Kwong Yuk Ngor v. Vocational Training Council

DCEC 189/2002

[2018]HKDC 1376

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

EMPLOYEES’ COMPENSATION CASE NO 189 OF 2002

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DECISION

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1.This is an application of Messrs Massie & Clement (“M&C”) to vary or revoke the Order made by Master S H Lee dated 27June 2017, under which the present common fund taxation proceedings are stayed pursuant to O 62, r 9D of the Rules of the District Court, Cap 336H (“RDC”), with liberty to the apply for variation or revocation of such order (the “Stay Order”).

Procedural background

2.Madam Kwong Yuk Ngor (“Madam Kwong”) is the applicant in the captioned Employees Compensation case (“EC Case”).  She was legally aided between 30 January 2002 and 25 February 2008.  Her legal aid certificate was discharged on 26 February 2008. Since then, she has acted in person.  The EC Case has since become stagnant, with neither Madam Kwong nor the respondent, Vocational Training Council (“VTC”), having done anything to bring the EC Case to a conclusion.

3.During the time when Madam Kwong was legally aided, various firms of solicitors were assigned by the Director of Legal Aid (the “Director”) to represent her in the EC Case.  These firms include Messrs Yip, Tse & Tang (“YTT”), Messrs Leung, Tam & Wong (“LTW”) and M&C.  M&C is the firm which last represented Madam Kwong in the EC Case before the legal aid certificate was discharged.

4.On 10 March 2017, M&C filed a Notice of Commencement of Taxation (the “Notice”) and a Bill of Costs (the “Bill”), seeking taxation of Madam Kwong’s own costs pursuant to Regulation 9(3)(a) of the Legal Aid Regulations, Cap 91A (“LAR”).  The Bill is issued not only for the costs of M&C, but also for the costs due to YTT and LTW (the “Taxation Proceedings”).  The Notice and Bill were served on Madam Kwong and the Director as the paying parties.

5.So far, no List of Objections to the Bill has been filed by Madam Kwong. The Director filed his List of Objections on 26 April 2017 (“Director’s LOO”). The sole contention raised by the Director is that the EC Case has not been concluded.  Thus, in accordance with O 62, r 9D of the RDC, M&C should not have commenced the Taxation Proceedings.

6.On 4 May 2017, M&C filed an Application to Set a Bill Down for Taxation (“ATSD”).  A call-over by way of paper disposal was fixed for 17 August 2017.

7.However, prior to the paper call-over, the Stay Order was made by Master S H Lee, on the ground that the EC Case has not been concluded.

8.By an Inter Parte Summons dated 7 July 2017, M&C seeks variation or revocation of the Stay Order (the “Application”).

9.The Application first came before me for call-over hearing on 17 August 2017 (“1^st Hearing”).  The 1^st Hearing was attended by Mr R Clement of M&C (“Mr Clement”), and Ms W L Lui (“Ms Lui”) of the Legal Aid Department.  As to Madam Kwong, just before the start of 1^st Hearing, she sent, by way of a facsimile message, her request for being excused from the hearing, citing her medical condition.  She had not, however, expressed in her message as to whether she would contest the Application.

10.Prior to the 1^st Hearing, I note from Ms Lui’s written submissions that, contrary to the Director’s LOO, the Director has abandoned his original stance, and argued in support of the Application (“Director’s 1^st Submissions”).  Be that as it may, I did have concern of whether the Stay Order should be lifted.  With the EC Case still being alive, there may be a chance that at its conclusion, VTC would be held liable for the costs or part of the costs that are now being claimed under the Bill.

11.In order to ascertain Madam Kwong’s stance as to the Application, and to receive further submissions from Mr Clement and the Director, I adjourned the call-over hearing to 26 October 2017 (the “2^nd Hearing”).  Notice of the 2^nd Hearing was sent by this Court to Madam Kwong.

12.The 2^nd Hearing was attended by Mr Clement and Mrs Christina Hadiwibawa, assistant principal legal aid counsel (“Mrs Hadiwibawa”).  Madam Kwong was again absent from the hearing.

13.During the 2^nd Hearing, there were discussions on the written submissions filed on 21 September 2017 (“Director’s 2^nd Submissions”).  In particular, I had raised the issue of the legislative intent of Regulation 9(3)(a) of LAR, a crucial point which I will return to later on in this Decision.  Mr Clement and Mrs Hadiwibawa were invited to file further written submissions on this issue.

14.In the middle of the 2^nd Hearing, a facsimile message dated 26 October 2017 from Madam Kwong was brought into the court.  In the said message, she cited her medical condition as a reason for her absence, and requested for an adjournment of the hearing, and a chance to file her submissions regarding the Application.

15.By reasons of the above, I adjourned the Application for argument, with an order that unless Madam Kwong files her written submissions within 14 days before the adjourned hearing, she would be debarred from filing the same and/or making any oral submissions on the Application.

16.The substantive hearing for the Application took place on 23 February 2018 (“3^rd Hearing”).[1]  Madam Kwong was again absent, and no written submissions was filed by her.  It was only after the conclusion of the 3^rd Hearing that a facsimile message from Madam Kwong was received.  In this facsimile message, Madam Kwong explained that she could not attend the 3^rd Hearing due to her health condition.  She also included in this facsimile message her written submissions, the contents of which I note are irrelevant to the Application.  I will, nevertheless, briefly set them out later on in this Decision for completeness sake.

17.I will now turn to the Director’s Submissions.

Director’s 1^st Submissions

18.As stated in the above, the Director originally objected to the Taxation Proceedings, on the basis that the EC Case has not been concluded.  This led to the Stay Order being made.

19.By the Director’s 1^st Submissions, the Director has changed his stance and now argues in support of the Application.  Consequential directions are also sought for the withdrawal of the Director’s LOO and leave to file a new List of Objections to the Bill.

20.Ms Lui, in the Director’s 1^st Submissions, first set out the background facts leading up to the Application.

The History of Legal Assistance

21.Legal aid certificates were granted to Madam Kwong on 30 January 2002 for her common law claim in HCPI 573/2003 (the “PI Case”) and the EC Case.  YTT was assigned to represent Madam Kwong in both actions.  The cases were then reassigned to LTW on 10 January 2006.  On 21 April 2006, the PI Case was settled upon Madam Kwong’s acceptance of a sanctioned payment.  On 21 June 2006, the EC Case was reassigned to M&C, until the legal aid certificate was discharged on 25 February 2008.  Madam Kwong’s appeal against the discharge of the legal aid certificate was dismissed by the Registrar of the High Court on 3 July 2008.

22.From April 2009 to April 2011, YTT, LTW and M&C had separately indicated their agreements to the Director’s assessment of their costs.  As the costs of the EC Case formed a first charge on the damages awarded in the PI Case, the Director had, between 2011 and 2012, tried to seek consent from Madam Kwong on the assessment of costs.  However, Madam Kwong did not agree on the costs assessed by the Director despite repeated requests.  In March 2016, Madam Kwong made counter-offers on the costs payable to YTT, LTW and M&C, which were considered to be too low and rejected by the said firms.  This gave rise to the Taxation Proceedings.

23.Ms Lui emphasized that the EC Case has remained stagnant for over 9 years since Madam Kwong’s legal aid certificate was discharged.

Interpretation of Regulation 9(3) of the LAR

24.In support of the Application, Ms Lui agreed with Mr Clement that O 62, r 9D of the RDC should not be followed.  Ms Lui argued that the applicable provision should be Regulation 9(3) of the LAR, under which the Bill was brought.  For easy and better understanding of the arguments that followed, Regulation 9 is reproduced below:-

“(1) Subject to the provisions of this regulation, a person whose certificate is revoked shall be deemed never to have been an aided person in theproceedings to which the certificate related, and a person whose certificate is discharged shall, from the date of discharge, cease to be an aided person in these proceedings.

(2) Upon receipt by him of notice of revocation or discharge of a certificate by the Director or upon revocation or discharge of a certificate by the court, the retainer of any solicitor and counsel acting for the aided person in proceedings to which the certificate relates shall forthwith determine.

