RE HO MEI LING

HCAL 51/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 51 OF 2011

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JUDGMENT ON COSTS

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1.  After I handed down my judgment on 29 August 2011, the Applicant applied to vary my costs order nisi.  The costs order nisi is that the Applicant shall pay the costs of the putative Respondent and the putative Interested Party.  The Applicant contended that costs should not be awarded to those parties.

2.  The Applicant referred to, amongst other authorities, the decision of the Court of Appeal in Sky Wide Development v Building Authority [2011] 5 HKLRD 202 in support of her submissions.  She distilled the following principles from the authorities,

“(1) An application for leave to apply for judicial review is mandatory ex parte as required by Order 53, rule 3(2) of the RHC;

(2) Beforeleave is granted, there is no respondent – the presence of the putative/proposed respondent is only by way of an indulgence granted to it by the court;

(3) The presence of the putative respondent (either invited by the court or allowed by the court) should be seen as a discharge of a public responsibility to provide assistance to the court;

(4) It is only in exceptional circumstances such as “when the court, in the exercise of its discretion, considers that an application for leave is so frivolous, so vexatious or motivated for a tactical purpose that indicates bad faith” that it should award costs to the putative respondent for its presence in the leave application; and

(5) The court should not exercise its discretion in a way that seriously impedes the right of citizens to have access to justice.”

3.  The Applicant further submitted that in any event the Applicant should not be ordered to pay more than one set of costs.  On the facts of the present case, the Applicant submitted,

In the present case, given the ex parte nature of the leave application, costs should not be awarded to the putative Interested Party because:

(1) the Applicant only proposed to join Billion Star as an interested party “if leave is granted” and on the condition it “will not seek costs from any other parties nor will be made liable for any party’s costs”: see §198 of the Form 86;

(2) the proposed Interested Party Billion Star asked for the Court’s indulgence to be heard in the leave application;

(3) following the principle identified by the Court of Appeal in 梁海朋 and Sky Wide Development Ltd, since the Applicant was not the person who caused the putative Interested Party to incur costs to attend the leave hearing, costs should not be ordered against her; and

(4) the issues argued on behalf of the putative Respondent and the putative Interested Party were largely the same, if not perfectly identical, rendering the latter's participation in the hearing unnecessary.”

4.  The putative Respondent and the putative Interested Party opposed the application for variation and each of them argued that the costs order nisi in their favour should be upheld.  To simplify matter, I shall just refer to them as the Respondent and Interested Party respectively in this judgment.

5.  Since the Applicant placed much emphasis on the ex parte nature of the hearing for leave, it is necessary for me to set out how the matter came to be heard by this court on 2 and 3 August 2011.

6.  Before the issue of the Form 86 in the present proceedings, the Concerned Group (which I have found to be the driving force behind the present proceedings) had been engaging in protest against the Interested Party as regards the proposed development of RP II and Section B.  The actions of the Concerned Group had led to the commencement of High Court Action No. 708 of 2011 by the Interested Party seeking inter alias injunctive relief.  The application for interlocutory injunction was adjourned on 29 April 2011.

7.  At the hearing on 29 April 2011, the Interested Party learned that judicial review application would be made to challenge the decision of the Respondent to approve the building plans.  This prompted the solicitors for the Interested Party to write to the court on 6 May 2011 requesting as follows,

“We write to put the Court on notice that our client would be an interested party and respectfully ask for an opportunity to be given to our client to appear and be heard in their application for leave to judicial review for leave to apply out of time. The general building plans for the Site were approved by the Building Authority in October 2010 so their application will be out of time and they will need leave to apply out of time. Our client would wish to be represented and heard should there be a hearing called to consider the application for leave.”

8.  The Form 86 was filed on 14 July 2011.  In it, the Applicant accepted that she needed to obtain an extension of time under Order 53 Rule 4(1).  The Interested Party was identified in the Form 86 as one of the parties which, upon leave being granted, would be joined as parties to these proceedings.

