TO KAN CHI AND OTHERS v. MILLER PEART (a firm)

HCMP 2111/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2111 OF 2005

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Reasons for Referral

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1.  On the 2^nd day of the preliminary issue hearing, the Solicitors for the Defendant issued an application seeking for, inter alia, an order to strike out the Points of Claim filed by the Plaintiffs on 23 April 2010.  The Points of Claim is filed in connection with the determination of the preliminary issues arising out of the taxation of the solicitor and own clients’ bills delivered by the Defendant to the Plaintiffs.  Having considered the submissions by leading counsel for both the Plaintiffs and the Defendant, I decided that such application should be referred to a judge for determination.  These are my reasons for the referral.

Background of the present proceedings

2.  This case has a chequered history.  The parties herein are also involved in 2 other similar proceedings in the High Court (i.e. HCA 1692/2004 and HCMP 1665/2006).  For the present purpose, I shall limit myself to setting out the background of the present proceedings and the events leading to the application for striking out the Points of Claim.

3.  By an Originating Summons dated 3 October 2005 (which was amended on 11 September 2006), the Plaintiffs sought for an order that the Defendant’s solicitor and own client bills of costs be referred to taxation.  There are altogether 3 bills (“the bills”) delivered by the Defendant to the Plaintiffs.

4.  By an order of Master Lung dated 8 September 2006, he directed that the bills be referred to taxation.  On appeal against his decision, Mr. Recorder Jat affirmed the order of Master Lung.  However, as the amount involved in the bills is very substantial (amounting to $81m), the parties have throughout these proceedings been in disagreement as to how the taxation of the bills is to be proceeded with.  Indeed, the 3 lists of objections filed by the Plaintiffs (“the lists”) consisted of over 300 pages in total.  The issues or objections set out in the lists involved substantive arguments on law as well as on facts which are disputed.

5.  At the hearing before Master Yu on 7 July 2008, attempts had been made to resolve the preliminary issues raised in the lists but to no avail.

6.  To avoid further delay in the taxation of the bills, by an order of Madam Registrar Au-Yeung dated 24 February 2009, she directed that the case be adjourned for taxation with 8 days reserved for the hearing of the preliminary issues and for the cross-examination of witnesses (i.e. for the witnesses who had filed affidavits).  She further ordered that the balance of the taxation, that is the actual item by item taxation be adjourned to a date to be fixed at least 6 weeks from the taxing master’s ruling on the preliminary issues with 15 days reserved.

7.  The preliminary issue hearing was fixed before me on 3 May 2010.  However, as the parties could not agree on the preliminary issues to be tried.  I directed that a pre-trial review be held (“PTR”) and that the parties were to submit a list of issues for the consideration of the Court.

8.  At the PTR held on 16 March 2010, the parties failed to agree on the preliminary issues.  However, the parties informed the Court that they would respectively instruct leading counsel to argue on the matter and that the leading counsel should be able to agree on the preliminary issues.  On that basis, I directed that a list of issues be agreed by leading counsel to be instructed and that the PTR was further adjourned to 8 April 2010.

9.  Unfortunately at the hearing on 8 April 2010, both leading counsel for the parties (i.e. Mr. Chan Chi Hung S.C. for the Plaintiffs and Mr. Barlow S.C. for the Defendant) failed to come up with an agreed list of issues.  They were still in serious disagreement on the preliminary issues to be tried.  In such circumstances and with the hope that the preliminary issues could be narrowed down and properly defined, I directed the Plaintiffs to file and serve a Points of Claim to set out their contentions on what they thought were the proper preliminary issues for trial.  The Defendant was to file and serve a Points of Defence with Points of Reply to be filed and served by the Plaintiffs thereafter.  To expedite the hearing, I further directed that agreed bundles and facts be prepared if possible.

10.  On the 1^st day of the hearing for preliminary issues, leading counsel for both parties were still in disagreement as to what were the preliminary issues to be determined by the Court despite that Points of Claim, Points of Defence and Points of Reply had been filed and served.  To ensure that the preliminary issues were properly defined before proceeding to hear evidence from the parties, I went through the Points of Claim, Points of Defence and Points of Reply with leading counsel for both parties.  With the concerted efforts of both leading counsel, the parties finally agreed on a list of issues to be tried.  As it was then approaching to the end of the 1^st day of the hearing, I directed that Solicitors for Plaintiffs to type up an “Agreed List of Issues” for use on the following day.  I further directed the parties to make arrangement for the witnesses to attend court on the 2^nd day to give evidence and for cross-examination.

11.  However, at the start of the 2^nd day hearing, Mr. Barlow contended that he had not agreed to the “Agreed List of Issues”.  He disputed that he had made any agreement at all.  Despite remarks by Mr. Chan that he was retracting from his agreement, Mr. Barlow maintained that he had not agreed to anything.  He further informed the Court that he would apply to strike out the Points of Claim filed by the Plaintiffs on the ground that no reasonable cause of action was disclosed

12.  The Court was indeed caught by surprise by the change of stance of Mr. Barlow and in the way that he had conducted the case.  The Court was of the firm view that he had agreed and confirmed the list of issues to be tried.  It was with regret that leading counsel like Mr. Barlow could have retracted from what he had agreed in court.  I would only assume that he was doing this according to instructions.  As I do not wish the case to be further protracted by arguing on whether Mr. Barlow had agreed or not agreed on a particular issue and thus wasting further costs and time, I held that Mr. Barlow had retracted from his agreement and that no agreement had been reached between the parties.  Nevertheless, I had indicated to the parties that after the disposal of the striking out application, the Court would rule on the preliminary issues to be tried.  After hearing submissions on costs, the Court ordered the Defendant to pay the costs incurred on the 1^st day of the hearing.  Such costs would be assessed on 12 May 2010 and after the solicitors for the Plaintiffs have submitted the statement of costs.

