COMMON LUCK INVESTMENT LTD v. DIRECTOR OF LEGAL AID

CACV 375/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 375 OF 2001

(ON APPEAL FROM COURT OF FIRST INSTANCE

HCMP NO. 2659 OF 2000)

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J U D G M E N T

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Hon Woo JA:

Introduction

This is an appeal from the judgement of Deputy High Court Judge Muttrie dated 22 January 2001 in favour of the applicant. The dispute relates to whether the Director of Legal Aid ("the Director") is liable for the costs awarded by the Court of Final Appeal against the legally-aided person in the appeal from HCMP No 1065 of 1994 ("HCMP 1065/94"). The resolution of that dispute depends on the true interpretation of s 16C of the Legal Aid Ordinance, Cap 91 ("the Ordinance").

The facts

2. The proceedings in HCMP 1065/94 were initiated by way of a notice of motion by Common Luck Investment Limited ("the company") against the then Attorney General for declarations that it was the rightful owner of a piece of land in the New Territories which had been resumed by the Government and for which compensation in the sum of $517,492.80 was payable, and that it was entitled to the payment of the compensation. The company acquired its title to the land by purchase from the liquidator of a bank (in liquidation) that was the mortgagee of the land under a mortgage dated 19 May 1964. The company commenced the action because it had learned that Cheung Siu Ming ("Cheung") claimed that he was the rightful owner. With the assistance of legal aid, Cheung intervened in that action to raise claim that he was the rightful owner of the land on two grounds, namely, that he had always been the registered owner of the land since 1962 and his purported signature on the mortgage dated 19 May 1964 under which the bank obtained title was a forgery or that he had acquired a possessory title to the land by way of adverse possession against the bank and the company pursuant to the Limitation Ordinance, Cap 347 even if the mortgage was valid.

3. The three parties appeared before the Vice-President, then Mayo J, on 13 December 1994, and he made orders and directions for the further conduct of the proceedings, the relevant parts of which read as follows:

"(1) The Claimant [ie, Cheung] do produce and show to the Applicant [ie, the company] the original of an Assignment dated 1st December 1962 ... in respect of the subject property ... within 7 days hereof.

(2) These proceedings do continue as if begun by Writ, under Order 53 Rule 9(5) of the Rules of Supreme Court and the Applicant do become the Plaintiff and the Claimant the Defendant therein to determine who is the true owner of the said property;

...

(7) After payment of the said compensation into Court all further proceedings against the Respondent [ie, the Attorney General] be stayed;

(8) If the original Assignment is not produced within 7 days the roles of the parties to these Proceedings be reversed;

(9) There be no Order for costs in so far as the Respondent is concerned, otherwise the costs be in the cause;

..."

4. At the conclusion of the trial of the action before Deputy Judge Whaley, he concluded that Cheung was the rightful owner, on the ground that he had obtained possessory title. He held that Cheung had failed to prove that the mortgage was a forgery.

5. The company appealed, and the Court of Appeal affirmed the judgment.

6. The company, after obtaining leave from the Court of Appeal, further appealed to the Court of Final Appeal. By that time, Cheung had passed away and his son was ordered by the Court of Final Appeal to represent him in the appeal. The Court of Final Appeal reversed both the judge and the Court of Appeal and found for the company on the basis that Cheung had not acquired possessory title. It ordered that the company's appeal be allowed with costs "here and below".

7. By HCMP 2659 of 2000, ie, the instant action, the company sought payment by the Director of the costs of the appeals before the Court of Final Appeal and the Court of Appeal as well as the costs of the counterclaim in HCMP 1065/94.

8. On 22 January 2001, Deputy Judge Muttrie ("the Judge") gave judgment in favour of the company. He held that the Director was liable to pay the company the following costs:

(a) all the costs of the counterclaim in HCMP 1065/94, including the costs of the original proceedings (by way of judicial review) brought by the company against the then Attorney General before Mayo J leading to his Order dated 13 December 1994;

(b) all the costs of the appeal before the Court of Appeal; and

(c) all the costs of the appeal before the Court of Final Appeal.

