Chinachem Charitable Foundation Ltd v. Wilkinson & Grist (A Firm)

HCMP 877/2020, HCMP 878/2020,
HCMP 879/2020, HCMP 880/2020,
HCMP 881/2020, HCMP 882/2020
(Consolidated)

[2021] HKCFI 3639

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 877 OF 2020

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 878 OF 2020

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 879 OF 2020

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 880 OF 2020

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 881 OF 2020

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 882 OF 2020

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(Consolidated pursuant to Order of Master Chow dated 14 September 2020)

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 2 November 2021

Date of Decision: 3 December 2021

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DECISION

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1.Before the court there are 6 Amended Originating Summonses all issued on 19 June 2020 and re-filed on 4 January 2021 by which the Plaintiff (“Foundation”) seeks to tax the bills issued by its former solicitors, the Defendant (“WG”), under s.67 of the Legal Practitioners Ordinance, Cap 159 (“Ordinance”) in relation to the following matters :

(1)  HCAP 8/2007, which was a probate action (“Probate Action”) between the Foundation and Mr Tony Chan in respect of the Estate of the late Madam Nina Kung (“Estate”) and other matters.  Work done for the trial before the Court of First Instance was covered by an Engagement Letter dated 10 February 2009 (“1^st Engagement Letter”) as varied by a Variation Letter dated 2 July 2009.  Work done for the appeals to the Court of Appeal and the Court of Final Appeal was covered by an Engagement Letter dated 9 February 2010 (“2^nd Engagement Letter”);

(2)  HCMP 853/2012, which related to the construction of the Will of the late Madam Kung (“Construction Proceedings”).  Work done for the matter including the trial before the CFI and the appeals before the CA and the CFA was covered by an Engagement Letter dated 30 May 2012 (“3^rd Engagement Letter”).  After the Construction Proceedings, work was done in relation to a scheme for the administration of the charitable trusts under the Will (“Scheme”);

(3)  A Mainland action (“PRC Action”), which was commenced by Tony Chan against the Foundation in the Mainland in 2018;

(4)  HCMP 998/2019;

(5)  HCA 764/2015, which was an action commenced by Lam Yee Hung against the Foundation;

(6)  HCA 832/2014, which was an action commenced by Chan Shu Chun against, inter alia, the Foundation.  Work done for this matter was covered by an Engagement Letter dated 29 June 2018 (“4^th Engagement Letter”).

The bills

2.These matters involve 76 bills in total spanning a period of over 10 years.  There were over 2,400 pages of documents which made up the 76 bills.  Mr Barlow SC, who appeared with Mr Lam for the Foundation, had helpfully included in Annex 2 to his skeleton arguments tables of summary of the bills rendered in each of the 6 matters.  The total fees charged in the bills for the 6 matters came to about HK$280 million. 

3.WG was initially instructed for the Probate Action in February 2009, and it ceased to act for the Foundation in May 2020. On 21 May 2020, a final bill was delivered in each of the 6 matters.  Ms Eu SC, who appeared for WG with Mr Ng, preferred to call them last bills.  The niceties in the terminology will become apparent below.  Over the years, the work in respect of the 6 matters overlapped in terms of timing, eg, from May 2012 WG was providing service in respect of both the Probate Action and the Construction Proceedings.  

4.Putting aside the bills for disbursements, it can be seen that the bills covered continuous periods in a chronological manner. For instance, for the Construction Proceedings, the first bill covered the period from 8 May 2012 to 19 December 2012 and for the last, 22 February 2020 to 19 May 2020.

5.It can also be seen that over the years, very substantial sums for costs on account were paid by the Foundation to WG.  It is common ground that such costs were applied by WG for the payment of their bills over the years.  Only 5 bills were directly paid by the Foundation[1].

Engagement Letters

6.The first 3 Engagement Letters were similar in terms.  The material terms of the 1^st Engagement Letter were :

(1)  The subject heading was “HCA P8 of 2007”;

(2)  Under “Scope of Services”, cl. 2.1:

“Our services … will cover … To prepare for and attend the trial of the above proceedings … and provide to you with legal advice in relation thereto (inclusive of all other incidental work).”