(3) Upon determination of proceedings under this regulation—

(a) the costs of the proceedings to which the certificate related, incurred by or on behalf of the person to whom it was issued, shall, as soon as practicable thereafter, be taxed or, as the case may be, assessed in accordance with the provisions of these regulations;

(b) the Director shall remain liable for the payment of any costs so taxed or assessed.

(4) (Repealed 60 of 1981 s. 4)

(5) Where a certificate has been revoked or, where aid was granted under the Supplementary Legal Aid Scheme, discharged, the Director shall have the right to recover from the person to whom the certificate was issued the costs paid or payable under paragraph (3)(b). (L.N. 194 of 1992)

(5A) The amounts recoverable by the Director under paragraph (5) shall be reduced—

(a) by any amount received by him by way of contribution if aid was not granted under the Supplementary Legal Aid Scheme; or

(b) where aid was granted under the Supplementary Legal Aid Scheme, by the amount of any interim contribution paid under section 32 of the Ordinance and the application fee paid under regulation 3(3). (L.N. 326 of 1984; L.N. 147 of 2000)

(6) Where a certificate has been discharged and the person to whom the certificate was issued continues to take, defend or be a party to the proceedings to which the certificate related— (L.N. 326 of 1984)

(a) the provisions of the Ordinance which relate to sums recovered by virtue of an agreement relating to costs made in favour of an aided person shall apply in so far as the costs were incurred while he was an aided person; and

(b) the provisions of the Ordinance which relate to an aided person’s liability by virtue of an order for costs made against him shall apply in so far as the costs were incurred while he was an aided person.

(6A) The Director has the right to enforce an order for costs in favour of an aided person made in proceedings for which the Director has issued a certificate, whether the certificate has been discharged or revoked, and the Director may bring proceedings in his official name in a court of competent jurisdiction to recover the costs ordered. (L.N. 5 of 1995)

(7) Where a notification of the discharge or revocation in the form determined by the Director is filed in the registry of the court, all proceedings in the litigation shall, unless the court otherwise orders, be stayed for a period of 14 days and during such period time fixed by or under any law or otherwise for the doing of any act or the taking of any step in the proceedings shall not run. (L.N. 89 of 1982; L.N. 326 of 1984; L.N. 194 of 1992; 79 of 1995 s. 50)

(8) The time during which proceedings are stayed by virtue of paragraph (7) may be reduced or extended by order of a judge of the court in which the litigation is pending.

(9) Where a certificate, other than a certificate granted under the Supplementary Legal Aid Scheme, has been discharged the person to whom the certificate was issued shall remain liable for the payment of his maximum contribution, if any, as determined by the Director up to the amount paid or payable by the Director under paragraph (3)(b). (L.N. 326 of 1984)

(10) Where a certificate granted under the Supplementary Legal Aid Scheme is revoked or discharged and the person to whom the certificate was issued continues to take, defend or be a party to the proceedings to which the certificate related and is successful in those proceedings in circumstances where, had the certificate not been revoked or discharged, a contribution would have been payable under section 32 of the Ordinance, he shall be liable to pay, in addition to any amount payable under paragraph (5), a contribution equivalent in amount to the contribution which would have been payable under section 32 of the Ordinance had the proceedings been settled at the time of the revocation or discharge and the value of the property subsequently recovered or preserved for the person to whom the certificate was issued in the proceedings, or by virtue of any compromise arrived at in order to bring the proceedings to an end, had been the value of property recovered or preserved for that person in the settlement: Provided that—

(a) nothing in this paragraph shall apply if the certificate was discharged under regulation 8(3); (L.N. 147 of 2000)

(b) if the certificate was discharged under regulation 8(2)(d) because the aided person rejected an offer in settlement and value of the property as subsequently recovered or preserved for him in such proceedings or by virtue of any compromise arrived at in order to bring the proceedings to an end is of an amount greater than the value of the offer, this paragraph shall apply as though the value of such property were the value of the offer. (L.N. 326 of 1984)” (emphasis added)

25.Under Regulation 9(2) of the LAR, once the legal aid certificate is discharged or revoked, the retainer of the solicitor or counsel assigned to act for the former legally aided person would be determined forthwith.  Regulation 9(3) then provides that upon determination of the proceedings, the assigned solicitors who have acted for the former legally aided person may proceed to have their bills of costs taxed as soon as practicable.

26.Ms Lui argued that Regulations 9(2) and (3) should be read in conjunction, and that the words “upon determination of proceedings under this regulation” used in the latter are referring to the discharge or revocation of a legal aid certificate.  She added that it should not be construed as the determination of the main proceedings, ie in the present case, determination of the EC Case.  Should it be the case, the words “under this regulation” which followed the word “proceedings” would be redundant.

27.Ms Lui also tried to differentiate the 2 phrases used in Regulation 9, namely “proceedings under this regulation” and “proceedings to which the certificate related”, with the latter referring to the main proceedings.  It is argued that if the 2 phrases bear the same meaning, then only one of them should have been adopted throughout. Instead, the former phrase only appears in Regulation 9(3).  Thus, the phrase “Upon the determination of proceedings under this regulation” had to be referring to the decision of discharge or revocation of the legal aid certificate by the Director.

28.In support of such interpretation, Ms Lui referred to Bennion on Statutory Interpretation, 6^th edition.  At page 438, the learned author wrote:-

“… a term or phrase may have different legal meanings in different Acts, or even within the same Act. If the grammatical meaning of the term of phrase is clear, the applicable interpretative criteria may require the literal meaning to be given to it in one place but a strained meaning in another. If the term of phrase is grammatically ambiguous, it may have one of its literal meanings in one place and other literal meaning in the other. Further combinations are obviously possible. This flexibility in the legal meaning of a verbal formula arises from the fact that automatic literalism is rejected in statutory interpretation. Legislative intention is always the ultimate guide to legal meaning, and this varies from Act to Act and may even vary with an Act.” (emphasis added)

29.Ms Lui further referred to the Court of Final Appeal case of HKSAR v Wong Lin Hung & Ors[2] wherein Tang PJ confirmed that “common sense has a place in interpretation”.

30.Based on above principles, Ms Lui submitted that it could not have been the legislative intention of the LAR that the taxation of assigned solicitors’ costs have to be deferred indefinitely until after the conclusion of proceedings for which the legal aid certificate was issued.

31.In support of such submission, Ms Lui first pointed out that, from time to time, after legal aid certificate has been discharged or revoked, the formerly aided person may not pursue the main proceedings.  His or her main proceedings may be left abeyance for many years.  For these cases, the assigned solicitors are entitled to have their bill of costs taxed on common fund basis and be paid.

Limitation period

32.Ms Lui added that where a legal aid certificate has been revoked under Regulation 8 of the LAR, the Director is entitled to recover from the formerly aided person the costs paid or payable pursuant to Regulation 9(5).  And there is a time limitation of 6 years for the Director to do so which runs from the date of revocation.  If Regulation 9(3) of the LAR is construed as assigned solicitors’ bill can only be taxed after finalization or conclusion of the proceedings for which the legal aid certificate was issued, then, in many revocation cases, the Director will be time-barred from recovering costs from the formerly aided person.  Ms Lui submitted that such interpretation of Regulation 9(3) would bring about an irrational result.

33.On this point, Ms Lui referred to the English Court of Appeal case of Legal Services Commission v Rasool.[3]  In that case, the defendant was granted legal aid certificate by the predecessor of the claimant, namely the Legal Aid Board. In May 1999, the claimant decided to revoke the legal aid certificate of the defendant, under regulation 79 of the Civil Legal Aid (General) Regulations 1989.  By regulations 74, 83 and 84, the effect of the revocation was that the defendant was deemed to have never been an aided person, the retainer of the assigned solicitors of the defendant was determined, and the costs which had been incurred under the legal aid certificate were submitted for taxation.  The costs were taxed in December 2001.  The claimant remained liable to pay the taxed costs to the solicitors, but had the right to recover the same from the defendant pursuant to regulation 86.  The claimant commenced action for recovery of the taxed costs against the defendant in March 2006, more than 6 years after the legal aid certificate was revoked in May 1999.  The judge in first instance, Deputy Judge Taylor, dismissed the claim.  It was held that under section 9 of the Limitation Act 1980, a 6-year limitation period would apply to an action to recover a sum recoverable by virtue of an enactment.  As the limitation period started to run from the date of revocation of the legal aid certificate, rather than the date when the costs were taxed, the claimant was time-barred from bringing this claim to recover the same from the defendant.  In coming to this conclusion, Deputy Judge Taylor referred to regulation 86(1) of the Civil Legal Aid (General) Regulations 1989 and held that the right to recover arose, and thus the cause of action began, at the time of revocation of the legal aid certificate.  Furthermore, the learned deputy judge was of the view that the requirement for a taxation or assessment certificate is a procedural requirement and no more.

