REGISTRAR, DISTRICT COURT v. LI KAI AND ANOTHER

CACV183/2005

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 183 OF 2005

(ON APPEAL FROM DCMP NO. 1091 OF 2004)

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J U D G M E N T

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Hon Ma CJHC :

1. This appeal from the decision of HH Judge Lok in the District Court, although in form a civil appeal, derives from criminal proceedings.  The principal question for our determination (there are other issues which I shall presently identify) is this : where a convicted person in criminal proceedings has paid money into court as a condition of his having been granted bail (in other words, cash bail), what, if any, priority does section 73(3) of the Criminal Procedure Ordinance, Cap.221 (“the CPO”) give to a victim of that convicted person’s crime in relation to this money as against an equitable assignee of the cash bail?  In this judgment, I shall use the terms ‘cash bail’ and ‘bail money’ interchangeably.

2. Before I expand on this question and identify the others that arise in this appeal, it is desirable to set out the relevant background and context.

Background

3. In March 2003, Messrs Andrew Lam & Co (“the 2nd Claimant) was retained by one Mr Poon Hon Kuen and Ms Lo Sau Lan to act for them in a criminal case in the District Court (DCCC No.346 of 2003) in which they faced charges of theft (Poon alone) and false accounting (Poon and Lo jointly).  The charges were based on sections 2 and 9 (theft) and section 19(1)(a) (false accounting) of the Theft Ordinance, Cap.210.

4. It appears from the affirmation of Mr Andrew Lam (the sole proprietor of the 2nd Claimant) that in or about July 2003, the two accused agreed costs of $200,000 for their trial.

5. Earlier, in March and April 2003, Poon and Lo had each paid in two tranches sums totalling $50,000 into court as cash bail in the criminal proceedings.  It is this cash bail amounting to $100,000 that forms the subject matter of the present appeal.

6. In order to meet the agreed costs of $200,000, the two accused agreed to apply the bail money of $100,000 for this purpose, the balance to be paid by way of a postdated cheque.  We are not concerned with the cheque although we understand it was dishonoured.  However, regarding the bail money, by two powers of attorney dated 25 July 2003 executed by Poon and Lo, they each appointed the 2nd Claimant as their attorney to “demand, receive or collect” the bail money (being $50,000 apiece).  The bail receipts, four altogether, were deposited with the 2nd Claimant and this fact was expressly mentioned in the powers of attorney.  As we shall see later, as a matter of legal analysis, the effect of the powers of attorney and depositing of the receipts was an equitable assignment of the bail money by the two accused to the 2nd Claimant.

7. The trial of Poon and Lo took place between 5 August 2003 and 11 August 2003 before Deputy District Judge Chainrai, after which they were convicted.  Subsequent to the conviction, the 2nd Claimant was discharged and replaced by a new firm, Messrs C K Mok & Co.  The 2nd Claimant’s fees were, however, unpaid and the new firm refused to give an undertaking to pay the outstanding fees.

8. As appears in the transcript of proceedings, on 11 September 2003 Deputy District Judge Chainrai heard submissions on sentence.  In sentencing the two accused, the Deputy Judge referred to the fact that Poon and Lo (who are husband and wife) together with Mr Li Kai (the 1st Claimant in the present proceedings) were shareholders and directors of a company called Century Island Limited, which was a company engaged in the manufacture of wooden doors, operating a factory in Dongguan.  The theft consisted of Poon persuading the 1st Claimant to sign cheques in favour of certain unidentified persons.  Poon represented to him that the cheques were in respect of some contract that the company had with Shui On Building Contractors Limited for the supply of doors at Tin Shui Wai but added that these cheques could, however, be treated as temporary loans from the 1st Claimant to Poon.  In fact, the cheques were appropriated by Poon for his own use.  The transaction was then recorded in the company’s books as being funds spent on subcontractors.  This false entry was the subject matter of the false accounting charge.  Deputy District Judge Chainrai regarded the offences as involving breaches of trust.

9. The court was addressed at length on the question of restitution.  It appears from a part of counsel’s mitigation that both accused offered to make available the cash bail totalling $100,000 as compensation to the 1st Claimant.  This was taken into account by the Deputy Judge who gave a discount of 25% to what she regarded as an appropriate starting point of 36 months’ imprisonment, and accordingly sentenced Poon to 27 months’ imprisonment for the theft charges.  He was also sentenced to 12 months’ imprisonment for the false accounting charges and this was to run concurrently with the sentence for the theft charges.  Lo was sentenced to perform 200 hours of community service.

