Eric Chan & Co. (A Firm) v. Wong Kwok Wang, Warren
Read the full judgment text of DCCJ 1155/2008 on BabelCite. This District Court judgment.
1. This assessment is rather unusual as this is an assessment on the reasonableness of a solicitors’ bill charged against his client. This is unusual as normally dispute of this nature would be dealt with by way of taxation pursuant to Section 67 of the Legal Practitioners Ordinance, Cap. 159.
Cites 1 case
|
DCCJ 1155 / 2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1155 OF 2008 _______________ BETWEEN
_______________
__________________ ASSESSMENT OF DAMAGES __________________ Introduction 1.This assessment is rather unusual as this is an assessment on the reasonableness of a solicitors’ bill charged against his client. This is unusual as normally dispute of this nature would be dealt with by way of taxation pursuant to Section 67 of the Legal Practitioners Ordinance, Cap. 159. 2.The issue on liability has already been determined by HH Judge Chow after a 7-day trial and Judgment was handed down on 4th October, 2011 (“the Judgment”). The learned judge found in favour of the Plaintiff and he directed that the Plaintiff’s bill of costs “be referred to 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 die, with liberty to restore by either party, for disposal of issues not yet determined”. 3.Hence, my mandate is to determine the reasonableness of the bill. 4.Subsequent to the Judgment, there were CMC hearings for the preparation of the assessment and for this purpose, discovery and exchange of witness statements on quantum took place. 5.The Plaintiff’s bill of costs is premised on the 1st and 2nd Retainers and the verbal instructions and authorization given by the Defendant during a legal visit on 2nd September, 2005. The learned judge found in favour of the Plaintiff and further held it is reasonable that the hourly charge was to be fixed at $4,000 per hour. [1] 6.I am bound by these findings. Background 7.The Defendant was a qualified quantity surveyor and a member of the U.K. Chartered Institute of Arbitrators. He was the Chief Manager of the Project Costs Department of a leading listed real estate developer in Hong Kong. In about 11th December, 2002 he was arrested by the ICAC and was subsequently charged with 13 counts of conspiracy to solicit advantages which was due to be tried in the High Court (being HCCC No. 321 of 2004) (“the Criminal Case”). At all times up to the conclusion of the trial, he retained the Plaintiff as his solicitor. 8.Initially, the Plaintiff was working in Messrs. Au Yeung, Cheng, Ho & Tin, Solicitors (“AYCHT”) and hence, AYCHT was the Defendant’s solicitors on record. 9.Then the Plaintiff left AYCHT and joined Huen & Partners (“Huen”) in early December, 2003 and he took the Criminal Case to Huen. 10.However, the relationship between the Plaintiff and Huen soon turned sour and eventually led to his summary dismissal on 20th October, 2004. On the next day, i.e. on 21st October, 2004, the Plaintiff rejoined AYCHT. Indeed, a few days before this on 15th October, 2004, obviously through the arrangement of the Plaintiff, the Defendant had already retained AYCHT to represent him in the Criminal Case in place of Huen. 11.At that juncture, the trial of the Criminal Case was due to commence in the Court of First Instance on 18th October, 2004. Dispute arose as to how to deal with the costs on account being held by Huen. 12.The Defendant entered into a written retainer with Huen on 1st March, 2004 at an agreed fee of $700,000 inclusive of fees and disbursements (save and except counsel fees) up to, in brief, the conclusion of the trial, and even re-trial, if any. 13.At that time, there was about $710,000 being held by Huen as costs on account. Upon the change to AYCHT, what Huen did was to issue a fee note on 18th October, 2004, in essentially one stroke of sentence, charging $700,000, leaving a meager of $10,000 to be refunded. 14.As a result, on the advice of the Plaintiff, the Defendant commenced an action against Huen in the Court of First Instance (being HCMP No. 2843/2004) on 2nd November, 2004 (“the Taxation Proceedings”) for taxing Huen’s bill and he entered into a retainer with AYCHT on 23rd October, 2004 for them to represent him in the proceedings. Naturally, the Plaintiff was the handling solicitor for the matter. This is the 1st retainer referred to in para 1(a) of the Judgment. 15.Then later on, since the Plaintiff had commenced his own practice in the name of Eric Chan & Co. in July, 2005, the Defendant signed another retainer with the Plaintiff in place of AYCHT on 4th August, 2005. This is the 2nd retainer referred to in para 1(b) of the Judgment. 16.In about September, 2005, since the Plaintiff himself was the handling solicitor of the Criminal Case when he was with Huen, the Taxation Proceedings met with Huen’s challenge on the ground of conflicts of interest on the part of the Plaintiff in acting for the Defendant. For this reason, through the arrangement of the Plaintiff, the Defendant retained Messrs. Tong & Tsoi, Solicitors (“T&T”) in place of the Plaintiff on 2nd September, 2005 and at the same time, since the Plaintiff was well conversed with the Criminal Case, he was verbally retained by the Defendant to assist T&T. This is the verbal instruction and authorization referred to in para. 1(c) of the Judgment. 17.I need to mention that in the meantime, the trial of the Criminal Case took place from 18th October, 2004 to 14th January, 2005, lasting for 73 working days. The Defendant was convicted of 9 counts of charges and was sentenced to 7 years’ imprisonment. At the time when he retained T&T, he was serving his term in the Shek Pik Prison. The retainer was signed during a legal visit made by the Plaintiff and Mr. Tsoi of T&T on 2nd September, 2005. 18.Meanwhile, as regards the Taxation Proceedings, substantive hearings were held before Master Kwang of the High Court on 5th and 6th September, 2005. On the second day of the hearing, the learned Master gave certain directions on how to proceed with the taxation, which I will come to in due course. For the time being, suffice for me to say is that these directions proved to be instrumental in driving the parties to come to a settlement. 