THE MAGWAY

HCAJ 14/1999 &
HCAJ 246/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NOS. 14 AND 246 OF 1999

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Admiralty action inrem against: the ship or vessel "Magway"

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(Consolidated)

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J U D G M E N T

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1. This is an appeal brought by the plaintiff against a decision of the Registrar in the course of taxation of Bills of Costs submitted by the defendant against the plaintiff. The decision, that is, the subject matter of this appeal, is that a large part of the costs of the defendant is recoverable, the costs having been incurred by work done by a Mr Aryon Paul Apostolis employed by the firm of Messrs Sinclair Roche & Temperley ("Sinclair Roche"), solicitors for the defendant.

2. The matter arose this way. This is a collision action involving the plaintiff's vessel (on which the deceased and other crew were employed) was involved in a collision with the defendant's vessel, and a large number of people on board the plaintiff's vessel were killed and the claim was therefore brought on basis that the defendant's vessels negligence caused loss to the plaintiff's estate.

3. The matter eventually was settled so far as liability is concerned and the apportionment of liability or percentage of blame was agreed. The costs of the action on that respective apportionment therefore would have to be borne by each side in accordance with that liability percentage agreed.

4. This Action came before me on a large number of occasions and there was on one occasion a serious mishap on the part of the plaintiff, in that the trial that was scheduled to take place had to be aborted because the plaintiff was not ready to proceed and a substantial order for costs was made by me against the plaintiff.

5. The determination of all collisions actions, whether in Hong Kong or England or other parts of the world, largely depends on the proper application of the international collision regulations. I think the applicable one here is the 1972 Regulation. In Hong Kong, we of course do not have the vast admiralty judicial learning in England where the Admiralty Court of England, with the help of their practitioners, have been deciding for a long time these collision cases.

6. It is to be noted that in collision cases, what is always important is the percentage of blame and cases would often be decided where the court would hold one party to be 60%, 70%, 80% or 90% to blame. Each percentage involves very often a great deal of money. So, the correct assessment of the various manoeuvres of the ship which results in the final percentage of blame is vitally important. That assessment of the proper manoeuvre or good seamanship involves knowledge not only of the collision regulations but very often of what could be said to be good seamanship and, generally, in England, that sort of work is always handled by specialists firms with either admiralty lawyers or admiralty managers and with assistants who are experts in what is generally known as "wet work".

7. Mr Apostolis is, by any standard, an expert in that kind of wet work. His qualification is extremely impressive. In his affidavit, he referred to his having completed his legal education in South Africa in 1985. Then he worked with a number of shipping lines, including the Lloyds Surveyors in South Africa, to obtain his practical shipping experience, and he had in fact sailed on board two vessels. He had also worked with stevedores in South Africa in the loading and discharging of bulk carriers and reefer vessels. He then obtained his master's degree in maritime law in University College, London, studying under leading professors in that field.

8. He joined Sinclair Roche in London, a leading admiralty firm, on 21 September 1987. He sat the Law Society final exam in 1991 and was admitted in 1992. He became an assistant solicitor of Sinclair Roche from that time until April 1997 when he became a partner. He remained a partner of Sinclair Roche until the date of his affidavit.

9. Before he came to Hong Kong, while he was with Sinclair Roche in London, in paragraph 25 of his affidavit, he said he took two casualty matters to the Court of Appeal in England, and one of them the "Sivand" became a leading case.

10. In 1999, he came to Hong Kong as a partner of Sinclair Roche. He headed the marine casualty and insurance department. He was registered with the Hong Kong Law Society as a foreign lawyer while he sat the overseas lawyers qualification examination to qualify as a Hong Kong solicitor. This took a little bit of time and he was eventually qualified in Hong Kong, I believe, in April 2001.

11. During the large part of the period when he had not yet qualified as a solicitor in Hong Kong, he was handling, as part of Sinclair Roche, the solicitors firm for the defendant, this collision matter. The Bill of Costs that had been submitted and the analysis done by the Registrar in his judgment showed clearly that he did the bulk of the work. I think the percentage expressed was some 90%. Was he qualified to do the work? Undoubtedly, he was, and there can be no better person in Hong Kong to do that work. Should that work therefore be paid? Certainly. Lay clients have no complaint about paying for that work.

