LAM AND LAI SOLICITORS v. HO CHUN YAN ALBERT

CACV 172/2017

[2018] HKCA 711

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 172 OF 2017

(ON APPEAL FROM HCMP NO 555 OF 2015)

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J U D G M E N T

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

1.  This is the plaintiff’s application brought under Order 20 rule 11 of the Rules of the High Court to amend the order of the Court of Appeal to provide for post-judgment interest, pursuant to section 49 of the High Court Ordinance, Cap 4.

Background

2.  The relevant background matters for present purpose may be stated as follows.

3.  The plaintiff, a firm of solicitors, brought taxation proceedings (HCMP 555/2015) against its client under section 67 of the Legal Practitioners Ordinance, Cap 159 when legal fees could not be agreed.

4.  On 27 January 2016, after a taxation hearing, Master S Lo awarded the plaintiff the fees of two partners as claimed in respect of 64 items in the bill of costs.

5.  The defendant took out an application for review of the taxation of those 64 items.  As stated in his objection, his stance was that he had never given express or implied approval to deploy two partners; there was duplication of work; the use of two partners was unusual; all items of costs for two partners were “unreasonable and should be reduced at least by taxing off one of the two partners”.

6.  On 27 January 2017, the master dismissed the defendant’s application for review.

7.  The defendant applied for a further review of the master’s decision to a judge of the Court of First Instance.  He succeeded before Deputy High Court Judge Saunders, who reached a decision on 5 July 2017 in which the plaintiff’s bill was taxed down to entitle the time claimed for one partner only.

8.  The plaintiff appealed against the decision of DHCJ Saunders to the Court of Appeal (CACV 172/2017).  On 28 February 2018, this court gave judgment allowing the plaintiff’s appeal.  We ordered that the decision of the judge be varied and be replaced with an order that the costs of one partner and the costs of a notional junior solicitor equivalent to half of the costs of a partner be allowed on taxation in respect of those 64 items in the plaintiff’s bill.  Our order did not provide for post-judgment interest.

The plaintiff’s application

9.  The plaintiff, who did not make any claim for post-judgment interest in the proceedings in HCMP 555/2015 or CACV 172/2017, invoked the slip rule provision in Order 20 rule 11, which provides that “Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on summons without an appeal.”  Its counsel, Mr Byron Chiu, relied on these statements in the judgment of Ribeiro PJ in Man Ping Nam v Man Fong Hang (No 2) (2007) 10 HKCFAR 140, which were said in the context of interest not having been dealt with in the judgment owing to the accidental omission of the appellant’s legal representatives to ask for it:

“18. Such accidental omissions are understandable since the Court almost invariably reserves judgment so that the oral hearing terminates without the result of the appeal being known. The judgment is then handed down without any further oral hearing. The question of interest on monies paid to satisfy a lower court’s judgment naturally arises as a topic prompted by success on the appeal when an entitlement to repayment of those sums is established. It is not surprising that it is a topic that may not have been addressed before the result was known. Of course, the parties should ideally make it clear in their respective printed cases precisely what orders, including consequential orders, should be made if they should succeed on the appeal. However, this is sometimes understandably overlooked by a party intent on achieving success on the appeal in the first place.”

“20. It is clear that the failure of the court’s original order to cover a particular matter as a result of an accidental omission of counsel or solicitors or the party is capable of being corrected under this rule: Re Earl of Inchcape [1942] Ch 394, approved by the Privy Council in Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 WLR 300 at p.304 et seq. In the Court of Appeal, the rule has been applied in a case where there was an accidental omission to ask for costs and interest: Winston Camera & Radio Co Ltd v Combi (Singapore) Pte Ltd [1988] HKC 156. The correction can be made by the Court “at any time”, so the fact that correction is sought after the appellants had the Order sealed is not an obstacle.”

10.  By the present summons issued on 12 July 2018 as amended on 17 August 2018, the plaintiff sought to amend the order of this court dated 28 February 2018 and sealed on 28 March 2018 to include the following paragraphs:

“4. The Defendant do forthwith pay to the Plaintiff interest on the costs of a notional junior solicitor equivalent to half of the costs of a partner allowed on taxation in respect of the 64 times objected to in the Review:

(i) At the judgment rate for the period from 27 January 2016 [date of the master’s taxation] to 4 July 2017 [day before the decision of DHCJ Saunders];

(ii) At the rate of 1% over the HSBC best lending rate for the period from 5 July 2017 [date of the decision of DHCJ Saunders] to 27 February 2018 [day before the judgment of the Court of Appeal];

(iii) At the judgment rate from 28 February 2018 [date of the judgment of the Court of Appeal] until the date of payment.

5. The Defendant do forthwith pay to the Plaintiff interest on the costs of one partner allowed on taxation in respect of the 64 items objected to in the Review at the judgment rate for the period from 27 January 2016 until the date of payment.”

11.  The plaintiff’s reasoning for seeking the above orders is as follows:

(1) The plaintiff is entitled to post-judgment interest on one partner’s fees at the judgment rate from 27 January 2016 (the date of the master’s award on taxation prior to any review) until the date of payment.  The review to the master, the further review to DHCJ Saunders and the judgment of the Court of Appeal do not affect this part of the award of the master.  Judgment rate should apply throughout.  This is reflected in §5 of the proposed order.

(2) In the award of the master and his review decision, he had allowed the fees of two partners.  It could be said that on the master’s decision, as the plaintiff was allowed the fees of more than one partner, the plaintiff was entitled, at the very least, to the fees of one partner and one notional junior solicitor equivalent to half of the costs of a partner (“1.5 partner’s fees”).

(3) It was when the master’s decision was further reviewed by DHCJ Saunders that only one partner’s fees were allowed.  But the judgment of the Court of Appeal restored the plaintiff’s entitlement to 1.5 partner’s fees.  This is not a situation in which it was held for the first time by the Court of Appeal that the plaintiff was entitled to 1.5 partner’s fees.

(4) Hence, between 27 January 2016 (date of the master’s taxation) to 4 July 2017 (day before the decision of DHCJ Saunders), as the plaintiff was entitled to at least 1.5 partner’s fees by the master’s decision, judgment rate should apply for this period.  See §4(i) of the proposed order.

(5) Between the period of 5 July 2017 (date of the decision of DHCJ Saunders) to 27 February 2018 (day before the judgment of the Court of Appeal), there was no order for the payment of the fees of a notional junior solicitor but only for the fees of one partner.  Judgment rate should not apply to the non‑existent award for this period in respect of the fees of a notional junior solicitor.  Instead, the plaintiff, who is eventually successful on appeal, should be compensated for being deprived of the fees of a notional junior solicitor during this period, at a rate of interest which reflects its costs of borrowing.  See §4(ii) of the proposed order.  For this approach, reliance is placed on Hongkong Electric Co Ltd v Commissioner of Rating and Valuation (No 2) [2012] 3 HKC 212 at §§6 to 8.

(6) As from 28 February 2018, being the date of the judgment of the Court of Appeal, the plaintiff is entitled to 1.5 partner’s fees pursuant to a court order.  So the judgment rate should apply to the fees of a notional junior solicitor from 28 February 2018 until payment.  See §4(iii) of the proposed order.

