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BVI Court of Appeal clarifies key principles for recoverability of costs

On 1 June 2021, the Eastern Caribbean Court of Appeal handed down its decision in the matter of Yao Juan v. Kwok Kin Kwok and Crown Treasure Group Limited which was an appeal of the 23 April 2020 decision of the Hon Justice Jack, who ruled that fees incurred by non-BVI admitted lawyers (employed to a BVI firm and working under the supervision of BVI legal practitioners) were recoverable. See previous discussion of the Hon Justice Jack’s decision here.

One of the issues to be determined on appeal was whether costs of three fee earners employed by the legal practitioners for the Respondent to the Appeal in their Hong Kong office who were not BVI admitted were irrecoverable pursuant to section 18(3) of the (BVI) Legal Profession Act, 2015 (the “LPA”). Section 18(3) provides that no fee in respect of anything done by a person whose name is not registered on the BVI roll, acting as a legal practitioner, is recoverable. At first instance, the Court ruled that these fees were recoverable on the basis that the fee earners in question were not “acting as [BVI] legal practitioners” in their own right within the meaning of section 18(3) but were rather working under the supervision of BVI legal practitioners who had ultimate responsibility for the work product. The Court of Appeal rejected this analysis and ruled that it mattered not whether a fee earner was working under the supervision of a BVI legal practitioner, given that the essential question under section 18(3) is whether the fee earner was “acting as a legal practitioner” within the meaning given to that expression while not enrolled as a BVI legal practitioner.

The Court of Appeal affirmed the principles set down in what is now a series of judgments interpreting various aspects of the LPA, namely Garkusha (BVIHCMAP2015/0010, decided 13 January 2016), Shrimpton (BVIHCMAP2016/0031, decided 3 February 2017) and Gany Holdings (2020) 96 WIR 378. However, the Court acknowledged that none of those decisions concerned the recoverability of fees claimed in respect of lawyers employed by a BVI firm, whose work the BVI firm sought to recover as fees of the firm itself. Ultimately, the Court ruled that allowing the recovery of such costs would undermine the policy objectives underpinning section 18(3) of the LPA, such as the development of the legal profession locally and ensuring that those practising BVI law are properly regulated by the LPA and accountable to the BVI Court. In affirming the position set out in Gany Holdings, the Court ruled that the proper approach is to consider the nature of the work carried out by the relevant individuals (regardless of whether they are acting under the supervision of a BVI legal practitioner, which the Court held raised no real point of distinction).

 

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Richard G. Evans
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