19.Eventually, the Defendant, acting through T&T, reached a settlement with Huen by way of a Consent Order dated 25th April, 2007 for the disposal of the Taxation Proceedings. 20.I will return to the Taxation Proceedings in due course. The Plaintiff’s Claim 21.What the Plaintiff is claiming now is for the professional services that he rendered to the Defendant in the Taxation Proceedings. Such services took place from about mid October, 2004 up to at least May, 2007 and were given first, by AYCHT pursuant to the 1st Retainer, then by Eric Chan & Co. pursuant to the 2nd Retainer and lastly, also by Eric Chan & Co. pursuant to the verbal instructions and authorization (that was the period when T&T were on record the Defendant’s solicitors). I need to mention that since AYCHT has assigned their interests under the 1st Retainer to the Plaintiff, the Plaintiff therefore has the title to claim for that part of the services as well. 22.It has also to be remembered that since the Defendant was imprisoned as from January, 2005 up to about 8th January, 2011, most of the work rendered by the Plaintiff was during the time when he was incarcerated. Approach to be taken 23.It is common ground that taxation of a solicitor’s bill payable by his client can only be taxed pursuant to section 67 of the Legal Practitioners Ordinance, Cap. 159 and that falls within the exclusive jurisdiction of the Court of First Instance under the term of the said Ordinance. 24.In the present case, the parties have deliberately chosen not to take that path and in any event, more than 12 months have expired since the delivery of the bill, the Defendant would not be able to obtain an order for taxation except in special circumstances: see: Proviso (i) of s. 67(2)(b), Cap. 159. 25.In the Court of Appeal case of Oldham Li & Nie Solicitors v. Wong Lin Chooi also known as Clara Chan, CACV no. 319/2005 (date of judgment: 1st March, 2006), it was held by Mr. Justice Barma (as he then was), in paragraph 39 of his judgment, that the Court’s inherent jurisdiction to order taxation is impliedly circumscribed by the said Proviso (i). The effect is that the Court can only order taxation if the requirements under section 67 are satisfied. 26.However, this is not the end of the matter. Mr. Justice Barma took the view that there was an alternative open to the defendant on the basis that the court’s usual jurisdiction to decide contested questions in proceedings before it remained intact. He said the following,
27.The Plaintiff tells me it was on that authority that the learned judge directed that the quantum of his bill, or in proper term, his damages, be referred to a taxing master for determination of reasonableness. 28.The Plaintiff develops his argument by submitting that since the present exercise is not a taxation but an assessment of damages, it is inappropriate for me to deal with the Defendant’s challenges items by items otherwise there would not be any difference from a taxation. He urges me not to approach the matter from a purely arithmetical standpoint but instead should look at the matter as a whole, and to consider whether in all the circumstances, the bill is reasonable. He refers me to the following extracts from Stikeman, Elliot (a firm) v. Wong Ming-yuen and Anor [1984] HKLR 191 (CA):
29.The Plaintiff draws my attention to the fact that Stikeman itself was a case on assessment and not on taxation. He submits in that case, the court looked at all the circumstances of the case. Despite the imperfections in the records of time submitted by the solicitors in that the numbers of hours of work done multiplied by the hourly rate did not come up to the sum charged, the court accepted that the amount charged as reasonable. 30.I think it must be right for me to look at all the circumstances of the present case when assessing the reasonableness of the bill but it does not mean that I shall pay no regard to the items in dispute. As has been opined by Mr. Justice Barma, supra, it must be for the client (i.e. the Defendant) to identify the items in dispute, even if the onus of establishing the reasonableness of the particular charges may still rest with the solicitor. 31.It is evident that the obiter of Mr. Justice Barma has its genesis from the English case of Turner & Co. v. O Paloma S.A. [2000] 1 WLR 37. In that case, Evans L.J. said as follows,
32.With the above authorities, it seems to me clear that I still have to give regard to the items challenged by the Defendant but I am not going to embark on a full scale taxation. The Taxation Proceedings 33.In order to appreciate the reasonableness of the Plaintiff’s work, it is pertinent to have an overview of what were involved in the proceedings. 34.The action was commenced by way of an Originating Summons accompanied by the Defendant’s supporting affidavit. 35.Since the bill issued by Huen was a gross sum bill, in the 1st Callover hearing of 14th December, 2004, Master Levy directed Huen to prepare an itemized bill and thereafter the Defendant (as plaintiff in that case) to file and serve a List of Objections. Huen’s itemized bill ran up to $2.3 million[2] and the Defendant filed 2 Lists of Objections. 36.There was a 2nd Callover Hearing before Mr. Registrar Lung on 11th January, 2005 and in the 3rd Callover Hearing before Master S. Kwang on 24th March, 2005, the action was set down for full argument on 5th and 6th September, 2005. 37.Then on 6th September, 2005, after having heard parties’ arguments on the day before, Master S. Kwang ruled that Huen was not able to charge the full amount of the agreed fee because the terms of the retainer was that the said $700,000 covered work up to the conclusion of the Criminal Case. On this, it is to be reminded that when Huen ceased to be the Defendant’s solicitors, the trial had yet to begin. 