Stikeman, Elliott v. Wong Ming Yuen and Another
Read the full judgment text of CACV 113/1983 on BabelCite. This Court of Appeal judgment.
1. This is an appeal from the judgment of Rhind, J. dated the 15th July 1983 in favour of a firm of lawyers who were claiming C$40,000 fees and C$4,707.64 disbursements from their clients.
Cited by 1 case
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CACV000113/1983
Solicitors - professional conduct - desirability of Canadian solicitors practising in Hong Kong observing the advice in the law Society's Guide to Professional Conduct by ensuring that their instructions are recorded at an early stage and that their clients are kept informed about the work being done and the likely costs being incurred. Courts, practice and procedure - a plaintiff who sued a principal and his agent in the alternative (but through his counsel at the trial maintained that the agent alone was liable) was allowed on appeal to argue that if the judgment against the agent was set aside, judgment should be entered against the principal because the issue had been open on the pleadings and evidence was heard on the matter - the plaintiff could not be said to have elected to proceed only against the agent or to have abandoned the alternative claim against the principal. Hickman v. The Kent or Romney Sheepbreeders Association (1920) 37 T.L.R. 163 distinguished. Courts, practice and procedure - 0.59 r.r. 4 and 6 - the plaintiff had properly sought to vary the judgment by his Respondent's Notice and a separate Cross-notice of Appeal was, in the particular circumstances of the case, unnecessary. Re Cavender's Trusts (1881), 16 Ch. D. 270 discussed.
BETWEEN
_________ Coram: Leonard, V.-P., Cons and Fuad, JJ.A. Date of hearing: 7th, 8th and 10th February, 1984. Date of judgment: 10th February 1984. __________ JUDGMENT __________ Fuad, J.A. : 1. This is an appeal from the judgment of Rhind, J. dated the 15th July 1983 in favour of a firm of lawyers who were claiming C$40,000 fees and C$4,707.64 disbursements from their clients. 2. The Plaintiffs - Stikeman, Elliott - are a very large firm of Canadian Barristers and Solicitors with branches in London, Toronto, Montreal, Ottawa and Hong Kong. They specialise in advising clients on Canadian tax matters. We are concerned with their Hong Kong office. It must be said at the outset that this unhappy controversy would probably not have reached the courts had Stikeman, Elliott taken the advice, and obeyed the injunctions contained in the Hong Kong Law Society's Guide to Professional Conduct, and in the Law Society of Upper Canada's Professional Conduct Handbook, of seeing to it, at a very early stage, that their instructions were recorded in writing. In referring to the relevant passages in the Hong Kong Guide at the Canadian Handbook, Rhind, J. was perhaps not putting the matter too high when he said "...nothing is more damaging to the legal profession's reputation than disputes between lawyers and their clients'. The Judge clearly reflected his condemnation of Stikeman, Elliott's neglect by awarding them only half their costs in their successful action. 3. The 1st Defendant, who now appeals, is Mr. Wong Ming-yuen. He is a director and shareholder of Berdaland Co. Ltd., the 2nd Defendant. Mr. Wong is also a director and holds shares in other companies in the same group of private companies: Yeoman Development Co. Ltd., Sun Ngai Development Co. Ltd., Magna Development Co. Ltd. and Verder Finance Co. Ltd. All these companies are under the effective control of his uncle Mr. K.C. Wong who is the majority shareholder and Chairman of each. 4. Rhind, J. had before him affidavits, filed in respect of an unsuccessful 0.14 application, by Mr. Daniel Colson, a Partner of Stikeman, Elliott and by Mr. Wong Ming-yuen. He also heard the oral testimony of these gentlemen. In addition, Stikeman, Elliott called Mr. Brian Hansen who works as a consultant with them, in support of their cause. For the Defendants, Mr. Joseph Lau, assistant manager of Verder Finance, and Mr, Raymond Li, assistant manager in the property department of Magna Development, also gave evidence. I would mention here, by way of tribute, that although the Judge did not have the assistance of shorthand writers, his notes of evidence are remarkably full and careful. 5. As one would expect in an action of this sort, the Statement of Claim was simple and short. Stikeman, Elliott claimed C$44,907 "for work carried out at the request of the 1st Defendant as solicitors for the 1st Defendant and the 2nd Defendant, and for money expended by the Plaintiffs on the Defendants' behalf and at their request in connection with the work particularised below". The particulars refer to a Bill of Costs dated the 29th March 1982 and delivered to the 2nd Defendant at the request of the 1st Defendant on the same day. 6. By their Defence, the Defendants denied that the work done, and the money expended, had been at their request. They had never expressly or impliedly requested the Plaintiffs to do the work for which they claimed payment. Nor had they expressly or impliedly encouraged the Plaintiffs to carry out the work or agreed to pay for it. Moreover they had never accepted the work which had been presented to them by the Plaintiffs on their own initiative. No legal relationship had been created and no liability existed. 