The defendant’s opposition

12.  The defendant’s stance is that this application should be dismissed with costs.  His counsel, Mr Leonard Chow, submitted that the slip rule in Order 20 rule 11 is not applicable in this instance for a number of reasons.

13.  First, the order sought by the plaintiff is not an error resulting from an accidental slip or omission by the court.  The slip rule is only applicable to errors which are rectifiable in order to give effect to the manifest intention of the court.  Man Ping Nam is distinguishable on the facts (in that the unsuccessful respondent was ordered to repay and restore to the appellant the amount that had been paid by the latter pursuant to the first instance judgment) and the plaintiff’s reliance on it is misconceived.  He cited Godfrey JA in Skink Ltd (in liquidation) v Comtowell Ltd [1998] 1 HKLRD 542 at p 543G:

“The court has an inherent power to vary its own orders so as to carry out its own meaning and to make that meaning plain; and an express power (under R.H.C. O.20 r.11) to correct any error in any order resulting from an accidental slip or omission. But these powers extend only to the correction of errors in expressing the court’s intention.The court has no power to correct mistakes of its own; even where it is satisfied that it has indeed made such a mistake.”

14.  Second, the proposed orders cannot be said to reflect the intention of the court.  They are not simple and straightforward computations of interest.  The date when interest should start to run and the rates of interest in the proposed orders are controversial.

15.  The defendant took the position that even if the plaintiff is entitled to interest, this should run from the date of the Court of Appeal judgment (28 February 2018), and not the date of the master’s award (27 January 2016).  The master’s decision was set aside by DHCJ Saunders.  The Court of Appeal upheld the judge’s decision to interfere with the master’s decision, holding that the master’s decision was rightly set aside and the judge was entitled to exercise the discretion on taxation afresh.  When the appeal from the judge’s decision was allowed, the master’s decision could not be regarded to have been restored as alleged.

16.  The defendant took issue with imposing judgment rate for any part of the period prior to the Court of Appeal judgment.  As the master’s decision was in effect set aside and not restored by the Court of Appeal, there was no judgment debt upon which the judgment rate of interest could hang.

17.  Furthermore, the proposed order has failed to take into account the defendant’s part payment to the plaintiff on 23 March 2016 in the sum of $1.2 million and the defendant’s sanctioned payment into court on 24 November 2016 of $305,000.

18.  Third, it is open to argument whether the plaintiff is entitled to interest at all in these taxation proceedings involving disputed costs between solicitor and own client.  Mr Chow submitted that the plaintiff is not entitled to any interest at all.  Unlike the taxation of party and party costs, where it has been held that an order for costs to be taxed is a judgment debt for the purpose of section 49 of Cap 4 (Hotung v Ho Yuen Ki & Ors (No 3) [2009] 2 HKC 378 at §§7 to 8), no judgment is pronounced in respect of taxation proceedings under section 67 of Cap 159, so there is no judgment debt on which interest may run.  Section 64(3) of Cap 159[1], which provides for the award of interest by the taxing master, does not apply in this situation.  And the plaintiff has not cited any authority to show that the court has allowed interest on taxed costs in proceedings regarding disputed costs between solicitor and own client.

Discussion

19.  We do not agree with Mr Chow that the statements of Ribeiro PJ in Man Ping Nam should be confined to the situation where the successful appellant had satisfied the judgment below and the unsuccessful respondent was ordered to repay the amount that had been paid by the appellant.  As explained by Ribeiro PJ, it is understandable that post-judgment interest was not sought by a successful appellant before the outcome of its appeal was known.  We also reject Mr Chow’s contention that the plaintiff’s failure to seek interest in this appeal was not an accidental slip or omission.  There is nothing of substance to indicate that it was a deliberate omission not to claim interest.  Nor do we agree with him that the slip rule in Order 20 rule 11 may not be invoked where the failure of the judgment to deal with interest was due to the omission of the plaintiff to make a claim for this.

20.  It is clear from the cases cited in §20 of Man Ping Nam that Order 20 rule 11 may be invoked where the failure of the court’s original order to provide for costs or interest was due to the accidental slip or omission of the party’s legal representative to ask for costs or interest, and where the court is satisfied that it should have made the order as sought if it had been asked to do so before giving judgment.  In allowing the original order to be varied, the court is giving effect to the order which it would have made but did not make due to the accidental slip or omission of the party’s legal representative.  This is to correct an error in expressing the court’s intention.  There is no deviation from the statements of principle in Skink Ltd (in liquidation) v Comtowell Ltd.  The Court of Appeal in that case declined to apply the slip rule because, among other reasons, if the point had been raised timeously, it “might have” not that it would or should have, made the varied order as proposed (at 544C).

21.  So the question is whether we can be satisfied that the orders proposed in the plaintiff’s summons are the orders we should have made, if our attention had been drawn to them before judgment was handed down.

22.  First and foremost, post-judgment interest is provided for in section 49 of Cap 4[2]. It is not required to be pleaded, as the award of post-judgment interest is mandatory, not discretionary (Hong Kong Civil Procedure 2018, vol 1, §18/8/18).

23.  As a matter of principle, we see no reason why costs allowed on taxation in respect of solicitor and own client costs pursuant to an order of taxation on the application of “the party chargeable to taxation” or the solicitor under section 67(1) or (2) of Cap 159 should not attract post-judgment interest, so that the party chargeable to taxation can continue to deprive the solicitor of the costs without any adverse consequence even though the solicitor’s bill has been taxed by the taxing master.  Where there is an application for taxation under section 67(1) or (2), as opposed to the situation when an action is brought to recover costs on a solicitor’s bill without invoking this taxation procedure, there is no valid reason why a judgment debt for the purpose of section 49 of Cap 4 would only arise when an action is commenced on a solicitor’s bill after it has been taxed and judgment is given in that action.

24.  It is correct that for party and party taxation, the entitlement to costs would flow from a judgment or order for payment of costs, and it has been held that interest on costs should run from the date upon which the judgment or order is pronounced (the incipitur rule), not from the date of the certificate of taxation (the allocatur rule), see Hunt v R M Douglas (Roofing) Ltd [1990] 1 AC 398, followed in Hong Kong in Caltex Oil Hong Kong v Director of Buildings and Lands [1994] HKDCLR 31 and Wong Wai Chun & Anr v Lewin [2000] 2 HKC 271.  It is also correct that there is no judgment or order for payment of a solicitor’s bill prior to taxation of the bill under section 67.  However, that section does provide for an order for taxation of the solicitor’s bill under section 67(1) or (2), and the taxing master is required under section 67(3) to issue a certificate certifying what is due to or by the solicitor in respect of the bill and in respect of the costs of the taxation.

25.  There being no judgment or order for payment of a solicitor’s bill prior to taxation under section 67, interest cannot run from a date prior to the certificate of taxation[3], unlike the situation of party and party taxation.  But that is not to say there is no judgment debt on which interest will run when a certificate is issued by the taxing master under section 67(3).

