Civil Justice Reform.

Executive summary

The Chief Justice's Working Party on Civil Justice Reform (the Working Party), established to review Hong Kong's High Court procedures and to recommend changes to improve access to justice at reasonable cost and speed, published its final report on 3 March 2004.

The Final report leads on from the Working Party's interim report and consultation paper in November 2001 and considers the responses and comments received and the experience of a number of other countries. It presents 150 recommended reforms for the Chief Justice's consideration. The Chief Justice's Working Party on Civil Justice Reform (the Working Party), established to review Hong Kong's High Court procedures and to recommend changes to improve access to justice at reasonable cost and speed, published its final report (the Final Report) on 3 March 2004. The Final Report leads on from the Working Party's interim report and consultation paper in November 2001, which contained 80 proposals leading to an extensive consultation exercise, including a number of public briefings and seminars. Drawing on numerous responses and comments received and on the experience of a number of other countries, the Working Party has identified many areas where reforms are necessary or desirable. The Final Report presents 150 recommended reforms for the Chief Justice's consideration.

The Working Party

The Working Party's membership includes judges of the Court of Final Appeal, Court of Appeal and Court of First Instance, a senior barrister and representatives of the Department of Justice, Department of Legal Aid, Hong Kong Consumer Council and Hong Kong University law faculty. Patrick Swain, a partner in Freshfields Bruckhaus Deringer's dispute resolution group in Hong Kong, is the solicitor member of the Working Party.

Comparative studies

In reviewing the options for reform, the Working Party considered a number of procedural innovations deriving from other common law jurisdictions. Given the historical links between the English and Hong Kong systems, particular attention was paid to the Civil Procedure Rules (CPR) adopted in England and Wales in 1998 as a result of the reports on access to justice issued by Lord Woolf 's working party.

Revolution or evolution?

A fundamental issue facing the Working Party was to decide whether the best means of achieving the aims of the reform lay in adopting a new code mirroring the CPR or in adapting the existing Rules of High Court (RHC). Consultees' views were divided on this issue. The Working Party has decided, on balance, not to recommend the adoption of a new code, but instead has favoured selective amendments to the existing procedural rules for the following reasons.

The CPR are widely regarded as having failed to meet one major goal of reform: to reduce the costs of litigation. Indeed, it has been a common complaint that the cocktail of measures in the CPR designed to 'front-load' cases (that is, requiring litigants to disclose more detail at an early stage of proceedings to aid settlement) may not only have resulted in some costs being incurred earlier but also unintentionally increased the total cost burden in some cases. Civil justice reform

Some of the acknowledged successes of the CPR have less significance for the Hong Kong market. For example, the benefit of a more modern 'plain English' version of the RHC would not improve access to justice for the vast majority of unrepresented litigants in Hong Kong who rely on the Chinese version of the RHC.

Adopting a series of reforms by amending the existing rules would be less disruptive than adopting an entirely new code. Instead, by concentrating on some of the more beneficial reforms through amendments to the RHC, any necessary training and re-education of the judiciary court administrators, litigation professionals and clients will be able to be more concentrated.

Managing litigation - the court's discretion

At the heart of the CPR was the adoption of an 'overriding objective' to enable the court to deal with cases justly. Dealing justly would include, where practicable, ensuring the parties are on an equal footing, saving expense, dealing with cases proportionately, expeditiously and fairly, and allotting an appropriate share of the court's resources to the parties. Procedural judges, under the CPR, therefore enjoy considerable discretion in the way they give effect to the overriding objective when managing cases or exercising any power conferred on them. While the majority of consultees in Hong Kong favoured increasing the degree of case management, concerns were raised regarding both the breadth of discretion and the experience of the judiciary (and the availability of resources to ensure appropriate training).

The overriding objective concept is designed to function in the context of an entirely new procedural code by providing the foundation for a new methodology for deciding procedural issues. Having decided against the adoption of a wholly new code (and taken into account consultees' views), the Working Party decided it would be inappropriate to prescribe an overriding objective with the associated level of discretion.

Instead, it has recommended the adoption of a rule acknowledging certain aims of judicial case management as the 'underlying objectives' of the civil justice system. These are: (i) cost-effectiveness of the court's procedures; (ii) encouraging economy and proportionality in the way cases are instituted and tried; (iii) disposing of cases expeditiously; (iv) promoting equality amongst parties; (v) facilitating settlement; and (vi) distributing the court's resources fairly. Crucially, however, these objectives are to be used in interpreting and applying the existing rules rather than as trump cards.

