Secretary for Justice v. Ocean Technology Ltd and Others

HCA 70/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 70 OF 2008

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Before : Hon Hartmann J in Chambers

Dates of Written Submissions : 27-28 January, 4 and 12 February 2008

Date of Handing Down Ruling : 13 March 2008

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RULING  AS  TO  COSTS

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1.On 9 January 2008, the plaintiff, the Secretary for Justice, applied ex parte, but on notice to the defendants, for an interlocutory injunction restraining them from maintaining an unlicensed radio broadcasting system and from using that system to make broadcasts.  The injunction was sought pending the determination of an action begun by writ in which the Secretary for Justice sought – and still seeks – a permanent injunction to the same effect.

2.Fung J, who heard the application, granted the interlocutory injunction but for a limited period of eight days only, expiring on 18 January.  On that last day, the Secretary for Justice came before me seeking an order that the injunction be continued.  The application was opposed by all of the defendants.  Having heard submissions, in a judgment delivered on 21 January 2008, I ruled that the injunction should not be further extended.  The application was therefore dismissed.

3.In respect of costs, I directed that the parties file written submissions.  I have now had an opportunity to consider those submissions.

4.However, before moving to the question of costs itself, something more (briefly) should be said of the background.

5.It appears that during the course of 2006, officers of the Office of the Telecommunications Authority discovered that the defendants were making unlicensed radio broadcasts.  In the result, the defendants were charged with offences under the Telecommunications Ordinance, Cap.106.  The penalties flowing from those offences include imprisonment.

6.When the matter came to trial in November 2007, the evidence showed that the 1^st defendant, a limited liability company, had made an application for a broadcasting license under the Ordinance but the application had been refused.  The defendants had, however, persisted with their broadcasts because, in their view, the licensing regime contained in the Ordinance was unconstitutional.

7.The presiding magistrate agreed with the defendants.  In a ruling given on 8 January 2008, he concluded by saying :

“I find that, for the reason that the decision to grant a licence or not lies solely at the unfettered and unchecked discretion of the Chief Executive in Council, not being a body independent of the government, and for the reason that the scope of that discretion is not defined in the licensing regime, the restriction on the right to freedom of expression as implemented lacks certainty and is therefore not prescribed by law, and therefore in breach of Articles 27 and 39 of the Basic Law, as well as Article 16 of the Bill of Rights Ordinance and unconstitutional.  Since the licensing regime is unconstitutional, it follows that any charges based upon a failure to comply with that regime must also be unconstitutional.”  [my emphasis]

8.The magistrate then acceded to an application by the prosecution that he adjourn the criminal proceedings pending an appeal of his ruling to be made by way of a case stated.  The magistrate also purported to suspend his ruling that declared the licensing regime to be unconstitutional.

9.The defendants, of course, had not been acquitted of the criminal charges.  The trial stood adjourned, that was all, pending a final determination by the higher courts of whether the licensing regime in the Ordinance was or was not constitutional.  The defendants appreciated that, if they continued to broadcast, they did so at their own risk.  They determined however, if only as an assertion of the right to freedom of speech, to continue doing so and at least one further broadcast was made after the magistrate had handed down his ruling.  This continued broadcasting was accompanied by a good deal of publicity. 

10.In light of these circumstances, in order to prevent the defendants from continuing to act in defiance of the Ordinance, at least as he saw it, and to protect the public right to have the radio spectrum managed in a way that ensured the safety and well-being of Hong Kong people, the Secretary for Justice applied for an interlocutory injunction.  The action taken by him was unusual : an action in which the aid of civil justice was sought to support criminal justice.

11.In considering the issue of costs, therefore, it is important at the outset to recognise that the interlocutory proceedings, in respect of which costs are sought, were in many ways exceptional.  First, they arose out of on-going criminal proceedings.  Second, as the criminal proceedings themselves were concerned with constitutional issues going to the protected right of freedom of expression, it meant that the civil proceedings too were coloured by the same issues.

12.As to the principles governing an award for costs, their award is always a matter of discretion, a discretion that must be exercised judicially and in accordance with the circumstances of each case.