 

The issues

9. There has not been dispute between the parties that the Director is liable for the costs of the counterclaim in HCMP 1065/94. The Director now appeals against the judgment of the Judge in all other aspects. The issues between the parties are therefore as follows:

(a) whether the Director is liable to pay the costs of the appeals before the Court of Appeal and the Court of Final Appeal ordered by the Court of Final Appeal in favour of the company against Cheung; and

(b) whether the Director is liable to pay the company's costs in HCMP 1065/94 which was instituted for judicial review against the Attorney General and which had been ordered by Mayo J to continue as if commenced by writ between the company and Cheung, to the exclusion of the Attorney General.

 

The relevant statutory provisions

10. The resolution of the issues hinges on the provisions of the Ordinance and the true construction of these provisions.

11. The provisions of the Ordinance that are relevant for consideration of this appeal must be examined carefully. Section 19 of the Ordinance provides

(1) A court or the Court of Final Appeal may make an order for costs in favour of or against an aided person in the same manner and to the same extent as it may make an order for costs in favour of or against any other person but such an order may only be enforced against the aided person and the Director to the extent permitted by section 16C.

(emphasis added)

12. Section 16C of the Ordinance provides as follows:

(1) ..., the liability of an aided person and of the Director for costs shall be determined in the following manner--

(a) ...

(b) where a court or the Court of Final Appeal makes an order for costs against an aided person, ..., in favour of a person not receiving legal aid-

(i) in any case in which the party not receiving legal aid is a defendant or respondent in the proceedings (other than a defendant or respondent to a counterclaim or cross-petition), or in the case of an appeal (including an appeal to, or an application for leave to appeal to, the Court of Final Appeal) is a respondent therein (other than a respondent to a cross-appeal) such costs shall be paid by the Director;

(ia) in any case in which the party not receiving legal aid is a defendant to a counterclaim or respondent to a cross-petition, or in the case of an appeal (including an appeal to, or an application for leave to appeal to, the Court of Final Appeal) is a respondent to a cross-appeal, the costs occasioned by the counterclaim, cross-petition or cross-appeal filed by or on behalf of the aided person shall be paid by the Director;

(ib) in any case in which the party not receiving legal aid is an appellant in an appeal (including an appeal to, or an application for leave to appeal to, the Court of Final Appeal) and in the court whose judgment or order is appealed against the plaintiff was an aided person, such costs shall be paid by the Director; and

(ii) in any other case, neither the Director nor the aided person shall be liable for such costs unless a contribution is payable by the aided person under section 18(1)(b); in which case the Director on behalf of the aided person shall pay such costs to the extent that the contribution is in excess of the costs incurred by the Director on behalf of the aided person; and ...

(emphasis added)

13. Both parties before us accept and rely on what was said by the Judge at pp 10R-11E of his judgment, as follows:

"The common feature is that liability falls on the Director when the aided person prosecutes unsuccessfully a claim, counterclaim or appeal. Even in the situation where the appellant is unaided liability will only ensue where the aided person has prosecuted a claim in the court below. So in simple and wide terms, when an aided person prosecutes a case and loses or loses on appeal, the director pays. When an aided person defends a case and loses, the Director only pays to the extent of the aided person's contribution, if any."

14. I think that the Judge's observations are correct. The intent and spirit of the provisions in s 16C of the Ordinance, according to my understanding, are that the Director will only be bound to pay the costs to the successful defendant where a legally-aided claimant is unsuccessful in his claim, because he has assisted the claimant to bring the claim which may not have been brought without the assistance that is made available from public funds. The reverse is that the Director will not pay the costs of a successful unaided claimant awarded against an aided unsuccessful defendant because the claim was initiated by the claimant and thrust upon the defendant who had no choice but to defend and the Director was merely assisting the defendant in defending such a claim. The fact that the aided litigant has been granted legal aid is indicative of his poor financial position so that there is little hope that his successful opponent will be able to recoup costs from him. The liability of the Director to pay costs is thus an additional benefit to the unaided litigant conferred by statute and resort is made to public funds. Such statutory provisions must therefore be strictly interpreted.

