CHUI KA WAI KIMMY v. IP, KWAN & CO. (a firm)

HCMP 1448/2017

[2019] HKCFI 927

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEDDINGS NO 1448 OF 2017

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D E C I S I O N

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INTRODUCTION

1.  The Plaintiff is an injured person in a traffic accident which happened on 29^th May 2015 (“Accident”).  At the time of the Accident, the Plaintiff was a private tutor to students. 

2.  On 10^th June 2015, the Plaintiff sought preliminary advice on her intended personal injuries claim from Ms Kwan Long Yee Corrina (“Ms Kwan”), a solicitor and a partner of the Defendant.   Ms Kwan advised the Plaintiff to consider applying for legal aid if she was eligible for it.  On 5^th August 2016, the Plaintiff was granted legal aid on the Supplementary Legal Aid Scheme and Ms Kwan was assigned by the Legal Aid Department (“LAD”) to represent the Plaintiff. 

3.  In February 2017, the Plaintiff decided to cancel her legal aid certificate.  On 2^nd March 2017, the Plaintiff’s legal aid certificate was discharged.  On 8^th March 2017, Ms Kwan received the Notice of Discharge dated 2^nd March 2017 from the LAD.  Accordingly, during the period between 5^th August 2016 (being the date of the grant of legal aid) and 2^nd March 2017 (being the date of discharge of legal aid), the Plaintiff was on legal aid (“Legal Aid Period”). 

4.  After the discharge, the Plaintiff continued to engage the Defendant as her solicitors on private basis. Through an email issued by Ms Kwan to the Plaintiff on 9^th February 2017, the Plaintiff was provided with a retainer agreement prepared by Ms Kwan dated 9^th February 2017.

5.  On 14^th March 2017, the Plaintiff signed the retainer agreement with the Defendant (“Retainer Agreement”) and became a private client of the Defendant.  Clause 3(c) of the Retainer Agreement provides as follows: -

“You will personally be responsible for paying our fees including legal costs and disbursements incurred as from the date of issuance of the legal aid certificate and on this basis, we shall confirm to the LAD that no fee is due from LAD to this firm.”

6.  On 18^th April 2017, the Defendant commenced the personal injuries proceedings under Action No. HCPI 389 of 2017 on behalf of the Plaintiff (“Personal Injuries Proceedings”) to claim damages for the personal injuries sustained by the Plaintiff in the Accident.  On 17^th May 2017, Ms Kwan asked the Plaintiff to change her solicitors.  On 22^nd May 2017, the Plaintiff’s current solicitors, ONC Lawyers (“ONC”) wrote to the Defendant that they were going to replace the Defendant to act as the Plaintiff’s solicitors in the Personal Injuries Proceedings. 

7.  On 23^rd May 2017, the Defendant delivered a fee note to the Plaintiff charging her for the services provided by the Defendant for the period from 10^th June 2015 up to 23^rd May 2017 and the same included the Defendant’s work done during the Legal Aid Period (“Bill”).  This Bill amounted to HK$405,720 (HK$400,360 for professional charges and copying charges and HK$5,360 for incidental disbursements). 

8.  On 22^nd June 2017, the Plaintiff commenced the present proceedings pursuant to s. 67 of the Legal Practitioners Ordinance (Cap 159) (“LPO”) to tax the Bill. 

9.  This is the hearing to determine the following preliminary issue pursuant to an order of Master Chow dated 13^th July 2017: -

“Whether the Plaintiff is personally responsible for paying the costs incurred as claimed in the Defendant’s Bill of Costs dated 23^rd May 2017 during the period when the legal aid certificate issued in HCPI 389 of 2017 was in place (i.e. from 5^th August 2016 to 2^nd March 2017.” (“Preliminary Issue”).

10.  The Preliminary Issue was originally scheduled to be heard before Master Elaine Liu on 3^rd November 2017. Shortly before the hearing, the Defendant took out a Summons on 26^th October 2017 to seek leave for cross examination of the Plaintiff on her 2 affidavits filed on 22^nd June 2017 and 3rd August 2017 which was also heard on 3^rd November 2017 (“Summons for cross examination”).  All along and until the hearing on 3^rd November 2017, the Plaintiff relied on two major grounds regarding the Preliminary Issue.  The first major ground was that the costs arrangement as set out in clause 3(c) of the Retainer Agreement was in breach of s.22 of Legal Aid Ordinance (Cap 91) (“LAO”) which rendered it illegal and unenforceable against the Plaintiff.  The second major ground was that the Retainer Agreement had not been adequately or properly explained to the Plaintiff.  In the course of the said hearing on 3^rd November 2017, Counsel for the Plaintiff confirmed to the Court that the Plaintiff would only be relying on the first ground and abandoned the other ground that the Retainer Agreement had not been adequately or properly explained to the Plaintiff. 

11.  In the end of the hearing on 3^rd November 2017, Master Elaine Liu concluded that the evidence from both parties were in heated dispute and the factual issues could not be resolved just on paper.  Master Elaine Liu ordered, inter alia, that the Plaintiff and Ms Kwan should attend the Court and be cross-examined on their respective evidence filed in the Summons.  The hearing of the Summons on the Preliminary Issue be adjourned to a date to be fixed and costs of the hearing on 3^rd November 2017 including a certificate for counsel be in the cause of the Summons on the Preliminary Issue. 

12.  The hearing for the determination of the Preliminary Issue took place on 11^th - 12^th September 2018 and 20^th November 2018 before me.  Two witnesses gave evidence, namely, the Plaintiff and Ms Kwan.  Both of them were cross-examined. 

The issues to be decided

13.  As regards the Preliminary Issue, the Plaintiff’s stance is that:-

(1)  The Plaintiff is not personally responsible to pay the costs incurred during the Legal Aid Period as claimed in the Bill because Clause 3(c) of the Retainer Agreement signed between the Plaintiff and the Defendantwas incontravention of s.22 of LAO.  According to the Plaintiff: -

(a) s.22 of LAO prohibits a person who acts for a legally aided person (ie including a solicitor) to take or agree to take or seek from an aided person any fee in respect of the case covered by the legal aid.  This is supported by the fact that if one reads ss. 16B, 20 and 22 of LAO together, it shows that the nature of the tripartite payment relationship between the aided person, the solicitors and the Director of Legal Aid, which is that, all monies should be paid to and by the Director of Legal Aid;  

(b) the Defendant has allegedly contravened s.22 of LAO; and

(c) Clause 3(c) of the Retainer Agreement is “like a confession - that every element under section 22(1) would be fulfilled word by word”. 

(2)  Since s.22 of LAO has been contravened, Clause 3(c) of the Retainer Agreement is illegal, void and unenforceable;  

(3)  The Court only has to consider s.22 of LAO to resolve the Preliminary Issue, which is purely a question of law.  The Court need not consider s.17 of the LAO relied on by the Defendant since this section is not applicable and irrelevant to the present case of taxation of the Bill; 

(4)  Since the factual evidence adduced at the trial relates only to the s.17 issue, the factual evidence is also irrelevant; and 

(5)  s.17 of LAO does not apply in the present case because:   

(a) s.17 of LAO is outside the scope of the Preliminary Issue because the Bill has nothing to do with s.17 of LAO; 

(b) the present proceedings are taxation proceedings commenced under s.67 of the LPO.  The Originating Summons and the framed Preliminary Issue do not touch upon or have anything to do with s.17.  If it is the Defendant wishes to pursue an order to compel the Plaintiff to pay costs incurred in the Personal Injury action on the ground of s.17, the Defendant would have to do it in the Personal Injury action; 

(c) the present proceedings are not the proper venue to deal with the question whether a costs order should be made pursuant to s.17 of LAO;  

(d) alternatively, a Master dealing with a s.67 of LPO application has no jurisdiction to make any costs order pursuant to s.17 of LAO because a s.17 costs order must attach to the litigation to which the legal aid certificate relates; 

(e) furthermore, alternatively and in any event, there is insufficient evidence to prove the applicability of s.17, particularly when the Director of Legal Aid (being the victim of fraud or misrepresentation), chose not to make any such application under s.17 and/or to take part in the proceedings and/or to present evidence which only the Director of Legal Aid holds and possesses.  This Court should not make an order under s.17(1) LAO. 

