麥家榮 v. 鍾氏律師事務所
Read the full judgment text of HCMP 829/2022 on BabelCite. This High Court CFI judgment was delivered on 20 April 2023.
1. This is the substantive hearing of the Originating Summons filed by the plaintiff on 30 June 2022 pursuant to which the plaintiff applies for an order under section 67 of the Legal Practitioners Ordinance (Cap.159, Laws of Hong Kong) ( “the Ordinance” ) for the taxation of three bills of costs delivered by the defendant law firm, namely, Bill No.214374 dated 22 October 2021 ( “the First Bill” ), Bill No.224543 dated 14 January 2022 ( “the Second Bill” ) and Bill No.224836 dated 12 May 2022 (
Cited by 2 cases · Cites 6 cases
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HCMP 829/2022 [2023] HKCFI 1041 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 829 OF 2022 --------------------------
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-------------------------- JUDGMENT -------------------------- INTRODUCTION 1.This is the substantive hearing of the Originating Summons filed by the plaintiff on 30 June 2022 pursuant to which the plaintiff applies for an order under section 67 of the Legal Practitioners Ordinance (Cap.159, Laws of Hong Kong) (“the Ordinance”) for the taxation of three bills of costs delivered by the defendant law firm, namely, Bill No.214374 dated 22 October 2021 (“the First Bill”), Bill No.224543 dated 14 January 2022 (“the Second Bill”) and Bill No.224836 dated 12 May 2022 (“the Third Bill”) (collectively, “the Bills”) respectively. FACTUAL BACKGROUND 2.The following factual background is adopted from the Affirmation of Ma Kit Wing filed on 25 July 2022 which is undisputed by the plaintiff. 3.On 28 September 2021, the plaintiff approached the defendant law firm for legal advice in relation to his disputes with the other directors and shareholders of Wamido Holdings Limited (“the Company”). On the same day, the defendant law firm issued an email to the plaintiff, in which it was stated, inter alia, that:
4.On 29 September 2021, the plaintiff and the defendant law firm executed an Agreement for Appointment of Hong Kong Legal Adviser (“the Agreement”) to which the Terms of Business (“the Terms of Business”) were attached. 5.The plaintiff paid the defendant $35,000 as costs on account on the same day. 6.At the beginning of this retainer, Mr Lawrence Chan (“Chan”) of the defendant law firm was the partner-in-charge of this case. Chan assigned Mr Santos Cheung (“Cheung”), who was then a paralegal pending admission as a solicitor in Hong Kong, to assist him. 7.From the beginning of the engagement up to 15 October 2021, the defendant law firm has been instructed by the plaintiff to undertake various tasks, including but not limited to reviewing at least 200 pages of documents provided by the plaintiff, reviewing letters issued by other parties including the enclosures thereof, issuing letters to other parties and attending a 2-hour conference with the plaintiff. 8.On 22 October 2021, the plaintiff approached the defendant for further legal advice since there has been new developments in the plaintiff’s shareholders’ dispute. In a telephone conference held between the plaintiff and Chan (“the 22 October Telephone Conference”), the plaintiff instructed the defendant to issue some letters. 9.After this telephone conference, the defendant law firm issued an email to the plaintiff on the same day, to which the First Bill (together with a Statement of Work in respect of the defendant law firm’s work done and disbursements incurred during the period from 29 September 2021 to 15 October 2021) was attached. A total fee of $217,710 was charged thereunder. The breakdown thereof is as follows:
10.It was further stated in the said email (and shown in the First Bill) that after deducting the defendant’s fees, the balance of the plaintiff’s costs on account was $17,290 (the original amount of costs on account was $235,000). 11.The said email also referred to the 22 October Telephone Conference and put on record that the defendant agreed to cap its fees for the preparation and issuance of a letter as instructed by the plaintiff at the amount of $117,290 (“the 2nd Fee Cap”). It further requested the plaintiff to pay $100,000 as costs on account, which the plaintiff duly did on 26 October 2021. 12.From 3 November 2021 to 22 November 2021, the defendant law firm was instructed by the plaintiff to advise on certain company law matters and to issue a further without prejudice letter to the other parties. 13.On 23 November 2021, the plaintiff received various notices for extraordinary general meetings (“EGMs”) from the Company and its subsidiaries. In view of the urgency of the matter, the defendant law firm reviewed the said papers and arranged a telephone conference with the plaintiff on the same day for discussion on whether winding-up petition (“the Petition”) should be issued and whether an application should be made for the appointment of provisional liquidators for the Company (“the PL Application”). 