Accurate Contractors & Renovators Co Ltd v. Messrs Wong & Lawyers

HCMP 66/2023

[2024] HKCFI 820

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 66 OF 2023

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J U D G M E N T

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Introduction

1.By Originating Summons issued on 13 January 2023, the Plaintiff (“ACR”) seeks an order for taxation of 3 bills issued by its former solicitors (“W&L”) dated 10 July 2014, 17 September 2014 and 12 May 2015 respectively pursuant to s.67 of the Legal Practitioners Ordinance, Cap 159 (“LPO”).

2.W&L oppose the application on a number of grounds. The main ground is that the application is an abuse of process and should be dismissed for that reason. Failing that, it is argued that this Court should in exercise of its discretion under LPO s.67(2) refuse to order taxation. Finally, in the event that taxation is ordered, the same should be on terms that ACR should bear the costs of the Originating Summons.

The Undisputed Factual Background

3.The material background facts are not in dispute. W&L were ACR’s solicitors in handling an arbitration in which ACR was the claimant. For present purposes, it is unnecessary to go into the details of the arbitration. What is pertinent to note is that ACR signed a written retainer letter with W&L dated 15 August 2013. ACR contends that the retainer governing the solicitor-client relationship was partly in writing (ie. the retainer letter) and partly oral. W&L dispute the existence of any alleged oral agreement or terms that are contrary to the express terms of the retainer letter. As will be explained presently, it is unnecessary to go into that dispute to resolve this application.

4.The arbitration commenced in August 2013 and took a number of years to complete. Eventually it was concluded in ACR’s favour in December 2021. W&L issued a total of 7 bills to ACR between July 2014 and January 2022, and ACR made a number of payments to W&L. The details of the 7 bills (“Bill 1” to “Bill 7”) and ACR’s payments are set out in a Table entitled “Summary of the Plaintiff’s Payments to the Defendant” in paragraph 12 of the First Affirmation of Mr Chan Chun Yuen (“Mr Chan”, a director of ACR) filed on behalf of ACR in support of the Originating Summons. It would be convenient to reproduce the Table:

5.What one would immediate note from the Table is that the 3 bills in question, ie. Bills 1 to 3, were issued in July 2014 to May 2015 totalling HK$889,788 (including disbursements), and that ACR had made a number of payments to W&L totalling HK$950,000 from February 2014 to April 2018.

6.The last bill, ie. Bill 7, was issued on 25 January 2022. On 16 February 2022, ACR applied by Originating Summons in HCMP 217/2022 seeking taxation of Bills 3, Bill 4, Bill 6 and Bill 7.[1] Bills 1 and 2 were not included in HCMP 217/2022. Mr Chan explained why that was the case in his First Affirmation filed in HCMP 217/2022:

“12. I was legally advised that since I have raised this application for taxation within 28 days of the delivery of Bill 6 and Bill 7, I may apply to have the bill taxed as of right, and no term or condition will be imposed.

13. I was also legally advised that if a bill has been paid and more than 12 months have elapsed, there shall be no order for taxation. Referring to the Plaintiff’s internal accounting report in “CCY-1”, I accept that Bill 1 and Bill 2 were paid well over 12 months ago and I cannot refer these bills to taxation.”

7.ACR’s accounting report in exhibit “CCY-1” confirmed that payments up to 7 January 2016 had been made to pay Bill 1 and Bill 2, as set out in the Table.

8.W&L accepted that ACR was entitled to have Bill 4, Bill 6 and Bill 7 taxed, but not Bill 3 which W&L considered had been paid more than 12 months before. ACR’s solicitors accepted that. By a Consent Summons dated 3 August 2022, ACR and W&L applied jointly to refer Bill 4, Bill 6 and Bill 7 to taxation. On 4 August 2022, Master Lai raised a number of requisitions to the parties, asking:

“How will the parties propose to deal with other applications in the Originating Summons ie. … and the fee note dated 12/5/2015 referred to in paragraph 2 [ie. Bill 3]?”

