ZHU LI v. THE LAW SOCIETY OF HONG KONG

HCAL 8/2014

[2019] HKCFI [1644]

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 8 OF 2014

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RULING ON PRELIMINARY ISSUE

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Introduction

1.  This is the determination of a preliminary issue in the taxation of this case.  The preliminary issue is what hourly rate shall be allowed for the applicant’s claim for costs for the period when she was acting in person in these proceedings? (the “Preliminary Issue”)  Is it subjected to the ceiling of HK$200 per hour as stipulated in Order 62 rule 28A(3) of the Rules of the High Court (the “RHC”)?

2.  Order 62 rule 28A(3) of the RHC provides that:

“(3) Where in the opinion of the taxing master the litigant has not suffered any pecuniary loss in doing any work to which the costs relate, he shall not be allowed in respect of the time reasonably spent by him on the work more than $200 an hour.”

3.  The respondent, being the paying party, contended that the hourly rate allowed to the applicant for her works done in respect of these proceedings should not exceed HK$200.  The applicant contended that as she had suffered pecuniary loss, Order 62 rule 28A(3) of the RHC was inapplicable to her costs claim.  Hence, the Preliminary Issue has to be determined before the court may proceed with taxation of the applicant’s bill of costs filed herein (the “Bill”).

The procedural history of the taxation proceedings

4.  This is a judicial review proceeding (the “Action”).  The applicant filed the Form 86 for the Action on 16 January 2014.  Leave to apply for judicial review was granted on 9 July 2014.  The originating summons for the Action was filed on 12 August 2014. 

5.  Substantive hearing for the judicial review took place on 16 December 2016.  On 31 May 2017 the court ordered that the application for judicial review be dismissed and ordered the respondent to pay 60% of the applicant’s costs for the Action (the “Order”). 

6.  The applicant was acting in person in the Action except for a short period of time from 10 November 2014 to 11 February 2015 when she was represented by Daly & Associates when legal aid was granted to the applicant for the Action.  Her legal aid certificate was discharged on 11 February 2015.

7.  The applicant filed the notice of commencement of taxation and the Bill on 30 October 2017. 

8.  In section A of the Bill, the applicant claimed HK$1,112,641 for 1,940.50 hours of work.  The applicant did not stipulate an hourly rate for her costs claim. 

9.  The respondent in its list of objections filed herein on 27 November 2017 (the “LOO”) took issue that under Order 62 rule 28A(3) of the RHC, the applicant being a litigation in person (“LIP”) should not be allowed to claim for more than HK$200 per hour.  The respondent suggested that HK$200 per hour be allowed to the applicant for her costs incurred in the Action. 

10.  On 12 November 2018, I directed that the hourly rate to be allowed to the applicant in the taxation be dealt with as a preliminary issue to the taxation proceedings.  I further gave directions for the parties to file and serve affidavit / affirmation on the Preliminary Issue. 

11.  The applicant had previously on 30 October 2017 filed an affidavit in support of her claims in this taxation (the “Affidavit”).  By a letter dated 29 November 2018, the applicant stated that she would rely on the Affidavit to support her costs claim with hourly rate exceeding HK$200 and did not intend to file any other affidavit.  The applicant further stated in her aforesaid letter that for the purposes of this taxation she claimed $3,300 as her hourly rate. 

12.  By a letter dated 19 December 2018, the respondents’ solicitors confirmed that the respondent did not consider it necessary to file any affidavit in reply.  The respondent sought directions from the court to dispose of the Preliminary Issue on papers without an oral hearing. 

13.  By a letter dated 20 December 2018, the applicant also sought directions from the court to deal with the Preliminary Issue on papers without an oral hearing.  The applicant stated that she had sufficiently proved, by the Affidavit, that she had suffered pecuniary loss. 

14.  On 2 January 2019, I directed that the Preliminary Issue should be dealt with on papers without an oral hearing.  I also gave directions for the parties to lodge written submissions. 

