FONG SO HO v. LEGAL AID DEPARTMENT

[English Translation – 英譯本]

HCMP 2012/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 2012 OF 2013

(ON AN INTENDED APPEAL FROM HCA NO. 391 OF 2012)

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J U D G M E N T

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1.  The Plaintiff commenced these proceedings to apply for leave to appeal out of time against the judgment dated 23 August 2012 in HCA 391/2012, and to file a notice of appeal. At the hearing, the Applicant clarified that he only sought leave to appeal out of time.

HCA 391/2012

2.  On 12 March 2012, the Plaintiff took out HCA 391/2012 to claim compensation from the Legal Aid Department.

3.  Upon the application of the Defendant, Deputy High Court Judge Lok struck out the writ of summons and statement of claim filed by the Plaintiff as well as dismissing the action on 23 August 2012.   Deputy Judge Lok also issued a restricted proceedings order [“RPO”] against the Plaintiff, and ordered the Plaintiff to pay costs to the Defendant.  Later, on 10 January 2013, the quantum of those costs was assessed to be at $17,320.10.

4.  On 23 May 2013 the Plaintiff took out a summons to apply for the discharge of the RPO.  Deputy Judge Lok dismissed the application on 8 August 2013.  

5.  On the same day, the Plaintiff took out a summons to apply for leave to appeal against the order made on 23 August 2012.  On 12 August 2013, the Plaintiff took out a further summons requesting withdrawal of the summons dated 8 August 2013 and application for leave to commence new legal proceedings of an appeal that seeks the setting aside of the order on 23 August 2012.  On 15 August 2013, Deputy Judge Lok dismissed the two applications by summons altogether.

The application in these proceedings

6.  On the following day (16 August 2013), the Plaintiff took out the application in these proceedings, his reason being:

“At that time, the Defendant said that I was subject to High Court case HCB 5653/2008 and as a bankrupt, I did not have the right to take out these proceedings. Now that it was discharged on 31 July 2013, I request to continue with the claim under HCA 391/2012.”

7.  The background relating to HCA 391/2012 is briefly described below.

8.  In 1995, the Plaintiff took out HCA 9421/1995, claiming against Fook Shing Hong (transliteration) Trading Company（福盛行貿易公司）operated by Li Moon Tong for a dishonoured cheque for $300,000.  On 19 August 1998, the Director of Legal Aid issued a legal aid certificate to the Plaintiff for the purpose of the action.  On 7 July 2000, the Director of Legal Aid revoked the said legal aid certificate, the reason being that the Plaintiff appeared to the Director to have wilfully concealed material facts about his financial resources, and purposely made untrue disclosures about his financial resources.  Subsequently, the Plaintiff was investigated and charged in respect of the purposeful concealment of financial resources.  After trial, Ms Bernadette Woo, a magistrate sitting in Shatin Magistracy, found the Plaintiff not guilty to the charge of fraud on 8 May 2002 (case no.: STCC 173/2002).

9.  On the other hand, through the Secretary for Justice, the Director of Legal Aid commenced DCCJ 4708/2008 at the District Court, seeking to recover from the Plaintiff the legal costs that the Director had paid in advance for HCA 9421/1995.  On 31 January 2005, the Secretary for Justice obtained a summary judgment and an order for costs, and the Plaintiff was to pay the judgment debt of $78,899.90.  The Plaintiff lodged an appeal, but that was dismissed by Judge HC Wong on 18 February 2005.  The subsequent applications for leave to appeal made by the Plaintiff were dismissed by Judge Wong and the Court of Appeal (HCMP 447/2005) respectively.

10.  Since the Plaintiff did not settle the said judgment debt, the Secretary for Justice took out HCB 5653/2008 to petition for the Plaintiff’s bankruptcy.  On 31 July 2009, the Court of First Instance declared that the Plaintiff was bankrupt.  The Plaintiff lodged an appeal.  The Court of Appeal dismissed the appeal on 4 June 2010, and refused leave to appeal to the Court of Final Appeal on 29 September 2010.

