RE LMSP

HCMH 48/2017

[2019] HKCFI 2997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MENTAL HEALTH CASE NO. 48 OF 2017

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DECISION ON COSTS

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1.  This is the hearing on costs for the application for the appointment of a committee for the estate of LMSP (“the Estate”) under Part II of the Mental Health Ordinance, Cap 136 (“the Ordinance”).

2.  LMSP is a lady who was 94 years old at the time of the hearing.  Together with her husband who died in 2011, LMSP has 6 children in total:  Thomas who is the Applicant, Cheung, Tsun, Tung, Ka and Amy.  Amy has also passed away leaving 3 surviving children.  Amongst these family members, only Thomas, Cheung and Tsun are actively participating in these proceedings.

3.  LMSP currently resides in Hong Kong.  She has been under the primary care of Cheung and Tsun since 2011.

4.  LMSP has substantial assets in both Hong Kong and the Mainland, estimated by Tsun to be worth around HK$200-300 million.

5.  By the order dated 11 January 2018, I appointed a solicitor, Ms Chan, to be the committee for the Estate (“the Committee”) with the usual power conferred, including the power to ascertain and verify the extent of LMSP’s assets in Hong Kong and elsewhere.

6.  In the last hearing on 11 January 2018, Tsun took issue with the scope of the Committee’s power over LMSP’s assets outside Hong Kong.  Subsequently, Tsun decided not to contest the scope of the Committee’s power.  Hence, the only remaining issue is one of costs.

7.  The Applicant asks for his costs to be borne by the Estate, whereas the costs of Cheung and Tsun should be borne by themselves whether wholly or partly.  On the other hand, Cheung and Tsun ask for all their costs to be borne by the Estate.

8.  Mr To, counsel for Thomas, submits that these proceedings have become unnecessarily protracted and costly for the following reasons:

(i) Cheung and Tsun unreasonably refused to accept the medical evidence as contained in the 2 medical certificates produced by Thomas in support of the Part II application (“the Medical Certificates”), and they insisted on appointing their respective and separate expert to further examine LMSP, as opposed to a joint expert.

(ii) Tsun took the liberty to file her affirmation dated 23 October 2017 (“Tsun’s Affirmation”) without the leave of the court.

(iii) Even after LMSP was certified to be mentally incapable by Professor Felice Lieh-Mak and all the parties accepted her opinion, Cheung still contended that a committee should not be appointed.  He asked the court to make an order under s 24 of the Ordinance instead.

(iv) After the appointment, Tsun still took issue with the power of the Committee to deal with LMSP’s assets outside Hong Kong.

9.  There is no serious dispute that Thomas should get his costs from the Estate.  In fact, his Part II application has resulted in the appointment of an independent committee and so there is no reason why his costs should not be paid out of the Estate.  The remaining issues before the court are whether Cheung and Tsun should get their costs from the Estate and the quantum of costs of the various parties.

Legal principles in considering the question of costs in Part II applications

10.  Though costs is always a fact-sensitive issue depending on the facts of each individual case, the following legal principles are still relevant in deciding the question of costs in Part II applications.

11.  In Re A[1], Lam J (as he then was) laid down the following principles governing the award of costs in Part II proceedings:

“6. Without trying to fetter the court’s general discretion as to costs, Lindley LJ had identified the following to be relevant considerations in the context of costs to be awarded in mental health proceedings in Re Cathcart [1892] 1 Ch 549 at p.558-9,

“The points to be considered are: (1) The reasons for believing in the [mental incapacity]; (2) The reasons for believing him to be not only [mentally incapable], but also incapable of managing himself or his affairs; (3) The reasons for instituting any proceedings … (4) The relation in which the Petitioner stands to the alleged [MIP], and the objects and conduct of the Petitioner; (5) The respective means of the parties and the amount of the costs.  These matters must always be important; but, in addition to them, there may be others, and if there are, they also must be taken into account by the court before coming to a conclusion as to what ought to be done.”

7. In the present context, it is pertinent to note what was said by the learned judge at p.561 as regards the amount of the costs claimed,

“Moreover, in considering these matters regard must be paid not only to the expenses incurred, but to the necessity for them, which will very often depend on the course taken by the Petitioner or by the [MIP].  Either party may by his conduct render an inquiry much more expensive than it might otherwise have been.”

