TIN WAN TUNG v. WONG SEE YIN AND OTHERS

HCA 167/2011

HIGH COURT ACTION NO 167 OF 2011

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HCA 1801/2010

HIGH COURT ACTION NO 1801 OF 2010

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(Consolidated by Order of Master S Kwang dated the 4^th day of December 2013)

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D E C I S I O N
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Background

1.  This is the taxation review hearing of the plaintiff’s Bills of Costs in HCA 167/2011 and HCA 1801/2010 previously taxed on 28 April 2014 and 25 November 2014 respectively.

2.  It should be noted that whilst the defendants in HCA 167/2011 and HCA 1801/2010 are the same, the plaintiff in HCA 167/2011 is Tin Wan Tung and that of HCA 1801/2010 is Full Pacific Development Ltd.

3.  The plaintiff’s Bill of Costs of 18 pages in HCA 167/2011 consists of 119 items.

4.  The defendants’ list of objections consist of 45 pages setting out 91 specific objections in addition to the general objections.  The Bill of Costs was taxed on 28 April 2014.

5.  The plaintiff’s Bill of Costs of 13 pages in HCA 1801/2011 consists of 84 items.

6.  The defendants filed on 2 July 2015 a 39 pages skeleton submission in connection with taxation of the Bill of Costs in HCA 1801/2010, enclosing therein an “Objection Schedule” of 34 pages with columns setting out description of items, their objections to each of the 84 items in the plaintiff’s bill, the costs allowed by court on taxation of “similar items” in plaintiff’s Bill of Costs in HCA 167/2011, the costs proposed by the defendants, and as directed by the court, degree of similarity of these individual items in plaintiff’s Bill of Costs in HCA 1801/2010 to corresponding items in plaintiff’s Bill of Costs in HCA 167/2011.

7.  In reply, plaintiff lodged their submission consisting of 26 pages on 10 July 2014.

8.  Decision on taxation of the bill in HCA 1801/2010 was handed down on 25 November 2014.

9.  Defendants lodged application for taxation reviews in respect of the taxation of the 2 Bills of Costs.

10.  On 5 December 2014, this court directed that the defendants’ application for review of the taxation rulings in HCA 167/2011 and HCA 1801/2010 be heard together.

11.  In support of the taxation review application of plaintiff’s Bill of Costs in HCA 167/2011, the defendants filed the skeleton submission consisting of 47 pages plus an annex of 38 pages on 9 December 2014.

12.  This court also directed the defendants to file their objections to the taxation rulings in writing and the plaintiff to file and serve their answers thereafter.

13.  Later, defendants filed another submission in support of taxation review application for Bills of Costs in HCA 167/2011 and HCA 1801/2010.  The same consists of 19 pages submission coupled with an “Objection Schedule” of 34 pages for HCA 1801/2010 and other annexures consisting of 225 pages.  The objections schedule is identical to the one previously annexed to the defendants’ submission for taxation hearing of the Bill of Costs in HCA 1801/2010.

14.  In reply, plaintiffs filed their consolidated skeleton submissions for the taxation review hearing of the 2 Bills of Costs.  The submission consists of 7 pages as well as the skeleton submission for taxation review of the Bill of Costs in HCA 167/2011 dated 3 October 2011 consisting of 13 pages together with a table consisting of 38 pages setting out costs allowed by court on taxation, costs proposed by defendants and reply from plaintiff and 21 pages of correspondence between parties and/or their solicitors and for Bill of Costs in HCA 167/2011 and likewise a 62 pages table setting out the costs proposed by defendants, costs allowed by court on taxation and reply from plaintiff for Bill of Costs in HCA 1801/2010.

Discussion

15.  This court now deals with the issues raised by the defendants in the present taxation review application.  The issues raised are largely issues previously raised at the taxation hearings of the Bills of Costs.  These issues have already been argued and considered during the taxation hearings.

1/6 Rule

16.  Defendants seek to rely on Order 62 rule 8D(3) of the Rules of High Court.  I agree, as submitted by the plaintiffs, the same does not apply to taxation between parties to the action.

