FAMV No. 33 of 2008
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO. 33 OF 2008 (CIVIL)
(ON APPLICATION FOR LEAVE TO APPEAL FROM CACV NO. 244 OF 2004)
_____________________
Between:
| | IN THE MATTER of the Companies Ordinance (Chapter 32) |
| |
and
|
| | IN THE MATTER of Wing Fai Construction Company Limited |
| |
and
|
| | IN THE MATTER of an application on behalf of Kelly Cheng Kit Yin and Robert Yip Kwong (Respondents) for an Order of Committal against DAVID JOHN KENNEDY (Applicant) |
_____________________
FACV No. 30 of 2008
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 30 OF 2008 (CIVIL)
(ON APPEAL FROM CACV NO. 244 OF 2004)
_____________________
Between:
| | DAVID JOHN KENNEDY | Appellant |
| | - and - | |
| | KELLY CHENG and ROBERT YIP | Respondents |
_____________________
| Before: Mr Registrar S. Kwang in Chambers (Open to Public) |
| Date of Hearing: 15 June 2011 |
| Date of Handing Down of Reasons: 29 July 2011 |
--------------------------------
REASONS FOR REVIEW OF TAXATION
--------------------------------
A. Introduction
1. After succeeding in this Court in setting aside the Judgment of the Court of Appeal and dismissing the Respondents’ motion to commit the Appellant for contempt[1], by a Judgment on Costs dated 12 January 2010, the Court awarded, inter alia, the Appellant costs in this Court against the Respondents to be taxed on an indemnity basis if not agreed.
2. On 28 April 2010, the Appellant lodged the FACV and the FAMV bills of costs for taxation[2]. After spending 3 ½ days for taxing the said 2 bills in October 2010 and April 2011, the Appellant now applies under Rule 57 of the Hong Kong Court of Final Appeal Rules (“the Rules”) to review the outcome of the taxation[3].
B. The Taxation Review
3. As I understand from the written submissions of the Appellant’s solicitors, the main reason why the Appellant decided to review my original taxation was that despite the Court allowed the Appellant to recover costs against the Respondents on an indemnity basis, their total costs claimed in the 2 bills in question were taxed down from $5,853,185.78 to $3,404,300.80 (representing a disallowance of about 42%). The shortfall is about HK$2.4 million.
4. The Appellant felt aggrieved by the substantial deduction which means that either he has to bear such shortfall himself or the shortfall will come out of the estate of Wing Fai Construction Co. Ltd (“Wing Fai”) and the creditors will suffer prejudice. According to Mr Johnson[4], their costs[5] claimed in the bills are all reasonable. Short of any evidence adduced by the Respondents to show that such costs were unreasonably incurred or of an unreasonable amount, the Court should allow 100% of their costs claimed in the bills. The Appellant submitted that there was no positive evidence adduced by the Respondents to show unreasonableness and therefore, it was wrong for me to tax off 42% of their costs.
5. In the List of Objections filed by the Appellant, he raised 7 and 26 items for the FAMV and FACV bills respectively for the Court to review. Many of these items share the same or similar line of arguments and the Appellant urged the Court to allow their review and gave him costs as claimed in full.
6. The 33 items which the Appellant now seeks to review can be categorised into 4 broad issues:
(a) the hourly rates of the solicitors;
(b) Senior and Junior Counsel’s fees[6];
(c) items of work which involved the time of 2 fee earners; and
(d) those items which involved only the reasonableness of the quantum of time claimed in the subject bills.
7. At the hearing of the taxation review on 15 June 2011, I have heard oral arguments from the parties on the first 3 issues above. At the invitation of Mr Johnson (who had no strong view on having a written reason for the review), I gave oral decisions on issues (a) to (c) during the hearing with brief reasons. However, Ms Fenn[7] (instead of making the request for written reasons within 14 days after the review[8]) made clear that her clients would ask for the written reasons of my decisions on the review. For issue (d), parties confirmed that they would rely upon the respective written submissions as set out in the Appellant’s List of Objections[9] and the Respondents’ Answers to the Application for Review[10] and made no oral submission at the hearing. Hence, I now give my written reasons for my decisions on issues (a) to (d).
C. Costs on Indemnity Basis
8. Before I go into the individual issue, since the Appellant’s solicitors had made detailed written and oral submissions on how they saw the Court should exercise discretion on a taxation on indemnity basis, it is preferable for me to deal with such argument first. In any event, in order to properly understand how I exercised my discretion for taxation under the indemnity basis at this review, I consider appropriate to discuss this matter first before examining the individual item for the review.
9. Parties have no dispute as to the meaning of taxation on indemnity basis. It is well defined in Order 62 Rule 28(4A) of the Rules of High Court (“RHC”). The Appellant’s solicitors argued that I had wrongly exercised my discretion in disallowing a substantial part of their claimed costs in the bills.
10. Rule 28(4A) provides:
“On a taxation on the indemnity basis, all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the taxing master may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party …”
11. As acknowledged by the parties after referring to the Hong Kong White Book[11], there are practical differences between taxation on party and party basis, common fund basis and indemnity basis. When the Court gave an order for the Appellant to recover costs against the Respondents on an indemnity basis, it intended to allow the Appellant to have a more generous level on costs upon taxation than those usually allowed on a party and party basis. However, it does not mean that the Court gave a blank cheque to the Appellant so that they can recover all the costs claimed in the bills without proper scrutiny. Otherwise, the taxation will serve no useful purpose at all.
12. I agree that if the Court is satisfied that the costs claimed by the receiving party are not unreasonably incurred and the amount is not unreasonable, it should allow all the costs claimed. Whether an item claimed is unreasonable or reasonable, the Court should apply an objective test taking into account of what a competent and sensible solicitor would consider whether such step taken was reasonable in light of the circumstances of the case and was reasonable in the interest of his client[12]. In adjudicating the reasonableness issue, the Court would consider the view of the solicitors handling the case for the receiving party. At the same time, the Court would consider the view of the solicitors acting for the opposing party. Neither view is conclusive. The taxing officer may also consider the issue on the basis of his/her experience in conducting taxations.
13. In EMI Records v. Wallace[13], Sir Robert Megarry VC was given the opportunity to consider the meaning of taxation on indemnity basis when at that time, there was no statutory definition in the English Rules of Supreme Court. In analysing the proper meaning, he said:
“… To say that on a taxation, ‘all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred’ seems to me to be giving the litigant a complete indemnity, shorn only of anything that is seen to be unreasonable. The litigant does not have to establish that the costs were necessary or proper, or that the costs were of a reasonable amount and reasonably incurred. Provided that they are costs ofand incidental to the proceedings, they are entitled to recover them, subject only to the qualification that they are liable to be reduced in respect of anything that the taxing master considers to fall within the headings ‘unreasonable amount’ or ‘unreasonably incurred’. …[14]”(emphasis added)
In considering whether the receiving party can recover all his costs as claimed under the bills, the taxing master has an independent duty to ensure that such costs are not falling within the categories of “unreasonable amount” or “unreasonable incurred”.
14. The Appellant’s solicitors argued that since the Respondents failed to discharge their burden or onus to adduce any positive evidence to prove unreasonableness of the costs claimed, it follows that the Court should allow “100%” of the bills of costs in question. With respect, I disagree with such argument.
15. Sir Robert Megarry VC in the EMI case doubted if the indemnity costs order would shift the burden from the winner to the loser. Rather, any benefit of doubt will be given to the successful party:
“I do not think that it would be right to express this difference in terms of the burden of proof being shifted from the winner to the loser, though no doubt in many matters much of the argument during the taxation will proceed on these lines. But during a taxation the taxing master sees many things which are not revealed to the party against whom the order for costs has been made, and so that the party will lack some of the relevant material. Instead, it is more a question of who gets the benefit of any doubt in mind of the taxing master. On a party and party taxation, nothing will be included unless the taxing master reaches the conclusion that it satisfies the requirement of ‘necessary or proper’. Similarly, where the taxation is on the common fund basis, the taxing master will include nothing unless he considers that it satisfies the requirement of ‘a reasonable amount in respect of all costs reasonably incurred’. On neither basis do the rules give the benefit of doubt to the party in whose favour the order has been made. Nothing is included unless it satisfies the words of inclusion. The indemnity basis, as I would construe it, is the other way round. Everything is included unless it is driven out by the words of exclusion, namely, ‘except in so far as they are of an unreasonable amount or have been unreasonably incurred’. …”[15]
16. The mere fact that the Respondents did not adduce positive evidence to show the unreasonableness of the costs does not mean that the Appellant can recover all the costs claimed in the bills as of course. Unless the receiving party is willing to allow the paying party to inspect all the available documents in the taxation bundles before the taxation hearing (which is quite unusual), it is difficult to expect that in normal case, the paying party can adduce any positive evidence to show the unreasonableness of the item in question. During the review hearing, I asked Mr Johnson what kind of evidence he was expecting the other side to put before the Court when these items of costs claimed in the bills were relating to work carried out by the Appellant’s solicitors. Apparently, Mr Johnson himself found it difficult to answer. Ms Fenn, on other hand, accepted that they would be in a better position to challenge the item in question if they have positive evidence.
