CHOW SING YUET ELTON v. CARRY EXPRESS INVESTMENT LTD

CACV 5/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 5 OF 2011

(ON APPEAL FROM HCCT NO. 18 OF 2007)

____________

BETWEEN

	CHOW SING YUET ELTON trading under the name or style of ELTON S. Y. CHOW & ASSOCIATES (a firm)	Plaintiff
	and
	CARRY EXPRESS INVESTMENT LIMITED	Defendant

____________

Before: Hon Tang VP and Kwan JA in Court

Date of Decision on Costs: 7 February 2012

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DECISION ON COSTS

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Hon Tang VP (giving the Decision on Costs of the Court):

1.  This is a gross sum assessment in respect of an application for leave to appeal out of time. Details about the application can be found in our judgment of 13 January 2012. The Defendant's statement of costs under O 62 r 9A shows an amount of $144,301 of which $80,000 represented counsel's fee. The solicitor's fees was charged at $4,000 per hour for a total of 10 hours.

2.  The Plaintiff has suggested a reduction of $93,100, the bulk of which related to counsel's fee (a reduction of $50,000). It is also said that the time charged and the hourly rate of $4,000 were excessive having regard to the simple and straightforward nature of the application.

3.  We agree.  Also, the hearing was fixed for half an hour and listed for hearing at 9:30 am.  In such circumstances, we believe $51,201 to be entirely adequate and will order that to be paid under O 62 r 9A.

(Robert Tang) Vice-President

(Susan Kwan) Justice of Appeal

Messrs Johnnie Yam, Jacky Lee & Co, for the Plaintiff

Messrs V Hau & Chow, for the Defendant

CACV 5/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 5 OF 2011

(ON APPEAL FROM HCCT NO. 18 OF 2007)

____________

BETWEEN

	CHOW SING YUET ELTON trading under the name or style of ELTON S. Y. CHOW & ASSOCIATES (a firm)	Plaintiff
and
	CARRY EXPRESS INVESTMENT LIMITED	Defendant

____________

Before: Hon Tang VP and Kwan JA in Court

Date of Hearing: 6 January 2012

Date of Judgment: 13 January 2012

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JUDGMENT

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Hon Tang VP:

1.  The Plaintiff (Mr Chow) is an architect and structural engineer, and an Authorised Person. He sued the Defendant, Carry Express Investment Limited ("Carry Express"), for professional fees under a formal written agreement dated 5 March 1991 as follows:

"1. a sum of $10,000 as a retainer fee pursuant to clause 5(ii) of the contract;

2. a sum of $26,500 being a processing fee paid by Mr. Chow on behalf of Carry Express, to the Buildings Department on about 7 November 1991;

3. the sum of $2,402,852.50 being as a total professional fees that would have been earned, had the building being constructed as designed by Mr. Chow, and the sum of $81.20 said to be the balance due of the GFA bonus.  A schedule was attached to the writ demonstrating a calculation of the construction cost of a gross floor area of 51,615.102 ft.², by applying an appropriate price index provided by Levett & Bailey Quantity Surveyors Ltd of Hong Kong."

2.  On 20 December 2010, after a trial which had lasted several days, Saunders J dismissed the Plaintiff's claim, essentially on the basis that the Plaintiff's claim had become statute-barred because of the effuxion of time.

3.  On 14 January 2011, the Plaintiff filed a Notice of Appeal.  On 31 March 2011, the Defendant's solicitors wrote, asking for security for costs of the appeal in the sum of $773,000.  On 20 April 2011, an application for security for costs was taken out by the Defendant.

4.  That was heard by Fok JA on 26 May 2011 and the Plaintiff was ordered to furnish security for the Defendant's costs of the appeal in the sum of $475,000 within 28 days of the service of the order, failing which the appeal would be dismissed.  In his judgment, Fok JA said the Plaintiff accepted that he was impecunious, but was unable to satisfy the court not only that he was unable to furnish security of the costs from his own resources, but also that he was unable to raise the money elsewhere. 

5.  Before Fok JA, it was argued on his behalf that the appeal had a strong chance of success.

6.  This is what Fok JA said:

"15. Whilst I do not say that the appeal is devoid of merit, I am not persuaded that the merits of the appeal are so strong that this provides a decisive factor in the exercise of my discretion on the issue of security for costs.  I note that in paragraph 6 of the judgment, the Judge summarised the contractual provisions for payment, which included a condition that the first tranche of the professional fees would be paid on the date of the approval for building plans.  In paragraph 61 of the judgment, the Judge noted that by 10 February 1996, the building plans, RC structural plans and foundation plans had been approved by the Buildings Authority and that approval comprised the condition precedent to the entitlement of the appellant to the first of the five tranches of payment of his professional fees under the contract.  When the appellant submitted his invoice for payment on that date, he sought payment of only two thirds of the sum that was due."