13.  In respect of the application to strike out the Points of Claim by Mr. Barlow, the Court refused to deal with the application there and then for the reason that no formal application had yet been taken out by the Defendant.  I took the view that this was a serious application and that the Court would not entertain such application simply on the oral submissions by Mr. Barlow.  It was also unfair to Mr. Chan who had come unprepared for such application.

14.  In the afternoon of the 2^nd day of the hearing, the Defendant issued an application seeking for, inter alia, an order to strike out the Plaintiffs’ Points of Claim and to dismiss the Amended Originating Summons.  The application was made returnable on the 3^rd day of the hearing, i.e. 5 May 2010.

15.  I would also add that a few days before the hearing for the preliminary issues fixed on 3 May 2010, Solicitors for the Defendant had taken out a summons for interim payment returnable on the 2^nd day of the hearing.  In the summons, the Defendant sought an order that the Plaintiffs do pay the Defendant a sum of $10m.  Having heard arguments from both sides, the Court dismissed the summons for want of jurisdiction.  The Defendant was also ordered to pay costs for the summons which was to be summarily assessed on 12 May 2010.

Should the application for striking out be referred to Judge?

16.  On this question of whether the striking out application (“the application”) should be referred to a judge for determination, Mr. Chan submitted that it should not.  He argued that the application has no merit at all and that it is a tactic on the part of the Defendant to delay the matter and to “torpedo” the hearing so that the witnesses need not go to the witness box to give evidence.  He suggested that the Court should proceed with the preliminary issues hearing and not be delayed by the application.

17.  Mr. Barlow submitted that the application should be referred to the judge.  He stated that it is quite certain that his client would take the matter on appeal if the application is unsuccessful.

18.  To some extent, I agree with Mr. Chan and do not exclude the possibility that the Defendant is trying to play tactics in order to delay the proceedings.  I can see, for example, that the Solicitors for the Defendant had taken out an interim payment application just a few days before the preliminary issue hearing.  Then, there was a retraction on the agreed preliminary issues to be tried followed by an application to strike out the Points of Claim and the Amended Originating Summons.  However, in deciding whether the application should be referred to a judge, I have taken into account of the background of the case in particularly the conduct of the parties in these proceedings (see the Decision of Mr. Recorder Jat referred to in paragraph 4 above for more details about the background of the case).  More importantly, when one looks at the application itself, the Defendant is in effect seeking for an order that the trial for the preliminary issues be struck out.  In my view, this goes to the root of the whole matter; that is whether the Court should hold a trial of the preliminary issues in the first place.  If the Court is to dismiss the application, I am assured by Mr. Barlow that the Defendant would appeal against my decision.  By the same token, if the Court is to accede to the Defendant’s application, the Plaintiffs’ taxation would be seriously prejudiced as it would mean that the Plaintiffs may not be entitled to rely on their main objections raised by way of preliminary issues.  These objections relate to a large number of items in the bills.  I do not think that the Plaintiffs would accept this and they would most probably take the matter on appeal as well.  In these circumstances, I do not see any point in proceeding with the present preliminary issues hearing which may prove to be a waste of time and costs at end of the day as it very much depends on the outcome of the application.

19.  I understand that Mr. Chan is complaining that the Defendant is trying to avoid the present hearing, but as I have mentioned to Mr. Chan, if the Defendant’s application is dismissed, he could always invite the Court to consider making a summary assessment of the Plaintiffs’ costs in the matter.

20.  Further, I would like to point out that when I consider whether I should refer the application to the judge, I have borne in mind the observations of Keith J (as he then was) in Hong Kong Polytechnic University and Others v Next Magazine Publishing Limited and Another [1996] 2 HKLR 260.  At page 266, he states:

“There is one final matter I wish to add.  This was a case in which whichever side lost before the master was going to appeal.  Since an appeal from a master to a judge takes the form of a rehearing, what was the point of the master considering the case at all?  The Rules of the Supreme Court recognize that there may be cases in which a hearing before a master should be dispensed with.  Thus, O.32 r.12 enables a master to refer to a judge any matter which he thinks should properly be decided by a judge.  That is a device which in my experience could be used more often than it is……  I take this opportunity to remind the profession that in those cases where an appeal is likely to be lodged whatever the decision of the master, costs will be saved in the long run if use is made of O.32 r.12.”

21.  I also note that the present proceedings are in fact taxation proceedings in which I am sitting as a taxing master only.  In this connection, I have also reminded myself of the comments made by Lam J. in Chun Wo Construction & Engineering Co. Ltd, Fujita Corporation, Henryvicy Construction Company Limited trading as Chun Wo-Fujita-Henryvicy Joint Venture v China Win Engineering Ltd HCCT37/2006, unreported, Judgment dated 12 June 2008.  At page 29, he states:-

“107.   As I said at the outset, the matter was first referred to this court as part of the taxation proceedings.  There is no specific provision under Order 62 for a taxing master to refer a preliminary point for the decision of a judge.

108.   However, it is a matter of case management for a taxing master to decide whether some preliminary points should be resolved first before proceeding with the substantive taxation.  If a taxing master considers that there should be a resolution of preliminary points, it is open to him or her to consider exercising the power under Order 32 rule 12 to refer the preliminary point to a judge.”

22.  For the above reasons, I am of the view that it is more appropriate that the application be referred to a judge for determination pursuant to O.32, r.12 of the High Court Rules and I so refer.