34.Dissatisfied with the above ruling, the claimant appealed.  The appeal was dismissed by the English Court of Appeal. Giving judgment of the court, Ward LJ first affirmed the application of section 9 of the Limitation Act 1980 to the action.  He then turned to the regulations in Civil Legal Aid (General) Regulations 1989.  The following regulations of the Civil Legal Aid (General) Regulations 1989 cited in the judgment are most relevant to the Application:-

“9. The effect of revocation or discharge is prescribed by regulation 83 to be that the retainer of solicitor and counsel is determined forthwith upon receipt of the notice of revocation or the notice of the dismissal of any appeal against such revocation or discharge: but if the proceedings have commenced, the retainer of the solicitor shall not determine until he has sent to the appropriate court office or registry, and has served, any notice required by regulation 82.

10. Regulation 84 then provides as follows:

“Costs to be taxed or assessed on revocation or discharge

“Upon the determination of a retainer under regulation 83 –

(a)   the costs of the proceedings to which the certificate related, incurred by or on behalf of the person to whom it was issued, shall, as soon as is practicable after the determination of the retainer, be submitted for taxation or assessment; and (b) the fund shall remain liable for the payment of any costs so taxed or assessed.”

11. Regulation 86 is the important one for our purposes. It provides as follows:

“Right to recover costs and contribution

“(1) Where a certificate has been revoked – (a) the Board shall have the right to recover from the person to whom the certificate was issued the costs paid or payable under regulation 84(b) less any amount received from him by way of contribution; and (b) the solicitor who has acted under the certificate shall have the right to recover from that person the difference between the amount paid or payable out of the fund and the full amount of his solicitor and client own costs.”

“(2) Where a certificate has been discharged, the person to whom the certificate was issued shall remain liable for the payment of his contribution (if any) as determined or re-determined, up to the amount paid or payable by the Board under regulation 84(b)…”

……

14 Mr Jay draws attention to regulation 100(8), in the regulation dealing with payments on account:

“Where, after taxation or assessment, payments made under this regulation are found to exceed the final costs of the case, the solicitor or counsel (if any) shall, on demand, repay the balance due to the fund and, where the total costs exceed any payments made under this regulation, the balance shall be paid from the fund.”” (emphasis added)

35.After referring to the provisions above and the authorities on when a cause of action would begin, Ward LJ affirmed Deputy Judge Taylor’s finding that the right for the claimant to recover costs from the defendant arose when the legal aid certificate was revoked.  He gave his analysis at pages 2720 to 2722:-

“23 …… If, however, the legal aid certificate is revoked then, per regulation 74(2), the assisted [person is deemed never to have been an assisted person in relation to those proceedings. None the less the claimant is not released from its duty to indemnify his solicitor in respect of the solicitor’s costs. The solicitor’s retainer is determined (regulation 83) and upon determination of the retainer, regulation 84 requires that the costs of the proceedings “shall” be submitted for taxation or assessment and, per regulation 84(b), “the fund shall remain liable for the payment of any costs so taxed or assessed”. Construing the scheme as a whole, this means that the fund remains liable notwithstanding the revocation and notwithstanding the fact that, as a result, the assisted party is deemed never to have had that assistance. Use of the word “remains” confirms that whilst the certificate was operative the fund was liable in the usual way and that once the certificate was revoked the fund continues to be liable to pay the solicitor. It seems to me to follow as part of a coherent scheme that the fund is liable to the solicitor for any costs that are payable (regulation 84(b)) and since it remains liable to pay the solicitor, it also has the right to recover from the person on whose behalf it has assumed liability by way, as it were, of indemnity. That right to recover is what is conferred by regulation 86.

24. Regulation 86(i) is, of course, crucial. This is the regulation which needs to be construed. Is the need to ascertain the precise sum which is payable a condition precedent to recovery, or is it merely a procedural step as opposed to an inherent element of the cause of action? To remind myself, regulation 86(1) provides that “the Board shall have the right to recover” from the formerly assisted person “the costs paid or payable under regulation 84(b)” less the amount of any contribution already made.

25. The right of recovery is given both in respect of costs paid and costs payable under regulation 84(b). The costs paid must refer to costs which were paid by virtue of other regulations than 84(b) because 84(b) quite clearly refers to costs which still have to be taxed or assessed. Final payment is only made once the process of taxation or assessment has been completed.

26. As for costs paid, costs may have been paid by way of an interim payment on account, and regulation 100(8) sets out the mechanism for the solicitor or counsel to repay any excess of the interim payment over the final costs as assessed or taxed, or for the solicitor to be paid the balance due if the interim payment is less than the final figure. I can see no reason why an action would not immediately lie against the formerly assisted person to recover such an interim payment, though in practice the claimant would probably wait until assessment or taxation to establish the final costs of the case up to revocation. Another case where costs may have been paid is envisaged by regulation 82 which applies only where costs have not already been determined. The scheme is that notice of revocation must be sent to the solicitor (regulation 82, set out at para 8 above); the solicitor’s retainer is then determined (regulation 83) and the solicitor is then required to have his costs assessed or taxed: regulation 84(1), set out at para 10 above. This procedure is not necessary where the costs have already been determined where, for example, the case has been concluded. If the information comes to the knowledge of the claimant that the certificate should never have been granted in the first place, nothing prevents the claimant revoking the certificate in order to claim back the moneys they have had to pay out in connection with the litigation. If the costs have been determined, they would invariably have been paid by the fund to the solicitors. At any rate, if the costs have been determined there is nothing more for the solicitor to do except to ask to be paid his costs as taxed.

27. If the costs have been determined and if the costs have been paid, then in my judgment – and I do not understand Mr Jay to dissent – the cause of action is complete because the right of recovery has been conferred by regulation 86 and all necessary facts and all constituent elements will have been ascertained. Nothing more needs to be done. Time will start to run from the date of revocation of the certificate.

28. If that is the rule for costs paid, then one asks why the rule should be any different if the costs are payable. Is there any justification for time running differently? I can see none at all. Take a hypothetical case where an interim payment had been made on 1 February 2000 but the interim payment is less than the final costs which had only been determined on a taxation on 1 June 2001. Assume revocation on 15 February 2000 and a claim brought on 1 March 2007. Does it mean that recovery of the interim payment is statute-barred though the balance may still be recoverable? Does it mean that two claims have to be issued, one before 15 February 2006 to recover the interim payment, and the other before 1 June 2007 to recover the excess? It would, in my judgment, be absurd to answer those questions in the affirmative. Assume again that a claim is made on 31 January 2006 within the limitation period for recovery of the interim payment and the claim is coupled with a declaration that the defendant is liable to pay such further sum as may be found to be due and payable on taxation. Will the court give summary judgment in respect of the interim payment but strike out the claim for a declaration on the ground that it discloses no cause of action? The answer must be a firm “No”. All the ingredients required by regulation 86 are present in the claim for a declaration: the certificate has been revoked, and there is a right in the terms of regulation 86 to recover costs payable under regulation 84(b). It is absurd to suggest that a declaration would be denied. Compare Sevcon Ltd v Lucas CAV Ltd [1986] 1 WLR 462, set out at para 18 above.

