Lau Yu Shing and Another v. Philip Chan Wing Hung

CACV 35/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 35 OF 2011

(ON APPEAL FROM HCMP NO 263 OF 2010)

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BETWEEN

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JUDGMENT

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Hon Yuen JA:

1.I agree with the judgment of Chu JA.

Hon Kwan JA:

2.I agree with the judgment of Chu JA.

Hon Chu JA:

Introduction

3.This is the appeal of the defendant against the Judgment (“the Judgment”) of Au Yeung J (“the Judge”) given on 28 January 2011. 

4.The defendant is a solicitor.  The plaintiffs issued an originating summons in the Court of First Instance to compel the defendant to render a bill of costs for the purpose of taxation.  The costs in issue were in respect of non-contentious work carried out by the defendant in connection with government compensation for resumption of lands that were registered in the name of the estate of Lau Wai Chau, deceased (“the Ancestor”) and were, pursuant to a deed of family arrangement, beneficially owned by the estates administered by the 1^st and 2^nd plaintiffs.  

5.The Judge decided in favour of the plaintiffs and ordered that: (1) the defendant deliver a bill for work done, if any, for the estates represented by the plaintiffs in connection with the land resumption described in the schedule to the originating summons (see paragraph 11 below); (2) the Draft Bill sent by the defendant to the plaintiffs under cover of the letter dated 6 March 2009 be deemed to be a bill that satisfies the letter and spirit of (1) above; (3) the defendant may file and serve a supplemental bill pursuant to (1) above for non-contentious work done after 2008; (4) further directions on whether the bills of the defendant shall be taxed or summarily assessed be deferred and to be given on paper; and (5) pending further directions, no further action shall be commenced on the bills. The Judge also made an order nisi for costs against the defendant, which was subsequently made absolute and summarily assessed at $320,000.  Subsequently, the defendant rendered a second bill of costs for work done after 2008.

6.In respect of the further directions on the bills of the defendant, at a hearing on 25 March 2011, the Judge refused the defendant’s application to stay the Judgment and directed summary assessment of the defendants’ bills.  By a Determination handed down on 7 July 2011, the Judge summarily assessed the plaintiff’s liability under the defendant’s 2009 bill at $213,150 plus $1,051 disbursement and that of the second bill at $27,400. 

Background

7.The background leading to the plaintiffs’ application can be briefly stated as follows.

8.The Ancestor had eight sons.  Lau Leung Chau and Lau Leung Kui were his 3^rd and 7^th sons (“3^rd son” and “7^th son” respectively).  The 3^rd son died in 1956 and Letters of Administration in respect of his estate was granted to the 2^nd plaintiffs jointly in 2008.  The 7^th son died in 1987 and Letters of Administration in respect of his estate was granted to the 1^st plaintiff in 2007.

9.The Ancestor died in 1933 leaving behind a very substantial estate that included agricultural lands in the New Territories.  In 1995, Letters of Administration in respect of the Ancestor’s estate was granted to Lau Yue Kui (“the Administrator”), who is the son of the Ancestor’s 4^th son.

10.In 1946, the respective families of the Ancestor’s eight sons (“the fongs”) entered into a Deed of Family Arrangement (“DFA”) to divide the New Territories lands held by the Ancestor’s estate into eight shares, after reserving a small portion for the purpose of ancestral worship, and each fong was allocated a share.  Subsequently, disputes arose among the eight fongs over the validity of the DFA, culminating into two sets of proceedings under HCMP 3924/1995 and HCMP 3209/1996 (collectively “the 95/96 proceedings”).  The 95/96 proceedings concluded with the judgment of the Court of Final Appeal in FACV 15/1999, which confirmed the validity and continued subsistence of the DFA: see Re Lau Wai Chau (2000) 3 HKCFAR 98.  Consequently, each of the eight fongs was in law the beneficial owner of the lands allocated to it under the DFA.  The trial judge’s order on the division of the lands and apportionment of land resumption compensation was also affirmed.