14.  The Plaintiff’s stance is vigorously opposed by the Defendant.  The Defendant’s stance is that: - 

(1)  Clause 3(c) of the Retainer Agreement has not contravened s. 22 of LAO;  

(2)  Accordingly, the Retainer Agreement being a valid contract between the Plaintiff and Defendant, is plainly binding and enforceable against the Plaintiff; 

(3)  Further and alternatively, irrespective of s.22 of LAO, s.17 of LAO plainly applies and falls within the ambit of the Preliminary Issue.  Since the evidence clearly shows that the Plaintiff had abused legal aid in that the same was obtained by her through fraud or misrepresentation, an order should be made by this Court pursuant to s.17(1) of LAO that the Plaintiff should be personally liable for the costs of the Defendant, who had acted for her as her solicitor in the related Personal Injuries Proceedings. 

15.  In these circumstances, in light of the parties’ respective positions, the following issues fall for determination by this Court, namely:

(1)  Whether Clause 3(c) of the Retainer Agreement has contravened s.22 of LAO; 

(2)  Whether s.17(1) of LAO falls within the ambit of the Preliminary Issue; and 

(3)  If s.17(1) of LAO falls within the ambit of the Preliminary Issue, whether the evidence shows that the Plaintiff had obtained her legal aid certificate through fraud and/or misrepresentation such that this Court should make an order pursuant to s.17(1) of LAO that the Plaintiff be personally liable for the costs of the Defendant incurred during the Legal Aid Period in the Personal Injuries Proceedings. 

Evidence

16.  The matters stated in paragraphs 1-12 above are not in dispute.  

17.  In the hearing on 11^th and 12^th September 2018, the parties made opening submissions and the Plaintiff and Ms Kwan gave evidence in Court on the factual matrix surrounding the making of the Retainer Agreement and how the Retainer Agreement was concluded.  As the hearing was originally fixed for two days on 11^th and 12^th September 2018 only, the parties came back on 20^th November 2018 to make final submissions on the case.  On 12^th September 2018, I allowed the release to the parties the typed transcript of evidence given by the two witnesses in the hearing on 11^th and 12^th September 2018. 

18.  The major evidence of the Plaintiff:- 

(a)  The Plaintiff had made a total of four affirmations in these proceedings respectively affirmed on 22^nd June 2017, 2^nd August 2017, 28^th November 2017 and 25^th June 2018.  The Plaintiff confirmed the contents of these affirmations and agreed to adopt the same as her evidence in chief. 

(b)  The Plaintiff is now aged 39 and her husband is aged 41.  She can read and understand Chinese and English.  At the time of the accident, the Plaintiff was working as a full time private tutor giving tuition lessons to students. The Plaintiff had been working as a private tutor for about 10 years.

(c)  As accepted by Plaintiff during cross-examination, the Plaintiff was informed by Ms Kwan, and also by Boris Siu of the Defendant during a phone call on 15^th February 2017 that she should not sign the Retainer Letter until her legal aid certificate was discharged. 

(d)  It is not disputed that as at June 2015, the Plaintiff had an account with SCB (314-2-035400-5) (“SCB Account”) under her own name and the said account was closed on 20^th August 2015.

(e)  Insofar as the Plaintiff’s legal aid application forms signed on 24^th February 2016 and 16^th June 2016(“Forms”) are concerned, the evidence shows that the Plaintiff stated that she was unemployed / jobless and left the income column blank.  She did not disclose, inParts 3B and 4 of the Forms, that her husband was working as a private tutor and was earning income therefrom.  She did not disclose, in Part 5C of the Forms, that she closed the SCB Account. 

(f)  The Plaintiff explained that she stated in the Forms that she was unemployed / jobless and left the income column blank because she was unemployed at the time when she applied for legal aid, which was about 9 months after the Accident. 

(g)  In Part 5C of the Forms, the Plaintiff put down 1^st February 2016 as the date which she became aware that she would have to commence the Personal Injuries Proceedings.  The Plaintiff explained that she told the clerk that she did call a lawyer before but she had forgotten the time, and the clerk told her to put down the date when she collected a copy of the application form. 

(h)  In the Personal Injuries Proceedings, the Plaintiff stated that she had not resumed her work as a private tutor.  The Plaintiff explained that shortly after the Accident, her husband and sister had taken up her tutorship and became tutors of her former students.  She delegated the teaching to her husband and younger sister at the Plaintiff’s home using the teaching materials provided by the Plaintiff, while the Plaintiff retained an overseeing or supervisory role to contribute or give comment, to liaise with the parents of the students and to receive the tuition fees, which would be passed to her husband and her younger sister.  The Plaintiff explained that the parents were willing to accept such new arrangement because the Plaintiff possessed a lot of past papers with her own remarks which served as very important teaching tools in the tuitions and her husband and sister could make use of these past papers and her remarks for teaching. 

(i)  When asked why she did not fill in her last job and the income she earned therefrom in the Forms, the Plaintiff explained that she did not know how to fill in the Forms so she asked the staff of the LAD what she was required to fill in and only filled in things as told by the LAD staff and that the LAD staff did not remind her to fill in her last job and the income she earned therefrom.  

(j)  The evidence shows that the Plaintiff kept a diary recording her schedules.  For 2015, she was using one diary.  In cross-examination, the Plaintiff confirmed that the 2015 Diary was the single diary which recorded both her private and work schedule.  This practice was also reflected in the diaries the Plaintiff used in 2013 and 2014.  After the Accident, nothing in relation to the new arrangement regarding the private tuition was recorded in the 2015 Diary.  When asked about this during cross-examination, the Plaintiff explained that as she was not responsible for teaching, she did not have to mark the times in her diary.  

(k)  During cross-examination, the Plaintiff explained that she recorded the tutorial schedule for the new arrangement in a separate piece of “A4 paper”.  She said there were three copies, each of which was retained by her husband, her sister and herself.  When the Plaintiff was asked how she would cope with the change of schedule, she answered that she would make changes on her husband’s copy.  The Plaintiff said that she could not adduce the “A4 paper” as evidence because she would discard them by the end of each month.  The Plaintiff said that, under the new arrangement, she considered them the pupils of her husband and sister not hers.  As she was not responsible for teaching, she did not have to mark the times in her diary. 

(l)  The Plaintiff maintained that she cared much for her students and, after the Accident, continued to be concerned with their academic results and affairs.  She was worried about herstudents and she wanted to get back to teaching as soon as possible.  She made the new arrangement with 4 tutees (Darren, Darryl, Ka Cheuk and Ashlynn).  The handwritten record prepared by the Plaintiff shows that Darren, Darryl and Ashlynn have been tutored by the Plaintiff since early 2013.  She explained that she implemented the new arrangement because she cared about these long-term tutees. 

(m)  Payment of tuition fees after the accident was made in cash.  The Plaintiff accepted that, prior to the Accident, more than 50% of the tuition fees were paid by cheque.  The records show that the parents of Darren, Darryl and Ashlynn paid their tuition fees by cheque prior to the Accident.  The Plaintiff explained that her husband and sister preferred taking cash. 

(n)  During cross-examination, the Plaintiff confirmed that her husband had experience to work as a private tutor.  The Plaintiff’s husband took over the Plaintiff’s students after the Accident. Apart from the 4 tutees under the new arrangement, the Plaintiff’s husband also tutored Samuel on his own. As to this, the Plaintiff explained that “... I completely forgot about it at the time when I filled in the forms.  I only realised after you mentioned about it yesterday”.   

(o)  In Part 5C of the Forms, an applicant is required to state whether he/she had cancelled any bank accounts since he/she became aware that he/she would take.  She stated in the Forms that she did not cancel any bank accounts after 1^st February 2016.  It is not disputed that as at June 2015, the Plaintiff had the SCB Account under her own name and this account was closed on 20^th August 2015.  The Plaintiff mentioned to Ms Kwan about this account for the first time during a conference on 14^th December 2016 and it was recorded in the attendance notes that Plaintiff herself considered that if this account was produced, legal aid would be cancelled.  The Plaintiff explained that she did not have to disclose the SCB Account in the Forms because: -

(i)  At a meeting on 10^th March 2016, she was told by a LAD staff called Ms Lau that she only needed to disclose all closed accounts within 3 months of her application; and 

(ii) The monies in the SCB Account belonged to her aunt and her younger sister and Part 5C only required her to disclose closed accounts which were under the name of herself or her spouse. 

