Koljonen John Albert v. Koljonen Yick Suk Han Formerly Known As Yick Suk Han

FCMC 4456/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO.4456 OF 2013

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DCMP 1127/2017

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO.1127 OF 2017

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DECISION

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1.There are 3 sets of costs in the captioned 2 proceedings for me to decide. This is a timely reminder to practitioners of what one should do in taxation after aided client had passed away.

The background

2.In Dec 2012, legal aid certificate (the LA certificate) was granted to the petitioner husband to carry out the captioned matrimonial proceedings (the family proceedings) with Ms Anne Hui (Ms Hui) of Messrs. Wong, Hui & Co. (WH&C) assigned as his solicitor. The respondent wife was represented therein by Messrs. Cheung Wong & Associates (CW&A).

3.On 7 Aug 2015, the petitioner passed away. 3 days later, WH&C filed notice of abatement of cause in the family proceedings addressed to CW&A (the abatement notice).

4.On 14 Aug 2015, the LA certificate was discharged by the Director of Legal Aid (the director) and a notice of discharge was filed in the family proceedings addressed to WH&C and CW&A (the notice of discharge).

5.More than 1 year later, WH&C signed a notice of commencement of taxation in the family proceedings addressed to the director (the NOCT) as “former solicitors for the petitioner, deceased (italics added)”, and filed the NOCT, on 1 Dec 2016. On the same date, WH&C also filed a Bill of Costs therein addressed to the director (the Bill) signed by it in the same manner.

6.At p.1 recital of the NOCT and p.1 recital of the Bill, WH&C indicated respectively that it “had commenced taxation by filing [the Bill]”, and “the Petitioner’s own costs” “against [the director] (italics supplied)” is to be taxed, pursuant to 8 costs orders made by HH Judge Melloy from Aug 2013 to June 2015, pursuant to Reg.9 of Legal Aid Regulations, Cap.91A (the regulations), upon the abatement notice and upon the notice of discharge.

7.The Bill, having 206 items in total, comes up to $1.4M odd and is divided into 2 parts, each totaling $700K odd. In each part, section A is solicitor profit costs, section B is disbursement and section C is costs of taxation. Part 2 makes it clear that it is on “common fund” (CF) basis but Part 1 is silent on this matter. At a summary found at its 2^nd last page, the “receiving party” was stated to be “WH&C (as the former solicitors for the deceased Petitioner) (italics supplied)”.

8.The NOCT required list of objections (LOO) to be filed and served within 28 days of its service and stating the said deadline to be on or before 29 Dec 2016, failing which directions may be sought to have the Bill taxed as drawn with costs of taxation awarded against the opposite party.

9.The NOCT further required any unnamed but interested party having financial interest in the outcome of the taxation to give notice in writing within 7 days of its service stating whether it intended to take part in the taxation proceedings or not, failing which such party shall not be entitled to take part in the taxation.

10.By its letter dated 5 Dec 2016 copied to WH&C, Ms Leung Ping Ching Jenny, Senior Legal Aid Counsel (Ms Leung), on behalf of the director, wrote to court to give notice that the director will take part in CF taxation of the Bill as the petitioner had been legally aided in the family proceedings and he has a financial interest in the outcome of the taxation. Ms Leung also applied for leave to participate in party & party (P&P) taxation of the Bill if the respondent failed to file LOO within stipulated time.

11.On 9 Dec 2016, this court informed the director noting his intention to take part in CF taxation of the Bill and required LOO to be filed by him within 21 days, and also said his application to participate in P&P taxation will be dealt with after time expired on 29 Dec 2016.

12.On the same day, WH&C served the Bill on CW&A by its letter dated 8 Dec 2016 and expressed that it was so served because the respondent may have a financial interest in the outcome of taxation of Part 1 of the Bill in that the director will, it was said, enforce against the respondent.

13.On 16 Dec 2016, CW&A wrote in a letter chopped “urgent” to WH&C putting on record that the Bill was only served on them on 9 Dec 2016, such that respondent had up to 5 Jan 2017 (i.e. 28 days from service of the Bill) and not 29 Dec 2016 as demanded in the Bill to file LOO. CW&A sought agreement of that with WH&C, saying that it would seek court directions if the same is not forthcoming.

