Chu Keung Fai and Yu Wai Heung v. Success Insurance Ltd and Others

HCA004517/1981

Practice and procedure - Costs - Plaintiffs ordered to pay costs on common fund basis to defendants when on 27.6.86 hearing in the fixture list for six days to commence on 30.6.86 vacated on plaintiffs application - whether vacating of hearing due to plaintiffs former solicitors default - whether such default amounted to professional misconduct - if so whether costs paid to defendants recoverable by plaintiffs from their former solicitors -

Held: 1. The hearing was vacated. due to plaintiffs former solicitors default; 2. Such failure was not limited merely to mistakes or errors of judgment but amounted to undue delay and other misconduct and default; 3. The plaintiffs former solicitors ordered to pay to the plaintiffs the common fund costs paid by plaintiffs to the defendants - Order 62 Rule 8, Rules of the Supreme Court, Cap. 4.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Dates of Hearing: 24 February, 8 and 9 June 1987

Date of Handing Down Reasons: 16 June 1987

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JUDGMENT

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1. This action for damages arose from the death of both deceased on 29th July 1978. The deceased were drowned as a consequence of the taxi, in which they were passengers, leaving the road on that day, during a typhoon and entering a pond formed on a construction site. The action commenced on the issue of the writ on 3rd July 1981.

2. On 6th March 1986 the plaintiff's then solicitors applied to set down the action for trial in the fixture list. On 22nd April 1986, the sole proprietor of that solicitors firm, attended before the Chief Justice at a hearing for fixing the date of trial. Application was made for a fixture after the Long Vacation. The ground of that application was that the solicitor employed by the firm who had charge of the conduct of the action was departing from Hong Kong on annual leave during June and that Counsel would also not be available until after the Long Vacation. The application was refused and the action set dorm for 6 days commencing on 30th June 1986.

3. The plaintiffs then solicitors had been assigned to act for the plaintiffs by the Director of Legal Aid in 1979. On 26th June 1986 the Director of Legal Aid terminated those instructions and commenced himself to act as solicitor for the plaintiffs. On 27th June 1986 the Director of Legal Aid, as the new solicitor for the plaintiffs, successfully applied to have the fixture for 30th June 1986 vacated. The action was adjourned generally with liberty to restore. Other consequential orders and directions were made. These included an order that the costs of and occasioned by the application to adjourn were to be the defendants costs in any event to be taxed on a common fund basis. There was also a direction that if the plaintiffs solicitor gave notice that he intended to seek the costs of the adjournment, against the plaintiffs former solicitors, that issue was to be determined at the conclusion of the proceedings.

4. On 25th October 1986 the Director of Legal Aid gave notice that he would seek to recover from the plaintiffs former solicitors, the costs awarded in the previous order. The action was eventually tried from 19th November to 4th December 1986. Judgment was delivered on 4th December and reasons were handed down on 19th December 1986. On 24th February 1987 the parties to the action attended, pursuant to leave reserved in the judgment for damages, to make submissions as to costs in the action. At the conclusion of those submissions Counsel for the plaintiffs proceeded to apply for costs against their former solicitors in terms of the notice of 25th October 1986. By arrangement the former solicitors were represented by Counsel and the solicitors they had instructed, at the 24th February 1987 hearing.

5. By the date of the hearing on 24th February 1987 the plaintiffs had filed two affidavits and three affirmations had been filed by the former solicitors. Neither party had served notice for leave to cross-examine the other's deponents or affirmants or adduce oral evidence. However, Counsel for the plaintiffs orally applied at the hearing for leave to adduce oral evidence from his deponents. Counsel for the former solicitors did not object to the application but indicated that if the evidence went beyond the contents of the affidavits he might be obliged to ask for an adjournment in order to seek further instructions. The first deponent, Mr. Turnbull, a Deputy Principal Legal Aid Counsel was then called to give evidence.

