Skyrun Light Industry (Hong Kong) Co Ltd and Another v. Swift Resources Ltd and Others

HCA 1278 /2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1278 OF 2014

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DECISION ON SUMMARY ASSESSMENT ON COSTS

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1.On 13 June 2017, pursuant to a summons filed by the 1^st and 2^nd defendants (collectively, “Ds”) on 31 May 2017 (“Summons”), I granted Ds’ application to vacate the trial of the present action scheduled to be heard on 21 June 2017 (“Trial”) on terms. I also granted an order that Ds do pay the 1^st and 2^nd plaintiffs (collectively, “Ps”) costs of and occasioned by the Summons (including costs of the hearing on 13 June 2017) and costs of and occasioned by and also thrown away by vacating and adjourning the Trial all on indemnity basis, such costs to be summarily assessed and paid forthwith (“Cost Order”).

2.I have reserved my reasons for decision, and on 19 June 2017 handed down my reasons for decision (“Reasons”). For convenience, I shall adopt the abbreviations in the Reasons.

3.On 26 June 2017, Ps lodged their Statement of Costs. On 3 July 2017, Ds lodged their List of Objections.

4.I bear in mind that the costs under the Cost Order were to be assessed on indemnity basis so that all costs shall be allowed except insofar as they were of an unreasonable amount or had 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).

5.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. 

6.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).

7.In my view, these principles are also applicable to summary assessment of costs on indemnity basis.  At the same time, I am mindful of the proper approach to summary assessment of costs that had 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. 

8.Here, Ps sought a total sum of $337,025 comprising solicitors’ profit costs and disbursements of $140,275 and counsel’s fees of $196,750. Ds sought total deductions of $120,325, thus proposing that costs be awarded to Ps in the sum of $216,700.

9.For the purpose of the summary assessment herein, I shall adopt a broad-brush approach pursuant to Practice Direction 14.3 as it would be inappropriate to carry out any mini-taxation.

10.In Ds’ List of Objections, they raised objection on 10 matters. I make the following general observations.

11.First, the hourly rate of the handling solicitor of Ps’ solicitors (admitted in 2002) was $4,500. Ds suggested such rate exceeded the amount stipulated in Circular 08-213 published by the Law Society of Hong Kong, and proposed that an hourly rate of $4,000 be allowed. I disagree. Here, the relevant solicitor fee-earner had 15 years of post‑qualification experience, and bearing in mind the guidance in Re Wing Fai Construction Co Ltd (Costs: Taxation) (see paragraphs 5-6 above), I am unconvinced an hourly rate of $4,500 was in all the circumstances unreasonable, excessive or extravagant.

12.Secondly, in respect of Item B1, Ps claimed for photocopying charges of 800 pages at $800. Ds suggested only $100 should be allowed as Ps did not file any affirmation and Ds prepared the hearing bundle for the Hearing. However, since costs were to be assessed on indemnity basis, it would not be unreasonable for Ps to provide the clients with copies of the Summons and supporting affirmations as and when they were served as well as the eventual hearing bundle so as to take proper instructions and/or to inform the clients, and to provide another set of these documents for counsel to seek his advice and for his use at the Hearing. There would also be correspondence with clients, counsel and Ds’ solicitors. In my view, $100 would not properly reflect the photocopy charges incurred. I am prepared to award $600 for Item B1.

13.Thirdly, in respect of Item B2, Ps claimed attendance by litigation clerk for 6 times at $600. I note here that Ps’ claim was made on the standard party-and-party rate of $100 per attendance rather than on the litigation clerk’s time cost. Nevertheless, Ds raised objection and proposed allowance of $100 on the ground that the litigation clerk was only required to re-lodge the PTR bundle for the 2^nd PTR. However, since costs were to be assessed on indemnity basis, there would be deliveries of affirmations and hearing bundles to counsel and clients. I particularly note Ds served Yeung’s affirmation and the Wong Aff on Ps’ solicitors only on the day before the Hearing, and I could envisage the need for urgent delivery of copies to the clients and counsel. Ps also had to submit to court draft orders for approval and to file/serve sealed copy orders in relation to the Summons. I allow $600 in full for Item B2.

14.Fourthly, in respect of item C1, Ps claimed 7 hours for attendance on the clients at $31,500. Ds suggested allowance of 1 hour. I bear in mind that apart from costs in relation to the Summons the Cost Order also allowed costs occasioned by and thrown away by vacating and adjourning the Trial. I also take note that leave was granted for such adjournment just a week before the Trial by which time preparations for the imminent Trial would have been underway. Briefing the clients/witness on what to expect at the imminent Trial and making preparations for trial (including usual pre-trial conference) would have taken place. Necessary liaison with and report to the clients for the 2^nd PTR were also wasted by the adjournment. In my view, allowing 1 hour would be unrealistic, but 7 hours would be excessive. I award 5 hours in the sum of $22,500 under Item C1.

15.Fifthly, in respect of Item C2, Ps claimed 2 hours for attendance on other side (and court) at $9,000. Ds suggested allowance of 0.5 hour. Bearing in mind the necessary liaison with the court over approving relevant court orders and re-fixing of the trial dates, dealing with the matters set out in paragraphs 90-91 of the Reasons as well as having necessary liaison with Ds’ solicitors, I am not persuaded 2 hours were excessive. I allow $9,000 under Item C2.