10. As to compensation, Poon was required to pay $100,000 to the 1st Claimant “to be paid through the courts”.  This was an obvious reference to the said cash bail of $100,000.  The transcript records the Judge as having asked the accused’s counsel whether the bail money of both Poon and Lo could be used for the purposes of paying compensation.  Counsel replied that both Poon and Lo agreed.  There was before us an affirmation from the 1st Claimant in which he stated his loss as $400,000.

11. Prior to the sentencing hearing, on 2 September 2003, the 2nd Claimant instructed a member of his staff to submit to the court the said powers of attorney and bail receipts in order to obtain payment for the firm of the $100,000 bail money.  The staff member was told by the Accounts Office of the District Court that the bail money would not be released until after sentencing.  On 13 September 2003, the said documents were once again presented to the Accounts Office for payment but this was refused in view of what was regarded as Deputy District Judge Chainrai’s ‘order’ to compensate the 1st Claimant with the $100,000 in court (as we shall see presently, her actual order was limited to the $50,000 attributable to Poon).  The 2nd Claimant then wrote to the Deputy Judge’s clerk setting out the firm’s position.  In the letter dated 13 September 2003, the 2nd Claimant referred to its “lien” over the $100,000 bail money and applied for the release of this money to the firm.  In a manuscript note on the court’s copy of this letter, the Deputy Judge questioned her jurisdiction to entertain the 2nd Claimant’s application.  This was presumably (and if I may say so, correctly) on the basis that the court was already at that stage functus officio.

12. Prior to the 13 September 2003 letter, the court was unaware of the assignment of the bail money.  As both the 1st and 2nd Claimants were each claiming the money for themselves, the Registrar of the District Court decided to take out interpleader proceedings by way of an originating summons dated 13 March 2004.

The decision below

13. The hearing of the interpleader summons took place on 7 September 2004 and 26 January 2005 before HH Judge Lok.  The court decided in favour of the 1st Claimant, declaring that the 1st Claimant (who was the Plaintiff in the interpleader proceedings) was entitled to the whole of the $100,000 bail money as against the 2nd Claimant (who was named as the Defendant in those proceedings).

14. In summary, the reasons for the Judge’s decision were as follows : -

(1) Although the Judge was satisfied that the bail money had been assigned to the 2nd Claimant, nevertheless the effect of Deputy District Judge Chainrai’s order was to confer an interest in the money which had priority over the interests of any third party including the 2nd Claimant.  He regarded the Deputy Judge as having made an order in relation to the whole of the $100,000.  Judge Lok said that “the interest conferred by [the order of Deputy District Judge Chainrai] was paramount.”  Earlier, in his judgment, the Judge said this : -

“As I see it, the interest conferred by the court order is absolute, and it is not possible for this court to hold that the [2nd Claimant’s] interest in the Bail Money does have priority over a court order.”

Reference was made to section 73 of the CPO.

(2) Judge Lok also said that if the 2nd Claimant had been dissatisfied with Deputy District Judge Chainrai’s order, the correct procedure was to challenge the decision by way of judicial review.  The suggestion implicit in this statement was that interpleader proceedings were inappropriate since it was wrong for a court to set aside the order of another court when there was no appeal or judicial review of the decision of that court.

(3) Judge Lok also added some obiter remarks doubting the legality of bail money being assigned at all and warning solicitors of the risk they would be taking were such assignments to take place.  Reference was made to the decision of the Alberta Court of Queen’s Bench in Webster v The Queen 94 CCC (3d) 562.

The issues in this appeal

15. Leave having been granted, the 2nd Claimant appealed Judge Lok’s decision that section 73 of the CPO conferred on the 1st Claimant an interest in the bail money that took priority over the 2nd Claimant’s interest in it.  A Respondent’s Notice was in turn served raising, inter alia, the point that in any event Judge Lok had no jurisdiction to vary the order of Deputy District Judge Chainrai.

