SKY WIDE DEVELOPMENT LTD AND OTHERS v. BUILDING AUTHORITY

Date of filing of Written Submission on Costs: 23 October 2008

Date of Decision on Costs: 16 December 2008

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DECISION ON COSTS

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1.  On 16 October 2008, I refused to grant leave to the Applicants to apply for judicial review.  My reasons were set out in the judgment of 24 October 2008.  Parties filed written submissions on costs according to my directions.  The following is my decision on costs.

2.  Although the Applicants are unsuccessful, Mr Pun resisted costs on the basis that the application for leave is ex parte and the usual order for costs should be no order as to costs unless the application is frivolous or vexatious.  He also submitted that the attendance of the putative respondent was unnecessary and such attendance should be seen as a discharge of a public responsibility to assist the court.

3.  Under Order 53 Rule 3(2), an application for leave is to be made ex parte.  I should explain how the putative respondent came to be involved at the leave hearing.  Upon reading the papers submitted by the Applicants, this court considered that there may be short answer to the application and the presence of the putative respondent may assist.  The putative respondent appeared at the request of the court.

4.  In so doing, this court followed the guidance in earlier authorities.  In Angur Begum v Secretary of State [1990] Imm AR 1, Lord Donaldson MR said,

“For my part, as it seems to me, a judge who is confronted with an application for leave to apply for judicial review should grant it if he is clear that there is a point fit for further investigation on a full inter partes basis with all such evidence as is necessary on the facts and all such argument as is necessary on the law.  If he is satisfied that there is no arguable case he should dismiss it.  But there is an intermediate category of cases in which the judge, on looking at the papers which support the application, can very reasonably come to the conclusion that he really does not know whether there is or is not an arguable case, either because the facts are not clear or because he has not received sufficient assistance with the law to enable him to be satisfied as to precisely what the relevant law is.  That is not necessarily a criticism of counsel supporting the application: it may well be inherent in the problem.

In those circumstances, where he is in doubt, the right course, in my view, is always to invite the putative respondent to attend and to make representation as to whether leave should or should not be granted.  This is not to say that the subsequent inter partes hearing should become anything remotely like the hearing which would ensue if leave were granted.  It is analogous to the approach which was considered by Lord Diplock in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at p 207 in a quite different context, that of arbitration: if, taking account of a brief argument on either side, the judge is satisfied that there is a case fit for further consideration, then he should give leave.  Adjournment for an inter partes hearing will at least enable the judge to have a bird's eye view of the contentions on both sides and any doubts or difficulties are likely to be resolved one way or the other; that is to say either in favour of granting leave or in favour of refusing leave, or resolved in the sense that it is obviously very difficult and needs further thought, which of course amounts to a requirement for leave to be granted.  I say no more about that.”

5.  As noted by Sedley J in R v Camden London Borough Council Ex p Martin [1997] 1 WLR 359 at 364, such a practice has become a common scenario in the Crown Office list in London.  In my experience, the same can be said for proceedings in the Constitutional and Administrative Law List in Hong Kong.

6.  The practice was endorsed by the Chief Justice in Peter Po Fun Chan v Winnie Cheung [2008] 1 HKLRD 319 at para.17.

7.  Mr Pun argued that notwithstanding the presence of the putative respondent, the hearing remains to be ex parte in nature.  On the other hand, Mr Fok SC contended that the hearing of 16 October 2008 was an inter partes hearing.

8.  In Angur Begum, Lord Donaldson MR referred to such a hearing as inter partes.  The same description was used in Wade & Forsyth, Administrative Law, 8^th Edn at p.644, in the Law Commission Report No.226 on Administrative Law under the chairmanship of Brooke J in 1994 at p.85 and in an article written by Mark Shaw on Costs at the Leave Stage [1996] JR 8.  Mr Pun referred this court to some authorities suggesting that strictly speaking, the hearing should still be regarded as ex parte.  In my judgment, it does not matter very much how one describes the hearing.  One thing is clear: the court has the jurisdiction to hear from the putative respondent before granting leave.

9.  The authorities also clearly establish that the court has jurisdiction to order an unsuccessful applicant to pay the costs of the putative respondent at such hearing.  I only need to refer to the decision of our Court of Appeal in Re Lorrain Esme Osman [1988] 2 HKLR 378 at p.387A to C and Sedley J in R v Camden London Borough Council Ex p Martin [1997] 1 WLR 359 at 365.

10.  It should also be clear by now that even for public law litigation, the usual order for costs is costs follow event, see Leung Kwok Hung v President of the Legislative Council HCAL 87 of 2006, 27 April 2007; Chu Hoi Dick v Secretary for Home Affairs (No.2) [2007] 4 HKC 428. 