(3)  Under “Our Fees and Expenses”, cl. 3.2:

“We may from time to time request from you payment on account of our fees and expenses which will be credited against payment of our fee notes. We shall render our interim fee notes on a regular basis and a final fee note when the matter is completed.”

(4)  Cl. 3.3:

“Our out-of-pocket expenses … will usually be billed as disbursements at the same time when we render our fee notes for stage payments.”

(5)  Under “Settlement of Fee Notes”, cl. 4.1:

“Our fee note is payable on despatch. Any fee note which has been overdue for thirty days may, upon our request and from time to time, be subject to an interest charge …”

(6)  Under “Termination of the Engagement”, cl. 11.2:

“We are entitled to terminate the Engagement at any time for good reason and upon 7 days’ prior written notice … The following events exemplify when this may be necessary: (a) if any payment due to us is not made …”

[all emphasis added]

7.With the exception of (1), the above terms could be found in the 2^nd and 3^rd Engagement Letters.  In the case of the 4^th Engagement Letter, those terms could be found in a set of Terms of Engagement attached to the Letter.

8.The subject heading of the 2^nd Engagement Letter was “[the Estate]”.  The scope of services covered was: “(a) to review the judgment and to take enforcement proceedings in [the Probate Action] and all matters incidental thereto; (b) to deal with any appeal from [the Probate Action] and any proceedings in relation thereto or arising therefrom; (c) to obtain Grants of Representation in respect of [the Estate] from the relevant courts; and (d) to assist you in the administration and distribution of [the Estate] and to make relevant applications to the relevant courts.”

9.The subject heading of the 3^rd Engagement Letter was “[the Construction Proceedings]”.  The scope of services was: “Our services … will include the provision of legal advice in accordance with Hong Kong laws in relation to the conduct of the subject action.”

10.The subject heading of the 4^th Engagement Letter was “HCA 832 of 2014”.  The scope of services was: “Our services … will cover the provision of legal services in relation to the above matter and the related issues.”

11.Clause 4 of the 4^th Engagement Letter, under “Terms of Engagement” provided: “You agree to comply with our Terms of Engagement attached hereto.  A copy of the updated version of our Terms of Engagement is also available at [website address].”

12.Clause 1.2 of the attached Terms of Engagement (“TOE”): “When we accept your instructions to provide legal services (the “Engagement”), a letter referring to these [TOE] may be sent to you (the “Engagement Letter”).  The Engagement Letter (if any) and these [TOE] constitute the agreement between you and us for the purposes of the Engagement. If no Engagement Letter is issued by us, these [TOE] constitute the agreement between you and us for the purposes of the Engagement.”

Issues

13.These applications concern the Foundation’s right to taxation of WG’s fees.  Such right depended on when the “limitation period” for taxation began to run.  To determine that question, the court will have to decide whether for each of the 76 bills the right to taxation started to run upon delivery, as contended by WG. 

14.On the other hand, the Foundation’s case is that the interim bills submitted by WG prior to the 6 final bills delivered on 21 May 2020 were series of bills under the 6 matters and the right to taxation only began to run upon delivery of the final bills.

15.There are other arguments advanced by WG under 3 headings: (a) completion of the work for which WG was engaged; (b) time started to run from delivery of each bill; and (c) abuse of process.

Law

16.The taxation of solicitors’ bills is governed by s.67 of the Ordinance.  Those provisions set out the time limit for the exercise of the right to taxation.  For the applicable principles, one will have to look into the case law. 

17.The principles are complex.  One may say that they should not be so.  Normally, consumers are entitled to dispute the bills presented to them for services rendered.  The lay clients’ entitlement to challenge the bills rendered by solicitors must be regarded as fundamental. Solicitors should not be shy in having their bills scrutinised by the court. The rules on exercising the right to taxation should be simple and easily understood by the consumers.  Regrettably, they are not. 

18.Solicitors stand in a fiduciary position in relation to their lay clients.  They have a duty not only to be perfectly transparent with their clients on their charges, but also to ensure that their clients are adequately advised on their right to taxation of their fees.

19.This court had been referred to many authorities by the parties in the course of submissions on the right to taxation.  It is lamentable that many of the disputes, including the present one, could have been avoided if the lay clients were advised, preferably in the engagement letters, in clear terms as to when their right to taxation would start to run, eg, from the delivery of each bill (if that be the consensus).  This is a matter which merits the attention of the Law Society. 