15.  The applicant lodged her written submissions on 18 January 2019 (“A’s Submissions”).  The respondent lodged its written submissions on 8 February 2019.  The applicant lodged her reply submissions on 14 February 2019.

The applicant’s case

16.  In the Affidavit, the applicant stated that she held a Bachelor degree in economic law from Shanghai Jiao Tong University in China and an LL.M degree in international business law from University of Hull in England. 

17.  She was admitted to the bar of China in 2000.  Since then she started working at a local law firm in Shanghai until 2003 when she moved to Beijing and joined the Beijing office of a Hong Kong solicitors firm (the “Firm”).  In 2010, she was seconded to work at the Hong Kong office of the Firm until 2012 when her secondment was terminated. 

18.  After the termination of her aforesaid secondment, the applicant was engaged in litigation with the Firm in DCCJ 977/2012 but her claims against the Firm were struck out by the District Court on 7 September 2012.  

19.  The applicant said that she possessed over 15 years post-qualification professional experience in China-related legal field and working experience in China’s major cities.  She claimed that headhunters often contacted her for senior position and she expected no difficulty in finding a full-time employment with a major international employer in Greater China area. 

20.  She contended that the Action consumed so much of her time and energy that made her unable to take an employment.  She stated that she had informed the prospective employers that she was engaged in an ongoing case for public interest and would require to take leave for 3 to 4 months each year to handle the case.  She was told by the prospective employers that it was impossible for them to accept her application for employment in such situation.  Headhunters also advised her to wait until the end of the court proceedings. 

21.  The applicant stated that in 2011 when she was working for the Firm, she earned BMB 420,000 per year.  With an annual increase of 5%, the applicant said that she should be earning at least HK$570,000 per annum between 2013 and 2017.

22.  The applicant contended that pursuant to Order 62 rule 28A of the RHC, the maximum costs allowed to a LIP would be two-thirds of the amount if the works were carried out and charged by his solicitor.  The applicant submitted that as the estimated solicitor’s costs of the respondent’s solicitors for the Action were HK$1,112,641 as revealed in the respondent’s security for costs application in the Action, she was entitled to claim HK$741,760 as costs incurred by her being two-thirds of the respondent’s solicitor’s costs. (Para 41 of the Affidavit) 

23.  The applicant submitted that she had proved by the Affidavit her pecuniary loss as a result of conducting the Action.  Thus, Order 62 rule 28A(3) of the RHC was inapplicable to her case and it was not necessary for the court to determine an hourly rate for her works in the Action.  She further submitted that if an hourly rate was required, the appropriate rate should be HK$1,650 per hour.  (Paras 25 and 26 of A’s Submissions)

The respondent’s case

24.  In the LOO, the respondent submitted that a LIP bore the burden of proof in establishing his pecuniary loss and had to do so by way of affidavit evidence.  The respondent referred to 霍兆榮 v 廉政公署 (Fok Siu Wing (transliteration) v ICAC) (unrep., CACV 341/2005, [2006] CHKEC 746, 27 April 2006) and Audrey Chow Securities Limited v Yung Lung Biu Albert & Ors (unrep., HCA 147/1998, 15 July 2009).  The respondent submitted that the applicant had failed to discharge her aforesaid burden of proof.  Accordingly, pursuant to Order 62 rule 28A(3) of the RHC, the applicant should only be entitled to charge the usual hourly rate of HK$200. 

25.  The respondent submitted that the Action was commenced in January 2014 and the substantive hearing took place in December 2016.  From 2014 to 2016, apart from filing of the Notice of Application, the major tasks involved filing of three affidavits and preparing and attending three hearings.  The respondent submitted that it was doubtful for the applicant to claim that it was impossible for her to find a suitable full-time or even part-time employment. The respondent contended that the applicant could handle the works relating to the Action during her spare time. 

26.  The respondent further pointed out that after the substantive hearing in December 2016, the only outstanding matter was taxation of the applicant’s costs but the applicant adduced no evidence on her current employment or salary. 