14.In the same letter, referring to p.1 recital of the Bill, CW&A asked WH&C to clarify “whether or not your client, [the director], is also seeking taxation of costs against our client under [the Bill]. If it should be the case that you are or you on behalf of [the director] is also seeking taxation of costs against our client under [the Bill], kindly: 1. apply for appropriate amendment of [the Bill] 2. clarify which part of [the Bill] relates to P&P costs… (italics supplied)”. CW&A asked for reply by 19 Dec 2016 reminding that delay in reply will hinder its preparation of LOO, and reserved its right to seek time extension and costs if it is required to apply the same out of time.

15.It was only by 20 Dec 2016 that WH&C replied CW&A’s letter dated 16 Dec 2016. Its letter reads: “we shall not take issue if your client’s [LOO] is filed and served on or before 5 Jan 2017. We are considering your suggestion that our Bill be amended. In the meantime, please be informed that the items claimed under Part 1 of our Bill relate to P&P costs. (italics supplied)”

16.On 30 Dec 2016, the director, purportedly pursuant to order of this court made on 9 Dec 2017[1], filed a LOO covering every section and every part of the Bill. For Part 1 thereof, if all his objections are upheld, no costs will be allowed because, among others, the director raised that costs in Part 1 should not be paid by him but “should be paid by respondent” as they are P&P costs, P&P disbursement or P&P costs of taxation. The director in its grounds of objection also asked if Part 1 costs are on P&P or CF basis.

17.On 5 Jan 2017, CW&A filed respondent’s LOO to the Bill addressed to WH&C, raising grounds of objection to items in all sections of Part 1 thereof. By its preliminary points, they sought clarification from petitioner which orders he relied on to seek taxation against respondent given p.1 recital thereof.

18.On 25 Jan 2017, WH&C filed an application to set the Bill down for taxation addressed to the director and CW&A (as solicitors for respondent as an interested party) and signed as “solicitors for the petitioner (italics supplied)”. It was initially set down for call-over by way of paper disposal on 13 Apr 2017.

19.On 7 Feb 2017, in a letter to this court copied to WH&C, CW&A referred to correspondences with WH&C seeking clarifications of the Bill and asked for directions regarding its ambiguity and whether or not respondent be heard/a party concerned in its taxation (saying that it did not receive notice of 13 Apr 2017 hearing from the court).

20.On 22 Feb 2017, this court by notice to all parties concerned re-fixed the call-over to become an oral hearing on 20 Apr 2017 and required attendance of the petitioner, the respondent and the director to address this court.

21.On 13 Apr 2017 i.e. a week before scheduled oral hearing before me, WH&C, as solicitors for the director, issued an originating summons in expedited form (OS) returnable before this court on 25 May 2017 in the captioned miscellaneous proceedings (MP action) by way of costs-only proceedings. And Ms Leung filed a supporting affidavit on the same day on behalf of the director.

22.In the MP action, the director sought, inter alia, orders that 1) the respondent do pay him such amount to be taxed (unless agreed) in settlement of such costs order made by HH Judge Melloy in favour of petitioner in the family proceedings[2]; 2) Part 1 of the Bill in the family proceedings be deemed duly served on the respondent; 3) the MP action be consolidated with the family proceedings in so far taxation of the Bill is concerned; and 4) costs of this application be costs in the cause in P&P taxation of the family proceedings against respondent.

Directions given

23.At the said oral call-over on 20 Apr 2017, after hearing the following suggested orders from Ms Hui and from Ms Leung, and with no objection from Ms Phyllis Wong of CW&A (Ms Wong) appearing for respondent, in the family proceedings, I gave

1) leave to the director to enforce P&P costs in his official title;

2) leave to the receiving party to make amendments to the Bill within 21 days; and

3) leave to the director and the paying party to make consequential amendment to their respective LOOs within 21 days thereafter.