9.A hearing took place before Master Lai on 5 August 2022. At the hearing, counsel appearing for ACR (not counsel for ACR before me) confirmed that ACR would not pursue taxation of Bill 3. This was recorded in the order made by Master Lai dated 5 August 2022, paragraphs 2 and 5 of which provide as follows:

“1. The Defendant’s Fee Note dated 21 June 2017 [ie. Bill 4], Fee Note No B3641 dated 24 January 2022 [ie. Bill 6] and Fee Note No. B3643 dated 25 January 2022 [ie. Bill 7] are to be taxed by Taxing Master;

5. Upon the Plaintiff’s confirmation that it does not pursue other matters raised in the Originating Summons, the court makes no order as to other items of the Originating Summons;”

10.On 18 November 2022, after ACR changed solicitors and when there was an unless order against ACR for filing its List of Objections by 14 December 2022, ACR took out a summons seeking to amend the Originating Summons to add a claim for taxation of Bill 1, Bill 2 and Bill 3, and to extend the time for filing and serving its List of Objections to 28 days after disposal of the amendment application or, if leave to amend is refused, the disposal of the application.

11.Naturally W&L objected strongly to what they considered to be a volte-face on ACR’s part and an attempt to delay the taxation process. By letter dated 22 November 2022, W&L responded to ACR’s summons to amend as follows:

“Re: HCMP 217 of 2022

We refer to your letter dated 18 November 2022 enclosing your client’s Summons filed on 18 November 2022 (“Summons”).

In the Originating Summons filed on 16 February 2022 (“OS”), your client applied for, amongst others, the taxation of our fee notes dated 12 May 2015, 21 June 2017, 24 January 2022 and 25 January 2022 (i.e. Bill 3, Bill 4, Bill 6 and Bill 7 as referred to in your client’s supporting affirmation). The OS has already been disposed of by the Order of Master Lai dated 5 August 2022 with no order as to costs. Under the same Order, Bill 4, Bill 6 and Bill 7 are to be taxed by Taxing Master. By consent, your client shall file and serve its List of Objections by 4:00 pm of 14 December 2022 on an “unless order” basis.

In the circumstances, we consider that:

1. Your client’s application for taxation of Bill 3 under the OS has already been disposed of;

2. If your client intends to apply for taxation of our fee notes dated 10 July 2014 and 17 September 2014 (i.e. Bill 1 and Bill 2 as referred to in your client’s supporting affirmation), your client shall make a fresh application instead of amending the OS;

3. In any event, your client’s application for amendment of the OS or new application for taxation of Bill 1, Bill 2 and Bill 3, if any, shall not be a ground for seeking extension of time for filing and serving the List of Objections concerning Bill 4, Bill 6 and Bill 7.

We therefore will oppose the Summons with costs.”

12.Faced with W&L’s objections, ACR withdrew the application for leave to amend the Originating Summons. ACR then issued the Originating Summons in the present case seeking taxation of Bill 1, Bill 2 and Bill 3. Mr Chan filed an affirmation in support of this application, paragraph 8 of which deposed as follows:

“8. The reason why Bill 1 and Bill 2 were not covered, and Bill 3 was not pursued under HCMP 217/2022 was that they were all issued more than 12 months prior to the commencement of HCMP 217/2022 and were all treated by the Defendant as having been settled from payments made by the Plaintiff. The Plaintiff was originally under the impression that the Subject Bills [ie. Bill 1, Bill 2 and Bill 3] were not referrable to taxation in such circumstances, but has since realized that they are still referrable to taxation if they were not interim final bills. The Plaintiff therefore makes this application to refer the Subject Bills to taxation as they were in fact not interim final bills and there exist special circumstances which justify such referral.”

13.Mr Chan’s affirmation, which ran to 39 pages excluding exhibits, deposed in considerable detail what “special circumstances” were relied upon. In particular, it is alleged that there was an oral agreement on fees made between him and Mr K O Wong, the sole proprietor of W&L, to the effect that: (a) ACR would pay up to HK$1 million of W&L’s fees by actual payment, (b) for any part of W&L’s fees which is over and above HK$1 million, the same would be settled through costs which W&L might recover for ACR from the other party to the arbitration, (c) if the aggregate of the actual payments made by ACR and the recovered costs was to exceed W&L’s fees, the excess would belong to ACR but W&L would absorb any shortfall, and (d) ACR was to pay up to HK$1 million for disbursements to be incurred during the course of the arbitration. Mr Chan also deposed to his version of W&L’s conduct of the arbitration and his (many) grievances.