7.  The sealed order was served on the Plaintiff's solicitors on 1 June 2011.  Therefore the security had to be provided by 29 June 2011.

8.  On 22 June 2011, the Plaintiff applied for legal aid.  The statutory stay of 42 days, expired on 10 August 2011.  On 11 August 2011, the Defendant reported to the court that the Plaintiff had defaulted in giving the security as ordered.  On 19 August 2011, Fok JA dismissed the Plaintiff's appeal.  As a consequence, the hearing of the appeal which was scheduled to be heard on 22 September 2011 was vacated.

9.  On 14 September 2011, legal aid was offered to the Plaintiff, limited to obtaining leave to appeal at the Court of Appeal against the dismissal of the appeal.  We proceed on the basis that legal aid would be extended to cover consequential proceedings.

10.  The Plaintiff accepted the offer of legal aid by document dated 14 October which was received by the Director of Legal Aid ("DLA") on 19 October 2011.  On 20 October 2011, legal aid was granted.  On 1 November 2011, counsel was assigned by DLA.  On 9 November 2011, the Plaintiff's solicitors sought consent from the Defendant's solicitors for leave to proceed with the appeal.  That was refused on 15 November 2011.  On 19 December 2011, the Plaintiff applied for leave to appeal against the dismissal order out of time.

11.  Mr K M Chong appeared on behalf of the Plaintiff.  He contended that since the Plaintiff has been granted legal aid and the DLA would be responsible for the costs of the appeal, it was no longer right to require the Plaintiff to provide security for costs.  That being so, failure to provide security should no longer be an obstacle to the appeal proceeding.  Mr Chong has also informed us, legal aid has been granted to the Plaintiff after leading counsel's advice has been obtained on the merit of the appeal, presumably under section 9 of the Legal Aid Ordinance.

12.  Ms Gekko Lan, for the Defendant, relied on the chronology that I have set out above to show that the Plaintiff has been guilty of an undue and inexcusable delay.  In her written submission, she said:

"(1) He only applied for legal aid in respect of his appeal (against the judgment of Saunders J) on 22 June 2011, which was 5 months after he lodged his appeal, and almost 1 month after he was ordered to furnish security for costs of the appeal, and just 7 days before he was required to furnish such security failing which his appeal would be dismissed.

(2) While DLA was considering his application, he took no step to prevent the Court of Appeal from making the Dismissal Order.

(3) When DLA offered to grant legal aid to him, he took 1 month before it was accepted.

(4) After legal aid was granted and counsel assigned on 1 November 2011, being the same counsel and the same handling solicitor, the Appellant took another 1 ½ month before taking out the present application."

13.  When we asked Mr Chong whether the Plaintiff has any explanation over any of the delay, Mr Chong was unable to say that there is any reasonable explanation. 

14.  In deciding whether or not to grant or refuse an extension of time, the court would normally take into account the following factors:

(1) the length of the delay;

(2) the reasons for the delay;

(3) the chances of the appeal succeeding if time for appealing is extended; and

(4) the degree of prejudice to the potential respondent if the application is granted. (59/4/9 Hong Kong Civil Procedure 2012) 

15.  However, as the notes in the Hong Kong Civil Procedure 2012 went on to say: the modern authorities disapprove of a rigid and mechanistic approach which focuses on the reasons for and length of the delay. Instead the court must consider all the circumstances and decide whether the overall justice of the case requires the exercise of the discretion to extend time. 

16.  Mr Chong submitted that it was not the Plaintiff's fault that legal aid was not granted within the statutory stay period of 42 days.  But the DLA had to seek counsel's advice on the merit of the Plaintiff's claim before granting legal aid, and DLA cannot be said to be guilty of any undue delay.  More importantly, there was no explanation why the application for legal aid was made so late.  Given the Plaintiff's admission that he was impecunious, it is difficult to understand why he had not applied for legal aid earlier.  There was also the unexplained delay in accepting legal aid when it was offered.

