Keen Lloyd Holdings Ltd and Others v. Commissioner of Customs and Excise and Another

CACV 97 and 107/2015
(Heard together)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOs 97 & 107 OF 2015

(ON APPEAL FROM HCAL NO 113 OF 2012)

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BETWEEN

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(ON APPEAL FROM HCAL NO 82 OF 2013)

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AND BETWEEN

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.In our judgment handed down on 22 April 2016, we directed for submissions on costs to be filed. Counsel filed submissions accordingly and we have considered the same. We now give our decision on costs.

2.There are two sets of costs involved:

(a) Costs before us; and

(b) Costs in the court below.

3.Before us, C&E succeeded in persuading us to overturn the Judge on the remedial interpretation issue, the warrants application issue and the information provision issue.  They also succeeded in resisting the cross-appeal.  On the other hand, we are with the applicants on the constitutionality issue and the time limit issue.  In terms of the ultimate relief, though C&E succeeded in terms of the declaratory relief on remedial interpretation of section 21 of the IEO (in CACV 107 of 2015)  and setting aside declarations (1) and (4) granted by the judge (in CACV 97 of 2015), and the dismissal of the cross-appeal in CACV 97 of 2015, the applicants are still entitled to declaration (2) (as amended by us) and (3) and they continue to form the basis for the claim of damages which, as far as we are aware, is proceeding at the court below.

4.Mr Wong SC on behalf of C&E asked us to adopt an issue-based approach and give them 85% of the costs (on account of issues they succeeded) and the applicants be given 15 % of the costs (on account of the time limit issue).

5.Ms Wong on behalf of the applicants asked us to give them 70% of the costs of the appeal, making a global discount of 30% on the remedial interpretation issue and the information provision issue, which she submitted should be paid by the applicants to C&E.  She conceded that C&E should have the costs of the cross-appeal.

6.In our judgment, there is no reason why C&E should not have the costs of the cross-appeal which is wholly unmeritorious. We order accordingly.  Notwithstanding the submissions of Ms Wong, in light of the wide ranging submissions advanced in the written materials (though not at the oral hearing, which the taxing master should take account of), it is appropriate to grant certificate for three counsel. 

7.As to the costs of the appeals of C&E, as both appeals were heard together and the directions to such effect were given at an early stage of the appeals, it is just and appropriate to have one single global order for costs in terms of the costs of the appeals.  Instead of giving separate orders for different issues, the practice more commonly adopted in this jurisdiction is to make a global order in terms of the overall percentage of costs to be awarded to one side instead of giving different parties different percentage of costs, see Hung Sau Fung v Lai Ping Wai CACV 240 of 2011, costs judgment of 1 March 2016 at [18].

8.We have considered the submissions of counsel and the authorities cited.  The relevant principles after CJR had been set out in Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2)[2012] 2 HKLRD 1128; Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679; Pfeiffer GmbH v Cheung Hay Kit CACV 245 of 2013, 29 Oct 2014, and applied recently in Chan Shun Kei v Hong Kong Construction (Hong Kong ) Ltd CACV 192 of 2014, 7 March 2016. 

9.At the same time, it is important to bear in mind that the present appeals are appeals from applications for judicial review and the issues raised are of general public interest.  We reject the submissions of Ms Wong that the applicants should be regarded as the ultimate winner in the appeals.  The purposes of the appeals cannot be confined to the merits of the applicants in seeking damages at the court below.  As submitted by Mr Wong, the remedial interpretation issue, the warrants application issue and the information provision issue have important implications for law enforcement agencies and to a large extent C&E had been vindicated in respect of the same in the outcome of these appeals.  We regard C&E as the substantial winners in the appeals though there should be a discount to reflect the unsuccessful challenge on the constitutionality issue and the time limit issue.  In our assessment, having regard to the time spent in oral arguments as well as the pre-hearing preparation and the written materials, we think a fair order is to give C&E 60% of the costs of the appeals on top of the costs of the cross-appeal, again with certificate for three counsel.  

10.In respect of the costs below, the judge ordered C&E to pay the costs of the applicants. 

11.Mr Wong submitted that in view of the time spent on factual disputes at the court below (all of which pertained to issues that the applicants failed on), and the lack of proper and reasonable basis for mounting the challenge on the warrants application issue (for which the applicants should pay the costs of C&E), the applicants should pay C&E 90% of the costs below and the applicants should be entitled to 10% of the costs below. 

12.Ms Wong submitted that C&E should pay 70% of the costs below to the applicants and the applicants should pay 30% of the costs below to C&E in light of the relative success on the issues according to the judgment of this Court.

13.In the court below, the applicants can be regarded as the winner as they have achieved the quashing of 13 search warrants with claim for damages and an order for the return of documents and directing C&E to use its best endeavours to retrieve documents from those to whom C&E had disseminated the same.

14.However, as submitted by Mr Wong the applicants had conducted the case improperly in terms of raising factual disputes on the warrants application issue and the information provision issue.  And these have occasioned substantial increase in costs in the proceedings below.  We are satisfied that this is a proper case to apply Order 62 Rule 7(1) and Re Elgindata (No 2) [1992] 1 WLR 1207 to deprive the applicants of costs.  We have seriously considered ordering the applicants to pay some of the costs on that account.  In the end, we decided we should not do so as we can see that to a limited extent the blame for escalation of costs at the court below should not be laid solely at the door of the applicants.  Adopting a broad brush approach, we set aside the order of costs of the judge and replace with it an order that each party shall pay its own costs in respect of the costs below, with certificate for 2 counsel.

15.In terms of the costs of these submissions on costs, neither side can be said to be completely successful.  We would order that costs of such submissions be treated as part of the costs of the appeals and shall be in accordance with our above determination on costs of the appeals generally.

Ms Maggie PK Wong and Ms Tanie WY Toh, instructed by Ho Tse Wai & Partners, for the 1^st to 10^th applicants in both cases

Mr Wong Yan Lung SC, Mr Edwin WB Choy and Mr Mike SK Lui, instructed by the Department of Justice, for the 1^st and 2^nd respondents in both cases