17. However, in my judgment, the taxing master still retains the discretion after seeing all the materials available in the taxation bundle and hearing submissions from both parties, may come to the conclusion that some of the items claimed in the bills are unreasonable. In such case, these unreasonable costs will be excluded and disallowed. Only if there is any doubt in the mind of the taxing master whether the item in question is unreasonable or not, then the benefit of the doubt should be given to the receiving party. The Court should then allow the receiving party to recover the item in question.
18. On the other hand, if the taxing master after considering all the relevant materials reaches a conclusion that there is no doubt on the item in question being unreasonable whether on its amount claimed or how it was incurred, then, in my view, there is no much difference in practical term between a taxation being conducted under common fund basis or indemnity basis[16].
19. The Appellant’s solicitors relied upon a passage in para.62/28/2 of the Hong Kong Civil Procedure 2011 in support of their arguments. After referring to the English Court of Appeal case of Petrotrade Inc. v. Texaco Ltd[17], the passage continues:
“… it was reiterated that an order for indemnity costs does not enable a claimant to receive more costs than he has incurred, its practical effect, is to avoid the costs being assessed at a lesser figure …”
The Appellant tried to put up the proposition that for indemnity costs, as long as the receiving party does not infringe the indemnity principle, he can actually get all of the costs claimed subject to whether any costs being incurred unreasonably. Upon reading the Judgment of Lord Woolf in Petrotrade[18], I must say it did not purport to change any established principle for taxation on indemnity basis. The Court still has to consider whether the costs were unreasonably incurred or for an unreasonable amount. Quoting the words of Sir Robert Megarry VC in EMI Records: “I do not see why the loser should have to pay for absurd extravagances of the winner, however stringent the order”[19].
D. Special Features of the Case
20. Both at the original taxation and the review hearings, the Appellant’s solicitors urged upon the Court to take into account of a number of special features of this case (as discussed in this section below) when taxing the costs claimed in the bills. The Respondent has no dispute about some of these special features. I bore in my mind all the relevant and material features touching upon this case when I decided whether to allow or disallow the costs of the Appellant during the taxation and no doubt, these matters will be given sufficient and appropriate weight when I consider and decide the review.
21. The Court made clear in the Judgment on Costs the rationale why it awarded costs in favour of the Appellant on an indemnity basis:
“6. Ms Cheng and Mr Yip chose to take a very strong course against Mr Kennedy when they moved to have him committed for contempt. Not only have they failed but they failed on the basis, as this Court has held, that he had no case to answer. Such a situation is one in which indemnity costs can be appropriate. And in all the circumstances of the present case, we are of the view that such costs as Ms Cheng and Mr Yip should be ordered to pay Mr Kennedy and to the Official Receiver ought to be taxed on an indemnity basis.”
22. The present action taken by the Respondents was not an ordinary kind of commercial litigation between 2 private parties. The case originated from a winding up petition against Wing Fai. The Respondents were ex-directors of Wing Fai and the Appellant Mr Kennedy at one time used to be the liquidator appointed in the winding up. In course of the winding up, the Appellant obtained transcripts from the Respondents through private examinations conducted under s.221 of the Companies Ordinance. The Appellant supplied the transcripts to the police in support of his allegations made against the Respondents for, inter alia, alleged misappropriation of monies from Wing Fai’s corporate bank accounts.
23. The subject motion was made by the Respondents against the Appellant to commit him for contempt. I agree with the Appellant’s solicitors that the present litigation was unprecedented and exceptional. It took the form of the most hostile litigation against a liquidator as officer of the court with the serious possible consequence of imprisonment. No doubt, the integrity and reputation of the Appellant are at stake. The Appellant was duty bound and had no choice but to defend against the motion taken by the Respondents.
24. The Court when considering what appropriate costs order to be made in this case must have taken into account the underlying objectives set out in Order 1A rule of the RHC[20]. As such, in its Costs Judgment, the Court signified clearly why the Appellant should get costs on a higher and more generous basis than the usual party and party basis. This taxation would then be conducted in accordance with the well-established principle under the indemnity basis. I do not agree with the Appellant’s solicitors that the taxation process should be used as a mechanism to reflect the public interest “in condemning misguided, hostile personal litigation against officers of the court”. As I understand, that is not the function of a taxation. The taxing officer in a taxation would assess the costs that should be payable by the paying party pursuant to the terms of the costs order made by the court. In any event, costs recovery by the winning party is only compensatory instead of punitive in nature.
25. On the other hand, the Appellant argued that in light of the special features of the case, the Court should be hesitant to catergorise their costs as “unreasonable” and by reducing 42% of the Appellant’s costs claimed in the bills failed to reflect neither the public interest nor the indemnity costs order given by the Court. In the latter part of this decision, I will explain why in my view, it is inappropriate for the Appellant to focus his mind substantially on the percentage deduction through the original taxation in order to evaluate whether the Court has assessed his costs properly under the indemnity basis. Neither this would constitute a competent ground for review.
26. One other matter the Appellant would urge the Court to take into account when taxing his bills was that the 42% of his costs taxed off by this Court at taxation (representing around $2.45 million) will come out of the estate of Wing Fai under the winding up proceedings and the creditors of the company will then suffer prejudice. Mr Johnson referred me to the Order given in this case dated 23 September 2004 when the motion was heard by Madam Justice Kwan (as she then was): “[Mr Kennedy] is entitled to recover any shortfall in his costs of this committal application out of the assets of Wing Fai Construction Company Limited.”
27. The said Order of Madam Justice Kwan only applies to costs incurred in the first instance proceedings. Since then, the Appellant ceased to be the liquidator of Wing Fai. Mr Johnson fairly accepted that for the appeal before this Court, there is no order allowing the Appellant to recover any shortfall in his costs from the estate of Wing Fai. As I was told, there is a Committee of Inspection for the company. It would be more appropriate for the Committee to consider if it will allow the Appellant to recover the shortfall in his costs incurred in the appeal out of the assets of Wing Fai; failing any agreement, that issue may be subject to further litigation elsewhere. For the present purpose, without a proper order either from this Court or the Companies Court, any proposition that the creditors of the company will suffer prejudice as a result of the taxation is only a matter of speculation. This is something that I should not take into account.
28. Lastly, the Appellant brought to the Court’s attention at the review that despite the issue of Interim Certificate dated 24 May 2011 in the sum of $2.7 million in respect of the FACV bill, up to the time of hearing of the review in June, no payment was received from the Respondents yet. Coupling with other matters, the Appellant contended that the Respondents failed to have proper regard to the underlying objectives of the RHC. The Court should exercise discretion by “allowing all these costs in full” so as to discourage other litigants from adopting similarly aggressive and obstructive litigation as pursued by the paying party and to ensure that the resulting costs burden on the innocent party is minimized.
29. There is no explanation why the Respondents choose not to pay the Appellant under the Interim Certificate. The Appellant can see fit to take enforcement proceedings or such other steps as so advised by his legal advisor to protect his interest. I do not consider that factor alone would cause me to exercise my discretion differently in this case so as to allow all the costs claimed by the Appellant as proposed. In any event, it is doubtful whether such matter is a material and relevant factor when the Court considers how to exercise its discretion in this taxation.
E. Hourly Rates of the Solicitors: (Objection 1 under the FACV and FAMV Bills)
30. Since the hourly rates of the solicitors involved in the case will affect most of the items in the bills except those relating to disbursements (Section B of the bills), any adjustment on the rates will have significant impacts on the eventual amount that would be allowed by the Court.