S.67 of the Ordinance

20.Section 67 of the Ordinance provides :

“(1) On the application, made within 1 month of the delivery of a solicitor’s bill …, of the party chargeable therewith the Court shall, without requiring any sum to be paid into court, order that the bill shall be taxed and that no action shall be commenced thereon until the taxation is completed.

(2) If no such application is made within the period mentioned in subsection (1), then, on the application of the solicitor or … the party chargeable with the bill, the Court may, upon such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order—

(a) that the bill shall be taxed;

(b) that, until the taxation is completed, no action shall be commenced on the bill, and any action already commenced be stayed:

Provided that —

(i) if 12 months have expired from the delivery of the bill, or if the bill has been paid, or if a verdict has been obtained or a writ of inquiry executed in an action for the recovery of the costs covered thereby, no order shall be made on the application of the party chargeable with the bill except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the Court may think fit;

(ii) if the bill has been paid, no order under this subsection shall be made where the application for the order is made after the expiration of 12 months from the date of payment of the bill.

…”

Case law

21.In Re Miller Peart [2007] 3 HKLRD 125 at §64, per Recorder Jat SC, it was held that 3 regimes had been created under s.67 :

“(1) Within one month since the delivery of the solicitor’s bill, the client may apply to have the bill taxed as of right, and no term or condition will be imposed (the 1^st regime).

(2) If the client fails to apply for taxation within one month since the delivery of the bill, either the solicitor or the client may apply for taxation and the court may so order and impose any terms as it may think fit except terms as to the costs of the taxation (the 2^nd regime).

(3)   If 12 months or more have elapsed since the delivery of the bill or if the bill has been paid, the client must demonstrate special circumstances to justify his application for taxation and the court may impose any terms including terms as to the costs of the taxation (the 3^rd regime).”

22.To the 3 regimes, one may add that if more than 12 months have elapsed from the date of payment of the bill, no taxation may be ordered (s.67(2)(b)(ii)[2]).

23.The legal principles were considered in detail by DHCJ To (as he then was) in Chin Yuk Lun Francis v Lo & Lo, unrep., HCMP 1142/2005, 7 July 2006, §§10-18.  Those principles had been consistently applied in subsequent cases, including Li Shu Chung v Stevenson Wong & Co [2018] 5 HKLRD 336, per DHCJ Le Pichon at §§12-14. 

24.The case law has evolved over time and some of the concepts developed in the older authorities should be understood in the present day context.  In the following summary, I endeavour to provide a simple and logical roadmap of the principles :

(1)  A retainer is normally an entire contract under which a solicitor is to do certain work for his client.  In the absence of a contrary agreement, the solicitor is not entitled to be paid until the work has been completed or the retainer has been terminated.  Thus, in protracted litigation, the burden of financing the client’s litigation falls upon the solicitor.

(2)  To mitigate this harshness, the principle of natural breaks evolved, whereunder the solicitor becomes entitled to bill his client upon the occurrence of a natural break in the course of protracted proceedings which have not concluded.

(3)  In course of time, another practice had also developed under which the solicitor’s right to demand interim payment is written into the retainer.  Hence, the modern approach is to look first at the retainer to see if the solicitor has the contractual right to issue bills prior to the conclusion of the matter for which he was retained.  If he has no such right, he may only issue bill at natural breaks in the course of providing his service.

(4)  It will be seen in para 47 below that this court is of the view that where a retainer has provided for the right to demand interim payment by the solicitor, the principle of natural break is not applicable.

(5)  If there is authority in the retainer for rendering bills prior to the conclusion of service, then it is a matter of construing the retainer in order to see whether the bills (by whatever term they are called – though usually they are called “interim bills”) are each a periodic final bill (in the sense that it will not be changed and implies self-containment) or interim bill (in the sense of a statement to show how the work was progressing).  Whilst a retainer may authorise the issue of a number of periodic final bills, the court should lean against such an interpretation.

(6)  Para (5) is important because if a bill is a periodic final bill the right to taxation would start to run from its delivery.

