Lau Leung Wa and Another v. Lau Yue Kui and Another

HCAP 10/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE JURISDICTION

ACTION NO. 10 OF 2001

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BETWEEN

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Before: Hon Chung J in Court

Date of Hearing: 5 July 2005

Date of Ruling: 5 July 2005

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RULING  ON  SPLIT  TRIAL

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1.This ruling deals with the plaintiffs’ application that there be separate trials of issues of liability and damages.  The application is opposed by D1 and D2.

2.The plaintiffs are two of the beneficiaries of an estate administered by D1.  D2 is the solicitor who assisted D1 to obtain grant of representation and to collect assets of the estate.  The plaintiffs’ main complaint in this action is related to the 3 fee agreements entered into between D1 (as the personal representative of the estate) and the D2.  Professional fees are payable to D2 by the estate under those agreements for the following types of work: applying for estate duty clearance and letters of administration, checking the devolution of title of various lots of land, ascertaining their particulars and instructing surveyors and other professionals to ascertain their sizes and areas.

3.The plaintiffs complain in short that the 3 fee agreements are grossly unfair and unreasonable and the fees payable thereunder are excessive.  They allege that, in agreeing to the payment of such fees, D1 has breached his fiduciary duty and duty of due diligence and has acted negligently.  Similarly, they also allege that D2 has also breached his fiduciary duty, has acted negligently and knowingly assisted D1 in D1’s breach of duties.  The allegations are denied by the defendants.

4.The relief sought in this action include the removal of D1 as the administrator of the estate and D2 as solicitors for the estate, the setting aside of the 3 fee agreements and damages for D1’s maladministration of the estate.

5.This application is made on the basis that, if the plaintiffs should succeed in setting aside the 3 fee agreements, no assessment of damages is necessary.  On the other hand, if the plaintiffs’ claim should fail, the need for assessment would not arise either.  It is only if and when the court should find that D2 is entitled to full payment under the fee agreements and yet D1 has acted in breach of his duties that such a need would arise.

6.The relevant legal principles are undisputed.  They are summarised in Hong Kong Civil Procedure 2004, para. 33/4/11:-

“Whilst the normal procedure should still be that liability and damages should be tried together, the court should be ready to order separate trials of the issues of liability and damages whenever it is just and convenient to do so …  However an order to separate trials … by way of exception to the general rule, is only to be made in exceptional cases where there was a clear line of demarcation between the issues of liability and quantum …

Where the issue of liability is separate and distinct from the issue of damages, litigants should take advantage of the facilities which are afforded of having the question of liability decided as a preliminary issue before the issue of damages … and this is especially so where the issue of damages is detailed and complicated and may have to be referred to an Official Referee or master … ”.

The parties herein differ as regards whether the factors outlined above apply to this action. 

7.The defence argues in particular that the issues of liability and quantum cannot be separated.  It is submitted that the court will have to consider evidence about what are fair and reasonable fees chargeable for works similar to what was done or is to be done by D2 before the court can properly determine the merits of the plaintiffs’ claim.  If the court should find that an assessment of damages is necessary, similar evidence will have to be adduced and considered for that purpose.  Accordingly, there is an overlap between the evidence relating to liability and that relating to quantum.

8.I disagree.  It is true that evidence about charges of solicitors for probate work may have to be considered in relation to the question of liability in this action.  However, any evidence which may be adduced by the defence for the purpose of disputing the plaintiffs’ claim as regards the 3 fee agreements is likely to be evidence which is aimed at showing that the fees charged by D2 are fair and reasonable.  By the time when an assessment of damages should become necessary, I would already have found in the plaintiffs’ favour on liability.  The evidence which may be adduced by the plaintiffs in support of their claim for damages against D1 would be aimed at showing that much lower rate(s) of charges and/or much less amount of work ought properly to be done by D2.  These two types of evidence are different.

9.I also agree with the plaintiffs’ submissions that, because they only received D2’s itemised bill of costs yesterday, they cannot reasonably be expected to be able to deal with the question of quantum at this trial.

10.Finally, having heard the defence argument that the plaintiffs have so far failed to state their case (in relation to liability) as regards what they consider to be the fair and reasonable amount of fees, I consider that the absence of such evidence is unlikely to prejudice the defence if I order liability to be tried separately.  On the contrary, the plaintiffs’ failure to adduce such evidence may assist the defence argument that there is no unfairness unreasonableness or excessiveness in the fees charged by D2 and that therefore the plaintiffs’ claim should be dismissed.

11.For the above reasons, I will exercise my discretion and order a split trial between liability and quantum.

Mr Anderson Chow, SC leading Mr Albert Yau, instructed by Messrs Hau Lau Li & Yeung, for the Plaintiffs

Mr Chan Chi Hung, SC leading Mr Jeremy SK Chan, instructed by Messrs Chui & Lau, for the 1^st Defendant

Mr Dennis G Yu, instructed by Messrs Philip Chan & Co., for the 2^nd Defendant