14.The plaintiff instructed the defendant law firm in writing to proceed with the Petition and the PL Application that night. 15.In response, the defendant law firm informed the plaintiff by an email dated 24 November 2021 that the estimated fees for the Petition and the PL Application (up to and including the first hearing of the PL Application) would be in the region of $300,000 to $350,000. However, the defendant stated that it would be willing to cap its fees at $250,000 (“the 3rd Fee Cap”). The defendant further asked to plaintiff to pay costs on account in the sum of $350,000 which the plaintiff duly did on 25 November 2021. 16.In the light of the very large volume of documents involved, the complexity of the issues and the urgency of the matters, Chan considered that it would be more appropriate to engage another partner with sufficient experience, skill and expertise in insolvency law for the purpose of supervising and reviewing the day-to-day work of the paralegal and junior counsel engaged to deal with the matter. Mr Ma Kit Wing (“Ma”) was therefore asked to act as the partner-in-charge of the case in the place of Chan, while Chan would keep his high-level supervisory role. This new arrangement was accepted by the plaintiff in a meeting held on 30 November 2021. 17.On 6 December 2021, the plaintiff instructed the defendant to commence HCCW 467/2021 by filing the Petition, and made the PL Application therein. 18.On 16 December 2021 and 28 December 2021, the Company and its subsidiaries convened EGMs and resolved to remove the plaintiff as a director of the Company and its subsidiaries. As this matter was closely related to the Petition and the PL Application, it was decided that the plaintiff should file a further affirmation so as to adduce additional evidence in support of his case. This affirmation was then filed on 4 January 2022. 19.On 30 December 2021, the 3rd respondent in HCCW467/2021 (“the 3rd respondent”) made an open offer to the plaintiff by letter, which enclosed a revised investigation report and a share valuation report of the Company. 20.On 5 January 2022, the 3rd respondent also filed a summons seeking to strike out the Petition (“the Striking-out Summons”) which was supported by two affirmations. 21.The PL Application and the Striking-out Summons were heard on 11 January 2022 by Harris J, who adjourned the matters to an early date to be fixed for substantive argument. 22.The defendant law firm then issued the Second Bill on 14 January 2022, which covered the work done in the period between 16 October 2021 and 11 January 2022. The total amount charged was $708,223.9. The breakdown is as follows:
23.The Second Bill showed (by way of calculation) that the then balance of the costs on account ($467,290) would be used to pay towards part of the bill, and the amount due was therefore reduced to $240,933.9. 24.The Second Bill was sent to the plaintiff by email on 14 January 2022. This email stated that the Second Bill would be paid off partly by the costs on account held by the defendant law firm. Through this email, Chan also requested the plaintiff to pay:
25.It was also stated in the email that solicitors’ work done for settlement negotiation (if any) would be charged separately. 26.On 19 January 2022, the 3rd respondent in HCCW 467/2021 made a revised open offer to the plaintiff, and in response, the plaintiff made a counter-offer on 25 January 2022. 27.On 16 February 2022, the defendant law firm attended a call-over hearing of the Petition before Master Lai, in which the learned Master adjourned the hearing, and expressly asked the plaintiff to:
28.The defendant law firm then sent an email to the plaintiff on 21 February 2022 and informed him, inter alia, that:
29.After some negotiations, it was agreed between the plaintiff and Chan on 26 February 2022 that the 4th Fee Cap should be revised to $60,000 (“the Revised 4th Fee Cap”). The plaintiff then paid the defendant law firm the sum of $60,000 on 1 March 2022 as costs on account accordingly. 30.The plaintiff also paid off the amount due under the Second Bill by payments made on 1 March 2022 ($100,000), 10 March 2022 ($100,000) and 17 March 2022 ($100,933.9). 31.On 11 March 2022, the plaintiff was notified that the Company would convene another EGM. After reviewing the documents, the defendant law firm proposed certain possible actions in response, and provided the plaintiff with a corresponding fee estimate in the region of $100,000 to $120,000. 32.After negotiation, the defendant law firm agreed on 12 March 2022 to cap its fee at $80,000 (“the 5th Fee Cap”) which the plaintiff accepted. 33.The plaintiff then paid costs on account on 14 March 2022 in the sum of $80,000 as requested by the defendant. 34.On 12 May 2022, the defendant law firm issued the Third Bill to the plaintiff covering its work done from 12 January 2022 to 11 May 2022. Its breakdown is as follows:
