HKSAR v. AU YEUNG LAI HUNG DORIS

[English Translation - 英譯本]

CACC 143/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 143 OF 2012

(ON APPEAL FROM DCCC NO. 446 OF 2011)

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REASONS FOR JUDGMENT

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Hon Yeung VP (giving the reasons for judgment of the Court):

Introduction

1.  Au Yeung Lai Hung Doris, the Respondent, originally faced an indictment consisting of six counts which alleged that she, being an agent of Li & Fung (Trading) Limited (“Li & Fung”), accepted gifts in cash offered by Yeung Lau Sze of Sun Xinfa Arts Manufacture Limited (“Sun Xinfa”) in a total sum of $1,411,444.  The Prosecution alleged that she had received monetary bribes from Sun Xinfa so as to make it easier for “Sun Xinfa” to obtain purchase orders of “Li & Fung”. The other two defendants (Guan and Yeung) were charged with one count of conspiracy to offer advantages to an agent.  Guan, Yeung and the Respondent pleaded not guilty and the trial was fixed to commence on 18 October 2011 before District Judge Yiu, with an estimated length of trial of 10 days.

2.  On the first day of trial, the prosecution applied to amend the indictment by substituting one count of conspiracy to offer advantages to an agent for the original six counts of accepting advantage as an agent, which became alternative charges to the said conspiracy count.  Leave was also sought to file the fifth witness statement which was newly submitted by prosecution witness Madam Choi.  About one week before the trial commenced, the prosecution orally informed Mr. Joseph Tse, SC for the Respondent of their stance and indicated that they would seek to amend the indictment at the commencement of the trial.  The prosecution informed the defence of the above in writing on 13 October 2011.

3.  Before the trial commenced, the application made by the prosecution to amend the indictment was allowed by Judge Yiu.  Mr. Tse, SC immediately applied for adjournment of the trial.  He submitted that the amendment of the indictment and the filing of the fifth witness statement of Madam Choi would affect the Respondent’s preparation for trial, and that the defence would need about two months to collect evidence both locally and abroad. He stressed that the new allegation put forward by Madam Choi was the main reason why the defence would have to collect evidence again.

4.  Judge Yiu asked Mr. Tse, SC to disclose more information in order to assist the court to decide whether the trial should be adjourned and (if it should) whether the length of adjournment sought would be appropriate.  Mr. Tse, SC refused to disclose further information which, he submitted, went to the grounds of defence.

5.  In the end, Judge Yiu allowed the Respondent’s application and adjourned the trial.

6.  Subsequent to Judge Yiu’s decision, Mr. Tse, SC did not apply for an order requiring the prosecution to bear costs incurred by the defence as a result of the adjournment.  Nor did he indicate to the court that he would reserve the right to apply for costs.

7.  In the end, the trial commenced on 4 January 2012 before Deputy District Judge Don So (the trial judge).

8.  On 27 February 2012, the trial judge delivered the reasons for verdict, finding the Respondent guilty on the first count of conspiracy to offer advantages to an agent, but acquitting Guan and Yeung.  On 12 March 2012, the trial judge passed sentence on the Respondent’s offence, following which Mr. Tse, SC applied for an order requiring the prosecution to bear costs arising from the previous adjournment of the trial.  The application for costs was fixed for hearing on 22 March 2012.

9.  In applying for costs before the trial judge, Mr. Tse, SC changed his original stance, stressing only the point that the amendment of the indictment had a great impact on the Respondent because the defence had to consider how to deal with the charge by, inter alia, conducting legal research to see whether the amendment was permissible at law and to assess the effect of the “co-conspirator’s rule” on the case.  It was also submitted that even if the application for amendment of the indictment was permissible, it was improper because it was made too late.  Mr. Tse, SC no longer pursued the submission that the amendment of the indictment and/or the new allegation in the fifth witness statement of Madam Choi would cause further work by the defence to prepare for trial such as collecting fresh evidence.

10.  Having heard the submissions made by both parties, the trial judge ordered the prosecution to pay the Respondent the costs thrown away by the vacation of the 10-day trial period starting from October 2011 as well as the costs of the hearing on 22 March 2012, all such costs to be taxed if not agreed.

11.  The prosecution appealed to this Court, seeking to set aside the costs order made by the trial judge.

12.  After the hearing, we allowed the appeal.  We set aside the costs order made by the trial judge and dismissed the Respondent’s application for costs in respect of the adjournment of the trial.  We made no order as to costs of the application for costs and of this appeal.  The reasons for our judgment are now set out below.

