CCMJ v. SSM formerly known as SKL

FCMP 67 / 2010

[2020] HKFC 198

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 67 OF 2010

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BETWEEN

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DECISION ON COSTS

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1.  The Applicant and Respondent are respectively the father and mother of the child N, who was born out of their cohabitation.  I will refer to them as “Father”, “Mother” and “Child” in this Decision.

2.  For the past 10 years, the parties have been engaged in hotly contested and protracted litigation which ended up with 16 Judgments handed down by the Family Court, 4 Judgments on leave to appeal, 1 Judgment by the Court of Appeal and lately, 8 Judgments by the High Court under the Wardship proceedings (HCMP No. 929/2017) taken out by the Father.  This is the 17^th Judgment of the Family Court between the parties.

3.  Throughout these years, the Father instructed different law firms specialized in matrimonial practice and engaged prominent Counsel including Senior Counsel such as Mr. Richard Todd Q.C., Mr. Russell Coleman S.C., Mr. Paul Shieh S.C. in the recent Wardship proceedings which appears to be still ongoing.

4.  On the other hand, the Mother was on legal aid beginning from the outset with assigned Counsel Mr. Kevin Li appearing for her in most, if not all, of the hearings during these years in the Family Court, High Court and Court of Appeal.  On this fact alone, it can be seen the disparity of means between the parties is vast and significant.

5.  At the time of this Decision, there are on-going enforcement steps taken out by the Mother by way of Garnishee proceedings in respect of expenses due from the Father under his Undertaking given to this Court and to the Mother embraced in a Consent Order dated 5 June 2015 (“2015 Order”).  The Garnishee Order to Show Cause once obtained by the Mother had now been set aside and a directions hearing had been scheduled for 9 October 2020 at the Family Court.  Suffice to say is that this Decision on Costs, though this is the 17^th Judgment of the Family Court between the parties, could not be expected to be the last decision between them.  It is yet unclear as to the progress of the Wardship proceedings.

Background

6.  On 5/10/2012, this Court after a 16-day trial handed down its 97-page Judgment (Custody, Care and Control) granting the Mother sole custody, care and control of the Child.

7.  On 5/6/2015, this Court after a 7-day trial handed down its 78-page Judgment (Financial Provisions) whereby, inter alia, the Father’s property at One Silver Sea be settled on trust for the use of the Child at nil consideration with a reversion to the Father upon the Child reaches 18 or ceases full time education, which is the later.

8.  On 13/3/2017, this Court handed down its 22-page Judgment (Jurisdiction: Section 10(2)(e) of the Guardianship of Minors Ordinance, Cap.13) (“GMO”) whereby, inter alia, the Father was ordered to deliver vacant possession of the property at One Silver Sea in compliance with the Judgment dated 5/6/2015. 

9.  On 19/7/2017, the Mother issued an Originating Summons (“OS”) seeking from the Father lump sum payments for non-recurring expenses in respect of renovation work done in the property One Silver Sea.  The Father in his 43^rd Affirmation contended that the property had been in a good and liveable condition since he moved out.  Only some simple cleaning and fixings were needed and thus disputing the Mother’s claim for renovation costs virtually on all aspects, including but not limited to, necessity, reasonableness and quantum.

10.  The substantive trial of the OS came along on 6/8/2019 during which the parties were able to reach a settlement, on a without admission of liability basis, that the Father shall pay a lump sum of HK$200,000 to the Mother, by way of reimbursement for the non-recurring expenses arising from the renovation of the property at One Silver Sea for use by the Child.  Question of costs of the OS be determined on paper and directions for mutual exchange of submissions and reply submissions were granted by this Court.

11.  Father now seeks costs of and occasioned by the OS together with Certificate for Counsel.  Mother invited the Court to exercise its discretion by awarding costs to her. 

The applicable legal principles on costs

12.  To start with, Order 62 rule 3(2) of the Rules of the High Court (“RHC”), which are applicable to matrimonial proceedings commenced in the Family Court by virtue of rule 3 of the Matrimonial Causes Rules, Cap.179A, provides :-

“3(2) If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

13.  Further, Order 62 rule 5 of the RHC provides :-

“5(1) The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account –

(aa) the underlying objectives set out in Order 1A, rule 1;

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2);

(d) any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) The conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g) any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2) For the purpose of paragraph 1(e), the conduct of the parties includes –

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.”

14.  The principles in relation to costs are well settled.  In family cases, except those where children are involved which normally attract no costs order, costs are in the discretion of the court and should be expected to follow the event except that it appears, by considering the overall impression, that some other order should be made in the circumstances of the case.