38.From that ruling, it followed that if the Defendant only agreed to pay $700,000 for the whole Criminal Case, this $700,000 must be apportioned between the work done by Huen and those subsequently done by AYCHT. This “apportionment’ was merely a hypothetical one in order to ascertain how much Huen was entitled to since it was not in dispute that at the outset the Defendant had already paid AYCHT’s costs together with counsel’s fees in full well before the commencement of the criminal trial. In other words, the exercise had nothing to do with how much AYCHT was going to get and if there was any balance from the said $700,000, the same would have to be refunded to the Defendant. 39.For this purpose, Master S. Kwang directed that an itemized bill particularizing the work done by AYCHT as from the change of solicitors up to the conclusion of the Criminal Case be submitted and the hearing was adjourned. 40.I am told by the Plaintiff that though at that time T&T were the solicitors for the Defendant on record, he was at all times in court rendering his assistance. He testifies that the formulation of “apportionment” was originated from him (not challenged by the Defendant). 41.As a result, a law costs draftsman was retained to prepare the bill. This bill, that the Defendant refers it as “AYCHT’s bill”, looms large in the Defendant’s complaint against the Plaintiff in the present proceedings which I will deal with in due course. At this juncture, I need only to point out that the hypothetical bill went up to about $2,847,000. 42.Subsequently, there was a further callover hearing on 10th January, 2006 but then after that, the Defendant, via T&T, conducted negotiation with Huen and the parties finally settled the dispute by way of a consent order dated 25th April, 2007.[3] The settlement was that Huen was to refund $640,000 and to pay the Defendant’s costs of the Taxation Proceedings, including costs previously reserved, and taxing fee, to be taxed if not agreed.[4] Observations 43.From the events alluded to above, I am able to draw the following observations. 44.First, all along Huen strenuously opposed the Defendant’s application. This can be seen from the fact that Huen instructed a senior junior counsel in even the 1st callover hearing before Master Levy. On the other hand, on the Defendant’s side, according to the Plaintiff (which was not challenged), it was he who did all the work and appeared in the hearing. 45.Secondly, the substantive hearing before Master S. Kwang lasted for 2 days and was part-heard when further directions were given. This indicates the complexity of the issues involved. Indeed, the transcript of the hearing before me shows the hearing of 6th September, 2005 lasted up to 4:42 pm and contains 43 pages. [5] 46.Thirdly, with the leave of the court, the Plaintiff was allowed to attend the hearings of 5th and 6th September, 2005 before the learned Master. I accept that the Plaintiff was instrumental in assisting the court in giving directions regarding the apportionment of the said $700,000. 47.Fourthly, the settlement shows the Defendant was extremely successful in his claim against Huen. It is common ground that out of $640,000 refunded, the Defendant pocketed $290,000 and the balance of $350,000 was for payment of counsel’s fees rendered during Huen’s period. These counsel fees had to be paid whether Huen ceased to be the Defendant’s solicitors or not. Further, Huen was to pay the Defendant’s costs which means that a major part of the Plaintiff’s bill (the subject matter of the present claim), at least up to the taking over of the matter by T&T on 2nd September, 2005, would have to be shouldered by Huen, albeit on party and party basis. As a matter of fact, for this purpose, T&T at that time did on 19th May, 2007 ask the Plaintiff for the bill of his costs. 48.I am told by the Defendant that pursuant to the terms of the settlement, Huen paid T&T’s costs and disbursements in the sum of $101,400. These were for services as from 2nd September, 2005 when T&T took over the Taxation Proceedings. As for the costs before the change over, the Defendant agrees that Huen are still potentially liable for them and T&T have chased after them. He admits that T&T has sent the Plaintiff’s bill to Huen and requested Huen to consider all the costs in one go but the latter preferred separate treatment. 49.I agree with the Plaintiff that it is up to the Defendant to enforce the costs order against Huen and the Plaintiff, as the Defendant’s solicitor, naturally looks to his client for payment. 50.As far as I can see, there is no reason why the Defendant cannot enforce the costs order against Huen. 51.Further, the Plaintiff contends that there are unbilled items of work, which could have been included but have not been included. There are also items which are short-claimed. Though I do not accept all the items raised by the Plaintiff, I do accept that there are items which have not been included, such as legal research done by the Plaintiff for the hearing before Master Levy, a legal visit on the Defendant on 26th April, 2005 for the purpose of responding to Huen’s affirmations, attendances at the Registry and Accounts Office for re-fund of the taxing fee deposit, attendances on the senior and junior counsels about the progress of the Taxation Proceedings, attendances on the Defendant’s wife and his sister, conferences with the law costs draftsman and T&T, and the drafting of court orders. 52.In my judgment, I am entitled to take the above into account when I consider the Defendant’s challenges and making any adjustments. 53.The Plaintiff has already given certain concessions which make the total quantum of his bill comes down from $711,511 to $673,221. Since there is no reason for the Defendant to dispute these, I do not think I need to set out the particulars here. The Defendant’s Challenges 54.The Defendant is determined to turn the table around and he leaves no stones unturned. However, he is not allowed to travel beyond the pleadings and further, he is bound by the findings made by the learned judge. 