(p)  The Plaintiff referred to two Chinese documents entitled “Important Note” and “Attached Documents” and explained that these documents show that a legal aid applicant is only required to produce all bank accounts of the applicant and the applicant’s spouse within 3 months of her application in §25 of her 4^th Affidavit.  

(q)  In the relevant handwritten attendance notes compiled by the Defendant, it was stated that part of it was belonging to Kimmy (“有一部分係Kimmy的”).  When this statement was highlighted to the Plaintiff during cross-examination, the Plaintiff explained that she did not know because she did not compile the handwritten attendance records (“我唔知喇，即係紀錄唔係我寫，係咪，我唔清楚，我唔知道...”). 

(r)  As regards the SCB Account, the evidence shows that:  

a.  The SCB Account was opened since 2008-2009;  

b.  According to the Plaintiff’s own records (at least for the period for about 2 years from 29^th May 2013 to 19^th May 2015), the SCB Account had been used by her for depositing cheques issued by the parents of her students to pay for the tuition fees she earned, and also for her daily use;  

c.  There are also other payments in and out of this account and some were transferred to a joint account held by the Plaintiff and her husband. 

(s)  The Plaintiff did not mention in any of her affidavits how much she owed her aunt, when she started owing money to her aunt, and under what circumstances did it come about that she owed money to her aunt.  Under cross examination, she said that before February 2016, she had borrowed about $800,000 - $900,000 from her aunt according to her best recollection. 

(t)  As can be seen from the passbook for the SCB Account, the Plaintiff sometimes made several withdrawals on the same day, for example, 5 withdrawals were made on 28^th April 2015.  According to the Plaintiff, the purpose of opening the SCB Account was to repay the debts owed to her aunt.  Since the monies belonged to her aunt, she said that she had to ask for her aunt’s permission whenever she had to make a withdrawal from the SCB Account, even if the amount to be withdrawn was only of a small sum, and that she would ask for her aunt’s permission on the phone because she talked to her aunt every day. 

(u)  In paragraph 5 of the Plaintiff’s 2^nd Affidavit (filed on 3^rd August 2017), the Plaintiff stated as follows: -

“... Ms Kwan asked me to disclose to her all the bank accounts that I had.  In the telephone conversation on 14^th December 2016, I told Ms Kwan I had had one Standard Chartered Bank account (“the SC bank account”) which I had already closed in about August 2015...”

(v)  In paragraph 22 of her 4^th Affidavit, the Plaintiff stated as follows: -

“I would like to clarify that in fact there were more than one bank account I maintained with Standard Chartered Bank but all the money held in all my Standard Chartered Bank accounts belonged to my younger sister and/or my aunt beneficially… I remember that all my Standard Chartered Bank accounts were closed on 20^th August 2015…”

(w)  It was not entirely clear how many accounts the Plaintiff actually did have with SCB.  During cross-examination the Plaintiff said she had three closed accounts with SCB.  When asked why she did not adduce the relevant materials relating to the closed accounts, she explained that she had provided everything to the LAD and that she did not keep any copies; or that she had already provided the materials to her lawyers. 

(x)  During cross-examination, the Plaintiff said that, after the three SCB accounts were closed, she transferred all the monies (around $3 million) in those accounts to her younger sister.  However, because her aunt thought that the Plaintiff handled her monies well when the monies were in the Plaintiff’s account, the monies were later transferred back to a new account of the Plaintiff which was opened with SCB in late 2016. 

(y)  The Defendant’s counsel put to the Plaintiff during cross-examination that the Plaintiff was required to disclose to LAD all the assets that she held for others.  As provided in r.10 of LAARCR, the Plaintiff was under a continuing duty to DLA to inform her of any change in financial circumstances that may affect the terms or continuation of her legal aid certificate.  The Plaintiff’s evidence is that she did not disclose the existence of this new SCB account to the LAD until 2017, when the LAD requested her to provide further information after these proceedings were commenced. 

(z)  The Plaintiff has repeatedly mentioned during cross examination that after making payment of the Bill to Ms Kwan, the Plaintiff was requested by the LAD to meet them and explain the matters relating to her legal aid application and she had already fully explained everything and submitted all relevant documents to the LAD.  She strongly maintained that she had made full disclosure to the LAD and did not hide anything. 

19.  The Plaintiff’s Counsel did not ask any questions in re- examination of the Plaintiff.   

20.  The major evidence of Ms Kwan is as follows: -

(a)  Ms Kwan had made a total of three affirmations in these proceedings respectively affirmed on 23^rd June 2017, 26^th October 2017 and 8^th February 2018.  Ms Kwan confirmed their contents and agreed to adopt the same as her evidence in chief.  

(b)  In Ms Kwan’s first affirmation, she set out the major background of the case on matters happened between 10^th June 2015 when the Plaintiff first contacted her on phone for legal advice on the traffic accident until 9^th June 2017 when the case was transferred to ONC and replied in opposition of the Plaintiff’s affidavit filed on 22^nd June 2017.  Ms Kwan explained that she had in the telephone call on 10^th June 2015 advised the Plaintiff to consider applying for legal aid if she was eligible for the assistance.  The Plaintiff did not explain why she had decided to cancel her legal aid certificate.  Ms Kwan maintained that the Plaintiff’s contentions that she was not explained the contents of the retainer letter and that she believed she was not liable for costs incurred during the Legal Aid period were untruthful and false.  Ms Kwan had explained to the Plaintiff that cheating for Government funds was a serious offence and could be punishable by imprisonment.  Ms Kwan told the Plaintiff that if she had not disclosed her bank account to the LAD when she made an application for legal aid, that would be a serious matter.  Ms Kwan also advised the Plaintiff that if the money in her undisclosed accounts did not beneficially belong to her, she could explain to the LAD.  Ms Kwan encountered a lot of difficulties in handling the Plaintiff and her case and as a result the Plaintiff was advised by the Defendant to change lawyers.  All in all, Ms Kwan denied the accusations made by the Plaintiff in her first affidavit. 

(c)  In paragraphs 18 - 22 of her 1^st Affirmation, Ms Kwan stated as follows to explain the major matters leading to the signing of the Retainer Agreement: -

“18. I was given to know by Boris on about 6^th February 2017 that the Plaintiff had decided to cancel her legal aid certificate. She cancelled it even though she had paid a contribution of about HK$70,000 odd to obtain the legal aid certificate, which had not been refunded to her. The Plaintiff was explained by me that in that case, this firm would not seek payment of any costs from the Legal Aid Department and we would look to her personally to pay our costs. I specifically explained to her that her said contribution (at about HK$70,000) would not be sufficient to pay the costs incurred in this firm up to that time. Usually, when the legal aid certificate is discharged, the Legal Aid Department would enquire with the assigned solicitor on the amount of legal expenses incurred so as to make reserve for the first charge. Since her contribution would not be sufficient to pay for the legal expenses and to simplify the matter, I told her that I would confirm to the Legal Aid Department that I had no claims against the Legal Aid common funds. I would look to the Plaintiff for payment of the legal expenses incurred during the Legal Aid Period. In fact, I told the Plaintiff that I would not mind to defer rendering my fee note until the end of the case when I had sought recovery of costs from the Defendant. I now say that this arrangement will however no longer be applicable when I have ceased to act for the Plaintiff as I had had no conduct of the case and I would not be able to seek any recovery of costs from the Defendant myself. At that time, I made it clear to the Plaintiff that if she had lost in her claims, she would still be liable to pay my costs. I also made it clear to her that she need to put me in fund for all counsel and expert fees before I would instruct them for her case. These have been set out in the retainer letter.