7. In the alternative, the Defendants pleaded that they were not liable because -
8. Further in the alternative, it was averred that the 1st Defendant was at all material times the agent of the 2nd Defendant and was therefore not personally liable. 9. I now turn to consider the facts which I take from Rhind J.'s judgment. It is necessary to go into them quite fully despite the course the hearing took before us. As he found, there was no dispute that there was a course of dealing between Mr. Colson and Mr. Wong over a period from the 10th December 1981 until about the 3rd February 1982 in connection with the feasibility of a tax-avoidance scheme which would involve changing the residence of Berdaland from Bermuda to Holland to escape liability for Canadian capital gains tax on the increased value of their real estate in Canada, by taking advantage of a double-taxation treaty between the Netherlands and Canada. Berdaland was incorporated and resident in Bermuda, but owned two pieces of land in Calgary. 10. Mr. Wong and Mr. Colson had first met at a business lunch, hosted by Mr. K.C. Wong at the Mandarin Hotel on 2nd July 1981. Since Mr. Colson had acted for a bank granting a mortgage to one of their Bermuda-based companies - Yeoman Development Ltd. - he was already aware they used Bermuda-based companies to hold land in Canada. Since there is no double-taxation agreement between Canada and Bermuda, Mr. Colson could not understand why they chose to hold the Canadian property in a "tax inefficient" way. He therefore raised the topic of off-shore holdings of Canadian real estate with Mr. Wong. 11. The Judge went on to find that either at the lunch on the 2nd July or at another lunch a fortnight or so later, Mr. Colson had explained to Mr. Wong the advantage of Canadian properties being held by companies with a Dutch connection, so that advantage could be taken of the double taxation treaty in relation to capital gains. 12. The Judge formed the opinion that Mr. Wong was no "greenhorn" at the time in relation to matters of tax avoidance through off-shore holdings. For, included in his group of companies was one incorporated in the Netherland Antilles in order to hold property in North America in a tax-efficient way. Moreover, Mr. Wong was aware of the possibility of tax avoidance schemes generally, because two of his staff had told the court that he had consulted a Canadian chartered accountant in Hong Kong to advise on a way of avoiding Canadian withholding tax. Rhind J. concluded that Mr. Wong was clearly a highly sophisticated businessman. 13. Immediately after the second of the lunches, Mr. Colson wrote as follows, to Mr. Wong: -
14. In late October or early November 1981, Berdaland granted what the Judge regarded to be, in effect, an option to purchase one of the Calgary properties; exercisable on or before 30th April 1982 If the purchaser completed, Berdaland stood to make a capital gain of C$4.6m. on its original investment. However, the Canadian tax authorities would seek to levy capital gains tax on the transaction. Since the rate of tax was 25%, Berdaland stood to be liable for C$1.15 m. to the Canadian Revenue. 15. The Judge further found that on or about 5th November 1981, Mr. Wong asked Mr. Lau to put the facts to Mr. Colson to obtain his views upon whether or not the Canadian capital gains tax could be avoided. Mr. Lau and Mr. Colson had met each other before in connection with a Berdaland mortgage transaction. Mr. Colson discussed the capital gains tax problem with Mr. Hansen and with a senior colleague who happened to be visiting Hong Kong at the time. Mr. Colson then wrote to Mr Lau, on the 10th November 1981, saying that there was no way of avoiding tax unless, instead of selling the property, the shares in Berdaland were sold, a course of action which held no attraction for Mr. Wong. 16. Stikeman, Elliott did not charge for this work. 17. Mr. Colson's evidence was that Mr. Lau continued, thereafter, to address queries to him on the possibility of avoiding the tax. Mr. Lau flatly denied this and was supported to a degree by Mr. Wong who said that after receiving Stikeman, Elliott's letter of the 10th November 1981 to the effect that there was no such possibility, he had resigned himself to' the necessity of paying the tax. 18. Rhind J. then summarised the conflicting versions of what took place at what he called the 'crucial' meeting of the 10th December 1981 in which Mr. Colson, and Messrs. Wong and Lau, took part. It was a fair and accurate summary. 