LI ZHUO MING v. HUAYAO BIO-TECHNOLOGY HOLDING GROUP LTD

Date of Hearing: 10 July 2006

Date of Judgment: 20 July 2006

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D E C I S I O N

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This decision is made on assessment of the Defendant's costs pursuant to Order 62 rule 9(4)(b) of the Rules of High Court (Cap. 4).  On 10 April 2006 I made an order that the action be discontinued and the costs of the action be to the Defendant to be assessed by me.

2. On 10 July 2006 the Defendant lodged a Statement of Costs claiming a total sum of $372,488.  I was rather surprised by the amount claimed as the case only reached the stage of checklist review and there was hardly any preparation for trial.

3. I conducted a hearing of the assessment of the costs.  The case was essentially handled by Mr. Liu Kin Sing, a partner of the solicitor firm for the Defendant, with more than 10 years' standing as solicitor at the material times.  I have no objection to his claim for a charge out rate of $4,000 per hour.  He was assisted by a trainee solicitor who was in his second year of articleship: I allow $1,300 per hour for her.

4. For item B relating to Mr. Liu's communication with different persons including client, the other side and court etc., Mr. Liu claims 47 hours 20 minutes.  I have read the pleadings and the other court documents.  I do not share the view of Mr. Liu that it is a complicated case particularly, for a solicitor of over 10 years' standing.

5. The Plaintiff in this action claimed that pursuant to a certain loan agreement the Defendant owed him a sum of US$4 million.  The Defendant denied liability.  In response to an O. 14 application the Defendant filed a detail affirmation in Chinese alleging that because of certain arrangement the Plaintiff was not the true lender of the loan and that the Plaintiff was not entitled to the claim.

6. Of the 47 hours that Mr. Liu claims, 24 hours were spent for his trip to Shangdong to take instructions.  I must remind myself I allow the costs on party and party basis i.e. I only allow those costs as were necessary or proper for defending the rights of a party.  Undoubtedly, it is better to take instructions face to face at a meeting.  With the modern technology in communication I do not find it necessary.  Apart from expedience, Mr. Liu has given no other reason.  In fact, on several occasions the persons in charge of the Defendant company visited Hong Kong and gave instructions.  I do not allow a greater part of those 24 hours.

7. Mr. Liu produced an information pamphlet and newspaper cuttings trying to impress me that the “joint venture” and arrangement behind the scene were very complicated.  It might be so but the central theme is to defend the claim for the loan advanced with evidence.  I estimate for all communications including taking clients and correspondence with other side etc. the time required to be 15 hours.

8. The trainee solicitor claims 14 hours 45 minutes.  Upon enquiry, I was told that 13 of those hours is spent on translation to facilitate those responsible to understand the contents of the court documents.  Both English and Chinese are official languages.  A party to any proceedings can choose to use either of the official languages.  The other party being served with a document can make a written request asking for supply of a translation under Section 5 of the High Court Civil Procedure (Use of Language) Rules (Cap. 5C).  The Defendant has made no such request.  I do not find it proper for the Defendant to do the translation and incur such costs.  I do not allow the 13 hours.

9. In the item under Preparation of Documents, the trainee solicitor claims 4 hours in total for drafting the defence and also the answer to request for further and better particulars of the defence.  Mr. Liu told me that he spent 3 hours on approving the draft defence and another 2 hours on the answer.  The general practice is only one fee earner will be allowed for doing a particular item of work.  I see no justification for two persons working on them, specially under the present circumstances: the defence has only 4 pages and the answers to the requests also about 4 pages.  I trust Mr. Liu has completely redrafted the documents prepared by the trainee: I do not allow the time claimed by the trainee solicitor.

10. As to the time claimed by Mr. Liu for preparation of documents, I allow 14 hours instead of 22 hours 30 minutes.  The only complicated document is the affirmation of Xu Dongfeng written in Chinese and filed on 7 March 2005.  The rest of them are relatively short and simple or have the contents derived from that affirmation.  The claim of 22 hours 30 minutes is very excessive.

11. Mr. Liu claims 13 hours 45 minutes for perusing documents including (i) court documents filed by both sides together with exhibits and (ii) documents supplied by client.  I invited him to give me those falling within the latter category.  As stated earlier, Mr. Liu gave me an information pamphlet and some newspaper cuttings.  I do not find they are relevant.  Neither do I find many documents are involved in defending this case.  I allow 6 hours.

12. As to the rest of the items, I allow in full except Postage, Travelling Expenses and Miscellaneous.  The solicitor charge out rate suggested by the Law Society of Hong Kong has already included postage and travelling expenses.

13. I find that Statement of Cost have not included the following and I wish to add them into my assessment:

Engrossment of documents:	$2,000
Attendance for filing and serving documents:	$700

14. The sums I would allow are as follows:

B	Communication
	Mr. Liu (para. 7)	15 hrs x $4,000	=	$60,000
	Trainee (para. 8)	1 hr 45 min x $1,300	=	$2,275
C1	Preparation of Documents
	Mr. Liu (para. 10)	14 hrs x $4,000	=	$56,000
	Trainee solicitor (para. 9)		=	$0
C2	Perusal of Documents
	Mr. Liu (para. 11)	6 hrs x $4,000	=	$24,000
C3	Preparation for hearing
	Mr. Liu	2 hrs x $4,000	=	$8,000
	Trainee solicitor	30 mins x $1,3000	=	$650
C4	Hearing
	Mr. Liu	25 mins x $4,000	=	$1,667
	Trainee solicitor	10 mins	=	$217
E1	Photocopying			$1,365
E2	Search Fee			$645
E3	Postage, Travelling Expenses & Etc. (para. 12)			$0
F	Unpaid Gross Sum Costs after setting off			$500
G1	Engrossment of Documents (para. 13)			$2,000
G2	Attendances for filing & serving documents (para. 13)			$700
	Total:			$158,019

15. Accordingly I assess the Defendant's costs for this whole action in the sum of $158,019.

16. Pursuant to Order 42 rule 5B I make an order nisi for costs that there be no order as to costs for the hearing of assessment.  The reasons are that more than half of the costs claimed has not been allowed by me and that had the claim not been so excessive, I could have made the assessment on paper without a hearing as the Plaintiff has not lodged any list of objections as directed by me.