Can one go behind the Order of 13/12/94 regarding the roles of the parties in the action?

15. Mayo J's Order of 13 December 1994 made the company the plaintiff and Cheung the defendant in HCMP 1065/94. Mr Bleach SC, for the Director, supports the Judge's ruling that one cannot and should not be allowed to go behind this order - the company was the plaintiff and Cheung was the defendant. While he accepts that the company was the defendant in the counterclaim and Cheung was the plaintiff by counterclaim, he submits that one cannot go behind this Order to say that in effect the company was the defendant in the action, in order to make Cheung fit in with the reference to "the plaintiff" under s 16C(b)(ib) of the Ordinance.

16. On the other hand, Mr Griffiths SC, for the company, argues that in the action Cheung was in fact and in name the plaintiff in the counterclaim, and that he was in effect, though not in name, the plaintiff in respect of the subject matter of the action. His argument is based on the following:

(a) The company was merely making a claim against the Government to pay him the compensation as agreed between him and the Government, and Cheung was not a party to the judicial review proceedings as originally brought.

(b) Cheung intervened in the judicial proceedings to claim to be the rightful owner of the land and the person to whom the Government should pay the compensation.

(c) Cheung raised two points in support of his claim, (i) that the mortgage that was allegedly executed by him was not in fact executed by him and was thus invalid as against him or invalid as passing a title to the land to the company; (ii) even if the company has acquired title under the mortgage which was valid, Cheung had obtained possessory title to the land by way of adverse possession for the required statutory limitation period.

(d) Since the company was the registered owner of the land and it was Cheung who was challenging the company's title to the land by raising the two matters referred to in (c) above, the company did not have to prove anything in the action and it was rather Cheung who had all the burden of proof relating to the two matters and thus Cheung, and not the company, should have been made plaintiff. Although Mayo J did not make Cheung the plaintiff, nevertheless the effect was that Cheung was the plaintiff.

(e) Alternatively, the action was in effect an interpleader proceeding where each party sought a declaration that he was the true owner.

17. Mr Griffiths urges us to look at the reality of the situation. Both the company and Cheung wanted to receive the compensation. Unless Cheung raised a counterclaim against the company he would not be able to obtain the compensation. Indeed, Cheung did counterclaim for a declaration that he was entitled to the compensation.

18. On this question, the Judge said (at p 11G-R of his judgment):

"It is no doubt true that Mr Cheung in the original proceedings was the 'natural plaintiff'. It was up to him to make out his case in the face of Common Luck's bona fide purchase of the lot from the mortgagee. He did so at first instance on the counterclaim, at least, on the limitation point. The Director contends that one cannot go behind the positions of the parties as they stand in the proceedings. He relies on Taly NDC International NV v. Terra Nova Insurance Co. Ltd & Ors [1985] 1 WLR 1359 where the Court of Appeal in England affirmed a decision at first instance, refusing to treat a third party as defendant for the purpose of security for costs against Common Luck (sic).

I think this must be right. Though it was the court that decided on the relative positions, making Common Luck the plaintiff and Mr Cheung the defendant, that was the decision and I do not see how one can go behind it for the purpose of deciding liability for costs, at any rate in the present situation where that liability depends on statute, though the position might be different if liability for costs fell to be decided under the court's discretion."

19. I agree with the Judge. I would add this. While it is true that Cheung had to counterclaim in order to obtain the compensation from the Government, the company had brought the judicial review proceedings against the Government for obtaining the compensation. The fact was, the company initiated the proceedings in which he was ordered by Mayo J on 13 December 1994 to be the plaintiff. Mayo J's Order had never been challenged. If one goes behind Mayo J's Order, this Court would have to decide on a matter that was never subject to appeal and that had been accepted by the parties at all times subsequent to the Order until the dispute between the company and the Director relating to the Director's liability for costs arose. Moreover, the issues before us relate to statutory interpretation and going behind the Order will cloud the issue and may avoid the effect of the true construction altogether.