The Working Party gave much attention to case management techniques. It identified as the key flaw in the present system one that will be familiar to many litigants: where one party seeks to delay proceedings and to obstruct the other side's progress, the present system is deficient and open to manipulation. In particular the system:

involves excessive leniency and a culture of tolerating non-compliance;

does not allow cases to be listed for trial until the parties are fully prepared, enabling a party to use its own dilatoriness as a reason for staving off trial; and

places the burden on the 'prudent' party to spend time and money to maintain progress against its opponent.

The Working Party recommends that the court take a more proactive and case-specific approach. This is likely to involve a questionnaire being filed by litigants with the court once the pleadings have been exchanged giving the court sufficient information to map out the procedural timetable. The court will then usually fix milestone dates for the progress of the action (which may not be varied by the parties). One of the milestones that the court will fix at this early stage would be the trial date (or, if flexibility is required by the court, a 'trial period' ie a window of potential dates within which the trial would be heard).

To many litigants, particularly those involved in commercial disputes, the greater predictability of such a system will be welcomed in contrast to the current more laissez-faire approach. Obviously, those in the judiciary responsible for fixing milestone dates on a case-specific basis will have to receive appropriate education and training to enable them to take informed judgements on the appropriate procedure.

Case management - specialist areas

The Working Party also considered whether additional case management tools are needed to deal with specific circumstances. Four of the areas in which recommendations are made are:

the use of specialist courts/lists;

access for unrepresented litigants;

multi-party litigation; and

dealing with vexatious litigants.

Maintaining the procedural autonomy of specialist lists (currently in use for commercial, personal injury, construction/arbitration and constitutional administrative cases) has proved popular with consultees. Having considered the issue of whether additional areas merited similar treatment in respect of demand or efficiency, a recommendation has been made to explore the establishment of a specialist list dealing with intellectual property/information technology matters. Such a move would reflect the practice in comparator jurisdictions and is very likely to prove popular with litigants in these fields.

Among other suggestions that have not been recommended was a proposal to have all proceedings involving unrepresented litigants dealt with by a specialist list. It was considered that the lack of homogeneity among such litigants (and their cases) militated against such an approach. However, a number of other recommendations have been made that should go some way toward assisting unrepresented litigants. These include improved access to information and education through a court-funded resource centre, appropriate latitude being granted regarding compliance with procedural issues and the court ensuring a better understanding of its proceedings by unrepresented litigants.

One area in which further consultation is recommended but that may give considerable assistance to unrepresented litigants is the development of the power to bring (and to finance) multi-party litigation. The Working Party endorsed the need to introduce a scheme enabling multi-party litigation to be conducted more readily; further study of the specifics is thought necessary rather than merely grafting on the CPR scheme. Such a scheme may, however, make it possible for unrepresented individuals to become represented by means of cost sharing. Equally, it is noteworthy that in commenting on this issue the Hong Kong government saw no reason in principle to object to the provision of legal aid to cover such proceedings. The confluence of such reforms could greatly improve access to justice for poorer litigants. Finally, recommendations are made to give the court greater flexibility in tackling the not inconsiderable problem of vexatious litigants.

Nuts and bolts - the major recommendations

From the many specific recommendations made by the Working Party, the main highlights are dealt with below.

To facilitate settlement and case management, a more rigorous requirement for pleading cases is recommended, including requirements for defendants to file substantive reasoned defences and for pleadings to be verified by a statement of truth (from the litigants or their legal advisers).

Measures are recommended to reduce the number of interlocutory applications to save time and costs. These will empower courts to make procedural orders of their own motion, where appropriate without hearings; to penalise unreasonable attitudes by cost sanctions; and to make orders that are self-executing in the event of non-compliance.

Contrary to the approach taken by the CPR, there will be no standard limit on discovery. The courts are, instead, to be encouraged to use discretion to tailor discovery to fit the needs of a particular case. A general power to permit pre-action discovery - against (potential) parties or non-parties - is also recommended.

Excessive and lengthy examination and cross-examination of witnesses are to be controlled by adopting a more stringent attitude towards relevance. The court should have discretion to permit witnesses to give evidence beyond the contents of their statements where appropriate (to avoid overworked and costly witness statements).

The court's permission will be required for interlocutory appeals to the Court of Appeal, unless the interlocutory decision appealed against determines a party's substantive rights.

Case management - specialist areas The Working Party also considered whether additional case management tools are needed to deal with specific circumstances. Four of the areas in which recommendations are made are:

the use of specialist courts/lists;

access for unrepresented litigants;

multi-party litigation; and

dealing with vexatious litigants.

Maintaining the procedural autonomy of specialist lists (currently in use for commercial, personal injury, construction/arbitration and constitutional administrative cases) has proved popular with consultees. Having considered the issue of whether additional areas merited similar treatment in respect of demand or efficiency, a recommendation has been made to explore the establishment of a specialist list dealing with intellectual property/information technology matters. Such a move would reflect the practice in comparator jurisdictions and is very likely to prove popular with litigants in these fields.