35.Shortly after the Third Bill was issued on 12 May 2022, the defendant law firm received a letter from Messrs. Benny Kong & Tsai, Solicitors dated 12 May 2022 informing the defendant that they would take over the conduct of HCCW 467/2021 on behalf of the plaintiff. 36.For the purpose of the substantive hearing held on 15 March 2023, the plaintiff has helpfully prepared a summary of invoices and payment with the support of the relevant documents. Mr Cheung for the defendant fairly accepted that the information in the summary is accurate and has raised no objection against the plaintiff referring to this summary at the hearing. I therefore quote the said summary below:
THE PLAINTIFF’S GROUNDS IN SUPPORT OF TAXATION 37.In his 1st Affirmation filed on 30 June 2022, the plaintiff relied on the following two grounds in support of his application herein:
38.In his 2nd Affirmation filed on 29 August 2022, the plaintiff added that:
39.At the hearing, the plaintiff also argued that the Bills were not final bills as such, and therefore the time under section 67 of the Ordinance has not started to run yet when he filed the Originating Summons herein. He further alleged that the defendant law firm had charged him for work which should have been included in the agreed cap fees. 40.Moreover, the plaintiff was not satisfied that there were duplication of work done in the sense that the same work was done by Cheung and then Chan, and he was charged twice. THE RELEVANT LEGAL PRINCIPLES Section 67 of the Ordinance 41.Section 67 of the Ordinance provides that:
42.The combined effect of the above statutory provisions is that[1]:
43.I should add that, in my view, even if the client has paid the bill, he is still entitled to have the bill taxed as of right if he applies for an order for taxation within one month after the delivery of the bill (i.e. under Scenario (1)), and does not need to show any special circumstances as such. This is because Proviso (ii) under section 67(2)(b) of the Ordinance is only applicable to subsection (2), which in turn is only applicable to the situation where “if no such application is made within the period mentioned in subsection (1)” (i.e. application for taxation made within one month of the delivery of the solicitors’ bill). Special circumstances 44.If the bill falls within Scenario (3) above, then the Court should not order taxation of such a bill unless it is satisfied that there are special circumstances in the case. 45.In Sutherland v CRB (a firm) [2023] 1 HKLRD 1, Au-Yeung J had the following to say on the meaning of “special circumstances”:
Final bill vs interim bill 46.As to whether a bill should be regarded as an interim bill or final bill, Au-Yeung J held in Sutherland v CRB (a firm) (supra) that:
47.In an earlier authority Chinachem Charitable Foundation Limited (華懋慈善基金有限公司) v Wilkinson & Grist (a firm) [2021] HKCFI 3639, Anthony Chan J, having reviewed a number of authorities, endeavoured to provide the following “simple and logical roadmap of the principles” at [24]:
DISCUSSION 48.To recap, the Originating Summons herein was filed by the plaintiff on 30 June 2022, whereas the subject bills were issued on the following dates:
49.To decide whether an order for taxation should be made pursuant to section 67 of the Ordinance, the first issue which the Court has to resolve is: Out of the four scenarios as set out above, which scenario(s) the subject bills fall into. 50.To answer this question, the Court has to find out whether the time stipulated under section 67 has started to run; and if so, when it has so started to run. 51.This would depend on whether the subject bills are interim bills or final bills. Interim bills or final bills 52.I have already set out the principles which are relevant to the determination of whether the Bills are final bills. 53.In the present case, I am of the view that the defendant law firm did have the power to issue the Bills as final bills, because it has been so stipulated in Clause 8(d) of the Agreement, which provides that:
54.The plaintiff stated that he has just glanced through the Agreement quickly before he executed thereon, and that the defendant did not explain the content thereof to him at the time. 55.I do not think these assertions can assist him. 56.Firstly, as a matter of fact, it is evident that the defendant law firm had sent the draft Agreement and the Terms of Business to the plaintiff on 28 September 2021 for his perusal, and the plaintiff did, by virtue of his email dated 29 September 2021, indicate that he had read those documents, and make various comments thereon. According to the 2nd Affirmation of Ma, the defendant law firm did revise the Agreement pursuant to one of the comments made by the plaintiff and send the revised Agreement together with the Terms of Business to the plaintiff again on the same day for his perusal. The plaintiff then signed the Agreement. In these circumstances, any complaint or hint that he did not know or understand the terms of the engagement must fail. 57.Secondly, in any event, it is trite that where a person of full age and understanding has executed a document which purports to have