17.  Order 62 rule 8D(3) reads: -

“3) If, on the taxation of costs to be paid out of a fund other than funds provided by the Legislative Council pursuant to Section 27 of the Legal Aid Ordinance (Cap 91), one-sixth or more of the amount of the bill for those costs is taxed off, the legal representative whose bill it is shall not be allowed the fees to which he would otherwise be entitled for drawing the bill and for attending the taxation.”

18.  It relates therefore only to costs of taxation of costs to be paid out of a fund other than funds provided by the Legislative Council pursuant to section 27 of the Legal Aid Ordinance (Cap 91).

19.  Order 62 rule 1(2) defines the word “fund” as follows:

“In this Order, references to a fund, being a fund out of which costs are to be paid or which is held by a trustee or personal representative, include references to any estate or property whether immovable or personal held for the benefit of any person or class of persons; and references to a fund held by a trustee or personal representative include references to any fund to which he is entitled (whether alone or together with any other person) in that capacity, whether the fund is for the time being in his possession or not.”

Section 67(5) of Legal Practitioners Ordinance (Cap 159)

20.  Defendants also seek to rely on Section 67(5) of the Legal Practitioners Ordinance.

21.  Section 67 of the Legal Practitioners Ordinance Cap 159 falls within the section headed “General Provisions regarding Remuneration” of solicitors and not costs recoverable in party and party taxation.

22.  In our case here, we are dealing with costs recoverable by a party against another party in the proceedings.  It does not deal with the remuneration of solicitors.  The remuneration of solicitors is subject to agreement between solicitor and client and in default, taxation on solicitor own client basis can ensue.

23.  Defendants seeked also to argue that as defendants are liable to pay to plaintiff’s solicitors Joseph Li & Co solicitors costs, defendants fall within the definition of “client” in the ordinance.  This argument cannot be accepted for the simple reason that costs is not payable to Joseph Li & Co but to the plaintiffs in the actions and that in taxing the quantum of costs payable, the hourly rate and time taken by plaintiffs solicitors are considered.  Should the plaintiffs change their firm of solicitors now, the same taxed costs would be paid to the new plaintiffs firm of solicitors for the benefit of the plaintiff, pursuant to the order of Mr Justice L Chan dated 26 April 2013.  The 1/6 rule therefore do not apply.

Allegations against the plaintiff’s solicitors

24.  In their submission, the defendants made various allegation against the plaintiff’s solicitors.  These allegations would only be considered so far if they relate to the proper or necessary consideration in party and party taxation.

Mediation

25.  After the taxation of the bills, defendants proposed a stay pending mediation between parties on the taxed costs, they say, in order to save costs and in furtherance of CJR objectives in promoting mediation.

26.  Plaintiffs disagreed to the proposal.  They take the view that as costs was taxed already, mediation is not possible and in any event, they do not agree to stay of taxation proceedings for mediation purpose.

27.  As mediation could only be undertaken by parties if both of them voluntarily consent to the same.  This submission therefore need not be further considered by this court.

28.  This court takes the view however that mediation is possible if parties consent even if the Bills of Costs had been taxed.  It is open for parties to reach agreement on whether they would and to what extent they would enforce the order for taxed costs or abide by terms in other agreement on costs reached between them, irrespective of any existing court order.

29.  Plaintiffs submitted that defendants’ allegation in paragraph 1.4 of the defendants’ submissions that the case of HCA 167/2011 may be “excepted proceedings” is also entirely irrelevant to the taxation review.

30.  Schedule 2 of Part 2 of the Legal Aid Ordinance Cap 91 deals with proceedings for which legal aid may not be applicable.  It is equally clear that the proceedings herein do not fall under paragraph 11(c) and (d) of the said Schedule 2.

31.  I agree with the plaintiffs.

Insufficient documents provided to defendants for taxation hearing

32.  This court had on 17 April 2014 already dealt with defendants’ complaint for insufficient documents being provided to them for taxation purpose.  There was no appeal from the order made.  The plaintiff’s solicitors did provide further documents to the defendants pursuant to the order.  The defendants’ submission in this respect is not accepted.