11.In 1995, the government gave notice to resume part of the New Territories lands owned by the Ancestor’s estate in connection with the construction of Route 3.  Included in these New Territories lands were three small lots that had been allocated to the 3^rd and 7^th fongs under the DFA.  The resumption of these three small lots were referred to by the parties and described in the originating summons as “Minor Route 3 Resumption”.

12.The defendant as solicitor representing the Administrator carried out liaison and negotiation with the government over the land resumption compensation.  With the agreement of the 3^rd and 7^th fongs, the defendant also dealt with the compensation for Minor Route 3 Resumption.  In January 2003, the government made an increased offer of compensation for Minor Route 3 Resumption in the amount of $2,628,000 together with interest, which was agreed to by the 3^rd and 7^th fongs.  By a consent order made on 24 January 2003 in the 95/96 proceedings, the Administrator (acting through his attorney) was authorised to receive the compensation from the government. 

13.For reasons that we need not go into in these proceedings, the agreed compensation of $2,628,000 together with interest of $762,420.87 was only received by the defendant in October 2008. The defendant has been holding the money on account of the Administrator.

14.By letter dated 27 October 2008 addressed to the plaintiffs’ solicitors, Hau, Lau, Li & Yeung (“HLLY”), the defendant informed the plaintiffs that:

“We estimate that your clients’ shares of contribution towards our costs for the resumption would not be less than $300,000 and propose to use this figure for the purpose of settlement with your clients.”

15.In the same letter and in a previous letter to HLLY dated 24 October 2008, the defendant also indicated that the solicitors acting for the 1^st and 2^nd fongs in total claimed $110,000 from the plaintiffs as their legal costs in connection with the claim for compensation for Minor Route 3 Resumption.

16.HLLY replied by letter dated 7 November 2008 saying that the costs of the defendant and those demanded by the solicitors for the 1^st and 2^nd fongs were manifestly excessive and unacceptable.  The letter concluded by asking the defendant and the solicitors acting for the 1^st and 2^nd fongs to proceed to taxation without delay.  HLLY repeated the request in their subsequent letters, including letters dated 2 December 2008 and 4 March 2009.

17.Eventually on 6 March 2009, the defendant sent to HLLY a bill of costs with the heading “5^th Draft” and in the amount of $492,630 for work done between January 1996 and December 2008 (“Draft Bill”).  The Draft Bill was sent under cover of a letter, which said, inter alia,

“… we are instructed to enclose our draft bill of costs with no less than 385 items for costs of not less than $492,630 from information and documents available for the time being. There are further items of work and time spent to be included in our bill. Yet if your clients’ contributions towards our costs at $300,000.00 can be agreed, we do not propose to incur further time in this respect.”

18.By another letter to HLLY of the same date, the defendant doubted the plaintiffs’ entitlement to administer the estates of the 3^rd and 7^th sons and to give valid receipts for the compensation money since the grants to them were limited to immovable property.  The defendant indicated that a court order consented to by the 1^st and 2^nd fongs had to be obtained to sanction the release of the compensation money to the plaintiffs.  HLLY disagreed with the defendant’s contentions.  Further correspondence ensued between them. 

19.By letters dated 6 August and 14 November 2009, HLLY reiterated the demand that the defendant deliver a bill of costs for the work done in respect of Minor Route 3 Resumption so that the plaintiffs could proceed to taxation without further delay.

20.Eventually on 11 February 2010, the plaintiffs issued an originating summons seeking an order that the defendant deliver to them a bill of costs in respect of work done in connection with obtaining compensation for Minor Route 3 Resumption and for the estates they represented.

21.On 28 January 2011, the Judge handed down the Judgment and granted the plaintiffs’ application (see paragraph 5 above).  Pursuant to the Judgment, the defendant delivered to the plaintiffs a supplemental bill which was filed in court on 21 February 2011.  By her Decision made on 25 March 2011, the Judge refused the defendant’s applications to stay the Judgment and to vary the costs order nisi, and ordered that summary assessment in lieu of taxation be carried out for the two bills rendered by the defendant.  By her Determination handed down on 7 July 2011, the two bills were assessed at $214,201 ($213,150 + $1,051) and $27,400 respectively.  The costs of the summary assessment payable by the plaintiffs to the defendant were assessed at $20,000.