Basis of and reasons for the costs order made by the trial judge

13.  The trial judge was of the view that Judge Yiu allowed the application by the defence for adjournment because he must have thought that the application was reasonable and eminently justified, on the basis that the prosecution’s decision to amend the indictment came too late, with their position made known only 6 days before the commencement of the trial, thereby leaving the defence with inadequate time for preparation.

14.  The trial judge considered that the prosecution had sufficient evidence in support of the original six counts of “agent accepting an advantage” against the Respondent.  Therefore, the amendment of the indictment was “superfluous” and “came too late”.

15.  The trial judge took the view that one of the principles governing the making of costs orders was that “whoever caused the vacation of the trial date and hence wastage of the costs thereof will have to bear the costs.  This principle is not ‘punitive’ but merely ‘compensatory’ in nature. Whoever initiated the wastage is liable for the costs incurred by those affected.  This is a matter of responsibility, not penalty.”

16.  The trial judge was of the view that the prosecution’s decision to amend the indictment “came too late” and they did not make their position known until 6 days before the commencement of the trial, as a result of which the defence did not have sufficient time to prepare their defence and had to apply for adjournment of the trial.  Therefore, the trial judge ordered the prosecution to bear costs of the adjournment, including the costs thrown away in respect of the vacation of the originally scheduled 10-day trial period and the costs of the hearing on 22 March 2012.

Grounds of appeal

17.  Mr. David Leung, Deputy Director of Public Prosecutions for the prosecution, submitted that the trial judge had exercised the discretion erroneously in awarding all costs arising from the adjournment to the Respondent.  Mr. Leung contended that the Respondent failed to apply for costs immediately after Judge Yiu made an order adjourning the trial and hence there had been delay in the application for costs.  Mr. Leung also submitted that the prosecution’s decision to amend the charge was not “an unnecessary or improper act or omission” within the meaning of section 17 of the Costs in Criminal Cases Ordinance, and that there was no causal relationship between the amendment of the indictment and the costs incurred by the adjournment.  Mr. Leung contended that the basis of the Respondent’s application for costs before Judge Yiu was the allegation that the amendment of the indictment and the filing of the fifth witness statement of Madam Choi rendered it necessary for the defence to collect new evidence.  However, before the trial judge, the defence only argued that the application for amendment of the indictment was made so late that the defence did not have sufficient time to consider the legal issues arising from such amendment.

18.  Mr. Leung contended that the amendment of the indictment was necessary and reasonable, and that the late filing of the fifth witness statement of Madam Choi was not the fault of the prosecution.  He stressed that even if the Respondent needed time to consider the legal issues arising from the amendment of the indictment, it was not necessary to have the case adjourned for more than two months, which adjournment had caused the complete wastage of the originally scheduled 10-day trial period.

19.  Mr. Leung further submitted that, even if an award of costs to the Respondent was justified, she should not have been awarded all the costs for the scheduled 10-day trial period; and that the costs of the hearing on 22 March 2012, which resulted from the Respondent’s delay in application, should be borne by the Respondent.

Respondent’s position

20.  Mr. Edward Wong, Counsel for the Respondent, submitted that although before the trial judge the Respondent no longer mentioned that the adjournment of the trial was sought because the defence needed time to collect evidence, at trial the defence did produce an email to the court for the purpose of refuting the allegations made by Madam Choi.  This showed that the defence indeed needed time to collect evidence.

21.  Mr. Wong further submitted that the prosecution had not refuted the argument that it was necessary for the defence to collect evidence, nor had the trial judge taken issue with that argument.  Therefore, the Respondent had proved that the amendment of the indictment and the late filing of the fifth witness statement of Madam Choi had indeed resulted in an adjournment to enable the defence to collect evidence, and hence there was sufficient basis to support the Respondent’s application for costs.

22.  Mr. Wong reiterated that the adjournment of the trial was caused by the prosecution’s delay in amending the indictment and the late filing of the fifth witness statement of Madam Choi, and that such delay amounted to “an unnecessary or improper act or omission”, and therefore it was correct to order the prosecution to bear all the costs arising from the adjournment.

23.  Mr. Wong stressed that there had been no delay on the part of the defence in applying for costs, and that, even if there had been delay, it should not prejudice the Respondent’s right to apply for costs.

24.  Mr. Wong contended that a pre-trial review of the case was conducted in September 2011, but the prosecution did not indicate their intention to apply for amendment of the indictment until a few days before the trial commenced, and the application would have a great impact on the trial preparation work of the defence.  Therefore, it was submitted, there had been an improper act or omission on the part of the prosecution and hence they should bear the costs arising from the adjournment of the trial.