31. In my view, it is rather misleading for the Appellant to place his emphasis on the overall deduction of 42% of his costs claimed resulting from the original taxation in order to support his grounds for review. As shown in the table below, just on the adjustment of the hourly rates of those main fee-earners that are subject matters of this review, it would account for an average deduction of about 28% (more than half of the overall deduction).
| Name of Fee-earners | Rate Claimed | Rate Allowed by the Court | Amount Deducted | Percentage Deduction |
M. Rogers
(MDXR) | $6,500 | $4,500 | $2,000 | 31% |
J. Wadham
(JW) | $5,180 | $4,300 | $880 | 17% |
E. Johnson
(ERJ) | $4,300 | $3,200 | $1,100 | 26% |
J. Chu
(JYTC) | $4,400 | $3,000 | $1,400 | 32% |
Trainee Solicitors
(TS) | $2,000 | $1,300 | $700 | 35% |
32. At para.62/App/22 of the Hong Kong Civil Procedure 2011[21], it set out a succinct summary on how the Court will usually approach the hourly rates of the solicitors during taxation:
“From time to time, the Law Society, after consultation with the Registrar, High Court, circulates to solicitors the hourly rates of solicitors with different seniority and unqualified staff that may be allowed on taxation. While the suggested hourly rates are of considerable use in taxation, they are not binding on the taxing masters. … Taxing masters may adjust the hourly rates when necessary. Assessing the appropriate rate of taxation is a matter for the individual judgment of the master who has examined the court file and will have seen whether, for instance, great responsibility has been accepted by the solicitor, or whether he has been exercising specialised skill, so as to justify a higher than the usual rate. Similarly, the taxing master will consider whether there has been unusual reliance upon counsel or failure to delegate mechanical tasks to junior staff so as to attract a lower than normal hourly rate. The hourly rate so arrived at is what is considered fair and reasonable in all the circumstances. …”
33. The current level of applicable hourly rates of fee-earners of different seniority was last revised in 1997 (“the 1997 rates”) and was shown in a letter written by the then Mr Registrar Betts to the Law Society dated 14 July 1997[22] and the rates were later set out in a Law Society’s Circular. Since then up to now, there is no further revision. During the original taxation, the Respondents argued that the Court should apply the 1997 rates to the fee-earners in question in accordance with their seniority so that MDXR, JW and ERJ should get $4,000, $3,000 and $2,200 respectively. As we can see, the hourly rates claimed by the Appellant are well beyond the 1997 rates. Further, it was argued that the Court should not take into account the overseas experience of the fee-earners in other common law jurisdictions and only their respective post admission experience in Hong Kong should count.
34. The Appellant’s solicitors argued that since this is an indemnity basis taxation, without any evidence from the Respondents to show that the hourly rates were unreasonable, they failed to discharge their onus and the Court should allow the hourly rates as claimed (which are much higher than the 1997 rates). Further, they invited the Court to give little to no weight to the 1997 rates since such rates have not been revised for the last 14 years and the Law Society has recently in April 2011 commissioned a survey seeking a review on the existing party and party rates.
35. Even though it is accepted that the 1997 rates do not bind the taxing masters as a strait-jacket, in my experience, they still form a useful guideline or as a starting point for the taxing masters to consider at taxations conducted at different levels of courts. In appropriate cases, the rates can be adjusted upwards or downwards according to the special circumstances of the case.
36. At present, it is difficult to foresee how the Law Society will present its case on the hourly rates upon completion of the survey. It is, thus, too speculative for the Appellant’s solicitors to suggest that the 1997 rates are out-dated so that the Court should attach little to no weight to them. Not until a set of revised applicable rates will be indicated by the court in the future, the court will still take into account of the 1997 rates. In fact, in majority of the bills of costs lodged in this Court for taxation these days, the receiving parties are still claiming their costs on the basis of the 1997 rates. For this case, I must say the recent survey conducted by the Law Society would offer no assistance to the Appellant’s arguments.
37. It has been suggested in the said paragraph 62/App/22 of the Hong Kong Civil Procedure 2011 that the hourly rates will not increase ipso facto merely because the taxation is on an indemnity basis. On this, I fully agree with the reasonings of Madam Registrar Chu (as she then was) in RePeregrine Investment Holdings Ltd & Others (no.5)[23] and with respect, I will follow her judgment. Although, in that case, the taxation was conducted under Rule 179 of the Companies (Winding-up) Rules, by a previous Order of the court, the solicitors’ bills (being agents of the liquidator) were taxed on a solicitor and own client basis. Despite agreement between the liquidator and the solicitors on the hourly rates, the Registrar reduced the rates after considering and comparing the 1997 rates. One of the arguments was that the hourly rates as set out in the Law Society’s circular only apply to taxation on party and party basis and therefore, have no bearing to taxation on higher basis.
38. In response to such argument, Registrar Chu decided:
“I now turn finally to the argument that the hourly rates set out in the Law Society Circular only relates to party to party taxation. The Circular was issued as a result of a letter written by Mr. Registrar Betts to the Law Society dated 14 July 1997. Since 1985, the Registrar, High Court, would from time to time indicate to the Law Society by correspondence the level of hourly rates which taxing masters would allow to solicitors upon taxation, by reference to the solicitors’ experience and seniority. In this letter of 14 July 1997, Mr. Registrar Betts set out the revised level of allowable hourly rates. Nowhere had he indicated that the rates should only apply to party and party taxation. Indeed, there is little justification for adopting different rates simply because the basis of taxation is different.
At any rate, it is irrelevant whether the rates set out in the Circular relate to party to party taxation. The fact remains that the Circular reflects the rates which taxing masters generally consider to be appropriate and reasonable for solicitors of comparable experience and for the unqualified fee earners. There has to be good and compelling reason before the Registrar in a Rule 179 taxation will allow a liquidator to recover from the estate his solicitors’ fees calculated at higher rates.”[24]
39. For this case, to consider the reasonableness of the hourly rates of the fee-earners in question, I shall draw assistance from the 1997 rates so that the experience and the seniority of the fee earners involved will be the first starting point. I shall also take into account the role played by each fee-earner in handling the case and the nature of work carried out by each individual person. As I understand, at all material times, Mr Wadham (being the partner in charge) was the main case handler who was assisted mainly by Mr Johnson and on one single incident by Mr Chu. The trainee solicitors were asked to carry out some mechanical work such as preparation of bundles and doing researches.
40. To properly exercise of my discretion, I have to consider all relevant circumstances of the case and of course, the 7 matters mentioned in para.1(2) of Part II to the 1st Schedule of Order 62 of RHC will be taken into account. It is not in dispute that the present appeal involved points of law of great general or public importance. The contempt issue against a liquidator for the alleged unauthorized disclosure of transcripts of private examination was a novel one which warrants careful consideration by this Court in particular, bearing in mind the different opinions expressed by the Court of First Instance[25] and later by the Court of Appeal[26].
41. Those relevant special features mentioned in Section D above will no doubt be considered. I also take into account the role of and responsibility assumed by the Appellant’s solicitors to the extent that they had been working as the junior Counsel assisting Senior Counsel in the leave application and later the substantive appeal. Junior Counsel Ms Ismail was only briefed shortly before the substantive appeal hearing to appear together with their London Silk. The written submissions for the leave application and the Appellant’s Case were first drafted by the Appellant’s solicitors and settled by the Senior Counsel. This factor provided a substantial basis why at the original taxation, I allowed a higher hourly rate to Mr Wadham at $4,300 than the norm.
42. Before I turn to discuss the hourly rate of the individual fee-earner, one matter raised in the written submissions of the Appellant’s solicitors warrants my comments. The Appellant’s solicitors relied upon the 7.5% deduction of the hourly rates of the fee-earners in the bill of costs filed in the HCCW proceedings pursuant to the costs order made by Kwan J (as she then was) on 23 September 2004. Since the costs order was also made for taxation on the indemnity basis, they argued that any deduction in this taxation should be limited to no more than 7.5%. Incidentally, the taxation of the HCCW bill was conducted by me on 14 April 2005 when I was acting as the Companies Master of the High Court. I checked with the file records which indicated that at that taxation, both parties agreed the hourly rates of the fee-earners by a deduction of 7.5%. The solicitors for the Respondents decided not to agree such percentage deduction for this taxation and the Court has to make a decision this time. I am not bound by the parties’ previous agreement in exercising my discretion and I do not see any significance of it to this taxation.
Hourly Rate of MDXR:
43. I now turn into the individual hourly rate of the fee-earner involved. Mr Rogers (MDXR) was originally the partner in charge of the file before Mr Wadham was made a partner of the firm. He was qualified in Hong Kong for more than 10 years when this appeal was conducted. He only claimed 5 minutes in the FACV bill for general care and conduct. His role was mainly supervisory. His hourly rate was claimed at $6,500. I take the view that such hourly rate is exceptional high and is unreasonable. Taking into the special features of this case, I allowed his hourly rate at $4,500 at the original taxation. I do stand by my ruling and see no ground to further increase his rate beyond what was allowed as put forward by the Appellant.
Hourly Rate of JW:
44. Mr Wadham (JW) was the partner in charge of the case. He was qualified in Hong Kong in 2002 but was previously admitted in New Zealand in 1999 and then worked as a commercial litigator before coming to Hong Kong. I do not accept the Respondents’ argument that the Court should only take into account his Hong Kong experience and ignore his overseas experience. His overseas experience is a relevant one and would contribute to his effective management and preparation of the appeal. The Respondents had no positive evidence to prove the otherwise. For this case, the Court is entitled to take into account of his overall seniority and experience in assessing his appropriate hourly rate.
