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Lau Yue Kui And Others v Philip Chan & Co (A Firm)

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date29 December 2014
Year2014
Judgement NumberCACV75/2014
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV75/2014 LAU YUE KUI AND OTHERS v. PHILIP CHAN & CO (A FIRM)

CACV 75/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 75 OF 2014

(ON APPEAL FROM HCMP NO. 593 OF 2007)

________________________

BETWEEN
LAU YUE KUI (劉汝蘧),
the administrator of the estate of LAU WAI CHAU (劉維疇), deceased		 1st Plaintiff
MA WAH YAN and WONG CHI LEUNG, the co-administrators of the estate of LAU LEUNG CHAU (劉良騶), deceased 2nd Plaintiff
MA WAH YAN, the administrator of the estate of LAU LEUNG KWAI (劉良騤), deceased 3rd Plaintiff
LAU YUE CHIU
 4th Plaintiff
LAU YU SHING, the administrator of the estate of LAU LEUNG KUI (劉良駒), deceased 5th Plaintiff
LAU YUE SUM and LAU YUE TING, the co-executors of the Will of LAU LEUNG WA (劉良騧), deceased 6th Plaintiff
and
Philip Chan & Co. (a firm) Respondent

________________________

Before :Hon Cheung, Kwan and Chu JJA in Court
Date of Hearing : 10 December 2014
Date of Judgment : 10 December 2014
Date of Reasons for Judgment : 29 December 2014

________________________

REASONS FOR JUDGMENT

________________________

Hon Cheung JA :

1. Philip Chan & Co (a firm) (‘the solicitors’), the respondent, had carried out work for Lau Yue Kui, the 1st plaintiff, who is the administrator (‘the administrator’) of Lau Wai Chau, deceased (‘the deceased’). In 1994, the administrator, as the intended administrator of the estate, engaged the solicitors to obtain estate duty clearance and letters of administration of the estate. After the letters of administration were granted in mid-1995, the administrator entered into another fee agreement engaging the solicitors to carry out work concerning administration of the estate. In 2000, he entered into a third fee agreement with the administrator agreeing that the value of the estate should be $1 billion for the calculation of the 2% remuneration the solicitors would receive under the 1st and 2nd fee agreements respectively. The work is known in legal terms as ‘non-contentious business’. The solicitors seek to recover from the administrator fees in the sum of $40 million represented by two bills.

2. The estate of the deceased which comprises large holdings of land in the New Territories is to be divided amongst eight fongs. The 2nd to 6th plaintiffs represent the 3rd, 5th, 6th, 7th and 8th fongs. They have taken an antagonistic role towards the fees charged by the solicitors. As a result of the compromise of an action brought by the 4th and 6th plaintiffs against the solicitors and the administrator (CACV 141/2006 on appeal from HCAP 10/2001), the solicitors agreed to submit the two bills rendered to the administrator for taxation. This Court (CACV 120/2013 on appeal from HCMP 593/2007) affirmed the right of the 2nd to 6th plaintiffs to take part in the taxation proceedings.

3. Bill No. 2 (then described as the 1st interim bill for the sum of $22.7 million but with a cap at $20 million) was served on the 2nd to 6th plaintiffs and lodged in Court for taxation on 2 August 2005. The 2nd to 6th plaintiffs had not lodged any list of objection to this bill until recently.

4. Bill No. 1 (a gross sum bill of $20 million) was served on the 2nd to 6th plaintiffs on 6 March 2007. Again no objection was filed by them until recently.

5. After further proceedings the nature of which I do not need to go into, the two bills were lodged for taxation on 14 March 2013.

6. The solicitors then sought an interim payment of fees from the 2nd to 6th plaintiffs. Master J Wong dismissed the application. On appeal to Recorder Houghton SC, the solicitors obtained leave to amend his summons for interim payment so as to seek the payment from the administrator and not the 2nd to 6th plaintiffs. The Recorder proceeded to hear the appeal based on the amendment and ordered $15 million be paid by the administrator as interim payment.

7. The 2nd to 6th plaintiffs who are directly affected by the order appealed against the judgment of the Recorder. The administrator took a neutral stand in this appeal. We dismissed the appeal at the conclusion of the hearing.

The plaintiffs’ case

1) Objections

8. Mr Albert Yau and Mr Leo Wong, counsel for the 2nd to 6th plaintiffs, objected to the interim payment on the following grounds :

1) The $40 million fee charged by the solicitors is excessive.

