Chen Ningning v. King & Wood (A Firm)

HCMP 163/2012

[2020] HKCFI 602

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 163 OF 2012

____________

_____________

______________

Before: Hon K Yeung J in Chambers

Date of Hearing: 9 August 2018

Date of Decision: 16 April 2020

______________

DECISION

______________

A Introduction

1.The defendant (“K&W”) is a firm of solicitors.  The plaintiff (“Chen”) used to be one of its clients.  Disputes have developed between them in respect of 4 Bills of Costs which K&W had issued to her (collectively the “4 Bills of Costs”).  A set of complicated and expensive proceedings ensued.  All substantive issues have been resolved.  What remain is a set of 3 costs orders (the “3 Costs Orders”) which Master Lai (the “Master”) made in his decision handed down on 7 February 2018 (the “Concluding Summons Decision”).  Those orders relate to:

(a)  the costs of the trial of the Preliminary Issues (the “Preliminary Issues” and the “Trial of the Preliminary Issues” as appropriate);

(b)  the costs of the main proceedings; and

(c)  the costs of the hearing on 14 December 2016 (the “14/12 Hearing”) in respect of Chen’s summons dated 1 April 2016 (the “Concluding Summons”).

2.This is Chen’s appeal against the 3 Costs Orders.  The main issue is whether, as Chen is seeking to say, this case falls within those limited circumstances where appellate intervention is called for, so that this Court should exercise the discretion vested in this Court afresh.

B.     The background facts

3.The Master has set out in detail the relevant background facts in the Concluding Summons Decision [1]. I refer to them without repeating them in full.  I set out the important events as follows.

4.Chen as said was a client of K&W.  She signed the retainer letter (the “Retainer”) in about September 2010.  When she did that, she dealt with a consultant of K&W called Ms Cindy Wong (“Ms Wong” or “Wong” as appropriate). 

5.Professional work was then undertaken by K&W for Chen.  We are not concerned with details of those work.  What we are concerned with are the 4 Bills of Costs that were subsequently issued in respect of those work.

6.The first of the 4 Bills of Costs was dated 29 November 2010 (the “1^st Bill”).  It was for profits costs and disbursements over the period from 28 September 2010 to 6 November 2010 in the respective total sums of HK$3,900,000 and HK$1,358,373.

7.The second one was dated 29 April 2011 (the “2^nd Bill”). It was for disbursements incurred between 7 November 2010 and 28 April 2011 in the total sum of HK$5,129,973.50.

8.The 1^st and 2^nd Bills were settled through deductions from the monies Chen had paid on account. 

9.The third one was dated 16 May 2011 (the “3^rd Bill”). It bore the heading “Bill of costs & disbursements (Final)”.  It was for professional charges (described as “Agreed Costs”) in one lump sum of HK$2,200,000, and disbursements in the total sum of HK$1,438,304.  It covered the period from 7 November 2010 to 16 May 2011.  Net of the monies on account, the sum billed thereby was HK$1,786,277.50.

10.Round about mid‑May 2011, Chen instructed another firm of solicitors, namely Tang & So (“T&S”) to act for her in place of K&W.

11.On 18 May 2011, Wong left the employment of K&W.

12.The 3^rd Bill was settled on 22 June 2011.  It was Chen’s case that she did so relying on the representation made by or on behalf of K&W (principally via the heading of the 3^rd Bill) that the 3^rd Bill would be the final bill.

13.K&W’s case was that the 3^rd Bill was in fact not the final bill.  In §§18(5) and (6) of its Points of Defence and Counterclaim[2], K&W averred that:

“ (5) Without the knowledge or approval of [K&W], and in breach of her said duties to [K&W], Ms. Wong in the 3^rd Bill purported to write off HK$7,959,975 from the Billable Costs (‘the Undercharged Fees’) and purported to charge [Chen] the mere sum of HK$2,200,000 as the alleged ‘Agreed Costs’ in relation to [K&W’s] professional services rendered during the Subject Period.

(6)     By reason of the matters aforesaid, [K&W] issued a   draft note of fees to [Chen], in the form of Bill No.B2011E0098(A) dated 14 June 2011, seeking to charge for the Undercharged Fees (‘Draft Note of Fees’), together with a letter dated 17 June 2011 explaining to [Chen] the background giving rise to the Draft Note of Fees and [K&W’s] intention to issue the Draft Note of Fees to [Chen].”

14.The letter dated 17 June 2011 (the “17/6/2011 Letter”) mentioned in §18(6) of the Points of Defence and Counterclaim contained inter alia the following 2 paragraphs:

“ In concluding the professional relationship between this firm and yourself, our former employee [Wong] issued [the 3^rd Bill] to you in the sum of HK$1,768,277.50 on 16 May 2011, her last day of employment with this firm. We enclose a copy of that fee note and also a copy of the record of time actually spent on the matter which reveals a shortfall between the bill tendered and fees actually incurred in the sum of approximately HK$8 million.

[Wong] was a Consultant of this firm and as such was an employee, and not a partner.  Whilst she has had the day to day conduct of the action, supervision of the matter and responsibility for administrative issues such as billing ultimately rested with our partners.  It is therefore disappointing to note that she has, without consultation with or the approval of the firm’s Management, purported to write off approximately 80% of all time recorded in assisting you in this matter.  Having reviewed this matter, we are firmly of the view that as a consequence of [Wong’s] unauthorized acts, the bill that has been tendered to you accounts for less than one quarter of the works actually undertaken on your behalf.  Whilst we regret any inconvenience this may cause, you will appreciate that it would be inappropriate to write off such a disproportionately large percentage of our fees.  We therefore enclose a draft note of our fees for acting on your behalf, which we trust you will find to be in order.”

15.It was Chen’s stance that the 17/6/2011 Letter was backdated [3].

16.In a letter dated 21 November 2011 from T&S to K&W (the “21/11/2011 Letter”), T&S said that:

“ We note your stance that you do not accept that our client’s payments in the total sum of HK$14,000,000 odd represent a full and final settlement of your costs and disbursements for the whole engagement of your firm.

We write to put you on notice that according to Section 67(1) of the Legal Practitioners Ordinance (“LPO”), our client may exercise her right to proceed with a court taxation of (i) [the 1^st Bill], (ii) [the 2^nd Bill], (iii) [the 3^rd Bill], and (iv) the Further Bill, in order to safeguard her rights and interests.