45. Mr Wadham had dual roles for this case. Prior to the engagement of the junior Counsel for the substantive appeal, Mr Wadham worked as the main case handler performing the role of the instructing solicitor and the supervising partner when work was delegated to his associates. In addition, he acted as a “quasi junior counsel” to assist the Senior Counsel and later the London Silk. He undertook drafting the main part of the written submissions for the leave application, the Appellant’s Case and the costs submission for the main appeal. He would give his views on matters raised by Senior Counsel and London Silk in course of settling the said documents and would finalise the documents after they were settled by Senior Counsel/ London Silk. He had to advise the Appellant on various legal issues arising out of the appeal and had to correspond with the Respondents’ solicitors. He had to exercise his expertise and skill in preparation of this appeal from the very beginning to the end. I have no single doubt about of his competence in particular, after having the chance to read his draft written submissions and printed case.
46. His hourly rate was claimed at $5,180. Even taking into account his overseas experience, such rate is substantially higher than a 10-year qualified solicitor under the 1997 rates (i.e. $4,000 per hour). I find it rather unreasonable to allow his full rate as claimed in this case. At the original taxation, bearing in mind the special features, I had adjusted his rate to $4,300. For this review, considering his dual roles played in this case and after having the chance to go through the draft documents, I am prepared to further increase his hourly rate to $4,500.
Hourly Rate of ERJ:
47. Mr Johnson (ERJ) was at all material times an assistant solicitor employed by the Appellant’s solicitors. He was first qualified in Australia in 2003 and worked as a civil litigator mainly on professional negligence and insurance claims before coming to Hong Kong. In Hong Kong, he joined the Appellant’s solicitors to become a registered foreign lawyer before he was admitted as a Hong Kong solicitor in 2008. His role in the case was to assist Mr Wadham in preparing the submission by conducting researches especially on the issue whether the proposed appeal was in the nature of a criminal or civil appeal[27]. His role, as I can see, mainly involved in co-ordination with counsel, correspondence with all relevant parties. His work was obviously less extensive and complicated than that of Mr Wadham.
48. He claimed his hourly rate at $4,300. Even taking into account his overseas experience so that in assessing his rate, he would not be treated as a newly-qualified solicitor for the purpose of this appeal, his rate claimed would be more appropriate for a solicitor well over 10-year of post qualification solicitor under the 1997 rates. Bearing in mind those special features in this case, I have no doubt that such rate is unreasonable to be allowed for a competent notional solicitor in performing the same kind of work that Mr Johnson had done in this appeal. The more appropriate hourly rate as I had allowed at the taxation should be $3,200. For this review, I see no substantial ground to further increase such rate for the FAMV bill. Since Mr Johnson took part in assisting Mr Wadham in preparing the Appellant’s Case, the Consolidated List of Authorities and the written submission on costs, I slightly increase his hourly rate to $3,300 to reflect his additional contributions for the FACV bill.
Hourly Rate of JYTC:
49. Mr Joseph Chu was also an assistant solicitor who was qualified in Hong Kong in 2003. He claimed his hourly rate at $4,400 (even more than Mr Johnson) despite his role in assisting in the case was more limited than Mr Johnson. According to Mr Johnson, Mr Chu was delegated to draft up a part of the Appellant’s Case which touched upon the actus reus and the mens rea of a criminal contempt which was eventually incorporated in Part 5D of the Appellant’s Case. Mr Johnson could not confirm if Mr Chu has any experience on criminal litigation and his input was only on a general issue of criminal law of which it is doubtful if he had any experience. Apart from this part of the work, Mr Chu was not involved in any other parts of the appeal.
50. Mr Chu was about 6-year of post qualification experience when he took part in the preparation of the appeal. As compared with the 1997 rates, his hourly rate is much more than a senior solicitor of more than 10-year of experience. Again, I conclude that such rate is unreasonable bearing in mind his limited role. In my judgment, the reasonable hourly rate should be $3,000. I see no ground to revise upwards such rate for the purpose of this review.
Hourly Rate of TS:
51. For the purpose of taxation, trainee solicitors are treated as unqualified staff. Because of their holding of a law degree and legal training, under the 1997 rates, they are given a little bit higher rate than a litigation clerk or a legal executive at $1,300. However, since they are still undergoing training to become a qualified solicitor, their rate cannot be awarded at the same rate of a newly-qualified solicitor.
52. In both bills, the Trainee Solicitor was claiming an hourly rate of $2,000 which is the rate payable to a newly qualified solicitor under the 1997 rates. Without any compelling reason, I must conclude that such rate is unreasonable. Further, as informed by Mr Johnson and appeared in the bills, the Trainee Solicitor only assisted in conducting researches and organization of documents and materials such as preparation and compilation of bundles. Bearing in mind that the Trainee Solicitor was still undergoing training and in my experience, quite a substantial part of the time would be spent by them for the purpose of their learning exercise such as researching into the Court’s rules and procedure. Such involvement does not warrant obtaining the hourly rate of a newly-qualified solicitor. I allowed at taxation the usual rate of $1,300 to them and nothing presented before me now can persuade me to vary such ruling upon review.
Conclusion
53. I allow the review on the hourly rate of Mr Johnson and partly on the hourly rate of Mr Johnson in the FACV bill. For other hourly rates, I refuse the review.
F. Senior and Junior Counsel’s Fees
54. The main objection raised by the Appellant for the review concerns the brief fees payable to the Senior and Junior Counsel in the leave application and the substantive appeal.
55. Counsel’s fees in general are taxed in accordance with para.2, Part II of the 1st Schedule of Order 62 of the RHC. In this case, since the brief fee of the Senior Counsel in appearing before the Appeal Committee (Item 3, Section B of the FAMV bill) was incurred on 31 October 2008, prior to the implementation of the Civil Justice Reform (“CJR”), the pre-amended para.2(5)[28] of Part II of the 1st Schedule would still be applicable[29].
56. On the other hand, since the brief fees of the London Silk and the Junior Counsel for the substantive appeal (Items 3 and 5 of Section B of the FACV bill) were incurred in October 2009, the provisions of the new Rules apply[30]. The difference is that the presumption made in favour of the Counsel’s fee is abolished after the implementation of the CJR. However, since this taxation is conducted on an indemnity basis, I see no substantial difference in practical term from the pre-CJR situation when I have to consider the brief fee here. In any event, both parties did not consider necessary to make submission on this issue.
57. In assessing the proper brief fee payable, the taxing master should apply the test of a notional or hypothetical counsel. In Simpsons Motor Sales (London) Ltd v. Hendon Borough Council[31], it was held that:
“The measure of counsel’s fee is to be determined by estimating (on the basis of the court’s knowledge and experience) the fee to which a hypothetical counsel capable of conducting the case effectively would be content to take on the brief, bearing in mind that such hypothetical counsel does not insist on the particularly high fees sometimes demanded and obtained by ‘fashionable’ Counsel.”
Brief Fee of Senior Counsel to Appear before the Appeal Committee (FAMV bill: Objection No.7)
58. Senior Counsel charged his brief at $380,000 and I taxed it down to $250,000 at the original taxation.
59. To support his ground of review, the Appellant’s solicitors relied upon their main arguments that there was no evidence to show that the brief was unreasonable and therefore, the Court should allow the brief in full. Further, they argued that the Respondents had engaged the “Rolls Royce” service of 3 Counsel to attend the hearing: 1 London Silk, 1 Hong Kong Senior Counsel and 1 Junior Counsel.
60. I have already dealt with the “no evidence” argument in paras 14 to 18 above and I do not intend to repeat here again. On the other hand, the fact that the paying party has engaged “Rolls Royce” service does not mean that whatever Counsel fee charged by the receiving party must be or tend to be reasonable. The Court still needs to assess whether the amount of Counsel’s fee in question is reasonable or not on the notional or hypothetical Counsel basis. There is established authority that fees charged by counsel for the paying party were not relevant and would not form a yardstick[32].
61. The brief should include the pre-hearing work such as perusal of documents, researching, settling written submission drafted by the solicitors and attending the hearing. For this leave application, the hearing lasted for about 2 hours only. The Senior Counsel was involved in the lower courts and so he should be familiarized with the factual backgrounds and the issues of law involved. The grounds of appeal had been argued before the Court of Appeal. No new ground that was not argued before the Court of Appeal could be raised in this Court unless with exceptional and special circumstances. Not because the Court of Appeal decided that the subject cause was a criminal cause and its decision was not final, the Court of Appeal would be prepared to accept that there were points of law of great general and public importance and certified the same for the purpose of this appeal[33]. Thus, before the Appeal Committee, apart from rehearsing the grounds of appeal heard before the Court of Appeal, the main substantive argument made was whether the Court of Appeal’s judgment was final or not and whether the subject cause was criminal or civil in nature. The leave application should not be a particularly difficult one.
