CHAN SHUN KEI t/a CHAN SHUN KEI CONSTRUCTION WORKS v. HONG KONG CONSTRUCTION (HONG KONG) LTD

HCMP 2302/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2302OF 2014

(ON AN INTENDED APPEAL FROM HCCT NO. 2 of 2011)

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DECISION

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Hon Lam VP (giving the Decision of the Court):

1.  We have read the submissions of the parties and noted the position of the Director of Legal Aid. As between the plaintiff and the defendant, we consider it is appropriate to make an order for costs up to 12 December 2014 on indemnity basis. The costs after that hearing would be ordered on party-to-party basis.

2.  In the latest statement of costs of the defendant, the defendant asks for $400,317.  In the context of this leave application, having regards to its nature and complexity, the court regards the quantum for the items charged by the solicitors as unreasonably high.  To start with, there is no justification for engaging three fees earners for such a simple application.  Charging $164,770 for preparation of documents and $73,710 for perusal of documents (bearing in mind the documents that needed to be prepared by the defendant in this application) in the present context is mind-boggling.  Also the charge of $51,060 for communications is unreasonably excessive.  Though we gave costs on an indemnity basis for costs up to 12 December 2014, there is substantial room for taxing down the costs as set out in the defendant’s statement of costs.

3.  Bearing in mind that after the initial stage the works were mostly done by counsel (whose fees we shall allow in full), we would only give $35,000 for preparation of documents (taking into account the statement pursuant to Order 59 Rule 2A(4) was prepared by the solicitor), $15,000 for perusal and $20,000 for communications.

4.  As regards preparation for hearing, we shall only allow the costs of one solicitor and that should include the supervision of the conduct of the proceedings by the partner.  Further, the 8.2 hours’ preparation by one solicitor and another 2.1 hours by a partner for the hearing are unreasonably excessive.  For items D3 and D4, we would allow $14,000 only. For item D5, we would only allow the attendance by one solicitor at $3,800.

5.  The court therefore fixes the costs of the defendant in this application at $149,917.

6.  As between the plaintiff and its legal advisers, though as things presently stand the legal aid charge might have already exceeded the sums recovered pursuant to the judgment of Deputy Judge Burrell, the picture might be different if the plaintiff were to succeed on the costs appeal.  The plaintiff should be duly advised in that respect.

7.  In any event, the liability of the Director (thus the public fund) for the costs (both as to costs of the defendant and the plaintiff’s own costs) is dependent upon whether the court exercises its power under Order 62 Rule 8 against the solicitor.

8.  At the moment, solicitor for the plaintiff asks that the costs of the defendant and the plaintiff’s own costs in relation to this unmeritorious application for leave to appeal be borne by the Director.

9.  Having considered the submissions so far, we are minded to hold a second stage hearing vis-à-vis the solicitor (but not the counsel concerned) pursuant to PD14.5.  That hearing will only be a matter between the solicitor, the plaintiff and the Director (if he wishes to be heard) and will be confined to whether an order should be made against the plaintiff’s solicitor under Order 62 Rule 8(2)(a) and (b)(i).  The defendant should not be involved.

10.  At the hearing, the court will ask the solicitor to address, amongst other issues, the following question:

“ Notwithstanding the authorities relied upon by counsel and solicitor as to the possibility of applying for a clarification of the costs order made by Deputy Judge Burrell, in view of the availability of avenue to correct whatever mistakes in that costs order in the appeal on costs (for which leave had been granted), how would it advance the resolution of the dispute as to costs by lodging a further application for leave to appeal without regards to the uncertainty as to the outcome of that course and the potential attendant costs implications flowing therefrom, and the adverse ruling on the application by M Chan J. and how can that be consistent with the underlying objectives in Order 1A Rule 1 and the solicitor’s duty under Order 1A Rule 3?”

11.  The matter shall be set down for a hearing of two hours to be listed before Lam VP and Poon J.  Notice of the hearing will be given to the plaintiff, solicitors for the plaintiff and the Director of Legal Aid.  Consideration should be given on whether the plaintiff should have separate representation in view of the potential conflict of interest as identified at paragraph 6 above.  As the defendant is not involved in the matter, attendance of the defendant is not expected.

