AA AND ANOTHR v. THE SECURITIES AND FUTURES COMMISSION

HCAL 41/2016

[2019] HKCFI 1703

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO 41 OF 2016

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JUDGMENT (ON COSTS)

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1.  The Court in its judgment handed down on 11 February 2019, dismissed the application for judicial review and made a costs order nisi that the applicants pay the costs of both the respondent, the Securities and Futures Commission (the SFC), and the intervener, the Secretary for Justice (the SJ), with a certificate for two counsel, to be taxed if not agreed.

2.  By summons dated 25 February 2019, the applicants apply to vary the costs order nisi to provide that the applicants pay one set of costs only.  An affirmation in support of the summons was filed by Mr Michael Chik Man Dick also dated 25 February 2019.  It appeared from the contents of the affirmation that the applicants took issue with having to pay the costs of the SJ and therefore the Court issued directions on that basis.

3.  The Court has received written submissions from the applicants on 17 April and 22 May 2019, and the SJ on 8 May 2019.  A letter dated 23 May 2019 was also received from the SFC, which was a response to the applicants’ submission that they should be liable to pay only one set of costs and that they were neutral as to how those costs between the SFC and the SJ should be apportioned.  The SFC noted that the variation application only concerned whether the applicants were liable for the SJ’s costs and did not affect their entitlement to costs from the applicants.  The SFC was of the view that there was no issue of apportionment of costs between the SFC and the SJ.  A letter dated 24 May 2019 from the solicitors of the applicants disagreed with the SFC’s understanding of the application, and emphasised that the applicants were seeking to vary the costs order nisi so that they would be liable to pay only one set of costs.

4.  Mr Timothy Parker, for the applicants, submits that they do not dispute their liability in principle to pay costs.  He takes issue with the fact that they have to pay two sets of costs when there are no “special circumstances” in the present case to require them to do so.  He relies on the general rule that where an application for judicial review is dismissed, the unsuccessful applicant will not be required to pay more than one set of costs if there were two or more respondents (the general rule). Although, “special circumstances” may sometimes warrant the court ordering an unsuccessful applicant to pay two sets of costs.[1] 

5.  In Cheng Kar-Shun v Hon Li Fung-ying and Ors, HCAL 79/2009, unreported, A Cheung J (as he then was), provides the following useful summary of the applicable principles on the question of costs against an unsuccessful applicant in judicial review proceedings involving multiple opposing parties.

“6. As I observed in the recent case of Hong Kong Aircrew Officers Association v The Director-General of Civil Aviation, HCAL 96/2008 (4 September 2009), generally speaking, an applicant for judicial review should only be made to pay one set of costs, where his application has been successfully opposed by more than one respondent, or where the opposition has come from the respondent as well as an interested party. It is for the additional respondent or interested party to justify his participation in the proceedings. As I set out in paragraph 5 of that judgment, costs is always in the discretion of the court, and there can be no hard and fast rules. In a situation of the present type, there are several interrelated questions to bear in mind:

(1) whether the separately represented respondent has any relevant or significant interest or reason to justify his participation in the proceedings;

(2) whether that party raises (successfully) any separate or distinct, material issue for adjudication in the same proceedings;

(3) whether that party can be represented by the same team of lawyers of his co-respondent for the proper protection of his interest or ventilation of the issue in question.

As the exercise of a discretion is involved, the court would of course be prepared to consider any other relevant matters.”

6.  See also Shiu Wing Steel Limited v Director of Environmental Protection, CACC 350/2003, 18 March 2005, unreported, at §§157 and 158.

7.  Mr Parker points out that the applicants opposed the SJ’s application to intervene as the SFC was named as the sole respondent in the Form 86, and the SJ only sought leave to intervene after being informed of the proceedings by the SFC.  He notes that the SJ’s intervention was confined to the issue of the constitutionality of section 181 of the Securities and Futures Ordinance, Cap 571, (the constitutional issue), but submits that she had no separate interest which required separate representation.[2]  He adds that the SFC could have, and did defend the constitutionality issue, and it was unnecessary for the SJ to be represented by separate counsel as she could have instructed counsel appearing for the SFC to also represent her interest.  In my view, this is a valid point that provides strong support for the variation application.

8.  Mr Parker also points out that when the SJ applied for leave to intervene, she did so on the basis that she would not be seeking her costs.  At the time, the order sought from the SJ included that: “There be no order as to costs between the Secretary for Justice and all of the other parties in these proceedings”. This order was opposed by the applicants because of its breadth, and the issue of costs was left unresolved.  However, in my view, it does evidence that the SJ considered her position was somewhat unusual in light of the fact that the SFC was the respondent which was legally represented to argue the issues raised by the judicial review.  She was merely adding her voice to the submissions being advanced by the SFC.  She was not adding anything new, although counsel on her behalf made more detailed submissions on the constitutional issue than counsel for the SFC, but that appeared to be an arrangement between the parties. 

