James S. Lee & Co Clothing Mill (HK) Ltd v. Messrs Hastings & Co

Case No.HCMP 2615/1983

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCMP002615/1983

Costs - right to taxation after 12 months since payment made by deduction - no such right were bills delivered after natural break in proceedings and payment deducted from funds held for that purpose.

M.P. No. 2615 of 1983

IN THE. SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

_____

IN THE MATTER of Messrs. Hastings & Co.,

and

IN THE MATTER of the Taxation of Costs

___

BETWEEN

	JAMES S. LEE & CO. CLOTHING MILL (HK) LTD.	Plaintiff
	and
	MESSRS HASTINGS & COMPANY	Defendant
	___

Coram: Hon. Penlington, J.

Date: 30th March 1984

___________

JUDGMENT

___________

1. This is an appeal from a master against an order for the taxation of 3 bills of costs delivered to the plaintiff by the defendant and dated the 8th April 1980, the 7th July 1980 and the 2nd December 1982. Counsel for the defendant, however, said that the defendant was not resisting the order in respect of the last bill and that the appeal was therefore only in connection with the first two.

2. It was not in dispute that the bills of costs concerned lengthy and difficult litigation in which the plaintiff took action against a firm of sharebrokers, Nomura International (HK) Ltd., which commenced in February 1975 by the issue of a writ. There was evidence that 3 leading counsel were briefed at various stages and that the litigation involved many thousands of documents. By the final stages of the litigation the writ had been re-amended so often it resembled a rainbow in colour. It is not in dispute that finally the matter was settled and a deed of settlement was executed in November 1982. The plaintiffs received, as a result of that litigation, the sum of about $3½ million.

3. By November 1979, the litigation having then already gone on for some 4 years, the defendants requested payment on account for legal fees for both themselves and counsel and on the 9th November the sum of $370,000 was sent to them being payment of counsel's fees of $270,000 and their costs on account of $100,000 "as agreed". On the 27th November 1979 a further $50,000 was sent to the defendants, the accompanying letter stating that this was "an additional tentative payment for the legal costs incurred by the captioned case with the understanding that you will kindly arrange to deposit the said payment in a fixed deposit account to be opened with a financial institution under your name and to reimburse us the interests thereon up to the final settlement of the captioned account as the case was in the previous payment of $370,000". These funds were duly deposited with the Sun Hung Kai Finance Co. on interest-bearing account. There was some complaint made in an affidavit filed on behalf of the plaintiffs alleging that there was delay in making these deposits. I find that such allegations were firstly unjustified and secondly irrelevant to these proceedings.

4. Counsel's fees were in fact paid from these funds and a bill of costs dated the 8th April 1980 was sent by the defendants to the plaintiffs and the amount involved, $120,000, was taken from the deposit account and the bill was paid in that manner. The bill has a stamp endorsed on it "Received $120,000 by deduction, April 4, 1980" and it is signed on behalf of the defendant. I am satisfied that in fact this bill was delivered and payment was deducted from the amount held with the Finance Co. at one and the same time. The 4th of April 1980 was Good Friday and legal offices were shut until the 8th.

5. The second bill which is in contention which is dated the 7th July 1980 was similarly paid by deduction from the account on the 17th July.

6. The provisions of the Legal Practitioners Ordinance as to the taxation of bills is set out in section 67. The proviso to subsection 2 reads as follows:

"Provided that -

(i)

if 12 months have expired from the delivery of the bill, or if the bill has been paid, or if a verdict has been obtained or a writ of inquiry executed in an action for the recovery of the costs covered thereby, 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;

(ii)

in no event shall any such order be made after the expiration of 12 months from the payment of the bill."

7. In this case money was paid to the defendants by the plaintiffs specifically to cover costs. The solicitors after a period deducted from that amount their costs and at the same time delivered fully itemized bills.The plaintiffs did not at that time or at any other time before these present proceedings commenced, dispute those bills or the manner in which payment for them had been deducted.