15.  In the unreported case of HK v BD[1], where Hartmann JA (as he then was) said as follows :-

“78. In family cases, as in all civil proceedings, the basic principles are that costs are in the discretion of the court but that costs should follow the event except when it appears to the court that, in the circumstances of the case, some other order should be made. In family matters, because of their particular dynamics, the exercise of discretion is broader-based than in other civil proceedings. However, as was observed by Butler-Sloss LJ in Gojkovic v. Gojkovic [1992] Fam 40, there still remains the necessity for some starting-point. That starting-point, as we have indicated, is that costs prima facie follow the event.

79. On behalf of the wife, the oblique criticism was made that the judge proceeded on the basis of “honours even”, that seemingly being the essential reason why he came to his determination that both parties should bear their own costs. We do not see that the judge can be criticised in that respect. If costs were to prima facie follow the event, it was necessary for the judge to identify who had been successful and who had not.

80. But there were of course many cases which the judge in the present case had to take into account in considering how best to exercise his discretion as to costs. It is a long established principle that, after analysing the case of each party, costs must be judged by way of overall impression. They are not to be assessed by breaking down the litigation into its many component and interlocking parts in order to draw up some kind of profit and loss account.”

16.  In the later case of YBL v. LWS (No.2) [2017] 2 HKLRD 783, the Court of Appeal said as follows :-

“9. In our judgment, the proper approach in determining costs is that succinctly put by the Chief Justice in Mimi Kar Kee Hung v. Raymond Kin Sang Hung, FAMV 10 & 11 of 2014, 7 July 2015 at [7] :

‘The discretion as to costs in this Court, as in any other Court, is to be exercised in a principled way with a view to reality and justice.’

10. For present purposes, the relevant principles on the exercise of discretion as to costs can be summarized as follows :

(a) whilst the courts often start with the proposition of costs following event, it is no longer a general rule but a starting point, see Hung Fung Enterprises v. Agricultural Bank of China [2012] 3 HKLRD 683;

(b) there have to be some justifications for depriving a successful party of his costs;

(c) in measuring who is the successful party and the extent of his success, the court must examine the reality and justice of the case. Thus, in Hysan Development Co Ltd v. Town Planning Board (No 2) (2016) 19 HKCFAR 635, the Court of Final Appeal made no order as to costs notwithstanding the success of the appellants in reversing the Court of Appeal’s decision because they did not achieve the full objects of their appeals;

(d) in addition, under Order 62 Rule 5, the court in exercising its discretion shall take into account the matters set out in Rule 5(1) as may be appropriate in the circumstances;

(e) Rule 5(2) highlights some conduct which the court may take into account including whether it is reasonableness for a party to take an issue, the manner in which the matter was pursued or defended, the extent of success, and conduct before, as well as during the proceedings;

(f) If a successful party has brought the litigation upon himself or has done some wrongful act in the course of the transaction, he could be deprived of his costs.”

17.  Guided by the above principles, I now proceed to consider the appropriate costs order in respect of the OS issued by the Mother.

Discussion

18.  Mother’s Counsel Mr. Li in his written submissions sets out 4 areas which the Court should consider when deciding costs should be awarded in favour of the Mother.  The 4 areas are, namely :-

- that renovation of the property at One Silver Sea was necessary and inevitable;

- that the Mother is the “winning party”;

- that the Father’s conduct has been reprehensible;

- that there was disparity between the parties’ financial positions.

19.  Father’s Counsel Mr. Yim made the first submission that reasonableness of renovation would only come into the picture when the renovation was determined to be necessary. Mr. Yim submitted that this was indeed an observation made by this Court at the substantive hearing on 6/8/2019.  The core question was whether the Mother was able to establish that the renovation that she had done at One Silver Sea was necessary or even inevitable.  The Father’s position, insofar as the condition of One Silver Sea was concerned, was that only some touch up and cleaning works might be required for habitation and that he had been readily offering to do the same but the Mother resisted. 

20.  Given the fact that the Mother had unilaterally started the renovation in December 2017, notwithstanding the Father’s demand not to dismantle or demolish the original renovation, it was submitted that the Father or the Court could not now possibly consider Mother’s claim.  The report of the single joint expert (“SJE”) which the Mother relied upon could only tell whether or not the finished work worth the amount of the claim.  The report of the SJE does not take the Mother’s claim for reimbursement any further since no inspection of the original renovation had ever been undertaken by the SJE.

21.  Father’s position as at the substantive hearing on 6/8/2019 was that the Mother had failed to make good her application both on causation and on law, thus not entitled to any relief claimed[2]. Nonetheless, at the hearing on 6/8/2019 the Father was willing to pay HK$180,000 to resolve the matter whilst the Mother insisted upon her claim of HK$327,538.20.  The trial then proceeded.

22.  Whilst Mother’s Counsel Mr. Li in his written submissions labelled his first area as the renovation was necessary and inevitable and Father’s Counsel Mr. Yim in reply submissions took issue upon “necessity” of the renovation works, it is my view that in determining costs of the OS proceedings, the Court should approach it from a different perspective.

