ATTORNEY GENERAL v. LEUNG KA KI

Magistracy Appeal No. 502 of 1996

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H E A D N O T E

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Leung was acquitted at the Magistrates' Court and defended by the Duty Lawyer. An application was made for costs in the sum incurred - $3,900, by the Duty Lawyer Service. Leung was liable to pay $300 as a handling charge.

The magistrate awarded $3,900.

The Crown appealed by Case Stated.

Held :

Section 69 of the Magistrates' Ordinance only empowered an award in the amount for which a defendant was personally liable - here it was only the handling charge of $300.

IN THE SUPREME COURT OF HONG KONG

(Appellant Jurisdiction)

MAGISTRACY APPEAL NO.502 OF 1996

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J U D G M E N T

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1. On 29th November 1995 the respondent, a 17 year old young woman, was charged in the Fanling Magistrates' Court with being in possession of a dangerous drug. She pleaded not guilty and the prosecution offered no evidence against her. The magistrate Mr Thomas dismissed the charge.

2. Counsel appearing for her made an application for costs and the magistrate ordered the sum of $3,900 to be paid to the respondent within 28 days, but it was to be payable care of an address of the Duty Lawyer Service at Fanling. The prosecution, being dissatisfied with the determination on the amount of costs, have appealed by way of case stated.

3. The power to award costs in the Magistrates' Court is currently governed by s.69 of the Magistrates Ordinance, Cap.227 :

"69. Power to award costs and recovery thereof by distress

(1) In every case of summary conviction or of an order made by a magistrate, except as provided in section 71, it shall be lawful for the magistrate making the same to award and order in and by the conviction or order that the defendant shall pay to the complainant or informant respectively such costs, not existing $5,000, as he may think fit; and where a magistrate dismisses the complaint or information he may, if he is satisfied that the proceedings ought not to have been instituted or pursued against the defendant, order that the complainant or informant shall pay to the defendant such costs, not exceeding $5,000, as he may think fit."

4. The issue in this appeal is whether a magistrate has jurisdiction to award an amount of costs which reflect the services carried out by the Duty Lawyer Service. It is therefore necessary to examine this Service.

5. Miss Grace Wong is the Administrator of the Duty Lawyer Service and she has sworn two affidavits detailing its work. It is a company limited by guarantee and incorporated on 17th August 1993. It is not a Government department, but a wholly subvented organization. It is jointly managed and administered by the Bar Association and the Law Society of Hong Kong, which have four members each on the council, together with not more than three lay persons who may be invited to sit on the council. Miss Wong in her affidavits describes the scheme which the Service operates. In para.3 she says :

" Defendants who pass the means and merits tests under the Duty Lawyer Scheme are required to pay a handling charge of $300- to the Service unless waiver is obtained from me. The payment of the handling charge is automatically exempted in the following cases : (i) where the defendants are Vietnamese boat people; (ii) on public assistance; (iii) illegal immigrants; (iv) defendants in custody and cannot arrange anyone to pay on their behalf and (v) defendants whose cases would normally be completed in one appearance."

6. The method by which the Duty Lawyer Service obtains a higher figure than the $300 is explained in paragraph 5 :

"5. Every defendant represented by the Duty Lawyer Scheme is required to sign an undertaking to pay over to the Service any costs awarded by the magistrate to the defendant against the Crown. Take for example, when cost, say $5,000-, is awarded to a defendant by a magistrate in a case, the Duty Lawyer Service will invite the defendant to sign an authorization form signifying his consent to have the cost paid directly to the Duty Lawyer Service. The Duty Lawyer Service will then write to the O.C. case requesting him to arrange to send the amount of the awarded cost to the Duty Lawyer Service. The authorization form is also enclosed with the letter. Upon receipt of the cost, the Duty Lawyer Service will deposit the same into the Service's current account and enter the amount into the ledger under the heading of sundry income. Such cost becomes part of the Service income resulting in the vote of the Duty Lawyer Service being enlarged."

7. What happened in this particular case was that after the costs were awarded by the magistrate, the Duty Lawyer Service wrote to the Customs & Excise Department requesting the officer in charge to arrange to send the amount of the awarded costs to the Service and enclosed an authorization form signed by the respondent, and upon receipt of those costs, the cheque was deposited into their current account.