6. Shortly after Mr. Turnbull's evidence-in-chief commenced, he referred to Mr. Hoy, a solicitor employed by the plaintiffs former solicitors. The former solicitors had filed an affirmation by Mr. Hoy but Mr. Hoy was not present in Court. Counsel for the former solicitors then rose and pointed out that notice to cross-examine or call oral evidence had not been given and for that reason arrangements had not been made for Mr. Hoy to be present. The luncheon adjournment was approaching. Counsel was unable to given any assurance that Mr. Hoy would at short notice be able to attend in the afternoon. In any event the hearing of oral evidence would clearly take much more time than remained on that sitting day. The proceedings were then adjourned and recommenced on 8th June 1987. By that time the Director of Legal Aid had filed two further affirmations, namely by Mrs. Pritchard, a Senior Legal Aid Counsel and by Miss Kwan, a barrister. Those affirmations were filed on 19th March and 22nd April 1987 respectively.

7. The single issue now to be determined is whether the former solicitors should be ordered to pay to the plaintiffs the costs the plaintiffs were ordered to pay on the adjournment granted on 27th June 1986. The Court's former inherent jurisdiction to make such an order, is now expressly provided for by Order 62, Rule 8, Rules of the Supreme Court, Cap. 4. In view of the nature of the submissions made by Counsel it may be useful at this stage to cite the relevant parts of that Rules:

Under Rule 8 the Court clearly has the power in the circumstances therein set out, to order the plaintiffs former solicitors to repay to the plaintiffs the costs which the plaintiffs were ordered on 27th June 1986 to pay to the defendants. The crucial question is whether those costs were "incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default..."

8. In order to determine the answer to that question, it is necessary to consider the events leading up to the decision of the Director of Legal Aid on 26th June 1986 to terminate the instructions to the former solicitors. I confirm that the plaintiffs former solicitors were assigned by the Director of Legal Aid in May, 1979. Since that time there had been several changes in the principals of that solicitors firm, including three changes of firm name. During the same period the firm had successively appointed several different solicitors, employed by it to be responsible for the conduct of the action. During November 1985 the action within the firm became the responsibility of its employee Mr. Jenkins.

9. On 12th November 1985 a summons was taken out by the 3rd defendant to have the action dismissed for want of prosecution. The summons came before the Master on 6th January 1986 when it was dismissed subject to the action being set down for trial in the running list or transferred to the fixture list within 14 days. The 3rd defendant appealed against that order. The appeal was heard on 20th January 1986. Judgment was delivered on 7th February 1986 when the appeal was dismissed. An order transferring the action to the fixture list was made on 27th January 1986. I confirm that on 6th March 1986 the former solicitors applied to set the action down for trial.

10. The plaintiffs former solicitors on 26th March 1986 filed a hearsay notice under Section 47 of the Evidence Ordinance, Cap. 8 in respect of 38 documents including statements of Mr. T.J. Cunnington and Mr. R.G.N. McPherson, former employees of Maunsell Consultants Asia who, it was claimed, could not be called, because they were beyond the seas. On 14th April 1986 the 3rd defendant filed a counter-notice contending that, inter alia, Mr. McPherson could and should be called as a witness at the trial. I confirm that the former solicitors application to the Chief Justice for a fixture after the Long Vacation was on 22nd April refused and the action was set down for hearing on 30th June 1986. On 13th June in respect of the hearsay notices, the former solicitors applied under Order 38 Rule 27 of the Rules of the Supreme Court, for an order that Mr. McPherson and Mr. Cunnington could not be called as witnesses at the trial, as they were beyond the seas. On 24th June 1986 this summons was adjourned by the Judge in Chambers to the hearing of the trial on 30th June 1986.

11. On about 19th June 1986, Mr. Jenkins left Hong Kong on his earlier arranged annual leave. Before departing he handed the action file over to another solicitor employed by the firm, namely Mr. Hoy. According to Mr. Jenkins, the principal matters then left for Mr. Hoy to deal with before trial were the hearsay notice summons, the issue of witness subpoenas and the preparation of trial bundles. On 19th June 1986 Mr. Hoy discussed the preparation of the action with Miss Kwan who was assigned by the Director of Legal Aid to act as Counsel for the plaintiffs from 26th March 1982 to 27th June 1986. Miss Kwan had on several occasions tendered written advice to the plaintiffs former solicitors including a long detailed 23 page memorandum on 13th March 1985. Among the advice given by Miss Kwan to Mr. Hoy was an amendment to substitute the by now deceased 1st defendant with his insurer. The Statement of Claim was so amended on 24th June 1986.

