Lai Hoi Ping and Another v. Persons Occupying Portions of Nathan Road Near To and between Argyle Street and Dundas Street To Prevent or Obstruct Normal Vehicular Traffic From Passing and Repassing the Occupied Areas and Others

HCMP 3090/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 3090 OF 2014

(ON AN INTENDED APPEAL FROM HCA NO. 2104 OF 2014)

________________________

________________________

________________________

J U D G M E N T

________________________

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

1.On 25 November 2014, we refused to grant leave to the 2^nd Defendant to appeal against the grant of interlocutory injunction by Au J on 14 November 2014 as amended on 22 November 2014.

2.By reason of Section 14AB of the High Court Ordinance, there cannot be any appeal from our decision on refusing such leave.

3.On 23 December 2014, solicitors for the 2^nd Defendant issued a Notice of Motion on his behalf seeking leave to appeal to the Court of Final Appeal.  The 2^nd Defendant (and those advising him) were aware of the difficulty in terms of Section 14AB.  In order to overcome it, the 2^nd Defendant put forward a challenge to the constitutionality of Section 14AB by reference to Article 82 of the Basic Law in the Notice of Motion.  

4.That notice of motion was issued whilst the 2^nd Defendant’s legal aid application was pending.  The court and the Plaintiff were notified of the legal aid application by a memorandum dated 19 December 2014 (filed in court on 22 December 2014). 

5.In view of that challenge, this court gave directions for considering the joinder of the Secretary for Justice as an intervening party on 8 January 2015 and partially lifted the legal aid stay for that limited purpose.

6.The directions were as follows:

“ 1. Notwithstanding the pending applications for legal aid, the following directions shall apply and to that extent, and to that extent only, the legal aid stay is lifted. The applications for leave to appeal to the Court of Final Appeal in HCMP 3090 of 2014 and HCMP 3028 of 2014 shall be listed for hearing together before three judges with an estimate of one day. The Listing Officer shall not fix a date for hearing until paras 2 to 4 below are complied with. If the Secretary for Justice is granted leave to intervene, the date shall be fixed in consultation with the diaries of all counsel, including those instructed by the Secretary for Justice.

2. In view of the challenge to the constitutionality of Section 14AB of the High Court Ordinance, the applicants shall serve the applications and papers relating thereto on the Secretary for Justice who shall indicate within 7 days after service of the papers whether he will intervene in the application.

3. If the Secretary for Justice is minded to intervene, the parties shall try to agree on the terms of intervention (including directions for filing of evidence pertaining to the issue of constitutionality of section 14AB, if necessary) and prepare a consent summons within 14 days after the indication by the Secretary pursuant to para 2.

4. If parties cannot agree on the terms of intervention, they should lodge their respective draft directions for intervention together with submissions thereon (not more than 5 pages) within 21 days after the indication by the Secretary pursuant to para 2.  Unless otherwise directed in the meantime, the court shall rule on the terms of intervention on papers.”

7.By a letter dated 16 January 2015, the Secretary for Justice indicated that he would intervene and he would liaise with the parties as to the terms of his intervention. 

8.On 22 January 2015, the Director of Legal Aid informed the court and the parties by a memorandum that he had refused to grant legal aid to the 2^nd Defendant.

9.Solicitors for the 2^nd Defendant then filed a document on 27 January 2015 called “Application to withdraw an application for leave to appeal”. 

10.The filing of such a document is not based on any applicable rule and its effect is doubtful.   Rule 11 of the Hong Kong Court of Final Appeal Rules has no application to proceedings in this court. Order 21 Rule 6 of the Rules of the High Court provides that a party who has taken out a summons in a cause or matter may not withdraw it without the leave of the court.   Though the application of the 2^nd Defendant for leave to appeal to the Court of Final Appeal was made by Notice of Motion, the same principle applies. 

11.By a letter dated 27 January 2015, solicitors for the Plaintiff indicated that the Plaintiff had incurred costs in the perusal and consideration of the matter and sought costs in the sum of $32,000. 

