C. P. Lin and Co. v. Kung Wong Sau Hin

HCMP001690/1986

1986, M.P. NO. 1690

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Penlington, J. in Chambers

Date of hearing: 22nd, 23rd & 26th October 1987

Date of delivery of judgment: 26th October 1987

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JUDGMENT

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1. The plaintiffs in this matter acted as the solicitors for the defendant in relation to the administration of the estate of the late Kung Yeuk Man. The defendant was the sole executrix but for all practical purposes acted through her son Kung Kwok Wai, David ("David Kung") who she appointed as her lawful attorney in carrying out those functions.

2. Instructions were given to the plaintiff in November 1981 in relation to the estate, which was very substantial. The value declared to the Commissioner for Estate Duty as the gross value of the estate was some $77,000,000, although this amount is in dispute. It is not in dispute that by early 1984, the defendant had withdrawn her instructions to the plaintiff prior to completion of the administration of the estate. It is the plaintiff's case that based on the Law Society Scale Fee which would come to $864,752, they are entitled to profit costs of $605,000 on the basis that they had done 70% of the work involved in the complete administration of the estate.

3. The plaintiff's Bill of costs came for taxation before the Taxing Master on the 6th June 1987 but the hearing could not be completed on that day and it was adjourned until the 13th July 1987. At this hearing, the defendant was represented by counsel and he tendered written submissions. These submissions alleged that the defendant has not taken into account, in estimating the size of the estate, certain gifts inter vivos made by the deceased to David Kung, amounting to some $6,000,000. It is suggested that this was not part of the estate, that Mr Kung was responsible for the preparation of stamp duty documents in respect of this gift and that he gave no instructions to the defendant to do so on his behalf. There were numerous other allegations of negligence on the part of the plaintiffs in handling the affairs of the estate.

4. The submissions however also went considerably further in that it was suggested that the plaintiffs had not challenged values of property owned by the deceased as found by the Stamp Duty Office and that they had done so to deliberately inflate the value of the estate so as to be able to charge higher fees. Not unnaturally the strongest objection was taken to these allegations as a result of which counsel agreed to withdraw the written submissions. It was in some doubt as to whether counsel had gone further and had undertaken that no allegation of negligence would be made against the plaintiffs. The Master declined to allow his record to be used and this matter was left in doubt. It was, however, submitted by counsel for the defendant that I should not have any regard to these written submissions as once they had been withdrawn, they simply became of no effect. It was the contention for the plaintiffs that they were of importance as showing the state of knowledge of the defendant, her attorney and her legal advisers at the time of the hearing of the taxation. I consider that was correct and ruled that the written submissions should be considered in evidence.

5. Application was then made by the defendant for a review of the Taxing Master's decision pursuant to 0.62, r. 33. This hearing was set down for the 18th September 1987. However, on the 16th September, an affidavit sworn by David Kung was filed on behalf of the defendant as further evidence. Under Rule 34(2), the Taxing Master may receive such further evidence but it would appear no application was made for such evidence to in fact be received. Application was then filed for the affidavit to be struck out on the grounds that it was scandalous, irrelevant and otherwise oppressive. This application was opposed and was argued before the Taxing Master who granted the application to strike out the affidavit. The defendant now appeals against that decision.

6. There was considerable doubt at the hearing of this matter as to what precisely had been the position regarding the affidavit which was struck out. No application was filed to obtain leave to file it as further evidence and indeed, in a letter from the defendant's to the plaintiff's solicitors, it was denied that any such application was being made. I proceeded with the hearing of this appeal on the basis that by his order striking out the affidavit, the Taxing Master was refusing to receive such further evidence.