26.  As for section 64(3) of Cap 159 cited by Mr Chow, this does not purport to govern the only instances in which interest may be allowed for costs between solicitor and own client.  Besides, as pointed out by Mr Chiu, section 64(3) is concerned with “moneys disbursed by the solicitor for the client” and “moneys of the client in the hands of, and improperly retained by the solicitor for the client”.  They would appear to pertain to matters arising before taxation, and have little bearing to post-judgment interest on a judgment debt.

27.  There being a judgment debt in respect of the costs allowed on taxation, the next question is when interest should start to run.

28.  The total amount of taxed costs, made up of 1.5 partner’s fees, came up to $1,877,851.33.  The plaintiff confirmed that it has received full payment of the taxed costs by these payments: $1.2 million was paid on 23 March 2016 after the master gave his award on 27 January 2016, and, after the judgment of the Court of Appeal on 28 February 2018, the amount paid into court of $305,000 was paid out to the plaintiff on 2 May 2018 and the balance of $372,851.33 was paid by the defendant on 8 May 2018[4].

29.  The defendant took the position that the plaintiff is entitled to recover the taxed costs of $1,877,851.33 only on the strength of the Court of Appeal judgment.  Hence, any post-judgment interest should accrue from the date of the Court of Appeal judgment, not from the date of the master’s award.  On this basis, the defendant has made an open offer to pay $10,013.67 in full and final settlement of the plaintiff’s claim for post-judgment interest.[5]

30.  Mr Chow pointed out it is clear from the Court of Appeal judgment that this court considered the master’s decision was wrong in principle and sufficient grounds had been made out for the judge to interfere with the master’s decision, and it was the judge’s error in failing to exercise his discretion on taxation afresh that we decided to interfere with his decision and to exercise the discretion afresh.  Mr Chow submitted that the order we made on allowing the appeal that 1.5 partner’s fees should be allowed on taxation is to give effect to the judge’s observation about the circumstances in which a junior solicitor may justifiably be engaged to assist the partner[6], it was not to restore the master’s decision to allow the fees of two partners as sought by the plaintiff on appeal.  The master’s decision had been set aside and could not be regarded as restored.

31.  Mr Chow further relied on this passage in §42/3/2 of Hong Kong Civil Procedure 2018, vol 1: “Where a judgment is set aside by the Court of Appeal and another judgment ordered to be entered in its place, the practice is to date the second judgment as of the date of the order of the Court of Appeal, and interest upon the debt or damages to be recovered runs from that date unless the Court of Appeal should make an order under this rule, antedating its judgment.”  In this instance, the Court of Appeal did not make any order antedating its judgment.

32.  We do not think it is correct that the entitlement to 1.5 partner’s fees only arose from the Court of Appeal judgment. We think it is right to break this down into one partner’s fees and another sum equivalent to 0.5 partner’s fees, as submitted by Mr Chiu.  It is clear from the defendant’s objection filed in support of his application for review that it was accepted he should bear the fees of one partner.  Plainly, this part of the taxed costs awarded on 27 January 2016 had survived the two reviews and the appeal, notwithstanding that the master’s decision was set aside and the discretion in taxation was exercised afresh, first by the judge and later by the appeal court.  Post-judgment interest on the fees of one partner should run from 27 January 2016, not the date of the Court of Appeal judgment.  §5 of the proposed order gives effect to the intention of the court in this regard, subject to one qualification.  The defendant had paid $1.2 million to the plaintiff on 23 March 2016, it would appear that he has paid the bulk, if not the entirety[7], of the taxed fees of one partner.  The plaintiff must give credit for the payment received and interest is payable only in respect of any amount outstanding during the period commencing from 27 January 2016.

33.  As for 0.5 partner’s fees, we think it is correct to say that notwithstanding the master’s award of the fees of two partners was set aside and the discretion in taxation was exercised afresh by the judge on review and later on appeal, looking at the substance of the master’s decision and the judgment of the Court of Appeal, the plaintiff was entitled to at least 0.5 partner’s fees from the date of the master’s award.  This is different from the situation in which a successful party on appeal is held to be entitled to a sum of money for the first time.  The passage in §42/3/2 of Hong Kong Civil Procedure 2018 cited by Mr Chow does not apply to this kind of situation.  Interest should run from the date of the master’s award on 27 January 2016 at the judgment rate, except for the period from 5 July 2017 to 27 February 2018, in which interest at the rate of 1% over the HSBC best lending rate is substituted, for the reasons submitted by the plaintiff as mentioned earlier.

34.  We are satisfied that §§4(i) to (iii) do give effect to the intention of the court, subject to the same qualification that the plaintiff should give credit for the payments made by the defendant in the amounts of $305,000 on 2 May 2018 and $372,851.33 on 8 May 2018, and that interest is payable only in respect of the outstanding amount at the specified interest rate during the relevant period.

Conclusion and orders

35.  For the above reasons, we make an order in terms of the proposed §§4 and 5 in the plaintiff’s amended summons, save that each of §§4 and 5 is qualified by the insertion of these words at the beginning of each paragraph: “Insofar as any amount was outstanding on the costs allowed on taxation as stipulated below in the relevant period,”.

36.  We make an order nisi as to costs with gross sum assessment.

37.  There is no reason why costs of this application should not follow the event.  We order the defendant to pay the plaintiff’s costs.  We reduce the fees in the statement of costs lodged by the plaintiff to $111,664.  Any party wishing to vary the costs order nisi or gross sum assessment should apply within 14 days of the handing down of this judgment.

CACV 172/2017

[2018] HKCA 199

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 172 OF 2017

(ON APPEAL FROM HCMP NO 555 OF 2015)

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DECISION ON COSTS

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

1.  On 28 February 2018, we handed down our judgment allowing the appeal of the plaintiff from the judgment of Deputy High Court Judge Saunders arising out of the second review of a taxation of costs by a taxing master. We varied the judge’s order by which he taxed off the costs of one of the two partners claimed in the plaintiff’s bill and replaced it with an order that the costs of one partner and the costs of a notional junior solicitor equivalent to half of the costs of a partner be allowed in respect of the 64 items objected to.

2.  We made orders nisi as to the costs of the appeal and below.  We awarded the costs of the appeal to the plaintiff without any deduction, with a certificate for two counsel.  We declined to disturb the judge’s costs order of the review applications before him and before the taxing master, which were awarded to the defendant, with a certificate for two counsel.

3.  By a summons issued on 6 March, as amended on 9 March 2018, the defendant sought leave to vary that part of the costs order nisi by which the costs of the appeal were awarded to the plaintiff, asking instead there should be no order as to the costs of the appeal.  In short, the defendant wishes to retain that part of the costs order nisi favourable to him and to vary that part of the order against him.  The summons is opposed by the plaintiff.

4.  We directed the summons be dealt with on paper and submissions have been served under the directions made on 9 March.  Our directions are clear.  We regret to say the defendant’s legal team did not comply with the direction that any reply submission on his part should not be more than three pages.  We were given a reply submission double the page limit.  In future, any submission not in compliance with the page limit will be returned to the party concerned unread.

