AU WING LUN, WILLIAM v. THE SOLICITORS DISCIPLINARY TRIBUNAL & ANOTHER

HCAL1942/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO.1942 OF 2001

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RULING  ON   COSTS

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Introduction

1. On 20 December of last year, in terms of a written judgment ('the substantive judgment'), I dismissed the applicant's application for judicial review of certain decisions of the 1st respondent, the Solicitors Disciplinary Tribunal. In the substantive judgment, in respect of costs, I said :

".... I am satisfied that costs must be awarded to the respondents. Mr Westbrook [counsel for the respondents] has indicated that, if costs are awarded in favour of the respondents, he may seek leave to argue that they should be awarded on an indemnity basis. He should be allowed to make his arguments. There will therefore be an order nisi awarding costs to the respondents on a party and party basis, that order to be made final 60 days after the date of handing down of this judgment unless application is made earlier to argue the matter."

2. Pursuant to this order nisi, the respondents chose to argue for the award of indemnity costs in their favour. The respondents, represented again by Mr Westbrook, have advanced their case on two bases. Their first argument ('the statutory argument') is founded on the provisions of s. 10(2)(e) of the Legal Practitioners Ordinance, Cap. 159 ('the Ordinance'). Their second argument ('the merits argument') is founded on the contention that the application for judicial review was so misconceived and so unreasonably pursued that it should be visited with indemnity costs.

The statutory argument

3. Section 10(2) of the Ordinance gives to the Solicitors Disciplinary Tribunal ('the Tribunal'), upon the completion of its inquiries into the professional conduct of a person subject to its jurisdiction, the power to make various orders. These include orders for payment of costs. In this regard, s. 10(2) reads :

" Subject to the provisions of this Ordinance, on completion of its inquiry and investigation, a Solicitors Disciplinary Tribunal shall have power to make such order as it thinks fit and any such order may, in particular, include provision for all or any of the following matters-

....

(e) payment by any party of the costs of and incidental to the proceedings of the Tribunal and the costs of any prior inquiry or investigation in relation to the matters before the Tribunal, to be taxed by a Master of the High Court on a full indemnity basis, or payment of an amount that the Tribunal considers is a reasonable contribution towards those costs." [my emphasis]

4. In the substantive judgment, I commented on the power to award costs in terms of s. 10(2)(e) by saying :

".... in determining costs, the Tribunal has three options open to it. First, it may elect to make no order for costs. Second, it may elect to order that a person found liable should indemnify the Law Society against its losses by paying costs on an indemnity basis, those costs to be taxed if not agreed. Third, it may elect to take an equitable 'middle course' and to assess a contribution towards the costs of the inquiry and any prior investigation. In this latter instance, costs may be assessed on a fixed sum basis (for example, $100,000) or as a percentage of the indemnity costs which are to be taxed if not agreed (for example, 25% of those costs)." [my emphasis]

5. As to why the Tribunal - in terms of the Ordinance, an independent body within the constituency of the Law Society - should have the power to order payment of indemnity costs, in the substantive judgment I said :

".... the Law Society has been given the responsibility by statute to investigate complaints concerning the conduct of its members. When it carries out an investigation and refers a matter for determination by the Tribunal, it is not therefore involving itself in private party and party litigation : it is, as a professional body, doing no more than fulfilling a statutory obligation. I agree with Mr Westbrook that the legislature, in imposing that obligation, also made provision for the society to be fully indemnified against loss.

Contrary to the applicant's contention that indemnity costs are in essence punitive and must, notwithstanding the circumstances, always be seen as condign punishment for profligate conduct, I am satisfied that, in terms of the Ordinance, indemnity costs are intended to do no more than fully indemnity the Law Society against loss. ...."

6. Flowing from the provisions of s. 10(2)(e), if I understand Mr Westbrook correctly, his argument is to the following effect. The legislature intended that the Law Society, in fulfilling its statutory responsibilities, should be indemnified against loss. As such, it gave to the Tribunal the power to order payment of costs on a full indemnity basis. It follows that, in the usual course of events, if a decision of the Tribunal is unsuccessfully challenged by way of appeal or judicial review (or indeed if any prior inquiry or investigation of the Law Society is unsuccessfully challenged) then the Law Society should, in accordance with the manifest intention of the legislature, be similarly indemnified against loss. After all, so the argument goes, proceedings by way of appeal or judicial review are simply generic extensions of the inquiry process that the Law Society is obliged by law to conduct in the general public interest.