12. After Counsel's conference with Mr. Hoy on 19th June 1986, there were also a number of telephone conversations between them. On 25th June 1986 Counsel gave a further written advice on the preparation of trial to the solicitors. During the late afternoon of 25th June, Mr. Hoy telephoned Counsel in response to her letter of the same date. As a result of that telephone conversation Counsel on the following morning took two immediate steps. First, she wrote to Mr. Hoy's firm offering to assist in their work by taking proofs of evidence of certain witnesses. Secondly, she telephoned Mrs. Pritchard and enquired if the Legal Aid Department could render assistance to the solicitors including obtaining proofs of evidence.

13. Mrs. Pritchard then reported the matter to Mr. Turnbull who at that time was the Assistant Director of Legal Aid in charge of litigation. As a result, Mr. Hoy was asked to attend at Mr. Turnbull's office, with his files relating to the action. At about that time Mr. Hoy was at the Supreme Court checking the pleadings on the Registry file against his own file before completing the pleadings bundle. Later that day he went to Mr. Turnbull's office where Miss Kwan was also present.

14. After perusing the solicitors file and discussing the state of preparation with Counsel and Mr. Hoy, Mr. Turnbull formed the opinion that the action was not ready for trial and would not be ready for trial by 30th June 1986. Mr. Turnbull was further of the opinion that if the action was to be tried on its merits, the only course available was to apply to vacate the trial date of 30th June 1986. He recognised that if that application was granted the plaintiffs would not be able to resist an application by the defendants for the costs thrown away by the adjournment.

15. Mr. Turnbull thereupon decided to terminate the plaintiffs solicitors instructions and to apply to the Court for the fixture to be vacated. Because it was anticipated that Counsel might be required as a witness, if a subsequent application by the plaintiffs against their solicitors for costs were pursued, a decision was also made on 26th June 1986 to retain new Counsel. For this reason Miss Kwan ceased to be retained as Counsel on 27th June 1986.

16. On the basis of the evidence available on 26th June 1986, was it reasonable for Mr. Turnbull to form the opinion that the action was not ready for trial and would not be ready by 30th June 1986? Before considering the evidence, I should make one observation on the burden of proof. Rule 8(2) provides that no order for costs against a solicitor should be made, unless he is given the opportunity "to show cause" why the order should not be made. In fact at the hearing the plaintiffs elected to open the application against the solicitors. At one stage Counsel for the former solicitors, made the passing submission that as the plaintiffs had followed that course, the burden of proof in the present application was not on the former solicitors to show cause. The plaintiffs made no contrary submission on this issue and at lease tacitly accepted that burden. Rule 62 is not exclusive but merely supplementary to the inherent jurisdiction of the Court. In view of the course adopted by the parties, I hold that in the particular circumstances of the present application, the burden of proof rests on the plaintiffs.

17. Mr. Turnbull stated that the file was in a state of disorder and a considerable amount of work required to be done before the case could be ready for trial. The work included ascertaining deceased's likely earnings; obtaining up to date proofs as those available were all several years old; obtaining Public Works Department and District Office files; locating and securing the attendance of several important witnesses including a representative of Maunsells, a former Inspector Still and Police Constable 9914; amendments of the statement of claim; preparing bundles of pleadings and documents. According to Mr. Turnbull even before these outstanding matters could be attended to several days work was required to arrange the existing file into proper order. I accept that Mr. Turnbull made his assessment of the state of preparation against the background of his considerable litigation experience, particularly in this field. In addition he had the benefit of a discussion with Miss Kwan and Mr. Hoy.