5.  The reasons for awarding the costs of the appeal to the plaintiff in the costs order nisi were set out in §61 of my earlier judgment:

“In my view, notwithstanding that the plaintiff did not succeed in restoring the master’s review decision in its entirety, I would regard the plaintiff as substantially successful and it is necessary for the plaintiff to bring this appeal to set aside the judge’s decision. I also take into account the judge’s error in failing to consider whether a junior solicitor may justifiably be engaged with a senior solicitor might well be attributable to the way the case was argued before him, in that the defendant’s challenge was confined to the fact of duplication. …”

6.  These grounds were advanced by the defendant in contending that the above order should be varied to no order as to costs: (1) the plaintiff was only partially successful on appeal; (2) its argument that the taxing master did not err in principle and his decision should not be disturbed was rejected by this court; (3) the plaintiff never asked for the reduction of any costs claimed for two partners and only accepted this court’s suggestion in the course of argument of replacing the costs of one partner by the costs of a notional junior solicitor equivalent to half of the costs of a partner; (4) the legal fees allowed by the taxing master were reduced by a substantial amount, i.e. half of the costs of a partner, and this court awarded costs materially less than the costs awarded pursuant to the taxing master’s order.

7.  We do not think it fair to make no order as to the costs of the appeal in all the circumstances, for the reasons given in the earlier judgment, and are not persuaded by the defendant’s submissions that the costs order nisi should be varied on any or all of the grounds as mentioned above.  It is a sterile argument to keep harping on the fact that since the plaintiff was allowed only half of the second partner’s costs, the outcome on appeal should therefore be regarded as more favourable to the defendant instead of to the plaintiff.  It could equally be said that since costs allowed by the judge’s order was increased by half of a partner’s costs, the costs ultimately awarded to the plaintiff were increased by a substantial amount.

8.  The whole package of the costs order nisi should be considered.  It gives recognition that neither party is wholly successful in costs.  And in declining to disturb the costs awarded by the judge to the defendant in the two review applications, we have given sufficient recognition to the fact that the plaintiff’s primary position that the taxing master’s decision should not be disturbed was rejected by us.

9.  We would mention two other matters.

10.  First, the plaintiff submitted that the defendant’s challenge to the approach on review by a judge of taxation of costs in Chan Yin Na v Union Medical Centre Limited [2011] 5 HKC 158, which necessitated members of this court to deal with the controversy at some length in our separate judgments, is a further reason why it lies ill in the defendant’s mouth to suggest there should be no order for the costs of the appeal.

11.  The defendant submitted in reply it was not his position to advocate a taxation de novo on review by the judge and stated that this issue was raised by the plaintiff in §5 of its submission served in the appeal, which misquoted §7 of the decision of the judge.

12.  If the defendant was indeed not advocating the approach of a taxation de novo, this was not made clear or sufficiently clear in its skeleton argument served in the appeal.  The relevant parts of his counsel’s submission suggesting the contrary have been quoted in my earlier judgment at §28.  Given the stance of the defendant on this issue, which is nebulous at best, it is necessary for this court to address the issue on the proper approach, to lay the matter at rest.

13.  We have re-read §15 of the defendant’s skeleton argument served in the appeal, in which the allegation of misquotation of §7 of the judge’s decision was made.  With respect, the complaint of misquotation is not to the point.  The part put in quotation marks in §5 of the plaintiff’s skeleton argument was taken from §23 of Chan Yin Na.  The judge had accepted the parties’ agreement on the proper approach as decided in ChanYin Na and recorded what the parties agreed on this in §7 of his decision.  So even though the words in quotation marks were not actually taken from the decision of the judge, they were taken from a judgment that he and the parties had agreed with.  The complaint of misquotation is immaterial and of no consequence.

14.  We agree with the plaintiff that the defendant’s stance on the proper approach to be taken by a judge on a taxation review is further reason why it is inappropriate to make no order as to the costs of the appeal.

15.  Second, in the reply submission of the defendant, it was mentioned in the last paragraph that in the event this court is minded to award costs of the appeal to the plaintiff, this court should consider apportioning the costs in the appeal in such proportions to reflect that the plaintiff has failed to restore the master’s decision in allowing the full costs of two partners.

16.  This submission is not acceptable.  The defendant’s summons, which has been amended once on 9 March, only asked for “no order as to costs of the appeal”.  Awarding part of the costs of the appeal to the plaintiff as an alternative was not mentioned in the summons, or even in the first submission served by the defendant on 16 March.  The opposite party had no opportunity to respond to this alternative suggestion.  In any event, we have fully considered this aspect and are not persuaded that the plaintiff should be deprived of part of its costs of the appeal.

17.  We dismiss the summons to vary the cost order nisi.

18.  As to the costs of the application to vary the costs order nisi, there is no reason why costs should not follow the event.  We order the defendant to pay the costs of the plaintiff in this summons.  We will grant a certificate for two counsel.  The costs order of the present application is an order nisi.

CACV 172/2017

[2018] HKCA 83

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 172 OF 2017

(ON APPEAL FROM HCMP NO 555 OF 2015)

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________________________

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J U D G M E N T

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Hon Lam VP:

1.  I agree with the judgment of Kwan JA and the orders proposed by my Lady. I only wish to elaborate upon the proper approach that a judge should adopt in a review of the taxing master’s certificate under Order 62 Rule 35. Though the point was not vigorously pursued by Ms Ng, in view of its general importance it is right that we consider the same at some length.

2.  As Her Ladyship explained, there are two lines of cases and they were discussed by Bharwaney J in Chan Yin Na v Union Medical Centre Limited [2011] 5 HKC 158.  In that case, the learned judge declined to follow the more recent English authorities and adopted the old English approach.

3.  The old English approach was set out in White v Altrincham Urban District Council [1936] 2 KB 138 and Hart v Aga Khan Foundation (UK) [1984] 1 WLR 994.  It was followed in Hong Kong in several first instance decisions cited in Chan Yin Na. Under that approach, the judge should examine if the taxing master had made any error in principle, had taken into account factors that he should not have considered, or failed to take into account any factor that he should have considered.  This is the approach the Court of Final Appeal adopted in a review by a single judge of the Registrar’s taxation of costs in that court, see Yue Kwok Wing v Mak Shiu Tong FACV 4/2004, 14 Feb 2006; Nam Chun Investment Co Ltd v Director of Lands (2007) 10 HKCFAR 523.

4.  The more recent English approach laid emphasis on the expression “all such powers and discretion as are vested in the registrar in relation to the subject matter of the application” in the equivalent of our Order 62 Rule 35(4).  It was held in Madurasingh v Penguin Electronics [1993] 1 WLR 989 that the discretion of a judge in such a review is unfettered by the manner in which the registrar exercised his discretion.  The approach was followed in Kawarindrasingh v White [1996] 1 WLR 785 and Truscott v Truscott [1998] FLR 265.  In Hong Kong, this approach was adopted by Barma J (as he then was) in Re Greater Beijing Region Expressway Limited [2005] 2 HKC 185 and Tang J (as he then was) in Tung Ka Hung v Wan Kin Chung Daniel HCCW 726 of 2002.