29. In my judgment the fact that declaratory relief is available demonstrated to me that the process of ascertainment of the amount of costs is a mere procedural requirement, not an inherent element of the cause of action itself. Compare Swansea City Council v Glass [1992] QB 844, set out in para 19 above.

30. Since it is now well established that a cause of action for a sum recoverable by virtue of an enactment accrues notwithstanding that is remains to be quantified (see Hillingdon London Borough Council v ARC Ltd [1999] Ch 139, set out at para 20 above) I can see no good reason for construing 86(1) in such a way as to make quantification a condition precedent to recovery in this case……As Coburn v Colledge [1897] 1 QB 702 (see para 16 above), has made clear, time runs from the date of the completion of work not from the date of taxation. I can see no reason why a similar rule should not apply by way of analogy so that the only facts to be proved to establish cause of action under regulation 86(1) are that work had been done under a certificate but that the certificate had been revoked. Taxation should not be the crystallising event in either case.” (emphasis added)

Non-prosecution of the EC Case by Madam Kwong

36.Finally, even if the Court considers that M&C’s costs should not be taxed until completion or conclusion of the EC Case, Ms Lui submitted that the EC Case has already been completed or concluded in view of the clear fact that the legal aid certificate has been discharged for over 9 years, and neither party to the EC Case has taken any steps to pursue the same further.

Director’s 2^nd Submissions

37.Although Ms Lui was the author of the Director’s 2^nd Submissions, Mrs Hadiwibawa adopted the same as her own at the 2^nd Hearing.  Mrs Hadiwibawa first adopted the same line of argument that the restriction under O 62, r 9D of the RDC is not applicable to the present case.  In a case where the legal aid certificate was revoked or discharged, taxation proceedings on the costs that are receivable by the previously assigned solicitor is governed by Regulation 9(3) of the LAR.  Regulation 9(3) envisaged that such taxation should be commenced as soon as practicable, that is, the taxation could take place either prior to or upon the conclusion of the main proceedings.

Interpretation of Regulation 9(3) of LAR

38.As to the interpretation of Regulation 9(3), Mrs Hadiwibawa first referred to two cases, the Court of Appeal case of Moulin Global Eyecare Ltd (in liquidation) v Commissioner of Inland Revenue[4], and the Court of Final Appeal case of Leung Chun Ying v Ho Chun Yan Albert[5]. In essence, what Mrs Hadiwibawa was trying to submit is that when interpreting a certain provision or word in a statute, a purposive approach should be adopted, having regard to the context of the whole statute.

39.On this point, Mrs Hadiwibawa submitted that Regulation 9(3) should be read in conjunction with Regulation 9(2).  The combined effect is that, after determination of the retainer of an assigned solicitor, as a result of a legal aid certificate being discharged or revoked, the costs of the assigned solicitor should be taxed as soon as practicable.  That is the purpose of Regulation 9(3).  In support of this submission, Mrs Hadiwibawa adopted the same line of argument that the 2 phrases used in Regulation 9, namely “proceedings under this regulation” and “proceedings to which the certificate related”, bore different meanings[6]. It is the Director’s stance that the phrase “proceedings under this regulation” used in regulation 9(3) had to be referring to the steps leading to the discharge or revocation of the legal aid certificate by the Director under Regulation 8 of the LAR.

40.Mrs Hadiwibawa further argued that the phrase “Upon determination of proceedings under this regulation” should not be construed as the determination of the main proceedings.  Given that the main proceedings could not be determined under Regulation 9, it is illogical to interpret such phrase as meaning “Upon determination of the main proceedings”.  And if the phrase “proceedings under this regulation” is referring to the main proceedings, the words “under this regulation” would be redundant.

41.This argument from Mrs Hadiwibawa was followed by two alternative arguments.  First, if the word “proceedings” in Regulation 9(3) is referring to the main proceedings, in our case the EC Case, the phrase “determination of proceedings under this regulation” should be referring to the decision of the Director to discharge or revoke the legal aid certificate in the EC Case. Second, the phrase “determination of proceedings under this regulation” could mean the determination of legal assistance to the EC Case.

Non-prosecution of the EC Case by Madam Kwong

42.In the Director’s 2^nd Submissions, Mrs Hadiwibawa also adopted the same submission that the EC Case has already been completed or concluded in view of the clear fact that the legal aid certificate has been discharged for over 9 years, and neither party to the EC Case has taken any steps to pursue the same further.  The Director took the view that Madam Kwong would unlikely continue with the EC Case or be successful in reviving the same by the leave of the Court.

Other arguments

43.Apart from the above, Mrs Hadiwibawa has raised a number of new points in the Director’s 2^nd Submissions.  The first of which is that, if the taxation under Regulation 9(3) could only be commenced after the conclusion of the main proceedings, it could bring about illogical and undesirable results.  For cases where legal aid certificate was granted and discharged or revoked prior to the commencement of any proceedings, the effect of Regulation 9(3) would debar taxation of the costs of the assigned solicitor.  On the other hand, where the situation is similar to the EC Case, ie the claimant and the defendant left the action in abeyance without bringing the same to a conclusion after discharge or revocation of the legal aid certificate, the previously assigned solicitor could only commence taxation after the formerly aided party has passed away which theoretically brings the main proceedings to an end.

44.Second, Mrs Hadiwibawa tried to draw comparison between Regulation 9(3) of the LAR and section 67(2) of the Legal Practitioner Ordinance, Cap 159 (“LPO”).  Section 67(2) of the LPO allows for taxation of a solicitor’s bill irrespective of the progress of the main proceedings.  It is argued that Regulation 9(3) should have the same effect, and it would be irrational and unreasonable that the costs incurred in legal aid cases could not be taxed under similar circumstances.

45.Third, in answer to my question during the 1^st Hearing as to whether the DLA’s current stance in this Application would open up a floodgate in future cases, statistics are provided by Mrs Hadiwibawa in the 2^nd DLA’s Submissions.  It is reported that from 2011 to 2016, there were 176 legal aid cases where the legal aid certificates were revoked in the midst of the main proceedings.  Amongst the 176 cases, only 1 went for common fund taxation and was successfully taxed.  The rest of the cases had the costs agreed by the parties concerned, so that no taxation was required.  By this, the Director does not envisage that there would be a sudden influx of taxation cases pursuant to Regulation 9(3) of the LAR, even if the Application is allowed.

The English position

46.Next, Mrs Hadiwibawa brought me to the position in the United Kingdom.  She referred to Legal Aid and Advice: Under the Legal Aid Acts 1949 to 1964 by E.J.T. Matthews and A D M Oulton, M A.[7]  In this book, the learned authors highlighted the duties of the previously assigned solicitors upon the discharge of the legal aid certificate and thus the determination of their retainers.  These duties include the arrangement for the costs incurred by these assigned solicitors to be taxed, or assessed, pursuant to Regulation 13(3)(a) of the Legal Aid (General) Regulations (“LAGR 1971”)[8].  Regulation 13(3) of the LAGR 1971 reads as follows:-

“(3) Upon determination of a retainer under this Regulation –

(a) The costs of the claim or proceedings to which the certificate related, incurred by or on behalf of the person to whom it was issued, shall, as soon as practicable thereafter –

(i) In the case of a claim be assessed in accordance with the provisions of the Act and these Regulations;

(ii) In the case of proceedings be taxed or so assessed, as the case may be;

(b) The fund shall remain liable for the payment of any costs so taxed or assessed.” (emphasis added)

47.Pausing here, one could see that Regulation 13(3) of LAGR 1971 is similar to Regulation 84 of the Civil Legal Aid (General) Regulations 1989 as cited in the Rasool case above.

48.Mrs Hadiwibawa argued that, notwithstanding the usual situation, ie where there have been both an order for costs inter partes in the proceedings and a direction for a legal aid taxation, the two sets of costs will be taxed at the same time,[9] the usual situation could be departed from as envisaged by Regulation 13(3) of LAGR 1971.