8. This Service is very valuable in the administration of justice in Hong Kong. It provides skillful and able advocates to assist defendants in the Magistrates' Courts. For the financial year ending 31st March 1996, there was a deficit of over $920,000 and the Service will have to apply to the Government through the Director of Administration for additional subvention. The revenue obtained by the awards of costs in the Magistrates' Courts over and above the $300 paid by each defendant is relatively small. In 1995, for example, it was $28,850. Nevertheless, the Service considers these awards of importance, particularly as it runs the Service at a deficit. Mr Wong submits, however, that these awards of costs incur the magistrates in having to examine the applications and assess the amounts to be paid, instead of making a straightforward award of $300 which is what a particular defendant would have paid.

9. The words used in s.69 appear to give a wide discretion to the magistrate. The words are "as he may think fit". Nevertheless, in my judgment, this discretion must be exercised in accordance with normal judicial principles. In the English Acts dealing with costs, the word "incurred" is frequently used, which is absent from s.69. The Common Law position as to costs generally was explained in 1860 in England by Bramwell B. in Harold v. Smith 5 H & N 381 :

"Costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them nor given as a bonus to the party who receives them. Therefore if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained."

10. This principle was reaffirmed in Gundry v. Sainsbury [1910] 1 KB 645 where a solicitor who was acting for a client had agreed with him that he should not pay the solicitor any costs. It was held that its client was not entitled to recover from the defendant more costs than were payable by him to his solicitor under the agreement.

11. The general principle which emerges from these and other authorities and the Common Law position is that when a judge exercises his discretion to make an award of costs in favour of somebody, whether in civil or criminal proceedings, the amount of costs is not a punishment of the other party, but is a means of compensating the particular person for his liability in respect of his costs. In the cases where the Duty Lawyer Service operates, the only liability for the defendant is the handling charge of $300. Although the Service incurs costs on behalf of the defendant, in my judgment, by virtue of the method by which the Service is provided to a particular defendant, there never is any liability on the defendant to pay more than the $300. The defendant signs an undertaking to pay over any costs awarded to him greater than $300 and authorizes the payment of that sum to the Duty Lawyer Service. This, however, is an artificial method to suggest that there is a liability on the defendant for more than $300.

12. In my judgment, although I recognise the ingenuity of those who devised this scheme of obtaining a sum more than $300, there has never been any liability on the defendant and he has never incurred any liability greater than the handling charge. When, therefore, I must construe s.69, it is on the basis that the order for costs that the complainant or informant shall pay to the defendant is that amount of costs for which the defendant is personally liable. Consequently the award made by this magistrate was wrong in law. The questions of law in the case stated are as follows :

"(1) Whether I was correct in holding that s.69(1) of the Magistrates Ordinance, Cap227 does empower me to award costs to a party represented by the Duty Lawyer Service; and

(2) Whether I was correct in holding that, if the answer to the above question is in the affirmative, that the quantum of the award should not be confined to the extent of the party's contribution to the Duty Lawyer Service."

13. The answer to the first question is "Yes". The parties accept that there is jurisdiction to make such an award of costs. The answer to the second question is "No". The only award that a magistrate can make is the amount of costs to which the defendant is liable, in this case, $300.

14. I have also been asked to express my opinion on the issue of costs in Criminal Cases Bill which shortly should become the law. By Clause 3, the power to award costs where, for example, there is a dismissal of the information or complaint, the words used are "the magistrate may order that costs be awarded to the defendant". However, under Part IV headed "General principles", Clause 15 reads :

"15.In any criminal proceedings-

(a) the costs that may be awarded by virtue of an order shall not be punitive but shall be such sums as appear to a court or a judge reasonably sufficient to compensate any party to the proceedings for any expenses properly incurred by him in the course of those proceedings, including any proceedings preliminary or incidental thereto;"

15. There the words are "expenses properly incurred by him". These words, in my judgment, make clear what the Common Law position has always been and I am in no doubt that when this Bill comes into effect, the restricted power to award costs only for a defendant's personal liability will continue.