Was Cheung 'the plaintiff" under s 16C(1)(b)(ib)?

20. There is no definition or interpretation provided in the Ordinance of those terms highlighted in the provisions cited in paras 11 and 12 above, in aid of construction. The Judge accepted that the provisions should be subject to strict interpretation because they relate to the liability of the Director to pay costs out of public funds. He said (at p 15B-Q of his judgment):

"The Director's main argument in any event is that legal aid expenses are from public money and clear express terms are necessary to found the liability. He relies on the English case of Holden & Co. v Crown Prosecution Services (No 2) [1994] AC 22. In that case, orders had been made in the Crown Court that four firms of solicitors should personally pay costs thrown away as a result of their conduct of the defences of their clients. They successfully appealed against those orders to the Civil Division of the Court of Appeal which granted orders for payment of the costs of their appeals out of central funds. On appeal, the House of Lords held that there was no express statutory authority for the orders made by the Civil Division of the Court of Appeal for payment from central funds and no power to make such orders could properly be implied into the legislation or as a matter of justice.

The principle of statutory interpretation set out in that case applies equally in Hong Kong. I accept that there is no room for the Director, or for this court, to imply into the Legal Aid Ordinance a power which is not there, whether the interests of justice require it or not.

So the question before me is quite simply whether the criteria set out in section 16C(1)(b)(ia) and (ib) apply. I can look no further than those criteria as they apply to the original action and the appeals."

21. However, the Judge held that Cheung, being the plaintiff by counterclaim in HCMP 1065/94, should be regarded as "the plaintiff" referred to in s 16C(1)(ib) of the Ordinance, so as to make the Director liable for the costs of both of the company's appeals to the Court of Appeal and the Court of Final Appeal. He said (at pp 16Q-17O of his judgment):

"At first instance Mr Cheung was the plaintiff by counterclaim and succeeded on it. He obtained exactly the declarations which he prayed for in his counterclaim. I do not see that there can be any difference, for the purposes of subparagraph (ib), between a plaintiff and a plaintiff by counterclaim. Order 15, rule 2 of the Rules of the High Court provides that a defendant may, instead of bringing a separate action, make a counterclaim and that where he does so he must add it to his defence. 'A counterclaim is to be treated, for all purposes for which justice requires it to be so treated, as an independent action" (Per Bowen LJ in Amon v Bobbett 22 Q.B.D. 543 at 548.)

I would also say that I cannot see how, if subparagraph (ia) applies, as the Director accepts that it does, because Common Luck was Mr Cheung (sic) in the counterclaim, subparagraph (ib) would not equally apply because Mr Cheung was plaintiff in the counterclaim.

It seems to me therefore that since Mr Cheung was, for the purpose of the counterclaim, the plaintiff in the court below, subparagraph (ib) must apply to the costs of the appeal against the judgment on the counterclaim in the Court of Appeal, to make them payable by the Director.

The same must apply to the costs in the Court of Final Appeal because subparagraph (ib) applies to appeals including an appeal to, or an application for leave to appeal to, the Court of Final Appeal. These costs also must be paid by the Director."

22. These cited passages are the subject of challenge by the first three of the four grounds of appeal raised by Mr Bleach, for the Director. Mr Bleach submits that s 16C, as a whole, deals with proceedings separately from its treatment of counterclaims and cross-petitions, and deals with appeals separately from its treatment of cross-appeals. S 16C(b)(i) and (ia) specifically refer to a "defendant to a counterclaim" and "respondent to a cross-appeal" and that in this context, s 16C(b)(ib)'s reference to a "plaintiff" must be a deliberate reference to a plaintiff other than a plaintiff in a counterclaim and other than a cross-appellant. It would not make sense, in the context, to attribute to "plaintiff" the meaning which might otherwise be permitted by Order 15, rule 2(2) of the RHC.

