WEST COAST INTERNATIONAL TRADING LTD<br>t/a DANDELION FINE ARTS v. CHELESA ART CO LTD

HCMP 1228/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1228 OF 2014

(ON AN INTENDED APPEAL FROM HCA NO. 1636 OF 2010)

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DECISION ON COSTS

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Hon Kwan JA (giving the decision on costs of the Court):

1.  On 3 September 2014, we gave judgment dismissing the plaintiff’s application for leave to appeal out of time and ordered the plaintiff to pay the defendant’s costs of the application on a party and party basis with gross sum assessment. Pursuant to the directions in our judgment, the defendant’s solicitors lodged a composite statement of costs on 4 September and the plaintiff served a “list of objections” on 10 September.

2.  The composite statement of costs gives a total amount of $142,282, which is the sum of the two statements of costs ($18,284 + $123,998) placed before us at the hearing on 27 August.  In our judgment at paragraph 11, we remarked that the work done by the defendant’s solicitors and counsel was “more than what was reasonably necessary to properly resist this application”.  The defendant’s solicitors have not taken note of what the court said and simply claim the same amount as before without making any adjustment to arrive at an amount that may be regarded as reasonable, proper and proportionate to the application.

3.  The response of the plaintiff’s solicitors is also misconceived.  In objecting to some of the items claimed as excessive, the plaintiff’s solicitors stated that the other party should “justify” the time claimed and that those items of work done should be “subject to the production of relevant attendance notes and correspondences”.  This is a summary assessment of costs.  The receiving party is not required to produce supporting documents as in a normal taxation of costs.

4.  In assessing the reasonable amount of fees to be awarded to the defendant, we approach the matter on the basis that the work done should not be “more than what was reasonably necessary to properly resist this application”.

5.  Other than the fees of counsel ($18,000), which we allow in full, we would reduce the solicitors’ costs of $124,282 substantially.  We do not propose to reduce the hourly rates of any of the fee earners as submitted by the plaintiff, but would reduce the fees claimed on the basis that it would not be reasonable to engage three fee earners on certain items of work.

6.  The defendant’s solicitors lodged in court four bundles of documents in two sets.  Photocopying charges of $3,372 were incurred.  Many of the documents cannot conceivably be of use to the application.  Although this item is not objected to by the plaintiff, we do not think it right to allow the amount in full.  On a broad brush basis, we would allow $1,500 for copying charges.  The sub-total allowed for item B is $2,270.

7.  Under item C, $35,620 is claimed for attendances on client, the other side, counsel and the court.  We do not think the attendances of three fee earners were reasonable and proper, apart from the time spent.  We would reduce the amount to $11,440.

8.  Item D is for professional work comprising preparation and perusal of documents, preparation for hearing and attendance at hearing.  The total claimed is $84,520.  The work done was excessive and disproportionate to the application.  Nor do we think it reasonable and proper to engage three fee earners for the preparation and perusal of documents.  We reduce the amount to $30,320.

9.  The total amount of fees we allow to the defendant is $62,030.

Hau, Lau, Li & Yeung, for the Plaintiff (Applicant)

Kao, Lee & Yip, for the Defendant (Respondent)

HCMP 1228/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1228 OF 2014

(ON AN INTENDED APPEAL FROM HCA NO. 1636 OF 2010)

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BETWEEN

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Hon Kwan JA (giving the judgment of the Court):

1.  We have before us a summons issued by the plaintiff on 21 May 2014 for leave to appeal out of time against an order made by Chung J on 30 April 2014. As the order of Chung J is an interlocutory order, leave to appeal is required and the application must be taken out within 14 days from the date of the judgment or order, pursuant to Order 59 rule 2B of the Rules of the High Court. According to the plaintiff’s solicitors, it was late by five working days. We have treated the present application as a composite application for extension of time to apply for leave and the leave application.

2.  As the delay is a short one, whether we should grant extension of time to apply for leave and whether leave to appeal ought to be granted would turn on the same consideration, namely, the merits of the intended appeal.

3.  The subject of the intended appeal is Chung J’s decision (“the Decision”) to set aside the directions made by the Registrar regarding expert evidence to be adduced on a number of matters.  They are summarised in the Decision at §§29, 30, 43 and 44.

4.  In short, the judge held that the Registrar was in error in giving directions for expert evidence to be adduced because “the lack of proper averments in the statement of claim means it is improper and/or premature to give directions to the parties’ expert(s) to compile valuation reports because time and costs may be wasted in preparing materials which may later prove to be irrelevant” (at §34).  The judge expanded on his reasons why he considered the plaintiff’s pleading of its claim for damages for conversion inadequate in §§39 to 42.  He explained why he thought it inappropriate for the Registrar to allow expert evidence to be adduced on the genuineness or otherwise of “the now disputed painting” and its market value (at §43) and on the alleged general practice of art dealers in Hong Kong to conduct due diligence to verify the origin of a painting (at §44).

