LEUNG FOR WING v. LIU SHAOHUAN

HCMP 3578/2016

[2018] HKCFI 1941

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3578 OF 2016

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IN THE MATTER OF FAMILY COURT MATRIMONIAL CAUSES
NO. 237 OF 2013 BETWEEN THE FOLLOWING PARTIES:

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J U D G M E N T

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Introduction

1.  This application raises the question as to whether a costs order awarded in favour of a successful party who is named as an “intervener” in Family Court proceedings is entitled to enforce his costs order against the unsuccessful legally aided party and/or the Director of Legal Aid (“Director”) under section 16C(1)(b)(i) and/or 16C(b)(ia) of the Legal Aid Ordinance, Cap 91 (“Ordinance”).

2.  Counsel Mr Edward TC Chan appeared for the applicant (“Mr Cheng”) at the hearing and Counsel Ms Queenie Lau appeared for the Director.

Background

3.  The Family Court proceedings concerned were Matrimonial Causes No 237 of 2013 (“FCMC Action”) issued by the petitioner husband (“H”) against the respondent wife (“W”).   On 8 October 2013, W was granted a legal aid certificate for the purpose of defending the FCMC Action limited to the questions of maintenance and custody (“LA Certificate”). There were no children of the family.

4.  On 15 October 2013, W issued  a Notice of an Application for Ancillary Relief  (Form A)[1] indicating her intention to apply for  financial orders for herself as set out in her Form A.

5.  On 18 November 2013, the Family Court Judge George Own pronounced a Decree Nisi of divorce and adjourned the question of ancillary relief to be dealt with in chambers.

6.  On 17 January 2014, W issued an inter-partes summon against H under section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) seeking, amongst other things, to set aside two assignments respectively in relation to two pieces of land (“s17 Application”). The 1^st piece of land was jointly owned by H and his brother and was assigned to another person and the 2^nd piece of land  which was solely owned by H was said to be sold and assigned  to the present applicant Mr Cheng.  

7.  In the s17 Application, W sought leave to join H’s brother and the two assignees (including Mr Cheng) as interveners.

8.  The s17 Application was   fixed for a call over hearing on 4 April 2014 (“1^st Hearing”) which was also the First Appointment hearing for W’s application for ancillary relief.   It was not clear whether service was effected on H’s brother and the other assignee by W.  So far as Mr Cheng was concerned, he was not served.  Anyway, apart from H and W and their legal representatives, no one else had appeared at the 1^st Hearing.  Judge Own gave directions for H and W for filing of their respective affirmations and adjourned the s17 Application to 29 July 2014 (“2^nd Hearing”). 

9.  On 7 April 2014, W’s solicitors served the s17 Application together with a copy of W’s supporting affirmation on Mr Cheng and the others by post.  In the letter, Mr Cheng was informed of the date of the 2^nd Hearing and that he should attend the hearing personally or through solicitors.  Mr Cheng instructed his present solicitors (“RH & CO”) to reply on 13 June 2014 asking W’s solicitors for a copy of the order made at the 1^st Hearing and asked whether there was any order or direction joining him as a 3^rd Intervener.  W’s solicitors responded by saying there was no order or direction joining Mr Cheng.  RH & Co wrote again to W’s solicitors seeking confirmation that no order or direction was made for filing of evidence by Mr Cheng and no order was made for Mr Cheng’s personal attendance at the 2^nd Hearing.  There appeared to be no reply from W’s solicitors.

10.  Neither Mr Cheng nor his solicitors attended the 2^nd Hearing.  Thereafter, on 12 August 2014, W’s solicitors served a copy of the order of 29 July 2014 on RH & Co.   

11.  There was no prior notice given by W’s solicitors to RH & Co that the W was going to seek an order to join Mr Cheng as the 3^rd Intervener at the 2^nd Hearing if he failed to attend.  Anyway, notwithstanding that Mr Cheng and his solicitors were absent, and presumably at W’s request, Judge Own gave leave then and there for W to join H’s brother, the other assignee and Mr Cheng as parties to the s17 Application respectively as 1^st Intervener, 2^nd Intervener, and 3^rd Intervener, and gave leave for W to serve the s17 Application and all documents and orders filed thereafter on the 3 Interveners.  Judge Own then adjourned the s17 Application, and also the “First Appointment” to 28 November 2014 (“3^rd Hearing”).