14.W&L disagreed vehemently with the alleged oral agreement as to fees and filed an equally lengthy affirmation (46 pages excluding exhibits) to address in detail the matters raised in Mr Chan’s affirmation. Mr Chan filed a relatively short affirmation of 9 pages in reply.

Procedural Mishap

15.The substantive hearing of the Originating Summons was fixed to be heard over 3 days. It would appear that the parties never properly considered what are the relevant issues which require determination. Rather, both sides in directions hearings represented to the court that there are substantial factual disputes which require cross-examination of deponents of affirmations filed on behalf of the parties.

16.However, in their skeleton opening submissions, counsel for both sides[2] agree that this is not a “third regime” case (see [18] below) so that the requirement of “special circumstances” does not come into play. Both counsel sensibly accept that cross-examination is not necessary to resolve this matter. Eventually the hearing took less than a day to complete, mainly due to counsel’s sensible use of time in developing their submissions for which I am grateful. However, I must record my disappointment that the parties and their legal advisers have not discharged their duties under O.1A r.3 of the Rules of the High Court to assist the Court to further the underlying objectives of the Rules. The Court’s resources could have been more efficiently utilised and perhaps substantial costs could have been saved as well. It is to be hoped that similar failure will not be repeated.

LPO section 67

17.The parties are in agreement that the statutory scheme under LPO s.67 stipulates the following scenarios in which the Court may order a solicitor’s bill to be taxed:

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

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

(a) that the bill shall be taxed;

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

Provided that –

(i) if 12 months have expired from the delivery of the bill, or if the bill has been paid … no order shall be made on the application of the party chargeable with the bill except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the Court may think fit; [third regime]

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

18.Since Re Miller Peart [2007] 3 HKLRD 125 and Lee Chi Enterprises Co Ltd v K C Ho & Fong (a firm) (unrep. HCMP 61/2007, 13 September 2007), the three scenarios when the Court would or may order taxation have been commonly referred to as the “first, second and third regime”. I will adopt the same categorisation in this Judgment.

19.The parties agree that “bill” in s.67 means “final bill”, rather than “interim bill”, so that time accrues from the date of the final bill.

Parties’ Contentions

20.It is common ground that Bill 1, Bill 2 and Bill 3 are interim bills. W&L accept that they are not “interim final bills”. Although it would seem to me that there may be a strongly arguable case that Bill 1 and Bill 2 are in fact “interim final bills”, I indicated to the parties that I would proceed on the basis of their stated positions.

21.Ms Euchine Ng on behalf of ACR submits as her primary case that the current case falls under the first regime, alternatively the second regime. Mr Paul Yuk Pui Lee on behalf of W&L contends that the second regime applies. As mentioned earlier, both counsel accept that the third regime is not applicable, so that the Court does not need to examine “special circumstances”. For completeness, neither side suggests that the fourth scenario, ie. s.67(2)(ii), is applicable.[3]

Not First Regime

22.I will dispose of Ms Ng’s primary case shortly. The last bill, ie. Bill 7, was delivered to ACR on 25 January 2022. The current Originating Summons was issued on 13 January 2023, long after the 1 month period stipulated in s.67(1).

23.In a beguiling argument, Ms Ng in her Skeleton Opening Submissions contends that:[4]

“(a) The final bill in the present case i.e. Bill 7 was only issued on 25^th January 2022.

(b) As mentioned above, on 16^th February 2022 i.e. within 1 month of delivery of Bill 7, P applied for taxation of Bill 7 alongside with other bills.

(c) Whilst the Subject Bills are not covered in the order for taxation made in HCMP 217/2022, they are nonetheless part of the series of bills culminating in the final bill i.e. Bill 7, for which taxation has been ordered by consent.

(d) The present application is analogous to that dealt with by DHCJ Le Pichon in Li Shu Chung [Li Shu Chung v Stevenson, Wong & Co (a firm) [2018] 5 HKLRD 336], both of which serve to clarify and delineate the scope of taxation of final bill i.e. Bill 7 (see in particular, §46). It is respectfully submitted that applying Li Shu Chung, the 1^st Regime is applicable”.

24.I am unable to accept that submission. The simple fact is that HCMP 217/2022 did not include Bill 1 and Bill 2, and the omission was intentional. The first application for taxation of those two bills is the current Originating Summons, which was issued on 13 January 2023. In substance Ms Ng’s contention means that an order for taxation of Bill 7, or Bill 4, Bill 6 and Bill 7 as a series, would automatically cover all bills issued in respect of the same subject matter even though ACR expressly excluded Bill 1 and Bill 2 in HCMP 217/2022. That is contrary to common sense as well as inconsistent with what actually happened.