VTC’s interest

49.In the Director’s 2^nd Submissions, Mrs Hadiwibawa has also addressed on another requisition raised by me during the 1^st Hearing.  As stated in the above, my concern was that, with the EC Case still being alive, there may be a chance that at its conclusion, VTC would be held liable for the costs or part of the costs that are now being claimed under the Bill.  If that is the case, the VTC should be given a chance to argue on the quantum of costs payable to the firms of solicitors.  However, VTC is not a party to this Taxation Proceedings, and has no locus to do the same.  In answer to this query, Mrs Hadiwibawa relies on Regulation 9(6)(b) and 9(6A) of the LAR, which empowers the Director to enforce such costs order in favour of Madam Kwong.

Director’s 3^rd Submissions

50.The Director’s 3^rd Submissions was filed on 15February 2018 in answer of the 3 requisitions I have raised during the 2^nd Hearing.

51.First, I asked whether in the past, the Director had relied on Regulation 9(3) of the LAR to object to the assigned solicitor’s commencement of taxation before the conclusion of the main proceedings.  If so, it begs the question why, in the present case, the Director seems to have taken the opposite stance.  In answer, Mrs Hadiwibawa submits it is the Director’s stance that the common fund costs of the assigned solicitors should be determined by way of assessment in lieu of taxation in revoked or discharged cases, where the main proceedings have not yet been concluded, as provided under Regulations 4 and 5 of the Legal Aid (Scale of Fees) Regulations, Cap 91C (“LASOFR”).

52.Regulations 4 and 5 of the LASOFR provide as follows:-

“4. Fees payable to counsel generally

The fees payable by the Director to counsel acting for an aided person shall be such as may be allowed on taxation or, in default of taxation, as may be allowed on taxation or, in default of taxation, as may be fixed by the Director, not exceeding such amount as in the opinion of the Director would have been allowed if there had been taxation.

5. Fees and costs payable to solicitor

The amount payable by the Director to a solicitor acting for an assigned person shall be –

(a) the full amount allowed on taxation on account of disbursements;

(b) the full amount allowed on taxation on account of profit costs; and

(c) in cases where fixed costs are applicable and the solicitor has made an election to take fixed costs, the full amount of such fixed costs,

or, in default of taxation or where an election to take fixed costs has not been made, an amount as may be fixed by the Director, not exceeding such amount as in the opinion of the Director would have been allowed if there had been taxation or would have applied if there had been an election to take fixed costs.”

53.Mrs Hadiwibawa noted that the above provisions would allow common fund costs to be assessed without taxation.  However, for cases similar to the present one, ie where Director’s First Charge is involved, and the formerly aided person disagrees with the Director’s assessment of the common fund payable to the assigned solicitor and/or counsel, and the formerly aided person has failed to bring his or her case to a conclusion for an unreasonable extended period of time, Regulation 9(3) of the LAR should be interpreted to allow the assigned lawyers to tax their common fund costs pursuant to Regulations 4 and 5 of the LASOFR.

Limitation period

54.Second, Mrs Hadiwibawa further addressed me on the limitation period for recovery from the former aided the costs paid or payable pursuant to Regulation 9(5).  As stated in the above, Ms Lui in the Director’s 1^st Submissions submitted that there is a time limitation of 6 years for the Director to do so which runs from the date of revocation as per the Rasool case.  I have asked whether the same limitation period would apply to cases where the legal aid certificate was not revoked but discharged, as in the present case.

55.On this point, Mrs Hadiwibawa’s submission is that where the legal certificate was granted under the Ordinary Legal Aid Scheme, and the legal aid certificate is discharged, the formerly aided person would not be liable to pay the Director if there is no property or money recovered or preserved by him or her in the proceedings concerned or no outstanding contribution.  Where a legal aid certificate is discharged in the midst of the proceedings, at that moment, it is still unknown if any money or property will be recovered or preserved by the formerly aided person.  In these cases, Mrs Hadiwibawa submitted, as the cause of action has yet to accrue, limitation period, if any, does not start to run.  If subsequently nothing is recovered or preserved in the proceedings, the Director is not entitled to pursue against the formerly aided person for payment.  However, if the formerly aided person recovers or preserves money or property in the proceedings concerned, pursuant to section 18A of the Legal Aid Ordinance, Cap 91 (“LAO”), the Director has a right over the money or property recovered or preserved, that is, the Director’s First Charge.  In these discharged cases, the Director’s action against the formerly aided person arises from the First Charge, not from the discharge of a legal aid certificate.

The legislative intent of Regulation 9(3) of LAR

56.Mrs Hadiwibawa then turned to the third requisition I have raised, and in my view a crucial point in the Application, namely the legislative intent of Regulation 9(3) of the LAR.  As seen in the above, both Ms Lui and Mrs Hadiwibawa have cited authorities that emphasized on the purposive interpretation of statutory provisions, and legislative intent is the ultimate guide to legal meaning.  From the English authorities referred to by Ms Lui and Mrs Hadiwibawa, it could also be noted that the English provisions comparable to Regulation 9(3) of the LAR adopted the words “upon determination of the retainer” instead of “determination of the proceedings”.[10]  It is therefore a distinct possibility that the English position was deliberately not followed in Hong Kong when the LAR was enacted.  On this point, I have researched on the origins of the LAR and legislative process.  On 13 February 2018, the following documents were sent to the Director and M&C for their further submissions:-

(1)   Hong Kong Hansard: Reports of the Meetings of the Legislative Council of Hong Kong, Session 1966.

(2)   Legal Aid Regulations: Arrangement of Regulations, 1966 Ed.

(3)   LAGR 1962.

57.In the Director’s 3^rd Submissions, Mrs Hadiwibawa first referred to “Chapter 2 – History: Development of Legal Aid in Hong Kong, Legal Aid in Hong Kong”, published by the Legal Aid Service Council.  It was explained therein that the Legal Aid Bill 1966 was drafted based on the English Legal Aid and Advice Act 1949 (the “1949 Act”), with some modifications based on the Singaporean Legal Aid legislation.  The Legal Aid Regulations 1966 (“LAR 1966”), including Regulation 9, was gazetted as L N 89 of 1966 on 23 December 1966.  Both the Legal Aid Ordinance, Cap 91 (“LAO”) and the Legal Aid Regulations came into operation on 12 January 1967.  There were 8 paragraphs in the LAR 1966 version of Regulation 9, and the wordings of Regulation 9(3) in LAR 1966 have remained the same as in the current version.

58.At the time of the enactment of the LAR 1966, Mrs Hadiwibawa noted, that the English counterpart was LAGR 1962.  The English equivalent to Regulation 9(3) of LAR 1966 could be found at Regulation 13(3) of LAGR 1962.  It reads as follows:-

“(3) Upon determination of a retainer under this Regulation –

(a) the costs of the claim or proceedings to which the certificate related, incurred by or on behalf of the person to whom it was issued, shall, as soon as practicable thereafter –

(i) in the case of a claim be assessed in accordance with the provisions of the Act and these Regulations;

(ii) in the case of proceedings be taxed or so assessed as the case may be;

(b) the Fund shall remain liable for the payment or any costs so taxed or assessed.” (emphasis added)

59.Notwithstanding the use of different words in Regulation 9(3) of the LAR 1966 and Regulation 13(3) of the LAGR 1962, Mrs Hadiwibawa did not make any submission on the cause of the same, but went back to the same argument regarding the different phrases “determination of the proceedings under this regulation” and “proceedings to which the certificate related” used throughout Regulation 9 of the LAR, and how the former phrase must mean “determination of the retainer”.  However, Mrs Hadiwibawa had this to say in the Director’s 3^rd Submissions:-

“15. …… With its departure from the UK counterpart, it is clear that the provision [Regulation 9(3)] does not intend to cater for legal aid taxation whenever the retainer of the assigned solicitor or counsel is determined upon revocation or discharge of the legal aid certificate as in the UK……” (emphasis added)

60.I will now turn to the submissions made by M&C in support of the Application.

M&C’s Submissions

61.M&C’s first submissions were made by way of the Affidavit of Mr Clement filed herein on 7 July 2017.  In it, Mr Clement took the view that O 62, r 9D has no application to the Bill, which is a taxation under Regulation 9(3) of the LAR.

