DESIGNING HONG KONG LTD v. THE TOWN PLANNING BOARD SECRETARY FOR JUSTICE

CACV 184/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 184 OF 2015

(ON APPEAL FROM HCAL NO 49 OF 2014)

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J U D G M E N T

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Hon Lam VP (giving the Judgment of the Court):

1. We handed down our judgment in this appeal on 16 February 2017.  We dismissed the appeal, holding that Au J was correct in refusing to grant a Protective Costs Order [“PCO”] to the Applicant due to its failure to discharge its burden of showing that it was genuinely not in a position to fund the litigation or to bear the Respondent’s costs in the proceedings.

2. By a Notice of Motion of 10 March 2017, the Applicant seeks leave to appeal to the Court of Final Appeal.

3. The Notice of Motion sets out the following as questions of great general or public importance:

“ The Applicant should be given leave to appeal pursuant to section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap 484) in that the appeal involves questions of great general or public importance, namely:

(1) What are the principles upon which the Court should exercise its discretion to grant a Protective Costs Order (“PCO”) in Hong Kong?

(2) In particular:

(a) What is the relevance of the financial resources of the directors and/or the members of a corporate applicant for a PCO?

(b) Should a corporate applicant be required to obtain and disclose those persons’ financial resources? If so, how is such evidence or its absence to be taken into account in deciding upon a PCO?

(c) Further, what is the relevance of the availability of legal aid to persons who are not applicants to the principles upon which the jurisdiction should be exercised, both generally and in particular to applicants who are themselves ineligible for legal aid?

(d) Further, what is the relevance of the financial resources of the respondent and how should that be considered and taken into account when deciding on an application for a PCO?

(3) What should be the procedure for the application and determination of PCOs at first instance?”

4. The application is opposed by the Respondent and the Intervener.

5. With respect, we find the formulation of the questions (apart from Question (2)(b) in the Notice of Motion) by the Applicant to be too general to be of much assistance.  It is not necessary for us to repeat the observations of the Chief Justice in Waddington Ltd v Chan Chun Hoo Thomas FAMV 49 of 2016, 22 Feb 2017 at [16] and of Fok PJ in Safder Tehseen v Permanent Secretary for Security (2014) 17 HKCFAR 567 at [10] regarding the proper manner in which questions are to be formulated in a notice of motion of this nature.  As submitted by Mr Wong SC (together with Mr Chan for the Intervener), the general manner in which Questions (1), (2)(a), (c), (d) and (3) are formulated in the Applicant’s Notice of Motion do not inform a reader of the same as to the precise points of law which Mr Kat SC (with Mr Marwah and Ms Olley for the Applicant) seeks to advance as points of great general public importance.

6. We have now read the written submissions of the parties.  Based on the written submissions, we understand Mr Kat contends that we should adhere strictly to the English jurisprudence, including the post-Corner House authorities and had we done so, we would have held that the Applicant need not disclose the financial resource of its directors, shareholders or other backers. 

7. We have explained in our judgment the reasons why in the circumstances of Hong Kong we do not regard it appropriate to follow the post-Corner House authorities.  We further explained, by reference to the rationale for the jurisdiction to grant a PCO and the Hong Kong jurisprudence on costs relating to Public Interest Litigation, why the Corner House criteria should be applied with the refinements discussed in our judgment to cater for local conditions.  It was a conclusion we reached after paying due regard to the differences between the English legal environment and that in Hong Kong, as well as the Canadian jurisprudence examined in our judgment. 

8. Mr Kat reiterated the arguments he had advanced before us in the appeal in his written submissions in support of the Notice of Motion.  As we have explained in earlier judgments, an application for leave is not the occasion to revisit arguments already addressed.  Notwithstanding Mr Kat’s repeated attempts, we are not persuaded that it is reasonably arguable that we erred in having regard to the difference between local conditions and the English landscape in setting the relevant considerations for the exercise of PCO jurisdiction in Hong Kong.  Nor are we satisfied that the refinements we have made in our judgment are wrong in principle. 

9. With respect, Mr Kat simply failed to pay proper attention to our discussion on the rationale of PCO in the Hong Kong context. Counsel’s suggestion that the concern as to potential injustice to a respondent can be addressed by hearing a respondent before making a PCO is misconceived. Quite apart from the lack of the full picture of the dispute at the early stage of proceedings, it is highly undesirable that a PCO application should become a prolonged and costly process.  That would defeat the purpose since an unsuccessful applicant may have to bear the costs of the PCO application.  If the court were to allow very lengthy submissions on the merits in a PCO application, that would escalate the costs of the proceedings and unduly lengthen the process.  In order to be meaningful, the PCO process should be a relatively summary one. 

10. More fundamentally, we are not satisfied it is reasonably arguable that the financial situation of the directors, members or other backers could not be relevant.  Thus, we do not see any reasonably arguable basis for suggesting Au J was wrong in the exercise of his discretion.

11. In short, we are of the view that Au J had addressed Question 2(b) on the facts of the present case correctly and it is not reasonably arguable to contend otherwise. 

12. Question (3) does not arise from any grounds of appeal before us as summarized at [22] of our judgment.  Hence, we do not find it necessary to discuss the topic in the judgment.  We do not see how this can now become a basis for seeking leave to appeal to the Court of Final Appeal.

13. We shall dismiss the Notice of Motion. 

14. Another outstanding issue is whether the order on costs we made (no order as to costs) should extend to the costs of the PCO application in the court below. 

15. Having considered the submissions of the Applicant and the Respondent, we are satisfied that the Applicant had sufficiently set out in the Notice of Appeal that they would challenge the costs order below.  With respect to Mr Mok SC (appearing with Mr Suen for the Respondent) we do not regard the present case as falling into the same situation as in Moulin Global Eyecare where the elucidation was incidental.  Even though the arguments on PCO might not have been as wide range as those advanced before us, Au J deemed it necessary to appoint an amicus to assist the court.  Bearing in mind this is the first case where PCO was extensively argued in a court in Hong Kong, we are satisfied that the application for PCO at the court below does fall within the PIL criteria.  As we said in our main judgment, there is scope for the requirement of lack of personal benefit to be relaxed.  In the present instance, though one can view the exemption from costs liability arising from a PCO as a kind of personal benefit, we think one could adopt a broader perspective.  Mr Kat’s team (including solicitors) were acting on pro bono basis.  We think it is fair and reasonable that there should also be no order as to costs in the court below.

16. In so holding, we do not say that in the future an unsuccessful PCO applicant would be immune from costs.  We have now given a judgment on PCO in Hong Kong and future litigants can no longer rely on the absence of Hong Kong appellate authority on PCO to contend that the PCO application is brought to obtain guidance on the law on PCO in this jurisdiction. An unsuccessful applicant in the future will not be able to rely on the PIL criteria to be absolved from costs liability stemming from an unsuccessful PCO application. 

17. As regards the costs of the Notice of Motion, we do not think there is any further justification for extending the PIL protection to the unmeritorious application for leave to appeal to the Court of Final Appeal.  We shall order the Applicant to pay the costs of the Respondent in the Notice of Motion.  Having considered the statement of costs of the Respondent, we fix the costs at $100,000.