19. Mr. Colson's version was that it was Mr. Wong who took the initiative by making it clear that he was anxious for Mr. Colson to find a solution to the problem of avoiding Canadian capital gains tax on the disposal of Berdaland's property. Mr. Colson had not given any thought to the matter since 10th November 1981 (when he had concluded there was no way to avoid the tax) and now explained to Mr. Wong and Mr. Lau that it would be very difficult to devise a solution. Despite the difficulty he had pointed out Mr. Wong had, nonetheless, urged him to work on a solution. He had explained further that devising a solution would be a long, complicated procedure invllving much research, and had added that his firm would..have to start charging straightaway. Moreover, because of the international dimensions of the problem, he had pointed out that he would be consulting outside lawyers. Mr. Colson made no reference to how much his firm would be charging for their services, and nothing was put into writing to record the extent of the retainer or an estimate of the costs. 20. The version given by Mr. Wong, who was substantially corroborated by Mr. Lau, was that having accepted Stikeman, Elliott's verdict on 10th November 1981 about the tax, they did not raise the topic again. It was Mr. Colson who chose to revive the subject. Mr. Colson had stated that Mr. Hansen had had second thoughts since the letter of 10th November, and while he, Mr. Colson, remained pessimistic regarding the prospects of a successful avoidance scheme, Mr. Hansen was optimistic. Mr. Colson had gone on to describe how there were still some minor points which needed to be clarified before a viable scheme could be devised, but had not said that he hoped to be in a position to contact them further in due course when the feasibility of the scheme had been fully worked out. They had listened politely and, without committing themselves in any way, had indicated that they would be interested to hear if there were any developments. Having been disappointed by Stikeman, Elliott once, they were not really hopeful that they would come up with anything this time; but if they did, they, in turn, would listen. 21. The Judge remarked that he was aided by being able to look at events both before and after the meeting of 10th December 1981. He felt that the events occurring before that meeting tended on balance to point towards the Defence version as the more likely. Stikeman, Elliott by their letter of 10th November 1981 had come down fairly emphatically in favour of the view that nothing could be done about the Canadian capital gains tax. Not long after that letter had been sent, Mr. Hansen had changed his opinion and became more optimistic about the prospects for tax avoidance. All this was more consistent with Mr. Colson approaching Mr. Wong and Mr. Lau on the question whether it might be worth looking further into the tax issue, rather than the other way around. 22. However, he came to the conclusion that the history of events after the 10th December 1981 led overwhelmingly to the inference that Mr. Colson's version was to be preferred. He remarked that if what Mr. Wong and Mr. Lau told the court about never having retained the Plaintiffs was the truth, then it was an utterly amazing circumstance that Mr. Lau, acting on Mr. Wong's behalf, had asked Mr. Colson to send in his bill as soon as it became apparent on or about 3rd February 1982 that Mr. Wong had decided against going ahead with the tax avoidance scheme. In his view, asking a solicitor for a bill was as unequivocal a piece of evidence as there could be that one had retained him. 23. Rhind J. noted that Mr. Wong had sought to explain the request for a bill on the basis of friendship, courtesy and Chinese custom, rather than as an acknowledgement that services had been rendered at his request. That explanation struck him as nothing more than "empty cant". A Chinese custom of paying for services which had not been ordered was wholly novel to him, and he suspected it had been invented by Mr. Wong in an endeavour to explain away what would otherwise be regarded as irrational conduct. 24. The Judge then commented that not only did Mr. Wong ask for a bill, but in a whole series of letters written by his agents between 9th February 1982 and 28th April 1982, he impliedly acknowledged that he was in principle liable to pay Stikeman, Elliott, the only dispute being over the amount. The Judge pointed out that several times in that correspondence he acknowledged that he would settle the account once the details had been verified. Further implied acknowledgement that the lawyers had been working for him occurred in the passage Mr. Wong caused to be included in the letter of the 1st April 1982 the words ... a detailed list of dates on which you and your agents have rendered the aforesaid services to us". 25. Rhind J. found that it was not until the 7th May 1982 (at a meeting between Mr. Colson and Mr. Wong to try amicably to settle the bill) that Mr. Wong had for the first time come up with the suggestion that he had never retained Stikeman, Elliott at all. That suggestion reeked of recent invention, and could in no way be reconciled with the preceding correspondence. 