13.Between private litigants, the guiding principle, in respect of interlocutory injunctive proceedings, is that, barring special circumstances, costs be in the cause or that the successful party only be entitled to costs in the cause.  As recently as March 2006, in King Fung Vacuum Ltd v. Toto Toys Ltd [2006] 2 HKLRD 785, at 794, Rogers VP, giving the judgment of the Court of Appeal, said the following :

“There is no justification if one applies American Cynamid principles for giving the successful party his costs in any event, or worse still an immediate order as to costs, unless of course, that party has acted improperly or is in some way to be penalised.  It could be, for example, that if a plaintiff seeks an interlocutory injunction and the application is totally baseless and does not even establish, for example, that there is a matter fit to be tried, that the Court would then consider that such an order might be made.  But those would be very special circumstances.  Normally an order of either costs in the cause, or perhaps the successful party’s costs in the cause would be appropriate.”

14.On behalf of the Secretary for Justice, it is submitted that a neutral costs order would be appropriate in this matter : either no order or costs in the cause.

15.On behalf of the Secretary, it is emphasised that the interlocutory injunction was not sought simply to enforce or protect some private right vested in the state.  The Secretary was instead exercising his constitutional duty to protect the public interest.  In Hoffmann-La Roche v. Trade Secretary [1975] AC 295 at 363, Lord Diplock described the action, which has no counterpart in ordinary litigation between subject and subject, as a ‘law enforcement action’.  This, of course, has always been understood.  It is one of the matters which marks out these interlocutory proceedings as exceptional.  In my judgment of 21 January 2008, I said the following :

“During the course of submissions, Mr Jat, for the Secretary for Justice, referred me to a number of authorities to the effect that the Secretary for Justice was in a different position from an ordinary litigant, that he represented the public interest and when he sought the assistance of the civil court, as he has done in the present case, the court should only refuse him relief in the most exceptional circumstances.

I do not in any way disregard those authorities.  I am aware that the Secretary for Justice would only have sought an injunction because he was of the opinion, an informed opinion, that, in the greater public interest, there were pressing reasons for it.”

16.The defendants have always accepted that the Secretary for Justice has played a special role and has a duty to protect the public interest.  In the present case, however, the defendants say that the Secretary was obliged to take into account that protection of the public interest also entailed protection of the fundamental right of freedom of expression.

17.As to what constituted the central issue for determination in the interlocutory proceedings, in the course of my judgment I said the following :

“In my judgment, the most pressing issue in this application is not compliance with the law for the law itself is in doubt.  The most pressing issue, it seems to me, is whether the continued broadcasts undermine the public right to have a radio spectrum managed in a way that ensures the safety and well-being of the community.  On behalf of the Secretary for Justice it is said that the continued broadcasts undermine this public right.  On behalf of the defendants it is said that they do no such thing.”

18.The defendants have asserted that, in light of all relevant circumstances, there was no justification, certainly no adequate justification, for the Secretary for Justice to seek an interim injunction as a matter of urgency in the manner that he did; that is, ex parte – albeit on what is said to be very short notice to the defendants. 

19.The defendants have emphasised that the jurisdiction enjoyed by the civil courts to aid the criminal law is only to be used exceptionally and with caution since the exercise of the jurisdiction may expose defendants to greater penalties than those prescribed by the criminal law itself.

20.As to the merits of the Secretary’s application, I came to the conclusion in my judgment of 21 January 2008 that, on the evidence before me, it could not be said that the continued broadcasting by the defendants in any way undermined the safety and well being of the community.  Indeed, during the course of argument, counsel for the Secretary for Justice had accepted that – thus far – no assertion could be made that the broadcasts had created any hazard.  Nor, in my opinion, was there any evidence of ‘copy cat’ broadcasts placing an unwarranted strain on the radio spectrum. 

21.In the light of these circumstances, bearing in mind that constitutional issues going to freedom of speech were the essential motivation for the continued broadcasts, I found that a continuation of the interim injunction was not warranted.

22.That being said, however, I cannot say that the application made by the Secretary for Justice was baseless or wholly misconceived.

23.Matters, however, do not end there.  There are, in my opinion, two other matters of importance which are relevant to the question of costs.  The first is the degree to which the interlocutory proceedings have, for all practical purposes, been decisive in respect of the principal action and, consequent upon that, the likelihood of the principal action ever coming to trial.