62. On the other hand, the work of the Senior Counsel in leave application had been shared and contributed to by the Appellant’s solicitors and the London Silk. The written submissions were originally drafted by Mr Wadham and later settled and commented by the London Silk before it was finally approved and settled by the Senior Counsel. As I understand, this applied also to the preparation of the list of authorities. Therefore, the work of the Senior Counsel was much lessened in this case as compared with some other cases whereby the counsel would be the only one to undertake the work alone.
63. Taking into the account the said matters and those relevant special features in this case, in considering a hypothetical counsel of comparable experience and competence capable in conducting this leave application, I am persuaded by the Respondents that the brief fee (being a half-day brief only) of the Senior Counsel was on the high side. The reasonable fee should be about $250,000 and I see no ground to vary the same upon review.
Brief Fee of Junior Counsel to Appear before the Court (FACV Bill: Objection No. 24)
64. No issue was arising in this taxation for the engagement of a Junior Counsel to assist the London Silk and her refresher. The only dispute is surrounding around the reasonableness of her brief which was claimed at $440,000. The Respondents argued that the brief was excessive and suggested to allow $250,000. Taking into account that Junior Counsel was only instructed at a very late stage (the Brief was dated 30 September 2009) less than a week before the hearing of the appeal on 5 October 2009, her work should be rather limited which mainly consisted of perusal of all the documents in order to assist the London Silk to address the Court. At the taxation, I allowed $350,000 on the basis of a hypothetical junior counsel who would have to assist a senior counsel in an appeal before this Court.
65. During the review, I was told by Mr Johnson that Junior Counsel was engaged much earlier than just a few days before the appeal hearing. He said that it should be sometime around when the London Silk sought permission to be admitted in Hong Kong for this case since this is a requirement of the Hong Kong Bar that a London Silk to practice in Hong Kong for a case must be assisted by a Hong Kong counsel. Mr Johnson referred to a series of correspondence dating back July 2009 with the Junior Counsel.
66. Mr Johnson further submitted that Junior Counsel had to peruse and consider the Respondents’ Case in order to see if a supplemental case was necessary. No supplemental case was eventually filed. From the correspondence, I note that Junior Counsel was also involved in finalising the consolidated list of authorities in early part of September 2009. At the review hearing, I specifically asked the Appellant’s solicitors to confirm if the Junior Counsel had given any advice on any aspect of this appeal. After sometime, Mr Johnson indentified a number of emails correspondence at Taxation Bundle 7 to show the advice given by the Junior Counsel. Since I needed time to go through the email exchanges, I reserved my decision at the review hearing.
67. I now have the chance to go through the email exchanges between the Appellant’s solicitors and the Junior Counsel and in particular, those identified by Mr Johnson. I am satisfied that Junior Counsel had rendered advice on various matters in the latter part of September 2009 such as those objections arising out of the Respondents’ Case to Part 5 of the Appellant’s Case and matters raised in different parts of the Respondent’s Case which may call for oral submission at the hearing. With this additional work in mind, I find that the brief charged by the Junior Counsel was not unreasonable and I am prepared to allow the sum in full.
Brief Fee of the London Silk for the Appeal (FACV Bill: Objection No.25)
68. A London Silk was engaged by the Appellant to appear with a Hong Kong Junior at the appeal hearing. In compliance with my directions, the Appellant’s solicitors had filed a breakdown of the fees of the London Silk with detailed particulars of the work carried out by the London Silk. From the breakdown, his brief and refresher were charged at a total sum of £90,820. When the refresher was claimed at £7,500, the brief should be around £83,320. In addition, he charged 2 refreshers for travelling to and from Hong Kong plus other miscellaneous disbursements such as air fare and hotel expenses.
69. Adopting an exchange rate of £1: HK$12.37 (which the Respondents indicated no objection), the London Silk charged a total sum of HK$1,394,198.02.
70. The Respondents raised no objection to the refresher. The main disputes concern the brief and the additional 2 refreshers for the travelling. The Respondents suggested the appropriate brief at $500,000.
71. At taxation, on the basis of a hypothetical local eminent silk with special expertise in the area of law in question who would be able to conduct this appeal, I assessed the brief at £82,500 (or HK$1,020,525). The London Silk was not involved in the proceedings below. He had to acquaint himself with the detailed background to and the complex history of the proceedings by going through all the judgments, documents and submissions made by the respective counsel. With all the special features in this case in mind, I estimate that it will take about 10 days for preparation of case before the appeal hearing plus 1day for the attending the appeal. Adopting 8 to10 hours work per day and an hourly rate of about £750 to £800, it comes up about the sum I allowed.
72. At the review hearing, I recognized that the sum that I had allowed at taxation was of a marginal difference from the brief claimed in the sum of £820. Thus, I should not find that the brief claimed was so unreasonable and any benefit of doubt should be given to the receiving party. As such, I allowed the review and revised the brief to the sum claimed.
73. That leaves the claim for the additional 2 refreshers for the time of travelling to and from Hong Kong. I disallow such claim in its entirety at the taxation. I considered that is a claim more for solicitor and own client. This claim is in fact not in form of an out of pocket expense but rather in the nature of compensation for loss of opportunity during the period the London Silk has to fly to and from Hong Kong and lost the opportunity to earn. In my view, it is unreasonable to recover such sum against a losing party in inter-partes taxation even under an indemnity basis. In the Appellant’s List of Objection filed for the review, he did not state any specific ground to argue for such claim. I must see no good reason to allow this separate claim on top of the brief and refresher charged and allowed by the Court. Even if I was wrong, looking at the global figure that the Court has allowed for the fees of the London Silk at about HK$1.2 million (including the incidental expenses but excluding the 2 refreshers in question), it should be more than a reasonable sum which a hypothetical local senior counsel was contented to receive for handling this appeal competently. For sake of illustration, in the CACV bill, the Appellant’s local senior counsel was charging $400,000 only for his brief in attending the substantive appeal hearing before the Court of Appeal in June 2005. For this part of the review, I would refuse it.
Conclusion
74. I refuse to review the brief fee of the Senior Counsel in the FAMV bill and the 2 refreshers of the London Silk for travelling in the FACV bill. However, I would allow the review for the brief for Junior Counsel and the London Silk in the FACV bill.
G. Items of Work Involving 2 Fee-earners
Objection No. 4 (Item 8.2 of the FAMV Bill):
75. The Appellant argued that it is not unreasonable to have both Mr Wadham and Mr Johnson to attend the hearing before the Appeal Committee with Senior Counsel. I disallowed Mr Johnson’s time at taxation.
76. I have already said that the leave application for this case was not a particularly difficult one and it was conducted by a Senior Counsel together with a senior solicitor. I consider that it is unreasonable to have another solicitor to attend the hearing. My original rulings do stand and the review is refused.
Objection No. 8 (Item 23.2 and 23.4 of the FACV Bill):
77. This item concerns the time of Mr Johnson in attending preparation before appeal hearing including reviewing authority and discussing with counsel after the hearing.
78. At the review hearing, Mr Johnson submitted that there was no duplication of the work carried out here by him and Mr Wadham since Mr Wadham delegated part of the preparation work to him. He had to discuss with Counsel on issues that he was involved. The 2 fee-earners had different roles to play.
79. Since I have allowed 2 fee-earners to attend the appeal hearing, I cannot see that it is unreasonable for the 2 fee-earners to discuss with Counsel during the course of the hearing especially they had different roles to play. Even if I have any doubt on it, the benefit of such doubt should go to the receiving party.
80. I therefore allow the review on this item and allow 60 and 30 minutes for ERJ under Items 23.2 and 23.4 respectively.
H. Items Involving the Reasonableness of the Quantum of Time Claimed
81. As confirmed by both parties during the review hearing, for those items under the Appellant’s List of Objections filed for this review which are not dealt with in the above sections will all be falling under this part which only concerns the reasonableness of the quantum of time claimed.
82. At the review hearing, the Appellant’s solicitors withdrew their review under Objection Nos. 9 and 16. I wish to mention that for Objection No. 16 (which relates to Item 37.3 of the FACV bill), the Appellant’s law costs draftsman withdrew that item for taxation during the original hearing. It is therefore wholly inappropriate for the Appellant to seek a review on an item that has not been taxed at all. Mr Johnson recognised his difficulty and sensibly withdrew their review.