5.  With the greatest respect, I beg to differ from those learned judges who departed from the old approach.  As explained in the English authorities, the basis for the new approach was the significance attributed to the expression I alluded to above.  In my judgment, one must have regard to the overall taxation regime before one can examine the significance attributable to that expression.  As my Lady shall explain below, by the time the matter comes to a judge for review, there has already been a first review by the taxing master himself.  The statutory scheme in Order 62 clearly envisages that the taxing master would be the primary decision maker in taxation proceedings.

6.  In a taxation hearing before a taxing master, all the working papers of the solicitor involved would be placed before him and he would examine the papers in some detail in connection with any disputed item in a taxation.  Assisted by law costs draftsmen, the taxing master can use his expertise in taxation in assessing such materials.  The process is akin to one of weighing the evidence at a trial.  By the nature of things, this process is not to be repeated before a judge and counsel appearing before him who generally would not have the experience of a taxing master or law costs draftsman in such matters.  Like a finding of facts by a judge, a taxing master’s reasons for decision cannot always capture all the minute nuances in his assessment process in coming to a particular finding on a disputed item.  In that respect, the observation of Lord Hoffmann in Biogen Inc v Medeva plc [1997] RPC 1 at 45 on finding of facts is equally applicable,

“The need for appellate caution in reversing the trial judge’s evaluation of the facts[1] is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance… which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation.”

7.  Further, a full blown re‑examination of a taxation decision as in the case of a rehearing on appeal from a master to a judge in respect of a procedural or interlocutory decision is not in line with modern litigation ethos as enshrined in our Civil Justice Reform.  It is not the practice of the court to list a review before a judge for the same length as the taxation before the taxing master.  Expensive and lengthy taxation processes (including review and appeal) is another form of satellite litigation which should be avoided if the utility is not high.  Given the relatively lesser experience of a judge in taxation matters, the following justification for appellate constraint given by Lord Neuberger in In re B (a Child) [2013] 1 WLR 1911 on appeal against finding of facts are also apposite in the present context,

“This can also be justified on grounds of policy (party should put forward their best case on the facts at trial and not regard the potential to appeal as a second chance), cost (appeals can be expensive), delay (appeals on fact often take a long time to get on), and practicality (in many cases, it is very hard to ascertain the facts with confidence, so a second, different, opinion is no more likely to be right than the first).”

8.  Hence, with the proper recognition of the regime for the taxation process and necessary limitations in a review by a judge, the old approach is, in my judgment, fully warranted.

9.  In light of such context, the expression relied so heavily in the authorities advocating the new approach cannot be a sufficient basis for holding that a judge should not follow the old approach. A similar expression in Rule 60(9) of the Hong Kong Court of Final Appeal Rules does not inhibit the Court of Final Appeal from adopting the old approach.  In the context of ordinary civil appeals to the Court of Appeal, which is to be heard by way of rehearing (see Order 59 Rule 3(1)), the Court of Appeal shall have all the authority and jurisdiction of the court from which the appeal was brought (Section 13(4) of the High Court Ordinance) and can give any judgment or make any order which ought to be given or made (Order 59 Rule 10(3) of the Rules of the High Court).  Notwithstanding this, these empowering provisions do not inhibit this Court from exercising appellate restraint in respect of appeals against finding of facts or exercise of discretion.

10.  For these reasons, I am thoroughly convinced that Hong Kong should continue to follow the old approach despite the adoption of a different approach in England.

11.  It is to be noted that taxation is to be conducted by “taxing master”.  Hence, a decision by a taxing master does not fall within a decision by a master in respect of which appeal can be brought under Order 58 to a judge.  The approach of Evans v Bartlam [1937] AC 473 at 478 is appropriate for an Order 58 appeal.  But it is not appropriate for a review under Order 62 Rule 35.

Hon Yuen JA:

12.  I agree with the judgments of Lam VP and Kwan JA.

Hon Kwan JA:

13.  This is an appeal of the plaintiff from the judgment of Deputy High Court Judge Saunders given on 5 July 2017 arising out of the second review of a taxation of costs by the taxing master, Master S Lo.

Background

14.  The defendant is the senior partner of a firm of solicitors and he stood for election for the Chief Executive of Hong Kong in 2012.  He brought proceedings for judicial review and an election petition against the successful candidate and the returning officer for the election.  The matters eventually went up to the Court of Final Appeal in 2013 (Leung Chun Ying v Ho Chun Yan Albert (2013) 16 HKCFAR 735).  The proceedings all turned on legal argument and there were basically no disputes on facts.

15.  The plaintiff acted for the defendant in the above matters.  The plaintiff brought taxation proceedings against the defendant under section 67 of the Legal Practitioners Ordinance, Cap 159 when they could not agree the legal fees.  The master taxed the plaintiff’s bill of costs in a hearing which lasted 3 days in January 2016.

16.  On 5 February 2016, the defendant took out an application for review of the taxation of 64 items in the plaintiff’s bill, pursuant to Order 62 rules 33 and 34.  As required by rule 33(3), the defendant specified in a list each item he objected to and stated the nature and ground of his objection in each instance.  It suffices to set out the objection for objection No. 1 as all other objections are similar:

“The Defendant had never given any express or implied approval to the Plaintiff firm to deploy and charge for 2 partners in handling his case; in fact he would never [have] approved any such duplication. There was no reason for both partners to be involved when one senior counsel and three junior counsel had been instructed. It was also unclear what contribution Mr Elden Lam (the other partner) had actually made to the case even if he did spend the time as set out in the taxation bill.

In fact the defendant had only [come] to realize that both partners had purportedly read each and every document and incoming communication only when he was served with the taxation bill herein.

Under Rule 3 of the General Rules of Taxation (62/App/21) only one fee earner will be allowed for a particular item of work. This rule is generally applied in taxations of costs under O 62 r 28(2) RHC. The use of 2 partners was even unusual as there could be no delegation of work, or any saving of costs using a partner to lead a junior solicitor.

O 62 r 29(3) RHC provides that any costs which in the circumstances of the case are of an unusual nature and such that they would not be allowed on a taxation of costs in a case to which rule 28(2) applies, shall, unless the solicitor expressly informs his client before they were incurred that they might not be so allowed, be presumed, until the contrary is shown, to have been unreasonably incurred.

The Defendant was not aware of the involvement of 2 partners throughout, and he had never been advised as required under O 62 r 29(3) RHC, as such all items of costs for 2 partners in this bill were unreasonable and should be reduced at least by taxing off one of the 2 partners.

…”

17.  The 64 items objected to essentially involved the consideration of letters, skeleton submissions and authorities, court documents, judgments delivered, conferences, and attending counsel in court.  In each item of work, the 2 partners were engaged and spent the same time on the work.  The costs of the 64 items totalled 367 hours and amounted to $1,460,000, out of a total of $2,558,000 claimed in the taxation proceedings for solicitors’ costs excluding counsel fees.  It was not in dispute that the defendant did not give express or implied approval to deploy and charge for 2 partners in respect of the challenged items.

