WONG KIT WAN v. LCP LAWYERS

HCMP 566/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 566 OF 2010

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D E C I S I O N

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1.  This is a trial on the preliminary issue arising out of this taxation hearing.

2.  The issue is of very narrow ambit and it is this.  What was the agreed hourly rate for the engagement of the defendant firm of solicitors in these proceedings represented by DW1, Miss Candi Chan, and the Plaintiff, Madam Wong Kit-wan?

3.  The litigants, Madam Wong, and the defendant solicitors have consented that there be a trial on this particular issue, which in the event took nearly three days.

4.  Madam Wong gave evidence on this matter as PW3 and she was preceded by two witnesses, siblings surnamed Lee.  PW2 was Connie Lee and she was followed by PW1, her younger brother, Raymond Lee.  For the defence the sole witness was the handling solicitor, Miss Candi Chan.  I shall simply refer to the parties as Madam Wong, Raymond Lee, Connie Lee and Candi Chan.

5.  These proceedings arose as a result of contested ancillary relief proceedings following divorce proceedings in the District Court.

6.  The evidence disclosed that the parties met for the first time at a restaurant in Causeway Bay.  This was the first meeting that saw the attendance of Madam Wong, Connie Lee and Candi Chan.  Connie Lee is, on the evidence, a keen golfer and she became acquainted with Candi Chan no doubt through golfing activities.

7.  Madam Wong was in the process of a divorce from her husband and required legal representation.  Connie Lee then stepped into the picture.  She and Raymond Lee are Malaysian nationals from the same village or small town in Malaysia.  Connie Lee and Madam Wong hark back to childhood days and so have known each other for many, many years.

8.  Connie Lee introduced Madam Wong to Candi Chan at that meeting where it was decided and agreed that Candi Chan would come in on the divorce case on behalf of Madam Wong.  That much is not in dispute.  What is in dispute was what was said at that particular first meeting for high tea at the Japanese restaurant.

9.  It is the case of Madam Wong and her witness Connie Lee that they were very anxious as to the hourly rate that might be charged by any solicitor handling the case.  There was some discussion about that.  Madam Wong and Connie Lee said that by the end of the meeting all was clear and that the hourly charge out rate that Candi Chan had agreed to was $1,800 per hour.  This, it was said, was reiterated at a second meeting that year.  This particular first meeting occurred on 26 September 2006.  The parties met again at a second meeting in the same year on 12 October.

10.  Raymond Lee was present at neither of those two meetings.  In fact, he did not feature until much later in the divorce proceedings when he became involved as a next friend in the suit.  He did not take part in any discussion concerning the hourly rate that we have spoken of at those two meetings.

11.  It is Candi Chan’s evidence, and about that she was quite adamant, that she did not agree to an hourly rate of $1,800 per hour as her charge out rate.  She said she was clearly prevailed upon by Connie Lee, who seemed to be taking a very active role in negotiating the fees to be charged, but she was adamant that she did not agree and did not say so in as many words that her charge out rate would be reduced to $1,800.  She let it be known to the parties at the first meeting that lawyers generally charged between $1,000 to $3,000 per hour but that her normal charge out rate was $3,000 per hour.  However, having some sympathy for the predicament of Madam Wong, she said that she was prepared to consider giving some discount.  

12.  As the case progressed and looking at the affidavit evidence of Candi Chan, it became apparent that she over time had become less sympathetic towards the position of Madam Wong.

13.  It is Candi Chan’s evidence, in essence, that she was prepared to discount the costs for Madam Wong only at the initial stages of the proceedings where matters were relatively straightforward and simple but not when it got to the stage of the ancillary relief with Madam Wong pushing for discoveries, an expensive exercise and costs began to build up.

14.  She, as a lawyer, had advised, and I accept that she did, that the parties should consider settlement of the ancillary relief proceedings in order to minimise costs.  I also accept that Madam Wong was well advised that with the family assets being heavily circumscribed, costs might well exceed any financial orders that she might get at the end of the day.  That was the duty of Candi Chan and I accept that that was discharged.

15.  I now turn to the four narrative bills that were issued by the defendant firm to Madam Wong.  These appear at pages 39, 41, 43 and 45 of the exhibit bundle.  Only the last bill was signed by Candi Chan.

16.  These four bills are nearly identical to four other bills which appear at pages 98 to 105 inclusive of the same bundle, save and except that the latter bills which were basically for office records did not carry the words, “Time spent not less than” a specified number of hours “but say”.  Those words appear on the four narrative bills which Madam Wong had been presented with.

17.  There was some discussion in cross-examination as to the meaning of those words. It is suggested by Madam Wong that looking at the figures being billed in each of those four narrative bills, the hourly rate charged was $1,800 an hour.  Therefore it fortified what they had been saying all along, that Candi Chan had agreed to and in fact did bill according to an agreed charge out rate of $1,800.

