Shem Yin Fun v. Director of Legal Aid & Another
Read the full judgment text of HCAL 183/2002 on BabelCite. This High Court CFI judgment was delivered on 30 January 2003.
1. This is an application for leave to judicial review :
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HCAL000183/2002 HCAL183/2002 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO.183 OF 2002 ---------------------
---------------------- Coram : Hon Chu J in Court Date of Hearing : 27 January 2003 Date of Decision : 30 January 2003 ----------------------- D E C I S I O N ----------------------- 1.This is an application for leave to judicial review :
BACKGROUND 2.The background leading to this application briefly stated is this. 3.The applicant is a 68 years old widow. Her husband, Tang Chun, died intestate on 16 July 2000. The applicant and her late husband were the 1st and 2nd defendants in High Court Miscellaneous Proceedings No.3289 of 1998 ("the Action"), which were commenced by Standard Chartered Bank in July 1998. After the death of Mr Tang, the applicant, in her capacity as the administratrix of Mr Tang, was substituted as the 1st defendant. Application for Letters of Administration of the estate is, however, still pending. 4.The applicant was the registered owner of a taxi. By a hire-purchase agreement, the applicant hired the taxi from AIG Finance (Hong Kong) Limited ("AIG"). She defaulted in her payment obligations under the hire-purchase agreement and the taxi was repossessed and sold in December 2000. The sale produced a deficit of $1,014,636 for which the applicant remains liable to pay to AIG. The applicant and her late husband also jointly own a property in Punyu of the Mainland ("the Mainland Property"). 5.For the purpose of defending the Action, the applicant had in December 2000 applied for legal aid ("the 1st LA application") but was initially refused on the basis that she failed in the means test. She successfully appealed against the refusal and she was granted legal aid to defend the Action. 6.On 13 May 2002, judgment was handed down in the Action against the applicant, both in respect of the claim and the counterclaim. The applicant has appealed against the judgment to the Court of Appeal. 7.On about 13 July 2002, the applicant applied for legal aid for the purpose of the appeal ("the 2nd LA application"). Her application was refused by the Director, which was communicated in a letter dated 22 July 2002. On 3 August 2002, the applicant appealed against the refusal. On 5 September 2002, her appeal was dismissed by the Registrar. 8.On 29 October 2002, the applicant issued her Form 86A applying for leave to judicial review the decisions of the Director and the Registrar. Apart from seeking orders of certiorari and declaration, the applicant also requested for an oral hearing of the application if leave is not granted on papers. On 31 October 2002, I directed that the leave application be heard inter partes. THE DIRECTOR'S DECISION 9.The Director refused the 2nd LA application on the basis that he was not satisfied that the applicant's financial resources did not exceed the statutory limit of $169,700. The Director had assessed the applicant's financial resources at $428,593.45. The calculations adopted by the Director are as follows :
THE REGISTRAR'S DECISION 10.The applicant appealed against the Director's refusal on the ground that the Director had failed to take into account her outstanding debts and liabilities in calculating her financial resources. The applicant contended that her liability to AIG should be included in the computation. Had this been done, her financial resources would have been a deficit of $586,042.55 [i.e. $428,593.45 - $1,014,636.00 = (- $586,042.55)]. In contending that her financial burden should also be taken into account, the applicant relied on two passages in the decision of the Legal Aid Review Committee chaired by the Registrar in Leung Kwai Lin Cindy v. Director of Legal Aid [2000] 4 HKC 516, at 524B-C, 525C-F. 11.The Registrar rejected the argument on the basis that the term "financial resources" for the purpose of a legal aid application is defined by statute. The Legal Aid (Assessment of Resources and Contributions) Regulations, Cap.91B, which applies to the applicant's legal aid application, contains no provision permitting the Director to take into account the liability of the applicant to AIG. The Registrar also considered that the decision of Leung Kwai Lin Cindy is not relevant. GROUND FOR JUDICIAL REVIEW 12.The application for judicial review is made on the sole ground that the decisions of the Director and the Registrar involve an error in law, namely, the failure to take into account the applicant's liability to AIG and also the failure to apply or correctly apply the decision of Leung Kwai Lin Cindy. THE ISSUES 13.For the purpose of the present leave application, the putative respondents advance no argument on whether the Registrar's decision is amenable to judicial review, having regard to section 26(4) of the Legal Aid Ordinance, Cap.91 ("the Ordinance"). The Director expressly reserves his position on the point. The point that calls for consideration at this stage is therefore confined to whether the Director and the Registrar had committed an error of law in their decisions. THE THRESHOLD 14.The threshold test for granting leave to judicial review has been stated to be : whether the material before the Court discloses matters which on further consideration demonstrate an arguable case for the grant of the relief sought : IRC v. National Federation of Self-Employed and Small Business Ltd [1982] AC 617, at 644 per Lord Diplock, applied in R. v. Director of Immigration ex parte Ho Ming Sai (1993) 3 HKPLR 159, at 161, 170. 15.In R. v. Legal Aid Board ex parte Hughes (1992) 24 HLR 698, at 702-703, Lord Donaldson MR considered that in an ex parte application, leave to judicial review should only be granted if prima facie there is already an arguable case for granting the relief claimed. This approach differs from that adopted in Ho Ming Sai in that leave will only be granted on the strength of an arguable case, as opposed to a case that may be arguable. 16.The difference in approach was recognized by Keith JA in Wong Chung Ki & Anor v. The Chief Executive and Anor (unreported), CACV 1/2000. In his judgment, Keith JA observed :