…

Nevertheless, if you confirm that upon the issue of your [3^rd Bill] (followed by our client’s full payment on 22 June 2011), there is already full and final settlement of all your costs and disbursements for the said engagement, then we will advise our client that the taxation of your said bills is not necessary.”

17.Chen’s case was that she on 29 December 2011 received the 4^th Bill from K&W together with the 17/6/2011 Letter.  The 4^th Bill was dated 17 June 2011.  It was for balance of professional charges over the same period covered by the 3^rd Bill, in the sum of HK$7,959,975 (HK$10,159,975 less the sum of HK$2,200,000 already billed under the 3^rd Bill).  K&W’s position was that that represented the Undercharged Fees which Wong had written off without authority.

18.On 27 January 2012, Chen took out the Originating Summons herein. Its heading refers to s 67 of the Legal Practitioners Ordinance Cap 159 (“LPO”) and Order 106 rule 2.  Chen sought thereby an order that the 4 Bills of Costs “be referred to the Taxing Master for taxation”, and that “[the] Taxing Master do tax the [4] Bills of Costs”.  No order was sought for the 4^th Bill to be struck out.

19.The matter was before Registrar Lung on 28 February 2012.  By order dated the same date, the learned Registrar ordered, inter alia,discovery, preparation of the bill of costs by K&W, and filing of objections by Chen.

20.K&W’s first Taxation Bill was filed on 25 September 2012.

21.On 13 November 2012, Chen filed her List of Objections.  It is a document of some 400 pages.

22.Also on 13 November 2012, Chen took out a Summons (the “PI Summons”) seeking a preliminary hearing to try, before a judge or a Master, the hourly rates of the fee earners and whether any duplication of work be allowed in the absence of any express consent from Chen.  As will be seen later, the issues framed in the PI Summons were only the first version of the Preliminary Issues subsequently tried.

23.On 22 January 2013, the PI Summons was ordered to be adjourned for substantive argument before a judge.

24.On 23 May 2013, parties agreed upon the second version of the preliminary issues to be tried.  That was the subject matter of a Consent Summons dated 23 May 2013 (the “23/5/13 Consent Summons”).

25.On 5 June 2013, the PI Summons was before Deputy Judge Marlene Ng (as she then was).  Having heard parties, the learned Deputy Judge ordered K&W’s Taxation Bill to be revised, and gave directions for the filing of pleadings for the Trial of the Preliminary Issues.

26.On 3 July 2013, K&W filed its Revised Taxation Bill.  Chen subsequently took out a summons to strike out the same, details of which we are not concerned with.

27.On 26 August 2013, the matter came before Deputy Judge Marlene Ng again.  The learned Deputy Judge in the course of the hearing gave some observations on the nature of the proceedings before her.  I will return to those observations later.  Having heard parties, the learned Deputy Judge gave certain directions and referred the matter to the Taxing Master.     

28.Between October 2013 and January 2014, pleadings were filed. 

29.In her Points of Claim:

(a)  Chen raised issues relating to Wong’s hourly rate,

(b)  Chen pleaded to the existence of certain pre‑retainer agreement which she said she had reached with Wong (the “Pre-Retainer Agreement”) and 3 sets of representations that she said had been made to her (the “1^st, 2^nd and 3^rd Sets of Representations” as appropriate).  As part of the 3^rd Set of Representations, Chen averred that K&W had made clear and unequivocal representations to her that the 3^rd Bill was the final bill to be issued by K&W to her and that she would not be required to pay any further costs in respect of the professional work K&W had undertaken for her.

(c)  She sought inter alia the following relief:

“ (1) A declaration that

(a) the Pre-retainer Agreement and the 2^nd Set of Representations were made between [Chen] and Ms Wong;

(b) the Pre-retainer Agreement and the 2^nd Set of Representations are binding on [K&W];

(c) [Chen] is entitled to rely on the Pre‑retainer Agreement and the 2^nd Set of Representations in these taxation proceedings;

(2) The [Retainer], or alternatively, Ms Wong’s hourly rate of HK$7,500 as set out in the [Retainer], is unenforceable against [Chen];

(3) The 4^th Bill should be struck out;

(4) The 1^st to 3^rd Bills (or as the case may be, the 1^st to 4^th Bills) should be taxed on the basis that Ms Wong’s hourly rate was HK$5,200 or such other rate as the Court deems appropriate and reasonable;

…”

30.I have set out above the relevant parts of K&W’s Points of Defence and Counterclaim in which it denied that Wong had the authority to write off the Undercharged Fees.  It further pleaded:

(a)  at §29 of its Points of Defence that:

“ (1) Whilst Ms. Wong had no actual, apparent or ostensible authority to agree with [Chen] on behalf of [K&W] on matters relating to costs at variance with the terms of the [Retainer], Ms. Wong had actual authority to agree with [Chen] on costs as per the terms of the [Retainer].”

(b)  at §43 of the Points of Counterclaim, that:

“ If (which is denied) [Chen] is entitled to a declaration that the 4^th Bill should be struck out such that the 3^rd Bill becomes the final bill issued by [K&W] to [Chen] in relation to the PSG Matter, [K&W] will accordingly seek a declaration that [Chen] is not entitled to tax the 1^st, 2^nd and 3^rd Bills in these proceedings.”

(c)  at §(2) of the prayer, K&W sought:

“ In the event of the Court declaring that the 4^th Bill is liable to be struck out, a declaration that [Chen] is not entitled to tax the 1^st, 2^nd and 3^rd Bills in these proceedings.”

31.In her Points of Defence to Counterclaim, at §28, Chen pleaded that:

“ Paragraph 43 [of the Points of Counterclaim] is denied. By reason of the matters stated above, [K&W] is not entitled to seek any of the relief sought in the Counterclaim.”

32.On 4 April 2014, parties agreed upon the third version of the preliminary issues.  Another Consent Summons (the “4/4/14 Consent Summons”) was filed.