25.Moreover, Ms Ng sensibly accept that the order of Master Lai made in HCMP 217/2022 would not cover Bill 1, Bill 2 or Bill 3. It is difficult to see how that concession could square with her submission on this point.

26.The reliance on Li Shu Chung is misplaced. The facts of that case are very different from the present case. In that case the client retained the solicitors in various matters from 2009 until early 2016 when the retainer was terminated. The client applied on 1 December 2016 to have 10 gross sums bills issued by the solicitors on 8 November 2016 referred to taxation. By consent, the 10 gross sum bills and an additional bill issued later (the 2016/2017 Bills) were ordered to be taxed. The client then applied to vary the consent order so as to refer 13 additional gross sum bills (Further Bills) to taxation. The principal question in that case was whether the client was entitled to have the Further Bills referred to taxation as part of a series together with the 2016/2017 Bills, which turned on whether the Further Bills were interim bills or final bills: see [11]. Deputy Judge Le Pichon held that they were interim bills.

27.Other than the fact that all the bills were gross sum bills, an unusual feature in that case was that the bills were delivered to the client in bulk long after the date of the bill shown on the Further Bills. As stated in [8]:

“It is apparent that the first bills ever delivered to the applicant since the retainer in October 2009 consisted of 9 of 11 Further Bills all of which were delivered on 15 May 2014. In other words, a bulk delivery of bills was made that day by email for legal services rendered from 29 October 2009 to 26 February 2014. The remaining 2 Further Bills were delivered in early February 2015, a month or so after the dates of each of those bills.”

28.Moreover, the Further Bills were “paid” by the firm appropriating the amount shown due from costs on account that the client had topped up from time to time rather than through any overt act on the part of the client, and the client would not have known of the particulars of the Further Bills until the date of the bulk delivery: [22] – [24].

29.It was in those circumstances that the learned Judge, in addressing a point on jurisdiction, observed that since the Further Bills were interim in nature and thus susceptible of subsequent change, they were only “finalised” upon delivery of the 2016 Bills in November 2016. The learned Judge viewed the Further Bills as a “series of bills culminating in the 2016/2017 Bills”, and held that the application served to clarify and delineate the scope of taxation of the 2016/2017 Bills which were within the Originating Summons: [44] – [46].

30.The present case is starkly different. Bill 1, Bill 2 and Bill 3 set out in detail the work done at the early stages of the arbitration and were issued to ACR timeously. ACR made payments to settle those bills without raising any query or protest, and were issued receipts for those payments. There is no question of any of those Bills being changed. ACR accepted that Bill 1 and Bill 2 had been paid. Ms Ng advances no submission that Bill 1, Bill 2 and Bill 3 serve to clarify or delineation the scope of taxation of Bill 4, Bill 6 and Bill 7. Moreover, there was absence of intentional exclusion or abandonment of any of the Further Bills in Li Shu Chung, in contrast to the abandonment of Bill 1, Bill 2 and Bill 3 in HCMP 217/2022.

31.In my judgment, Li Shu Chung is distinguishable and does not support Ms Ng’s contention that the present case falls under the first regime.

Second Regime

32.I turn to consider whether an order for taxation should be made under s.67(2) and if so, whether any terms or conditions should be imposed.

33.In this respect, Ms Ng’s main submission is that subject to any terms that may be imposed, the Court will generally be inclined to order taxation, citing Lee Chi Enterprise v K C Ho & Fong at [21] per Recorder Ambrose Ho SC. The learned Recorder does not refer to any authority which establishes that general principle, but since Mr Lee does not dispute that proposition I will accept (without deciding) it to be the correct approach.

34.The main objection advanced by Mr Lee is that the attempt to resurrect Bill 1, Bill 2 and Bill 3 in this Originating Summons is an abuse of process. He relies on what is commonly known as Henderson v Henderson abuse (named after Henderson v Henderson (1843) 3 Hare 100) or Yat Tung abuse (named after Yat Tung Investment Co Ltd v Dao Heng Bank [1975] AC 581, an appeal from Hong Kong), that is, the abuse in raising in subsequent proceedings claims or issues that could and should have been litigated in earlier proceedings between the parties.