FAMV Bill:
Objection Nos. 2 & 3 (Items 7.1, 7.2, 7.3 & 7.7 of the Bill)
83. These items were grouped as preparation for the hearing of the leave application on 31 October 2008.
84. Item 7.1 concerns drafting and considering revised skeleton submissions from Counsel. Mr Wadham claimed a total of 1,450 minutes (about 24 hours). Coupling with the time spent by Mr Johnson under Item 7.3 (1,166 minutes, or about 19 hours) for reviewing case law for preparing such submission and list of authorities, it took the Appellant’s solicitors a total of about 43 hours to complete and finalise that part of the work. If we take an average of 8 hours work per day, it means about 5-day work for a solicitor. As I understand, there were 9 drafts involved. For those reasons that I have discussed at paragraph 61 (relating to Senior Counsel’s brief fee) on the complexity of the leave application, I consider that a total of about 43 hours for this part of the work were highly excessive and thus unreasonable. 15 hours would be in my view a reasonable time for the drafting of written submission by a competent senior solicitor under item 7.1.
85. For item 7.3, most if not all relevant case law should have been covered in hearings before the Court of Appeal. There were 27 items under the List of Authorities filed by the Appellant. I do not see why Mr Johnson had to spend another 19 hours to review case law including the previous judgments. Even taking into account that this taxation is conducted on a more generous basis, 5 hours that I had allowed at taxation was from any angle more than reasonable and generous for work done under this item. I am not persuaded by the reasons stated in the List of Objections. I refuse the review on items 7.1 and 7.3.
86. The Appellant claimed 95 minutes for item 7.2 concerning the time for drafting and considering supplemental submission. The supplemental submission was a 2-page document in response to the Respondents’ submission trying, inter alia, to clarify the relevance of the Barma Order given on 8 June 2004 to the leave application. The supplemental submission was settled by Senior Counsel.
87. At taxation, I considered that the reasonable time that had to be incurred for this work should be 60 minutes. On quantum, I see no reason to vary such assessment upon review.
88. Since the submission tried to clarify the Barma Order which the Court of Appeal eventually decided to vary its Judgment, I indicated at taxation that this item should be reduced by 50% in light of the Judgment on Costs for those parts of costs incurred in the Court of Appeal. Mr Wu, the LCD for the Appellant, indicated no objection for such adjustment at taxation. I therefore allowed 30 minutes on such basis. The Appellant did not specifically put this issue for review in his List of Objections. Despite that, upon reconsideration, I am of the view that such item should be taxed as part of the costs incurred in this Court and therefore, should not be adjusted by 50%. I would allow 60 minutes instead upon review.
89. Mr Johnson claimed 570 minutes (about 9.5 hours) under item 7.7 for preparing the hearing bundles for the hearing before the Appeal Committee including the time for drafting and amending the index and collating documents. In the List of Objections, the Appellant argued that this was an important aspect of preparation and inherently time-consuming. It was further stated that our Court sets rigid and exacting standards for preparation of appeal bundles.
90. As I understand, there were 4 bundles of documents lodged for the hearing. There is no explanation why the appeal bundles used before the Court of Appeal for the leave application cannot be re-used for the hearing before the Appeal Committee. I would expect that the bundles used at this Court should have no substantial difference from those used before the Court of Appeal. Spending 9.5 hours for preparing such bundles by a solicitor of Mr Johnson’s seniority are far from reasonable. I allowed 2 hours at taxation.
91. While the Court’s Rules have prescribed how to prepare Part B of the Record for the substantive appeal hearing[34], there is no equivalent provision for leave applications. So I do not know what rigid and exacting standards the Appellant was referring to in his List of Objections. However, the applicant should exercise due care to include only those necessary documents in the bundles for the hearing of the leave application and on this, I would refer to the guidance and reminder given by the Appeal Committee in the Determination given in Peter Gerardus Van Weerdenburg & others v. HKSAR[35].
92. Even I accepted that in light of the special features of this case, it warranted a solicitor of such seniority of Mr Johnson to prepare the hearing bundles (which in an ordinary case, it could be done by a more junior solicitor), I am not convinced that it is reasonable to spend 9.5 hours to prepare such bundles. In any event, after he prepared the Index, the collation of documents could be delegated to a clerk to handle and such costs would be covered by the photocopying charges of $3.00 per page. 2 hours for identifying the documents for the hearing bundles and finalising the Index are more than reasonable for such work.
93. I do stand by my original ruling to allow only 2 hours for the work done under item 7.7 and refuse the review.
Objection No. 5(Item 20 of the Bill)
94. Item 20 covers legal researches carried out by various fee-earners and there are 6 sub-items. In the List of Objections, the Appellant did not state any specific ground for each sub-item save to state the broad ground that on an indemnity taxation costs should be allowed for such legal research save those unreasonably incurred.
95. While I have already stated my views on how discretion should be exercised on an indemnity taxation, I do not consider that the general ground given in the List constituted a competent ground for review. It has not referred to the reasons that I had given at taxation why such costs were disallowed and to state why such exercise of discretion was improper.
96. For sake of record, I agree with the Respondents that for items 20.2, 20.3 and 20.5, those researches relating to the grounds of appeal should be covered by work done under items 7.1 and 7.3 and therefore, it is unreasonable for the Appellant’s solicitors to claim such costs separately in item 20.
97. For item 20.1, it related to research done by a trainee solicitor on procedure for a stay of execution upon appeal and steps required to vacate a hearing date. These matters are general procedural issues which a senior solicitor handling the case is expected to be conversant and asking a trainee solicitor to do a research was just a part of his/her learning exercise and it is unreasonable to charge against the Respondent. In any event, I am not aware of any application for stay being made before the Appeal Committee.
98. That applies equally to item 20.6 claiming 90 minutes incurred for conducting research in reviewing case law on security issues by Mr Johnson. This is general procedural issue and payment of security for costs of appeal is a standard order given by the Appeal Committee in granting leave to appeal under Practice Direction 2.3. As a competent solicitor, this is something that the Court would expect him to know.
99. Finally, the time spent under item 20.4 was allowed at taxation in full. I do not see under what ground the Appellant wishes to review such item.
100. In summary, I refuse the review under this item.
Objection No. 6 (Item 22 of the Bill)
101. This item touches upon general care and conduct and the Appellant claims time for internal discussions between fee-earners. In the Bill, about 5 hours were claimed for Mr Wadham, 10 hours for Mr Johnson and 6 hours for the trainee solicitor.
102. General care and conduct should be claimed for the time spent by handling solicitor to supervise work of junior solicitors and unqualified persons. In allowing such time, it is suggested that the taxing master will have regard to, inter alia, the duration of the proceedings, the steps taken and the number of unqualified persons or junior solicitors who required supervision[36].
103. I considered the time claimed by the Appellant’s solicitors were excessive and unreasonable and allowed at taxation 3 hours for Mr Wadham and 2 hours for Mr Johnson under this head while no time being allowed for trainee solicitor. I take into account that the leave application took about 6 months from commencement to completion (not a very long period), steps being taken were rather standardized and straight-forward, and supervision over junior staff should be minimal. Further, I see no reason to allow time for trainee solicitor under this head.
104. I am not convinced that there is any ground to vary my decision made at taxation and review sought by the Appellant should be refused.
FACV Bill:
Objection Nos. 2 & 4 (Items 1.1 & 6 of the Bill)
105. Mr Johnson claimed 60 minutes in drafting the Notice of Appeal filed in this Court under Item 1.1. The Notice is a standard form prescribed under Form C of the Schedule 1 of the Court’s Rules. The document (which is only 2 pages) requires no great difficulty for a competent solicitor to fill in the necessary particulars and attaching the relevant Court of Appeal judgment. I have no doubt that using 60 minutes to draft such a standard document must be unreasonable. I do not believe that just because this taxation is conducted on a more generous basis, then a solicitor should spend more time than usual in drafting up such a standard document. 20 minutes that I had allowed at taxation is more than reasonable and such ruling do stand in this review.
106. Item 6 relates to the time for drafting the Appellant’s printed case which is the written submissions advanced by the Appellant in support of his appeal[37]. As stated before, the Appellant’s case was initially drafted primarily by Mr Wadham and later settled by Senior Counsel and the London Silk. Apart from Mr Wadham, he was also assisted by Mr Johnson and the trainee solicitor in reviewing files and collating all relevant documents and transcripts for cross referencing.
107. At taxation, without objection of both parties, I adopt a global approach in assessing a lump sum for preparing the case instead of assessing the time spent by each fee earner individually. On this basis, I assessed a lump sum of $250,000 which had taken into account all the special features as mentioned in this appeal.
108. I accept that the printed case was prepared with great care by Mr Wadham and substantial time will have to be spent on it. He claimed about 95 hours in drafting the case. On top, Mr Johnson and the trainee solicitor incurred another 34 and 27 hours respectively for the case. That add up to a total of 156 hours of work and in monetary term (using the hourly rates claimed in the bill), a lump sum of $700,000.
