Melvin Waxman v. Li Fei Yu and Others

HCA 1973/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1973 OF 2012

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DECISION ON SUMMARY ASSESSMENT OF COSTS
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1.At the hearing on 9 April 2015 (“Hearing”), I ordered inter alia that the plaintiff (“P”) shall pay the costs of the 2^nd and 4^th to 7^th defendants (“Subject Ds”) in respect of the Subject Ds’ summons filed on 10 March 2015 (“Amendment Summons”) for amendment of my order dated 21 October 2014 and sealed on 2 March 2015 (“Order”) to be summarily assessed and paid forthwith (“Costs Order”). Such Costs Order did not include the costs of and occasioned by the hearing bundles.

2.Three matters are of note.  First, the scheduled hearing time for the Amendment Summons was 15 minutes and the actual hearing time limited for such summons was about 26 minutes from 9:34 am to 10:00 am.  Secondly, there was another summons taken out by the Subject Ds for time extension to comply with the Order of Master S Kwang dated 3 September 2014 (“Time Summons”), and the adjourned hearing of such summons was returnable and heard at the same time as the Amendment Summons at the Hearing.  Thirdly, on any account the Amendment Summons was a straightforward application with no complexity at all.  Notwithstanding some initial resistance by P which eventually transpired to be nothing more than dispute over where costs of the application should lie, the Subject Ds were merely seeking amendment of the Order under the slip rule so that the sealed copy of the Order should reflect what the court actually ordered at the hearing on 21 October 2014 and recorded in my judgment dated 30 January 2015.

3.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, ……”

4.Here, the Subject Ds sought a total sum of $63,159 comprising solicitors’ profit costs and disbursements of $40,659 and counsel’s fees of $22,500.  P suggested that $4,089 be allowed, ie solicitors’ profit costs and disbursements of $36,570 and all counsel’s fees should be deducted.

5.I bear in mind the two-stage approach required for summary assessment.  Having considered the nature and scope of the application under the Amendment Summons, the affirmation filed in support of such summons, the skeleton submissions, what transpired at the Hearing, the involvement of counsel in this matter, the matters noted in paragraph 2 above, and considering all circumstances, the overall costs claimed by the Subject Ds under their statement of costs appeared to be disproportionate on party and party basis.  It is therefore necessary to consider each item to be satisfied whether or not it “was necessary and its costs reasonable” on the sensible standard of necessity as explained by the Court of Appeal.

Hourly rates

6.The Subject Ds claimed that hourly rates for HW (senior partner admitted in 1988), LCS (senior associate admitted in 2007) and zht (1^st year trainee solicitor) were $4,000, $3,500 and $1,300 respectively.  P contended that the respective hourly rates for LCS and zht should be $2,900 and $1,066.

7.I am not persuaded that on party and party basis the Subject Ds would be entitled to the hourly rates as claimed.  Having carefully considered all the circumstances, including the matters referred to in paragraph 5 above, I consider appropriate party and party hourly rates for LCS and zht should be $3,100 and $1,100 respectively.

8.Of more significance is the time spent by three fee earners on “communications including conference, telephone calls and letters” and “professional work”.  In my view, given the overall simplicity of the application a duplicative approach is unnecessary.  Most of the work could have been done by LCS or by zht as supervised by LCS with little need to involve HW.  Taking into account these matters, in assessing costs for a piece of work, the quantum of costs will have to be adjusted to take into account whether such work should notionally be done either by a junior fee earner under the supervision of another fee earner or by one fee earner of appropriate seniority alone. 

9.For the purpose of the summary assessment herein, I shall adopt a broad-brush approach pursuant to paragraph 13 of Practice Direction 14.3 as it is inappropriate to conduct any mini-taxation.

Items B1

10.The Subject Ds claimed photocopy charges of $64 for 16 pages x 4.  I agree with P’s objection that the relevant rate is $1, and the charges under Item B1 should be $16 and not $64.

Item C1

11.Under this Item, the Subject Ds claimed $14,200 being 1.75 hours by HW ($7,000.00), 1.5 hours by LCS ($5,250) and 1.5 hours by zht ($1,950) for “communications including conference, telephone calls and letters”.  P claimed this was excessive, and suggested that I should only allow LCS 0.5 hours.