18.  On the review of taxation first brought before the master and later before the judge, no challenge was made to the amount of the charges made by the 2 partners, or the time spent (as taxed off in the original taxation decision), for the 64 items.  So neither the master nor the judge reviewed the amount of the charges or the time spent.  The challenge before the master and the judge was confined to the duplication of work in that the 2 partners handled the same item of work and, as it was contended this was unreasonable, the 64 items should be reduced by taxing off one of the 2 partners.

19.  The master dismissed the defendant’s application for review by his decision on 27 January 2017.  He was not persuaded that the 64 items which involved the participation of 2 fee earners charging $4,000 per hour each are of an unreasonable amount or have been unreasonably incurred.

20.  The defendant pursued the matter further before the judge who treated the application as made pursuant to a review of the taxing master’s certificate under Order 62 rule 35.  The judge took the view that the duplication of work by the 2 partners was not necessary or proper for the attainment of justice or for enforcing or defending the rights of the defendant[2]. He was satisfied that in rejecting the review for the 64 items, the master has erred in principle, has taken into account irrelevant matters, and failed to take into account relevant matters[3]. He taxed down the plaintiff’s bill to entitle the time claimed for one partner only.

21.  The plaintiff brought this appeal to restore the decision of the master on review.

The approach on review by a judge of a taxation of costs

22.  There are two lines of authorities in Hong Kong regarding the correct approach to be taken by a judge in a review of taxation pursuant to Order 65 rule 35.  They were considered in some detail by Bharwaney J in Chan Yin Na v Union Medical Centre Limited [2011] 5 HKC 158.

23.  The first line is to the effect that a review of taxation by a judge under the said provision is not a hearing de novo, and the judge should only interfere with the decision of the taxing master in limited circumstances: if it is shown to have been arrived at under a mistake of law, or in disregard of principles, or under a palpable misapprehension as to the facts, or plainly in reliance on irrelevant matters, or to be such as to fall outside the generous ambit within which reasonable disagreement is possible (Chan Yin Na at §§3, 7 to 9).

24.  The other line of cases is to the effect that the approach should be no different from an interlocutory appeal against a discretionary order and the principles are as stated in Evans v Bartlam [1937] AC 473 at 478 by Lord Atkin.  Hence, the judge on a review of taxation is in no way fettered by the previous exercise of the master’s discretion and is entitled to exercise it as though it came before him for the first time.  The judge will give the weight it deserves to the decision of the master but is in no way bound by it.  These were founded on more recent English cases (referred to in Chan Yin Na at §§11 to 16) and they were followed in Hong Kong by Tang J (as he then was) in Tung Ka Hung & Ors v Wan Kin Chung Daniel & Ors, HCCW 726/2002, 29 July 2004, at §3 and by Barma J (as he then was) in Re Greater Beijing Region Expressway Limited [2005] 2 HKC 185 at §8.

25.  Bharwaney J adopted the approach in the first line of cases, relying on two decisions which dealt with taxation of costs in the Court of Final Appeal (Yue Kwok Wing v Mak Shiu Tong, FACV 4/2004, 14 February 2006; Nam Chun Investment Company Limited v Director of Lands (2007) 10 HKCFAR 523), even though they are not binding on him in that they dealt with an appeal to a single permanent judge from a taxation decision of the Registrar under the Hong Kong Court of Final Appeal Rules (Chan Yin Na at §§23 to 26).

26.  In §7 of the judgment of Deputy Judge Saunders, he recorded that the parties were agreed that the judge “is not required to conduct a taxation de novo, but only considers the reasons for the taxing master’s decision to ascertain whether or not taxing master erred in principle, took into account irrelevant matters or failed to take into account relevant matters”, quoting from Chan Yin Na at §26.

27.  It was not disputed in this court that the judge did not proceed with the review on the basis that he had a full and unfettered discretion but regarded himself as guided by the approach in Chan Yin Na.

28.  However, in the written submissions of Ms Margaret Ng, who had also appeared with Mr Leonard Chow before the judge, she contended on behalf of the defendant that Order 62 rule 35 “gives the Judge full discretion on a review of the Master’s review of taxation, subject only to the restrictions expressly stated in r 35 itself” and “there is no rule of law restricting the Judge’s discretion to review a Master’s review to where there is a mistake of law or disregard of principle, and/or took irrelevant matters into account.”  At the hearing, Ms Ng did not persist in this stance and was content to accept that in a review by a judge of the taxing master’s review, the judge should only interfere with the decision of the taxing master in limited circumstances.

29.  Insofar as there is any confusion as to the appropriate approach, I wish to state clearly that in my view the decision in Chan Yin Na is correct.  As Bharwaney J rightly stated in §26, the parties to taxation already enjoy a right of review before the taxing master under Order 62 rules 33 and 34, in which the master may “exercise all the powers he might exercise on an original taxation”.  In applying for a second review before the judge, the aggrieved party must first request the master to state the reasons for his decision in respect of that item or part and any special facts or circumstances relevant to it.  The taxing master is the primary decision maker under the statutory mechanism.  The relevant provisions in Order 62 rules 34(2), (4) and 35(1) support the conclusion that the judge, in the second review of the matters of complaint, does not conduct a taxation de novo and should not interfere with the taxation decision, which is essentially a matter for the discretion of the master, save on limited grounds.

The approach in this appeal

30.  Ms Ng submitted that in this appeal, this court should refuse to interfere with the judge’s taxation decision unless the judge’s decision is shown to have been arrived at under a mistake of law or in disregard of principle, or if he has taken into account some matter he should not have, or if the decision was plainly wrong, citing Poon Shu Fan v Wong Tin Yan [2015] 5 HKLRD 512 at §§10 to 11 and Chan Man Pan v Fu Fung Yan Cafornia, CACV 29/2017, 13 September 2017, at §4.6).  But neither was an appeal from the review by a judge of the review of taxation by a master.

31.  Mr Bernard Man, SC, who appeared with Mr Byron Chiu for the plaintiff on appeal, submitted that the focus should first be trained on the decision of the taxing master, who was the primary decision maker.  Applying the approach of Chan Yin Na to that decision, the question one should ask is whether there is any ground that would justify an interference with the master’s decision.  In other words, whether the judge was right to conclude that in rejecting the review for the 64 items, the master has erred in principle, has taken into account irrelevant matters, or failed to take into account relevant matters.

32.  I think that is correct.  On our scrutiny of the master’s decision, if there is no ground to interfere with his decision, the judge’s decision must be set aside and the master’s decision restored.  If, however, the judge is correct in holding that the master has erred for one reason or other, the judge would be entitled to exercise his discretion in the taxation afresh.  It would then be for this court to examine if there is any basis to interfere with the fresh exercise of discretion by the judge, applying the familiar orthodox principles as mentioned in Poon Shu Fan v Wong Tin Yan and Chan Man Pan v Fu Fung Yan Cafornia.