5.  The Decision, apart from being an interlocutory decision, is a case management decision in the exercise of discretion of the judge.  The appeal court has emphasised more than once that an appeal against a case management decision should not be lightly brought, as it is contrary to a sense of reasonable proportion and procedural economy promoted as one of the underlying objectives in Order 1A rule 1 of the RHC, not to mention that the resources of the court must be distributed fairly such that the appeal court should not be concerned with unmeritorious appeals against the exercise of judicial discretion.  The court had said this in Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887 at §31:

“Case management decisions are only subject to appeal in rare circumstances. The appellant faces a “very high hurdle” and must show that the Judge “has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task” (Lee Tak Yee v Chen Park Kuen [2001] 1 HKLRD 401, 403E to H), or if the Judge “erred in principle or the order was irrational having regard to the issues that had to be resolved” (Kan Miu Wah v Aeroflot Russian International Airlines, unrep., CACV 142/2006, para 11; Chan Wing Cheung v Ho Shu Yee, unrep., CACV 393/2004, para 8). It need hardly be emphasised that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible (Cheung Kam Wah v Cheung Hon Wah [2005] 1 HKC 136, 142F to G, para 17; Carlos Manuel Kwong v Lo Kam Wing, unrep, CACV 128/2005, para 28 (concerning an order on specific discovery)).”

6.  It is clear that the Decision cannot be said to be plainly wrong, or outside the generous ambit within which a reasonable disagreement is possible.

7.  Other than the ruling at §44 relating to the alleged general practice of art dealers in Hong Kong to conduct due diligence, all the other matters canvassed by the judge for refusing to allow expert evidence to be adduced as directed by the Registrar could be put right by the plaintiff by laying down a proper basis for such expert evidence in its pleadings.  In the exercise of his discretion, the judge took the view that the plaintiff should plead its case on damages for conversion properly before taking out a fresh application to adduce expert evidence.  We see nothing wrong about that, and certainly would not interfere with the judge’s discretion.

8.  As for his ruling at §43 about the genuineness or otherwise of “the now disputed painting” and its market value, the judge is correct in saying that at the state of the pleadings before the Registrar, and before the judge has given leave to amend the defence to plead that “the now disputed painting” is not “the 2^nd painting”, “the now disputed painting” has no place in the pleadings at that time and the Registrar was in error to give directions that expert evidence be adduced regarding the genuineness or otherwise of “the now disputed painting” and its market value.  Although the position has changed with the amendment of the defence allowed by the judge, the judge did not mention the new state of pleadings in §43.  We decline to interfere with the judge’s decision here.  As the pleadings of the plaintiff should be amended before the court below is to consider the application to adduce new evidence, it is desirable that directions on expert evidence should be given at one go instead of on a piecemeal basis.  The plaintiff could raise this aspect on which it desires to adduce expert evidence in its fresh application, if it should persist in the view that expert evidence would somehow help to resolve the new issue in dispute that “the now disputed painting” is not “the 2^nd painting”.

9.  The last aspect in which expert evidence was refused is the alleged general practice of art dealers in Hong Kong to conduct due diligence at §44.  We see no basis to interfere with the judge’s exercise of discretion on the existing pleadings and evidence.

10.  The costs order of the judge in the Decision is also the subject of the intended appeal.  The high threshold for the appeal court to disturb the exercise of discretion in a costs order is plainly not met.

11.  We dismiss this application which should not have been brought.  The plaintiff should pay the defendant’s costs of this application.  The defendant sought costs forthwith on an indemnity basis.  We are not minded to order indemnity costs on this occasion.  We noted that the work done by the defendant’s solicitors and counsel was more than what was reasonably necessary to properly resist this application.

12.  The defendant has submitted two statements of costs, one for the application for extension of time to seek leave (of $18,284) and the other for the leave application ($123,998).  As stated above, we have treated this as a composite application.  We direct the defendant to submit a composite statement of costs within seven days hereof, with leave to the plaintiff to file a response within seven days thereafter.  We will then make a gross sum assessment on paper on a party and party basis.

Mr Clark Wang, instructed by Hau, Lau, Li & Yeung, for the Plaintiff (Applicant)

Mr Justin Lam, instructed by Kao, Lee & Yip, for the Defendant (Respondent)