23. Looking at the provisions of ss 16C and 19 in their entirety, it is plain that the order for costs made by the Court of Final Appeal in favour of the company (the unaided party) against Cheung (the aided party) can "only be enforced against ... the Director to the extent permitted by section 16C" (see the highlighted part of s 19 cited in para 11 above). The four sub-subparagraphs ("items") under s 16C(b) provide for the situations in which costs can be enforced against the Director. Apart from these provisions, the Director is not liable to pay for the costs. These items provide for different situations depending on the role of the aided litigant and the unaided litigant in those situations. Only the relevant situations where liability attaches to the Director for the payment of costs awarded to the successful unaided party are set out below, following the wording of the provisions:

(a) Under item (i), the unaided litigant is a defendant in the proceedings (other than a defendant to a counterclaim) or a respondent to an appeal (other than a respondent to a cross-appeal);

(b) Under item (ia), the unaided litigant is a defendant to a counterclaim or a respondent to a cross-appeal, the costs occasioned by the counterclaim or cross-appeal;

(c) Under item (ib), the unaided litigant is an appellant in an appeal from a judgment given by the court in which the "plaintiff was an aided person"; and

(d) Under item (ii), "in any other case, neither the Director ... shall be liable" for the costs unless the contribution payable by the aided person exceeds the costs incurred by the Director on his behalf.

24. It is important to note that the terms of s 19 and item (ii) are expressed in a very restrictive manner. It is only in the situations covered by the various items that the Director is liable for the costs of the company in HCMP 1065/94 and in the appeals from that action. As item (i) specifically excludes such liability where the unaided person was a defendant to a counterclaim, it has no application to the facts of the present appeal. Item (ia) however applies to make the Director liable for the costs occasioned by the counterclaim, and there is no dispute on this. The question whether such costs should include the costs of HCMP 1065/94 before Cheung counterclaimed will be dealt with later. While Mr Bleach submits for the reasons referred to in para 22 above that the ambit of item (ib) does not cover the situation where the aided person is the plaintiff by counterclaim, Mr Griffiths contends the opposite.

25. Mr Griffiths submits that the specific reference in item (i) and item (ia) to a "defendant to a counterclaim" as opposed simply to a "defendant" was necessary for the draftsman to deal specifically with the position of a defendant by counterclaim in order to restrict the Director's liability for the unaided party's costs generated by that counterclaim as opposed to the costs generated by the defence to the claim raised by him (the unaided party). Similarly, it was necessary for the draftsman to deal specifically with the position of a respondent to a cross-appeal so as to distinguish between the costs generated by a defence of the appeal from costs generated by the prosecution of the cross-appeal. In item (ib), however, it is not necessary to draw this distinction because the action can only relate to the costs consequent on the aided party's prosecution of his cause of action. The word "plaintiff" in item (ib) can apply to a plaintiff by original action or a plaintiff by counterclaim. Otherwise, so the argument continues, there would be a wholly illogical lacuna in the structure and obvious intent of s 16C(1)(b) and there would be an obvious and anomalous gap not covered by this subsection. The reference in item (ib) to "the plaintiff" including a plaintiff by original action or by counterclaim does not require any implication into the provision to be drawn. It is a consequence of a natural construction of the word "plaintiff" in the context and purposes of the Ordinance, given that a claim and a counterclaim are properly to be regarded as independent actions.