Duplication of work and related charges

33.  It is said that the documents prepared in the 2 cases, being subject matter for taxation, bears similarity and that the plaintiff’s solicitors had duplicated charging the defendants doing the same or similar piece of work.

34.  Plaintiffs in reply said that the 2 cases share some similar background and factual matrix, the 2 plaintiffs are still separate and distinct.  The plaintiff in HCA 167/2011 is an individual who is legally aided, whereas the plaintiff in HCA 1801/2010 is a limited company which is privately funding the litigation.  The plaintiffs’ solicitors do need to take separate instructions from each plaintiff in each case, as the defendants’ allegations in respect of the credentials and credibility of the plaintiffs concern different people.

35.  They said further that for work done in common for the 2 proceedings by the same fee earner, the plaintiff’s solicitors have actually taken the total time spent and apportioned such time between the 2 cases.  Where different fee earners did the work for the respective cases, the different fee earners’ rates have been applied accordingly.  So there has been no double counting of costs to “earn almost the double amount of professional fees” as alleged by the defendants or at all.

36.  They further rebutted, the saying of the defendants that the work charged in the Bill of Costs are “copy and paste” and could have been done by a less experienced member of staff such as a trainee solicitor or legal executive instead of the plaintiff’s handling solicitors.  Plaintiffs submitted that there are distinct but important differences between the cases of HCA 167/2011 and HCA 1801/2010 which would require qualified solicitor of sufficient seniority to handle.  The 2 cases, they say, involve highly complex legal and factual issues, with lengthy pleadings and documents.

37.  In support of this contention of “similarity”, defendants in the table aforesaid did set out their view the degree of similarity for each item of work in the bills.

38.  Whilst this court agrees that some of the documents prepared for the plaintiffs in the 2 cases bear similarity, the degree of similarity does not always tally with the defendants’ assessment.

39.  Further, there is indeed no evidence that should lead to question or query the plaintiffs bills so far as the identity of the fee earner responsible for a particular item in the bill is concerned.  It is always open and free for any litigant to choose their own solicitors and counsel.  The plaintiffs in both actions are 2 different legal entities and the legally assigned solicitor or counsel is not obliged to take up the case of the other plaintiff nor is the other plaintiff in the other action obliged to engage the same assigned solicitor or assigned counsel.

40.  This issue in fact has been raised and considered in the taxation hearing.

Consolidation of HCA 167/2011 and HCA 1801/2010

41.  It is a fact that pursuant to order of Master S Kwang, dated 4 December 2013, ie after the Bill of Costs of the plaintiffs were lodged, the 2 actions were ordered to be tried together. It must be accepted that there are common issues and facts and laws in the 2 actions.

Taxation should be conducted in District Court Scale

42.  Defendants complained also that having regard to the disputed issue and amount involved, these cases should have been brought and proceeded in the District Court.  Again this is an issue for the trial judge before making the costs order and not a matter for the taxing master.

43.  Mr Justice L Chan sitting in the Court of First Instance in his order dated 26 April 2013 did not state that the costs be awarded to the plaintiffs at District Court scale, there is therefore no doubt that costs at High Court scale is applicable.  The order now standing as a good and valid order, not subject to appeal, the taxing master simply must tax the Bill of Costs accordingly, though degree of complexity of the case is relevant in the taxation of process.

Choice of counsel

44.  Defendants raised the issue that in the case of HCA 167/2011, Mr Michael Liu counsel assigned by Director of Legal Aid should be replaced by one counsel with only 5-6 years standing like counsel Mr Joseph Lee and that the legal aid assigned solicitors, Joseph Li & Co, solicitors should assign his solicitors work to counsel like Joseph Lee who charge less.

45.  It is submitted by plaintiff’s solicitors that in fact defendants themselves see it fit to instruct Jenkin Suen, a counsel of nearly 9 years at the relevant times.

46.  This Court also takes the view, agreeing with the plaintiffs the mere fact that the plaintiff in HCA 1801/2010 has instructed a relatively junior counsel does not make the engagement of counsel Michael Liu in HCA 167/2011 not proper or necessary.