16. At the hearing of the appeal (7 February 2006), as a result of an intervention from the Court, the 2nd Claimant sought leave to introduce a new ground of appeal.  This was to the effect that Deputy District Judge Chainrai did not in fact have any jurisdiction to order that the $50,000 bail money belonging to Lo be used to pay compensation to the 1st Claimant.  The point was simply this :  an order under section 73(3) of the CPO could only be made if compensation was ordered to be paid by the accused who had paid into court a sum of money; in the present case, no compensation order was made against Lo, only against Poon (in respect of theft charges in which Lo had no part).  Mr Simon Lam, who appeared for the 1st Claimant, did not resist the application for leave to amend.

17. The following issues accordingly fall for determination in this appeal : -

(1)   Does an order under section 73(3) of the CPO over monies in court take priority over an equitable assignment of those monies?  (Issue 1 : Effect of section 73(3) of the CPO).

(2)   Position of the $50,000 bail money paid into court by Lo.  (Issue 2 : The wife’s $50,000).

(3)   Jurisdiction of Judge Lok to set aside or vary Deputy District Judge Chainrai’s order.  (Issue 3 : Jurisdiction).

Issue 1 : Effect of section 73(3) of the CPO?

18. This is the principal question in the appeal identified in paragraph 1 above.  In summary, the answer to the question posed is Yes.  An order under section 73(3) of the CPO over money paid into court by a convicted person does have priority over an equitable assignment of that money in favour of a third party.  In the present case, the section 73(3) order in favour of the claimant made by Deputy District Judge Chainrai (which, as we shall see, relates only to the $50,000 bail money paid into court by Poon) takes priority over the 2nd Claimant’s interest as equitable assignee.

19. As Judge Lok correctly analyzed, the critical provision is section 73 of the CPO (the provisions of this Ordinance generally apply to criminal proceedings in the District Court : see section 79 of the District Court Ordinance, Cap.336) : -

“73.  Power to award compensation

(1)   Where a person is convicted of an offence, the court may, in addition to passing such sentence as may otherwise by law be passed or making an order under section 107(1), order the person so convicted to pay to any aggrieved person such compensation for – 

(a)   personal injury;

(b)   loss of or damage to property; or

(c)   both such injury and loss or damage,

as it thinks reasonable.

(2)   The amount ordered as compensation under subsection (1) shall be deemed a judgment debt due to the person entitled to receive the same from the person so convicted.

(3)   If before an order for compensation is made, any money –

(a)   was taken from the person so convicted on his apprehension, arrest, being taken into custody or his surrender to custody; or

(b)   was paid into court by the person so convicted,

the court may, on making the order, order that the compensation be paid out of any money so taken or paid.

(4)   Subsection (3) shall not apply to any money that is a first charge for the benefit of the Director of Legal Aid within the meaning of section 18A(1) of the Legal Aid Ordinance (Cap. 91).

(5)   Payment of the compensation may be enforced at the instance of any person entitled thereto in the same way as a judgment debt.”

20. It is worth observing that sections 73(3) and (4) were introduced only in 2002.  Prior to this, section 73 contained more or less only what is now sections 73(1), (2) and (5), although certain amendments were made in 2002 regarding the predecessor to these provisions as well.  Before sections 73(3) and (4) were introduced, the position was that there was no power in the court to order that any compensation to a victim could be paid out of bail money paid into court by the relevant convicted person : see R v Yeung Mau Lam [1991] 2 HKC 296.  As Silke VP said in that case at 298I-299A : -

“When a person answers to his bail and the proceedings terminate, then he is entitled to receive the bail money back.  This also, of course, applies to any surety.  Should, however, compensation orders, fines or costs be ordered to be paid, and the convicted person is prepared to use some or all of his bail money for payment, that is entirely a matter for him. If he should so indicate to the trial judge, then no doubt arrangements can be made to see that his desires are carried out.  The ‘out of bail money’ order here lacks  jurisdiction.”  (emphasis added)

21. With respect, as far as it goes, that statement of principle by Silke VP is impeccable.  When an accused answers to his bail by surrendering to custody, he is normally entitled to the return of whatever cash he has paid into court.  Bail is dealt with in Part IA of the CPO.  Although a court may not make it a condition of bail that an accused must provide a recognizance to secure his surrender to custody – viz bail on his own recognizance – (see section 9D(3)(a)), the court can nevertheless order an accused to deposit with the court a reasonable sum of money for this purpose (see section 90(3)(b)(viii)) – this is the concept of cash bail.  The difference between a recognizance and cash bail is largely a conceptual one.  In the Law Reform Commission Report on Bail in Criminal Proceedings [Topic 16] published in 1989, the two terms were thus described : -

“7.1     INTRODUCTION

A recognizance is a promise made to the court.  Sometimes, the promise is backed by an obligation to pay a sum of money to the court if the promise is not kept.  The defendant undertakes to attend court at the stated time by a formal undertaking (or ‘recognizance’).  This is to be contrasted with ‘cash bail’ where the defendant may be required to deposit actual cash before being released, which sum will be forfeited if he does not attend.”