11.  Is there a special rule for leave application as contended by Mr Pun?  At one stage counsel suggested that a costs order in favour of a putative respondent should only be made in exceptional case.  Reference was made to the English authority of R (on the application of Mount Cook Land Ltd) v Westminster City Council [2004] 2 P&CR 405.  That case was decided against the background of the English procedural regime for judicial review application in which there are specific provisions for extensive pre-action exchanges between an intended applicant and an intended respondent with a view to identify the real issues in dispute and canvass the respective contentions of the parties.  Such materials would be included in the papers submitted in support of an application for leave.  There is also a procedure for a respondent to file acknowledgment of service before leave is granted and to make representations on papers regarding whether permission should be granted.  A putative respondent’s costs for the preparation of the acknowledgment of service is recoverable: Leach v Commissioner for Local Administration [2001] EWHC Admin 455.  See the discussion of the practice under CPR Part 54 at paras.48 to 58 of the judgment in Mount Cook.  With such procedures in place, one can readily see why the attendance of a putative respondent at a leave hearing is usually unnecessary.  We do not have a similar procedural framework in Hong Kong.  Proposal for introduction of a similar procedure under our Civil Justice Reform had been dropped at the final stage in the drafting of the amendments to Order 53.

12.  Mr Pun also relied on the decision of Hartmann J (as he then was) in Shum Ngai Woh v Director of Immigration  HCAL 2603 of 2000, 5 December 2000 and Cheung Wai Mei v Michael Pik-kiu Chan HCAL 24 of 2007, 9 March 2007.  It is quite plain that Hartmann J was not trying to lay down any principle of general application governing the exercise of discretion on costs in all judicial review leave applications.  Rather what His Lordship said must be read as how he decided the question of costs on the facts of the case before him.  This was emphasized explicitly in Shum Ngai Woh at p.8.  The facts of Cheung case speak for themselves.  As Mr Fok demonstrated, there were other instances where Hartmann J awarded costs in favour of a respondent successfully resisting leave without referring to the considerations alluded to in these two cases.

13.  There have been many instances where our court ordered costs against an unsuccessful applicant in favour of a putative respondent who was a public authority.  Some of these cases were cited by Mr Fok and there is no need to refer to them here.  I do not think the Hong Kong cases show that costs would only be awarded in favour of a putative respondent attending a leave application if the application for leave is frivolous and vexatious.

14.  An article written by Mark Shaw, Costs at the Leave Stage in [1996] JR 8 gives a good summary of the position in England before CPR came into the picture.  For present purposes, I will quote partly from para.2 of the article,

“Where the respondent appears at the leave stage and leave is refused, prima facie the normal inter partes principles apply: in short, costs follow the event so an unsuccessful applicant is at risk.  There is, however, no uniform practice and many designated Crown Office judges are reluctant routinely to award respondents the costs of what should be ex parte applications.  Undue willingness to do so would inevitably increase the prevalence of the opposed leave application.  However, as opposed leave applications become more and more common anyway, there is a growing tendency for respondents to apply for and be awarded their costs.”

15.  The author of the article then highlighted some instances where the court made such an award.  One of the instances is,

“A request from the judge, who has examined the case on the papers or adjourned the oral application, for the respondent’s assistance in deciding whether to grant leave.  Although the applicant can argue that he did not ask the respondent to attend, the Court may conclude that he ought to have been aware of the risk when he launched the proceedings.  It will be different where the judge requires the respondent’s help because of the failure of the latter’s own documents properly to explain the challenged decision.” 

16.  Then at para.3 of the article, it was said,

“Where, however, the applicant has merely notified the respondent of the date of the leave application and the respondent has chosen to attend and make submissions if called upon, there are strong arguments that he should not generally have his costs.  In those circumstances, the respondent makes a voluntary tactical decision in the hope of saving his own future costs which will be incurred if leave is granted.  A fortiori, where the respondent has himself discovered the date of the leave application (for example, by scanning the cause list) he should appear at his own risk as to costs.”

17.  Similar sentiment was expressed in the recommendation of the Law Commission Report No.226 in 1994.  After setting out the prima facie entitlement of a respondent who successfully opposed leave at para.10.2, the report went on to say at para.10.3,

“… we have proposed that all applications for preliminary consideration should be made entirely on paper in the first instance unless the application includes a claim for immediate interim relief or the application judge dealing with the matter considers it desirable in the interests of justice to hear oral submissions.  The philosophy underlying our proposals is that this preliminary stage of an application ought not to involve the applicant in having to pay the costs of a respondent when he or she is seeking to surmount for the first time the initial hurdle of arguability, and we consider that normally a respondent should not be entitled to costs in relation to appearing on an oral application for which the court does not request his or her presence.  On the other hand, if the applicant renews his or her application in open court after it has been initially rejected by a judge on paper, we see no reason why the normal regime as to costs should not apply, and this discipline should make a party’s advisors reconsider the merits carefully before deciding to renew an application.  We therefore recommend that in those cases where an oral hearing is required by the court on its first consideration of an application the court should not normally order the applicant to pay a successful respondent’s costs unless the court has specifically requested the respondent to attend: on the other hand if an applicant renews his application after it has been refused on paper the court should have the power to make a costs order in favour of either applicant or respondent.” (my emphasis)