23.  Given the fact that the OS proceedings was commenced to recover expenses already spent (emphasis added) by the Mother for the renovation of One Silver Sea, the proper question to ask is whether the OS proceedings (emphasis added) were necessary or inevitable for recovery of the money spent rather than any part of the renovation work already undertaken was necessary or inevitable.  The cause of action, so to speak, under the OS proceedings was for recovery of sums of money.  In my decision, had the OS proceedings been seeking mandatory or peremptory reliefs or orders such as to carry out renovation work then the question of “necessity to do the renovation” would come into play.

24.  That said, the OS proceedings which was issued back in July 2017 but was only settled 2 years later in August 2019 during the substantive hearing, when it comes to consider the question of costs, the proper question to be asked is how likely or unlikely would the Mother be able to recover the money spent, or any part thereof, or at the end of the day that she might even lost in her claim, had she not commenced the OS proceedings against the Father ?  The likely outcome of the Mother’s monetary claim under the OS proceedings at the conclusion of the trial should not be a relevant factor for costs determination if the proceedings were concluded by way of compromise or on a “no admission of liability” settlement. Needless to say, unless expressly provided for or conceded by the parties, all settlement would be taken as “no admission of liability” ways of resolution of disputes.

25.  More importantly, had the Mother failed in her monetary claim under the OS proceedings for whatever reasons, there might be costs sanction against the Mother.        

26.  Going through the historical background of these proceedings, following this Court’s Judgment (Financial Provisions) dated 5 June 2015  handed down after trial whereby, inter alia, the One Silver Property was directed to be settled on trust for the use of the Child and the primary carer, namely, the Mother[3], the Father lodged an application for leave to appeal the said Judgment at this Court and the Court of Appeal.  His application was dismissed at this Court and also at the Court of Appeal where he was ordered to pay costs at indemnity basis summarily assessed at HK$100,000.

27.  To compel compliance and implementation of the said Judgment (Financial Provisions), the Mother was forced upon to issue another Summons on 2 March 2016 for delivery of vacant possession of the One Silver Sea which application was strenuously contested by the Father.  Yet it took another 2 years when this Court handed down its Judgment (Jurisdiction : Section 10 (2)(e) of the Guardianship of Minors Ordinance, Cap.13) dated 13 March 2017 after trial.  The Father was directed to deliver up vacant possession of the settled property, namely, One Silver Sea.  Vacant possession was only delivered on 5 April 2017.

28.  From a review of the Father’s recalcitrant attitude in these proceedings throughout the past 10 years, I am of the firm view that the OS proceedings was inevitable and justifiably issued by the Mother had she wanted to recover the money spent.  Leaving aside the fact that it took another 2 years since the OS proceedings was commenced on 19/7/2017 and that compromise could only be reached during the course of trial on 6/8/2019, it can be seen from the Father’s Affirmations filed in opposition that he had tried his best endeavours to raise every possible contention to the Mother’s monetary claim.  As rightly referred by Mother’s Counsel Mr. Li to the earlier Judgment of the Court of Appeal in HCMP No.178/2013 at §9, where it was said :

“However, in the course of the more than 2 years that have elapsed, it became clear that (to put it neutrally) the father has left no stone unturned in his efforts to criticise the mother’s personality, her family and her care of the child, leading to a fractious and uncooperative relationship between the parents.”

29.  For the above reasons, I am in favour of the Mother, insofar as the commencement of OS proceedings is concerned, that it was necessary and inevitable.

30.  As to who is the “winning party”, this would have to be considered from the “overall impression”[4] of the case, and also to examine the case with a view to reality and justice[5], before the Court can exercise its discretion fairly and in a principled manner.

31.  My overall impression is that the Mother had achieved the purpose of recovery of money spent on renovation of One Silver Sea from the Father.  Therefore, she should be regarded as the winning party.  The amount settled at the end fall below the amount claimed for should not be a relevant factor for deciding who is the winning party. 

32.  Father’s Counsel Mr. Yim submitted that the Father had made various open offers since November 2018 up to January 2019 starting from HK$150,000 and then at HK$180,000 with conditions that there be no order as to costs[6].  The Mother did not eventually obtain a better result than what the Father had offered to pay on 9 January 2019[7].

33.  With respect, I can hardly agree with Mr. Yim.

34.  The Mother was on legal aid and is subject to the Director of Legal Aid’s First Charge (“First Charge”).  I am minded to say that the Father’s legal team and Counsel would have informed the Father that his open offers, if accepted, would be subject to the First Charge which effectively means that whatever sums agreed would have to be deducted the legal fees spent on the Mother if no separate costs order was granted in favour of the Mother.  Thus, it is within the spectrum of reasonableness for the Mother not to consider any offers attached with conditions that there be no order as to costs.  Such kind of offers, if accepted, could have the result of the settlement sum not even enough to cover the First Charge.