12.  In the meantime, if solicitor of the plaintiff, the Director and the plaintiff can come to an agreement of some form (including undertakings from the solicitor), parties can submit the same for the court’s consideration.

13.  A copy of this decision will be sent to the Director of Legal Aid for his attention.

HCMP 2302/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2302OF 2014

(ON AN INTENDED APPEAL FROM HCCT NO. 2 of 2011)

________________________

________________________

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  By a summons of 18 June 2014, the plaintiff sought amendment or clarification of a sealed order on costs made by Deputy Judge Burrell. The summons was dismissed by Mimmie Chan J on 25 June 2014. Leave to appeal was refused by the judge on 2 September 2014. All these happened against the background that on 22 April 2014, the plaintiff also sought leave to appeal against the costs order. That application was refused by Mimmie Chan J on 3 July 2014. On 17 July 2014, the plaintiff issued a summons in HCMP 1745 of 2014 seeking leave from this court to appeal against the costs order.

2.  By the time the present summons was taken out on 16 September 2014, leave had already been granted on 11 September 2014 in HCMP 1745 of 2014 to challenge the costs order of Deputy Judge Burrell.   Whatever problems or clarifications which the plaintiff needs in respect of that order can be properly canvassed and addressed in the context of that appeal.   As far as issues related to the costs order of Deputy Judge Burrell were concerned, there was no need to take out a further satellite application to pursue an appeal against the decision of Mimmie Chan J of 25 June 2014.

3.  Further, we are of the view that the interpretation of Mimmie Chan J put on the costs order of Deputy Judge Burrell was plainly right.   The words “and preparation” are simply otiose and we have never seen such words to be included in a costs order.   We also do not see any arguable basis for disturbing Mimmie Chan J’s exercise of case management discretion in dealing with the matter substantively on 25 June 2014 instead of referring the matter back to Deputy Judge Burrell for clarification. 

4.  We find it surprising that the plaintiff (and those advising him) deems fit to launch the present application when (i) there was nothing unclear in the costs order; (ii) Mimmie Chan J had made it crystal clear to the plaintiff what was the correct interpretation of the costs order; (iii) Mimmie Chan J gave a fully reasoned judgment on 2 September 2014 explaining at length (in our respectful view, correctly and adequately) why the intended appeal has no reasonable prospect of success; and (iv) in any event, the plaintiff would have the opportunity to canvass whatever concerns he has about the costs order in the appeal brought pursuant to leave granted on 11 September 2014.

5.  We shall dismiss the application with costs.

6.  Substantial costs and public resources (including valuable judicial resources) have been spent on this piece of unnecessary satellite application.  For the application before us only: solicitors for the defendant placed before us a statement of costs running up to $275,205; solicitors for the plaintiff presented to us a statement of costs running up to $206,504. At the court below, in respect of the unsuccessful application for leave before Mimmie Chan J, she ordered the plaintiff to pay the costs of the defendant in the sum of $70,000. On top of that, someone has to pay the plaintiff’s own costs for that application. The plaintiff was also ordered to pay the costs of the defendant in respect of the hearing of 25 June 2014, such costs have yet to be taxed. Apparently, the plaintiff (and/or those advising him) did not have adequate regard to the duty under Order 1A Rule 3 and somewhere along the line someone has lost the sense of proportionality.

7.  We note that the plaintiff is on legal aid. We are not told whether the plaintiff has been advised of the costs implications, including the legal aid charge that may be imposed on the monies he recovered from the defendant pursuant to the judgment of Deputy Judge Burrell.  In any event, we are concerned about the use of public fund in this manner and we may consider whether an order should be made under s.17(3) of the Legal Aid Ordinance or Order 62 Rule 7, 8 or 8A. We decide to hear submissions on the same.  We will draw this matter to the attention of the Director of Legal Aid and invite his submissions on costs of the present application as well. For those purposes, we asked parties to submit a set of draft agreed directions to facilitate that process by next Tuesday.

8.  We direct our clerk to send a copy of this judgment to the Director of Legal Aid.