26. The Judge said that having had ample opportunity to observe Mr. Wong and his assistants in the witness box, and from his overall knowledge of the evidence in the case, he had little doubt that Mr. Wong would have told the lawyers almost immediately after the 3rd February 1982 that he had not retained them, and was therefore not obliged to pay them anything, if that in fact had been.the position. 27. Rhind J. reached the conclusion that Mr. Colson's evidence was borne out by such correspondence as there was between the 10th December 1981 and the 3rd February 1982, and also by the conduct of .Mr. Wong and his assistants. He found that a number of other facts additionally pointed to the truth of Mr. Colson's version. It is not necessary to review them. 28. The Judge described Mr. Colson as being a far from perfect witness, but said that he preferred his testimony to the combined evidence of the Defendants' witnesses on the material aspects of the retainer. He mentioned certain aspects of his testimony which were unsatisfactory. Despite these matters, and after careful consideration, the Judge came to the conclusion, on the evidence as a whole, that Mr. Colson was basically an honest witness and that the unsatisfactory features of his evidence were attributable to nothing worse than carelessness. The Judge further explained that despite his reservations about Mr. Colson as a witness, he had concluded "on balance and at the end of the day" that his version of events on the 10th December 1981 was correct and that Stikeman, Elliott had in fact been retained. 29. On this issue, the judgment had been attacked on a number of grounds in the Notice of Appeal. However, at the outset of the hearing of the appeal, Mr. Martin Lee (who did not appear in the lower court) abandoned that part of the appeal which related to this finding. If I may say so, this was obviously a course dictated by the facts and the state of the authorities. 30. The Notice of Appeal says that the Judge erred in concluding that the amount claimed by Stikeman, Elliott was recoverable because, inter alia -
31. Rhind J. was satisfied on the evidence that he accepted that Stikeman, Elliott were given instructions to seek a solution to Canadian capital gains tax problems and therefore they were entitled to be paid costs which might reasonably be contemplated they would incur. He rightly criticised Stikeman, Elliott for not following the sensible practice suggested in paras. 16:4 and 16:5 of the Hong Kong Law Society's Guide to Professional Conduct. The Judge said that ideally, Stikeman Elliott should have kept Mr. Wong better informed about what work was being done, and about the likely costs being incurred, but that he did not think for one moment it would have affected Mr. Wong's attitude about wanting them to continue with the work. Mr. Wong was playing for high stakes - a saving of over C$l.8 m. for his companies was in issue. Considered in isolation, C$44,000 for lawyers' fees might at first blush sound a lot, but it visa "pretty small beer" compared to the potential saving for the clients. 32. He commented that to run up a bill of that magnitude without forewarning to the ordinary client would obviously be unacceptable in respect of most classes of business passing through a solicitor's office. However, Mr. Wong, as a sophisticated businessman with an extremely complicated problem, and with much at stake, should not have been surprised at the size of the bill. Moreover, the solicitors were racing against a dead-line, so their failure to conform with the Hong Kong law Society's recommended practices became more understandable. 33. Rhind J. went on to hold that he was satisfied that not only Mr. Colson and Mr. Hansen in Hong Kong, but also the lawyers in the Plaintiffs' Canadian and London offices had in fact worked the hours claimed on Mr. Wong's problems. Moreover, Mr. Wong knew work of this magnitude was being performed. Further, he was made aware from the outset that disbursements such as the Dutch lawyers' fees were being made on his behalf, and these disbursements did not go beyond what Mr. Wang should have contemplated. He formed the opinion that, if anything, Mr. Wong had got off lightly with the bill ultimately presented. Through no fault of Stikeman, Elliott, Mr. Wong had decided not to go ahead with the scheme but they, nonetheless, had charged him not much more than two thirds of their normal time rate, taking the attitude that it might be unduly harsh to charge the full rate for work which ultimately proved of no benefit to the client. The Judge did not think that any of the work done was unnecessary. 34. We have been addressed by Mr. Lee on this issue at considerable length, and with his customary skill. In broad outline, he submitted that the Judge's conclusion that the Plaintiffs' bill should be paid in full since it was based on an honest and accurate table of hours could not be sustained. He referred us to Stikeman, Elliott's letter of the 6th February, 1982 in which they said:
35. Mr. Lee contended that since the Plaintiffs had not said what type of work fetched more or less than C$125 per hour, one could only use the rate of C$125. The Judge had accepted a table showing 283 hours only had been worked, and therefore, at most, even if the amount was held to be reasonable, C$35,375 would be due. I would say here that during argument before us, it transpired that the number of hours in the table had been added up wrongly and it should have been 293 hours, according to the table. 36. In my view it would not be right to approach the matter from a purely arithmetical standpoint. The hours worked were clearly only approximate, and they were charging at less than their normal rate. There was also 5-15 hours work which had not been recorded. The Judge had a difficult task to perform and, if I may say so, he did it most carefully. What is important, it seems to me, is that he thought the table of hours was honest and accurate and that Mr. Wong knew the magnitude of the work involved; that Mr. Wong had in fact "got off lightly"; none of the work done was unnecessary; and that it was an extremely complicated problem with much at stake. It must not be overlooked that at one stage, in his cross-examination, Mr. Wong said he would not be disposed to object that the rate of C$125 Per hour worked was unreasonable and that the Judge had earlier accepted Mr. Colson's version of what had taken place on the 10th of December, 1981 and that Mr. Wong knew that "finding a solution would be a long, complicated procedure, involving much research". I do not think that a reading of the judgment as a whole on this issue can lead to any other conclusion than that the Judge was deciding that the fees claimed were, in all the circumstances, entirely reasonable. 37. I would permit myself to say that it is perhaps a pity that the points made by Mr. Lee were not fully canvassed at the trial - and about a number of them, it roust be acknowledged,, Mr. Colson might well have had an explanation had they been specifically put to him in cross-examination. 38. I am not persuaded by anything urged upon us that the Judge's conclusion on this issue can be assailed. He was fully aware of the imperfections in the evidence before him and was entitled to his findings. 39. Before I continue, I should refer to two procedural matters which were raised on behalf of the Defendants. Firstly, Mr. Lee drew our attention to the fact that when all the evidence was in, during his final address to the trial court, counsel for the Plaintiffs had persisted in asking the Judge to enter judgment against Mr. Wong. Despite the pleading in the alternative, he had expressly not invited the Judge to give judgment against Berdaland if he found that Mr. Wong was not personally liable. Mr. Lee drew our attention to para. 59/10/5 of the White Book, which cites authority for the proposition that, on appeal, the court has a discretion to prohibit a party from raising a point which, although pleaded, was deliberately omitted from argument at the trial. 40. Mr. Lee relied on Hickman v. The Kent or Romney Marsh Sheepbreeders' Association (1920) 37 T.L.R. 163. In the second of the two actions with which that decision was concerned, the plaintiff had complained of his exclusion from the Association because (a) the Chairman, had counted the votes cast and had declared the motion for his expulsion lost - therefore a recount by the Chairman was invalid, and (b) the amended article under which the Chairman had purported to act had no application to the offence for which he had been expelled. Complaint (b) had been raised by the pleadings but was not argued. By a majority (Atkin L.J. dissenting) the Court of Appeal held that on the second complaint it was in the discretion of the court whether, when it had not been raised in the court below, although pleaded, it could now be raised". It appeared that "the omission to raise it was deliberate and therefore it could not be raised now". Atkin L.J. was for permitting the matter to be relied upon and would have allowed the appeal upon that ground on the merits. 