LEUNG KWOK HUNG v. THE PRESIDENT OF THE LEGISLATIVE COUNCIL OF THE HKSAR AND ANOTHER

HCAL 87/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 87 OF 2006

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R U L I N G

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Introduction

1. In a judgment handed down on 22 January of this year, I dismissed the applicant’s application for judicial review.  In respect of costs, I directed that there should be written submissions.  I have now received those submissions.  

2. In civil proceedings, including judicial review proceedings, while costs are in the discretion of the court, a successful litigant is prima facie entitled to his costs.  The successful litigants in this case are the first and second respondents and both have sought costs.

3. On behalf of the applicant, however, it has been said that he did not make his application out of personal gain.  He did so instead to clarify an issue of law that for several years has remained undecided, an issue that fundamentally influences the workings of the Legislative Council (‘LegCo’).  On the basis therefore that his application – in many ways a test case – settled a matter of public importance, the applicant should not been penalised in costs.  The appropriate order should be one of no order as to costs.

4. On behalf of the applicant, it is further argued that, even if an order of costs is made against him, he should not be visited with two sets of costs; that is, the costs of both respondents.

5. In this respect, one of the matters I have taken into account in coming to my determination is the fact that the applicant’s claim originally cited only one respondent, the President of LegCo.  The Secretary for Justice intervened in order to assist the court and on his request was made the second respondent.

The background

6. Art.74 of the Basic Law enables LegCo members to introduce bills but restricts the type of bills that may be introduced.  It reads :

“Members of the Legislative Council of the Hong Kong Special Administrative Region may introduce bills in accordance with the provisions of this Law and legal procedures.  Bills which do not relate to public expenditure or political structure or the operation of the government may be introduced individually or jointly by members of the Council.  The written consent of the Chief Executive shall be required before bills relating to government polices are introduced.”

7. Unless they have the written consent of the Chief Executive, art.74 therefore prohibits LegCo members from introducing bills which relate to public expenditure; that is, bills which will have a charging effect.

8. The Basic Law, however, is silent on the subject of proposed amendments to bills already introduced into LegCo which, if accepted, will have a charging effect.

9. In 1998, this silence led to conflicting interpretations of art.74.  As I described it in my judgment (paras.37 ad 38) :

“The Secretary for Justice took the view that the word ‘bills’ in art.74 must be construed to include later committee stage amendments to a bill.  Any other interpretation, it was argued, would create the anomaly that members may achieve by way of committee stage amendments that which they were constitutionally prohibited from achieving by way of introducing a bill.

On the basis of an opinion obtained from Mr Denis Chang SC in 1998, LegCo took the view that art.74 bore a clear meaning.  There was no ambiguity in the concept of ‘introducing a bill’, that phrase plainly referring solely to the initiation of the legislative process.  Even on a purposive construction, therefore, it was not possible to contend that the phrase, or the word ‘bill’ itself, included later committee stage amendments.”

10. In short, the Secretary for Justice construed art.74 as prohibiting LegCo members, without the consent of the Executive, from proposing amendments which have a charging effect.  In contrast, however, Mr Chang’s opinion opened the gates to a construction which permitted such amendments.  An impasse loomed, one which lay at the heart of the legislative process.

11. After deliberation, LegCo determined that proposed amendments to bills were procedural issues and could therefore be governed by its rules of procedure.  Art.75(2) of the Basic Law permits LegCo to make its own rules of procedure provided they do not contravene the Basic Law itself. 

12. In the result, LegCo introduced r.57(6), directing that a proposed amendment —

“… the object or effect of which may, in the opinion of the President … be to dispose of or charge any part of the revenue or other public moneys of Hong Kong shall be proposed only by —

(a)    the Chief Executive; or

(b)    a designated public officer; or

(c)    a Member, if the Chief Executive consents in writing to the proposal.”

13. But r.57(6), as a rule of procedure, could not supplant the Basic Law and it is apparent that the divergence of opinion remained.  To put it another way, r.57(6) did no more than allow a modus vivendi to exist.  It constituted a suitable accommodation. 

14. As to how it was, despite this accommodation, that the issue arose in the present proceedings, it is easiest, I think, to cite from my judgment (paras.16-22) :

“In February 2006, on the advice of the Executive Council, the Chief Executive ordered that a bill called the Interception of Communications and Surveillance Bill be introduced into LegCo.  The Bill proposed a regime (which the Executive believed would accord with the requirements of the Basic Law) regulating covert surveillance operations.