18. As to these criticisms, I also have the evidence of Mr. Hoy and Mr. Jenkins. Mr. Hoy denied that the file was in a state of disorder. He stated that it was an old, large file which had its difficulties but he was familiar with its contents and was able to produce any document Mr. Turnbull requested. He stated that partly because he had just taken over the file he checked the Supreme Court Registry file before preparing the pleadings bundle. This check confirmed that his own file included a copy of all the pleadings in the Supreme Court Registry. He described the preparation of bundles as largely a mechanical exercise involving considerable photo-copying but considered he could have completed the bundles by 27th June 1986. There were certain certified translations which would not have been available from the Court until 28th June 1986 but Mr. Jenkins pointed out that uncertified copies could have been included in the original bundles.

19. So far as the preparation of evidence was concerned, Mr. Hoy pointed out that at the late stage he became responsible for the action, his task was the technical preparation of subpoenas, bundles and other documents for trial, rather than evidentiary investigations. As to the preparation of evidence, it was common ground that there were no up to date proofs of evidence. The majority of witnesses had in 1978 or shortly thereafter, given statements to the Police and copies of these statements were relied upon. The solicitors seemed to be of the opinion that as those statements were taken close to the time of the accident they would have been more valuable than any proofs taken close to the date of the trial.

20. The evidence from persons employed by Maunsells was a little more complicated. The accident occurred on a temporary road in a construction site. The road appeared also to form the boundary between two areas of the site contractually allocated to two different contractors. Maunsells were the Government's appointed Engineer responsible for the construction sites and therefore had knowledge of the precise boundaries of those contractual areas. There was also doubt as to whether the contractors had been given possession of the whole of their areas. In addition, Maunsells staff daily attended at or inspected those areas. The liability of the 3rd defendant, in particular, appeared to depend, at least in part, on the precise boundaries of its area and whether it had been given full possession.

21. I accept that as at 26th June 1986 no subpoena had been issued to any of Maunsells employees. However, I recognise the difficulties facing the solicitors then responsible for the action due, to the very long period their firm had handled the file without bringing the action on for hearing. During that time Mr. McPherson and Mr. Cunnington, Maunsells two engineers most closely involved with the area where the accident occurred, had returned to live in the United Kingdom. However, hearsay notices in respect of their statements to the Police had been served. Mr. McPherson's statement together with a sketch plan were clearly vital documents. Cross-notices had been served and the admissibility of his documentary evidence depended on a Court Order. The solicitors had made the appropriate application but the Judge in Chambers had adjourned it to the trial judge, because he was apparently not satisfied that the makers were beyond the seas. There was previously some conflict whether a Court had a discretion to admit a statement where it is proven that the maker was overseas. However, it is now clear that a Court has no discretion but must admit the statement - Cluett HK Ltd. v. Hercules Knitters Ltd. Civil Appeal No. 33/86. Mr. Jenkins, who prepared the hearsay application and personally completed the affirmation in support, was no doubt properly confident that the statements would be admitted. It would, of course, have been preferable to have called the makers to give evidence. I accept that Mr. Jenkins believed that the Legal Aid Department would not approve the Expenses necessary to bring either Mr. McPherson or Mr. Cunnington or both, from the United Kingdom to Hong Kong.

22. No application to the Director of Legal Aid for approval to bring either witness to Hong Kong was made. I had evidence from his officers that generally approval would not be given unless the overseas witness was crucial to the case when an application would have been considered in its merits. Mrs. Pritchard stated that she may have been asked about the Department's general practice in which case she would have replied that strong reasons would be required. In any event Counsel advised that the hearsay notice procedure should be followed. Counsel also advised Mr. Jenkins that another Maunsell employee, a Mr. Lewis, should be called and requested a proof of his evidence. In fact that oral request was repeated in Counsel's letters of 25th and 26th June 1986 which were received by Mr. Hoy. The prior letter referred to a letter from the solicitors to Maunsells in 1984 listing 29 questions to which answers were sought. Mr. Hoy did approach Mr. Lewis and asked him to go through the documents necessary to answer the questions. However, according to Mr. Hoy he found, as Mr. Jenkins had also earlier experienced, that Mr. Lewis responded that he had no personal experience of the matter and anything he said would be limited to information recorded in the documents. No proof had been obtained from Mr. Lewis by 26th June 1986. Counsel had advised that, whatever the reaction of Mr. Lewis, he had to be called.