12. It is an objection from the plaintiff which has brought this case to this court. The plaintiff has taken what I regard as a wholly unmeritorious step, to contend that no part of the work done by Mr Apostolis should be recoverable. They have an alternative case -- but it is a backup case -- to say if it is recoverable it should be paid at the lowest possible rate of a clerk, at about $1,200. The Registrar had assessed his work as being worthy of the rate of $3,000, having cut it down from $3,500.

13. Two points are relied upon by the plaintiff's counsel, in the course of the argument before me, to say that no costs should be recoverable at all. The first is based on sections 45 and 50 of the Legal Practitioners Ordinance. The second point is based on what is said to be a breach of Regulation 12 of the Foreign Lawyers Registration Rules. I will deal with them in turn.

14. Section 45 of the Legal Practitioners Ordinance provides as follows :

" (1) A person who, by virtue of section 7, is not qualified to act as a solicitor shall not act as a solicitor, or as such sue out any writ or process, or commence, carry on or defend any action, suit or other proceeding, in the name of any other person or in his own name, in any court of civil or criminal jurisdiction or act as a solicitor in any cause or matter, civil or criminal, to be heard or determined before any court or magistrate.

(2) Any person who contravenes the provisions of this section shall--

(a) be guilty of contempt of the court in which the action, suit, cause, matter or proceeding in relation to which he so acts is brought or taken and may be punished accordingly;

(b) be incapable of maintaining any action for any costs in respect of anything done by him in the course of so acting; and

(c) be guilty of an offence and shall be liable on summary conviction to a fine of $500,000 and to imprisonment for 2 years."

15. Section 7 referred to in section 45 provides as follows :

"No person shall be qualified to act as a solicitor unless--

(a) his name is for the time being on the roll of solicitors;

(b) he is not suspended from practice;

(c) he has in force a current practising certificate; and

(d) he is complying with any indemnity rules made by the Council under section 73A or is exempt from them."

16. Section 50 provides as follows :

" No costs in respect of anything done by an unqualified person acting as a solicitor shall be recoverable in any action, suit or matter by any person whomsoever."

17. At the outset, one can say that section 45 is the key provision and that section 47, which deals with conveyancing documents, does not in fact provide an appropriate escape from the applicability of section 45. I think in so far as the Registrar relied on section 47 as having any impact on the application of section 45, he was mistaken.

18. Section 45 on the face of it may be in wide terms, but it has to be read very carefully. The key words in section 45(1), are : "A person .... who is not qualified to act as a solicitor shall not act as a solicitor....". What does it mean -- acting as a solicitor -- in this context? A large number of cases had been cited to me but I agree with Mr Toms for the defendant, that none of them provide the court with much assistance, because they all turned on their particular facts and there is no case cited which is similar or akin to our situation.

19. In the general litigation process, a firm of solicitors would have a team of people working for that particular case, and they range from not just messengers boys, but clerks, assistant solicitors, partners and, in admiralty matters, sometimes admiralty managers. In England, admiralty manager is a commonplace phenomenon in all collision cases and the admiralty manager would often be the first point of contact between the client and also between barristers with the solicitors firm. Their expert knowledge is invaluable. No one has ever suggested that when someone who is not a qualified solicitor and has performed work as part of a team for a firm of solicitors in the course of general litigation or collision litigation, that such costs would not be recoverable. In fact, the costs for work done by admiralty manager is readily recoverable and sanctioned.

20. The question therefore is : were they acting as solicitors so that these people could be said to be in breach of section 45. Section 45 is a penal provision because subsection (1) provides for the prohibition, and subsection (2) provides three kinds of penalties for the consequences of contravention. Under subsection (2)(a) - he would be guilty of contempt of the court and could be punished accordingly; under (2)(b) - he would be incapable of maintaining action for costs for anything done by him in the course of so acting; and (2)(c) - he would be guilty of an offence and be sentenced to imprisonment of two years and to a fine of $500,000. So, these are serious offences, and one therefore must look at it in that light to consider whether a person could be said to be in breach of section 45.

21. I have no doubt that in the course of the work done by people in general litigation, whether it is in the course of writing letters (whether to lay client or to the other side), or for taking instructions, or for liaising with or instructing counsel, these are not people who are acting as solicitors. Obviously, one particular act would be acting as a solicitor and that is appearing in court as opposed to attending court. If someone appears in court who is not a solicitor, then he is undoubtedly acting as a solicitor. But apart from that, it is difficult to say, in relation to any particular piece of work, whether that piece of work done by a person who is not a qualified solicitor, would be considered as acting as a solicitor and therefore in breach of section 45 with a criminal offence consequence.