35.In Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72, Ma CJ, with whom the other members of the Court agreed, explained the principle at [82] – [83]:

“82. The abuse that is known as the Henderson v Henderson abuse (or res judicata in the wider sense – the nomenclature is not important) is derived from the case of that name. It has been developed and explained by the House of Lords in Johnson v Gore Wood & Co. (a firm) [2002] 2 AC 1, by the Judicial Committee of the Privy Council in Yat Tung Investment Co. Ltd. v Dao Heng Bank and Brisbane City Council v Attorney General for Queensland [1979] AC 411, by the English Court of Appeal in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482 and by our Court of Appeal in Ngai Few Fung v Cheung Kwai Heung [2008] 2 HKC 111 and Chiang Lily v Secretary for Justice [2009] 6 HKC 234. The essence of the doctrine is that a party ought generally not be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.

83. For reasons that will become evident presently, it is unnecessary in order to resolve this part of the appeal to go into the precise ambit of the principles regarding this form of abuse, although for my part, I would say that the present state of the law is reflected by the decision of the House of Lords in Johnson v Gore Wood and of the Court of Appeal in Chiang Lily v Secretary for Justice. For present purposes, it is sufficient just to refer to the following facets of the doctrine:-

(1) The starting point is to recognise that the doctrine is founded on an abuse of process. As Lord Wilberforce said in Brisbane City Council v Attorney General for Queensland, “it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation”: (p.425).

(2) This concern (that a party ought not lightly be deprived of the right to have serious matters litigated) was echoed by Lord Millet in Johnson v Gore Wood: (p.59D-G).

(3) It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim) that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings. This abuse will usually take the form of the other party being “vexed” (or in some cases, the terms “oppressed”, “unjustly harassed” or “unjustly hounded” are used) by the subsequent set of proceedings: Johnson v Gore Wood, 31A-B.

(4) The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily, 256D-G ([58]) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529. With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process. RHC O.1A r.1(f) states as one of the underlying objectives of the court’s procedural powers under the Rules to be “to ensure that the resources of the court are distributed fairly”.

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice. It is important therefore here to emphasise that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel. On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests. See here, Bradford and Bingley Building Society, 1490F-H. It is also worth making the following observations at this juncture:-

(a) There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned. In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood, 59D (“It is one thing to refuse to allow a party to re-litigate a question which already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon” (Lord Millett)).

(b) The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion. A number of decisions of the English Court of Appeal have cast doubt on whether the court does indeed exercise a discretion as such: see Aldi Stores Ltd. v WSP Group Plc. [2008] 1 WLR 748, 762C-D ([16]) and Stuart v Goldberg Linde (a firm) [2008] 1 WLR 823, at 845E-846C ([81]). It is unnecessary for present purposes to decide whether or not a discretion is actually being exercised. The more important point to bear in mind is that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors. Nothing in the two said cases suggests otherwise; in fact, quite the contrary.” (Emphasis added)

36.In this context, it is pertinent to be reminded that in Johnson v Gore Wood & Co [2002] 2 AC 1 at 23B-F, Lord Millett referred to the statement of the principle by Sir James Wigram VC in Henderson v Henderson (1854) 3 Hare 100 at 114-115:

“In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.” (Emphasis added)

37.Then at 31A-F, Lord Millett observed that:

“But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances.” (Emphasis added)

38.I am also reminded of what the Privy Council held in Yat Tung Investment Co Ltd v Dao Heng Bank [1975] AC 581, at 590A-E:

“where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.”

39.Mr Lee submits that the present case falls squarely within the principle. Bill 1 and Bill 2 were intentionally excluded from HCMP 217/2022. Whether that was because of erroneous legal advice as alleged by ACR is irrelevant: see Henderson v Henderson and Yat Tung cited above. There is no reason why ACR should be allowed to raise in these proceedings a claim which it could, and plainly should, have raised in HCMP 217/2022.

40.The abuse is even worse in the case of Bill 3, so submits Mr Lee. The claim for taxation of Bill 3 was abandoned by ACR in the course of the parties agreeing to the Consent Summons in HCMP 217/2022, which resulted in the Order of Master Lai ordering taxation of Bill 4, Bill 6 and Bill 7. There is no reason why ACR should be allowed to resurrect that claim.

