Lin Zhen Man t/a Yet Chong Electric Co v. Topfine Machinery Co Ltd

[English Translation - 英譯本]
HCA 5037/98 and
HCA 5038/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST ISTANCE

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HCA 5037/98

HCA 5038/98

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(Consolidated by Order of the Honourable Madam Justice Yuen
dated 25/11/1999)

CACV 633/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 633 OF 2001

(ON APPEAL FROM HCA NO.5037 AND 5038 OF 1998 (Consolidated))

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CACV 122/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 122 OF 2004

(ON APPEAL FROM HCA NO.5037 AND 5038 OF 1998 (Consolidated))

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Before: Deputy High Court Judge To in Chambers (Open to Public)

Date of Hearing: 16 April 2009

Date of Judgment: 16 April 2009

JUDGMENT

Introduction

1.The plaintiff instituted civil proceedings in HCA No. 5037 and 5038 of 1998 (hereinafter referred to as HCA 5038/1998).  Afterwards, these two actions were ordered to be consolidated and heard together.  He appealed from the decision of the consolidated action: CACV 633 of 2001 (hereinafter referred to as ‘CACV 633/2001’) and CACV 122 of 2004.  The plaintiffs in all of these four actions were ordered to pay the Defendants’ costs.  The Defendant in HCA 5038/1998, namely the Hong Kong Plastic Technology Limited (hereinafter called ‘Hong Kong Plastic Technology’) filed four bills of costs for taxation by the taxing master.  Dissatisfied with the amount of costs assessed after taxation, the plaintiff sought a taxation review from the taxing master.  On the 28^th November 2008, Master Roy M K Yu handed down four decisions in respect of the taxation review of the four bills of costs.  He refused the application for review in respect of the majority of the items in three of the bills of costs and on all of the items in the fourth bill of costs.  He ordered the plaintiff to pay Hong Kong Plastic Technology the costs of the taxation review hearing.  The plaintiff, being dissatisfied with the decision of the master, now applies for review of the taxing master’s decision by a judge of the Court of First Instance pursuant to Order 62 rule 35 of The Rules of the High Court.

2.Generally speaking, to allow or disallow any item on a bill of costs, or to fix the amount allowed in respect of any item is a matter of discretion for a taxing master.  Unless the taxing master made an error of law, took into account irrelevant matters or failed to take into account relevant matters, the court hearing the taxation review will not interfere with the decision of the taxing master: see FACV 4/2004 Yue Kwok Ying v Mak Shiu Tong and White v Altrincham Urban District Council [1936] 2 KB 138.  It is also inappropriate for the court to re-assess individual items on a bill of costs: see Bank of China (Hong Kong) Limited and Villa King Enterprises Limited, HCMP 5727/1999 and HCA 15005/1999 (consolidated).

3.I have read ‘the submission in taxation review hearing’, ‘the first submission by the plaintiff’ and ‘the second submission by the plaintiff’ provided by the plaintiff.  The plaintiff seeks to review the taxation decision in respect of tens of items, but most of his grounds for review are frivolous, vexatious and without substance.  He alleged that the taxing master sided with the Defendants, worked hand in glove with the PRC Government and the HKSAR Government in robbing him of his money on the pretext of awarding costs, and even shared the exaggerated costs with the Defendants.  He also alleged that the PRC Government had bribed the Nobel Prize Award Panel with the motive of covering up his success in inventing cure for SARS and bird flu so as to preclude him from being awarded the Nobel Prize in medicine.  His submissions were nothing but nonsense.  I do not intend to deal with these frivolous, vexatious, groundless and irrelevant grounds for review.  Apart from making scandalous, frivolous, ridiculous and groundless allegations against the master, he failed to prove that the master erred in law, took into account irrelevant matters or failed to take into account relevant matters.  Hence, I do not intend to deal with the tens of items for review one by one.  I would only deal with some grounds of review that may involve legal principles. My decision on these grounds of review is applicable to the review on all four bills of costs.

Hourly rate of the solicitor

4.The plaintiff alleges that when Mr. Hui Wai Keung of counsel appeared on behalf of Hong Kong Plastic Technology in the hearing on the 15^th March 2001, he admitted before Mr Justice Andrew Chung that the hourly rate of the lawyers was HK$2,600. The plaintiff stressed that the $2,600 covered counsel fees, and fees for the solicitor and staff of the solicitors’ firm. Based on the rate as alleged by the plaintiff, he alleges that Hong Kong Plastic Technology exaggerated the fees charged by the lawyers.

