LAI CHEUK KWAN, ARTHUR v. THE DIRECTOR OF LEGAL AID

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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JUDGMENT

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The Background

1. Both applicants are facing criminal proceedings that will be lengthy and complex. They have sought to obtain legal aid, but the respondent has not granted this. The applicants have brought proceedings to subject the respondent's decisions to judicial review.

2. It seems to me that it is desirable that the applicants should be legally represented in the criminal proceedings, but it is not for me to decide whether or not they should have legal aid to that end. That decision is, by law, in the hands of the respondent. My function is to decide whether or not the respondent, in dealing with the applications for legal aid, acted properly.

3. The applicants have brought separate proceedings in this court. I have considered them separately, although, for the sake of convenience, the applications were argued at the same hearing.

Mr Mou's Application for Legal Aid

4. Mr Mou applied for legal aid on 23 January 1997.

5. On 3 February 1997, the respondent wrote to Mr Mou asking for further information to be supplied on or before 15 February 1997. On 15 February 1997, Mr Mou's solicitors responded to this letter. Not all the information requested by the respondent was supplied. In particular, information regarding Mrs Mou's bank account and a document relating to the discharge of a mortgage bond was promised "as soon as possible".

The Respondent's Decisions on Mr Mou's Application.

6. On 25 February 1997, the respondent send to Mr Mou the standard form of notice of refusal of legal aid. This notice read -

7. The notice said that reasons for refusal were enclosed, but I have not seen these. I do not know if any were given.

8. On 21 March 1997, there was a meeting regarding this matter. In an attendance note by Mr Mou's solicitor, it is recorded that Mrs Fanny Yu, the Assistant Director of Legal Aid, was asked by the solicitor what factors were taken into consideration in deciding that the favourable exercise of the respondent's discretion was not required in the interests of justice, and that her reply was that the complexity of the trial and that it was estimated that it would last six months were considered.

9. In a letter dated 6 May 1997, Mr Mou's solicitor asked that the respondent reconsider the refusal and exercise the discretion under rule 15(2). The solicitor also offered any further information to assist.

10. By a letter dated 16 May 1997, the respondent told the solicitor that "having reconsidered the financial resources of your client and your letter aforesaid, our decision to refuse legal aid on means is maintained for the reasons disclosed" in the refusal notice.

11. On 23 May 1997, the respondent wrote to the solicitor in these terms -

"I refer to your submissions before the Honourable Mr. Justice Michael Wong this morning. For the purpose of clarification, let this be recorded that legal aid is refused upon the ground that the Director is not satisfied that your financial resources do not exceed the statutory limit of $169,700, or that your client has made full and frank disclosure of your financial resources upon which the Director can make a full means calculation to find out the full extent of your financial resources, without which the Director is not in a position to exercise his discretion under Rule 15(2) of the Legal Aid in Criminal Cases Rule, Cap. 221."

12. On 17 June 1997, the solicitor replied to this letter saying that the letter contradicted the earlier communications on the refusal of legal aid, and was the first intimation that there was any dissatisfaction with the disclosure. The solicitor complained that Mr Mou had no means of knowing what further information was required.

13. The respondent replied on 8 July 1997. The letter reads -

14. It appears from the affidavit of Mr Chan Wing Cho, a senior legal aid counsel in the respondent's office, that the respondent's concerns were as follow-

The Review Sought

15. The decisions that Mr Mou seeks to challenge are those of 25 February 1997 and 16 May 1997.

16. The relevant statutory provision is contained in rule 15 of the Legal Aid In Criminal Cases Rules (Cap. 221). This reads -

17. I should say that Mr Mou does not seek to argue that his financial resources do not exceed the statutory limit. He seeks to bring his case within rule 15(2) as an appropriate case in which the respondent should exercise his discretion.

18. As to the interpretation of this provision, the respondent takes the view that the question of whether or not to exercise the discretion under sub-rule (2) does not arise until the Director is able to make an assessment of an applicant's financial resources. This view is supported by the decision of the Court of Appeal in Mirchandani v AG [1994] 2 HKLR 117 in which Bokhary JA, as he then was, said at 118 -

"But the sub-rule [sub-rule 15(2)] does not provide that the Director may grant legal aid when, by reason of insufficient disclosure by the applicant of his financial resources, the Director is unable to determine whether or not, and if so by what extent, such resources exceed the amount so specified."