41. Mr. Lee also cited Ex Parte Reddish, re Walton (1877) 5 Ch. D. 882 in support of his contention. There the claim as advanced in the court below was based on fraudulent preference. The Court of Appeal felt it could not go into the case of fraud or misrepresentation which was a new case inconsistent with that originally raised, even though the evidence might support such new case. 42. Mr. Lee submitted that the Plaintiffs had been "blowing hot and cold". Their Counsel at the trial had disagreed with the submission of Counsel for the Defendants when he had suggested that only the 2nd Defendant could be liable-on the facts. He well knew the Defendants' common stand on the point and that in law the Plaintiffs could only have judgment against the 1st Defendant or the 2nd Defendant, but not against both. Mr. Lee referred us to the case of Morel Brothers and Co. Ltd. v. Earl of Westmorland [1904] A.C. 11 where the House of Lords held that where the Plaintiff, on the facts, could have sued either the agent or the principal, having obtained judgment against the agent, he could not get judgment against the principal also. It was an alternative remedy and could not be made available against the two. 43. As has been mentioned, the issue had indeed been raised and was perfectly defined at the close of the pleadings. Evidence was called on the matter. The record shows that Counsel for the Defendants recognised that it was still a live issue at the conclusion of the trial. Counsel for the Plaintiffs, in his final submission, posed the question "who should be liable: the 1st Defendant or the 2nd defendant?" He then went on to argue that the, 1st Defendant was personally liable, for the bill had been rendered at his request, although it was sent, again at his request, to the 2nd Defendant. He argued that the 2nd Defendant should only be liable if they had accepted that the matter was done on their behalf.. He suggested that there was no evidence that the Plaintiffs had been told that the 1st Defendant was acting for the 2nd Defendant, and that this defence was not -open to the 1st Defendant. 44. As I understand the position, the circumstances were far different from those revealed by the cases relied upon by Mr. Lee. I do not think it is fair to hold that Counsel for the Plaintiffs had made an election or had abandoned his alternative claim by persisting with his submission that in fact Mr. Wong was personally liable. Certainly the judge seemed to consider it was a live issue and one wonders what arguments could have been addressed to us on the authorities cited on this point had the Judge held that Berdaland and not Mr. Wong were liable. Could it have been successfully maintained that on the pleadings and the evidence as they stood at the end of the trial, it was not open to the Judge to so find because the Plaintiffs' Counsel had continued to maintain that the facts showed that Mr. Wong was himself liable? I think not, and I understand Mr. Lee to have conceded as much. In my view the point raised is not valid, but if a question of discretion does arise, I feel it would be quite wrong not to allow the controversy between the parties to be resolved on its merits, particularly in view of what is pleaded in para. 6 of the Defence. 45. The second procedural point was this. Mr. Lee referred us to para. 59/6/1 of the White Book and relied on Re Cavender's Trusts (1881), 16 Ch. D. 270 where it was held that where there are several parties and a respondent seeks to vary the order of the court on a point in which the appellant has no interest, but other parties have, a Cross notice of Appeal should be given rather than raising the matter in a Respondent's Notice. It is fair to Mr. Lee to say at once that he acknowledged that this was very much a technical point. It is so because Mr. Bunting represented both Defendants in the Court below and Mr. Lee represents them both before us. The Respondent's Notice was served on both Defendants. No one could have been in any possible doubt that the plaintiffs were saying that they supported the Judge's finding that there was a retainer. And that they also supported his finding-that Mr. Wong was personally liable, but if the Court of Appeal held that the Judge was wrong here, they maintained that judgment should be entered against Berdaland. 46. I permit myself to wonder whether the principle stated in Re Cavender's Trusts can apply in the particular circumstances of this case. I see practical difficulties in the way. If, as is suggested by the note in the White Book, the only material difference under the present rule between a Cross-notice of Appeal and a Respondent's Notice appears to be the time within which they must be served, it is difficult to see hour the Plaintiffs could have been in time with their Cross-notice. They had judgment against Mr. Wong which they had asked for, and with which, presumably, they were satisfied. It would not seem to me to be realistic to have required them to do anything until they realised that the Defendants were appealing. When this happened, then they were able to raise the point (very clearly, as I have said, by their Respondent's Notice) that judgment should be entered, if the appeal succeeded in respect of Mr. Wong's personal liability, against Berdaland in the alternative. I ask myself when they should have filed their Cross-notice if one were necessary? If the Appellant took all the time he-is allowed by 0.59 r.4, then the Respondent would almost certainly be out of time if that rule governed his position too, and not 0.59 r.6. And does it really matter if there is only one document, or two, entitled differently? I think not. If there was any procedural irregularity (which I doubt) it is surely one which the Court should overlook and it was for this reason that I agreed with my brothers, during the hearing of the Appeal, abundante cautela, that leave should be given to file a Cross-notice out of time - and that the relevant part of the Respondent's Notice should be treated as the Cross-notice. In effect this was what happened in Ralph v. Carrick (1879) 11 Ch. D. 873. 