Re Chow Chung Kwan

HCB 2942/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 2942 OF 2005

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Re: CHOW CHUNG KWAN, Bankrupt

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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1.On 8 October 2015, I handed down my Decision and granted the application by the trustees in bankruptcy of Mr Chow Chung Kwan (“Trustees”) for an order for sale of a property known as Flat no 15 on 23^rd Floor of Block 3 (Yee Wai Court), Tsing Yi Estate, No 10 Fung Shue Wo Road, Tsing Yi, New Territories. By my Decision, I also granted a costs order nisi that the respondent Madam Leung Lai Ping (“Leung”) do pay the costs of the Trustees in respect of the costs of their application (including all costs reserved if any) to be summarily assessed (“Costs Order Nisi”). Such Costs Order Nisi had been made absolute since there was no application to vary the same within 14 days from the date of my Decision. For convenience, I shall adopt the abbreviations in my Decision.

2.The Trustees had lodged their statement of costs dated 22 September 2015.  By the Decision, I gave directions for Leung to lodge/serve list of objections within 21 days.  Leung failed to do so.  So I proceed to deal with the summary assessment of costs.

3.The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.  For present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512‑514 as follows:

“(2) As in an ordinary taxation, under O.62 r.28(2) of the Rules of the High Court (Cap.4A) (the RHC), in a summary assessment, party-and-party costs were allowed only if they were ‘necessary or proper’ for the attainment of justice or for enforcing or defending the rights of the receiving party. Pursuant to Practice Direction 14.3, the court adopted a broad‑brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in O.1A of the RHC, even if there was no challenge to individual items. ……

(3) A summary assessment required a two-stage approach. If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the cost reasonable. If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable. A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for the litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty. The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary. ……

(6) Since Civil Justice Reform in 2009, taxation of counsel’s fees under a party-and-party taxation was no different from taxation of costs and expenses. The test of ‘necessary or proper’ applied and must take into account the matters set out in para.1(2) of Part II of the First Schedule to O.62 of the RHC, as well as the requirement of reasonable proportionality.  Accordingly, paras.62/App/28(5) (p.1172) and 62/App/28A of Hong Kong Civil Procedure 2012 (p.1172), which referred to the previous pre-CJR ‘excessive and unreasonable’ test under the former para.2(5) of Part II of the First Schedule to O.62 of the RHC, should no longer be followed, ……”

4.Here, the Trustees sought a total sum of $161,600 comprising solicitors’ profit costs of $126,500 and disbursements of $5,500. 

5.Several matters are of note.  First, although the hearing time claimed for the hearings on 18 June 2012, 29 May 2013 and 22 September 2015 were 1 hour, 1 hour 15 minutes and 3 hours, the actual hearing time were respectively 17 minutes (9:30am - 9:47am), 1 hour 15 minutes, and 1 hour (10:43am – 11:43am).  Secondly, the Trustees claimed 10 hours of time spent on mechanical or simple work by non‑qualified clerks or paralegals.  In my view, much of the work (such as filing and serving documents) is subject to standard rates, and preparation of affirmations of service is not complicated.  There should be reduction for this item.  Thirdly, the background to the case that led up to the Trustees’ application for an order for sale is largely undisputed, and as regards Leung’s objection, the grounds she raised were straightforward and there was no complexity in responding to the same.  Indeed, the response was largely by way of submissions rather than affidavit evidence.  I am not satisfied it would require solicitor (2) 25 hours to prepare documents and 6 hours to peruse documents.  Thirdly, as experienced solicitors who acted for the Trustees and with solicitor (2) being the solicitor involved in a number of authorities in this area of the law, the scope for legal research was more limited.  I am not persuaded that solicitor (2) would require 4 hours to prepare 2 call-over hearings and a substantive hearing that was scheduled to last for 3 hours and that eventually took 1 hour.

6.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 the hourly rates sought by the Trustees are not disproportionate and unreasonable for assessment of costs on party and party basis.  I also bear in mind the two-stage approach required for summary assessment.  Having considered the nature and scope of the application, the affirmations filed in respect of the application, the skeleton submissions, what transpired at the hearings, the non‑involvement of counsel in this matter, the matters noted in the above paragraph, and considering all circumstances, the overall costs claimed by the Trustees under their statement of costs appeared to be somewhat on the high side on party and party basis for the items discussed in the above paragraph.  Upon considering the items of costs claimed to see whether or not they were “necessary and its costs reasonable” on the sensible standard of necessity as explained by the Court of Appeal, the total costs of the Trustees on their statement of costs are assessed at $125,000.  I therefore order that Leung shall pay costs in the sum of $125,000 to the Trustees.

Gallant Y T Ho, Co, for the joint and several trustees of the property of the bankrupt, for the applicant

The respondent acting in person