26. I am unable to accept Mr Griffiths' arguments. It is significant to note that there is reference to a "defendant to a counterclaim" in both items (i) and (ia), but no reference to "plaintiff by counterclaim" appears in item (ib). It is true that there are lacunae regarding "plaintiff by counterclaim" under items (i), (ia) and (ib), but in my view these lacunae are filled by the terms of item (ii) which is that "in any other case", the Director shall not be liable for the costs. This is a literal and natural interpretation of the provisions. The intent and spirit of the provisions, as stated in paras 13 and 14 above, are also consistent with this interpretation. Where an unaided plaintiff has brought an action or claim against an aided defendant and is successful, the Director is not liable under s 16C(1)(b) to pay the costs awarded against the aided defendant. If the unaided plaintiff fails in his claim and appeals successfully, the Director is similarly not liable to pay the costs awarded against the aided defendant on appeal. The aided defendant is normally in such an appeal compelled to oppose the appeal. The only exception is provided by item (ia) regarding the costs of the counterclaim raised by the defendant in the action and he fails in his counterclaim, because such a defendant is on the offensive. Even in such a situation, the Director is not liable under item (ia) to the costs occasioned by the unaided plaintiff's claim. As said, if the aided defendant raises a counterclaim and fails, the Director is liable under item (ia). If that defendant appeals and fails again, the Director is liable under (i). But, as in this case, where the defendant succeeds on his counterclaim and the plaintiff appeals, the defendant is normally compelled to oppose the appeal, and the same reasoning as when the plaintiff who succeeds in prosecuting an appeal relating to his claim applies: the Director is not liable for the costs if the plaintiff succeeds in his appeal against a judgment on the counterclaim.

27. Factually speaking, the claim raised by the company against Cheung related to the same subject as the counterclaim raised by Cheung. The company claimed that it was the rightful owner and Cheung claimed that he was the true owner. The courts, namely, Deputy Judge Whaley, the Court of Appeal and the Final Court of Appeal, dealt with the claim and the counterclaim together. While it is true that but for the fact that Cheung raised forgery of the mortgage and possessory title, the company would have been the undisputed person to receive the compensation, nevertheless, the appeals brought by the company were as much against the decision that its claim as the rightful owner had been rejected as that Cheung's counterclaim that he was the rightful owner had been allowed. In my view, these factual circumstances do not help the company.

28. The Judge referred to and Mr Griffiths relies on Amon v Bobbett (1989) 22 QBD 543 for support that "A counterclaim is to be treated, for all purposes for which justice requires it to be so treated, as an independent action" (per Bowen LJ at 548). However, that case related to whether a plaintiff who brought an action in the High Court to claim a sum which was within the county court's jurisdiction should, where he had succeeded on both his claim and the counterclaim raised by the defendant, be allowed his costs on the counterclaim on the High Court scale, which counterclaim was for a sum in excess of the county court's jurisdiction, he having accepted that he was only entitled to county court scale costs in respect of his claim. The decision that a counterclaim should be treated as though it were a cross-claim depended on the true construction of the relevant Rules of the Supreme Court and related to the scale for taxation of costs. It has no application to the instant case.

29. When deciding that the word "plaintiff" in item (ib) covers the role and situation of Cheung in HCMP 1065/94, the Judge fell into error and was inconsistent with his own views (at p 15M of his judgment) that "there is no room for the Director, or for the court, to imply into the Legal Aid ordinance a power which is not there, whether the interests of justice require it or not", and that one cannot go behind Mayo J's order of 13 December 1994 (referred to in para 18 above).

30. Although it may be said Cheung's claim that the Government should pay him the compensation had caused the company to institute the judicial review proceedings in HCMP 1065/94, he was not the plaintiff in the action. It will be noted that para (8) of the Order provides that if he failed to produce the Assignment of the land, he would have to become a plaintiff. The fact that he had been the defendant demonstrates that he had complied with that para (8). For the interpretation of s 16C(1)(b), and item (ib) in particular, there is no justification for treating him as the plaintiff in the action.

Was there a cross-appeal by Cheung?

31. The Respondent's Notice before us challenges the Judge's decision that Cheung was not a cross-appellant and that the company was not a respondent to a cross-appeal under item (ia).

32. Mr Griffiths draws our attention to the respondent's notice issued by Cheung in the company's appeal from HCMP 1065/94 and contends that despite its expressly referring to Order 59, rule 6(1)(b) of the RSC, it was in fact used to bring a cross-appeal against the decision of Deputy Judge Whaley.