9.  It is plain that the Interested Party would be affected if the Applicant succeeded in her application for judicial review.  Not only would the grant of substantive relief have an adverse effect on the development plan of the Interested Party, the grant of leave with the extension of time would inevitably delay the project pending the final resolution of the judicial review application.  Though the injunction application in HCA 708 of 2011 was adjourned to December 2011, there was no guarantee that if leave were granted the judicial review proceedings could be finally resolved before that date.

10.  Further, in view of the letter of 6 May 2011, this court deemed it fair and just that an opportunity to be heard should be afforded not only to the Respondent but also the Interested Party to address it on the application for extension of time.  Thus, notice of hearing was issued on 14 July 2011 to the Applicant, the Respondent and the Interested Party.

11.  On 27 July 2011, this court gave directions for the service of the papers on the Respondent and the Interested Party.  In respect of the application for extension of time the court directed that certain paragraphs of the Form 86 shall be treated as the Applicant’s skeleton submissions and supplemental submissions shall be lodged and served by 28 July 2011.  Directions were also given as to the lodging of skeleton submissions by the Respondent and the Interested Party by 1 August 2011.

12.  In such special circumstances, parties were fully prepared to argue the matter on an inter partes basis when the court heard the case on 2 August 2011.  The depth in which the parties have advanced their arguments is reflected in the length of the hearing and the issues covered in my judgment.

13.  Though Order 53 Rule 3(2) provides for the making of application for leave on ex parte basis, for the reasons I have canvassed in my judgment in Sky Wide Development v Building Authority [2009] 1 HKC 450 at paras. 3 to 9, this cannot prevent the court from hearing the putative respondent (and indeed in a proper case, a putative interested party) before deciding whether leave should be granted and to order an applicant paying the costs of such putative parties.  Whether the court will do so is a matter of discretion.

14.  In any event, this is not a usual application for leave.  The Applicant also applied for extension of time under Order 53 Rule 4(1).  The rules do not provide whether extension of time should be granted on ex parte or inter partes basis.  In Hong Kong, there were occasions where the court granted extension of time on ex parte basis whilst on some other occasions the court insisted on hearing other putative parties before extension of time was granted.  It depends on the exercise of discretion of the judge dealing with the application for extension in view of the facts of each case.

15.  The effect of an extension of time granted under Order 53 Rule 4(1) was considered by the House of Lords in Reg v Criminal Injuries Board, ex p A [1999] 2 AC 330 at p.341,

“It seems to me that the two provisions produce the following result. (a) On an ex parte application, leave to apply for judicial review out of time can be refused, deferred to the substantive hearing or given. (b) Leave may be given if the court considers that good reason for extending the period has been shown. The good reason on an ex parte application is generally to be seen from the standpoint, as here, of the applicant. Thus the reason for the delay here was “the practical difficulties [the applicant’s solicitors] have encountered in trying to bring this matter before the court” (counsel for the applicant before Carnwath J.). It is possible (though it would be unusual on an ex parte application) that if the court considers that hardship, prejudice or detriment to good administration have been shown, leave may still be refused even if good reason for an extension has been shown. (c) If leave is given, then an application to set it aside may be made, though as the Court of Appeal stressed, this is not to be encouraged. (d) If leave is given, then unless set aside, it does not fall to be reopened at the substantive hearing on the basis that there is no ground for extending time under Ord. 53, r. 4(1). At the substantive hearing there is no “application for leave to apply for judicial review,” leave having already been given. (e) Nor in my provisional view, though the matter has not been argued and the question does not arise here, is there a power to refuse “to grant ... leave” at the substantive hearing on the basis of hardship or prejudice or detriment to good administration. The court has already granted leave; it is too late to “refuse” unless the court sets aside the initial grant without a separate application having been made for that to be done. What the court can do under section 31(6) is to refuse to grant relief. (f) If the application is adjourned to the substantive hearing, the question under both Ord. 53, r. 4(1) (good reason for an extension of time) and section 31 (6) (hardship, prejudice, detriment, justifying a refusal of leave) may fall for determination.”