47.  After reconsideration of the submissions, this Court maintained the rulings in the previous taxation hearing, that having regard to the legal and factual matrices as in this case, the form of pleadings filed, it is proper and necessary that counsel of such seniority as Michael Liu be instructed.

Outsourcing work by legally assigned solicitor or solicitor engaged on private basis

48.  In their submission, defendants also argued that plaintiff’s solicitors should have outsourced their solicitor work to the junior counsel Joseph Lee instead, so as to save costs.

49.  Firstly, it is the role of the court to rule if it is proper or necessary that certain items of work are to be undertaken by the fee earner having regard to the complexity of the case etc.  Obviously, a solicitor of over 10 years standing, charging hourly rate of $4,000 will have to deliver work at a rate commensurate with his years of experience.  More time would be allowed for a solicitor of junior standing than that allowed for a solicitor of more senior standing, though doing the same piece of work.

50.  Further, unless the assigned solicitor has been granted permission by Director of Legal Aid to delegate/outsource his work to third party, the same is not allowed by Legal Aid Department.

51.  In any event, every litigant has a right to choose his own legal representative.

52.  As submitted by the plaintiffs, it would be improper and unprofessional for the plaintiffs’ solicitors to delegate work wholesale without bothering to keep apprised of what is going on.  As a matter of fact, the plaintiffs’ solicitors need to be familiar with the conduct of the matter in order to be able to instruct counsel properly.

Excessive counsel fee

53.  Defendants here reiterate their objections in the taxation hearing on the excessive amount of counsel fee.  This court after reconsidering of all the relevant submissions maintain its rulings on counsel fee having regard to the seniority of counsel, complexity of the case, both factual and legal coupled with the exceptionally long pleadings in this case.

Excessive hourly rate of handling solicitors

54.  Mr Joseph Li, the assigned solicitor by Legal Aid Department and Mina Da Luz, the private engaged solicitor are the main handling solicitors for the two cases.  Both solicitors have more than 10 years post qualifications experience at the relevant times.  They claim hourly rate at $4,000 which is within the appropriate band pursuant to Law Society Circular 08-213 (PA).  As said, the cases justify the necessity to be being conducted by solicitors of such seniority.  After reconsidering, this court maintain the rulings on hourly rate of these solicitors at $4,000.

Set off

55.  Plaintiff submitted that the defendants seek to set off the taxed costs with sums not yet adjudicated by the court as due and owing by the plaintiffs. This court agrees there is no sound basis for this submission.  The same is therefore not accepted.

56.  Further, the defendants’ submission to pay the taxed cost into court would deny the plaintiffs immediate enjoyment of these sums without good cause.

57.  This court does not accept this submission.

Legal aid abused

58.  Defendants’ comment that as HCA 167/2011 concern disputes between partners and/or shareholders, legal aid should not be granted to the plaintiff.  This complaint is irrelevant to the taxation proceedings or taxation review hearings.

59.  The defendants are also dissatisfied that the Legal Aid Department had not properly controlled the costs of the trial to save taxpayers’ funds.  This again is not relevant in the party and party taxation before this Court.

Matters of public importance

60.  Defendants also raised that as the 2 cases concern matters of public importance, such as misuse of public funds etc that the court in the taxation proceedings should also address and consider these issues.  This submission again cannot be accepted.  These are not matters for the taxing masters.

61.  Defendants also said in the Bill of Costs for taxation, the attendance of Joseph Li were included when he was absent or the time spent were exaggerated.  In fact, during the taxation hearing, these submissions were made and considered.  So far as the length of hearing was concerned, the same had been checked against the court records.  As solicitors were ordered to be at court at specified time, though the hearing starts later, depending on the circumstances, this court would allow certain costs in relation to waiting time.

62.  Further, the defendants’ dissatisfaction about costs order being made against them in circumstances where the cases involve matters of public importance are again irrelevant to the taxation hearings or taxation review hearings.

63.  They have the right to appeal.

64.  As far as the taxing master is concerned, she has no alternative but shall tax the bill as per the order of Mr Justice L Chan.

