HSYC v. CLTK

FCMC 11141/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11141 OF 2013

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J U D G M E N T
(Litigation funding)

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Introduction

1.  This is the second application by the Petitioner wife for litigation funding, pursuant to s 3 Matrimonial Proceedings and Property Ordinance, Cap 192 (MPPO). In the first judgment dated the 1 December 2015 I concluded as follows:

22.   Having considered the above arguments I will therefore rather reluctantly make an order that the husband do contribute HK$350,000 towards the wife’s legal costs – i.e. HK$50,000 per month with effect from the 1 December 2015 until the 1 June 2016. The preliminary issue hearing is scheduled to take place in late April 2016. In addition I will set the Financial Dispute Resolution hearing down for hearing on the 13 June 2016 at 2:30 pm with 2 hours reserved. Both parties do personally attend that hearing. This order is made on the premise that the wife will undertake to apply those funds only to the payment of her legal costs and that this sum shall be paid directly to her legal representatives. There shall also be liberty to apply.

The wife now seeks HK$100,000 per month from the date of the summons i.e. the 16 May 2016.

2.  Unfortunately the preliminary issues hearing went part heard. It is due to come back before the court on the 1 November 2016 for a further three days. Some of the difficulty arose because of the very late disclosure of documents by the husband and the interveners. They sought leave to file additional documents on the last day of trial. I am told that it was not until the 27 June 2016 that audited reports and other financial documents relating to the 1^st Intervener Company were actually produced. It seems to me that this approach is also indicative of the litigation tactics employed by the husband and the interveners to date. For example I have referred previously to the de minimalist approach taken by the husband to disclosure and the “catch me if you can” element to it.

3.  In addition I have also been critical of the wife’s rather dogged approach to disclosure. The concern of course is that ultimately the legal costs may outstrip the value of any assets held by the couple and that this will render any final award nugatory.        

4.  The wife’s legal team complain, and with some justification that it is proving increasingly impossible to understand the financial arrangements surrounding the 1^st Intervener company and other related companies. They wish to employ a forensic accountant to assist them. However given the stated financial circumstances of the parties it is hard to see how that will be possible.  

5.  The husband for his part says that his position is now untenable. He says that he is not avoiding his responsibilities but that he simply does not have the means to pay the maintenance ordered – either for litigation funding or generally. He says that the business has suffered of late and that his elder sister (the 2^nd Intervener) is no longer in a position to advance him funds. Likewise lending institutions are no longer willing to loan him money. He says that he has borrowed HK$150,000 from a friend and that this will hopefully be sufficient for the next six months. As I said in the previous judgment on litigation funding

7.  ….Although it is of course correct that I can take into account what the husband’s current financial resources are, including his ability to borrow, that does not mean that I should ignore completely what now appears to be the reality of the situation. ...

6.   I am though concerned that the preliminary issues trial should conclude with the same legal teams in place. I accept that it would not be in the interests of justice for that to be altered in any way now.

The central issue

7.   The only issue to be determined then is whether or not there should be a further order for litigation funding, and if so, in what amount and for what period?

Litigation costs

8.  As indicated previously in so far as the law on the funding of litigation costs is concerned, Currey v Currey [2006] EWCA Civ 1338 continues to be routinely applied in Hong Kong. This states inter alia that:

“the conditions for a ‘costs allowance’ are as follows:

(1) That the applicant spouse has no assets, or none that can reasonably be deployed (at para [19], [20]).

(2) That she can provide no security for borrowing, or none which can reasonably be offered (at paras [19], [20]).

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation (at para [20] and see Sears Tooth, per Wilson J).

(4) That she cannot secure publicly funded legal help ‘at a level of expertise apt to the proceedings’ (at para [20])”

There is also a requirement to undertake an overarching enquiry

At para [20], Wilson J held that the initial, overarching enquiry should be into whether the applicant for a costs allowance could demonstrate that she cannot reasonably procure legal advice and representation by any other means. Therefore, to the extent that an applicant has assets (as in C v C), she has to demonstrate that they cannot reasonably be deployed (whether directly or as the means of raising a loan) in funding legal services …… Other factors may well come into play.  The subject matter of the proceedings would always be relevant, as would the reasonableness of the applicant’s stance in the proceedings.

9.  In addition reference can be made to the English case TL v ML [2006] 1 FLR 1263 and in particular to paragraph 124 (v):

[124] (v) Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed, but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial (M v M).

Is this an appropriate case to award litigation funding, and if so, in what amount and for what period?

10.  As before I continue to have concerns about this application and the litigation generally. I accept that the wife satisfies the four conditions referred to above in Currey and Currey, namely she has no assets of her own and there are none that can be deployed for litigation funding. I accept that it follows that she can provide no security for borrowings. She cannot offer a charge on the outcome of the litigation and previously she has applied for and been refused legal aid – although it seems to me that this is something that may need to be revisited post the preliminary issues hearing. Thus on the face of it she has no ability to raise funds for her own litigation. The husband maintains that he is in a similar position. He is currently representing himself. 

11.  Previously I reluctantly made an order with the intent of taking this matter up to a Financial Dispute Resolution hearing. That did not happen. The fault for this lies entirely at the door of the interveners and the husband; the wife is entirely blameless for this rather unfortunate turn of events.    

12.  In such circumstances I will at this stage make an order with a view of taking this matter up to the preliminary issues hearing only. Thereafter it may be that the wife will need to give some thought to making a further application for legal aid.

Conclusion

13.  I will therefore make an order that the husband do continue to contribute HK$50,000 per month towards the Petitioner’s litigation costs with effect from the 1 July 2016 until the 1 November 2016 inclusive. I accept that it will not be possible for the husband to pay HK$100,000 per month but I am reasonably confident that he should be able to continue to borrow as he has in the past to meet this lower amount. 

Costs

14.  Costs shall be reserved.