Lee Chan Cheng and Another v. Yung Mei Chun

HCA004594/2002

HCA 4594/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4594 OF 2002

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Coram: Deputy High Court Judge To in Chambers

Date of Hearing: 6 January 2004

Date of Decision: 21 January 2004

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D E C I S I O N

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Background

1.This is the Defendant's appeal against the orders made by Master Ho on 8 July 2003. The Plaintiff is a practising solicitor and the former solicitor of the Defendant representing her in District Court Action DCCJ No. 15756 of 2000. Following the Defendant's complaint of professional negligence in conducting the DCCJ No. 15756 of 2000 against the Plaintiff, the Plaintiff terminated the retainer and issued a final fee note demanding the Defendant a fee of $614,805 on 30 October 2002. The Defendant requested the Plaintiff to send her the invoices and receipts in respect of items of disbursements. The Plaintiff did not respond and issued a writ of summons against the Defendant on 6 December 2002. On 26 March 2003, the Defendant took out a summons seeking an order for further and better particulars of the Plaintiff's fee note. After hearing the parties on 8 July 2003, Master Ho ordered the Plaintiff to give particulars in respect of Request 3 only and refused to order particulars in respect of the other twenty-five requests. He also ordered the Defendant to pay three-fourths of the costs of the application including the reserved costs, assessed at $5,000 to the Plaintiff within 14 days from the date hereof.

2.At the appeal, the Defendant said that the Plaintiff's answers in respect of Request 3 were sufficient to cover most of the particulars sought in her other twenty-five requests. She effectively abandoned her appeal against Master Ho's order refusing to order particulars in respect of the other twenty-five requests. Thus her appeal is essentially against the costs order. She submitted that the master erred (1) in awarding costs against her; (2) in adopting an hourly rate of $2,500 for the Plaintiff notwithstanding that the Plaintiff was a litigant in person; (3) in assessing the time spent in preparation and appearing at the hearing and (4) in ordering payment of the costs forthwith.

Whether the master erred in awarding costs against the Defendant

3.The Defendant was successful in connection with one only out of her twenty-six requests. The master considered that she was substantially unsuccessful and ordered her to pay three-fourths of the costs of the application. She submitted firstly that in effect she was substantially successful as the particulars ordered to be given to Request 3 as amended by Master Ho substantially answered most of her other requests. Secondly, that even if she was successful in one out of twenty-six requests, she was entitled to have costs of the application on the principle of Paul Y - ITC Construction Limited and Kin Shing Company Limited in HCA No. 2220 of 1998. I shall deal with the second limb of her argument first.

4.The Defendant relied on the following dicta of Sakhrani J in Paul Y - ITC Construction Limited and Kin Shing Company Limited as establishing the principle that a litigant is entitled to all the costs of an application even if she was successful in one only out of a number of requests:

"The Defendant did not succeed in all its request for particulars that it sought but it has succeeded in getting an order from the Master that the Plaintiff's Reply No. 3(1) was lacking in particulars. To obtain that order it was, of course, necessary for the Defendant to issue the summons. Right up to the stage of the hearing before the Master, the Plaintiff was also objecting, in principle, that the Plaintiff need not supply any further particulars to particulars as the particulars that had previously been provided was not a pleading. Although this point may not have been pursued before Master Poon, it was certainly pursued in correspondence and it was necessary for the Defendant to issue the summons for further and better particulars. To that extent, the Defendant has succeeded and I see no reason why the Defendant should not get its costs for that application."

It appears that in that case, there were two requests made in relation to the plaintiff's reply No. 2 and 3. The plaintiff was ordered to give particulars in relation to part of its reply No. 3 and was ordered to pay costs for the whole application. Even if those were the facts of that case, I do not think the above dicta as establishing any principle of law in support of the proposition suggested by the Defendant.

5.The master or the judge in hearing the appeal against the master's decision, for convenience I call them the "trial judge", were the persons in the best position to understand the nature and assess the overall merit of the application, based on which to exercise their discretion. By "overall merit", I mean the merit of the entire application and not just the part in which the applicant was successful. When a party is only partially successful, only the trial judge knows where the overall merit lies. There may be a number of scenarios. At the one extreme end, the successful party may have a meritorious request in respect of which he was successful but had a number of unmeritorious requests which he abandoned at the hearing or which were not actively pursued or which even if he did, did not take up much time. At the other end, the successful party may have succeeded in respect of one request which was conceded by his opponent but was unsuccessful in respect of a large number of other unmeritorious requests which he argued exhaustively and unreasonably and which took up almost the entire hearing. These are matters which are solely within the knowledge of the trial judge and which he should take into consideration in exercising his discretion. I do not think Sakhrani J's dictum was intended to apply equally to both scenarios. I would be surprised if it was.

