Tam Mei Kam and Others v. Hsbc International Trustee Ltd and Others

HCA 1856/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1856 OF 2014

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BETWEEN

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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1.By my Decision handed down on 22 June 2015 (“Decision”), I struck out the Statement of Claim, and dismissed the action by the 1^st plaintiff (“Mother”) and the 2^nd and 3^rd plaintiffs (“Nieces”) against the 1^st defendant (“HSBC Trustee”) and the 2^nd defendant (“New Horizon”). I also granted a costs order nisi that (a) the Mother and the Nieces do pay HSBC Trustees the costs of its summons filed on 5 February 2015 (“HSBC Summons”) and of the action as between them on indemnity basis to be summarily assessed and paid forthwith, (b) the Mother and the Nieces do pay New Horizon the costs of its summons filed on 26 January 2015 (“NH Summons”) and of the action as between them on indemnity basis to be summarily assessed and paid forthwith, and (c) there be no order as to costs in respect of the action between the Mother and Nieces on the one part and the 3^rd defendant on the other part (“Costs Order Nisi”).

2.By a summons filed on 6 July 2015, the Mother applied to vary the Costs Order Nisi insofar as it affected her.  Pursuant to a consent summons filed on 25 August 2015, I granted leave for the Mother to withdraw such summons at the hearing on 28 August 2015.

3.By a summons filed on 6 July 2015, the Nieces applied to vary the Costs Order Nisi insofar as it affected them.  At the hearing on 8 September 2015, I dismissed such summons by the Nieces.

4.In the circumstances, the Costs Order Nisi has become absolute (“Costs Order”).  HSBC Trustees and New Horizon lodged/served their statements of costs dated 12 June 2015 and 29 June 2015 respectively.  By my orders dated 28 August and 8 September 2015, time was given to the Mother and the Nieces to lodge/serve lists of objections to such statements of costs on or before 7 and 18 September 2015 respectively.  No list of objections had been lodged by the Mother and/or the Nieces.

5.Several matters are of note.  First, the actual hearing time for substantive argument of the HSBC and NH Summonses on 15 June 2015 was 1 hour 20 minutes from 10:05am to 11:25am.  Secondly, the Costs Order covered not just costs of the HSBC and NH Summonses, but also costs of the whole action as between the Mother and Nieces on the one part and HSBC Trustees and New Horizon on the other part.  However, the HSBC and NH Summonses were filed at an early stage of the present action.  The proceedings before the filing of such summonses largely concerned applications by HSBC Trustees and New Horizon for extensions of time to file their respective Defence or applications by the Mother for “unless” order which resulted in costs orders in favour of the Mother and/or order for costs to be reserved.  Hence, neither HSBC Trustees nor New Horizon would be entitled to costs of and occasioned by those applications.  But New Horizon did file its Defence on 23 December 2014.  Thirdly, as evident from the Decision, the HSBC and NH Summonses raised some nice issues of law.  Indeed, the Mother’s submissions raised a number of legal issues which called upon HSBC Trustees and New Horizon to address.

6.Here, HSBC Trustees sought a total sum of $257,861 comprising solicitors’ profit costs and disbursements of $130,975 and counsel’s fees of $75,000.  New Horizon sought a total sum of $186,891 comprising solicitors’ profit costs and disbursements.  This is my decision on the summary assessment of the costs of HSBC Trustees and New Horizon under the Costs Order.

7.I bear in mind that the costs under the Costs Order are to be assessed on indemnity basis so that all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred, and any doubt shall be resolved in favour of the receiving party (see Order 62 rule 28(4A) of the Rules of the High Court).

8.In Re Wing Fai Construction Co Ltd (Costs: Taxation) (2012) 15 HKCFAR 657, Chan PJ held that an award of costs on an indemnity basis was intended to allow for payment of costs on a more generous level as compared to the case of costs awarded on a party and party or common fund basis.  The object of such an order was to reimburse the receiving party “all (his) costs” and to give him “a complete indemnity” and “everything”, “shorn only of” or “except the unreasonable” or “anything that was seen to be unreasonable”.  Hence, the receiving party was prima facie entitled to be paid all his costs, provided that they were “costs of and incidental to the proceedings”, subject only to the qualification that any particular item which had been unreasonably incurred or any particular amount which was unreasonable must be excluded.  The receiving party did not have to show that his costs had been reasonably incurred or were of a reasonable amount, only that they were not unreasonable. 

9.In particular, Chan PJ said “…… if the court, for good reasons, saw fit to award him his costs on a more generous basis (ie on an indemnity basis), [Chan PJ] did not think it should be regarded as unreasonable to allow him to recover more than the normal average fees so long as they are not clearly excessive or …… absurd or extravagant” (p 670), and “…… on an indemnity taxation, it would not be considered unreasonable for the receiving party to have engaged solicitors who charged more than the average hourly rates unless they are clearly excessive.  What is clearly excessive depends on the circumstances of each case” (p.672).

10.In my view, these principles are also applicable to summary assessment of costs on an indemnity basis.  At the same time, I am mindful of the proper approach to summary assessment of costs that has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512, ie that the final figures assessed should not be disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter. 

11.Having considered the nature and scope of the present action and the applications under the HSBC and NH Summonses, the affirmations filed in respect of such summons, the skeleton submissions, what transpired at the hearings for such summonses, the involvement of counsel on the part of HSBC Trustees, the matters noted in paragraph 2 above, and considering all circumstances, I am satisfied that the claims for costs in the statements of costs by HSBC Trustees and New Horizon are not disproportionate save that items concerning attending client, preparing documents and attending hearings are, in my view, unreasonable and excessive.

12.I propose to adopt a broad-brush approach and not deal with each and every item of the statements of costs since it is not the purpose of a summary assessment of costs to carry out a mini-taxation.  I am satisfied that the hourly rates sought by HSBC Trustees and New Horizon are, in the particular circumstances of the present action, not disproportionate and unreasonable for assessment of costs on indemnity basis.  However, considering the matters in the above paragraph, I find KYKS spending 5 hours attending on client, 12 hours on preparing documents and 3 hours 15 minutes on attending hearings (for HSBC Trustees) excessive and unreasonable, and I will adjust it down to 15 hours (ie reduction by $25,966.50).  I also find TSW spending 6.6 hours on attending client, 10.25 hours on preparing documents and 3.65 hours on attending hearings (for New Horizon) excessive and unreasonable, and I will adjust it down to 15 hours (ie reduction by HK$22,000).

13.In the circumstances, the total costs of HSBC Trustees on its statement of costs are assessed at $231,894.50 (being $257,861 - $25,966.50), and the total costs of New Horizon on its statement of costs are assessed at $164,791 (being $186,791 - $22,000).  I therefore order that the Mother and Nieces shall forthwith pay costs in the sum of $231,894.50 to HSBC Trustees and in the sum of $164,791 to New Horizon.

The 1^st, 2^nd and 3^rd plaintiffs acting in person

Clifford Chance, for the 1^st defendant

Wong Shum & Co, for the 2^nd defendant