Korea Exchange Bank, Hong Kong Branch and Another v. Sscp Holdings (Hong Kong) Ltd and Others

HCA 146/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 146 OF 2013

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BETWEEN

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DECISION ON SUMMARY ASSESSMENT OF COSTS

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1.On 27 October 2014, I ordered the whole of paragraph 4 of the Reply be struck out and directed the 2^nd plaintiff to file and serve within 14 days the Amended Reply with paragraph 4 crossed out in red. I further ordered items 3, 4 and 5 of the Interrogatories without order served by the 2^nd plaintiff on the 3^rd defendant on 25 July 2014 be withdrawn. I also granted a costs order nisi that the 2^nd plaintiff do pay to the 3^rd defendant costs of and occasioned by the latter’s summons dated 8 August 2014 (“Summons”) (with all costs reserved, if any) to be taxed if not agreed.

2.On 10 November 2014, I varied the costs order nisi to the effect that costs of and occasioned by the Summons (with all costs reserved, if any) be paid by the 2^nd plaintiff to the 3^rd defendant forthwith and be summarily assessed on paper without a hearing.  I further ordered:

(a) the 3^rd defendant to file and serve a statement of costs within 14 days from the date of the order; and

(b) the 2^nd plaintiff do file and serve its list of objections within 14 days thereafter.

3.On 24 November 2014, the 3^rd defendant filed its statement of costs.  On 8 December 2014, the 2^nd plaintiff filed its list of objections.

4.The proper approach to summary assessment of costs has been laid down by the Court of Appeal in Poon Shu Fan v Wong Tin Yan [2012] 5 HKLRD 512.  For present purpose, it is sufficient to refer to the useful summary in the headnote of the reported judgment at pp 512‑514 as follows:

“(2) As in an ordinary taxation, under O.62 r.28(2) of the Rules of the High Court (Cap.4A) (the RHC), in a summary assessment, party-and-party costs were allowed only if they were “necessary or proper” for the attainment of justice or for enforcing or defending the rights of the receiving party.  Pursuant to Practice Direction 14.3, the court adopted a broad-brush approach to ensure the final figure assessed was not disproportionate and/or unreasonable having regard to the nature and circumstances of the application or matter and the underlying objectives stated in O.1A of the RHC, even if there was no challenge to individual items.  ……

(3) A summary assessment required a two-stage approach.  If total costs claimed appeared proportionate, then all that was normally required was that each item should have been reasonably incurred and the cost reasonable.  If the overall costs appeared disproportionate, then the court would have to be satisfied that each item was necessary and its costs was reasonable.  A sensible standard of necessity should be adopted allowing fully for the different judgments which those responsible for the litigation could sensibly come to as to what was required. While the threshold was higher than that of reasonableness, it should be achievable by a competent practitioner without undue difficulty.  The conduct of the other party was relevant, since a cooperative party could reduce costs, but an uncooperative party could render necessary costs which would otherwise be unnecessary.  ……

(6) Since Civil Justice Reform in 2009, taxation of counsel’s fees under a party-and-party taxation was no different from taxation of costs and expenses.  The test of “necessary or proper” applied and must take into account the matters set out in para.1(2) of Part II of the First Schedule to O.62 of the RHC, as well as the requirement of reasonable proportionality.  Accordingly, paras.62/App/28(5) (p.1172) and 62/App/28A of Hong Kong Civil Procedure 2012 (p.1172), which referred to the previous pre-CJR “excessive and unreasonable” test under the former para.2(5) of Part II of the First Schedule to O.62 of the RHC, should no longer be followed, ……”

5.Bearing in mind the two-stage approach required for summary assessment, and having considered the nature and scope of the Summons, the skeleton submissions and list of authorities, what transpired at the hearing for the Summons, and considering all the circumstances, I make the following general observations. 

6.First, costs are assessed on party-and-party basis such that only costs that are necessary and reasonable will be allowed. 

7.Secondly, the 2^nd plaintiff claims that the Summons is simple in nature, and the time incurred for attending the client, the 2^nd plaintiff, the 4^th and 5^th defendants, the court and counsel, for preparing and perusing documents, and for preparing and attending the hearing for the Summons are excessive.  In my view, it is not correct to say that the Summons is simple because it merely involves matters of law and no supporting affirmation is required.  In my view, the matter is of some complexity and the wealth of authority cited by counsel evidences this. 

