ME v. A-M G

FCMC 9947 / 2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 9947 OF 2012

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JUDGMENT
(Costs)

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Introduction

1.  The only outstanding issue in this matter pertains to costs with each side seeking costs against the other.

2.  On the 29 April 2014 the Petitioner husband issued the following summons:

1.   Time for transfer of the properties situate at Gyneju XXXX, Vilnius, Lithuania (“Vilnius”), Vaci Utca 74, Budapest, Hungary (“Budapest”), X Taney Manor, Dublin 14, Ireland (“Taney Manor”), XX Pikk Street, Apt XX, Tallinn 10123 (“Tallinn”) and shares in C Investments be extended such that references to 6 months in paragraphs 1, 2, 3, 4 and 6 of the order dated 30 October 2013 are replaced with references to 9 months, and the transfers of the relevant properties and shares shall take place by 30 July 2014.

2.   Time for transfer of the property situate at XX Bellevue, Islandbridge, Dublin 8 Ireland (“Bellevue”) be extended so that reference to 90 days in paragraph 5 of the Order dated 30 October 2014 is replaced with reference to 9 months, and transfer of the relevant property shall take place by 30 July 2014.

3.   The Respondent shall within 7 days pay the Petitioner the outstanding lump sum payment of HK$850,000 by transfer to his nominated bank account required by paragraph 7 of the Order dated 30 October 2014.

4.   The Respondent do pay the Petitioner’s costs of and associated with this summons, to be taxed if not agreed.

3.  This summons was heard by the court on the 30 October 2014. However by that time it was clear that there were wider issues that needed to be determined and that these had to do with the construction and enforcement of the court order entered into by the parties one year earlier on the 30 October 2013. I summarized the situation as follows in my Ruling:

The application by the husband was to originally extend the time of transfer from the 30 April 2014 to the 30 July 2014. However by the time that the matter came before me in September he was asking for an extension of time until today or until the transfers could be concluded. Today is exactly 12 months after the original order was made. In addition he sought payment of HK$850,000 in compliance with order 7 of the court order. The husband has complained that the wife has not been co operative and he says that she is intent on selling the properties in question and of reducing the lump sum due and owing to him.

The wife for her part asks that the properties be sold immediately – given that that is the default option under the terms of the order. She says that the husband has failed to comply with the condition precedent relating to the lump sum of HK$850,000 and that consequently she was not obliged to pay the lump sum owed until after that had been complied with. She denies that she has not been co operative.

4.  In my Ruling I found as follows in relation to the lump sum payment:

Conclusion on the lump sum payment

I will therefore make an order that the wife shall pay to the husband the sum of HK$700,000 less HK$50,150 = HK$649,850 forthwith. The remaining sum of HK$150,000 shall be paid into court pending a final reconciliation of the figures – such sum to also be paid forthwith. The balance of monies shall be released to the parties once there has been a final reconciliation of figures.

I have noted the husband’s assertion that he has been prevented from transferring the properties in part because of cash flow problems caused by the wife’s reluctance to pay him the lump sum in question. This obstacle, if true, has now been removed.  

5.  It should also be noted that I did not find entirely for one side or the other in this Ruling. I granted the husband his request in relation to an extension of time for the transfer of the properties until the 31 December 2014. I did not accept the husband’s argument that the parties should be held jointly responsible for all costs and expenses of the properties from the date of separation. Further I did not accept the wife’s argument that she should be entitled to half of the rental of the properties that were nominally held in the name of the husband. I noted that there was no accounting exercise undertaken at the time that the consent summons was entered into. This was with respect to any expenses outstanding as at that date. It follows that both sides must accept some responsibility for that oversight. There were also other arguments small in themselves, but which the parties found impossible to compromise on. Given all of that, both sides presented arguable, but rather extreme cases on the basis of the consent order as drafted. As I have said I did not wholly accept either side’s arguments as presented.

6.  The parties were unable to resolve the outstanding issues arising out of the Ruling and in particular the required reconciliation of figures. Consequently the matter returned to court on the 30 March 2015 in order to deal with that and the issue of costs. It only proved possible to deal with the reconciliation of figures and the issue of costs was further adjourned. I directed that it be dealt with on paper and I gave both sides the opportunity to file a further submission in reply if so required. Both sides elected to do so. 

7.  In so far as the reconciliation of figures was concerned the final order was made following the hearing on the 30 March 2015:

1. Following the reconciliation of figures pursuant to the Ruling dated the 30 October 2014, the sum of HK$150,000.00 which is currently held in Court shall be released to the parties forthwith as follows:

1.1. The sum of HK$120,653.00 shall be released to the Petitioner’s Solicitors, Messrs Howse Williams Bowers; and

1.2. The sum of HK$29,347.00 shall be released to the Respondent’s Solicitors, Messrs Oldham Li & Nie.

The law on costs

8.  The law in relation to costs is well settled.  In particular reference is often made to Butler-Sloss LJ in the leading case of Gojkovic v Gojkovic [1992] Fam 40, which is routinely followed in the Family Court in Hong Kong. This states as follows:

“There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation: for instance material non-disclosure of documents. Delay or excessive zeal in seeking disclosure are other examples. The absence of an offer or of a counter-offer may well be reflected in costs – or an offer made too late to be effective. The need to use all the available money to house the spouse and children of the family may also affect the exercise of the court’s discretion. It would, however, be inappropriate, and indeed unhelpful, to seek to enumerate and possibly be thought to constrain in any way, that wide exercise of discretion. But the starting point in a case where there has been an offer is that, prima facie, if the application receives no more or less than the offer made, she/he is at risk not only of not being awarded costs, but also of paying the costs of the other party after communication of the offer and a reasonable time to consider it. That seems clear from the decided cases and is in accord with the Rules of the Supreme Court and the County Court Rules 1981 requiring the court to have regard to the offer. I cannot, for my part, see why there is any difference in principle between the position of a party who fails to obtain an order equal to the offer made and pays the costs, and a party who fails by the offer to meet the award made by the court. In the latter case prima facie costs should follow the event, as they would do in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position”.

9.  Clearly the issue of costs lies in the discretion of the court and costs are normally expected to follow the event.  This presumption is more easily displaced in family proceedings that in others.  The court may be influenced by the existence of without prejudice save as to cost letters but they do not bind the exercise of the court’s discretion.  (See In re Elgindata Ltd (No.2) [1992] 1 WLR and Gojkovic v Gojkovic [1992] Fam 40).

Decision

Costs pre – ruling of the 30 October 2014

10.   In so far as the costs prior to the Ruling of the 30 October 2014 are concerned I will make an order that there be no order as to costs. As indicated above I did not find wholly for one side or the other and given the way in which the consent summons was drafted it seems to me that this is the fairest outcome in the circumstances.

Costs post ruling of the 30 October 2014

11.   Both parties attempt to blame the other for the impasse that followed. I have now had an opportunity to read the without prejudice correspondence that passed between the parties in the intervening period. The following is of note. On the 3 November 2014, immediately following the hearing on the 30 October, the wife’s solicitors wrote to the husband’s solicitors and made the following without prejudice save as to costs offer:

3.   In the meantime, we set out below our client’s proposals for a full and final settlement with your client:

(i)   the Order for our client to pay any further amounts into Court be set aside (i.e. the payment of HK$150,000 into court);

(ii)   the Order that there be an account of all the expenses incurred on the joint properties be set aside;

(iii)   the hearing on 20^th February 2014 at 9:30 am be vacated; and

(iv)   there be no order as to costs including the costs reserved by the Orders dated 16^th May 2014 and 30^th October 2014.

12.   Thus it seems that the wife was asking that she retain the sum of HK$150,000 and that each party simply walk away from the situation on the basis of no order as to costs.

13.   Two days later the wife’s solicitors wrote again with a revised offer as follows:

2.   Our client would like to finalise matters without further costs being incurred and therefore proposes the following:

2.1.   Our client will pay to your client both the lump sums of HK$649,850 and HK$150,000 totalling HK$799,850.

2.2.   The Draft Order be amended to reflect the lump sum payment to your client and the extension of time for the transfers to 31^st December 2014, whilst the remaining paragraphs be discharged.

2.3.   No Order as to costs including any costs reserved.

14.   This offer beats the final order of the court as set out in paragraph 7 above. This offer was rejected by the husband on the 19 November 2014. Four months later, on the 24 March 2015, which was only 6 days before the scheduled hearing date, the husband wrote proposing exactly the same as follows:

   We are instructed to put forward the following offer to you for your client’s consideration.

1.   The sum of HK$150,000 paid into Court shall be released to our client forthwith.

2.   Our client proposes that each party should walk away from this case without any sum due one to the other.

3.   The hearing on 30 March 2015 be vacated.

4.   There be no order as to the costs of and incidental to our client’s summons dated 29 April 2014.

15.   The wife seems somewhat aggrieved by this and counter offered in her letter of the 25 March 2015 as follows:

3.   However, our client would like to finalize matters without the need to attend the hearing on 30^th March 2015 and without further costs and time being spent on the case.

4.   Therefore, our client has instructed us to put forward proposals for your client’s consideration, which takes into account our client’s Counsel’s fees since her without prejudice offer of 5^th November 2014.  Our client has already briefed counsel for the hearing on 30^th March 2015 and has met with Counsel in conference, in preparation for the costs hearing.  Our client’s proposal is as follows:

4.1   The sum of HK$150,000 paid into Court be released to our client forthwith.

4.2   Your client shall pay to our client a lump sum of HK$65,000.

4.3   There be no order as to costs including any costs reserved.

4.4   The hearing listed on 30^th March 2015 be vacated.

5.   We await hearing from you by 12 noon on Thursday 26^th March 2015 at which time this offer will lapse, unless extended.

16.   In other words the wife reverted to her original position of the 3 November – i.e. that she retains the HK$150,000. In addition she asked for a further HK$65,000 to cover counsel’s costs. I take the view that the wife’s original proposal of the 5 November was a sensible one. The husband’s refusal of that is noted. The husband’s later offer on the exactly the same terms really came very late in the day and only after further costs had been expended. It really came too late to be effective. Unfortunately the wife’s last offer made a sensible compromise impossible to achieve. It is that final offer that now stands when considering the issue of costs.

17.   Consequently it seems to me that in all of the circumstances there shall be no order as to costs for this period also. Had the wife stood by her second offer of the 5 November, then I most likely would have made a costs order in her favour. She chose not to do so.