22. I think, in the context of admiralty work, it is even more difficult, having regard to the various expertise required (and there is a lot of nautical expertise), to say that someone was acting unlawfully because he was acting as a solicitor.

23. The case that was put before me relies on the totality of the bill and of the large percentage of work done by Mr Apostolis, and it is therefore said that in relation to all the work that had been relied upon for recovery of costs and in relation to each and every piece of work therefore, he was acting as a solicitor. I do not agree. I think, having regard to the criminal provisions and the appropriate high standard required to show that there was a breach (and I do not mean therefore necessarily I have to apply the high criminal standard but it is nevertheless an appropriately high standard even in civil cases), that I can be satisfied that there was a breach of section 45(1) of the Ordinance.

24. So far as section 50 is concerned, the matter cannot be advanced any further because there are similar words, they are : "No costs in respect of anything done by an unqualified person acting as a solicitor shall be recoverable ....". So, again, I think the same consequence must apply. That disposes of the first point of objection.

25. In relation to the second point of objection, I think the case of the plaintiff is even weaker. I say it for this reason. Whereas sections 45 and 50 make express provisions about non-recovery of costs, Regulation 12 of the Foreign Lawyers Registration Rules does not even say that. What these rules provide is a scheme whereby the foreign lawyers are put under certain control as a price of their being admitted as a foreign lawyer.

26. The first question that was raised in relation to Regulation 12 by Mr Toms is the proper interpretation of "provide any legal service." I agree with Mr Toms that the provider of the legal services here is the firm. The reason is the client goes to the firm, the solicitors on record is the firm. The firm may engage a number of people to work for the firm, including Mr Apostolis, but the provider of the legal services is not Mr Apostolis but is Sinclair Roche, this is to be contracted with, for example, a registered foreign lawyer on his own account starts practicing as sole practitioner and offering legal or providing legal services. That would be a very different situation. But this is someone who works for Sinclair Roche, who was a qualified English lawyer working in Hong Kong as a foreign lawyer under the scheme. I do not believe, therefore, that he was providing any legal services. The firm did.

27. The second point is that the proviso under Regulation 12(2) makes it clear that a foreign lawyer may handle any matter which involves private international law or conflict of laws. It was argued before me that there was no element of private international law or conflict of laws in this collision case and, therefore, Regulation 12(2) does not bite. I do not agree. The international collision regulation is derived from the international convention, and the proper application of that collision regulation is a substantial part, not only of English law of which Mr Apostolis is a qualified person, but also of other foreign law which has interpreted the regulations. I cannot over-emphasise the importance of these regulations for a collision case such as this. It is every manoeuvre, every nautical step taken, that has deep implication for the proper application of these regulations, and I think Regulation 12(2) does bite on this case.

28. Thirdly, it seems to me that the lack of any criminal sanction or of any non-recovery of costs sanction in Regulation 12 is to be contrasted with sections 45 and 50 of the Legal Practitioners Ordinance. By no stretch of imagination, even if there is a breach of Regulation 12, can one come to a view that the statute or the Regulation (the subsidiary legislation) has in mind an implication of non-recovery of costs, and this is even more so when the recovery of costs is by the employer client (not the firm) from the other side. In my view, Regulation 12 is really not a proper defence to the claim for costs for work done by Mr Apostolis.

29. So far as the third point is concerned, that is to say, the hourly rate, having regard to the fact that I have decided against the plaintiff on the first and second points, it would not be necessary for me to deal with that and I do not propose to do so. I certainly do not think the Registrar was wrong in assessing the costs at $3,000 an hour and I do not propose to vary it in any way.

30. The appeal therefore is dismissed with order of costs nisi against the plaintiff. The plaintiff's own costs will be taxed in accordance with Legal Aid Regulations.

Representation:

Mr Maurice Peter Tracy, instructed by Messrs Crump & Co., for the Plaintiff

Mr Jason Toms of Messrs Stephenson Harwood & Lo, for the Defendant

HCAJ14/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO.14 OF 1999

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Admiralty action in rem against: the ship or vessel "MAGWAY"

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JUDGMENT

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1. This is the gross sum assessment of the court's order I made on 5 May 2000 whereby I ordered that the plaintiff should pay the defendants the costs of the hearing of that day and the costs thrown away as a result of the order made to vacate the trial date. The trial was supposed to start on 16 May, lasting for 10 days.