24.On behalf of the defendants, it is submitted that my judgment has effectively determined not only whether the interim injunction should have been extended but also whether a permanent injunction – the subject of the principal action – should be granted in the future.  In the circumstances, so it is argued, there is no real prospect that the principal action will come to trial.  That being the case, there is, on balance, no purpose served in leaving over the question of costs to be determined at some uncertain later stage.  They should be determined now.

25.On behalf of the Secretary for Justice, however, it is said that it is intended to proceed with the principal action and a statement of claim will be filed.

26.That may be so but, in the circumstances of this case, it may properly be asked : if the principal action will be brought to trial, is that likely to be before the case stated appeal has been finally determined or later?  As things stand, with the case stated appeal already referred to the Court of Appeal on an expedited basis and no statement of claim having yet been issued in the principal action, I think it is most likely that the constitutional issues will be determined by way of the case stated appeal well before the principal action can come to trial.  That is an important consideration because a determination of whether the licensing regime contained in the Ordinance is or is not constitutional will, I believe, determine not only the adjourned criminal proceedings but may well be decisive in deciding the principal action.

27.But even if I am wrong in this regard and the principal action does, in fact, come to trial, I believe there is substance in the submissions made by Mr Dykes SC that an application for a permanent injunction may still be found to be unmeritorious.

28.Mr Dykes has put his submissions in the following way :

(i)      At present, criminal proceedings have already been instituted against the defendants under the Ordinance.  If the licensing regime in the Ordinance is found to be constitutional, the defendants must then, if convicted, face criminal penalties under the Ordinance.  In such circumstances, inviting the court to grant a permanent injunction to restrain the defendants from breaching the law would be tantamount to exposing the defendants to double jeopardy by exposing them to penalties under both civil and criminal law.  As Mr Dykes has expressed it : ‘the relevant provisions in the Ordinance already provide for adequate criminal sanctions of fines and imprisonment.  There is no reason why the Secretary for Justice should be granted a permanent injunction by the civil courts to enforce the available criminal sanctions under the Ordinance’.

(ii)    If, however, the licensing regime is found to be unconstitutional, the criminal charges against the defence will then be dismissed.  If that occurs, the Secretary for Justice will have no legal basis for seeking a permanent injunction because he will be unable to do so in aid of any threatened criminal offence.

29.In summary, taking into account the limited likelihood of the principal action coming to trial or, in any event, a permanent injunction being found necessary, I believe that this is an instance when I should determine costs now rather than making an order which can only be brought to fruition if and when the principal action comes to trial.

30.In my judgment, costs should follow the event.  I have no difficulty in coming to that conclusion.

31.But should the costs be paid forthwith?  Such an order at this time, I think, would be to take matters one step too far.  What lies ahead in respect of both the case stated litigation and the principal action is uncertain.  In addition, it seems to me that invariably an order that costs be paid forthwith is an indicator of the court’s disapproval of the conduct of the party being ordered to pay the costs and I do not believe that the conduct of the Secretary for Justice warrants such an indication.

32.That leaves one final question; namely, the request made on behalf of the 1^st defendant, Ocean Technology Limited, for a certificate for three counsel.  While I appreciate that opposition to the application made by the Secretary for Justice meant that a good deal of work had to be undertaken in a limited time span, and while I appreciate that the issues were not simple, I am of the view that a certificate for three counsel is only justified in the most difficult cases, cases which are distinguished by their complexity and invariably, although not always, by their length.  I have considered the arguments put forward by counsel for the 1^st defendant but, looking to matters in the round, I am not convinced that a certificate for three counsel in this case is warranted.  I believe that the justice of this matter requires a certificate for two counsel only.

33.For the reasons given, I will therefore order that costs are to be to the defendants in any event.  These costs are to include the entirety of the interlocutory proceedings before both Fung J and myself.

Mr Jat Sew Tong, SC and Mr Anthony Chan, instructed by Department of Justice, for the Plaintiff

Mr Philip Dykes, SC, Mr Hectar Pun and Ms Ann Lui, instructed by Messrs Ho, Tse, Wai & Partners, for the 1^st Defendant

2^nd Defendant in person

Mr Martin Lee, SC and Mr Lee Siu Him, instructed by Messrs Ho, Tse, Wai & Partners, for the 3^rd, 4^th and 5^th Defendants

6^th Defendant in person