17.In the same case, Godfrey VP referred to Atkin's Court Forms, (2nd Edition), Vol.23(2), 1998 Issue, p.177, which states :
The vice-president accepts that there is room for flexibility and for debate on the question of the threshold test and considers that the Court should adopt a common sense approach. 18.In a case like the present where the sole ground for judicial review turns on a construction of the statute and does not involve any investigation of fact, I consider that the Court ought to adopt a more flexible approach. Leave should only be granted if the point of law is arguable for it is very difficult, if not impracticable, to draw a meaningful distinction between an arguable point of law and a potentially arguable point of law. But in the present case, for the reasons set out hereafter, it makes no practical difference to the outcome whether the threshold test is one of arguability or potential arguability. THE STATUTORY FRAMEWORK FOR DETERMINATION OF FINANCIAL ELIGIBILITY 19.Section 5(1) of the Ordinance provides :
Section 10(1) of the Ordinance further provides :
Section 5AA relates to the Director's power to waive the limit of financial resources whether the applicant's proceedings involve issues of human rights. It is irrelevant to the present consideration. 20."Financial resources" is defined in section 2 of the Ordinance to mean "financial resources as determined in the prescribed manner". Similarly, "income", "disposable income" and "disposable capital" mean "income, disposable income or disposable capital as determined in the prescribed manner". Section 2 of the Ordinance further defines "prescribed" as "prescribed by regulations made under section 28". The relevant regulations made under section 28 is the Legal Aid (Assessment of Resources and Contributions) Regulations ("the Regulations"). 21.Regulation 2A of the Regulations provides :
22."Disposable capital" and "disposable income" are defined under Regulation 2 of the Regulations to mean "disposable capital or disposable income as determined or to be determined by the Director under [the Regulations]". Regulation 4 of the Regulations further provides :
23.It is evident from these provisions of the Ordinance and the Regulations that the Director has no general discretion in assessing the financial resources of legal aid applicants. The method of calculations or assessment is prescribed by the statute. It follows that the Director has no general power to include or exclude any income or capital, or any outgoing or debt. 24.Given that "financial resources" has been statutorily defined to be the sum of the monthly disposable income multiplied by 12 and the disposable capital, the applicant, in contending that the liability owed to AIG should be taken into account, must demonstrate that the liability is relevant to the computations of the disposable income and/or the disposable capital. It is the applicant's case that the liability owed to AIG is relevant to the computation of the disposal capital of the applicant. 25.The rules for computing disposable capital are set out in Schedule 2 of the Regulations. Only paragraphs 1 and 2 are relevant for the present purpose. The material part of paragraph 1 of Schedule 2 provides :
In the case of a resource that does not consist of money, paragraph 2 of Schedule 2 provides that the amount or value of the resource shall be, inter alia, the amount which the resource would realize if sold in the open market. 26.The liability owed by the applicant to AIG is a debt. It is no different from any ordinary debt. It is not of a capital nature, even though it arose out of a hire-purchase agreement for a taxi previously registered in the applicant's name. Firstly, the applicant was only a hirer and not the owner of the taxi under the hire-purchase agreement. Secondly, by reason of the taxi being repossessed and sold by AIG, the applicant could no longer have any proprietary right or interest in the taxi. The liability due to AIG therefore does not come within the ambit of paragraphs 1 and 2 and Schedule 2. As such, it cannot be taken into account in computing the "disposable property" of the applicant. It also follows that, as a matter of statutory construction, the Director cannot have regard to the liability in assessing the financial resources of the applicant. DECISION OF LEUNG KWAI LIN CINDY 27.In Leung Kwai Lin Cindy, the appellant was refused legal aid to prosecute her appeal before the Court of Final Appeal on the ground that her financial resources exceeded the statutory limit. She appealed against the refusal to the Review Committee, which was designated by section 26A of the Ordinance to hear appeals against refusal of legal aid for appeals to the Court of Final Appeal. The appellant's husband had a flat with an outstanding mortgage loan that exceeded the market value of the flat, producing therefore a negative value of some $400,000. The monthly mortgage repayment was partly paid by the husband's employer and partly by the husband himself. The appellant argued that part of the repayment subsidized by the employer should be excluded from the computation of disposable income because the amount was deducted by the employer from the husband's salary at source. The appellant also argued that the negative value of the flat should be included in computing the disposable capital of the appellant. 