Tribest Investments Ltd v. The Incorporated Owners of South East Mansion (No. 77 Kimberley Road)

DCCJ 2021/2022

[2023] HKDC 1713

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2021 OF 2022

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BETWEEN

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DECISION ON COSTS

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1.In the Decision dated 3 November 2023, I made an order nisi (which became absolute on 17 November 2023) that the Plaintiff do pay the 2^nd Defendant’s costs of the Stay Application on an indemnity basis with Certificate for Counsel to be summarily assessed.

2.Pursuant to my directions, the 2^nd Defendant filed a Statement of Costs and the Plaintiff filed a List of Objections. The 2^nd Defendant claims a total of $451,009. The Plaintiff objects on the ground that the 2^nd Defendant’s costs are excessive and unreasonable. The Plaintiff proposes to allow only $87,104.

Legal Principles

3.When assessing the 2^nd Defendant’s costs, I bear in mind that they are to be assessed on indemnity basis so that all costs shall be allowed except insofar as they were of an unreasonable amount or had been unreasonably incurred, and any doubt shall be resolved in favour of the 2^nd Defendant; see Order 62 rule 28(4A) of Rules of District Court.

4.In Liu Hui Hong, the person appointed to represent the estate of Li Shiyou, deceased v Fong Wai Meng, [2021] HKCFI 3665, Marlene Ng J helpfully summarized the guiding principles as follows:-

“[12] In Re Wing Fai Construction Co Ltd (Costs: Taxation), (2012) 15 HKCFAR 657, Chan PJ held that an award of costs on an indemnity basis was intended to allow for payment of costs on a more generous level as compared to the case of costs awarded on a party-and-party or common fund basis. The object of such an order was to reimburse the receiving party “all (his) costs” and to give him “a complete indemnity” and “everything”, “shorn only of” or “except the unreasonable” or “anything that was seen to be unreasonable”. Hence, the receiving party was prima facie entitled to be paid all his costs, provided that they were “costs of and incidental to the proceedings”, subject only to the qualification that any particular item which had been unreasonably incurred or any particular amount which was unreasonable must be excluded. The receiving party did not have to show that his costs had been reasonably incurred or were of a reasonable amount, only that they were not unreasonable.

[13] In particular, Chan PJ said “…… if the court, for good reasons, saw fit to award him his costs on a more generous basis (ie on an indemnity basis), [Chan PJ] did not think it should be regarded as unreasonable to allow him to recover more than the normal average fees so long as they are not clearly excessive or …… absurd or extravagant” (p 670), and “…… on an indemnity taxation, it would not be considered unreasonable for the receiving party to have engaged solicitors who charged more than the average hourly rates unless they are clearly excessive. What is clearly excessive depends on the circumstances of each case” (p 672).

[14] In my view, these principles are also applicable to summary assessment of costs on indemnity basis.

[15] At the same time, I am mindful of the proper approach to summary assessment of costs that had been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan, [2012] 5 HKLRD 512, ie that the final figures assessed should not be disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter.”

5.I also refer to the following guidance in PD14.3:-

“13. A broad-brush approach will be taken by the Court in the summary assessment procedure. The Court will not embark on a mini-taxation. Prolixity in contents of a statement of costs is therefore not acceptable. Costs for gathering information and drafting of these statements will generally not be granted.

14. Although the Court may allow the full amount claimed by the receiving party, it will, so far as possible, ensure that the final figure is not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in Order 1A. The Court will retain this responsibility notwithstanding the absence of challenge to individual items in the make-up of the figure sought. The fact that the paying party is not disputing the amount of costs can however be taken as some indication that the amount is proportionate and reasonable. The Court will therefore intervene only if satisfied the costs are so disproportionate that it is right to do so.”

6.With the above principles in mind, I proceed to assess the 2^nd Defendant’s costs of the Stay Application.

Hourly rate

7.The 2^nd Defendant’s claim is based on the hourly rate of $3,000 of the handling solicitor (DC) who has 6 years of experience. I note that DC’s hourly rate is higher than what the Court usually allows on party-and-party taxation for a solicitor with 5 to 6 years of experience, ie $2,600. Whilst I bear in mind that the 2^nd Defendant’s costs are to be allowed on indemnity basis, I think DC’s hourly rate is still on the high side. I agree with the Plaintiff that $2,800 is more appropriate on indemnity basis. For legal executive (LE), I accept the hourly rate of $1,000.