12.In the absence of further progress in the matter, on 13 February 2015 this court directed that the application for withdrawal be proceeded by summons and upon the issue of such summons, the court would give directions for paper disposal of the application.

13.On 16 February 2015, solicitors for the 2^nd Defendant issued a summons seeking leave to withdraw the Notice of Motion of 23 December 2014 with no order as to costs.

14.On 2 March 2015, this court gave directions for the filing of submissions on the application to withdraw.  Parties filed written submissions accordingly.

15.There is no dispute that the 2^nd Defendant should be permitted to withdraw the application for leave to appeal to the Court of Final Appeal.  The real issue between the parties is whether the 2^nd Defendant should bear the costs of the Plaintiff and if so, for how much.

16.Mr Dykes SC, together with Ms Yu, advanced the submissions on behalf of the 2^nd Defendant on a pro bono basis, that there should be no order as to costs because at the material time there was a legal aid stay under section 15 of the Legal Aid Ordinance.  Notwithstanding the partial lifting of the stay for the purpose of consideration of joinder of the Secretary for Justice, the general stay was still in place.  He submitted that if the Plaintiff were allowed to claim costs for works done during this period, it would defeat the objects of the Legal Aid Ordinance in protecting persons with limited means exercising their right of access to the court and in giving time to the Director to carry out the necessary enquiries before reaching a decision on the grant or refusal of legal aid.  He further contended that to allow the claim for costs would encourage the late filing of applications with the incidence of the need to seek extension of time.

17.On the other hand, Ms Leung, submitted on behalf of the Plaintiff that section 15 does not have the effect of precluding the making of an adverse order for costs against an applicant for legal aid in respect of costs incurred pending the decision of the Director of Legal Aid. Counsel contended that there is no justification for depriving the opposite party of costs incurred simply because a party chooses to apply for legal aid after initiating a step in an action. 

18.Citing Societe Anonyme Pecheries Ostendaises v Merchants’ Marine Insurance Co [1928] 1 KB 750, Ms Leung submitted that as a general rule, an order of stay does not amount to a direction to the parties to hold their hands from the time when the order was made.  At p.759, Atkin LJ said:

“ One of the defendants’ contentions was that the effect of the stay of proceedings was that the plaintiffs could not recover any costs incurred by them during that period --- that they were, as the Taxing Master has put it in his answers to the objections, ‘paralysed’. That seems to me to be quite an incorrect view of the effect of the order. All that the order does is to stay proceedings, and ‘proceedings’ obviously do not include the preparations which may be made by the parties by seeing witnesses, taking proofs, carrying on correspondence, and so forth.”

And then, at p.760:

“ To my mind it is quite a mistake to suppose that an order to stay proceedings amounts to a direction to the parties to hold their hands from the time when the order is made and to indulge in no further activities with a view to ascertaining the facts, procuring evidence and so forth. Such a view would be quite contrary to the ordinary practice.”

19.But a stay is a factor to be taken into account in terms of the extent to which costs could be reasonably incurred.  This is apparent from what Atkin LJ said further down the same page, after referring to the common practice of continuing with preparation during the period of stay (in the context of stay pending payment of security for costs):

“ They may, of course, go too far and make excessive preparations, and if they make excessive preparations it may well be that the costs will not be allowed …”

20.The same point can be made by reference to the judgment of Lord Hanworth MR at p.757:

“ It is not a stay of activities, the steps which prudence dictates are not forbidden.”

(Our emphasis) 

See also the judgment of Lawrence LJ at p.765:

“ A solicitor must of course be careful in what he does during such a stay, because the Taxing Master would no doubt take the existence of the stay into consideration in coming to a conclusion whether any costs incurred during such stay were premature or not.”

21.Ms Leung accepted that the costs have to be reasonably incurred before they could be recovered.

