Eric Chan & Co. (A Firm) v. Wong Kwok Wang, Warren

DCCJ1155/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1155 OF 2008

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Coram : H.H. Judge Chow

Date of Hearing : 18^th – 20^th, 23^rd – 24^th May, 2^nd June, 8^th August 2011

Date of Handing Down Judgment : 4^th October 2011

________________________

Judgment

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1.The Plaintiff is a firm of solicitors, whereas the Defendant was formerly a member of the Chartered Institute of Arbitrators, United Kingdom. The Plaintiff’s claim is for legal fees and disbursements in respect of services rendered to the Defendant in a High Court taxation case (Case No. HCMP 2843/2004) (“the taxation case”), in which the Defendant was the Plaintiff. Its claim is based on:-

(a)  the 1^st retainer (dated 23.10.2004) entered into between the Defendant and Messrs. Au Yeung, Cheng, Ho & Tin (“AYCHT”).  AYCHT has assigned its interests in the retainer to the Plaintiff;

(b)  the 2^nd retainer entered into between the Defendant and the Plaintiff on 4.8.2005.  All the terms of the 2^nd retainer were the same as those of the 1^st retainer; and

(c)  the verbal instructions and authorization given by the Defendant during a legal visit on 2.9.2005 for the Plaintiff to continue to assist after the change of solicitors from the Plaintiff to Messrs. Tong & Tsoi, solicitors (“TT”).

2.On 11.12.2003 the Defendant was arrested by the Independent Commission Against Corruption, and subsequently charged under a High Court Criminal Case (“the Criminal Case”).  On the same day he approached a Mr. Eric Chan (“Eric Chan”), a solicitor under the employment of AYCHT, to act as the Defendant’s legal representative for him.  Various payments of costs on account were made by the Defendant to AYCHT in relation to the Criminal Case.

3.In or about November / December 2003, Eric Chan left AYCHT and joined Messrs. Huen & Partners (“Huen”).  Huen replaced AYCHT as the Defendant’s legal representative for the Criminal Case.  In October 2004, Eric Chan informed the Defendant that he was going to change his employment back to AYCHT.  Subsequently, AYCHT substituted Huen as the Defendant’s solicitors for the Criminal Case.  On 18.10.2004, the trial of the Criminal case commenced.  On 20.10.2004, Eric Chan was summarily dismissed by Huen.  On the same day, Huen issued to the Defendant a letter, forfeiting the bulk of the costs on account held by Huen in respect of the Criminal Case.

4.The contents of the 1^st retainer, signed by the Defendant, are set out as follows:-

“ 23^rd October 2004

Re: HCCC 321 of 2003

Mr. Wong Kwok Wang, Warren

We refer to the above matter and the meeting between you and our Mr. Eric Chan this afternoon discussing the letter dated 20^th October 2004 sent to you by Messrs. Huen & Partners.

We write to put on record that on your instructions, we will issue proceedings to seek taxation of the costs of Messrs. Huen & Partners on your behalf. Our Mr. Eric Chan will be the handling solicitor of this matter. His hourly rate will be HK$4,000.00.

	Agreed by
	_______________ Wong Kwok Wang, Warren”

(Underline provided)

5.In respect of the circumstances under which the 1^st retainer was signed, the Defendant said that one day, Eric Chan entered the conference room of AYCHT in which he was making preparation for the Criminal case.  Eric Chan asked him to sign on a document (namely, the first retainer).  Eric Chan told him that what Huen did was unfair to him and the whole world, when Huen did not settle the counsel fees.  Eric Chan asked for his consent to borrow his name to sue Huen.  He asked him not to have any worry.  He would settle the whole matter, and would not require him to incur extra legal costs (“the assurance”).  Eric Chan said that the hourly rate of $4,000 was put there just for the recovery of costs from Huen.  He had quite a long argument with Eric Chan.  He told Eric Chan his concern:-

“… … if I won the proposed legal proceedings against Huen, I would gain nothing as all the interests and benefits belonged to the counsel and solicitors. On the other hand, if I lost, I would have to bear all the legal costs. … … … However, Eric Chan assured me that he would be personally take care of the proposed action against Huen and there would not be any legal costs to be borne by me at all…. …”

(Underlines provided)

