HKSAR v. LI KWOK CHEUNG GEORGE

FACC Nos. 4, 5, 6 of 2013

FACC No. 4 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 4 OF 2013 (CRIMINAL)

(ON APPEAL FROM CACC NO. 96 OF 2010)

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FACC No. 5 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 5 OF 2013 (CRIMINAL)

(ON APPEAL FROM CACC NO. 96 OF 2010)

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BETWEEN

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FACC No. 6 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 6 OF 2013 (CRIMINAL)

(ON APPEAL FROM CACC NO. 96 OF 2010)

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BETWEEN

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JUDGMENT ON COSTS

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The Court:

1.  On 5 June 2014, the Court handed down its judgment[1] allowing these appeals, quashing the appellants’ convictions on Charge 4 (more particularly described in paragraph 9 of the June Judgment) and directing the filing of submissions regarding costs.

2.  The Court concluded in the June Judgment that the offence charged as Charge 4 was not established on the facts alleged by the prosecution since the property said to be the subject of the money-laundering offence, whilst being property used in furtherance of an indictable offence (namely the conspiracy to defraud charge laid as Charge 3), did not constitute the proceeds of an indictable offence within the meaning of section 25(1) of the Organized and Serious Crimes Ordinance (OSCO).[2]

3.  Subject to the question of costs, the June Judgment brought the criminal proceedings against the four appellants who were parties to these appeals[3] to an end.  Li and Cheng only faced Charge 4 and so the quashing of their convictions on that Charge resulted in their having no criminal liability in respect of the matters giving rise to these proceedings.  Tsang and Kwok, who had been convicted of Charges 1, 3 and 4 at trial, but whose conviction on Charge 1 was quashed on intermediate appeal, remain convicted on Charge 3 notwithstanding the quashing of their convictions on Charge 4.

4.  The parties have now duly filed their submissions in accordance with that direction and this is the judgment of the Court on the question of costs.

5.  There are six sets of costs in respect of which orders are sought by the parties:

(1) The costs of the trial in the District Court in DCCC 24/2008 before HH Judge A Wong;

(2) The costs of the substantive appeal to the Court of Appeal in CACC 96/2010;

(3) The costs of the application to the Court of Appeal for certification of a point of law of great and general importance;

(4) The costs of the applications to the Appeal Committee of this Court for leave to appeal[4];

(5) The costs of the substantive appeals in FACC 4, 5 & 6/2013 to this Court; and

(6) The costs of preparing the written submissions on costs pursuant to the June Judgment leading to this Judgment on Costs.

6.  It is convenient to address these various sets of costs in reverse order.  We shall then also address the question of whether certification of the case as fit for more than two counsel is appropriate and, if so, to what extent.

Costs of preparing the written submissions on costs

7.  We have been assisted by each of the parties’ written submissions on costs.  As will be apparent, we have not accepted all of the submissions of any one appellant on the one hand or the respondent on the other.  However, the submissions that have been filed were consequential on the substantive appeal itself and, in the circumstances, we consider that the appropriate order is to include the costs of preparing the written submissions on costs as part of the costs of the substantive appeals.

Costs of the substantive appeals in FACC 4, 5 & 6/2013

8.  The effect of the June Judgment is that the facts alleged by the prosecution could not amount to an offence under section 25(1) of OSCO.  Prima facie, consistently with the principles established by previous decisions of the Court,[5] the appellants, as acquitted defendants, should be compensated for their costs of defending the charge.  The respondent contends that these costs should be subject to a discount of 50% on the basis that the point which ultimately prevailed was “absent from or underdeveloped” in the appellants’ printed cases.  We do not consider this point to be substantiated since the underlying point that “clean” money cannot be the subject of a charge of money-laundering under section 25(1) of OSCO was, in our view, sufficiently present in all of the appellants’ cases and submissions to this Court.

9.  We therefore consider that the appellants are all entitled to an order for the whole of their costs of the substantive appeals.  Those costs, and the other costs orders we make in favour of the appellants, are to be taxed in the usual way.

Costs before the Appeal Committee

10.  It is usual when leave to appeal is granted by the Appeal Committee for it to order that the costs of the leave application be in the cause of the appeal.  Often that order is not pronounced and, as here, the issue of where those costs should lie is resurrected at the outcome of the appeal.  The respondent points to the fact that the appellants relied on other grounds of appeal when seeking leave, which were rejected, and therefore invites us to order the parties to bear their own costs.  That order would have the effect of depriving the appellants of the costs of obtaining permission to bring to this Court appeals on which they have been successful.  We are not minded so to deprive the appellants.  Whether the inclusion of additional unsuccessful points in the leave application might justify a discount in the appellants’ recoverable costs is another matter.  It would ordinarily be preferable for such a submission to be made to the Appeal Committee which will be in a better position at the time of the leave application to consider if such a discount is warranted (with the remainder of the costs being in the cause of the appeal). Nevertheless, where appropriate the Court itself may exercise its discretion to disallow costs if it considers they were unnecessarily incurred in pursuing unarguable grounds of appeal. 