If there is basis for interfering with the master’s decision

33.  Mr Man submitted that in coming to the view that the circumstances of the case justified “every assistance from 2 fee earners … to the 4 counsel involved” and “it is also necessary for the 2 solicitors to be fully conversant with and [have] proper understanding of the various applications, their backgrounds and the relevant legal principles in order to discharge their professional duties”[4], the master was plainly entitled to take into account the following matters:

(1)   the various applications and their appeals to the Court of Final Appeal must be extremely important to the defendant, who is not only a politician but also a candidate in the 2012 Chief Executive election[5];

(2)   the subject matter and the issues involved in those proceedings are undoubtedly complicated, unprecedented and of great political importance to Hong Kong and of great public interest[6]; and

(3)   the applications were all heard in the utmost urgency, no matter in the first instance or the Court of Final Appeal[7].

34.  The above matters, which the master did take into account, were not disputed.

35.  Mr Man was at pains to emphasise that he is not advocating a position that in a case that is complicated, important and urgent, it must be reasonable and justified for 2 partners to be engaged in handling the same item of work.  All that he is saying is that the conclusion reached by the master is one he was entitled to reach and one on which different judges can legitimately differ.  The master had spent 3 days doing the original taxation and he then undertook the review.  His reasons should be approached on the premise that he knew how he should perform his functions and which matters he should take into account.  Whether the complexity, importance and urgency of the proceedings were such as to justify the participation of 2 partners handling the same item of work in considering submissions and authorities, correspondence, the judgments delivered, attending conferences and attending counsel in court, are all matters of degree and reasonable people may disagree as to the conclusion arrived at.

36.  Mr Man submitted that the judge’s criticisms of the master’s reasons do not amount to an error of principle and hence do not justify the reversal of his decision.

37.  I turn to the judge’s criticisms of the master’s reasons.

38.  The main criticism, as I see it, is §23 in which the master said as follows:

“In gist, Ms Ng, Counsel for the defendant, submitted that it is of an unusual nature for RL and EL doing exactly the same piece of work such as studying the same authorities and submissions, and attendance of court. In my view, if the defendant had already accepted that these 4 Counsel were instructed, they should be allowed to do exactly the same or substantially the same piece of work such as studying the same authorities and submissions, attendance of court etc. In that case, I fail to see why it is unreasonable to expect the defendant to also accept 2 solicitors to do exactly the same or substantially the same studying the authorities and submissions, attendance of court. Needless to say, the various applications in HCAL 84/2012 and HCAL 85/2012 including their appeals to the CFA must be extremely important to the defendant who is not only a politician but also a candidate in the 2012 Chief Executive Election.”

39.  The judge criticised the master’s reasoning in this manner in §47 of his decision:

“At paragraph 23 of the decision, the master has simply applied a wrong principle. The mere fact that four counsel were instructed is no basis to say that the client must also accept two solicitors doing exactly the same or substantially the same work, especially matters such as studying authorities and submissions or attending at court. It does not follow from the fact that four counsel were instructed that the work was of an unusual nature, or necessary or proper for the attainment of justice or enforcing or defending the rights of [the defendant] to justify the duplication.”

40.  Mr Man submitted that §23 of the master’s decision ought to be read in light of the earlier paragraphs in which the master emphasised the complexity, urgency and importance to the client of the legal proceedings.  He argued the fact that four counsel were instructed at substantial costs would go to illustrate the complexity and importance of the case and the great public interest involved and it is clearly rational for the master to take this fact into account.  And reasonable people may differ as to the weight to be attributed to this fact.  He contended this is not a ground for upsetting the master’s decision.

41.  Mr Man has tried to put the master’s reasoning in the best possible light but I am not persuaded that is a fair reading of §23 of the master’s decision.  It is difficult to get away from the master’s reasoning as tied to the fact that 4 counsel were instructed, and that fact would appear to have influenced his thinking that it is not unreasonable to expect 2 partners to be engaged to do the same or substantially the same piece of work.  I would agree with the judge that the master has erred in principle here.  This flaw in the master’s reasoning would cast doubt on the soundness of the weighing exercise of the factors he had considered in arriving at his conclusion.

42.  The judge also criticised §24 of the master’s decision, which read as follows:

“Even as to the question of costs, I am of the view that it must be very complicated since the costs order made by Lam JA in HCAL 84/2012 against the defendant with certificate for 2 counsel was indeed overturned by the Appeal Committee of the CFA[8] by replacing with “no order as to costs” eventually.”

43.  The judge said he did not understand how §24 could be used by the master to justify a finding of complexity[9].  Earlier on, the judge also said he accepted that the case was “a complex and difficult case for counsel to argue in court, fully justifying the seniority of the counsel involved”, “[but] there was nothing in [the plaintiff’s counsel’s] submissions to indicate that the solicitors side of the work was equally as complex and difficult.”[10]

44.  I think those criticisms are justified.  There was a palpable misapprehension as to the facts.  There is nothing complex about the question of costs in the legal proceedings, which was quickly disposed of in the Court of Final Appeal.  The fact that the costs order at first instance was overturned was simply a consequence that followed from the Court of Final Appeal differing from the reasoning of the court below (Leung Chun Ying v Ho Chun Yan Albert, supra at §52).  It cast doubt if the master did have a proper grasp as to the complexity or otherwise of the solicitors’ side of the work.

45.  I am mindful that in §27 of the master’s decision, he mentioned that he accepted the evidence in the affidavit filed by one of the partners that “in every court hearing, instructing solicitors are expected to render assistance to counsel and the court, and to take instructions from client as and when necessary, especially in view of this extremely important and complicated case” and that “to enable the instructing solicitors to follow the proceedings and assist the counsel team, they were obliged to go through the submissions and legal authorities.”  If the master had made no error in principle and no misapprehension of fact, the judge in reviewing his decision would not have grounds to interfere with his conclusion that it was necessary and reasonable for both solicitors to go through submissions and legal authorities in order to follow the proceedings and assist counsel. But that is not the case here.

46.  There is also one other matter and that relates to the rebuttable presumption in Order 62 rule 29(3), which provides as follows:

“For the purposes of paragraph (1), any costs which in the circumstances of the case are of an unusual nature and such that they would not be allowed on a taxation of costs in a case to which rule 28(2) applies, shall, unless the solicitor expressly informed his client before they were incurred that they might not be so allowed, be presumed, until the contrary is shown, to have been unreasonably incurred.”

47.  The master had quoted the full text of this provision but expressed no view as to whether the presumption would apply in this instance.  Although in §23 he would appear to have rejected the defendant’s submission that “it is of an unusual nature for RL and EL doing exactly the same piece of work such as studying the same authorities and submissions, and attendance of court”, and hence one of the requirements giving rise to the presumption is not met (i.e. that the costs were of an unusual nature), for the reasons I have given, the master had made an error in principle in arriving at his view and this would provide a basis for the judge to look at the matter afresh.

48.  The judge did so and he came to the view that the presumption would apply[11]. Mr Man criticised the judge for making no clear finding that the costs were of an unusual nature.  I agree that the judge could have expressed himself in a more felicitous manner but reading as a whole the relevant paragraphs in the judgment[12] which Ms Ng took us through, I think it is tolerably clear the judge was of the view that the costs incurred by the 2 partners doing exactly the same work or substantially the same work were unusual.