6.As a general rule, a successful litigant, in the absence of special circumstances, has a reasonable expectation of obtaining an order for payment of his costs by the other party. The usual costs order is "costs shall follow the events", except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs: see Order 62 rule 3(2). This rule envisages an apportionment of the costs according to whether the party is successful. Where an application is made up of identifiable component parts, the above rule can apply to the various component parts separately. Indeed, the reverse of Sakhrani J's dictum must also apply to the part of the application in which the plaintiff successfully resisted the application to provide particulars in the following terms:

"To successfully resist to providing the particulars, it was, of course, necessary for the plaintiff in that case to attend court to resist the application. Right up to the stage of the hearing before the master, the defendant was insisting to be supplied the particulars and it was necessary for the plaintiff to put an end to that demand by attending court. To that extent, the plaintiff has succeeded and I see no reason why the plaintiff should not get its costs for having successfully resisted that part of the application."

7.It is not clear where between the two extremities I referred above lies the facts of Paul Y - ITC Construction Limited and Kin Shing Company Limited. It is obvious that the particulars relating to the plaintiff's reply No. 3(1) took up a substantial part of the application. It may well be that the rest of the application where the defendant was unsuccessful was very speedily disposed of by the master. Hence Sakhrani J awarded the defendant with costs of the entire application even though it was successful in respect of one part of a request only. I think the decision in that case could be justified on the basis of substantial or overall merit.

8.The Defendant also cited the case of Aktieselskabet Dansk Skibsfinansiering (body corporate) and Wheelock Marden & Company Limited and Others CACV 88/1992 in which, on appeal, the Court of Appeal ordered costs to the successful defendants requesting for particulars. There were 281 requests made, the majority of which were ordered after hearing argument or conceded. The plaintiff was successful in resisting a few only of the requests. No reason was given by the Court of Appeal as to why the costs were not apportioned. Probably, the costs order was justified on the basis of overall merit.

9.I do not think these cases as having established any principle of law that a party which is successful in respect of one of a number of requests must be awarded the costs of the entire application. Whether to award costs, the extent and quantum is always a matter of unfettered discretion for the trial judge. Section 52A of the High Court Ordinance gives the Court full power to determine by whom and to what extent the costs are to be paid. Depending on the facts of the individual case, the trial judge may take an overall view of the merit of the application and award the successful party the costs of the entire application on the basis of overall merits, or he may carry out a weighing exercise, determine to what extent a party is successful and unsuccessful, set off what he has failed against what he has succeeded and award costs on that basis. For my part, I would prefer the second approach so far as it is reasonably practicable to do so. That was what Master Ho did. I do not think he could be criticised for adopting that approach.

10.I now turn to the Defendant's other argument. There are 250 items in the fee note. Request 3 as drafted by the Defendant is as follows:

"For each and every single item of work done and service, state whether there were any written and/or oral agreements of an agreed fee and/or estimates."

Master Ho allowed the request and amended it as follows:

"For the alleged work done and services rendered by the Plaintiff for the Defendant, state whether there was any written and/or oral agreement as to payment of fees. If so please state:

(a) when the agreement was made;

(b) between whom it was made;

(c) gist of the agreement made;

(d) if the agreement is in writing, copy be produced."

11.The Defendant argued that Request 3 as amended by the master substantially covered most of her other requests, hence she was substantially successful in her application and should be awarded costs. I do not agree. What the master did was to re-write her request in a lawyerly manner. He replaced "for each and every single item of work done and service" (there were 250 items) by an overall description of "for the alleged work done and services rendered" and enlarged the particulars requested to include details as to time, identity of the persons making the agreement and the content of the agreement, including a request for a copy if made in writing. Her other requests, which were refused by the master, were about details of the work done, advice given, steps taken, breakdown and documents. These requests were, in my view, rightly refused. They are either irrelevant or related to evidence and not to facts pleaded in the statement of claim. Thus, the Defendant was successful in one out of her twenty-six requests. She was, as Master Ho said, substantially unsuccessful. On a strict mathematical basis, she was successful as to one- twenty-sixth and after setting off against what she was unsuccessful, she should be liable for twenty-four-twenty-sixths of the costs to the Plaintiff. Probably Master Ho assessed her as being successful in one-eighth and unsuccessful in seven-eighths and hence after setting off, he awarded three-fourths of the costs against her. The allowance given to her by the master was very generous. The master applied the correct principle in the exercise of his discretion. How he apportioned the costs is a matter solely within his province. He was in a better position to assess the time spent in respect of the request which she was successful and where the merit lied. I shall not upset his assessment.