2. I have put before me a fairly full schedule of costs by solicitors for the defendants. Basically it can be broken down into various categories. There is a category for counsel and a category for solicitors, which in turn was further broken down into the work relating to the 1st pre-trial review of 17 April, the 2nd pre-trial review on 5 May and work relating to interrogatories. There are number of matters which divide the parties.

3. I will first consider the matter in relation to what divides parties as to counsel's fees. The counsel's fees were sought in the total sum of $539,000, made up of Brief, Refreshers of counsel agreed on the special basis of the Vine Formula, Counsel's fees for rendering advice on collision damage apportionment and Counsel's fees for advising on and attending the hearing on 5 May. In my view, except for the counsel's fees in respect of their advising and attending for the 5 May hearing amounting to $45,000, the rest is not a matter that should be recoverable or which can be said to be costs thrown away wholly as a result of the trial being vacated. So far as refreshers are concerned, I think it is the duty of solicitors to agree refreshers on use basis. To my knowledge, no Taxing Master has ever allowed taxation on the basis of Vine Formula. In any event, in the exercise of my discretion, I do not think it would be right on the gross sum assessment to order as against the plaintiff more than the sum of $45,000 for the counsel's fees.

4. So far as solicitors are concerned, there are a number of disputes. The 1st dispute is that it is said that there are fees claimed in respect of the work done by Mr Apostolis who is a partner of Messrs Sinclaire Roche in England who has been admitted in England but not having been admitted in Hong Kong. He is a more senior solicitor, having been admitted in England in 1992, whereas Mr Toms, who is the assistant solicitor of the defendants firm, is admitted in England in 1995. Mr. Toms was admitted in Hong Kong in 1997 and, therefore, so far as Mr Toms is concerned, he can rightly seek taxation on the basis of his being a solicitor of three years' standing, and he asked that his fees to be paid at his hourly rate of $2,500 per hour.

5. The other dispute is in relation to duplication, that is to say, the defendants' solicitors should not put two lawyers both on the same piece of work. I notice that from the schedule, there are a large number of items where they were both taking part to do the same work, in attendiing conferences, in attending court and so on and so forth. I find there is considerable justification for that criticism. Then I think it is also said which I accept that there is a considerable amount of over-servicing.

6. Looking at the total bill and the nature of what had happened, it seems to me that there is considerable justification in the criticisms. Overall, having regard to what had happened, all the matters that had come before me and to be considered, in my view a generous figure to be given to the solicitors for the defendants in respect of solicitors' work would be in a total sum of $65,000. I, of course, having regard to what has been said about the interrogatories, would have not allowed for interrogatories.

7. The total figure that I arrive at on the gross sum assessment is $45,000 for counsel fees and $65,000 for the solicitors' costs, thereby making a total of $110,000, which is the gross sum I assess as being payable.

8. I also add to the above sum of $110,000, the sum of $5,000 for today's costs of two hours court hearing attendance and the total sum of gross sum assessment is therefore $115,000.

HCAJ14/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO.14 OF 1999

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Admiralty action in rem against: the ship or vessel "MAGWAY"

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J U D G M E N T

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1. This is the resumed hearing of the pre-trial review. The applications are by the plaintiff for further directions in relation to several matters.

2. This is a collision action involving a small fishing vessel of the plaintiff with a larger vessel of the defendants in the harbour of Hong Kong in 1997. In essence, the dispute between the parties now seems to be whether it was a case of a crossing situation where the plaintiff's vessel should be giving way to the defendants, or whether it is a case of the defendants' vessel overtaking the plaintiff's vessel which was on a parallel course.

3. The number of applications come before the court consisted of several categories. The first category is the plaintiff now wishes to have, out of time, several new witnesses to be called by way of serving late witness statements. The second category is that the plaintiff wishes to call some additional expert evidence. The third category, which is a relatively uncontroversial category, is the matter of the late service of the Hearsay notices.

4. The original direction hearing took place last year on 13 October 1999 where directions were given relating to signed witness statements, Hearsay Notices, as well as the giving of expert evidence limited to one expert each on the hydrodynamic interaction. There was a subsequent hearing of directions on 4 November 1999 where I gave leave to set the case down for trial, and for the trial to take place starting from 16 May with two weeks reserved and giving a pre-trial review date of 17 April 2000.

