MK v. REGISTRAR OF HIGH COURT

CACV 355/2021

[2023] HKCA 43

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 355 OF 2021

(ON APPEAL FROM HCAL NO 2433 OF 2019)

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J U D G M E N T

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Hon Poon CJHC (giving the judgment of the Court):

1.  Regulation 21(1) of the Legal Aid Regulations (“LAR”)[1] provides:

“Where an aided person’s solicitor or counsel has reason to believe that the aided person –

(a) has required his case to be conducted unreasonably so as to incur unjustifiable expense or has required unreasonably that the case be continued; or

(b) has wilfully failed to comply with any regulation requiring him to provide information or in furnishing such information has knowingly made a false statement or a false representation,

the solicitor or counsel shall forthwith report the fact to the [Director of Legal Aid] (“the Director”).”

The core issue raised in this appeal from the judgment of Keith Yeung J (“the Judge”) dated 23 June 2021[2] by the Director concerns the extent of the abrogation of legal professional privilege (“LPP”) between an aided person and his legal representatives regarding his financial resources for the purpose of regulation 21(1)(b).

A.  Background

2.  In June 2018, the applicant was granted leave to apply for judicial review in HCAL 1077/2018 to challenge the denial of same-sex couples to the institution of marriage under Hong Kong law; and the failure of the Government to provide for a legal framework for the recognition of same-sex relationships as an alternative to marriage, as unconstitutional. Prior to the commencement of the proceedings, on 5 June 2018, the applicant and her same-sex partner (“C”) attended a conference with Mr Gene Bond Ng (“Mr Ng”) of Messrs Bond Ng Solicitors (“BNS”), Mr Hectar Pun SC, Mr Anson Wong and Ms Tina Mok, who is also a personal friend of the applicant (“the Conference”).

3.  On 25 July 2018, the applicant was granted legal aid to pursue the judicial review. In August 2018, Mr Ng, Mr Pun and Ms Mok were respectively assigned as her solicitor, leading counsel and junior counsel. After repeated requests by the applicant to change her leading counsel, the Director on 9 January 2019 reassigned the case to Ms Gladys Li SC and Ms Linda Wong.

4.  On 22 January 2019, the Director received an anonymous email from an “Informed Taxpayer” alleging that the applicant and C jointly owned a pet shop business. On 31 January 2019, Mr Wong wrote an email to the Director, informing him that he had received an email raising a serious allegation against the applicant’s legal team which prompted him to write to the Director to put the record straight. Specifically, Mr Wong wrote that during the Conference, the applicant and C told the legal representatives that they were co-owners of a pet shop business as they had jointly invested in its operation and contributed to the capital for purchasing the stock for the business. A question was then raised as to whether they would be entitled to legal aid because their assets might exceed the eligibility limit under the legal aid scheme. Mr Pun expressly said that he was not familiar with how financial resources were actually assessed under the means test for legal aid, and would leave it to Mr Ng to assist them in making the legal aid application. Mr Wong did not advise the applicant and C in that regard either.

5.  What followed was a chain of enquiries by the Director regarding the applicant’s financial eligibility. Relevantly:

(1)  The applicant refused to accede to the Director’s repeated requests for disclosure of the conference note of the Conference on the ground that it was covered by LPP which she was not prepared to waive: see the letters from BNS to the Director dated 9 and 30 April 2019.

(2)  BNS stated further in the letter dated 30 April 2019 that at the Conference, the applicant did not make any disclosure of her ownership in the pet shop or admission of having made financial contributions to the same; and that she had never said anything to that effect.

(3)  The applicant herself signed a statutory declaration at the meeting to show cause on 2 May 2019, confirming that there was no written employment contract with her employer; that her monthly salary of HK$5,000 was below the minimum statutory requirement so that she did not have to make any contribution to the Mandatory Provident Fund; that she did not have any ownership in the pet shop; and that she had never made any financial contribution for ordering any stock of the shop. She reiterated that she would not disclose any note regarding the Conference because of LPP, which she was not prepared to waive.

(4)  In response to the Director’s request for information and documents relevant to the applicant’s financial circumstances within his knowledge, Mr Pun in a letter dated 3 May 2019 referred to what the applicant told the legal representatives at the Conference more or less in the same terms as what Mr Wong had written in his email of 31 January, adding that the applicant specifically mentioned that she and C had each contributed hundreds of thousand dollars to the capital for purchasing the stock for the pet shop business.