Rate for solicitor appearing in person

12.At the hearing of the appeal, the Defendant raised this further ground of appeal that since the Plaintiff was representing himself, he was technically a litigant in person and the master was wrong in assessing costs at the hourly rate of $2,500 on the basis that the Plaintiff is a practising solicitor. Order 62 of the Rules of the High Court provides for separate rules of assessment of costs for a litigant in person and a legally represented litigant. In essence, rule 28A provides that a litigant in person may only recover costs at the rate of $200 an hour or where he has suffered any pecuniary loss in doing any work to which the costs relate, such sum not exceeded two-thirds of the sum which in the opinion of the taxing master would have been allowed in respect of that item of work if the litigant had been represented by a solicitor. However, rule 28A(6) expressly provides that for the purpose of this rule, a litigant in person does not include a litigant who is a practising solicitor.

13.The Defendant submitted that a solicitor conducting litigation on his own behalf was carrying out work for himself and not for his client and his costs should not be assessed using the rate applicable to solicitors. I can see some force in that argument. The taxed costs of a solicitor were the costs which the successful party paid its solicitors and invariably included an element of profit for the solicitors. A solicitor litigating in person should not be given the benefit of that profit which he would earn as if he were representing his client. He is in fact litigating in person and should be subject to the same rule applicable to all litigants in person. Even assuming that he suffered pecuniary loss, the costs he may recover should not exceed the two-thirds ceiling applicable to all other litigants in person. Attractive and appealing as those considerations may appear, I think I am bound by the clear and unequivocal language of rule 28A. Rule 28A applies to assessment of costs of a litigant in person and sub-rule (6) clearly takes a practising solicitor out of the application of that rule. The strict application of the other rules in Order 62 must result in the Plaintiff's costs having to be assessed in accordance with the other provisions of the order, i.e. as if he had been represented by a solicitor and indeed he was, albeit by himself. Accordingly, the hourly rate of $2,500 adopted by the master was correct.

Whether assessment of time spent excessive

14.The Defendant said that it was excessive to allow the Plaintiff two and half hours for attending a three-minute hearing on 4 April 2003, one hour for the hearing on 8 July 2003 and in preparing a six paragraph skeleton submission of half a page for that hearing. The master having heard the application and read the bundle of documents was in the best position to make that assessment. Having done so myself, I would not disagree with the master's assessment.

Whether costs to be paid forthwith

15.The Defendant submitted that she should not be ordered to pay the costs forthwith and referred to the following dicta of mine in Asia-Pac Infrastructure Development Limited and Ing Yim Leung Alexander and Others in HCA No. 16778 of 1999:

"Costs are usually taxed and paid after the conclusion of the trial. The obvious reasons are that the costs in interlocutory proceedings are too small to make taxation worthwhile. In addition, there is also the possibility of set off in other interlocutory proceedings. Other considerations are whether it is unfair to keep the successful party out of pocket for his costs, especially if he is not a person of means and the costs are substantial and also the possibility that there may be no trial for one reason or another. Of course, where a litigant has conducted his case in bad faith and dishonestly, the court should show disapproval by ordering costs to be paid forthwith."

This part of the appeal was not vigorously contested. The Defendant was appearing in person. She might have taken longer to present her case and raised irrelevant arguments. Most of her requests were irrelevant and were refused. She should be penalised in costs. But there is nothing to suggest that she conducted her case in bad faith, vexatiously and dishonestly. There is nothing to suggest that she will not pay the costs. She was only ignorant of the rules and procedures. I do not think the circumstances were such as to justify an order for payment of costs forthwith. To this extent her appeal must be allowed.

Costs

16.The Defendant only succeeded in reversing the master's order as to payment of costs forthwith. She was substantially unsuccessful in this appeal. I consider she should be liable for 80% of the costs of this application. To save the parties' costs, I would make a global assessment of the costs in lieu of taxation. In essence, the Plaintiff was repeating the arguments before the master. The hearing took two and half hours. I allow the Plaintiff's costs for three hours for preparing for and attending the hearing and assess the costs at $6,000, i.e. $2,500 x 3 x 80%.

Conclusion

17.For the above reasons, the appeal is allowed to the extent that the master's order of payment of costs be set aside and replaced by an order that such costs be paid in any event. I also order the Defendant to pay the Plaintiff's costs of this appeal assessed at $6,000 in any event.

Representation:

Mr Edmund Li, of Messrs Lee Chan Cheng, for the Plaintiff

Defendant, appearing, in person