35.  The OS proceedings had lasted for 2 years between 17/7/2017 and 6/8/2019.  Given the amount of paper work undertaken and the time spent, the legal costs incurred must be significant if not more than the settlement sum of HK$200,000.  I am not convinced that settlement at HK$200,000 with costs to be determined by the Court could not be said to be better than HK$200,000 with no order as to costs. Unless and until this Court had determined to be the latter, it is premature for the Father to say so and it is in fact quite to the contrary.    

36.  The reality of the case is that the Mother had to bitterly fight for every single penny and cent for the Child over the past 10 years through the assistance of legal aid.  The justice of the case is simply that costs should follow the event. 

37.  Father’s Counsel Mr. Yim in his submissions sought to further argue that the Father could not be criticised in any way for his approach in the OS application by referring to 3 aspects, namely, there were open offers at different stages made by the Father and by refusing to accept and proceed further, the Mother failed to obtain a better outcome.  Secondly, Mother’s OS proceedings were unnecessarily and unreasonably taken.  Thirdly, Mother had unreasonably dismantled and demolished the original renovation despite the Father’s protests and thereby depriving Father to appoint expert and the Court to assess the Mother’s claim.

38.  The 1^st limb of the further contention had been dealt with at paragraphs 34 and 35 of this Decision.  The 2^nd limb of the further contention had been dealt with at paragraphs 23 to 29 of this Decision.  The 3^rd limb of the further contention could only stand when there are findings of fact by this Court upon the evidence of the parties as to the condition and habitability of One Silver Sea.  The parties’ evidence on the condition and habitability of One Silver Sea are in sharp difference which calls for the Court’s adjudication at trial.  In the absence of any findings of fact by the Court on the parties’ evidence and to take the Father’s evidence to be the truth, then to comment upon the Mother proceeded with the renovation against the Father’s protests, is incorrect and unfair.  Such 3^rd limb of the further contention must fail.

39.  On the aspect of disparity of financial means between the parties, Father’s Counsel Mr. Yim referred me to the decision of DHCJ Gill (as he then was) in the case of S v. S[8] where it was said that the relevant consideration is how any costs order may impact on the parties.  Mr. Yim went further to submit that the Mother had eventually agreed to accept a sum of HK$200,000 which is substantially less than what she had claimed for, her financial means is one factor that this Court may consider.

40.  However, in the cardinal case of Piglowska v. Piglowska[9] where Lord Hoffmann, when deciding the approach of the appellate court concerning challenges of findings of fact and the exercise of judicial discretion, had said :-

“Fourthly, there is the principle of proportionality between the amount at stake and the legal resources of the parties and the community which it is appropriate to spend on resolving the dispute..……. To allow successive appeals in the hope of producing an answer which accords with perfect justice is to kill the parties with kindness.”

41.  I am of the view that the principle of proportionality enunciated by Lord Hoffmann applies equally when costs are being determined by the courts in their exercise of judicial discretion.  Disparity of financial means warrants the Court’s consideration when deciding what type of costs order, with a view to reality and to ensure justice to the parties, are appropriate on the facts of the case.  This is far more important than the impact of the costs order that may affect the parties.  

42.  As the docket judge overseeing these proceedings for 10 years since 2010 with 16 written Judgments handed down, I am confident to say there is a huge disparity of financial means between the Father and the Mother, let alone the fact that throughout the past 10 years of protracted litigation, different prominent and senior Counsels had been instructed through different reputable matrimonial law firms engaged by the Father.

43.  For completeness, I would add that the impact, if any, of costs order on the Mother who was on legal aid throughout the past 10 years would be far more significant than the Father. 

Conclusion

44.  Taking into account all the above, I decided that the Father should pay the Mother’s costs of the OS dated 17 July 2017, together with all costs reserved, to be taxed if not agreed.

45.  The Father shall also pay the Mother’s costs of this costs application, to be taxed if not agreed.

46.  I also grant Certificate for Counsel.

47.  The Mother’s own costs in respect of the OS and of this costs application be taxed in accordance with Legal Aid Regulations.

Orders

48.  I now make the following Orders :-

(a) The Applicant (Father) do pay the Respondent’s (Mother’s) costs of the Originating Summons dated 17 July 2017, together with all costs reserved, to be taxed if not agreed;

(b) The Applicant (Father) do pay the Respondent (Mother) costs of this costs application, to be taxed if not agreed;

(c) There be Certificate for Counsel on both the OS application and this costs applications;

(d) The Respondent’s (Mother’s) own costs be taxed in accordance with Legal Aid Regulations.

49.  This is a costs order nisi which will become absolute if no application to vary the same is made within 14 days from the date of this Decision.