18.  That recommendation should be read together with the recommendation at paras.4.8 to 4.11 on a request for information procedure (by which a judge can seek information from a putative respondent) facilitating the judge in dealing with the intermediate category of cases: where there is no prima facie case but there is a cause for concern or alternatively the judge feels that there may be an easy answer to the applicant’s case.  And one must also pay regard to the recommendation at para.5.11 for leave application to be considered on paper unless it falls within specified categories, one of which is where on the basis of the written material it appears to the judge that a hearing is desirable in the interest of justice.

19.  What was said by Brooke J (the chairman of the Law Commission making the above report) in R v Honourable Society of the Middle Temple ex p Bullock [1996] ELR 349 at 359C should be understood against the above background,

“In the normal course of events it takes unusual circumstances for this court to award costs to a respondent successfully opposing a grant of leave.”

20.  The English experience can provide some guidance.  But one must pay regard to the different developments in the procedural setting.  Further, Hong Kong courts only applied the test of arguability recently after the decision of the Court of Final Appeal in Peter Po Fun Chan v Winnie Cheung [2008] 1 HKLRD 319 whilst that test has been applied in England since 1992.

21.  Be that as it may, like England, there will be cases in Hong Kong which falls within the intermediate category (c.f. Angur Begum, ibid.; R v Secretary of State for the Home Department, ex parte Doorga [1990] COD 109 at p.110).  In dealing with such cases, as discussed above, the court has the discretion to seek the assistance from the putative respondent.

22.  The discretion can be exercised in different ways.  There are cases where the court may find it sufficient to seek specific information from a putative respondent with liberty to the applicant to comment on the same.  On the other hand, there are cases where the court may wish to hear submissions from both parties. 

23.  The fact that a putative respondent was requested by the court to attend to make submissions must be a relevant factor in dealing with costs.  I agree with Mr Fok that such a respondent is obviously in a different position from a respondent who, conscious of its interest in the proceedings, decides to intervene when it has been merely put on notice.  The latter appears at his own risk as to costs and the court may not even find his presence useful or necessary.

24.  But I am not suggesting that whenever a putative respondent appeared at the invitation of the court, it can recover costs from the applicant if leave is not granted.  The court must balance this factor against other relevant considerations.  Sometimes, the court may invite a putative respondent to appear with a view to explore whether a satisfactory means of resolving the matter can be achieved instead of litigating over the same.  That would be quite different from the situation where the court invites a putative respondent to argue a particular point of law.

25.  Given the state of authorities in Hong Kong and the developing jurisdiction of the court in administrative law cases, I do not think it is desirable for this court to formulate a test of universal application identifying cases where a costs order should be made against an unsuccessful applicant for leave.  I am of the view that the issue may have to be further debated in future cases.

26.  For present purposes, it suffices for me to say in the light of the following factors, notwithstanding that the application for leave has to be made ex parte under Order 53 Rule 3(2), the Applicants (apart from the 7^th and 8^th Applicants) should pay the costs of the putative Respondent.

(a)  The court invited the putative respondent to attend to argue a specific point;

(b)  The Applicants tried to delay the enforcement of Building Orders made more than two years ago notwithstanding they accepted that their structures were unauthorized works;

(c)  The Building Authority had made it clear that enforcement action would be taken against unauthorized works and the Applicants were not able to advance any argument based on legitimate expectation;

(d)  Applicants did not even appeal to the Buildings Appeal Tribunal;

(e)  The Applicants had all the information necessary to enable them to properly assess whether the application is meritorious at the time when the application was filed;

(f)  On grounds that this court held to be fatal to the Applicants, parties had actually deployed full argument and documentary evidence at the hearing for leave application.  To that extent, the Applicants has had in effect the advantage of an early substantive hearing and failed;

(g)  The attendance of the putative Respondent at the leave hearing had assisted the court in understanding the enforcement policy of the Building Authority;

(h)  The putative Respondent did not conduct himself in such a manner that lead to any increase in costs in the proceedings;

(i)  In the circumstances, it is fair and just that costs should follow the event. 

27.  As regards the 7^th and 8^th Applicants, even though they only informed the putative Respondent of their withdrawal at a rather late stage, they had done so before the hearing.  Since not much additional costs is incurred on their account and the putative Respondent should be adequately compensated by the costs order against the other Applicants, I would not make any order for costs against these two Applicants.

28.  I therefore order that the Applicants (apart from the 7th and 8th Applicants) shall pay the costs of the putative Respondent, including the costs on the argument as to costs.  Such costs to be taxed if not agreed.