Solicitor and Own Client Costs

Hard facts can make for tough decisions. So might be said of the judge’s review of a master’s decision on a solicitor and own client taxation in Lam & Lai (Solicitors) v Ho Chun Yau Albert, HCMP 555/2015, 5 July 2017.

Following a complex piece of litigation (including appeal proceedings) the solicitors commenced taxation proceedings for their costs, pursuant to s. 67 of the Legal Practitioners Ordinance (Cap. 159). Dissatisfied with the costs outcome before the master, the client (the respondent) applied to review the master’s decision. The review related to some 64 items on the solicitors’ bill of costs and the main ground of objection was stated to be “duplication” of work; in particular, an objection that two partners handled the same items of work without the client’s prior agreement.

The master had dismissed the client’s application for review, finding that the duplication of work in the circumstances was not unreasonable. Significant to the master’s reasons was that four counsel had been instructed on the client’s behalf and, therefore, it was not unreasonable for two solicitors to do the same or substantially the same work (such as, for example, reviewing legal submissions).

Dissatisfied with the outcome, the client applied for a review of the taxing master’s certificate by a judge; the nature of the review being to determine whether the master’s reasons were wrong in principle rather than being a new hearing.

On the review before the judge, the sole objection to all 64 items was that both solicitors had done precisely the same work. The challenge was based solely on the “duplication” of work; not on the amount charged or time spent (after taxation).

As far as the judge was concerned, the starting point was that costs are presumed to be unreasonably incurred where the client has not been expressly informed that the costs might not be recoverable on an inter partes basis.

From that point, things appear to have become difficult for the solicitors. The judge noted that for each item in dispute both solicitors were engaged and they appeared to have spent the same amount of time. Therefore, the judge considered that the duplication of costs was unreasonable in the absence of any special or unusual reason why two solicitors were engaged with respect to the same work. As a result, the client’s review of the master’s decision was allowed and the amount of the disputed bill taxed down to allow the time claimed for one solicitor only.

Some lawyers may prefer the master’s reasoning and regard the judge’s decision as being on the harsh side, given the complexity of the underlying litigation and the number of counsel involved. However, as in most matters of costs, for every loser there is likely to be a winner.

A take-away point is that clients should not refuse to pay costs incurred as a result of what they have authorised their solicitors to do (including involving a second solicitor for a similar task). For their part, solicitors may have difficulty in rebutting the presumption (on a solicitor and own client costs challenge) that “unusual” items of costs are unreasonable unless they have warned their clients in advance that such costs may not be recoverable on an inter partes basis.

Jurisdictions: 

Partner, RPC

Senior Consultant, RPC