7. The matter that came before me was an application for judicial review, it was not an appeal to the Court of Appeal brought pursuant to s. 13 of the Ordinance. My consideration of Mr Westbrook's argument is therefore restricted to challenges brought by way of judicial review to this Court.

8. As a matter of fundamental principle, judicial review is not, of course, a challenge to the merits of a decision made by an administrative tribunal (which would include a professional disciplinary tribunal). The principle has been stated by Lord Clyde in Reid v. Secretary of State for Scotland [1999] 2 AC 512 (at 541F) :

".... Judicial review involves a challenge to the legal validity of the decision. It does not allow the court of review to examine the evidence with a view to forming its own view about the substantial merits of the case. It may be that the tribunal whose decision is being challenged has done something which it had no lawful authority to do. It may have abused or misused the authority which it had. It may have departed from the procedures which either by statute or at common law as a matter of fairness it ought to have observed. As regards the decision itself it may be found to be perverse, or irrational, or grossly disproportionate to what was required. Or the decision may be found to be erroneous in respect of a legal deficiency, as for example, through the absence of evidence, or of sufficient evidence, to support it, or through account being taken of irrelevant matter, or through a failure for any reason to take account of a relevant matter, or through some misconstruction of the terms of the statutory provision which the decision-maker is required to apply. But while the evidence may have to be explored in order to see if the decision is vitiated by such legal deficiencies it is perfectly clear that in a case of review, as distinct from an ordinary appeal, the court may not set about forming its own preferred view of the evidence."

9. The legislature, in giving powers of investigation and inquiry to the Law Society and to its constituent organ, the Tribunal, must be presumed to have intended for those powers to be exercised lawfully. A challenge to the lawfulness of the process of inquiry carried out by these bodies is not, therefore, to use my earlier term, simply a 'generic extension' of the process which these bodies are by statute obliged to discharge. It is a distinct and entirely independent challenge which invokes the supervisory jurisdiction of this Court to ensure that the powers exercised accord with the substantive law created by the legislature and that the manner of such exercise conforms with the standards of fairness which the legislature must have intended. As a distinct and independent challenge of that nature, I do not see how it falls in any way to be resolved by having regard to the powers given to the Tribunal under s. 10(2) of the Ordinance.

10. I can find nothing in the Ordinance to suggest that the legislature intended that a challenge to the lawfulness of actions carried out under the Ordinance by the Law Society or the Tribunal, if that challenge failed, must be visited with a costs order contemplated in s. 10(2)(e). That, in my judgment, simply cannot be the case. In fairness to Mr Westbrook, he made his argument with becoming diffidence, seeking (essentially) clear guidance from this Court. That guidance has now been given.

The merits argument

11. In Sung Foo Kee Ltd v. Pak Lik Company (a firm), Civil Appeal No. 68 of 1996, Godfrey JA, in giving the judgment of the Court, rejected the submission that indemnity costs should only be awarded where there has been deception or underhand conduct. In this regard, he cited with approval the approval the dicta of Eastham J in Disney v. Plummer,, 16 November 1987, in the Court of Appeal, unreported :

"The judge having listened to the various submissions which are summarised, clearly took the view that this was one of the cases in which he could, and should, make a robust order so as to discourage other plaintiffs from pursuing litigation in the way in which this litigation has been pursued on behalf of this particular plaintiff. In my judgment he had ample material on which he could find that it was appropriate to order costs on the indemnity basis and indeed, after the defendants had been exposed to the very serious consequences of this bitterly conducted litigation, they would have felt a sense of considerable injustice if their costs had been whittled away down to the costs on a standard basis."

Godfrey JA further cited the dicta of Millet J in Macmillan Inc. v. Bishopgate Investment Trust Ltd, 10 December 1993, an unreported Chancery Division judgment :

"The power to order taxation on an indemnity basis is not confined to cases which have been brought with an ulterior motive or for an improper purpose. Litigants who conduct their cases in bad faith, or as a personal vendetta, or in an improper or oppressive manner, or who cause costs to be incurred irrationally or out of all proportion as to what is at stake, may also expect to be ordered to pay costs on an indemnity basis if they lose, and have part of their costs disallowed if they win. Nor are these necessarily the only situations where the jurisdiction may be exercised; the discretion is not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be 'appropriate'."

