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Judgment affirms need for written agreements

By Teddy Lam

Hong Kong, 14 February 2022: Law firms and their clients have been given a timely reminder of the requirement to have fee agreements for non-contentious work in writing following a conclusive ruling by the Court of Appeal.

The judges dismissed a lawsuit brought by a firm of solicitors seeking to enforce an oral agreement with clients for payment of HK$600,000 plus interest for rectifying the defects in title raised in one of the requisitions in a conveyancing transaction which had fallen through. They ruled the firm’s application was “wholly without merit” and ordered it to pay the clients’ HK$126,000 legal costs.

The case – George Y.C. Mok & Co. (a firm) v New Land Properties et al [2021] HKCA 1919 – centred on the wording of section 56 of the Legal Practitioners Ordinance Cap. 159 (the “LPO”). This provides that a solicitor and his or her client may, in the course of the transaction of any non-contentious business by the former, make an agreement regarding remuneration of the solicitor and this shall be “in writing and signed by the person to be bound thereby or his agent in that behalf”.

The case was first heard in the District Court which ruled there was no agreement in writing within the meaning of section 56. The firm, acting as plaintiff, was refused leave to appeal by the same court and subsequently appealed to the Court of Appeal.

The plaintiff contended that section 56 was “not drafted in clear terms”. He argued that on the proper construction of section 56 and in the context of other relevant provisions of the LPO, the provisions in section 56 were “not exhaustive and the Courts in Hong Kong still have powers under common law to enforce an oral agreement”, notwithstanding that the express requirements in section 56(3) were not met.

The Court of Appeal, however, refused to grant the plaintiff leave to appeal. In their ruling, the judges considered at length the English jurisprudence from which section 56 originated. The Solicitors Act 1870 allowed for a solicitor to make an agreement in writing with his client regarding payment of fees for both contentious and non-contentious work. The subsequent Solicitors Remuneration Act 1881 made the requirement for written agreement for non-contentious work mandatory. This was reproduced in section 57 of the Solicitors Act 1957 and adopted in Hong Kong in the LPO.

The Court of Appeal concluded section 56(3) of the LPO “is a prescriptive provision” which positively requires the agreement for non-contentious work to be in writing. “So unless the prescriptive requirements are complied with, the agreement for remuneration in a non-contentious business is not enforceable. The position is clear and the plaintiff’s arguments to the contrary are quite simply untenable.”

In summary, it is important that solicitors ensure a retainer letter for non-contentious work is signed by the firm and client to avoid unnecessary disputes. This applies to such services as conveyancing, transfer of company shares, drafting commercial agreements, review of employment contracts, and probate, among various matters.

Teddy Lam has been a Partner in BC&C since 2003. He heads the firm’s burgeoning Insurance & Personal Injury practice while also handling criminal and civil litigation, employment disputes and commercial law. He can be contacted at teddy@boasecohencollins.com.

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