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16 July 2019
Hong Kong has a high incidence of litigants in person, particularly in the first-instance courts. This is largely explained by the cost of civil litigation generally, the absence of class actions, contingent fee arrangements and third-party funding of most civil claims, and the financial eligibility limits for civil legal aid. Where litigants in person conduct their own litigation and are awarded costs, they cannot expect to recover anything like the amount of costs awarded to legally represented parties. As recent decisions demonstrate, the rates at which litigants in person are awarded costs are far from generous and, to get more, they have to prove that they had to work on the case during their working hours or that they suffered actual pecuniary loss.
In Zhu Li,(1) the applicant – who was largely unrepresented during the proceedings – was awarded 60% of her costs (to be assessed) arising out of certain judicial review proceedings. Her challenge had not been successful but, as sometimes happens (eg, with public interest litigation), the costs order reflected the fact that the applicant had raised an important issue.
In the assessment of the applicant's costs, an issue arose as to what hourly rate should be allowed for the period when she had not been represented by lawyers. Order 62, Rule 28A(3) of the Rules of the High Court provides that:
Where in the opinion of the taxing master the [litigant in person] has not suffered any pecuniary loss in doing any work to which the costs relate, he shall not be allowed in respect of the time reasonably spent by him on the work more than $200 an hour.
Where a litigant in person can demonstrate a pecuniary loss, in principle and subject to the court's assessment, that person can recover up to two-thirds of the sum which the court considers would have been allowed if the person had been represented by a solicitor.(2)
In Zhu, the applicant's starting point was to claim two-thirds of the respondent's own legal costs or, if an hourly rate was required, HK$1,650 per hour. She argued that she was an experienced lawyer, and that she had suffered a pecuniary loss as a result of the litigation. However, it does not appear to have been disputed that, at all material times, she had not been gainfully employed.
The respondent argued that the maximum rate of recovery was HK$200 and required the applicant to discharge the burden of proving that she had suffered a pecuniary loss.
The court directed that before assessing the applicant's costs, the preliminary issue for determination was whether the applicant had suffered a pecuniary loss in conducting the judicial review proceedings to which the costs related, such that she should be allowed more than HK$200 per hour. If not, the second issue was whether the recovery rate should be HK$200 or less.
The relevant case law sets out the following general principles:
The applicant contended that she fell within the third scenario; the respondent contended that she fell within the second.
According to the evidence, the applicant had been out of work for the entire period in which the judicial review proceedings were conducted. It also appears that, at certain times, the very existence of the litigation was the cause of concern for the applicant as opposed to the time spent on it.
The court held that the applicant had failed to discharge the burden on her to show that she had suffered any pecuniary loss as a result of conducting the judicial review proceedings. Therefore, pursuant to Order 62, Rule 28A(3), she was not allowed to recover more than HK$200 per hour with respect to the time reasonably spent by her on the judicial review proceedings.
Having so held, the next issue for determination was the hourly rate to be recovered not exceeding HK$200. While some litigants in person have recovered as little as HK$100 per hour,(4) in this case the court allowed HK$200 per hour given the complexity of aspects of the judicial review proceedings.
This case is an interesting review of some of the general principles underpinning a claim by a litigant in person to legal costs and demonstrates how difficult it can be to prove a pecuniary loss in such circumstances. The fact that litigation conducted by a litigant in person may make it harder for them to secure work is not the same thing as demonstrating a pecuniary loss. The pecuniary loss must relate to costs incurred as opposed to other alleged financial hardship.
There is also the general point that civil litigation in Hong Kong is not a profit venture for the parties involved. A party that is awarded costs recovers only some of their legal costs from the party ordered to pay them – in practice, this indemnity principle is not an entitlement to a full costs recovery.
In this case, the amount recoverable by the applicant remains to be assessed by the court, and the respondent will be entitled to set off against them its (probably) not inconsiderable costs of the preliminary issue.
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