16.  See also the discussion of Simon Brown LJ  in the Court of Appeal in that case reported at [1998] QB 659 at p. 676B to D and p. 676H to 677B as to the different perspective of the court when the question of delay is considered at the substantive hearing after leave had been granted and time extended,

“If, of course, at the substantive hearing it appears that the grant of relief would be likely to cause hardship, prejudice or detriment, then clearly the reasons for the earlier delay may come back into play.  But by that stage the applicant will have established his substantive challenge (else he will in any event fail on the merits and all questions of delay will be irrelevant) and the question will be: should the applicant have to suffer an unlawful decision or should the respondent (or third party) have to suffer the hardship, prejudice or detriment which would result from its being quashed? (I pose the question by reference to a certiorari challenge such as this.) It is into that balance that the earlier “undue delay” must then be put, …”

“In short, quite different questions arise with regard to delay depending upon whether the point is raised at the leave stage or at the substantive hearing.  At the leave stage (putting section 31(6)(a)aside), the question is whether there is “good reason” for extending time and allowing the substantive application to be made.  This involves consideration both of the reasons for the delay and the apparent merits of the challenge; the better the prospects of success, the readier will the court be to extend time even where the delay is unjustifiable, i.e. the merits themselves can contribute to or even supply the “good reason.” At the substantive hearing, however, the question is whether, in a case where there was initially “undue delay” (which may have been wholly justifiable), the merits of the challenge (by now actually established) should be overridden by the hardship, prejudice or detriment that would result from the grant of relief.”

17.  Based on these authorities, whilst it is open to the court to extend time without hearing the putative respondent or other parties affected, such parties may apply to set aside the extension on an inter partes basis.  Since the effect of granting an extension is to prevent any revisit of the question of delay in the context of grant of leave, if a party affected indicates he wishes to make representation on the question the court will usually afford him the opportunity to do so.  Whether this should take the form of an oral hearing or written submissions is a matter of case management for the judge.

18.  In the present case, in view of the request of the Interested Party in the letter of 6 May 2011 and the history of the dispute, this court deemed it appropriate to hold a hearing for the application for leave and extension of time and gave notice and directions for lodging of submissions by all the parties.  It does not matter much whether the hearing should be labeled as ex parte on notice or inter partes.  In substance, it is a full inter partes hearing.  The matter can be tested as follows: assuming this court ruled against the Respondent and the Interested Party, can they apply again for the setting aside of leave and extension of time? In my judgment, that would plainly be impermissible and the application would probably be regarded as abuse of process.

19.  Therefore, on the facts of the present case, I do not think the ex parte nature of general application for leave under Order 53 Rule 3 carries much weight as to how the discretion on costs should be exercised.

20.  But it does not follow that having heard the Respondent and the Interested Party on 2 and 3 August I must give them costs of the hearing.

21.  As the Court of Appeal said in Sky Wide, the court’s discretion as to costs is a broad one.  I have also emphasized at para. 25 of my judgment in that case that it is not desirable to fetter such discretion by formulating a test of universal application.

22.  Insofar as the Applicant suggested that costs should only be awarded in favour of putative parties at this stage if the application for leave is so frivolous, vexatious or motivated for a tactical purpose that indicates bad faith, I must reject this as being inconsistent with the holding of the Court of Appeal in Sky Wide.  Whilst Tang VP agreed at para. 28 of the judgment that it takes unusual circumstances for an award of costs to be made against an applicant for leave and the power should be exercised sparingly, His Lordship did not say that costs could only be awarded when the application is frivolous, vexatious or motivated by bad faith.

23.  When Sky Wide was argued at the first instance, one of the arguments advanced was that there should be no order as to costs unless the application is frivolous or vexatious.  The argument was rejected, see para. 13 of my judgment at [2009] 1 HKC 450.  In the reasons given by me as to why I awarded costs for the leave hearing against the applicant in that case, I did not make any finding that the application was frivolous or vexatious or that the applicant was motivated by bad faith.  My decision on costs was upheld by the Court of Appeal.  Tang VP said at para. 32 that if His Lordship were to exercise such discretion, he would exercise it in exactly the same way.