2) The solicitors had already received $10 million from the 1st and 4th fongs on account of the costs.

9. Mr Albert Yau further submitted that at most the interim payment should be $2.9 million which is the amount assessed by the 2nd to 6th plaintiffs’ law costs draftsman.

2) New Evidence

10. In support of the payment of $10 million as agreed costs, Mr Yau seeks leave to adduce evidence which was not before the Recorder who accepted the solicitors’ contention that the $10 million payment was paid on ‘personal basis’. The solicitors objected to the new evidence on the ground that it does not conform with the Ladd v Marshall requirement.

11. In my view this is not strictly a Ladd v Marshall situation. The effect of the Recorder allowing the amendment and then proceeded to hear the appeal on the basis of the amendment means that he was dealing with, for the first time, a new case from the solicitors. The 2nd to 6th plaintiffs had in fact asked the Recorder not to deal with the new case and to allow them an opportunity to put in new evidence. The Recorder indicated that such chance would be given if he saw it necessary.

12. In respect of the $10 million, the Recorder referred to Chung J’s decision in HCAP 10/2001 that it was not part payment of fees and he further accepted the solicitors’ submission that the payment was not for the non-contentious work covered by these two bills. Mr Yau said the Recorder was wrong in not taking into account the fact of payment or in apprehending the nature of payment.

13. The new evidence includes an affirmation of the administrator in support of a 2001 application by the 1st and 4th fongs for payment out of compensation arising from resumption of the estate land that had been lodged in Court in 2001. The administrator affirmed that $5 million out of the 1st and 4th fongs’ share of the resumption compensation sought to be released out of Court would be applied to pay to the solicitors as agreed legal costs under the fee agreements. The work done under these fee agreements were itemised in the two bills of costs. I (then sitting as a judge of the Court of First Instance in HCMP Nos. 3924/1995 and 3209/1996) ordered that the compensation monies to the said two fongs were to be released by cheques payable to the solicitors.

14. The 2nd to 6th plaintiffs contended this evidence shows that the solicitors did receive part of his costs under the bills. Hence, in the circumstances, the solicitors are not entitled to interim payment.

3) Excessive charge

15. In respect of the plaintiffs’ case on excessive charge, Bill No. 1 is a gross sum bill of $20 million. In the breakdown of Bill No. 1, Mr Philip Chan of the solicitors claimed to have spent 448.9 hours and his clerk 23.3 hours for the work done. The hourly rate claimed was $5,500 for Mr Chan and $1,000 for his clerk respectively. At such rate, even if all the items are allowed on taxation, the work would only attract fees in the sum of about $2.49 million.

16. Bill No. 2 relates to the work done by the solicitors under the 2nd Fee Agreement. Under that agreement, the solicitors were instructed to do three things at the hourly rate of $5,500, subject to a cap of $20 million :

1) checking the devolution of title of each of the lots comprised in the estate (and there are a total of 217 lots of land);

2) to ascertain their particulars; and

3) instructing surveyors and other professionals to ascertain the sizes and area of land to be distributed under the Deed of Family Arrangement (‘DFA’).

17. Bill No. 2 consisted of 32 heads of work. Heads 1 to 31 concern the solicitors’ work in reading and working on 31 items of documents. They account for about 40% of the amount claimed (i.e. $8,978,955 out of $22,753,255). Head 32, which accounted for the remaining 60% of the total value of the bill, concerns work spent on checking the devolution of title of each and every piece of land covered by the DFA.

18. Mr Yau submitted that the bill is highly repetitive and in respect of the largest head of items, templated. It is artificially broken down into excessive and minute detail.

19. Mr Yau argued that for the purpose of administration of the estate, the personal representative of the estate would only need to vest the relevant property in the name of the beneficiary according to the testamentary instrument. He is not under any obligation, like a vendor in an ordinary conveyancing transaction, to make good title of the property to the beneficiary as if he were a purchaser. It is doubtful if checking the devolution of title is necessary for the administration of estate. In any event, most of the checking can be done through a conveyancing clerk.

20. Further, as an experienced probate lawyer, Mr Chan had to work with reasonable skill, care and efficiency. If the checking of one lot helped him to understand the situation which also applied to the other lots, he should have taken advantage of his learning curve and the foundation knowledge.

21. In this case, all the title deeds of these 217 lots were lost. So the only relevant documents of title, apart from the...

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