LEUNG CHUN KWONG v. SECRETARY FOR THE CIVIL SERVICE AND ANOTHER

FACV No. 8 of 2018

[2019] HKCFA 34

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 8 OF 2018 (CIVIL)

(ON APPEAL FROM CACV NO. 126 OF 2017)

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JUDGMENT ON

RELIEF AND COSTS

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The Court:

1.  The Court handed down its judgment in this appeal on 6 June 2019,[1] allowing the appellant’s appeal and directing (at [83]) the filing of further written submissions by the parties on the form of relief that should follow in the event the appeal were allowed and on the question of costs.

2.  Written submissions dated 4 July 2019 were filed on behalf of the appellant, to which the respondents replied by written submissions dated 18 July 2019.  Further written submissions in reply dated 29 July 2019 were filed on behalf of the appellant.

3.  As foreshadowed by the Court in our main judgment (at [84]), we have proceeded to determine the relief to be granted and our costs order on the basis of the written submissions from the parties and without any further oral hearing.  In this judgment on relief and costs, we adopt the abbreviations and definitions used in our main judgment.

Relief

4.  In respect of the Benefits Decision, the parties agree to adopt the form of order made by Chow J in the Court of First Instance, namely:

“(1) There be a declaration that the Benefits Decision constitutes discrimination against the Applicant based on his sexual orientation contrary to Article 25 of the Basic Law and Articles 1 and 22 of the Hong Kong Bill of Rights and is unlawful;

(2) There be an order of certiorari to bring up and quash the Benefits Decision;

(3)     There be a declaration that the Applicant and Mr. Scott Paul Adams are entitled to the benefits and allowances that the Government provides to married civil servants of the same employment terms and conditions of the Applicant whose marriages are to persons of the opposite gender and their spouses respectively.”

5.  We are satisfied this is the appropriate form of order in respect of the Benefits Decision and we so order.

6.  There is an issue between the parties regarding an undertaking given by the 1^st respondent when a stay of Chow J’s order pending appeal was granted.  That undertaking was to the effect that the Civil Service Bureau (CSB) would reimburse the appellant (and would issue a memorandum notifying other civil servants that the CSB would reimburse same-sex married civil servants) in respect of “any loss of benefits … caused solely by the extension of the time … to the final resolution” of the appeal before the Court of Appeal “should the [1^st respondent’s] appeal in CACV 126/2017 be dismissed”.

7.  The 1^st respondent was successful in appealing against Chow J’s judgment in respect of the Benefits Decision and so the undertaking given was necessarily spent and of no further effect.  It is beyond the scope of this appeal to make an order in respect of the reimbursement of lost benefits of other same-sex married civil servants.  However, we would simply observe that, subject to administrative practicalities, fairness and good administration would seem to dictate that the reimbursement of benefits contemplated by the undertaking would be an appropriate outcome as from the date of Chow J’s order.

8.  In respect of the Tax Decision, the parties are in agreement that remedial interpretation of the IRO is appropriate.  The proposed form of order is in the following terms:

“(1) There be a declaration that the Tax Decision constitutes discrimination against the Applicant based on his sexual orientation contrary to Article 25 of the Basic Law and Articles 1 and 22 of the Hong Kong Bill of Rights and is unlawful;

(2) There be an order of certiorari to bring up and quash the Tax Decision;

(3) There be a declaration that, consistently with Article 25 of the Basic Law and Articles 1 and 22 of the Hong Kong Bill of Rights:

(a) The existing limb (b) of the term ‘marriage’ in s.2 of the Inland Revenue Ordinance (Cap.112) (‘IRO’) shall be read as:

‘any marriage, whether or not so recognized, entered into outside Hong Kong according to the law of the place where it was entered into and between persons having the capacity to do so, provided where the persons are of the same sex and such a marriage between them would have been a marriage under this Ordinance but for the fact only that they are persons of the same sex, they shall be deemed for the purposes of such a marriage to have the capacity to do so’; and

(b) For the purposes of the IRO, references to:

(i) ‘husband and wife’ shall be read as ‘a married person and his or her spouse’;

(ii) ‘not being a wife living apart from her husband’ shall be read as ‘not being a spouse living apart from the married person’; and

(iii) ‘either the husband or wife’ shall be read as ‘either the married person or his or her spouse’.

(4)     There be a declaration that the Applicant and Mr. Scott Paul Adams are entitled to elect to be assessed to salaries tax jointly pursuant to s.10 of the IRO.”

9.  We agree that this form of relief is appropriate and that an order in these terms should be made.  An order that only addressed the interpretation of s.10 of the IRO would be of limited assistance and would lead to possible inconsistencies and anomalies as set out in evidence filed on behalf of the 2^nd respondent accompanying the respondents’ written submissions.[2]

10.  The only issue between the parties as regards the order in respect of the Tax Decision concerns the question of whether the 2^nd respondent should be given time to implement the proposed remedial interpretation.  The 2^nd respondent’s evidence refers to the need to revise the IRD’s computer system and various guidelines and practice notes.  It is suggested that it would take “no more than 6 months” for the completion of the various steps necessary, although it is stated that, in the meantime, “the IRD will process tax returns and assessments accordingly”.[3]

11.  The appellant submits that no suspension is necessary.  However, it is not suggested that any prejudice will accrue to the appellant if a short suspension were granted. There clearly are practical matters that need to be addressed in order to anticipate the declaration taking effect.  A suspension of six months would still mean that the remedial interpretation would become effective before the end of the current tax year on 31 March 2020.  Accordingly, we suspend the operation of paragraph (3) of the order in respect of the Tax Decision for a period of six months from the date of our order.

Costs

12.  On costs, there is no dispute between the parties that the appellant must have an order for the costs of the proceedings. 

13.  The only issue regarding costs is whether the basis of taxation should be on the normal party and party basis of taxation, as the respondents submit, or on the more generous indemnity basis of taxation, as the appellant submits.

14.  The appellant submits that it is appropriate that costs should be taxed on the indemnity basis because these proceedings involve the public interest, the conduct of the respondents was unreasonable and their cases were wholly unmeritorious, and the appellant will be out of pocket because of the substantial contribution he was required to make in order to obtain legal aid for these proceedings.

15.  Whilst we have some sympathy for the appellant because of the extent to which he will be out of pocket despite winning this litigation, we are satisfied that this is not an appropriate case for indemnity taxation of the appellant’s costs.  We do not consider that the behaviour of the respondents in making the challenged decisions and thereafter in contesting the judicial review proceedings, then pursuing the appeal to the Court of Appeal and thereafter resisting the appeal to this Court was so unreasonable and without merit as to be deserving of a costs sanction usually reserved for those cases in which there has been something improper or inappropriate or wholly unreasonable in the administrative decisions under challenge or in the conduct of the proceedings.

16.  Accordingly, we make the following order in respect of costs:

“The respondents pay the appellant’s costs of and occasioned by the proceedings here and below (including the costs of his written submissions) with a certificate for three counsel before this Court and the Court of Appeal and a certificate for two counsel before the Court of First Instance; and that the appellant’s own costs be taxed in accordance with the Legal Aid Regulations.”