33.Ultimately on 10 April 2014, the preliminary issues became finalized (and became what I referred to as the Preliminary Issues in §2 above).  They were recorded in the Order of Master Ho dated 10 April 2014 in the following terms (“Issue (1) to (6)” respectively):

“ (a) Whether [K&W] is entitled to rely on the hourly rates as set out in the [Retainer] dated 6 October 2010;

(b) If the answer to the above question is ‘no’, (i) whether the 1^st to 3^rd Bills (or as the case may be, the 1^st to 4^th Bills) should be taxed on the basis that the hourly rate of [Wong] should be HK$5,200 or such other rate as the Court deems appropriate and reasonable and (ii) what should be the appropriate hourly rates of the other fee earners of [K&W];

(c) Whether the Pre‑retainer Agreement and the 2^nd Set of Representations … were made between [Chen] and [Wong];

(d) If the answer to the preceding question is ‘yes’, whether the Pre‑retainer Agreement and the 2^nd Set of Representations are binding on [K&W], and/or [Chen] is entitled to rely on the Pre‑retainer Agreement and the 2^nd Set of Representations in these taxation proceedings;

(e) Whether [K&W] is entitled to issue the 4^th Bill or whether the 4^th Bill should be struck out; and

(f) If the 4^th Bill should be struck out, whether [Chen] is entitled to tax the 1^st, 2^nd and 3^rd Bills in these taxation proceedings.”

34.On 5 November 2017, the Trial of the Preliminary Issues commenced before the Master.  Ultimately, the Trial took 5 days over the period between November 2017 and April 2015.

35.I have summarized above K&W’s stance that Wong did not have authority to agree with Chen on matters relating to costs at variance with the terms of the Retainer.  On 24 March 2015, during the 4^th day of the Trial, K&W made a concession in that regard (the “Concession”).  As recorded by the Master in §119 of his Decision dated 21 March 2016 on the Preliminary Issues (the “PI Decision”):

“ [K&W] conceded for the purpose of these proceedings that Ms Wong had authority to bind [K&W] on fees agreement with [Chen].”

36.On 21 March 2016, the Master handed down the PI Decision.  It comprises 79 pages with 207 paragraphs.  His answers to the 6 Preliminary Issues were as follows:

(a)  Issue (1) — yes;

(b)  Issue (2) — not applicable;

(c)  Issue (3) — no;

(d)  Issue (4) — not applicable;

(e)  Issue (5) — K&W was not entitled to issue the 4^th Bill and the 4^th Bill should be struck out;

(f)  Issue (6) — No

37.On the question of costs, the Master made an order nisi (the “PI Costs Order Nisi”) that Chen should bear 50% of K&W’s costs for the Trial of the Preliminary Issues.  His main reasons are:

“ 28. … The existence or non‑existence of the Pre‑retainer Agreement and/or the 2^nd Set of Representations is the main area of dispute between the parties for the Preliminary Issues …

…

204. Out of the six Preliminary Issues [Chen] only succeeded on Issue 5 and [K&W] had conceded on Issue 4. I am of the view that [Chen] shall bear part of [K&W’s] costs for the application relating to determination of the Preliminary Issues. [Chen] is not liable to [K&W’s] costs for Issues 4 and 5. Instead, [Chen] is entitled to recover costs on these two Issues from [K&W]. After taking into consideration the time spent on Issues 4 and 5 at the hearing, I am of the view that a fair costs order is for [Chen] to bear 50% of [K&W’s] costs for the application relating to determination of the Preliminary Issues. As the application involved some legal issues which warrant involvement of counsel and both parties are represented by two counsel at the hearing, I grant counsel certificate for two counsel.

205. I make a costs order nisi that [Chen] to pay 50% of [K&W] costs for the application relating to determination of the Preliminary Issues, including costs previously reserved in relation to the application, with certificate for two counsel, to be taxed if not agreed.

206. The aforesaid costs order nisi shall become absolute after 14 days from the date of this decision unless application to vary the same is received from either party within this 14‑day period.

207.  In accordance with my above rulings, the remaining issues for these proceedings are having the 4^th Bill formally struck out and determination of costs for these proceedings.  The parties shall take out appropriate applications to deal with these remaining issues and to conclude these proceedings.”

38.As directed by the Master at §207 of the PI Decision, Chen took out the Concluding Summons.  Chen sought thereby:

“ 1. the [PI Costs Order Nisi] be varied so that costs of and incidental to the trial of the Preliminary Issues be in the cause of these taxation proceedings;

2. the taxation proceedings herein be concluded as follows:

(1) the 1^st, 2^nd and 3^rd Bills … are allowed;

(2) the whole of the 4^th Bill … is struck out and disallowed;

(3) costs of the taxation proceedings, including costs of and incidental to the trail of the Preliminary Issues with certificate for two counsel and costs previously reserved in relation to the taxation proceedings, be to [Chen] to be taxed if not agreed;

…

4.  the costs of this application be to [Chen].”

39.The Concluding Summons came before the Master on 14 December 2016. In the Concluding Summons Decision, which comprises 55 pages and 169 paragraphs, the Master made the following relevant rulings:

(a)  As (i) the 4^th Bill had been ordered to be struck out, (ii) the 1^st to 3^rd Bills had been paid, and (iii) there being no special circumstances justifying an order for their taxation, the Master did not find it inappropriate to allow the 1^st to 3^rd Bills.  Nor in his view would an order dismissing the Originating Summons accurately reflect the rulings on the Preliminary Issues.  In the end, the Master ordered that the application to tax the 1^st, 2^nd and 3^rd Bills be disallowed; and

(b)  The Master ordered the 4^th Bill be struck out, but did not consider it necessary to disallow the 4^th Bill as there had been no taxation of the 4^th Bill.

40.In respect of costs, he made the 3 Costs Orders:

(a)  In respect of Chen’s application to vary the PI Costs Order Nisi, the Master dismissed the same:

(i)  The Master considered Surrey Heath Borough Council v Lovell Construction Ltd and Anor [1990] 48 BLR 108.  He appreciated that he might make the costs of the trial of the Preliminary Issues in the cause, or to reserve them, or might award the costs, or a proportion of the costs, to one or other party[4];

(ii)  The Master found it inappropriate to reserve the costs as there was not going to be a trial[5];

(iii)  Nor did he find it appropriate to make the costs in the cause of the proceedings, because in his view, the Preliminary Issues raised were distinct and separate from the “cause” or “event” of the main proceedings; 

(iv)  The Master then proceeded to analyze the 6 Preliminary Issues.  He observed in the Concluding Summons Decision that:

“ 112. … [Chen] failed on four Issues (ie Issues 1, 2, 3 and 6). As I have pointed out in para 28 of the [PI] Decision that: ‘The existence or non‑existence of the Pre‑retainer Agreement and/or the 2^nd Set of Representations is the main area of dispute between the parties for the Preliminary Issues.’ The aforesaid failed Issues on the part of [Chen] had occupied the bulk of the time of the trial of the Preliminary Issues and the preparation for that trial including the preparation of pleadings and witness statements.