6.  On 3 May 2019, the Director asked BNS to confirm by way of a statutory declaration the matters stated in their letter of 30 April. When BNS refused to do so, the Director pursuant to section 11 of the Legal Aid Ordinance[3] (“LAO”) and regulation 8(4) of the LAR revoked the grant of legal aid to the applicant on 9 May 2019.[4]

7.  For present purposes, we will refer to what according to Mr Pun and Mr Wong were allegedly said by the applicant at the Conference regarding her financial position as “the Information”.

B.  Legal aid appeal and the ensuing judicial review

8.  On 14 May 2019, the applicant lodged the legal aid appeal.

9.  Mr Pun made an affirmation of 22 May 2019 confirming the contents of his letter of 3 May. Further upon the request of the Director, he provided in a letter his comments on the applicant’s supporting affirmation and the submissions filed on her behalf for the legal aid appeal.

10.  On 23 May 2019, after hearing counsel, the Master dismissed the applicant’s legal aid appeal. Briefly, the Master proceeded on the basis that what transpired at the Conference was protected by LPP. However, regulation 21 applied to Mr Pun so that he could disclose the Information to the Director. Regulation 21 on the other hand did not apply to Mr Wong but the principle derived from R v Cox and Railton [1884] 14 QBD 153 did, which meant that Mr Wong could also disclose the Information to the Director. Having regard to the Information so disclosed, the Master confirmed the Director’s decision to revoke the grant of legal aid to the applicant. Judicial review against the Master’s decision then ensued.

11.  Before the Judge, the applicant contended that the Master erred in law in the application of the law on LPP and regulation 21 in holding that the Information disclosed by Mr Pun and Mr Wong was not protected by LPP; and had further erred in taking into account the Information as it was irrelevant consideration. In allowing the judicial review, the Judge reasoned that:

(1)  On a proper construction of the LAO, LPP is impliedly abrogated to the limited extent concerning the communications on the financial eligibility of an aided person. However, because of section 24(1)(a) and (b) of the LAO, which specifically mention the relationship between the specified parties, namely, an applicant for legal aid, the Director, counsel and solicitor to whom the application is referred, during the application stage and upon assignment, the abrogation should be restricted temporally to times and situations after those relationships have arisen. Similarly, regulation 21 could not apply to pre-application communications.

(2)  Thus, although regulation 21 applied to Mr Pun, the Information was protected by LPP, which, subject to the rule of R v Cox, he could not disclose to the Director. Regulation 21 on the other hand did not apply to Mr Wong as he was never assigned as the applicant’s counsel. He could only disclose the Information to the Director under the rule of R v Cox.

(3)  However, on the facts, the rule of R v Cox did not apply to the Information.

(4)  It followed that the Master erred in taking into account the Information which was disclosed in breach of LPP.

12.  For the above reasons, the Judge granted the applicant leave to apply for judicial review and made an order of certiorari to bring up the decision of the Master and the same be quashed. He further granted declaratory relief that the Master erred in law in the application of LPP and regulation 21 of the LAR; and that the Master took into account irrelevant matters when weighing evidence before him. He finally ordered that the matter be remitted back to the Director for re-consideration as to whether the legal aid certificate granted to the applicant should be revoked with a costs order nisi in favour of the applicant.

C.  Grounds of appeal

13.  The grounds of appeal stated in the Notice of Appeal boil down to three grounds in substance:

(1)  The Judge erred in holding that the Master took into account irrelevant matters because under regulation 8(4)(b) of the LAR, the Director is entitled to take into account all material information regardless of whether such information was provided pursuant to regulation 21 or in breach in LPP.

(2)  The Judge erred in his construction of regulation 21 and in his analysis of LPP in the context of the legal aid scheme in the LAO in holding that the abrogation of LPP regarding an aided person’s financial eligibility for legal aid only arose after the grant of legal aid.

(3)  The Judge ought to have found that the Information was not in fact privileged according to the rule of R v Cox.

14.  Before us, Mr Abraham Chan SC, for the Director,[5] did not pursue the third ground. However, he sought to raise a fourth ground in his written submissions, namely, the Information was not privileged at all because after its disclosure by Mr Pun and Mr Wong to the Director, it had lost its confidential character. As this was a wholly new ground not even pleaded in the Notice of Appeal, we indicated that we would not entertain it, whereupon Mr Chan did not press it any further.