5.Normally, the Court allows an hourly rate of HK$2,500 for a solicitor of two or three years’ standing when attending to High Court proceedings and an hourly rate of $3,000 for a solicitor of five years’ standing, but the rate for Counsel fees varies.  The rate for counsel fees depends on the standing of the counsel as well as the degree of complexity of the case concerned.  Obviously, the hourly rate of $2,600 that Mr. Hui Wai Keung of counsel quoted was only confined to the solicitor’s fees and did not include the costs of the staff of the solicitors’ firm involved in the litigation, not to mention counsel fees.  This hourly rate of charge is in line with what the courts consider reasonable. In his decision in CACV 633/2001 dated the 28^th November 2008, the taxing master gave his reasons for the decision in detail from paragraph 3 to paragraph 13.  In taxing the fees of the solicitor concerned, he made no error in law nor did he take into account any irrelevant matters or fail to take into account any relevant matters.  In my view, the master taxed the solicitor’s fees on a correct basis whereas the plaintiff’s grounds in support of his taxation review defy reasons.  I dismiss the plaintiff’s review in respect of the solicitor’s hourly rate of charge.

The Defendant’s obligation to submit proof of payment

6.The plaintiff alleges that Hong Kong Plastic Technology had to submit relevant proof of fee payment such as bank deposit record and the master shall assess the costs concerned based on such proof.  He further submits that Hong Kong Plastic Technology’s failure to produce relevant payment proof is evidence of fraud on their part.

7.Generally speaking, the court accepts payment receipts as the basis for assessing related expenses incurred, and it is not the usual practice for the court to require bank transfer record.  Should the party awarded costs be required to produce bank transfer record for each item of expenses incurred, more and unnecessary expenses would be incurred on taxation of costs and such a requirement would also be difficult to meet.  The taxing master had a good knowledge about the standard rate of counsel fees.  He was entitled to refer to receipts for counsel fees as the basis for assessing the counsel fees.  The plaintiff’s allegation of fraud is a very serious allegation, but he has utterly failed to advance any proof in support.  His demand for proving payment by bank transfer record was vexatious and ridiculous.  I reject this ground of review.

In CACV 633/2001, the taxed costs payable by the plaintiff to Hong Kong Plastic Technology far exceeds the costs he has to pay the other Defendant

8.The plaintiff alleges that at the taxation hearing of CACV 633/2001, the taxed costs which the master ordered him to pay Hong Kong Plastic Technology was much higher than that which he had to pay the other Defendant in the same case.  He opines that when taxing the bill of costs from Hong Kong Plastic Technology, the master should have adopted the same basis of assessment used in awarding costs to the other Defendant in CACV 633/2001.

9.The master gave detailed reasons for his assessment of the taxed costs from paragraph 8 to 10 in his decision for HCA 5038/1998 dated 28^th November 2008.  Put simply, different defendants in the same case may raise different arguments in defence against the claims of a plaintiff and different defendants may be represented by different solicitors or counsel.  The rate of charge rate of solicitors and counsel of different seniority differs.  The quantum of counsel fees charged depends on the nature of the issues in dispute and the degree of complexity of the case concerned.  Bearing all these factors in mind, the plaintiff cannot challenge the taxed costs awarded by the master to one defendant by comparing it to the quantum of the costs awarded to another defendant of the same case.  In assessing costs, the taxing master, shall observe Order 62 rule 28(2) of The Rules of the High Court and assess costs based on the expenses set out in the bill of costs.  Should the master compare the amount of expenses on one bill of costs against that on the other, he would have erred in law by taking into account irrelevant matters.  In my view, the master had not erred in law in the slightest way.  The plaintiff’s grounds for review are without merits, I therefore dismiss the grounds of this review.

Costs of taxation before the master

10.The plaintiff submits that on the taxation of the four bills, the master taxed off more than one sixth of the amount of the bills.  Relying on Order 62 rule 8, he asserts that Hong Kong Plastic Technology should not have been awarded costs for drafting the bills and attending the taxation review, but the master nevertheless ordered him to pay costs to Hong Kong Plastic Technology.  He is of the view that the master must have acted under a mistake of law.

11.The plaintiff had also raised the same argument in another application for taxation review, namely No. 61 of 2002 of Building Management Application, which I also rejected.  Order 62 rule 8(1) and (7) stipulates that:

‘8. Personal liability of solicitor for costs (O. 62, r. 8)

(1)  Subject to the following provisions of this rule, where in any proceedings costs incurred improperly or without reasonable cause or are wasted by undue delay or by any other misconduct or default, the Court may make against any solicitor whom it considers to be responsible whether personally or through a servant or agent an order -

(a) disallowing the costs as between the solicitor and his client; and

(b) directing the solicitor to repay to his client costs which the client has been ordered to pay to other parties to the proceedings; or

(c) directing the solicitor personally to indemnity such other parties against costs payable by them.