Among other suggestions that have not been recommended was a proposal to have all proceedings involving unrepresented litigants dealt with by a specialist list. It was considered that the lack of homogeneity among such litigants (and their cases) militated against such an approach. However, a number of other recommendations have been made that should go some way toward assisting unrepresented litigants. These include improved access to information and education through a court-funded resource centre, appropriate latitude being granted regarding compliance with procedural issues and the court ensuring a better understanding of its proceedings by unrepresented litigants.

One area in which further consultation is recommended but that may give considerable assistance to unrepresented litigants is the development of the power to bring (and to finance) multi-party litigation. The Working Party endorsed the need to introduce a scheme enabling multi-party litigation to be conducted more readily; further study of the specifics is thought necessary rather than merely grafting on the CPR scheme. Such a scheme may, however, make it possible for unrepresented individuals to become represented by means of cost sharing. Equally, it is noteworthy that in commenting on this issue the Hong Kong government saw no reason in principle to object to the provision of legal aid to cover such proceedings. The confluence of such reforms could greatly improve access to justice for poorer litigants.

Finally, recommendations are made to give the court greater flexibility in tackling the not inconsiderable problem of vexatious litigants.

Nuts and bolts - the Major Recommendations

From the many specific recommendations made by the Working Party, the main highlights are dealt with below.

To facilitate settlement and case management, a more rigorous requirement for pleading cases is recommended, including requirements for defendants to file substantive reasoned defences and for pleadings to be verified by a statement of truth (from the litigants or their legal advisers).

Measures are recommended to reduce the number of interlocutory applications to save time and costs. These will empower courts to make procedural orders of their own motion, where appropriate without hearings; to penalise unreasonable attitudes by cost sanctions; and to make orders that are self-executing in the event of non-compliance.

Contrary to the approach taken by the CPR, there will be no standard limit on discovery. The courts are, instead, to be encouraged to use discretion to tailor discovery to fit the needs of a particular case. A general power to permit pre-action discovery - against (potential) parties or non-parties - is also recommended.

Excessive and lengthy examination and cross-examination of witnesses are to be controlled by adopting a more stringent attitude towards relevance. The court should have discretion to permit witnesses to give evidence beyond the contents of their statements where appropriate (to avoid overworked and costly witness statements).

The court's permission will be required for interlocutory appeals to the Court of Appeal, unless the interlocutory decision appealed against determines a party's substantive rights.

Plaintiffs, as well as defendants, will be permitted to make offers of settlement, which, if not accepted by the other party, carry a risk of costs and/or interest sanctions. This should encourage parties to take possible settlement seriously and avoid unproductive continuation of the litigation.

While the 'loser pays' principle will remain the usual approach for apportioning the costs of an action, greater use of summary and punitive costs orders will be encouraged, particularly to deter unreasonable interlocutory behaviour.

Solicitors and barristers are to be obliged to provide clients with information on the basis of their charges and estimates of the costs of litigation. Further consultation on the manner of implementation is recommended.

Do the recommendations for reform go far enough?

Following its request for feedback during the consultation stage, the Working Party received a number of responses strongly in favour of introducing a new civil procedure code along the lines of the CPR.For such proponents of a complete overhaul, the recommendation to proceed by way of selective amendment of the existing rules may have fallen short of their expectations.

However, given that a key aim of reform is to improve the cost-effectiveness of litigation, the pitfalls associated with 'front loading' of costs, highlighted by the CPR experience, must be avoided. Although some innovations, such as pre-action disclosure of information, pre-action protocols to exchange information about claims and defences, annexing relevant key documents to pleadings and identifying witnesses at the outset, may enable parties to better negotiate settlement on a properly informed basis, they also require litigants to do more case preparation and incur more costs at the outset of a case. As most proceedings are settled before trial, these measures add to the overall costs of litigation. From this standpoint the Working Party's recommendation against the adoption of similar measures in Hong Kong is supported. The Working Party's recommendations, if accepted by the Chief Justice, will provoke important changes to the litigation culture in Hong Kong. The many initiatives to:

simplify the way proceedings are commenced;

enhance the case management powers of the court; and

encourage the parties, through cost sanctions and procedural simplifications, to be less adversarial and more co-operative,

should significantly improve the cost-effectiveness of litigation in terms of timescale, affordability, predictability and complexity. A copy of the Final Report can be downloaded as a CD-ROM from [e-mail].

The information and opinions contained in this article are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations.

[c] Freshfields Bruckhaus Deringer 2004

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