The Judge’s Judgment

22.Before the Judge, the defendant contested the plaintiffs’ application on three bases: (1) the plaintiffs did not have the locus standi to make the application in that they were not the defendant’s clients and their letters of administration were limited grants that did not entitle them to receive the government compensation; (2) by reason of the Draft Bill sent on 6 March 2009, the defendant had already delivered a bill of costs; and (3) the plaintiffs should not have commenced fresh proceedings but should have dealt with the issues of costs and taxation in the 95/96 proceedings.

23.The Judge decided the three issues in the plaintiffs’ favour.  On the basis of Part VI of the Legal Practitioners Ordinance, Cap.159 (“LPO”), in particular s. 68(1), the Judge considered that the plaintiffs are persons liable to pay the defendant’s bill and were therefore entitled to issue the originating summons without joining the Administrator.  The Judge noted in paragraph 11 of the Judgment that the defendant had conceded that the plaintiffs did have locus standi pursuant to s. 68(1) of LPO.  The Judge did not accept that the defendant’s duty of confidentiality to his client, namely, the Administrator, would have prevented him from rendering a bill of costs to the plaintiffs or answering queries raised on it. 

24.The Judge also had regard to the meaning of “administration” and “estate” in s. 2 of the Probate and Administration Ordinance, Cap. 10 (“PAO”) and held that the powers of administration of the plaintiffs extend to property passing on the death of the 3^rd and 7^th sons; the change in form or character of the property between the time of death and administration is irrelevant.  Since at the time of the deaths of the 3^rd and 7^th sons, their estates held interests in the lands that form the subject matter of Minor Route 3 Resumption, the plaintiffs were entitled to receive the compensation money notwithstanding that their letters of administration were to deal with immovable property in Hong Kong.  

25.The Judge further accepted the plaintiffs’ argument that since the plaintiffs had asked the defendant to do work for them and accepted liability to pay the defendant, and the defendant had sent the Draft Bill to the plaintiffs, effectively agreeing that they were liable to pay him, the plaintiffs would be entitled under s. 68(1) of LPO to make the application even if they had no right to receive the compensation.

26.In respect of the Draft Bill, the Judge rejected the defendant’s argument that it was an interim bill, pointing out that it was expressly marked as “5^th DRAFT” and there are differences between a draft bill and an interim bill.  The Judge also took into account the fact that despite repeated requests from HLLY, the defendant had never indicated that the Draft Bill was a proper bill for taxation and/or asked the plaintiffs to proceed with taxation of it.  The Judge noted in paragraph 27 of the Judgment that at the hearing, the defendant agreed to adopt the Draft Bill as a bill falling within the letter and spirit of the bill sought under the originating summons and was amenable to have it taxed, but indicated he would like to put in a supplemental bill for work done after 2008.

27.As for the 95/96 proceedings, the Judge took the view that the bill of costs sought by the originating summons was in respect of non-contentious work in the administration of the Ancestor’s estate and although the judgment of the Court of Final Appeal was relevant, the costs of the non-contentious work need not be dealt with in the 95/96 proceedings.

28.The Judge therefore granted the plaintiffs’ application and made the orders set out in paragraph 5 above.  In reserving further directions on the assessment of the defendant’s bills until after the defendant had delivered the supplemental bill, the Judge was satisfied that the plaintiffs had made out a case for the court to examine the reasonableness of the defendant’s bill and noted that: “Both parties are amenable to summarily disposing of the question of quantum instead of going through formal taxation. I consider that a sensible suggestion …” (paragraphs 32 and 33 of the Judgment).

The appeal

29.By the Amended Notice of Appeal, the defendant seeks to set aside the Judge’s order dated 28 January 2011 and the consequential orders and assessments on a number of grounds.  Mr Wong who appears for the defendant has summarised them into what he calls “the construction point” and “the factual point”.  I shall deal with them in turn.

The construction point

30.The construction point covers two arguments. The first is that on a proper construction of s. 65 to s. 68 of LPO, the plaintiffs, being persons other than the party chargeable, can only apply for taxation of a bill of costs that the solicitor has delivered to the party chargeable, but has no right to ask for the delivery of an undelivered bill of costs.