Costs order made inappropriate

65.  The defendants are very much dissatisfied with the way the two cases were conducted by plaintiffs’ solicitors.  He described these cases were not professionally handled by the plaintiff’s firm of solicitors and that they were unmeritorious litigation.  These submissions are not useful to a taxing master.  As said, the Bill of Costs are to be taxed as per the costs order made.

66.  As for the defendants’ contention that plaintiff’s solicitors and/or law costs draftsman overcharge, or provide incorrect items, these are subject matter that should be and in fact had been dealt with by the court in the taxation hearing/taxation review hearings.  The court would allow only those that is proper or necessary.

Costs to be apportioned between the 2 cases

67.  Defendants submitted also as the 2 cases in question involve similar issues of fact and law and since the plaintiffs in both cases are represented by same firm of solicitors, the costs among the plaintiffs and the defendants should be apportioned or allocated accordingly.

68.  In fact, according to the plaintiff, that was their approach.  However, these are applicable only if the work is identical.  Once there is difference in the work to be performed, there should be variation in the costs allowed.

69.  Further, as one would note from the plaintiffs bill of costs, though plaintiff in the two cases are represented by the same firm of solicitors, the contribution of each handling solicitor to each case is different.

70.  There is also no reason why this court should doubt the genuiness of the identity of the fee earner responsible for a piece of work as set out in the Bill of Costs.

71.  There is indeed some similarity in some of the pleadings and documents prepared for the 2 cases but not all.  In fact, the defendants had helpfully prepared a table setting out the degree of “similarity” in the items in the 2 Bill of Costs.

72.  Since the cases of the plaintiffs in the 2 cases are handled by the same 2 solicitors in the same firm of solicitors (though are plaintiff is legally aided and the other is funding the litigation itself), this court has paid due regard to the fact that when the solicitors are acting in one of the two cases, he has gained background knowledge to the case from his involvement in the other case, the time necessary and proper for him/her to undertake an item of work (if similar is nature, having regard to the applicable legal issues and factual background) has been taxed in such light.

73.  The court accordingly had considered the cost allowed in the 2 cases in light of such similarity (not necessarily to the extent as described by the defendants).

Unnecessary work done by solicitor

74.  The defendants say the plaintiff in these cases made misstatements but still charge for such work.  The order of Mr Justice L Chan did not give an order for costs excluding costs for certain work done nor did he say in the judgment that certain work done by the plaintiff’s solicitors are of no use to the court and/or are unnecessary.  In such circumstances, it is not open for the taxing master to vary the costs order made by Mr Justice L Chan to disallow cost for certain work done unless the same is not proper or necessary.

Breach of indemnity principle

75.  Defendants also doubted the certification by Mr Joseph Li that amount claimed in the Bill of Cost rendered for taxation does not exceed plaintiff’s liability to pay costs to their firm.

76.  This however is not supported by any evidence, it remains mere speculation and is therefore not accepted.

Items in Bill of Costs withdrawn or waived

77.  Defendants said that at or after the taxation hearing on 28 April 2014, plaintiff did drop or waive a number of cost items and therefore the plaintiffs were overcharging in the plaintiff’s bill of costs.  Defendants queried why there was no follow up action against the plaintiffs.

78.  If the number of items withdrawn is substantial, the court will take this into account when costs for taxation are considered.

79.  In the present case, the number of items withdrawn are not very significant.

Mistake of fact and law

80.  Defendants allege “mistake of fact and mistake of law are found in the cost taxation hearings”.  They also argued that “the costs items” for review of the said cases are under undue influence and/or opposes during costs taxation hearings and totally reflect no fair trial in the taxation hearing.  Thus, the content of reviews should be further amended before any hearing(s) for appeal(s).  These allegations are made without particulars or elaborations save that this Court is aware of the defendants’ complaint on insufficient documents furnished to them.  This Court has no idea on the undue influence allegation.

81.  Defendants argued most of the works charged for in the Bill of Cost are really copy and paste which should be done not by experienced solicitors like JL and MDL but by less experienced staff such as trainee solicitor or legal executive.

