Chiu Sui Ching, The Administrator of the Estate of Leung Ho Tin, Deceased v. Cheng Kwai Hung t/a Hang Nagi Works and Others
Read the full judgment text of HCPI 939/2017 on BabelCite. This High Court CFI judgment.
1. Following the assessment hearing on 24-26 March and 28 April 2021, I handed down reasoned judgment (“ Written Judgment ”), corrigendum (“ Corrigendum ”) and ruling on interest (“ Ruling on Interest ”) in respect of the plaintiff’s (“ P’s ”) claim against the 1 st , 2 nd , 3 rd , 4 th and 5 th defendants (“ D1, D2, D3, D4 and D5 ” or collectively, “ Ds ”) on 11 November, 7 December and 7 December 2022 respectively. I granted (a) final judgment in the sum of $220,315.63 in favour of P agai
Cited by 7 cases · Cites 13 cases
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HCPI 939/2017 [2023] HKCFI 1417 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE PERSONAL INJURIES ACTION NO. 939 OF 2017 ________________________ BETWEEN
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________________________ DECISION ON COST ________________________ I. BACKGROUND 1.Following the assessment hearing on 24-26 March and 28 April 2021, I handed down reasoned judgment (“Written Judgment”), corrigendum (“Corrigendum”) and ruling on interest (“Ruling on Interest”) in respect of the plaintiff’s (“P’s”) claim against the 1st, 2nd, 3rd, 4th and 5th defendants (“D1, D2, D3, D4 and D5” or collectively, “Ds”) on 11 November, 7 December and 7 December 2022 respectively. I granted (a) final judgment in the sum of $220,315.63 in favour of P against Ds jointly and severally (“Judgment”), and (b) a costs order nisi that Ds shall jointly and severally pay P’s costs of and occasioned by the assessment of damages (including all costs reserved, if any) to be taxed on District Court scale if not agreed (“Costs Order Nisi”). 2.On 25 November 2022, D2-D5 filed a summons to seek various reliefs (“Summons”). A substantial part of the reliefs sought under the Summons was resolved by consent pursuant to 2 orders of DHCJ Simon Leung dated 30 December 2022 (“30/12/22 Order”) and 4 January 2023 (“4/1/23 Order”). 3.The plaintiff in this action was not legally aided. But on 6 December 2022, the Director of Legal Aid filed a Memorandum of Notification of an Application for Legal Aid to give notice that P had applied for legal aid to prosecute an appeal against the Judgment. 4.After this court granted the Judgment and the Costs Order Nisi, it transpired that earlier in the proceedings between 30 April 2018 and 22 October 2020 D2-D5 had made sanctioned payments into court in the total sum of $3,900,000 (“Sanctioned Payments”).[1] On 12 September 2019, Master Roy Yu ordered D2-D5 to pay interim payment to P in the sum of $550,000 (“Interim Payment”) out of the Sanctioned Payments, which meant that (a) prior to the Judgment P had already received $550,000 as interim payment, and (b) the remaining amount of the Sanctioned Payments in court was $3,350,000. 5.By the 30/12/22 Order, DHCJ Simon Leung granted an order by consent as follows:
6.By the 4/1/23 Order, DHCJ Simon Leung granted inter alia the following orders:
7.The 4/1/23 Order also granted case management directions for (a) filing/serving affidavit evidence and (b) lodging/serving written submissions to support and to oppose the Disputed Applications, and for paper disposal of the Disputed Applications. 8.On 25 November 2022 and 22 February 2023, D2-D5 filed the 2nd and 3rd affidavits of their solicitor Lam Bik Kwan Margaret (“Lam”) (“Lam 2nd Aff” and “Lam 3rd Aff”) respectively to support the Disputed Applications. On 1 February 2023, P filed the affirmation of her solicitor Pang Yiu Kwong (“Pang”) (“Pang Aff”) to oppose the Disputed Applications. 9.On 8 March 2023, Mr Sakhrani, counsel for D2-D5, and Mr Kwan, counsel for P, lodged their respective written submissions and list of authorities. 10.Paragraph 6 of Practice Direction 14.5 – Application for Wasted Costs Order under Order 62, rules 8, 8A, 8B and 8C (“PD14.5”) provides inter alia that “[the] application [for wasted costs order] should usually be heard by the Judge …… who dealt with the proceedings in which wasted costs are alleged to have been incurred, unless there are exceptional circumstances which dictate otherwise”. It has been said that “[in] almost every case, the judge who heard the substantive application will be the right judge to deal with consequential issues as to costs, even if he made findings adverse to a party in the course of reaching his conclusion” unless necessary exceptions, eg apparent bias, require recusal.[2] After all, the trial judge is particularly well-placed to evaluate the evidence served in support of an application for a wasted costs order as he can rely on his own impressions, but this does not in any way reduce the burden on the applicant to demonstrate the requisite factors for a wasted costs order. 11.For convenience, I shall adopt the abbreviations in the Written Judgment, the Corrigendum and the Ruling on Interest. II. LAM 2ND AFF 12.Lam noted that P by the RSoD claimed damages in the sum of $8,055,781.07, but the award under the Judgment was about 2.7% of P’s claim and less than the Interim Payment (which was overpaid by $397,598.72). 13.Lam said this court (a) heard evidence from P, the Sister, Chak and Tang at the assessment hearing, (b) found P was not a reliable or credible witness, and (c) did not accept P’s evidence as to fundamental elements of her case, eg (i) P alleged at the time of the death of the Deceased he contributed $5,000/month to her as household financial provision but this court found he at most paid $1,500/month to her as pocket money, and (ii) this court expressed concern over the contradictions between the SWD / HKHA Forms made by the Mother on the one hand and the 4/16/18 Parts of the Mother WStmt and the Mother’s oral evidence to the same effect on the other hand (“Discrepancies”). Lam said if the declarations in the SWD / HKHA Forms were true (as the Mother confirmed in evidence at the assessment hearing), it followed the claims in the Mother WStmt must be false, and this must have been abundantly clear to P’s solicitors, so the only inference to be drawn was that they deliberately turned a blind eye to this reality. 14.Lam noted the SWD / HKHA Forms came to light upon D2-D5’s specific discovery requests in the present action, so P’s solicitors must have been fully aware of the Discrepancies, and should have made enquiries (eg obtain reasonable explanation from P), but no proper explanation was adduced by way of, say, the Mother’s supplemental witness statement. 15.Lam referred to the Calderbank letters exchanged between P’s solicitors and D2-D5’s solicitors between 15 April 2019 and 25 February 2021, which were said to reveal the following:
16.Lam claimed that upon receipt of the aforesaid Calderbank letters from D2-D5’s solicitors, P’s solicitors should have reviewed P’s case, obtained proper explanation from P, “and adduced supplemental witness statement”, but no or no proper explanation by P was adduced, and the present action proceeded to the assessment hearing without support for P’s pleaded case by way of objective/credible evidence. Lam further claimed there was no credible basis to think P’s case could still be maintained with reasonable prospect of success to beat the Sanctioned Payments, and at the assessment hearing neither the Mother nor the Sister was able to provide any explanation when asked about the Discrepancies. 17.Lam said P was impecunious and not on legal aid, so D2-D5 / their insurers were concerned the significant amount of costs they had incurred since the commencement of the present action could not be recovered from P. Lam further said P’s solicitors should have properly advised P to realistically reconsider her position to avoid incurring unnecessary costs, especially when her case was obviously contradicted by objective evidence, ie the SWD / HKHA Forms and the Deceased SWD Forms. 18.Lam claimed that in light of the conduct of P’s solicitors, it was appropriate and just in all circumstances to make a wasted costs order against them to personally bear D2-D5’s costs. III. PANG AFF 19.Pang emphasised that filing/serving the Pang Aff should not be regarded as waiver of legal advice privilege. 20.For the Para 3 Application, Pang disclosed a letter dated 17 October 2019 by P’s solicitors to P (“17/10/19 Letter”) that enclosed a cheque for the Interim Payment with advice to P that “請注意,若上述案件結案時所判定 [P] 應得之賠償額少於上述金額, [P] 可能要支付 [P] 多收了 [D2-D5] 的中期付款額給予 [D2-5]”. 21.For the Para 5 Application, Pang did not see any reference in the Lam 2nd Aff to any improper/unreasonable conduct or any misconduct on the part of P’s solicitors (which Pang denied in any event), and he claimed P’s solicitors all along had acted diligently in taking instructions from P on D2-D5’s offers by way of their Sanctioned Payments (see copies of written instructions on divers dates[7] that P signed to give instructions to P’s solicitors for each stage of proceedings when D2-D5 made the Sanctioned Payments, “SP Written Instructions”). 22.The Pang Aff also disclosed (a) copy written instructions dated 18 February 2021 that showed P’s solicitors had duly taken instructions for settlement of the present action (ie to make a sanctioned offer to D2-D5 to settle the present action upon receipt of $6,600,000 (inclusive of interest), but D2-D5 did not accept such offer put forward by P’s solicitors on behalf of P), and (b) copy written instructions dated 18 December 2020 that P signed to confirm her intention to litigate despite D2-D5’s attack on the weaknesses of her evidence (eg D2-D5 claimed the Mother’s alleged dependency on the Deceased at $5,000/month was not supported by evidence, which appeared to be the weakest point in her claim, but P still wished to litigate and let the court decide the amount of compensation to be awarded) (“18/12/20 Instructions”). Pang believed that whether the court would accept the Mother’s evidence turned on her credibility as witness, so P’s claim could not be considered a hopeless case. 23.Pang also said P’s solicitors had informed and explained to P inter alia her various rights including her right to apply for legal aid as evident in paragraph 17 of the retainer agreement dated 27 April 2016 signed by P.[8] IV. LAM 3RD AFF 24.Lam said there was no lacuna in evidence as to the impugned conduct of P’s solicitors, which was clear from the chronology of discovery of the SWD / HKHA Forms:
25.Lam claimed that by/about 15 August 2018 D2-D5’s solicitors must have reviewed the 2012 HKHA Declaration and noted the discrepancies between the information therein and P’s case pleaded in the SoD, so when P’s solicitors prepared the Mother WStmt (exchanged on 25 October 2018 which was more than 2 months after disclosure of the 2012 HKHA Declaration) and the RSoD, they ought to have taken P’s instructions and demanded explanation on such discrepancies, but P’s solicitors “in breach of [their] duty to the court” knowingly prepared the Mother WStmt / RSoD without explanation for the aforesaid contradictions, and “caused [the Mother] to swear an oath on the contents therein”. 26.Even if P’s solicitors were not aware of the Discrepancies when they prepared the Mother WStmt, D2-D5’s solicitors by their Calderbank letter dated 15 May 2019 to P’s solicitors highlighted the discrepancies as to the dependencies on the Deceased between the HKHA Forms and the Mother WStmt, and thereafter repeatedly alerted/reminded D2-D5’s solicitors the same. Further, upon considering the subsequently disclosed SWD Forms, D2-D5’s solicitors also pointed out to P’s solicitors the discrepancies between P’s case and the SWD Forms as well as P’s failure to make full disclosure to SWD in respect of the EC she received.[9] There was still was no supplemental witness statement from P to account for the Discrepancies. 27.Lam contended that P’s solicitors disregarded the Discrepancies highlighted by D2-D5’s solicitors, and “deliberately proceeded with the claim unchanged”. The reply letter dated 17 May 2019 by P’s solicitors to the 3rd letter dated 15 May 2019 by D2-D5’s solicitors[10] merely stated “…… [P] is not impressed by [the letter by D2-D5’s solicitors] ……” without explaining what they meant and without providing any reasonable explanation for the Discrepancies. Lam claimed that in subsequent exchange of correspondence P’s solicitors “continued to adopt an evasive attitude and refrained from addressing the [Discrepancies] raised by [D2-D5’s solicitors]”. 28.Lam was unclear whether P’s solicitors consulted P when they prepared the reply letter dated 17 May 2019[11] because it was not until more than 1½ years later (ie on/about 18 December 2020) that P confirmed with P’s solicitors she understood the weaknesses of her case (ie the 18/12/20 Instructions). Lam said the Pang Aff did not demonstrate P’s solicitors had at any time properly advised P on the Discrepancies and the potential criminal and/or other consequences. 29.As regards the 18/12/20 Instructions that P signed, P knew D2-D5’s solicitors challenged her for not adducing evidence to prove the Deceased gave her $5,000/month as household financial provision, which would be her greatest weakness in the present action. Lam said it was plain and obvious P withheld evidence when the SWD / HKHA Forms showed she did not receive the Deceased’s contributions as alleged, which was the court’s eventual finding and which D2-D5’s solicitors pointed out to P’s solicitors on various occasions. Lam suggested whereas in any other case lack of documentary proof might well feed Pang’s assertion in the Pang Aff that it would be “a matter of credibility of witness whether Court will accept the evidence of [P], thus this action cannot be considered a hopeless case”, here “there was cogent (prior) documentary evidence that contradicted [P’s] bare allegations”. 30.Lam claimed P’s solicitors as officers of the Court owed a duty to the court not to pursue an unmeritorious claim on behalf of their client P when objective, unambiguous and unequivocal evidence by way of the SWD / HKHA Forms clearly indicated P’s pleaded claim or “instructions” were untenable, and there was simply no reason for P’s solicitors to believe P would be able to beat the Sanctioned Payments in view of the contrary evidence placed before the court. If P’s solicitors did not duly advise P despite their clear knowledge of the Discrepancies, it would be intentional omission on their part, disregarding their duty to P and to the court. If P’s solicitors duly advised P on the Discrepancies but P insisted on pursuing her claim, P’s solicitors ought to have ceased to act for P. Given the conduct of P’s solicitors, Lam considered it appropriate and just in all the circumstances for a wasted costs order to be made for P’s solicitors to personally bear D2-D5’s costs from the date of the Mother WStmt (ie from 25 October 2018) onwards. 31.As for the Para 3 Application, Lam said notwithstanding (a) the Repayment Order requiring P to repay to D2-D5 on/before 10 January 2023 the sum of $397,587.72 being overpaid Interim Payment together with interest thereon at 8%pa from 12 September 2019 to date of repayment and (b) a chaser letter dated 13 January 2023 by D2-D5’s solicitors, P still had not made any repayment to date, or offered any reply/explanation for the delay, or made any request for extension of time to repay. 32.The 17/10/19 Letter showed P’s solicitors advised P that in the case of overpayment, the overpaid Interim Payment “may have to” (可能要) be repaid to D2-D5,[12] but Lam claimed P’s solicitors ought to have known that if P was overpaid, the excess amount of the Interim Payment must be repaid to the paying defendants, and they erred in not properly advising P and/or possibly misleading P in this regard. V. PARA 5 APPLICATION 33.The essential bases for the Para 5 Application were inter alia: (a) given the material but unexplained Discrepancies, P’s solicitors (i) ignored the “reality” that (1) the Mother WStmt / RSoD were false “if” the SWD / HKHA Forms were true, (2) P must have withheld information and (3) P’s case had no or no substantial prospect of success, and (ii) failed to advise P to accept the Sanctioned Payments and to not pursue her claim in the present action, but (b) if P’s solicitors did advise P on the Discrepancies but P insisted on pursuing her claim, they should have ceased to act for her, but they did not and instead they “deliberately” progressed her claim to the assessment hearing despite her impecuniosity. 34.Nevertheless, despite the breadth of the Summons and the Lam 2nd Aff that asked for P’s solicitors to personally bear D2-D5’s costs in the present action, it appeared D2-D5 were not saying P’s solicitors knew at the outset P had no case that could have left the front door at all, but rather they claimed P’s solicitors should have realised so by the time the Mother WStmt was filed, so D2-D5 asked for P’s solicitors to bear their costs from 25 October 2018 onwards (or alternatively, according to Mr Sakhrani’s written submissions, “not less than 80% of [D2-D5’s] agreed or taxed costs that were incurred after 25 October 2018 (the date [the Mother/Sister WStmts] were filed) ……”). 35.On the other hand, P contended that a wasted costs order was wholly inappropriate in the circumstances, so the Para 5 Application should be dismissed with costs. (a) Jurisdiction 36.Section 52A of the High Court Ordinance Cap 4 (“HCO”) provides as follows:
37.The court has inherent power to prevent its process from being thwarted by abuse, used for improper purpose and/or used as an instrument of injustice, which is related to the court’s power to supervise its own officers. As explained by Litton JA (as he then was) in Ho Lee Man v Wong Wai Kai (No 2), “[the] source of the jurisdiction over solicitors in relation to the costs of legal proceedings, as regulated by O 62 r 8(1), is the inherent jurisdiction of the court to exercise control over its own officers, including solicitors”.[13] 38.In Ma So So v Chin Yuk Lun & anor,[14] Li CJ said in considering exercise of the statutory wasted costs jurisdiction, the court should approach the matter by dealing with the following questions: (a) whether the solicitor is responsible for (i) acting improperly or without reasonable cause or (ii) undue delay or any other misconduct or default in any proceedings, (b) whether such conduct of the solicitor has caused costs to be incurred or wasted,[15] and (c) whether the court should exercise its discretion to make the order (page 300). All 3 questions have to be answered in the affirmative before a wasted costs order can be made. 39.The jurisdiction to grant wasted costs orders should be exercised in reasonably plain and obvious cases, and the courts should approach their task with caution bearing in mind the need to carefully balance the tension between 2 important public interests, ie (a) that legal representatives should not be deterred from pursuing their clients’ interests for fear of incurring personal liability for costs to their clients’ opponents, and (b) that litigants should not be financially prejudiced by unjustifiable litigation conduct of the legal representatives of their opponents.[16] 40.The court has a parallel inherent jurisdiction to order a solicitor to pay wasted costs, but something more serious is needed than mere negligence.[17] However, as Jackson & Powell on Professional Liability explains, “it is difficult to foresee many circumstances in which it will be used given the easier requirements of the statutory provision”.[18] (b) General principles 41.The applicable principles in relation to the wasted costs jurisdiction are well-established. I do not think Mr Kwan and Mr Sakhrani[19] were in disagreement over such principles although they had some differences in emphasis in their submissions. I have set out the principles extracted from Hong Kong Civil Procedure 2021[20] in paragraph 171 in Liu Hui Hong, the personal representative appointed to represent the estate of Li Shiyou, deceased (by carry on order dated 30 September 2015) & anor v Fong Wai Meng & ors,[21] which I adopt but do not repeat here. But it is useful for the present purpose to reiterate some general principles. 42.Improper/unreasonable conduct In Ridehalgh v Horsefield & anor, Sir Thomas Bingham MR (as he then was) explained that the word “improper” connotes conduct which is regarded as improper according to the consensus of professional opinion, and the word “unreasonable” connotes conduct which is vexatious or designed to harass the other side rather than to advance the resolution of the case:[22]
“Improper” is plainly the more “serious” category of conduct concerned, but “it does not require proof of bad faith”.[23] “It would perhaps be more accurate to describe [the impugned conduct] as conduct which involves a failure on the part of the solicitor to fulfil his duty to the court and to realise his duty to aid in promoting in his own sphere the cause of justice (Myers v Elman [1940] AC 282; KB Chau & Co (a firm) v China Finance Trust & Investment Corp [1995] 2 HKLR 567 (CA). The conduct must be inexcusable and such as to merit reproof (J v C [1995] 1 HKLR 19). The test was whether the conduct amounted to a serious dereliction of duty (Que Jocelyn Co (t/a Scented Delights) v Broadair Express Ltd [1999] 3 HKLRD 104)”.[24] 43.Both Mr Sakhrani and Mr Kwan agreed that mere mistake or error of judgment or even negligence is not sufficient.[25] It has been said that “…… any impropriety should be very serious …… There had to be something akin to abuse of process. It is a necessary requirement of any wasted costs order that there should be a breach of the lawyer’s duty to the court, there be something more than mere negligence for the wasted costs jurisdiction to arise ……”[26] 44.In Dolphin Advertising Ltd v Tronken Enterprises Ltd,[27] Harris J noted that section 51(7)(a) of the English Supreme Court Act 1981[28] defines wasted costs to mean any costs incurred by a party “as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative ……” (my emphasis), and held that the omission of negligence from the equivalent local provision, ie section 52A of the HCO, was not inadvertent. Consideration had been given to lower the threshold for liability to “encompass cases where wasted costs are incurred as a result of negligence which does not itself amounts to a species of misconduct, along the lines adopted in England and Wales”,[29] but such proposal was rejected. As Harris J explained at page 142, the correct approach is to ask at the 1st stage in the exercise of the wasted costs jurisdiction[30] whether there is prima facie evidence of conduct that is improper, or constitutes an unreasonable act or omission, or amounts to misconduct or default, so as to engage section 52A of the HCO. I pause to note here that the English authorities that rely on the “negligence” limb of the wasted costs regime, eg Maurice Dempsey v Allan Johnstone,[31] should be read with caution given the absence of this criterion in Hong Kong. I will return to the “negligence” limb below to highlight the difference in meaning between “negligent” on the one hand and “improper” or “unreasonable” on the other hand since the former threshold, which is irrelevant in Hong Kong, is not to be applied for invoking the local wasted costs jurisdiction. 45.Causation As seen in paragraph 47 below, the wasted costs jurisdiction is also “compensatory and not merely punitive”.[32] It is essential for the party claiming for a wasted costs order to prove causation, ie to demonstrate a causal nexus between the improper or unreasonable conduct (or other misconduct or default) complained of and the wasted costs that have been incurred and are being claimed.[33] 46.Jackson & Powell on Professional Liability[34] says as follows:
Thus, an applicant for a wasted costs order must bring before the court proper evidence to identify what costs have been caused by the impugned conduct. 47.Compensatory/punitive nature The nature of the wasted costs jurisdiction is said to be (a) compensatory in the sense the costs ordered to be paid by the respondent solicitors under a wasted costs order cannot exceed the amount of costs incurred and wasted, and also (b) punitive to the extent the wasted costs order shifts the burden of costs from a party who will otherwise be liable onto the solicitor.[37] In Medcalf v Mardell & ors, Lord Hobhouse said as follows:[38]
48.Legal professional privilege Legal professional privilege gives rise to practical difficulties for an application for a wasted costs order. The solicitor has a legal and professional duty to uphold his client’s arguable rights to legal professional privilege.[39] As explained by Sir Thomas Bingham MR (as he then was) in Ridehalgh, “…… it is the client’s privilege, which he alone can waive …… [the] privilege is not [the respondent solicitor’s] to waive ……” (page 237). So before a respondent solicitor can use arguably privileged material, he has to consult his client, ask his client whether he consents to use of such material, and allow his client to assert any rights he believes he has. There is necessarily a tension between the respondent solicitor’s interest in seeking waiver of privilege to help defend a wasted costs application and his client’s interest in maintaining privilege, which means the respondent solicitor cannot advise his client on whether right of privilege subsists, and if so, whether to waive such right of privilege. As Sir Thomas Bingham MR (as he then was) explained in Ridehalgh, the former may well feel bound “to advise that the client should take independent advice before doing so [ie waiving privilege]” (page 237). In the absence of a court decision that no privilege subsists or informed waiver by the client pursuant to independent legal advice, the respondent solicitor cannot reveal matters that are arguably subject to legal professional privilege. 49.Thus, respondent solicitors responding to a claim for wasted costs may labour under significant difficulties in defending their conduct before the court if their client declines to waive privilege, so the judge must make allowance for the solicitors’ inability to tell the whole story, and in cases of doubt they are entitled to the benefit of the same. The Court of Final Appeal in Ma So So reminded as follows (page 302):
In this respect, Li CJ referred to Lord Bingham’s observations in Medcalf at page 136 as follows (page 302):[41]
50.In Medcalf, Lord Bingham at pages 136-137 emphasised 2 matters:
51.Lord Hobhouse in Medcalf referred to the principles stated in Ridehalgh and stated as follows at page 146:
52.Medcalf concerns allegations of fraud contained in a notice of appeal drafted by leading/junior counsel. In the application for a wasted costs order against the barristers, the question was whether they had before them reasonably credible material that established a prima facie case of fraud. To justify their pleading, the barristers needed waiver of privilege from their clients to release the relevant materials, but there was no such waiver. Lord Steyn at page 139 held that the burden of proof was on the party claiming wasted costs and there was no shift in evidential burden “where barristers are prevented by professional privilege from telling their side of the story”, and he went on to say as follows:
53.Jackson & Powell on Professional Liability[42] accepts that “…… [in] some cases, the court can come to a clear decision despite the absence of any waiver of privilege by making assumptions in the lawyers’ favour or by concluding (where an error had been admitted) that legal professional privilege made no difference. However, there is a limit to what the courts will be prepared to assume. In Dempsey v Johnstone (Wasted Costs Order), the Court of Appeal was unwilling to infer from the fact that legal aid had been extended to trial that the lawyers were asserting that there were good prospects of success”. 54.In Maurice Dempsey, a wasted costs order was made against the claimant’s solicitors for their “negligence” (based on the English provision equivalent to section 52A of the HCO, but see Harris J’s observations in Dolphin Advertising Ltd in paragraph 44 above) in pursuing a hopeless case that was eventually struck out. The question under the “negligence” limb of the English statutory provision was whether no reasonably competent solicitor would have evaluated the chance of success as justifying continuation of the claim. I will return to this English “negligence” limb (which has no applicability in Hong Kong) below, but suffice to state here that as regards legal professional privilege Latham LJ said as follows:
(c) Procedure 55.Rules of High Court Order 62 rules 8, 8A and 8B of the Rules of the High Court (“RHC”) provide as follows:
56.Summary jurisdiction It was made clear in Ma So So that the summary jurisdiction under Order 62 rule 8 of the RHC is confined to questions that are suitable for summary determination,[43] which will usually be clear cases: where the need for an order is reasonably obvious and where there is a clear picture of the solicitor’s fault (page 301).[44] Lord Bingham at page 136 in Medcalf citing Harley v McDonald[45] gave examples of such clear cases, such as “…… [failure] to appear, conduct which leads to an otherwise avoidable step in the proceedings or the prolongnation of a hearing by gross repetition or extreme slowness in the presentation of evidence or argument ……”, which matters “…… can thus be dealt with summarily on agreed facts or after a brief inquiry if the facts are not all agreed”. While the desirability of compensating litigating parties who have been put to unnecessary expense by the unjustified conduct of their opponent’s legal representatives is an important public interest, it is only one of the public interests which have to be considered. Another important consideration is that “any hearing to investigate the conduct of a complex action is itself likely to be expensive and time-consuming” (page 136). 57.Thus, the Court of Final Appeal in Ma So So reminded judges to be astute to control any application for wasted costs from becoming a new and costly form of satellite litigation (page 301).[46] A wasted costs application should not be allowed to go forward if it cannot be dealt with by means of a simple and summary procedure and at a cost which is proportionate to the sum claimed. Elaborate pleadings and interlocutories such as discovery or interrogatories are generally inappropriate. “Hearing should be measured in hours, and not in days or weeks.”[47] This is especially so in the context of the court exercising its supervisory jurisdiction over its own officers. Justice is served so long as the procedure is fair in that the respondent solicitor is “very clearly told what he is said to have done wrong and what is claimed” and opportunity is given for him to answer the claim.[48] In Burkhard Hedrich &anor v Standard Bank London Ltd,[49] Ward LJ said as follows:
58.In short, the applicant party for a wasted costs order against his opponent’s solicitors has to satisfy both a merits test and a proportionality test,[50] which is now enshrined in PD14.5 as follows:
59.2-stage approach Ma So So noted the summary jurisdiction under Order 62 rule 8 of the RHC, which is discretionary, is to be exercised in 2 stages:[51]
60.Paragraph 13(1)-(3) of PD14.5 elaborates on the procedural approach by noting that procedural issues arise at 3 points: (a) when an application is initially made by a party,[52] (b) at the 1st stage when the court decides whether the proceedings should proceed further,[53] and (c) at the 2nd stage when the court proceeds to a substantive assessment of the application.[54] 61.On (a) above, ie the initial application, PD14.5 provides as follows:
62.On (b) above, ie the 1st stage, PD14.5 provides that the court must be satisfied the evidence before it, if unanswered, would likely lead to the making of a wasted costs order, and the wasted costs proceedings are justified notwithstanding the likely costs involved:
In Persuad v Persuad & ors,[55] Peter Gibson LJ said at page 4 that “…… [as] is made clear in Ridehalgh v Horsefield [1994] Ch 205 at page 239D per Sir Thomas Bingham giving the judgment of this court (consisting of himself, Rose and Waite LJJ), the first stage is no mere formality but requires the court to exercise its discretion judicially having regard to the case put by the party seeking the order. A strong prima facie case must be shown ……” 63.On (c) above, ie the 2nd stage, PD14.5 provides the respondent legal representative will have an opportunity to give reasons or show cause why the wasted costs order should not be made, and then the court is to consider in light of such evidence whether to make the wasted costs order:
(d) Procedural defects 64.In my view, Mr Kwan was right in submitting that D2-D5 failed to follow the requisite procedures for the Para 5 Application:
65.Mr Kwan submitted the above defects were no mere technicalities for they went to the crucial matter of whether P’s solicitors knew what allegations were made against them. Li CJ in Ma So So made clear “[the] solicitor concerned should be informed of the allegations made against him: the conduct complained of, how such conduct caused costs to be incurred or wasted and all other circumstances relied on” (page 304). The importance of procedural compliance in this regard by the applicant for a wasted costs order was underlined by paragraph 18 of PD14.5 which provides that “[the] less clear the complaint is and/or the more complicated and wide-ranging the particulars are, the less likely that it will be that the Court will be prepared to allow the matter to proceed to the second stage hearing”.[66] 66.In my view, the rationale for this is clear. First, fairness and justice demand that a legal representative (in contra-distinction to the litigant whom he represents) should know clearly and precisely why it was said he should be visited with a costs order payable to the opposing party. Secondly, whilst the legal representative need not file any evidence for the 1st stage, he is free to do so if it is desired to place some important item of evidence before the court for the purpose of its decision at the 1st stage (see paragraph 21 of PD14.5), and the legal representative cannot effectively do so unless (a) clear and precise particulars are given in the summons and (b) the supporting affirmation verifies the facts alleged in the particulars of complaint and identifies the evidence or other material on which the applicant relies in support. 67.Here, D2-D5 only set out the fullness of their case against P’s solicitors in the Lam 3rd Aff (ie after the Pang Aff was filed). For example, the Lam 3rd Aff for the 1st time stated (a) if P’s solicitors had duly advised P on the Discrepancies but P insisted on pursuing her claim then P’s solicitors should have ceased to act in the present action,[67] and/or (b) the wasted costs that P’s solicitors should personally bear were D2-D5’s costs from the date of the Mother WStmt (25 October 2018) onwards[68] (and it later transpired from Mr Sakhrani’s written submissions that D2-D5 invited the court to grant a wasted costs order on such basis “or alternatively not less than 80% of [D2-D5’s] agreed or taxed costs that were incurred after 25 October 2018 (the date [the Mother WStmt and the Sister WStmt] were filed) to be paid by [P’s] solicitors to [D2-D5]”), but it was far too late to give fair opportunity for P’s solicitors (if they so wished) to file responsive evidence to deal with the allegations made in the Lam 3rd Aff. 68.Further, I note the title of Mr Sakhrani’s written submissions was “For [P’s] solicitors to show cause”, which in conjunction with the last paragraph therein showed that D2-D5 appeared to have jumped over the 1st stage envisaged in Order 62 rule 8B(1)(a) of the RHC and paragraphs 23-25 of PD14.5[69] and proceeded directly to the 2nd stage (a) by having P’s solicitors to show cause why a wasted costs order should not be made, and (b) by inviting this court to now grant a wasted costs order against P’s solicitors as set out in paragraph 67(b) above. But as Order 62 rule 8B(2) of the RHC and paragraph 26 of PD14.5[70] provide, it is only when the court is satisfied a legal representative has already had a reasonable opportunity to show cause by giving reasons why the court should not make a wasted costs order that the court may proceed to the 2nd stage without adjournment from the 1st stage. But as seen in paragraph 67 above, P’s solicitors at this stage did not yet have reasonable opportunity to address the fullness of D2-D5’s particulars and/or facts/materials (especially those in the Lam 3rd Aff) in support of the wasted costs order sought, so no wasted costs order could be granted at this 1st stage in any event. (e) Duty to the court 69.Solicitors’ function/responsibilities The starting point is that a barrister (in my view, likewise a solicitor) “must promote and protect fearlessly and by all proper and lawful means his lay clients’ interests ……”[71] Lord Hobhouse at page 141 in Medcalf notably explained as follows:
70.Duty to client’s opponent? The solicitor owes no duty to his client’s opponent. Any such duty will be fundamentally inconsistent with the adversarial legal system because inevitably the proper discharge by the solicitor of his duty to his own client will more often than not be disadvantageous to the interests of his client’s opponent.[72] 71.Duty to the court As Lord Hoffmann explained in Arthur J S Hall & Co (a firm) v Simons, “[lawyers] conducting litigation owe a divided loyalty. They have a duty to their clients, but they may not win by whatever means. They also owe a duty to the court and the administration of justice ……”[73] Where the solicitor’s duty to the court comes into conflict with his client’s wishes or what the client thinks are his personal interests, the overriding duty that the solicitor as an officer of the court owes to the court eclipses all other duties.[74] The underlying purpose of the paramountcy of the solicitor’s duty to the court is to protect the public interest in the administration of justice. It is a duty to act with independence in the interests of justice. 72.As explained by Lord Hobhouse at page 142 in Medcalf, which explanation reflects the public interest in the administration of justice, the duties that the professional advocate, whether solicitor or barrister, owes to the court arise out of the distinctive role and position of the advocate in the legal system and the special relationship between the advocate and the court, and represent the price which he must pay for the privileges and immunities he enjoys:
73.But at the same time, given that the duty to the court serves a vital public interest in the proper administration of justice, the court is empowered to enforce appropriate behavior by legal representatives so as to achieve such end, notwithstanding the caution urged by Lord Hobhouse in the exercise of the wasted costs jurisdiction. Consequently, “…… the Court has a right and a duty to supervise the conduct of those appearing before it, and to visit with penalties any conduct of a lawyer which is of such a nature as to defeat justice in the very same cause in which he is engaged professionally”.[75] 74.The circumstances that may give rise to breaches of the duty to the court are infinite. While it is impossible to enumerate them all, the content of such duty is set out in the case authorities,[76] and also find expression in The Hong Kong Solicitors’ Guide to Professional Conduct. Solicitors are required to act professionally with fairness and integrity, and they have a general duty not to mislead the court and/or not to abuse the court’s process. Further, the integrity of the legal system also requires solicitors (irrespective whether or not they are so instructed) not to bring proceedings or to make claims for ulterior purpose. 75.Ulterior purpose Taking the last point first, solicitors should not distort the course of justice by using litigation procedures for purposes for which they are not intended, eg (a) pursuit of a claim known to be dishonest in order to harass the opposite party, (b) issuing or pursuing proceedings for purposes unconnected with success in the litigation, eg to generate costs for the solicitors or to gain a temporary bargaining position rather than to vindicate the client’s rights,[77] (c) lodging and pursuing an appeal which the solicitors know is manifestly hopeless and will not go ahead to full hearing, eg as delaying tactic to postpone payment, to resist execution[78] or to pressure the opposite party to accept a lower sum to dispose of the matter. 76.An example of (a) above in Tolstoy-Miloslavsky v Aldington,[79] which is discussed in paragraphs 113 below. 77.An example of (b) above is Re Estate of Lau Heung[80] cited by Mr Sakhrani. In that case, the plaintiff beneficiary of his father’s estate issued an originating summons against the executor defendants seeking inter alia an account of the estate and interim payment. The estate monies were deposited into a bank account in the executors’ joint names. It was eventually agreed that the plaintiff was at least entitled to an undisputed sum for which the executors were prepared to make interim payment, but one of the executors (Deng) being resident in Mainland China was unable to come to Hong Kong to authorise payment out of the bank account for the interim payment and to complete the account. On 6 October 2020, the executors’ solicitors sent a without prejudice letter to the plaintiff’s solicitors (a) stating Deng had secured a 3-month exit and re-entry permit and could stay in Hong Kong until 20 December 2020, (b) enclosing a cashier order for the undisputed sum and interest thereon until 7 April 2020, and (c) proposing inter alia to render the account on/before 20 December 2020, and asked to vacate the hearing of the originating summons with no order as to costs. The plaintiff’s solicitors replied by open letter on 7 October 2020 seeking payment of the undisputed sum, the account and costs of the originating summons in the sum of $135,000 otherwise the plaintiff would issue a joinder summons to join the bank for a vesting order. The plaintiff’s solicitors in asking whether Deng could come to Hong Kong to authorise payment of the undisputed sum (i) ignored the without prejudice letter by the executors’ solicitors,[81] (ii) relied on an earlier affirmation filed by the executors to the effect that Deng was previously unable to travel to Hong Kong, and (iii) deliberately did not present the cashier order for payment because, as evident from the plaintiff’s eventual skeleton submissions, “[they] considered that they should turn a blind eye to what was said in without prejudice communications” (page 549). 78.When the executors’ solicitors did not respond on the next day, the plaintiff filed a joinder summons. Then, on the following day, the executors (a) by open letter reminded the plaintiff’s solicitors of the earlier without prejudice letter and the cashier order, and urged the plaintiff’s solicitors to withdraw the joinder summons, and (b) by without prejudice letter offered to pay interest on the undisputed sum after 8 April 2020 and to pay costs of the originating summons in the sum of $33,750, confirmed completion of the account as proposed earlier, and suggested vacating the upcoming hearing. The executors’ solicitors also explained that the cashier order was not without prejudice but was for distribution of the estate to the plaintiff, and confirmed that receipt of the cashier order would not bind the plaintiff to any terms proposed in the without prejudice letter in (b) above. But the plaintiff’s legal team considered they could not act on such assertions, and ignored the cashier order and the fact Deng had arrived in Hong Kong. 79.DHCJ To considered the joinder summons was unnecessary as the plaintiff essentially got what he asked for, and the only outstanding issue was the amount of costs of the originating summons, so he ordered the plaintiff to pay the executors’ costs of the joinder summons with certificate for counsel to be taxed if not agreed. As regards the plaintiff’s solicitors, the learned judge found they took a mechanistic approach, turned a blind eye to disclosed facts (albeit in without prejudice letters), and sought an unnecessary confirmation by their letter dated 7 October 2020 to which they knew the answer (pages 557-558). Also, there was no satisfactory answer why, when the cashier order was to hand, they would still (a) issue the unnecessary joinder summons except for the de minimus interest after 7 April 2020 which the executors promptly agreed to pay within 3 days, and (b) proceed with the hearing of the unnecessary joinder summons (which was doomed to fail with costs against the plaintiff and which was eventually withdrawn) to argue just for costs (pages 558-559). The learned judge considered it quite improper to take out the joinder summons (and thereby to incur disproportionate costs) to coerce the executors to comply with the demand for costs of the originating summons or additional interest (pages 559-560), and he went on to say as follows at page 560:
80.I note that in Re Estate of Lau Heung the abuse was clear and obvious and required no further investigation because (a) the plaintiff’s solicitors already had the cashier order to hand which showed Deng was already in Hong Kong, (b) the interest after 7 April 2020 was de minimus and was met by the executors’ prompt offer to pay the same, and (c) the executors had agreed to render the account by 20 December 2020 before Deng returned to Mainland China. There was nothing more to be gained by the unnecessary joinder summons, which was not to the plaintiff’s interest since there was foreseeable risk of adverse costs order that eventually materialised. In my view, this case is a good illustration of the straightforward and obvious nature of the necessary abuse required to attract a wasted costs order. 81.An example of (c) above is Re Labour Buildings Ltd[82] which is discussed in paragraphs 189-191 below. 82.However, conduct is not unreasonable simply because it led to an unsuccessful outcome or because some other more cautious solicitors would have acted differently. It is not unreasonable to be optimistic and “…… [the] acid test is whether the conduct permits of a reasonable explanation ……”[83] 83.Duty not to mislead the court There is a general duty of legal representatives (including solicitors) not to mislead the court. Where the litigation solicitor consciously or knowingly misleads the court by act or omission, the inevitable inference is that he has deceived the court and acted dishonestly. The court regards this as one of the most serious offence that a litigator can commit as “such conduct is a fundamental affront to a rule designed to safeguard the fairness and justice of proceedings”.[84] 84.As regards the content of such duty not to mislead the court, the litigation solicitor must refrain from, say, consciously or knowingly misstating the true facts, stating untrue facts, concealing facts which should have been drawn to the court’s attention and/or permitting the client to deceive the court. A solicitor must also refrain from knowingly causing a witness to give incorrect evidence, or allowing a witness to give evidence which he knows to be false, or knowingly permitting the client to attempt to deceive the court. If these duties conflict with the solicitor’s duty of confidentiality to the client, the solicitor’s duty to the court is paramount.[85] 85.Mr Sakhrani referred to The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 which provides as follows:
86.An illustrative example is Vernon v Bosley (No 2).[86] In that case, 2 of the plaintiff’s children (who were passengers in the car driven by the defendant) were killed when the car went off the road and plunged into a river. The plaintiff sued the defendant for damages for personal injuries suffered as secondary victim. The defendant admitted liability and the plaintiff was awarded substantial damages. The award for damages was reduced on appeal. But before the final order was drawn up, the defendant’s counsel received anonymous information that the expert medical evidence adduced by the plaintiff in the county court family proceedings between him and his wife (from the same experts called in the personal injuries action) suggested the plaintiff had improved dramatically and had a more optimistic prognosis. The plaintiff’s legal advisers had known of the improved prognosis before judgment was given in the personal injuries action, but advised the plaintiff not to disclose that fact to the judge, the defendant’s advisers or the English Court of Appeal. Stuart-Smith LJ held that “…… where the case has been conducted on the basis of certain material facts which are an essential part of the party’s case, in this case the plaintiff’s condition at trial and the prognosis, which were discovered before judgment to be significantly different, the court is not being misled by the failure of the defendant to put before it material of which she could or should have been aware, but by the failure of the plaintiff and his advisers to correct an incorrect appreciation which the court will otherwise have as a result of their conduct of this case hitherto” (page 699).[87] 87.Vernon was different from the present case in that, notwithstanding Lam’s and Mr Sakhrani’s complaints that the Discrepancies were not alluded to and/or explained in the Mother WStmt / RSoD, (a) the SWD / HKHA Forms and the Deceased SWD Forms were adduced as evidence before this court at the assessment hearing, and (b) this court was not misled by any total non-disclosure of inconsistent evidence. 88.This brings me to 3 further points in relation to the duty not to mislead the court in the context of the adversarial legal system. First, solicitors must not connive at the client’s falsity, assist in the client’s improper/dishonourable conduct and/or help to substantiate a fraud (eg in circumstances when the solicitors learn that the client intends to give deliberately false evidence at the trial). As explained above, where there is conflict between the solicitor’s duty to the court not to corrupt the proper administration of justice and the duty to the client to advance his best case, the former prevails and is paramount. But if the solicitor only has a suspicion but no proof of falsity, it is for the court and not for the solicitor to determine the reliability of the client’s or the witness’ testimony.[88] 89.Secondly, the fact that a solicitor must not mislead the court or misstate the facts to the court does not mean that he or she must, in all the circumstances, disclose all the facts to the court, eg (a) solicitors for the defendant have no duty to bring to the court’s attention facts favourable to but not proved by the plaintiff, or (b) where in a civil case there may be several witnesses who can speak to a certain matter of fact with some supporting one side and the others the opposite case, neither the litigant nor his legal representatives are bound to call those witnesses who do not support their case.[89] There is a distinction between falsifying/ fabricating evidence or knowingly presenting false evidence whether by act or omission (which is not allowed) and not disclosing evidence (which is allowed).[90] Commentary 6 under Principle 10.03 in The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 provides as follows:
90.Thirdly, as noted in The Hong Kong Solicitors’ Guide to Professional Conduct, “[in] general, there is no duty upon a solicitor to enquire in every case where he is instructed as to whether his client is telling the truth and it will be for the court, and not the solicitor, to assess the truth or otherwise of the client’s statement”,[91] and “[if], either before or during the course of the proceedings, a client makes statements to his solicitor which are inconsistent, this is not of itself a ground for the solicitor to refuse to act further on behalf of the client”.[92] In short, no general obligation is imposed on the litigation solicitor to conduct pre-trial screen of his client’s case claim or defence. To require a litigation solicitor to conduct a pre-trial screen will put him in a position of conflict by making him a preliminary assessor or judge of the issue in dispute. 91.This was aptly summarised in the headnote in Orchard v South Eastern Electricity Board “…… that the jurisdiction to order a solicitor to pay the costs of the opposing party under R.S.C., Ord. 62, r. 8 could be exercised only where it was clear that he was guilty of a serious dereliction of duty or serious misconduct, and should be exercised with care and discretion; that, although a solicitor should not assist a litigant where prosecution of a claim amounted to an abuse of process it was not his duty to attempt to assess the result of a conflict of evidence or to impose a pre-trial screen on a litigant’s claim or defence; that such a charge of misconduct against a solicitor ought not to depend on inference without direct evidence ……” (my emphasis).[93] 92.In that case, the legally aided plaintiff sued the electricity board claiming damages for negligence and breach of statutory duty. He alleged that due to defects in electricity supply, electricity was escaping in the vicinity of his house and heating water in the earth so it turned to steam or changed into its constituent gases, giving rise to penetration of the concrete floors by water, appearance of water from electricity sockets, and other physical phenomena eg movement of objects in the house. Surprisingly, these allegations were supported by the evidence of an independent expert. The action was dismissed after trial, and the judge held that the events complained of were caused by the plaintiff’s son, and that the plaintiff / his wife must have realised that from an early stage. The board asked after judgment for an order against the plaintiff’s solicitors to pay their costs. 93.Sir John Donaldson MR explained the solicitors’ duty in relation to the veracity of their client’s case as follows (page 572):
94.Sir John Donaldson MR’s views were cited with approval by the Court of Appeal in Ho Lee Man (No 2). In that case, Litton JA (as he then was) said as follows (page 196):
95.Turning back to Orchard, the English Court of Appeal emphasised the importance of not viewing the matter through the prism of hindsight wisdom (which echoed the observations by DHCJ To in Pine Enterprises Limited v Cyber Strategy Ltd & anor[94] in paragraph 214 below). In that case, the fact that a trial witness was rejected as wholly unbelievable did not serve to impugn the conduct of the plaintiff’s legal representatives as they brought the action on the basis of independent observations of the phenomena and the supporting expert report. It was found that legal aid was properly granted, and that the plaintiff’s solicitors/counsel had acted properly. 96.Whilst I am on Orchard, I should also refer to Dillon LJ’s observations on the impact of legal professional privilege. He noted the board had difficulty in discharging the onus of establishing on balance of probabilities that the plaintiff’s solicitors were guilty of requisite dereliction of duty or serious misconduct (page 579) as they did not know what passed between the plaintiff’s solicitors and the plaintiff since such matters were privileged, which privilege belonged to the plaintiff and not to his solicitors or the board. So the board had to rely on the fact that the plaintiff’s case was quite bizarre (page 578), and to “…… ask the court to draw inferences from the weaknesses of the plaintiff’s case, as formulated from time to time, to which the defendants’ solicitor repeatedly drew the plaintiff’s solicitors’ attention from the outset of the proceedings” (page 579). But Dillon LJ said at page 580 as follows:
97.The absence of obligation to conduct pre-trial screen in respect of the client’s claim or defence is also reiterated in Wee Soon Kin Anthony v Law Society of Singapore[95] which concerns disciplinary procedures of the legal profession. In that case, the plaintiff complained that a solicitor GSH as well as GSH’s solicitors made reckless allegations against him, and that GSH’s solicitors failed to take reasonable steps to verify the truth of GSH’s statements before preparing or filing GSH’s affidavit. The Council of the Law Society found inter alia that GSH’s solicitors were merely acting on instructions, and were under no duty to verify the truth of GSH’s statements. On appeal, it was held that the complaint against GSH’s solicitors were wholly without merit as they were under no duty to verify the truth of GSH’s statements. Chan Sek Keong JC said as follows at page 462:
98.Hopeless cases Solicitors owe a duty not to abuse the court’s process by the “improper” initiation/continuance of legal proceedings,[96] but solicitors are not liable for pursuing an action which proved wrong but not manifestly inappropriate.[97] I reiterate the observations by Sachs J in Edwards v Edwards,[98] which Sir John Donaldson MR referred to in Orchard and which Litton JA (as he then was) cited in Ho Lee Man (No 2) in paragraphs 93-94 above. 99.A solicitor may be placed in a difficult position when his client wishes to pursue what the solicitor may consider to be a hopeless case. In such circumstance, the solicitor is obliged to advise the client that his case is hopeless and urge him not to bring his case. Principle 10.18 of The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 states that “[a] solicitor must inform his client if a proposed or continuing action has no prospect of success as a matter of law”. 100.But as a matter of well-established principle, the fact legal representatives act for a party who advances a hopeless case is not itself a ground for making a wasted costs order.[99] In Ridehalgh, Sir Thomas Bingham MR (as he then was) said as follows:[100]
101.Likewise, Lord Hobhouse said at page 143 in Medcalf as follows:
102.The above principles are neatly summarised by Jackson J in Lady Archer v Williams[101] as follows: “[the] mere fact that lawyers have pursued a hopeless case or hopeless defence does not mean that their conduct was improper, unreasonable …… It is often the duty of lawyers to put forward a hopeless claim or hopeless defence, if the client has rejected wise advise and insists upon that course of action”.[102] 103.As for the “constitutional principles” referred to by Lord Hobhouse in paragraph 101 above, Sir Thomas Bingham MR (as he then was) at page 226 in Ridehalgh recognised that the competing policy interests, ie overriding duty of frankness to the court and duty of loyalty to the client, are exacerbated in handling hopeless cases:
104.Indeed, in the earlier case of Rondel v Worsley,[103] Lord Pearce in the House of Lords explained as follows:
While Rondel dealt with the cab-rank rule and its relationship with barristerial immunity from suit for negligence by lay clients rather than with the advocate’s liability for costs for misconduct, it usefully held that the public policy principles discussed therein also apply to solicitors, which has been affirmed by the observations of Sir Thomas Bingham MR (as he then was) in Ridehalgh.[104] 105.To impose a duty on the litigation solicitor not to bring an argument, claim or defence that is without merit before the court (a) will require him to conduct pre-trial screen of doomed cases, which, as explained in paragraphs 90-97 above, will bring considerable conflict with his duty to the client and will make him a preliminary assessor or judge of the issue in dispute, (b) cause him to wait for retainers with better merits/prospects, which consequence has to be reconciled with the cab-rank rule that even though not strictly applicable to solicitors many solicitors do respect the public policy underlying the same,[105] and (c) will lead to skepticism of the client’s claim and also wariness in presenting legal arguments on the client’s behalf, which may be detrimental to general legal development. To allow a litigant to go further and to apply for a wasted costs order against his opponent’s solicitors may cause solicitors to conduct their client’s case not just in the client’s interest, but also to see no injustice is done to the client’s opponent in order to minimise risk of a claim by such opponent against them for wasted costs. In my view, these are pertinent public policy reasons against granting a wasted costs order against solicitors for bringing a hopeless claim/defence even though their client’s opponent may well find it frustrating to have spent time and costs to meet a claim/defence that never has any prospect of success. 106.These public policy considerations have been endorsed by the local courts. DHCJ To in Pine Enterprises Limited citing Harley[106] explained as follows:
107.Indeed, DHCJ To at paragraph 13 in Pine Enterprises Limited went on to refer to the observations of the Judicial Committee of the Privy Council in Harley at pages 708-709 that “it will almost always be unwise for the court, in the exercise of this jurisdiction, to treat the pursuit of hopeless cases as a demonstration of incompetence. As a general rule litigants have a right to have their case presented to the court and to instruct legal practitioners to present them on their behalf …… the public interest requires that the doors of the court remain open. And on the whole it is in the public interest that litigants who insist on bringing their cases to court should be represented by legal practitioners, however hopeless their cases may appear. For these reasons something more than the mere fact that the case is hopeless is required”. 108.In Ridehalgh, the English Court of Appeal took the view that bringing a hopeless claim is not per se improper or unreasonable, and Sir Thomas Bingham MR (as he then was) said at page 234 as follows:
Sir Thomas Bingham MR (as he then was) acknowledged it is not entirely easy to distinguish between (a) a hopeless case and (b) a case that amounts to an abuse of process, the latter of which comes within the wasted costs jurisdiction, but he made clear that if there is doubt, the legal representative is entitled to the benefit of it. In my view, this is readily understandable since the court’s power to grant a wasted costs order for assisting in the issuance/pursuit of a hopeless case in (b) above presumes such case should not be brought before the court. But other than that, it is in the public interest for litigants to have ready access to the courts. Excluding a claim from the courts is a serious matter, which jurisdiction the courts will exercise with caution in face of such public interest. This also explains why in case of doubt the legal representative should have the benefit of it, ie the case is presumed to be not hopeless. 109.Likewise, Au-Yeung J in Qiyang Limited & ors v Mei Li New Energy Ltd & ors[107] discussed the wasted costs jurisdiction and explained as follows:
110.Having reviewed the judicial guidance falling from Ridehalgh that refers to “constitutional principles” for a solicitor to present his client’s case, albeit weak or even hopeless, to the court to that from Pine Enterprises Limited that refers to the “public interest” of litigants who insist on bringing their cases to the court, albeit hopeless, being represented by legal practitioners, I agree with Mr Kwan there are sound public policy reasons for not regarding the merits of the losing party’s case because to do so will disincentivise solicitors from representing litigants with apparently “hopeless” cases, thereby depriving them of their day in court. As explained in Harley in paragraph 107 above, and as noted in Ridehalgh,[108] Pine Enterprises Limited[109] and Qiyang Limited & ors,[110] something more than the fact that the argument, claim or defence presented by the litigation solicitor on behalf of the client is hopeless is necessary for establishing “improper” or “unreasonable” conduct or “other misconduct or default” on the part of such solicitor. 111.The authorities show that Mr Sakhrani and Mr Kwan were correct to submit that mistake, error of judgment or even negligence is not sufficient.[111] But if an action that is inappropriately brought/pursued or an unreal defence is put forward with the assistance of legal representatives, it should be open for the wronged opponent to apply for a wasted costs order against such legal representatives as compensation for the expense incurred in dealing with and eventually dismissing the proceedings that are an abuse of process. Thus, running a hopeless case is not enough, but running a hopeless case that amounts to an abuse of process may attract the wasted costs jurisdiction. 112.The court has always assumed power over those who appear before it, especially over legal representatives who are officers of the court, to protect its own procedures against abuse and to supervise the conduct of its officers who exercise the privilege of appearing in court. As His Honour Judge Birss QC neatly summarised in Media CAT Limited v Malcolm Adams & ors,[112]
113.In light of the aforesaid broad principles, I now turn to discuss the English and local authorities. I start with Tolstoy-Miloslavsky and adopt the useful summary in Jackson & Powell on Professional Liability as follows:[113]
As seen above, the plaintiff’s case that was eventually struck out was not merely hopeless (which Ward LJ at page 752 said “that by itself may not have been enough”) as the court was firmly of the view that (a) the new action brought to collaterally attack a previous final decision (ie Rose LJ said “this was the second if not the third occasion on which [the plaintiff] had sought by litigation to defeat [the defendant] in relation to the same matters ……” – page 747) was an abuse of process, and “was clearly vexatious” as “[it] heaped fraud and perjury upon the vicious calumny of the allegation of being a war criminal” on the defendant, and (b) “[the] action was instituted to harass [the defendant]” (page 752). This is distinguishable from other cases where the claims though weak (or “weird” or “bizarre” as described by Sir John Donaldson MR and Dillon LJ respectively at pages 572 and 578 in Orchard – see paragraphs 91-96 above) or inconsistent (eg Commentary 4 under Principle 10.03 in The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 in paragraph 90 above) were not known to the solicitors to have been brought in bad faith. 114.The need to establish abuse of process is again emphasised by Lord Hobhouse in Medcalf at pages 143-144: “…… [the] position is different if the court concludes that there was improper time-wasting by the advocate or the advocate has knowingly lent himself to an abuse of process.[114] However, it is relevant to bear in mind that, if a party is raising issues or is taking steps which have no reasonable prospect of success or are scandalous or an abuse of process, both the aggrieved party and the court have powers to remedy the situation by invoking summary remedies – striking out – summary judgment – peremptory orders etc. The making of a wasted costs order should not be the primary remedy; by definition it only arises once the damage has been done. It is a last resort” (my emphasis). 115.In Persuad, 2 sons (who were legally aided) sued the father and the father’s company, and the 3rd son was made a defendant because he held a share in the company. The sons claimed they worked for the company’s business without salary for 5 years upon accepting the father’s offer and assurance that their work was regarded as an investment, that they would be entitled to 10% shareholding and that a dwelling house would be purchased for each of them, but after the business prospered, the father announced he would dispose of the assets of the business and emigrate overseas, so they sued the father for breach of his promises/ assurances (page 2). In the proceedings, the claimants secured a mareva injunction (page 3). The father denied the alleged promises/assurances, and also denied the claimants’ entitlements to relief (page 3). The trial judge disbelieved the sons and held their account to be not true, found they failed in law even if (contrary to his view) a contract had been made (page 3), and awarded indemnity costs against them (page 1). The father and the company applied for a wasted costs order against the barrister who conducted the case for the claimant sons and appeared for them at the trial (pages 1-2). The barrister’s 3 advices (upon waiver of privilege) were put before the judge, but privilege was not waived in respect of the instructions to counsel and the materials underlying the advices (page 5). The trial judge dismissed the application for wasted costs order at the 1st stage (page 2). 116.Peter Gibson LJ said “…… the 2 cases of Ridehalgh and Medcalf must now be taken to state what the law is in this area ……” (page 9), so “…… there must be something more than negligence for the wasted costs jurisdiction to arise; there must be something akin to an abuse of process if the conduct of the legal representative is to make him liable to a wasted costs order” (my emphasis) (page 11). The English Court of Appeal held that the case of the claimant sons was neither hopeless on facts nor hopeless in law:
In the exercise of discretion to dismiss the application for a wasted costs order, the court in that case took into account (1) the father took out but did not pursue a striking out application (bearing in mind that a wasted costs order is a remedy of last resort – see observations by Lord Hobhouse in Medcalf in paragraph 114 above), and (2) there was only limited waiver of privilege with possibility that relevant matters which might have explained the barrister’s conduct were unknown to the court, so any doubt had to be resolved in his favour (pages 15-16). 117.Maurice Dempsey, which discusses the issue of wasted costs under the “negligence” limb of the English statutory wasted costs regime in the context of pursuit of a hopeless case, was carefully summarised by Jacobs J in Anthony Douglas King & ors v Barry Stiefel & ors referred to footnote 43 above as follows:
118.I have referred to Maurice Dempsey (even though it is a case on English “negligence” limb) for 2 reasons:
119.In Ratcliffe Duce & Gammer v Binns,[116] Elias J applied a test of abuse of process without Maurice Dempsey having been cited to him, and held that it would be a very exceptional case indeed where a court could infer abuse of process in pursuing a hopeless case where privilege had not been waived (which echoed Dillon LJ’s observations in Orchard – see paragraph 96 above). Jacobs J in Anthony Douglas King & ors summarised this case as follows (paragraph 80):
120.Locally, in Dolphin Advertising Ltd, Harris J at page 141 said “…… even if the solicitors did think that the plaintiff’s case was hopeless unless there is evidence, which there is not, that they were assisting in the continued prosecution of the action for some ulterior motive this would not be a ground for making a wasted cost order” (my emphasis). As seen in paragraphs 75-82 above, lending assistance to litigation commenced or continued for some ulterior purpose is plainly an abuse of process. 121.Further, as seen in Re Estate of Lau Heung in paragraphs 77-80 above, the plaintiff’s solicitors were guilty of breach of duty to the court and liable for bearing wasted costs when they lent assistance to the issuance/pursuit of the useless and hopeless joinder summons in order to generate costs for themselves, ie an ulterior purpose that amounted to an abuse of process. 122.Mr Sakhrani’s list of authorities included Shahid Muhammad v The Kowloon Motor Bus Co (1933) Ltd,[117] which was strangely not referred to in his written submissions, so D2-D5’s views on the significance or relevance of such case to the Para 5 Application were not given/explained. I note, however, Shahid Muhammad is different from the present case in that it was the court that invoked the wasted costs jurisdiction on its own motion. 123.As seen in the Reasons for Decision in Shahid Muhammad, the plaintiff did not turn up at the trial to prove his claim for damages for personal injuries suffered as a result of an accident on a bus, so HHJ Andrew Li dismissed the plaintiff’s claim and ordered him to pay costs of the action including costs of the aborted trial (paragraph 2). The learned judge required the plaintiff’s solicitors to show cause why they should not be made personally liable to bear costs of the action on indemnity basis to be paid forthwith. 124.At the trial hearing, (a) the Urdu interpreter arranged by the plaintiff’s solicitors did not turn up in court because the plaintiff’s solicitor (who thought the court would likely adjourn the trial as the plaintiff was “sick”) told him he need not do so, and (b) the copy medical certificate issued to the plaintiff did not support his counsel’s submission that he had fever. Time was allowed for the plaintiff’s legal team to ascertain why the plaintiff failed to attend the trial, and they subsequently reported that the plaintiff claimed to be unwell (but without saying he had any fever or was COVID-positive). The plaintiff’s legal team later produced the original medical certificate and another medical certificate granted to the plaintiff, but neither certificate mentioned any fever. According to paragraph 9 of the Decision on Costs, HHJ Andrew Li took the view that the plaintiff’s solicitors were one of the players, if not the main player, who led to the plaintiff’s abandonment of the action on the 1st day of the trial. 125.On further review of the case, HHJ Andrew Li found the plaintiff and his solicitors dragged their feet in bringing on the case for trial in the running list after leave was granted to set the case down for trial, and the learned judge was unimpressed by the efforts of the plaintiff’s solicitors to blame the delay on a COVID-19 situation at their offices. He went on to note (a) the CCTV recording of the alleged accident on the bus clearly refuted the plaintiff’s pleaded case as to how the accident happened, (b) the plaintiff’s solicitors knew there was no criminal conviction against the bus driver for careless driving, and (c) the plaintiff’s solicitors had copy police statement of the bus company’s staff that referred to the aforesaid CCTV recording submitted to the police (which meant the footage was retrievable from the police), and to find that the plaintiff’s solicitors should have realised the clear and objective CCTV recording so completely refuted the plaintiff’s pleaded case that the plaintiff’s claim had no reasonable prospect of success, which claim should have been arrested at an early stage of the proceedings. Although the plaintiff’s solicitors tried to suggest it was the plaintiff who insisted on progressing the action to trial, they would have realised from a review of the CCTV recording that there was no longer any reasonable evidential basis to act on the plaintiff’s instructions, so at that point they should have ceased to act for the plaintiff. 126.HH Judge Andrew Li found the plaintiff’s solicitors had (a) breached their duty to the court when they ought to have known the plaintiff’s case was a completely hopeless one to begin with, and (b) acted unreasonably, if not improperly, in the conduct of the action, so a wasted costs order was warranted, especially as the court found they ought to have been aware the plaintiff would not be able to pay the defendant’s costs of the action if he failed to prove his case at trial. I will return below to discuss the learned judge’s approach to liability for wasted costs in the context of a hopeless claim commenced/continued by an impecunious claimant that was eventually unsuccessful, but, in my view, it suffices to say here that on the learned judge’s findings there was abuse in the sense that the plaintiff’s solicitors lent assistance to the pursuit of the plaintiff’s claim which they knew from incontrovertible, objective and independent evidence (ie the contemporaneous CCTV recording) that such claim was false. 127.Lastly, in the recent case of Anthony Douglas King & ors, Cockerill J struck out the claims in the underlying action, which she held to be “totally without merit”, even before defences were served (paragraph 1). The defendants obtained a costs order against the claimants, and later applied for wasted costs orders against the claimants’ barrister and solicitors (paragraph 3). They relied on Cockerill J’s finding that the claims lacked substance and should never have been brought, and argued that the claimant’s legal representatives who advanced the claims should be liable for their costs (paragraph 56). Jacobs J declined to allow the wasted costs applications to proceed to the 2nd stage, and dismissed them in their entirety (paragraph 186). The learned judge emphasised that the mere pursuit of a hopeless case is not normally a sufficient basis to make a wasted costs order against a solicitor, and something akin to an abuse of process will normally be required (paragraphs 75-80). Further, the fact that the underlying claim itself has been struck out as an abuse of process does not ipso facto mean it is improper, unreasonable or (in the English context) negligent for the legal representatives to have brought the claim. 128.Jacobs J emphasised that the wasted costs regime is intended to be a simple and summary process with short hearings for plain cases (and rejected an argument that such rule does not apply in some cases), and found it was not suitable for the case before him where the allegations amounted, in effect, to a substantial professional negligence action that would require extensive findings of fact and careful determination at trial (paragraphs 109-134). 129.Further, the learned judge applied the principles in Ridehalgh and Medcalf that, if the client does not waive privilege, then a court should be very slow to conclude that his legal representatives who have advanced a “hopeless case” are necessarily acting improperly, unreasonably or (in the English context) negligently. If privilege has not been waived, then the court will be unable to reach conclusions as to the advice given and the materials available to the legal representatives for preparing the pleadings (paragraphs 123-125). Jacobs J found the available evidence did not suggest the proceedings or the conduct of the respondent legal representatives in that case were akin to an abuse of process (paragraph 139). Further, even if the procedure was suitable, Jacobs J considered it unlikely that a wasted costs order would have been made, so he did not allow the applications to proceed further (paragraphs 135-184). In any event, even if the defendants’ application for wasted costs order was allowed to proceed against the barrister, they would not be allowed to proceed against the solicitors since the barrister carried the prime responsibility for drafting the Particulars of Claim (paragraphs 142 and 185). 130.In my view, there may be many reasons why a litigant may want to commence, raise or pursue an apparently hopeless argument, claim or defence, and why a litigation solicitor will assist in such proceedings. The courts have sought to achieve a balance between competing public interests (a) to protect litigation solicitors who conduct proceedings or appear before the courts from fear of personal liability to their clients’ opponents and (b) to compensate innocent victims of the litigation solicitors’ wrongdoing or abuse. Although the wasted costs regime in (b) above is not to be emasculated, full weight has to be given to the public interest in (a) above, which explains why the threshold for wasted costs orders even in the context of hopeless claims is a high one of being akin to an abuse of process (and in the case of doubt or lack of evidence due to non-waiver of privilege or otherwise, the court will err in favour of the respondent legal representatives who will enjoy benefit of such doubt). 131.Hopeless case and litigant impecuniosity One can readily understand the grievance of a litigant who successfully defended a claim against him but is denied compensation for costs incurred due to the plaintiff’s impecuniosity. But the fact the unsuccessful plaintiff is impecunious does not mean that responsibility for the successful defendant’s costs should lie with the plaintiff’s legal representatives. As seen below, the general view is that a litigant’s impecuniousity is not to be held against his solicitors because any suggestion otherwise will impose risk on those solicitors who choose to act for litigants without funds, which consequence runs counter to the public interest of having legal assistance available to litigants without means. The courts are jealous to ensure impecuniosity does not pose a hurdle to a plaintiff complaining of a wrong done to him from seeking legal redress. After all, as pointed out by Mr Kwan, the defendant is not without redress if the plaintiff is impecunious for he can, in an appropriate case, seek security for costs, especially where the plaintiff’s case is doubtful or hopeless, in which case the defendant can also seek peremptory remedies as explained in paragraph 114 above. 132.Such rationale is reflected in the principle that there is no jurisdiction to make a wasted costs order against solicitors solely on the ground that they have acted without fee (eg when the client is without funds) even in a hopeless claim. As explained by Rose LJ in Tolstoy- Miloslavsky,
From the above, it is evident that Tolstoy-Miloslavky separated (a) the fact that the legal representatives acted without fee for the impecunious plaintiff from (b) the fact that the case was a hopeless one that amounted to an abuse of process. For (a) above, the courts encouraged pro bono work, so solicitors are not required to conduct pre-trial screen of their clients’ case when they choose to act without fee for, say, impecunious litigants with hopeless claims/defences, and so acting will not of itself justify making wasted costs orders. For (b) above, solicitors lending assistance to the pursuit of a claim/defence that they know is an abuse of process, eg for a purpose unrelated to the success of the claim/defence,[118] may attract a wasted costs order. 133.In considering whether a litigation solicitor has acted in proceedings that constitute an abuse of process, although the fact such solicitor knows his client cannot bear the costs consequences of the proceedings of itself is insufficient to justify a wasted costs order, in an appropriate case this fact may well be part of the overall factual matrix/ background that goes to show something akin to abuse of process that may in turn form a justifying reason for making a wasted costs order. For example, in Tolstoy-Miloslavsky, Rose and Ward LJJ at pages 747 and 752 said the plaintiff’s case being hopeless “may not have been enough”, but they found there was abuse of process in that case upon reviewing “all the other circumstances” and “the background of the previous history”, particularly in light of factors such as (a) the plaintiff’s claim was vexatious as it was the 2nd if not the 3rd occasion in which the plaintiff sought by litigation to defeat the defendant in relation to the same matters, (b) the proceedings were a collateral attack on the previous judgment of a court of competent jurisdiction, (c) the English Court of Appeal had already been highly critical of the plaintiff’s “new” evidence, (d) allegations of perjury and fraud were made on manifestly insubstantial basis and (e) the purpose of the litigation was to harass the defendant, and in such context the plaintiff’s known impecunioisity, his failure to satisfy (and his efforts to avoid satisfying) the existing judgment against him and his purchase of the cause of action from his trustee-in-bankruptcy to take out the new action against the defendant were part of the facts and matters that demonstrated his new round of litigation was an abuse of process to vex and harass the defendant (pages 747 and 752). 134.Interestingly, Mr Sakhrani included HHJ Andrew Li’s decisions in So Kam v Guildford Ltd[119] and Shahid Muhammad in his list of authorities, but did not refer to them in his written submissions. But putting aside allegations of misleading the court for the moment, there was some suggestion in the Lam 2nd/3rd Affs and Mr Sakhrani’s written submissions that P’s solicitors were liable for a wasted costs order because they enabled P’s pursuit of her hopeless claim when (a) “no reasonably competent legal representative would have continued with the action” against Ds, and (b) it was apparent P was not on legal aid and had “very modest means and would not be able to pay [D2-D5’s] costs, if so ordered”. Mr Sakhrani’s written submissions did not facilitate understanding as to the relevance of So Kam and Shahid Muhammad to the above proposition. This court can only surmise that Mr Sakhrani might have wished to rely on the following observations by HHJ Andrew Li at page 339 in So Kam:
and also in the Decision on Costs in Shahid Muhammad in which the learned judge noted there was a question mark as to whether the plaintiff himself would be able to pay the defendant’s costs arising from those proceedings (as the plaintiff’s solicitor had not deposed as to who or how the costs of the litigation were provided for) when:
It appeared from the above observations that the learned judge considered as a matter of principle that the litigant’s impecuniosity when pursuing a hopeless claim or defence is a relevant factor for the court to take into account when deciding whether or not to make a wasted costs order against his solicitors. 135.That being the case, it is necessary to look more closely into the facts and the findings in So Kam. In paragraph 180 of Liu Hui Hong, the personal representative appointed to represent the estate of Li Shiyou, deceased (by carry on order dated 30 September 2015) & anor, I have summarised the facts and findings in So Kam as follows:
Consequently, HHJ Andrew Li made the observations set out in the above paragraph. I did not deal with So Kam in any detail in Liu Hui Hong, the personal representative appointed to represent the estate of Li Shiyou, deceased (by carry on order dated 30 September 2015) & anor as it was unnecessary for me to do so in that case (paragraph 184). 136.I make no observation on the fact-specific finding in So Kam that there was no reasonable cause of action to establish liability on the basis that there was insufficient evidence in the plaintiff’s police/witness statements for commencement and/or continuance of his claim, or on the learned judge’s view that the plaintiff’s case was a hopeless one from the beginning. I simply reiterate the following in the context of the local wasted costs regime:
137.In light of the aforesaid principles, why then did the learned judge in So Kam conclude at the 1st stage that the plaintiff’s solicitors should be called upon to show cause at the 2nd stage? 138.In So Kam, the plaintiff was previously granted legal aid to cover his common law action but the legal aid certificate was later discharged, and when he later re-applied for legal aid, his application was refused (page 334). HHJ Andrew Li surmised that such discharge/refusal was likely due to the plaintiff’s case having no merits because the plaintiff admitted during the trial he had no money and was in debt (page 334):
139.HHJ Andrew Li then referred to Winnie Lo v HKSAR,[123] which dealt with the common law offences of maintenance and champerty. Whilst the learned judge noted the Court of Final Appeal held it is not maintenance or champerty for a solicitor to agree to act in litigation without charge, for less than his ordinary charges, or on terms that he will merely be reimbursed his disbursements (pages 334-335), the Court of Final Appeal, upon citing Ladd v London Road Car Co[124] and Clyne v New South Wales Bar Association,[125] observed that if the solicitor is not to cross the line into maintenance or champerty, there are 2 conditions, ie “he has considered the case and believes that his client has a reasonable cause of action or defence as the case may be”,[126] and “he must not in any case bargain with his client for an interest in the subject matter of the litigation, or (what is in substance the same thing) for remuneration proportionate to the amount which may be recovered by his client in a proceeding” (page 335). 140.On the basis of such authorities, HHJ Andrew Li elicited the general principles stated in the above paragraph, and went on to make the following observations in the context of a personal injuries action (pages 336-337):
141.HHJ Andrew Li then elided the general principles drawn from the case authorities on maintenance and champerty and his own observations developed from such general principles in paragraphs 139-140 above into the wasted costs regime under Order 62 rules 8, 8A and 8B of the Rules of the District Court (similar to the corresponding provisions in the RHC) and came to the view set out in paragraph 134 above (pages 338-339). On the premise that (a) the plaintiff’s claim was hopeless and should never have been brought, (b) the plaintiff was not qualified for and had been rejected legal aid, and (c) the plaintiff was not in a position to pay the successful defendant’s costs (pages 337-338), ie the plaintiff’s solicitors knew the claim by the impecunious plaintiff was hopeless, the learned judge concluded at the 1st stage that the plaintiff’s solicitors were required to show cause at the 2nd stage why they should not personally bear the defendant’s costs on indemnity basis with certificate for counsel (pages 338-339). 142.In my view, the key question is whether it is appropriate to elide the general principles in respect of maintenance and champerty (as well as HHJ Andrew Li’s observations developed therefrom) into the wasted costs regime under section 53(1) and (3)-(6) of the District Court Ordinance Cap 336 (“DCO”)[127] (which the learned judge invoked on his own motion in So Kam), which jurisdiction is in contra-distinction to the non-party costs regime under section 53(1)-(2) of the DCO[128] (that was not referred to let alone invoked in So Kam). 143.In dealing with this question, one has to start with the legal concepts of maintenance and champerty as explained by the Court of Final Appeal in Unruh v Seeberger[129] and Winnie Lo. I rely on but do not repeat here the summary in Part V / paragraphs 51-82 of my judgment in Re A.[130] In short, (a) maintenance of litigation by an unconnected third party by, say, financial support is directed at “officious intermeddling” in someone else’s litigation, and (b) champerty is a form of maintenance that involves a third party paying all or part of the litigation costs in return for a share of the subject matter or a division of the spoils if the action succeeds.[131] However, in recent years, their scope has shrunk as a result of a “carving out” process by which the courts have formed a patchwork of exceptions/qualifications that exclude certain categories of conduct that otherwise constitute maintenance and champerty.[132] 144.On the matter of champerty vis-à-vis solicitors/barristers, Lord Neuberger in Sibthorpe v Southwark London Borough Council (Law Society intervening)[133] explained that “[a] type of contract which has relatively often given rise to an allegation of champerty or maintenance is one between a claimant in a piece of litigation and the person conducting the litigation (almost always a solicitor or barrister) on the claimant’s behalf”, and the law did not sanction an agreement by which a lawyer is remunerated on the basis of a contingency fee, ie he gets paid the fee if he wins, but not if he loses, which Lord Denning MR in Wallesteiner v Moir (No 2) described as champerty.[134] 145.On the matter of maintenance vis-à-vis solicitor/barristers, Ribeiro PJ in Winnie Lo explained that “the starting point must nevertheless be the well-established proposition that a solicitor acting in his or her ordinary professional role in conducting litigation which amounted to good faith does not “officiously intermeddle” in the action and does not commit maintenance” (page 51). Indeed, as Lord Neuberger explained at page 2126 in Sibthorpe, it is not mere maintainence even if a solicitor charges a contingency fee:
146.Ribeiro PJ in Winnie Lo went on to explain that “[a] solicitor who has conduct of a piece of litigation therefore may attract liability [for maintenance and champerty] only when he transgresses his proper professional role”, eg “when an action brought in a client’s name was in reality a suit conducted for the solicitor’s own purpose and not bona fide litigation on the client’s behalf”.[135] To put it in another way, a solicitor commits champerty (which is by far the most common instance of a solicitor incurring liability in respect of litigation which he is conducting) by departing “from his professional role and is held liable for that “particularly obnoxious form” of maintenance “when the maintainer seeks to make a profit out of another man’s action – by taking the proceeds of it, or part of them, for himself”” (page 52). 147.As HHJ Andrew Li recognised in paragraph 139 above, Ribeiro PJ said “[it] has been held, for instance, that it is not maintenance or champerty for a solicitor to agree to act in litigation without charge. Nor is it unlawful for the solicitor to agree to act for less than his ordinary charges or on terms that he will merely be reimbursed his disbursements …… This is so whether the solicitor agrees to charge nothing or a reduced amount in any event or whether the solicitor agrees to look to a hoped-for favourable costs order against the other side to recover his ordinary costs and disbursements ……” (page 53). Likewise, Lord Neuberger said at pages 2124 and 2125 in Sibthorpe that “[no] case has been cited in which it has been held to be champertous for a person to agree to run the risk of loss if the action in question fails, without enjoying any gain if the action succeeds ……”, and that “…… it is by no means unknown, and perfectly proper, for solicitors to conduct litigation for a client knowing that, unless the client wins, the solicitors may find it impossible, or will find it hard, to recover their fees ……” even though this means “the solicitor has an interest in the outcome of the litigation”. 148.From the above, it was clear that Ribeiro PJ in Winnie Lo was at pains to emphasise that solicitors may attract liability for champerty if they cross the line by transgressing outside their proper professional role as legal representatives. If a solicitor so crosses the line, he may attract civil consequences (eg the champertous agreement between him and his client is illegal and hence unenforceable) and/or criminal liability (eg champerty is still a criminal offence in Hong Kong). But it is clear that “…… illegal maintenance is not a defence to the action or a ground for stay of the proceedings (provided the action/proceedings do not constitute an abuse of process of the court). Also, the champertous support of the fundee claimant in an action is probably not a defence to the action and probably affords no ground for a stay of the proceedings. The mere fact that the claimant is being funded under a champertous agreement is of no concern to the court trying the cause of action, or to the defendant, or to any other party”.[136] 149.In such circumstances, it is not easy to see how the principles that guide determination as to whether an arrangement between a solicitor and his client is or is not champertous can be elided into the principles that guide determination as to whether a wasted costs order should be granted. After all, under the wasted costs regime, the court grants wasted costs orders against solicitors qua legal representatives, ie “…… the Court of First Instance may …… order the legal representatives concerned to meet …… wasted costs” (my emphasis).[137] As Ribeiro PJ said, a solicitor may attract liability for champerty by transgressing outside his proper professional role as legal representatives, eg when an action brought in the client’s name is in fact primarily aimed for the solicitor’s own interest/purpose, or when the solicitor seeks to make a profit out of his client’s action by taking all or part of the proceeds of the action for himself. The liability of such solicitor as a non-party for the costs of his client’s opponent (if any) is not a matter of wasted costs. Such liability (if any) does not stem from the solicitor’s professional role acting as legal representative in the proceedings. Rather, the overall rationale for such liability (if any) is that it is wrong to allow someone who is a non-party (ie a solicitor) to fund the litigation in the hope of gaining a benefit (ie pursuing the litigation for his own purpose or seeking to make a profit from the litigation) without a corresponding risk that such person will share in the costs of the proceedings if he fails in those proceedings, which is outwith the wasted costs regime qua legal representatives. 150.Thus, where a non-party (eg a solicitor) is substantially likely to benefit from the proceedings, one has to turn to the non-party costs jurisdiction under section 52A(2) of the HCO:[138]
and Order 62 rule 6A of the RHC:
Order 62 rule 6A(2) of the RHC clearly shows that wasted costs order and non-party costs order have distinctly separate jurisdictional basis,[139] so it is inappropriate to channel the factors that justify a wasted costs order into the non-party costs regime. As HHJ Stephen Davies said in Tinseltime Ltd v Roberts & ors,[140]
151.The jurisdiction to make costs orders against non-parties is explained in Hong Kong Civil Procedure 2023,[141] and by the Court of Appeal in Leung Chung Ching Edwin v Estate of Leung On Mei Amy:[142]
152.On the basis of the aforesaid broad principles, I turn to the case authorities. 153.The distinction between the wasted costs regime and the non-party costs regime drawn in paragraphs 149-151 above came up in Tolstoy-Milosklavsky. In that case, both counsel and solicitors provided their services to the plaintiff without fee, and no application was made for legal aid. The defendant applied for a non-party costs order against the plaintiff’s solicitors on the basis that they maintained the action by putting themselves in the position of third party funders and by making their services available for free when they knew the plaintiff would not be able to pay costs if he lost (pages 740 and 743), but the plaintiff’s solicitors argued that (a) the court only had jurisdiction to make costs orders against them under the wasted costs jurisdiction or under the court’s inherent jurisdiction for breach of duty to the court, (b) it was wrong to equate solicitors acting without fee as a third party funder, and (c) it was only when solicitors were acting without fee in a case both without merit and constituting abuse of process that would give rise to impropriety (page 742). The legal professional bodies that intervened in Tolstoy-Miloslavsky supported the proposition that the wasted costs jurisdiction comprised the whole jurisdiction to award costs against legal representatives, and alternatively even if there was jurisdiction it would be wrong to exercise it against a legal representative against whom a wasted costs order could not be made (page 743). 154.Rose LJ held that section 51(1) and (3) of the Senior Courts Act 1981 (as substituted by the Courts and Legal Services Act 1990) (ie the English equivalent of section 52A(1)-(2) of the HCO) “do not confer jurisdiction to make an order for costs against legal representatives when acting as legal representatives” (page 743). He explained that Parliament would not have introduced the statutory wasted costs regime against legal representatives if the statutory non-party costs regime is sufficiently wide to enable the court to make costs orders against solicitors qua legal representatives (page 744). Rose LJ said there are only 3 categories of conduct which can give rise to an order for costs against a solicitor: (a) the wasted costs jurisdiction, (b) where the solicitor acts in breach of his duty to the court, and (c) “if he acts outside the role of solicitor, eg in a private capacity or as a true third-party funder for someone else””. Rose LJ then went on to make the observations set out in paragraph 132 above. But as seen in paragraphs 113 and 132-133 above, Rose LJ accepted the wasted costs jurisdiction was engaged in that case and dismissed the appeal against the wasted costs order made by the judge below. Ward LJ in his concurring judgment agreed with the reasons given by Rose LJ (pages 750-751). 155.Roch LJ also came to the same view and held that a non-party costs order could not be made against the plaintiff’s solicitors in that case. At page 750, he said that “[the] legal representative who acts as a legal representative does not make himself a quasi-party and no jurisdiction to make an order for costs against him under section 51(1) and (3) arises. However, a legal representative who goes beyond conducting proceedings as a legal representative and behaves as a quasi-party will not be immune from a costs order under section 51(1) and (3) merely because he is a barrister or a solicitor”. 156.Such distinction between solicitors qua legal representatives and qua third party funder was followed in Floods of Queensferry Ltd & anor v Shand Construction & ors.[143] Buxton LJ accepted the distinction was a matter of delicate judgment (paragraph 36), but disagreed the respondent solicitors in that case was a third party funder (paragraph 35). Hale LJ also drew a distinction between funders (ie those who provide money to pay for legal services) and legal representatives (ie those who provide those legal services):
157.Hale LJ in her judgment referred to Hamilton v Al Fayed (No 2)[144] handed down shortly before Floods of Queensferry Ltd. Hamilton concerns “pure funders” (who contributed to a fighting fund on the understanding that if the action was successful the money would be returned but not otherwise) rather than solicitors, and the trial judge refused to make a non-party costs order against the funders of the unsuccessful plaintiff. On appeal, Simon Brown LJ considered the countervailing public policy interests, ie the unsuccessful funded litigant’s access to justice and the successful unfunded party’s recovery of costs, and concluded that “on balance …… the unfunded party’s ability to recover his costs must yield to the funded party’s right of access to the courts to litigate the dispute in the first place. That seems to me to be the essential policy underlying the cases ……” (page 145). Chadwick LJ at page 151 also came out in favour of the principle that a claimant should not be denied access to the courts on the grounds of impecuniosity:
Hale LJ was “reluctantly persuaded to agree. This is a situation in which the greater good of the community must prevail over considerations of justice to the individuals concerned ……” (page 153). The system of adversarial justice depends heavily upon the use of lawyers to conduct litigation, and litigants in person are often at a considerable disadvantage. It is also difficult to predict in advance whether the funded party had a reasonable prospect of success in the litigation, and “[lawyers] give advice on the basis of what their client tells them is honest and accurate (although they should draw attention to the difficulties which a court may have in accepting the evidence). It is unreasonable to expect funders to be any more skeptical. In practice, there has to be a general approach, whether for or against making such orders, even if there may sometimes be exceptions …… On balance, the arguments in favour of a general approach that “pure” funders should not be expected also to fund the opposing party’s costs outweigh the arguments in favour of a general approach that they should ……” (my emphasis) (pages 155-156). 158.In Myatt v National Coal Board & anor (No 2),[145] the claimants, who were former coal miners, sued the defendant for damages for noise-induced hearing loss. The claimants were represented by the same solicitors with whom they entered into similar conditional fee agreements (“CFAs”). The claims were settled, and a detailed assessment of costs was ordered. On the detailed assessment, the costs judge found as a preliminary issue that the CFAs were unenforceable, which meant the claimants would have to pay certain of their costs out of their damages, but their solicitors might not be able to recover their profit costs from them. Since the solicitors entered into similar CFAs in approximately 60 other cases, a substantial sum was at stake for the solicitors. The claimants appealed, but the English Court of Appeal dismissed the appeal. The defendant sought a non-party costs order against the claimant’s solicitors in relation to its appeal costs. 159.According to Dyson LJ, “[the] question that arises for our decision is whether, despite the claimants’ financial interest in the appeal, there was jurisdiction to order that [their solicitors] should pay some or all of the defendant’s costs and if so how that jurisdiction should be exercised” (page 1561). He referred to Tolstoy-Miloslavsky and Dymocks Franchise Systems (NSW) Pty Ltd, and held that the 3rd category in which a non-party costs order may be made against solicitors as described by Rose LJ[146] includes a solicitor who is “a real party …… in very important and critical respects” and who “not merely funds the proceedings but substantially also controls or at any rate is to benefit from them” (as explained by Lord Brown in Dymocks Franchise Systems (NSW) Pty Ltd) even when they are solicitors on the record for the unsuccessful party in the litigation (page 1563). If the claimants had no financial interest in the outcome of the proceedings because their solicitors “had assumed liability for all the disbursements with no right of recourse against the clients”, the solicitors being the only party with interest the proceedings “would undoubtedly be acting outside the role of solicitor, to use the language of Rose LJ” (page 1563). But if the solicitors had major financial interest in the proceedings, the claimants’ modest financial interest in the proceedings was not fatal to an application for non-party costs against the solicitors, and bearing in mind Lord Brown said in Dymocks Franchise Systems (NSW) Pty Ltd that the non-party need not be the only real party to the litigation provided that he is a real party in very important and critical respects, so it was held there is jurisdiction to make a non-party costs order “against a solicitor where litigation is pursued by the client for the benefit or to a substantial degree for the benefit of the solicitor” (page 1563). In that case, the main reason why the expensive appeal was lodged was to protect the substantial profit costs of the claimants’ solicitors, so there was jurisdiction to make a non-party costs order against such solicitors, but in view of the claimants’ real but modest financial interest in the success of the appeals (and also the defendant’s failure to warn the claimants’ solicitors of its intention to apply for costs against them), a fair and just order in all the circumstances was that the solicitors should pay 50% of the defendant’s costs of the appeal (page 1564). 160.Lloyd LJ concurred with Dyson LJ’s judgment (and Sir Henry Brooke agreed with both judgments), and went on to say as follows (pages 1564-1565):
Lloyd LJ concluded that in relation to the conduct of the appeals in that case, the claimants’ solicitors acted “…… in part for the sake of their own benefit in a respect of which was of no interest or concern to their clients, and as having acted as a matter of business to seek to establish their right to be paid, not by their own clients in practice, the profit costs on these four cases and all the others of which these were representative”, so it was proper to regard the solicitors as having acted in respect of the appeal in a dual capacity, ie acting for their clients with a real interest of those clients to protect but primarily acting for their own sake (page 1566). 161.Tinseltime Ltd concerned the defendant’s application for costs against the claimant’s solicitors either as a non-party “funder” or for a wasted costs order. The court considered the issue of whether or not a solicitor, who takes on a case for an impecunious claimant under a CFA with no after the event (“ATE”) insurance in place and who agrees to fund the disbursements necessary to enable the case to proceed, thereby constitutes himself a non-party funder and renders himself liable to a non-party costs order. 162.In that case, the claimant’s solicitor was aware from the outset that the claimant was impecunious and practically insolvent, and that it would not be able to meet any liability for costs if it lost the claim (pages 1101 and 1103). He agreed to take the case under a CFA (but the claimant was unwilling to spend money to procure an ATE insurance policy unless forced to do so in the context of a security for costs application), so he would pay on the claimant’s behalf the disbursements for the proceedings on the basis that he would be indemnified for any expenditure only in the event of the claim succeeding (pages 1101 and 1103). The defendant complained that the claimant’s solicitor “controlled or had material control over the litigation”, and failed to investigate various issues at an early stage of the proceedings as any competent solicitor should in view of the available information (page 1103). 163.HHJ Stephen Davies warned against the temptation of judging the claimant’s solicitor with the benefit of hindsight and accepted “some solicitors might have adopted a more robust approach to their client, testing the instructions they were receiving more forcefully against the documentation reasonably available to them”, but he considered (a) these criticisms were not relevant to the non-party cost application, and even if they were, he was not satisfied on the evidence before him they were clearly established (pages 1103-1104), and (b) the evidence did not clearly establish the claimant’s solicitor acted improperly, unreasonably or negligently. Even though the claimant’s solicitor overly trusted the client and was over-optimistic about the claim, it was far from saying that his conduct was unreasonable let alone self-interested, or that he deliberately or recklessly closed his eyes to the deficiencies of the claimant’s case. Further, other than the above criticisms which the learned judge rejected, there was no other basis advanced for suggesting the plaintiff’s solicitors “controlled” the litigation any differently from any other solicitor conducting litigation on behalf of the client, especially when he obtained his client’s instructions on an offer for settlement and explained the implications about his own recovery of costs (pages 1104-1106). 164.The learned judge referred to the general principles on non-party costs orders against solicitors in inter alia Tolstoy-Miloslavsky, Dymocks Franchice Systems (NSW) Pty, Myatt and the first instance judgment by Eady J in Flatman v Germany & ors,[147] opined that the authorities showed “[the] starting point when considering the position of a solicitor is that it must be shown that he has in some way acted beyond or outside his role as a solicitor conducting litigation for his client to make him liable for a non-party costs order” (pages 1119-1120), and then went on to say as follows at pages 1120-1121:
165.As far as control and conduct are concerned, HHJ Stephen Davies was not aware of any reported case in which a solicitor acting under a CFA has had a non-party costs order made against him on the basis of control (paragraph 58), and the learned judge made the observation set out in paragraph 150 above. 166.As far as “some financial benefit to the solicitor over and above the benefit which he can expect to receive from the CFA” is concerned, HHJ Stephen Davies gave the example of “…… the solicitor …… taking a conscious business decision to fund the disbursements in order to kick start the litigation with a view to making a substantial financial recovery which may, in such a case, be out of all proportion to the recovery which the client stands to make”, and which may “support a conclusion that this is a case which is really being controlled by the solicitor and/or being run primarily for his own benefit” (paragraph 58). But it was held that something more than a solicitor acting on a CFA without an ATE policy in place was required to justify a non-party costs order against the solicitor (paragraph 60). 167.In that case, the application for a non-party costs order was dismissed as there was nothing on the evidence to show the claimant’s solicitor was taking on the case in any capacity other than as a solicitor willing to work under a CFA and willing to fund disbursements thereunder (paragraph 63-65), or he was controlling the litigation in any way (paragraphs 66-67), but with hindsight, there was room for criticism for his failure to delve into some issues (paragraph 68). And the learned judge reminded that “…… the availability of such an order [for security for costs] is a potent weapon against injustice to a defendant in a case as the present where the claim is being mounted by an impecunious limited company” (paragraph 70). 168.On the application for a wasted costs order, having acquitted the claimant’s solicitor of having acted improperly, unreasonably or negligently on the information before him, HHJ Stephen Davies held that the applicant failed to establish the causative link between the conduct complained of and the costs incurred by the defendant, ie any different approach by the claimant’s solicitor would have made any difference to the way in which the case would have been presented on the claimant’s instructions (paragraphs 72-76). 169.In Heron v TNT (UK) Ltd & anor,[148] the employer’s insurers sought a non-party costs order against the solicitors who acted for the unsuccessful employee under a CFA in personal injury proceedings. Protracted negotiations failed, and the employee’s solicitors withdrew from representing the employee on the eve of the trial. The damages eventually awarded were less than any of the Part 36 offers. The employer’s insurers alleged the employee’s solicitors did not obtain ATE insurance for the employee even though they knew the employee would not be able to meet adverse costs order against him without ATE insurance, or did not disclose that fact to employee. It was said that they pursued the litigation with direct financial interest in concealing their negligence (so as to secure their own costs and to cause the employer’s insurers to incur irrecoverable costs). The 1st instance judge refused the application, and the English Court of Appeal dismissed the appeal. 170.Leveson LJ (with whom Beatson and Gloster LJJ agreed) confirmed that (a) a non-party costs order is exceptional, (b) an act of negligence by a solicitor in the conduct of litigation which means that an opposing party has incurred costs that may not otherwise have been incurred is not in itself sufficient to justify making of such an order, and (c) it is normally necessary to show the solicitor has in consequence become a “real party” to the litigation with the principal interest in its outcome and is acting primarily for his own sake. Furthermore, a solicitor is entitled to act on a CFA for an impecunious client whom they know or suspect will not be able to pay his own or the other side’s costs if unsuccessful, and whether the solicitor has negligently failed to obtain ATE insurance to protect his client (as opposed to not being able to obtain such insurance) does not impact on the costs which the other side would have incurred unless it is demonstrably provable that the costs will not otherwise have been incurred (page 1287). In the circumstances, failure of the employee’s solicitors to obtain ATE insurance or to disclose that failure to the employee in that case was not sufficient to demonstrate the firm had become a “real party” to the litigation, and it was not demonstrably provable that costs would not otherwise have been incurred by the employer. 171.Flatman v Germany (Law Society intervening)[149] concerned 2 conjoined appeals in which (a) the claimants commenced personal injury actions by the same firm of solicitors with the benefit of CFAs, (b) the actions were dismissed with costs to the defendants who had the same insurer, and (c) the insurer was unable to recover its costs because the claimants were impecunious and did not have ATE insurance. Suspecting the claimants’ solicitors had effectively funded the actions by defraying the claimants’ disbursements, the defendants sought orders for disclosure of how the actions had been funded, and the defendant in 1 of the actions sought a non-party costs order. 172.Leveson LJ reviewed the relevant authorities including Tolstoy-Miloslavsky, Dymocks Franchise Systems (NSW) Pty Ltd and Myatt. The Law Society submitted as follows (page 2688):
173.Leveson LJ gave approval (a) to disbursements being funded generally (ie solicitors paying disbursements as the case progresses with the client repaying at the end) and (b) to disbursements being contingent (ie the solicitor paying them and only recovering them if the case is won). In respect of (a) above, Leveson LJ described as follows (pages 2688-2690):
In the circumstances, the basis for ordering disclosure was not justified in law. But information had since emerged regarding the claimant’s solicitors in the 2nd case which suggested they might have been seeking to control the course of the litigation and so justified disclosure in both cases. 174.In Harcus Sinclair (a firm) v Buttonwood Legal Capital Limited & ors,[150] solicitors brought interpleader proceedings in respect of money entrusted to them as a stakeholder for funding substantial litigation brought in the Commercial Court. BLC as fundee won the interpleader proceedings, and they then sought their costs from the solicitors for the unsuccessful defendants AREF in both the interpleader and the underlying proceedings on the basis that had AREF succeeded, the success would have brought a benefit to AREF’s solicitors in that they would have been paid sums which they had earned/disbursed on AREF’s behalf in the underlying proceedings. 175.DHCJ David Donaldson QC noted there are many cases in which a solicitor provides at least some element of financing for his client, but held that this together with possible benefits if successful enables the client to pay the solicitor is not a factor which can properly justify a non-party costs order against the solicitors:
176.In Peter Williers v Elena Joyce and John Nugent (in substitution for and in their capacity as Executors of the Will of Albert GuBay, deceased),[151] the defendants joined the solicitors and counsel who previously represented the claimant in a failed malicious prosecution claim in the proceedings to seek non-party costs orders against them. The claimant alleged the defendant executors of the estate of the deceased had maliciously prosecuted an earlier action against him, which was subsequently discontinued. When the claimant’s malicious prosecution claim was dismissed, he was ordered to pay costs of that claim and to pay interim payment on account of those costs which he failed to pay (paragraphs 3-4). The defendants’ costs for the malicious prosecution claim were about £1.9 million, and “unless the Executors can obtain an order for costs against the Costs Respondents, they will recover nothing from [the claimant] in respect of the costs of their successful defence of the Malicious Prosecution Claim” (paragraph 4). The defendants claimed the costs respondents (ie the claimants’ solicitors and counsel) were the “real parties” to the claim because the principal purpose of the claim was to recover damages for the tort of malicious prosecution in an amount equal to the unpaid fees owed by the claimant to the costs respondents for the legal services they provided to him in the earlier action, which unpaid fees were disallowed upon detailed assessment of the claimant’s costs in the earlier action. On such basis, it was said the costs respondents had “direct, personal financial interest” in the malicious prosecution claim (because they were effectively “extending credit” to the claimant and would be repaid only if he came into money) such that they (and the claimant) should pay the defendants’ costs when that claim failed (paragraph 5). 177.Rose LJ discussed the law in relation to non-party costs orders, including most of the authorities referred to above, and said as follows:
178.In that case, the key question was whether the fact that the damages claimed in the malicious prosecution claim included a substantial amount of money still owed to the costs respondents from the earlier action made a difference (paragraph 55). Although Rose LJ conceded hers was a “difficult” decision, she acknowledged the public interest referred to in the above paragraph, and concluded it was not a case in which the claimant’s solicitors and counsel acted outside the role of legal representatives to such an extent as to bring themselves within the non-party costs jurisdiction (paragraph 56). 179.Among other factors that led to such conclusion, Rose LJ said “…… it is important that legal representatives know when they first take on a client whether they are exposing themselves to the potential claim for costs from the opposing party at the end of the day ……” In that case, everyone knew by the time the malicious prosecution claim was lodged that the claimant had no funds to pay either his own ongoing legal expenses or the costs shortfall in the earlier proceedings. “But there may be cases in which the facts are not so clear cut. I agree with the comment of Hale LJ in Hamilton v Al Fayed that it is better to have a general approach to these cases rather than for liability to turn on nuances of fact in particular cases - even though in a particular case it may lead to a hard result” (paragraph 59). Further, Rose LJ said she “…… must not fall into the trap of assuming that the Costs Respondents were encouraging [the claimant] to bring and pursue the Malicious Prosecution Claim. It is clear from cases such as Hodgson v Imperial Tobacco Ltd [1998] 1 WLR 1056 that a solicitor or barrister who enters into a CFA still owes to the client exactly the same duties that he would owe to the client and to the court if he were being paid on a conventional basis ……” (paragraph 62). Still further, the claimant was entitled to instruct the same lawyers for the malicious prosecution claim as they best understood the case (paragraph 58). Also, Rose LJ said the defendants had not proved that if the claimant had wearied of the proceedings and decided to settle for a modest nominal payment, the costs respondents would have refused to allow him to abandon his claim if that meant the costs shortfall in the earlier action would never be met (paragraph 73). Rose LJ therefore dismissed the application for a non-party costs order against the costs respondents, and held the interest they had “in the success of the Malicious Prosecution Claim was not so different from the direct financial interests that lawyers commonly have in litigation as to make them a real party in substantial and critical respects” (paragraph 76). 180.In the recent case of PME v The Scout Association,[152] the claimant in a personal injury claim accepted, without proceedings being issued, a Part 36 offer from the defendant to which the Qualified One-Way Costs Shifting (“QOCS”) applied with costs to be be paid by the defendant to be assessed if not agreed (paragraphs 8-10). The claimant’s costs were provisionally assessed (to be below the offer of costs made by the defendant), and orally reviewed only on matters of hourly rates and document time (which failed, so the 1st cost order was made against the claimant) (paragraphs 9-14). The claimant appealed to the costs judge and raised new argument late in the day. The costs judge rejected the claimant’s contentions on the preliminary issue (paragraphs 15-19). The claimant then appealed against the decision on the preliminary issue, but the appeal was dismissed and a 2nd costs order was granted for the claimant to pay the defendant’s costs of such appeal (paragraphs 20-22). As a result of settlement of the underlying claim by way of acceptance of a Part 36 offer by the defendant, the defendant was, as a matter of law, unable to recover its costs by way of set-off against the damages or costs payable by the claimant (paragraphs 23-25), and applied for a non-party costs order against the claimant’s solicitors on the ground that following the rejection of the defendant’s offer of costs (which if accepted would have resulted in a better outcome for the claimant) the defendant had been forced to incur costs at a level that substantially exceeded both the damages payable to the claimant and the claimant’s recoverable costs of the claim itself, so it was said the claimant’s solicitors were the only party with an interest in the outcome of the detailed assessment and in particular in recovering more by way of costs than the defendant had offered, which offer was nominally rejected by the claimant but in reality, according to the defendant, by the claimant’s solicitors (paragraphs 28-29). In that case, the retainer agreement between the claimant and the claimant’s solicitors was close to a “CFA lite”,[153] so it was said that “the only party with a tangible financial interest in the outcome of these detailed assessment proceedings has been [the claimant solicitors] itself” (paragraphs 30-35).[154] 181.Costs Judge Leonard said the application for a non-party costs order had to be viewed in the context of the underlying proceedings, which were an assessment of the claimant’s costs recoverable under a court order following settlement of his claim for damages for personal injury (paragraph 129). Although Myatt dealt with the making of a non-party costs order where the issue is the enforceability of a CFA, “Lloyd LJ did not exclude the possibility of such an order being made where the enforceability of the CFA is not an issue, only that it would be “most unusual” …… [the] point is …… that [a non-party costs order] is itself exceptional, in that occasion for making such an order will only arise outside the ordinary run of cases” (paragraph 131). Costs Judge Leonard went on to say that “…… [it] is in my view clear from Flatman v Germany first that a solicitor cannot be said to be acting outside the role of a solicitor if the solicitor is doing no more than the legislation pertaining to CFAs renders lawful, and second that in such circumstances it would not be right to conclude that the solicitor is “the real party” or even “a real party” to the litigation. It seems to me that those principles, in particular, preclude the making of [a non-party costs order] in this case” (paragraph 133). There was no suggestion the capped CFA in any way failed to comply with the legislative requirements (paragraph 134), and if the claimant’s solicitors were properly open to a non-party costs order because of the way they managed the cost assessment proceedings, so would any solicitor who acts under a “CFA lite” where costs orders are made against his clients in the course of the assessment of his clients’ costs, which (irrespective whether QOCS applies or not) will be contrary to the principles in Flatman, Tinseltime Ltd and Hodgson (paragraphs 134-136). Also on the matter of causation, there was no good reason in that case to suppose the claimant’s solicitors had acted differently than they would have done had the claimant had direct financial interest in the outcome of either the detailed assessment or the appeal (paragraph 137), which showed the claimant’s solicitors had, “in attempting unsuccessfully to maximise the Claimant’s cost recovery and to beat the Defendant’s offer, been doing no more than any solicitor might do who is acting under any CFA lite or capped CFA” (paragraph 139). The costs judge also accepted there was a point with regard to access to justice (paragraphs 143-144), and if a non-party costs order can be justified whenever a costs order is made against a solicitor pursuing costs under a “CFA lite” or capped CFA merely because the client has no significant stake in the recovery of costs, then non-party costs orders will not be exceptional but will become routine (paragraph 145). Thus, it was held not to be just or convenient or consistent with established authority to make a non-party costs order against the claimant’s solicitors in that case (paragraph 148). 182.In my view, the above authorities and discussions show that if a litigant claims costs against the solicitors acting for his unsuccessful opponent qua legal representatives, then he should invoke the wasted cost jurisdiction under the principles as explained in paragraphs 36-133 above by establishing, say,something more than just presenting a hopeless case on behalf of an impecunious client, ie that the legal representatives have lent their assistance to proceedings which are akin to an abuse of process. 183.But if a litigant claims costs against the solicitors for his unsuccessful opponent on the basis that they have transgressed outside their proper professional role as legal representatives, then the case law mandates a close look at the questions of funding, control and benefit, and how overall in light of these factors the discretion under the non-party costs regime should be applied. Although CFA, ATE insurance and QOCS rules have no relevance in Hong Kong, the above authorities clearly reflect the broad approach of the courts towards the non-party costs regime in contra-distinction to the wasted costs jurisdiction. 184.The starting point is that legal representatives should not be at risk of being visited by non-party costs orders unless they are in some way outside the professional role of legal representatives.[155] The distinction between the wasted costs regime qua legal representatives and the non-party costs regime qua third party funder explained in paragraphs 148-150, 154-156, 160, 164, 175 and 177 above means the successful litigant cannot seek to justify a claim for a non-party costs order against the solicitors for his unsuccessful opponent who have allegedly transgressed outside their professional role as legal representatives by reference to complaints that such solicitors have acted improperly or unreasonably in their conduct and carriage of the proceedings as legal representatives for the unsuccessful party, ie by eliding the principles for the wasted costs regime against solicitors qua legal representatives into the non-party costs regime against solicitors qua, say, third party funders (and vice versa).[156] 185.Nevertheless, a non-party costs order (like a wasted costs order) is exceptional, and solicitors often informally fund proceedings in the sense of taking a risk by extending credit to the client in the manner as explained in paragraphs 145-147 above (eg by deploying fee-earners’ time and paying disbursements when the client is impecunious). Although such solicitors are unlikely to be “pure funders”,[157] a non-party costs order requires something more than the mere fact that they have extended credit to a client (who has a weak or hopeless claim/defence but without funds) by informally funding the litigation in the manner explained above, which of itself is insufficient to demonstrate that such solicitors have been acting in some way outside their proper professional role as legal representatives. 186.There is, of course, a duty on the part of such solicitors qua legal representatives to properly advise the client on the merits (or demerits) of the case if perceived to be weak or hopeless,[158] but they are not required to assess the result of conflict of evidence or to conduct pre-trial screen of the client’s claim/defence,[159] and it is up to the client to decide whether to heed such advice.[160] Further, unless there is abuse of process or breach of duty not to mislead the court, it is neither unreasonable nor improper for the solicitors to continue to act qua legal representatives,[161] and whether the client is or is not impecunious such that his solicitors may or may not act for remuneration and/or may or may not extend credit by deploying fee earners’ time and/or paying disbursement expenses do not alter the existence or the nature of their duty to the client and to the court.[162] As Sir Thomas Bingham MR (as he then was) in Ridehalgh said, “…… wasted costs orders should not become a back-door means of recovering costs not otherwise recoverable against a legally-aided or improverished litigant ……”[163] Indeed, the fact that the solicitors stand to benefit financially from the success of the litigation in the sense that otherwise they will not be able to recover their profit costs and disbursements (eg when they have extended credit for, say, an impecunious client) does not of itself mean they have acted in some way beyond or outside their role as legal representatives conducting litigation for their client, and one should not fall into the trap of assuming that the solicitors therefore encouraged the client to raise or pursue the claim or defence.[164] So merely establishing that the solicitor has funded the litigation in the sense as explained in paragraphs 145-147 above and/or the claim is weak or hopeless and/or the client is impecunious will not be sufficient to demonstrate that the solicitor is the or a real party to litigation in important and critical respects with self-interest in the outcome of the suit for his own sake, and/or that he substantially controls the litigation and/or that he stands to financially benefit from the proceedings over and above the benefit he can expect to receive as a solicitor acting on behalf a client[165] (as in Myatt where the claimant’s solicitors had a greater interest in a successful appeal as the appeal would become a binding precedent to enable them to recover costs in 60 other similar cases[166]). 187.For all of the above reasons, I am not persuaded that (a) the the criteria for granting non-party costs orders, which normally require evidence to indicate the respondent solicitor has become the or a real party to the litigation with principal interest in its outcome and is acting primarily for his own sake,[167] (b) the principles elicted from maintenance/champerty law that concern the solicitor who has crossed the line to transgress outside his proper professional role as legal representative for his client[168] and (c) the observations developed therefrom as bolstered by CJR objectives[169] can elide into the different and “exceptional” wasted costs statutory regime qua legal representatives as discussed in paragraphs 36-133 above and as particularly summarised in paragraph 186 above. 188.However, in So Kam HHJ Andrew Li invoked the wasted costs jurisdiction but did not invoke the non-party costs jurisdiction. In any event, no attempt was made in that case to join the plaintiff’s solicitors as a party to the proceedings for the purpose of costs only as required under Order 62 rule 6A of the RHC. There was also no indication in So Kam that the defendant had given warning at an early stage of the proceedings that should the plaintiff’s claim fail at the end of the day, the defendant would or might apply for costs against the plaintiff’s solicitors. But, as explained above, the principles and observations referred to in paragraph 187(a)-(c) above cannot be elided into the wasted costs jurisdictions. 189.2 further matters arise from So Kam (and Shahid Muhammad that in turn relied on So Kam). First, HHJ Andrew Li cited Rogers VP’s observations in paragraphs 7-8 of Re Labour Buildings Limited to support his proposition in relation to the wasted costs regime that “there must be a case to make solicitors who decide to pursue a hopeless case on behalf of a litigant to pay for the costs of the successful defendant when it is apparent that the plaintiff is not in a position to pay those costs as [the plaintiff] in that case”. 190.I have summarised the facts and background of Re Labour Buildings Ltd at the first instance and at the Court of Appeal in Liu Hui Hong, the personal representative appointed to represent the estate of Li Shiyou, deceased (by carry on order dated 30 September 2015) & anor as follows:
191.It is clear from the judgment of Rogers VP that there was undue delay and/or misconduct that supported the wasted costs order. On the point of undue delay, what happened was that C’s solicitors “strained every nerve to avoid the sale of the property which was the subject of the proceedings before Harris J” (paragraph 2), and when the notice of appeal was set down and the hearing date was fixed, C’s solicitors “asked for an adjournment on 19 March and again on 22 March and that was refused”. As for unreasonable/improper conduct or other misconduct, since C’s solicitors “had no idea where any funds for the appeal would come from” and “there is every reason to believe that the Company has no funds at all” as it was in the process of being wound up (paragraphs 3-5), so there was no call upon C’s solicitors to file the notice of appeal and, more importantly, to progress the appeal to hearing without counsel. Thus, the misconduct and abuse by C’s solicitors were (a) their improper attempt to instruct counsel by “informing the counsel that they may not get paid because the Company was in the process of being wound up” (paragraph 5) when it was obvious that “…… [they] cannot ask counsel to appear on a speculative basis that may or may not get paid. What is worse is to instruct counsel that they may be get paid if they are successful and obtain an order for costs and, if they do not and are unsuccessful, no costs will be forthcoming and they will not get paid ……” (paragraph 6), and (b) their efforts to keep up the façade right until the hearing commenced that it was an appeal that would go ahead when they “…… well knew it was not going ahead ……” (paragraph 7). The impecuniosity of C was not of itself a factor for granting the wasted costs order, but was part of the background that went to explain C’s solicitors’ breach of duty to the court by their own misconduct or their lending of assistance to the abuse of process in (i) knowing attempt to instruct counsel on an improper basis, and (ii) knowing effort to mask the reality that the appeal actually would not go ahead in any event. In my view, Rogers VP did not regard C’s impecuniosity or inability to pay costs itself was a factor that sufficiently went to the “something more” to ground a wasted costs order. A similar situation arose in Tolstoy-Miloslavsky in which the client’s impecuniosity was part of the overall factual matrix that bolstered the “something more” (ie the abuse of process) to justify a wasted costs order.[171] 192.Secondly, in respect of the wasted costs jurisdiction invoked in So Kam on the premise that the defendant incurred wasted costs as a result of “an improper or unreasonable act or omission” or “any undue delay or other misconduct or default” on the part of the plaintiff’s solicitors qua legal representatives, the meaning of “improper” and “unreasonable” in paragraphs 42-44 above sets a high threshold of serious impropriety (involving inter alia breach of duty to the court, inexcusable conduct, serious dereliction of duty, conduct that merits reproof, conduct that is vexatious and is intended to harass the other side and/or conduct that is akin to abuse of process) that makes a wasted costs order exceptional. But the “negligence” limb under the English statutory wasted costs regime, which covers conduct that no reasonably well-informed and competent solicitor would have done or omitted to do, is locally not applicable or sufficient.[172] Thus, to invoke the local wasted costs regime against solicitors handling weak/hopeless claims for clients without funds (in contra-distinction to prudent post-CJR litigation practice by reasonably well-informed and competent litigation solicitors vis-à-vis their clients), it is doubtful whether, absent mala fides, ulterior purpose, assistance to abuse of process and/or the court being knowingly misled, it is sufficient to simply show the respondent solicitors have been overly optimistic by overlooking relevant facts/law and not investigating material issues and thus continuing to act for an impecunious unsuccessful party when no reasonably well-informed and competent solicitor can have considered the claim to have any prospects of success.[173] As evident from Maurice Dempsey, this may go to show the solicitors have been negligent, but (a) there is no “negligence” limb in the local wasted costs regime, and (b) even under the English “negligence” limb, there is need to show that the respondent solicitors in continuing to act in a case hopeless on facts have acted unreasonably akin to an abuse of process.[174] Further, as explained in paragraphs 131-132 above, and again absent mala fides, ulterior purpose, assistance to abuse of process and/or the court being knowingly misled, the client’s impecuniosity of itself does not alter the existence or nature of the solicitors’ duty to the client or to the court, and it is also doubtful whether the solicitors have (a) any duty or continuing duty to conduct pre-trial screen of their client’s case, to see that the client is telling the truth and/or to verify the client’s inconsistent statements,[175] and/or (b) any duty to cease to act (in contra-distinction to a duty to advise on the perceived weaknesses of the client’s case and/or the risks/consequences upon any failure of the claim or defence) if his client still wishes to pursue his claim or defence which is weak/hopeless and has no reasonable cause.[176] 193.In light of the above discussions and Mr Sakhrani’s non-explanation as to how So Kam and Shahid Muhammad would feature in D2-D5’s contentions for the wasted costs order they sought, I have reservations whether a wasted costs order (which is a remedy of last resort) can be made against solicitors acting for an impecunious litigant with a hopeless claim/defence when it has not been shown they have lent themselves to proceedings that are akin to an abuse of process (especially in the absence of any application for peremptory remedies such as for striking out order or summary judgment,[177] or application for security for costs).[178] (f) D2-D5’s case 194.Mr Sakhrani argued that (a) since P’s solicitors knew P/Mother was a woman of modest means but was not on legal aid such that she would not have been able to pay D2-D5’s costs if so ordered by the court (see her non-repayment of the excess Interim Payment to date), and (b) given the chronology of specific discovery of the SWD / HKHA Forms set out in the Lam 3rd Aff,[179] P’s solicitors must have (i) taken the Mother’s instructions on the HKHA Forms (which information therein she confirmed to be true and accurate when she gave oral evidence at the assessment hearing) to prepare the Mother WStmt / RSoD that were verified by the Mother’s SoTs, (ii) realised the information in the HKHA Forms contradicted the SoD as to the dependencies upon the Deceased (and yet they prepared the Mother WStmt / RSoD that were silent on the HKHA Forms and the Discrepancies), and (iii) realised the SWD Forms and the Deceased SWD Forms reinforced the contradictions between the HKHA Forms on the one hand and the Mother WStmt / RSoD on the other hand (and yet no supplemental witness statement was filed/served thereafter). 195.Given this court’s findings in the Written Judgment that (a) the Mother had better understanding about the information in the SWD / HKHA Forms, which she confirmed was truthful/accurate and which therefore suggested she was not telling the truth when she also adopted the contradictory/discrepant 4/16/18 Parts in the Mother WStmt as her evidence,[180] (b) the Mother did not give credible explanation for the obvious and material Discrepancies between the SWD / HKHA Forms and the 4/16/18 Parts, which contradictions were not addressed in the Mother WStmt,[181] and (c) the material Discrepancies undermined the Mother’s evidence and P’s case so that the Mother must have withheld information to bolster P’s case and that her alleged dependency on the Deceased was inherently improbable,[182] Mr Sakhrani submitted that no reasonably competent solicitor could have failed to conclude in light of the “admission of truth” in the SWD / HKHA Forms and the absence of any explanation for the Discrepancies that “there were serious credibility issues and no realistic prospect of success” (my emphasis), or could have thought the absence of explanation for the Discrepancies between the SWD / HKHA Forms (which were said to contain the “truth”) and the Mother WStmt / RSoD (which were said to be “false”) was a mere “matter of credibility of witness whether Court will accept the evidence of [P], thus this action could not be considered to be a hopeless case”[183] (irrespective whether P’s solicitors genuinely believed this or not). Mr Sakhrani submitted that P’s solicitors must have known that without any or any credible explanation the claimed dependency was “inherently improbable”. 196.On such basis, it was said that P’s solicitors as officers of the court boldly ignored their duty to the court by enabling the Mother’s “half-truths, untruths or even lies for her own purpose” as found by this court in the Written Judgment in their (a) preparation of the Mother WStmt / RSoD “that contained false information, contradicting the HKHA / SWD Forms, which contained the truth”, (b) continuation to act for P in the present action, and (c) demand for “astronomical sums to settle this case, as the correspondence shows”, eg by 18 October 2019 the Sanctioned Payments of $4,270,038 were rejected, and even though by 2 September 2020 the Sanctioned Payments were increased to $4,570,038,[184] “[P’s solicitors] wanted $6.9m” (but it was unclear how this “extortionate” figure was arrived at). 197.Mr Sakhrani suggested P’s Solicitors “should have advised a course correction, failing which they should have withdrawn” or ceased to act instead of (a) drafting/filing the Mother WStmt and making huge unwarranted demand on D2-D5, failing which they “knowingly played a part in [P’s] dishonest misconduct” and/or (b) taking the present action up to the assessment of damages which took days of hearing and was hard fought to the end by P’s legal team. Mr Sakhrani submitted that P’s solicitors as officers of the court were duty bound not to enable/present a case they knew or ought to have known contained “half-truths, untruths or even lies for the Mother’s own purpose”, as found by this court in the Written Judgment, and the fact they did so revealed “gross negligence, incompetence, misconduct or errors of such a nature which is an affront to the conscience of a solicitor”, which was said to amount to breach of their duty to the court and thus warranted reproof. It was said the legal system should not be so manipulated. 198.Mr Sakhrani submitted that (a) refusal to waive privilege would not have precluded a finding of abuse when the particular conduct admitted of no reasonable explanation, (b) disclosure of the SP Written Instructions in the Pang Aff was disingenuous as such standard-form instructions said nothing about why P rejected the Sanctioned Payments, and (c) P’s solicitors did not explain why they did not cease to act as they were obliged to. It was said the failure by P’s solicitors to either advise P of the inherent improbability of her claim as to the dependencies or to cease to act if P insisted on maintaining such claim contributed to D2-D5’s wasted costs. (g) Discussion 199.Wasted costs jurisdiction only The starting point was that D2-D5 only invoked the wasted costs jurisdiction and did not invoke the non-party costs jurisdiction. Thus, D2-D5’s complaints were against P’s solicitors qua legal representatives of P, and not qua non-party who had transgressed outside their proper professional role as legal representatives, say, as a third party funder controlling the litigation in the hope of gaining benefit/profit therefrom. Indeed, no application was made to join P’s solicitors as a party to the present action for costs only, and the Lam 2nd/3rd Affs as well as Mr Sakhrani’s written submissions did not allude to any prior warning to P’s solicitors of any intention to invoke the non-party costs jurisdiction, ie warning that should have been issued at an early stage of the proceedings to the effect that, if P’s claim would fail, D2-D5 would or might apply for costs against P’s solicitors (see Myatt at page 1564). 200.D2-D5’s complaints The essence of D2-D5’s complaints was that given (a) the Discrepancies as to the dependencies between the SWD / HKHA Forms on the one hand and the 4/16/18 Parts in the Mother WStmt / RSoD on the other hand, (b) the absence of explanation as to the Discrepancies in the Mother WStmt or by way of supplemental witness statement, and (c) the findings by this court set out in paragraph 195(a)-(c) above, no reasonably competent solicitor would have failed to conclude P’s case had “serious credibility issues”, had “no prospect of success” to beat the Sanctioned Payments and was “inherently improbable” (ie P’s claim was hopeless), consequently P’s solicitors were in breach of their duty to the court by (i) knowingly preparing the Mother WStmt / RSoD without explanation for the Discrepancies, and “causing” the Mother to verify the same by her SoTs, (ii) progressing the case to the assessment hearing by disregarding the declarations in the SWD / HKHA Forms (which if true would have meant the 4/16/18 Parts of the Mother WStmt would have been false) and not adducing statement evidence to explain the Discrepancies, (iii) failing to advise or properly advise P (1) to accept the Sanctioned Payments and (2) to not further prosecute her claim in the present action (especially when P, who was not on legal aid, was impecunious thus giving rise to concern that she would be unable to satisfy any costs orders in favour of D2-D5 against her), and/or (iv) if they did so advise P but P insisted on proceeding with her claim, failing to refrain from enabling P’s “false case” and “dishonest conduct” (ie preparing the Mother WStmt and the RSoD that contained “false information” in contra-distinction to “the truth” in the SWD / HKHA Forms, putting forward “extortionate” sum for proposed offer of settlement, and bringing P’s claim for “astronomical” sum up to and including to the assessment hearing despite availability of the Sanctioned Payments) and to cease acting for P. 201.Court’s approach The trial judge is recognised to be well-placed to evaluate the evidence in support of an application for a wasted costs order as he/she is entitled to rely on his/her own impression/ opinion, but such evaluation should not descend into investigation of the minute details. After all, if such detailed exercise is required, then more likely than not the case for a wasted costs order will not be plain and obvious. In Burkhard Hedrich & anor, Ward LJ said as follows:
202.1st stage At the 1st stage, D2-D5 had to show on the evidence before the court a strong prima facie case[185] on the 3 questions identified in Ma So So,[186] which if unanswered would likely lead to the grant of a wasted costs order. 203.Alleged impecuniosity or inability to pay D2-D5’s costs Mr Sakhrani submitted that P’s solicitors knew P was “a woman of very modest means” who did not have legal aid. In my view, P’s alleged impecuniosity featured in D2-D5’s contentions in 2 respects: (a) D2-D5 alleged that the significant amount of costs they incurred could not be recovered from P,[187] and (b) D2-D5 also alleged that P’s impecuniosity or modest means combined with the hopeless nature of her claim justified the grant of a wasted costs order against her solicitors who acted for her in the present action. 204.Whilst I readily accept P was previously on CSSA and had not complied with the Repayment Order to repay the excess Interim Payment that had been overpaid by D2-D5 within the prescribed time or to date, I find the only useful and relevant inference that could be drawn from the known factual matrix was that P failed or was not willing to comply with the Repayment Order to repay D2-D5, but in all the circumstances I am unable to say there was strong prima facie case for inferring that she was impecunious. 205.First, the Mother had use of the EC Sum in the sum of $1,070,038.[188] Secondly, the Mother had the benefit of the 1st/2nd NCB Loans in the sums of $100,000 and $50,000[189] (which were eventually repaid with interest).[190] Thirdly, the Mother as administratrix of the estate of the Deceased received from CLI the insurance pay-outs in the sum of $232,403.01 under the CLI Policy.[191] Fourthly, the Mother probably received the insurance pay-outs under the HSI Policy, the amount of which was unknown.[192] Fifthly, the Mother probably received (a) CSSA since January 2019 (that ranged from $2,525/month to $5,050/month and later reduced to $2,130/month as evident from deposits into her HSBC Account) after her successful application for CSSA in December 2018,[193] and/or (b) earnings as a post-natal care worker probably in the range of $5,250 to $5,950 per month (as seen in the transactions in her HSBC Account).[194] Sixthly, the Mother had pocket money in the sum of $1,500/month given to her by the Brother.[195] Seventhly, the Mother had modest pocket money given to her by the Sister after the Sister started working upon graduation in May 2020.[196] Eighthly, the transactions in the Mother’s HSBC Account showed that quite possibly she might have made investments (eg on foreign exchange) with her money.[197] Ninthly, the Mother received the Interim Payment in the sum of $550,000. 206.In light of the above, I am unable to say P only had modest means let alone she was impecunious, bearing in mind that the Mother alleged her household expenses were just under $11,000/month [198] (with free rent for the Flat) when the Sister still lived with her, which expenses would have been reduced after the Sister moved out. Simply the 3 sums of the EC Sum (save for a modest portion for the Sister), half of the CLI Policy pay-outs and the Interim Payment amounted to over $1,500,000. Plainly, the Mother should have spare money, but, as I have found, she was reticent about their whereabouts. But then, neither Mr Chong (and Mr Ho with him), then counsel for P at the trial, nor Mr Sakhrani delve into the Mother’s NCB and BOC Accounts in any depth (if at all) at the assessment hearing.[199] 207.Against the aforesaid findings at the assessment hearing, I am unable (a) to say there was strong prima facie case for drawing the inference that P was impecunious or unable to pay D2-D5’s costs pursuant to the 4/1/23 Order simply from the fact (i) P had private legal representation without legal aid and (ii) she had not repaid the excess Interim Payment overpaid by D2-D5 to date, and/or (b) to conclude that D2-D5 had a strong prima facie case for a wasted costs order in all the circumstances, especially when the Lam 2nd/3rd Affs gave no idea at all as to the approximate level/amount of D2-D5’s costs under the 4/1/23 Order or as claimed under the Para 5 Application. It was not for this court to speculate why P did not comply with the Repayment Order, and it was for D2-D5 to take appropriate action to enforce payment. 208.I note HHJ Andrew Li in paragraph 27 of the Decision on Costs in Shahid Muhammad (a) cited the case of Pang Yiu Hung Robert v Commissioner of Police,[200] and (b) held in the case before him that the plaintiff’s solicitors were “in a position to depose as to whether the plaintiff has paid any of the legal fees and disbursements for these proceedings but he chose not to do so”. For the present purpose, I am prepared to assume without expressly finding that Pang Yiu Hung Robert supports the learned judge’s proposition that the client’s payment or non-payment of his solicitor’s costs and disbursements for the conduct of legal proceedings is not information subject to legal professional privilege and can be openly disclosed. 209.But here, I have 3 observations. First, for the Para 5 Application, D2-D5 did not by the Lam 2nd/3rd Affs and/or in Mr Sakhrani’s written submissions complain that (a) P was unable to pay her own solicitors’ costs and disbursements in acting for her in the present action, and/or (b) P’s solicitors had to extend credit to P for funding her claim in the present action by deploying the value of fee earners’ time and/or paying for disbursement expenses on her behalf. Secondly, I am presently dealing with the 1st stage and not the 2nd stage of the wasted costs application, so P’s solicitors might but were not as yet obliged to place evidence before the court. Thirdly, whether or not P paid her own solicitors’ costs and disbursements, and if so, the source of those payments were matters that were plainly intertwined with the state of the Mother’s finances, but the state of the Mother’s finances and/or her disclosure (or non-disclosure) thereof (as supported by her own declarations) would impact on her application for and use of CSSA provided by SWD and housing support provided by HKHA, which were the very subject of (i) warnings in relation to privilege against self-incrimination at the assessment hearing[201] and (ii) referral via the Registrar of the High Court to the Secretary for Justice for his consideration.[202] In my view, even if (as HHJ Andrew Li suggested) there was no legal professional privilege over whether P had or had not paid P’s solicitors their profit costs and disbursements in representing her in the present action and/or how she funded the present claim, it was not for P’s solicitors to waive P’s privilege against self-incrimination without her informed consent. 210.In my view, there was no strong prima facie mileage in D2-D5’s suggestion that D was impecunious or unable to pay D2-D5’s costs. That being the case, there is no need for me to deal with the further contention in paragraph 203(b) above. I reiterate the discussion in paragraphs 131-187 above, and in particular the observations by Rose LJ in Tolstoy-Miloslavsky that whether a solicitor is acting for remuneration or not (eg where the client is impecunious) does not alter the existence or nature of his duty to his client and the court[203] (see also Hodgson cited by Rose LJ in Peter Williers in paragraph 179 above). 211.Ulterior purpose There was no suggestion in the Lam 2nd/3rd Affs and/or in Mr Sakhrani’s written submissions that P’s solicitors in issuing/pursuing the present action on P’s behalf did so for any ulterior motive unconnected with the success of the litigation (eg that P’s solicitors (a) enabled P to commence/continue the present action to harass Ds as in Tolstoy-Miloslavsky – see paragraphs 76 and 113 above, (b) created work to generate costs for themselves at the expense of P and/or her opponents Ds as in Re Estate of Lau Heung – see paragraphs 77-80 above, or (c) facilitated issuance/pursuit of the present action which she would not have brought to full assessment hearing as in Re Labour Buildings Ltd – see paragraphs 81 and 189-191 below). 212.Hopeless claim: issues Next, D2-D5 and Mr Sakhrani submitted that no reasonably competent solicitors would have failed to conclude P’s case had no prospect of success, and hence it was a hopeless case and not merely one that turned on witness credibility. This raised 2 matters: (a) whether P’s claim was one that had no prospect of success and/or was hopeless, and/or (b) whether it was sufficient for the 1st stage to demonstrate a strong prima facie case that no reasonably competent solicitors would have failed to conclude that P’s case had no prospect of success. 213.Hopeless claim: hindsight Before I deal with the above 2 matters, it is important to highlight that the alleged improper or unreasonable acts/omissions or the alleged default/misconduct of P’s solicitors should be considered in their relevant context at the material time rather than through the prism of hindsight wisdom at the end-point of the assessment hearing when this court upon holistic consideration of all evidence made findings with the benefit of (a) the parties’ factual witness evidence (both statement and oral evidence) having been tested under cross-examination, (b) the documentary evidence having been assessed against the factual witness evidence in (a) above, and (c) the totality of the evidence in (a)-(b) above having been weighed with the help of counsel’s written/oral submissions. One must not forget that P’s solicitors were not on trial at the assessment hearing and had no opportunity to address the court on their own position, so one should not jump too hastily from the court’s eventual findings at the end-point of the assessment hearing that P’s credibility/case were less than satisfactory to a conclusion that no reasonable solicitor would have acted on P’s instructions and/or would have recognised the Mother’s/P’s assertions in the Mother WStmt / RSoD amounted to a “false” claim or “dishonest” conduct. 214.This was echoed by the following observations by DHCJ To in Pine Enterprises Limited to which I agree:[204]
Though the above reminder was directed at the judge hearing the application for a wasted costs order, it also usefully serves as careful admonition to the applicant for a wasted costs order to be on the alert for the above matters when trying to harnass the court’s findings of fact/ credibility at the end-point of the underlying substantive proceedings for the wasted costs jurisdiction. 215.Here, Mr Sakhrani particularly relied on paragraphs 78, 108 and 209 of the Written Judgment[205] to suggest P’s case was “false” and/or “dishonest”, had “no prospect of success”, and was “inherently improbable”, and therefore hopeless. 216.But the overall finding as to the Mother’s poor credibility as witness in relation to the SWD / HKHA Forms in paragraph 78 of the Written Judgment was the result of this court’s overall assessment of witness credibility/reliability pursuant to the approach/manner set out in paragraph 76 therein, and this court’s conclusion that the Mother “must have told half-truths, untruths and even lies for her own purpose” was not the narrow result of a blinkered comparison between the SWD / HKHA Forms on the one hand and the Mother WStmt / RSoD on the other hand, but was in fact premised on a holistic consideration/analysis of all the evidence. As regards paragraph 108 of the Written Judgment, the discussions/conclusions therein were part of the deliberations set out in the Written Judgment as to why this court preferred the SWD / HKHA Forms except for the parts I have rejected (see paragraph 109 of the Written Judgment wherein I came to this view “[on] balance, for reasons set out above (and taking into account the further discussions and findings below) ……”). And it was on the basis of my overall assessment of the totality of the evidence that I concluded in paragraph 209 of the Written Judgment that the Discrepancies severely undermined the Mother’s evidence and P’s case that (a) the Mother must have withheld information to bolster P’s allegations, and (b) her alleged dependency on the Deceased was improbable. 217.I should also mention that I did not make any adverse finding against P’s solicitors in the Written Judgment and/or the Corrigendum. Thus, the question became whether one could infer from the above findings in relation to the Mother’s poor credibility as witness (made on holistic consideration of all the evidence that unraveled at the assessment hearing) that, according to D2-D5 and Mr Sakhrani, (a) no reasonable solicitor would have accepted and acted on P’s instructions at the material time (and not at the end-point of the assessment hearing), and/or (b) P’s solicitors knowingly assisted/enabled P’s “false” claim or “dishonest” conduct, or knowingly enabled proceedings that were akin to an abuse of process. 218.Hopeless claim: breach of duty to act competently In my view, it is not enough to demonstrate at the 1st stage strong prima facie case that no reasonably competent solicitors would have failed to conclude that P’s case had no prospect of success (ie the issue in paragraph 212(b) above). 219.Mr Sakhrani referred to The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 which provides as follows:
I accept that as officers of the court, all legal practitioners must act competently, diligently and with candour when dealing with the court. 220.But even if P’s solicitors were in breach of their duty to act competently to recognise P’s case was hopeless (but it is not necessary for me to so find), Mr Sakhrani did not explain how this would ground D2-D5’s Para 5 Application when it should be premised on “improper” or “unreasonable” conduct and/or “other misconduct” of P’s solicitors, and not on the English “negligence” limb that is not applicable in Hong Kong. I reiterate (a) the meaning of “improper” and “unreasonable” in paragraphs 42-45 above in contra-distinction to the meaning of “negligence” in paragraph 118(a) above (and it is the latter rather than the former that covers conduct that no reasonably well-informed and competent solicitor would have done or omitted to do), and (b) the discussions/ analysis in paragraphs 44 and 190 above to the effect that the latter is insufficient to trigger the local wasted costs jurisdiction. 221.Further, for reasons discussed in paragraphs 98-133 above, I do not agree with any general proposition that a solicitor who presents a hopeless case on behalf of a client should be visited with a wasted costs order to pay wasted costs of the successful defendant, irrespective whether the solicitor’s client is or is not in a position to pay those costs. There has to be “something more” in the manner explained above to demonstrate improper/unreasonable conduct or other misconduct/default in order to invoke the wasted costs jurisdiction. As explained above, for the 1st stage, the applicant for a wasted costs order has to show a strong prima facie case that the respondent solicitors, say, (a) have knowingly lent assistance to or enabled proceedings that are an abuse of process, (b) have acted on behalf of the client for an ulterior purpose unconnected with the success of the argument, claim or defence, (c) have knowingly misled the court, and/or (d) have committed other serious misconduct or dereliction of duty to the court. 222.Hopeless claim: P’s claim hopeless, dishonest or false? The thrust of various contentions advanced by D2-D5 and Mr Sakhrani was that P’s claim in the present action was hopeless and therefore should not have further advanced to the assessment hearing. On the other hand, Mr Kwan submitted there was no express suggestion in the Lam 2nd/3rd Affs and/or Mr Sakhrani’s written submissions that P’s claim in the present action was an abuse of process even though it was said (a) there were unexplained Discrepancies between the SWD / HKHA Forms and P’s instructions (evident from the Mother WStmt / RSoD) that should have excited P’s solicitors to advise P to accept the Sanctioned Payments and/or to not further prosecute her claim, and (b) this court eventually rejected the claimed dependencies and disbelieved the Mother’s evidence in relation thereto, which, D2-D5 claimed, showed her case was false/ dishonest. 223.I have referred to the authorities on this aspect in relation to the wasted costs jurisdiction, including Ridehalgh, Medcalf and the subsequent English/local authorities, which set out the interplay of public policy reasons that does not favour making wasted costs orders against legal representatives of unsuccessful parties in apparently hopeless cases, and which in turn indicates that the court will usually be looking for something akin to abuse of process.[206] For reasons discussed herein, I am not persuaded there was sufficient proving material in the existing evidence placed before the court that would raise a strong prima facie case that the carriage and conduct of the present action by P’s solicitors was akin to abuse of process in the sense described in the authorities. 224.In my view, the nature of civil litigation is that if a party’s claim or defence succeeds, then in all likelihood the court has rejected the opponent’s case/evidence (including factual/documentary witness evidence). But it does not follow that bringing the failed claim/defence to trial for determination by the court is necessarily an abuse of process. There is a distinction between a hopeless case and one that is an abuse of process, and it is from the latter rather than the former that one may in appropriate circumstances conclude there has been knowing assistance by the legal representatives to proceedings that are akin to abuse of process. 225.Here, P plainly thought the Deceased had been seriously wronged, and she sought to use the court’s process to obtain a remedy for the perceived serious wrong. Such belief was borne out by the interlocutory judgments entered against Ds in favour of P. As for the matter of quantum, after lengthy argument by P and D2-D5 and detailed analysis in the Written Judgment / Corrigendum, P successfully established her claims (a) for dependencies on the Deceased and loss of accumulation of wealth but was shown to have overreached her claims in those respects, and (b) for funeral expenses and bereavement. In my view, it did not necessarily follow from (a) above that it was abusive in the sense described in Ridehalgh for P’s solicitors to have advanced such claims. Whether it was so was a fact-specific matter. 226.It is true that at the end-point of the assessment of damages (in contra-distinction to during the process of the litigation), as a result of this court’s concerns/findings upon overall assessment of the totality of the evidence, including (a) the Discrepancies between the SWD / HKHA Forms on the one hand and the 4/16/18 Parts and the Mother’s oral evidence to similar effect on the other hand as well as (b) various other factors (eg (i) the Mother’s finances as revealed in the HSBC, NCB and BOC Accounts, (ii) the sufficiency of disclosure or otherwise under declaration in various SWD / HKHA Forms, etc), this court directed the Registrar of the High Court to refer the matter to the Secretary for Justice for his consideration.[207] Further, whilst this court’s assessment of the Mother’s credibility put her in poor light, and further investigation by the Secretary for Justice (and/or by SWD / HKHA) might possibly reveal abuse on the part of P (but not necessarily in the context of the legal proceedings with which the wasted costs jurisdiction is concerned), it was not necessary for this court to find and this court did not expressly find in the Written Judgment that P’s solicitors knowingly connived in or assisted a deliberately “false” claim or “dishonest” conduct. 227.If D2-D5 wished for a wasted costs order against P’s solicitors, they had to raise at the 1st stage a strong prima facie case on specified facts and circumstances that the conduct of P’s solicitors in continuing P’s claim was unreasonable or improper in that they (a) lent themselves to P’s abuse of process by knowingly enable P’s pursuit of the present action that was akin to an abuse of process (in contra-distinction to merely presenting P’s allegedly hopeless case), or (b) knowingly performed any act or omission in the conduct of the present action which of itself was akin to an abuse of process. On such premise, I turn to D2-D5’s and Mr Sakhrani’s arguments. 228.The Lam 3rd Aff claimed that P owed a duty to the court not to pursue an unmeritorious claim on behalf of P when objective, unambiguous and unequivocal evidence in the shape of the SWD / HKHA Forms clearly indicated P’s pleaded claim or “instructions” were untenable, and there was no basis for P’s solicitors to believe P would be able to beat the Sanctioned Payments in view of the SWD / HKHA Forms placed before the court.[208] 229.I have 3 observations in relation to this contention. First, I am not persuaded the SWD / HKHA Forms (which D2-D5 was the claimed countervailing evidence to P’s case) could be said to be any incontrovertible or immutable evidence, and it was certainly not “objective” or independent as it was information provided and declared by the Mother herself. In this sense, the present case is quite different from Shahid Muhammad in which the falsity/dishonesty of the plaintiff’s case was obvious as there was clear, objective and independent CCTV recording to show the accident did not happen as the plaintiff in that case claimed. There was no need for any judicial evaluation to ascertain the true facts because the mechanical CCTV footage spoke for itself and incontrovertibly trumped the plaintiff’s pleaded claim, so the plaintiff’s case not only did not have any or substantially any prospect of success, it was obviously unsupportable and false, which the plaintiff’s solicitors should have realised from review of the CCTV footage (retrievable/available from the police) before trial.[209] I am not persuaded P’s case in the present action fell into such clear and obvious category. 230.Secondly, the Lam 2nd/3rd Affs and Mr Sakhrani’s written submissions drew on this court’s factual findings made at the end-point of the assessment hearing[210] to suggest the unexplained Discrepancies between the SWD / HKHA Forms and the 4/16/18 Parts / RSoD raised “serious credibility issues” such that P’s pleaded claim was untenable.[211] Whilst the 18/12/20 Instructions indicated P’s solicitors did indeed recognise the Discrepancies were major weaknesses in P’s case, this of itself was not enough for raising a strong prima facie case for granting a wasted costs order. As explained in paragraphs 213-217 above, one should not transport too hastily this court’s eventual findings pursuant to evaluation of the totality of the evidence at the end-point of the assessment hearing into a conclusion that during the course of the litigation and before eventual judicial evaluation / finding P’s solicitors knew P’s case was hopeless and then infer P’s solicitors must have knowingly advanced P’s claim that was akin to an abuse of process. I have also explained why a hopeless case, without more, does not invite a wasted costs order against the solicitor who presents such hopeless case for his client,[212] so one cannot elide a solicitor’s presentation of his client’s weak/hopeless case (which is permissible) into a conclusion that he is lending assistance to or enabling proceedings that are akin to an abuse of process (which is not permissible). 231.Thirdly, P’s own SWD / HKHA Forms as supported by her own declarations and the Mother WStmt / RSoD as verified by her own SoTs were in the nature of inconsistent statements. As explained in Commentaries 2 and 4 of Principle 10.03 in The Hong Kong Solicitors Guide to Professional Conduct,[213] (a) it is for the court and not the solicitor to enquire whether the client is telling the truth or to assess the truth or otherwise of his statement evidence, and (b) it is not a ground for the solicitor to cease to act further for the client if the latter makes inconsistent statements to former. 232.As explained in paragraphs 86-93 of the Written Judgment, the proper approach towards prior inconsistent forms/declarations is not to regard them as so immutable that subsequent discrepant averments in the pleadings and in the statement evidence must ipso facto be rejected as false or dishonest. There is no evidential/legal rule that precluded “going behind” the SWD / HKHA Forms (ie pre-existing forms and declarations that the Mother gave to the government authorities). In paragraphs 87-88 of the Written Judgment, I took the view that Seagroatt J’s observations in Yim Fat Fong v Wong Kim Hung & anor[214] do not preclude looking beyond the documents submitted to the IRD although the learned judge did not need to do so in that case. I followed (as did Bharwaney J in Fung Suen Sim for herself, the Personal Representative and the Intended Administratrix of the Estate of Lung Kai Hon, deceased v Liu Chun Pong & anor[215]) the approach explained by Reyes J in Christopher Gordon Young v Lee Chu,[216] ie (a) it is a matter of evidence, (b) the court is bound to investigate the actual facts, and (c) the past picture painted by the forms/declarations submitted to the government authorities cannot bind the judge, who may at the end of the day find the true state of affairs is as stated in such forms/declarations or something other than that depicted therein. Thus it was necessary to consider, as put by Reyes J, “the totality of the proving material before [the judge]”[217] or to investigate, as put by this court, “what the real facts were upon considering the totality of the evidence”[218] in deciding on the evidence whether this court should not accept as true the information the Mother gave and verified by her declarations in the SWD / HKHA Forms. 233.This court then proceeded to consider the totality of the evidence as set out and discussed in the Written Judgment, and concluded from such analysis that the true position was stated in the SWD / HKHA Forms (save for the parts I have rejected). As Mr Kwan pointed out in his written submissions, I did not simply consider the Discrepanies, and in fact I had also reflected on inter alia (a) whether P understood the significance of the prior declarations,[219] (b) whether P appreciated the precise matter that was required to be disclosed in the prior declarations,[220] (c) how the prior declarations ought to be understood in light of the Deceased SWD Forms,[221] and (d) how the prior declarations should be read in light of P’s conduct in voluntarily cancelling CSSA.[222] I have also taken into account the overall credibility/reliability of the Mother as witness on other aspects of her case, including eg the Mother’s/Sister’s expenses, the Mother’s reason(s) for giving up CSSA, the Mother’s post-natal care work, the Mother’s allegations as to lack of financial support by the Brother, etc. 234.Whilst I did recognise[223] the SWD / HKHA Forms were different from the IRD documents in respect of which other courts were prepared to “go behind” in the authorities cited by counsel at the assessment hearing in that (a) the claimants in those authorities gave “cogent and credible oral/documentary evidence that convincingly explained how [the IRD documents] came about and how/why they were incorrect” so as to give persuasive evidential basis for the courts to “go behind” them “to find on the facts what the true position was”,[224] but (b) here, although the Mother WStmt (which the Mother adopted in her evidence-in-chief) claimed the Deceased took the initiative to give her monthly household family provision that was not documented due to their mother-son relationship, the Mother was constrained under cross- examination at the assessment hearing to accept the contents of the SWD / HKHA Forms were true and correct, which enhanced rather than resolved the Discrepancies in the absence of credible/reliable explanation, these matters (together with other factors/considerations as well as overall witness credibility) were part of the totality of the evidence that were subjected to this court’s evaluative analysis and eventual judgment at the end-point of the assessment hearing, which led to the conclusion that the information given by the Mother in the SWD / HKHA Forms (save for the parts I have rejected) should be accepted. 235.During the course of the litigation before the end-point of the assessment hearing, one might perceive P might have a uphill task and might likely not have prevailed, especially when P did not present statement evidence to explain the Discrepancies. The Lam 2nd/3rd Affs complained that such lack of explanation for the Discrepancies showed P had withheld evidence in relation to the SWD / HKHA Forms so there was no or substantially no prospect of success to uphold P’s claim as to the dependencies and to beat the Sanctioned Payments.[225] But in my view, there is a distinction between knowing presentation of false evidence by act or omission (eg keeping the primary SWD / HKHA Forms under wraps) and not disclosing evidence (eg placing the primary SWD / HKHA Forms before the court but not going further to give explanation)[226] in the then context during the course of the litigation and not with hindsight wisdom learned at the assessment hearing, and it was not for P’s solicitors to believe or disbelieve their client’s instructions or to cease to act even if P made inconsistent statements.[227] Indeed, P’s solicitors, without misleading the court, had no duty to conduct pre-trial screen of P’s case.[228] 236.I also bear in mind that notwithstanding the Discrepancies, the Mother verified the Mother WStmt / RSoD by SoTs and went on to stand by and adopt the contents of the Mother WStmt at the assessment hearing even though she chose not to offer explanation for the Discrepancies in her examination-in-chief despite further opportunity given to Mr Chong on the 1st day of the assessment hearing to advise her on the same.[229] P was obviously keen for her claim to proceed and to be determined by the court notwithstanding having received advice by P’s legal team and explanation by this court.[230] Even though P was constrained under cross-examination to acknowledge the accuracy of the contents of the SWD / HKHA Forms, the Mother in her oral evidence still stood by the claimed dependencies as asserted in the Mother WStmt, so ultimately, it was my evaluative judgment of the proving material before the court that led to the factual findings of the actual facts. As explained in Christopher Gordon Young, it was for the court to analyse/weigh the totality of the evidence for determining whether or not to “go behind” the SWD / HKHA Forms. In my view, it was not for P’s solicitors to usurp such function of the court[231], and it was inappropriate to view the conduct of P’s solicitors from the end-point of the assessment hearing through the prism of this court’s findings against the Mother in the underlying proceedings between P and Ds (and not in the context of between P and P’s solicitors)[232]. 237.As discussed in paragraphs 244-250 below, in the absence of waiver of legal professional privilege, I cannot say there was strong prima facie case that P’s solicitors had not advised P on (a) the impact of the Discrepancies and/or (b) the evidential effect of not providing an explanation therefor by way of statement evidence. Since D2-D5 advanced their case for a wasted costs order on the premise of unreasonable or improper conduct or other misconduct (and that was how I have addressed it), it seemed right to take into account the fact that the SWD / HKHA Forms, the Deceased SWD Forms and the transaction statements for the HSBC, NCB and BOC Accounts were placed before this court at the assessment hearing without attempt to mislead the court by keeping such documents/evidence under wraps.[233] And as seen from the Written Judgment, this court had considered those documents in detail in coming to the relevant findings. In my view, the present case was quite different from Vernon where the plaintiff’s legal team knowingly decided not to let the trial court know of inconsistent expert opinion by the same expert.[234] 238.Mr Kwan noted Lam seemed to suggest P’s solicitors were the primary driver of the present action (eg paragraph 5 of the Lam 3rd Aff claimed P’s solicitors must have reviewed the HKHA Forms, and “…… in breach of its duty to the court, [P’s solicitors] knowingly prepared a witness statement and [RSoD] offering no explanation for the contradictory evidence. They caused [P] to swear an oath on the contents therein ……” (my emphasis)), but submitted this was a mischaracterisation of their role. In my view, there was scanty evidence to show or to infer (in the absence of waiver of privilege) P’s solicitors advised and/or caused P to refrain from giving any explanation for the contradictions in the Mother WStmt / RSoD in contra-distinction to this being P’s/Mother’s position/stance notwithstanding any advice by P’s solicitors on the merits of the claim and/or on the consequences of the Discrepancies / Sanctioned Payments. It was also difficult to reconcile Lam’s suggestion with (a) the SP Written Instructions that showed P’s insistence on pursuing her claim notwithstanding advice given to her by P’s solicitors, and (b) P’s insistence on continuing her claim to formal assessment of damages notwithstanding opportunity given to Mr Chong to advise her on the legal/other consequences of the Discrepancies and this court’s explanation to her in punti language on the 1st day of the hearing. Thus, I am unable to infer any strong prima facie case that P’s solicitors knowingly “enabled” P to present a “false” or “dishonest” case by way of the Mother WStmt / RSoD, and even less basis to suggest P’s solicitors knowingly “caused” P to verify her “false” or “dishonest” case by SoTs. 239.Mr Sakhrani next suggested P’s claim was false, dishonest and had no or substantially no prospect of success because it was “inherently incredible”, inherently improbable and/or logically impossible. But such contention was again nothing more than an attempt to rely on the awareness by P’s solicitors of the Discrepancies at the material time and to marry such awareness to this court’s eventual evaluative assessment/findings at the end-point of the assessment hearing (as set out in the Written Judgment) that rejected P’s claim and the Mother’s statement/oral evidence as to the claimed dependencies, and then to go on and suggest therefore that P’s solicitors must have known the Mother WStmt / RSoD contained “false” information since the SWD / HKHA Forms contained the “truth”.