55.In his Amended Defence, which is professionally drafted by his then solicitors, and as far as the contents of the Plaintiff’s bill are concerned, the Defendant’s only averment is that the costs in the bill was excessive and he put the Plaintiff to strict proof that actual services had been rendered to justify the charge in the bill. 56.In his Amended List of Objections, his attacks are generally on two grounds, first, the costs were already paid for pursuant to an oral agreement/agreed fee made between the Plaintiff and the Defendant and secondly, that the time claimed under almost all the items was excessive. It seems to me clear that the first ground goes to liability and has already been rejected by HH Judge Chow. What remains is the alleged excessiveness of the items. 57.There is also another ground of challenge specific to the attendances of the Plaintiff on the Defendant such as his conferences with the Defendant and attending taking instructions from the Defendant.[6] The Defendant says, in his Amended List of Objections, that he had no knowledge of the work done as alleged and he put the Plaintiff to strict proof. With the leave of the court, the Defendant filed his revised witness statement on 5th April, 2012 enclosing an “expanded” version of his List of Objections. Apart from expanding on the excessiveness of the items, he also raises, for the first time that, as far as these attendances of the Plaintiff on the Defendant were concerned, not only that he had no knowledge of the work done, these attendances in fact never happened. In other words, these were the Plaintiff’s sheer fabrications. 58.Finally, there is one further item of work that the Defendant denies having taken place in his Amended List of Objections and this was the conference with the Defendant and his wife together with one Mr. Ho of AYCHT on 15th October, 2004. [7] The Plaintiff admits it was a mistake as the item related to the Criminal Case and he had already withdrawn this item in his Reply dated 29th September, 2010. 59.The Defendant mounts 15 grounds of challenges. Since numerous items were involved, I think it would be convenient for me to deal with them in the order of the Defendant’s grounds. 60.1st Ground: It seems to me clear that this 1st Ground forms the foundation of his challenges. The Defendant argues that the Plaintiff is claiming exorbitant fees in taxing his own costs. Whether it is Huen’s bill or AYCHT’s bill, most if not all the items of work on the bill are the Plaintiff’s own work with which the Plaintiff should be familiar and he challenges why the Plaintiff needed to take up so much time to check his own work. For instance, the Defendant challenges why the Plaintiff needed 2 hours to approve the draft bill of AYCHT prepared by law costs draftsman.[8] 61.In my view, there is some substance in this argument. The Plaintiff was not an outsider to the dispute. I will bear this fact in mind in assessing the reasonableness of the bill. 62.The Defendant also argues that the dispute in fact did not concern him. At that point in time, he had already agreed with his solicitors on the amount of costs inclusive of counsel’s fees payable for the Criminal Case. The whole dispute was merely a matter of how the said $700,000 was to be divided between the solicitors and counsels and it had nothing to do with him. Hence, he did not require the Plaintiff’s services and as a matter of fact, the Plaintiff had not delivered any services. The Plaintiff was all along checking his own work and in doing so, generating income for himself and cashing his cheques (i.e. the retainers) for 3 years. He also raises the point that the Plaintiff never explained to him whether the $700,000 was still his money and how the remaining $10,000 being retained by Huen was to be dealt with. 63.On this point, I note the Defendant’s defence in trial was that he was just lending his name to the Plaintiff in taxing Huen’s bill and he agreed to do so on the strict undertaking by the Plaintiff that the Plaintiff would be responsible for all costs of taxation and indemnify the Defendant of all liabilities.[9] I have no doubt that the Defendant is revisiting the liability issue through the back-door and he is not entitled to do so. 64.Further, it cannot be right to say that the Taxation Proceedings have nothing to do with him. The truth is that the Defendant pocketed $290,000 from the money returned. 65.2nd Ground: The Defendant contends that a significant portion of the work claimed by the Plaintiff, such as booking appointments with the Prison authorities for legal visits and issuing routine or simple letters could have been competently undertaken by junior staff, bearing in mind the Plaintiff is charging $4,000 per hour. 66.The Plaintiff’s response is that the charging rates are in accordance with the practice of taxation in the Court of First Instance, and depending on the length, they are from 5 minutes to 15 minutes for a single page letter and if the work was delegated to his junior staff, there would be additional costs of supervision. 67.In my view, the ultimate question is whether the Plaintiff’s charges on “letters out” to various parties are, on an overall basis, reasonable or on the reverse, of unreasonable amounts. According to the bill, the Plaintiff engaged the following time in “letters out”:
68.Some of the letters to Huen were written by one Mr. Ho, a partner of AYCHT. I would also assess them at an hourly rate of $4,000 per hour. I have gone through the correspondences in the bundle, I accept that some of the letters contain one or a few strokes of sentences only and it seems to me that charging 5 minutes or 10 minutes each are unreasonable. I must emphasize that any adjustment here is not an exact science and I must exercise my discretion on the basis of the materials before me. Doing the best I can, I would deduct 2 hours (i.e. $8,000) from the “letters out” to the Defendant and 40 minutes from “letters out” to Huen (i.e. $2,667). As for the “letters out” to law costs draftsman, I consider that since the Plaintiff had not engaged in any conferences with the law costs draftsman and hence more time would have to be incurred in correspondences, I would make a deduction of 3 hours only (i.e. $12,000). 69.The Defendant launches the same attack on the telephone calls that the Plaintiff had with the law costs draftsman, 2 of which were made by the Plaintiff’s legal clerk and the rest by the Plaintiff. The charges range from 3 minutes to 10 minutes. Though there are no records before me, I do not think on the face it these charges are unreasonable. I would not make any deduction. 70.The 3rd Ground: The Defendant also argues that the Plaintiff was his solicitor in the Taxation Proceedings for 22 days only and so he is not entitled to charge the full period. I take he is referring to the period when Eric Chan & Co. were his solicitors on record in the Taxation Proceedings. The Defendant submits that after T&T had taken over the case, T&T had full conduct of the Taxation Proceedings and the Plaintiff was instructed to assist T&T in court only. 71.I do not find any merit in this argument. 72.On the evidence before me, it is clear that at the relevant times, the Plaintiff liaised and worked with T&T. T&T must be fully aware of what happened including the Plaintiff’s status at that time and T&T allowed the Plaintiff to work with them. By way of an example, the Plaintiff testifies that the law costs draftsman’s bill was given to him by T&T and the Defendant does not dispute this. The Defendant cannot now be heard to say that the Plaintiff travelled beyond his instructions or such work was not necessary. 73.The Defendant also challenges the validity of AYCHT’s assignment of their interests under the 1st Retainer to the Plaintiff. I am told by the Plaintiff that the validity of the assignment has been fully canvassed before HH Judge Chow. For the simple reason that the Defendant is bound by the findings of the learned judge that he is liable to the Plaintiff under the retainers, I do not think he is entitled to launch these challenges here. 74.4th Ground: The Defendant repeatedly challenges that the Plaintiff failed to disclose AYCHT’s bill to substantiate his claim and did not inform him that the law costs draftsman’s bill is AYCHT’s bill. As I said in the earlier part of this judgment, this AYCHT bill looms large in the Defendant’s arguments. I incline to think that the Defendant is putting up a red herring. It is clear that the AYCHT bill is just a hypothetical bill which was prepared by the law costs draftsman for the purpose of gauging Huen’s charges, it has nothing to do with the Plaintiff’s bill here. I agree with the Plaintiff that how that bill came about is clear from the transcript of the proceedings before Master S. Kwang and the transcript was obtained as a result of a joint application by the Plaintiff and the Defendant. In any event, the Plaintiff has produced the AYCHT bill that he has, albeit that there appears to have 2 versions. I accept the Plaintiff’s explanation that it is likely that either one or even both of them are drafts and the final version should be with T&T who were and are the solicitors on record. To conclude, I see no merit on this ground. 75.5th Ground: The Defendant submits that the Plaintiff’s claim unreasonably covers works relating to his change of employment from Huen to AYCHT. He refers to 3 letters (a total of 25 minutes) from Huen which are related to the Criminal Case only.[10] I have perused the letters. [11] Apparently these letters related to the Criminal Case only. I would deduct $1,667 accordingly: $4,000 X 25/60. 76.6th Ground: The Defendant submits that the Plaintiff claims as much as 950 minutes of conferences and communications that never existed. His arguments are that at that time he was heavily involved in the Criminal Case and his only instruction to the Plaintiff was to get back the money for payment of counsel’s fees. During that time, he did have a lot of conferences and communications with the Plaintiff but these were all on the Criminal Case. Essentially what the Defendant says is that all the Plaintiff’s attendances in item nos. 89(A)(a) 1 to 12 (Conferences) and telephone calls in item no. 89(A)(c) never exist. In a nutshell, he is saying that the Plaintiff fabricates all these works. For instance, referring to item no. 89(A)(a)12 “Explained and discussed Huen’s bill of costs for 2 hours”, the Defendant says it was impossible for him to have spent 2 hours on the bill because he was in the middle of the criminal trial, he simply would not have the time to do so. It was also totally absurd and meaningless for the Plaintiff to have spent any time with him in perusing and discussing Huen’ bill in which most of the items directly related to the Plaintiff himself. 77.Despite the production of the attendance notes, the Defendant argues that these are self-serving and the Plaintiff could have simply made them up. 78.I have no hesitation in rejecting this contention. 79.First, this ground has never been pleaded in his Amended Defence or Amended List of Objections. As regards the contents of the bill, the Defendant’s averment in his Amended Defence is that the Plaintiff’s bill was excessive[12] and that the bill “did not reflect truly and fairly the charges of the alleged services rendered”. And in his Amended List of Objections, the Defendant’s ground of objection is that he “has no knowledge of the work done as alleged or at all”. Clearly, these assertions fall short of making a positive allegation that there were no such services at all. As the assertions have not been pleaded, the Defendant is not entitled to rely on them. 80.Secondly, it has to be reminded that the Defendant admits, in his Amended Defence[13] that, his then solicitors (T&T) received the Plaintiff’s itemized bill of costs on 4th July, 2007 and it was only in his Revised Witness Statement of 29th December, 2011 (i.e. 4 years later) that he first raised the “fabrication” ground. Given that the Defendant got the bill as early as July, 2007, throughout all these years, he should have ample time and opportunity to go through the same. If what the Defendant says were true, it is hard to believe that T&T did not raise this upon receipt of the bill and the Defendant did not raise this in his defence. 