113. [Chen] tried to tie all the Preliminary Issues to the issue relating to Ms Wong’s authority …

114. With respect, I disagree. I am of the view that Issues 1 to 4 were raised not because [K&W] denied that Ms Wong had authority to agree with [Chen] on fees at variance with the [Retainer] but were attempts of [Chen] trying to gain a more advantageous position in the taxation by reopen the terms of the [Retainer] which [Chen] failed at the trial of the Preliminary Issues.

115. Issue 6 clearly had nothing to do with the issue on Ms Wong’s authority. It also had nothing to do with [K&W] issuing the 4^th Bill. It was put forward by [Chen] on the basis that the 4^th Bill would be struck out. Issue 6 was an attempt of [Chen] to clawback part of the fees previously paid by her to [K&W] by reopen the 1^st, 2^nd and 3^rd Bills which [Chen] again failed at the trial of the Preliminary Issues.

…

117. Even if [K&W] had not taken issue on the authority of Ms Wong, I do not see that [Chen] would not pursue the Preliminary Issues which were for the purpose of reopen the terms of the [Retainer] to gain an advantageous position in the taxation or for the purpose of clawback previous payments as aforesaid. In fact, Mr Dawes, counsel for [Chen] at the trial of Preliminary Issues, in answering a point raised by the court expressly confirmed that [Chen] would still seek taxation of the 1^st, 2^nd and 3^rd Bills even if the 4^th Bill was struck out. This is not a case where the issue on which [Chen] would not have been litigated if [K&W] had conceded the issue on which [Chen] won.

…

120. These proceedings are brought to a conclusion not only because [Chen] succeeded on Issue 5 and [K&W] conceded on Issue 4 but also because [Chen] failed on Issue 6. Taking into account the fact that [Chen] had also failed on Issues 1 to 3, if a single party has to be identified as the overall successful party in the trial of the Preliminary Issues, I am of the view that [K&W] is more successful than [Chen].

121. In Summit Property Ltd v Pitmans [2001] EWCA Civ 2020, Chadwick LJ explained issue-based approach to costs as follows:

‘ An issue based approach requires a judge to consider, issue by issue in relation to those issues to which that approach is to be applied, where the costs on each distinct or discrete issue should fall. If, in relation to any issue in the case before it the court considers that it should adopt an issue based approach to costs, the court must ask itself which party has been successful on that issue. Then, if the costs are to follow the event on that issue, the party who has been unsuccessful on that issue must expect to pay the cost of that issue to the party who has succeeded on that issue. That is the effect of applying the general principle on an issue by issue based approach to costs.’ (Para 27 of the judgment)

122. Adopting the aforesaid approach and engaging principle 3 of Re Elgindata (supra), I have deprived part of [K&W’s] costs for the trial of the Preliminary Issues and order [Chen] to pay 50% of [K&W’s] costs for the trial of the Preliminary Issues.

123.  I maintain the view that this is a fair costs order for the trial of the Preliminary Issues.  I make the Costs Order Nisi absolute.”

(b)  In respect of the costs of the main proceedings, the Master ordered that there be no order as to costs:

(i)  The Master considered the 1/6 Rule [6] referred to him.  He said that[7]:

“ … Section 67(5) of the LPO refers to ‘the costs of the taxation shall be paid according to the event of the taxation’. There is no taxation in these proceedings. I agree with Mr Wong that section 67(5) of the LPO is simply not engaged.”

(ii)  The Master noted that in the Originating Summons, Chen did not seek any declaration to any effect that K&W was not entitled to issue the 4^th Bill.  Nor did she seek to strike out the 4^th Bill.  Chen sought instead taxation of the Bills.  As none of the Bills would be taxed, Chen’s application by the Originating Summons had strictly speaking failed [8];

(iii)  He on the other hand noted that the initial purpose of Chen in commencing these proceedings was to stop K&W from charging her the additional costs under the 4^th Bill.  As she had successfully achieved that, she was to that extent the successful party[9];

(iv)  The Master then made the important observations that that initial purpose of Chen had changed:

“ 147. However, [Chen] did not stop at there. [Chen] wished to clawback part of the payments which she had previously paid to [K&W] under the 1^st, 2^nd and 3^rd Bills. In the originating summons [Chen] also seeks an order for [K&W] to refund to the [Chen] such sums of money as may on such taxation appeared to have been overpaid. [Chen] asserted that she had overpaid [K&W] and sought taxation of the 1^st, 2^nd and 3^rd Bills in these proceedings with a view to clawback part of her previous payments. To such extent, [Chen] fails.

…

153. Although [Chen] alleged that if [K&W] had not issued the 4^th Bill, she would not have commenced these proceedings. However, as I have pointed out in para 92 above, [Chen] did not seek to strike out the 4^th Bill or to declare that [K&W] was not entitled to issue the 4^th Bill. Instead, [Chen] sought taxation of all the Bills (including the 2^nd Bill) and went further to try to seek taxation of the 1^st, 2^nd and 3^rd Bills even after the 4^th Bill had been struck out. [Chen] contended that when she commenced these proceedings, she was not aware of her right to claim that [K&W] was estopped from issuing the 4^th Bill. I had rejected such contention of [Chen]. (See para 123 of the [PI] Decision).

…

155. … I note that in the [PI] Decision, I expressed the view that [Chen] commenced these proceedings as a logical response to [K&W’s] issuing of the 4^th Bill and denial of Ms Wong’s authority to charge fees at variance with the [Retainer] (see para 128 of the [PI] Decision[10]). However, [Chen] took the matter further. In the course of these proceedings, [Chen] changed her stance with a view to get the best of both worlds but failed. I do not see this as a reasonable way to tackle the dispute as to whether [K&W] was entitled to issue the 4^th Bill or whether Ms Wong had the authority to deal with costs charged to [Chen] at variance with the [Retainer] .

…

158. If [K&W] did not issue the 4^th Bill and dispute the authority of Ms Wong to agree fees with [Chen], [Chen] might not have commenced these proceedings.

