THE DEMOCRATIC PARTY v. THE SECRETARY FOR JUSTICE

HCAL 84/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 84 OF 2006

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RULING AS TO COSTS

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1. The applicant in this matter is a political party.  In 1994, the members of the party chose to be incorporated under the name of the Democratic Party as a company limited by guarantee.  In the result the applicant so structured its affairs that, upon incorporation, the register of members became at one and the same time both the register of members of the company and the register of members of the political party.

2. S.95 of the Companies Ordinance, Cap.32, directs that all companies must keep a register of members and, among other things, that the register must record the names and addresses of those members.  The statute further provides that the register must be kept open for inspection by the public.

3. In respect of the applicant, it meant that any person who wished to identify the members of the party needed to do no more than exercise his right to inspect the company’s register of members.

4. In 2006, the applicant began to receive requests from persons who were not members of the party to inspect the Register of members.  It appears that some of those requests came from the press.  When the applicant canvassed the views of its members, a significant number objected to the Register being made available for general scrutiny.  Indeed, it appears that 18 members withdrew their memberships.

5. It was this predicament which prompted the applicant to bring judicial review proceedings.

6. In the judicial review proceedings, it was the applicant’s assertion that the provisions of the Ordinance, in so far as they gave to the public at large the right to inspect its register, were disproportionately prejudicial to two constitutionally protected freedoms enjoyed by its members.  First, the freedom to associate with others and, second, to be able to do so free from arbitrary interference with their privacy.  The applicant sought declaratory relief to that effect.

7. In a judgment dated 21 May 2007, I dismissed the application for judicial review.  In respect of costs, I said the following (para.109) :

“	I see no reason why costs should not follow the event and I make an order nisi to that effect.  The order will be made final in 14 days from the date of this judgment unless an application is made within that time to set the matter down for argument.”

8. The applicant, however, contended that it had instituted its proceedings not simply to protect its own interests but in order to seek clarification of the law in respect of a matter of public importance.  The judgment of the court had achieved that purpose and in the result the interests of Hong Kong society at large had been furthered.  In such circumstances, it was argued, the applicant should not be forced to bear the costs of its unsuccessful application. 

9. Rather than a further oral hearing, it was agreed that the parties would file written submissions.  This ruling is given in the light of those submissions.

10. It is fundamental that costs lie within the discretion of the court.  The issue before me is how that discretion should be exercised.

11. By way of guidance, the starting point, even in cases where the factor of ‘public interest’ litigation can be invoked, is that costs follow the event.  In his submissions, leading counsel for the respondent, Mr Benjamin Yu SC, explained the reason for that in succinct language that I can do no better than repeat.  It is right, in both private and public law cases that successful parties should be compensated, said Mr Yu, to ensure that they are not penalised in having to incur costs to defend themselves and also to encourage parties to act sensibly in the conduct of litigation.  In public law litigation, he said, if a successful respondent is not compensated for its costs, these costs will have to be paid out of public funds.

12. But this starting point is no more than that and in appropriate cases may be set aside.  In respect of ‘public interest’ litigation, in Leung Kwok Hung v. The President of the Legislative Council, unreported, HCAL 87/2006, para.24, I observed that it is today well established that, in an age in which laws intrude into every aspect of our lives, some public law litigation may be instituted for altruistic purposes, seeking determination of a matter of manifest public importance which benefits society as a whole.  This being so, it is acknowledged that, if such proceedings are unsuccessful, it may be unjust to impose the usual costs order.

13. As to when an order other than the usual order is to be made in ‘public interest’ cases, Kirby J in Oshlack v. Richmond River Council [1998] HCA 83, para.136 made the following observations :

“

I agree that it is difficult to define with precision what is meant by ‘public interest’ litigation.  Stein J acknowledged this.  However, the series of cases to which his Honour referred illustrates, clearly enough, that in this country, as well as in England, New Zealand, Canada and elsewhere a discrete approach has been taken to costs in circumstances where courts have concluded that a litigant has properly brought proceedings to advance a legitimate public interest, has contributed to the proper understanding of the law in question and has involved no private gain.  In such cases the costs incurred have occasionally been described as incidental to the proper exercise of public administration.  Upon that basis it has been considered that they ought not to be wholly a burden on the particular litigant.”