12.  RH & Co was served with a copy of the order made at the 2^nd Hearing (“29.07.14 Order”) on 12 August 2014 and on 1 September 2014 they filed a notice to act for Mr Cheng. However, Mr Cheng took no steps to set aside the 29.07.14 Order made in his absence.

13.  At the 3^rd Hearing, Judge Own gave directions for the filing of affirmations and that the s17 Application to be fixed for a PTR on 26 March 2015 (“1^st PTR”), and W’s application for ancillary relief was adjourned sine die with liberty to restore after the determination of the s17 Application.  At the 1^st PTR, Judge Own gave directions for the joint valuations and adjourned the s17 Application to a 2^nd PTR hearing on 17 June 2015 (“2^nd PTR Hearing”).

14.  The following detailed directions for filing of pleadings were then given by Judge Own at the 2^nd PTR:

(i) The 2^nd PTR be adjourned to a hearing on 15 October 2015 for a another PTR hearing (“3^rd PTR”);

(ii) W (Respondent) to file Points of Claim within 21 days;

(iii) H (Petitioner), the 1^st, 2^nd and the 3 Interveners to file Points of Defence within 21 days thereafter:

(iv) W to file Points of Reply within 14 days thereafter;

(v) Parties to exchange List of Documents within 21 days thereafter, with inspection thereafter, if necessary, within 7 days;

(vi) The affirmations previously filed by the respective parties be treated as their examination in chief during the trial of the s17 Application;

(vii) Leave to the parties to issue all necessary applications including any interlocutory applications 14 days prior to the 3^rd PTR;

(viii) 14 days prior to the 3^rd PTR, the parties to file a list of disputed issues and a chronology of events;

(ix) 14 days prior to the 3^rd PTR, each party was to serve a certificate on the others the estimated time required for (i) opening submissions(ii) examination in chief of each of ow witnesses; (iii) cross examination of the other parties’ witnesses; (iv) closing submissions;

(x) No further affirmations were to be filed.

15.  At the 3^rd PTR, the trial dates for the s17 Application were fixed from 20 to 22 January 2016.

16.  On 31 December 2015, the LA Certificate issued to W was amended to cover the s17 Application.

17.  Eventually the trial took place on 20 and 21 January 2016, and on 16 May 2016, Judge Own handed down his judgment on the s17 Application refusing to set aside the sale of the piece of land by H to Mr Cheng and ordered the sale was to stand. In other words, W’s s17 Application as against the Mr Cheng failed.  He further ordered W to pay to H and Mr Cheng the costs of the s17 Application in respect of that transaction, to be taxed if not agreed, with a certificate for counsel, and that W’s own costs be taxed in accordance with Legal Aid Regulations.  (“Costs Order”).

18.  So far as Mr Cheng was concerned, he did not take part in any of the subsequent proceedings in the FCMC Action after 16 May 2016, save for taxation of costs.

19.  On 1 June 2016, W’s solicitors wrote to the Family Court to restore the hearing of the First Appointment for W’s application for ancillary relief, and this was not copied to any of the Interveners.

20.  As W had succeeded against H, 1^st and 2^nd Intervener in the s17 Application in respect of the other piece of land, H and the 2^nd Intervener had sought leave to appeal but this was later dismissed on 3 November 2016, and that concluded W’s s17 Application against all the Interveners.

21.  On 10 August 2016, Mr Cheng issued a notice of commencement of taxation of his costs.  W’s legal aid certificate was later discharged on 29 November 2016.

22.  The Director took the view that neither s16C(1)(b)(i) nor s16C(1)(b)(ia) of the Ordinance applies, and that under s16C(1)(b)(ii), neither the Director nor the aided person, ie W, was liable to pay Mr Cheng’s costs under the Costs Order .  This was because W had paid a contribution of only HK$3,429, which was less than the costs incurred by the Director in the FCMC Action and left no excess, and therefore, neither the Director nor W ought to be liable to pay Mr Cheng’s costs under the Costs Order.