8. To that, I would add that the conducts of the other family members may also have an impact on the costs actually incurred.

9. That case went on appeal. In the appeal, Lord Halsbury agreed with the observations of Lindley LJ except His Lordship did not regard the means of the parties to be relevant, see [1893] 1 Ch 466 at p.472.

… … …

21. The guiding principle is that an applicant who makes a Part II application bona fide in the interest of the MIP should usually get costs out of the estate and if that person has been conducting the application reasonably he should not be out of pocket. Hence, one can find the following statement from the judgment of Lord Halsbury in Re Cathcart [1893] 1 Ch 466 at p.473,

“It seems to me that if the demand for inquiry is really prompted by a desire to protect the person and property of the alleged [MIP], and is presented on reasonable grounds and in a reasonable manner, the expense of such a proceeding ought not to fall upon the person so invoking the aid of the law to protect those in need of protection.”

22. A family member other than the applicant is in a slightly different position. Once an application has been made, there is no need to incur an extra set of costs unless (1) there are matters relevant to the welfare of the MIP and pertinent to the court’s determination which ought to be brought to the court’s attention; and (2) the applicant has failed to allude to the same. If these criteria are satisfied, the family member may recover the reasonable costs in so doing out of the estate.

23. An applicant as well as other family members intending to participate in Part II inquiry should bear in mind the summary nature of the inquiry and the matters that the court can properly decide at this stage. Those advising them should also bring to their attention the court will scrutinize whether the costs incurred by them are reasonable and necessary before deciding whether such costs should fully be borne by the estate.

12.  In Re LCC[2], a case concerning a statutory will application, Poon J (as he then was) also said the following:

“10. First, as an overriding principle, the court should always exercise the discretion on costs judicially with a view to achieving a fair and just result on the facts of the case before it. In this regard, the court takes into account all the relevant circumstances.

11. Second, Part II proceedings are non-adversarial but quasi-inquisitorial. They are essentially protective in nature, which are taken for the benefit and protection of the persons believed to be incapable, by reason of mental incapacity, of protecting themselves and their property. Because of its special nature, the usual principles of costs in ordinary civil litigations do not apply to Part II proceedings : see In re Cathcart [1893] 1 Ch. 466, per Lord Halsbury at p. 471.

12. Third, it is the mental incapacity of the patient and his protection that necessitate the Part II proceedings. Thus always subject to the overriding discretion of the court, it is generally fair and just to order his estate to bear the costs of the proceedings.

13. Fourth, in exercising its protective jurisdiction under Part II, the court carries investigations and determines the matters before it fairly and expeditiously, always having regard to the patient’s best interest as the paramount consideration : see section 10A(2)(a) of MHO. The court expects the parties to act accordingly. Their role is to provide the court with all necessary information and submissions to facilitate the court in reaching a decision which is in the best interest of the mentally incapacitated person : see Re M, HCMP25/2005, unreported, 1 November 2005, per Lam J at para. 13. Viewed objectively, if a party has so conducted himself and has in the course of doing so acted bona fide in the interest of the patient and for his protection and property, he is entitled to reasonable costs from the patient’s estate even though his evidence or submissions are not accepted by the court. And the costs that he is entitled from the estate are normally assessed by the common fund basis : see Re C.E.F.D. [1963] 1 WLR 329 and Re D(J) [1982] 1 Ch. 237; applied in Re CYL, ibid.

14. This general rule reflects the court’s concern that appropriate applications and information relating to the patient should be brought to the court’s attention, and that the parties should not be discouraged from so doing in good faith by being penalized in costs. See In re Cathcart [1891] 1 Ch. 549 and Heywood & Massey: Court of Protection Practice 2009, para. 15-015.

15. Fifth, the patient’s estate is not at the mercy of the parties in costs. For the above general rule is always subject to the court’s overriding discretion and it may be departed from when circumstances justify so doing. While is it impossible to detail all the circumstances exhaustively, the parties’ conduct in the proceedings is plainly a relevant and indeed very important factor. Some of the matters pertaining to conduct that are essential for consideration are :

(1) Whether a party had a legitimate interest in participating in the Part II proceeding.