19. Therefore, the Plaintiff’s claim that she did not know how she should be responsible for our costs incurred for the legal aid period is not truthful. I personally explained to her the arrangement that I would not make a claim for costs against Legal Aid Department and would look to her for payment of those costs. She agreed to the arrangement. On the other hand, if the Plaintiff’s legal aid certificate was obtained inappropriately or illegally, this firm would definitely not agree to seek any payment of our costs from the Legal Aid Department, or this firm would have been acting in collusion with her in deceiving the Government monies. That said, the Plaintiff had never given me any records of her accounts which showed the substantial savings. She had only given me copy of cheques copied from her various accounts. I do not have the direct materials to make a report to the Legal Aid Department. As stated above, I had had no duty nor power to investigate.

20. Pursuant to the said discussion on fee arrangement when the Plaintiff’s legal aid certificate was discharged, Boris told me in beginning February 2017 that the Plaintiff had decided to cancel her legal aid certificate. I sent an email to the Plaintiff on 9^th February 2017 together with the retainer letter of the firm for her consideration. I exhibit hereto marked “KLYC-2” a copy of my said email and the retainer letter. In this email, I also referred to the arrangement that ‘‘…I can confirm to the Legal Aid Department that I am not charging any fees against them…”

21. The Plaintiff was also told that she would only be required to sign the retainer letter after her legal aid certificate was cancelled. I could not act for her on private basis when the legal aid certificate was still in place. Thereafter, she has been provided the retainer letter since 9^th February 2017.

22. On about 8^th March 2017, I received by post the Notice of Discharge of the Legal Aid Certificate dated 2^nd March 2017. I exhibit hereto marked “KLYC-3” a copy of the said Notice. Boris then made arrangement for the Plaintiff to attend this office on about 14^th March 2017 to sign the retainer letter and pay the deposit at HK$10,000. ……..”

(d) Boris Siu was Ms Kwan’s colleague who was involved in the handling of the Plaintiff’s case. He is a qualified Legal Executive.

(e) Ms Kwan made her 2^nd affirmation in support of the Summons for cross examination. Ms Kwan maintained that the Plaintiff was not telling the truth in her affidavits that she was made by Ms Kwan to cancel her legal aid certificate. The Plaintiff was a greedy claimant and would falsify evidence to boost up her claims. A total of 10 witness statements were drafted and signed, and most of them were procured to prove the Plaintiff’s substantial claims of loss of earnings. It was time consuming to handle her claims. Ms Kwan maintained that the serious accusations made by the Plaintiff against her could not be decided without the Court hearing the Plaintiff’s evidence and giving an opportunity to cross examine the Plaintiff on the reason for making the subject fee arrangement.

(f) In paragraph 4(d) of Ms Kwan’s 2^nd Affirmation, she stated as follows: -

“When the Plaintiff had decided to cancel her legal aid certificate, I agreed to confirm waiver of my rights to claim costs from LAD so as to enable the Plaintiff to be refunded the contribution at no less than $70,000 by LAD and close her accounts and files with LAD as soon as possible.”

(g) In paragraph 39 of Ms Kwan’s 2^nd Affirmation, she stated as follows: -

“As recorded above, the Plaintiff admitted to me that she had other substantial deposits. I have not seen the accounts which contained the money she held for her sister, aunt etc. and that was why I did not make a report of her to DLA. I repeatedly advised her to explain to DLA. But to me, they are sufficient admissions by the Plaintiff that her legal aid certificate could have been invalid and illegally procured such that, subject to her instructions, I would rather take on her case from the start as a private client, waiving my rights to claim costs under the legal aid certificate.”

(h) Ms Kwan made her 3^rd affirmation in reply to the Plaintiff’s 3^rd Affidavit. In gist, Ms Kwan took strong objection against the various accusations made by the Plaintiff in her 3^rd affidavit. Ms Kwan maintained that a number of matters stated in the Plaintiff’s legal application forms were not truthful. Ms Kwan denied that she had pressurized the Plaintiff to cancel the Legal Aid certificate. Ms Kwan contended that the Plaintiff lied in her legal aid application and had falsified evidence to boost up her Personal Injuries claims.

(i) During cross-examination, Ms Kwan said that from 3^rd to 9^th February 2017, she already agreed that subject to the discharge of legal aid and after the Plaintiff turns to her private client, costs for the legal aid work would not be billed to the Legal Aid Department but the Plaintiff would have to personally bear such costs.

(j) Ms Kwan maintained that she had made it clear to Plaintiff that the terms relating to the costs arrangement were to be set out in a written document to be signed in the form of a retainer letter. The Plaintiff could not have been under any misunderstanding in this regard. Moreover, the parties clearly intended that the Retainer Agreement would only be signed by the Plaintiff after her legal aid was discharged.

(k) Ms Kwan maintained that the Retainer Agreement can only be signed by Plaintiff after the legal aid certificate was discharged, and that the parties did not make an agreement before the legal aid certificate was discharged. Under paragraph 15 of Ms Kwan’s 2^nd Affirmation, she alluded to the fact that Mr Siu told Plaintiff that the Retainer Agreement could only be signed after the legal aid certificate had been discharged, and with what was recorded in the relevant attendance notes.

(l) Ms Kwan pointed out that some of the attendance notes were not prepared by her personally. Some prepared by her colleague. These attendance notes were not verbatim record and do not represent a complete record of everything discussed but only the main points.

(m) After the Plaintiff indicated that she might cancel her legal aid certificate and the parties discussed about the costs arrangement between them, Ms Kwan sent an email to the Plaintiff on 9^th February 2017 attaching a copy of the Retainer Agreement, wherein Ms Kwan stated the following: -

“Dear Kimmy,

Boris told me you request to cancel the legal aid certificate on about 6^th February 2017.

I am yet to hear from Legal Aid Department on your said request. Before I can confirm to the Legal Aid Department that I am not charging any fees against them, please could you sign the attached retainer letter and have it returned to me.

If without legal aid, you will become a private client. It is our Solicitors’ Code that the private client should sign a retainer letter which sets out the terms of the appointment.

If you have any question on the terms of the retainer letter, please do not hesitate to contact me or Boris.

Corrina ”

(n)  The Retainer Agreement was signed by the Plaintiff on 14^th March 2017, after the Plaintiff’s legal aid had been discharged.  Ms Kwan maintained that was when the agreement took effect and became binding on the parties.  Ms Kwan pointed out that there was nothing to prevent the Plaintiff from going to another solicitor and not to retain the Defendant.  Ms Kwan maintained that there was no binding agreement between the parties before the Retainer Agreement was signed.   

(o)  The Retainer Agreement reads as follows:

“We refer to your instructions in relation to the above.

We set out the terms of our retainer as follows: -

1. Our principal, Ms Corrina Kwan, has been and will be handling the case and will carry out most of the work on this matter personally. She will have the assistance of other relevant members of staff at the appropriate stages.

2. We were initially instructed by the Legal Aid Department (“LAD”) to represent you and therefore, our fees should have been met by LAD. On about 6^th February 2017, you informed us that you would cancel your legal aid certificate and you will personally instruct us directly. We confirm our agreement to represent you as a private client on the following fee arrangements:-

3 (a). Our fees are calculated on an hourly basis, primarily reflecting the time expended in carrying out your instructions.

	Hourly rate
Partner-in-Charge	charged at (HK$)
Ms Corrina Kwan	$5,000.00
Legal Executive	$1,800.00

(b) From time to time, we shall submit interim fee notes to you setting out our costs and disbursements and all the fee notes of Counsel (f Counsel is engaged). Usually, interim bills will be delivered upon completion of recognized stages in your instructions, or at a time we think appropriate by virtue of the value of work done up to that date. We may in our absolute discretion use any costs on account or other funds deposited with us to settle any such interim or final bills;

(c) You will personally be responsible for paying our fees including legal costs and disbursements incurred as from the date of issuance of the legal aid certificate and on this basis, we shall confirm to the LAD that no fee is due from LAD to this firm.

4. Throughout the course of our retainer, we shall require to hold on account not less than HK$10,000.00 to cover our own fees and also disbursements which are likely to incur on your behalf. As your case progresses and monies on account are used up, we will request further sums from you to ensure that sufficient balance is maintained throughout the duration of our retainer. We shall also require that you place sufficient fund with us to cover, amongst other things,

(a) the counsel fee to be incurred for any instructions to be delivered to him/her and any hearings that is to be attended by counsel;

(b) expert fee to be incurred;

(c) mediator fee and expenses to be incurred.