19. Mr Matthews submits that this interpretation does apply since the repeal of sub-rule 16(3) in 1995. I do not accept this. In my view, sub-rule 15(2) requires the respondent to first assess the applicant's resources before deciding whether to exercise his discretion. If he cannot assess the resources, he cannot exercise his discretion.

Irrationality

20. Mr Mou attacks the decisions on the basis of irrationality.

21. In the first place, he argues that the respondent refused to exercise his discretion because the favourable exercise of the respondent's discretion was not required in the interests of justice, and that was because of the complexity of the trial and that it was estimated that it would last six months. This, he says, was irrational. And, indeed, if the respondent did decide that it was not desirable in the interests of justice to grant a legal aid certificate because the trial would be complex and lengthy, it might well be said that this was irrational. I do not accept, however, that this was the case. In my view, the evidence establishes only that, in considering whether or not it was desirable in the interests of justice to grant a legal aid certificate, the respondent took into account, as one would expect him to do, that the trial would be long and complex. I would have thought that no one in his right mind would have thought for one moment that the respondent would have believed that it was not desirable that an accused should be represented under legal aid in a trial because it was complicated and lengthy. This is improbable in the extreme. And the respondent has said that this was not the basis of the decision. I do not accept that this ground has any validity.

22. Secondly, Mr Mou argues that, in relation to his decision of 25 February 1997, the respondent exercised his discretion under sub-rule 15(2), but, in his letter of 23 May 1997, he said that he was "not in a position to exercise his discretion". This, Mr Mou says, is irrational.

23. In his notice of refusal dated 25 February 1997, the respondent said - "I do not consider that the favourable exercise of the Director's discretion, as provided for under rule 15(2), is required in the interests of justice."

24. In his letter of 23 May 1997, the respondent said - "your client has [not] made full and frank disclosure of your financial resources upon which the Director can make a full means calculation to find out the full extent of your financial resources, without which the Director is not in a position to exercise his discretion under Rule 15(2)".

25. These documents are not as clear as they might have been, but I do not think that there was anything confusing in the message conveyed to Mr Mou by them. This was simple - "You fail the means test and I am not going to grant a certificate under sub-rule 15(2).". Whether this refusal to grant a certificate was because, generally, the respondent was not satisfied that the interests of justice required this, or, more specifically, because Mr Mou had not made a full and frank disclosure is not, in my view, a legitimate basis on which the decision can be challenged.

26. Although it is argued that Mr Mou was not given an adequate opportunity to be heard on the grounds on which the respondent did not grant a certificate, it is not suggested that these grounds are, in themselves, irrational, It was right not to so suggest; clearly the grounds cannot be said to be irrational.

Unfairness

27. The other platform on which Mr Mou rests his case is that the respondent did not act fairly in that he acted on grounds regarding which Mr Mou had not been given a reasonable opportunity to be heard.

28. When Mr Mou applied for legal aid, he knew that he was obliged to make a full disclosure of his and his wife's financial resources. He accepts this.

29. When he was interviewed on 28 January 1997, he knew that the respondent was concerned about his allegation that he had spent about $2.4 million on legal fees. Mr Mou undertook to provide documentary evidence of this. He did not do so. So Mr Mou had an adequate opportunity to be heard on this matter, but he chose not to exercise it.

30. After Mr Mou had made his application, the respondent wrote to Mr Mou on 3 February 1997 asking for further information to be supplied on or before 15 February 1997. This action must have made it quite clear to Mr Mou that the respondent was scrutinising his application carefully.

31. He knew that the respondent was concerned with the loan of $1 million by his employer for bail. Mr Mou had a full opportunity of dealing with this concern. He knew that the respondent was concerned about his income and expenditure, and that of his wife. He knew that the respondent was concerned about his wife's financial resources. Mr Mou had a full opportunity of dealing with these matters and presenting his case regarding them.

32. It is undeniable that Mr Mou did not supply all the information he should have supplied in support of his application. In particular, he did not supply information regarding the alleged expenditure of $2.4 on legal fees, regarding Mrs Mou's bank account and regarding the discharge of a mortgage bond. It follows that it is undeniable that Mr Mou did not make a full and frank disclosure in his application. It is not for me, of course, to decide whether or not Mr Mou made full and frank disclosure; that is a matter for the respondent, but I can find that he had the opportunity of dealing with these matters and he did not exercise it.

33. I know, of course, that Mr Mou says now that, if he had been given further time, he could have dealt with some matters. But he did not say that at the time; he did not ask for further time to present his case.

