Chu Kong v. Wat Fung Ying and Another

HCA 2239/2019

[2019] HKCFI 3116

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2239 OF 2019

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BETWEEN

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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I. INTRODUCTION

1.At the hearing on 6 December 2019 (“Hearing”), I dismissed the plaintiff’s (“P’s”) application by inter partes summons filed on 3 December 2019 (“Summons”) for injunctive relief against the 1^st and 2^nd defendants (“D1” and “D2”, collectively “Ds”). I also ordered P to pay Ds costs of and occasioned by the Summons on party-and-party basis to be summarily assessed, and for such purpose I gave directions for the parties to lodge/serve statement of costs and statement of objections.

2.D1 and D2 had separate legal representation, and D2 appeared before me on 6 December 2019 by counsel.

3.On 11 December 2019, Ds lodged their respective statement of costs (“D1/D2 Costs Statements”). On 16 December 2019, P lodged his statements of objections to D1/D2 Costs Statements (“P/D1 and P/D2 Objections”). The P/D1 and P/D2 Objections were in breach of my directions made on 6 December 2019 as they were 5 pages and 3 pages in length, which well exceeded the 1-page limit for each list of objections allowed under my directions. On this occasion, I would deal with the summary assessment of costs on the basis of the P/D1 and P/D2 Objections, but in future litigants should not expect the court to smile kindly on having prolix objections placed before the court that has handled and is therefore familiar with the subject application. In such circumstances, the court may return the prolix list of objections to the relevant party for revision with costs in favour of the other party who has to spend wasted time/effort to consider on the original prolix list of objection.

4.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.[1] 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, ……”

5.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.”

6.On an overall basis, P submitted that the total quantum of the D1/D2 Costs Statements was unreasonable/excessive in that (a) the solicitors’ professional fees were disproportionate, (b) the involvement of 2 senior solicitors was not properly justified, (c) communications between D1 and D2 were not justified, and (d) there was no certificate for two counsel.

7.Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the Summons, skeleton submissions and list of authorities, what transpired at the Hearing in relation to the 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)  The Summons was returnable on urgent basis and called for urgent response. The Writ of Summons and the Summons were filed on 3 December 2019, and the Summons was heard 3 days later on 6 December 2019. P’s supporting affirmation also filed on 3 December 2019 contained 16 pages and had 6 exhibits. In short, Ds only had 3 days to consider the matter and put up their opposition to the Summons.

(c)  In view of the tight timeframe for the Hearing, the involvement of counsel in preparatory work/and litigation strategy leading up to the Hearing (which D2 attended by counsel) was not only reasonable but proper.

(d)  Whilst on party-and-party assessment the availability of counsel’s advice would have impact on the scope of work done and time spent by solicitors, it must also be remembered that in civil litigation counsel and solicitor have different roles to perform.

II.  SUMMARY ASSESSMENT OF D2’S COSTS

8.In respect of item C1, D2 claimed costs for 3.5 hours spent by KC (admitted in 1996) and 3.5 hours spent by AW (admitted in 2015). P complained the time spent was excessive as D2 did not file evidence in opposition for the Hearing, and D2 was well familiar with the background of the present action which stemmed from HCA 265/2019, so no significant attendance by KC/AW on D2 would be required.

9.I disagree. The fact D2 commenced HCA 265/2019 against P would not have informed D2 how P made out a claim against him on the basis of such background, and it was essential for KC/AW to liaise with D2 on how P deployed his assertions for raising the present claim so as to come up with relevant litigation strategy and to scale confirmation of instructions. The fact D2 did not yet put up affirmation evidence for the Hearing did not mean KC/AW would not have to take instructions in order to strategise and advise on whether or not to deploy affirmation evidence. But that said, I am not persuaded KC/AW would need to spend the time claimed for attendance on client. I allow 1.5 hours (KC) and 2 hours (AW) being $5,800 x 1.5 hours + $3,200 x 2 hours = $15,100 for item C1.

10.In respect of item C2, D2 claimed KC and AW respectively spent 3 hours on attending the other side and D1/ her solicitors. P claimed there was no need for D2 to liaise with D1, and P should not be responsible for the fact that Ds were separately represented. P noted that D1 did not claim costs for attendance on D2, and that in any event D2’s costs for liaising with P’s solicitors should not be significant (and should not have involved KC).

11.In my view, the fact D1 chose not to claim costs for liaison with D2 did not mean D2’s claim for such liaison was unjustified on party-and-party basis. Bearing in mind how P’s claim was framed vis-à-vis D1 and D2, ie that D1 was employed by D2, that D1 was in possession of the alleged confidential information, that there was proximity between D1 and D2, that D2 had already started using the alleged confidential information, and that D1 and/or D2 would further use the alleged confidential information, there was implicit suggestion that D1 passed on the alleged confidential information to D2, and this was indeed the alleged misuse relied on by Mr Hon, P’s counsel, at the Hearing. On such basis, it was plainly sensible and reasonable for D2 to liaise with D1 to ascertain her stance in respect of the Summons and/or gather evidence/information. Further, D1 and D2 were entitled to be separately represented, and P could hardly complain about this. However, I do accept the liaison between P and D2 would be minimal. On such basis, I allow 1 hour for KC and 1.5 hours for AW being $5,800 x 1 hour + $3,200 x 1.5 hours = $10,600 for item C2.

