SERIDOM SERVICIOS INTEGRADOS IDOM S.A.U. v HENG WEN TRADE CO., LIMITED (桓文貿易有限公司)

HCA 1631/2017

[2019] HKCFI 1184

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1631 OF 2017

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Before: Hon Marlene Ng J in Chambers

Date of the plaintiff’s statements of costs: 11 and 29 March 2019

Date of the 8^th and 10^th defendants’ list of objections: 8 April 2019

Date of Handing Down Decision (Paper Disposal): 8 May 2019

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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I. INTRODUCTION

1.  On 2 August 2017, DHCJ William Wong SC granted inter alia an ex parte injunction order against inter alia the 8^th defendant (“D8”) prohibiting it from removing, disposing of, dealing with and/or diminishing the value of its assets in Hong Kong up to the value of US$251,570 (or HK$ equivalent), and ordered inter alia D8 to inform the plaintiff’s (“P’s”) solicitors in writing at once (to be confirmed by affidavit served on P’s solicitors within 14 days after service of such order on inter alia D8) of “all of their assets of an individual value of HK$10,000 or more in Hong Kong, whether in their own names or not and whether solely or jointly owned, giving the value, location and details of all such assets” with exception for privilege against self-incrimination (“2^nd Injunction Order”). On 11 August 2017, DHCJ William Wong SC continued inter alia the 2^nd Injunction Order until the determination of the present action or further order (“2^nd Continuation Order”).

2.  On 27 September 2017, DHCJ Lee (as he then was) granted an ex parte injunction order against inter alia the 10^th defendant (“D10”) prohibiting them from removing, disposing of, dealing with and/or diminishing the value of their assets in Hong Kong up to the value of US$200,000 (or HK$ equivalent), and ordered inter alia D10 to inform P’s solicitors in writing at once (to be confirmed by affidavit served on P’s solicitors within 14 days after service of such order on inter alia D10) of “all of their assets of an individual value of HK$10,000 or more in Hong Kong, whether in their own names or not and whether solely or jointly owned, giving the value, location and details of all such assets” with exception for privilege against self-incrimination (“3^rd Injunction Order”). On 13 October 2017, Mimmie Chan J continued inter alia the 3^rd Injunction Order against inter alia D10 until determination of the present action or further order (“3^rd Continuation Order”).

3.  On 13 February 2018, D8 and D10 filed a summons for orders that (a) the 2^nd Injunction and 2^nd Continuation Orders against D8 and the 3^rd Injunction and 3^rd Continuation Orders against D10 be discharged, and (b) in the event of being unsuccessful in relation to (a) above, P do fortify its respective cross-undertaking as to damages under the 2^nd Injunction and 2^nd Continuation Orders with respect to D8 and under the 3^rd Injunction and 3^rd Continuation Orders with respect to D10 by paying HK$500,000 into court for each cross-undertaking (“Summons”).

4.  On 21 January 2019, I handed down written decision and dismissed the Summons with costs order nisi that D8 and D10 do pay costs of and occasioned by the Summons (including all costs reserved if any) to be taxed if not agreed (“1^st Decision”).

5.  On 30 January 2019, P filed a summons to vary the aforesaid costs order nisi to the effect that D8 and D10 do pay P costs of and occasioned by the Summons (including all costs reserved if any) forthwith, and that such costs shall be assessed summarily (“Costs Summons”). At the time of the hearing of the Costs Summons (“Costs Hearing”), P provided D8 and D10 with P’s 1^st Costs Statement in respect of such costs.

6.  On 22 March 2019, I handed down written decision and granted the following orders (“2^nd Decision”):

(a)	the costs order nisi dated 21 January 2019 be varied to the effect that D8 and D10 do forthwith pay P’s costs of and occasioned by the Summons (including all costs reserved if any) to be summarily assessed;
(b)	D8 and D10 do forthwith pay P’s costs of and occasioned by the Costs Summons to be summarily assessed;
(c)	P do within 7 days from the date thereof lodge and serve statement of costs under the order in (b) above not exceeding 1 page pursuant to Practice Direction 14.3 (“PD14.3”) (“P’s 2nd Costs Statement”);
(d)	D8 and D10 do within 14 days thereafter lodge and serve succinct summary of objections of not more than 3 pages in respect of P’s 1st and 2nd Costs Statements (“D’s List of Objections”);
(e)	the summary assessment of costs will be by paper disposal (unless otherwise ordered).

7.  For the present purpose, I shall adopt the abbreviations in the 1^st and 2^nd Decisions.

8.  On 11 and 29 March 2019, P lodged P’s 1^st and 2^nd Costs Statements. On 8 April 2019, D8 and D10 lodged their List of Objections.