27.  The respondent submitted that there was no evidence of the applicant’s actual loss.  The applicant merely stated in the Affidavit that she spoke with a few partners of major international employers on various occasions and liaised with headhunters.  There was no mention of whether the applicant had received or refused any job offers during the period of the judicial review proceedings.  The respondent submitted that the applicant had failed to produce evidence of what the pecuniary loss might be and the Affidavit was insufficient to prove her pecuniary loss.

Discussion

28.  The applicant rightly pointed out that: “the preliminary issue more precisely is: whether the Receiving Party shall be allowed more than HK$200 an hour, and in other words, whether the Receiving Party has suffered any pecuniary loss in conducting these proceedings to which the costs relate.”  (Para 5 of A’s Submission”) 

29.  Both parties refer to the case of Fok Siu Wing (supra) and the English case of Mainwaring and another v Goldtech Investments Ltd [1997] 1 All ER 467 in their submissions. 

30.  In Cheuk Shu Yiu v Law Yeuk Kan (No 2) [2018] 2 HKLRD 249, the Court of Appeal set out in para 4 of the judgment [at 252] the legal principles established by the Fok Siu Wing case as follows: 

“(1) If a litigant in person, who is gainfully employed, needs to do the work in relation to the litigation during his working hours, the maximum costs allowed is two-thirds of the sum which would have been allowed to a solicitor for doing that work.

(2) If the litigant in person has no job or could handle the work in relation to the litigation in his spare time, he has not suffered any actual pecuniary loss and hence shall not be awarded costs under the indemnity principle of the common law. However, pursuant to O.62 r.28A(3), he may be allowed costs of not more than $200 per hour. The number of hours allowed in O.62 r.28A(2) is the time a solicitor would have spent on that item, not the time the litigant in person has actually taken.

(3) If the litigant in person has no job but claims to have suffered pecuniary loss, he will need to prove his claim by an affirmation, which would include providing proof of his academic qualifications, working experience, loss of income etc.”

31.  The respondent contended that the applicant fell into the second situation stipulated above.  Whereas, the applicant contended that her case belonged to the third situation discussed above. 

32.  There is no dispute that the applicant was unemployed at the material times.  The applicant adduced no evidence to show that she had been under any gainful employment since her employment with the Firm was terminated in 2012. 

33.  It was held in Mainwaring (supra) that whether a litigant in person had suffered significant loss of earnings was a matter peculiarly within his or her own knowledge.  The burden of proof was on the receiving party to establish her pecuniary loss.  This is confirmed by the Court of Appeal in the Fok Siu Wing case (supra) when Yuen JA stated that: 

“21. 在Mainwaring案例中，Robert Walker J裁定r.28A的運作是，如果無律師代表的訴訟人聲稱他沒有職業但仍蒙受了金錢上的損失的話，該訴訟人需用誓章證明該聲稱，包括證明該訴訟人的學歷及資格、曾擔任的工作、不繼續工作的理由，他可得的職位及報酬、他所拒絕了的職位及報酬等 … …。” (Emphasis added)

34.  The same was confirmed in the Cheuk Chu Yin case (supra) when the Court of Appeal stated at para 4 of the judgment that: “If a litigant in person has no job but claims to have suffered pecuniary loss, he will need to prove his claim by an affirmation” (emphasis added).  (See also the Audrey Chow Securities Limited case (supra))  It is plainly wrong for the applicant to contend that: “it [ie the Mainwaring case] did not set a general rule that the LIP bears the burden of proof in establishing pecuniary loss. … … Hence there is no solid legal basis for the Hong Kong courts to impose the said burden of proof on the LIP.”  (See paras 7 and 8 of A’s Submissions) 

35.  I find that the burden is on the applicant to prove that she had suffered pecuniary loss in doing the works to which the claimed costs relate. 