The letter refers to “on your instructions”.  It signifies that the Defendant gave prior instructions to sue Huen.  But, according to his evidence, he did not give such instructions.  So it would be very natural for him to ask why this happened at all!  According to him, Eric Chan did not explain to him why he would want to borrow his name to sue Huen, and he himself did not ask Eric Chan to explain.  If his name was borrowed for the purpose of suing another person, it would be very natural for him to ask “why?”.  But the Defendant did not do so.  This is entirely incredible.  Of course, Eric Chan denied that he had given the assurance as alleged by the Defendant

6.It is ironical that, in his affidavit, the Defendant provided a reason for instituting the taxation case:-

“In addition, I was made anxious that I should do something for my two counsel as they were fighting my case in court. I did not want their attention to be divested from defending my trial.

“…… because I want to help my counsel get paid so that they could concentrate on fighting the court battle for me.”

Here he revealed the purpose of instituting the taxation case against Huen.  If his name was borrowed to sue Huen, it means that he did not have the intention to sue Huen at all.  But, as revealed in his affidavit, he wanted to help his counsels to recover their fees.  So he decided that he should do something for them.  What he did was to institute the taxation case against Huen.  Hence he did intend to sue Huen.  This is inconsistent with his allegation that his name was borrowed for the purpose of suing Huen.

7.On 29.1.2008, the Defendant, through TT, proposed to sell his interest in the taxation case to the Plaintiff.  The letter stated:-

“We are instructed to inform you that our client would like to assign all his interests entitlements and costs to your firm in connection with the taxation proceedings against Huen & Partners in the above action.”

This letter shows that the Defendant had interests and entitlements in the taxation proceedings against Huen.  This is inconsistent with his allegation that the Plaintiff had borrowed the Defendant’s name to sue Huen.  If his name was borrowed to sue Huen, he would not have any interests or entitlements in the proceedings, because the interests and entitlements would go to the person who borrowed his name to sue.  This is also repugnant to what he allegedly told Eric Chan before signing the 1^st retainer, namely, “If I won the proposed legal proceedings against Huen.  I would gain nothing as all the interests and benefits belonged to the counsel and solicitors.”

8.The 2^nd retainer was entered into between the Plaintiff and the Defendant on 4.8.2005 (but signed by the Defendant on 11.8.2005).  Its contents are set out as hereinbelow:-

“We refer to the above case and your reply dated 29^th July 2005.

Since Mr. Eric Chan has left Messrs. Au-Yeung, Cheng, Ho & Tin and set up his own practice, we write to seek your consent for the transfer of the case to us.  With your consent, the retainer with Messrs. Au-Yeung, Cheng, Ho & Tin will be continued by our Mr. Eric Chan with all the terms thereof remain unchanged.

Grateful if you can kindly signify your consent by signing and returning to us the duplicate copy of this letter.

… … … … … …

Thank you for your attention.

	I consent to the above transfer arrangement
	_______________________ Wong Kwok Wang, Warren 11/8/2005”

The Defendant did sign this retainer.  It is to be noted that this retainer does not refer to the assurance at all.

9.In his affirmation the Plaintiff explains the circumstances relating to the 3^rd basis of his claim:-

“13. The substantive hearing for HCMP 2843/2004 had been fixed for 5^th September 2005 (Monday) with 6^th September 2005 reserved. Messrs. Huen & Partners had raised the question of conflict of interests as an issue in their skeleton submission exchanged for the hearing, because on the one hand I was entitled to share the profit costs of Messrs. Huen & Partners as commission in the capacity of a former employee, on the other hand I was arguing for the Defendant as his solicitor against Messrs. Huen & Partners that they should not be entitled to the extent of the profit costs that they claimed. … … …

14. To deal with this serious situation, on 2^nd September 2005 (Friday), I paid a legal visit with Mr. Edmond To of Messrs. Tong & Tsoi to see the Defendant at Shek Pik Prison. According to my plan, in order to avoid the possibility of any adverse finding by the Court on the question of conflict of interest, the Defendant had to sign a new retainer with Messrs. Tong & Tsoi to take over HCMP 2843/2004, but then I would render my assistance to Mr. Edmond To. In order to enable me to have the capacity to do so after the change of solicitors, I needed the approval and instructions of the Defendant, particularly when I planned to attend the court hearing with Mr. Edmond To scheduled for 5^th September 2005 which was only 3 days away.