159. If [Chen] had adhered to her pre‑action position of only disputing [K&W’s] entitlement to issue the 4^th Bill in these proceedings whether as the only claim or as an alternative claim, the court will certainly deal with this fundamental issue before directing the parties to incur the very substantial costs to prepare the Taxation Bill, the Revised Bill and the List of Objections.

…

161. [Chen’s] change of stance to try to clawback part of her previous payments paid to [K&W] and [K&W’s] taking advantages of this change of stance of [Chen] by agreeing to a taxation of all the Bills with a view to legitimatize the 4^th Bill have contributed equally to causing the substantial costs for preparing the Taxation Bill and the List of Objections.

162.  In view of above, I find that there is no overall successful party in these proceedings.  I take into account the matters stated in Order 62, rule 5(1)(e) and (f) of the RHC, ie the conduct of all parties and whether a party has succeeded on part of his case and the matters stated in Order 62, rule 5(2) of the RHC especially the matters stated in sub‑paragraphs (a), (b) and (d).  I am of the view that a fair costs order for these proceedings is no order as to costs.  I so order.”

(c)  In respect of the Concluding Summons, the Master made a costs order nisi (subsequently became absolute) that Chen shall pay 30% of K&W’s costs for the same (including costs previously reserved in respect of the same) with certificate for two counsel:

(i)  The Master noted that both parties were successful in certain aspects but failed on certain others;

(ii)  At §164 of the Concluding Summons Decision, the Master stated that:

“ … Doing my best to make a rough apportionment of the costs incurred for various matters raised in the [Concluding] Summons and to assess the setting‑off effect of the aforesaid costs orders, I am of the view that [Chen] shall pay 30% of [K&W’s] costs for the [Concluding] Summons including costs previously reserved in respect of the [Concluding] Summons.”

41.It is against the set of 3 Costs Orders which Chen is now seeking to appeal.

C.     Preliminary objection on jurisdiction

42.Mr Wong, leading counsel for K&W, takes one preliminary objection on the jurisdiction.  He submits that since Chen is appealing from the Master’s costs orders made on his determination of matters pursuant to Order 36, rule 1, the present appeal should lie to the Court of Appeal by virtue of Order 58, rule 2.  He submits consequentially that this Court has no jurisdiction to hear the same.

43.Mr Wong’s preliminary objection is premised upon the proposition that the Trial of the Preliminary Issues was conducted pursuant to Order 36, rule 1.

44.I note however that:

(a)  The main proceedings were commenced pursuant to s 67 of the LPO — see the heading of the Originating Summons;

(b)  Taxing masters have extensive powers under Order 62, rules 12 to 14.  In particular, taxing masters have powers to give directions “for the just and expeditious disposal of the taxation of a bill of costs”[11] and as to “the steps to be taken or things to be done at any stage of the taxation proceedings”[12], “examine any witness”[13] and “direct the production of any document which may be relevant in connection with those proceedings”[14].  The undertaking and conduct of the Trial of the Preliminary Issues by the Master were well within by those powers.

(c)  The PI Summons was taken out pursuant to Order 62, rules 13A and 14 and Order 1A.  Order 36, rule 1 was not mentioned;

(d)  During the hearing on 26 August 2013 before Marlene Ng J, the learned Deputy Judge made specific reference to s 67 of the LPO and the powers of taxing masters under Order 62, that:

“ Well, the long and short of it is that this is a solicitor/own client taxation. Under section 67, which I have referred to on the last occasion, is that the court can make an order to tax the bill. So I think, apparently, Registrar Lung has made that order and therefore has also consequently asked for the taxation bill to be prepared.[15]

So once an order for taxation is made, it is the taxation proceedings that are paramount and nothing else can really be done on the bill. So then we come back to Order 62. Order 62 rule 12 …

Then Rule 14: [rule 14(c) and (d) read]. So it is anticipated that there might be dispute of facts , or trial for taxation purpose.”[16]

(e)  The exact Preliminary Issues contemplated to be tried evolved over the period between 13 November 2012 and 4 April 2014.  Two consent summons had been filed in that regard (ie the 23/5/13 Consent Summons and 4/4/14 Consent Summons mentioned above).  On both, Order 62, rules 13A and 14 and the inherent jurisdiction of the Court were mentioned, but not Order 36, rule 1.

45.In the circumstances, I do not accept the preposition that the Trial of the Preliminary Issues was conducted pursuant to Order 36, rule 1.  I accept the submissions of Mr Chang, leading counsel for Chen, that the Trial of the Preliminary Issues arose from taxation proceedings commenced under s 67 of the LPO, and was undertaken and conducted pursuant to powers which the Master had under Order 62.  I rule that this Court has jurisdiction to hear the present appeal.

D.     Applicable law

46.The law is not in serious dispute.  I state them as follows, which I will apply.

D.1.     Scheme of Taxation under s 67 of the LPO

47.S 67 of the LPO permits a client to apply to have a bill of costs rendered to him by his solicitor taxed.

48.Under s 67(1), if an application for taxation is made within 1 month of the delivery of the bill, the Court shall order that bill be taxed.  In his submissions, Mr Chang calls this the “1^st Regime taxation”. I will adopt the same term.

49.Under s 67(2), if no application is made within 1 month, the Court still may, upon terms, order taxation.

50.The operation of s 67(2) is subject to the provisos contained in ss 67(2)(i) and (ii).  S 67(2)(i) stipulates that if 12 months have expired from the delivery of the bill, or if the bill has been paid, no order shall be made on the application of the client except in special circumstances.  Mr Chang calls this the “3^rd Regime taxation”.  Just to complete the picture, s 67(2)(ii) provides that if the bill has been paid, but where the application is made after the expiration of 12 months from the date of payment, no order under s 67(2) shall be made.

51.Section 67(5) relates to the costs of the taxation.  It stipulates, inter alia, that:

“ Unless—

(a) the order for taxation was made on the application of the solicitor or the foreign lawyer, and the party chargeable does not attend the taxation; or

(b) the order for taxation otherwise provides,

the costs of the taxation shall be paid according to the event of the taxation, that is to say, if one-sixth or more of the amount of the bill is taxed off, the solicitor or the foreign lawyer, shall pay the costs, but otherwise the party chargeable shall pay the costs …”

I will call this the “1/6 Rule”.