In March 2006, after the second reading of the Bill had been adjourned to a date to be fixed, LegCo formed a bills committee to study it.  Some four months later, in July 2006, the House Committee directed that the second reading of the Bill should take place in early August of that year.

Many of the provisions of the Bill had excited controversy.  In the result, a substantial number of committee stage amendments were proposed by members.

The proposed committee stage amendments were placed before the President of LegCo.  In terms of art.72 of the Basic Law, the President presides over meetings, decides on the agenda to be followed and exercises such other powers and functions as are prescribed in the Council’s rules of procedure.

On 31 July 2006, the President ruled that certain of the proposed amendments would go forward for consideration by the Council sitting in committee.  On the following day; that is, on 1 August 2006, the President ruled that the remaining proposed amendments had a charging effect and, in terms of r.57(6) of the Rules of Procedure, could not go forward for consideration.

Although the applicant was not himself the author of any of the proposed amendments which were made the subject of the President’s 1 August ruling, he was of the view that, as a member of LegCo, he had been unlawfully hindered in the discharge of his constitutional duty by that ruling.  The applicant therefore instituted the present proceedings on 5 August 2006 while the Bill was still before LegCo.

It is to be emphasised that the applicant’s challenge does not in any way touch on the lawfulness of the President’s reasons for refusing to permit certain proposed committee stage amendments to go forward for consideration.  The challenge goes only to the constitutional validity of r.57(6) under which the President made her ruling.”

The guiding principles

15. O.62, r.3(2) of the Rules of the High Court provides that :

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings, the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

16. This rule reflects a long-standing principle of our civil procedure; namely, that, while costs are in the discretion of the court, they should follow the event except when it appears to the court that in the circumstances of the case some other order should be made.  Costs are not awarded to punish an unsuccessful party.  The primary purpose of an award of costs is to indemnify the successful party.

17. I am satisfied that these principles apply equally to public law challenges by way of judicial review.  For example, in R. v. Lord Chancellor, ex parte Child Poverty Action Group [1999] 1 WLR 347, at 355G, Dyson J observed :

“It is true that the role of the court in all public law cases is to ensure that public bodies do not exceed or abuse their powers, but the parties to such proceedings are nevertheless adverse as is the litigation.  As Lord Diplock said in F. Hoffman-La Roche & Co. A. G. v. Secretary of State for Trade and Industry [1975] A.C. 295, 365:

‘Under our legal system, however, the courts as the judicial arm of government do not act on their own initiative.  Their jurisdiction to determine that a statutory instrument is ultra vires does not arise until its validity is challenged in proceedings inter partes either brought by one party to enforce the law declared by the instrument against another party or brought by a party whose interests are affected by the law so declared sufficiently directly to give him locus standi to initiate proceedings to challenge the validity of the instrument.”

18. Dyson J went on to articulate why the principle that a successful litigant has a prima facie right to his costs should be no different in public law cases :

“… what lies behind the general rule that costs follow the event is the principle that it is an important function of rules as to costs to encourage parties in a sensible approach to increasingly expensive litigation.  Where any claim is brought in court, costs have to be incurred on either side against a background of greater or lesser degrees of risk as to the ultimate result.  If it transpires that the respondent has acted unlawfully, it is generally right that it should pay the claimant’s costs of establishing that.  If it transpires that the claimant’s claim is ill founded, it is generally right that it should pay the respondent’s costs of having to respond.  This general rule promotes discipline within the litigation system, compelling parties to assess carefully for themselves the strength of any claim.

The basic rule that costs follow the event ensures that the assets of the successful party are not depleted by reason of having to go to court to meet a claim by an unsuccessful party.  This is as desirable in public law cases as it is in private law cases.”

19. The further observation was made that, where an unsuccessful claim is brought against a public body —

“it imposes costs on that body which have to be met out of public funds diverted from the funds available to fulfil its primary public functions.”

The issue of public interest

20. Public law litigation, by its nature, may from time to time be concerned, not with the private gain of a litigant, but with seeking clarification of the law in respect of a matter of public importance, the essential purpose, and result, being the furtherance of the interests of society at large.  When such cases occur, depending on the circumstances of the case, the courts have occasionally been persuaded to exercise their discretion by not penalising an unsuccessful applicant in costs.  The cost burden left with the public authority has been described as an incidental to good administration.