11.  Prior to this, on 17 February 2009, the Plaintiff took out HCAL 16/2009 at the Court of First Instance, applying for leave to apply for judicial review on the order made by Judge Wong on 18 February 2005.  On 25 February 2009, the application was refused by Fung J.  On 13 May 2009, the Plaintiff’s appeal was dismissed by the Court of Appeal.

12.  On 4 August 2011, the Plaintiff commenced DCCJ 2946/2011 in the District Court, claiming against the Legal Aid Department as well as the two solicitors’ firms which had been appointed by the Director of Legal Aid to represent him.  In his statement of claim, the Plaintiff alleged that: (1) the lawyer(s) and staff of the Legal Aid Department that handled his application for legal aid were avenging a personal grudge in the name of public interest and negligent respectively, causing him to be prosecuted; (2) the lawyer assigned by the Legal Aid Department was negligent in handling HCA 9421/1995, which led to his being unable to execute the judgment against Li Moon TongandFook Shing Hong (transliteration) Trading Company（福盛行貿易公司）even though he obtained a favourable judgment.  On 28 November 2011, a Master of the District Court struck out the Plaintiff’s writ of summons and statement of claim, dismissed the action and ordered that the Plaintiff do pay costs to the Legal Aid Department and 1^st Defendant.

13.  The Plaintiff’s reasons for his claim in HCA 391/2012 were similar to those in DCCJ 2946/2011.  Again, the Plaintiff alleged that the lawyer(s) of the Legal Aid Department was not handling his application properly, the staff of the Department were negligent, and the lawyer assigned did not conduct the action properly, causing him to be prosecuted for no reason, and that he was unable to execute the judgment even though he had obtained a favourable judgment.  He asked for damages in the sum of $3.8 million.

14.  Deputy Judge Lok granted the Defendant’s application, struck out the writ of summons and statement of claim as well as dismissing the claim, mainly based on 3 reasons (vide paragraphs 10-14 in the judgment dated 23 August 2012):

“10. First of all, pursuant to sections 12(1) and 58(1) of the Bankruptcy Ordinance, Cap 6 of the Laws of Hong Kong, after a Bankruptcy Order has been made, the Official Receiver shall thereby become the provisional trustee of the property of the bankrupt, and the property of the bankrupt shall vest in the Official Receiver.

11. Pursuant to the above provisions in the Bankruptcy Ordinance, the right to take out this action was not with Fong, but with the Official Receiver as the trustee (vide: the legal principles laid down in the case of Cheung Wing Kwan, Tommy and Hong Kong Export Credit Insurance Corporation and others [2012] 2 HKLRD 1225).

12. As Fong conducted the action without the consent of the Official Receiver, he did not have the right to take out this action. Under the circumstances, this action is frivolous, vexatious, or an abuse of the process of the Court. The Court should strike out the claim by Fong.

13. Secondly, as mentioned before, DCCJ 2946/2011, which was taken out by Fong on the same matters, has been dismissed. By reason of the doctrine of res judicata, the Court should not entertain this action.

14. Thirdly, the matters mentioned in Fong’s pleadings do not have any reasonable cause of action.  To start with, one point not in dispute is that after his application for legal aid was accepted by the Legal Aid Department in 1995, the case was assigned to two solicitors’ firms for handling respectively.  According to what has been clearly stated in the case of Ngao To Ki otherwise spelt as Ngo Dao Kei v Attorney General [1981] 1 HKLR 259, the responsibility of the Legal Aid Department is to ensure the funds granted to them by the Government will be correctly used.  If the case has been assigned to a solicitors’ firm, then the Legal Aid Department does not have further responsibility for handling that case, and does not legally owe any professional duty of care to the aided person (refer to Yeung Shea Chun v The Director of Legal Aid, unreported, HCA 8439/1996, 28 July 2000). Moreover, the cause of action as described by Fong was one that was clearly beyond the statutory time-bar.  Regarding the decision of refusing the application for legal aid, there are statutory mechanisms under the Legal Aid Ordinance that can handle it, instead of by way of civil litigation.  By insisting on lodging the claim, Fong’s acts are obviously vexatious and an abuse of the process of the Court.”