The relevant provisions of the Ordinance

23.  Section 19(1)  of the Ordinance sets out that a court[2] or the Court of Final Appeal may make an order for costs in favour of or against an aided person in the same manner and to the same extent as it may make an order for costs in favour of or against any other person but such an order may only be enforced against the aided person and the Director to the extent permitted by section 16C.

24.  Section 16C of the Ordinance provides as follows:

“16C. Liability for costs

(1) Subject to section 18A, the liability of an aided person and of the Director for costs shall be determined in the following manner—

(a) an aided person shall not be liable for costs incurred by the Director on his behalf—

(i) in the case of costs incurred under the Supplementary Legal Aid Scheme, except in accordance with section 32; and

(ii) in any other case, in excess of such aided person’s contribution;

(b) where a court or the Court of Final Appeal makes an order for costs against an aided person, or an agreement is entered into for the payment of costs by an aided person, in favour of a person not receiving legal aid—

(i) in any case in which the party not receiving legal aid is a defendant or respondent in the proceedings (other than a defendant or respondent to a counterclaim or cross-petition), or in the case of an appeal (including an appeal to, or an application for leave to appeal to, the Court of Final Appeal) is a respondent therein (other than a respondent to a cross-appeal) such costs shall be paid by the Director;

(ia) in any case in which the party not receiving legal aid is a defendant to a counterclaim or respondent to a cross-petition, or in the case of an appeal (including an appeal to, or an application for leave to appeal to, the Court of Final Appeal) is a respondent to a cross-petition, the costs occasioned by the counterclaim, cross-petition or cross-appeal filed by or on behalf of the aided person shall be paid by the Director;

(ib) in any case in which the party not receiving legal aid is an appellant in an appeal (including an appeal to, or an application for leave to appeal to, the Court of Final Appeal) and in the court whose judgment or order is appealed against the plaintiff was an aided person, such costs shall be paid by the Director; and

(ii) in any other case, neither the Director nor the aided person shall be liable for such costs unless a contribution is payable by the aided person under section 18(1)(b); in which case the Director on behalf of the aided person shall pay such costs to the extent that the contribution is in excess of the costs incurred by the Director on behalf of the aided person; and

(c) where a court or the Court of Final Appeal makes an order for costs against an aided person, or an agreement is entered into for the payment of costs against an aided person, in favour of a person who is also receiving legal aid, neither such person shall be liable for such costs in excess of his contribution and the contribution of the party who is liable for the payment of costs under such order or agreement shall be charged first with the costs of both parties and thereafter the contribution of the other party shall be charged to the extent of his own costs in so far as such costs are not recovered from the contribution of the party liable to pay costs.

(2) Subsection (1), in so far as it relates to the costs of an aided person, relates only to costs arising in respect of proceedings to which, and during the period to which, a legal aid certificate relates, and nothing in that subsection shall otherwise affect the liability for costs of an aided person.

(3) Where subsection (1) limits the liability for costs of an aided person such limitation shall extend—

(a) where the aided person has been granted legal aid in a representative or fiduciary capacity, to any other person on whose behalf the aided person is acting and for the benefit of any fund held for such other person; and

(b) where the aided person has been granted legal aid as the guardian of an infant, to the infant.”

25.  As summarised by Bohkary PJ in  his judgment in the Court of Final Appeal decision of Common Luck Investment Limited and  Director of Legal Aid (2002) 5 HKCFAR 467, FACV 1/2002, 30/07/02,  there are 7 situations in which a non aided person who has been awarded costs against a legally aided person can recover such costs from the Director[3] (“7 Scenarios”).  The 7 Scenarios are :

(1) any claim to which he was a defendant (s16C (1)(b)(i));

(2) any petition to which he was a respondent (s16C (1)(b)(i));

(3) any appeal to which he was a respondent (s16C (1)(b)(i));

(4) any counterclaim to which he was a defendant to counterclaim (s16C (1)(b)(ia));

(5) any cross-petition to which he was the respondent (s16C (1)(b)(ia));

(6) any cross-appeal to which he was the respondent to cross-appeal (s16C (1)(b)(ia)); and

(7) an appeal and the proceedings below even where he was the appellant if the legally-aided person had been the plaintiff below (s16C (1)(b)(ib)).

