IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES NO. 5929 OF 1998
||Petitioner (Receiving Party)
||Respondent (Paying Party)
Coram: Queeny Au Yeung, Acting Registrar, District Court in chambers
Hearing Date: 9th December, 2000
Date of reasons for judgment: 22nd December, 2000
1. It is unusual to give written reasons in taxation. However, the case reveals some mal-practice of solicitors in inflating bills of costs which eventually are taxed down to below the sum of $100,000. It is necessary to state the court's position regarding award of costs in taxation hearings.
2. This matrimonial case involved issues over custody and ancillary relief. It was, in my view, a simple matter. The assigned solicitor ("S") represented the Petitioner throughout the proceedings. The Respondent was on legal aid on the questions of custody and ancillary relief. No counsel or expert was involved on either side. There was no trial. A social investigation report was called for and the matter was eventually settled by way of consent summons. The Respondent was ordered to pay only the costs of the suit. The Petitioner's costs of the whole proceedings (except one hearing before H.H. Judge Bruno Chan) were to be taxed in accordance with Legal Aid Regulations.
3. After the case was settled, S very properly prepared a bill on solicitor's letter head ("the Initial Bill") for the sum of $59,367.00 of which $21,234.00 was party-and-party cost. S sent it to the Director of Legal Aid ("DLA"), the Respondent's solicitors and subsequently, the Respondent directly. There was no offer for settlement. DLA instructed S to proceed to formal taxation. S then prepared the 4-column bill now before me ("the Formal Bill"). The total amount claimed on this bill was $101,980.00, 171% of the Initial Bill. Again, the Respondent made no offer on settlement. DLA told S that the question of common fund costs should be considered with party and party costs on taxation.
4. After taxation, I have allowed a total sum of $59,480.17. It was about $113.17 more than the Initial Bill. I have to decide:
(i) How much time to allow for drafting the Formal Bill.
(ii) Whether or not S should get the costs of the formal taxation.
(iii) Whether or not S should bear the costs of DLA for the formal taxation.
S was represented by a law costs draftsman ("the LCD") at the hearing. I stood the matter down for S and the officer of DLA in charge of this bill to appear personally before me to make submission on these issues.
The Cause Shown
5. At the outset, I have asked the law costs draftsman ("the LCD") to explain to me why S did not opt for fixed costs. He could not give any valid explanation. Be that as it may, it was S's right to opt for taxation instead.
6. I queried why the Initial Bill was $59,000 odd and yet the Formal Bill was for $100,000 odd. S explained that the Initial Bill was a rough estimate prepared with a view to settle with the Respondent at an early stage and was not as detailed as the Formal Bill. It was at a lower rate. It was not for taxation but just for the Respondent and DLA. When asked why couldn't he rely on the Initial Bill with a supplemental bill claiming additional items missed out from the Initial Bill and work done since then, S replied by saying it was DLA who asked him to go for taxation. He did extra work in expanding the Initial Bill from 6 pages to 29 pages for the Formal Bill. He had to add in items that have been missing from the Initial Bill. Prompted by his LCD, S relied on a circular of the Law Society which referred to the format of a 4-column bill normally used in taxation under the legal aid provisions where costs were to be recovered from another party. S also referred to a letter from the learned Registrar Betts dated 31st May 1991, stating that bills that did not comply with the 4-column format would be rejected. DLA, on the other hand, also supported the idea of having a 4-column bill, stating it has long been the "practice". I asked S 3 times as to whether or not he reasonably believed that he would receive something close to $100,000 upon taxation. It was after much hesitation that S said that he "hoped" to get as much as possible.
How Much Time to Allow for Drafting the Formal Bill
7. S charged 1-1/2 hours for drafting the Initial Bill. He also claimed a total of 4 hours for drafting the Formal Bill. The Initial Bill was in itself very detailed. I accept that he needed 1-1/2 hours for drafting. That bill was short and succinct. It presented the work done in chronological order. There was no need to cross-refer to other items. The reader did not have to worry about duplication in charging for the same piece of work. The bill set out clearly which items were party-and-party costs and which were common fund costs. Even DLA admitted that by a short glance one could identify which item was party-and-party cost and which was common fund cost. I share this view. I see no reason why S could not have relied on that bill and a supplemental bill for taxation. The reliance on the circular to state that if bills not in 4-column form will be rejected was taken out of context. Registrar Betts was not criticising draftsmen for failure to adopt a particular format. He was complaining about the contents of bills that gave a full list of the work done in chronological order without regard to the form and sections indicated by Scale 5 of the First Schedule to Order 62. There was no breakdown or sub-total of the time in preparing or considering any particular document.
8. If I am wrong and a 4-column bill is a necessity, I need to consider the additional costs for its preparation. The most difficult part of framing a bill was done when the Initial Bill was prepared. S only needed to mechanically transfer the contents to the 4-column bill. I accept that S, with an intention to settle and obtain early...