Bjorn Willumsen v. Alsop Wilkinson

CACV000107/1995

IN THE COURT OF APPEAL

1995, No. 107
(Civil)

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Coram: Hon Litton, V.-P. Godfrey and Mayo, JJ.A. in Court

Date of hearing: 25 May 1995

Date of handing down judgment: 6 June 1995

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J U D G M E N T

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Mayo, J.A. (giving the judgment of the court):

1. This is an appeal from a decision of Sears J. He in turn was hearing an appeal from an order made by Master Jennings on 20 January 1995 when he declined to enter judgment for the plaintiff and ordered the 4th defendant to make an interim payment of $150,000.00. Sears J allowed the appeal and entered judgment in the sum of $315,751.00. He also ordered that there should be a stay of execution pending the taxation of the bill of costs referred to in the statement of claim.

2. The respondent is a firm of solicitors. They are seeking to recover disbursements they claim to have made on behalf of the first three appellants who were their clients. The 4th appellant while not a party to the litigation which the first three appellants were party to is the husband of the 1st appellant and has an interest in the 2nd and 3rd appellants. The action in question was HCA 8217/88.

3. It appears to be common-ground that the 4th appellant did give instructions to the respondents.

4. There was an unhappy history in the litigation concerning the payment of the respondent's costs and disbursements. The respondents say that the appellants were tardy in paying bills delivered to them and placing the respondents in funds on account of costs and disbursements it was anticipated would be incurred.

5. These difficulties were compounded by the necessity for lengthy adjournments of HCA 8217/88 when it was due to be heard in February 1994. It was eventually settled on 22 April 1994 when the defendants in that action agreed to pay $5 million in settlement of the appellants' claims against them.

6. The action concerned various transactions relating to shares in Japan. It was accordingly necessary to engage the services of interpreters proficient in the Japanese language.

7. Mr Murtagh the solicitor representing the appellants in HCA 8217/88 had various discussions with the solicitors representing the defendants in the action Messrs Lovell White & Durrant. The purpose of the discussions was to seek agreement between the parties concerning the provision of interpretation and court reporting services during the trial.

8. It was agreed that Japanese interpreters should be engaged and that court reporters should be appointed to provide a satisfactory transcript of the proceedings and that each side should pay one half of the cost of providing these services. Also it was agreed that if the costs could not be agreed at the conclusion of the case and there was a taxation of costs the side against whom the order was made would not raise any objection on the taxation to these costs.

9. It is Mr Murtagh's evidence on affidavit that before entering into an agreement with Lovell White and Durrant on this he telephoned the 4th appellant who was in Japan at the time and obtained his authority to enter into the agreement. According to him the conversation took place on 17 February 1994.

10. He says that he acquainted the 4th appellant with the terms proposed and informed him that the Japanese interpreters based in Australia and Japan would be flown to Hong Kong for the trial and be remunerated on a daily basis. Their expenses for staying in Hong Kong would also be defrayed. As to the court reporters he advised the 4th appellant that the best quotation which had been obtained by Lovell, White and Durrant was a firm of court reporters based in London. Even taking into account the additional expenses which would inevitably arise their rates were competitive with Verbatim Reporters in Hong Kong.

11. It is this discussion between Mr Murtagh and the 4th appellant which gives rise to the main issues in this action. It is the 4th appellant's contention that Mr Murtagh led him to believe that the costs for providing for both the interpreters and the court reporters would not exceed $6,000 per day after being divided equally between the parties.

12. As indicated earlier there were problems between the parties concerning payment of bills. When the action was settled on 22 April 1994 the defendants were prepared to deliver a cheque for the amount agreed in favour of the respondents.

13. The 4th appellant wanted the cheque to be made out in the 3rd appellant's favour. The respondents were only willing to agree to forego any lien they may have for costs if the 4th appellant was prepared to enter into a firm commitment in respect of costs and disbursements.

14. On 22 April an undertaking was signed by the 4th appellant in these terms:

"April 22, 1994

Alsop Wilkinson Attn.
Mr Murtagh

Fax 810 1345

Dear Adrian,

Re Settlement NJ

On your request I hereby confirm in writing my response to Camille's letter dated April 11, 1994, which I gave you verbally in court Thursday April 14. It was as follows

1. I shall pay your firm 200,000 HKD April 15, 1994 and another 200,000 HKD on May 15, 1994 towards its fees and disbursements.

2. The balance of your firms fees and disbursements taking into account the payments referred to under 1. above shall be settled within one month of the conclusion of this case be it through trial or negotiation.