82.  Whilst the end product ie the document filed in one action might look similar to the document filed in the other action, as the plaintiff in each case is a different legal entity, not all the legal issues involved are identical. It would not be professional or prudent to “copy and paste” without considering each of the issues pertaining to the plaintiff in each case nor is it proper to delegate the same to unqualified staff without proper supervision.

83.  1^st defendant also complained that he “has been disturbed by Master to express all his views and grounds for objections in the process of the costs taxation hearing(s)”.

84.  Prior to the taxation hearing, the defendants, including the 1^st defendant, has already made very detailed submissions on his grounds of objections to the Bills of Costs lodged by the plaintiffs for taxation.  During the taxation hearing when making oral submissions the 1^st defendant had been repeating his submissions and also been wandering into areas which do not concern taxation such as his complaint on the appropriateness of the costs order by Mr Justice L Chan etc.  For case management purpose, it is a must that the court should avoid the waste of court time in hearing irrelevant submissions and at the same time allow the defendant sufficient time and opportunity to complete his submissions relevant for taxation purpose.

85.  Defendants also commented that Legal Aid Department has approved the engagement of Michael Liu counsel which is unnecessary and his counsel fee is excessive and that they should have engaged one as counsel Joseph Lee.  This court does not agree, for the reasons as said above.  This court whilst agrees to the principle enunciated in the case quoted by the defendants, the Court of Final Appeal case of Re Raid John Kennedy & others [2011] HKCFA 62 does find that the engagement of Michael Liu in this case proper and necessary.

86.  Defendants also submitted that in certain applications, the plaintiffs originally made a large number of requests for Further and Better Particulars of the Amended Defence and Counterclaim and later vast majority of these requests were not proceeded with in the hearing.  This court again is of the view the submission would be relevant if the defendants were making submission on costs during the same hearing.  Once the costs order was made, the taxing master was obliged to tax the costs on the terms as per the costs order made.

Order A Rules of High Court

87.  This court agrees to the defendants’ submission on the duty of the solicitors to observe Order 1A of the Rules of High Court or the general principles applicable to party and party taxation quoted from the White Book and had been applying these legal principles and rules in both the taxation hearings and the taxation review.

Conclusion

88.  In considering the amount of costs to be allowed for each of the items under review, the court had considered all the circumstances of the case, including but not limited to, the grounds advanced by the defendants and the reply from the plaintiffs.

89.  The 2 Bills of Costs are taxed at different times.

90.  With the helpful tables prepared by both the defendants and the plaintiffs, one can see that in some cases, there are disparity in the quantum of taxed costs allowed, for similar items.

91.  Invariably, this Court finds in these cases that the costs taxed and allowed actually should be adjusted upwards in favour of the plaintiffs.

92.  The rulings were made at the time based on the submissions of the parties and the materials before the court then.

93.  Since only the defendants are seeking to review, this court does not find it appropriate to disturb the amount of taxed costs for these items by adjusting the same upwards.  Had the plaintiffs applied for review, this court would have allowed the review on these items in favour of the plaintiffs.

94.  After reconsidering each individual items in the Bills of Costs and the submissions of the parties as aforesaid, this court maintain all the rulings made during taxation hearings for the 2 Bills of Costs.

95.  Most of the grounds submitted by the defendants have been fully argued before the taxation rulings were made.  There is nothing in the submissions presently before this Court or any good reason to vary the rulings.

96.  In maintaining the rulings, this court adopts the reasons submitted by the plaintiffs in their reply submission in the table they prepared and would not repeat the same here.

97.  It is also noted that the defendants here seek a blanket review of all items taxed, including those items withdrawn by the plaintiffs and also of those items where the rulings accord with what the defendants seek for in their list of objections.  This sort of conduct illustrates the attitude of the defendants in the taxation proceedings and the taxation review applications.

98.  This court therefore refused the review applications of the defendants.

Costs

99.  As a general rule, costs follow the event, this court therefore grants an order nisi that the defendants shall pay the plaintiffs the costs of the taxation review application for the bills in HCA 167/2011 and HCA 1801/2010, the same to be taxed if not agreed.