(7)  Where the retainer does not provide for the issuance of interim bill and the solicitor relies upon natural breaks to do so (para (2) above), more than one such bill may be issued.  On limitation period for taxation, where each of the bill is a separate final bill, the prima facie time limit for taxation is one month from delivery for each bill.  If the bills are a series which together form one composite bill, then the prima facie time limit is one month from the delivery of the final bill in the series.

(8)  This concept of treating a series of bills as a single bill was evolved for the purpose of overcoming statutory time-bars for taxation. 

(9)  I am inclined to the view that, like natural breaks, it is a concept which is not applicable to cases whether the retainer provides for interim bills.  In such cases, it is a matter of construction whether the bills are periodic final bills, and the court should lean against such construction (para (5) above and see further below).

(10)  To determine whether a bill is a separate final bill or one of a series of bills, the court asks two questions: first, whether the solicitor has the power to send it in as a final bill (“1^st Question”) and second, whether the bill has been delivered as a final bill (“2^nd Question”).  The answers to both questions must be in the affirmative if one bill amongst a number of bills is to be treated as a separate final bill of costs.  The burden of proof in respect of both questions is on the solicitor.

(11)  In respect of the 1^st Question:

(i)  the solicitor has to prove that the bill was rendered within a natural break in the litigation;

(ii)  a natural break is not synonymous with the conclusion of a distinct and separate matter.  The matter should be considered form the perspective of the lay client;

(iii)  to constitute a natural break there must be either: (a) a physical break in the litigation process of such a duration as would entitle a solicitor to say to his client that the matter is going to be inactive for an indefinite period or for a foreseeably long period, so that it is appropriate to square or finalise the account for the time being; or (b) a break in the nexus between one component matter and another in the litigation.

(12)  The 2^nd Question is one of fact involving two elements, namely: (a) the solicitor has to deliver the bill intending it to be a final bill; and (b) it must also be intended and understood by the client to be a final bill.  These questions are to be answered by looking at the intentions of the solicitor and the client, plus their conduct, including the reaction of the client upon receipt of the bill and the form that the bill took.

The Engagement Letters

25.There is no serious dispute that the bills issued for HCAP 8/2007 were governed by the 1^st and 2^nd Engagement Letters; those for HCMP 853/2012 governed by the 3^rd Engagement Letters; and the 4^th Engagement Letter governed those issued for HCA 832/2014. 

The PRC Action, HCMP 998/2019 and HCA 764/2015

26.There was no engagement letter for the PRC Action, HCMP 998/2019 and HCA 764/2015.  However, neither WG nor the Foundation argued that the engagement of WG for those matters was not governed by any terms. 

27.In respect of the bills issued for the PRC Action and HCMP 998/2019, WG argued that the terms of engagement were those posted on its website since 19 July 2019 (“Website Terms”).  Clause 3.4 of the Website Terms provided that: “… [e]ach invoice represents the final bill for charges for work done for the relevant stage of the Engagement …” [emphasis added].  By signing the 4^th Engagement Letter (dated 29 June 2018 for HCA 832/2014), the Foundation was informed that WG’s website contained the latest version of its Terms of Engagement.  This argument was not advanced in respect of HCA 764/2015, probably because WG was instructed for those matters prior to the existence of the above clause 3.4.   

28.There is no evidence that the Foundation had consulted WG’s website.  Further, clause 4 of 4^th Engagement Letter merely stated that: “[the Foundation] agree to comply with our Terms of Engagement attached hereto” and “[a] copy of the updated version of our Terms of Engagement is also available at [WG’s website]”.

29.I agree with Mr Barlow that the effect of clause 4 was that the Foundation is bound by the TOE attached to the 4^th Engagement Letter.  It did not have the effect of binding the Foundation to any amendments to the TOE made after the 4^th Engagement Letter was signed in the absence of any agreement by the Foundation.

30.There is no evidence of any step taken to bring the updated TOE to the Foundation’s notice.  On the other hand, the Foundation’s evidence was that it had never received a copy of or been referred to the updated TOE.

31.In the premises, the updated TOE (in particular clause 3.4) cannot be relied upon by WG, whether in respect of the PRC Action or HCMP 998/2019.