7. The defendant argues that the review of the Taxing Master's previous decision is not an appeal and that therefore further evidence should be received much more readily than if it was such an appeal. He points out that Order 59, rule 10(2) states that the Court of Appeal shall have power to receive further evidence but it shall be admitted only on special grounds. There is no such qualification in Order 62, r. 34. Furthermore, as this is an appeal pursuant to 0.58, it is by way of rehearing and I have just as much discretion to reject or receive the affidavit as the Taxing Master when he originally heard the matter. It is the case for the plaintiff that the affidavit contains mostly matters which are submissions and not matters of fact but that where matters of fact are affirmed, these clearly were matters which were known to the deponent, David Kung, prior to the adjourned hearing on the 13th July and he has produced no reasons why these matters were not put before the Taxing Master then. In a supplementary affidavit, Mr Kung says that he is asking the Court to receive his affidavit as "fresh evidence" in the review. It has been submitted by counsel for the defendant that "fresh evidence" and "further evidence" are synonymous terms, no distinction should be drawn between them. I do not think that can be correct. "Fresh evidence" is evidence as to something which has happened since the former hearing or evidence which has come to the knowledge of the party since that hearing or which could not, by any reasonable inquiry have come to his knowledge before that time. It is not evidence which was available   to the party now seeking to call it but for some reason did not do so. "further evidence" in my view is simply evidence which was not, for any reason, called at the prior hearing. This is the ruling made by Jessel, M.R. in In re Chennell⁽¹⁾ at 505. He goes on however to say that there must be a good reason why such further evidence is to be admitted. Even though O.62, r.34 does not contain the same words in relation to further evidence as it is contained in O.59, r. 10, I think the principle is nevertheless the same. It would, in my view, be quite wrong if a party had evidence available at the hearing of a taxing but did not call it and was allowed to do so on review unless there was a good reason for him doing so. While therefore further evidence may be received on a review of the taxing decision, perhaps more readily than on a normal appeal, the criteria laid down in Ladd v. Marshall ⁽²⁾ still are applicable. These are that the evidence must be such as it could not have been obtained with reasonable diligence for use at the first hearing; secondly, that it must be such that it would probably have an important inference on the result of the case, though it need not be decisive and thirdly, it must be apparently credible though it need not be incontrovertible.

8. I am also of the view that while this is an appeal by way of rehearing pursuant to 0.58, the decision to strike out the affidavit was essentially one for the Taxing Master who had done the original taxation and was familiar with the whole matter. Although I am not bound by his decision, I feel that where it is a matter of exercising a discretion of this sort, I should interfere with his decision only if it was clearly wrong.

9. A great deal of David Kung's affidavit are matters of submission which can be made by counsel for the defendant at the review. They are not in my view properly put in an affidavit. It was pointed out that the solicitor for the plaintiff, Mr Robinson, has also in his own affidavit made submissions and therefore he should not be allowed to query the defendant's affidavit on that ground. The point is well taken but I do not think it affects the position in relation to David Kung's affidavit. Any affidavit should be a statement of fact or on some occasions of belief but it should not be a submission. (Order 41, Rule 5).

10. David Kung's affidavit runs to some 52 clauses and there are numerous exhibits. Most of these would have been readily available at the hearing of the taxation and indeed would still be available to the Taxing Master as forming part of the record. I have no doubt that he is perfectly entitled to call for any documents to which he is referred in the course of the review of the taxation. I also consider a very large part of this affidavit should not have been received because it contains material which, even if relevant, and I have great doubts as to whether it is in view of the nature of the taxation, do not pass the third test in Ladd v. Marshall, i.e. they are not credible. Furthermore, overall I do not consider that the affidavit is such as would have an important influence on the result of the taxation. It is to be remembered that this is a taxation based on the size of the estate and in accordance with the Law Society Scale. There are arguments concerning the size of the estate itself and also as to the amount of work done by the plaintiffs before instructions were withdrawn. I do not think Mr Kung's affidavit will be of any assistance to the Taxing Master in deciding those issues. Coming at the very late stage that he did, I see no reason for interference with the Master's decision that it was oppressive. The application is therefore refused.

11. The plaintiffs are entitled to their costs on a party and party basis. I would not interfere with the order for costs made before the master.

(1)    [1878] 8 Ch. 592

(2)    [1954] 1 W.L.R. 1489

Representation:

David Robinson of (Wilkinson & Grist) for Plaintiff/Respondent

Edward Chan (T.L. Ip & Co.) for Defendant/Appellant