22. In HKSAR v Ngai Wing Keung, unreported, HCMA110/2004, 21 May 2004, Beeson J, consistent with the principle just referred to, allowed an appeal where the trial magistrate had applied pressure on a convicted person to use bail money paid into court by him to pay the fine imposed.

23. Both Yeung Mau Lam and Ngai Wing Keung underline the principle that, in the absence of express powers, a court will not be able to order bail money or a recognizance of bail to be applied for any purpose other than as volunteered by the payer of that money (be that person the accused or a surety).  However, where express provisions exist, this will make all the difference.  For example, where an accused fails without reasonable cause to surrender to custody, any bail money paid into court by him or any recognizance taken from a surety is liable to be forfeited : see section 9M(1) of the CPO.

24. In my view, the provisions of section 73(3) of the CPO clearly permit a court to order any money taken from an accused on his apprehension, arrest, being taken into custody, his surrender to custody or paid into court by him (such as cash bail) to be used to pay any compensation to a victim of the accused’s crimes (obviously upon the accused being convicted).  It was enacted specifically to deal with the problem which existed regarding bail money as shown by cases such as Yeung Mau Lam (see paragraph 20 above).  The relevant provisions regarding when compensation is payable are set out in section 73(1).  Section 73(2) states that any compensation order to be payable to a victim is to be deemed a judgment debt due to the victim from the convicted person, thus enabling the civil machinery of the courts regarding enforcement and execution to be utilized.

25. So far, there is perhaps little controversy as far as the court’s ability to order bail money to be utilized for the purposes of compensating the victim is concerned.  The convicted person cannot, in view of section 73(3), rely simply on the fact that the bail money is his and that he has answered to his bail to prevent the court from making an order directing that the bail money be paid to the victim.

26. In the present appeal, however, the question of priority is much more contentious : what is the position where the relevant money paid into court, say bail money, does not actually belong to the accused person or where he has divested his interest therein?  The 2nd Claimant argues that he is now the “owner” of the bail money paid into court by Poon and Lo by reason of the equitable assignments referred to above.  Mr Neville Sarony SC (for the 2nd Claimant) argues that as far as the $50,000 paid in by Poon is concerned (I shall deal with Lo’s position later), the extent of the victim’s (the 1st Claimant’s) interest in the money is only that of a judgment debtor.  This status must, so he submits, be subordinate to the 2nd Claimant’s interest, which is that of an assignee.  At the very least, this is a strong factor in the exercise of the court’s discretion in deciding whether or not to make an order in favour of the victim under section 73(3) of the CPO.  Another factor that Mr Sarony urged as being relevant was the fact that as Poon had answered to his bail (viz surrendered to custody) when he appeared at trial and also, when upon conviction his bail was revoked, at these points in time, Poon must have been entitled to the release of his cash bail.  In these circumstances, although Poon (or anyone else) did not actually apply to take the money out, the fact that the money could have been taken out was a relevant factor for Deputy District Judge Chainrai to take into account in the exercise of her discretion under section 73(3).

27. There is a superficial attraction to some of these submissions but on closer analysis, they cannot be accepted : -

(1)   One starts with the basic principle that the purpose of imposing conditions of bail on the accused (such as the requirement of the payment of cash bail under section 9D(3)(b)(viii)) is, as stated above, to secure the surrender to custody of the accused.  Any payment made into court for this purpose is, therefore, as far as the court is concerned, a payment made by the accused himself, regardless of who is actually providing him with the money and under what conditions.  Neither the CPO nor any other Ordinance recognizes anyone other than the accused who is granted bail as being the person who has paid the cash bail (if such condition is imposed) even though someone else might physically have paid the money into court.  It should be noted that section 9D(3)(b)(viii) of the CPO refers to the person admitted to bail or any other person “on his behalf” (or both of them) paying cash bail.