34. In Fok Lai Ying v Governor in Council, (1997) 7 HKPLR 327, the Judicial Committee said that the current position as to natural justice or fairness was, as far as relied upon in this case, as follows -

          "Fairness will often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will often require that he is informed of the gist of the case which he has to answer."

35. I can see no breach of those principles in this case. Mr Mou had ample opportunity to make representations. He knew precisely what he was required to do; to make a full and frank disclosure of all his financial resources, and those of his wife, to the respondent. He was told more than the gist of the respondent's concerns; he knew just what they were.

36. Mr Mou's real complaint is not that he did not have the opportunity of putting his case properly; what he says amounts to this - "I had every opportunity of presenting my case, but you made findings adverse to me and acted upon these. You did not inform me of these findings so that I could have another opportunity of satisfying you." I do not think that is a legitimate complaint of unfairness. The courts do not work on this basis; there is no reason why the courts should expect the administrative authorities to do so. For example, if a person who as an onus to discharge in litigation is fairly informed that he should explain an undocumented loan of $1 million to him and he attempts to do so, but the court is not satisfied about that explanation, no court would make a tentative finding that it is not so satisfied and then give the person concerned another opportunity to satisfy it. The finding would be the end of the matter. I do not see why I should expect a higher standard than this from the respondent.

The Result of Mr Mou's Application

37. I can find no justification in Mr Mou's complaints. His application is dismissed. I make an order nisi that he pay the respondent's costs.

Mr Lai's Applications for Legal Aid

38. Mr Lai applied for legal aid on 4 October 1996. On 9 December 1996, the respondent sent to him a request for information and documents.

39. On 27 December 1996, Mr Lai responded to this request.

40. On 23 January 1997, the respondent offered legal aid to Mr Lai subject a maximum contribution by him of $2,153,611. Mr Lai did not signify his acceptance of this offer so it lapsed.

41. Mr Lai re-applied for legal aid on 27 March 1997.

42. On 24 April 1997, the respondent asked for information and documents.

43. On 22 May 1997, the respondent issued a notice of refusal of legal aid.

This notice said -

44. The copy of this notice addressed to the applicant mentioned that reasons for refusal were enclosed. These reasons were -

45. On 23 May 1997, the respondent wrote to Mr Lai as follows -

"I refer to your submissions before the Honourable Mr. Justice Michael Wong this morning. For the purpose of clarification, let this be recorded that legal aid is refused upon the ground that the Director is not satisfied that your financial resources do not exceed the statutory limit of $169,700, or that you have made full and frank disclosure of your financial resources upon which the Director can make a full means calculation to find out the full extent of your financial resources, without which the Director is not in a position to exercise his discretion under Rule 15(2) of the Legal Aid in Criminal Cases Rule, Cap. 221."

46. Mr Lai replied to this letter on 27 May 1997. He asked for further information regarding the respondent's reasons. He pointed out that the content of the respondent's letter was "not exactly the same" as the reasons given earlier. This is true. He also said "My wife do have resources per disclosure to you exceeding $169,700. It is her intention to defend her money with her life as she view this her sacred duty to feed the children, to educate them, and to keep the family alive."

47. Apparently, Mrs Lai's attitude changed later. In a letter by Mr Lai's solicitors dated 14 October 1997, it was said that he was prepared to give full and frank disclosure of her financial situation.

48. The respondent's reply to Mr Lai's letter of 27 May 1997 is dated 8 July 1997. It reads -

The Review Sought

49. The decision of the respondent that Mr Lai seeks to bring on review is one "made on or about 22 May 1997 refusing to exercise his discretion pursuant to rule 15(2) of the Legal Aid in Criminal Cases Rules Cap 221 to grant the Applicant Legal Aid funding to cover his legal representation in respect of High Court Criminal Case No. 303 of 1996." The respondent's decision on 23 January 1997 is not challenged.

Irrationality

50. Mr Grossman seeks, without much enthusiasm I suspect, to hang onto Mr Matthews coat-tails on the point concerning the allegation that the respondent found that it was not in the interests of justice to grant a certificate because the trial would be long and complex. This point has failed.

51. Mr Grossman also submits that, Mr Lai having given or offered to give full and frank co-operation to any standard required by the respondent, it was irrational to refuse to make a determination in terms of sub-rule 15(2). I do not accept this. I have already found that the respondent must be satisfied as to the applicant's resources before he can exercise his discretion under sub-rule 15(2). It was Mr Lai's obligation to make full and frank disclosure. If the respondent was not satisfied he had done so, it cannot be irrational not to issue a certificate under that sub-rule. Mr Grossman does not argue that the respondent acted irrationally in failing to be satisfied; he could not have done so.