15.  As to the first ground, Mr Erik Shum, for the applicant,[6] complained that it was also a new ground not raised before the Master or the Judge. He invited us not to allow Mr Chan to argue it. We tend to agree with Mr Shum. We also have some reservation about the correctness of Mr Chan’s submissions on the effect of regulation 8(4)(b) but we do not find it necessary to deal with it. For what is dispositive of this appeal is really the second ground, to which we now turn.

D.  Necessary abrogation of LPP for the purpose of regulation 21(1)(b)

16.  It is well settled that LPP is an absolute right which may be overridden only by express statutory provision or necessary implication from the terms of the legislation properly construed in light of their context and purpose: see R v Morgan Grenfell & Co Ltd v Special Commissioner of Income Tax [2003] 1 AC 563, Lord Hobhouse at [45]; read together with R (Black) v Secretary of State for Justice [2018] AC 215, per Lady Hale at [36(4)]. Contrary to her position before the Judge, the applicant does not now take issue that LPP which existed between an aided person and his assigned solicitor and counsel regarding his financial eligibility for legal aid has been abrogated for the purpose of regulation 21(1)(b) by necessary implication. The only difference between the parties is whether such LPP has been so abrogated only after legal aid has been granted to the aided person, as found by the Judge. That difference has to be resolved by a proper interpretation of regulation 21(1)(b) applying the contextual and purposive approach as said.

D1.  Context and purpose

17.  As a general rule, delegated legislation is interpreted in the same way as the primary legislation, with the additional consideration that since delegated legislation derives its authority from the enabling legislation, it must be interpreted in light of the latter: Bennion, Bailey and Norbury on Statutory Interpretation, Eighth Edition, §3.17 of p.114. Applying the general rule, the context and purpose of the LAO relevantly informs the construction of regulation 21(1)(b).

18.  The LAO was enacted in 1967 to establish the statutory regime for the granting of publicly funded legal aid in civil actions to persons of limited means: see its long title. Its primary purpose is to enable those having reasonable grounds but lacking the financial means to enforce their legal rights or defend their interests through the civil justice system to do so. It thus plays a crucial role in facilitating access to justice by those persons with subsidized legal services, which is essential to ensuring equality before the law. Three broad points of immediate relevance arise from such general purpose of the LAO.

19.  First, the expenses for legal aid are publicly funded generally and the Director must ensure that the funds allocated for legal aid are properly expended.

20.  Pursuant to section 27, the expenses for legal aid shall be met by the Director from moneys provided by the Legislative Council, with the exception of expenses incurred under the Supplementary Legal Aid Scheme, which are to be met by the Supplementary Legal Aid Fund, unless such expense are those that cannot be paid out of the Supplementary Legal Aid Fund. Plainly, like any other public authority applying public funds in discharge of his statutory functions, the Director must ensure that public funds for legal aid are properly spent so that the legal aid scheme is competently managed without wastage of public funds: Ngao To-ki v Attorney General [1981] HKLR 259, at p 266F. This duty is central to the sustainability of a credible, efficient and cost-effective legal aid service in Hong Kong.

21.  As to the Supplementary Legal Aid Fund, it is a self-financing fund managed by the Director to support the Supplementary Legal Aid Scheme established in 1984. Under section 31(1), the Director shall keep proper accounts and proper records in relation to the affairs of the Fund. Evidently, the Director must ensure that moneys in the Fund are properly applied to maintain the Supplementary Legal Aid Fund, as is the case for the public funds appropriated for legal aid generally.

22.  Further, as is the case for other government bureaus or departments, the accounts of the Legal Aid Department are subject to the audits by the Director of Audit under the Audit Ordinance,[7] and also section 31(2) of the LAO specifically in connection with the Supplementary Legal Aid Fund. These audits reinforce the financial accountability of the Director.

23.  Second, only those persons who are statutorily recognized to be of limited means are qualified for legal aid under the LAO.

24.  The Ordinary Legal Aid Scheme is available for any person whose financial resources do not exceed HK$420,400 for the proceedings mentioned in Part 1 of Schedule 2, except proceedings mentioned in Part 2 of that Schedule: section 5(1). The Supplementary Legal Aid Scheme is available to any person to whom legal aid is not available because his financial resources are in excess of the amount prescribed for that scheme; and whose financial resources do not exceed HK$2,102,000 for the proceedings mentioned in Part 1 of Schedule 3, except proceedings mentioned in Part 2 of that Schedule: section 5A.

25.  The financial resources of an aided person are to be determined in the manner as prescribed: section 2. Under regulation 2 of the Legal Aid (Assessment of Resources and Contributions) Regulations (“LA(ARC)R”),[8] the financial resources of an aided person is to be assessed by multiplying the aided person’s monthly disposal income by 12 and adding his disposable capital.