31.The argument advanced by Mr Wong runs as follows. The court’s supervisory jurisdiction over solicitors to order them to deliver a bill of costs is distinct from the jurisdiction to order taxation of a bill of costs.  The distinction is reflected in ss. 65 to 68 of LPO.  The wording of s. 68(4) shows that an applicant who makes an application under s.68(1) or (2) is only entitled to the delivery of a copy of the bill already rendered by the solicitor to his client.  S. 65 merely reflects the common law position and does not extend the court’s jurisdiction to enable a third party to demand the delivery of a bill of costs that has yet to be delivered.

32.Part VI of LPO deals with remuneration of solicitors.  By s.65(1), the court’s jurisdiction to order a solicitor to deliver a bill of costs is extended to non-contentious business.  S.66 deals with the right of a solicitor to sue for his fees by restricting the right to after the expiry of one month after the delivery of the bill of costs and imposing requirements regarding the bill to be delivered.  S. 67(1) and (2) provide that a party chargeable with the bill of costs (who is usually the client) or the solicitor may apply to tax the solicitor’s bill.  Under proviso (i) to s. 67(2), a party chargeable with the bill may not, except in special circumstances, apply for taxation after the expiry of 12 months from the date of the delivery of the bill or after the payment of the bill.  Proviso (ii) further provides that no order for taxation shall be made after the expiration of 12 months from the date of payment of the bill.  

33.S. 68(1) and (2) of LPO deal with the position of third parties as follows:

“(1) Where a person other than the person who is the party chargeable with the bill for the purposes of section 67 has paid, or is or was liable to pay, the bill to the solicitor or the foreign lawyer, or to the party chargeable with the bill, that person or his executors, administrators or assignees may apply to the Court for an order for the taxation of the bill as if he were the party chargeable therewith, and the Court may make thereon the same order, if any, as it might have made if the application had been made by that party:

Provided that, in cases where the Court has no power to make an order except in special circumstances, the Court may, in considering whether there are special circumstances sufficient to justify it in making an order, take into account circumstances affecting the applicant but which do not affect the party chargeable with the bill.

(2) If a trustee, executor or administrator has become liable to pay a bill of a solicitor or of a foreign lawyer the Court may, upon the application of any person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay, the bill, and upon such terms, if any, as it thinks fit, order the bill to be taxed, and may order such payments, in respect of the amount found due to or by the solicitor or the foreign lawyer and in respect of the costs of the taxation, to be made to or by the applicant, or to or by the solicitor or the foreign lawyer, or to the executor, administrator or trustee as it thinks fit:

Provided that in considering any such application the Court shall have regard to-

(a) the provisions of section 67 as to applications by the party chargeable with a solicitor's bill or a foreign lawyer's bill so far as they are capable of being applied to an application made under this subsection;

(b) the extent and nature of the interest of the applicant.”

34.Under s. 68(1), a third party who has paid or is liable to pay the solicitor or the party chargeable with the bill has the right to tax the solicitor’s bill as if he were the party chargeable with it, and the court may make such order as it might have made on an application by the party chargeable with the bill.  The proviso to s. 68(1) is to address the situation in proviso (i) to s. 67(2).  S. 68(2) enables a third party who is interested in an estate which has paid or is liable to pay the solicitor’s costs to apply for taxation.   

35.S. 68(4)(b) provides that:

“On an application made under this section-

(a) … ;

(b) the Court may, if it orders taxation of the bill, order the solicitor or the foreign lawyer to deliver to the applicant a copy of the bill upon payment of the costs of that copy.”

36.Mr Wong argues that, in providing for the delivery of “a copy of the bill”, s. 68(4) presupposes the existence of an already delivered and existing bill and consequently, an applicant under s. 68(1) and (2) may only demand the delivery of a copy of the bill of costs that the solicitor has already rendered to his own client, but has no right to ask the solicitor to deliver a bill of costs if the solicitor has not rendered one to his client. 

37.I have difficulty with this argument.  Firstly, there is nothing in either s. 68(1) or s. 68(2) to limit the right of third parties to apply for taxation to cases where the solicitor has already delivered a bill to the party chargeable with the bill. 