17.  Now, Mr Chong has rightly not submitted that the appeal has a strong chance of success.  Notwithstanding that leading counsel has advised that the appeal has merit, with respect, like Fok JA, I am only prepared to say that the appeal may not be devoid of merits.

18.  In para 9 of Saunders J's judgment, he said:

"9. Pursuant to clause 6 of the contract, Carry Express had the right at any time prior to the completion of the project to terminate the contract by notice in writing.  In those circumstances provision was made for reduced fees to be paid to Mr. Chow. Although the project was never completed, it is common ground that Carry Express did not exercise its rights under that clause."

19.  Damages are assessed on the basis that the contract-breaker would have performed the contract in a way which would have benefited him most, eg at the least cost to himself.  See para 26-048 Chitty on Contracts (30 ed), "General Principles".  In other words, since Carry Express could terminate the contract, damages would be assessed on the basis that it had done so.  So even if it turns out that Saunders J was wrong on the limitation point, in relation to which I am prepared, for present purposes only, to proceed on the basis that the Plaintiff's contention is arguable, the damages recoverable by Mr Chow are likely to be substantially lower than the amount claimed by him.

20.  The Plaintiff's claim is at best, a stale one, as is evident from the section in Saunder J's judgment under the heading of "The events between January 1998 and August 2005".  It is clear from the facts that the project for which the Plaintiff had been engaged by the Defendant in March 1991 would not proceed by 2001-2002 at the latest.  Yet the writ was only issued in 2007.

21.  In all the circumstances, I do not believe there is a case where extension of time should be granted and I would refuse an extension of time to appeal with costs.

22.  The Plaintiff's costs are to be taxed under the Legal Aid Regulations (Cap 91A).

Hon Kwan JA:

23.  I agree with the judgment of the Vice President.  The Plaintiff has failed to explain the various periods of delay pointed out by the Defendant.  It is for him to show real prospects of success on the merits of his appeal.  As he has not done so for the reasons given by the Vice President, I would decline to grant an extension of time to appeal.

(Robert Tang) Vice-President

(Susan Kwan) Justice of Appeal

 

Mr K M Chong, instructed by Messrs Johnnie Yam, Jacky Lee & Co, for the Plaintiff

Ms Gekko Lan, instructed by Messrs V Hau & Chow, for the Defendant

CACV 5/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 5 OF 2011

(ON APPEAL FROM HCCT NO. 18 OF 2007)

________________________

BETWEEN

	CHOW SING YUET ELTON trading under the name or style of ELTON S. Y. CHOW & ASSOCIATES (a firm)	Plaintiff
	and
	CARRY EXPRESS INVESTMENT LIMITED	Defendant

Before: Hon Fok JA in Chambers

Date of Hearing: 26 May 2011

Date of Judgment: 26 May 2011

________________________

J U D G M E N T

________________________

 

1.  This is an application by the respondent for security for the costs in this appeal.

2.  The appeal is against a judgment of Saunders J given on 20 December 2010.  The Judge dismissed the appellant’s claim against the respondent with costs.  Additionally, the appellant was earlier adjudged liable for the costs arising from the adjournment of the trial.

3.  The appellant is an architect and structural engineer and an Authorised Person.  His claim in the action was for certain professional fees rendered by him pursuant to a formal written agreement dated 5 March 1991 whereby the defendant appointed the appellant’s firm to be project consultant for a project in the Mid-levels.

4.  At trial, the Judge upheld the respondent’s plea of limitation in respect of the appellant’s claim.  He held that the appellant’s cause of action had accrued from April 1996 or at the latest from February 1998, so that the claim by writ issued on 20 March 2007 was statute barred by reason of section 4(1)(a) of the Limitation Ordinance, Cap. 347.

5.  The basis of the respondent’s application for security for costs of the appeal is that the appellant is impecunious and there is therefore a risk that the respondent will be unable to recover the costs of the appeal in the event that the appeal is dismissed.  The respondent has conducted a litigation search in respect of the appellant which has brought to light four previous occasions on which the appellant has been sued.

6.  It is well established that the fact an appellant is impecunious does not lead automatically to an order that security for costs must be provided.  The court is entitled to consider other relevant factors such as the strength of the appeal to determine whether or not it would be just to order security for costs to be provided: see Chung Kau v Hong Kong Housing Authority & Ors [2004] 2 HKLRD 650 at §14(1).

7.  In the present case, the appellant points out that the costs orders against him below have not yet been taxed and so there is no current liability on his part to pay those costs to the respondent.  In any event, as against those untaxed costs, it is accepted by the respondent that it has a liability to pay to the appellant the costs in respect of an application to amend the defence which were assessed on a gross sum basis at HK$225,180.