Mr. Li Zhuo Ming, Plaintiff, Absent.

Mr. A. Liu of Messrs. Boase Cohen & Collins for Defendant.

Date of Hearing: 31 March 2006

Date of Judgment: 10 April 2006

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J U D G M E N T

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The Defendant applies for an Order that the Plaintiff be granted leave to discontinue this action with costs to the Defendant, to be taxed if not agreed, on condition that no subsequent action shall be commenced by the Plaintiff on the same or substantially the same subject matter as in this action again.

2. Usually it is the Plaintiff who makes the application of this type.  In this case is the Defendant because the Plaintiff has indicated that he intends to discontinue the action by filing a Notice of Discontinue (sic Discontinuance) on 8 March 2006.

3. The filing was irregular.  Under Order 21 rule 2(1) of the Rules of High Court (Cap. 4A) the Plaintiff has the right to discontinue an action or withdraw any claim within 14 days after service of the defence without leave of the court.  In this case the defence was filed on 7 June 2005, some nine months ago.  The filing was irregular because leave had not been obtained.

4. As I understand from Ms. Yu for the Defendant, the Defendant has no objection to the discontinuance but the discontinuance should have a condition that no further action be taken by the Plaintiff on similar subject.  Ms. Yu relies on the Judgment of Mr. Justice Keith in the case of Trend Publishing (HK) Limited v Vivien Chan & Co. (A Firm) [1996] HKC433.  In paragraph 11 of his Judgment, Keith J has this to say:

“11.     The discontinuance of an action does not prevent a plaintiff from commencing a subsequent action for the same or substantially the same cause of action (see Ord. 21 r. 4).  Accordingly, if a plaintiff seeks leave to discontinue an action in order to avoid having to pay the defendant’s costs of the action, the plaintiff runs the risk that leave would only be granted on condition that no subsequent action will be commenced on the same or substantially the same grounds.  The resurrection of actions which have been discontinued is something to be avoided if at all possible, and I see no reason at all why the Plaintiff’s sensible decision to discontinue these proceedings should not be treated as bringing the dispute between it and the Defendant to an end once and for all.  In my view, the mater should have made the discontinuance of the action conditional upon the Plaintiff not commencing another action on the same or substantially the same subject-matter as the present action.  To be fair to the master, it may be that she lost sight of this point because the principal focus of the argument before her obviously related to the issue of costs.”

5. I must say the paragraph does not seem to me to establish a general rule: every discontinuance must have a term that the Plaintiff is disallowed to commence another action on the same or substantially the same subject matter as the discontinued action.  We have to look at the circumstances of the case before such a condition is imposed.

6. In the case of Trend Publishing (HK) Limited, Keith J had analysed the merits of the Plaintiff’s case in that action and came to the conclusion that the Plaintiff’s action against the defendant was bound to fail (paragraph 9 of the Judgment).  It was under such circumstances Keith J imposed the condition.

7. In the present action, the proceeding has passed the stage of checklist hearing.  The Plaintiff was asked to supply further and better particulars of the Reply by 4:00 p.m. on 29 March 2006, failing which the Plaintiff’s claims be dismissed with costs to the Defendants.  Before the due date, on 8 March 2006 the Plaintiff filed the Notice of Discontinuance.

8. I am not sure the purpose of the discontinuance whether it is to avoid the consequence of the unless order.  But, I am sure that he has no intention to abide by the terms of the unless orders.

9. On examination of the documents index in the court file, there were quite a number of instances that the Plaintiff failed to file and serve his documents within time.  Against this background the unless order was imposed.

10. It is very clear that the Plaintiff does not intend to proceed with the present claim.  It is logical to conclude that he also did not intend to supply the further and better particulars of the Reply requested for.  If the action had taken its normal course, the unless order would have taken its effect and judgment be entered.  In such a case, the Plaintiff would not have any right to institute another action on the same or similar cause.

11. For the above reason I make an order that the action be discontinued on condition that no subsequent action shall be commenced by the Plaintiff on the same or substantially the same subject matter in this action.

12. As to costs of this action including the costs of this application, I make an order nisi under Order 42 rule 5B(6):

(a)   That the costs be to the Defendant to be assessed by me with the following directions:

(i)   That the Defendant shall at least 21 days before hearing of the assessment file and serve a Statement of Costs in the form as suggested by me to the Law Society contained in Circular No. 06-2;

(ii)  That the Plaintiff shall within 14 days thereafter file and serve a list of objections;

and    (iii)   That a date be fixed for hearing of the assessment with an estimated length of one hour.

(b)   That this order shall become absolute 14 days after the date of this Judgment unless a written application has been made to vary this order within the said 14 days.

Mr. Li Zhuo Ming, Plaintiff, Absent.

Ms. R. Yu of Messrs. Boase Cohen & Collins for Defendant.