28.The appeal was allowed by the Review Committee. The Registrar who chaired the Committee considered that the amount of mortgage loan payment that came from the employer should be deducted from the amount of disposable income. Alternatively, he was of the view that the negative value of the flat should be added to the disposable capital either by reason of paragraph 6 of Schedule 2 of the Regulations, which does not concern us, or paragraph 1 of Schedule 2 of the Regulations : at pp.523B-524. 29.Mr Malcolm Merry, member of the Review Committee, also agreed that the negative value of the flat should be taken into account in determining the financial resources of the appellant. He was, however, of the view that the negative value is related to the computation of disposable capital rather than income or disposable income : at pp.526I-527A. 30.Mr Hui draws assistance from the following passages in the decision :
and :
31.Mr Hui submits that the decision illustrates that the meaning of value can include both positive and negative value, and that the financial burden of a legal aid applicant should also be taken into account in order to fulfil the statutory intendment. Mr Hui further argues that if contingent liability, as represented by the negative value in Leung Kwai Lin Cindy case, can be taken into account, there is no reason not to consider a present and established liability, such as the debt due to AIG. Mr Hui therefore argues that the Director and the Registrar were wrong in not following the decision of Leung Kwai Lin Cindy. 32.For my part, I do not accept that a failure or refusal to follow Leung Kwai Lin Cindy decision per se can amount to an error of law. The Review Committee is an administrative body. Its decisions are not binding either on the Registrar or any master hearing legal aid appeals. 33.As to the reasonings underlying the decision of the Review Committee in Leung Kwai Lin Cindy case, I do not propose to express any view on the Registrar's reasoning (at p.523) relating to the computation of disposable income since the issue does not arise in the present case. 34.With regard to the reasonings of the Registrar and Mr Merry on the computation of disposable capital and the passages quoted above, it must be borne in mind that they were made in the context of discussions on the computation of disposable capital. Accordingly, when the Registrar said that the negative value should also be considered, he was referring to the computation of the value of a capital resource. Similarly, when Mr Merry commented that a person's financial burdens should be taken into account, he was dealing with the Director's practice of attaching no value to property that has a value less than the outstanding balance of the loan secured upon the property. 35.Contrary to Mr Hui's submissions, the Review Committee did not decide or rule as a matter of construction that in determining financial resources, any form of financial burden, irrespective of its nature, should be taken into account. 36.Properly understood, the reasonings of the Review Committee have no application to the present case. The applicant does not own the taxi, and the Director is not concerned with the value of the taxi in assessing her financial resources. The liability due to AIG is in no way analogous to the negative value of a property because it is a debt and not a liability affecting the value of a capital resource. 37.As to the argument that it is unfair that a contingent liability, arising out of the property having a negative value, can be taken into account whereas the present liability to pay AIG cannot be included for assessing the financial resources of an applicant, it is an irrelevant consideration given that the method of calculating financial resources is statutorily defined and prescribed. CONCLUSION 38.For the reasons aforesaid, there is plainly no room for arguing that the applicant's liability owed to AIG should be taken into account in assessing the applicant's financial resources. The rules for computation prescribed by the statutes simply do not permit this to be done. Given that the appeal hearing before the Registrar is a hearing de novo, the Registrar has no greater power than the Director. It therefore follows that the debt due to AIG could not be taken into account by the Registrar. 39.In the circumstances, neither the Director's decision or the Registrar's decision can be said to be erroneous in law. The application for leave to judicial review must fail. 40.Accordingly, I dismiss the application and make an order nisi that the applicant pays the Director the costs of the application.
Representation: Mr David Hui Tai Wai, instructed by Messrs Joseph Li & Co., for the Applicant Mr Anderson Chow, instructed by Department of Justice, for the 1st Respondent The 2nd Respondent not appearing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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