109. In my experience in taxing bills lodged in this Court, the said sum is most probably amongst the highest amount claimed for preparation of the appellant’s case[38]. While there are special features that I have to take into account in this case, I have also taken into account that Mr Wadham had been involved in the lower courts proceedings and he should well familiarized with the issues in dispute and grounds of appeal. All the arguments that they proposed to put in the printed case must have been argued fully before the Court of Appeal. In any event, the printed case was settled by Senior Counsel and the London Silk. After considering all these factors, I have no doubt that the lump sum time costs claimed by the Appellant of $700,000 must be excessive and unreasonable. I stand by my original assessment that the reasonable costs for this part of the work should be in the range of $250,000 (which is about 55 hours of work on the hourly rate of $4,500 allowed by the Court for Mr Wadham).
Objection Nos. 3 & 5 (Items 3, 11 & 12 of the Bill)
110. These items relate to the preparation of the Parts A and B of the Record.
111. How to prepare the Records is prescribed by the Court’s Rules[39] and it should not be a very complicated exercise. In most of the cases, it can be handled by a junior solicitor or in a straight-forward case, by a clerk.
112. For item 3.1, Mr Johnson claimed almost 6 hours in preparing the Part A of the Record. It is now a standard practice of this Court when a Notice of Appeal is filed, I will issue a direction letter guiding the appellant what documents have to be included in the Part A of the Record. In this case, the direction letter was issued to the Appellant’s solicitors on 5 January 2009. I would expect that the handling solicitor would read the direction letter and followed the guidance in preparation of the Part A of the Record. Knowing that Mr Johnson had been handling the case in the lower court and taking into account his seniority, it should be rather a straight-forward step for him and should not involve any complication. I do not understand why the Appellant’s solicitors said in their List of Objection that it is “inherently time consuming”.
113. The Part A of the Record contains 17 items, all of them are court documents filed here and below as prescribed by the said direction letter. In my judgment, spending almost 6 hours in this case to prepare such record by any solicitor of whatever seniority must be unreasonable and excessive, not to say by Mr Johnson who has been qualified in Hong Kong since 2002. I must say allowing 2.5 hours for time spent on this item at taxation is more than reasonable and I see no ground at all to vary such assessment.
114. Items 11 and 12 are time relating to drafting and revising Index to the proposed Part B of the Record submitted for my approval as required under Rule 36 of the Court’s Rules. Mr Johnson claimed a total of about 22 hours and the trainee solicitor claimed another 30 hours. Altogether, it took the Appellant’s solicitors 52 hours in completing the Record. In my experience, it is extraordinary to incur such an amount of time in preparing such Record.
115. Part B of the Record shall consist of such documents that were before the court below that are necessary to be laid before the Court on the hearing of the appeal, including a copy of every document referred to in the printed cases of the parties[40]. It is the duty of the appellant’s solicitors to identify the necessary documents that must be laid before the Court at the appeal hearing and include them in the Record. I accept that it must take the solicitors considerable time to go through the bundles of documents used at the lower courts carefully and diligently in order to identify such documents. In this case, the Appellant’s solicitors initially identified about 130 items of documents when they first submitted the proposed Record for my approval in August 2009 which included pleadings and affidavits filed in the lower courts, reports of the Official Receivers, skeleton submissions and transcripts of the hearings below.
116. In compliance of my directions given under letter dated 26 August 2009, the Appellant’s solicitors had revised the proposed Part B of the Record and eventually included only 19 items of documents in 2 bundles. It tends to demonstrate that time had been wasted initially to include 130 documents in the proposed Record when at the end of day after more careful consideration, a great majority of them were excluded and only 19 items were selected as necessary for the hearing of the appeal. While the Appellant’s solicitors would have to consider the matter with Counsel and the Respondents’ solicitors, I take the view that incurring 52 hours for this part of the work is clearly excessive. Adopting again a global approach, 10 hours for Mr Johnson to complete the work here would be more than reasonable and no extra time will be allowed for the trainee solicitor in compiling, amending and double checking the Record.
Objection Nos. 6 & 7 (Items 16.2 and 20.2 of the Bill)
117. Item 16.2 is the time spent by the trainee solicitor in preparing the Consolidated List of Authorities. About 23 hours were claimed. The List contains 98 cases. Mr Johnson has already claimed 6 hours in drafting the List which the Respondent has no objection to the claim. Even if some extra time should be allowed for the trainee solicitor to prepare each case to be placed in the List, I cannot see how he/she could spend some 3 days (assuming 8 hours work per day) to complete the work. One possible explanation is inefficiency which is not uncommon for work undertaken by a trainee solicitor. I cannot see why it is reasonable for the Respondents to pay for the inefficient work of the Appellant’s trainee solicitor. At taxation, I had allowed 8 hours for the trainee solicitor to prepare the cases (which mean about 5 minutes per case) solely because this is an indemnity basis taxation. If on party and party basis, most probably, I would disallow all the time spent. I see no basis to vary such ruling.
118. Item 20.2 refers to the 5 hours claimed by Mr Johnson for perusing and considering the Respondents’ supplemental list of authorities (which consists of 8 items of documents) when Mr Wadham has already claimed 1.5 hours for the same kind of work. While accepting that Mr Johnson worked together with Mr Wadham in preparation of the appeal hearing so that it is reasonable for him to spend time in considering the supplemental list, I see no explanation and reason why Mr Johnson should spend an extra of 3.5 hours to go through the 8 items of documents included in the supplemental list. As such, 1.5 hours allowed at taxation do stand and no extra time should be allowed in this review.
Objection Nos. 10 & 11(Items 28.1, 28.2 & 28.3of the Bill)
119. These items relate to time spent by various fee-earners for drafting and preparing the Appellant’s written submission on costs after handing down of the Judgment. The written submission was drafted by Mr Wadham who claimed about 17 hours. Mr Johnson prepared the chronology and conducted the research and he spent another 25 hours when the trainee solicitor incurred 4 hours for compiling the hearing bundles. It takes altogether 46 hours to complete the work here.
120. I am prepared to accept that the written submission is an important document for the Appellant and there was no counsel’s involvement so that Mr Wadham was the one who was solely responsible to draft up the contents. The written submission has 13 pages. There were 4 cases referred in the List of Authorities re Costs and the chronology is of 2 pages long. The Bundle contained 20 documents, some of them are documents already included in the Records.
121. Upon considering the contents, the main disputes between parties on costs are the proper basis for the taxation[41] and who should bear the costs of the hearings before the Court of Appeal after the first Judgment was handed down in August 2006. There is no dispute for the Respondent to bear the costs of the Appellant incurred in this Court and the courts below. At taxation, without objection by both parties, I assessed costs under these items on a global basis instead of assessing time for each individual fee-earner. I consider appropriate to assess such costs on the basis of the time incurred by Mr Wadham in preparing and completing all the work and other time (just as research and bundle) was just part and parcel of the total time incurred for such work. I stand by my original assessment of 12 hours which were about 1.5 day of work for Mr Wadham and I am not convinced with any ground to depart from my original ruling.
Objection Nos. 12 & 13 (Items 36.1 & 36.2 of the Bill)
122. These are time spent for conducting legal researches.
123. I can dispose of Item 36.2 quickly. According to my record, the 30 minutes allowed were agreed by parties at taxation. The Appellant is not entitled to seek a review on matter agreed between parties without setting out ground why such agreement should be set aside in the first place.
124. Item 36.1 is time spent by Mr Joseph Chu in conducting research on English and Australian case on contempt by liquidators. His role in the appeal is explained in paragraph 49 above. Having considered the part of the printed case that he had drafted and his email exchanges with Mr Wadham, I see no ground to vary my original assessment of 3 hours being reasonable time for conducting such research. In essence, it appears that there are only 2 relevant English cases being cited in his draft submission[42].
Objection Nos. 14 to 21 (Items 37.1 to 37.9 of the Bill)
125. These are miscellaneous attendances carried out by different fee-earners (mainly trainee solicitor) at various stages of proceedings. Apart from arguing that the time claimed in the bill was not unreasonable, the Appellant, in my view, failed to present any convincing and competent ground to persuade me to vary most of my original rulings.
126. As I understand, Item 37.1 is time for Mr Johnson preparing a chronology of tasks required to be taken in compliance with the timetable prescribed by the Court’s Rules. The chronology served as a reminder of all the deadlines imposed by the rules. Our Court’s Rules are clear and straight-forward on these deadlines and incurring 3.5 hours in doing the work is unreasonable. I stand by my original assessment of 1.5 hours.
127. Mr Wadham spent 80 minutes in considering the Court’s Judgment in Akai Holding Ltd. V. Ernst & Young (FACV 28/2008) and its implication for this case under item 37.2. I allowed only 30 minutes at taxation. Upon reconsideration at this review, I consider such time claimed is not unreasonable. I am prepared to allow the time in full.
128. As mentioned above[43], the Appellant is not entitled to review item 37.3 since such item was withdrawn from taxation.