36.  The applicant submitted that she had provided evidence by the Affidavit showing the pecuniary loss incurred. (Para 10 of A’s Submissions)  The applicant submitted that by the Affidavit, she had provided all the relevant facts required, including her training and qualifications, professional experience and what paid employment she might have taken but for the Action. She further submitted that: “the Receiving Party [ie the applicant] is a seasoned lawyer well-educated and respectable.  She was an associate at MBJSM [ie the Firm] and she could take a similar or senior position at a similar firm.”  (Para 16 of A’s Submissions)

37.  The applicant contended that the legal market was robust and she was employable during the time the costs related and, but for the litigation, she would take an employment at a salary no less than HK$570,000 per annum.  (Para 21 of A’s Submissions)

38.  The applicant submitted that the Action, being a complicated judicial review case, was extremely time-consuming, laborious and stressful for her. The Action occupied her at least four full months a year.  She contended that the time-consuming, laborious and stressful litigation and litigation-related work had made it impossible for her to take an employment.  (Paras 17 and 20 of A’s Submissions)

39.  I agree that the applicant had set out her training, qualifications and professional experience in the Affidavit.  To substantiate her case that but for this litigation, she would have been in gainful employment earning substantial salary, the applicant stated in the Affidavit:

“38. After the commencement of this case, I spoke with a few partners of major international employers on various occasions. I honestly informed them that I was on an ongoing case for public interest, without disclosing the Respondent and other details, that would require me to leave the job for three to four months a year to fully concentrate on the case and it was hard to predict when would be the end. I was told to my face by them, that it was impossible for them to accept my application in such a situation. I also talked about some opportunities and the situation with headhunters. They advised me to wait until the end of the court proceedings.

39. Understandably, it is a fair and reasonable requirement that employees should dedicate to their work without other distracting and overmuch engagement. This judicial review case occupied me at least four full months a year, and more importantly, such time was needed at unpredictable intervals. In such situation, it was impossible for me to find a suitable full-time or even part-time employment. I sat in a few job interviews, but all went in vain after my special situation was discussed. I was told by some interviewers that they would not consider my application until there is a change in my situation. Attached as “ZL-T6” are examples of correspondence with headhunters and potential employers.”

40.  The applicant exhibited two emails to the Affidavit as “ZL- T2” to show that headhunter often contacted her for senior positions.  One of the emails was dated 14 October 2010 and the other dated 17 January 2013. 

41.  In the email dated 14 October 2010, the headhunter wrote: “Thank you very much for your reply.  Would you please let me know when you will be back in Beijing?” (Emphasis added)  It showed that the Applicant had already been actively seeking other employment in October 2010 when she was still working for the Firm.  The fact that she was still working for the Firm until termination of her employment in 2012 suggested that her efforts in findings alternative employment in 2010 was not very successful.  This does not support her assertion that: “If time has allowed, I would expect no difficulty in finding a full-time employment with a major international employer in Greater China area.” (Para 6 of the Affidavit)  The legal market was not so “robust” as the applicant wished to be. 

42.  Contrary to her expectation, the applicant seems to have been unemployed since 2012 after her employment with the Firm was terminated.  She was unemployed in 2013 before the commencement of the Action in January 2014 and there was no evidence suggesting that she was in gainful employment after the substantive hearing of the Action on 16 December 2016 at least up to 30 October 2017 (ie the date of the Affidavit). 

43.  It is noted that the applicant was engaged in litigation with the Firm in 2012 after termination of her employment with the Firm.  According to the decision dated 7 September 2012 delivered in DCCJ 977/2012 (exhibited as “ZL-T1” to the Affidavit), the applicant’s claims against the Firm had been struck out on 7 September 2012.  However, the applicant remained unemployed from September 2012 to January 2014 when she commenced the Action. 

44.  The applicant also exhibited another email dated 17 January 2013 to “ZL-T2” which showed that she was in contact with headhunters in early 2013 after her claim in DCCJ 977/2012 against the Firm was struck out in September 2012.  However, the fact that the applicant had remained unemployed for the whole year of 2013 again suggested that the applicant was unsuccessful in her efforts of finding employment in 2013. 

45.  In “ZL-T6”, the applicant exhibited her exchanges of email in November 2014 with a headhunter in relation to a proposed job interview to support her contention that the ongoing judicial review proceedings had made it impossible for her to find full-time employment.