15. During the legal visit, after being explained about he situation and the plan, the Defendant approved the plan and signed a new retainer with Mr. Edmond To of Messrs. Tong & Tsoi.  I also suggested to the Defendant that a new written retainer with clear instructions for my continued assistance after the change of solicitors at the same hourly rate of HK$4,000 as in the 2^nd retainer be entered.  Further, I also indicated to the Defendant that by my rough estimate, the Defendant would have to pay me about HK$40,000 in addition to what could be recovered from Messrs.  Huen & Partners on a party to party basis.  Then the Defendant said he did not want to enter any new retainer, but I should trust him that he would pay me such modest sum of money for my work and continued assistance.”

10.The defence is that he did not give any consent and authority to the Plaintiff to continue representation in the taxation case, other than free assistance to the newly appointed solicitors after the change of representation on 5.9.2005.  Initially he said that no legal fees was mentioned during the legal visit on 2.9.2005 by Mr. Edmond To (“Edmond To”) of TT and Eric Chan for the transfer of the taxation case.  There was a common understanding that he would not be required to pay legal fees.  But on the next day of cross-examination, he said that Edmond To told him that he would not be required to pay costs to TT.  Edmond To told him that the whole matter was not the Defendant’s business.  Therefore he would not impose any charge on him.  The Defendant admitted that he had approved Eric Chan to assist Edmond To after the transfer of the case.  He denied that Eric Chan had produced a new retainer at an hourly rate of $4,000 for him to sign.  But subsequently he said that it could or could not have happened.

11.The credibility of his evidence can be adjudged from what happened afterwards.  On 19.5.2007, TT wrote to the Plaintiff, inviting him to produce his bills of costs for settlement.  The letter states:-

“ We write to inform you that a settlement has been reached between the parties in the above action. As such, we are instructed to return you herewith the said tow box files for your retention.

In addition, as our client is now seeking recovery of the incurred costs and disbursements from Messrs. Huen & Partners pursuant to the settlement order, we shall be grateful if you could kindly let us have your bills of costs setting out your costs and disbursements so that we may send the same to Messrs. Huen & Partners for settlement.  Please note that the settlement was reached on 25^th April 2007.  Therefore, we shall be grateful if you could kindly let us have your bills of costs soonest possible.”

(Underlines added)

In this letter the Defendant asked the Plaintiff for his bills of costs.  This is unequivocal proof that he had retained him. If he had not retained him, it would not have been necessary to ask him for the bill of costs.  The fact that he had retained the Plaintiff in the taxation proceedings destroys the allegation that the Plaintiff borrowed his name to sue Huen. 

12.In his letter dated 30.12.2007 to the Plaintiff, the Defendant said: -

“Regarding your Bill of Costs amounting to HK$711,511.00 in respect of the HCMP 2843/2004, I’m going to commence taxation proceedings against Messrs. Huen & Partners. However, I shall reserve all my rights to hold you liable for the costs of taxation if your Bill of Costs is proved to be exorbitant.”

If his name had really been borrowed for the purpose of suing Huen, the taxation case would have nothing to do with him.  Therefore whether the Bill of Costs is exorbitant or not would have nothing to do with him.  It would also serve no purpose to say that he would reserve all his rights to hold him liable.  If he really meant what he said, then the Bill of Costs, if exorbitant, would affect his interests.  The Bill of Costs had a direct connection with him.  So it could not be a mere borrowing of his name to sue. 

13.Whether his evidence is credible or not can also be adjudged from the response he made to the letters written to him by the Plaintiff.  On 21.1.2006, the Plaintiff wrote to him, stating:-

“ Action No.: HCMP 2843/2004

The whole day hearing on10th January 2006 before Master Kwan was further adjourned to a date to be fixed with 3 and ½ hours reserved. As before, with leave of the Court 1 was able to sit beside Mr. Edmond To to assist. At the moment, the Court is assessing the work done before and after the change of solicitors so that the HK$700,000.00 can be reasonably apportioned.