5. It is your right to seek a taxation of any of the bills received within 30 days of delivery. After 30 days, a taxation can be ordered if you apply to the Court but the Court has the power to impose terms as its discretion. We require all our bills, whether interim or final, to be settled within 30 days. Thereafter, all outstanding sums due to us, whether they be our own costs or disbursements, will be subject to interest at the rate of 2% per month.

6. Without affecting any lien to which we are otherwise entitled at law over any of your funds, papers and other property in our possession: -

(a) We shall be entitled to retain by way of lien any of your funds, property or papers which are from time to time in our possession or under our control until all costs, disbursements and interest due to the Firm have been paid;

(b) Our lien shall continue notwithstanding that we cease to act for you in accordance with Clause 6.

7. There may be certain circumstances, which might include for example, a case where we are unable to obtain proper instructions from you, or where our interim bill or request for costs on account has not been paid or where a conflict arises in which we would not be able to continue acting for you. In such circumstances we reserve the right to cease to act for you and if appropriate, to apply to the court to be removed from the court record as acting for you.

8. If there are any terms in this letter which are not clear to you, please raise such queries with us as soon as possible, otherwise we shall consider that by us continuing to act for you that you understand and accept these terms.

9. As confirmation that you would like us to proceed on this basis, we should be grateful if you would sign the extra copy of this letter enclosed and return it to us.”

(p)  Ms Kwan maintained that by the time when the Retainer Agreement was signed, the Plaintiff was not an aided person and the Defendant was not acting for her as an aided person.  The Plaintiff signed the Retainer Agreement with the Defendant as a private client.  The Defendant did not take or agreed to take or seek from an aided person any fee, profit or reward. 

21.  I accept that the evidence shows that Ms Kwan had all along been supportive of the Plaintiff’s application for legal aid.  The Plaintiff accepted during cross-examination that Ms Kwan was supportive of her applying for legal aid.  I accept that Ms Kwan had explained the contents of the Retainer Letter to the Plaintiff. 

22.  I do not accept that Ms Kwan had pressurised or misled the Plaintiff to cancel her legal aid certificate.  Ms Kwan had advised the Plaintiff fairly on other aspects as to how her Personal Injuries claim should be conducted.  As accepted by the Plaintiff, Ms Kwan had repeatedly told the Plaintiff that her case was not ready for trial because there were a number of problems with her case.  I accept that Ms Kwan had also explained to the Plaintiff of the costs consequences if she proceeded to cancel her legal aid.  The insinuation by the Plaintiff that Ms Kwan had pressurised or otherwise misled her into cancelling legal aid is not accepted by this Court.  

Whether Clause 3(c) of the Retainer Agreement has contravened s.22 of LAO

23.  S.22 of LAO provides as follows: -

22. Prohibition against taking fees from aided person

(1)   Subject to the provisions of section 18, no person who, pursuant to any reference under this Ordinance, makes any investigation or report or gives any opinion or certificate or who acts for an aided person, shall take or agree to take or seek from an aided person any fee, profit or reward (pecuniary or otherwise) in respect thereof.

(2)   A person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine at level 5 and to imprisonment for 6 months.

24.  S.18 of LAO provides as follows: -

18.  Contribution by aided person

(1)  An aided person shall pay to the Director a contribution–

(a)  where legal aid has been granted to him under the Supplementary Legal Aid Scheme, in accordance with section 32; and

(b)  in any other case, if so required by the Director, towards the sums that may be or become payable on his account by the Director.

(2)  Any contribution payable by an aided person to the Director under this Ordinance shall be a debt due to the Director and shall be paid in such manner as may be prescribed.

(3)  If the total contribution paid by an aided person is more than the net liability of the Director on his account within the meaning of section 18A(2), the excess shall be repaid to him:

Provided that nothing in this subsection shall apply to a contribution payable under section 32.

The Defendant’s contentions

25.  The Defendant contends that Clause 3(c) of the Retainer Agreement was not in contravention of s.22 of LAO for the following reasons: -

a.  S.22 of LAO only prohibits a person (including a solicitor) to take or agree to take fee or seek fee from an aided person i.e. a person who has been granted a legal aid certificate which is still in force; 

b.  The Plaintiff was not an aided person at the time when the Retainer Agreement was made; 

c.  The Defendant was not acting for any aided person at the time when the Retainer Agreement was made; and 

d.  The Defendant never took, agreed to take, or sought payment from an aided person. 

26.  In respect of the interpretation of s.22 of LAO, the Defendant makes the following major submissions: - 

a.  The Defendant draws my attention to the definition of “aided person” (受助人), which is defined in s.2 of LAO to mean a person to whom has been granted a legal aid certificate which is still in force…”.  

b.  The Defendant contends it is therefore clear that a person is only an aided person if he or she has a legal aid certificate which is still in force. 

c.  Further, Regulation 9(1) of the Legal Aid Regulations (Cap. 91A) expressly provides that: 

“Subject to the provision of this regulation… a person whose certificate is discharged shall, from the date of discharge, cease to be an aided person in these proceedings.”

d.  s.22 of LAO only prohibits a person (including a solicitor) to take or agree to take fee from an aided person (“受助人”).  In the Chinese version, “受助人” is expressly defined in s.2 to mean “已獲發給法律援助證書的人，而該證書仍然有效”. Both the Chinese and English version of s.22(1) of LAO provide clearly that a person is an “aided person” only if he/she has a legal aid certificate which is still in force.  When a legal aid certificate is discharged, a person ceases to be an aided person from the date of the discharge of the legal aid certificate.

e.  s.22 of LAO uses the present tense when it provides that a person who “acts for an aided person” shall not take fee etc from an aided person.  It is a well-settled principle of statutory construction that “prima facie, the meaning of an enactment which was intended by the legislator (in other words its legal meaning) is taken to be that which corresponds to the grammatical meaning”:  Bennion on Statutory Interpretation(7^th edn), section 9.4, p 292.  The use of the present tense in s.22(1) of LAO clearly points to the legislative intention that s.22 only prohibits the charging of fees (or agreement to do so) while the person concerned (usually a solicitor) is acting for a person who is an aided person within the definition of s.2.  

f.  apart from the presumption in favour of grammatical meaning, other sections in LAO clearly show that whenever the legislature intends to extend the definition of “aided person” in s.2 for the purpose of any particular section, it would expressly say so.  Some examples are: 

(i)  S.17(2) which provides that: -

“In subsection (1) a reference to an ‘aided person’ (受助人) shall include, in any case where the legal aid certificate has been revoked or discharge before the making of the order, the person who immediately before such revocation or discharge was the aided person.” (with emphasis added)

(ii)  S.19A(5) which provides that:

“In this section reference to an ‘aided person’ (受助人) includes an aided person whose legal aid certificate has been revoked or discharged.”

No such extension of the definition of “aided person” is provided in s.22.  This is a clear indication that it is not the legislative intention that the prohibition therein should be extended to someone acting for a person whose legal aid certificate has already been discharged. Indeed, in the context of the legal aid legislations (including the LAO and the subsidiary regulations), whenever the legislature wants to refer to a person who is no longer an aided person but who was or used to be one, it would expressly adopt a different expression in describing him/her (and would not describe him as an aided person): e.g. the expression “the person to whom the certificate was issued” is frequently used in the Legal Aid Regulations: see, for instance, Regulations 9(5), 9(6), 9(9) and 9(10).

g.  s.22(2) prescribes serious criminal consequences for breach of subsection (1).  It is another well-settled canon of statutory construction (ie the principle against doubtful penalisation) that a person should not be penalised except under clear law.  Bennion at section 27.1, pp 715-716 describes the principle as such: 

“It is a principle of legal policy that a person should not be penalised except under clear law. … [The court] should therefore strive to avoid adopting a construction which penalises a person where the legislator’s intention to do so is doubtful…”

h.  While the principle against doubtful penalisation is not an absolute one, where the “detriment” imposed by the statute is serious, the principle will be given great weight.  Hence, the more severe is the detriment, the more powerful is the weight attached to the principle: Bennion p 716. S.22(2) of LAO provides that if s.22(1) is contravened, one shall be liable on conviction to a fine at level 5 (ie HK$50,000) and to imprisonment for 6 months.  The statutory detriment is thus one that impacts upon a person’s personal liberty - a penalisation of a most severe kind.  Plainly, this requires that s.22(1) (even if the language were otherwise ambiguous in its meaning) should not be interpreted expansively. 

