George Y. C. Mok & Co. (A Firm) v. New Land Properties Development Ltd and Another

DCCJ 505/2019

[2020] HKDC 1166

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 505 OF 2019

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BETWEEN

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DECISION

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Introduction

1.Before the court is the plaintiff’s application by a summons dated 4 June 2020 for leave to appeal against my decision handed down on 22 May 2020 (“Decision”).  Where appropriate, I adopt the terms defined in the Decision.

2.In these proceedings, the plaintiff, a firm of solicitors, seeks to recover agreed costs in the sum of HK$600,000 and contractual interest from the defendants.

3.By the Decision, I acceded to the defendants’ application made pursuant to RDC Order 14A, rule 1 and determined Questions 1 and 2 (as defined in the Decision) in their favour.  In essence, I agreed with the defendants’ contention that:-

(1) as a matter of law, as between a solicitor and his client, an agreement for remuneration for non-contention business under section 56 of the Legal Practitioners Ordinance Cap 159 (“LPO”) and not signed by the client or his agent in that behalf was unenforceable and could not be relied upon by a solicitor against his client;

(2) as a matter of construction, the So Lung Letter did not constitute an agreement within the scope of section 56 of the LPO.

4.Upon those determinations, I dismissed the plaintiff’s claim against the defendants: paragraphs 8, 82, 83 and 99(1) of the Decision.

5.Given my determination on the Order 14A Application, I made no order on the defendants’ Strike Out application, dismissed the plaintiff’s Summary Judgment Application, and made no order on the defendants’ Transfer Application.  As regards the Strike Out Application, I stated that had I been required to make an order, I would have ordered that the Statement of Claim against the 2^nd defendant and the claim for contractual interest against the 1^st defendant be struck out (“Alternative Reasoning”): paragraphs 84-89 and 99 of the Decision. 

6.In this application, the defendants have retained the same representation (Mr Benny Lo together Mr Jack Chan of counsel).  Mr Richard Leung now appears in addition to Mr Tommy Cheung for the plaintiff.  The parties acceded to my invitation to have the present leave application dealt with on paper.

7.In the plaintiff’s skeleton submissions dated 26 June 2020 (“P’s Submissions), Mr Leung has succinctly set out the scope of the plaintiff’s challenge.  In gist:-

(1) it is said that the plaintiff has a reasonable prospect of success in relation to its challenge against my determination on Question 1;

(2) in any event, as there are conflicting authorities, it is in the interest of justice that leave should be granted so that the construction and application of section 56 of the LPO may be considered and elaborated by the appellate court;

(3) in respect of the Alternative Reasoning, it is not plain and obvious that the plaintiff’s pleaded case does not show a reasonable cause of action against the 2^nd defendant;

(4) however, Mr Leung fairly accepts that the challenge against the Alternative Reasoning does not take the matter further in the event that I do not find the appeal against the Question 1 has a reasonable prospect of success.

8.It is therefore the case that the focus is squarely on Question 1 and Mr Leung and Mr Lo have advanced their submissions on this basis.

Question 1 and the present rival arguments

9.I dealt with Question 1 at Section D1 of the Decision.  Relevant for the present purpose, at Sections D1b and D1c, I dealt with:-

(1) the plaintiff’s attempt to distinguish the present case from Re A Solicitor [1956] 1 QB 155, Super Strategy Investments Ltd & Anor v Kao Lee & Yip (a firm) [2008] 5 HKC 71 (“Super Strategy CFI”) and Super Strategy Investments Ltd & Anor v Kao Lee & Yip (a firm) [2009] 3 HKC 92 (“Super Strategy CA”);

(2) the plaintiff’s reliance on the case of Clare v Joseph [1901] 2 KB 369.

10.Mr Leung contends at paragraph 12 of P’s Submissions that:-

(1) properly construed, section 56 of the LPO is only engaged if the solicitor seek to displace a prevailing practice and/or mandatory rule;

(2) the word “may” in section 56(1) of the LPO supports the proposition that it is permissive or enabling, instead of mandatory;

(3) the legal consequence of non-compliance alleged by the defendants, namely unenforceability of any agreement reached, is not stated in the LPO.

11.In further development of the above propositions, Mr Leung at paragraphs 13 to 15 of P’s Submissions:-

(1) maintains that Re A Solicitors is distinguishable, on the sole basis that scale fee in conveyancing transaction has been abolished, and Rule 5 of the Solicitors Costs Rules (referred to at paragraphs 56 and 57 of the Decision) is only a guidance but not a mandatory rule;

(2) submits that no detailed analysis was conducted in either Super Strategy CFI or Super Strategy CA;

(3) contends that the correct analysis is that set out in Deacons v Wiseking Mining Investment Co Ltd, DCCJ 3097 of 2010, 31 May 2011;

(4) repeats the reliance on Clare v Joseph and in particular the proposition that if it remains good law, the rules in the LPO are not exhaustive and the Hong Kong court may still enforce an oral agreement under the common law.