Part B: Manual Work

8.The 2^nd Defendant’s claim under “Manual Work” consists of two items.

9.Item B1 is “Photocopy charges” and the amount claimed is $2,409 (at the rate of $1 per page). The Plaintiff argues that the Defence (which consists of 27 pages) is not relevant to the Stay Application and photocopy charges in relation to the Defence should be disallowed.

10.In my view, for the sake of completeness, it is not unreasonable to include the Defence in the hearing bundle. Thus, I will allow this item in full.

11.Item B2 is “Making photocopies of documents and paginating the same”. The time spent by LE is 8 hours and the claim is $8,000. It is the Plaintiff’s argument that, pursuant to Item No 1 of Schedule 1 (Part I) of Order 62 rule 38, copying charges include preparation and compiling bundles (including indexing and pagination) and this item is a “double claim”.

12.The relevant part of the First Schedule provides that, for preparation of a bundle of copies of documents, including the costs of copying and collating the documents and compiling (including indexing and pagination), the bundle should be charged at $4 per page in respect of the first bundle, and $1 per page in respect of each subsequent bundle. Clearly the higher charge for the first bundle is to cover the manual work for indexing and pagination which is not required for subsequent bundles.

13.I note that the 2^nd Defendant’s photocopying charge is based at $1 per page for 3 sets of documents with each set containing 803 pages. However, only the hearing bundles (consisting of 372 pages) require compiling and pagination. I will allow an extra $3 per page for the first set of the hearing bundles to cover the costs of compiling and pagination, ie $3 x 372 = $1,116.

14.The total costs allowed under Section B is: $2,409 + $1,116 = $3,525.

Part C: Communications including conferences, telephone calls and letters

15.The 2^nd Defendant’s claim under “Communications” consists of three items and the total claim is $91,500.

16.Item C1 is “Attendance on client” and the 2^nd Defendant claims 14 hours by DC. It is said that the purpose of the communication was for “explaining and interpretating the contents of Courts documents, perusing and considering the documents/‌information provided by the client, advising client on merits, etc”.

17.The Plaintiff argues that the Stay Application is simple and straightforward which involves only 3 relatively short affirmations. The Plaintiff proposes to allow 4 hours.

18.I agree with the Plaintiff. This is a simple and straightforward application which does not involve any dispute of facts. The application mainly involves arguments on law and interpretation of DMC. This is reflected by the fact that the three relevant affirmations and affidavit consists of only 30 pages in total (excluding the exhibits). Whilst I accept that it is necessary to communicate with the client for the stated purpose, I am of the view that 14 hours are clearly excessive and unreasonable. Resolving the doubt in favour of the 2^nd Defendant, I will allow 6 hours and the amount is: $2,800 x 6 = $16,800.

19.Item C2 is “Attendance on the other side” and the particulars are set out in Schedule 1. The total amount claimed is $25,000.

20.The Plaintiff repeats the argument that time spent by DC (ie 8 hours) is excessive. The Plaintiff argues that the summons for the Stay Application was taken out on 17 January 2023 and the communication prior to that date is irrelevant. The Plaintiff proposes to allow only 30 minutes for DC.

21.I do not agree with the Plaintiff that the communication before the summons were taken out must be irrelevant. It is not uncommon for the parties to discuss the matters by letters first before an application is formally taken out. Having considered the descriptions of the correspondence at Schedule 1 to the 2^nd Defendant’s Statement of Costs, I am of the view that item nos 1 (relating to water leakages reports and documents), 2 (relating to joint expert examination), 3 (relating to expert directions), 5 (relating to water leakage documents), 6 and 7 (both relating to tenancy agreement) are irrelevant to the Stay Application. The total time allegedly spent on the remaining item (ie nos 4 and 8-12) is 100 minutes and I will allow it in full. Applying the hourly rate of $2,800, the total costs are: $2,800 x 100/60 = $4,667. Adding the time spent by LE (ie 1 hour) for fixing the hearing date, the total costs are $5,667.

22.Item C3 is “Attendance on counsel”. According to the Schedule 2, this item involves 51 emails between Solicitors and Counsel and, the total time spent by DC and LE are 8 hours and 3.5 hours respectively. The total costs claimed are $24,500.

23.The Plaintiff considers that the time spent is highly excessive and proposes to allow only 1.5 hours for DC.