(2) Whether a party had acted bona fide in the best interest of the patient and for the protection of his property.

(3) Whether a party had adopted an adversarial approach by, for example, embroiling themselves in unwarranted allegations in evidence and arguments in submissions : see Re A, HCMH36/2008, unreported, 15 April 2009, per Lam J at para. 14.

(4) Whether it was reasonable for a party to raise or contest an issue.

(5) Whether a party had adduced or relied on patently irrelevant or unbelievable evidence or expert evidence which did not render any meaningful assistance to the court.

(6) Whether a party had unreasonably dragged out the proceedings by, for example, poor preparation of the case or pursuing points that were plainly untenable.

16. Sixth, in assessing quantum, the court will consider if the costs incurred were reasonably proportionate to the nature and complexity of the issues involved.”

Whether Cheung and Tsun should get their costs from the Estate?

13.  With these principles in mind, I proceed to determine whether Cheung and Tsun should get their costs from the Estate.

14.  In answering such question, I need to deal with briefly the relationship of the parties prior to the Part II application and the progress of the present proceedings.

15.  It is clear that there has been a history of mistrust within the family.  In §11(f) of the Certificate of Family and Property filed by Thomas (“the FP Certificate”), he had raised a number of concerns about the alleged improper handling of LMSP’s assets, including, inter alia, the propriety of the 2 powers of attorney executed by LMSP in 2011, the conduct of the affairs of some companies related to the family and the distribution of the funds in LMSP’s bank accounts.  Apart from these disputes, there has been disagreement between Thomas and Cheung in respect of the winding up of a company since 2012.

16.  In November 2016, Thomas arranged LMSP to be examined by 2 doctors (“the 2 Doctors”).  According to Tsun and Cheung, there was no prior notice of the medical examination, and the whole examination was causing great distress to LMSP.   2 days later, LMSP was hospitalised and was disgnosed to have suffered a stroke.  Cheung and Tsun took the view that the stroke was partly caused by the examination itself. 

17.  Thomas took out the present Part II application in June 2017.  In support of the application, Thomas submitted the Medical Certificates issued by the 2 Doctors who certified that LMSP was a mentally-incapacitated person (“MIP”) within the meaning of the Ordinance.

18.  The first hearing took place before me on 29 August 2017.  By that time, both Tsun and Cheung did not accept the Medical Certificates produced by Thomas.  I therefore made a suggestion that the parties should try to agree on a single joint expert to examine LMSP.  The hearing was therefore adjourned.

19.  Subsequently, the parties agreed to appoint Professor Lieh-Mak as the single joint expert.  Professor Lieh-Mak visited LMSP 3 times and produced a report on 14 September 2017 concluding that LMSP was a MIP for the purpose of the Part II application.

20.  On 25 September 2017, Tsun accepted Professor Lieh Mak’s assessment and proposed Ms Chan, who has considerable experience in handling welfare matters for MIPs, to be the Committee.  Initially, Thomas did not agree for Ms Chan to be the Committee.  It was only on 5 January 2018 that Thomas indicated his agreement for Ms Chan’s appointment.

21.  In the hearing on 11 January 2018, I appointed Ms Chan as the Committee.  Cheung took issue with the power of the Committee outside jurisdiction, and so I adjourned the hearing for further arguments on such issue and costs.

22.  Having considered the progress of the present case, I take the view that Cheung and Tsun should not get the costs for contesting the Medical Certificates adduced by Thomas.  According to Professor Lieh-Mak, LMSP is clearly a MIP under the meaning of the Ordinance, and so it would not have been reasonable, nor in the interest of LMSP, for Cheung and Tsun to contest the findings in the Medical Certificates.  In particular, it is their case that LMSP has been placed under their care for some time, and so they should have had a fair understanding of the then mental condition of LMSP.

23.  Cheung and Tsun seek to justify as to why they do not accept the Medical Certificates on their face value.  First, they question why Thomas, without prior notification, arranged LMSP to be medically examined by the 2 Doctors in November 2016.  Second, they claim that some of the factual matters stated in the Medical Certificates are not accurate, for example the time when LMSP started to lose her mental capacity.