18.  If one were to look at the bills very carefully it is quite apparent that a discount had first been given on each occasion. The discounted figures are equally consistent with a discount, as Candi Chan explained, of 40 per cent having been given on each bill as with the allegation of Madam Wong that the charge out rate was $1,800.  Both are equally consistent so cannot be decisive of the truth.

19.  Credibility features heavily in this case because as counsel for Madam Wong submitted the two versions are so diametrically opposed that both cannot be true.  So if I were to accept that Madam Wong’s version is correct it would inevitably lead to the conclusion that a lawyer with an otherwise impeccable reputation had set out to pull the wool over the eyes of her client, in other words, to cheat her for her own gain.

20.  Any evidence that goes to prove dishonesty against Madam Wong would have to be quite compelling in my view because allegations of serious impropriety may possibly lead to not just Law Society discipline but also criminal prosecution.  These are matters which Mr Wong, the learned solicitor for Madam Wong, says I should not take into account.  But I do have to take that into account because that would help explain the conduct of Candi Chan.  Would she as a solicitor with a hitherto unblemished record and who has practised since 1987 have stooped so low as to conduct herself in the fashion that Madam Wong now says she did?

21.  I do not find any evidence of sufficient weight or in fact, any evidence that begins to demonstrate such misconduct.

22.  Reverting once more to the four narrative bills appearing at pages 39 to 45, inclusive, of the exhibit bundle, it is clear to this court that a discount had indeed been given.  If, in fact, the parties have agreed, as Madam Wong and her witness contend, it would not have been necessary, in my view, to indicate a discount in the bill itself.  Each bill would simply be calculated at $1,800 per hour for the number of hours of work done.  The first bill, I think, which appears at page 39, for instance, says, “Time spent not less than 22 hours but say” and then the amount is given.  So it is quite clear that possibly more than 22 hours of work had been undertaken but it was decided to simply charge for 22 hours and therefore discounted according to Candi Chan.

23.  This is not a case in which I am persuaded on the evidence that there was an agreement to have a charge out rate of $1,800 that was subsequently raised, as submitted by reference to the e-mails appearing at pages 173 or 178.  Those two e-mails literally stand independently and they concern precisely the subject of the communication.  They were not meant to address the issue of the charge out rate. 

24.  If one were to look at page 173 the first paragraph is material.  Candi Chan indicated that the e-mail was really for the purpose of apprising Raymond Lee of the costs situation.  It was not, as was submitted, to inform the parties that if she were to deal with the case herself she would henceforth be charging $3,000 an hour.  I do not read that e-mail as suggesting that.  In fact, it reads, “To be honest, the lawyers will be the only parties to benefit if the case continued.  My hourly charge is $3,000”.  It seems clear to me that Madam Wong’s team was being warned that costs should be borne uppermost in mind if the parties were to push for a trial of the ancillary relief, that costs would be high as her rate was $3,000, and not that, “From then on my rate will be $3,000 per hour.”

25.  Turning then to the e-mail at page 178, it begins at the bottom of page 177 and was addressed to Raymond Lee, once more with a view to capping costs.  Rather than suggesting that she herself was less competent to research on trusts, Candi Chan indicated that the alternative of using junior counsel at much lower costs to accomplish the same purpose would be preferable to her doing the research at $3,000 an hour.  This e-mail does not, as is suggested by Madam Wong prove that Candi Chan would be charging $3,000 an hour then or from that point onwards.

26.  I am aware that Madam Wong and Connie Lee were adamant that there was an agreement that Candi Chan would charge no more than $1,800 per hour.  That notion seems to be quite fixed in their minds.  There was no documentation to that effect.  A written retainer would have clarified all the matters and this issue would not have arisen in the first place.  However I am satisfied that Candi Chan had, in fact, at those meetings that I have referred to mentioned that her charge out rate would be $3,000 an hour but that she was prepared to be accommodating.  She did in fact do so at the beginning stages of the divorce suit.

27.  Why she did not provide further discount as the case progressed she has covered in her affidavit which she adopted in evidence.  She has given a satisfactory explanation, in my view.

28.  I do not find and I do not hold that there had, in fact, been an agreement to charge no more than $1,800 per hour for all purposes for the entirety of the suit. 

29.  In sum, on the preliminary issue I am satisfied to find that the charge out rate from the commencement of the involvement of the defendant firm, Messrs LCP Lawyers was $3,000 an hour as stated by Candi Chan.  At the early stages of the suit the firm was prepared to be and was accommodating in giving a discount which was discontinued for the reasons apparent in Candi Chan’s affidavit evidence.  Albeit she did not say so in the witness-box it is quite clear that she became less sympathetic towards Madam Wong seeing the way in which the case was being pushed by Madam Wong and her friend, Connie Lee.

30.  For those reasons I find that the hourly rate was agreed at $3,000.