Massie & Clement (A Firm) v. Eastern Globabl Property Management Ltd

DCCJ 2850/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2850 OF 2006

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BETWEEN

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Coram : Deputy District Judge W. C. Li in Court

Date of Hearing : 8^th January 2007

Date of Handing Down Judgment : 16^th January 2007

DECISION

1.This was a hearing for summary judgment under Order 14 taken out by the Plaintiff who claimed for payment of outstanding legal fees and costs as against the Defendant who was its client. The Plaintiff acted for and was the Defendant’s solicitors in Lands Tribunal case No. LDBM 351/2004. It was not disputed that the Plaintiff had done work for and rendered services to the Defendant and was entitled to professional fees and costs. The Defendant had already paid $433,520.00 for costs and disbursement, and when the Plaintiff delivered the second and third interim bills of costs dated 17 March 2006 and 30 May 2006 respectively for the total amount of HK$526,928.80, the Defendant failed to pay the Plaintiff, and the Plaintiff issued a Writ to claim for the same. The Defendant in its Defence denied that it owed the Plaintiff the said amount of HK$526,928.80 and put the Plaintiff to strict proof thereof. The Defendant averred that it had made payments to the Plaintiff and the Plaintiff had agreed to give discount to the Defendant, therefore the Defendant did not owe the Plaintiff the amount of HK$526,928.00.

2.The Plaintiff had previously applied to the District Court under Sec. 67 of the Legal Practitioner Ordinance, Cap. 159, to have their second and third interim bills of costs taxed but the District Court had no jurisdiction to hear this application. The Defendant did not apply to the High Court to have the Plaintiff’s bills of costs taxed. The Defendant’s stance was one of denial. Understandably, the reason for not wanting taxation was because they did not admit liability. At the end of the hearing before me, the Defendant appeared to have changed its mind and asked for taxation but soon withdrew that application, and maintained that it did not want to have the bills taxed. The Plaintiff on the other hand, in the hearing for Order 14 summary judgment application before me, was aware that this court had no jurisdiction to determine any issues related to taxation. That means the Plaintiff could only ask for summary judgment on liability with quantum to be assessed or bills to be taxed. In other words, this court could not give summary judgment for the amount of HK$526,928.80 claimed as the Defendant raised triable issues on quantum and reasonableness of the fees charged, these issues being within the exclusive jurisdiction of the High Court under the Legal Practitioners Ordinance, Cap. 159, but this court could determine whether the Defendant should be given unconditional leave to defend, or that the Defendant had no real or bona fide defence, and judgment on liability should be entered in favour of the Plaintiff. The bills of costs of the Plaintiff was within the 12 months period under Seec. 67(2) of the Legal Practitioners Ordinance, Cap. 159, and the Plaintiff undertook to apply for taxation in the High Court.

3.A director of the Defendant, Mr. Ng Hung, filed an affirmation and raised issues that the Plaintiff’s bills were unreasonable and excessive. These triable issues on quantum were not relevant issues in the present application. It is settled law that the District Court has no jurisdiction to deal with the reasonableness and amount of costs (Oldham, Li & Nie, Solicitors, v  Wong Lin Choi Clara CACV 319/2005).

4.The Defendant’s affirmation also alleged that the Plaintiff had orally promised the Defendant that the Plaintiff’s legal costs would only amount to HK$400,000.00 and the Plaintiff would not charge the Defendant until the completion of the whole of the legal proceedings. Since the defendant had already paid $433,520.00 for legal costs and disbursements, the Defendant would therefore no longer be liable to pay further costs.

5.The background facts of this case was that the Defendant was a limited company with two directors, the other director was Mr. Ng Yee Keung, who was the brother of Mr. Ng Hung, and the two directors did not have agreement on the conduct of this case, and Mr. Ng Yee Keung had refused to sign any cheque to pay for legal costs. In order to have access to the funds of the Defendant to pay for legal costs, the Plaintiff also acted for the Defendant in case HCMP 2749 of 2005 whereby  Mr. Ng Hung was able to seek a court order allowing him to have access to company funds  to pay  the $433,520.00 partial costs that had been paid to the Plaintiff.