D.2.     Discretion on costs — certain guiding principles

52.Whilst costs are in the discretion of the Court, there are both statutory and common law guidance on how the discretion should be exercised. Some of those guidelines are relevant to this appeal.

53.Order 62, rule 3 stipulates that:

“ (2) If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

54.Order 62, rule 5(1) sets out certain special matters which the Court shall to such extent, if any, as may be appropriate in the circumstances, take into account.  They include:

“ (1) …

(aa) the underlying objectives set out in Order 1A, rule 1;

…

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful;

…

(2) For the purpose of paragraph (1)(e), the conduct of the parties includes—

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

55.In In re Elgindata Ltd (No.2) [1992] 1 WLR 1207, Nourse LJ observed at p 1214 that:

“ … [The principles which ought to have been applied] … do not in their entirety depend on the express recognition or provision of the rules. In part they depend on established practice or implication from the rules. The principles are these. (i) Costs are in the discretion of the court. (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs. Of these principles the first, second and fourth are expressly recognised or provided for by [the rules] respectively. The third depends on well established practice. Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party’s costs. …”

56.The third of those so‑called Elgindata Principles has subsequently been modified.  In AEI Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, Lord Woolf M.R. at 1523 observed that:

“ The ‘well established practice’ on which Nourse L.J. based his third principle is, as I have already indicated, less generally followed than it has been in the past and it is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed. …”

57.However, despite the qualification, it remains important to draw a distinction between depriving a successful party of his costs on the one hand, and ordering him to pay the costs of the losing parties on the other.  For the latter, impropriety or unreasonableness on the part of the successful party has to be demonstrated.  As explained by Lam V‑P in Chan Shun Kei v Hong Kong Construction (Hong Kong) Ltd,CACV 192/2014 (unrep, 7 March 2016), at §36:

“ We accept there are cases where over and above being deprived of his own costs, a successful Plaintiff could be ordered to pay a specific portion of the costs of the Defendant. However, there is difference in principle between depriving a successful plaintiff some of his costs due to the outcome on some issues and ordering such plaintiff to pay the costs of the defendant on such issues. As Longmore LJ observed, in cases of this nature, the most important thing is to identify the party who has to pay money to the other party. It is only appropriate to order a successful plaintiff to pay the costs of the unsuccessful defendant where the plaintiff has to come to court to get the relief in a case where one can say the successful party has raised issues or made allegations improperly or unreasonably, viz a case falling within principle (iv) in the often cited judgment of Nourse LJ in In re Elgindata (No 2)…”

58.Relevant to the above is the circumstances in which the court may adopt an “issue‑based” approach when considering costs.  As explained by J Lam J (as he then was) in Hong Kong Kam Lan Koon Ltd & another v Realray Investment Ltd & others, HCA 15824/1999 (unrep, 14 October 2005), applying Peter Seepersad v Theophilus Persad, Capital Insurance Limited [2004] UKPC 19:

“ 13. I also bear in mind what was said at Para 24 of the judgment of Lord Carswell in Seepersad v Persad [2004] UKPC 19,

‘ The general rule which should be observed unless there is sufficient reason to the contrary is that costs will follow the event. Were the party who has been successful overall has failed on one or more issues, particularly where consideration of those issues has occupied a material amount of hearing time or otherwise led to the incurring of significant expense, the court may in its discretion order a reduction in the award of costs to him, either by a separate assessment of costs attributable to that issue or, as is now preferred, making a percentage reduction in the award of costs … The Court of Appeal’s order was predicated upon the proposition that the assessment of damages for pain and suffering and loss of amenity was a separate issue from the assessment of the other heads of damage. This was an incorrect assumption. An issue for these purposes must be something so distinct and separate in itself that the decision of it constitutes as ‘event’. The ‘event’ was the quantum of damages to which the appellant was entitled and he succeeded on his appeal in obtaining a higher award than the judge had given … Their Lordships accordingly consider that the Court of Appeal had insufficient ground for reducing the award of costs made to the appellant and that he should have been awarded full costs in that court …’ (my emphasis)

14.  One therefore starts with the premise that a successful party is prima facie entitled to the full costs of the action.  The burden is on the losing party to show that there is good reason to depart from the general rule.  The exercise is a matter of discretion.  It would be wrong to read Elgindata as laying down that as a rule, the court must (instead of may) deprive a successful litigant of costs for his failure on a discrete issue which caused a significant increase in costs.  The court has to exercise its discretion to achieve a just result having regard to the circumstances of the case.”

D.3.     Appeal against Master costs order — applicable legal principles

59.In Hoddle v CCF Construction Ltd [1992] 2 All ER 550, Morland J observed at 550h‑551b observed that:

“ In my judgment it would be highly undesirable as a matter of general principle that a judge in the position that I am in today should intervene and make different orders as to costs from that made by a master, unless it can be shown by the appellant that the master demonstrably erred in the exercise of his discretion in the order that he made. If it can be shown that the master took into account matters that he should not have taken into account or failed to take into account matters that he should have taken into account, in those circumstances the judge in chambers would be entitled to vary the order made by the master, but in my judgment it would not be in the interests of justice if judges in chambers entered into detailed examination of all the matters that were before the master in order to decide whether they would have come to the same decision as the master. Generally speaking, in my judgment, judges in chambers should not allow appeals against costs orders by masters, unless it can be shown that the order made was unreasonable or erred in law or, as I have indicated, either failed to take into account proper matters or took into account matters that should not have been taken into account.”

60.Hoddle was applied in Man Fong Hang v Man Ping Nam and Ors, HCA 7935/1998 (unrep, 26 September 2002) per Deputy Judge A Cheung (as he then was) at §16.

61.In Gee Fung Yin v Gee Fung Kuen,HCA 1940/2015 (unrep, 28 April 2017), Wilson Chan J observed at §18 that it is not the correct approach on an appeal on costs to re‑run the arguments made before the Master.