26.  The Ordinance was first introduced on 12 January 1967 to make provision for the granting of legal aid in civil actions to persons of limited means and for purposes incidental thereto or connected therewith.  Sections 16B and 16C were first added under the Legal Aid (Amendment) 1984 Bill[4], and in the “Explanatory Memorandum”, these sections were added to “clarify the provisions of the Ordinance as to the benefits afforded to aided person and the liability of the aided person to costs by introducing 2 new sections specifying these and which replace existing provisions in this respect”.

27.  Thereafter, there were further amendments to s16C under the Legal Aid (Amendment) 1989 Bill, including repealing the previous subparagraph (i) of s16C(1)(b) and replacing it by a new subparagraph (i) and subparagraphs (ia) and (ib) were added.  These have remained the same save that in so far I could see, in the 1995 amendments, “Privy Council” was replaced by “Court of Final Appeal”.

28.  The “Explanatory Memorandum” of the 1989 Bill explained that the amendments were to clarify the provisions to section 16C “to make it clear that the Director shall pay a successful non-aided party’s costs of counterclaim, cross-petition or cross-appeal where such party is the defendant or respondent in these proceedings.  The clause also provides that the Director shall pay the costs of appeal by a successful non-legally aided appellant who was unsuccessful in the original proceedings in which the plaintiff was legally aided”.

29.  The Explanatory Memoranda or legislative materials provided to this Court do not shed any further light on the construction of s16C of the Ordinance.  

The Director’s grounds for opposing

30.  The Director’s reasons for saying neither s16C(1)(b)(i) nor s16C(1)(b)(ia) applies in the present case are as follows:

Re: s16C(1)(b)(i) (“Subparagraph (i)”)

(i) Mr Cheng is not in substance a defendant or a respondent in FCMC Action;

(ii) The s17 Application cannot be said to be separate “proceedings” for the purposes of Subparagraph (i);

(iii) Even if the s17 Application were separate “proceedings”, Mr Cheng was an “intervener” and not a “respondent”;

(iv) Further, s16C of the Ordinance cannot be construed as being applicable to an “intervener” who is in substance a defendant or respondent.

Re: s16C(1)(b)(ia) (“Subparagraph (ia)”)

As for Subparagraph (ia), this does not apply as the s17 Application cannot be properly construed as either a counterclaim or a cross petition; as a matter of both fact and law, Mr Cheng could not be in substance a defendant to a counterclaim or respondent to a cross-petition for the purposes of Subparagraph (ia).

List of Issues

31.  Ms Lau has submitted on behalf of the Director that the Court needs to analyse the following questions/issues:

(1) Whether Mr Cheng can be said to be “in substance” a defendant, respondent or co-respondent “in the proceedings” for the purposes of Subparagraph (i) (“Issue 1”) in particular:

(a) What are the “proceedings” referred to in Subparagraph (i) and does the s17 Application constitute a separate claim or proceedings in which parties’ roles can be looked at separately from the main action? (“Issue 1(a)”)

(b) As a matter of fact, is Mr Cheng, being an intervener, in substance a defendant, respondent or co-respondent? (“Issue 1(b)”)

(c) As a matter of law, can Subparagraph (i) of the Ordinance be construed to apply to an intervener who is in substance a defendant or respondent? (“Issue 1(c)”)

(2) Whether Mr Cheng can be said to be “in substance” a defendant to a counterclaim or respondent to a cross-petition for the purposes of Subsection (ia) (“Issue 2”), in particular:

(a) Does the s17 Application constitute a counterclaim or cross-petition?

(b) As a matter of fact, is the Applicant, being an intervener, in substance a defendant or respondent?

(c) As a matter of law, can Subparagraph (i) of the Ordnance be construed to apply to an intervener who is in substance a defendant to a counterclaim or respondent to a cross-petition?

Issue 1

Issue 1(a)

32.  What are the “proceedings” in the present case involving Mr Cheng?  Can the s17 Application be said to be separate “proceedings” for the purposes of Subparagraph (i) as argued by Mr Chan, or as Ms Lau has invited the Court to hold, that the FCMC Action constitutes the “proceedings” under Subparagraph (i) ?

