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Ding Xiaohong And Others v King & Wood (A Firm)

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date27 December 2012
Year2012
Judgement NumberHCMP1817/2011
Subject MatterMiscellaneous Proceedings
CourtHigh Court (Hong Kong)
HCMP1817/2011 DING XIAOHONG AND OTHERS v. KING & WOOD (a firm)

HCMP 1817/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1817 OF 2011

_____________

IN THE MATTER of Section 67 of the Legal Practitioners Ordinance, Cap 159

_____________

BETWEEN
DING XIAOHONG (丁小紅) 1st Plaintiff
DING YU (丁育) 2nd Plaintiff
HONG KONG FIRST MAINLAND COMPANY LIMITED (香港第一大陸有限公司) 3rd Plaintiff

and
KING & WOOD (a firm) Defendant
__________

Before: Deputy High Court Judge Lok in Court

Dates of Trial: 5, 6 & 7 November 2012

Date of Judgment: 27 December 2012

__________________________

JUDGMENT

__________________________

1. This is an application for an order for taxation of certain solicitor-and-own-client bills.

Background

2. The defendant is a firm of solicitors and the plaintiffs are the former clients of the defendant.

3. In this originating summons, the plaintiffs apply for an order for taxation under s 67 of the Legal Practitioners Ordinance, Cap 159 (“the LPO”) in respect of the 5 bills (“the 5 Bills”) issued by the defendant to the plaintiffs for legal services rendered in advising and representing them in the High Court Action No 992 of 2010 (“the High Court Action”).

4. S 67 of the LPO reads:

“(1) On the application, made within 1 month of the delivery of a solicitor’s bill or a foreign lawyer’s bill, of the party chargeable therewith the Court shall, without requiring any sum to be paid into court, order that the bill shall be taxed and that no action shall be commenced thereon until the taxation is completed.

(2) If no such application is made within the period mentioned in subsection (1), then, on the application of the solicitor or the foreign lawyer, or of the party chargeable with the bill, the Court may, upon such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order –

(a) that the bill shall be taxed;

(b) that, until the taxation is completed, no action shall be commenced on the bill, and any action already commenced be stayed;

Provided that –

(i) if 12 months have expired from the delivery of the bill, of if the bill has been paid, or if a verdict has been obtained or a writ of inquiry executed in an action for the recovery of the costs covered thereby, no order shall be made on the application of the party chargeable with the bill except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the taxation as the Court may think fit;

(ii) if the bill has been paid, no order under this subsection shall be made where the application for the order is made after the expiration of 12 months from the date of payment of the bill.

… … … ”

5. The particulars of the 5 Bills issued by the defendant are as follows:

Bill Number Date of Bill Period of
services covered 		Amount (HK$)
B2010L0314
(“the 1st Bill”)		 29 Dec 2010 7 Nov 2010 -
15 Dec 2010		 621,838.40
B2011B0202
(“the 2nd Bill”)		 28 Feb 2011 16 Dec 2010 –
31 Jan 2011		 5,661,709.00
B2011C0683
(“the 3rd Bill”)		 31 Mar 2011 1 Feb 2011 to
11 Mar 2011		 3,654,169.57
B2011G0310
(“the 4th Bill”)		 30 Jul 2011 12 Mar 2011 –
15 Jul 2011		 6,385,754.40
B2011I0041
(“the 5th Bill”)		 5 Sep 2011 16 Jul 2011 –
25 Aug 2011		 1,027,370.88
Total 17,350,842.25

6. The plaintiffs’ originating summons was issued on 19 September 2011. There is no dispute that the 5th Bill was issued less than 1 month of the plaintiffs’ originating summons, and so the plaintiffs are entitled to have that Bill taxed as of right. For the 1st to 4th Bills, they were issued less than 12 months but more than 1 month before the plaintiffs’ originating summons, and there is a dispute between the parties as to whether the plaintiffs are entitled to have those Bills taxed and under what conditions.