(7)  If, on the taxation of costs to be paid out of a fund other than funds provided by the Legislative Council pursuant to section 27 of the Legal Aid Ordinance (Cap. 91), one sixth or more of the amount of the bill for those costs is taxed off, the solicitor whose bill it is shall not be allowed the fees to which he would otherwise be entitled for drawing the bill and for attending the taxation.

(In interpreting this rule, focus must be had to the underlined phrase)

12.The plaintiff reiterates that since order 62 rule 8(1) stipulates that the rule is applicable to any legal proceedings, it must also apply the taxation of costs between the parties to a litigation.  Such a submission amounts to an unwarranted generalisation and a defiance of common sense.  This rule is only applicable to circumstances where in any proceedings costs are incurred improperly or without reasonable cause.  The rule stipulates that where costs are wasted by undue delay or by any other misconduct or default on the part of a solicitor, the solicitor shall be personally liable to such costs.  The rule confers on the court the power to make an order disallowing the costs as between the solicitor and his client, directing the solicitor to repay to his client costs which the client has been ordered to pay to other parties to the proceedings, or directing the solicitor to personally indemnify such other parties to the action against costs payable by them.  Rule 8(1) is only applicable to the costs between a solicitor who has caused costs to be wasted and his clients or the other parties to the proceedings.  The rule is not applicable to taxation between parties to the same proceedings.  The four bills of costs here do not come down to the fact that costs have been wasted by a solicitor.  The bills are about costs which the plaintiff shall have to pay the defendant.  In any event, the rule is totally unrelated to the allegation made by the plaintiff that one sixth of the amount had been taxed off.

13.The plaintiff then seeks to argue on order 62 rule 8(7).  He emphasises that the costs in these proceedings are not to be paid out of funds provided by the Legislative Council pursuant to section 27 of the Legal Aid Ordinance, Cap. 91, consequently, rule 8(7) is applicable to the taxation of these costs.  He alleges that since the master taxed off more than one sixth of the amount during taxation review, Hong Kong Plastic Technology should not be allowed the costs for drawing the bills and attending the review.  This argument was already rejected by me in the Building Management Application no. 61/2002.

14.The plaintiff similarly made an error in construing the ambit of the application of this rule.  Exactly as what is stated in the opening sentence of the rule, rule 8(7) is applicable to ‘costs to be paid out of a fund other than funds provided by the Legislative Council pursuant to section 27 of the Legal Aid Ordinance (Cap. 91)’.  Put simply, ‘--- a fund other than funds provided by the Legislative Council’ means a fund other than Legal Aid fund.  They key words of rule 8(7) are ‘to be --- paid out of’.  In other words, this rule is applicable to a fund other than Legal Aid funds for paying costs.  In this context, ‘a fund’ is a legal term and not a general term.  Order 62 rule (12) of The Rules of the High Court accords this term the following construction :

‘2)       In this Order, references to a fund, being a fund out of which costs are to be paid or which is held by a trustee or personal representative, include references to any estate or property whether immovable or personal held for the benefit of any person or class of persons; and references to a fund held by a trustee or personal representative include references to any fund to which he is entitled (whether alone or together with any other person) in that capacity, whether the fund is for the time being in his possession or not.’

According to this construction, this rule is applicable to costs to be paid by a fund other than Legal Aid funds.  The fund refers to a fund held by a trustee, for instance, the trustee or personal representative of an estate.  Say for example, when a beneficiary of an estate institutes legal proceedings on the construction of a will, the court can order the costs of the parties to be paid out of funds held by the estate.  Under these circumstances, if one sixth or more of the amount of the bill for the solicitor’s costs is taxed off, the solicitor whose bill it is shall not be allowed the fees to which he would otherwise be entitled for drawing the bill and for attending the taxation.  This rule is inapplicable to costs paid from the resources of one of the litigating parties.

15.Given that the costs incurred by the plaintiff or Hong Kong Plastic Technology are not to be paid out of a fund under Order 62 rule 8(7), it was absolutely correct that the master refused to apply Order 62 rule 8(7) to disallow the costs for drawing the four bills of costs and attending the taxation by Hong Kong Plastic Technology.

16.At the conclusion of the taxation review of the four bills, the master rightly exercised his discretion when he ordered costs to follow the event in that the plaintiff was to pay Hong Kong Plastic Technology the fees for drawing the bill and for attending the taxation.  The master made no mistake in law nor did he contravene Order 62 rule 8(7).

Conclusion

17.For the above reasons, I would dismiss the plaintiff’s application to review the taxing master’s decision on the taxation review.  Hong Kong Plastic Technology shall have the costs of this application for review which I assess on a lump sum at $10,000.

Representation:  plaintiff, in person, present.

Mr. Chung Ho Yee, instructed by Tong & Co., T.S., for the Defendant.

Translated by the Judgment Translation Unit of the Judiciary and approved by JJO.