129. Mr Chu claimed about 12 hours in preparing his draft submission on contempt including time for reviewing case law under item 37.4. I have already allowed 3 hours under item 36.1 for conducting research on this area. I gave another 3 hours for him to draft up the submission only. Upon considering the contents of the draft submission, I maintain my original ruling.
130. Items 37.5 and 37.6 are time spent by the trainee solicitors in reading the Respondents’ case, updating Part B of the Record and the Bundles of Authorities. These are time already claimed somewhere in the bill by other case handlers (items 7, 11, 12 14, 15, 16 & 20). I do not see how time spent by the trainee solicitor would add any contribution to the preparation of the case and most probably, these were time spent for their learning process in how to prepare a case for trial/appeal hearing. It is unreasonable to ask the Respondents to bear these costs when substantial time has been claimed and allowed for the same or similar kind of work carried out by other main case handlers in the bill.
131. Item 37.8 refers to time for trainee solicitor to compose old reference in the printed cases with new references in Parts A & B of the Records. I find that this work is reasonable but claiming about 3.6 hours is excessive. I stand by my original ruling of 2 hours.
132. Finally, item 37.9 refers to 6 hours spent by trainee solicitor to prepare a new set of folders, labels and dividers for Bundles used by the London Silk. The work is purely clerical and administrative in nature and should be covered by the profit costs claimed by the main fee-earners in the case. It is unreasonable to have these costs separately charged. I do not see any ground to vary my original ruling.
Objection Nos. 22 and 24 (Items 38 and 49 of the Bill)
133. These are time for general care and conduct. I reiterate what I have said in paras 102 to 103 above. I am not convinced at all that I should vary my assessment upon this review and my original rulings do stand.
134. In particular, for item 49, it relates to the application for the ad hoc admission of the London Silk in Hong Kong which lasted for less than 2 months and this part was mainly handled by Mr Johnson who should have minimal supervision of the work of unqualified staff and trainee solicitor (who mainly dealt with the visa application for the London Silk). 1 hour allowed should be more than reasonable.
Objection No. 23 (Item 46.3.2 of the Bill)
135. This part of the work relates to corresponding with the Hong Kong Bar Association seeking their consent for the ad hoc admission of the London Silk for advising and appearing in this appeal. A long letter dated 16 July 2009 was written by Mr Johnson to the Bar Association setting out the detailed backgrounds of the case and explaining the basis for the application for admission. Mr Johnson claimed a total of 11.5 hours.
136. Since Mr Johnson was involved in the case in the lower court, he should have no great difficulty in drafting the background of the case. Upon considering the contents of the letter, the most difficult part is to explain the basis for the application (paragraphs 16 to 22 of the letter). Taking these matters into account, I still consider my original ruling of 5 hours for writing this letter is a correct and appropriate assessment of the reasonable time that a notional and competent solicitor should spend on this work.
137. In summary, for the FACV bill, on the quantum issue, I refuse all the reviews sought except Objection No. 15 (item 37.2). For item 37.2, I grant the review and allow the time claimed (80 minutes) in full.
I. Conclusion
138. For the FAMV Bill, I allow partly the review under Objection No. 1 in relation to the hourly rate of Mr Wadham and Objection No.2 regarding Item 7.2. For other Objections, I refuse the reviews sought.
139. For the FACV Bill, I allow partly the review under Objection No.1 in relation to the hourly rates of Mr Wadham and Mr Johnson and Objection No.26 in respect of the Brief fee of the London Silk only (but not the 2 refreshers for travelling). Reviews under Objection Nos 8, 15 & 25 are allowed in full for the time claimed in the Bill. Save as aforesaid, reviews sought under other Objections are refused.
J. Costs of the Review
140. Judging from the above conclusion, the Appellant fails in most of the reviews sought. Out of the total of 33 objections raised for review in both Bills, the Appellant only succeeds in 3 items in full and partly for 4 items. I cannot see in this review why costs should not follow event.
141. Adopting a broad-brush approach, I would make a costs order nisi that the Appellant do pay the Respondents 80% of the costs of the review and such costs shall be assessed gross sum if not agreed. If either party wishes to contend a different order as to costs, that party must lodge a written submission of not more than 1 page of A-4 paper within the next 7 days and any written submission in reply (also on a 1 page A-4 paper) shall be lodged within 7 days thereafter. Otherwise, the said costs order nisi will become absolute. While parties have already submitted their respective costs statements pursuant to my directions given on 15 June 2011, I will assess the costs of the review gross sum (if so required) at the next taxation hearing for the CACV Bill scheduled on 16 August 2011.
| | (S. Kwang)
Acting Registrar, Court of Final Appeal |
Mr Edward Johnson (of Messrs Clifford Chance) and Mr Harry Wu (LCD instructed by Messrs Clifford Chance) for the Appellant (Receiving Party)
Ms Lily Fenn (of Messrs Lily Fenn & Partners) and Mr Nelson Yu (LCD instructed by Messrs Lily Fenn & Partners) for the Respondents (Paying Party)
[1] Judgment of the Court of Final Appeal handed down on 20 October 2009. Reported in (2009) 12 HKCFAR 601.
[2] In the Judgment, the Court also gave costs order for the proceedings before the Court of Appeal. The CACV bill of costs was lodged at the same time but has not yet been taxed. Thus, the subject taxation review does not concern the said CACV bill.
[3] Under Rule 57, Order 62 of the Rules of High Court applies to the taxation in the Court. The review is conducted under Order 62 Rule 33
[4] Solicitor representing the Appellant.
[5] Including profits costs, Counsel fees and other disbursements.
[6] Including the fees payable to the London Silk.
[7] Solicitor representing the Respondents who only appeared in the morning of the hearing.
[8] As provided under Order 62 Rule 34 of the Rules of High Court.
[9] For the FAMV bill, the List of Objections was filed on 28 December 2010. For the FACV bill, the List was filed on 27 April 2011.
[10] Filed on 13 May 2011.
[11] Para.62/App/14 of the Hong Kong Civil Procedure (2011) at p.1163.
[12] Francis v. Francis and Dickerson [1955] 3 All ER 836.
[13] [1982] 2 All ER 980.
[14] EMI Records, p.989.
[15] EMI Record,p.989
[16] See Judgment of Master Yam (as he then was) in Wharf Properties Ltd v. Eric Cumine Associates, unreported, HCA 13431 of 1983 (13/2/1991).
[17] [2001] 4 All ER 853.
[18] Para.62 at page 856.
[19] EMI Record, p.988 at line j.
[20] One of which is “to ensure fairness between the parties”.
[21] P.1165.
[22] See the Judgment of Madam Registrar Chu (as she then was) in Re Peregrine Investment Holdings Ltd & Others (no.5) [2000] 1 HKLRD 157 at 163.
[23] Op cit.
[24] At p.163.
[25] Judgment of Kwan J (as she then was) (23/7/2002) reported in [2004] 3 HKLRD 357.
[26] Judgment of the Court of Appeal (18/8/2006) reported in [2006] 4 HKLRD 58.
[27] Before the Court of Appeal, it was decided that the contempt proceeding was in the nature of a criminal cause while before the Appeal Committee, it was held that the present matter was a civil cause or matter.
[28] It provides: “Every fee paid to counsel shall be allowed in full on taxation, unless the taxing master is satisfied that the same is excessive and unreasonable, in which event, the taxing master shall exercise discretion having regard to all the relevant circumstances and in particular to the matters set out in para.1(2).
[29] Order 62 Rule 37(2) of the RHC.
[30] “The amount of fees to be allowed to counsel is in the discretion of the taxing master who shall, in exercising his discretion, have regard to all relevant circumstances and in particular to the matters set out in para.1(2)”.
[31] [1965] 1WLR 112.
[32] See para.62/App/31 of the HK Civil Procedure 2011. See also Ngan Wun Yeung v. Lok Sin Tong Benevolent Society, Kowloon & others [2002] 2 HKC 404.
[33] Judgment of the Court of Appeal dated 6 June 2008, para.14.
[34] See Rules 31 to 36 of the Rules.
[35] FAMC 44, 45 & 46 of 2010 (16/9/2010), para.4.
[36] Para.62/App/23 of the HK Civil Procedure 2011.
[37] Rule 37 of the HKCFA Rules.
[38] In majority of cases, the printed cases are drafted by Counsel and may be settled by Senior Counsel or London silk. Thus, the Court would assess the Counsel’s fee in drafting the printed case.
[39] Rules 30 to 37 of the Rules.
[40] Rule 31(3)(a) of the Rules.
[41] Whether on an indemnity basis as contended by the Appellant or party and party basis as contended by the Respondents.
[42] Attorney General Newspaper Publishing Plc [1988] Ch 333and Attorney General v. Punch [2003] 1 AC 1046.
[43] Para.82.