(2)   Any cash bail paid into court can, as we have seen, be used to pay the victim of a convicted person’s crimes, providing that the conditions of section 73(1) are met and that the convicted person is the person who paid in the cash bail in the first place :  see section 73(3).

(3)   Where, as in the present case, an accused has purported to divest himself of his interest in the cash bail, this does not mean that the cash bail ceases somehow to be a payment into court by him as far as the court is concerned.  Nothing in the CPO permits a change of ownership or interest in the cash bail which has been paid into court.  As will be seen below, however, the correct analysis of any assignment of interest in cash bail  (such as in the present case) can only be an assignment of a chose in action, not of the cash bail itself.  Once money is paid into court as cash bail, that money is not held on trust by the court for the accused or anyone else.  All that the accused possesses is the right to claim back the money providing it is not otherwise legitimately disposed of by the court.  If the court without good reason refuses to pay back the cash bail (or more accurately, the money equivalent of the amount paid in as cash bail), the accused may by action claim the amount.

(4)   In any event, whatever the legal analysis whenever a divestment of interest by an accused of his bail money takes place, this must be subject to the provisions of section 73.  In my judgment, section 73 enables the court to retain all money paid into court by an accused until such time as it becomes apparent that such money will not be used to pay compensation to a victim under section 73(3).  In other words, regardless of whether the accused or anyone else may wish to withdraw bail money paid into court by him (for example, when he has surrendered to custody or had his bail revoked), the court can nevertheless retain such money for the purpose of any order it may make under section 73(3).  The wording of that provision suggests quite simply that any money paid into court by a convicted person can be ordered to be paid to the victim of his crime.  There are no qualifications to this.  The intention of the Legislature must have been to make the monies referred to in section 73(3) available for the benefit of victims of crimes.  Accordingly, money should remain in court until an accused has been convicted and sentenced or at least until such time as when it is clear that the money will not be used to pay compensation to a victim under section 73(3).  By referring only to section 73, I do not of course mean to be exhaustive of the circumstances in which the court may have power to retain money in court.  Section 14(2) of the Costs in Criminal Cases Ordinance, Cap.492 is perhaps another example of a situation in which the court may retain money paid into court.

(5)   I agree with Mr Sarony that the victim in whose favour a compensation order is made under section 73(1) is in the position of a judgment creditor, but section 73(3) gives the victim a more special status regarding money in court.  The court will have power to retain any money paid into court by an accused until conviction and sentence has taken place (when the question of compensation orders under section 73 arises) although until orders are actually made under sections 73(1) and (3), a victim’s interest is inchoate or conditional.

(6)   Furthermore, as a matter of commonsense, it appears extremely odd that there should be any difference between the position of an accused who has, say, had his bail revoked (when according to Mr Sarony he should be entitled to the immediate return of his bail money so that the provisions of section 73(3) cannot apply) and an accused who has, right up to his sentence, been on bail (in which case any bail money paid by him remains in court and section 73(3) can then bite).  In my view, there is no difference.

(7)   As regards the question of priority, it is important to bear in mind here the fact that one is not really looking at the competing interests as between the 1st and 2nd Claimants but as between the 1st Claimant and the accused.  Based on the facts outlined above, Poon and Lo clearly intended to assign their interest in the bail money to the 2nd Claimant  and this was an equitable assignment (the provisions of section 9 of the Law Amendment and Reform (Consolidation) Ordinance, Cap.23 (“LARCO”) not applying) : see Halsbury’s Laws of England Vol.6 (4th ed. 2003 Reissue) at paragraph 30.  However, it is important to note that the 2nd Claimant was an equitable assignee not of the cash paid into court as cash bail (as stated above I cannot conceive of the court being in the position of the trustee of money paid into court), but only of a chose in action, as Mr Sarony accepts.  The relevant chose in action is the debt owed by the court to the accused relating to the cash bail paid into court and the accused will be able to reclaim this money providing that the money is not otherwise legitimately dealt with.  An equitable assignment (or even a legal assignment for that matter) creates no new rights; in other words, the assignee is in no better a position than the assignor :  see section 9 of  LARCO (legal assignment); Halsbury’s Laws of England Vol.6 at paragraphs 13 (legal assignment) & 61 (equitable assignment); Webster v The Queen.  Thus analyzed, the competing interests are in reality only as between the 1st Claimant (the victim) and Poon (the convicted person who has paid the cash bail into court and the assignor).  And as between these two competing interests, for the reasons articulated above, it is clear from the scheme of section 73 that any money paid into court become subject to the possibility of an appropriation order under section 73(3) and once an order is made, this will give priority to the victim over the interest of the convicted person (and his assigns).  Section 73(4) expressly provides for the priority of the charge of the Director of Legal Aid over a victim’s entitlement under section 73(3).  No other exception is stated in the Ordinance.