38.Secondly, the reference in s. 68(4) to the delivery of “a copy of the bill” has to be viewed against the fact that the third party taxation provided for under s.68 is a taxation, not of the solicitor’s bill between the third party and the solicitors, but as between the solicitors and client (i.e. the party chargeable with the bill): see Tim Martin Interiors Ltd v. Akin Gump LLP [2012] 2 Costs LR 325, 337 at para.32, and 355 at para.69.  Hence, when a bill of costs is rendered, it will normally be rendered to the solicitor’s client in the first place.  There is no warrant to construe s. 68(4) as limiting the scope of s. 68(1) and (2) to cases where the solicitor has already rendered a bill of costs to his client.

39.Thirdly, and importantly, the purpose of s. 68(1) and (2), as can be seen from their plain wording, is to give to a third party a right to tax the solicitor’s bill for which he is liable to pay. The types of situation that can give rise to an application under s. 68(1) are varied, including mortgagee and mortgagor, vendor and purchaser, landlord and tenant, parties to litigation under a compromise, creditor, principal debtor and guarantor, and trustee and beneficiary: Tim Martin Interiors Ltd v. Akin Gump LLP at para.71 and see the cases discussed in paras.35-64.  The authorities have recognised that it is possible that the third party’s liability to the solicitor’s client in respect of the solicitor’s costs may be for a lesser amount than the amount for which the client is liable to the solicitor.  This is expressly catered for in s. 68(2) which provides that the court may order the solicitor to pay any amount found due from him to the executor, administrator or trustee of the estate in which the third party is interested.  The two sections therefore are important safeguards for the third party’s liability to the solicitor for his costs.  On the defendant’s construction, the third party will not be able to challenge the solicitor’s bill if the solicitor and his client were to reach an agreement on the costs and/or to agree to dispense with the rendering of the bill.  This will defeat the purpose of s. 68(1) and (2) completely.  There is no justification for adopting such a construction.  

40.In support of the submission that the inherent jurisdiction of the court over solicitors does not extend to third party taxation so that in common law a third party cannot demand delivery of a bill of costs that has yet to be delivered, Mr Wong relies on the following passage in the judgment of Stamp J in Forsinard Estates Ltd v. Dykes & Ors [1971] 1 WLR 232,  239G-H:

“The plaintiff claims in the alternative to a taxation under the Solicitors Act 1957, to have the bill taxed under the inherent jurisdiction of the court over solicitors, who are its officers. That jurisdiction has never been extended to enable a party to have a taxation of a bill of the attorney of another, see Chadwell v. Bruer (1728) 1 Barn.K.B. 43, and that claim, in my judgment, fails in limine.”

41.Forsinard Estates Ltd is an application by the liquidator of a mortgagor under s. 70(1) of the Solicitors Act 1957[1] for taxation of the costs of the mortgagee’s solicitors incurred in the sale of the property.  With knowledge and agreement of the mortgagor, the solicitors deducted the costs from part of the proceeds of sale and sent the balance to the mortgagee with a receipted bill of costs.  Stamp J refused the application for taxation primarily on the basis that the second proviso to s. 69(2)[2] also applied to an application under s. 70(1) and since the bill had been paid more than 12 months before the application, no order for taxation could be made.  Stamp J then went on to deal with whether there were special circumstances justifying the court’s exercise of its discretion to order taxation, had there been only delivery (but not payment) of the bill 12 months before the application.  In this connection, Stamp J took the view that the mortgagor could not have an order against the solicitors for payment of the amount disallowed upon a taxation of the bill because the application for taxation was not a proceeding to make the solicitors account for moneys of the mortgagor coming into their hands and there was no provision which required the court to direct payment to a third party mortgagor of sums taxed off the bill of the mortgagee’s solicitors.

42.It was in the context of the discussion on whether, on a s. 70(1) (in our case, s. 68(1)) application for taxation, the court can order the solicitor to pay to the third party the amount taxed down that Stamp J made the obiter statement that, notwithstanding the court’s inherent jurisdiction over solicitors, the jurisdiction does not extend to enable a third party to make a claim for payment against the solicitor under a taxation application.  The statement does not provide the basis for the argument that the court has no power to order the delivery of a bill of costs to a third party who comes within s.68 with a view to enable the third party to tax the bill.   