And, in the MP action, I give/order: -

4) leave to the director to withdraw the OS; and

5) vacation of the hearing of the OS scheduled on 25 May 2017.

24.My directions given in the family proceedings are based on reg.9(6A) of the regulations as interpreted by Master Roy Yu (Master Yu) in his unreported decision of Chan Sau Mui & another v To Cheong Lam, HCA 7415/1995, 4 Jul 2006, which decision was helpfully drawn to my attention by Ms Leung and Ms Hui.

25.Reg. 9(6A) of the regulations reads: “The Director has the right to enforce an order of costs in favour of an aided person made in proceedings for which the Director has issued a certificate, whether the certificate has been discharged or revoked, and the Director may bring proceedings in his official name in a court of competent jurisdiction to recover the costs ordered (italic added)”. Master Yu interpreted the word of “enforce” widely to include the right of the director to take out taxation proceedings and I followed his decision.

26.The problem before Master Yu is that a bill was presented by WH&C for legally-aided 1^st plaintiff and for 2^nd plaintiff to tax costs orders in favour of both plaintiffs against the defendant. But when the bill was issued, the 1^st plaintiff had passed away and WH&C acted upon instructions of 2^nd plaintiff and the director.

27.Preliminary issue was thus taken of the right of the director to issue proceedings to tax costs orders in favour of 1^st plaintiff[3] against the defendant and Master Yu answered it in the positive by his interpretation of reg.9(6A).

28.However, procedure-wise, to avail of reg.9(6A), Master Yu held, the taxation proceedings should be instituted in the official title of the director and not in the name of the deceased aided person.

29.Before him, WH&C took out the bill in the name of 1^st and 2^nd plaintiffs, and not in the official title of the director. As 1^st plaintiff had passed away and cannot authorize the director or WH&C (i.e. his former solicitors) to institute taxation proceedings for him, WH&C cannot proceed with the bill on behalf of deceased 1^st plaintiff. The taxation of the bill of 1^st plaintiff was thus ordered by Master Yu to be adjourned sine die with liberty to restore.

30.The alternative, said Master Yu, is for the director to seek consent from the relative of deceased 1^st plaintiff to continue the proceedings and to make application under O.15 of the Rules of High Court to appoint someone to represent the estate of deceased 1^st plaintiff. Absent such leave given under O.15, the taxation of the bill of the 1^st plaintiff cannot continue either.

Costs in dispute

31.After I gave my directions above in the family proceedings and in the MP action, Ms Wong on behalf of respondent applied against WH&C (i.e. not against deceased petitioner it formerly acted for and, of course, the deceased petitioner was not represented before me) and/or the director for: -

1) costs of the hearing before me in the family proceedings;

2) costs of and occasioned by the amendments to the Bill in the family proceedings; and

3) costs of the MP action.

Submissions

32.In gist, Ms Wong submitted that the respondent was misled to have incurred costs to prepare and file her LOO, was brought into the MP action and oral hearing before me, and, finally, was further required to incur more costs to make consequential amendments to her LOO all for failures of WH&C and/or the director to put their own houses of the taxation in the family proceedings in order in good time or at all before the said oral call-over before me.

33.Ms Leung on behalf of the director resisted any costs order against the director. She did not seek costs against anyone and suggested that there be no order as to costs and/or that the costs of the MP action be in the cause of P&P costs in the family proceedings as the director prayed for in the OS.

34.Ms Leung emphasized that there was throughout no fault on the part of the director at all.  The OS in the MP action was taken out in line with the procedure suggested by Master Yu in his decision of Chan Sau Mui, supra.

35.Ms Hui of WH&C explained that her firm took out the Bill as instructed by the director in order solely to tax petitioner’s own costs against the director under the Regulations. She produced a copy letter dated 25 Aug 2016 from the director to WH&C saying, “we note that your bill involves P&P costs (against the Opposite Party) and common fund costs. Since you are the receiving party, you shall proceed with the taxation pursuant to O.62 r.21 and it does not matter whether Legal Aid Certificate was discharged or not. Please keep us informed of the taxation of your costs (italics supplied)”. As the director may seek to recover such taxed costs against the respondent, the Bill, said Ms Hui, was therefore also served on respondent as an interested party.