81.7th Ground: The Defendant submits that the Plaintiff has included lunch breaks and transportation time and these are unreasonable. 82.As regards lunch breaks, the Defendant refers to the hearings before Master Kwang on 24th March, 2005, 5th and 6th September, 2005. 83.During the assessment hearing, substantial time has been spent in examining the Plaintiff’s attendance notes. I do not think I need to narrate in details the relevant contents of the attendance notes here. Suffice for me to say is that 3 discrepancies are found. The first is the hearing on 24th March, 2005.[14] The attendance note records a total time of 4 hours only but the Plaintiff is charging 5 hours. Hence, $4,000 ought to be deducted. 84.The second one is the hearing on 5th September, 2005.[15] The attendance note records a total time of 4 hours 20 minutes but the Plaintiff charges 5 hours. The Plaintiff accepts this discrepancy but argues that he has spent time during the lunch time in preparing the written submission and the same has been produced in pages 936-938 of the Bundle and for this reason, no deduction should be made. Though the Defendant does not dispute the written submission, in my view, there is no evidence that the Plaintiff took the whole 40 minutes in preparing the submission. Doing the best I can, I would deduct 20 minutes, i.e. $1,333. 85.The final one is the hearing of 6th September, 2005.[16] According to the attendance note and the transcript of the hearing, the morning session was from 10:00 am to 12:47 pm (2 hrs 47 min) and the afternoon session was from 2:35 pm to 4:42 pm (2 hrs 7 min), hence a total of 4 hrs 54 min. However, the Plaintiff charges 5 hrs 15 min for this item, i.e. 21 minutes more. I would deduct $1,400 ($4,000 X 21/60). 86.As for the transportation time, the Defendant complains that it was unreasonable for the Plaintiff to include travelling time in the legal visits to him at the Shek Pik Prison in Lantau.[17] As the Defendant’s 8th Ground is directly on the legal visits, I will deal with this complaint together with the 8th Ground below. 87.The 8th Ground: The Plaintiff charges a total of 18 hours 36 minutes (i.e. $74,400) for the 4 legal visits that he made to the Shek Pik Prison in Lantau.[18] The Defendant argues that he never requested for any of these conferences and they were initiated unilaterally by the Plaintiff without any prior notice. Further, these conferences were totally unnecessary and could be done by way of simple exchange of letters. 88.In response, the Plaintiff explains that for the fact that Shek Pik Prison is located in the remote part of Lantau it is justified for him to add 4 hours being the transportation and waiting time on each trip, and where the legal visit is relating to the Criminal Case as well, he has already deducted half of the time to reflect this situation. 89.Again, much time has been spent on the examination of the relevant attendance notes to verify the Plaintiff’s charges. By and large, the attendance notes reflect the Plaintiff’s position and their authenticity have not been challenged. However, it seems to me that there remain 2 questions. The first is whether it is reasonable for the Plaintiff to charge the items and secondly, whether it is reasonable for the Plaintiff to add 4 hours on each trip. 90.Legal Visit on 26th May, 2005:[19] From the attendance note, it is clear that the morning session of the visit was on the Criminal Case and part of the afternoon session was on the Taxation Proceedings. I would therefore apportion half of the time of the afternoon session to the Taxation Proceedings. The attendance note shows the afternoon session lasted for 1 hour 45 minutes; half of it is 53 minutes. As for the transportation time, in my view, 4 hours are unreasonable and I would allow 2 hours, which means 1 hour for the Criminal Case and another hour for the Taxation Proceedings. Hence, I would allow a total of 1 hour 53 minutes. 91.Legal Visit on 11th August, 2005:[20] The attendance note shows roughly half of the time was on the Taxation Proceedings and the time lasted for 2 hours 15 minutes. Adding 2 hours as transportation time would give a total time of 4 hours 15 minutes, half of it that goes to the Taxation Proceedings is 2 hours 8 minutes. This is the time I would allow. 92.Legal Visit on 2nd September, 2005: [21] It is clear that this legal visit was necessitated by Huen’s challenge of conflicts of interest on the part of the Plaintiff. To tackle, the Plaintiff had to introduce T&T to the Defendant for the latter to continue with the Taxation Proceedings. In my view, it is clear that the change was caused by the Plaintiff’s own predicament and he, as a professional legal practitioner, should have foreseen this challenge. On that basis, I think it is unreasonable for him to charge this item. 93.Legal Visit on 31st March, 2006:[22] The attendance note shows the visit lasted for 2 hours and that part of the visit was on the Criminal Case. I would apportion half of it to the Taxation Proceedings. Hence, adding one hour as transportation time would give a total of 2 hours. 94.To sum up, the total time allowed is shown as below:
95.The original charges for the above legal visits are $74,400 (18 hrs 36 min X $4,000 per hr). I would therefore deduct $50,333 from this sum : $74,400 - $24,067. 96.9th Ground: The Defendant argues the Plaintiff was the only person with the knowledge and in a position to maneuver the situation in whatever way he pleased and hence, being able to take advantage from the Defendant. He says whether it was Huen’s bill or AYCHT’s bill, they were records of the Plaintiff’s “own” work and it was unreasonable for the Plaintiff to have spent 18 hrs 24 minutes to verify his work with the law costs draftsman. The Defendant questions, for instance, why the Plaintiff needed 2 hours to approve the draft bill prepared by the law costs draftsman. [23] 97.In response, the Plaintiff explains that the law costs draftsman was on board from the very beginning and despite the meetings he had with the law costs draftsman, he has not charged them. Further, at that time all the documents and attendance notes of the Criminal Case were being retained by Huen and that took him longer time. Hence, the time so charged is not unreasonable. 98.I have gone through the relevant documents. The impression I get is that the Plaintiff was punctilious and diligent in his work. On the Defendant’s complaint as to why the Plaintiff needed 2 hours to approve the draft bill, the relevant email indicates that the Plaintiff checked each and every item when approving the draft. [24] I also note at times there are hand-written notes on various parts of the drafts indicating that he went into the details and as a matter of fact, the law costs draftsman produced more than one draft, I accept that the Plaintiff had to check and communicate with the law costs draftsman back and forth in the delivery of his work. Given the observations that I have said about the complexities of the matter and the Plaintiff’s role in the overall picture, I do not think the time so charged is unreasonable. 99.10th Ground: The Defendant argues that the Plaintiff’s work was not necessary or proper as he was no longer the solicitor on record after 2nd September, 2005. He also says that any disbursements should be handled by T&T, his solicitors on record. The Defendant specifically refers to the following items:
100.Again, I do not find any merit in these arguments. The reason is simple. After having lived with this case for some time, from the evidence before me, it is clear that even after T&T had formally taken over the case from the Plaintiff, the latter continued to co-work with T&T and indeed, I can infer that the bulk of the work was done by the Plaintiff. These works were clearly done with the implied approval of the Defendant or T&T since if this was otherwise, there should be objections raised by them. For instance, there were letters sent by the Plaintiff to the Defendant from 27th September, 2005 to 26th February, 2007. If the Defendant did not approve of the work, he should have raised his objections at the time but clearly there was none. Further, as I have referred to in earlier part of this judgment, the Law Costs Draftsman’s draft AYCHT’s bill was indeed given to the Plaintiff by T&T and this has not been challenged by the Defendant. The Defendant cannot now be heard to say that the Plaintiff was acting without instructions. 101.11th Ground: This ground is similar to the earlier one. The Defendant argues that since as from 3rd September, 2005 T&T had the full conduct of the Taxation Proceedings, the Plaintiff’s work was not necessary and further it was unreasonable for the Plaintiff to have engaged in 173 minutes communications with T&T. For the same reasons that I have set out above, I do not find any merit in this argument. 102.12th Ground: The Defendant complains that it was excessive for the Plaintiff to have engaged 48 hours on drafting the following documents.
103.In response, the Plaintiff says that the times charged are his best estimates and probably, he has spent more time than charged. 104.I have gone through the documents. I do accept that the charges are unreasonable in amount. 105.The Originating Summons is short and essentially contains a few paragraphs only. I do accept that the Plaintiff might have spent some time on checking the precedents or forms before setting out for the drafting work but in any event 3 hours are unreasonable. I would allow half of the time charged, hence, a deduction of 90 minutes (1 ½ hrs). 106.As for the Affidavits, the main body of Warren Wong’s Affidavit contains 12 pages (without exhibits) and that of Eric Chan’s contains 22 pages (without exhibits). I have read the documents. They are essentially a narration of how the disputes between the Plaintiff and Huen led to his leaving the firm. As I said above, the Plaintiff was not an outsider but a major player in the dispute. He was the one who was in the best position to tell a story which was by and large his. Against this background, I do form the view that the time charged (27 hrs) is unreasonable. Doing the best I can I would deduct 9 hours (4 hrs from Warren Wong’ s Affidavit and 5 hrs from Eric Chan’s Affirmation). 107.The 2 written submissions take up a total of 18 hrs. I do appreciate that they are well organized and comprehensively written and I also bear in mind the overall favourable result achieved, but I do think that the times charged are unreasonable. Again, doing the best I can and considering them in a round, I would deduct 6 hours from these 2 items. 108.To sum up, for the 12th Ground, a total of 16 ½ hours are deducted (i.e. $66,000). 109.13th Ground: The Defendant complains that the Plaintiff’s charges at a total of 13 hrs 5 min for perusal of documents is excessively high.[25] Again, he founds his argument on the fact that the dispute was essentially one between the Plaintiff and Huen which the Plaintiff should be well familiar with and there is simply no reason why he needed to spent so much time. Further, the Defendant says there are duplications of the items. 110.The Plaintiff admits that there are no actual time records and all the time charges are the best estimates he made at the time of preparing the bill. 111.I do not find there is any duplication of the items. However, it does not mean that I am not entitled to consider the overall reasonableness. Here, I do find that the overall 13 hrs 5 min is unreasonable. I will round it up to 10 hours (i.e. a deduction of 3 hrs 5 min): $4,000 X 3 hrs 5 min = $12,333. 112.14th Ground: The Defendant complains that a total of 7 hrs 30 min in the preparation for hearings is excessive because the Plaintiff was actually preparing for taxing his own items of costs.[26] Again, the Defendant says there are duplications of items. For instance, the drafting of the submissions for hearing of 5th September, 2005 duplicates with his work in preparation for the hearing. 