9.  Mr Abraham Chan, SC, for the SJ, contends that the cost order nisi was rightly made, and he invites the Court to dismiss the variation application.  He points out that the Court allowed the SJ to intervene without the condition that there be a no costs order between the SJ and the applicants.  He submits that the SJ had initially put forward a “no order” proposal, “with the view to encouraging a sensible response to her intervention”, but the applicants eschewed it.  He contends that now the SJ has given a full argument, she should not be deprived of her costs because of the previous “no cost” proposal.  He also contends that the SJ was vindicated in resisting the constitutional challenge and that the public should not bear the bill for her doing so.

10.  Mr Chan seeks to draw a distinction between multiple respondents in judicial review proceedings and the SJ’s status as an intervener.  However, I do not see how the status of an intervener, rather than a respondent or interested party, justifies a departure from the general rule. The general rule is that an unsuccessful applicant should only be required to pay one set of costs. It is for the additional respondent or interested party, or intervener for that matter, to justify his participation in the proceedings.[3]  As submitted by Mr Parker, the question is one of substance and discretion, not labels.[4]  

11.  Mr Chan also contends that the general rule does not apply to the SJ in public law proceedings as intervener in the discharge of her role as guardian of the public interest because her position is fundamentally different from a respondent or interested party to which the general rule only applies.  He adds that in this role, the SJ acts for and represents the public as a whole and is not partisan towards any separate or narrow interest as may be displayed by a body like the SFC.  He submits that it was not inappropriate for the SJ to be separately represented because the SFC may have its own priorities and purposes in how it handled the constitutional issue.  However, in my view, that was not the case and it was clear that the SFC and the SJ were on the same page in relation to the constitutional issue.

12.  When leave was granted to the SJ to join the proceedings, it was recognised that the public interest warranted her intervention and that her concern was confined to the constitutional issue.  Mr Chan relies on Cheng Kar-Shun as authority for the proposition that the SJ may be entitled to the costs of her involvement in proceedings involving issues of constitutionality and broad public concern.

13.  Mr Parker submits that the substance of the SJ’s participation in this case did not justify separate representation or a departure from the general rule.[5]  A party may be entitled to his costs where he had raised a new and separate point from the other parties which had been material to the outcome.[6]  However, this exception to the general rule is inapplicable to the SJ in the present case because the SJ did not raise any different arguments on any separate issue from those already advanced by the SFC.

14.  Mr Parker further submits that the mere assertion of the SJ being the “guardian of the public interest” is not of itself a good reason for departing from the general rule.  He submits that the SJ’s constitutional role does not grant her a privileged position over other litigants when it comes to costs.  As a general proposition that is true, although there may be situations where the SJ would be entitled to her costs, having intervened in proceedings involving issues of constitutionality and broad public concern, but that would depend upon the particular circumstances of the case.

15.  In my view, when the SJ intervened in these proceedings, she realised that she was merely adding her voice to the submissions of the SFC on the constitutional issue.  That was apparent by her initial proposal that there be no order as to costs either for or against her.  The SFC and the SJ had the same interest in relation to the constitutional issue and they advanced the same argument.  No new or separate issue was raised by the SJ that entitles her to costs.

16.  I am in agreement with the submissions of the applicants to the extent that they should not be liable for the costs of the SJ.  I am of the view that no separate interest was served by having the intervener separately represented. I am also of the view that the SFC is entitled to its costs and that the SJ intervened in the judicial review proceedings to add her voice to the submissions of the SFC on the constitutional issue and should therefore bear her own costs.  I therefore order that the costs order nisi be varied to the extent that the applicants not be liable for the costs of the SJ and the SJ is to bear her own costs.  Otherwise, the costs order nisi that the applicants pay the SFC’s costs be made absolute. 

17.  On the basis that costs follow the event, I also order that the SJ pay the applicants’ costs of the variation application, to be taxed if not agreed.

[1] See Hong Kong Civil Procedure, 2019, at §53/14/63.

[2] PCCW-HKT Telephone Limited v The Telecommunications Authority & Ors. [2008] 2 HKLRD 282, at §38.

[3] Cheng Kar-Shun v Hon Li Fung-ying and Ors [2011] 2 HKLRD 555, at §6.

[4] Cheng Kar-Shun, at §6.

[5] Cheng Kar-Shun, at §9.

[6] Cheng Kar-Shun, at §§10 and 11; Shiu Wing Steel Ltd v Director of Environmental Protection CACV 350/2003, 18 March 2016, unreported, at §158.