(8)   Mr Sarony refers to the court having a discretion as far as the making of a section 73(3) order is concerned.  The court does have a discretion but it is one that must in the present case be exercised in favour of the 1st Claimant as far as the $50,000 cash bail paid by Poon is concerned.

28. In conclusion, the order made by Deputy District Judge Chainrai under section 73(3) of the CPO in relation to the $50,000 paid into court by Poon did give the 1st Claimant priority over the interests of the 2nd Claimant, and Judge Lok was correct in arriving at this conclusion.

Issue 2 : The wife’s $50,000

29. As far as the $50,000 cash bail paid into court by Lo, although Mr Sarony used the same arguments as in the case of Poon, quite different considerations arise.

30. The gist of the argument has already been set out in paragraph 16 above.  The point is a short one.  The words “so convicted” in sections 73(3)(a) and (b) make it clear that an appropriation order made under that subsection can only be made in respect of money taken from or paid into court by the convicted person against whom a compensation order is made under section 73(1).  In the present case, that could only relate to Poon since no compensation order was made in respect of Lo.  There was clearly therefore no jurisdiction on Deputy District Judge Chainrai’s part to make a section 73(3) order as to the $50,000 attributable to Lo.

31. Mr Lam all but accepted this analysis.  However, in response, he submitted that even if Deputy District Judge Chainrai had acted without jurisdiction, she nonetheless made an order that has not been appealed.  In substance, this was the same argument as that raised in relation to Issue 3 dealt with below.

32. In my view, on analysis, Deputy District Judge Chainrai did not make a section 73(3) order regarding the $50,000 attributable to Lo at all.  There is certainly no order in writing to this effect.  There being no jurisdiction to make an order under section 73(3) regarding Lo’s $50,000 cash bail (and the Deputy Judge must have been aware of this), Deputy District Judge Chainrai was doing no more than merely acknowledge a desire on Lo’s part to allow her cash bail to be utilized for the purposes of paying the victim compensation (no doubt hoping this would assist her husband’s plea in mitigation).  Whether or not there existed a better claim to the money was not a question that was before Deputy District Judge Chainrai.  In these circumstances, there is little doubt that Judge Lok had the jurisdiction to deal with the interpleader summons before him.

33. In the court below, the 2nd Claimant did not address Judge Lok on the point that Deputy District Judge Chainrai had no jurisdiction to make an order under section 73(3) in respect of Lo’s $50,000 and that it must therefore follow that she (Lo) was perfectly entitled to assign her interest to the 2nd Claimant (this, as stated above, comprising the equitable assignment of a chose in action).  However, it is a point that is in my view unanswerable and for that reason the appeal must be allowed to this extent.

34. Judge Lok entertained some doubts as to whether as a matter of principle, assignments of bail money should be permitted.  He quoted the following passage from the judgment of Veit J in Webster at 563h : -

“Moreover, there is no public interest argument to support the position of the assignees.  If the accused assigns the bail, the accused has lost all interest in it; therefore, the assignment does not operate as an incentive for the accused to attend court.  If the accused does not show up for trial, he does not get the bail deposit back.  If the accused does show up for trial, he does not get the bail deposit back – the bail money goes to partial payment of the lawyer.  The assignment of bail moneys, therefore, does not operate to advance the purposes of bail.  Parliament’s purpose in establishing bail was not to provide for lawyers; it was to ensure attendance for trial.”

