitted in Hong Kong in 2014), TS (trainee solicitor) and LC (litigation clerk) were respectively HK$4,000, HK$2,000, HK$1,300 and HK$1,000. P suggested their respective hourly rates should be HK$3,800, HK$1,800, HK$1,000 and HK$650 in view of the involvement of counsel and the simple nature of the matter. I am unable to see how involvement of counsel or any suggestion of simple nature of the matter would affect the nature of the work of TS and LC. Further, the hourly rates claimed were not unusual, and the fact counsel was engaged did not diminish necessary professional work and other solicitors’ duties on the part of the instructing solicitors.

8.  Thirdly, P complained that for Item B2 (HK$6,000 in respect of attendance by LC for 6 hours) the amount claimed was excessive. In my view, manual work by LC including filing/serving documents should not be on a time-cost basis. The relevant guidance for costs in respect of such work is in the Scale of Costs in Part 1 of the First Schedule of Order 62 of the RHC.[3] I agree that this item of costs should be reduced.

9.  Fourthly, D claimed HK$59,350 for attendance on client (Item C1), attendance on other side (Item C2) and attendance on counsel (Item C3), and HK$72,500 for preparation of documents (Item D1), perusal of documents (Item D2), preparation for Appeal Hearing (Item D3) and attendance at the Appeal Hearing itself (Item D4). P suggested that because of the simple nature of the matter, there should be global reduction of the time for VL and TS to 5 hours and 6 hours (from 17 hours and 19.5 hours) respectively for Items C1-C3, and to 2 hours and 2 hours (from 9 hours and 7 hours) respectively for Items D1-D2. I am not persuaded this was a simple matter when the Appeal was by way of re-hearing and P sought to re-argue all aspects of the Summons on appeal. But that said, no new evidence was adduced by either party, and I am unconvinced extensive time would be required to advise, take instructions from the client and/or liaise with counsel. I note it was the same counsel who appeared for D at the Registrar Hearing, and he would have been familiar with the case. Further, D’s solicitors necessarily had the benefit of input by counsel and also elucidation of the issues/findings by the Registrar’s Decision. I am not persuaded VL and TS would require 17 hours and 19.5 hours to attend to Items C1-C3.

10.  Fifthly, P claimed there was duplication of work for Item D3 and suggested EY’s time should be disallowed, and only 2 hours’ time be allowed for each of VL and TS.  For reasons set out in paragraph 11 below, I am not persuaded I should allow for EY’s attendance at the Appeal Hearing. In the circumstances, EY’s time for preparation for Appeal Hearing must also be disallowed. I am quite unable to understand why VL and TS would respectively require 6.5 hours and 5 hours for preparation for hearing when (a) the hearing was attended by counsel, (b) VL and TS were actively involved in case-handling all along, and (c) the Appeal was P’s appeal and no new evidence was filed for the purpose of the Appeal. I agree with P that VL’s and TS’ time should be reduced.

11.  Sixthly, P also claimed there was duplication of work for Item D4 and suggested taxing off EY’s time of 3 hours. The Appeal Hearing was from 9:55am to 1:00pm, so I have no quarrel with D’s claim for 3 hours. But I agree with P there was no need for 3 fee-earners to be present at the Appeal Hearing especially given the attendance of counsel. Given that VL and TS were the fee-earners who were involved in communications under Items C1-3 and in professional work under Items D1-2, EY’s time should be disallowed.

12.  Seventhly, P suggested appropriate counsel’s brief fee should be HK$70,000. Having considered the nature of the Appeal, and bearing in mind that P sought to re-argue all aspects of the Summons, I do not find counsel’s brief fee of HK$100,000 to be disproportionate. I accept it was within the range of what was necessary or proper for suitable notional counsel on party-and-party assessment.

13.  Taking into account all of the above matters, and upon considering the items of costs claimed to see whether or not they were “necessary and its costs reasonable” on the sensible standard of necessity as explained by the Court of Appeal, D’s total costs on his Statement of Costs are assessed at HK$170,000.  I therefore order that P shall pay D costs in the sum of HK$170,000.