11.  In the circumstances of this case, given the appellants’ reliance on grounds which were rejected by the Appeal Committee, it is appropriate to award only a proportion of their costs of the application for leave to appeal.  In the present case, we adjudge that the appellants should be entitled to 50% of their costs of the applications to the Appeal Committee for leave to appeal.

Costs of the application to the Court of Appeal for certification

12.  Li and Cheng’s applications for costs in relation to their applications to the Court of Appeal for a certificate under section 32(2)[6] are not opposed and, accordingly, we award them those costs.

13.  Tsang and Kwok do not apply for such costs.

Costs of the substantive appeal to the Court of Appeal in CACC 96/2010

14.  The costs of a successful appellant before the Court of Appeal will normally be awarded to compensate him for having had to incur those costs. However, there may be reasons to depart from this general rule and those reasons may include the grounds of appeal and the conduct of the appellant or his legal representatives in the course of the appeal.[7]

15.  Li and Cheng were, of course, wholly unsuccessful before the Court of Appeal since they only faced Charge 4.  For their part, Tsang and Kwok were partly successful in their appeal to the Court of Appeal in that their convictions on Charge 1 were quashed, although their convictions on Charges 3 and 4 were upheld.[8] Subsequently, the Court of Appeal increased their sentences on Charges 3 and 4 in the light of the quashing of the convictions on Charge 1 and the falling away of the sentences for that particular charge.[9]  The Court of Appeal received written submissions on the question of Tsang and Kwok’s costs and ordered that they should bear 40% of the costs of appeal incurred by the respondent.[10]

16.  The Court of Appeal’s costs order against Tsang and Kwok must be set aside in the light of the outcome of the final appeals.  The question then arises as to what order should be made in substitution.  Tsang and Kwok acknowledge that some discount from a full recovery of their costs is warranted and contend that a reasonable apportionment would be 50%.

17.  For its part, the respondent invites us to order that Tsang and Kwok bear their own costs of the appeal.  That submission is made on the basis of their conduct and that of their legal representatives in taking numerous grounds of appeal that were found to be without merit and in not taking the point of law that succeeded in this appeal.[11] All but one of the grounds taken on appeal failed and attracted trenchant criticism from the Court of Appeal for their lack of merit and the time caused to be wasted in dealing with them.[12]  To the extent that they were successful, Tsang and Kwok prevailed on a point that can be described as technical (namely, that as husband and wife they could not be guilty as the only parties to a criminal conspiracy) and which was conceded by the respondent in reply and dealt with briefly by the Court of Appeal.[13]

18.  In the circumstances, we consider that there is justification for depriving Tsang and Kwok of any positive costs order in their favour in respect of their appeals to the Court of Appeal and we order that they bear their own costs before the Court of Appeal in CACC 96/2010.

19.  As regards Li and Cheng, both appellants did take the point of law on which the appeal ultimately succeeded in the Court of Appeal.[14] However, “a substantial part of the appeal on behalf of Cheng (D4) was devoted to an attack on the weight placed by the judge on the evidence of Au Yeung; to the suggestion that in finding that Cheng was party to the Charge 4 conspiracy he failed to take into account relevant considerations; and to the further contention that inferences which the judge drew as against Cheng were not the only reasonable inferences to draw”.[15]  The Court of Appeal was also critical of both Cheng and Li for, in effect, wasting judicial time in pursuing unmeritorious grounds of appeal.[16]

20.  In the circumstances, whilst we consider that a costs order in favour of Li and Cheng is warranted in respect of their appeals to the Court of Appeal, that order should be discounted to reflect the unmeritorious arguments they pursued.  Accordingly, we order that Li and Cheng should be entitled to two-thirds of their costs in CACC 96/2010.

Costs of the trial in the District Court in DCCC 24/2008

21.  Where a defendant has brought suspicion upon himself he may be deprived of the costs of the trial, even though he is ultimately successful in overturning the conviction on appeal.[17] Relying on this principle, the respondent submits that each of the appellants brought suspicion on themselves and therefore should not be awarded any costs of trial, including any preliminary and incidental proceedings.

22.  The difficulty with this argument, from the respondent’s point of view, is that the offence charged was not one capable of being committed on the facts of the case as advanced by the prosecution.  Given that the money which was being laundered was clean money and which was not and could not represent the proceeds of an indictable offence within the meaning of section 25(1) of OSCO, the charge was ultimately misconceived as a matter of law.  For that reason, it cannot be said that the appellants brought suspicion upon themselves in relation to that offence.  In the circumstances, we do not consider that the respondent’s argument that the appellants should be deprived of a costs order in their favour in respect of Charge 4 is sound.

23.  In Li and Cheng’s case, the respondent refers to the fact that the trial judge found that what they did was serious and that they knowingly joined in a scheme to cover up a false representation of a serious nature.[18] In this Court’s judgment, reference was made to the fact the Court of Appeal pointed out that their participation in the Charge 3 conspiracy had been established on the evidence.[19]  The respondent refers to the trial judge’s findings of fact in respect of the involvement of Li and Cheng and the Court of Appeal’s acceptance of them and therefore submits that this conduct amounts to their bringing suspicion on themselves such as to justify depriving them of their costs of trial.