He then said this in his judgment : -

“In the Webster case, Veit J. seemed to accept that the interest in the bail money was assignable, but as the lawyer was not entitled to a more favourable position than that of the accused, the lawyer’s motion could not succeed in that case.  In order not to defeat the object of bail money, it is certainly an attractive proposition for the court to say that the interest in bail money is not assignable.  However, in the absence of detailed submission on this issue, in particular appropriate representation from the Law Society, I am not prepared to make a ruling on this matter.  However, solicitors who rely on such kind of arrangement to satisfy their legal costs are taking grave risk.  If an accused fails to comply with any bail terms, the court must be entitled to estreat whole or part of the bail money irrespective of the interest of the solicitors.  In my view, so far as the disposal of bail money kept in the court is concerned, the relationship should be one strictly between the court and the accused.  In exercising its criminal jurisdiction, the court should be able to treat the accused as the sole owner of his bail money and not concern itself with the interest beyond that of the accused.  If the accused does not reveal to the court the interest of his solicitors in the bail money and the latter suffer any loss as a result, the solicitors should only be allowed to seek compensation from the accused himself.  Ultimately, it is the solicitors, with full knowledge of the risk involved, who decide to trust their own client.  In any event, such kind of practice should not be encouraged.”

35. There may perhaps be some force in these observations if the legal position was that the court held bail money as some form of trustee.  However, as observed above in paragraphs 27(3) and (7) above, this is not the position.  Any divestment of interest in bail money can only be, on analysis, a divestment of a chose in action.  I see no difficulty as a matter of principle in an accused being able freely to dispose of his cash bail once he has free access to these funds.  By ‘free access’ I refer of course to that situation where provisions such as sections 9M and 73 of the CPO (or section 14(2) of the Costs in Criminal Cases Ordinance) do not apply.  To put it another way, once provisions like sections 9M and 73 cease to operate, the court is then in no position to prevent an accused doing as he will with his money.

Issue 3 : Jurisdiction

36. This issue is, as we have seen, one that is raised in the 1st Claimant’s Respondent Notice.  Put shortly, the 1st Claimant submits that if Deputy District Judge Chainrai’s order is to be disturbed, it should be done by way of appeal (or by way of judicial review) and not by an interpleader application as in the present case.

37. In my view, the 1st Claimant’s arguments have much force as far as the order that was made by Deputy District Judge Chainrai against Poon under section 73(3) of the CPO was concerned.  Here, the Deputy Judge clearly made an order and if an interested party wished to set aside the effect of that order, the proper course would then to have applied to be joined for the purposes of lodging an appeal.  In fact, I am of the view that in the present case, with hindsight, the 2nd Claimant ought to have applied to be joined before Deputy District Judge Chainrai heard submissions on sentence.  After all, the 2nd Claimant knew that sentencing would take place (it represented Poon in his trial) and should reasonably therefore have anticipated the possibility of a compensation order under section 73 of the CPO.  All this provides another reason to dismiss the 2nd Claimant’s appeal regarding Poon’s $50,000.

38. The same argument cannot, however, apply to the wife’s (Lo’s) $50,000.  Here, as I have explained above, Deputy District Judge Chainrai made no order at all.  There was therefore nothing to appeal and the question of who was ultimately entitled to this money was therefore left unresolved.  Mr Lam valiantly tried to argue that in respect of this money, the 2nd Claimant should also have applied to be joined before Deputy District Judge Chainrai at the sentencing hearing.  However, unlike in the case of Poon, there was really no necessity to do this and by not so doing, the 2nd Claimant could not be taken to have in any way waived its right to claim the money at a later stage.  It could not have been reasonably anticipated that a compensation order would be made as against Lo.

Conclusion

39. For the above reasons, I would allow the 2nd Claimant’s appeal to the extent of $50,000 and order that the 2nd Claimant is entitled to payment out of that sum (as representing the cash bail paid into court by Lo).

40. As for costs, although the 2nd Claimant has succeeded in part in this appeal and ought also have succeeded in part in the court below, I would make no order as to costs both here and below.  The point on which the 2nd Claimant has succeeded was not raised below and could only be raised on appeal by reason of the 2nd Claimant having sought and obtained an indulgence from the court allowing it to amend its Notice of Appeal.

Hon Woo VP :

41. I agree.

Hon Tang JA :

42. I agree.

Hon Ma CJHC :

43. Accordingly, the 2nd Claimant’s appeal is allowed in part and we order that $50,000 (being the cash bail originally paid into court by Lo) be paid out to the 2nd Claimant.  As for costs, an order nisi is made that there be no order as to costs both here and below.