49.  I agree with the judge the rebuttable presumption would apply in this instance, and that gives another reason to interfere with the master’s decision and to look at the matter afresh.

50.  It is unnecessary to deal with Mr Man’s criticism of the judge in applying what Master de Souza said in Deacons v Wiseking Mining InvestmentCompany Limited, HCA 1221/2011, 25 June 2013 at §59.  Nor is it necessary to consider what the judge said about the defendant’s ability to impose a limit on the costs incurred.

51.  For the reasons given above, I am satisfied sufficient grounds have been made out for the judge to interfere with the master’s decision.  But that is not the end of the matter, as it falls on this court to examine the judge’s decision in his fresh exercise of discretion and to see whether there is any basis to interfere with his decision applying the familiar principles.

If there is basis for interfering with the judge’s discretion

52.  The judge exercised his discretion by taxing off the costs of one of the partners.  In so doing, he would appear to have simply acceded to the position urged upon him by the defendant that as duplication of work was not necessary or proper, the costs of one partner should just be taxed off.  It does not seem from the judgment he had formed a clear view whether it would be justified to engage 2 fee earners, not both partners or senior solicitors, but a senior solicitor and a junior solicitor, in the matter.

53.  In §33, the judge had referred to this passage in §38 of the decision of Master Christopher Chan in The Educational Group (HK) Ltd v Deacons, HCMP 2138/2008, 11 May 2009:

“I cannot say that obtaining the assistance of another solicitor is something of an unusual nature. This happens everyday in a solicitor firm. However, the fees of two fee-earners are not allowed for both solicitors doing the same piece of work in a party and party taxation unless it is very complicated.”

54.  The judge went on to consider the circumstances in which a junior solicitor might reasonably be engaged to assist a senior solicitor:

“36. There is nothing unusual in a senior solicitor delegating work to a junior solicitor, so that two fee earners are engaged in the matter. For example, upon receipt of a bundle of authorities it would not be unusual for a senior solicitor to delegate the work of reviewing the authorities to a junior solicitor. The junior solicitor, having reviewed the authorities, would give the senior solicitor a note of which of the authorities, and which parts of those authorities, would be a matter of concern in the litigation.

37. Authorities which stated principles which were not in dispute, or on which counsel instructed by the senior solicitor would rely in any event, need not be subject to close examination by the senior solicitor. The note the senior solicitor would expect from the junior solicitor would draw his attention to the important authorities, and in particular the specific passages in those authorities, which were against the case. …

38. The same principles must apply to the requirement to read affirmations or skeleton submissions when they are received.”

55.  When the judge turned to consider the duplication of work done by the 2 partners here, his focus was on whether it was justified to engage 2 partners for the various items of work.  Probably because of the way the parties argued the matter before him, he did not go on to consider whether it would be reasonable and proper to engage a senior solicitor assisted by a junior solicitor.  The relevant paragraphs in the judgment read as follows:

“43. It is plainly right that it is not unreasonable to expect a solicitor to have a proper understanding of the issues involved in a case when the bundles are prepared. But nothing was said to me which would justify two solicitors reading every authority, in order to prepare the bundles, when four counsel were instructed. The only point taken on the application for review is that the two solicitors duplicated the work they undertook. For myself, I would have had difficulty in allowing the amount of time claimed by one senior solicitor on the authorities and submissions in this matter. But it is not open to me in this review to make any adjustment in that respect. My jurisdiction is limited to examining the master’s reasons and determining whether or not they are in accordance with principle.

44. Even allowing for the complexity of the case, I am quite unable to say that the duplication of work by the solicitors in respect of the reading of authorities was necessary or proper for the attainment of justice or for enforcing or defending the rights of Mr Ho.

45. The same proposition must necessarily apply to the remainder of the work duplicated. Other than complexity and importance to the client, no justification was offered as to why both solicitors should exactly match each other on the 64 items of work. The best that could be said in respect of the attendances at court was that one solicitor would back up the other if the other had to leave the courtroom. That is not a sufficient justification. That is a role for a junior solicitor to play, especially when there are four counsel.

46. There was nothing in the submissions for the solicitors that justified both solicitors reviewing every item of correspondence, every interlocutory order, every judgment, and every step taken in the proceedings.”

56.  In my judgment, the judge had fallen into error in failing to consider properly or at all whether it would have been justified to engage a senior solicitor with a junior solicitor in this matter.  It was plainly wrong for him simply to tax off the costs of one partner without more.  Once he was satisfied sufficient grounds were made out to interfere with the master’s decision applying the approach in Chan Yin Na, he was entitled to exercise the discretion on taxation afresh.  He was wrong to consider that as the defendant’s challenge was confined to the fact of duplication, his hands were tied in making any adjustment.  Under Order 62 rule 35(6), it is provided that “the judge may make such order as the circumstances require, and in particular may order the taxing master’s certificate to be amended or, except where the dispute as to the item under review is to amount only, order the item to be remitted to the same or another taxing master for taxation.”

57.  As the judge had erred in the exercise of his discretion, this court is entitled to interfere with his decision and to exercise the discretion afresh.  I am satisfied from what the judge had said about the circumstances in which a junior solicitor may justifiably be engaged to assist the senior solicitor with reviewing authorities, submissions, affirmations and skeletons, correspondence and steps taken in the proceedings and attending counsel in court, and having regard to the complexity, urgency and importance to the lay client of the case, it would be justified to engage 2 fee earners, a partner and a junior solicitor, in this instance.

58.  Mr Man indicated that the plaintiff would prefer not to have the matter remitted to a taxing master for taxation, if this court should be of the view that a partner and a junior solicitor may justifiably be engaged.  He also accepted if taxation is to be done by this court, it would be on a rough and ready basis.  I do not understand Ms Ng to have strong views to the contrary.

59.  On that basis, I would allow the appeal and vary the judge’s taxation and replace it with an order that the costs of one partner and the costs of a notional junior solicitor equivalent to half of the costs of a partner be allowed on taxation in respect of the 64 items objected to in the review.

Costs

60.  We have not heard arguments on the costs of the appeal and the costs below.  So the costs orders I propose to make would be in the nature of orders nisi.

61.  For the costs of the appeal, I am inclined to award costs to the plaintiff, without any deduction.  In my view, notwithstanding that the plaintiff did not succeed in restoring the master’s review decision in its entirety, I would regard the plaintiff as substantially successful and it is necessary for the plaintiff to bring this appeal to set aside the judge’s decision.  I also take into account the judge’s error in failing to consider whether a junior solicitor may justifiably be engaged with a senior solicitor might well be attributable to the way the case was argued before him, in that the defendant’s challenge was confined to the fact of duplication.  I would grant a certificate for 2 counsel.

62.  The judge awarded to the defendant the costs of the 2 review applications before the master and before him, with a certificate for 2 counsel.  I am not minded to disturb the judge’s costs orders, as I have taken the view that there were grounds for the judge to interfere with the review decision of the master.