15.  In this action, the Plaintiff requested to appeal against Deputy Judge Lok’s order out of time, the reason being that his bankruptcy order was discharged on 31 July 2013.  In the case of Cheung Wing Kwan, Tommy and Hong Kong Export Credit Insurance Corporation [2012] 2 HKLRD 1225, the Court of Appeal decided that (vide paragraphs 21-23):

(a) upon the making of a bankruptcy order, the property of the bankrupt shall vest in the Official Receiver, who will hold the property first as provisional trustee and then as trustee.  The property of the bankrupt vested in the Official Receiver shall include the bankrupt’s right to sue in respect of certain causes of action at the commencement of the bankruptcy, namely on the day of the bankruptcy order (sections 2, 43(1) and 30).

(b) The property vested in the trustee in bankruptcy is not returned to the bankrupt upon the automatic discharge of the bankruptcy order. Although the discharge releases a bankrupt from all the bankruptcy debts (subject to section 32(1) and (3) to (8)), it does not discharge the functions of the trustee.  Consequently, following the discharge of the bankruptcy order, the trustee is still under a duty to complete the administration of the bankrupt’s estate, including realising all realisable property vested in the trustee and distributing the proceeds to the creditors.  Applying the above legal principles, the bankrupt’s right of action did not revert to the bankrupt upon the discharge of the bankruptcy order.

(Emphasis added)

16.  When taking out HCA 391/2012, the Plaintiff was still a bankrupt.  Subject to sections 12(1) and 58(1) of the Bankruptcy Ordinance, the right of action, therefore, was vested in the Official Receiver.  This right of action did not revert to the Plaintiff because of the discharge of his bankruptcy order on 31 July 2013.  Until now, the Plaintiff does not have the consent of the Official Receiver to conduct HCA 391/2012.  Therefore, the discharge of the Plaintiff’s bankruptcy order does not constitute a ground of appeal out of time, nor is it a viable ground of appeal.

17.  Moreover, Deputy Judge Lok’s decision was based on 3 reasons.  The fact that the Plaintiff did not have the right of action owing to the bankruptcy order was merely one of those.  The doctrine of res judicata was another reason for his decision.  The Plaintiff indicated that he was only claiming against the Legal Aid Department in HCA 391/2012, and this is different from DCCJ 2946/2011, in which there were a number of defendants.  Nevertheless, since the Legal Aid Department was also a defendant in DCCJ 2946/2011, and the Plaintiff took out an action against the Department with the same matters and cause of action as in HCA 391/2012, obviously it is in violation of the doctrine of res judicata.

18.  Regarding Deputy Judge Lok’s third reason for his decision, the Plaintiff submitted that he had been applying for legal aid in the hope of taking out an action.  Even though he was declared bankrupt subsequently, he still raised his counterclaim, only that he was unable to conduct the action because he was a bankrupt.  However, it is an indisputable fact that the matter for which the Plaintiff is claiming happened in 2000, so when he took out HCA 391/2012 in 2012, the cause of action he described was already far beyond the statutory time-bar.  The matters raised by the Plaintiff cannot change this fact.

19.  I am of the view that Judge Lok’s reasons for his decision are entirely correct, and the Plaintiff has not been able to demonstrate any errors in them.  The Plaintiff’s intended appeal does not have a real prospect of success.

20.  When handling applications for appeal out of time, the Court usually considers:

(1) the length of the delay;

(2) the reasons for the delay;

(3) the chances of the intended appeal succeeding; and

(4) the prejudice to the Respondent by the delay: see paragraph 59/4/9, volume 1, Hong Kong Civil Procedure 2013.

21.  Based on the above analysis, the Plaintiff does not meet the criteria for granting leave to appeal out of time. Therefore, I dismiss the Plaintiff’s application.

22.  According to the convention in litigation, the award of costs should follow the event.  This case does not have any circumstances which warrant a deviation from this principle.  Therefore, I order that costs be awarded in favour of the Defendant.  Regarding the quantum of the Defendant’s costs, it is assessed at $8,000, and it is an order nisi.  If any party to the action wishes to vary this order nisi, he will have to apply to the Court in writing within 14 days hereof, stating in his written application the reasons and the proposed quantum, a copy of which is to be served on the other party.  If the other party to the action objects to the application, he has to, within 14 days thereafter, submit to the Court his written reasons for the objection, and serve a copy of his reasons on the other party.