21. In New Zealand Maori Council v. Attorney-General of New Zealand [1994] 1 AC 466, at 485F, Lord Woolf said this :

“There remains the question of costs.  Although the appeal is to be dismissed, the applicants were not bringing the proceedings out of any motive of personal gain.  They were pursuing the proceedings in the interest of taonga which is an important part of the heritage of New Zealand.  Because of the different views expressed by the members of the Court of Appeal on the issues raised on this appeal, an undesirable lack of clarity inevitably existed in an important area of the law which it was important that their Lordships examine and in the circumstances their Lordships regard it as just that there should be no order as to the costs on this appeal.”

22. The order of no costs recognised that the proceedings had not been brought for private gain.  It further recognised that the wider public interest was advanced by the resolution of an issue of the law earlier marked by a lack of clarity.

23. That does not mean of course – as Munby J recognised in R, on the application of Smeaton v. Secretary of State for Health [2002] 2 FLR 146, at 243 – that some bright-line distinction must be drawn between those judicial review cases which do and those which do not involve a purportedly altruistic challenge of public importance.  A more flexible and nuanced approach is demanded by the requirement in each case to have regard to all the circumstances.  As Munby J said :

“There will in the nature of things be differing degrees of public interest involved in different types of case.  And cases which do involve – as I entirely accept the present case does – some degree of public interest will range across a very wide spectrum of public interest and public importance, mixed up with what may be a greater or lesser amount of private interest.”

24. That being said, common law courts have come to recognise 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 for the benefit of society as a whole.  In the light of that recognition has come the acknowledgement that, if such proceedings are unsuccessful, it may be unjust to impose the usual costs order.  In this regard, in Oshlack v. Richmond River Council [1998] HCA 83, at 123, Kirby J said :

“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.”

25. But caution must be sounded.  Public interest litigation, as Kirby J noted in Oshlack v. Richmond River Council, does not grant an immunity from costs or a ‘free kick’ in litigation.

26. Of more direct relevance in the present case, in Leung Kwok v. Clerk to the Legislative Council (unreported) HCAL 112/2004, at para.13, I said :

“That does not mean, of course, that all public law challenges which relate to constitutional issues bring with them a protection against any adverse order for costs.  Each case will depend on its own circumstances.  What must always be remembered is that, when a public body, such as the Legislative Council, is made the subject of legal challenge, it may well have to expend costs in defending its position and such costs, as in the present case, must come from public funds; put bluntly, from the pockets of Hong Kong tax payers.”

My conclusions

27. What then, taking into account all the circumstances of the present case, does justice require?  It has not been the easiest matter to determine.  However, at the end of the day, I have been drawn to the conclusion that this is a case in which the general rule should not be followed; in short, that the appropriate order should be one of no order as to costs.

28. Fundamental to my determination is the fact that these proceedings have gone a long way to resolving difference in interpretation of the Basic Law going to a profoundly important aspect of the legislative process; namely, whether there are constitutional limitations placed on LegCo members in proposing amendments to bills, and, if so, the nature and extent of those limitations. 

29. It is to be emphasised that this is a dispute of interpretation that dates back to 1998, a dispute that arose at the highest level; that is, between the Executive and LegCo.  The dispute may not have excited great public concern.  Indeed, it is probable that the public was ignorant of the dispute.  But that cannot undermine its manifest public importance.  The Basic Law enshrines the separation of powers and the determination of the issue in dispute went directly to that separation, helping to define the limits of LegCo’s powers in the enacting process.

30. It is, of course, true that r.57(6) of LegCo’s rules of procedure was introduced as a suitable accommodation.  But, as I have said earlier, as a rule of procedure, r.57(6) could not supplant the Basic Law.  The fact remained that, if the Basic Law, on a true construction, permitted LegCo members to propose amendments with a charging effect, then r.57(6) was of no force or effect.

31. Nor can it be said that the applicant’s claim lacked substance.  Even though unsuccessful, it was very much an arguable claim.

32. Also fundamental to my determination is my finding that the applicant did not institute proceedings for private gain.  No doubt, in its broadest sense, he was seeking to advance a ‘political’ cause, that cause being the assertion of LegCo’s full measure of power under the Basic Law.  But the character of the proceedings was not in any way coloured to advance the cause of the applicant himself or of any political alliance to which he adhered.  The application for judicial review did no more than seek the court’s interpretation of the Basic Law to ensure that both the Executive and LegCo act in accordance with that Law.