36.It is, said Ms Hui, only after leave for amendments given by this court that recovery would be sought from the respondent for P&P costs. And, with amendments to the Bill allowed, WH&C may transfer some items from one part of the Bill to the other[4].

37.Ms Hui did not seek costs against anyone and also suggested that there be no order as to costs. She emphasized that WH&C was not at fault either.

Discussion

38.To start with, it is clear to me that WH&C had no authority, and could not have authority, from deceased petitioner or the director to issue, and file, the Bill (and the NOCT) on behalf of the deceased petitioner. Neither was there any suggestion of authority to WH&C or the director from relative of deceased petitioner before me.

39.While it was said that WH&C only purported to tax deceased petitioner’s own costs against the director pursuant to reg.9 of the Regulations with itself as the “receiving party” and WH&C had only signed the Bill as the “former” solicitors of a “deceased” petitioner, the entirety of Bill was not on CF basis (and queries were thus raised by both respondent and the director afterwards in their respective LOOs).

40.As one recalls, Part 1 of the Bill was silent on the basis of taxation. When CW&A later sought clarification by its 16 Dec 2016 letter, WH&C answered in its letter dated 20 Dec 2016 that items claimed under Part 1 thereof related to P&P costs and raised no objection to respondent taking more time to file her LOO.

41.Had the Bill sought P&P costs in Part 1 thereof against the respondent as the aforesaid clarification from WH&C suggested, it ought, I think, to be instituted in the official title of the director in the first place but it was not (for otherwise WH&C had no authority from deceased petitioner, his relative or the director to issue and file a bill for P&P costs on behalf of a dead person against the opposite party). The alternative is for WH&C or the director to get leave under O.15 of the Rules of District Court to appoint someone to represent the estate of deceased petitioner to commence P&P taxation.

42.While WH&C in its reply letter dated 20 Dec 2016 to CW&A said amendments to the Bill were being considered, it went ahead to set the Bill down for taxation in Jan 2017 and, despite 7 Feb 2017 letter to court from CW&A seeking directions regarding “ambiguity” of the Bill copied to it, it took out no summons in the family proceedings to seek leave to amend the Bill even up to oral hearing before me on 20 Apr 2017 (if not fully resolved the problem by consulting every concerned party and filed such consent summons in the family proceedings to dispense with the oral call-over before me).

43.Instead, the MP action was taken out by WH&C acting on behalf of the director a week before the oral hearing before me. That was, in my view, a piece of avoidable satellite litigation taken out prematurely and unnecessarily without trying to solve the problem in the family proceedings itself, including taking benefit of possible directions given at the forthcoming oral call-over hearing.

44.All in all, there was, I find, no fault with the respondent and she was misled to have incurred costs and brought into all these proceedings (and required to incur more costs) by the above failures of WH&C and the director.

45.I accordingly agree with the submissions of Ms Wong and disagree with the contrary submitted by Ms Hui and Ms Leung.

Disposition

46.Having regards to all circumstances, materials and submissions before me, in exercise of my discretion, it is, I think, appropriate to order and I so order:

1) WH&C to pay costs of the respondent for the hearing before me on 20 Apr 2017 in any event;

2) the costs of and occasioned by the amendments to the Bill be paid by WH&C to the respondent in any event; and

3) the costs of the MP action be paid by the director to the respondent.

47.All 3 costs orders above in the respondent’s favour are to be summarily assessed by this court on papers and payable within 14 days after their assessment. For purpose of such assessment, I direct the respondent to file her statement of costs within 21 days from the date of this decision and allow the director & WH&C to file their respective grounds of objection, if any, within 14 days thereafter.

48.Finally, I thank Ms Wong, Ms Leung and Ms Hui for their assistance.

Ms Anne Hui of Messrs. Wong, Hui & Co. as former solicitors for the deceased petitioner

Ms Phyllis Wong of Messrs. Cheung, Wong & Associates for the respondent

Ms Jenny Leung, Senior Legal Aid Counsel, of the Legal Aid Department