DEACONS (a firm) v. YAN SU ZHER AND ANOTHER

HCMP 1784/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1784 OF 2005

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J U D G M E N T

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1. This is an appeal by rehearing from an interlocutory order a Master made, in which he declined to reconsider an order he had earlier made which was to the effect that the appellant should not be permitted to prosecute for recovery of bills of costs pending taxation.

2.  The substantive proceedings are an application for taxation of bills of costs rendered by the plaintiff Messrs Deacons to former clients, whom I shall call for convenience Mr and Mrs Yan, or the Yans, and consequent adjustment in moneys paid on account and still outstanding.  The order that Deacons now appeals against prevents the firm’s suing for recovery in the interim.

3.  The history can be briefly stated.  Mr and Mrs Yan were targeted in a number of actions brought by neighbours called Mr and Mrs Oh following a dog-fight in which a dog owned by the Oh’s was mauled and killed.  By and large the Yans have been successful in their defences, but there are appeals and these are pending, and party and party costs awarded to them are as I understand it largely unpaid.

4.  Pending taxation Deacons have calculated their costs and disbursements to be in excess of HK$6.2m.  The Yans put down a deposit of HK$100,000 at the outset in December 2002 and have been paying interim payments thereafter, but it cannot be gainsaid that no one could have anticipated the extent of the litigation and the cost of that.

5.  By February 2005, with the trial in the main action pending and the appeal of another yet to be heard, the Yans had fallen behind in meeting the costs then billed for, to the extent that Deacons’ Debt Committee came to be concerned.  The upshot was a letter of 25 February 2005 in which it was written that if Deacons were to continue to act the Yans would have to put down sizable lump sums to diminish the debt and meet the anticipated costs of the trial and appeal, and then monthly instalments in reduction of the remaining arrears.  It is pertinent that no mention was made as to taxation of any bills of costs already rendered or still to come.

6.  That was the precursor of an agreement made between a partner of Deacons Mr Shaw and Mr Yan on revised terms, to the effect that upon terms of repayment Deacons would continue to represent the Yans.  Details of the agreement were set out in a letter from Mr Shaw to the Yans of 7 March.  It is not necessary to reproduce those details, save to note part of the final paragraph:

“As I mentioned, Deacons will tax any of its bills you wish regardless of whether they have already been paid or will be paid as a result of the payments made in accordance with our agreement of this afternoon.”

7.  Deacons thereafter continued to act until October 2005 when they ceased to act because of further default.  Meanwhile, they issued the summons for taxation and an accounting.

8.  The orders of 12 October were directions given, effectively by consent, at the first call over date of the proceedings, and included a leave to amend and the filing by the defendant of a list of objections.

9.  That part of the order preventing prosecuting by Deacons for payment of any of the bills pending taxation is a standard direction in taxation proceedings; regrettably, from Deacons’ point of view, their representative did not alert the Master to the agreement detailed in the 7 March letter, presumably because he did not know of it himself.

10.  This was spotted prior to the order having been sealed and perfected and there followed an application to the Master to reconsider, and the hearing of 15 December.  The Master was of course by then alive to the agreement and its terms, but declined to reconsider, at least on Deacons terms, and dismissed the application.

11.  In the appeal before me Mr Erving now representing the Yans has first taken a point on jurisdiction.

12.  The appeal is against not the order of 12 October but against the dismissal of the application to reconsider.  Yet it is a term of the order of 12 October that Deacons seeks to vary.  That has been mounted without an application to vary the notice of appeal (and an application to extend time); thus the court has no jurisdiction.

13.  I am against Mr Erving on the point.  I do have power under order 58 rule 1 RHC to deal on appeal with ‘any order or decision of a Master’ as a rehearing.  It is not in dispute that the Master was on 15 December empowered to reconsider the terms of the order of 12 October because it had not been perfected by sealing.  I am, as I find, able to deal with the reconsideration of part of the 12 October order because the issue was re-opened and re-addressed and not confirmed until 15 December.

14.  I come now to the substantive issue.  It can be shortly dealt with.

15.  The agreement between the parties provided an obligation by the Yans to continue to pay Deacons in consideration for their continuing to act.  Deacons for its part agreed to tax such bills as the Yans requested be taxed, whether or not they had been paid and whether or not there was a legal obligation to do so.

16.  Deacons honoured the terms.  They continued to act.  By these proceedings they committed themselves to a taxation of all of the bills.  The Yans are in default.  As I find, there is no good reason why Deacons should not sue on that default.  As I am told, the Master having been apprised of the existence of the agreement at the hearing of 15 December nevertheless declined to change his order because of the right by Deacons to sue on the allocator once taxation has been completed, and to avoid the expense, unnecessary as he regarded it, of a further action.

17.  Mr Erving invites me to adopt the same approach.  There will be no benefit to do otherwise.  There will at the end of the day be an accounting.  Further proceedings will add to the costs and the animosity.

18.  That may be so.  But as I find, that is not good or sufficient reason for Deacons to be denied its right to enforce the agreement.

19.  In my view the proper approach in the exercise of my discretion is to allow the appeal and by this means order the setting aside of that part of the order of 12 October 2005 at paragraph 2.  I order accordingly, with costs below (of 15 December) and of this appeal to Deacons, taxed if not agreed in any event. (The costs order is nisi).