[235] Likewise, paragraph 8 of the Lam 2nd Aff seized upon the findings in the Written Judgment made at the end-point of the assessment hearing to transform (a) a possibility (ie that “if” the declarations in the SWD / HKHA Forms were true, then the contents of the Mother WStmt must be false) into (b) “the only inference be drawn” (ie that P’s solicitors turned a blind eye to “this reality”).[236] But it was not for P’s solicitors to investigate, evaluate and/or verify P’s case to assess/resolve the conflict in evidence and/or to impose pre-trial screen of P’s claim when the vitality of her claim that required “going behind” the SWD / HKKA Forms depended upon the court’s consideration/assessment of the totality of the evidence that included the factors D2-5 relied upon (eg the existence of and lack of credible explanation for the Discrepancies), but such factors were not exclusive or exhaustive. Whilst it might have been difficult (or, as Mr Sakhrani suggested, even hopeless) for P to persuade the court of the vitality of her claim as regards the dependencies, it did not mean P’s solicitors, without usurping the judicial function of assessing the evidence and making the findings at the assessment hearing and without the benefit of hindsight wisdom of such findings, must have known that P’s case in the Mother WStmt / RSoD was necessarily “false” (even when the SWD / HKHA Forms were available) and would have failed. 240.In my view, the present case was different from (a) Tolstoy-Miloslavky in which the plaintiff’s solicitors must have known the new action was the 2nd or 3rd set of proceedings by the client that sought to collaterally attack a previous decision and to vex the defendant,[237] (b) Re Estate of Lau Heung in which the plaintiff’s solicitors issued a useless joinder summons that was unnecessary and hopeless by turning a blind eye to the cashier order actually in his their hands and/or the objective reality known to them that Deng was already in Hong Kong,[238] and (c) Shahid Muhammad where the objective and independent mechanical CCTV recording clearly demonstrated that the plaintiff’s account of the accident was false and his solicitors should have been aware of such falsity from review of the available CCTV footage.[239] As explained in Wee Soon Kin Anthony, it was not for P’s solicitors to disbelieve or reject P’s story because it appeared improbable; rather their duty would not go beyond “advising [the client] of the folly of making incredible or illogical statements”.[240] 241.Without viewing the matter with the benefit of hindsight through the prism of this court’s findings at the end-point of the assessment hearing, I am not persuaded there was strong prima facie basis to say, as Mr Sakhrani would have me say, no reasonable solicitor would have concluded otherwise than P’s claim was false/dishonest (eg falsifying or frabricating evidence) and had no or substantially no prospect of success, and in any event it was not for P’s solicitors to pre-screen P’s claim as a result of inconsistent statements. 242.Failure to advise? In any event, I am not persuaded there was sufficient prima facie evidence before the court to infer that P’s solicitors failed to advise P to accept the Sanctioned Payments and to not further prosecute her claim in the present action. The Lam 3rd Aff claimed (a) the Pang Aff did not demonstrate P’s solicitors had at any time properly advised P on the Discrepancies and potential criminal/other consequences,[241] and (b) even though the Pang Aff seemed to suggest P appeared to have confirmed with P’s solicitors by the 18/12/20 Instructions that she understood the weaknesses of her case,[242] it was still unclear whether P’s solicitors properly consulted/advised P at the time when they prepared the reply letter dated 17 May 2019 to D2-5’s solicitors.[243] 243.In my view, Lam’s stance was not understood. After all, at the 1st stage under the wasted costs jurisdiction, the burden was on D2-D5 as applicants to raise strong prima facie evidence of unreasonable or improper conduct on the part of P’s solicitors, and not for P’s solicitors as respondent to show cause, explain and/or justify their conduct.[244] 244.Further, it was plain that any advice given by P’s solicitors to P on the merits or demerits of accepting or rejecting the Sanctioned Payments was subject to legal advice privilege, which privilege belonged to P and hence not for P’s solicitors to waive, so in the absence of waiver of privilege by P, P’s solicitors would be unable to disclose what advice/ warnings they had given to P.[245] Here, P’s solicitors were apparently authorised to waive privilege over instructions received from P pursuant to advice given by P’s solicitors, so the Pang Aff disclosed the SP Written Instructions that rejected the Sanctioned Payments, but in the absence of waiver of privilege beyond this,[246] P’s solicitors could only point to the SP Written Instructions that confirmed “…… 律師已向 [P] 解釋是否合理接受上述款項以最終和解上述的申索 ……”,[247] so they were greatly disadvantaged in answering the allegations in paragraph 242 above, and the court would not have access to privileged materials and would not know the full extent of the materials available to P’s solicitors or the nature of the advice (which was shown to have been given) as to the strength of P’s case or the merits of accepting or rejecting the Sanctioned Payments. In such circumstances, P’s solicitors would be entitled to the benefit of doubt, which makes it inherently improbable that an adverse conclusion would be reached against them on these issues. 245.As explained in Ma So So and Medcalf, where there is room for doubt, the respondent solicitor is entitled to the benefit of it, and it is rare for the court to be able to make full allowance or to conclude there is no room for doubt.[248] This was reiterated by DHCJ To in paragraph 9 in Pine Enterprises Limited citing Medcalf:[249]
246.Here, not only did P confirm in the SP Written Instructions that in the course of the present action prior to the assessment hearing P’s solicitors had advised her “…… 是否合理接受上述款項以最終和解上述的申索 ……”, on the 1st day of the assessment hearing (a) this court stood down the case for Mr Chong to advise the Mother/P on the legal/ other consequences of the Discrepancies between the 4/16/18 Parts in the Mother WStmt and the SWD / HKHA Forms and “to take instructions” from P/Mother, and (b) this court also took the liberty to explain the above matters in punti language directly to the Mother (who was in court), but P decided to proceed with her claim and with the assessment hearing notwithstanding Mr Chong’s advice and this court’s explanation.[250] 247.In my view, there was little if any basis for the assertion that P’s solicitors failed to advise P in paragraph 28 above. I also do not ascribe to Mr Sakhrani’s suggestion that the SP Written Instructions were disingenuous in the sense that they were in standard form and said nothing about why P rejected the Sanctioned Payments. It was not for P’s solicitors to waive privilege to disclose either their advice to P and/or P’s reasons for not accepting the Sanctioned Payments[251]. As for the claim that refusal to waive privilege does not preclude a finding of abuse when the particular conduct admits of no reasonable explanation,[252] the true question was whether there was strong prima facie basis for the court to conclude there was nothing P’s solicitors could have said by way of privileged material which could counter that suggestion.[253] As explained above, I am unable to say so. In my view, without sight of such privileged materials and advice, I am not persuaded there would be sound basis for concluding that P’s solicitors had failed to properly advise P on her claim as well as the Sanctioned Payments or that inferentially P’s solicitors failed to render any advice at all or were asserting that there were good or reasonable prospects of success. Medcalf made clear that the court should only come to such conclusion if it is satisfied that there was nothing that the legal representatives could have said by reference to the privileged material which could counter that inference. 248.Given the confirmations in the SP Written Instructions that advice had been given to P on the merits or otherwise as to whether or not to accept each and every Sanctioned Payment made, there was little (if any) basis for this court to infer that P was only advised on the weakness of her case by the time of the 18/12/20 Instructions. I reiterate Dillon LJ’s observations in Orchard that even though the successful defendant may have difficulty in showing the plaintiff’s solicitors were guilty of requisite dereliction of duty or serious misconduct as they have no access to privileged material, one must also not forget that the charge against the plaintiff’s solicitors is a serious one with serious consequences which “ought not to rest solely on inference”, and the justification for privilege lies in public policy[254] (see also Persuad in which the court declined to exercise discretion to grant a wasted costs order by taking into account inter alia limited waiver of privilege so that possible relevant matters that might have explained the conduct of the barrister in that case were unknown to the court,[255] and Ratcliffe Duce & Gammer in which the court held that it will be a very exceptional case for the court to infer that a party is abusing the process of the court by pursuing a hopeless case[256]). 249.Here, in light of the above discussion, the obvious doubts must be resolved in favour of P’s solicitors, and I am not persuaded this case is a “very exceptional case” with strong prima facie evidence to infer abuse of process in pursuing an allegedly hopeless case in the sense described in Ridehalgh when privilege over legal advice rendered had not been waived.[257] In my view, all the court could infer was that P declined to accept the Sanctioned Payments and proceeded to the assessment hearing despite having received advice by P’s solicitors. Jacobs J in Anthony Douglas King & ors warned that if the client does not waive privilege, then a court should be very slow to conclude his legal representatives who allegedly advanced a “hopeless case” were necessarily acting improperly or unreasonably as the court will be unable to reach conclusions as to the advice given.[258] To allow the Para 5 Application to go further would require the court to consider D2-D5’s substantive case with much of the relevant evidence obscured from the court’s view. Whilst legal professional privilege is not a trump card, it is relatively rare for the court to come to a safe or satisfactory conclusion in the absence of waiver of privilege. Here, I am unable to safely assume that the privileged material could not assist P’s solicitors, and I find it unlikely that a wasted costs order would be made on the premise that P’s solicitors failed to timely and properly advise P without seeing privileged material. In my view, this is a factor for not allowing the Para 5 Application to proceed beyond the 1st stage 250.To summarise, I am unable to infer that P’s solicitors failed to advise P when (a) the SP Written Instructions expressly stated P’s solicitors had advised P on the merits/demerits of accepting/rejecting the Sanctioned Payments,[259] (b) the 18/12/20 Instructions expressly highlighted the Discrepancies as the weakness in P’s case and recorded P’s/Mother’s insistence on proceeding with her case to the assessment hearing for the court’s determination,[260] (c) the 17/10/19 Letter highlighted the risk of having to return overpaid Interim Payment,[261] (d) P’s/Mother’s insistence on proceeding with the assessment hearing notwithstanding opportunity given for Mr Chong to advise her of the legal/other consequences of the Discrepancies and explanation given by this court to P in punti language on the 1st day of the assessment hearing.[262] Further, in the absence of waiver of privilege over the advice that P’s solicitors gave to P, the benefit of doubt must be given to P’s solicitors.[263] 251.Cease to act? In light of the above discussions, I agree with Mr Kwan that there was also little basis to say P’s solicitors ought to have ceased to act for P. As explained above, irrespective whether P’s case was weak or even hopeless, without the benefit of hindsight wisdom through the evaluative judicial function of assessing the totality of the evidence, it was not so plain and obvious that presenting P’s case that required “going behind” the SWD / HKHA Forms (despite the unexplained Discrepancies) was conduct akin to abuse of process. After all, as I have explained above, (a) while it was the duty to the solicitor to advise his client of the strength or weakness of his case, it is up to the client to accept or reject that advice, and if he sees fit to instruct his solicitor to proceed with a case which the solicitor thinks is weak or doomed to fail,[264] and (b) I cannot assume P’s solicitors did not properly advise P,[265] and after all it was up to P to decline to follow the advice. 252.I am not persuaded there was sufficient prima facie evidence that showed P’s solicitors were aware or reckless about any obvious falsity of P’s case to show they had enabled a dishonest or misleading claim so to fall within Commentary 3 of Principle 10.03 in The Hong Kong Solicitors’ Guide to Professional Conduct.[266] This was in contrast to the CCTV recording (ie objective, independent and mechanical evidence that the plaintiff could not “go behind”) that incontrovertibly refuted the plaintiff’s claim as to how the accident happened in Shahid Muhammad,[267] or to the plaintiff’s solicitors in Re Estate of Lau Heung who turned a blind eye to the cashier order already in their own hands, which incontrovertibly showed Deng was already in Hong Kong to have authorised issuance of the cashier order and to complete the account by 20 December 2020, in order to issue the useless joinder summons to generate costs for themselves.[268] As explained in Pine Enterprises Limited, even in hopeless cases there are strong public policy reasons for the solicitor to continue representing his client than to leave him unrepresented.[269] Indeed, Commentary 1 of Principle 10.05 of The Hong Kong Solicitors’ Guide to Professional Conduct[270] Vol 1 provides that “[a] solicitor should never terminate a retainer without good cause and without reasonable notice”. 253.Causation In light of my views that D2-D5 failed to establish unreasonable or improper conduct on prima facie basis, it is unnecessary to deal with the matter of causation, but I proceed to briefly deal with Mr Kwan’s submissions for completeness. I do not think Mr Sakhrani disputed it was for D2-D5 to show a strong prima facie case for establishing a causal link between the solicitor’s conduct and the extent of costs incurred or wasted.[271] I reiterate the principles on the matter of causation in Jackson & Powell on Professional Liability[272] in paragraph 46 above, and “[the] court must ask whether the costs in question would have been incurred on the balance of probabilities but for the lawyers’ conduct, not whether there was a substantial possibility that they would not have been incurred, see Brown v Bennett (No. 2) ……” 254.Here, the Lam 3rd Aff claimed P’s solicitors ought to personally pay D2-5’s costs from the date of the Mother WStmt (ie from 25 October 2018) onwards, but did not expressly particularise or depose the evidence for establishing the requisite causal link. It was plain that P all along insisted on progressing her claim to the assessment hearing for determination by the court (see her confirmation of such instructions in the SP Written Instructions, and her insistence on proceeding with the assessment hearing even after opportunity was given to Mr Chong to advise her on the legal/other consequences of the Discrepancies and this court’s explanation to her in punti language on the 1st day of the hearing). P was a determined litigant, and I consider it inherently unlikely that the action would have taken any course other than it did based on the parties’ conduct before and at the assessment hearing, and on the evidence that was before the court. It was not D2-D5’s case that P’s solicitors wrongly enabled proceedings to be brought from the start. Their complaint was that costs were wasted upon and after the filing of the Mother/Sister WStmts. D2-D5’s contention was that the proceedings should have been arrested and discontinued at that point at the latest or by timely acceptance of the Sanctioned Payments. But the evidence showed that once having started, P could and would have continued with her claim. The litigation was hard-fought on both sides, and it was always going to turn on the veracity of the Mother’s evidence (which in any event would have required detailed cross-examination preceded by trial preparation). The assessment hearing did proceed, and whilst the Mother was constrained under cross-examination to accept the accuracy of the contents of SWD / HKHA Forms, she also stood by the Mother WStmt and even gave evidence to similar effect. In my view, the likelihood was that the assessment of damages would have proceeded as it did.[273] In my view, it was the assessment hearing itself with consequent findings of fact and credibility by the court that led to resolution of the issues. Although in the Written Judgment / Corrigendum I have criticised the Mother’s evidence including the Discrepancies, I did not expressly find these failings amounted to unreasonable or improper conduct, or misconduct/ default, on the part of P’s solicitors. The evidence suggested that ultimate fault likely lied with P/Mother for the Discrepancies. 255.Further, D2-D5 did not attempt to carve out D2-D5’s costs that did not turn on P’s claimed dependencies (eg D2-D5’s answer by way of pleadings/evidence in relation to P’s claim for funeral expenses and bereavement, and D2-D5’s evidence on the Deceased’s future notional earnings such as Chak’s/Tang’s statement/oral evidence), and did not explain why these costs were caused or incurred as a result of the alleged unreasonable or improper conduct of P’s solicitors in relation to the Discrepancies. If it were said that P ought to have accepted the Sanctioned Payments in such circumstances instead of progressing her claim to the assessment hearing, then her refusal despite advice could not equate to unreasonable or improper conduct on the part of P’s solicitors. In any event, there was no prima facie basis to show wasted costs extended to D2-D5’s costs of the whole or 80% of the present action (whether after 25 October 2018 or otherwise). 256.On the facts before me, I do not consider there was need for P’s solicitors to come off the record. In any event, there was no affidavit evidence that provided answer to Mr Kwan’s submissions that even if P’s solicitors ceased to act, P, given her persistence with her claim, would have continued to prosecute her action in any event. Also it was not suggested that D2-D5 would have incurred less costs had P’s solicitors ceased to act and P pursued her claim for damages as a litigant in person (given that she persisted with her claim despite advice by Mr Chong and explanation by the court on the 1st day of the assessment hearing and that she also stood by the Mother’s WStmt and gave similar evidence notwithstanding the Discrepancies). I do not think such suggestion (if made) could be supported as detailed cross-examination and closing submissions would have been inevitable. In any event, it would have been difficult to quantify what extra costs (if any) were incurred if P’s solicitors had ceased to act to justify the summary wasted costs jurisdiction. In my view, these causation arguments are unsuitable for determination in a summary process. 257.I am satisfied that D2-D5’s claim for a wasted costs order would likely have failed as a matter of causation, and it was probable that they would not have been able to establish the necessary causal link. 258.Summary process, discretion and proportionality As explained in Ma So So, D2-D5 had to establish strong prima facie case that the court is likely to exercise its discretion to make the wasted costs order sought. A wasted cost order is primarily concerned with unnecessary costs incurred by the client’s opponent in the litigation, and proportionality has to be kept in mind at all times. The summary procedure envisaged for the wasted costs jurisdiction is narrowly confined, and the court should concern itself with the matter of costs wasted by specified improper or unreasonable conduct or other misconduct/default in the context of the litigation.[274] There was no dispute that the onus is on the applicant to satisfy the court at the 1st stage hearing that the costs likely to be incurred in litigating the application for the wasted costs order are not likely to be out of proportion to the amount of the costs that are at stake.[275] 259.But here, on the matter of proportionality that would justify the Para 5 Application to go ahead to the 2nd stage, there was no indication of the level/amount of the costs claimed and/or the anticipated costs for bringing the Para 5 Application up to fruition at the 2nd stage so that a prima facie view could be formed as to whether or not the alleged unnecessary costs that were said to have been incurred/caused by reason of the conduct of P’s solicitors would be disproportionate to the costs involved and to be involved in the 1st and 2nd stages of the Para 5 Application. Even though the taxation process of D2-D5’s costs under the 4/1/23 Order probably had not commenced or completed, D2-D5 should have been able to identify in advance the approximate level of wasted costs claimed. Further, D2-D5 could have identified/estimated the costs incurred and to be incurred for dealing with the application for wasted costs order as a whole. In this respect, I refer to the observations in Ma So So in relation to the 1st stage, ie that the court will assess inter alia the proportionality of the evidence, comparing the amount of costs at stake with the likely costs of the application.[276] 260.Further, the court’s task at the 1st stage is to consider whether the application as presented is suitable for summary determination as a whole. For the reasons discussed above and the matters canvassed below, I conclude that the Para 5 Application is not suitable for summary determination, and in the circumstances considered as a whole, the court’s discretion should be exercised against the Para 5 Application proceeding to stage 2. 261.I also bear in mind that the English Court of Appeal in Ridehalgh (as endorsed by Ma So So) was at pains to emphasise proportionality and to warn that applications for wasted costs orders should not be turned into substantive satellite litigation. As explained above, the relevant facts and materials for D2-D5’s present application for a wasted costs order would turn not on what happened at the assessment hearing but what transpired between P’s solicitors and P in the course of the litigation prior to the end-point of the assessment hearing (eg the causation point itself would need detailed evidence, inference and findings as to what passed between P and P’s solicitors), and there might be complexity as a result of argument over (a) legal advice and litigation privilege, and (b) privilege against self-incrimination. 262.Apart from any dispute over the scope of privilege that would bind P’s solicitors, if there is no waiver of privilege, the enquiry under the Para 5 Application would concern circumstantial evidence as to whether P’s solicitors should or should not have continued/advanced P’s claim, which will be a complex inquiry since it is likely that P and D2-D5 would take different views and the court would have to carry out a balancing exercise. It might require significant aspects of the Written Judgment (which ran to 313 pages) to be revisited through the prism of this question, which question vis-à-vis P’s solicitors would be different from the issues as between P and Ds that this court addressed in the Written Judgment. 263.Further, D2-D5 had various themes in support of the Para 5 Application, and their arguments included (a) P’s solicitors improperly pursued a hopeless case, (b) the court should infer that no advice had been given to P in respect of her claim and its prospects of success, (c) otherwise P’s solicitors should have ceased to act, (d) P’s solicitors knowingly prepared the Mother WStmt / RSoD without explanation and caused the Mother / P to verify the same by her SoTs, and (e) P’s solicitor knowingly advanced P’s claim by pleading damages and making settlement offer in “extortionate” sums. As Mr Kwan submitted, in considering whether or not to allow the Para 5 Application to go forward to the 2nd stage in the context of such allegations, a number of factual matters not covered by the Written Judgment / Corrigendum had to be canvassed, especially when P’s solicitors had not had the opportunity to respond to a number of D2-D5’s allegations in the Lam 3rd Aff, eg (a) whether P’s solicitors had consulted P when formulating the 17/10/19 Letter,[277] (b) whether P’s solicitors advised P on the potential criminal consequences of the Discrepancies,[278] and (c) whether P’s solicitors had ulterior or improper motives,[279] so further evidence (although P’s solicitors could not reveal privileged matters) would be needed. In my view, it was not unreasonable for P’s solicitors to wish to do so given the seriousness of the allegations against them, and it is also not difficult to envisage that D2-D5 might wish to challenge that evidence in due course. This would add to the view that the exercise would be disproportionate, and I am not persuaded this would be a straightforward and simple case for a wasted costs order that would be amenable to a summary process or determination. 264.There would also be argument as to the scope of costs to be caught under any wasted costs order that were allegedly caused by the impugned conduct, which might require delving into costs spent/ incurred by D2-D5.[280] In my view, the Para 5 Application was not fit for summary determination, and it was likely that the costs to be incurred in such exercise would be disproportionate. (h) Summary 265.Quentin Loh J said in Goh Eileen née Chia & anor v Goh Mei Ling Yvonne & anor[281] in relation to the Singaporean wasted costs jurisdiction as follows:
266.For all of the above reasons, I am not convinced D2-D5 has satisfied the requirements under the 1st stage for this court to allow the Para 5 Application to move to the 2nd stage. I am not persuaded it is fair and/or appropriate to make the show cause order. In the premises, the Para 5 Application fails. VI. PARA 3 APPLICATION 267.The Para 3 Application sought an order that in case of P’s default under the Repayment Order, P’s solicitors be required to (a) inform the court the reason therefor, and (b) affirm to the court whether they had duly advised P there was a chance that the Interim Payment should be repaid to the paying party in case of overpayment. The basis for requiring P’s solicitors to comply with (a)-(b) above was not addressed in the Lam 2nd Aff and/or Mr Sakhrani’s written submissions save to say P had failed to return the excess Interim Payment. The Lam 3rd Aff reiterated P’s failure to return the excess Interim Payment,[282] and suggested P’s solicitors erred in stating in the 17/10/19 Letter that the overpaid Interim Payment “may have to” (可能要) be repaid to D2-D5 when in fact it must be so repaid.[283] 268.Order 29 rule 17 of the RHC provides that where a defendant inter alia has been ordered to make an interim payment or has in fact made an interim payment, whether voluntarily or pursuant to an order, the court may inter alia in giving or making a final judgment or order, make such order with respect to the interim payment as may be just, and in particular inter alia (a) an order for the repayment of the plaintiff of all or part of the interim payment, or (b) an order for the payment to be varied or discharged. Should the amount of interim payment exceed the amount of the final award for damages, the court would usually order the plaintiff to repay the difference to the defendant who made the interim payment.[284] 269.As regards the 1st part of the Para 3 Application that sought an order requiring P’s solicitors to inform the court the reason for P’s default under the Repayment Order, there was simply insufficient basis to assume that P had told or would have told P’s solicitors the reason for default under the Repayment Order. Even if P did tell P’s solicitors as part of her instructions to them in relation to the conduct of the present action (eg seeking legal advice on possible execution or bankruptcy proceedings by D2-D5 against her), such information would be subject to legal professional privilege (whether legal advice privilege or legal litigation privilege). Since such privilege was P’s privilege, it was not for P’s solicitors to waive the same. D2-D5 had not explained how non- compliance by P of the Repayment Order would justify or allow this court to override such privilege and to order P’s solicitors to disclose the reason for P’s default (if known to them). 270.As regards the 2nd part of the Para 3 Application that sought an order requiring P’s solicitors to affirm to the court whether they had duly advised P there was a chance that the Interim Payment should be repaid to the paying party in case of overpayment upon her default under the Repayment Order, this was plainly a matter of legal advice by solicitors to their client that would attract legal advice privilege. Again, D2-D5 had not explained how non-compliance by P of the Repayment Order would justify or allow this court to override such privilege (which privilege was that of P and not that of P’s solicitors) and to order P’s solicitors to disclose their legal advice to P with respect to the consequences of overpayment of the Interim Payment. 271.Nevertheless, the Pang Aff made limited waiver of P’s legal advice privilege by the 17/10/19 Letter from P’s solicitors to P that stated “…… 若上述案件結案時所判定閣下應得之賠償額少於上述金額, [P] 可能要支付 [P] 多收了 [D2-D5] 的中期付款額給予 [D2-5]”, which detailed the advice by P’s solicitors to P. Such disclosure by way of the Pang Aff rendered it unnecessary to order P’s solicitors to affirm to the court whether they had duly advised P there was a chance that the Interim Payment should be repaid to the paying party in case of overpayment. Lam complained that the advice P’s solicitors gave to P that any overpaid Interim Payment “may have to” (可能要) be repaid to D2-D5 was not proper advice or was in fact misleading to P.[285] But I am unable to see this complaint as any justifiable basis for the Para 3 Application when P’s solicitor do not owe any duty to D2-D5.[286] 272.In the circumstances, the Para 3 Application fails. VII. CONCLUSION 273.I therefore dismiss the Dispute Applications being the Para 3 and Para 5 Applications. There is no reason why costs should not follow event. I therefore grant a costs order nisi that costs of and occasioned by the Para 3 and Para 5 Applications (including all costs reserved if any) be paid by D2-D5 to P on High Court scale to be taxed if not agreed.