23. The documents Mr. Turnbull referred to which he considered should have been obtained from the Public Works Department and District Office, were relevant to the issue of the boundaries of the contractors areas and the extent to which they had been given possession. Counsel had on numerous occasions requested the solicitors to investigate the separate areas of the contractors; the relationship between them; and the dates when Government had handed over possession. These matters, or some of them, were the subject of letters or notes from Counsel dated 29.3.82, 20.7.82, 23.8.82, 7.10.82, 27.6.83, 13.6.84, 13.3.85, 25.6.86 and 26.6.86. The evidence for the solicitors really only disputed the plaintiffs allegations, to the extent that there had never been any request, for Public Works Department or District Offices files.

24. In assessing the evidence I recognise at once that when there is a change of solicitors, the new solicitors, even where the files are well kept, will take some time to familiarise themselves with the contents. In the case of a file which had been opened 8 years earlier that task could well be considerable. I also appreciate that as between equally competent and conscientious solicitors, there well be some degree of difference in method or approach.

25. I also remind myself that the present application is against the firm of solicitors who acted for the plaintiffs from 1979 to 1986. It may well be that the actions of some members or employees of the firm may in themselves have been reasonable, given the particular circumstances, the firm obliged them to face. I am primarily concerned with the firm's actions. So far as the firms employees are concerned, their individual acts are only elements in the firm's overall performance.

26. After hearing the whole of the evidence certain matters are quite clear. This action had been the responsibility of the plaintiffs former solicitors from May 1979 to 26th June 1986. Although there were some evidential difficulties, it was basically a relatively straightforward fatal accident damages claim. The change in principals and in the employees of the firm responsible for the action, no doubt contributed to the very slow progress towards a hearing. On the other hand, so far as events during 1986 were concerned there were at least some mitigating factors relevant to the employees position even if they were less relevant to the firm's performance. For example, Mr. Jenkins annual leave arrangements were in ample time well known to the principal, who had by then become sole properietor of the firm. Subpoenas were prepared if not issued before Mr. Jenkins went on leave. Mr. Jenkins when he handed the file over to Mr. Hoy left a written note of the remaining steps to be taken before trial. Mr. Jenkins was available to Mr. Hoy in the United Kingdom. The villagers whose original addresses in the unissued subpoenas had changed, had been located at their new address by a visit Mr. Jenkins personally paid to them before his departure. Mr. Hoy did interview Mr. Lewis and requested him to provide answers to the earlier queries addressed to Maunsells. Mr. Hoy was in the process of completing the bundles for trial. All amendments advised by Counsel had been made to the pleadings.

27. As to the uncompleted work this was of varying importance. The information in relation to the likely earnings of deceased was considered by Mr. Jenkins to be a relatively simple task. Both deceased were hawkers within a group of relatively easily ascertainable low incomes. But the fact remained that no information on this aspect of the quantum claim had been obtained by 26th June 1986. I am prepared to infer that by working long hours on 26th June 1986 the pleadings bundle and probably the documents bundles, could have been completed before the commencement of trial although the 2 day before trial requirement may not have been met.

28. The more important individual matters uncompleted, wore up to date proofs and the obtaining of documents from the various Government Departments. Counsel was entitled to have up to date proofs. There were none. I appreciate that in many personal injuries and fatal accident actions, parties may be content to rely on police accident statements by witnesses as proofs. Such statements, even where an action is brought to trial promptly, are often unsatisfactory. Where there is a long delay before trial they are even more unsatisfactory. Proofs for the civil action should have been taken within a reasonable time of the solicitors being instructed in 1979 so that the witnesses evidonce was as fresh as possible. As another 7 years passed before a fixture was obtained, up to date proofs after re-interviewing witnesses should have been obtained a reasonable time before trial. Subpoenas should also have been issued and served an adequate time before trial.