6.In the conduct of HCMP 2749 of 2005, Mr. Ng Hung’s letters to his co-director, Mr. Ng Yee Hung, were also disclosed. In these letters, Mr. Ng Hung said (inter alia) to his brother and co-director that the Defendant had instructed the Plaintiff in the Lands Tribunal action and urgently needed funds to be released for the conduct of these proceedings. In a letter dated 10 May 2005 from Mr.Ng Hung to Mr. Ng Yee Keung, this was said, “The Incorporated Owners of Golden Castle Mansion has instituted legal proceedings against the company intending to seize our management right over Eastern Global Car Park. As the company failed to settle the legal fees, Messrs. Cheng & Lo, have ceased to act for the company in the said proceedings. The company now instructs Messrs. Massie & Clement. I paid HK$5,000 as costs on account. As the case is complicated, we need the relevant evidence. We are unable to settle the legal costs as you intentionally refused to sign the company cheques. Messrs. Massie & Clement informed us that they are unable to proceed further unless the company pays HK$50,000.00 to HK$100,000.00 to them in relation to the said proceedings.” In another letter dated 4 October 2005, Mr. Ng Hung had this to say to his brother, “Since the date of instruction given in this action to Massie & Clement, solicitors, representing this company, I have spent many painstaking cares to hold conferences with solicitor and to collect documentation. Now we owed a sum of legal costs, this should repay to them as soon as possible.”  A further letter dated 10 October 2005 from Mr. Ng Hung to Mr. Ng Yee Keung, Mr, Ng Hung had this to say, “As to the law suit commenced by Massie & Clement, Solicitors, claiming against this company for a sum of legal costs which remained unpaid and outstanding, what should we respond? Please reply as soon as possible.” By another letter from Mr. Ng Hung to Mr. Ng Yee Keung dated 8 December 2005, this was said in the letter, “Since Massie & Clement, Solicitors, acted for our company for appearances and hearings in the case of LDBM351/2004, we owe legal costs of HK$233,520.00 and still outstanding. Massie &Clement, Solicitors already issued proceedings for the recovery of their legal costs…………….because this case is set down for trial from 9^th to 13^th January 2006, if costs are not settled, Massie & Clement, Solicitors, will not represent the company to attend the said trial….” In all these correspondence between the two directors of the Defendant who were at deadlock, not a word was mentioned that the Plaintiff had promised the Defendant that their legal costs would be capped at about HK$400,000.00 and the Plaintiff would not bill the Defendant until the completion of the whole proceedings. To the contrary, Mr. Ng Hung’s letters to his co-directors amply showed that costs had to be paid on account and the Plaintiff were all along asking for costs to be paid for the conduct of these proceedings. Mr. Ng Hung would not have written these letters if the Plaintiff had promised not to bill the Defendant until the completion of the Lands Tribunal trial and that the costs would only be $400,000.00 or thereabout. If there really had been an agreed fee between the Plaintiff and the Defendant, I would expect this fact to be stated in the letters between the two directors of the Defendant. I also noted that in the letter dated 10 October 2005 when Mr. Ng Hung informed his brother that the Plaintiff was suing them for costs, he actually asked “what should we respond?”.

7.The Defence filed contended that the Plaintiff would give a discount in legal fees and not specifically that the legal costs would be capped at around $400,000.00.  The Defendant denied that they were liable to pay the full legal costs. Nevertheless, there was a written Retainer whereby the Defendant signed and agreed to pay the Plaintiff according to its respective rates and disbursements. The written Retainer was addressed to the Plaintiff and referred to the Lands Tribunal action in LDBM 351/2004 and it reads, “Eastern Global Property Management Limited (“the Company”) confirmed to retain the service of your firm to represent the Company in the above matter in the place of Messrs. Cheng & Lo, Solicitors. We agree to pay your service charges at the following rates and disbursements. Partner : $2,800 per hour; Assistant Solicitors : $2,300 per hour; Trainee Solicitors: $1,300 per hour; Legal Executive: $1,300 per hour. Dated the 2^nd day of March 2005”. This written Retainer was chopped with the Defendant’s company chop and signed by Mr. Ng Hung, under the title of “director”.

8.Brief to counsel and Counsel fee notes were also shown by the Plaintiff. Without going into the arena of taxation, I observed from the counsel fee note that counsel fees amounted over $400,000.00 for a brief and 4 refreshers, and, for conferences and drafting works. It would surprised me  if the Plaintiff had agreed costs with the Defendant that HK$400,000.00 would cover the whole action in the Lands Tribunal, that counsel fees alone had already exceeded the agreed fees alleged by the Defendant.

9.The Defendant’s contention that there was an agreed fees of approximately HK$400,000.00 was an allegation of a collateral contract, the sole effect of which was to vary or alter the term of the principal contract. The onus of proving this collateral agreement was on the Defendant. Such an allegation is often viewed with suspicion by the law (Bank of India  v  Surtani Murlidhar Parmanand(1994) 1 HKC 7) A bare assertion would not be sufficient and the Defendant must condescend upon particulars and satisfy the court that there are reasonable grounds for advancing the defence. (Interform (Interior & Marble) Co Ltd  v  Far East Wagner Construction Ltd (unrep., CACV No. 59 of 1999 14) The Defendant’s argument of an agreement for a ceiling fee was vague and devoid of particulars.

10.“The test at the summary stage is whether the Defendant’s assertions are believable. But it must be recognized  - because failure to recognize it would create a debt-dodgers’ charter – that whether the defendant’s assertions are believable is a question to be answered not by taking these assertions in isolation but rather by taking them in the context of so much of the background as is either undisputed or beyond reasonable dispute”   (Safe Rich Industries Ltd unrep., CACV No. 81 1994, as per Bokhary JA (as he then  was)  at para. 13).  The Defendant’s evidence had clearly shown itself to be incredible and devoid of substance and merits. It was contradicted by contemporaneous documents and circumstances that it became clear that its defence was a sham. The Defendant does not have a real or bona fide defence and judgment should be given to the Plaintiff on liability.

11.Judgment on liability is therefore entered against the Defendant in favour of the Plaintiff with quantum to be assessed. I also order that the Defendant is to pay the Plaintiff’s costs of this action, to be taxed if not agreed, together with certificate for counsel.

Representation:

Miss Elizabeth Yang instructed by Messrs. Massie & Clement for the Plaintiff.

The Defendant, not legally represented and appeared in person by its director by Mr. Ng Hung.