9.  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, ……”

10.  I also refer to the following guidance in PD14.3:

“13. A broad-brush approach will be taken by the Court in the summary assessment procedure. The Court will not embark on a mini-taxation. Prolixity in contents of a statement of costs is therefore not acceptable. Costs for gathering information and drafting of these statements will generally not be granted.

14. Although the Court may allow the full amount claimed by the receiving party, it will, so far as possible, ensure that the final figure is not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in Order 1A. The Court will retain this responsibility notwithstanding the absence of challenge to individual items in the make-up of the figure sought. The fact that the paying party is not disputing the amount of costs can however be taken as some indication that the amount is proportionate and reasonable. The Court will therefore intervene only if satisfied the costs are so disproportionate that it is right to do so.”

11.  On an overall basis, D8 and D10 submitted that the total quantum of P’s 1^st Costs Statement was unreasonable/excessive in that (a) the solicitors’ professional fees ($253,940) were disproportionate to the fees of counsel ($50,000) who was engaged to perform most of the work related to the Hearing, and (b) the involvement of 2 senior solicitors of more than 15 years of post-qualification experience was not properly justified. As for P’s 2^nd Costs Statement, D8 and D10 submitted that the total quantum was also excessive/unreasonable as P did not even submit written skeleton submissions for the 15-minutes’ Costs Hearing.

12.  Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the Summons and Costs Summons, the skeleton submissions and list of authorities, what transpired at the hearings for the Summons and Costs Summons, and considering all the circumstances, I make the following general observations:

(a)	Costs are assessed on party-and-party basis such that only costs that are necessary and reasonable will be allowed.
(b)	This was a case of alleged “email fraud”, and D8 and D10 were involved in alleged Secondary and Tertiary Transfers. P had no personal knowledge of such alleged transfers save for information essentially discerned from discovery from banks and the Zhong Aff. Thus, at best, P could only provide limited instructions in relation to factual matters concerning the Summons and/or the Keady Aff.
(c)	P filed their Reply to D8 and D10 Defences shortly before the Summons, and D8’s and D10’s application for security for costs was heard after the Summons and before the Hearing, so P and his solicitors had canvassed D8’s and D10’s contentions just before and in the course of preparation for the Summons.
(d)	Counsel was briefed to appear for P at the Hearing.
(e)	The issue raised by the Costs Summons was quite limited, and P’s solicitors did not cite the authorities discussed by this court in the 2nd Decision.
(f)	Manual work by LC including filing, serving, delivering and collecting documents should not be on a time-cost basis. The relevance guidance for costs in respect of such work is in the Scale of Costs in Part 1 of the First Schedule of Order 62 of the RHC.[1]
(g)	Travelling expenses are not a chargeable item of disbursement (independent of an overall claim for profit costs) on inter partes assessment/taxation of costs.

13.  There is some force in D8’s and D10’s contention that it is not necessary or proper on party-and-party basis to involve 5 professional fee-earners, especially 2 senior fee-earners with inevitable increased supervision, reporting and/or possible duplication, and it is a factor I shall take into account in the assessment of costs. However, it is not inappropriate to have a partner-in-charge to work with a more junior solicitor, so that fees can be reasonably contained with more general work done by the junior fee-earner under focused supervisory input by the partner. Here, given JW’s significant involvement (and JW himself was admitted to practise in 2013 and could not be said to be very junior) largely under the supervision of RK (and RK himself was admitted to practice in 2002), and also counsel’s involvement, I am persuaded the involvement of multiple professional fee-earners is not reasonably warranted on party-and-party basis.

14.  In relation to items C1, C2 and C3 of P’s 1^st Costs Statement, I find the time spent by JW and JZ excessive.[2] In light of P’s stance already expressed in the Reply filed just shortly before the Summons and P’s consistent maintenance of its proprietary claim, I am unconvinced extensive time would be required to advise or take instructions from the client and/or liaise with counsel. I note it was the same counsel who appeared for P in respect of the hearing of D8’s and D10’s application by summons to seek security for costs before Master C Lam on 3 May 2018 (after the Summons and before the Hearing) in which P’s and D8’s/D10’s respective case/stance was canvassed. I am not persuaded JW would require 2.7 hours to attend the client, JZ and JW would altogether require 14.8 hours to attend the other side and/or JW would require 9.6 hours to attend counsel.

15.  In relation to item D1 of P’s 1^st Costs Statement,[3] I have reviewed the relevant documents, and I am persuaded the time taken for perusal of documents in this matter was rather on the high side for party-and-party taxation. The Summons, order made by DHCJ Kent Yee on 11 April 2018 and Notice of Hearing dated 17 April 2018 would require only minimal time. The substance of the Zhong Aff was only 10 pages with limited exhibits, and its contents were heralded by D8’s and D10’s defence pleadings. The substance of the Chan 3^rd Aff was just 4 pages. As for the list of authorities, it was unclear whether it was Mr Brown’s or Mr Chiu’s authorities. But given the involvement of counsel for the Hearing, I am not persuaded it would be necessary for the professional fee-earners to make detailed study of the cases cited save to familarise with the principles discussed in counsel’s skeleton submissions.

