Tetra Finance (HK) Ltd (in Liquidation) v. King and Co

HCMP002579/1983

1983 M.P. No. 2579

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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BETWEEN

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Coram: Master J. Betts

Date of Hearing: 11 January 1984

Date of Judgment: 18 January 1984

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JUDGMENT

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1. This is an application by the liquidators of the Plaintiff (Tetra) for taxation of three bills of costs rendered by the defendants (the solicitors) and settled out of money held on account by the solicitors prior to the liquidation.

2. The first question raised by Mr Bunting for Tetra is whether the bills have ever been "paid" within the meaning of the Legal Practitioners Ordinance, Cap. 159. If no such payment has been made he is, he says, entitled to his order without further ado.

3. On the authority of In re Foss, Bilborough, Plaskitt & Foss. ([1912] 2 Ch 161) he says that where settlement is made by deduction form money held payment means at least positive consent to the deduction after proper examination of the bill. Mere acquiescence is not sufficient. He contends that the evidence before me falls short of showing either that Tetra, through properly authorised directors, had any proper opportunity to consider the bills or that they consented to settlement by deduction. I disagree. An affirmation is before me by Jackson Pau, a director at the relevant time, which reads in part:-

"3.         Payment of these bills was effected out of monies paid on account to the Defendants. I was aware of the amounts involved in these fees and also that the relevant sums were deducted. The bills and relevant Statements of Account were sent to Tetra and were seen by myself and Mr Mathew Yeung (a co-director). We both knew of and raised no objections to the amounts charged, the purpose for which the fees were charged and the manner in which the fees were paid."

4. Mr Bunting urges that the use of the phrase "We....... raised no objections" shows mere acquiescence and no more; but taken as a whole, and without undue exploitation of semantics, I take the paragraph to show that the directors considered the bills, approved the bills and approved settlement by transfer from funds held on account by the solicitors.  I find they were paid within the meaning of the Ordinance.

5. That being so the only way Tetra can get to taxation is to show that there are special circumstances.

6. I considered the question of special circumstances in Axona International Credit & Commerce Limited (In liquidation) v. Iu, Lai & Li (a firm) (1983 No. 2633 M.P.) which is a related matter and where I found special circumstances to exist.

7. I will not set out again my reasons in that action save to say that the authorities suggest that special reasons exist where the bill in question is prima facie excessive and there is some additional factor such as improper pressure by the solicitor on the client. In the Axona case I found not only that all the bills were prima facie excessive but that the funds held by the solicitors consisted of monies released from assets subject to a Mareva injunction and that constituted special circumstances.

8. In that case Mr  Bunting put forward seven matters each of which he asked me to accept as special circumstances. All those factors, with the exception of the source of the funds held by the solicitors, are common to thise case. I felt constrained to reject his argument. My reasons are set out in my judgment in that case.

9. Even, therefore, if the bills here are prima facie excessive, in the absence of any evidence that the funds were released, for the purpose of legal expenses, from money subject to a Mareva order I am unable to find any special  circumstances entitling Tetra to the orders sought.

10. Should I be wrong in not finding what may be called the second element required to constitute special reasons I consider whether the bills are, in any event, prima facie excessive.

11. Bill number 7880/82 is short and to the point. In full it reads:-

"RE : General

To our professional fees for being retained by you in all matters concerning your company ................. $200,000"

As a retainer it is, in my view, prima facie excessive; even more so as other bills showed it was in addition to fees charged for work actually done. It was, as was explained to me, a fee for that other work being given priority.

12. Bill number 7781/82 is more detailed. If shows nine attendances at the offices of Tetra, conferences with two counsel, other solicitors and "studying bundles of various documents".I cannot say that, on the face of the bill, I consider the profit costs of $49,600.00 to be excessive .Counsels' fees shown as disbursements seem in proportion although they are not explained. I do not find that bill prima facie excessive.

13. Bill number 8168/83 is more difficult in that, with the exception of one conference with Counsel, there is no connexion between the narrative showing how the solicitors profit costs are computed and the disbursements of fees.

14. Other than a trivial item for travelling there are three fees paid with which I will deal in the reverse of the order they appear in the bill.

15. $90,000.00 is paid as "Consultant fee to Mr Greg Crichton". There is nothing whatever in the bill to explain that item and no explanation was offered to me. In the absence of any explanation I hold the item to be prima facie excessive.

16. The next item is a fee of $15,000.00 to Mr Geoffrey Ma of Counsel. The narrative part of the bill discloses one conference with Mr Ma and nothing more. His fee note was not produced and in the absence of further explanation the disbursement is prima facie excessive.

17. The final disbursement is a fee of $120,000.00 to Mr John Swaine, Q.C. Again the narrative is wholly silent but I have been given an explanation which, I believe, is common ground between the parties.The fee, I understand, is a two third share of Counsel's fees for a conference from 6.30 p.m. to 8.30 p.m. on a Friday evening and an appearance of some 30 minutes the following day before the Commissioner of Deposit-Taking Companies.In the absence of any further explanation I find the fee prima facie excessive.

18. It follows that by virtue of my findings in regard to the disbursements the bill is prima facie excessive.

19. I have dismissed this Originating Summons with costs to the defendants and a certificate for counsel. Time for appeal is to run from the date of delivery of this judgment.

Representation:

Mr Michael Bunting instructed by Messrs Wilkinson & Grist for Plaintiff.

Mr R. Faulkener instructed by Messrs Sit, Fung, Kwong & Co for Defendants.

Date of Hearing : 11 January 1984