24.  We do not agree with this submission.  It may be correct that Li and Cheng were fortunate not to be charged with the Charge 3 conspiracy.  However, the respondent did not charge them with that offence and instead attempted to secure convictions against them for an offence which, on the facts asserted by the prosecution, was incapable of being committed.  In these circumstances, to deprive Li and Cheng of their costs of trial in the District Court would, in our judgment, be wrong and we therefore order that they be entitled to their costs of trial in DCCC 24/2008.

25.  Tsang and Kwok’s position is slightly different.  Notwithstanding the quashing of their convictions on Charge 4 and although acquitted of the Charge 1 conspiracy to defraud, they remain convicted of the Charge 3 conspiracy to defraud.  That was a serious offence for which they were sentenced to terms of imprisonment of 22 months and 20 months respectively.

26.  The respondent submits that, having regard to the relative importance of Charge 3 and their overall conduct reflected by the trial judge’s finding that they were both fully complicit in the money circle scheme,[20] Tsang and Kwok should be left to pay their own costs of the trial.  On the other hand, it is submitted on behalf of Tsang and Kwok that they should be entitled to their costs of defending Charge 4 and that a reasonable estimation of the costs of doing so would be 25% of their overall costs of trial.

27.  We are satisfied that the appropriate order is that no order be made in respect of Tsang and Kwok’s costs of trial in DCCC 24/2008.  This reflects the fact that, although they have ultimately prevailed in respect of Charge 4, they remain convicted of the Charge 3 conspiracy.

Certificate for more than two counsel

28.  Tsang and Kwok apply for a certificate for three counsel where more than one was engaged and a certificate for three counsel in the appeal to this Court.  Cheng applies for a certificate for two counsel where more than one was engaged and a certificate for four counsel in the appeal to this Court.

29.  In view of the orders we propose to make as to the costs of trial and before the Court of Appeal, the only issue on certification relates to the engagement of two counsel by Cheng in the Court of Appeal and the engagement of more than two counsel by Cheng, Kwok and Tsang in this Court.

30.  As regards the costs of Cheng in the Court of Appeal, we grant a certificate for two counsel.  Although Li has not applied for such a certificate, the approach of the Court of Appeal is that, even if not asked for, a party will be entitled to one[21] and we would therefore grant a certificate for two counsel in his case too.

31.  Normally, subject to the reasonableness of the fees paid, the Registrar will allow the costs incurred by a party who has employed two counsel in the Court of Final Appeal.[22] A party who wishes to recover the costs of more than two counsel in this Court should ask the Court to certify to this effect.[23]

32.  The respondent, who was represented by three counsel in this Court, understandably refers to the observations of Mr Justice Bokhary NPJ in Fu Kor Kuen Patrick v HKSAR[24] that a certificate for more than two counsel in this Court requires something exceptional and that the employment of three counsel by the paying party may or may not get the party home on the argument that the case was exceptional.  The respondent also submits that it is highly unusual for the Court to certify a case fit for more than three counsel and invites us to leave the question of certification beyond two counsel to the taxing master.[25]

33.  We are satisfied that this was not a case of such an exceptional nature to warrant the engagement of more than two counsel and so, whilst we grant certificates for two counsel for Tsang, Kwok, Li and Cheng in their appeals to this Court, we decline to grant certificates for more than two counsel in that respect.

Conclusion

34.  Accordingly, in respect of Tsang and Kwok, for the reasons set out above:

(1) We make no order in respect of their costs of trial in DCCC 24/2008;

(2) We make no order in respect of their costs before the Court of Appeal in CACC 96/2010;

(3) We order that they be entitled to payment of 50% of their costs of applying to the Appeal Committee for leave to appeal in FAMC 1/2013, with a certificate for two counsel, to be taxed in the usual way;

(4) We order that they be entitled to payment of their costs of the substantive appeals in FACC 6/2013, to include the costs of preparing written submissions on costs, with a certificate for two counsel, to be taxed in the usual way.

35.  Accordingly, in respect of Li and Cheng, for the reasons set out above:

(1) We make an order that they be entitled to their costs of trial in DCCC 24/2008;

(2) We order that they be entitled to payment of two-thirds of their costs in CACC 96/2010, with a certificate for two counsel, to be taxed in the usual way;

(3) We order that they be entitled to payment of their costs of applying to the Court of Appeal for a certificate under section 32(2) of the Hong Kong Court of Final Appeal Ordinance (Cap.484), with a certificate for two counsel, to be taxed in the usual way;

(4) We order that they be entitled to 50% of their costs of applying to the Appeal Committee for leave to appeal in FAMC 66/2012 and FAMC 67/2012 respectively, with a certificate for two counsel, to be taxed in the usual way;

(5) We order that they be entitled to payment of their costs of the substantive appeals in FACC 4/2013 and FACC 5/2013 respectively, to include the costs of preparing written submissions on costs, with a certificate for two counsel, to be taxed in the usual way.