43.Mr Wong also refers to In re Heritage ex parte Docker (1878) 3 QBD 726 in support of his argument that there is no jurisdiction to order an undelivered bill to a third party.  In that case, a debtor applied for an order that his creditor’s solicitor deliver to him a bill of costs for work done in relation to an action brought by the creditor against the debtor to recover the debt and in promoting a composition between the debtor and his creditors.  As part of the composition agreement approved by the debtor’s creditors, the debtor had agreed to and did pay the solicitor a fixed sum. Within 12 months from making the payment, the debtor took out the application, claiming that the amount was excessive and that he was pressurised into making the payment.  The English Court of Appeal held that the debtor having failed to establish fraud or undue pressure, there were no special circumstances within the meaning of ss. 37, 38, 40 and 41 of the Solicitors Act 1843 to warrant the application

44.Cockburn CJ in his judgment spoke obiter of the terms of s. 37 of the 1843 Act as follows (at 728-729):

“I entertain a strong opinion that this case is not within the terms of ss. 37 and 38 of the Act 6 & 7 Vict. c.73. When we look at the terms of s. 37 it would seem that the legislature meant that the right to have a bill of costs delivered with a view to its taxation should be given to the person who was himself liable to have an action brought against him for the costs, and that it does not apply to the case of a defendant in an action, who, if defeated, must pay the costs, for in that case the costs are taxed as between party and party and upon a different footing. Now the present is not a case arising out of the relation of solicitor and client; it is the case of a defendant who is sued and who before he has by law become liable to pay costs agrees to pay them and to have them fixed at a given amount.”

45.Mr Wong submits that the part underlined represents the “proper construction of ‘delivery’ to a ‘party chargeable’”.  On this basis, he argues that the Judge erred in ordering the defendant to deliver a proper bill of costs to the plaintiffs since the plaintiffs are not the defendant’s clients, and the defendant cannot maintain against the plaintiffs a contractual cause of action (there being no retainer or contractual relationship) or a cause of action for work done for the plaintiffs (the work was done at the Administrator’s instructions).

46.I am unable to see how this case and the passage relied upon would advance the defendant’s appeal.  The debtor in the case failed primarily because, in the absence of special circumstances, he could not bring his application within what is the equivalent of proviso (i) to s. 67(2) of LPO.  There was no determination of the scope of the court’s power to order the delivery of a bill of costs to a party chargeable or to a third party.  The statement that Mr Wong seeks to rely upon was said in the context of s. 37 of the 1843 Act, which is in substance the same as s.70 of the Solicitors Act 1974 and s. 67 of LPO.  It provides for a reference to taxation upon the application of the party chargeable with the bill.  This explains why Cockburn CJ said the right under the section to have a bill delivered with a view to its taxation was given to a person who would be liable upon an action brought by the solicitor.  As can be seen from the rest of the passage cited above, the distinction that was drawn was between solicitor and client costs and inter-partes costs.  The statement in no way demonstrates that the Judge’s judgment is erroneous.   

47.The second argument under the construction point is that the plaintiffs lack locus standi to compel the defendant to deliver a bill of costs by reason of the limited grant obtained by the plaintiffs.  Mr Wong’s submission is that the estates represented by the plaintiffs are only beneficiaries of the Ancestor’s estate and, until assent or conveyance, their right is limited and inchoate.  Further, the lands that form the subject matter of Minor Route 3 Resumption remained vested in the Administrator.  Since they were resumed before the plaintiffs obtained the letters of administration, they never formed part of the estates administered by the plaintiffs.  And as the plaintiffs only have limited grants to administer immovable properties, they have no right to administer the compensation money.

48.This point can be dealt with shortly.  On the facts, the defendant had demanded payment from the estates represented by the plaintiffs of his costs for work done in connection with Minor Route 3 Resumption, and has also issued the Draft Bill.  The defendant has therefore accepted that the estates are liable to him for the costs in question.  This being the case, even if the defendant was correct to say that the plaintiffs have no right to administer the compensation money, they are still entitled to have the defendant’s costs taxed pursuant to s.68(1) of LPO and for that purpose the court will have the necessary power to order the defendant to deliver a bill of costs.  