33. Order 59, rule 6(1) of the RHC (the same as the former RSC) provides:

(1) A respondent who, having been served with a notice of appeal, desires--

(a) to contend on the appeal that the decision of the court below should be varied, either in any event or in the event of the appeal being allowed in whole or in part, or

(b) to contend that the decision of the court below should be affirmed on grounds other than those relied upon by that court, or

(c) to contend by way of cross-appeal that the decision of the court below was wrong in whole or in part,

must give notice to that effect, specifying the grounds of his contention and, in a case to which sub-paragraphs (a) or (c) relates, the precise form of the order which he proposes to ask the Court to make.

34. After citing Order 59, rule 6 of the RHC and Atkins Court Forms (1997 Ed, pp 80-81) referring to the three categories of respondent who has given a respondent's notice, the Judge went on (at pp 13-14 of his judgment):

"Common Luck seeks to equate these three categories of respondent. It relies on four cases : Cracknall v. Janson (1879) 11 Ch. 1, Harrison v. Cornwall Minerals Ry. Co. (1881) 18 Ch. 334, How v Earl Winterton (1896) 2 Ch. 626 and Jones v. Stott (1910) 1 KB 893. In particular, Harrison is relied on by the authors of both the Hong Kong Civil Procedure and the Supreme Court Practice as authority for the proposition that :

'A respondent who has given a respondent's notice under this rule is generally in the same position as to costs as though he had presented a cross-appeal.' (59/6/5 in both works).

So far as I can see, none of these cases covers the situation of a respondent who seeks to affirm the decision of the court below on additional or alternative grounds. What was sought was variation or in the case of Jones v Stott a cross-appeal.

In fact, it is difficult to see how a respondent who seeks to affirm the decision of the court below can be in the same position as a cross-appellant. Where the respondent seeks to vary the original order or cross-appeal on a separate cause of action, both parties may succeed with costs which must then be apportioned or set off. Where the respondent simply affirms the decision of the court below as it stands, either the appeal succeeds in which case he may normally expect to pay the costs of the appeal and below, or the appeal fails in which case he may expect to recover those costs from the appellant. That must be so whether there is any consideration of, or even need for, additional or alternative grounds relied on by the respondent.

I do not, therefore, see how a respondent who seeks to affirm the decision of the court below can be equated with a cross-appellant even if he is not an aided person. It seems to me that the cases referred to can only apply to the situation where the respondent seeks to vary the decision of the court below or contend that it is wrong in whole or in part. To hold otherwise would be to hold that a respondent who gives notice affirming the decision of the court below becomes in effect the appellant, which would make the appellant the respondent, in respect of the whole of the decision. That would be absurd.

Here, Mr Cheung in affirming the decision at first instance, sought to attack that part of it which went against him, i.e. the findings of facts that he had executed the mortgage, while affirming the part which went in his favour, i.e. the decision on the limitation point. It is contended that this puts him in the position of a cross-appellant because he was attacking that part of the decision at first instance which went against him. I do not see that it does, because he was still seeking to affirm the decision on fact on other grounds, if the decision on the limitation point went against him. In any event, costs are awarded not on the basis of which points succeed and which points fail, but on the final decision.

I therefore find that Mr Cheung, as a respondent who affirmed the decision of the court below on additional or alternative grounds, could not be regarded as in the position of a cross-appellant."

35. Indeed, Mr Griffiths raises the same arguments and authorities before us. I am of the opinion that the Judge's views on the authorities and his conclusion on this point are proper and correct. Cheung's respondent's notice sought the affirmation of Deputy Judge Whaley's judgment by an additional ground (that the mortgage was forged) that had been rejected by the judge. That was not a cross-appeal but merely adding further arguments to the appeal that had been brought by the company. Ironically, Cheung's respondent's notice did the same thing as the company's Respondent's Notice before us does, both seeking to have the judgment appealed against affirmed by the appellate court. In VCS Ltd v Magmasters Ltd [1984] 1 WLR 1208 (CA), where Sir John Donaldson MR was dealing with the sub-paragraphs of Order 59, rule 6(1) of the RSC which is identical in terms to the same rule in our RHC, he said at 1209F:

"In sub-paragraph (b) it covers the situation to which this note refers, namely adding further arguments to an existing appeal, but under (a) and (c) it is in reality a cross-appeal."