41.Faced with those objections, Ms Ng advances three answers.

42.First, she submits that it is too late for W&L to raise abuse at the substantive hearing, relying on the observations of Ma CJ in Ko Hon Yue at [84] – [88]; and Lord Bingham in Johnson v Gore Wood at 34C-D.

43.In my view, Ms Ng’s first argument fails to meet the abuse of process objection. Mr Lee does not seek to strike out the Originating Summons, but relies on abuse as a substantive response to the order for taxation sought. ACR has not identified any prejudice suffered by reason of the alleged delay.

44.Further, and in any event, the present case is very different from the circumstances considered in Ko Hong Yue and Johnson v Gore Wood. In those cases, which were hotly contested trials, the parties have spent years in the pre-trial process starting from pleadings with multiple rounds of amendments, lengthy discovery and other interlocutory steps, preparing witness statements and finally preparation for the substantive trial. In those circumstances, it is not difficult to see why an application to strike out on the ground of abuse should have been made at the earliest opportunity, and the court should not entertain such an application made at the beginning of the trial.

45.In contrast, the present case is an Originating Summons, which has to be supported by the plaintiff’s affidavit. Other than the filing of the defendant’s affidavit in answer, nothing much has happened other than several non-contentious directions hearings prior to the substantive hearing before me. It is true that the parties have, I am told, prepared for cross-examination, but that is due to both parties’ failure to focus their minds on what are the issues that require determination. I do not think there is any material delay on W&L’s part which would prevent their reliance on abuse as a substantive ground for rejecting the Originating Summons.

46.Secondly, Ms Ng argues that W&L’s delay in raising the abuse point shows that they did not consider there was abuse, or have acquiesced in it. Indeed, Ms Ng goes further and suggests that there was active encouragement on W&L’s part to ACR commence these proceedings.

47.I am not persuaded that ACR could legitimately complain of any material delay on W&L’s part in raising the abuse. As Mr Lee points out, even before the Originating Summons was issued, W&L had in their letter dated 22 November 2022 already raised the point that Bill 3 had been disposed of in HCMP 217/2022. After the Originating Summon was issued on 13 January 2023, the parties have agreed on a List of Issues on 27 February 2023 as directed by the Master, Issues 1 and 2 of which concerned W&L’s complaint in respect of Bill 1, Bill 2, and more specifically Bill 3:

“1. Whether or not Bill 1, Bill 2 and Bill 3 were paid and settled the Plaintiff.

2. Whether or not the Plaintiff’s application for taxation of Bill 3 has already been disposed of in HCMP 217/2022 by way of the Order of Master Lai dated 6 August 2022 thereunder.”

48.Admittedly Issue 1 appears to be directed towards whether s.67(2)(ii) applies, an issue which the parties now accept does not arise. Issue 2, however, specifically concerns the disposal of Bill 3 in HCMP 217/2022. That, in my view, is in substance the abuse point now relied on by W&L. Although no complaint of abuse was specifically raised in relation to Bill 1 and Bill 2, ACR must have anticipated that W&L would rely on abuse as a ground of objection.

49.In any case, I fail to see what is the substance of ACR’s complaint on delay. W&L rely on what has happened in HCMP 217/2022 and ACR’s own evidence. It is not suggested that there is or may be further relevant evidence on the issue had W&L raised the abuse point more specifically and earlier in time. In my view W&L’s conduct of these proceedings do not give rise to any reason why the Court should not entertain the abuse point.

50.As to encouragement, Ms Ng relies on W&L’s letter dated 22 November 2022. I have already set out the terms of that letter in [11] above. It is said that paragraph 2 of that letter was “active encouragement” that ACR should commence new proceedings to tax Bill 1 and Bill 2.