62.In Chan Shun Kei v Hong Kong Construction (Hong Kong) Ltd,CACV 192/2014 (unrep, 7 March 2016), Lam V‑P observed in §22 that:

“ It must be stated at the outset that this court should acknowledge that costs is very much a matter of discretion of the judge and we should be circumspect in interfering with the same. The established approach is that this court will only interfere when it is satisfied that the decision of the judge is either wrong in principle or plainly wrong, see Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419. The rationale for this approach was explained by Woo JA (as he then was) in Ho Shu Kwong. The trial judge is the best person to exercise the discretion on costs because he is most familiar with the conduct of the case at the trial and the impact of the success and failure on each issue canvassed before him. In a way it is like an appeal against findings of fact. As explained in numerous judgments (see e.g. China Gold Finance Ltd v CIL Holdings Ltd CACV 11 of 2015, 27 November 2015), an appellate court is institutionally disadvantaged from re-assessing a decision of this nature as if it is hearing the matter in the first instance. Thus, this court should examine whether a primary judge committed any palpable error in the exercise of the discretion on costs. In the absence of such an error, the mere fact that the appellate judges might have exercised the discretion in a different manner is not a sufficient ground to warrant interference with the decision of the primary judge.”

63.While Chan Shun Kei was an appeal against a costs order made by a judge after trial, the circumspection explained by the Court of Appeal is in my view equally applicable to the present appeal where the Master has undertaken the Trial of the Preliminary Issues, which for all practical purposes resembles a trial. 

E.     Parties’ submissions

64.Mr Chang’s submissions may be summarized as follows.  He submits that both the 3 Costs Orders themselves and their underlying reasons are plainly and fundamentally wrong in principle and unreasonable in result.  He develops his submissions as follows:

(a)  He refers to the 21/11/2011 Letter.  He relies heavily on the observations made by the Master in §128 of the PI Decision, that:

“ … these taxation proceedings were caused by [K&W] asserting that Ms Wong had no authority to issue the 3^rd Bill as the final bill. [Chen’s] act in commencing these proceedings was logical response to such assertion.”

(b)  The main proceedings commenced by Chen via the Originating Summons were as of right 1^st Regime taxation pursuant to s 67(1) of the LPO.  The Master was “plainly wrong when he said that the LPO was not engaged”[17];

(c)  The Concession was made late, and by the time it was made, a large amount of costs had been incurred.  Upon conclusion of the 4‑bill taxation, total time costs of HK$14.06m has been reduced by HK$7.96m;

(d)  Chen was clearly the overall victor of the taxation proceedings, regardless of whether the 1/6 Rule applies;

(e)  It was Chen who applied to conclude the taxation proceedings.  There was no actual application to convert the same from a 1^st Regime taxation to a 3^rd Regime taxation.  Upon conclusion of the main proceedings, the Master ought to have made an order for costs in Chen’s favour;

(f)  If the Trial of the Preliminary Issues was part of the main taxation proceedings:

(i) the Preliminary Issues were inter‑linked issues affected by the Concession which was made late.  They should be looked at overall.  At the conclusion of the proceedings the very cause which led to the taxation proceedings in the first place was removed;

(ii) Chen was plainly the overall victor and an order for costs should have been made in Chen’s favour (with or without some percentage of costs disallowed);

(iii) Chen should not have been ordered to pay the costs, let alone 50% of the costs of K&W;

(g)  Even if the Trial of the Preliminary Issues could properly be treated as being separate from the rest of the main proceedings, Chen was still the overall victor:

(i) if the 1/6 Rule is applicable, he should have the costs;

(ii) even if the 1/6 Rule is not applicable, it would still be wrong under the “modified Elgindata principles” for the Master to have ordered Chen to pay 50% of the costs of K&W;

(h)     Applying Man Fong Hang, this is plainly a case for appellant intervention.

65.Mr Wong’s stance is a straightforward one.  He refers to Man Fong Hang where the court observed that it is only in limited circumstances where a judge will disturb an order as to costs made by a master.  He submits[18] that:

“ Despite the prolix arguments raised by Chen, Chen has singularly failed to show that the learned Master’s costs orders were erroneous in law or were unreasonable. [K&W] submits that the Master’s exercise of discretion in making the costs orders was unimpeachable, and hence Chen’s appeal ought to be dismissed.”

F.     Discussion

66.One main plank of Mr Chang’s arguments is that it was K&W’s conduct which led to the taxation proceedings.  They issued the 4^th Bill. They did so despite the 21/11/2011 Letter.  They chose to deny Wong’s authority to agree with Chen on matters of costs at variance with the terms of the Retainer.  Given s 67 of the LPO, having a 4‑bill taxation pursuant to the 1^st Regime was the only option in the absence of special circumstances.  What she did was described by the Master in the PI Decision as a “logical response”.  Several years later, on the 4^th day of the Trial of the Preliminary Issues, the Concession was made.  Chen did not seek to turn the 4‑bill taxation into a 3‑bill one.  Yet, she, having had to incurred a substantial amount of costs, and despite the conduct of K&W, was landed with the 3 Costs Orders.  The result, as described by Mr Chang in his oral submission, is a fundamental grievance, is unreasonable and wrong, and warrants appellate intervention.

67.Mr Chang’s main plank however does not take into account the change of stance by Chen since the 21/11/2011 Letter:

(a)  Just 2 months after the 21/11/2011 Letter, when Chen issued the Originating Summons, she did not confine her claim to an application for the 4^th Bill to be struck out.  In fact, she did not even ask for that.  She sought an order that all 4 Bills of Costs to be referred for taxation and, inter alia, “refund to [Chen] such sums of money as may on such taxation appear to have been overpaid…”.  Her explanation that she was not aware of her right to claim that K&W was estopped from issuing the 4^th Bill has been rejected by the Master[19];

(b)  In §33 of her affirmation filed in support of the Originating Summons, she said:

“ I now exercise my right to tax all the time costs and disbursements charged by [K&W] for my case, that is to say, the four Bills of Costs of [K&W] … during the period of the whole engagement of [K&W] for the period from 8 October 2010 to 16 May 2011, and further, [K&W] do upon the taxation give credit for all sums of money received by them from or on account of me (totaling HK$13,768,277.50) and refund such sums of money as may on such taxation appear to have been overpaid.”