legal effect as signifying his agreement thereto, the law has never regarded it as enough to show that he signed without knowing its contents, unless there is shown to be a recognized legal basis for concluding that the agreement has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity: Ming Shiu Chung & Others v Ming Shiu Sum & Others [2006] 2 HKLRD 831, at [84] – [90]. The plaintiff has not relied on any such recognized legal basis in the present case. 58.Apart from finding that the defendant law firm did have the power to issue final bills prior to the conclusion of the engagement, I am also satisfied that the Bills had indeed been delivered as periodic final bills, because it is stipulated in the Terms of Business that, the Bills, once issued, would be payable immediately, and if they were not paid within 7 days from the date of the Bills, the defendant would have the right to charge interest at 1% per month from the date of the Bills until full payment thereof. The defendant also had the right to suspend or even terminate the engagement if no timely payment was received.[2] It can also be seen that the defendant law firm did chase the plaintiff for payment of the Second Bill after its issuance. 59.Therefore, the time under section 67 of the Ordinance should run from the respective dates of the Bills. 60.In these circumstances, Scenario (1) and Scenario (4) can be ruled out in the present case because the Bills were issued more than one month but less than 12 months before the commencement of these proceedings. Whether the Bills had been paid 61.Whether the Bills should fall under Scenario (2) or Scenario (3) would depend on whether they had been paid by the plaintiff. If any of the Bills had been paid, then such a bill would fall into Scenario (3), under which the Court would not make an order for taxation unless the plaintiff can establish special circumstances. On the other hand, if any of the Bills has not been paid, then such a bill will fall into Scenario (2), and in which case the Court will generally be more inclined to order taxation: Lee Chi Enterprises Co Ltd v KC Ho & Fong (a firm) (HCMP 61/2007, unreported, 13 September 2007), at [21], followed in Sutherland v CRB (a firm) (supra), at [26(2)]. The First Bill and the Second Bill 62.The defendant law firm’s case is that both the First Bill and the Second Bill had been fully paid. 63.As aforesaid, by the time when the First Bill was issued on 22 October 2021, the plaintiff had paid the defendant $235,000 as costs on account. When the defendant issued the First Bill, the said costs on account was automatically applied towards the fees and disbursement payable under the First Bill, and as a result, it was shown in the First Bill that the balance of costs on account was reduced to $17,290. 64.It appears that the defendant was indeed entitled to apply the plaintiff’s costs on account towards the outstanding amount under the Bills pursuant to Clause 8.4 of the Agreement[3] and section 7(a)(iv) of the Solicitors’ Accounts Rule (Cap.159F, Laws of Hong Kong)[4]. The effect of the defendant’s application of such costs on account towards the due amount of fees before the First Bill was issued to the plaintiff is that if the plaintiff did not apply for an order for taxation within one month (i.e. under Scenario (1)), the plaintiff would not be able to obtain an order for taxation unless he can show that there are special circumstances in the case. In other words, such a case would never fall into Scenario (2). 65.The plaintiff argued that this legal consequence is quite unfair to him. However, that seems to me to be the legal effect of the arrangement. More importantly, it can be seen from the factual background recited above as well as the summary table of the plaintiff’s payment that the plaintiff did make three payments of $100,000, $100,000 and $100,933.9 respectively in March 2022 to settle the outstanding amount under the Second Bill. In my view, that should be seen as the plaintiff’s endorsement (if such an endorsement was still needed despite the provision of Clause 8.4 of the Agreement) for the defendant law firm to apply the costs on account towards its outstanding fees. Viewed in such light, there can be little doubt that the First and Second Bills must be regarded as having been paid for the purpose of section 67 of the Ordinance. The Third Bill 66.The Third Bill was issued on 12 May 2022. Excluding disbursements and expenses, there are 4 parts in this bill. 67.It is alleged by the defendant law firm that:
68.There is no dispute that the Third Bill has not been fully paid, in that the plaintiff has not paid Part 4 and the expenses and disbursements thereunder. For this reason, the defendant accepted that an order for taxation may be made in relation to these parts. The question is, if part of the Third Bill has not been paid, is the defendant entitled to ask the Court to dissect the bill as if different parts under the Third Bill would constitute different bills for the purpose of section 67 of the Ordinance? 69.In my view, there is no basis for the defendant law firm to interpret section 67 of the Ordinance in such a way. In Proviso (ii) under section 67(2)(b), it mentions that the proviso would be applicable “if the bill has been paid”. It does not say that “if a part of the bill has been paid”. The bill concerned should therefore be considered as a whole. In other words, unless the whole bill has been paid, the said proviso would not be applicable. 70.Hence, the Third Bill should be regarded as not having been paid yet, despite the defendant’s application of the plaintiff’s costs on account for the settlement of the amount claimed thereunder partially. Exercise of discretion in respect of the Third Bill 71.In the light of my conclusion above, the Third Bill should fall under Scenario (2), and in such a case, the Court would incline to make an order for taxation, even though the Court still retains a general discretion to refuse taxation. 72.If the plaintiff has made the application within one month after the issuance of the Third Bill, he would have been entitled to have it taxed as of right. As he had only been “late” for 3 weeks (he made the application herein within 7 weeks after the delivery of the Third Bill), this is a very forceful factor which weighs in his favour. 73.I have not lost sight of the defendant’s arguments that the defendant has charged the plaintiff in accordance with its estimation of fees as far as Part 1 is concerned (despite the fact that it was not obliged to do so), and it has only charged the plaintiff for the agreed capped fee in Part 2 and Part 3 of the Third Bill. However, as explained, I do not agree that the Court may treat different parts of the same bill differently for the purpose of section 67 of the Ordinance. I therefore do not think the Court may order that the taxation should only be limited to part of the bill. Those arguments referred to above therefore cannot assist the defendant. 74.Therefore, I would make an order for taxation of the Third Bill. Special circumstances 75.As aforesaid, the plaintiff has to show special circumstances in relation to the First Bill and the Second Bill. 76.To recap, the plaintiff argued that:
77.I have considered the defendant’s undisputed evidence as well as the First and Second Bills carefully. I am not satisfied that the plaintiff has made out his case on special circumstances for the following reasons:
78.I will therefore refuse to make any order for taxation in respect of the First Bill or the Second Bill. Conclusion 79.To conclude, this Court would only make an order for taxation in respect of the Third Bill. Interim payment 80.The defendant law firm submitted that any order for taxation should only be made on the condition that the plaintiff shall make a payment into Court (or pay the defendant) a sum of $300,000. 81.This submission was made on the basis that the plaintiff has not paid Part 4 or the expenses and disbursements of the Third Bill, in the total sum of $410,799.95. 82.In Lau Yue Kui, the administrator of the estate of Lau Wai Chau, deceased & Others v Philip Chan & Co (a firm) (CACV 75/2014, unreported, 29 December 2014), Cheung JA adopted a number of principles on interim payment of costs. In my view, those principles may be adapted as follows for the case of solicitors-client taxation[5]:
83.In the present case, the plaintiff has not alleged that he does not have the financial ability to satisfy any order for interim payment. Hence, the prime factor in the determination of the amount of interim payment would be the amount of fees/expenses/disbursements which could be reasonably taxed off by the taxing Master. 84.Adopting a “rough and ready” approach, I fix the amount of interim payment at $200,000. ORDER 85.For the above reasons, I give the following orders:
COSTS 86.Having taken into account the respective stance adopted initially by the parties and the outcome of the case, I make a costs order nisi that the plaintiff shall bear 75% of the defendant’s costs of these proceedings (including all costs reserved), to be taxed if not agreed. 87.The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof.
[1] See Sutherland v CRB (a firm) [2023] 1 HKLRD 1, at [26] [2] Clauses 8.1 and 8.3 of the Terms of Business [3] Clause 8.4 of the Agreement provides that: “We may also apply any money that we are holding for you (whether on account or otherwise) towards the settlement of any outstanding invoice.” [4] Section 7(a)(iv) of the Solicitors’ Accounts Rule reads: “7. There may be drawn from a client account — (a) in the case of client’s money— (iv) money properly required for or towards payment of the solicitor’s costs where a bill of costs or other written intimation of the amount of the costs incurred has been delivered to the client and the client has been notified that money held for him will be applied towards or in satisfaction of such costs” [5] At [28] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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