32.The Foundation submitted that clause 1.2 of the TOE attached to the 4^th Engagement Letter provided that the TOE should apply if no engagement letter was issued by WG.  Therefore, the TOE applied to the bills issued for the PRC Action, HCMP 998/2019 and HCA 764/2015.

33.Alternatively, by reason of the wide scope of the 2^nd Engagement Letter, which covered, inter alia, the provision of assistance “in the administration and distribution of [the Estate] and to make relevant applications to the relevant courts” (see para 8 above), the 2^nd Engagement Letter applied to the PRC Action, HCMP 998/2019 and HCA 764/2015.

34.Whilst the above submissions have some merits, I believe that on analysis the parties had by their conduct adopted the terms of the existing Engagement Letters (they were basically identical) to govern the work for the PRC Action, HCMP 998/2019 and HCA 764/2015.  The evidence is that the parties simply continued with the course of conduct established since February 2009 in the treatment of the bills issued for those matters.  In particular, costs on account were utilised by WG to pay some of the bills for HCMP 998/2019 and HCA 764/2015. 

35.In the premises, despite the lack of engagement letter, the PRC Action, HCMP 998/2019 and HCA 764/2015 were governed by the same set of terms.

Construction of the material terms

36.On construction of the relevant terms of the Engagement Letters, this court was referred for principles to the most recent judgment of the CFA in Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) 23 HKCFAR 487 at §§43-45 :

(1)  The starting point is the ordinary and natural meaning of the words of the contract, and in the vast majority of cases, that is also the end point.

(2)  In the more difficult cases, it is not particularly helpful to refer to the ordinary and natural meaning of words because it may be open to much debate.  In such cases, the surer guide is context.

(3)  In such cases, account should be taken of the natural and ordinary meaning of the provision disputed, the purpose of the contract and of the provision, other relevant provisions, the facts and circumstances known or assumed by the parties at the time that the contract was executed, the quality of the drafting of the instrument, and commercial common sense.

(4)  Some agreements may be successfully interpreted principally by textual analysis, eg, because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals, whereas contracts marked by informality, brevity or the absence of skilled professional assistance may require a greater emphasis upon the factual matrix.

(5)  Commercial common sense and surrounding circumstances should not be used to undervalue the importance of the language of the disputed provision, and the mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly for one of the parties is not a reason for departing from the natural language.

37.With the above principles in mind, I agree with the Foundation that the Engagement Letters did not empower WG to issue periodic final bills prior to the conclusion of the matters. 

38.The most important contractual provisions were those set out in clause 3 under “Our Fees and Expenses”.  Clause 3.2 clearly provided that WG “shall render [their] interim fee notes on a regular basis and a final fee note when the matter is completed” (see para 6 above).  The natural and ordinary meaning of those provisions is that there would be interim fee notes issued periodically but the final one would be issued upon the conclusion of the matter.  The implication is that the interim fee notes might be changed upon final reckoning when the final fee note was issued.

39.The above construction is fortified by, firstly, the preceding part of clause 3.2 which stated that WG “may from time to time request from [the Foundation] payment on account of [their] fees and expenses which will be credited against payment of fee notes”.  Reading the retainer as a whole, the provisions for costs on account and application of the same by WG to paid its interim fee notes suggest that it was not essential for the interim fee notes to be scrutinised by the lay client before payment.  Hence, there would be a final reckoning in the final fee note.

40.Secondly, clause 3.3 described the interim bills issued by WG as “fee notes for stage payments”, again implying a final accounting exercise in the future.

41.There is another powerful support for the above construction.  The Foundation was undoubtedly a highly important client of WG, and the latter was instructed to carry out very extensive work for the Foundation over a number of contentious matters.  The fees likely to be generated would run into many millions.  It is almost inconceivable for either party to have contemplated putting their relationship at risk by having WG’s fee notes carefully scrutinised, and challenged by way of taxation where necessary, within 1 month after delivery.  Such potentially contentious exercise might have to be carried out periodically when the fee notes were issued.  I have little doubt that the interim fee notes issued by WG could not be periodic final bills. 