49.The construction point therefore fails.

The factual point

50.Under the factual point, it is argued that the defendant has already delivered a bill for non-contentious work such that the plaintiffs’ originating summons is an abuse of process. 

51.This is in substance a challenge to the finding of fact made by the Judge that the Draft Bill is not a proper bill.  Two points have been raised in this regard. The first relates to a letter from HLLY dated 17 July 2010 containing an open offer to dispose of the plaintiffs’ application on the basis that the defendant shall undertake to deliver a bill of costs within 14 days and to take steps to facilitate its taxation.  Mr Wong submits that the two options proposed under the open offer are self-contradictory in that one of it involves having a taxation of the bill already delivered by the defendant. With respect, this is a misreading of the two options stated in the open offer.  Both options involve staying the originating summons on the basis that the defendant undertakes to deliver a bill of costs for taxation; the only difference is how to deal with the costs of the proceedings.  Taxation of the Draft Bill is not part of the open offer.

52.Secondly, it is said that the defendant had as early as 27 October 2008 by letter issued a lump sum or gross sum bill of costs of $300,000 and the defendant had later on the plaintiffs’ demand provided details of the bill.  The material parts of the letter dated 27 October 2008 and the letter dated 6 March 2009 enclosing the Draft Bill had been set out above (see paragraphs 14 and 17 respectively).  The 27 October 2008 letter can hardly be regarded as a lump sum or gross sum bill of costs.  It is no more than an offer to accept $300,000 as the plaintiffs’ contribution to the costs charged by the defendant.  There is further no indication in the 6 March 2009 letter that the Draft Bill is to provide details of a lump sum or gross sum bill issued previously.  There is simply no factual foundation for this submission.  

53.Mr Wong also seeks to argue as a matter of law that the requirements for a bill of costs for non-contentious business are less strict.  It is said that a non-contentious bill can be deemed to be delivered if a lump sum is offered and some details are given to inform what work was done.  In Re a Solicitor (Taxation of Costs) [1955] 2 QB 252, 272, Lord Denning said of what was required to be contained in a bill of costs for non-contentious business as follows:

“[I]t must contain a summarized statement of the work done, sufficient to tell the client what it is for which he is asked to pay. A bare account for “professional services” between certain dates, or for “work done in connection with your matrimonial affairs” would not do. The nature of the work must be stated, such as, advising on such and such a matter, instructing counsel to do so and so, drafting such and such a document, and so forth.”

54.The defendant’s letter of 27 October 2008 hardly fulfils the requirements of a bill for non-contentious business. 

55.As to the Draft Bill, it was held not to amount to a proper bill for taxation because it was put forward as a draft bill.  Despite counsel’s submissions before the Judge and in this appeal that it is in the nature of an interim bill, this was not how it was described or put forward by the defendant.  In fact in his second affirmation filed in March 2011 (at paragraphs 18 and 19), the defendant explained that he could only render a draft bill because under the Solicitors Professional Conduct Rules, a solicitor can only deliver a bill of costs within a reasonable time of concluding the matter and that interim bills can only be rendered with agreement of his client.  It is clear from this affirmation that the Draft Bill was deliberately marked “5^th Draft” and that it was as a practical measure that it was delivered as a draft bill.  In these circumstances, it is not open to the defendant to now say that the Judge should have accepted the Draft Bill as an interim bill and should have further held that a proper bill had already been delivered by him. 

56.The factual point therefore also fails.   

Conclusion

57.Given my conclusion that there are no merits in the grounds of appeal, it is not necessary to go into the argument on estoppel raised by the Respondent’s Notice.

58.For the reasons set out above, the appeal should be dismissed with costs against the defendant, to be taxed if not agreed. 

Mr Albert Yau and Mr Leo Wong, instructed by Hau, Lau, Li & Yeung, for the plaintiffs (respondents).

Mr Alexander Wong and Mr Earl Deng, instructed by Philip Chan & Co, for the defendant (appellant).