24.  The Applicant referred to the judgment of the English Court of Appeal in R (Ewing) v Deputy Prime Minister [2006] 1 WLR 1260 which basically confirmed the approach in England as to the award of costs at permission stage as laid down in R (Mount Cook Land Ltd) v Westminster City Council [2003] EWCA Civ 1346.  In my judgment in Sky Wide I have explained the difference between the procedural regime for permission to apply for judicial review and that in Hong Kong.  Two important differences have to be borne in mind in considering the application of the English authorities in Hong Kong,

(a)  Paragraph 8.6 of the Judicial Review Practice Direction in England provided that a claimant at a permission hearing will not generally be ordered to pay the costs of a defendant or any other party who attends;

(b)  There are provisions for pre-action protocol and acknowledgment of service to be filed by a defendant setting out in a summary of his grounds for resisting the claim.  It was held in R (Leach) v Commissioner for Local Administration [2001] EWHC Admin 445 that the costs of the preparation of the summary can be recoverable if permission for judicial review is not granted.

25.  Subject to these considerations, I think it is helpful to have regard to the English authorities for reference as to how the discretion as to costs should be exercised.  In Mount Cook Auld LJ gave the following guidance at para. 76,

“1) The effect of Leach, certainly in a case to which the Pre-Action Protocol applies and where a defendant or other interested party has complied with it, is that a successful defendant or other party at the permission stage who has filed an acknowledgment of service pursuant to CPR 54.8 should generally recover the costs of doing so from the claimant, whether or not he attends any permission hearing.

2) The effect of paragraph 8.6, when read with paragraph 8.5, of the Practice Direction, in conformity with the long-established practice of the courts in judicial review and the thinking of the Bowman Report giving rise to the CPR 54 procedure, is that a defendant who attends and successfully resists the grant of permission at a renewal hearing should not generally recover from the claimant his costs of and occasioned by doing so.

3) A court, in considering an award against an unsuccessful claimant of the defendant’s and/or any other interested party’s costs at a permission hearing, should only depart from the general guidance in the Practice Direction if he considers there are exceptional circumstances for doing so.

4) A court considering costs at the permission stage should be allowed a broad discretion as to whether, on the facts of the case, there are exceptional circumstances justifying the award of costs against an unsuccessful claimant;

5) Exceptional circumstances may consist in the presence of one or more of the features in the following non-exhaustive list:

a) the hopelessness of the claim:

b) the persistence in it by the claimant after having been alerted to facts and/or of the law demonstrating its hopelessness;

c) the extent to which the court considers that the claimant, in the pursuit of his application, has sought to abuse the process of judicial review for collateral ends – a relevant consideration as to costs at the permission stage, as well as when considering discretionary refusal of relief at the stage of substantive hearing, if there is one; and

d) whether, as a result of the deployment of full argument and documentary evidence by both sides at the hearing of a contested application, the unsuccessful claimant has had, in effect, the advantage of an early substantive hearing of the claim.

6) A relevant factor for a court, when considering the exercise of its discretion on the grounds of exceptional circumstances, may be the extent to which the unsuccessful claimant has substantial resources which it has used to pursue the unfounded claim and which are available to meet an order for costs.

7) The Court of Appeal should be slow to interfere with the broad discretion of the court below in its identification of factors constituting exceptional circumstances and in the exercise of its discretion whether to award costs against an unsuccessful claimant.”

26.  Though we do not have the equivalent of paragraph 8.6 in our Practice Direction, in the light of the Court of Appeal’s affirmation in Sky Wild that costs should only be ordered against an unsuccessful applicant at the leave stage in unusual circumstances, paras. (3) to (7) of the guidance of Auld LJ are also relevant in Hong Kong. As stated in para. 77 of Mount Cook, the approach of Auld LJ was formulated to accord with public policy in ready access to courts balancing with protection to public bodies and public funds against unnecessary, burdensome and costly litigation in exceptional cases.

27.  In view of the submission advanced on behalf of the Applicant, I need to emphasize that Auld LJ’s list of circumstances at para. (5) is not meant to be exhaustive.  His Lordship made the same point at para. 79 of the judgment,

“What amounts to exceptional circumstances for not following the general rule may vary considerably according to the circumstances of the case, including the strength or weakness of the application and the respective conduct and circumstances of the parties.”