12.In respect of item C3, D2 claimed 2 hours (KC) and 3.5 hours (AW) for attendance on counsel. P claimed this item duplicated counsel’s brief, and noted D2’s opposition to the Summons was premised on legal submissions by counsel such that the quantum was excessive.

13.I believe P misunderstood this head of claim. The fact that counsel was briefed to appear on behalf of D2 at the Hearing would not obviate the need for D2’s solicitors to brief and liaise with counsel. Item C3 concerned solicitors’ profit costs and not counsel’s fees. But that said, I am unable to see how KC/AW would require to spend the claimed time  for liaison with counsel. I allow as necessary and/or proper time spent 1 hour (KC) and 1.5 hours (AW) being $5,800 + $3,200 x 1.5 hours = $10,600 for item C3.

14.In respect of item D1, D2 claimed 1.5 hours (KC) and 2.5 hours (AW) for preparation of documents (D2’s skeleton submissions). However, counsel was briefed to appear on behalf of D2 at the Hearing, and skeleton submissions were the product of counsel. I am not prepared to allow any solicitors’ profit costs for such purpose.

15.In respect of item D2, D2 claimed 5 hours (KC) and 8 hours (AW) for perusal of the Summons, the supporting affirmation, P’s skeleton submissions and authorities, and skeleton submissions and list of authorities by D2’s counsel. I agree with P that the time claimed was excessive on party-and-party basis. In my view, necessary or proper costs for item D2 would be 1.5 hours (KC) and 3 hours (AW) being $5,800 x 1.5 hours + $3,200 x 3 hours = $18,300.

16.In coming to the aforesaid view, I disagree with 3 points raised by P as follows:

(a)  P claimed that certain exhibits to the supporting affirmation were pleadings in HCA 2065/2019 and HCA 227/2017 in respect of which D2 was represented by his present solicitors. As explained in paragraph 9 above, D2’s solicitors would need to consider how P deployed the pleadings in HCA 2065/2019 and HCA 227/2017 in framing his claim in the present action, and it did not help to merely say D2 and his solicitors were involved in the other proceedings.

(b)  P claimed there was duplication of costs between KC and AW. In my view, it is not inappropriate for a senior fee-earner to work with a more junior fee-earner with more general work done by the latter under supervisory input by the former so that costs could be reasonably contained. But this meant that both KC and AW would need to peruse the relevant documents with the more junior fee-earner requiring more time.

(c)  It was said that costs claimed under this item duplicated counsel’s brief and should be written off. As explained in paragraph 13 above, item D2 concerned solicitors’ profit costs being work done by D2’s solicitors (ie perusal of counsel’s advice, skeleton submissions and authorities) as distinct from counsel’s work (ie drafting of advice and skeleton submissions).

17.In respect of item D3, D2 claimed time spent of 1 hour (KC) and 2.5 hours (AW). P claimed there was duplication of work between KC and AW, and further suggested this head of claim duplicated counsel’s brief and hence should be written off in full. I cannot accept the latter point, as explained in paragraphs 13 and 16(c) above, there was no duplication with counsel’s brief since item D3 concerned solicitors’ work (and profit costs) in preparation for attending the Hearing and not counsel’s attendance at the Hearing which costs would be included in his brief. As for the former point, I agree it would be sufficient for AW to attend the Hearing as counsel was engaged to appear on behalf of D2. Further, given the shortness of time between the service of the Summons and the Hearing, AW would not have to spend significant effect to refresh his memory from review of the papers for the Hearing. I allow 0.5 hours for AW in the sum of $1,600 for item D3.

18.In respect of item D4, D2 claimed 5 hours for each of KC and AW. I agree with P that under party-and-party assessment it would not be necessary or proper for 2 professional fee-earners to attend the Hearing when counsel was briefed to appear on behalf of D2. The total hearing time was from 9:53am to 12:22pm and from 2:58pm to 3:37pm, ie about 3.5 hours. I therefore allow 3.5 hours for AW being $3,200 x 3.5 hours = $11,200.

19.In respect of items E1 and E2, D2 claimed for costs of advice on the Summons by senior counsel ($18,000) and junior counsel’s brief for attending the Hearing ($85,000). P claimed there was no certificate for two counsel so senior counsel’s fees for rendering advice should be rejected altogether, and further claimed that counsel’s brief was excessive. 