(c)  In and via her Points of Claim, Chen did not just seek an order for the 4^th Bill to be struck out.  She also sought to establish the Pre‑Retainer Agreement, 3 sets of Representation, and a lower hourly rate of Wong.  She specifically sought the relief that “The 1^st to 3^rd Bills (or as the case may be the 1^st to 4^th Bills) should be taxed ” on the bases of her case as pleaded;

(d)  In their Points of Counterclaim, K&W sought a declaration that should the 4^th Bill be struck out, Chen would not be entitled to tax the 1^st to 3^rd Bills (§43 of the Points of Counterclaim and §(2) of the prayer).  In her Points of Defence to Counterclaim, Chen specifically denied §43 of K&W’s Points of Counterclaim, and denied K&W’s entitlement to that declaration;

(e)  In the final version of the Preliminary Issues, Issue (6) was framed, which also indicated an intention on the part of Chen to, if she could, proceed with the taxation of the 1^st to 3^rd Bills even upon the striking out of the 4^th Bill;

(f)  Indeed, as recorded by the Master [20], “counsel for the plaintiff at the trial of Preliminary Issues, in answering a point raised by the court expressly confirmed that the plaintiff would still seek taxation of the 1^st, 2^nd and 3^rd Bills even if the 4^th Bill was struck out”.

68.Mr Chang submitted that in the absence of special circumstances, Chen could only have pursued a 4‑bill taxation under the 1^st Regime. But Chen could have in the Originating Summons sought to strike out the 4^th Bill and confined her claim to that.  She did not.  Her explanation for not doing so has been rejected by the Master.

69.I am not criticizing Chen for attempting to in effect re‑open the 1^st to 3^rd Bills.  She could do so.  Just that having done so, and having failed, her conduct in having done so can be taken into account when it comes to costs.

70.That was indeed what the Master effectively has done.  Having referred to his observation that the commencement of these proceedings was a “logical response” to K&W’s issue of the 4^th Bill, the Master said[21] that “However, the plaintiff took the matter further.  In the course of these proceedings, the plaintiff changed her stance with a view to get the best of both worlds but failed.  I do not see this as a reasonable way to tackle the dispute…”.  I have reproduced §155 of the Concluding Summons Decision above and will not repeat it here.

71.The above also impact upon another main plank of Mr Chang’s arguments, namely Chen was the clear victor in both the main proceedings and the Trial of the Preliminary Issues:

(a)  Mr Chang submits[22] that:

“ The learned Master failed to consider the true effect of the striking out of the 4^th Bill and this led to the unreasonable result that [K&W] would not have to pay [Chen] any costs even when such costs were the consequence of D’s wrongful action in issuing the 4^th bill that caused these proceedings.”

(b)  Chen has failed on four issues.  K&W lost one and conceded one;

(c)  As the Master has recorded[23], Issue (3) was the main area of dispute between the parties for the Preliminary Issues.  This Court is in no position to disagree in this regard;

(d)  As the Master has observed[24], which I agreed, the main proceedings were brought to a conclusion not only because Chen succeeded in Issue (4), but also because she failed in Issue (6);

(e)  The question of success or otherwise in an action or cause is relative to what a party is trying to seek in that action and what the cause is.  In the Originating Summons, Chen did not seek any order for the striking out of the 4^th Bill.  She sought to have all 4 Bills taxed.  She failed in that regard;

(f)  (e) above is not a technical way of looking at the matter.  Chen, having been issued, rightly or wrongly, with the 4^th Bill, had the liberty of choosing how to respond.  Mr Chang tried to focus upon the overall net effect which, it is said, is the same as the 4^th Bill having been struck out. He also tried to focus upon the net monetary implications that came with that.  That might have been the way to look at the situation had Chen chosen to focus in the Originating Summons upon the 4^th Bill. She did not.  She tried to re‑open the 1^st to 3^rd Bills. She failed.  This, in my view, is an important consideration when gauging success (or otherwise) in the present case;

(g)  In my view, the Master was perfectly entitled to form the view that in respect of the Trial of the Preliminary Issues, K&W was overall the more successful party, and that in so far as the main proceedings was concerned, there was no overall successful parties.

72.In his written submissions[25], Mr Chang submitted that “the learned Master was plainly wrong when he said that the LPO was not engaged ”.  In my view, that criticism was not a fair one.  What the Master observed was that there was no taxation in these proceedings.  He therefore agreed with Mr Wong’s submission that the 1/6 Rule in s 67(5) was not engaged.  I agree with the view of the Master. Indeed, in the course of his oral submissions, Mr Chang accepted that the application of the 1/6 Rule in the present case, stricto sensu, might present some difficulties.

73.Mr Chang then submits that the Master has made no finding that Chen had behaved unreasonably, and he was therefore wrong in making the 3 Costs Orders under the modified Elgindata principles.  But those submissions are premised upon Chen being the successful parties.  I have expressed my view, in agreement with the views of the Master, that Chen was not.

74.On the application of the issue‑based approach, I agree with the Master that the “cause” and “event” of the main proceedings are distinct and separate from the Preliminary Issues.  To that extent, they were quite discrete.

75.Viewed as above, I can detect no error of law or unreasonableness in respect of the costs orders of the Trial of the Preliminary Issues and the main proceedings, or their underlying reasoning.  Quite the contrary, I am of the view that on the facts of this case, and noting the conduct of the parties as a whole, the Master was quite entitled to form the views as he has and to make the related costs orders accordingly.

76.In respect of the costs of the Concluding Summons, I agree with Mr Wong[26] that once the other 2 of the 3 Costs Orders are affirmed, it must follow that the Master was entitled to make a proportionate order for 30% costs to K&W.  I add that the Master has tried the Preliminary Issues; he has considered all the other matters raised in the Concluding Summons; he has done his best to apportion the costs incurred and to assess the off-setting effect of the related costs orders[27].  The Master was in the best position to gauge the reasonableness of the proportionate costs order he made in respect of the Concluding Summons.  This Court is institutionally disadvantaged from reassessing the Master’s decision in this regard.  This applies to all 3 Costs Orders, and specifically to the order in respect of the Concluding Summons.

G.     Disposal and costs

77.For reasons set out above, I dismiss Chen’s appeal.  I make a costs order nisi that K&W shall have the costs of the appeal, with certificate for 2 counsel, to be taxed if not agreed.  Any party who seeks any variation or summary assessment should file their submissions within 14 days from the day of this Decision, submissions in response within 14 days of receipt, and submissions in reply within 7 days.

Mr Denis Chang SC, leading Ms Ifan Chan, instructed by Fu and Cheng, for the Plaintiff

Mr Anson Wong SC, leading Mr Martin Kok, instructed by Fairbairn Catley Low & Kong, for the Defendant