14. In the same judgment of the High Court of Australia, McHugh J, while recognising that each case must depend on its own facts, sounded a note of caution (para.75) :

“

Without an organizing principle to apply or a set of criteria to guide, there is a real danger that, by invoking the ‘public interest litigation’ factor in cases that affect the public interest or involve a public authority, an award of costs will depend on nothing more than the social preferences of the judge …”

15. In the recent judgment of Chu Hoi Dick and Another v. Secretary for Home Affairs, unreported, HCAL 87/2007, at para.29, Lam J, having reviewed relevant authorities, most helpfully formulated three criteria for ensuring a disciplined and principled approach to the exercise of the court’s discretion.  The court may take the unusual step of not ordering that costs should follow the event if it is satisfied that :

(i)	the proceedings have not been concerned with the private gain of the applicant;
(ii)	the proceedings have instead been instituted to seek clarification of the law or the guidance of the court on a matter of public importance so that the litigation is for the benefit of the community as a whole, warranting the costs of litigation being borne by the public purse as costs incidental to good administration, and
(iii)	if the judicial decision has contributed to the proper understanding of the law in question.

16. In light of these guiding factors, I see no reason to order that the respondent’s costs should be met out of the public purse.  The proper order, in my view, is that the applicant must pay the costs.

17. First and foremost, the proceedings were not instituted by the applicant for a purely altruistic purpose; that is, to seek a ruling from the court solely for the greater benefit of Hong Kong society.  The fundamental purpose of the proceedings was to protect the applicant’s position.  It was to prevent any intrusion on the privacy of its members and by that means to stem the loss of membership.  The application was founded upon – and solely focused upon – the applicant’s own interests.

18. On behalf of the applicant, Mr Shum pointed to the fact that in every case an applicant who has locus standi must have some private interest, either by way of seeking a gain or preventing a loss.  That may be true in almost all cases.  But, as Mr Shum recognised, it is always a matter of degree.

19. In the present case, if I may put it plainly, I am of the view that in truth the greater public interest was more incidental to the application than pivotal to it.

20. It was never disputed that political parties in Hong Kong have a number of choices open to them as to how best they wish to order their affairs.  They are not forced to incorporate.  Even if they do incorporate, they are not forced into a situation in which every member of the party is, by that fact, also a member of the company.  But that is how the applicant had chosen to structure itself and its application, in my view, was brought essentially to defend that choice, a choice particular to itself.  Other bodies of a political or quasi-political nature have chosen different structures.

21. Clearly, in a democratic society such as Hong Kong the unhindered operation of political parties is a matter of public importance.  But the core issue in this application was founded not on hindrance generally but on a particular form of perceived hindrance if a political party chose to incorporate itself in the way in which the applicant had chose to do so.

22. It may well be that certain rulings of public importance arose out of the proceedings.  For example, Mr Shum referred to the construction which I gave in my judgment to s.98 of the Companies Ordinance.  But, as Mr Yu pointed out, the construction which I gave to the section was not in accordance with the applicant’s arguments.  It was essentially contrary to them.  In any event, the fact that a ruling of importance arises out of litigation cannot of itself be determinative.

23. I return to what I believe is determinative in this case; namely, that this litigation, while it may have been of some benefit to the community as a whole, arose out of a determination on the part of the applicant to protect its own interests.  That is my firm view.  Nothing that has been put before me by Mr Shum has caused me to doubt that view.

24. Accordingly, for the reasons given, it is my final order that costs are to follow the event and are awarded to the respondent.  In my judgment, this is not an appropriate case for ordering that the respondent’s costs should be borne by the public purse.

25. For the avoidance of doubt, costs related to this ruling are also awarded to the respondent.