20.I do not believe the issue of certificate for two counsel came into the picture at all. The work done by senior counsel and junior counsel did not overlap. In respect of item E1, the true question was whether senior counsel ought to be engaged to render advice. In my view, reasonable notional counsel should be junior counsel, and I am satisfied counsel engaged to appear on behalf of D2 at the Hearing was of sufficient seniority and experience to render appropriate advice. In such circumstances, I would allow $9,000 for item E1. Given that I have allowed fees for counsel to render advice under item E1, this should be taken into account in considering the quantum for item E2 given the shortness of time up to the Hearing. I consider that reasonable brief fee for notional counsel under item E2 would be $70,000.

21.In coming to the above view, I have taken into account all the circumstances, and adopted a broad brush approach in considering the scope of the Summons, the skeleton submissions, what transpired at the Hearing, the involvement of counsel and the matters noted above. 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, D2’s total costs in the D2 Costs Statement are assessed at $730 (B1) + $200 (B2) + $15,100 (C1) + $10,600 (C2) + $10,600 (C3) + $0 (D1) + $18,300 (D2) + $1,600 (D3) + $11,200 (D4) + $9,000 (E1) + $70,000 (E2) = $147,330 to be paid by P.

III.  SUMMARY ASSESSMENT OF D1’S COSTS

22.As an overall objection, P disagreed with the involvement of 2 solicitors for D1 in this matter. I note FH and JCHW were respectively admitted in 2005 and 2010. In my view, involvement of such fee-earners was necessary and/or proper given that D1 did not engage counsel in the matter and that the matter demanded urgent attention and prompt action. Further, as explained in paragraph 16(b) above, it was not inappropriate for a senior fee-earner to work with a more junior fee-earner with more general work done by the latter under focused supervisory input by the former so that costs could be reasonably contained. I note there was some delegation by FH to JCHW as the former spent less time than the latter.

23.In respect of item B1, D1 sought photocopy costs of $100. Given that D1 did not lodge skeleton submissions and did not file affirmation in opposition for the Hearing, P claimed and I agree photocopy costs should be $50 for item B1.

24.In respect of item C1, D1 claimed FH and JCHW respectively spent 0.8 and 1.5 hours. I am unable to see how it could be said this ipso facto meant there were duplicated costs. The time spent on briefing the client on P’s application, confirming the litigation strategy and reporting on the outcome of the Hearing would take some time, and such work could well have been taken up by different fee-earners. On party-and-party basis, I allow 0.8 hours (FH) and 1 hour (JCHW) being $5,200 x 1.8 hours = $9,360 for item C1.

25.In respect of item C2, D1 claimed FH and JCHW respectively spent 0.4 hour and 0.8 hour on attending the other side. P again complained of duplication, and suggested that liaison with the other side was limited to 1 short letter and a brief telephone conversation. I accept the quantum claimed was excessive. I allow 0.5 hours (FH or JCHW) x $5,200 = $2,600 for item C2.

26.In respect of item D1, D1 claimed 0.6 hour (FH) and 2 hours (JWHC) were spent on this item of costs. But since no skeleton submissions or affirmation in opposition were filed, one is at a loss to understand what drafting work would require 2.6 hours. I disallow this head of claim on party-and-party basis.

27.For perusal of documents under item D2, D1 claimed time spent was 1.5 hours (FH) and 3.5 hours (JWHC). P claimed the time spent was excessive and there were duplicated costs between the 2 fee-earners. I am persuaded that both FH and JWHC would reasonably require to peruse documents to carry out solicitor’s work and proper supervisory function. But on party-and-party basis, I allow 1.5 hours (FH) and 2 hours (JCHW) being $5,200 x 3.5 hours = $18,200 for item D2.

28.As for item D3, D1 claimed 1 hour (FH) and 3.5 hours (JWHC) for preparation for the Hearing. I do not see why FH would have to prepare for the Hearing when he did not attend such Hearing. As for JWHC, he worked on this matter in the 3 days that led up to the Hearing and not much time would be required to refresh memory. Indeed, by that time he would have read the skeleton submissions of D2’s counsel, and would have realised he probably had little to add to those submissions. But I accept he was the advocate for D1 at the Hearing, and I allow 0.7 hours being $5,200 x 0.7 hours = $3,640 for item D3.

29.In respect of item D4, D1 claimed 5 hours for time spent by JCHW. Since the Hearing took about 3.5 hours, I allow $5,200 x 3.5 hours = $18,200 under item D4.

30.In coming to the above view, I have taken into account all the circumstances, and adopted a broad brush approach in considering the scope of the Summons, the skeleton submissions, what transpired at the Hearing, and the matters noted above. 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, D1’s total costs in the D1 Costs Statement are assessed at $50 (B1) + $9,360 (C1) + $2,600 (C2) + $0 (D1) + $18,200 (D2) + $3,640 (D3) + $18,200 (D4) = $52,050 to be paid by P.

Sit, Fung, Kwong & Shum, solicitors for the plaintiff

Zhong Lun Law Firm, solicitors for the 1^st defendant

DLA Piper Hong Kong, solicitors for the 2^nd defendant