Discussion

25.  The Costs in Criminal Cases Ordinance, Cap 492 of the Laws of Hong Kong (“the Ordinance”), contains provisions which govern costs in criminal cases.  Generally speaking, where the charge against a defendant or an application made by the prosecution is not proceeded with, or where a defendant is acquitted, or where his appeal is allowed or the prosecution’s application fails, the court may, in the exercise of discretion, order the prosecution to bear costs of the defence (see Part II of the Ordinance).

26.  At the same time, Part III of the Ordinance empowers the court to award costs to the prosecution where a defendant is found guilty or where his appeal or application is dismissed.

27.  In addition, section 17 of the Ordinance provides as follows:

“Where at any time in the course of criminal proceedings a court or a judge is satisfied that costs have been incurred in respect of the proceedings by a party to the proceedings as a result of an unnecessary or improper act or omission by or on behalf of the other party to the proceedings, the court or the judge may, after hearing all such parties, order that all or part of the costs so incurred shall be paid to the first-mentioned party to the proceedings by the other party to the proceedings.”

28.  Section 17 of the Ordinance confers upon the court or the judge a discretion to order a party to criminal proceedings to pay costs to another party.  However, the exercise of the discretion is subject to a condition precedent, namely that the costs must have been incurred as a result of an unnecessary or improper act or omission by or on behalf of the party against whom such costs are sought.

29.  We agree that where a party to the proceedings considers that a decision made by the court will lead to costs being incurred and that the other party has to bear such costs, the first-mentioned party should immediately apply to the court for costs because, being more conversant with the circumstances of the case, the judge who made the decision in question is in a better position to make a discretionary decision on costs.  Delay in applying for costs will not only stale the matter but also waste judicial resources.

30.  Under certain circumstances, for example, when the development of a case will have a bearing on liability for costs, the proper approach is to withhold a decision on an application for costs until the situation becomes clear.  However, the party seeking costs should make its position clear to the court and explain why the issue of costs should be adjourned.  The final decision will of course be made by the judge dealing with the matter.

31.  Mr. Leung referred to a number of authorities in support of the appeal.  He referred in particular to the following observations made by the Court of Appeal in HKSAR v Leung Wai Hung (unreported) CACC 52/2006:

“It was said in R v Kwok Moon-yam and Lok Man-chiu [1989] 2 HKLRD 396 that if there is to be an application for costs, it should be made upon the judgment of the Court of Appeal being pronounced and in respect of all proceedings for which the order is sought; and in R v Chan Kwong-yik Cr App No. 179 of 1995 that: ‘The court is loath to entertain [applications made subsequent to the determination of an appeal].’ The practical difficulties that are posed by delay were mentioned in R v Tsui Ching Kwai Cr App No. 554 of 1988, where the Court said that if the practice is not followed, costs of a late application may not be awarded ‘unless there be good reason’.”

32.  There is in fact no need to cite any authority in support of the approach advocated above as it is both reasonable and sensible.

33.  Of course, delay in applying for costs may be caused by negligence or insufficient familiarity with the matter, and the court should not refuse an application solely by reason of delay.  That said, delay is a factor which can be taken into account in considering how to exercise the discretion in making a decision on liability for and amount of costs.

34.  As far as criminal cases are concerned, we also take the view that, in considering an application for costs involved in interlocutory proceedings, unless the act and/or omission of a party is plainly unnecessary and extremely improper, a more proper approach is to withhold making a decision on costs pending final determination of the case, that is, pending a verdict convicting or acquitting the defendant.  Section 15(e) of the Ordinance provides for this scenario, as follows:

“the question of whether or not an order as to costs ought to be made in respect of any expenses properly incurred by any party to the proceedings in the course of the proceedings, including any proceedings preliminary or incidental thereto, may be adjourned until the end of those proceedings.”

35.  One of the important factors which the court will very likely have to take into account in making a decision on costs is whether the defendant is convicted or not in the end.  If the defendant is acquitted, the court may well take the view that the costs which should be awarded to the prosecution for the interlocutory proceedings have to be offset by or deducted from the costs which should be awarded to the defendant as a result of his acquittal.  On the contrary, if in the end the defendant is found guilty, the costs which should be awarded to him for the interlocutory proceedings may have to be offset by or deducted from the costs which he is liable to pay to the prosecution as a result of his conviction.