12.In my view, there is no need for attendance on client except to tell them such an application would be made.  An error in a sealed copy court order must be corrected by amendment under the slip rule, and the uncorrected order should not be allowed to stand.  Only two letters were sent to P’s solicitors and their contents were quite similar.  Although counsel was engaged, the matter is so straightforward and self-evident that any necessary liaison between the solicitors for the Subject Ds and their counsel should have been quite minimal.  Taking all these matters into account, but considering the nature and scope of the subject application, I agree that the time spent by HW, LCS and zht (ie 4.75 hours) under this Item excessive.  On party and party basis, I allow 0.5 hour for LCS in the sum of $1,550.00 for this Item.

Item D1

13.The essential documents under this Item are the Amendment Summons and its supporting affirmation.  I have reviewed those documents, and find the Subject Ds’ claim for 5.45 hours of work (1.7 hours by HW, 1.5 hours by LCS and 2.25 hours by zht) in the sum of $14,975.00 excessive.  P suggested that at most 0.25 hours for HW and 0.5 hours for zht be allowed.

14.In my view, given the ambit and nature of the application and the documents involved, I find the Subject Ds’ claim of time spent for drafting work excessive on party and party basis.  The Amendment Summons has only two straightforward reliefs, ie correction of the Order and provision for costs, and only a small correction was added to the draft amended order.  The supporting affirmation gave a brief summary of the relevant proceedings, the circumstances that led to the application (which were quite similar to the contents of the letter dated 9 March 2015 by the Subject Ds’ solicitors), and extracts from my judgment dated 30 January 2015.  There is no complexity at all in respect of such work.  I allow $1,825.00 under this Item (0.75 hours for zht and 0.25 hours for HW). 

Item D2

15.The Subject Ds claimed 1.5 hours (0.5 hour for each of HW, LCS and zht) for perusal of three letters from P’s solicitors in the sum of $4,400.00.  Upon consideration, I am not persuaded that such exercise would require 0.5 hours for any fee earner and there is no justification to charge for perusal by three fee earners.  On party and party taxation basis, I allow 0.25 hours for LCS in the sum of $775.00 for this Item.

Items D3

16.The Subject Ds claimed $6,800 (0.5 hour for HW and 1 hour each for LCS and zht) for preparation for and attendance of the Hearing.  I am unable to see how such intensive preparation can be justified as being necessary or proper, or indeed, proportionate.  In my view, on such a straightforward application and given counsel’s involvement, only zht was required to attend the Hearing.  Since she drafted the supporting affirmation (and hence well familiar with the background) and counsel was involved, only minimal time is required to refresh for the Hearing.  I allow zht 0.75 hours at $825 for such Item.

Item E1

17.The Subject Ds claimed for counsel’s brief fee of $22,500.  P claimed this Item should be disallowed since there was no certificate for counsel.  However, paragraph 2(3) of Part II of the First Schedule of Order 62 rule 38A of the Rules of the High Court provides that “[no] costs shall be allowed in respect of counsel appearing before a master in chambers, or of more counsel than one appearing before a master in open court or a judge or the Court of Appeal, unless the master or judge or the Court of Appeal, as the case may be, has certified the attendance as being proper in the circumstances of the case”.  No certificate for counsel is required for counsel appearing solely before judge (in contra-distinction to a master) in chambers, and P did not apply to disallow cost of counsel’s attendance at the Hearing when this court granted the Costs Order. 

18.But that said, on party and party taxation, only necessary and proper counsel’s fees on the basis of notional counsel of suitable seniority/experience will be allowed.  Given the simple nature of the Amendment Summons, only the most junior counsel would have been appropriate.  I also bear in mind that counsel was briefed to deal with both the Amendment Summons and Time Summons.  In my view, the brief fee for suitable notional counsel attending the Hearing on both the Amendment Summons and Time Summons, which had no complexity at all, would be $9,000.00, and I allow $4,500.00 of such apportioned brief fee for the Amendment Summons.

Conclusion

19.The total costs of the Subject Ds on their statement of costs are assessed at $9,711 (being $16 (B1) + $220 (B2) + $1,550 (C1) + $1,825 (D1) + $775 (D2) + $825 (D3) + HK$4,500 (E1)).  I therefore order that P shall forthwith pay costs in the sum of $9,711 to the Subject Ds.

Oldham, Li & Nie, for the plaintiff

Henry Wai & Co, for the 2^nd and 4^th to 7^th defendants