12. As I understand it, therefore, our judges have a broad discretion to award indemnity costs where such costs are considered 'appropriate', regard being had to the facts before them.

13. In the course of his submissions, Mr Westbrook has been able to point to a number of instances where in the substantive judgment I have been critical of the manner in which the applicant has pursued his application and argued it before me. There is no doubt that at the end of the day, despite the dogged persistence of applicant's counsel in pursuing his submissions, I found each of the applicant's challenges to be either misconceived or without merit. In my judgment, it was ill-advised litigation and on one occasion at least it was precipitously argued with less than commendable regard for the factual basis upon which counsel founded his submissions. But the difficult question I have had to resolve is whether the applicant's challenge was so wholly misguided and/or oppressively pursued that it merits a visitation of punitive costs.

14. Judicial review, as I have made clear, is not simply a form of collateral appeal where the grievances are differently phrased but seek in truth exactly what should properly be sought on appeal. Intellectual rigour is therefore required to ensure two matters : first, that judicial review is the appropriate process and, second, that grounds of substance; that is, arguable grounds, are defined. If that is not done then invariably the respondents in the matter are forced to defend litigation which is, from the outset, misconceived. In the present case, in my view, for the reasons stated in the substantive judgment, the applicant's litigation was wholly misguided in respect of both matters to which I have just referred. By way of example, one material challenge argued before me was founded on complete ignorance of the true facts. Fortunately, during an adjournment, the true facts were ascertained. But that was done by the respondents not the applicant. The applicant in the present case is a solicitor, he has at all times been represented by counsel. The application for judicial review was not, therefore, pursued by neophytes: novices in the discipline. The authorities state plainly that the courts must, in appropriate circumstances, act robustly in awarding costs. I am satisfied, on a consideration of all the relevant circumstances and having regard to the comments made in the substantive judgment, that this is an appropriate case for a robust decision, one that awards costs at the enhanced level.

15. By way of postscript, I should make mention of one matter that was canvassed on behalf of the applicant during the course of submissions. The argument was to the effect that, having obtained leave to apply for judicial review, the essential substance of the application had thereby been recognized by the Court and that of itself protected the applicant from any claim for punitive costs founded on the assertion that the application had been devoid of merit. It appeared to be suggested that the granting of leave somehow estopped the court that determines the issues substantively from awarding anything other than party and party costs against an applicant, at least in so far as the grounds of challenge are concerned.

16. That argument, however, does not take into account the true nature of the test presently applied in the Court in deciding whether to grant leave. Nor does it take into account the fact that often - as was the case in the present instance - any hearing for leave is ex parte : only one side of the story being advocated.

17. In terms of O. 53, r. 3 of the Rules of the High Court, no application for judicial review shall be made unless the leave of the Court is first obtained. In deciding whether to grant leave, our courts are obliged to adopt the test approved in R. v. Director of Immigration ex parte Ho Ming Sai (1993) 3 HKPLR 157 (at 161 and 170). In that case, Kempster JA described the test in the following terms :

".... whether the material before [the judge] disclosed matters which, on further consideration, might demonstrate an arguable case for the grant of the relief sought."

18. That is not a test which sets a high threshold. In Wong Chung Ki & Another v. The Chief Executive & Another, CACV 1/2000, Keith JA said that under the test the court grants leave if it thinks that the court at the subsequent, substantive hearing may think that the applicant has an arguable case. It follows, of course, that the court at the subsequent, substantive hearing with the benefit of submissions from all parties, and invariably being able to consider the matter in greater depth, may decided that the applicant does not have an arguable case; indeed, that the case is entirely without merit.

19. That being the case, applicants should not think that, having obtained leave pursuant to O. 53, r. 3, they will thereafter be impervious to any claim for costs of a punitive nature. The fact that leave has been granted will be one of the factors to be considered and, depending on the circumstances, it may or may not be a particularly persuasive factor. In the present case, the hearing for leave was before myself. Not only was it ex parte but I recall considerable exchanges between myself and counsel in which I expressed reservations as to the merits of the application before I was persuaded (against the background of a factually complex inquiry by the Tribunal) that matters had nevertheless been disclosed which, on further consideration, might demonstrate an arguable case.

Conclusion

20. For the reasons given in this ruling, my final order as to costs is therefore that costs are awarded to the respondents on an indemnity basis. Such costs are to include the costs of the application made to argue this matter.