Cep Ltd v. 無鍚市佳誠太陽能科技有限公司

CACV 97/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 97 OF 2014

(ON APPEAL FROM HCCL NO. 12 OF 2012)

________________________

BETWEEN

________________________

Before: Hon Kwan JA

Dates of Written Submissions: 22 and 26 September 2014

Date of Decision: 6 October 2014

________________________

________________________

1.This is an application for security for costs on appeal. By consent, it is to be disposed of on paper. The only dispute is on the amount to be ordered as security. The plaintiff appellant, which is a company incorporated in the British Virgin Islands with an office in Beijing, does not contest liability to provide security on appeal.

2.For the trial below, the plaintiff was ordered by L Chan J on 28 February 2013 to provide security for costs of a trial scheduled to last six days in the sum of $1.5 million.

3.The plaintiff’s claim was for damages for non-delivery in breach of a sales contract.  A material issue was the construction of the contract whether it permitted the plaintiff buyer to make payment by transferable letter of credit.  If this issue was resolved against the plaintiff, another material issue was whether the conduct of a sales manager of the defendant had clearly and unequivocally represented to the plaintiff that the defendant would accept a transferable letter of credit thereby giving rise to waiver or estoppel.

4.The trial took place before Recorder Jat, SC over five days in December 2013.  A judgment of 49 pages was handed down on 4 April 2014 in favour of the defendant.  In the notice of appeal, the plaintiff challenged each of the findings of fact and law made by the judge against it and sought to set aside the judgment and to have judgment entered in its favour in the sum of €2,607,280.  The defendant filed a respondent’s notice seeking to affirm the judgment on additional or alternative grounds and challenged each of the findings of fact and law made by the judge against it.

5.For the appeal, which is scheduled to last for one day, the defendant seeks security in the amount $1,372,130.03.  The estimated costs include the costs of the application for security on the basis of a contested hearing.  As the dispute in this application is now confined to quantum and is dealt with on paper, the defendant’s solicitors recognised that some reduction to their revised skeleton bill is appropriate.

6.The plaintiff contended by its counsel that an appropriate amount of security for this appeal should be not more than $300,000.

7.In my view, neither the estimate given by the defendant nor the estimate given by the plaintiff in response is a realistic amount of the costs that might be regarded as reasonably incurred for this appeal.

8.I will first consider the estimated costs for the application for security.  They are in Part II of the skeleton bill being items 2 (15 hours for drafting and preparing documents: $52,500), 3 (6 hours for perusal: $24,000), 6 (13 hours for attending hearing and preparation: $44,500) and 8a (brief to counsel: $100,000), giving a total of $221,000.  The defendant’s solicitors have not engaged counsel for this application, so there is no question of a brief to counsel.  Instead, they prepared the skeleton submission for this application.  I will allow $60,000 for the estimated costs of the present application, on the basis of 10 hours work for the partner and 8 hours work for the assistant solicitor.

9.Next I consider the fees of the solicitors for the appeal, made up of incurred and estimated costs, leaving aside disbursements for the time being.  I will not reduce the fees incurred of $22,230.  The estimated costs are made up of these items in Part II: items 1 (scale costs: $5,000), 4 (25 hours for communications: $85,000) and 7 (20 hours for attending hearing and preparation: $72,500).  I do not propose to reduce the scale fees.  For the other two items, I will allow 20 hours work for the partner and 12 hours work for the assistant solicitor, giving a sum of $110,000.  My estimate of the total amount of reasonable fees for the solicitors for the appeal is $137,230.

10.Lastly, I turn to disbursements.  Disbursements already incurred are made up of counsel’s fees for preparing respondent’s notice ($60,000) and charges to law costs draftsman for preparing skeleton bill ($6,400).  I will allow $44,800 for disbursements already incurred, made up of counsel’s fees of $40,000 and charges to law costs draftsman of $4,800.

11.Disbursements to be incurred are made up of brief fee to senior counsel of $600,000 and brief fee to junior counsel of $300,000.  The plaintiff took issue on the reasonableness of engaging a senior counsel, and pointed out the defendant had sought security for costs for the trial on the basis senior and junior counsel would be engaged at total costs of $700,000 but in the end only an experienced junior counsel was engaged for the trial.  The plaintiff submitted that given the nature of the issues involved and no novel points of law are raised, senior counsel should not be required.  It was also pointed out that the brief fee of junior counsel of $300,000 for the appeal would appear to be excessive, given that in the skeleton bill submitted for the security for costs of the trial, the brief fee of junior counsel for the trial inclusive of refreshers was only $200,000.

12.I would agree with the plaintiff that it is not reasonably necessary to engage a senior and junior counsel for the appeal.  I decline to attach significance to the brief fee of junior counsel in the skeleton bill for the trial as I have no information on the seniority and experience of the junior counsel proposed to be engaged with a senior counsel at the trial.  This junior counsel might be different from the junior counsel who was engaged for the trial without a leader and who settled the respondent’s notice.  I note also that a different junior counsel appeared before L Chan J for the defendant in the application for security for costs of the trial.

13.I propose to allow $200,000 as the fees that may be commanded by a reasonably competent counsel of suitable seniority to handle the appeal for the defendant.

14.The total estimate of reasonable fees arrived at is $442,030.

15.I make the following orders:

(1) the plaintiff do within 28 days hereof give security for the defendant’s costs of the appeal in CACV 97/2014 in the sum of $442,030 by making lodgement in court of the said sum by cash or bankers draft, or by provision of a bank guarantee of like amount, which guarantee shall have been approved by the Registrar; and until such lodgement be made and notice thereof given to the Registrar and to the solicitors for the defendant (such notice to be given on the same day as the lodgement is made) all proceedings in the said appeal are to be stayed;

(2) in default of the plaintiff making such lodgement as aforesaid within the time specified, or within such further time as the court may for special reasons allow, the said appeal do (upon the solicitors for the defendant certifying such default to the Registrar) stand dismissed out of this court without further order;

(3) in the event that the appeal is dismissed in the circumstances provided for above, the plaintiff do pay to the defendant its costs occasioned by the said appeal, such costs to be taxed if not agreed; and

(4) the plaintiff do pay to the defendant its costs of this application in any event.

Written submissions by Mr Christopher Chain, instructed by Sit, Fung, Kwong & Shum, for the plaintiff (respondent)

Written submissions by Sidley Austin, for the defendant (appellant)