7. According to s 67 of the LPO, there is a time limit for a client of a solicitor to apply for an order for taxation. However, the time would only start to run against a client if the bill issued by the solicitor is a final bill. Problems may arise if the solicitor is issuing “interim” bills to his client. If these bills are true interim bills, time may not start to run against the client; whereas if the bills are “interim final” bills, the client may lose the right to taxation for failing to comply with the time limits set out in s 67. Hence, in order to determine whether the plaintiffs are entitled to have the order for taxation, Master Ko ordered on 12 January 2012 that there be a trial on the following preliminary issues (“Master Ko’s Order”):

(a) Are the 1st – 4th Bills true interim bills or are they final bills; and

(b) Are there any special circumstances justifying any extension of time for the plaintiffs to apply for taxation under s 67(2) of the LPO.

8. Despite Master Ko’s Order, the ultimate issue before me today is whether the plaintiffs are entitled to have the 5 Bills taxed and under what conditions. The preliminary issues identified in Master Ko’s Order are certainly relevant for the court to determine the ultimate issue, but it would be quite pointless to have a separate trial on these preliminary issues. Both parties therefore agree that I should treat this hearing, which is supposed to be a trial on preliminary issues according to Master Ko’s Order, as the trial of the plaintiffs’ application under the originating summons.

9. Before the hearing, the plaintiffs have taken out a summons dated 18 October 2012 to adjourn the trial in this action and another summons also of the same date in the related action, High Court Action No 1727 of 2011. Mr Barlow SC, counsel for the plaintiffs, informs me that the plaintiffs are not pursuing these applications.

Legal principles about the distinction between true interim bills and interim final bills

10. I first start with the legal principles. In George Y C Mok & Co (a firm) v Trade Advisers Company Limited, unreported, DCCJ 18479 of 2001 (decision of HH Judge Lok on 21 August 2009), I have dealt with a similar issue about the legal effect of some “interim” bills issued by a solicitors’ firm. In the judgment, I have set out the legal principles about the distinction between true interim bills and interim final bills:

“57. A retainer is normally an entire contract under which the solicitor is to do certain work for his client. In the absence of a contrary agreement, the solicitor cannot seek any remuneration until that work has been completed or the retainer has been terminated in some other way. However, as litigation usually extends over a considerable period of time, the parties can agree for the solicitor to issue interim bills to cover the solicitor’s fee before the conclusion of a case. The solicitor is also entitled to issue interim bills when a “natural break” occurs in the course of protracted proceedings (Chin Yuk Lun Francis & anr. v Messrs. Lo & Lo (a firm), ibid., per Deputy Judge To in para. 10).

58. According to Cordery on Solicitors 9th ed., there are 2 kinds of interim bills. The first kind is called “interim statute bills”, which are so called because they comply with all the requirements of the Solicitors Act 1974 in England and the LPO in Hong Kong and result in all the consequences which flow from such compliance – the solicitor can enforce payment by suing the client, the client can obtain an order for taxation and the various time limits relating to the client’s rights to tax run from the date of their delivery. Although they are interim bills, they are also final bills in respect of the work covered by them. There can be no subsequent adjustment in the light of the outcome of the business. They are in effect complete self-contained bills of costs to date (see: Cordery on Solicitors, para. 305).

59. The second kind is called “interim bills on account”. Such kind of bill is only a request for payment on account. If the client does not pay such bill within a stipulated or reasonable time, the solicitor can withdraw from the retainer. If the client regards the amount requested on account as excessive, he can invite the solicitor to render a statute bill which he may then have taxed. Bill on account is not the final quantification of all the work included in it, so that when preparing his later statute bill, the solicitor can assess a fair overall charge for all the work done since the commencement of the retainer in the light of the result achieved. It also does not limit any party and party costs recoverable in respect of this period to the amount of the bill on account (see: Cordery on Solicitors, paras. 308-320).

60. The court had to deal with such distinction of the bills in the case of Chin Yuk Lun Francis & anr. v Messrs. Lo & Lo (a firm), ibid., in which Deputy High Court Judge To said the following:

‘11. If there is authority in the retainer for rendering bills prior to the conclusion of the litigation, then it is a matter of construction of the retainer whether the bills, by whatever term they are called, though usually they are called ‘interim bills’, is a final bill or just a mere statement of how things were going on. For this purpose, I respectfully adopt the meaning of the word ‘final’ in the context of a solicitor’s bill of costs as defined by Cohen J in De Cotiis v Owen Bird [1998] 51 BCLR (3ed) 272. He held at 280:

‘Some support for the interpretation advanced by the defendants, namely that a ‘ final’ account need not be the ‘last’ account, or that...

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