Malicious prosecution - New weapon against unmeritorious litigants in civil proceedings in Hong Kong?
The number of court hearings involving litigants in person are on the rise and this presents a challenge to the courts and also those who are on the opposite side of a litigant in person.
According to statistics published by the CJR Monitoring Committee, in the year ending 31 March 2017, litigants in person are involved in around 43.4% and 37.1% of the interlocutory applications and trial respectively in the Court of First Instance. In the District Court the percentages are 60.2% for interlocutory applications and 45.3% for trial.
Unfortunately, despite the help of legal aid and the Government’s scheme to assist litigants in person, some of the litigants in person’s claim are ill-founded or misconceived in many different shapes or forms. In some cases, the claim might be brought with malicious intent.
This article will first look at the current regime in relation to the available legal remedies against unmeritorious litigants (litigants in person or otherwise) in Hong Kong. We will then consider how the recent development of case law in England and Wales could mean that there might be a case for the tort of malicious prosecution or tort of abuse of court process to be actionable in Hong Kong, thereby giving a right of recourse for victims of civil actions brought in bad faith.
- Current law in Hong Kong
Striking out and vexatious litigant
In Hong Kong, the most obvious means of disposing a claim brought in bad faith is an application of striking out. Such application is based on the Court’s power to strike out interlocutory applications and fresh proceedings to prevent any abuse of process (see O.18, r.19 of Rules of the High Court (Cap 4A)).
Further, under s.27 of the High Court Ordinance (Cap 4), if, on an application by the Secretary for Justice or an affected person who is aggrieved, the High Court is satisfied that any person has habitually and persistently and without any reasonable ground instituted vexatious civil proceedings or made vexatious applications the court may order that no legal proceedings shall be instituted by that person in any court without the leave of the High Court and that any legal proceedings instituted by him in any court before the making of the order shall not be continued by him without such leave.
Tort of unlawful interference with trade or business
The most relevant authority remains the English Court of Appeal case of OBG Ltd v Allan  UKHL 21, it was held that the cause of action only exists where the claimant has suffered damage which the defendant has intentionally brought about by interference with the claimant’s interests using unlawful means.
The majority in OBG Ltd v Allan appears to consider “unlawful means” as “consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful against the third party and is intended to cause loss to the claimant; but it excluded acts which did not affect the third party’s freedom to deal with the claimant”.
In respect of vexatious litigants, the issue with this cause of action is that the victim would be left with the difficult task of proving that the litigant has used the civil process unlawfully in order to make out a case for unlawful interference with trade or business. It might also be difficult for non-businesses, i.e. individuals, to bring such an action.
It is arguable that the tort of unlawful interference is actionable in Hong Kong. This tort was considered in a number of interlocutory applications in Hong Kong but still awaits further clarification from higher courts.
- Malicious prosecution
Historically, the tort of malicious prosecution in English law refers to an unreasonable criminal prosecution and one would not normally associate the action with civil proceedings. Indeed, until recently, malicious prosecution were generally brought as an aftermath of unsuccessful criminal proceedings and malicious prosecution in civil proceedings was not actionable.
This has resulted in a lack of recourse against vexatious litigants by defendants of unmeritorious lawsuits, apart from the traditional costs sanctions, which generally do not reflect the actual legal costs incurred by the defendant. The costs sanctions also do not take into account of loss of earnings, health and reputation.
By the landmark judgment of Willers v Joyce  UKSC 43, the English Supreme Court has shed new light on the law of malicious prosecution, allowing it to be applied to any form of legal proceedings, be it civil or criminal.
In Willers v Joyce, the claimant was the subject of civil proceedings brought by a company of which he was director. It was alleged that the claimant has breached his contractual and fiduciary duties. However, the company withdrew its claim shortly before trial. The claimant issued proceedings against the defendant for malicious prosecution, alleging that the defendant, as a controller of the company, has caused the company to pursue such proceedings. He claimed damages for loss of earnings, health and reputation, as well as legal expenses over the amount awarded to him in costs.
The claim was initially struck out at first instance. On a “leapfrog” appeal, the case came before a Supreme Court panel of nine judges. The Supreme Court, by a 5:4 majority, reversed the first instance decision and allowed the whole claim to proceed to trial. The majority concluding that it would be unjust for a person to suffer injury as a result of malicious civil prosecution and yet not be entitled to compensation.
In an action for malicious prosecution of civil proceedings the claimant must show that:
1. He was prosecuted by the defendant;
2. The prosecution was determined in his favour;
3. It was without reasonable and probable cause, i.e. on the materials which the defendant acted, there was no proper case to lay before the court; and
4. It was malicious.
The idea of malice is central to the action. In Willers v Joyce, Lord Toulson explained that malice requires the claimant to prove that the defendant deliberately misused the process of the court. In the most obvious cases, the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation. In other instances, the critical feature which has to be proved is that the proceedings instituted by the defendant were not a bona fide use of the court's process.
As mentioned, in Willers v Joyce, the Supreme Court has allowed all claims for damages for loss of earnings, health and reputation to proceed to trial.
Given so, in respect of damages, the Supreme Court appears to have agreed with the earlier Privy Council case of Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd  UKPC 17. Lord Wilson, in his leading judgment in Crawford, argued that in malicious prosecution of civil proceedings cases, a claimant should be able to recover not only out-of-pocket expenses, but also damages for all foreseeable economic loss (special damages of around US$1.56 million had been claimed in Crawford).
- Tort of abuse of civil process
In passing, it is worth mentioning that the majority in Crawford, apart from arguing for the recognition of a general tort of malicious prosecution of civil proceedings, did not deny the existence of a distinct tort of abuse of the civil process. It appears that an improper purpose for instigating proceedings must be identified and proven to make out a claim. The Court noted that “[i]f the proceedings are merely a stalking horse to coerce the defendant in some way entirely outside the ambit of the legal claim upon which the court is asked to adjudicate they are regarded as an abuse of process for this purpose”.
However, unlike malicious prosecution, abuse of process requires neither that the action should have been brought without reasonable cause nor that it should have terminated in favour of the alleged victim.
- Application to Hong Kong?
The issue of whether malicious prosecution of civil proceedings and tort of abuse of court process are actionable torts in Hong Kong is yet to be definitively decided.
That said, and as much as it is important to bear in mind that Willers v Joyce and Crawford are not binding authorities in Hong Kong, these cases will invariably be regarded by any judge of Hong Kong as being of weight and persuasive value. Given so, it would not be unreasonable to expect that Hong Kong Courts might follow their English (and Commonwealth) counterparts’ footsteps and path the way for this new tort to be developed in Hong Kong.