33.  Ms Lau has made 3 points under Issue 1(a), namely:

(1) Interpreting the s17 Application as “proceedings” for the purposes of Subparagraph (i) would be completely contrary to the proper approach in construing s16C of the Ordinance as propounded by the Court of Final Appeal in the Common Luck case;

(2) The argument that Mr Chan is seeking to make about the meaning for “proceedings” in Subparagraph (i) was made and rejected in Ye Jinxiang v Kam Ping Kwong HCAP 25/2012 (unreported) judgment 18.02.15 by the Court in that case applying the principles laid down by Court of Final Appeal in the Common Luck case;

(3) The common feature of the 7 Scenarios where the Director has to bear the costs in favour of a non-aided person is that such costs have been brought about and occasioned to the non-aided party by the aided person having vexed him by claim, counterclaim or appeal but unsuccessfully, and had H not commenced the FCMC Action in the first place, the s17 Application would not have arisen, and thus the Director did not facilitate the bringing of an application under s17 of MPPO.

34.  First of all, the word “proceedings” in the Ordinance is defined in section 2(1) of the Ordinance to include[5]:

(a) legal proceedings;

(b) negotiations prior to the issue of legal proceedings, including mediation, and for the payment of compensation by the Motor Insurers’ Bureau for which no legal proceedings are issued;

(c) an application to the Mental Health Review Tribunal.

35.  Part II of the Ordinance sets out the scope of legal aid and sections 5 and 5A thereunder provide that legal aid /or supplementary legal aid and subject to the provisions of the Ordinance be available for any person whose financial resources do not exceed the stipulated limits for the “civil proceedings” mentioned in Part 1 of Schedule 2 or Part 1 of Schedule 3.

36.  Section 10(3) then states that a person shall not be granted a legal aid certificate in connection with any proceedings unless he shows that he has reasonable grounds for taking, defending, opposing or continuing such proceedings or being a party thereto and may also be refused legal aid under those circumstances set out therein.

37.  Section 18 further sets out the contributions an aided person shall pay to the Director and section 18A sets out the Director’s first charge on property recovered or preserved for the aided person in the proceedings or in any other proceedings in respect of which the person was aided and which, in the opinion of the Director, were substantially related to or connected with the proceedings in which property was recovered or preserved.

38.  In the present case, the legal aid certificate granted to W on 8 October 2013 was not in respect of the whole of the FCMC Action, and only for purpose of defending the FCMC Action limited to the questions of maintenance and custody.  However, the certificate seems to be meaningless, since all H sought was a divorce in the FCMC Action based on the parties’ two years’ separation, and H did not made any claims at all against W in the petition for costs, or for maintenance or any ancillary relief and there were no children of the family.   Prior to the grant of her legal aid, W did try to apply for leave to file an answer out of time which was dismissed by Judge Own.  Although she tried to file a further application in this regard, this was withdrawn by her. 

39.  Thus, by the time the legal aid certificate was issued, there was nothing for W to defend or oppose, or to continue in the FCMC Action.   After the issue, W’s solicitors filed a Form A to commence an application for ancillary relief.  The legal aid certificate was subsequently amended or extended on 31 December 2014 and retrospectively to cover W’s s17 Application issued on 17 January 2014.  

40.  Having regard to W’s legal aid certificate, in my view, the “civil proceedings” for which W was granted legal aid was not in fact to defend the FCMC Action, but for W to commence or initiate an application for maintenance or ancillary relief and later the s17 Application.

41.  As to whether the ancillary relief proceedings and the s17 Application constitute separate claim/s or proceedings from the matrimonial cause (or the ‘main action’ as referred to by Ms Lau) under Subparagraph (i), I think one would need to examine the statutory provisions in MPPO, the relevant statutory provisions in the Matrimonial Causes Ordinance (“MCO”) and the subsidiary legislation, ie the Matrimonial Causes Rules (“MCR”) to understand the nature of those proceedings.  Although neither Counsel has made submissions on those relevant provision, I do not think what is set out below will be controversial.

42.  There are essentially three types of actions in the Family Court, namely those commenced under the title “FCMC”, those commenced under the title “FCJA”, and those commenced under the title “FCMP”. “FCMC” stands for “Family Court Matrimonial Causes”, “FCJA” stands for “Family Court Joint Application” and “FCMP” stands for “Family Court Miscellaneous Proceedings”.