36.  We do not wish to speculate what Mr. Tse, SC had in his mind.  The reason why he did not immediately apply for costs of the adjournment before Judge Yiu might be that he wished to wait until the conclusion of the proceedings before dealing with the matter.  If that was the case, however, Mr. Tse, SC should have made his position clear to the court by indicating that an application for costs would be made at the conclusion of the proceedings. Otherwise, the order for adjournment pursuant to section 15(e) of the Ordinance would not even be engaged, because without an application there would have been no decision for adjournment.

37.  The trial judge considered that the amendment of the indictment was “superfluous” and “came too late”, and that the principle on costs liability was “whoever caused the vacation of the trial date and hence wastage of the costs thereof will have to bear the costs”.

38.  Although a decision on costs is discretionary, the order must be made on the basis provided for in the statute, and all relevant factors must be taken into account in exercising the discretion.  Otherwise the decision will neither meet the statutory requirements nor be convincing.

39.  Section 17 of the Ordinance provides that only when costs have been incurred as a result of an unnecessary or improper act or omission by or on behalf of a party to the proceedings should the court order that party to pay costs to the other party.

40.  The trial judge’s view that the amendment of the indictment was “superfluous”, and hence “unnecessary”, is incorrect.  Had the amendment been “superfluous”, the defence would very likely have raised objection and Judge Yiu would not have allowed the amendment.  According to the submissions of Mr. Wong for the Respondent, the purpose of amending the indictment was to invoke the “co-conspirator’s rule” so that some evidence which was otherwise inadmissible could be used as evidence against the Respondent.   If this was the case, the amendment of the indictment would not be “superfluous”.  The fifth witness statement of Madam Choi was relevant to the case, and therefore the filing of that witness statement was also certainly not “unnecessary”.

41.  What constitutes an improper act or omission in relation to costs was explained in DPP v Denning [1991] 2 QB 532, in which Norlan LJ had this to say in his judgment (at 541 C-D):

“… that the word ‘improper’ in this context does not necessarily connote some grave impropriety. Used, as it is, in conjunction with the word ‘unnecessary’, it is in my judgment intended to cover an act or omission which would not have occurred if the party concerned had conducted his case properly.”

42.  In Re Ronald A. Prior & Co. (Solicitors) [1996] 1 Cr App R 248, the English Court of Appeal construed the phrase “improper, unreasonable or negligent act or omission” to mean “without reasonable cause and one which no reasonably well informed and competent legal profession would have made in these circumstances”.

43.  In the course of criminal prosecution, it is necessary for the prosecution to make appropriate amendments to the indictment in light of the outcome of investigation, the strength of evidence and other relevant factors.  Prosecution witnesses may also provide new relevant information just before the trial commences or even while giving evidence at trial. Amending indictments and filing new witness statements are common and frequent occurrences. They do not constitute “unnecessary” acts or omissions within the meaning of section 17 of the Ordinance.  However, if very shortly before the trial commences the prosecution informs the defence of amendment of the indictment or adduces new evidence (including witness statements) which should have been adduced earlier, then such delay may constitute an “improper” act or omission.

44.  Mr. Leung contended that one week before the scheduled commencement of the trial, the prosecution had orally informed Mr. Tse, SC of their intention to substitute one count of conspiracy to offer advantages to an agent for the original six counts of accepting advantage as an agent.  Although the charge was different, the basic factual allegations against the Respondent had not changed.  A pre-trial review hearing concerning the case had been conducted in September 2011, but it was not until about one week prior to the commencement of the trial that the prosecution orally informed the defence of the intended amendment of the indictment.  The prosecution’s delay might have constituted an “improper” act or omission.  However, the prosecution did not obtain the fifth witness statement of Madam Choi until 14 October 2011.  Therefore, even though the witness statement was adduced only at the commencement of the trial, this should not constitute an “improper” act or omission.

45.  The Respondent applied for adjournment on the first day of trial on the ground that time was needed to collect evidence, but refused to disclose further information.  When the case was formally heard before the trial judge, the Respondent neither gave evidence nor called any witnesses to give evidence.  Furthermore, when applying for costs, the defence did not adduce any evidence to explain whether evidence had been obtained during the two months or so following the adjournment and (if the answer was in the affirmative) what sort of evidence it was and how much effort had been expended to obtain such evidence, in order to prove that there was sufficient basis and justification for the application for adjournment.

46.  The trial judge’s remark that the amendment of the indictment was “superfluous” was incorrect.  The Respondent had failed to adduce evidence to show that the amendment of the indictment would reasonably have resulted in the application by the defence for adjournment.  The trial judge had failed to consider whether the amendment of the indictment would reasonably have resulted in the application by the defence for adjournment and whether there was any causal relationship between the two.  In the absence of a causal relationship between the amendment of the indictment and the Respondent’s application for adjournment, the court should not make a costs order against the prosecution.  See R v Wood Green Crown Court, Ex parte DPP [1993] 1 WLR 723 at 729 C-D:

“The language requires that a causal relationship between act or omission and incurrence must be established before payment of the costs incurred can be ordered.”