51.In my view Ms Ng’s argument lacks substance. W&L’s letter must be considered in context. It will be recalled that after Master Lai on 5 August 2022 ordered taxation of Bill 4, Bill 6 and Bill 7 in HCMP 217/2022, ACR was required to file their List of Objections. ACR apparently was dilatory in doing so, hence was required to file their List of Objections by 4pm on 14 December 2022 on an unless basis. On 18 November 2022, ACR issued the summons to amend the Originating Summons to seek taxation of Bill 1, Bill 2 and Bill 3, but importantly also for an extension of time to file their List of Objections until 28 days after disposal of the amendment application. W&L’s letter of 22 November 2022 objected to the amendment summons as a whole, which they must have perceived to be yet another attempt to delay filing of the List of Objections. Whilst I have never understood why practitioners should see fit to suggest to their opponents what steps ought to be taken, reading the letter in context W&L were objecting to ACR’s attempt to delay the taxation in HCMP 217/200. I do not think it could reasonably be taken as encouragement to ACR commencing proceedings for taxation of Bill 1, Bill 2 and Bill 3, let alone acquiescence in ACR doing so.

52.Ms Ng’s third main argument is that the Henderson abuse principle only applies when the first set of proceedings have concluded, and does not apply here because HCMP 217/2022 is still ongoing. She relies on Yifung Developments Ltd v Liu Chi Keung Ricky (unrep., HCA 3020/2015, 29 August 2016) at [34]-[38]; Cheung Ping Sum v Wong Chi Hang [2018] HKCFI 70 at [20, [26] and Lo Kai Shui v HSBC International Trustee Ltd [2021] 5 HKC 337 at [180]- [181].

53.I am unable to agree. In my view Ms Ng has taken those authorities out of context. In Yifung and Cheng Ping Sum, the earlier proceedings have not reached trial so that the parties’ respective allegations remain undecided. In so far as the subsequent action raised similar or related issues these could have been considered and determined without jeopardising the existing proceedings or risking duplication. Hence any duplicated or overlapping claim could be remedied by appropriate case management directions such as amendment of the existing proceedings, joinder or consolidation with the existing proceedings etc. so that the parties would not be shut out from ventilating undecided claims.[5]

54.That is not the situation here, because the claim for taxation was settled or disposed of on the basis that ACR would not pursue taxation of Bills 1 to 3. An order for taxation has been made in HCMP 217/2022 and that claim (one may say the substantive claim) has undoubtedly concluded; what remains is the taxation process. The present case is similar to one where the issue of liability has been determined, with quantum to be assessed.

55.Mr Paul Lee also pointed out (in my view rightly) that what matters is that the issue or matter ought to have been raised in the earlier proceedings. In the present case, it is plain that an order for taxation of Bill 1 and Bill 2 could and should have been raised in HCMP 217/2022. The reality is that ACR chose not to pursue that claim. Whether the decision was (according to ACR) based on wrong legal advice is irrelevant.

56.Bill 3, of course, stands in a different position because it had been raised, but was expressly abandoned. There is nothing outstanding in relation to that bill.

57.Accordingly, I am not persuaded that W&L is prevented from relying on Henderson abuse as a substantive objection to the Originating Summons.

58.Finally, Ms Ng submits that taking a “broad, merits-based judgment” there is no Henderson abuse in the present case. The grounds she relies upon are essentially the same as those I have already considered and do not add anything of substance.

59.In my judgment, this is a clear case for the application of the Henderson abuse principle. There can be no doubt that the claim for taxation of Bill 1 and Bill 2 could and should have been made in HCMP 217/2022. Wrong legal advice does not excuse ACR’s intentional exclusion of those bills from the earlier proceedings. There is no reason why W&L should be vexed again for the same subject matter which ACR had knowingly excluded (Bills 1 and 2) and abandoned (Bill 3). In my view ACR has no answer to that objection.

60.Further, I would also take into account the fact that Bills 1 and 2 have been delivered to ACR many years ago. Those Bills set out in detail the work done at the early stages of the arbitration, and ACR had paid them without query or protest. Although these Bills are accepted to be interim bills, there is no question of W&L varying them. Nor has it been suggested how these Bills might affect the taxation of Bill 4, Bill 6 and Bill 7. These factors also point heavily against allowing ACR to tax those Bills now.

61.In conclusion, while accepting that in general the Court would order taxation under the second regime, in my judgment the circumstances of the present case point strongly against allowing ACR a second bite.

Disposal

62.Accordingly, the Originating Summons is dismissed.

63.I see no reason why costs should not follow the event. I order that the costs of the Defendant be paid by the Plaintiff, to be taxed if not agreed.

Ms Euchine Ng, instructed by NWK Lawyers, for the plaintiff

Mr Paul Yuk Pui Lee, instructed by Wong & Lawyers, for the defendant