KONEW FINANCE LTD v. LEUNG KWOK KIN JOSEPH T/A JOSEPH LEUNG & ASSOCIATES

HCMP 1019/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1019 OF 2009

———————-

IN THE MATTER OF Section 67(2) of the Legal Practitioners Ordinance
and
IN THE MATTER OF Joseph Leung & Associates, Solicitors
and
IN THE MATTER OF DCCJ 6152 of 2004, DCMP 1490 of 2005 and DCCJ 2218 of 2009

———————-

BETWEEN
KONEW FINANCE LIMITED Plaintiff
and
LEUNG KWOK KIN JOSEPH
trading as JOSEPH LEUNG & ASSOCIATES
Defendant

———————-

Coram: Before Madam Registrar Au-Yeung in Chambers

Date of Hearing: 29 September 2009

Date of Decision: 5 November 2009

———————-

D E C I S I O N

———————-

1. This is an application for taxing a solicitor-client bill. The Plaintiff has agreed to pay a sum of $62,666 in full and final settlementof the Defendant’s costs in 3 sets of underlying actions in the District Court. The only issue is one of costs of the presentproceedings. The Plaintiff seeks costs of $30,000. The Defendant contends that there should be no order as to costs.

Background

2. The Plaintiff (“Konew”) was a money lender and mortgagee who wanted to take action against a borrower (“the Borrower”). The Defendant (“the Solicitors”) was instructed in the matter. Three sets of underlying proceedings followed:

(i) A writ action in the District Court taken out by the Solicitors on behalf of Konew to seek money judgment under Order 83A againstthe Borrower based on a loan agreement. Subsequently, a charging order nisi was also obtained but the charging order absolute wasnot registered.

(ii) An originating summons taken out by the Solicitors on behalf of Konew to recover possession under Order 88 against the Borrowerbased on a mortgage executed by him.

(iii) A writ action taken out by the Solicitors in the District Court against Konew for payment of a bill for over $125,000 (“theBill”) in respect of those 2 sets of proceedings which the Plaintiff did not pay.

Konew then took out the present originating summons to tax the Bill.

The Plaintiff’s Case

3. Konew alleged that the Solicitors should have combined the first 2 actions. As mortgagee, Konew simply did not have to apply fora charging order. Costs of one set of proceedings was wasted. In addition, The Solicitors committed a number of errors in the 2sets of actions. For example, since Konew was a money-lender, an action should have proceeded by way of writ but the Solicitorstook out an originating summons. Further, the originating summons made wrong references to the previous writ action, leading toamendments. The Solicitors billed Konew for these errors. Although the costs for the first 2 underlying actions have been settled,Konew submits that the Solicitors should bear the costs of Konew’s investigation and contest in the present case.

The Defendant’s Case

4. On the other hand, the Solicitors claimed that they knew that the Court would not allow having a mortgage action alone where thePlaintiff was a money lender but would require the action to be taken out under both Order 83A and Order 88. Notwithstanding theyhad advised on the procedure and risks to Konew’s officers the express instructions and pattern of litigation had been to have2 separate actions for Order 83A and Order 88 for against the Borrower and other borrowers. Konew did not want litigation but justwanted the borrowers to continue their repayment. Therefore an action could be repeatedly commenced and withheld. This had beenthe pattern for the past 10 years but there was no written record of the advice given to Konew. It was only until 2007 when Konewset up its own legal department that it combined proceedings for Order 83A and Order 88 into one.

5. To the allegations of the Solicitors, Konew says that its officers were laymen and relied on the Solicitors for the correct procedureto use. The wasteful litigation procedure was only discovered recently.

Analyses

6. I have considered all the affirmations and the submission of the parties. The Solicitors’ version, if true, will involve findingsof oppressive conduct against the Borrower and abuse of process by Konew and/or the Solicitors. The contest between the partiesis one that cannot be resolved on affirmation alone but that the deponents ought to attend to be cross-examined. This is thus nota clear case where the Court can say that a particular party has a strong prima facie case. I consider that it is appropriate notto make any order as to costs.

7. As a side note, if I am wrong in my decision, I consider that $30,000 sought by Konew as costs for these proceedings to be a reasonableamount. Mr. Cheng for Konew sought an hourly rate of $5,000 and a total of 15 hours spent on preparing 2 affirmations and consideringthe Solicitors’ 2 affirmations. The hourly rate is of course too high on a party and party basis but the spending of 15 hourscan in no way be regarded as unreasonable.

Conclusion

8. I order as follows:

(i) By consent, the Plaintiff do pay $62,666 to the Defendant in full and final settlement of costs in relation to the 3 sets ofunderlying proceedings.

(ii) There be no order as to costs (including the costs for attendance on 29 September 2009) for these proceedings.

(Queeny Au-Yeung)
Registrar

Mr. S. Cheng of Messrs. Siao Wen & Leung for Plaintiff.

Mr. J. Leung of Messrs. Joseph Leung & Associates for Defendant.