47.  In our view, the trial judge had failed to consider whether, following the amendment of the indictment, it was necessary for the Respondent to seek an adjournment of the trial.  Nor had the trial judge addressed the question of whether the costs incurred by the Respondent’s application for adjournment and the amendment of the indictment were causally related.

48.  We are of the view that in making the costs order that he did, the trial judge did not follow the guidelines laid down in section 17 of the Ordinance and did not consider all relevant factors, particularly what were the unnecessary or improper acts or omissions on the part of the Prosecution, and whether those acts or omissions had reasonably resulted in the decision to adjourn the trial, i.e. whether there was any causal relationship between the two.

49.  It is true that the appellate court should be slow to interfere with a costs order made by the trial judge in the exercise of his discretion.  However, if it is shown that the trial judge’s discretionary decision was not made in accordance with the statutory guidelines, or that in making the decision the trial judge took into account irrelevant factors or failed to take into account relevant factors, the appellate court has the duty to deal with the application for costs by exercising the discretion afresh in light of relevant factors and, where appropriate, vary the costs order in question.

50.  We have fully considered the background of the case and the relevant factors.  We stress that before the Respondent is awarded costs pursuant to section 17 of the Ordinance, she must prove that the prosecution has done an unnecessary or improper act or omission and that such act or omission has caused the incurrence of the costs.

51.  We have found that neither the amendment of the indictment nor the filing of the fifth witness statement of Madam Choi was an unnecessary act or omission, and that, in the circumstances of the case, the filing of the fifth witness statement of Madam Choi just before the commencement of the trial was not an improper act or omission.

52.  We agree that the prosecution’s delay in amending the indictment can be regarded as an improper act or omission. However, in order to be successful in an application for costs pursuant to section 17 of the Ordinance, the Respondent bears the burden of proving that the amendment of the indictment had reasonably resulted in her application for adjournment.  As mentioned above, the Respondent did not adduce any evidence before the trial judge to show that she had done anything to collect evidence during the period of adjournment and (if she had done something) to show what she had done and how much effort she had made to obtain the evidence.

53.  We cannot ignore the fact that before Judge Yiu, Mr. Tse, SC applied for adjournment on the grounds that the amendment of the indictment and the filing of the fifth witness statement of Madam Choi would affect the Respondent’s trial preparation work and render it necessary for the defence to collect evidence locally and abroad, the new allegation raised by Madam Choi being the main reason for the need to collect new evidence.  It was also mainly on the above grounds that Judge Yiu allowed the Respondent’s application for adjournment.  However, before the trial judge, Mr. Tse, SC no longer relied on the need for time to collect evidence as a reason in support of his application for costs.  The email to which Mr. Wong referred did not provide a reasonable basis in support of the Respondent’s application to adjourn a scheduled 10-day trial for more than two months.

54.  Nor can we ignore the fact that before the trial judge, Mr. Tse, SC relied on a new basis for the application for adjournment, namely that the defence needed time to consider the legal issues arising from the amendment of the indictment.  

55.  We should point out that it would be impossible to have to vacate the scheduled 10-day trial period in its entirety by reason of the amendment of the indictment.  In our view, even if the defence needed time to consider the legal issues arising from the amendment of the indictment, the time needed would not have justified an adjournment of the whole case.  We also take the view that, had Mr. Tse, SC applied for adjournment on the basis that time was needed to consider the legal issues arising from the amendment of the indictment, the application would not have enjoyed a great prospect of success.

56.  In our view, the Respondent failed to discharge the burden of proving that the amendment of the indictment had rendered it necessary to adjourn the trial.  Therefore, there was not sufficient evidence to establish a causal relationship between the amendment of the indictment and the adjournment.

57.  We are of the view that, in the context of the present case, even if there had been delay in the prosecution’s application to amend the indictment and such delay constituted an improper act or omission, the court should not have exercised its discretion to order the prosecution to bear the costs of the defence arising from the adjournment.

58.  On this basis, it is not necessary for us to proceed to consider the two issues concerning the amount of the costs and who should bear the costs of the hearing on 22 March 2012.

59.  We have allowed the appeal of the prosecution’s appeal, set aside the costs order made by the trial judge on 22 March 2012 and dismissed the Respondent’s application for costs.  However, we have made no order as to costs of the hearing on 22 March 2012 and of this appeal.