8.  Whilst these points in respect of the untaxed costs and the costs due to the appellant are well made, the fact remains that the appellant accepts that he is impecunious.  His answer though is that his impecuniosity arises from the wrongful acts of the respondent in failing or refusing to pay his fees, the subject matter of the action.  He argues that an order for security for costs against him would have the effect of stifling his appeal.

9.  I do not, however, find this argument to be convincing in the light of the lengthy period of time before the appellant commenced his action against the respondent.  It would be surprising if this project was his only professional engagement in the relevant period and so there must be some question as to whether the entirety of the appellant’s financial condition has been caused by the respondent’s failure to pay his outstanding fees.  It is also relevant to note that the appellant has been legally represented so far in these proceedings and is not in receipt of legal aid.

10.  Furthermore, where an appellant contends that security should not be awarded because it would prevent him pursuing his appeal, he has to satisfy the court not only that he is unable to furnish security of the costs from his own resources but also that he is unable to raise the money elsewhere.  The onus of proof is on him on this issue.  In assessing whether he could raise money elsewhere, the court adopts the same rigourous approach as in the Order 14 case of York Motors v Edwards [1982] 1 WLR 444 at 449 and 450.  Here, I am not satisfied that the evidence filed by the appellant, which in substance amounts merely to a bare assertion of inability to raise money elsewhere, is sufficient to discharge that onus.

11.  The next argument advanced by the appellant in opposition to the application for security for costs is that the appeal has a strong chance of success.

12.  As was held in Chung Kau v Hong Kong Housing Authority & Ors (at §14(3)), where the merits of the appeal appear to go strongly one way or the other, this may, by itself, be a decisive factor on the issue of whether to order security for costs.

13.  The appellant argues that the merits of the appeal are strong because: there was no dispute as to the quantum claimed by the appellant; the appellant lost on the technical ground of time limitation; and, except the facts concerning the time when the appellant’s cause of action accrued, the Judge’s findings of fact were in favour of the appellant.

14.  On the issue of limitation, the appellant contends that the Judge was wrong because there was an express timetable for the payment of the appellant’s fees and the respondent’s obligation to pay would only arise when the stipulated milestones were reached.  The appellant contends that those milestones had not been reached in 1996 or 1998 and that it was only in 2006 when the appellant accepted the respondent’s repudiation of contract that his cause of action against the respondent arose.

15.  Whilst I do not say that the appeal is devoid of merit, I am not persuaded that the merits of the appeal are so strong that this provides a decisive factor in the exercise of my discretion on the issue of security for costs.  I note that in paragraph 6 of the judgment, the Judge summarised the contractual provisions for payment, which included a condition that the first tranche of the professional fees would be paid on the date of the approval for building plans.  In paragraph 61 of the judgment, the Judge noted that by 10 February 1996, the building plans, RC structural plans and foundation plans had been approved by the Buildings Authority and that approval comprised the condition precedent to the entitlement of the appellant to the first of the five tranches of payment of his professional fees under the contract.  When the appellant submitted his invoice for payment on that date, he sought payment of only two thirds of the sum that was due.

16.  In the circumstances, in accordance with the guidance laid down in Chung Kau v Hong Kong Housing Authority & Ors, I look to see if there are any other factors to tilt the balance against an order for security for costs.  In my judgment, there are no such factors present and I conclude that it would be appropriate to order security for costs of the appeal.

17.  The respondent seeks an order for security in the sum of HK$571,000 and has provided a skeleton of costs in support.  The appellant questions the reasonableness of instructing Senior Counsel for the appeal.  However, it is to be noted that the appellant himself instructed three counsel to appear at trial and the names of all three appear on the notice of appeal.  The skeleton bill is, of course, an estimate and there is a possibility it would be reduced if subject to taxation.

18.  In the exercise of my discretion, I propose to make an order that the appellant provide security for the respondent’s costs of the appeal in the sum of HK$475,000.

[Argument as to costs.]

19.  There will be an order that the costs of the application be to the respondent in any event.

 

	(Joseph Fok)
	Justice of Appeal

 

Ms Yvonne Yip, instructed by Messrs Johnnie Yam, Jacky Lee & Co., for the Plaintiff/Appellant

Ms Gekko Lan, instructed by Messrs V. Han & Chow, for the Defendant/Respondent