47. The final matter in this appeal is the Defendants' submission that on the undisputed facts, judgment could only have been entered against the 2nd Defendant, Berdaland Co. Ltd., and not personally against Mr. Wong. As I have mentioned, by a Respondent's Notice, too, we are asked to enter judgment against Berdaland if we conclude that they and not Mr. Wong, were liable. This is how the Judge dealt with the issue -
48. Did Mr. Wong expressly or impliedly contract in such a way as to make himself personally liable to Stikeman, Elliott, having regard to all the surrounding circumstances? I would remark that it is not perhaps surprising that this issue (and the one on the quantum) was much overshadowed, and perhaps clouded, by considerations of the principal issue that was so hotly contested - whether or not a retainer had been given. 49. Mr. Woo invited us to uphold the Judge's finding on the issue. He asks us to weigh in the scales, as the Judge must have done, that Mr. Wong had been the one to give the instructions and Stikeman, Elliott's file had been opened in his name. These facts seem to me to be entirely equivocal. It is said that part of the Defendants' defence was inconsistent, in that they each denied that either had retained the Plaintiffs and therefore, factually, it could not have been their case that the 2nd Defendant had authorised the 1st Defendant to retain the Plaintiffs. This is quite legitimate pleading. Mr. Woo added that the Judge's conclusion was justified since Mr. Wong had been authorised by his uncle, and in view of the fact that, the instructions were widened to cover Yeoman and Sun Ngai. It is also said that since Mr. Wong made no objection, when he later saw it, to the wording of Stikeman, Elliott's telex of 17 December 1981 to the Bermuda lawyers ("we have been instructed to advise the shareholders of Berdaland ... "), this must have been the true positions. In my view this last point is based on a wholly unreal proposition. 50. The Judge seems to have based his conclusion to a considerable degree on the fact that Mr. Wong had included in his instructions the tax position of two other companies in the group of companies of which he was a director. For example, in their memoranda and letters of the 20th, 22nd, 28th and 29th January 1982, Stikeman, Elliott made reference to Yeoman Development, Berdaland, and Sun Ngai. Mr. Wong, in his draft letter of the 28th January, 1982, refers to all three companies. But I do not think it provides the answer to the question. 51. It is well settled that directors, being agents of the company, are personally liable only in circumstances that liability would attach to an agent under the ordinary law of agency. If liability would attach to the principal, and only to the principal, and only to the principal, then the company alone is liable. 52. Despite Mr. Woo's forceful submissions, in my judgment it is quite clear that Mr. Wong was acting as the agent of his companies on their behalf and was not personally instructing the Plaintiffs. I ask myself, if the whole scheme had been accepted and implemented, who would have been responsible for the expenses involved? Surely not Mr. Wong. Indeed, by their letters of the 1st, 16th, 20th, 23rd and 28th April, Berdaland (on the view of the facts taken by the Judge which is not now challenged) were acknowledging their indebtedness to Stikeman, Elliott for the work done. 53. I agree with Mr. Lee's contention that in all the oral and documentary testimony there is nothing whatever that would warrant a finding that Mr. Wong had contracted personally with Stikeman, Elliott; indeed all the circumstances point overwhelmingly the other way. I do not, however, say that Stikeman, Elliott were not justified in joining Mr. Wong in the light of the averment that there had been no retainer at all. The fact that Mr. Wong might also have been the agent of Yeoman and Sun Ngai as well, is neither here nor there, in my opinion. It is clear that on a joint retainer each client is-responsible for the whole costs. The Plaintiffs could elect, as they did, to sue only Berdaland of the companies involved, even though they might later face procedural difficulties by not having sued them all in the same action if they did not recover from Berdaland. With due respect, I think the Judge's approach to this issue was misdirected. On my view of the matter, I do not consider that it is capable of further elaboration. 54. For the reasons I have attempted to give, I would allow Mr. Wong's appeal on liability, and allow Stikeman, Elliott's cross-appeal by entering judgment for the sum claimed against Berdaland.