For my estimate, the Court may award to you $400,000 to $500,000 plus about 10% interest in the end.  I would expect that you will have to pay about $100,000 for your share of costs given that the Court while allows me to assist cannot award me costs as I am not the solicitors on record.”

14.On 30.6.2006, he wrote to the Defendant again, stating:-

“2. Ever since the change of the handling solicitor from me to Edmond To on or about 2^nd September 2005, under your instructions I have been assisting actively Edmond To and Alfonso Fung, the law costs draftsman with the leave of the Court, I have been able to sit beside Edmond To not only to assist Edmond To and Alfonso Fung, but also to answer questions from the Master.

…………………

5. I repeat that even costs can be recovered from Huen & Partners, I am entitled to receive more from you on solicitor and own client basis. I already explained this to you during my previous legal visits. Apart from this, I also pointed you to you both in my letter dated 21^st January 2006 and in my legal visits that though the Court allowed me to assist your case, it would be unlikely for the Court to award me costs for that part of my work because I was not the solicitor on record. It is only reasonable for you to pay me for that part of my work.

6. For your information, the right to recover all costs and disbursements due to Messrs. Au-Yeung, Cheng, Ho & Tin had been assigned to me because I had to settle the outstanding accounts of the present case. Despite my repeated requests, you have made no response to settle the costs incurred for the work done in respect of the appeal case, the restitution order in favour of ex-employer and the present case against Huen & Partners.

7. ……

8.       In the circumstances, I have no alternative but to terminate whatever retainer there may have existed between you and me and/or my firm in relation to the case.  Upon termination, I shall send you our bill (including the costs and disbursements of Au-Yeung, Cheng, Ho & Tin) for your settlement.  In case you dispute any matters or entitlement of our bill, you have the right to request taxation of our bill by the Court, in which case you should seek independent legal advice.”

15.On 26.2.2007, he wrote to the Defendant again:-

“I refer to my letter to you dated 30^th June 2006.

……………….

Perhaps you may instruct your sister Rita to contact me as to how the matter can be resolved amicably while it is still possible.”

In these letters the Plaintiff repeatedly urged the Defendant to settle his costs, but the Defendant did not make any response.  The Defendant argued that all legal fees should be asked from Huen. It had nothing to do with him.  He also said that the conditions of the prison were poor, and he had to focus on his ICAC appeal case.  That is why he did not respond to the Plaintiff’s letters.  The simplest thing to do is to tell his sister to contact the Plaintiff.  It would take only a short time to do so.  It would also take him a short time to write back to the Plaintiff.  He did not do so.  I am not convinced that he was telling the truth.

16.On his own admissions he had reasons to commence the taxation case against Huen.  As shown before it cannot be true that the Plaintiff borrowed his name to sue Huen in the taxation case.

17.The Defendant is bound by the terms contained in the 1^st and the 2^nd retainers.  He indicated his agreement to the contents of the two retainers by signing his name on them.  Hence he was bound by the two retainers.  He did continue to retain the Plaintiff, after the change of solicitors from the Plaintiff to Messrs. Tong & Tsoi, solicitors.  It is reasonable that the hourly charge was to be fixed at $4000 per hour.

18.In conclusion, I simply do not find that the Plaintiff made any assurance to the Defendant as alleged by him.  I find that the evidence of the Plaintiff is supported by ample documentary evidence.  His evidence is credible.  The Defendant is not an honest witness.  His evidence contradicts the documentary evidence adduced in court.  The documentary evidence reveals what actually happened.  I reject his evidence in so far as it contradicts those of the Plaintiff.  Accordingly I enter judgment in favour of the Plaintiff.  I order that the Plaintiff’s bill of costs delivered to Messrs. Tong & Tsoi under the Plaintiff’s cover letter dated 4.7.2007 be referred to the taxation master for determination of its reasonableness, in light of the Defendant’s list of objections filed on 10.3.2011 and re-filed on 18.5.2011.  The hearing of the trial be adjourned sine dine, with liberty to restore by either party, for disposal of issues not yet determined. 

The Plaintiff : represented by Mr. Chan Hing Wing, Eric in person

The Defendant : represented by Mr. Poon Sui Bunn, instructed by M/S. Lam & Co., Solicitors

Please refer to HCMP174/2012 for the relevant appeal(s) to the Court of Appeal.