43.  The term “matrimonial cause” is defined in section 2 of MCO to mean “any proceedings for (a) divorce; (b) nullity; (c) judicial separation;(d) presumption of death and dissolution of marriage”.

44.  MCO, under Part II thereof, sets out the jurisdiction of the court for a “matrimonial cause” and then, under Parts IIA to V thereof, provides for the commencement of a “matrimonial cause” and various matrimonial causes.  The original Part VI of MCO was in relation to the proceedings for “ancillary relief”.  The MCO was repealed substantially in 1972 and Part IV with all the provisions in relation to “ancillary relief” were removed from MCO, to be separately provided for in the new ordinance MPPO when MPPO came into effect on 1 July 1972.  

45.  MPPO was introduced to, amongst other things, consolidate and amend the law relation to ancillary and other relief in matrimonial causes and other matrimonial proceedings and for purposes connected with or relating to these matters.  Section 2A under Part IA of the MPPO then provides for the commencement of proceedings under MPPO and Part II sets out those ancillary and other relief in matrimonial causes and other matrimonial proceedings. 

46.  Section 25 of MPPO provides for the commencement of proceedings for financial provision order.  In particular, section 25(2) provides for when proceedings for ancillary relief may begin, and how the application is to be made, namely in the (1) petition, (2) joint application or (3) answer, or (4) subsequently with leave of the court.  Section 25(3) states that “ancillary relief” in section 25(2) means relief under any of the provisions of sections 3, 4, 5, 6 and 6A of MPPO.  Further, Practice Direction 15.11 provides that a notice of intention to proceed with the application or a notice of application for ancillary relief shall be made by notice in Form A (Form 25) annexed to the Practice Direction 15.11.

47.  The procedural rules for matrimonial causes and proceedings for ancillary relief, and other matrimonial proceedings are provided under one umbrella set of rules, namely MCR.  Rule 3 of MCR further provides that the Rules of the High Court (RHC) shall apply with the necessary modifications to the commencement of matrimonial proceedings in, and to the practice and procedure in matrimonial proceedings.

48.  The term “matrimonial proceedings” is defined in rule 2 of the Matrimonial Causes Rules to mean any proceedings with respect with which rules made be made under section 54(1) of MCO or section 32 of MPPO.  Thus the term “matrimonial proceedings” is an all encompassing term, which include both proceedings under MCO and all the proceedings under MPPO. 

49.  As seen from the Final Report on the Review of Family Procedure Rules issued by the Chief Justice’s Working Part on Family Procedure Rules (“Final Report”),  the term “ancillary relief” is regarded as an archaic term, and that the use of the descriptive term “ancillary” which connotes that the remedy sought is not free-standing may not be correct, and that the Working Party considered that “financial order” is more preferable as a neutral and general all-encompassing term[6].  Further, under Recommendation 10, although it is recommended that the statutory definition of “matrimonial cause” in the MCO should be retained and incorporated into the new rules, it is not necessary to give a definition of “matrimonial proceedings” in the new rules and instead there will be a new comprehensive term “family proceedings”[7].

50.  Proceedings for a “matrimonial cause” are quite different in nature from those for ancillary relief. Different procedural rules apply.  The proceedings for a “matrimonial cause” is formal, and this can be seen that for a cause begun by way of a petition, there is time stipulated for filing of acknowledgement of service and service of pleadings and in a defended cause, the formal procedure for discovery and inspection of documents prescribed by the RHC shall apply.  By comparison, for the trial in ancillary relief proceedings, the court has power to investigate and may order discovery etc at any stage of the proceedings[8].

51.  Moreover, the hearing or trial of a “matrimonial cause” is usually held in open court unless otherwise ordered, whereas the hearing or trial of an application for “ancillary relief” is usually held in chambers not open to public.

52.  The parties in a “matrimonial cause” can also be quite different as those parties in proceedings for “ancillary relief.”