Leonard, V.-P. : 55. I agree. I would endeavour to summarize the position. The judgment was originally attacked before us on three points, the first being that the Plaintiffs were not entitled to recover anything because they had not been retained. That was the stance taken in the Court below and the one preserved until the Appellants entered this Court. They no longer take that stance and the Respondents are therefore entitled to succeed on that point. 56. The second point taken was that even if they had been retained they were charging too much. We have gone into that in considerable detail and I consider that they were not charging too much. 57. Finally, it was contended that the judgment was against the wrong person, and with that I agree. I also agree with what my brother has said about the solution to it by regarding the Respondents' Notice as a Cross-appeal delivered out of time, with leave.
Cons, J.A. : 58. I agree with my lord and would only add a few words in relation to the quantum, lest some of the comments made during the course of the argument should be thought to have indicated too cavalier an approach to this question. 59. The amount claimed by the plaintiff was reached by multiplying a number of hours said to have been worked by the appropriate hourly rate. Attack is launched against the first of those two figures, i.e. the number of hours worked. 60. One line of attack is upon the accuracy of the plaintiff's record. This record was said to have been made up from various slips of paper which in their turn had been marked by the person who was actually working on that case. Various comments have been made both in general and in particular as to the conduct of Mr. Colson who is the partner who collated these various slips of paper into one list. They are comments which could have influenced, and probably did influence the Judge below, for he was not too favourably impressed by the evidence of Mr. Colson. However, one factor is said to speak for itself conclusively. It is derived from the evidence given by Mr. Hansen who in effect acts as a consultant to the plaintiffs:-
The list prepared by Mr. Colson, which the Judge accepted as "honest and accurate" sets out the hours day by day and according to the particular day of the month. It is submitted that in the light of Mr. Hansen's evidence that list must inevitably be suspect. 61. I must confess that for myself - and despite the ingenuous repunctuation and explanation which my Lord the Vice President suggested - I doubt if that evidence left alone, as it was, necessarily goes as far as counsel would wish it to go. Nevertheless it does look to me as though the Judge accepted the point now made, for at one stage of his judgment he said:
I see no reason to think that he had forgotten the point when he came a little later to write the words "honest and accurate". It may be that it would have been better had he written "accurate enough". But in my view the omission of that one word is not sufficient to warrant our saying that his general satisfaction with the plaintiffs record was not justified. 62. The other line of attack is arithmetical. In the letter in which the plaintiffs first, put forward their claim the number of hours they gave as having been worked, when multiplied by the appropriate figure, simply did not reach the C$40,000 claimed. It came to only C$37,500. Then a document they produced in support, i.e. the list to which I have already referred, on the face fact of it gave even fewer hours. However, when the arithmetical error; had been corrected it was found to be somewhere near the figure originally given in the letter, although still not sufficient to support the claim to C$40,000. It is submitted therefore that the amount should be accordingly reduced. 63. It is easy to appreciate the simple logic of the submission. Of course a man who agrees to charge for his work at so much per hour cannot inflate his bill by false arithmetic. It is also easy to appreciate his client's feelings when that is shown to have happened. 64. However in my view the client's feelings in this case, although genuine in themselves, are based upon two fallacies. The first is the premise that the plaintiffs did agree to charge in that manner. They did not. They agreed - although it is an agreement imposed on them by law, as there was no actual agreement - that they would charge a reasonable figure. It is accepted that the particular rate claimed is reasonable in the circumstances. As the attack upon the number of hours found to have been worked has failed, that number must now be accepted. In this way we arrive at a figure of C$37,500 or thereabouts. 65. We then come to the second fallacy, which is the premise that what is a reasonable figure can be determined with precision. It cannot. By its very nature a reasonable figure must connote any figure in a bracket between two more or less definite extremes. This Court can only interfere if the figure found by the Judge below is beyond one of those extremes, and for my part I would need more than just impassioned argument to persuade me that if C$37,500 or thereabouts is within the bracket for work which extended over a fair period of time, C$40,000 then is not. I agree with the criticism of the plaintiffs' conduct, And of their failure to keep their promise to the law Society. These however are not grounds for concluding that the figure ultimately accepted by the Judge below was not reasonable.
Representation: Mr. K.H. Woo (Deacons) for the Plaintiffs Mr. Martin Lee Q.C., with Mr. Michael Bunting (D.W. Ling & Co.) for the Defendants. |
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