26.  The means test based on disposable income and disposable capital is derived from the general expectation that a person engaged in legal proceedings should draw on both his income and capital to meet his legal costs to the extent that he can do so without suffering undue financial hardship. Put differently, the financial eligibility limits set to reflect the individual’s affordability in taking up litigation on his own financial resources, if required. Based on the same general expectation, requiring an aided person to pay reasonable contributions commensurate to his financial resources under section 18 of the LAO ensures that legal aid is provided to those who cannot afford to engage lawyers on a private basis.

27.  The first two points lead to the third, namely, the applicant must satisfy the means test to qualify for legal aid at the time of application and grant of legal aid, and must remain so qualified financially thereafter. This point may be elaborated thus.

28.  Since financial eligibility is a statutory pre-requisite to legal aid, and for the purpose of determining any contribution to be paid by the applicant if legal aid is to be granted, the Director must have the full power to carry out the necessary assessment on his financial resources. Thus, the Director is empowered to make such inquiries as he thinks fit as to the means of a legal aid applicant; require the applicant to furnish such information and such documents as the Director may require for the purpose of considering the application; require the applicant to attend personally before the Director; and refer the application or any matter arising from the application to counsel or solicitor on the panel (under section 4) to investigate the facts and make a report: section 9(a), (b), (c) and (d) of the LAO.[9] More specifically, pursuant to regulation 3 of the LA(ARC)R, the Director is empowered to determine the financial resources, income, disposable income and disposable capital of a person and the extent of his liability to contribute in respect of any proceedings.

29.  Correspondingly, the applicant must provide full and frank disclosure of his financial resources as required under the relevant provisions to enable the Director to carry out the necessary assessment for the purposes of the means test and contributions. Failing to do so may attract criminal sanction. Under section 23 of the LAO, any person seeking or receiving legal aid who wilfully fails to comply with any regulations as to the information to be supplied by him; or in furnishing any information required by such regulations knowingly makes any false statement or false representation, shall be guilty of an offence and liable on summary conviction to a fine at level 3 and to imprisonment for 6 months. Such failure may also lead to revocation or discharge of his legal aid certificate under regulation 8(4) of the LAR.[10]

30.  The aided person’s duty to make full and frank disclosure of financial resources continues after the grant of legal aid. Under regulation 10 of the LA(ARC)R, an aided person shall inform the Director of any change in the financial circumstances with reference to which the original determination was made where that person has reason to believe that such change may affect the terms or continuation of his certificate. The failure to do so may also lead to revocation or discharge of the certificate under regulations 8(4)(viii) of the LAR.

31.  The consequences of the aided person’s failure to discharge his duty to make full and frank disclosure of his financial resources underscore its importance in ensuring that publicly funded legal aid is only granted to persons who are truly financially eligible.

D2.  Construing regulation 21(1)(b) of the LAR

32.  Regulation 21 has already been set out at [1] above. Construed purposively in context and with the above provisions as a coherent whole, its legislative intent is clear.

33.  Regulation 21 aims at preventing abuse of legal aid. Obtaining legal aid when the aided person was not financially eligible or maintaining the legal aid certificate when he is no longer financially eligible is a most serious form of abuse of legal aid. It strikes at the core of the legal aid service which is, like any other forms of public expenditure, subject to constraints in terms of availability and allocation of public resources, by unjustifiably exploiting such resources and diverting them away from other qualified legal aid applicants. A proper construction of regulation 21(1)(b) must give full effect to this crucial purpose. It follows that the duty to report in regulation 21(1)(b) must cover the aided person’s financial eligibility for legal aid.

34.  Further, given the relationship between the aided person and his solicitor or counsel, the drafters must have envisaged the real possibility that the relevant information covered by regulation 21(1)(b) is obtained by the solicitor or counsel under circumstances where LPP attaches. Given the immense importance of preventing abuse of legal aid as discussed above, the legislative intent is plainly that the duty to report the matter to the Director under regulation 21(1)(b) must override LPP which existed between the aided person and his assigned solicitor or counsel on communications concerning his financial eligibility. In short, by necessary implication, such LPP has been abrogated by regulation 21(1)(b).