33. Nor can it be said, in my view, that the applicant engineered a situation which enabled him to bring the proceedings.  He may have seized the opportunity presented to him but there was nothing artificial in the dispute he presented.  Indeed, it had been other members of LegCo, not the applicant, who had had their committee stage amendments refused on the basis that they had a charging effect.  The applicant brought his application on the basis that, as a member of LegCo, that refusal had undermined his ability to fulfil his constitutional duty in respect of what was a highly contentious piece of legislation. 

34. In summary, therefore, I am satisfied that the applicant’s proceedings advanced a legitimate public interest, indeed an interest, as I have emphasised, of real importance to the working of our constitution.  I am further satisfied that the proceedings were not instituted for private gain.

35. I would add that, in my view, the proceedings, in advancing the public interest, have, in the result, enhanced public administration.  Yes, the successful respondents have been deprived of their costs.  But it is a loss to the revenue not to them directly, a loss, in the present case, which may be said to be the cost of ensuring that the enactment of Hong Kong’s laws are in accordance with constitutional requirements.

36. In written submissions made on behalf of the respondents it was said that the status quo or modus vivendi, as it was variously described, had worked smoothly for many years.  The assertion was that, in the circumstances, there was simply no need, certainly no need in the public interest, for the applicant to disrupt the arrangement at this time.

37. In my judgment, however, it is an issue of real public concern to ensure that the limits of LegCo’s powers under the Basic Law are not defined by an accommodation reached by the interested organs of state but are defined by law so that there can be no doubt as to the constitutional limits of that power.  In any event, during the hearing of the application all parties recognised that a day would inevitably come when the issue would have to be determined by the courts.  In this regard, in para.33 of my judgment, I made the following observation :

“… the issues raised by the applicant remain of considerable public importance, colouring the day-to-day work of our legislature.  In my view, if the issues are not dealt with now, they will have to be determined in fresh proceedings in the near future.  In short, the issues remain immediate.”

38. On behalf of the respondents it was further argued that, on analysis, the judicial review application did not resolve the long-standing difference between the Executive and LegCo.  That is partially correct.  It did not resolve it in its entirety.  But it went a long way to doing so.  I may have declined to make a determination in respect of the first declaration sought, that declaration going to the interpretation of art.74 of the Basic Law.  But that does not mean that the first declaration was superfluous or irrelevant.  In this regard, I said the following in my judgment (paras.44 and 45) :

“In the present case, I do not see the necessity of coming to a broad and definitive interpretation of the nature and effect, for all purposes, of art.74.  I will therefore decline to determine, one way or the other, the first declaration.  I will give a determination in respect of the second declaration only.  

That being said, in my judgment, the meaning of art.74, in the context of other relevant provisions of the Basic Law, is integral to a consideration of the constitutionality of r.57(6).  To adopt the phrase used by Mr Thomas, I have found it necessary therefore to consider art.74 as a stepping-stone to determining the core issue in this matter; the issue which, in my view, is encapsulated in the second declaration sought.”

39. In my judgment, to make an adverse costs order against the applicant because in the end result I declined to determine the first declaration sought would bear unduly harshly on him.

40. On behalf of the respondents it was further submitted that, if the applicant was concerned as to the constitutionality of r.57(6), it was always open to him to seek a review of the rule by LegCo’s Committee on Rules of Procedure.  As it was put on behalf of the first respondent, any member of LegCo who wishes to refer a matter of practice and procedure for consideration by the Committee may do so through a member of that Committee or through the House Committee itself of which all members of LegCo, with the exception of the President, are members.

41. That is a point of substance, one that has caused me some concern and made the resolution of this costs dispute less than straightforward.  But the fact remains that the applicant was seeking determination of a matter not going merely to practice and procedure but to a fundamental issue of constitutionality; that is, as to the powers of LegCo members under the Basic Law.  That issue had not been finally resolved by the creation of r.57(6) and it may be said that referring the matter back to the Committee on Rules of Procedure would not have done so either.  In the light of conflicting interpretations of the Basic Law, only the courts could give a definitive determination.

My order

42. For the reasons given therefore I decline to make an order for costs in favour of the respondents.  It is my order that the costs will lie where they have fallen; in short, that there will be no order as to costs.