62.In his supplemental submissions, Mr Clement also emphasized on the importance in taking the purposive approach on statutory interpretation, citing the passage of Bokhary PJ in China Field Ltd v Appeal Tribunal (Buildings) [2009] HKCU 1650.[11]

63.Mr Clement further referred to section 2 of the LAO, which defined the word “proceedings” to include:-

(a)   legal proceedings;

(b)   negotiations prior to the issue of legal proceedings, including mediation, and for the payment of compensation by the Motor Insurer’s Bureau for which no legal proceedings are issued;

(c)   an application to the Mental Health Review Tribunal.

64.It seems that from the above definitions, the words “legal proceedings” would not include revocation or discharge of a legal aid certificate, or determination of a retainer under Regulations 9(1) and (2) of the LAR.

65.Mr Clement next argument is that, in the phrase “Upon determination of proceedings under this regulation”, the word “regulation” was written in singular term, and the “regulation” referred to must therefore be restricted to Regulation 9 of LAR.  As such, “determination of the proceedings” must mean the determination of a retainer upon discharge or revocation of a legal aid certificate.  Mr Clement argued that such proceedings would fall under section 2(b) of the LAO[12], thus whether the legal proceedings (ie the EC Case) under (a) is determined or not does not preclude the Bill from being taxed.

66.At the end of his supplemental submissions, Mr Clement added that taxation of the Bill would not affect the VTC, being the respondent in the EC Case.  He explained that VTC would not be asked to pay the costs claimed under the Bill, even if VTC is subsequently held to be liable for the costs of Madam Kwong.

67.In his further supplemental submissions, Mr Clement agreed with the Director’s 3^rd Submissions.  He added that no reason was provided as to why the word “retainer” used in Regulation 13(3) of the LAGR 1962 was not adopted in the LAR 1966.  In the absence of any legislative intention to adopt an approach different from LAGR 1962, Mr Clement argued that the Director’s interpretation of Regulation 9(3) of the LAR is correct.

Madam Kwong’s Submissions

68.Madam Kwong’s written submissions, in gist, focused on the alleged poor performances and/or neglect on the part of her lawyers.  She also complained that the Director was unfair in discharging her legal aid.  As I have mentioned in the above, these complaints are irrelevant to the Application.

Analysis

69.As the Stay Order has its roots in O 62, r 9D of the RDC, I will first highlight the general principles applicable to the same. O 62, r 9D provides that:-

“(1) Subject to paragraphs (2) and (4), the costs of any proceedings shall not be taxed until the conclusion of the action.

(2) If it appears to the Court when making a costs order that all or any part of the costs ought to be taxed at an earlier stage it may order accordingly.

(3) No order may be made under paragraph (2) in a case where the person against whom the costs order is made is an aided person.

(4)    Where it appears to a taxing master that there is no likelihood of any further order being made in a cause or matter, he may order the person entitled to payment of the costs of any interlocutory proceedings which have taken place to commence taxation proceedings in accordance with rule 21.”

70.The general rule that taxation of costs should not take place until the conclusion of the action is well established.  This is so unless the exceptions under O 62, r 4(1) or O 62, r 9D(4) apply.  The reason for such rule is fully explained in the case of Dyson Technology v German Pool Group Co Ltd. [13] At paragraph 46 of his judgment, Mr Justice To said:-

“Under this construction, the hardship suggested by Mr Yan SC may well be real, but the observation of Holman J in London Borough of Enfield v P and the views of the working party quoted above provide the complete answer. The goal is one taxation per party per action. Thus, the general rule is to debar all taxation until the conclusion of the action. Rule 9D was therefore intended to be applicable to costs of any proceedings, interlocutory or otherwise. Rule 9D(1) was intended to debar taxation of any proceedings until conclusion of the entire action. If the circumstances so justify, a party may apply for summary assessment or immediate taxation under rule 9D(2). The master may in an appropriate case order the party entitled to costs to commence taxation under rule 9D(4).” (emphasis added)

O 62, r 4(1) of the RDC

71.O 62, r 4(1) of the RDC provides the Court with the discretionary power to deal with or order costs against a person despite that the proceedings have not been concluded.  A master is also vested with such power.[14]  By the Taxation Proceedings and their arguments in support of the Application, M&C and the Director are in effect asking this Court to exercise such discretion.  The basis for doing so is Regulation 9(3) of the LAR.  Thus, strictly speaking, Mr Clement and the Director are inaccurate to say that O 62, r 9D is not applicable to the Taxation Proceedings.

Statutory Interpretation: the General Principles

72.Turning now to the interpretation of Regulation 9(3) of the LAR, I will first refer to the case of Ng Cho Chu Judy v Chan Wing Hung [2016] 1 HKLRD 1073.  At paragraph 76 of the judgment, Deputy District Judge Winnie Tsui (as she then was) has summarized on the approach to statutory interpretation:-

“76. The approach to statutory interpretation is well-established.

(a) The task of the court is to ascertain the intention of the legislature as expressed in the legislation: Town Planning Board v Society for the Protection of the Harbour Ltd (2004) 7 HKCFAR 1 at §28.

(b) The court adopts a purposive approach. The statutory language must be understood in its context and having regard to its purpose. The court should adopt an interpretation which is consistent with and gives effect to the legislative purpose and should avoid an interpretation which is inconsistent with and does not serve that purpose: Town Planning Board at §§28-29 and HKSAR v Cheung Kwun Yin (2009) 12 HKCFAR 568 at §12.

(c) Context and purpose are considered in the first instance when interpreting the words used and not only at some later stage when an ambiguity may be thought to arise: HKSAR v Lam Kwong Wai (2006) 9 HKCFAR 574 at §63; Cheung Kwun Yin at §12; Vallejos Evangeline Banao v Commissioner for Registration (2013) 16 HKCFAR 45 at §§77-78.

(d) The purpose and proper context of the legislation can be gathered and ascertained from (i) the legislation itself, (ii) the existing state of the law, (iii) where the legislation implements the recommendations of a report, the report, (iv) the Explanatory Memorandum or Objects and Reasons annexed to a bill, (v) a statement made by the responsible official of the government in relation to the bill in the Legislative Council as long as such statement is used to identify the legislative purpose and is not to be treated as the meaning of the legislation: Cheung Kwun Yin at §14.

(e) The court should also pay due regard to the legislative history of the enactment as the proper interpretation of a statute is informed by an examination of its history, including the pre-enacting, the enacting and the post-enacting history: Bennion on Statutory Interpretation (6th ed) at section 208, p548.

(f)    The court may imply words into the statute, so long as in doing so, it is giving effect to the legislative intention as ascertained on a proper application of the interpretive process.  What the court cannot do is to read words into a statute in order to bring about a result which does not accord with the legislative intent properly ascertained: Lam Kwong Wai at §63.”

73.I respectfully adopt the same approach in this Decision.

74.After considering the submissions of Mr Clement and the Director, I am of the view that Regulation 9(3) of the LAR does not justify the exercise of discretion under O 62, r 4(1) of the RDC. My reasons are given below.

Purpose of the LAO and the Interpretation of Regulation 9(3)

75.As provided in its Long Title, the LAO is to make provision for the granting of legal aid in civil actions to persons of limited means and for purposes incidental thereto or connected therewith. The Attorney General, during the meeting of the Legislative Council session 1966, expanded on the purpose of the legislation:-

“The Bill, which is based largely on the United Kingdom Legal Aid and Advice Act, with some modifications based on Singapore legal aid legislation, introduces a scheme of free and assisted legal aid in civil cases, to help people of limited means to bring and defend actions in the courts. A measure of free legal aid in civil actions, in the Supreme Court only, has been provided in the past for the poor persons by the legal profession at its own expense as a public service, but there has been criticism that this does not go far enough, and that the costs of litigation must often deter poor men from asserting their legal rights in our courts. This scheme will go far to removing any basis for that criticism.”[15]

76.The purpose of the LAO, and its subsidiary legislations, in particular the LAR, is sufficiently reflected in the above passage.  There is, however, no explanation as to why Regulation 9(3) of the LAR is drafted differently from its English equivalent in Regulation 13(3) of the LAGR 1962.  But one could note from their wordings that Regulation 9(3) of the LAR would provide more protection to a formerly aided person than that in Regulation 13(3) of LAGR 1962.  In the former, it seems that the formerly aided person would not have to go through taxation of his or her costs on common fund basis until conclusion of the main proceedings.  Whereas in the latter, the legal costs of the formerly assigned lawyer could be taxed when the legal aid is discharged or revoked, and the retainer consequentially terminated.  Although it is not expressly so stated, that could be the reason behind its departure from Regulation 13(3) of LAGR 1962.