53.  The main parties to “matrimonial cause” are the parties to the marriage or the spouses.  If the proceedings for the matrimonial cause are commenced by way of a petition, the spouse who initiates the proceedings and issues the petition is called the “petitioner” and the other spouse is called “respondent”.  If the proceedings for the matrimonial cause are commenced by way of a joint application, the parties or spouses are called respectively “1^st applicant” and “2^nd applicant”.

54.  However, in a “matrimonial cause” commenced by way of a petition based in adultery and/or contains certain allegations, apart from the spouses, there may be other persons made parties in the cause as can be seen under section 14(1) of MCO and rule 13 of MCR.

55.  Thus, in a “matrimonial cause”, apart from the spouses, there may be other parties apart from the respondent spouse, called a “co-respondent”, or a “party cited”[9], and that these will only be  parties to the  matrimonial cause, and they may not be parties to the ancillary relief  proceedings at all.

56.  As for the parties to the ancillary relief proceedings, as seen in PD 15.11, the party making the application can be (i) the petitioner or the respondent in the petition; or (ii) the respondent in the answer; or (iii) the 1^st applicant or the 2^nd applicant in the joint application.  In PD 15.11, the party making the application is referred therein as the “Applicant” and the other party is referred to as the “Respondent”.   Further, under PD 15.11, at the First Appointment, the Judge gives various directions, including the service of a Form F (Notice of allegation in proceedings for ancillary relief) on all relevant persons under s 6A(5) and s17 of MPPO[10], and the  persons served with the Form F may intervene by applying for directions regarding the filing and service of pleadings and the conduct of further proceedings,  within 8 days after receipt of the Form F.

57.  Quite separate from applying to intervene, since under rule 3 of MCR, the RHC shall apply with modification to matrimonial proceedings, an applicant in an application for ancillary relief can also apply for joinder of other parties under the RHC, in particular under Order 15 rule 6(2) of RHC. 

58.  Hence, as seen above, apart from the spouses, the other parties in ancillary relief proceedings can be quite different from the parties in a matrimonial cause.  Further, there are different rules in MCR in relation to the transfer of a cause or an application therein (rule 32) and the transfer of an application for ancillary relief (rule 80) from the District Court to the Court of First Instance.

59.  I accept that the matrimonial cause and the ancillary relief proceedings all come under the same umbrella action number under the “FCMC” or “FCJA”, and indeed any related enforcement proceedings, such as judgment summons or garnishee proceedings or contempt proceedings are also issued under the same umbrella action.  I also accept that an application for ancillary relief is pendent upon the matrimonial cause and has no independent existence.   However, in my view, ancillary relief proceedings under MPPO are not “interlocutory applications or interlocutory proceedings” , and rather they are parallel proceedings as the matrimonial cause and  are  separate  proceedings from the matrimonial cause[11]. 

60.  That the proceedings for ancillary relief under MPPO are different and separate proceedings from the matrimonial cause  may also  be  supported by the definition of the term  “domestic proceedings”  in section  2 of the Ordinance[12].  Although there is no specific reference to “domestic proceedings” under the definition for “proceedings”, or under Schedules 2 or 3, it is not disputed that “proceedings” or “legal proceedings” or “civil proceedings” in the Ordinance should include “domestic proceedings”.

61.  Under section 2 of the Ordinance, “domestic proceedings” is defined to mean proceedings under:

(i) MPPO

(ii) MCO

(iii) Guardianship of Minors Ordinance (Cap 13)

(iv) Separation and Maintenance Orders Ordinance (Cap 16) or

(v) Parent and Child Ordinance (Cap 429).

62.  The above definition of “domestic proceedings” in the Ordinance contemplates 5 separate types of domestic proceedings, respectively under each of those 5 different ordinances, and in my view the definition also supports that proceedings under MPPO and MCO are different and separate types of proceedings.

63.  I now come to an application under s 17 of MPPO.  Although an avoidance of disposition order is not regarded as “ancillary relief” under s 25(3) of MPPO for the purposes of s 25(2), the definition of “ancillary relief” under rule 2 of MCR includes an avoidance of disposition order. 