35.  As a matter of practice, in assigning a case out to a private legal practitioner, the Director takes into account, among other considerations, whether the aided person has nominated a particular private legal practitioner to represent him. Where the aided person has done so, it is not uncommon that he has already consulted the private legal practitioner so nominated. If the Director decides to assign the case according to the nomination, a client/lawyer relationship where LPP attaches may well have already existed between the aided person and the assigned practitioner before the grant of legal aid. To give full effect to the purpose of regulation 21(1)(b) and to prevent abuse in such scenario, its abrogating effect must extend to the relevant communications between the aided person and his solicitor or counsel before the grant of legal aid, requiring the latter to report the same to the Director after the grant of legal aid. There can be no temporal limits on its abrogating effect, contrary to what was suggested by the Judge and adopted by the applicant. Any suggestion of temporal limits would defeat the very purpose of regulation 21(1)(b). It is because were such limits applied, it would deprive the Director of what was otherwise useful information for investigating into and preventing abuse of legal aid by those who are not financially eligible. It would amount to a wholly unwarranted impediment to the discharge of his statutory mandate in ensuring that there would be no wastage of public funds for legal aid by such abuse.

36.  The Judge took the view that if there were no temporal limits, the result would be disproportionate and irrational, for there would be no time limit for abrogation, and imposing a duty on assigned lawyers to report all information originally covered by LPP, however long ago the information was imparted and whatever nature and context the communication might be, is overly cumbersome and unwarranted. However, as submitted by Mr Chan, such reasoning missed the crucial point that regulation 21(1)(b) serves the highly targeted and restricted purpose of preventing abuse by enabling the Director to properly discharge his statutory duty to safeguard public funds. Focusing on and limiting to those communications on preventing abuse only, it does not involve such disproportionality or irrationality as contended.

37.  The Judge further reasoned that the abrogation of LPP should be confined temporally to the time and situations specified in section 24(1)(a) and (b), that is, at the application stage and upon assignment. Section 24(1) provides:

“The like privileges and rights as those which arise from the relationship of client, counsel and solicitor acting in their professional employment shall arise from the following relationships, that is to say–

(a) the relationship between an applicant for legal aid and the Director and counsel and solicitor to whom the application is referred;

(b) the relationship between an aided person and the Director and counsel and solicitor assigned to act for him in any proceedings to which a legal aid certificate relates.”

Properly understood, the effect of section 24(1) is to statutorily extend LPP to the relationships as stipulated.

38.  However, the privileges and rights so extended by section 24(1), including LPP, may be limited by other provisions of the LAO and regulations made under it. A ready example is the requirement of giving information as to the progress and disposal of the assigned legal proceedings to enable the Director to discharge his statutory functions under regulations 12(9) and (10) of the LAR. Another example is the reporting requirement of “unreasonable requirements” in respect of the conduct of the case under regulation 21(1)(a) of the LAR. A proper construction of section 24(1) with regulation 21(1)(b) as a coherent whole should strive to give full effect to the purpose of the latter in preventing abuse. It follows that as a matter of construction, section 24(1) cannot and does not give rise to any temporal limit on the abrogating effect of LPP necessitated by regulation 21(1)(b) as suggested.

D3.  Application to the present case

39.  Applying regulation 21(1)(b) to the present case, the Information is covered by it and Mr Pun was under a duty to report the same to the Director. The Director was entitled to take it into account under regulation 8(4) of the LAR in deciding whether to revoke the legal aid certificate granted to the applicant. So was the Master in determining the applicant’s legal aid appeal.

40.  Regulation 21(1)(b) did not apply to Mr Wong as he was never assigned as counsel for the applicant.

E.  Dispositions of the appeal

41.  Since Mr Chan did not pursue the third ground of appeal relating to the rule of R v Cox, there is no basis for us to disturb the Judge’s ruling that the Master erred in taking into account the Information as disclosed by Mr Wong. It means that the Judge’s judgment and order insofar as it is based on the Information as disclosed by Mr Wong stands. However, in light of our conclusion on the abrogating effect of regulation 21(1)(b) and its application to the present case, the Judge did err in holding that the Master had wrongly taken into account the Information as disclosed by Mr Pun as being irrelevant. Tainted by this error, the remainder of Judge’s judgment and order cannot stand. Since the Master was entitled to take into account the Information as disclosed by Mr Pun, and in the absence of any complaint before us that the Master had failed to properly weigh the evidence, the judicial review must fail. So the proper order to make is to dismiss it.

42.  In consequence, we allow the appeal to the extent as indicated above and substitute the Judge’s order with an order that the judicial review be dismissed. We further direct the parties to file and serve written submissions on costs (limited to 5 pages) for paper disposal within 14 days of this judgment.