42.The above construction is supported by Li Shu Chung (see §§18, 22 and 35).  The retainer in that case contained terms which were similar to those being considered here.  Para 35 of Li Shu Chung is consonant with the view expressed in para 41 above :

“It has to be appreciated that when the bulk delivery happened in May 2014, the client relationship was still very much ongoing. It did not terminate until early 2016. The list provided in the covering email demonstrates that the applicant was involved in a prolific number of actions and relied on the professional assistance of the firm. Is a lay client realistically expected not only to fight his opponents in litigation but also his own legal advisers by querying/challenging their bills when he has to rely on their professional expertise in dealing with his opponents?”

43.I believe that the need for both the lay client and the solicitor to maintain a harmonious relationship during the engagement of the solicitor provides a sound justification for the court to lean against construing a retainer as permitting the issuance of periodic final bills (see para 24(5) above). 

44.I have considered WG’s submissions that its fee notes were payable “on despatch” (clause 4.1); interest might be chargeable on non-payment (clause 4.1); and WG’s entitlement to terminate the engagement for non-payment of its fees (clause 11.2(a)).  These provisions do not outweigh the above analysis. 

45.In respect of WG’s reliance on the Foundation’s financial documents which identified their fee notes as due and payable, I agree with the Foundation that the point is misconceived because those fee notes were due and payable according to the terms of the Engagement Letters.

46.As regards WG’s submission that some of its bills were rendered may years ago and it would be extremely onerous to have them taxed now, I can only say that, with the benefit of hindsight, WG should have advised the Foundation on its right to taxation and have the parties’ agreement on when the time for taxation should start to run clearly stated in the Engagement Letters.  It is not the function of the court to remake the contract when the operation of its terms is harsh (see para 36(5) above). 

Natural breaks

47.I agree with the Foundation that where clear terms were contained in the Engagement Letters for the issuance of interim fee notes, there is no room for the application of the common law entitlement of solicitors to issue periodical bills at natural breaks.  Doing so is simply contrary to the agreement of the parties.  It must also be remembered that the concept came into being to mitigate the harshness that solicitors could not issue any bill for their work until the conclusion of the same.

48.The concept has no application in this case, and that disposes of much of the arguments advanced on behalf of WG.

WG’s interim fee notes

49.It is convenient at this point to deal with WG’s submissions on the proposition that the interim bills issued by WG were of the nature of or bore the characteristics of periodic final bills.  Firstly, as analysed above, those arguments are not relevant in this case where the Engagement Letters governed the issuance of the interim bills.

50.Secondly, whilst there are dicta in the case law which sought to define or identify the characteristics of a periodic final bill and those of an interim bill, such definitions must be considered in light of the infinitely variable circumstances.  Consequently, in my respectful view, the dicta should not be regarded as written in stone.

51.Thirdly, whether WG was entitled to issue periodic final bill was governed by the Engagement Letters.  If it was not entitled to do so according to the terms of the Letters, it could not gain that right by drawing up the bills in certain manner.  As a matter of law, post-agreement conduct and statements of the parties are not generally relevant on the construction of agreement: see Marble Holdings Ltd v Yatin Development Ltd (2008) 11 HKCFAR 222, §22.

52.There is a useful table lodged with Ms Eu’s Skeleton Submissions (“Table”).  The Table identified the 11 arguments advanced by WG and the bills to which they applied.  Some of the arguments have already been addressed above.  Also, in dealing with the applicable principles of law, some of the arguments have been rendered redundant.  I shall address the remaining arguments.

Conclusion of the matters and termination of WG’s service

53.WG was first engaged in February 2009 to deal with the trial in HCAP 8/2007.  Hence, the 1^st Engagement Letter was signed.  It covered the work done in HCAP 8/2007 up to the conclusion of the trial (see para 6(2) above).  The trial was concluded with judgment handed down on 2 February 2010.  WG contended that the work under the 1^st Engagement Letter had been completed.

54.The completion of work covered by the 1^st Engagement Letter gave rise to the need to sign the 2^nd Engagement Letter.  The scope of the 2^nd Engagement Letter was stated in §2.1(a) to (d) (see para 8 above).  Sub-paragraphs (c) and (d) were on the basis that the Foundation was the beneficiary under the Estate.  This became inapplicable as a result of subsequent events.  The appeal in HCAP 8/2007 was completed after the CFA refused Tony Chan’s application for leave to appeal on 24 October 2011.