29. I am prepared to find that it was reasonable to rely on Mr. McPherson's hearsay statement if he were not to be called. But in that event a proof should have been obtained from Mr. Lewis in sufficient time for Counsel to consider it in relation to possession, which clearly well before trial was recognised as a vital issue. This was not done. The former Inspector Still had left the Police but was still in Hong Kong. A reasonable time before trial he should have been located, a witness proof taken and a subpoena issued and served.

30. Moving on from these specific matters, I will proceed to consider the other evidence on the general state of preparation for trial. In this area there was the relatively subjective evidence principally of Mr. Turnbull, Mr. Jenkins and Mr. Hoy. Any potential difficulties in making findings on that evidence was removed by the evidence given by Miss Kwan. Miss Kwan had been directly involved as Counsel from 26th March 1982. Her evidence was marked by its clarity and an impressive grasp of events and their chronology. Her evidence was further enhanced by the restraint with which it was delivered.

31. Miss Kwan was obliged to deal with a succession of solicitors who were responsible for the file on behalf of the instructed solicitors firm. Miss Kwan accurately described her instructions from them as piece meal and dilatory. The documents provide independent confirmation of her concern to have the demarcation of contract areas and the dates of handing over of possession clarified. The criticism that the solicitors were not expressly asked for files from the Public Works Department and District Office is wholly without merit. The first letter to the solicitors of 29th March 1983 expressly asked for the related question of contractual areas and possession to be investigated. In subsequent letters she expressly refers to the New Territories Development Department which had by then taken over, in the area of the accident, the former responsibilities of the Public Works Department. The solicitors were asked to writo to the New Territories Devolopment Department and a suggested series of questions were put forward in writing. These letters were more than sufficient to enable any reasonably competent firm of litigation solicitors, to make enquiries of the appropriate Departments. The fact that from 1979 to 1986 many of the names of those Departments seemed to be everchanging, may have complicated the solicitors task but certainly did not diminish choir duty to make adequate enquiry.

32. I find that Miss Kwan's letters of 25th and 26th June 1986 did not comprise belated requests but were written to assist Mr. Hoy who, as the solicitor newly in charge of the action, expressed difficult in coping. These requests mainly repeated much earlier written and oral requests to the firm which had not adequately been dealt with by Mr. Hoy's predecessors. Counsel expressed in evidence her concern at the solicitors capacity to cope. with the outstanding work under the increasing pressure of time. On the other hand, she was conscious of the desirability of maintaining Mr. Hoy's co-operation. The letter of 25th June 1986 was written on that basis. The letter of 26th June 1986 is in similar spirit, even offering to take proofs from Mr. Lewis and other witnesses which, of course, was strictly the duty of the solicitors. In evidence Miss Kwan emphatically stated that the action was on 26th June 1986 not ready to go to trial on 30th June 1986.

33. The plaintiff's former solicitors were responsible for the action being ready for trial. The firm had carried out virtually all the work actually done, through a suceession of employed solicitors. The current state of this particular file should have attracted the concern of the principal, From the evidence I accept that the principal was well aware, months before the hearing, that the solicitor then responsible for  the file would be leaving Hong Kong on leave during June 1986. Indeed, the only direct evidence of the principal's involvement, was his appearance on 22nd April 1986 before the Chief Justice, to obtain a hearing date, when he put forward the solicitor's absence as a ground for the action not being heard until after the Long Vacation. The principal, knowing that the solicitor involved would be overseas, therefore had actual knowledge that the hearing would occur when that solicitor was still overseas.

34. The principal filed in the instant application an affirmation of 5 paragraphs which was mainly limited to dealing with the undisputed position which arose at the fixtures meeting. However, the affirmation contains the allegation that he was informed by both Mr. Jenkins and Miss Kwan that the case was ready for trial. I accept Miss Kwan's evidence that she has never spoken to or even met Mr. Au. Mr. Jenkins explained his similar statement as meaning that the action had to be set down for trial - whether ready or not - because of the Master's order, upheld on appeal, that unless set down or transferred to the fixture list within 14 days, the action was to stand dismissed against the 3rd defendant.