i.  it is a principle of statutory interpretation that the status orreputation of a person should not be impaired or endangered, except under clear authority of law.  The more likely a particular construction is to damage a person’s reputation, the more likely a court is to strain against that construction: Bennion, section 27.11,p 742.  For a solicitor to be held to have committed an offence in the conduct of his/her practice is a very serious stigma, and the same is likely to have severe consequences for him/her.  The principle that the status or reputation of a person should not be impaired or endangered except under clear authority of law plainly applies here.  There is simply no cause for adopting an expansive interpretation of s.22(1) of LAO that would result in great harm to the status and reputation of a professional such as Ms Kwan. 

j.  At the time when the Retainer Agreement was made and at the time when the Bill was issued, the Defendant was not acting for any aided person as the Plaintiff was not an aided person at that time.  Nothing in s.22 of LAO takes away the freedom of a solicitor to contract with his/her non-legally aided client by way of a retainer agreement.  Bearing in mind that the Plaintiff ceased to be an aided person on 2^nd March 2017, the Plaintiff’s reference to the “tripartite relationship” between DLA, the solicitor and the aided person (that exists while the person is an aided person) is wholly beside the point.  The tripartite relationship only subsists for so long as the legal aid certificate is still in force.  The Regulations make this abundantly clear because according to Regulation 9(1) of the Legal Aid Regulations, the Plaintiff “shall, from the date of discharge, cease to be an aided person”. Further, Regulation 9(2) expressly provides that “the retainer of any solicitor … acting for the aided person in proceedings to which the certificate relates shall forthwith determine”.  Accordingly, the tripartite relationship comes to an end upon the discharge of the legal aid certificate.  Insofar as the relationship between the Plaintiff and the DLA is concerned, the Plaintiff continues to owe certain obligations towards the DLA after the discharge of legal aid (eg Regulation 9(9)).  However, such obligations arise from specific provisions in the legislation, but not from the tripartite relationship which only subsisted for the period of legal aid.  For provisions governing post-discharge scenarios, the legislature consistently adopts the expression “the person to whom the certificate was issued” (as opposed to “an aided person”): see, for instance, Regulations 9(5), 9(6), 9(9) and 9(10).  The careful language used by the legislature clearly indicates that the tripartite relationship terminates upon the discharge of the legal aid certificate. 

k.  The Defendant contends that it never took, agreed to take, or sought payment from an aided person.  The Retainer Agreement was made on 14^th March 2017 and the Bill was issued by the Defendant on 23^rd May 2017. By that time, the Plaintiff was no longer an “aided person”.  The Plaintiff signed the Retainer Agreement with the Defendant as a private client. Therefore, the Defendant did not take or agreed to take or seek from an aided person any fee, profit or reward.   

27.  In the premises, the Defendant contends that it has not contravened s.22 of LAO and the Plaintiff’s case on s.22 of LAO must fail. 

The Plaintiff’s contentions s.22 of LAO

28.  The Plaintiff contends that the Court only has to consider s.22 of LAO to resolve the Preliminary Issue, which is purely a question of law.  The Court does not need to consider s.17 of the LAO relied on by the Defendant since the section is irrelevant to the present case of taxation of the Bill.  Since the factual evidence adduced at the hearing relates only to the s.17 issue, it is also irrelevant.  The Plaintiff submits that upon the proper interpretation of s.22, a legal aid assigned solicitor is prohibited from taking (money is received), agreeing to take (focusing on any agreement), or seeking (even asking for money is prohibited) from a legally aided person any fee in respect of work done under the legal aid certificate at all times, ie before the granting of the certificate, during the subsistence of the certificate and after the discharge of the certificate. 

29.  The Retainer Agreement (falling within the limb of “agreement”) and the Bill (falling within the limb of “seeking”) clearly is an agreement for and a seeking of payment of fees from the Plaintiff in respect of work done by the Defendant as assigned solicitor in the legally aided Personal Injury case and hence are in breach of s.22.  The Retainer Agreement and the Bill are hence illegal and unenforceable in case of breach.  

30.  Further or alternatively, even if the Court accepts the Defendant’s interpretation of s.22 to the effect that s.22 does not apply to a situation when the assigned solicitor only agrees to take or seeks payment after the discharge of legal aid, the fact proven by documentary evidence shows that the Defendant had already agreed to take payment and/or sought payment from the Plaintiff for work done under the legal aid certificate (ie when the certificate was in force) on the latest by 9^th February 2017 by sending the Retainer Agreement signed by the Defendant to the Plaintiff. This conduct of the Defendant is still a breach of s.22 and the subsequent conduct pursuant to the said breach was also tainted by such breach and is illegal.  

Findings regarding s.22 of LAO

31.  Having carefully considered the parties’ written and oral submission, documents in the various Bundles and evidence of the Plaintiff and Ms Kwan, I come to the conclusion that Clause 3(c) of the Retainer Agreement has contravened s.22 of LAO.  I accept and agree with Plaintiff’s submissions as follows: -

(a)  First of all, the title of s.22 does not refer to any time or period when the prohibition applies.  The logical implication is that the prohibition applies at all times in respect of work done rendered during the legal aid period.  The mischief to be prevented by the section is that an assigned solicitor (or expert witness or counsel) shall not seek or take any fee from the legally aided person who is protected in that sense.  The absence of any reference to time of the prohibition is perfectly correct and is the only proper title. The same logic apples to the body and wording of s.22(1): the total absence of reference to time of prohibition is proper since the prohibition should protect the legally aided person in respect of work done rendered during the legal aid period at all times. 

(b)  Secondly, the acts prohibited by s.22 are wide, which implies that the prohibition is strict and aims at a complete ban on “trying to get fees” from a legally aided person.  s.22 prohibits:

a.  Taking of fees (where money is actually received);

b.  Agreeing to take fees (where the solicitor agrees to take fees); or

c.  Even seeking the fees is wrong (where the solicitor asks for money).

     The prohibited acts of agreeing to take and seeking do not depend on the reaction of the legally aided person.  That means it is not material as to whether the aided person agrees to pay.  That is demonstrated clearly by the prohibited act of “seeking”.  The above wide scope of the acts of prohibition shows the intention of the legislature to completely stop any attempt by a solicitor to get any fees from his aided person. 

(c)  Thirdly, the main intent of the prohibition is to stop solicitors from asking the legally aided persons for fees which should be paid by the Director of Legal Aid.  The main criterion of the prohibition is in the words “seek fees … in respect thereof”.  The clear legislative intent is to impose a complete ban against solicitors acting for aided persons to seek fees for work done pursuant to any reference under the legal aid certificate. 

(d)  Fourthly, the Chinese wording of s.22(1) supports the above submissions: 

“ 除第18條另有規定外，任何人如依據本條例作出的案件轉介而… … 提供意見… … 或代受助人行事，均不得就此等事情而向受助人收取或協定向受助人收取或求取任何費用、利潤或報酬(不論是金錢或其他方面的)。”(emphasis added)

It is clear from the Chinese version that there is again no limit of time or period for which the prohibition applies.  The sole criterion is “in respect of work done under the reference of legal aid”.  Clearly, the prohibition applies at all times including after the discharge of the certificate. 

(e)  Fifthly, the above interpretation and legislative intent are reinforced by the fact that s.22(2) renders the contravention to subsection (1) a criminal offence on the part of the offenders with sentence of imprisonment.  As the consequence of a breach of s.22 is a criminal sanction, the legislative intent must be to consider the mischief a very serious one and the protection afforded to the legally aided persons important and not to be easily circumvented. I consider that there are no ambiguity in the wordings of s.22.  The legislative intent and the wordings are clear under s.22.  With respect, I consider that the Defendant’s suggested interpretation to the effect that the solicitors could seek and take fees in respect of the work done rendered under the legal aid period after the discharge renders the whole s.22 ineffective, frivolous and the criminal sanction a sham.  