Mr Kwan Ping Kan, instructed by Michael Pang & Co, solicitors for the plaintiff Mr Ashok Sakhrani, instructed by Munros, solicitors for the 2nd to 5th defendants [1] $2,800,000 by D4 on 30 April 2018, $100,000 by D2-D5 on 15 May 2019, $300,000 by D2-D5 on 23 September 2019, $300,000 by D2-D5 on 2 September 2020 and $400,000 by D2-D5 on 22 October 2020 [2] see Jackson & Powell on Professional Liability 9th ed para 11-136 at p 799 citing Bahai v Rashidian [1985] 1 WLR 1337, Re Freudianan Holdings Ltd The Times, 4 December 1995 (English Court of Appeal) and Gray v Going Places Leisure Travel Ltd [2005] PNLR 26, and see also In re P (a barrister) [2001] EWCA Crim 1728 (23 July 2001) at paras 38-53 and Mulugeta Guadie Mengiste & anor v Endowment Fund for the Rehabilitation of Tigray [2013] EWCA Civ 1003 (14 August 2013) paras 58-64 [3] D2-D5’s solicitors sent their 3rd letter dated 15 May 2019 to P’s solicitors stating inter alia that (a) P’s solicitors should have duly advised P that the burden fell on her to prove each and every pleaded allegation, including the alleged amount of dependency and the alleged promotion prospects of the Deceased, (b) P did not produce any or any cogent evidence to support her allegations in the RSoD which were mostly bare assertions, (c) P failed to produce any proof of her household expenses including household utilities bills which P must have had, but (d) there was cogent evidence showing that the Mother’s dependency on the Deceased was minimal or nil, eg the 2014 HKHA Declaration showed the only source of the Mother’s household income was CSSA (and P’s solicitors were reminded that the Mother would be subjected to intense cross-examination on the HKHA Forms which she made under declaration, and that D2-D5 were then considering to report the apparent discrepancies between the 2014 HKHA Declaration and the Mother WStmt to the relevant authorities), and the Schedule to the Letters of Administration showed the Deceased only had few assets at the time of his death, such as $500 credit balance in his bank account with HSB but no cash, stocks, household goods, motor vehicles, land and buildings and/or other choses-in-action, so the only reasonable inference was that the Deceased had not been able to save/accumulate wealth, bearing in mind his monthly earnings were modest at $12,518.33 at the time of his death [4] D2-D5’s solicitors again sent their letter dated 9 July 2019 to P’s solicitors stating inter alia that (a) there was no or no cogent evidence adduced by P to support her claim but (b) there was cogent evidence to show the Mother had been relying on CSSA, and claiming that (c) the Mother could not then resile from her declarations in the HKHA Forms and (d) D2-D5 shall report to HKHA and SWD about the apparent discrepancies between the HKHA Forms and the Mother WStmt [5]see para 24 below [6] D2-D5’s solicitors sent their letter dated 20 December 2019 to P’s solicitors stating inter alia that (a) P had verified her alleged dependency on the Deceased by way of SoT, but (b) the SWD Forms showed the Deceased had moved out of the Mother’s residence at the Flat and refused to disclose his residential address at least 2 years before the Accident (see the 2012 SWD Review Form, the 2013 SWD 1st/2nd Review Forms and the 2014 SWD 1st Review Form), and (c) the Deceased made the Deceased 2013 SWD 1st/2nd Declarations dated 20 March and 8 September 2013 respectively that declared he had not made any financial assistance to P, so (d) the above clearly showed the Mother made false SoT when in fact the Deceased had not been making any financial assistance to her and had moved out of the Flat before the Accident, (e) the Mother’s credibility was in grave doubt and she would be cross-examined at the assessment hearing, (f) D2-D5 would report the above declarations to SWD, and (g) P failed to make full disclosure to SWD about the EC she received ($998,960) which she was obliged to do (as P only disclosed and declared a sum of $300,000) (see also D2-D5’s solicitors’ letters dated 29 September and 20 October 2020 to P’s solicitors) [7] dated 4 May 2018, 17 May and 30 September 2019, and 9 September and 28 October 2020 [8] para 17 of the retainer agreement dated 27 April 2016 provided that “[you] confirm and agree you have been advised by our legal firm of your rights to apply for Legal Aid and you still elect to retain our legal firm as your own” [9]see para 15(b) above [10]see paras 15(a) and 20 above [11]see para 20 above [12] “…… 若上述案件結案時所判定閣下應得之賠償額少於上述金額, [P] 可能要支付 [P] 多收了 [D2-D5] 的中期付款額給予 [D2-5]” [13] [1993] 1 HKC 193, 195 (see also Hong Kong Civil Procedure 2023 Vol 1 para 62/8/1 at p 1336 which stated that “[the] underlying principle is that the court has a right and a duty to supervise the conduct of his solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally ……”) [14] [2004] 3 HKLRD 294 [15] this is a question of causation, ie the causal link between the solicitor’s conduct and the extent of costs incurred or wasted must be established [16] see the observations by Sir Thomas Bingham MR (as he then was) in Ridehalgh v Horsefield & anor [1994] Ch 205, 226 set out in para 103 below [17] see Myers v Elman [1940] AC 282, 292, 303 and 319 in which Lord Maugham required “a serious dereliction of duty”, Lord Atkin required “gross negligence” and Lord Wright considered that a “mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor’s duty to ascertain with accuracy may suffice” (see also Jackson & Powell on Professional Liability 9th ed para 11-126 at pp 793-794) [18] 9th ed para 11-126 at pp 793-794 [19] Mr Sakhrani in his written submissions fairly recognised inter alia “…… [there] must be misconduct which involves a failure on the part of the solicitor to fulfil his duty to the court and his duty to promote the cause of justice …… The solicitor must have caused costs to be incurred improperly or without reasonable cause or to be wasted by other misconduct or default” [20] see also Hong Kong Civil Procedure 2023 Vol 1 paras 62/8/1-62/8/10 at pp 1335-1340 [21] HCPI390/2015 (unreported, 24 September 2021) [22] [1994] Ch 205, 232 (cited locally in Qiyang Limited & ors v Mei Li New Energy Limited & ors HCA420/2011, Au-Yeung J (unreported, 20 April 2017) para 23, and see also Jackson & Powell on Professional Liability 9th ed para 11-129 at p 795) [23] see Medcalf v Mardell & ors [2003] 1 AC 120, 139 [24] see Hong Kong Civil Procedure 2023 Vol 1 para 62/8/1 at p 1336 [25] see Hong Kong Civil Procedure 2023 Vol 1 para 62/8/1 at p 1336 [26] see Hong Kong Civil Procedure 2023 Vol 1 para 62/8/1 at p 1338 [27] [2010] 1 HKC 137, 142 [28] later known as the Senior Courts Act 1981, but such provision is now substituted by section 4 of the Courts and Legal Services Act 1990 which provides that “(6) In any proceedings mentioned in sub-section (1), the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court. (7) In sub-section (6), “wasted costs” means any costs incurred by a party – (a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or (b) which in light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay” (my emphasis) [29] see paras 546-554 (especially para 548(a)) of the Final Report of the Chief Justice’s Working Party on Civil Justice Reform [30] see para 59(a) below [31] [2003] EWCA Civ 1134 (30 July 2003) [32] see Ridehalgh at p 227 [33] see Order 62 rule 8(1)(a) of the Rules of the High Court and para 55 below [34] 9th ed para 11-137 at pp 799-800 [35] Sir Thomas Bingham MR (as he then was) observed at p 237 that “[as] emphasised in In re A Barrister (Wasted Costs Order) (No. 1 of 1991) [1993] Q.B. 293 the court has jurisdiction to make a wasted costs order only where the improper, unreasonable …… conduct complained of has caused a waste of costs and only to the extent of such wasted costs. Demonstration of a causal link is essential. Where the conduct is proved but no waste of costs is shown to have resulted, the case may be one to be referred to the appropriate disciplinary body or the legal aid authorities, but it is not one for exercise of the wasted costs jurisdiction” [36] [2002] 1 WLR 713, which means the doctrine of loss of a chance is not applicable [37] see Ma So So at p 300 (see also Harley v McDonald [2001] 2 AC 678, 703) [38] [2003] 1 AC 120, 143 [39] see also Commentary 8 of Principle 8.01 of The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 which provides that “[a] client has the right to refuse to disclose, even to a court, confidential communication with his lawyer made for the purpose of obtaining legal advice. This right to resist disclosure is a privilege granted to a client and so may be abandoned only by him. A solicitor is bound to assert this privilege on behalf of his client. A solicitor has no right unilaterally to waive a client’s privilege; consent of the client or a court order must be obtained” [40] see Ridehalgh at p 237 and also para 48 above [41] see para 50 below [42] 9th ed para 11-130 at pp 795-796 [43] see also observations in Harley at p 703 that applications for wasted costs orders “should be confined strictly to questions which are apt for summary disposal by the court”, observations by Jacobs J in Anthony Douglas King & ors v Barry Stiefel & ors [2023] EWHC 453 (Comm) (2 March 2023) paras 70-71, 97-108 and 128-129 that “[there] is a long line of consistent authority …… which fully accords with what Jackson J said as to simple and summary procedure and proportionate cost ……” (para 71) and “…… [the] authorities set out above speak with one voice as to the nature of the summary process ……” (para 129), and Jackson & Powell on Professional Liability 9th ed para 11-133 at pp 797-780 [44] see also Hong Kong Civil Procedure 2023 Vol 1 para 62/8/1 at p 1337 [45] [2001] 2 AC 678, 703 [46] see also Ridehalgh at pp 238-239 [47] see Ridehalgh at p 238 [48] see Ridehalgh at p 238 [49] [2008] EWCA Civ 905 (30 July 2008) [50] see Media CAT Limited v Malcolm Adams & ors [2011] EWPCC 10 (18 April 2011) paras 10 and 15 [51] see also Order 62 rule 8B(1) of the RHC and para 55 above [52] see Order 62 rule 8A of the RHC and para 55 above [53] see Order 62 rule 8B(1)(a) of the RHC and para 55 above [54] see Order 62 rule 8B(1)(b) of the RHC and para 55 above [55] [2004] 1 Costs LR 1 ([2003] PNLR 26) cited in Jackson & Powell on Professional Liability 9th ed footnote 671 at p 802 [56] see Order 62 rule 8B(3)(a) of the RHC, para 16 of PD14.5 and paras 55 and 61 above [57] see Order 62 rule 8B(3)(b) of the RHC, para 17 of PD14.5 and paras 55 and 61 above [58] see Order 62 rule 8B(3) of the RHC, para 19 of PD14.5 and paras 55 and 61 above [59] see paras 5(a)-(b) and 6(a)-(b) above [60] see para 13 above [61] see paras 16-17 above [62] see para 13 above [63] see para 16 above (and see also para 25 above) [64] see para 17 above (and see also para 30 above) [65] see Order 62 rule 8B(3)(b) of the RHC and paras 45-46, 55 and 61-62 above [66] see para 61 above [67] see para 30 above [68] see para 30 above [69] see paras 55 and 62 above (see also Order 62 rule 8B(1)(b) of the RHC and para 25 of PD14.5 that show the respondent solicitors are only required to show cause at the 2nd stage) [70] see paras 55 and 62 above [71] see Lord Steyn’s observation in Medcalf at p 128 and also Commentary 1 in Principle 10.02 of The Hong Kong Solicitors’ Guide to Professional Conduct Vol 1 that “[a] solicitor had a duty to his client ‘fearlessly to raise every issue, advance every argument, and ask every question, however distasteful, which he thinks will help his client’s case’ and to endeavor ‘to obtain for his client the benefit of any and every remedy and defence which is authorised by law’ (per Lord Reid in Rondel v Worsley [1969] AC 191 at 227). This duty must always be discharged by fair and honourable means, without illegality and in a manner consistent with his client’s instructions and his duty to treat the court with candour, fairness, courtesy and respect” [72] see Medcalf at pp 142-143 (and also para 47 above) and Orchard v South Eastern Electricity Board [1987] QB 565, 571 [73] [2002] 1 AC 615, 686 [74] see Rondel v Worsley [1969] 1 AC 191, 227-228 [75] see Myers at p 319 [76] Lord Hoffmann at p 686 of Arthur J S Hall & Co (a firm) explained that “…… [they] may not mislead the court or allow the judge to take what they know to be a bad point in their favour. They must cite all relevant law, whether for or against their case. They may not make imputations of dishonesty unless they have been given the information to support them. They should not waste time on irrelevancies even if the client thinks that they are important. Sometimes the performance of these duties to the court may annoy the client. So, it was said, the possibility of a claim for negligence might inhibit the lawyer from acting in accordance with his overriding duty to the court. That would be prejudicial to the administration of justice” [77] see Flower Hart (A Firm) v Whate Industries (Qld) Pty Ltd (1999) 163 ALR 744, FCAFC cited in Jackson & Powell on Professional Liability 9th ed para 11-140 at p 803 [78] see Woolwich Building Society v Fineberg [1998] PNLR 216 cited in Jackson & Powell on Professional Liability 9th ed para 11-140 at p 803 [79] [1996] 1 WLR 736 [80] [2020] 5 HKLRD 545 [81] which without prejudice letter revealed that Deng was already in Hong Kong and had executed authorisation for issuance of the cashier order that had been sent over to the plaintiff’s solicitors, and that the executors would finalise the account by 20 December 2020 [82] CACV37/2010 (unreported, 26 April 2010) [83] see observations by Sir Thomas Bingham MR (as he then was) in Ridehalgh at p 232 (see para 42 above) [84] see Alastair Brett v The Solicitors Regulation Authority [2014] EWHC 2974 (Admin) (11 September 2014) paras 111-113 [85] see Rondel at pp 227-228 [86] [1997] 3 WLR 683 [87] see also pp 722-723 per Thorpe LJ [88] see Myers at pp 292-294 [89] see Vernon at p 699 [90] see Vernon at p 699 [91] Vol 1 Commentary 2 under Principle 10.03 [92] Vol 1 Commentary 4 under Principle 10.03 [93] [1987] 1 QB 565 [94] HCA1221/2006, DHCJ To (unreported, 27 March 2009) [95] [1988] 1 SLR 455 [96] see para 75 above [97] see Jackson & Powell on Professional Liability 9th ed para 11-139 at p 802 (see also para 82 above) [98] [1958] 2 All ER 179, 186 where Sachs J said “[it] is, of course, axiomatic, but none the less something which in the present case should be mentioned, that the mere fact that the litigation fails is no reason for invoking the [wasted costs] jurisdiction; nor is an error of judgment; nor is even an error merely because it is of an order which constitutes or is equivalent to negligence. There must be something that amounts, in the words of Lord Maugham (ibid., at p. 490 [in Myers] to “a serious dereliction of duty”, something which justifies according to other speeches in that case, the use of the word gross. It is not, however, normally necessary to establish mala fides or other obliquity on the part of the solicitors, though it may be that if mala fides is established that might turn the scale in a particular case ……” [99] see Dolphin Advertising Ltd at p 141 and Jackson & Powell on Professional Liability 9th ed para 11-138 at pp 800-802 [100] at pp 233-234 [101] [2003] EWHC 3048 (QB) (2 December 2003) at para 45 [102] see Anthony Douglas King & ors at para 69(iv) where Jacobs J cited the helpful summary of the principles drawn from Ridehalgh by Jackson J in para 45 of Lady Archer [103] [1969] 1 AC 191, 275-276 [104] see para 100 above [105] see para 100 above [106] at pp 704-705 and 708 [107] HCA420/2011, Au-Yeung J (unreported, 20 April 2017) [108] ie the legal representative “[lends] his assistance to proceedings which are an abuse of the process of the court”, eg “by issuing or pursuing proceedings for reasons unconnected with success in the litigation or pursuing a case known to be dishonest” (at p 234 and para 108 above) [109] ie the legal representative “had indeed been grossly negligent in advising his client to pursue a hopeless case or knowingly lends his assistance in proceedings which are an abuse of the process of the court” or “is in serious dereliction of such duty” “to achieve and maintain appropriate levels of competence and care” (at para 13 and see para 106 above) [110] ie the legal representative “[lends] assistance to proceedings which are an abuse of process of the court” (at para 22 and see para 109 above) [111] see Jackson & Powell on Professional Liability 8th ed para 11-139 at pp 822-824 (and see para 43 above) [112] [2011] EWPCC 10 (18 April 2011) [113] 9th ed para 11-138 at pp 801-802 [114] see also Pine Enterprises Limited at para 13 [115] see paras 108-114 above [116] [2008] Lloyd’s Rep PN 12 (see Jackson & Powell on Professional Liability 9th ed para 11-139 at pp 802-803) [117] DCPI527/2020, HHJ Andrew Li (unreported, 14 October 2022 and 2 December 2022) [118] see paras 75-80 above [119] [2021] 2 HKLRD 319 [120] see paras 98-130 above [121] see paras 90-97 and 132 above [122] see para 114 above [123] (2012) 15 HKCFAR 16 [124] [1990] LT 80 [125] (1960) 104 CLR 186 [126] Ladd put this condition as “the solicitor had honestly satisfied himself by careful enquiry that an honest case existed”, and Clyne put this condition as “subject to the cause of action or defence being reasonable” (page 335) [127] see equivalent provisions in the HCO set out in para 36 above [128] section 53(2) of the DCO provides that “[without] prejudice to the generality of subsection (1), the Court may, in accordance with rules of court, make an order awarding costs against a person who is not a party to the relevant proceedings, if the Court is satisfied that it is in the interests of justice to do so” [129] (2007) 10 HKCFAR 31 [130] HCMP2728/2017 (unreported, 19 March 2020) [131] see Unruh at pp 63-64 and 69 and Winnie Lo at pp 29 and 45 [132] see Re A at para 55 [133] [2011] 1 WLR 2111, 2117 [134] [1975] QB 373, 393 (see also Regina (Factortame Ltd & ors) v Secretary of State for Transport, Local Government and the Regions (No 8) [2003] QB 381, 407 in which Lord Phillips MR emphasised there is good reason why the principles of maintenance and champterty should apply with particular rigour to those conducting litigation, and cited a passage from the judgment of Buckley LJ in Wallersteiner (which concerns contingency fees) that ended with saying “…… [a] legal adviser who acquires a personal financial interest in the outcome of the litigation may obviously find himself in a situation in which that interest conflicts with [his] obligations [as an officer of the court] ……” [135] in my view, this suggests that an honest or bona fide claim in such context means the litigation is that of the client and not that of the solicitor [136] see Re A at paras 66-74 [137] see section 52A(4) of the HCO and para 36 above [138] see the equivalent provision in section 53(2) of the DCO in para 142 and footnote 128 above [139] see the authorities that underline this point, say, in paras 153-156 below [140] [2012] 6 Costs LR 1094, [2012] EWHC 2628 (TCC) (see also paras 161-168 below) [141] Vol 1 para 62/6A/6 at pp 1326-1329 [142] [2019] 1 HKLRD 109, 130-131 [143] [2002] EWCA Civ 918 (29 May 2002) cited in Hong Kong Civil Procedure 2023 Vol 1 para 62/6A/17 at p 1332 [144] [2003] 2 WLR 128 referred to in Hong Kong Civil Procedure 2023 Vol 1 para 62/6A/6 at p 1327 [145] [2007] 1 WLR 1559, also cited in Hong Kong Civil Procedure 2023 Vol 1 para 62/6A/17 at p 1332 [146] ie “if he acts outside the role of solicitor, eg in a private capacity or as a true third-party funder for someone else” (see para 154 above) [147] [2012] 2 Costs LR 271, [2011] EWHC 2945 (QB) (the judgment on appeal to the English Court of Appeal is discussed at paras 171-173 below) [148] [2014] 1 WLR 1277 [149] [2013] 1 WLR 2676 [150] [2013] EWHC 2974 (Ch) (9 October 2013) [151] [2019] EWHC 2183 (Ch) (8 August 2019) [152] [2023] EWHC 158 (SCCO) (20 January 2023) [153] ie a CFA under which a solicitor undertakes litigation on the basis that the client will be responsible for the solicitor’s fees and expenses only to the extent that they are recovered from the other party, so under such circumstances, win or loss, there are no circumstances in which the client will have to draw upon his own resources to meet those fees and expenses [154] the defendant argued inter alia that (a) the claimant’s solicitors funded the assessment proceedings by paying disbursements as well as deploying the value of their fee earners’ time, so they were the “real party” to the exclusion of the claimant (para 62), (b) claimant’s solicitors should be encouraged to accept reasonable offers on costs just as their clients are encouraged to accept reasonable offers on damages, and to free the claimant’s solicitors from the risk of adverse costs order would put them in a better position than their own client (because had the claimant rejected the Part 36 offer on damages and received less at trial, under the QOCS rules the defendant would have been entitled to set-off any costs awarded to it against the damages awarded at trial) (para 77), (c) the claimant’s solicitors were perfectly able to judge for themselves what would be a reasonable level of costs recovery and to weigh up the risks and benefits of rejecting an offer on costs or challenging the result on detailed assessment (para 78), (d) granting the application would not imperil access to justice as the claimant’s solicitors did not have to offer an arrangement that gave the claimant no interest in the costs assessment (para 80), and (e) exposure of the claimant’s solicitors to a costs order derived only from the fact they had unrealistic expectations about their own costs recovery (para 82) [155] see paras 148-151, 154-156, 160, 164, 175 and 177 above [156] see observations by HHJ Stephen Davies in Tinseltime Ltd in para 163 above [157] see paras 151 and 157 above [158] see para 99 above [159] see paras 90-97 above [160] see paras 100-102 above [161] see paras 98-130 above [162] see paras 98-133 and in particular para 132 above [163] see para 103 above [164] see paras 145-147, 164-166, 172-173, 175-177 and 181 above [165] see observations by HHJ Stephen Davies in paras 161-168 above (despite over-optimism of the claimant’s solicitors and their failure to vigorously test/investigate various issues in that case) (see also observations by Leveson LJ in Heron at paras 169-170 above and in Flatman in paras 171-173 above) [166] see paras 158-160 and 175 above [167] see paras 159, 170, 172-173 and 175-181 above [168] see para 139 above [169] see para 140 above (but see general principles discussed above that (a) solicitors are not required to assess the result of conflict in evidence or to conduct pre-trial screen of the client’s claim or defence – see paras 90-97 above, (b) solicitors can present the client’s case throught to be hopeless unless there is something akin to abuse of process or unless the court is misled – see paras 98-130 above, and (c) solicitors owe no duty to the client’s opponent – see para 70 above, and see also the sound public policy reasons for setting the “unreasonable” and “improper” threshold for the wasted costs jurisdiction –see paras 69-74, 98-112 and 131-133 above) [170] [2010] 2 HKLRD 280 [171] see para 133 above [172] see para 118(a) above [173] see Mr Sakhrani’s written submissions to such effect in the context of the present case in para 195 below [174] see para 118(a)-(b) above [175] see paras 90-97 above [176] see paras 98-133 above [177] see para 114 above [178] see para 167 above (although the discussion therein was in relation to the non-party costs jurisdiction, it served to highlight that an application for security for costs is “a potent weapon against injustice to a defendant in a case …… where the claim is being mounted by an impecunious [claimant]” [179] see para 24 above [180] see para 78 of the Written Judgment [181] see para 108 of the Written Judgment [182] see para 209 of the Written Judgment [183] as alleged in the Pang Aff (see para 22 above) [184] inclusive of interest, the EC already paid to and received by the Mother and the Sister in the sum of $1,070,038, and the Interim Payment in the sum of $550,000 [185] see para 62 above [186] see para 38 above [187] see paras 17 and 31 above [188] see para 8 of the Written Judgment (save for a modest portion for the Sister) [189] see para 160(a)-(b) of the Written Judgment [190] see paras 161-162 of the Written Judgment [191] see para 163 of the Writen Judgment [192] see paras 165-166 of the Written Judgment [193] see paras 165-168(a) of the Written Judgment [194] see paras 177-178 of the Written Judgment [195] see paras 173 and 332 of the Written Judgment [196] see paras 177-178 of the Written Judgment [197] see para 179 of the Written Judgment [198] defrayed from CSSA and/or household financial provision (see para 51 of the Written Judgment) [199] see para 169 of the Written Judgment [200] [2002] 4 HKC 579, 593 [201] see paras 18-20 of the Written Judgment [202] see paras 419-420 of the Written Judgment [203] see para 132 above [204] see also Orchard in para 95 above (see similar observations by HHJ Stephen Davies in Tinseltime Limited under the non-party costs jurisdiction in para 163 above) [205] see paras 195(a)-(c) and 200(c) above [206] see paras 98-130 above [207] see paras 419-420 of the Written Judgment [208] see para 30 above [209] see paras 122-126 above [210] see para 195(a)-(c) above [211] see para 195 above [212] see paras 98-130 above [213] see para 90 above [214] HCPI1173/1996, Seagroatt J (unreported, 24 June 1999) [215] HCPI896/2007, Bharwaney J (unreported, 23 December 2011) – see para 92 of the Written Judgment [216] CACV131/2003 (unreported, 19 May 2004) – paras 89-91 of the Written Judgment [217] see para 91 of the Written Judgment [218] see para 93 of the Writen Judgment [219] see paras 94-97 of the Written Judgment [220] see paras 98-106 of the Written Judgment [221] see paras 110-117 of the Written Judgment [222] see paras 118-128 of the Written Judgment [223] see para 93 of the Written Judgment [224] see the observations by Reyes J in Christopher Gordon Young and the findings by Bharwaney J in Fung Suen Sim for herself, the Personal Representative and the Intended Administratrix of the Estate of Lung Kai Hon, deceased [225] see paras 16, 25-27 and 29-30 above [226] see para 89 above [227] see paras 90-97 above [228] see paras 90-97 above [229] see para 18 of the Written Judgment [230] see paras 18-20 of the Written Judgment [231] see paras 90-97 above [232] see paras 213-217 above [233] see paras 83-85 above [234] see paras 86-87 above [235] see Parts II and IV above [236] see para 13 above [237] see para 113 above [238] see paras 77-80 and 121 above [239] see paras 122-126 above [240] see para 97 above [241] see para 28 above [242] see para 22 above [243] see para 28 above [244] see paras 59(a) and 61-62 above [245] see paras 48-54 above [246] see para 3 of the Pang Aff that made clear the affirmation evidence therein “does not denote the waiver of legal advice privilege ……” (see para 19 above) [247] see para 21 above [248] see paras 48-54, 115-116, 119 and 129 above [249] at pp 135-136 [250] see para 18 of the Written Judgment [251] see para 198 above [252] see para 198 above [253] see Latham LJ’s observations in Maurice Dempsey in para 54 above [254] see para 96 above [255] see paras 115-116 above [256] see para 119 above [257] see Elias J’s observations in Ratcliffe Duce & Gammer in para 119 above [258] see para 129 above [259] see para 21 above [260] see para 22 above [261] see para 20 above [262] see para 246 above [263] see paras 48-54 and 245 above [264] see observations of DHCJ To in Pine Enterprises Limited at para 106 above [265] see paras 242-250 above [266] see para 85 above [267] see paras 122-126 above [268] see paras 77-80 above [269] see para 106 above (see also discussion of the “constitutional principles” in Ridehalgh and Rondel in paras 103-105 above) [270] “If during litigation a client desires or intends to take a course of action which will involve a breach of the duties owed to the court and the opponent, his solicitor must refuse to take or support that course of action. The solicitor must do all he can reasonably to prevent it. If that course cannot be prevented then the solicitor should cease to act or seek leave to do so, subject to the rules concerning ceasing to act.” [271] see Ma So So at p 300 and paras 45-46 above [272] 9th ed para 11-137 at pp 799-800 [273] see similar observations on causation by HHJ Stephen Davies in Tinseltime Limited under the non-party costs jurisdiction in para 168 above [274] see observations by Jacobs J in Anthony Douglas King & ors in para 128 above [275] see Pine Enterprises Limited at para 15 and Kwok Chin Wing v Kao Lee & Yip HCCW743/2002, Kwan J (as she then was) (unreported, 18 July 2007) para 37 [276] see para 59(a) above (see also Order 62 rule 8B(1)(a)(ii) of the RHC in para 55 above) [277] see para 28 above [278] see para 8 of the Lam 3rd Aff and para 28 above [279] see para 27 above [280] see paras 255-256 above [281] [2014] 3 SLR 1356, 1367 [282] see para 31 above [283] see para 32 above [284] see Hong Kong Civil Procedure 2023 Vol 1 para 29/17/1 at p 847 [285] see paras 32 and 267 above [286] see para 70 above | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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