77.What Mr Clement and the Director is now trying to argue, in essence, is that despite such difference in wordings, there is actually no difference in the effect of the Hong Kong and UK versions. I disagree.

78.I do not accept the words “upon determination of proceedings under this regulation” used in Regulation 9(3) are referring to the discharge or revocation of a legal aid certificate, or determination of the retainer, rather than determination of the main proceedings.  I do appreciate that the whole Regulation 9 is dealing with the aftermath of the revocation or discharge of a legal aid certificate.  But to read the said phrase as meaning “upon discharge or revocation of the legal aid certificate” or “upon determination of the retainer” as suggested by Mr Clement and the Director, in my view, would be inconsistent with the purpose of the LAR.

79.First, if the phrase adopted in Regulation 9(3) of the LAR carries the meaning as submitted by Mr Clement and the Director, I see no reason for its departure from Regulation 13(3) of LAGR 1962. As explained by the Attorney General at the Legislative Council and in Chapter 2 – History: Development of Legal Aid in Hong Kong, Legal Aid in Hong Kong, the Legal Aid Bill 1966 was drafted based on the 1949 Act, with some modifications based on the Singaporean Legal Aid legislation.  At the time of the enactment, the English equivalent to Regulation 9(3) of LAR 1966 could be found at Regulation 13(3) of LAGR 1962. Despite the phrase “Upon determination of a retainer under this Regulation”, a meaning that Mr Clement and the Director are trying to suggest, was being used in LAGR 1962, it was clearly not followed in Regulation 9(3) of LAR 1966.  It is therefore implausible that Regulation 9(3) of the LAR 1966 would deliberately depart from the wordings used in its English equivalent but with the intention of maintaining the same meaning or effect.

80.Pausing here, I have tried to research on the Singapore’s version of the Legal Aid and Advice Regulations.  Unfortunately, I could only find its revised edition in 1995.  As such, it is unknown whether the Singapore’s version, at the time when LAR 1966 was enacted, contained the same wordings as in Hong Kong’s Regulation 9(3).  But currently, the same phrase of “Upon determination of proceedings under this regulation” is adopted in Regulation 9(3) of the Legal Aid and Advice Regulations.[16]

81.Second, the revocation or discharge of the legal aid certificate is a decision of the Director exercised under Regulation 8 of the LAR.  It does not necessarily engage the court, unless the Director makes an application under Regulation 8(5) to the court for revocation or discharge, or where the formerly aided person appeals against such decision.  As per the Hong Kong English-Chinese Legal Dictionary, the general definition of the word “proceeding” is:-

“An action commenced in a court. Historically, the term ‘proceeding’ was given a narrow interpretation to mean the ‘invocation of jurisdiction of the court by process other than a writ’: Herbert Berry Associates Ltd v IRC [1977] 1 WLR 1437. This traditional legal meaning has been extended to include any proceedings before any court, tribunal or person having by law power to hear, receive and examine evidence on oath: Crimes Ordinance (cap 200) s 28.”

82.The meaning of the word “proceeding” is also discussed in Hong Kong District Court Practice.[17] At paragraph [2.06]:-

“‘Proceeding’ standing by itself and without any adjectival description, has a meaning or meanings that are so general and imprecise that the dictionary definition do not carry the matter any further: see Quazi v Quazi [1980] AC 744 at 788, [1979] 3 All ER 424 at 429, CA (Eng) (per Ormrod LJ). In a broad sense, ‘proceeding’ is merely some method permitted by law for moving a court or judicial officer to come authorized act, or some act of the court or judicial officer: see Cheney v Spooner (1929) 41 CLR 532 at 536 (per Issacs and Gavan Duffy JJ).”

83.Clearly, from the definitions above, the word “proceeding” involves action taken out in court, and the act of a judge or a judicial officer.  The decision of the Director to discharge or revoke a legal aid certificate, and the automatic termination of the retainer of an assigned solicitor under regulation 9(2), do not fit into these definitions.  If Regulation 9(3) is to be understood and applied in the way as suggested by Mr Clement and the Director, it would require court’s sanction for revocation or discharge of all legal aid certificates, and even the consequential termination of the retainer of the assigned lawyer prescribed by Regulation 9(2).  Such interpretation is inconsistent with Regulation 8 of the LAR.

84.For the same reason, I am also unable to accept Mrs Hadiwibawa’s submission that the phrase “determination of proceedings under this regulation” could mean the determination of legal assistance to an aided person.

85.Mr Clement referred to section 2(b) of the LAO and argued that the word “proceedings” in Regulation 9(3) of LAR falls within such definition.  I disagree. I cannot see how it could be argued that the suggested meaning of “discharge or revocation of the legal aid certificate” or “determination of retainer” has any connection with “negotiations prior to the issue of legal proceedings, including mediation, and for the payment of compensation by the Motor Insurer’s Bureau for which no legal proceedings are issued”.

86.Third, despite that the phrase “proceedings under this regulation” is used exclusively in Regulation 9(3), with the other sub-regulations under Regulation 9 adopting the phrase “proceedings to which the certificate related”, it is not assured that they would bear different meanings.  Furthermore, if one argues that the former restricts the proceedings as those under Regulation 9 and nothing more, it then begs the question as to which proceeding under Regulation 9 it is referring to.  The reason being, Regulation 9 does not only provide for the termination of the retainer.  As per Regulation 9(6A), the Director could bring proceedings to enforce an order for costs in favour of an aided person.  Moreover, such interpretation does not sit well with the other argument ran by Mr Clement and the Director, ie that the phrase “determination of the proceedings under this regulation” means “discharge or revocation of the legal aid certificate”.  As mentioned, the revocation or discharge of the legal aid certificate is a decision of the Director exercised under Regulation 8 of the LAR, not Regulation 9.  If the suggested interpretation is to be adopted, it would bring about ambiguity rather than clarity.

87.Fourth, I do not accept Ms Lui’s argument that, it could not have been the legislative intention of the LAR for the taxation under Regulation 9(3) to be deferred indefinitely until after the conclusion of the main proceedings. In fact, as highlighted in the above, such intention could be inferred from the deliberate departure from Regulation 19(3) of LAGR 1962.  In addition, the situation where a formerly aided person may not pursue the main proceedings and left the same abeyance for many years, would unlikely to have been contemplated at the time when LAR 1966 was enacted.  It is perhaps only in hindsight that such loophole could be identified.

88.I am also unable to follow Mrs Hadiwibawa’s argument that, for cases where legal aid certificate was granted and discharged or revoked prior to the commencement of proceedings, the effect of Regulation 9(3) would debar taxation of the costs of the assigned solicitor.  If subsequent to the revocation or discharge of the legal aid certificate, the formerly aided person commenced the proceedings, costs of the assigned lawyer could be taxed after conclusion of the proceedings.  Whereas the formerly aided person did not commence the main proceedings, I do the not see how Regulation 9(3) would be applicable at all. There is simply no main proceedings to be concluded.

89.Fifth, the argument based on limitation period relied on by Ms Lui has evidently been countered by the submissions of Mrs Hadiwibawa.[18]  Even if this argument is to be pursued, I see no conflict with the interpretation that the taxation should be commenced after determination of the main proceedings.