(f)  Sixthly, the Plaintiff’s interpretation of s.22 is also supported the tripartite payment relationship between the Director of Legal Aid, solicitors and the aided persons as provided expressly in the framework of the LAO, namely:

a. Sections 16B and 20 make it clear that the obligation to pay fees incurred by counsel and solicitors acting for an aided person is on the Director. 

b. Indeed, under the LAO, all monies to be paid by the legally aided persons (contribution), or to be received by them (fruits of the litigation) and to be paid to solicitors for work for the legally aided persons (legal fees) are made by or through the Director. 

c. When money is to be paid by the aided person for his contribution it is governed by ss.18 and 32 which expressly provide that the money should be paid to the Director, and NOT to the solicitors. 

d. Under s.18 relating to the Supplemental Legal Aid Scheme ("SLAS”), an aided person has to pay to the Director a contribution in accordance with s. 32. 

e. Under s. 32, an aided person under the SLAS may have to pay an interim contribution to the Director. If the aided person is successful in his/her claim, a final contribution shall be paid to the Director.  If the aided person is unsuccessful, the interim contribution will not be refunded unless the costs incurred on his or her behalf during the certificate is less than the amount of interim contribution already paid. 

f. There is no provision for any payment by the aided persons to their solicitors, not to speak of by-passing the Director.  The tripartite payment relationship is clearly established in the following sections of the LAO and regulations thereof: -

i. An aided person is not liable to pay his/her own costs (except under ss.18 and 32).  This continues to apply even after the discharge of the legal aid certificate: 

ii. Ss.16B(a) and 20 LAO: the Director is responsible to pay solicitor and counsel fees;

iii. S.16C(1)(a) LAO: an aided person is not liable for costs incurred by the Director on his/her behalf under the SLAS (except for contribution under s.32);

iv. Regulation 9(3)(b) Legal Aid Regulations (Cap. 91A)(“LAR”) [P6]: the Director remains liable for costs even after the discharge of the certificate.

g. The Director has a first charge over all monies due to the aided persons (including monetary judgment, costs and properties):

i. S.19A(1) LAO: monies recovered on behalf of the aided person would be paid to the Director to recoup costs incurred on his/her behalf.  This includes taxed costs and interests of costs from the other party (see §§103-105, 113-118 and 130-137 of IMY v. Dr. Lo Ni Boon Peter [2014] 5 HKLRD 109 [P4])

ii. S.18A LAO: there is a first charge for the benefit of the Director on any property which is recovered or preserved for the aided person. 

iii. Regulation 9(6) LAR: if the certificate is discharged and the previously-aided person continues to be a party to the proceedings, LAO provisions relating to cost orders against and for the person would continue to apply for costs incurred under the certificate.

(g)  All in all, s.22 is not an isolated provision to prevent the said mischief.  It is to be read and understood within the said framework of the whole LAO.  S.22 is to put the matter beyond doubt that once a legal aid certificate is issued, the assigned solicitor would not be involved in taking monies from or giving monies to the aided persons.  All these transactions would have to be done through the Director who has the ultimate control.  

(h)  Indeed, the Courts have made similar observations in the context of s.22.  In Tso Wing Yu Anita v. Lau Siu Fan & Anor (unrep., HCA 6928/1993, 23^rd April 1998 [P3], the Court held at page 6:

“Section 22 is clearly designed to prevent a solicitor or any other person from obtaining money from an aided person other than through the channels prescribed by the Ordinance and its subsidiary legislation. In simple terms, any payment for services rendered to an aided person will be made by the Director and not by the aided person or any one else.”

(i)  In IMY v. Dr. Lo Ni Boon Peter [P4] at §21, the Court observed:

“Section 22(1) of the LAO further provides that subject to the provisions of s.18(1) of the LAO, no person who, pursuant to any reference under the LAO, acts for an aided person, shall take or agree to take or seek from an aided person any fee, profit or reward (pecuniary or otherwise) in respect thereof. Thus, under the LAO and LA(SOF)R, an assigned solicitor in carrying out assigned legal aid work, is only entitled to be paid the specified sums in the manner prescribed in regs.5–6 of the LA(SOF)R and no more.”

(j)  Regulations 5-6 of the Legal Aid (Scale of Fees) Regulations (Cap 91C) provide as follows:

5. Fees and costs payable to solicitor

The amount payable by the Director to a solicitor acting for an aided person shall be—

(a)  the full amount allowed on taxation on account of disbursements;

(b)  the full amount allowed on taxation on account of profit costs; and

(c)  in cases where fixed costs are applicable and the solicitor has made an election to take fixed costs, the full amount of such fixed costs,

or, in default of taxation or where an election to take fixed costs has not been made, an amount as may be fixed by the Director, not exceeding such amount as in the opinion of the Director would have been allowed if there had been taxation or would have applied if there had been an election to take fixed costs.

6. Advance of fees to counsel and solicitor

(1)  The Director may before taxation make an advance to counsel or solicitor of an amount not exceeding 75% of the sum which the Director estimates will be payable under regulation 4 or 5 and such advance shall be on account of moneys so payable.

(2)  If the amount paid under subregulation (1) exceeds the amount payable under regulation 4 or 5, the counsel or solicitor, shall repay the excess to the Director.

32.  Based on the above analysis, I consider that the overall legislative intent is to protect aided persons from any possible abuse by persons rendering services to them, hence the said tri-partite relationship and the ultimate enactment of s.22(1) with criminal sanction in s.22(2). With respect, if s.22 is to be interpreted in the way that the Defendant suggests, the whole control and power of the Director of Legal Aid would be taken away and there is simply no need for the Director of Legal Aid to exercise its power relating to legal aid taxation of the costs incurred for aided persons. 

33.  Therefore, I take the view that the Defendant’s purported interpretation works against the whole comprehensive scheme of the LAO and its regulations, and in particular squarely in contravention of s.20 LAO and Reg 9(3)(b) LAR. 

34.  In reply to the Defendant’s case relating to the definition of “aided person” under s.2 LAO, the Court would need to consider the whole context of s.22(1), its true intent and the mischief it seeks to prevent, but not just focus only on the term “an aided person” when it appears for the second time in s.22(1).  From a logical point of view the “an aided person” in the context of the phrase, “no person…shall…seek from an aided person any fee… in respect thereof” refers to the very person for whom the solicitor represented and incurred costs under the legal aid certificate.  Therefore, one cannot dissociate the second “aided person” from the first “aided person” in the same section.  In the premises, it is clear that those two terms refer to the same person and the Court would have no difficulty at all to conclude for the reasons hereinabove that (a) the second “aided person” should not be read in isolation and distinguished form the first “aided person” and (b) there is no limit to the period of the intended prohibition under s.22 insofar as it relates to work done rendered under the legal aid period.  

35.  I consider that under s.22, clearly a legal aid assigned solicitor is prohibited from taking (money is received), agreeing to take (focusing on any agreement), or seeking (even asking for money is prohibited) from a legally aided person any fee in respect of work done under the legal aid certificate at all times, i.e. before the granting of the certificate, during the subsistence of the certificate and after the discharge of the certificate.  The wordings under s.22 are very clear with no ambiguity.

36.  It is clear that the Retainer Agreement was sent out by the Defendant to the Plaintiff on 9^th February 2017 and under its contents it did not mention that it was subject to the discharge of legal aid.  In paragraph 2 therein, the Defendant stated that “we confirm our agreement to represent you as a private client on the following fees arrangement…”  This clearly demonstrates that the subject fee arrangement was agreed by the Defendant at least on 9^th February 2017 if not earlier.  The legal aid was discharged on 2^nd March 2017. 

37.  In my view, in the present case, the Plaintiff was granted legal aid and that the Defendant acted for the Plaintiff. The Legal Aid Period ran from 5^th August 2016 to 2^nd March 2017. I consider that the email sent by Ms Kwan dated 9^th February 2017 falls within the “agreement” limb and “seeking limb” under s.22(1).  The Retainer Agreement falls within the “agreement” limb and “seeking limb” under s.22(1).  The Bill falls under the “seeking” limb under s.22(1) as it demands for payment of fees by the Plaintiff in respect of and for work done by the Defendant covering the Legal Aid Period as the assigned solicitor under the legal aid certificate.  The prohibited acts of agreeing to take and seeking under s.22 do not depend on the reaction of the legally aided person. 

