The Registrar of the Hong Kong Institute of Certified Public Accountants v. X and Another

CACV 244/20 16

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 244 OF 2016

(ON APPEAL FROM THE ORDER OF THE DISCIPLINARY COMMITTEE OF THE HONG KONG INSTITUTE
OF CERTIFIED PUBLIC ACCOUNTANTS DATED 2 DECEMBER 2016)

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DECISION ON COSTS

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Hon Kwan JA (giving the decision on costs of the Court):

1.On 2 June 2017, we handed down our judgment granting the application of the respondents to stay the publication of two decisions of the Disciplinary Committee of the Hong Kong Institute of Certified Public Accountants (“the Institute”) until the final determination of the appeal from the decisions. There was no dispute at the conclusion of the hearing that costs of the application should follow the event. Accordingly, we made an order that the Registrar of the Institute (“the Registrar”) should pay the costs of the respondents in this application, with a certificate for two counsel. We directed the respondents to provide an updated statement of costs within 7 days for summary assessment of costs.

2.We have considered the respondents’ updated statement dated 9 June 2017.  We have also taken into account the list of objections served by the Registrar’s solicitors on 13 June without prior permission. The respondents’ solicitors sought to respond to the same by a letter dated 15 June 2017. We do not consider it helpful for a party to make lengthy submissions in response in a summary assessment of costs. If the court thinks it necessary to seek a response, it would invite the receiving party to reply. There is no right to the last word.

3.Previously, the respondents had submitted a statement of costs on the basis that the application was to be dealt with on paper, the total amount of which was $528,550.  The Registrar’s bill on the basis of paper disposal was slightly more than half of the respondents’ costs.  The updated statement of costs of the respondents came up to $1,009,885.  We think this is excessive on any view.

4.We will reduce the hourly rate of one of the fee earners from $5,000 to $4,000.  Taking into account the degree of complexity of the work involved in this matter, we do not think the enhanced rate of $5,000 is justified.  We agree with the observations of the solicitors for the Registrar that as the other fee earner is a partner with 8 years’ qualification, there would appear to be much duplication of work of the two fee earners as well as excessive time.

5.We will also make substantial reduction to the fees of senior and junior counsel, taking into account that much work had already been done on the basis of paper disposal and counsel had been assisted by solicitors who had spent significant time on the matter.

6.On the basis of the above matters, we reduce the total amount of solicitors’ fees from $442,385 to $234,410.  We reduce the total amount of counsel’s fees from $567,500 to $390,000.

7.The Registrar’s solicitors submitted that the court should make a further reduction on top of the above considerations on account of the risk of a chilling effect in which the public will be disadvantaged if the Institute, as a privately funded regulator[1] exercising a public function, can be threatened with the damaging financial risk of a substantial litigation bill, citing Baxendale-Walker v Law Society [2007] 3 All ER 330 at §§34 and 39.

8.The English Court of Appeal was addressing the proposition that when the Law Society is discharging its responsibilities as a regulator of the profession, an order for costs should not ordinarily be made against it on the basis that costs follow the event.  It held that the ‘event’ is simply a factor for consideration and is not a starting point, given the regulatory function of the Law Society places it in a wholly different position to that of a party in ordinary civil litigation.

9.We are not concerned with the incidence or liability of costs in this application.  As mentioned above, it was not disputed at the conclusion of the hearing that costs should follow the event.  The order for costs we made in our judgment is not an order nisi.  We do not think the English decision can be relied on to further reduce on taxation the amount of reasonable costs that had been awarded against the Institute.

10.Accordingly, the amount of costs we would allow the respondents on summary assessment is $624,410.

Reed Smith Richards Butler, for the Complainant

Wilkinson & Grist, for the 1^st and 2^nd Respondents