5. We are now 11 days before the trial, and it is clear that if the additional materials that the plaintiff wishes to rely upon are to come in, then the trial cannot proceed and the trial date must be vacated.

6. Are the materials that the plaintiff wishes to rely on relevant? I think it is quite clear that they are relevant. Just take, for example, three new witnesses that the plaintiff wishes to call. They are, firstly, Mr Lam, who would give very valuable and pertinent evidence on the course of the fishing vessel; Mr Chan, who would give slightly more marginal evidence on the sound signal he heard or rather not heard and Mr. Lo, who would give evidence on the speed capability of the fishing vessel.

7. There is, so far as the experts are concerned, the evidence of Dr Giles, who is a forensic expert and who had examined the contemporaneous documentation: the chart, the logs and the Engine books of the defendants and came to the conclusion that there had been a great deal of alterations and that, of course, is extremely material evidence.

8. So far as materiality is concerned, I have no doubt that the materials now the plaintiff wishes to rely on are relevant and will be extremely helpful to the court. In fact, on the matter of, for example, the course of the fishing vessel, this is going to be of crucial importance and would materially affect the percentage of the responsibility of the vessels depending on the view the court takes on the evidence as to the course of the fishing vessel.

9. It is, however, also quite clear that the applications now made have come in extremely late, and if I may say so, with lamentable little excuse for its lateness. So what is the court supposed to do? On the one hand, the plaintiff would be severely handicapped if he is refused leave to adduce such evidence. On the other hand, the defendants say that they would be prejudiced if they have to face all these new materials in the trial that is coming up in 11 days' time.

10. The question is, according to authorities, whether the defendants had suffered any prejudice or would suffer any prejudice as a result of this late application. I have no doubt some form of inconvenience would be suffered, but in terms of serious prejudice that cannot be compensated by costs, there is no material before me to show that that would be the case.

11. Mr Sussex in his able submission pointed out to the court that the modern approach to case management is that the court must be much more strict and the court can also take into account the other court users of the court. It does not just affect the immediate parties involved. I of course accept this. But I also take into consideration the following factors.

12. Firstly, this is a somewhat of a specialist type of case and collision cases do not come often before the Admiralty court in Hong Kong. It is because of the unusual nature of collision actions and the special expertise required and the general unfamiliarity of solicitors with what is essential in a collision action that resulted in some essential steps not haven been taken in this case.

13. Secondly, I have to take into account that this is a case where I will be sitting with nautical assessors at the Trial and these are professional men who have professional commitments and who would have committed themselves to two weeks once the Trial begins. If the Trial does become longer because of the complications in the Trial and there are many complications, it is undesirable in my view that the case which has not been properly prepared, that may go wrong in the course of the Trial due to a number of factors, should start when it is plain that it might be best served by not starting it. It will be better that the case be better prepared so that all issues are properly joined and that necessary works are done before the Trial commences.

14. The third factor I take into account is, I think, in what was said in the judgment of China Everbright-IHD Pacific Ltd. v Ch'ng Poh & Others [1999] 1 HKC 278, where the passage at page 289 said:-

"... from the point of view of a court seeking to further the interest of justice, which is generally best served by a full and proper consideration of all the evidence which is relevant to the issues between the parties, and not by considering only part of the relevant evidence, half-baked as a result of a procedural slip on the part of one party's solicitors."

I think there is much wisdom in that view. In all the circumstances, I think my discretion should be exercised by allowing the applications and by forcing the parties to prepare the case properly and by vacating the trial dates. I therefore order that the trial date, starting on 16 May, be vacated and for a new trial date to be fixed at some future date when the parties are able to come before me to show their full readiness for the trial.

15. So far as costs are concerned, I have no doubt that this is a case where the defendants ought to be paid their costs immediately arising out of the vacating of the trial and arising out of today's application. I therefore order that the plaintiff should pay forthwith the costs of the defendants for the costs of today's hearing and the costs thrown away by the vacating of the trial of 16 May. If the parties wish me to do a gross sum assessment, I will hear the parties subsequently in relation to that application.

16. That deals with the costs of the defendants. So far as the plaintiff's costs is concerned, I am going to do something unusual. I see this as wholly arising out of the omission and fault of the solicitors for the plaintiff, and I direct, as order nisi, that the plaintiff's solicitor should not be entitled to have the costs of today's hearing to be paid by the Director of Legal Aid.