16.  In relation to item D2 of P’s 1^st Costs Statement, I am unable to see how such intensive preparation could be justified as necessary or proper, or indeed, or appropriate.[4] First, the Consent Summons dated 7 May 2018 sought extension of time for P to file affidavit in opposition for the Summons, and proposed to pay costs to D8 and D10 in the sum of $1,045. The order by Master Hui made on 11 May 2018 pursuant to such Consent Summons required P to pay costs in the sum of $1,045 to D8 and D10. There is simply no costs order in favour of P, and costs for preparation of these 2 documents must be rejected. Secondly, this court cannot understand how solicitor fee-earners could charge for preparing counsel’s written skeleton submissions which costs must be included in counsel’s brief fee. At the very least, it could not be part of party-and-party costs. Thirdly, the Costs Summons was a straightforward application, and its preparation should pose no difficulty for JW who must be well familiar with the case. Fourthly, the body of the Keady Aff comprised 6 pages with paragraphs 1-12 being summary of the Transfers, paragraphs 13-14 raising the issue of illegality that was expressly reserved for legal argument by counsel, and paragraphs 15-21 dealing with P’s assets within the jurisdiction. D8 and D10 did not object to time spent of 1 hour by RK. I am not persuaded that substantial time would be required for JW to assist given the nature of the contents of the Keady Aff, and I do not see the need for AR’s involvement.

17.  In relation to item D3 of P’s 1^st Costs Statement,[5] JW attended the call-over hearing before DHCJ Kent Yee on 11 April 2018 (15 minutes) and the Hearing, and AR attended the hearing of the Costs Summons (25 minutes). That being the case, I am unable to see any need to involve RK for preparation for hearing. Further, I do not allow LE’s time-costs which reasonably could only have been collation and lodgment/service of the hearing bundle. These mechanical tasks are not chargeable on time-costs basis (see paragraph 12(f) above). Costs of “collation the documents and compiling (including indexing and pagination) the bundle” are included in the photocopying charges, and lodgment, service and/or collection of documents are $110 for each delivery (see items 1-2 of the Scale of Costs in Part 1 of the First Schedule of the RHC). In my view, the time taken for preparation for hearing was rather on the high side for party-and-party taxation. Given the call-over nature of the hearing before DHCJ Kent Yee, and the involvement of counsel for the Hearing, preparation for hearing by JW need not be a full-scale in-depth study, and on party-and-party basis certainly would not require double the hearing time for the hearings themselves. Given JW’s involvement in the conduct of the proceedings all along, I find that familarising himself with arguments and documents pre-hearing to assist counsel would not take that long.

18.  In relation to item D4 of P’s 1^st Costs Statement,[6] I see no justifiable reason on party-and-party basis to allow LE’s time-costs for attending hearing. But I agree AR’s time costs should be allowed for attending the hearing of the Costs Summons.

19.  As for P’s 2^nd Costs Statement, apart from the typographical error as to the amount of LE’s fees in item C2, in relation to items C1 to C3,[7] I find attendance on client by AR on the high side, but otherwise the profit costs were necessary or proper. In having AR work with LE rather than with JW on the straightforward matter of the Costs Summons, costs were kept at reasonable level.

20.  In relation to item D1 of P’s 2^nd Costs Statement,[8] I bear in mind Mr Tsui’s written skeleton submissions were 1½ pages and only 2 authorities were cited apart from the 1^st Decision. I am not persuaded it would take AR 2 hours for perusal, and I see no reason for LE to peruse such documents since AR himself attended the hearing of the Costs Summons.

21.  In relation to item D2 of P’s 2^nd Costs Statement,[9] the time- costs by AR and LE were on the high side on party-and-party basis, and ought to be reduced. I allow AR 15 minutes and LE 1.5 hours.

22.  Adopting a broad-brush approach and not dealing with the niceties of each and every item of P’s 1^st and 2^nd Statements of Costs, and having considered the nature and scope of the Summons and Costs Summons, the affirmations filed, the skeleton submissions, what transpired at the Hearing and at the Costs Hearing, the involvement of counsel for the Hearing, the matters noted in the above paragraphs, and considering all the circumstances, the overall costs claimed by P under P’s 1^st and 2^nd Statements of Costs appear to on the high side on party-and-party basis. Upon considering the items of costs claimed to see whether or not they are “necessary and its costs reasonable” on the sensible standard of necessity as explained by the Court of Appeal, the total costs of P on P’s 1^st and 2^nd Statements of Costs are assessed at $210,000 to be paid by D8 and D10.

Bird & Bird, solicitors for the plaintiff

Tsui & Co, solicitors for the 8^th and 10^th defendants