8. The defendant relied on several authorities but I do not think there is any need for me to cite them in extenso. These authorities extend from the leading case of In re Romer v Haslam⁽¹⁾. The headnote to that case states:

"Where a solicitor is retained to conduct litigation other than an ordinary action at common law which may extend over a considerable period of time any in which breaks may occur of such a kind as to be the equivalent to the conclusion of a definite and distinct part of the proceedings, he may deliver to his client a bill of costs for business done up to the occurrence of any such breaks in the litigation and demand payment. Where, however, in the course of the proceedings, severa bills of costs have been sent in at different times by the solicitor, it is always a question of fact whether they were sent in as final bills for work done up to the occurrence of such break in the litigation so as to be separate bills and of 12 months, or whether they were merely satatements of account or portions of the entire bill so as to make the whole liable to taxation if the last part has been delivered within 12months of the application to tax

9. In this case the action commenced in 1975 and came on eventually for hearing on the 25th May 1979. It was adjourned to the 14th January 1980 and then adjourned again on the 1st March 1980. The first bill was then delivered on the 8th April. The hearing was resumed on the 14th April. It was then continued until the 27th May when an order was made which subsequently went on appeal. The hearing was however continued until the 11th September 1980 and a bill of costs, the second bill, delivered on the 7th July 1980. The matter was not resumed until the 9th February 1981.

10. There seems to me that there was certainly a natural break in the proceedings at the time of the delivery of the second bill and, in my view, that also applies to the delivery of the first bill. Be that as it may, on the 7th July 1980 there was a substantial break in proceedings at which time both the first two bills had been delivered and paid by deduction. I consider, therefore, that the matter falls clearly within the dicta in Romer v Haslam and the bills could be delivered as separate items. Even if that was not so, here we have moneys paid to the solicitors by the client for the express purpose of paying costs. Properly set out bills of costs were delivered and the amounts deducted in the manner which was clearly contemplated by the parties.

11. Moreover there was, in this case, clearly an agreement between the plaintiff and the defendant certainly in respect of the first bill, that it could be paid by deduction from money sent for that specific purpose. The second bill was delivered and paid in the same way and, on the facts of this case, I am satisfied that the acquiescence of the plaintiffs constituted an agreement. In re RG Thompson Exparte Baylis⁽²⁾.

12. In re Street⁽³⁾ held that deduction of costs before delivery of the bill was not payment but here there was delivery of bills and in Hitchcock v Stretton⁽⁴⁾ it was said that in re Street was decided on its own special and peculiar circumstances.

13. The only authority which it seems to me can be of the slightest assistance to the plaintiffs is In Re Ingle⁽⁵⁾ which is referred to in paragraph 3088 of the White Book where it is said:

"If a bill has been delivered the retention of moneys by the solicitors is no payment unless there has been a settlement of account; mere acquiescence is not enough."

In Re Ingle is then cited as authority for that statement. A perusal of the case, however, shows that it depended very much on its own particular facts. There a widow who was described as very illiterate entered into an agreement whereby certain shares held by her late husband's extate and which were of then unknown value were applied towards the payment of the estate's costs. At p 866 Sir John Romilly, MR. said:

"In the first place I have no doubt that the agreement was as stated viz. one by which in consideration of Sarah Nadin being released from personal liability, the solicitor was contented to look to the produce of the railway shares for the payment of the bill of costs; and the client on her part agreed to the amount of the bills of costs. Such an agreement might have been perfectly good if entered into between persons who understood their situation; but such is not the case here. Leaving out the question that she was a very illiterate person the bill was delivered at the time and she had no means of knowing whether it was a proper bill or not and was impossible to obtain proper advice."

14. The situation here is as different as it could possibly be. The plaintiff in this case is a substantial company which had over a period of time been engaging in extensive investments and I have no doubt whatever was fully aware of its position and most certainly had access to the most competent advice. I do not think the case of In Re Ingle is of assistance to the plaintiff here.

15. I have no doubt whatever that on the facts of this case the bills were paid on the 8th April 1980 and the 17th July 1980. Even if that were not so there is nothing to suggest there were any special circumstances present so as to come within the first proviso to section 67.

16. I might finally say that in neither of the affidavits filed was there any suggestion that the plaintiffs have grounds for believing that either of the bills of costs which are in dispute was excessive.

17. The appeal is allowed to the extent that the bills of costs dated the 8th April 1980 and the 7th July 1980 will not be referred to the taxing master and the order of the master is set aside to that extent. The defendants are to have the costs of today and before the master to be taxed on a common fund basis, the taxing master to use his discretion under rule 32(a). By consent there will be no order as to the costs of the adjourned hearing before Mayo, J.

(R.G. Penlington)

Judge of the High Court

(1) (1893) C.A. 286

(2) 1894 1 QB 462

(3) X Equity Cases 165

(4) 1892 2 Ch. 343

(5) 1855 25 LJ Ch.

Representation:

Mr. W. Stone (Hastings & Co.) for Defendant

Mr. Suen Kam Hee (Loh & Co.) for Plaintiff