55.After the resolution of HCAP 8/2007, a different dispute arose, namely, whether the Foundation was a beneficiary under the Will of Madam Kung, or whether it was a trustee.  This gave rise to the Construction Proceedings (HCMP 853/2012).  The 2^nd Engagement Letter did not cover the Construction Proceedings.  Hence, the 3^rd Engagement Letter was signed.

56.The Construction Proceedings went all the way to the CFA, and the CFA held on 18 May 2015 that the Foundation was not a beneficiary.  This concluded the Construction Proceedings and rendered sub-paragraphs (c) and (d) of the 2^nd Engagement Letter, which were premised upon the Foundation being the beneficiary of the Estate, inapplicable.

57.As a result of the CFA’s decision in the Construction Proceedings, the Scheme had to be drawn up to give effect to the Will of Madam Kung.  WG was retained to deal with this aspect also.  WG acted for the Foundation in relation to the Scheme until the latter terminated its engagement on 16 January 2018.  WG contended that this termination enabled it to issue the final bill for work done in relation to the Scheme.

Conclusion of the trial and appeals in HCAP 8/2007

58.Five fee notes were issued to cover the trial of HCAP 8/2007 (121332, 121714, 122888, 123454 and 126039) in respect of the period from 1 February 2009 to 3 February 2010.  Although the last bill did not state that it was the “final fee note” under the 1^st Engagement Letter, it could be seen from the “Detailed Breakdown of Time” that the last item was the reviewing of the judgment. 

59.I accept WG’s submission on the conclusion of service under the 1^st Engagement Letter.  All 5 fee notes were paid before 19 June 2019, ie, over 12 months before the issuance of taxation application, and no taxation can be ordered.

60.For the appeals, 5 further fee notes were issued (129673, 129674, 129058, 134271 and 140898) covering the period from 4 February 2010 to 24 October 2011. 

61.The Foundation submitted that the HCAP 8/2007 proceedings in fact continued after the CFA Leave Application.  As late as 26 March 2021, Chu JA heard the Joint Administrators’ application in relation to their costs of administering the Estate.

62.The submission was consistent with WG’s fee notes for HCAP 8/2007.  Fee Note 140898 covering a period up to 24 October 2011, ie, the date of the hearing of the CFA Leave Application, was followed by Fee Note 145627 charging for work rendered from 25 October 2011 onwards, which included dealing with an array of matters within HCAP 8/2007, including costs.

63.Whilst there is force in the Foundation’s submission, I do not believe that in light of the terms of the 2^nd Engagement Letter, in particular sub-paragraphs (a) and (b) under scope of services (see para 8 above), the continuous provision of service by WG in dealing with miscellaneous matters[3] which arose after the conclusion of the appeals would deprive WG of the right to render a final fee note.  Otherwise, the time for taxation would be considerably delayed, which would not be in the interest of the Foundation or WG. 

64.I therefore also agree with WG that upon the conclusion of the appeals, it was entitled and did issue a final fee note (140898).  These 5 fees notes were also paid before 19 June 2019 and no taxation can be ordered. 

Conclusion of the Construction Proceedings

65.Under the Construction Proceedings, there were 4 fee notes which covered the period from 8 May 2012 to 23 April 2015 (146832, 148787, 153667 and 156968).  The hearing before the CFA was concluded on 23 April 2015. 

66.On the evidence before the court, I accept WG’s case on conclusion of the matter. 

Termination of WG’s service for the Scheme

67.WG’s service for the Scheme was rendered immediately following the CFA’s judgment in the Construction Proceedings (dated 18 May 2015).  The 4 bills for the Scheme (167903, 167904, 174619 and 177865) were sent under “[the Construction Proceedings] – Preparation for the Scheme”.  They covered the period from 18 May 2015 to 15 January 2018.  There was no argument that the service under the Scheme was governed by the terms of the 3^rd Engagement Letter.  In any case, the analysis set out in para 34 above can be applied.

68.I accept WG’s evidence that its engagement over the Scheme came to an end on 16 January 2018 with a letter of termination from the Foundation that WG should “stop” representing it.  The termination of the engagement entitled WG to issue its final fee note (177865).