12.Mr Leung relies on paragraph 12(d) of Deacons which states:-

“… Nevertheless, at the hearing before me, both parties agreed that [section 56(3) of the LPO] did not make a written retainer a mandatory requirement. An agreement to provide legal service is nothing more than an example of a contract. It can be made orally, in writing, or by conduct and/or a combination of them. However, of course, to avoid unnecessary argument, it is advisable to have something in writing before the provision of services. Indeed, if one also looks at other provisions of section 56, the purpose of the Ordinance will become clear…” (my emphasis)

13.At paragraph 16 of P’s Submissions, Mr Leung contends that I had erred in holding that the common law rule in general or the rule in Clare v Joseph had been replaced by section 56 of the LPO.

14.Mr Lo disagrees.  He says that:-

(1) by reference to a number of additional authorities not previously relied upon, in particular Electrical Trades Union v Tarlo [1964] 2 All ER 1, there is a “complete answer” to the plaintiff’s intended appeal, and especially the plaintiff’s reliance on Clare v Joseph;

(2) in short, Electrical is an authority for the proposition that section 57(3) of the UK Solicitors Act 1957 (which is identical to section 56(3) of the LPO) and its predecessors are superimposed on the common law and bring in a new type of disability to make an agreement as regards non-contentious business unless it is in writing; it is a prescriptive provision as to the formality required to be complied with for the purpose of enforcement: Electrical at 5H-6I;

(3) the present case is not distinguishable from Re A Solicitors as, without the Plaintiff’s Alleged Oral Agreement, the mandatory provisions of Rule 5 of the Solicitors Costs Rules “shall” apply;

(4) Deacons is a case concerned with retainers, not an agreement under section 56 of the LPO and therefore provides no assistance to the plaintiff.

Discussion

15.I agree with Mr Lo. 

16.I note that the plaintiff in its reply submissions dated 22 July 2020 (“P’s Reply Submissions”) does not quarrel with the propositions set out in Electrical. 

17.The only point made by Mr Leung is that the English legislative framework is not determinative of the true meaning of section 56 of the LPO in Hong Kong and its meaning should be determined in light of the local circumstances, legislative background and the existing authorities.

18.Mr Leung has not made any submissions on how the local circumstances and legislative background would render an application of Electrical to how section 56 of the LPO ought to be construed inappropriate.  The only authority relied on by the plaintiff is Deacons.  It appears that the plaintiff has again conflated retainers with fee agreements: paragraph 48 of the Decision.  As is clear from the quotation cited at paragraph 12 above, Deacons was plainly concerned with a retainer, not a fee agreement under section 56 of the LPO.  Contrary to Mr Leung’s submissions made at paragraph 3 of P’s Reply Submissions, I do not regard the Decision to be in conflict with Deacons.

19.It is clear that Electrical further fortifies the observations made Section D1c of the Decision, namely that the plaintiff’s reliance on Clare v Joseph is misplaced.

20.P’s Reply Submissions also do not address Mr Lo’s argument that but for the Plaintiff’s Alleged Oral Agreement, the mandatory provisions of Rule 5 of the Solicitors Costs Rules “shall” apply, and therefore, Re A Solicitors is not distinguishable: paragraphs 52-58 of the Decision. 

21.Mr Leung submits that, in Super Strategy CFI, only a procedural point was taken and there was no challenge to the regime under section 56 of the LPO.  He made these submissions by reference to (only) paragraph 68 of Super Strategy CFI.  I do not accept Mr Leung’s reading of Super Strategy CFI.  I had set out my reading of Super Strategy CFI at paragraphs 41, 59-62 of the Decision.

Conclusion

22.For all the above reasons, I am not satisfied that the plaintiff’s intended appeal against Question 1 has a reasonable prospect of success.  I also do not agree with Mr Leung’s proposition that there are conflicting authorities such that leave to appeal should be granted in the interest of justice.

23.I dismiss the plaintiff’s application for leave to appeal with costs to be taxed if not agreed with a certificate for counsel.

24.I thank all counsel for their assistance.

Mr Richard Leung and Mr Tommy Cheung, instructed by George Y C Mok & Co, for the plaintiff

Mr Benny Lo and Mr Jack Chan, instructed by Au Yeung, Cheng, Ho & Tin, for the 1^st & 2^nd defendants