52. Further, Mr Grossman says that, given the extraordinarily complex and lengthy proceedings against Mr Lai, it can hardly be maintained that the interests of justice do not require that Mr Lai be granted legal aid. It may be that the nature of the proceedings are such that it is in the interests of justice that Mr Lai be legally represented, but it does not follow, given what I have said about disclosure and the respondent's power under sub-rule 15(2), that it irrational for the respondent not to have granted a certificate under that sub-rule. I do not accept this argument.

Unfairness

53. Mr Lai's argument on unfairness is essentially the same as that of Mr Mou, although, of course, based on different facts.

54. As in Mr Mou's case, the respondent's statements regarding his decision could have been framed in less ambiguous terms, but again the substance of the decision is clear enough - "You have failed the means test, and I decline to grant a certificate under sub-rule 15(2)".

55. Again, Mr Lai had a full opportunity of presenting his case, and he knew the nature of the respondent's concerns. In particular, he knew that one of the queries related deposits amounting to $800,000 in cash and by cheque into the account of Mrs Lai on 21 May 1996.

56. In relation to the deposit of $800,000, Mr Lai said the sum was deposited into Mrs Lai's account as a fixed deposit "for and on behalf of her great aunt Madam Teoh Hong Keow who is now retiring in Penang. This is her aunt's life saving she asked my wife to look after for her in the case of rainy days.".

57. The respondent noted that Mrs Lai withdrew $81,000 - this should be a reference, as it was understood by Mr Lai, to $810,000 - from her account on 12 August 1996, and asked about this. Mr Lai said that his wife decided that "it's best for her to transfer the money she is managing for her great aunt to her sister ... and for her to manage for Madam Teoh. My wife transferred the fixed deposit together with interest to [her sister's] account.".

58. The respondent did not accept these explanations, and explained why. In one of his affidavits, Mr Lai says that if the respondent had at any time indicated a concern about the deposit of $800,000 into his wife's account, he would have given full details. The respondent did, of course, indicate a concern about this as I have recited above. Mr Lai said that the first time he learnt about this concern was from the respondent's affirmation. This, of course, is not true. Mr Lai then says that the money belonged to the great aunt "and other relatives". He says the great aunt and other relatives sent the money to assist him with his financial difficulties. His wife made use of the money, but not as a gift. When he was arrested, his wife transferred the money to her sister "in order to help raise the bail money to secure my release from jail.". This, of course, is not the same story as Mr Lai originally told.

59. Mr Lai also knew that another of the respondent's concerns was that he had failed to disclose fully his wife's financial resources.

60. The respondent asked for mandates to be signed by Mrs Lai so that the respondent could obtain information about his wife's financial resources. Mr Lai wanted the respondent to give a list of those from whom the respondent would seek information regarding Mrs Lai's financial affairs. The respondent would not do this. Mr Lai corresponded with the respondent over this issue for some time. Mr Lai was told in clear terms by the respondent that it was his duty to satisfy the respondent that he was financially eligible for legal aid, and, without his full co-operation, it was "impossible to properly assess your application.". Eventually, he wrote to the respondent on 21 May 1997 saying that he had conveyed to his wife that "I was unable to give her the necessary comfort in order to assure her that her only bank account, the one at Hong Kong Bank, and her only credit card, VISA, would not be affected by my application for legal aid. I have given her the 35 copies of mandates for her to consider. I trust she will revert to you as soon as possible."

61. Now it may well be that Mr Lai did not have the power to compel his wife to co-operate in disclosing her financial resources. In that sense, it could be argued that it was not his fault that he did not disclose these. But I am not concerned with fault in that sense. Mr Lai had the obligation to disclose his wife's financial resources, and, if he was unable to do so, he cannot complain that the respondent failed in his duty.

62. As with Mr Mou, Mr Lai's case on analysis is that the respondent, having made his findings on the information supplied to him by Mr Lai, should have disclosed these findings to Mr Lai and given him another opportunity to present his case more fully. I have already found that the duty of fairness, in the courts or in administrative procedures, does not require this.

63. I find that no breach of the duty to be fair has been made out by Mr Lai.

The Result of Mr Lai's Application

64. In the result, Mr Lai's application must also be dismissed. I make an order nisi that Mr Lai pay the respondent's costs.