3. I shall continue to pay counsels fees the week after they are incurred or when requested by Barrie. I shall update payments as soon as I have put my new banking facilities in place.

I hope this concurs with your own understanding of what was said.

I take to heart your assurance that there is no problem with the settlement and that the account of Porvel Holdings SA shall be able to receive value May 2, 1994.

I sincerely appreciate your efforts and patience on behalf of Ruriko and me during a difficult time, which went far beyond the call of duty and without which I can now see. I should probably not have been able to put up any credible cases at all. My apologies again for putting you under unnecessary and unwarranted strain. I can only hope I shall come out of this experience a better man and I shall treasure any opportunity to do business with you in the future.

May God bless you.

Yours sincerely,

Bjorn Willumsen"

15. The 4th appellant had a few days previous to entering into this undertaking entered into an agreement whereby he had guaranteed to pay the respondents' costs and disbursements. The consideration for this guarantee was the respondents' agreement to continue to represent the appellants in HCA 8217/88. The 4th appellant disputes this.

16. This encapsulates the main issues between the parties.

17. It is however necessary to refer to an important development in the litigation.

18. On the 4 November 1994 the appellants' issued an application to tax the bill which had been delivered by the respondents. This taxation was pending when Sears J heard the appeal from Master Jennings. The taxation was conducted by Master O'Donnell on 30 and 31 March 1995. He allowed the disbursements in full and ordered that the costs of the taxation be to the respondents.

19. One of the main difficulties encountered in this appeal is in determining the extent to which Sears J when hearing the appeal from Master Jennings attempted to himself perform functions analogous to those undertaken by a taxing master. It is evident from his judgment that he did go beyond simply determining the issue of the appellants' liability to pay disbursements. Also unfortunately the order which was subsequently drawn up and filed did not accurately reflect the judge's obvious intention as it stated that the judgment was entered in the plaintiff's favour in the sum of $315,751.00 and that there was to be a stay of execution pending the taxation of the bill. This would seem to indicate that the result of the taxation had already been determined. We are satisfied that the order should have followed the form adopted in Smith v. Edwards 22 QBD 10.

20. This form provided in effect that the amount payable under the judgment would be the amount certified in the allocatur by the Taxing Master.

21. However it would appear that this difficulty was to an extent overcome at the commencement of the taxation by counsel representing the respondents giving an undertaking that the respondents would apply to the court to vary the terms of Sears J's judgment to reduce the amount payable under the judgment by any amounts which may be taxed off by the Taxing Master. This was not an altogether satisfactory solution to the problem.

22. Mr Bell for the appellants was particularly concerned about the difficulties which arose from the order which had been made by Sears J. It was evident from his judgment that he had considered the quantum of the items in the bill notwithstanding the fact that he had been aware of the outstanding taxation. It was also evident that he had attempted to resolve the contested issues of fact on the affidavit evidence. He should not have attempted to do this on an Order 14 application.

23. The result of his dealing with the appeal in this way was to in effect predetermine the outcome of the taxation. At the very least the Taxing Master would be inhibited from making deductions from the items claimed when Sears J had indicated in such definite terms his views on the items being claimed.

24. Having regard to the issues which have been framed in this action we are satisfied that the sole issue which should have been ventilated on the Order 14 application was whether the appellants were able to demonstrate that there was a triable issue on liability.

25. Taxations between a solicitor and his own client are provided for in Order 62 rule 29.

"29. (1) On the taxation of a solicitor's bill to his own client (except a bill to be paid out of funds provided by the Legislative Council pursuant to section 27 of the Legal Aid Ordinance, or a bill with respect to non-contentious business) all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

(2) For the purposes of paragraph (1), all costs incurred with the express or implied approval of the client shall, subject to paragraph (3), be conclusively presumed to have been reasonably incurred and, where the amount thereof has been expressly or impliedly approved by the client, to have been reasonable in amount.

(3) For the purposes of paragraph (1), any costs which in the circumstances of the case are of an unusual nature and such that they would not be allowed on a taxation of costs in a case to which rule 28(2) applies, shall, unless the solicitor expressly informed his client before they were incurred that they might not be so allowed, be presumed, until the contrary is shown, to have been unreasonably incurred."

26. In the context of this appeal it was necessary for Sears J to consider whether on the evidence before him instructions had been given by the 4th appellant to the respondents and whether any limitation had been imposed upon those instructions.

27. There can be no doubt that instructions were given to Mr Murtagh. As to whether any limitation was imposed on those instructions the appellants place reliance upon the 4th appellant's evidence concerning the telephone conversation which took place between himself and Mr Murtagh on 17 February 1994 when the subject was discussed.