69.These 4 fee notes were also paid before 19 June 2019 and no taxation can be ordered.

Abuse of process

70.WG argued that in seeking taxation over various bills, the Foundation has fallen foul of the principles adumbrated in Chan Chun Chuen v Kao Lee & Yip, unrep, HCA 597/2015, 12 October 2017, per DHCJ Anson Wong SC, at §§25 & 30 :

(1)  If a party seeks to raise new matters in separate proceedings or seeks to reverse a previous assumption that had been the basis of earlier proceedings in new proceedings, that amounts, first of all, to an abuse of process and second, he is estopped from doing do;

(2)  It may be an abuse of process for a party, with full knowledge of the facts, to advance a claim that is diametrically opposed to its position taken in an earlier set of proceedings; 

(3)  The abuse lies in its effect on the “integrity of the administration of justice”.  Where a party with full knowledge of the facts advances a claim which is diametrically inconsistent with his allegations in previous proceedings, the integrity of the justice system would be no less compromised simply because his previous allegations were not followed through to judgment.

(see also Re Minloy Ltd [2020] HKCFI 2215, per Linda Chan J, at §§31-33)

71.WG said that the abuse of process on the part of the Foundation arose from: (a) the use of WG’s bills to successfully claim costs from Tong Chan in HCAP 8/2007; (b) the use of WG’s bills to successfully claim costs from other parties; and (c) submitting WG’s bills for reimbursement from the Estate pursuant to an Order of Chow J (as he then was) dated 30 November 2016 (“Taxing Mechanism”).

72.Alleged abuse (a) is not relevant because the 5 bills in question were those covered under Conclusion of service under the 1^st Engagement Letter (see para 58 above). 

73.In respect of abuse (b), only 2 bills have not been covered by the above analysis on conclusion of matters, namely, 166876 and 177866.  Fee Note 166876 was for disbursement of the law costs draftman’s fees.  It is not clear from WG’s evidence whether such fees had been recovered from third party or taxed down.  It appears from the evidence that the disbursement formed part of the Foundation’s Bills of Costs put forward in draft form for negotiation with the paying party (see Keith Ho’s 3^rd affirmation filed on 1 April 2021, §21). 

74.In the absence of clear evidence, I reject the claim of abuse of process in relation to this bill.

75.Fee Note 177866 should be considered in conjunction with 183194, 183353 and 184052 (they came under abuse (c)) because all 4 bills had been put forward by the Foundation for reimbursement under the Taxing Mechanism.  The Foundation’s evidence was that the last 3 bills “had not been assessed or agreed” (2^nd affirmation of Dr Kung filed on 4 June 2021, §16).  I assume it meant that the Estate had not agreed those bills for reimbursement.  The evidence is not clear as to what, if anything, had happened to 177866.

76.It is regrettable that the Foundation had not accepted WG’s offer to accept such amounts as agreed by the Estate for these bills.  Be that as it may, I do not believe that the evidence had established that putting forward these bills under the Taxing Mechanism would constitute an abuse of process as alleged, bearing in mind the Foundation’s undertaking to the court that, should these taxation proceedings reduce the amount payable to WG, it will repay any difference to the Estate. 

77.For these reasons, I am unable to accept the abuse of process argument.

Fee notes issued to other parties

78.There is agreement between the parties that the 4 fee notes which were issued by WG to other parties as set out in page 8 of the Table should not be taxed.

Conclusion and disposition

79.For these reasons, save for the fee notes identified in paras 58, 60, 65, 67 and 78 above, the remainder of WG’s fee notes should be taxed.  I make an order nisi that the Foundation should have 3/4 of its costs of these applications with a certificate for 2 counsel. 

80.The parties are to agree the appropriate draft order within 14 days from the date of this Decision for the court’s approval.  Unreasonableness in so doing may be penalised in costs.  In the event of disagreement, a succinct joint letter should be lodged with the court identifying the disagreement and the parties’ respective position.  The matter may then be resolved on paper if the court sees fit.

81.I am grateful to counsel for their assistance.

Mr Barrie Barlow SC and Mr Justin Lam, instructed by Jones Day, for the Plaintiff

Ms Audrey Eu SC and Mr Tom Ng, instructed by Wilkinson & Grist, for the Defendant