 

Extent of costs occasioned by the counterclaim

36. The last ground of appeal relates to the costs of HCMP 1065/94 that the Judge held the Director to be liable. He ordered that the costs were to include the costs of the originating proceedings by way of judicial review. He said (at p 17Q-S of the judgment):

"It also appears to me that the costs in respect of the counterclaim must include the costs of the originating proceedings by way of judicial review, given that Mayo J ordered in his Order dated 13 December 1994 that there be no order for costs insofar as the respondent (i.e. the Attorney General) is concerned, otherwise, the costs be in the cause."

37. While it is true that the costs order of "costs be in the cause" made by Mayo J must include the costs of the originating proceedings by way of judicial review, because the "cause" must include the action itself, continued as if begun by writ, the claim by the company and the counterclaim by Cheung, whether the Director is liable for the costs of the action and the claim again depends on the true construction of item (ia) under s 16C(1)(b). Under item (ia), the Director is only liable for "the costs occasioned by the counterclaim" and he is not liable for any other costs. It follows that it is plain that he is not liable for the costs occasioned by the originating proceedings. This conclusion is also supported by the fact that Cheung was originally not a party to the judicial review proceedings. He merely took steps to intervene and at his intervention, he was joined as a party and to be treated as a defendant according and pursuant to the Order of Mayo J. The costs of originating the judicial review proceedings can in no circumstances be said to be costs occasioned by his counterclaim.

Conclusion

38. In the circumstances, I would allow the appeal and set aside the entirety of the judgment save the part that relates to the Director's liability to pay the costs of the counterclaim in HCMP 1065/94 which do not include the costs of the original judicial proceedings by way of judicial review. To make it absolutely clear, the Director is not liable to pay the costs of the appeals before the Court of Appeal and the Court of Final Appeal. I would also make an order nisi that costs here and below be paid by the company to the Director.

Hon Yeung J:

39. I agree with the judgment of Woo JA. I wish to point out however what I consider to be an injustice in the statutory provisions.

40. Section 16C of the Legal Aid Ordinance clearly prohibits the payment out of the legal aid fund of a plaintiff's costs of his successful claim against a legally aided defendant. The rational is that it is up to a plaintiff to decide if he wants to commence proceedings against someone who is not good for the costs. If he chooses to do so, he should not be in a better position than he would have been but for the statutory provisions. As Woo JA has put it, the liability of the Director to pay costs is thus an additional benefit to the unaided litigant conferred by statute and resort is made to public funds.

41. Such argument in my view applies only in cases where the plaintiff has a genuine option whether to sue or not but not in a case where a plaintiff is compelled to sue to rid himself of unjustifiable claims against his right or interest. In such a case, a plaintiff either has to put up with unlawful and unjustifiable fetters over his right or interest or sue. When he sues, those who have made unjustifiable claims are assisted by the Director to maintain what is ultimately held to be not maintainable. If unassisted by the Director, the legally aided defendant might have given in at an earlier stage or not fought the case at all.

42. In the instant case, if Cheung had not made the unjustifiable assertions as he did, none of the proceedings would have been necessary.

43. In reality, the company had no option but to sue to get back what it was legally entitled to. Yet at the end of the day, the company did not get the fruit of its success and was burdened with substantial legal costs.

44. I hope the legislature would consider giving an unaided plaintiff wider rights to be paid his costs by the Director and that the court might be given some discretion to order the Director to pay the costs of a successful plaintiff who has been forced to sue a legally aided defendant in order to rid himself of unjustifiable fetters against his interest.

45. But the Legal Aid Ordinance in its present form has made it abundantly clear that the Director is not liable for any part of the costs of the claim made by an unaided plaintiff.

46. For the reasons given by Woo JA, I too would allow the appeal and make the orders as he proposes.

Hon Mayo VP:

47. I also agree with the judgment of Woo JA for the reasons he has given. In the result, this Court unanimously allows the appeal and makes the orders as proposed in the last paragraph of Woo JA's judgment.