46.  The email dated 28 November 2014 sent by the applicant to the headhunter showed that there were discussions between the applicant and the headhunter on the implication of the Action on her job seeking.  However, it was unclear whether the concern was on the time occupied for the Action or the fact of a pending litigation.  It is noted that on 11 November 2014, the applicant was granted legal aid.  As such, she was legally represented in the Action at that time and would not need to spend so much time on the Action (assuming that the Action had occupied the extent of her time as alleged when she was acting in person). 

47.  The Applicant stated in her aforesaid email that: “It is difficult to estimate when the proceedings will end.  I agree with you and [redacted] that I shall wait to see the end of the proceedings.”  It seems that in November 2014 the existence of a pending litigation (rather than the time she had to spent on the Action) was the concern.  Nevertheless, after the substantive hearing on 16 December 2016, the applicant seemed to have remained unemployed as at 30 October 2017. 

48.  The applicant exhibited another series of email exchanges in March 2016 between the applicant and a prospective employer.  The emails showed that the applicant had attended a telephone interview with the prospective employer on 15 March 2016 when the Action was ongoing. 

49.  It can be seen that despite what the Applicant had said in her aforesaid 28 November 2014 email that she “shall wait to see the end of proceedings” and her assertion that the works relating to the Action had made it impossible for her to engage in even part-time employment, the applicant had been actively seeking employment in early 2016.  However, her efforts were again unsuccessful. 

50.  The emails exhibited to “ZL-T2” and “ZL-T6” showed that the applicant had been active in the employment market since 2010 to seek employment but without success.  They did not support the applicant’s contention that: “If time has allowed, I would expect no difficulty in finding a full-time employment with a major international employer in Greater China area.”  The applicant was over-optimistic on her employment prospect.  The fact that she remained unemployed since 2012 after termination of her employment with the Firm up to at least 30 October 2017 speaks for itself. 

Conclusion

51.  The applicant has failed to satisfy me that she had suffered any pecuniary loss in doing works relating to the Action.  I find that the applicant had not suffered any such pecuniary loss.  As such, pursuant to Order 62 rule 28A(3) of the RHC, the applicant shall not be allowed in respect of the time reasonably spent by her on the works relating to the Action more than HK$200 an hour. 

52.  The next question needs to be dealt with by this court is: How much shall be the hourly rate allowed to the applicant for her works relating to the Action? 

53.  In the Cheuk Shu Yin case (supra), the Court of Appeal allowed HK$100 per hour for a LIP for works done in relation to an appeal before the Court of Appeal as the Court of Appeal was of the view that the issues of the appeal were not complicated and mainly concerned the trial judge’s finding of fact. 

54.  I agree that in the Action, the issues involved had certain degree of complexity and more efforts would have to be put in by the applicant in handling the Action.  In such case, I am of the view that the applicant shall be allowed HK$200 an hour for the time reasonably spent by her on the works relating to the Action. 

Costs

55.  As the applicant has failed to persuade this court that she had suffered any pecuniary loss in doing works relating to the Action, the applicant failed on the Preliminary Issue. 

56.  Costs shall follow event.  I make an order nisi that the applicant shall pay the costs of the respondent for the Preliminary Issue, including costs previously reserved in relation to the Preliminary Issue, to be assessed by summary assessment. 

57.  The above costs order nisi shall become absolute after 14 days from the date of this ruling unless application to vary the order nisi is received from any party within this 14-day period. 

58.  I further direct the respondent to submit statement of costs to the court within 14 days after the aforesaid order nisi shall become absolute with copy to the applicant.  The applicant shall submit to the court her comments (if any) to the respondent’s statement of costs within 14 days thereafter with copy to the respondent. 

59.  The costs payable by the applicant to the respondent will be assessed by summary assessment by way of paper disposal.  Such costs shall be set-off from the costs payable by the respondent to the applicant under the Order.  The net balance, if any, to be paid forthwith after conclusion of the taxation of the Bill.