90.I agree that the Director’s power to recover costs from a formerly aided person comes from the LAR, and a 6-year limitation period for such recovery is applicable pursuant to section 4(1)(d) of the Limitation Ordinance, Cap 347.  Similar to the situation in Rasool Case, the Director’s claim could be time-barred.  However, as explained by the English Court of Appeal in the Rasool Case, taxation is nothing more than a mere procedural requirement in order to ascertain the amount of costs payable by the formerly aided person.  It is not a condition precedent to recovery.  Moreover, it was said in the judgment of Ward LJ at paragraph 28, that the claimant (ie the Legal Aid Board) could seek a declaration under regulation 86 of the Civil Legal Aid (General) Regulations 1989, an equivalent to Regulation 9(5) of the LAR, and protect its claim from being time-barred.

91.Applying the same to this Application, it could equally be argued that notwithstanding the possibility of the main proceeding not being concluded until 6 years or more after revocation or discharge of the legal aid certificate, and Regulation 9(3) does not allow taxation until determination of the main proceeding, the Director could protect himself from being time-barred for recovery against the formerly aided person by first seeking a declaratory relief from the court, and subsequently having the costs taxed once the main proceeding is concluded.

92.Sixth, I do not accept Mrs Hadiwibawa’s argument under section 67(2) of the LPO.  Whereas section 67(2) of LPO allows taxation of solicitor’s bill irrespective of the progress of the main proceedings, Regulation 9(3) makes an exception to the same, based on my interpretation above.  I see no reason to compare a party who is financially capable to hire his own lawyer to one who required and had received legal aid.

Summary on O 62, r 4(1) and Regulation 9(3) of the LAR

93.In light of the above, I am not persuaded that Regulation 9(3) of the LAR allows taxation of costs, upon discharge or revocation or the legal aid certificate, and the consequential termination of the retainer of M&C, before conclusion of the EC Case.  I am therefore not convinced that I should exercise the discretion under O 62, r 4(1) of the RDC.

O 62, r 9D(4)

94.I now turn to the effect of O 62, r 9D(4) and how it could provide an exception to the general rule that taxation should only take place after conclusion of the main proceedings.  In this regard, I will first quote the following passage from the case of Big Boss Investment Ltd v So Lai Kei.[19]At paragraph 19 of her judgment, Madam Registrar Au-yeung (as she then was) set out the situations where a master could make an order under O 62, r 9D(4) for taxation of costs where the action has not been concluded. She stated:-

“Finally, Mr. Chong prayed in aid Rule 9D(4). He submitted that since the “cause or matter” (which was an interlocutory injunction) was over, the taxing master can order taxation proceedings to commence. I respectfully disagree. This rule is applicable to the situation where, e.g. an action never comes on for trial; no costs have ever been awarded; nobody has lost or won; the action goes to sleep and neither side wants to go on; neither wants to pay the costs of the other side: c.f. JT Stratford Ltd. v. Lindley [1969] 1 WLR 1547, at 1553. Moreover, an express order of the taxing master is required before the receiving party can even commence the taxation under this sub-rule. I can see no good reason why an order should be made under this sub-rule to disturb the consent of the parties.” (emphasis added)

95.In JT Stratford Ltd v Lindley, a case cited by the learned Registrar in the above passage, the action had gone to sleep for 4 years after an interim injunction was granted by the House of Lords in favour of the plaintiff in 1964.  During that time, there had been intermittent discussions between the parties as to how to resolve the disputes, and both parties had expressed their intention not to proceed any further with the action.  However, there were costs that were ordered to be in the cause, and each party wished to seek those costs in his own favour.  The parties finally brought applications to conclude the action in 1968.  The plaintiff sought to discontinue the action with costs in the interlocutory applications to be paid by the defendant, whereas the defendant applied for the plaintiff’s claim to be dismissed for want of prosecution and for all costs reserved to be paid to the defendant.  Master at the first instance, and Chapman J on appeal, both ordered that leave be granted for the plaintiff to discontinue the action, and with a cost order that each party should bear their own costs.  The matter was ultimately appealed to the English Court of Appeal.  The English Court of Appeal affirmed the decisions of the Master and Chapman J, and dismissed the appeal.  The English Court of Appeal preferred discontinuance of the action to dismissal for want of prosecution because the former would give the court more options as to how to deal with the issue of costs.

96.What can be taken from the above authorities is that the discretion under O 62, r 9D(4) could be exercised by a master only in limited circumstances.  For the EC Case, one could say that it fits into some of those situations as set out in the JT Stratford Case and the Big Boss Case: (1) the EC Case has yet been brought to trial; (2) no costs have been awarded; (3) nobody has lost or won; and (4) the action has gone to sleep for over 9 years since Madam Kwong’s legal aid certificate was discharged.

97.On the other hand, there are also factors, and I think they are important factors, that distinguished the JT Stratford Case from the EC Case.  In JT Stratford Case, the parties to the action had by their correspondences expressed their intention not to proceed any further with the action.  Moreover, the parties in that action did pursue on their intention by taking out applications to conclude the case, ie by way of discontinuance and dismissal for want of prosecution.  These are all missing in the EC Case.  Neither Madam Kwong nor the VTC has made known to this Court their intention as to whether to proceed with the EC Case, and neither has made any application to conclude the same.  They have not been heard on this subject matter.  Instead, it is now the non-parties (ie M&C and the Director) trying to suggest that the EC Case should deem to have been concluded as it has been left abeyance for over 9 years. I cannot accept such proposition.

98.Apart from the above, I have expressed my concern to continue with the Taxation Proceedings in the absence of VTC.  As I have stated, with the EC Case still being alive, there remains the possibility that the VTC, at the conclusion of the EC Case, would be held liable for the costs or part of the costs that are now being claimed under the Bill.  For instance, the costs for drafting the application, and considering the answer filed by the VTC in the EC Case, are party and party costs.  If the VTC is held liable for the same, it should be given a chance to argue on the quantum of costs payable to the firms of solicitors.  VTC’s right to do so would be denied if those costs are now taxed under the Taxation Proceedings with VTC not being a party to it.  This is utterly unfair.  The answer provided by Mrs Hadiwibawa, that the Director would rely on Regulation 9(6)(b) and 9(6A) of the LAR to enforce such costs order in favour of Madam Kwong, provides no relieve at all.

Summary on O 62, r 9D(4)

99.For the above reasons, I am not persuaded that I should exercise the discretion under O 62, r 9D(4) of the RDC and to allow taxation of the Bill before determination or conclusion of the EC Case.

Conclusion

100.In light of the above, I find no reason to disturb the Stay Order. I would order that the Application be dismissed, and the Stay Order should continue.

101.As to costs of the Application, since Madam Kwong has made no appearance at the hearings, and her lone written submission filed focused on matters which have no relevance to the Application, I will make an order nisi that there be no order as to costs between M&C and Madam Kwong.  Subject to any application to vary it, this order would become absolute within 14 days upon its service.

102.Regarding the costs between M&C and the Director, I have received letters from both the M&C and the Director.  In gist, the Director agrees to bear costs of the Application, and the costs should be summarily assessed by the court.  I agree with this approach.  During the hearings, I was told that the Taxation Proceedings were commenced with the go-ahead from the Director.  It was a shocker that the Director would then, albeit correctly from hindsight, oppose on its prosecution and asked for a stay.  But when the Application was brought by M&C, the Director did a three-sixty and supported the same.  In fact, the Director was evidently more aggressive in seeking the uplifting of the Stay Order, a creature of his own.  In my view, the whole debacle was the making of the Director, and M&C should not be blamed for it.

103.For these reasons, despite that the Application is dismissed, I would order that the Director do pay costs of the same to M&C, to be summarily assessed by this court if not agreed.  I would also make an order that in the event that M&C and the Director cannot agree on the costs, M&C do file and serve its statement of costs within 21 days from the service of this order, and the Director do file and serve his objection, if any, within 21 days thereafter.  The costs would then be summarily assessed on paper.

104.Lastly, I must thank Mrs Hadiwibawa, Ms Lui and Mr Clement for their assistance.

Mr R Clement of Massie & Clement, for the receiving party

Ms W L Lui (17 August 2017) and Mrs Christina Hadiwibawa (26 October 2017 and 23 February 2018) for the Director of Legal Aid, paying party

Madam Kwong Yuk Ngor, paying party, acting in person and absent