16.Sixthly, in respect of Item C3, Ps claimed 2.5 hours for attendance on counsel at $11,250. Ds argued such claim was excessive and only 0.5 hour should be allowed. As seen in the discussion in relation to Item E2 below, out of the 2.5 hours claimed 1.5 hours were for attending conference with counsel. Ds suggested (a) the conference with counsel was unnecessary and (b) there was overlap between Items C3 and E2. In my view, the latter point was easily dispelled because Item C3 was for solicitor’s fees and Item E2 was for counsel’s fees for attending the conference. There was no duplication at all.

17.I disagree the conference with counsel was unnecessary. Given the lateness of the Summons and the uncertainty of its outcome until the Hearing only a week before the Trial, it was only to be expected that usual pre-trial conference would have been arranged. Further, the last-minute Summons had potentially serious implications for Ps as it might entail an adjournment of the Trial (which outcome did eventuate). It could not be said to be excessive, extravagant or unreasonable for Ps to have conference with counsel to discuss both litigation strategy and substantive preparation for the Trial in case it was not adjourned. I find such conference reasonable. As for the remaining 1 hour, it would have been taken up by preparing instructions and/or brief to counsel, and there would have been further communications with counsel given the late affirmations served by Ds only on the day before the Hearing. I allow $11,250 under Item C3.

18.Seventhly, in respect of Item D1, Ps claimed 3.5 hours for preparation of documents at $15,750. Ds disagreed by pointing out that no documents were prepared by Ps’ solicitors for the Summons and/or Trial (which could not be re-used at the adjourned trial), and suggested allowing 0.5 hour by a litigation clerk at $1,000/hour. Other than court orders, I am unable to see what documents required preparation. However, in view of the terms of the order granted at the Hearing, which required speedy follow up for re‑fixing the Trial, I find it was reasonable (when costs were to be assessed on indemnity basis) for the solicitor fee-earner to attend to the drawing up of the relevant orders for approval. However, 3.5 hours would be excessive and I allow 1 hour at $4,500 under Item D1.

19.Eighthly, in respect of Item D2, Ps claimed 8 hours for perusal of documents at $36,000. Ds contended that only perusal of the affirmations filed by Ds and the parties’ written submissions should be allowed, and suggested allowing 1.5 hours. I disagree. Surely Ps’ solicitors must be allowed to peruse the Summons too. Further, Ds had to bear costs thrown away by vacating/adjourning the Trial on indemnity basis. Since the Trial was only vacated a week before its commencement, preparations for the Trial must have been underway by then, so it would not have been unreasonable for the solicitor fee-earner to re-fresh himself with documents and materials in this case for the purpose of attending the pre-trial conference with counsel and also the then imminent Trial. Such efforts were wasted as the same exercise had to be re-done for the adjourned trial. But that said, counsel was involved and it would not be reasonable for the solicitor fee-earner to have deep review of the documents and materials in the course of pre-trial preparations. In all the circumstances, I find it reasonable and appropriate to allow 5 hours at $22,500 for Item D2.

20.Ninthly, in respect of Item D3, Ps claimed 5 hours for preparation for the Hearing and 2^nd PTR at $22,500. Ds claimed this was excessive and a legal clerk or paralegal spending 0.5 hour at $1,000/hour would suffice. I do not understand the nature of such objection. Since Ds had no objection to Item D4 (ie attendance at the Hearing and 2^nd PTR by Ps’ solicitor fee-earner), such solicitor fee-earner rather than any legal clerk or paralegal should be the one who had to prepare for such hearings. That said, given the allowances above for attendance on counsel (including conference with counsel) and perusal of documents, and further given the involvement of counsel for the Hearing and 2^nd PTR, even on a generous indemnity basis, I am unconvinced the solicitor fee-earner would have to spend much time for preparation for the hearings. I allow 1.5 hours at $6,750 for Item D3.

21.Tenthly, in respect of Item E2, Ps claimed counsel’s fees for conference for 1.5 hours in the sum of $6,750, which translated to an hourly rate of $4,500. I find such rate reasonable for counsel of 20 years’ experience. As explained in paragraph 16 above, there was no duplicate between this item and Item C3. For the reasons explained in paragraphs 16-17 above, I allow counsel’s fees at $6,750 for Item E2.

22.Taking into account all of the above matters, having considered the nature and scope of the present action and the Summons, the affirmations filed in support of such summons, the skeleton submissions and list of authorities, what transpired at the Hearing and 2^nd PTR, the involvement of counsel, and considering all circumstances, I am satisfied the claim for costs in Ps’ Statement of Costs (save for the items I have adjusted down) was not unreasonable or disproportionate. Ps’ total costs on their Statement of Costs are assessed at $287,325 (being $600 (B1) + $600 (B2) + $22,500 (C1) + $9,000 (C2) + $11,250 (C3) + $4,500 (D1) + $22,500 (D2) + $6,750 (D3) + $12,375 (D4) + $6,750 (E2) + $30,000 (E3) + $135,000 (E4) + $25,000 (E5) + $500 (F)). I therefore order that Ds shall forthwith pay costs in the sum of $287,325 to Ps.

Christine M Koo & Ip, for the 1^st and 2^nd plaintiffs

Michael Li & Co, for the 1^st and 2^nd defendants