28. Page 147 of the bundle contains the 4th appellant's version.

"Paragraph 10

5. As I indicated above I was mistaken as to the day of the week upon which I discussed the question of transcribers and translators with Mr Murtagh when I was in Japan. This telephone conversation took place on 18th day of February, 1994 which was a Friday. I have checked with my diary in my computer and found that there was a message at my hotel in Japan from Mr Murtagh on the afternoon of 17th February 1994. I was trying to negotiate a settlement at that time through my Japanese contracts. On the 18th I spoke with Mr Murtagh after he called me. The main subject of this conversation was a payment into court by the other side. However, Mr Murtagh informed me that the trial was due to commence very shortly and advised that, as he had indicated before he was of the view that we should have translators and transcribers present. He further informed me that this would cost a total of HK$8,000.00 per day for translators and HK$4,000.00 per day of transcribers.

6. He explained that Lovell White Durrant were anxious for his response on this matter as the trial was due to start on 21st February 1994 and explained that we would have to pay half of such costs and Lovell White Durrant's clients the other half of such costs. I replied that if that was his advice then he should go ahead and as I deposed previously, semi-jokingly said that I should count on paying an additional HK$6,000.00 per day in court. Mr Murtagh confirmed that my understanding was correct."

29. Reliance is also placed upon a passage from an earlier affidavit sworn by the 4th appellant where he states that he considers that Mr Murtagh gave him a firm quotation for the cost of translators and transcribers.

30. We do not consider that it was arguable that any limitation was imposed upon the instructions given to the respondents. This being the case Sears J was right to enter judgment for the respondents on liability.

31. Mr Bleach Q.C. for the respondents submitted that it was not even open to the appellants to prosecute this appeal.

32. On 11 January 1995 Master Chan made an order that the taxation of the respondents' bill must be stayed until the conclusion of the action. At the time of the taxation the respondents had had no intimation of the appellants' intention to appeal against Sears J's decision and accordingly had assumed that as they were proceeding with the taxation it was not their intention to appeal. Had they known of this intention they would have objected to the taxation proceeding. Mr Bleach argued that by prosecuting the appeal the appellants were in effect being afforded two opportunities to canvass the same issue. This constituted an abuse of court.

33. What is clear is that Master Chan's order is binding. We are satisfied that the correct venue for the determination of the amount to be payable by the appellants is a taxation of the respondent's bill.

34. As indicated earlier in this judgment a taxation has already been undertaken. We are however informed that an application has been made to Master O'Donnell to review his taxation. The question is whether, in these circumstances, the appeal against Sears J's order constitutes an abuse of the process of this court. We are not satisfied that it is. Whilst the judge's decision is correct, the formal order as drawn up does not accurately reflect the sense of that decision. As we understand the judgment, the effect of what the judge decided, in terms of Ord. 62 r29 is this: (i) he concluded that, unarguably, all the disbursements were made with the implied approval of the client, but (ii) he left it to the taxing master to determine whether, in terms of para (3) of r28, any of the items are "of an unusual nature" and such as would not be allowed on a party-and-party taxation under r28(2). The formal order, unfortunately, does not reflect this.

35. Although the appeal is dismissed we set aside the order made by Sears J.

36. For the avoidance of doubt we direct that on the pending review by the Taxing Master of the plaintiff's bill of costs mentioned in the statement of claim in the action the appellants are to be at liberty (pursuant to the provisions in that behalf contained in Order 62 rule 29 of the Rules of the Supreme Court) to contend the costs itemized in bill No. 12331 dated 4 November 1994 were of an unusual nature such that they would not be allowed in a case to which Order 62 rule 28(2) refers.

37. We further order that on the said review of taxation the respondents do give credit for all sums of money received by it for and on account of the appellants in respect of the said costs.

38. And it is ordered that the respondents be at liberty to enter judgment against the appellants for the amount found due to the plaintiff by the Taxing Master's allocatur on the review of taxation (with interest if any) and the costs of the action to be taxed.

39. A further matter which has to be dealt with is that the appellants are seeking to assert a right of set off in respect of various items. All of these items have been dealt with elsewhere and it is inappropriate for us to make an order. Also an application has been made for a stay pending the determination of the appellants' counterclaim. This claim is based upon the respondent's alleged professional negligence. It is an unquantified claim and we can see no justification in ordering any stay.

40. And an order nisi is made that the respondents shall have the costs of this appeal.

Representation:

Mr John Bleach, Q.C. and Mr Kevin Lewis (Messrs Alsop Wilkinson) for Respondent

Mr Adrian Bell instructed by Messrs Oldham, Li and Nie for Appellants