113.Logically, I do not think there are any duplications of the items as such, but as I said, this would not prevent me from assessing the overall picture, i.e. whether the items on the whole are reasonable. On this, I remind myself that on the one hand the Plaintiff has already spent substantial time on drafting the documents and other work such as perusal of documents, and on the other, the Plaintiff must have spent some time in preparing for the hearings. Indeed, the Plaintiff impresses me as a well-prepared person. Doing the best I can, I would deduct 2 hrs, leaving 5 ½ hrs. 114.15th Ground: The Defendant challenges that the Plaintiff’s charges of 2 hours for general care and conduct is excessive. Given that the case has dragged on for about 2 years and 8 months, I do not think 2 hours for general care and conduct is unreasonable. An Additional Argument 115.Apart from the above, the Defendant runs an additional argument. He complains that the Plaintiff failed in his duty to keep him informed of the costs involved from time to time and this is in breach of Principle 4.06 (Regular Information) of the Hong Kong Solicitors’ Guide to Professional Conduct, which states as follows,
116.His arguments run like this. From the commencement of the 1st retainer in about October, 2004 up to the end of that year, the Plaintiff’s costs had accumulated up to $157,801 which was not an insubstantial sum. Then the costs ran up to $629,355 by the end of 2005 and up to $673,868 by the end of 2006. Despite the escalation of the costs over this protracted period, the Plaintiff failed to inform him of the approximate amount of costs throughout. 117.The Defendant complains that the Plaintiff’s conduct was highly improper because he was deprived of the chance to assess his own position at those critical stages and choose not to proceed further with the case. 118.In response, the Plaintiff’s answers are that the Defendant knew his hourly rate and he has all along kept the Defendant informed of the progress. He also says that he did advise the Defendant that even if he won, he would only be able to get costs on party and party basis, and the Defendant would probably need to pay him 1/3 of the costs out of his own pocket. However, he admits that he never informed the Defendant of any estimates as the case progressed. The reason being that the time for the preparation of the bill had not come yet; it was when the bill was prepared that he knew the figure; and further, since it was an entire contract case, he was not allowed to render an interim bill. He adds that it was not unusual for a case of this nature to have its costs run up to $600,000 odd. 119.Despite all these answers, it seems to me clear that the Plaintiff has not been in compliance with the said Principle 4.06. There was nothing preventing him from giving the Defendant an estimated figure of costs from time to time. It was only on 21st January, 2006 that the Plaintiff informed the Defendant, by way of a letter, that according to his estimate, the court might award the Defendant $400,000 to $500,000 plus interest and the Plaintiff expected the Defendant would have to pay about $100,000 for the Defendant’s share of costs given that while the court allowed the Plaintiff to assist T&T, the court could not award the Plaintiff’s costs as he was not the solicitor on record. It is clear that even by this letter, the Plaintiff was not giving any estimates of the costs incurred. 120.That said, I do not think this would assist the Defendant. 121.First, this ground has not been pleaded and hence, the Defendant is not allowed to rely on it. This should be a complete answer. 122.Even if I were wrong, I do not think it would make any difference. I have no doubt that the Defendant was fully aware of the hourly rate and the magnitude of the work involved at that time. Further, it should be noted that as from 2nd September, 2005, T&T were the Defendant’s solicitors but they had not asked the Plaintiff for any estimate of his costs. Finally, neither the Defendant nor T&T raised this complaint after the receipt of the bill in May, 2007. This shows it is a sheer after-thought. Conclusion 123.I summarize below the deductions or adjustments that I have made above:
124.The Plaintiff’s final figure is $673,221.[27] Deducting $167,733 from $673,221 gives a figure of $505,488. I need to emphasise that the assessment exercise is not and cannot be an exact science or a purely arithmetic exercise. I have considered the Defendant’s challenges in light of the materials before me and against the background that gives rise to the present proceedings, i.e. the Taxation Proceedings including the complexities, the nature of them and the documents involved. Considering the matter in a round, I am of the view that $505,488 is a reasonable sum. 125.To conclude, the Plaintiff’s damages are assessed at $505,488. 126.I respectfully leave the costs issues to be determined by the trial judge. These would include the costs reserved in the CMC hearings.
Representation The Plaintiff: Mr. Eric Chan of Eric Chan & Co. in person The Defendant: Mr. Wong Kwok Wang Warren in person [1] Para 7 of the Judgment [2] Page 432 of Bundle [3] Page 1017-1018 of Bundle [4] Pages 1017-1018 of Bundle [5] Pages 960-1003 of Bundle [6] Item nos. 89(A)(a)(2) to 89(A)(a)(12) [7] Item no. 89(A)(a)(1) [8] Item no. 89(D)(1)(b)25 [9] Para. 4 of the Amended Defence [10] Item no. 89(C)(a)1-3 [11] Pages 705-707 of Bundle [12] Para 9 of the Amended Defence [13] Paras 13-14 of the Amended Defence [14] Item no. 49 [15] Item no. 84 [16] Item no. 85 [17] Item nos. 89(B)(d)1-4 [18] Item 89 (B)(d)1-4 [19] Item 89 (B)(d)1 [20] Item 89 (B)(d)2 [21] Item 89 (B)(d)3 [22] Item no. 89(B)(d)4 [23] Item 89(D)1(b)(25) [24] Pages 857-859 of Bundle [25] Item nos 89(E)(2)1-10 [26] Item nos. 89(F)1-6 [27] See Para 53 above Please refer to HCMP961/2013 for the relevant appeal(s) to the Court of Appeal. |
Cases cited in this judgment
Further hearings and rulings under DCCJ 1155/2008