35. On 25th February 1987, the plaintiffs gave notice that they required Mr. Au to attend at the instant hearing, for the purpose of being cross-examined on his affirmation dated 21st February 1987. At the hearing Mr. Au did not attend. I was informed by his Counsel of his non-attendance. As a party to the proceedings as to costs, he could not, of course, be compelled to attend under subpoena.

36. The principal's knowledge of the importance of properly preparing this action to be ready for trial on 30th June 1986, was not limited to his unsuccessful application before the Chief Justice to have the hearing deferred until after the Long Vacation and the known absence of his employee Mr. Jenkins during the hearing in June 1986. On 30th March 1980 the Master, on the summons for directions, ordered that the action be set down for trial within 48 days. On 21st April 1983 time for setting down was extended for 5 days. After further delays the plaintiff's former solicitors, on 3rd July 1985 filed a notice of intention to proceed. On 12th November 1985 the 3rd defendant filed a summons to dismiss.

37. I have already indicated that the Master dismissed that summons and on appeal the Master's order was upheld in a judgment delivered on 7th February 1986. In the latter judgment, it was held that the delay was inordinate and inexcusable. The learned judge went on to hold that although the delay would probably cause the defendants some prejudice, it would not amount to serious prejudice. On that residual ground the action was allowed to continue.   Those protracted proceedings should have further highlighted to the by then sole proprietor of the plaintiff's solicitors, the gravity of the position and the need to take a direct interest in the action to ensure that it was properly prepared for the hearing commencing on 30th June 1986.

38. Before reviewing the evidence, I have reminded myself of the legal basis of the Court's twofold power, to order a solicitor to pay costs incurred by a client because of the solicitors undue delay, other misconduct or default. I was also referred to Cordery On Solicitors (17th Edn) 125 et seq. The general jurisdiction of the Court is summarised at page 125:

39. Counsel for the plaintiffs former solicitors emphasised that the present application was not an action for negligence. I accept that is the position, although as Cordery points out, the Court may in proper cases use its inherent jurisdiction or its powers under Rule 8, to dispose of what might otherwise require an action in negligence. Lord Wright's judgment in Myers v. Elman (1940) AC 282,319 is cited in support of that proposition. But in this application I am concerned with the different and simpler issue, whether the costs incurred by the plaintiffs against the defendants, were due to their former solicitors undue delay or other misconduct or default.

40. When I review the whole of the proceedings, I accept Miss Kwan's evidence as true and her opinion on the state of preparation as sound. I further find that on 26th June 1986, Mr. Turnbull on proper grounds reasonably arrived at the conclusion that the action was not ready for trial and would not be ready by 30th June 1986. The cumulative effect of the matters outstanding simply meant that the action, in the interest of the plaintiffs, could not have been tried on its merits on 30th June 1986.

41. There may on the evidence have been mitigating factors personal to the some of the solicitors employed by the firm. There were none in relation to the firm. The matters complained of were not limited merely to mistakes or errors of judgment. The firm's default went far beyond conduct of that kind. I hold that the firm's failure falls within the more stringent requirement in Rule 8 of "undue delay or by any other misconduct or default". On those findings and in the exercise of my discretion under Rule 8, the plaintiffs application for costs is granted.

42. The plaintiffs application for costs being granted, the remaining costs matter, relates to the short initial hearing under the plaintiffs notice, which was adjourned on 24th February 1987. Counsel for the plaintiffs former solicitors asks for costs in any event of an occasioned by that adjournment. I have already explained the reasons for that adjournment. I consider there is merit in Counsel's application. In the exercise of my discretion the plaintiffs will be liable for those costs,

43. In the result I make the following orders:

The plaintiffs former solicitors shall also pay to the plaintiffs the costs of and occasioned by the present application, except for the costs of the hearing on 24.2.87 which I have already ordered shall be paid by the plaintiffs, to be taxed if not agreed.

Representation:

Mr. R. Pritchard and Mr. N. Sarony instructed by the Director of Legal Aid for the plaintiffs.

Mr. Edward Chan instructed by P.C. Woo & Co. for the plaintiffs former solicitors.