8.Thirdly, even though the Summons is grounded on matters of law, the 3^rd defendant’s solicitors would have to inform their client about the merits of the application, seek their instructions to proceed with the application, and to advise on its ramifications.  The 3^rd defendant’s solicitors would have to report to the client on the results of the application.  There would be necessary liaison with counsel as well.  But that said, it will be much less time-consuming that having to take factual instructions.

9.Fourthly, 2^nd plaintiff objects to all time incurred by the partner of the 3^rd defendant’s solicitors AS apart from 0.5 hours to attend the client, and at the same time the 2^nd plaintiff also seeks to reduce the time spent by the associate solicitor AK on all items of work.  But in so doing, the 2^nd plaintiff does not allow any time for supervision and general care and conduct by AS.  When a more junior fee earner is handling work under the supervision of a partner, it will be necessary to bear in mind the time spent by the solicitor and the partner respectively, and the overall costs incurred.  Whilst I accept some delegation of work should be made to AK, given that fine issues of law are involved, it is appropriate for AS to be involved to some extent in liaison with client and counsel, and to have overall supervision of AK in carrying out his work.  I also bear in mind that at the last moment, counsel for the 2^nd plaintiff introduced a revised draft amendment to pleadings in her written submissions.  In my view, this would lead to a flurry of late activity in seeking counsel’s advice and advising client on strategy and ramifications. 

10.Fifthly, I reject the notion that time for perusal of documents should be allowed for AK and not for AS.  If that were the case, AS would hardly be able to properly liaise with client and counsel.  But only appropriate time should be allowed for perusing and considering documents, including counsel’s advice and skeleton submissions.  Further, given counsel’s involvement and the research already done by them, the time spent on such perusal of documents should not be excessive.

11.Sixthly, whilst I accept that with counsel’s involvement preparation for hearing by instructing solicitors need not be a full‑scale in-depth study, I do not agree with the 2^nd plaintiff’s suggestion that no time should be allowed at all for the 3^rd defendant’s solicitors to prepare for the hearing.  I consider it is necessary or proper for appropriate time to be given to the 3^rd defendant’s solicitors to familiarise themselves with the arguments and documents to assist counsel. 

12.Seventhly, I am not persuaded it is necessary to have two handling solicitors to attend the hearing given the nature of the Summons.  Given AS’ seniority, his attendance should suffice.

13.Eighthly, it is necessary or proper for the 3^rd defendant to have junior counsel settle the Summons.  Since the application turns on law without any supporting affidavit, the wording of the Summons takes on significance.  Further, I am satisfied that brief fee for counsel is appropriate in light of the issues involved.  I also bear in mind that counsel at the hearing had to (a) face revised draft amendments to pleadings proposed by the 3^rd defendant at the last moment and (b) muster up arguments against this new stance.

14.Ninthly, I am not persuaded that the hourly rates are excessive and they are allowed in full.

15.Bearing in mind the above, I consider the following items in the 3^rd defendant’s statement of costs should be reduced as follows:

Item	Type of work	Time claimed (hours)	Time allowed (hours)	Amount reduced (HK$)
B2	Attendances by TS	3 (TS)	Nil	3,900.00
C1	Attendance on client	2 (AK)	1 (AK)	3,000.00
C2	Attendance on 2nd plaintiff	2 (AK)	1.5 (AK)	1,500.00
C3	Attendances on 4th and 5th defendants	0.5 (AK)	0.25 (AK)	750.00
C5	Attendance on counsel	1 (AS)	0.75 (AS)	1,000.00
		2 (AK)	1.5 (AK)	1,500.00
D1	Preparation of documents	1 (AK)	0.75 (AK)	750.00
D2	Perusal of documents	6 (AS)	2.5 (AS)	14,000.00
D3	Preparing for hearing	3 (AS)	1 (AS)	8,000.00
		1 (AK)	1 (AK)	3,000.00
D4	Attending hearing	2 (AK)	2 (AK)	6,000.00
Total amount reduced				43,400.00

16.The plaintiff’s costs under my order dated 10 November 2014 is therefore assessed at $173,025.00.

Wat & Co, for the 2^nd plaintiff

Anthony Siu & Co, for the 3^rd defendant