24.  Despite their queries, the court eventually accepts that LMSP is a MIP and it would be in her interest to appoint a committee to manage the Estate.  In other words, the medical assessments made by the 2 Doctors are correct and it would not have been necessary for LMSP to be medically examined again by Professor Lieh-Mak.

25.  So far as the other information contained in the Medical Certificates is concerned, for example as to how long LMSP has suffered from mental incapacity, this is not relevant as the court only needs to focus on the mental condition of LMSP at the time of the inquiry.  Instead of demanding for a separate assessment with a view to correct some of the information contained in the Medical Certificates, Cheung and Tsun could have just indicated to the court that they would reserve the right to contest the other information contained in the Medical Certificates for the purpose of other proceedings.

26.  As I understand it, the mental history of LMSP would only be relevant in determining whether she had the capacity to do certain acts in the past years, which would in turn affect the rights and interests of the siblings.  The determination of such issue has nothing to do with the welfare interest of LMSP.  As emphasised by the courts on a number of occasions[3], the main considerations in Part II applications are always the interests and the requirements of the MIP concerned, and the Mental Health court should guard against any attempt by the MIP’s family members to make use of such kind of proceedings to advance their own personal interests.

27.  The same applies to the Tsun’s Affirmation. Though Thomas might have made certain allegations in the FP Certificate, it would not have been necessary, for the purpose of the Part II application, for Tsun to respond to each of those allegations.  It may be the case that, in future adversarial proceedings between the siblings, the court may have to determine whether Thomas’ allegations are true, but they are quite irrelevant for our present purposes.  Instead of filing an affirmation with a view to disprove Thomas’ allegations, Tsun should have just indicated to the court that she reserved the right to challenge those allegations in other proceedings.  As to her contention that Tsun’s Affirmation can help the court to determine who should be appointed to manage the Estate and the contents of the order for final relief[4], it would not have been necessary for Tsun to respond to each of Thomas’ allegations by way of affidavit evidence.  A general response by way of submissions would be sufficient for such purpose.

28.  Further, I accept that the proceedings have also been protracted by the following matters:

(i) Cheung took issue with the necessity of the appointment of a committee to manage the Estate and made the alternative suggestion for the court to make an order under s 24 of the Ordinance.

(ii) Tsun took issue with the power of the Committee to deal with LMSP’s assets outside Hong Kong.

29.  However, Cheung and Tsun have properly pointed out to the court that, as compared with professional accountants, a solicitor with relevant experience should be a more appropriate person to manage the Estate.  Hence, Cheung and Tsun should be entitled to some costs in obtaining legal advice as to who should be the appropriate committee and to make representations to the court in this regard.  They should also be entitled to some costs in obtaining legal advice for the appropriate provisions to be included in the order for final relief, for example as to whether §19 of original draft prepared by Thomas should be included in the final order.  Time incurred by their solicitors in dealing with the correspondence relating to these matters should also be allowed.  I therefore allow them to recover costs from the Estate to such extent.

Quantum of costs allowed

30.  The amounts of costs claimed by the parties are as follows:

(i) Thomas : $859,311

(ii) Cheung : $556,628

(iii) Tsun : $235,132.66

31.  In my judgment, the costs claimed by all the parties are grossly excessive.  According to my experience, the costs in uncontested proceedings are normally in the sum of about $50,000.  Though the present proceedings have been somewhat protracted by the actions taken by Cheung and Tsun, the application cannot be regarded as a complicated one.

32.  For Thomas, though it might be necessary to engage counsel to attend the first hearing in view of the possible complications, it would not be in the interest of LMSP to require further attendance of counsel in subsequent hearings.  I also take the view that the time engaged by solicitors in taking instructions and preparing documents is grossly excessive.  Though it might be necessary to obtain instructions in order to give a general background of the events leading to the Part II application, the time spent by Thomas’ solicitors went far beyond that.  With such amount of time claimed, I have reasons to believe that his solicitors had spent considerable time in taking detailed instructions from Thomas with a view to protect his own interests, and so the court should be cautious in scrutinising the costs claimed by him.

33.  Having considered all these factors, I only allow Thomas to claim costs in the sum of $450,000 from the Estate.

34.  For Cheung and Tsun, I only allow them costs to the extent as mentioned in §29 above.  As summary assessment, I allow costs each in the sum of $80,000 to be paid out from the Estate.