22.Further, Ms Leung submitted that there was no need for the 2^nd Defendant to take out the Notice of Motion before the Director reached a decision on legal aid.  As held in Brook v The Law Society of Hong Kong [1998] 1 HKLRD 113, the time limit for appeal does not run during the period of the legal aid stay.  Hence, once the 2^nd Defendant made an application for legal aid, the Director would be obliged to file a memorandum under section 15 which would have triggered the stay.

23.In our judgment, as a matter of principle, a legal aid stay operates in the same way as a stay ordered by the court in respect of potential liability for costs incurred during the interim period. We agree with Ms Leung that such a stay does not amount to a direction to withhold all activities.  We can envisage scenarios where a party facing a legal aid stay would need to have legal advice from his lawyers as regards what should be done in the meantime, including consideration as to the possibility of applying for the lifting of the stay in cases where an application for legal aid is deployed as a delaying tactic.  Section 15(5) makes it clear that certain steps can be taken in the relevant legal proceedings notwithstanding the stay.  Whilst we are not dealing with those scenarios, we are of the firm view that it is not the intention of the legislature to impose a moratorium on the incidence of costs as soon as a legal aid stay comes into operation. 

24.At the same time, we must emphatically state that a legal aid stay is an important matter in the overall background against which the reasonableness of the costs incurred has to be assessed.  Thus, in a situation like the one the Plaintiff is faced with in the present case, whilst we accept it was indeed reasonable for them to incur some costs in terms of perusals and consideration of documents (including the directions from this court) and incidental advice and correspondence, the costs must be circumscribed as we cannot see any urgency which requires much further activities on the part of the Plaintiffs during the period of stay.

25.With such rider, we do not agree with Mr Dykes’ submission that the rejection of his contention as to the effect of section 15 will be contrary to the objectives of the Legal Aid Ordinance. 

26.The above analysis also addressed Mr Dykes’ submission on the lack of judicial guidance on the effect of section 15. 

27.In the present case, Ms Leung submitted that the activities of the Plaintiffs’ solicitors during the interim period were within reasonable bounds as they were confined to perusal and consideration of documents and correspondence.  She further submitted that the other factors relied upon by Mr Dykes (the lack of means on the part of the 2^nd Defendant, his conduct of proceedings with legal aid all along, the public importance of  the question in respect of section 14AB) were not pertinent to the question of reasonableness of the Plaintiffs in incurring those costs.

28.By and large, we agree with Ms Leung.  We would grant leave to the 2^nd Defendant to withdraw the Notice of Motion of 23 December 2014 and order the 2^nd Defendant to pay the costs of the Plaintiff in respect of the same. 

29.However, as far as quantum is concerned, we find the sum of $32,000 claimed in the letter of 27 January 2015 to be excessive. Instead of escalating costs by way of taxation, we are of the view that this court should do a summary assessment and we provisionally fix the costs up to 27 January 2015 at $20,000.  Any party who wishes to contend otherwise may write to this court within 7 days and we shall then make a final determination on paper. 

30.It follows from the above that the Plaintiffs achieve better than what is proposed by the 2^nd Defendant in the summons of 16 February 2015 and they should have the costs of the application to withdraw.   Ms Leung asked for costs on indemnity basis in light of the lack of merit of the Notice of Motion and the opportunistic stance of the 2^nd Defendant.  We agree that the challenge as to section 14AB is a very bold challenge and the 2^nd Defendant did appear to be opportunistic.  Having said so, we also take into account of the prompt action on the part of the 2^nd Defendant to withdraw.  In the end, we decide to order costs on party to party basis.  In the statement of costs, the Plaintiffs asked for $75,691.67.  We think the modest fee charged by Ms Leung is very reasonable.  However, bearing in mind the works involved on the part of the solicitors for the Plaintiff in relation to the summons, there is room for deduction.  We shall fix such costs (including counsel fees) at $60,000.

Written submissions by Ms Eva Leung, instructed by Phyllis K Y Kwong Associates, for the 1^st and 2^nd plaintiffs

Written submissions by Mr Philip Dykes, SC and Ms Christine Yu, instructed by JCC Cheung & Co, for the 2^nd defendant