28.  In the present instance, having regard to the following matters, I come to the conclusion that there are unusual circumstances calling for the court’s exercise of discretion against the Applicant in respect of the costs of the Respondent,

(a)  In substance, there had been an inter partes hearing necessitated by the application for extension of time;

(b)  The delay is serious when it is considered against the background to the underlying dispute between the Concerned Group and the Interested Party and the potential implication as regards the progress of the development project;

(c)  The intended judicial review is a forensic attempt by the Concerned Group to shift the private dispute between them and the Interested Party to a public law matter involving the Respondent with reference to its exercise of its public function in approving building plans.  As analysed in my judgment, the arguments of residual plot ratio and site coverage is constructed on the misconceived notion as to the public function of the Respondent;

(d)  In light of the full deployment of arguments at the hearing in August, the Applicant has had in effect the advantage of a rolled-up substantive hearing;

(e)  The Respondent attended the hearing at the court’s request to address the extension of time application which, in the present circumstances, involves considerations as to the merits of the Applicant’s application for leave;

(f)  This is not a case where the Applicant sought to defend some public interest instead of her private personal interest in the matter;

(g)  The Respondent did not advance any unnecessary argument or otherwise conduct himself in a manner which escalates the costs of the hearing.

29.  In respect of the Interested Party, the position is different.  But for the letter of 6 May 2011, this court would not have given it notice nor invite submissions from it at the hearing.  Although the court would not refuse to hear it, its attendance by a team of counsel at such hearing had to be considered on the footing of attendance at its own risk as to costs.  Though Mr Yu had been very helpful in his submissions at the hearing, there are overlaps between the Respondent and the Interested Party in the arguments on the merits of the leave application.  I accept that from a practical point of view the Interested Party has a separate (and perhaps more direct) interest in the matter.  But the fact remains that the decision being challenged is that of the Respondent and the Respondent did resist the application for leave by leading counsel.  For the purpose of resisting the application, their interests are in common.

30.  I was referred to some authorities as to the award of a separate set of costs in favour of an interested party.  There is no need for me to discuss them at length.  For present purposes, I can take the proper approach from the judgment of Ma CJHC (as he then was) in Shiu Wing Steel Ltd v Director of Environmental Protection CACV 350 of 2003, 18 March 2005 at para. 158,

“158. From these authorities, it is clear that while costs are of course in the discretion of the Court, the following factors offer some guidance (they are not exhaustive) : -

(1) The mere fact that a person has the necessary locus standi to appear does not by itself entitle that person to an order for costs should the outcome be successful:- see R v Registrar of Companies, Ex parte Central Bank of India [1986] QB 1114, at 1162F.

(2) Where several parties appear having the same interest in proceedings, the starting point is that the unsuccessful party should not have to pay more than one set of costs:- R v Industrial Disputes Tribunal, Ex parte American Express Co Inc [1954] 1 WLR 1118; Ex parte Central Bank of India at 1162F-G. The rationale here is simply that an unsuccessful party should not have to pay for costs which are unnecessarily incurred. Either the different parties with the same interest engage the same solicitors and counsel or they adopt the position of one of the other parties.

(3) Where, however, the party can show that there is a separate issue on which he was entitled to be heard, being an issue not covered by the other party or parties in the proceedings, he would be entitled to his costs:- see Bolton Metropolitan District Council at 1178H.”

31.  One must also bear in mind that this is only a leave application and what I said above as to the approach as to costs for such application.

32.  Applying these principles, the starting point is that the Defendant should not be saddled with another set of costs.  There is however one area where the Interested Party had provided material assistance to the court which the Respondent was not in a position to provide.  This is in respect of the history of dispute between the Concerned Group and the Interested Party.  Though I do not think the Applicant had been guilty of deliberate non-disclosure of information in that regard, there were indeed material information which Mr Yu had referred to in the history of dispute that she failed to mention in her evidence.

33.  In the circumstances, I would order the Applicant to pay ¼ of the costs of the Interested Party.  Further, for that particular aspect, I do not think the engagement of three counsel by the Interested Party can be justified.  I would only allow ¼ of the costs of attendance of one junior counsel.

34.  To conclude, I would maintain my order as to costs in favour of the Respondent but substitute my costs order in favour of the Interested Party by the one set out in para. 33.