38.  I rule that both the Retainer Agreement and the Bill relating to the Legal Aid Period are in breach of s.22 and therefore illegal and unenforceable.  It follows that if they are in breach of s.22, they would be unenforceable and the Plaintiff is not liable to pay for that part of the Bill issued by the Defendant in relation to the period when the legal aid certificate was subsisting. 

Whether s.17(1) of LAO falls within the ambit of the Preliminary Issue

39.  S.17 of LAO provides as follows: -

“Court may order payment of costs by aided person in certain events.

(1) Where it appears to a court or judge that a legal aid certificate has been obtained by fraud or misrepresentation, the court or judge may order the aided person to pay the costs of the Director and of the counsel and solicitor who acted for him or the costs of the other party, or the costs of the Director and such counsel and solicitor and such party.

(2) In subsection (1) a reference to an “aided person” (受助人) shall include, in any case where the legal aid certificate has been revoked or discharged before the making of the order, the person who immediately before such revocation or discharge was the aided person.

(3) Where it appears to a court or judge that an aided person has acted improperly in bringing or defending any legal proceedings or in the conduct of them, the court or judge may order the aided person to pay the costs of the Director and of the counsel or solicitor who acted for him or the costs of the other party, or the costs of the Director and such counsel and solicitor and such party.

(4) Where an order is made under subsection (1) or (3), the costs shall be taxed as if the party ordered to pay them were not an aided person.

(5) The costs so ordered to be paid shall, unless otherwise directed by the order, include fees and charges of the nature referred to in section 16B(c) and (d).”

40. The Defendant contends that s.17 of LAO falls within the ambit of the Preliminary Issue and the present proceedings can accommodate a s.17 inquiry and this Court has the jurisdiction to make a s.17 costs order. The Defendant contends that the power of the Court to make an Order under s.17(1) of LAO is exercisable where it appears to it that a legal aid certificate has been obtained by fraud or misrepresentation.  If the Court considers that a legal aid certificate has been obtained by fraud or misrepresentation, the section expressly provides that the Court may make an order that the Plaintiff pay “the costs of… the solicitor who acted for [her]”.  The effect of such an order is that the Plaintiff shall be held personally responsible for the costs in question.  In other words, this Court will have resolved the Preliminary Issue in the Defendant’s favour.  If a s.17 Order is made, the Plaintiff would be required to pay the costs of her solicitor in respect of the costs incurred during the Legal Aid Period.   Given that s.67(3) of LPO expressly provides that a taxing officer shall certify what is due to a solicitor in respect of the Bill in his/her order for the taxation of the Bill, the Defendants submits that the scope of s.67 of LPO is clearly wide enough to accommodate a s.17 inquiry which may result in the making of an Order that Plaintiff shall pay the Defendant the relevant costs, the amount of which would be certified upon taxation as due by the Plaintiff to the Defendant in respect of the Bill. 

41.  I do not agree with the Defendant’s submissions that s.17 of LAO falls within the ambit of the Preliminary Issue. 

42.  First of all, the Defendant did not take out any Summons under s. 17 of LAO.  

43.  Further, s.17(1) is totally irrelevant to the present action as the nature of which is “taxation proceeding” commenced under s.67 of the LPO. The Originating Summons and the framed Preliminary Issue do not touch upon or have anything to do with s.17.  The Bill which falls under the definition of costs as stated in s.2 LPO as “fees, charges, disbursements, expenses and remuneration”.  The present action is in the nature of taxation proceedings of the Bill of Costs commenced under s.67 of the LPO.  The Originating Summons and the framed Preliminary Issue do not touch upon s.17 LAO which is totally foreign to the present proceedings.  The Court is presently tasked with the determination of the Preliminary Issue as framed, nothing more and nothing less, which does not include any reference to any question or application under s.17. 

44.  This Court is therefore under no duty to deal with matters other than those set out in the Preliminary Issue. S.17(1) of LAO does not fall within the ambit of the Preliminary Issue. 

If s.17(1) of LAO falls within the ambit of the Preliminary Issue, whether the evidence shows that the Plaintiff had obtained her legal aid certificate through fraud and/or misrepresentation such that this Court should make an order pursuant to s.17(1) of LAO that the Plaintiff be personally liable for the costs of the Defendant incurred during the Legal Aid Period in the Personal Injuries Proceedings.

45.  Assuming I am wrong regarding my ruling that s.17(1) of LAO does not fall within the ambit of the Preliminary Issue, given the available evidence, I consider that there is insufficient evidence before me during the hearing to prove that the Plaintiff obtained the legal aid by fraud or misrepresentation, particularly when the Director of Legal Aid (the alleged victim of fraud or misrepresentation) has chosen not to make any such application under s.17 and/or to take part in the present proceedings, and/or to present evidence which only the Director of Legal Aid holds and possesses.  There is simply insufficient evidence before me during the hearing to prove fraud or misrepresentation perpetrated against the Director of Legal Aid who is the alleged victim of fraud or misrepresentation.  There is no evidence from the Director of Legal Aid or persons processing the Plaintiff’s legal aid application whatsoever.  

46.  The Director of Legal Aid was informed of the suspected and alleged abuse of legal aid and was well-aware the present proceedings and issues brought in by the Defendant.  However, the Director of Legal Aid chose not to make any application under s.17, or to take part in the proceedings or to present any evidence.  The Defendant was at liberty to invite the Legal Aid handlers to give evidence in Court but chose not to do so. 

47.  I consider that only the Director of Legal Aid and the relevant Legal Aid handlers possess the relevant evidence as to what material considerations were taken by it in granting legal aid to the Plaintiff, what exactly were the materials and information submitted by the Plaintiff and whether any omissions or information submitted by the Plaintiff were considered to be misleading or false or material.  In the absence of any representations or evidence provided by the so called victim of fraud or misrepresentation, i.e. the Director of Legal Aid, there is no way this Court could decide : -

(a)  what information was actually received by the Director of Legal Aid;

(b)  what documents were submitted to the Director of Legal Aid;

(c)  whether the information provided by the Plaintiff was misleading or false and if the Director of Legal Aid was satisfied with the explanations given by the Plaintiff; 

(d)  whether the Director of Legal Aid actually considered the information in question to be material to the granting of legal aid; 

(e)  whether the Director of Legal Aid would have granted the legal aid in any event despite the information in question; 

(f)  whether the Director of Legal Aid considers that Plaintiff was dishonest in presenting the information in question or misrepresenting the information. 

48.  Obviously, the answers to the above are very essential to decide if any fraud or misrepresentation was perpetrated by the Plaintiff against the Director of Legal Aid.  The Defendant is not the victim of the fraud or misrepresentation and is not privy to the communications between Plaintiff and the Director of Legal Aid. 

49.  The burden of proving fraud or misrepresentation falls on the accuser.  I take the view that the present available evidence presented by Defendant purely on the Forms and answers under cross examination of Plaintiff who denied categorically any fraud or misrepresentation against the Director of Legal Aid in obtaining legal could not possibly satisfy the above test. 

50.  I do not consider that the discretion of this Court should be exercised in making an order under s.17(1) against the Plaintiff.  Accordingly, I will not order the Plaintiff to pay the Defendant’s costs incurred during the Legal Aid Period. 

Conclusion

51.  For the above reasons, the Preliminary Issue should be answered in favour of Plaintiff who should not be responsible for those costs claimed by the Defendant in the Bill falling within the Legal Aid Period when legal aid subsisted.  

52.  I make an order nisi that the Defendant should pay the Plaintiff’s costs of the Preliminary Issue and the Summons for cross examination filed on 26^th October 2017, on a party and party basis to be taxed if not agreed, with certificate for Counsel.  Unless any of the parties applies by Summons to vary the same, the costs order nisi shall be made absolute within 14 days from today. 

53.  I direct that a copy of this decision be served on the Director of Legal Aid. 

54.  I am most grateful to Mr. Horace Wong, SC and Mr. Erik Shum for their very able and helpful assistance.