24.As the Stay Application mainly involves arguments on law, I accept that time would need to be spent with Counsel. But still 51 emails and a total of 8 hours are excessive. Taking a broad-brush approach, I will allow 4 hours by DC and the costs are: $2,800 x 4 = $11,200.

25.The total costs allowed under Section C is: $16,800 + $5,667 + $11,200 = $33,667.

Part D: Professional Work

26.The 2^nd Defendant’s claim under “Professional Work” consists of six items and the total claim is $270,000.

27.Item D1 is “Perusal and preparation of documents” and the particulars are set out in Schedule 3. I do not agree that item nos 1 (perusal of Amended Writ of Summons) is irrelevant. In my view, it is necessary to consider the basis of the Plaintiff’s claim in order to determine whether the claim comes within the ambit of the arbitration clause in the DMC. However, I agree with the Plaintiff that item nos 3 (perusal of the 1^st Defendant’s Defence) and 8 (relating to the 2^nd Defendant’s Defence) are irrelevant to the Stay Application.

28.As for the remaining items, I am of the view that the time spent on perusal of affirmation filed by the Plaintiff (5 hours) and my Decision (4 hours) are excessive and unreasonable. As for the preparation of documents, I am of the view that the time spent by DC for preparation of two affidavits of Kwok Wai Kwan Ricky (6 hours) is also excessive when Counsel was instructed to draft documents (see below). Taking a broad-brush approach, I will allow 10 hours by DC and the costs are: $2,800 x 10 = $28,000.

29.Item D2 is also “Perusal and preparation of documents” and the particulars are set out in Schedule 4. The total costs for this item alone are $150,000 which represents 47 hours by DC and 3 hours by LE. It is not surprising that the Plaintiff raises strong objection to this item.

30.For preparation of documents, ie item nos (1) to (4), I am of the view that it is clearly excessive and unreasonable for DC to spend 5 hours for preparation of hearing bundles. On any view, it is also excessive and unreasonable for DC to spend 24 hours in total for preparation of the 2^nd Defendant’s skeleton submissions, list of authorities and supplemental list of authorities when Counsel was instructed to attend the hearing.

31.For pursual of documents, ie item nos (5) to (7), I agree that time would need to be spent to peruse the Plaintiff’s skeletons submissions but I consider 18 hours are too much.

32.Taking a broad-brush approach and resolving the doubt in favour of the 2^nd Defendant, I will allow a total of 10 hours by DC and 2 hours by LE for Item D2: $2,800 x 10 + $1,000 x 2 = $30,000.

33.Item D3 is “Preparation for hearing” and the time spent by DC is 4 hours.

34.I agree with the Plaintiff that the hearing on 3 February 2023 is a call-over hearing. I am of the view that 4 hours are excessive and allow 1 hour for Item D3, ie $2,800.

35.Item D4 is “Hearing (for 3/2/2023)”. The hearing was a call-over hearing which was fixed for 15 minutes only. The time allowed is therefore 15 minutes by DC and the amount is $700.

36.Item D5 is “Preparation for hearing” and the time spent by DC is 6 hours. As mentioned above, Counsel was instructed to attend the hearing on 16 October 2023 and the 2^nd Defendant has already claimed costs for pursual of the Plaintiff’s skeleton submissions as well as preparation of hearing bundles. Any further preparation for hearing would be, in my view, rather minimum and I would allow 2 hours by DC: $2,800 x 2 = $5,600.

37.Item D6 is “Hearing (for 16/10/2023)”. According to Court’s records, the hearing lasted for 2 hours and the costs allowed are: $2,800 x 2 = $5,600.

38.The total amount allowed under Part D is $72,700.

Part E: Counsel

39.The total fee claimed is $76,800 which consists of drafting and conference ($56,800) and Brief ($20,000).

40.Assuming that the drafting and conference were for the Stay Application only, I am of the view that the amount claimed is excessive. I will allow $40,000 instead. The Brief is very reasonable and I will allow it in full. The total amount allowed is $60,000.

Part F: Other Disbursement

41.The 2^nd Defendant claims disbursement for land search, downloading documents from Land Registry, travelling expenses, search fee, postage fee, etc in the total sum of $2,300.

42.Taking a broad-brush approach, I will allow $2,000.

CONCLUSION

43.The 2^nd Defendant’s costs are assessed at $171,892.

List of Objection to Statement of Costs of Cheng & Ng, for the Plaintiff

Statement of Costs for Summary Assessment of K B Chau & Co, for the 2^nd Defendant