64.  S 17(1) of MPPO begins by stating that “Where proceedings for relief under any of the relevant provisions of the Ordinance (hereafter in this section referred to as “financial provision” are brought by a person (hereafter in this section referred to as “the applicant”) against any other person (hereafter in this section referred to as the other party”, the court may, on an application by the applicant…”.  This means that an application under s 17 is to be made within the proceedings for financial provision.  Further, it is stated that under rule 77(2) of MCR, an application for an avoidance of disposition order shall, if practicable, be heard at the same time as any related application for financial provision.

65.  Not all s 17 applications will necessitate a “preliminary issue” trial, and thus for those applications which do not call for a preliminary issue trial, there should be no question that such applications are part of the proceedings for ancillary relief.  There are often preliminary issue trials in family proceedings, such as there may be a preliminary argument over jurisdiction or forum, there may be a preliminary fact finding hearing in cases involving children and domestic violence.  In my view, the fact that there is a preliminary issue trial over the s 17 application will not result in that application being separate proceedings.

66.  Having regard to the above, I am of the view that the s17 Application is part of W’s ancillary relief proceedings.

67.  As mentioned earlier, Ms Lau has submitted that interpreting the s17 Application (or the proceedings for ancillary relief) as the “proceedings” for the purposes of Subparagraph (i) would be completely contrary to the proper approach in construing s16C of the Ordinance as propounded by the Court of Final Appeal in the case of Common Luck Investment Limited and Director of Legal Aid.  In the Common Luck case, the liability of the Director to pay costs awarded to non-aided persons against legally aid persons under s16C of the Ordinance has been considered by the Court of First Instance[13], the Court of Appeal[14] and the Court of Final Appeal[15]. 

68.  Ms Lau emphasised what has been said by Bohkary PJ in  his judgment[16], that  the obvious intention of s16C is to provide a code by which a non-aided person’s costs entitlement against the Director can be seen from the face of the court’s order, and Ms Lau argued that if the Court were to interpret that the s17 Application ( the ancillary relief proceedings) constitutes “proceedings” under Subparagraph (i), this would be departing from the face of the order and would encourage further disputes.

69.  However, I am of the view that under Subparagraph (i), the Court should first of all form a view as to what in fact are the proceedings concerned and what in fact are the proceedings in which one party is legally aided and what was said in the Common Luck case does not affect this.

70.  Ms Lau also referred to the case Fastway (HK) Investment Ltd and Anorther v Lee Kwok Wai trading as Wing Bo Motor Co and Another HCMP 2851/2013, (unreported) Judgment 26.11.15 in which the argument was essentially over whether the 1^st defendant’s application for interlocutory injunctive relief against the plaintiffs could be regarded as a counterclaim for the purpose of Subparagraph ia).  As said by Anthony Chan J, to entertain an argument whether an interlocutory application is or is not a counterclaim would encourage further disputes, and is therefore contrary to the intention behind s16C.  The alternative argument of the plaintiffs was that the 1^st defendant should be regarded as the plaintiff in the interlocutory application under Subparagraph (i), and Anthony Chan J found that such argument was equally defeated by the strict interpretation of the statutory provisions and the adherence to form. 

71.  Ms Lau submitted that the argument Mr Chan was seeking to make about the meaning of “proceedings” in Subparagraph (i) was also made and rejected in Ye Jinxiang and Kam Ping Kwong, HCAP 25/2012, (unreported) 18.02.15.  In the Ye Jinxiang case, the plaintiff had argued that “proceedings” in Subparagraph (i) should include interlocutory proceedings, and in such proceedings, an application should stand to be treated as a claim and the respective positions of the parties were dictated by who was the applicant and who was the respondent.  DHCJ Leung found the plaintiff was rehearsing the argument that in construing s16C, the court was to look at the substance as to which party was bringing about the proceedings (or in that case, interlocutory proceedings) and which was at the receiving end of them.  DHCJ Leung accepted that a non-aided plaintiff may feel aggrieved especially when the applicants are unmeritorious and numerous, but said the answer to that, still lies with the rationale behind the limited manner in which the public fund is made by statute to bear the consequence of the risk in respect of costs that the non-aided person would have had to take when deciding to claim against a person with no financial resource.

72.  The arguments in both the Fastway case and the Ye Jinxiang case essentially concerned interlocutory applications being the “proceedings” under s16C.  In any event, I do not find that what was said in those cases would mean that this Court should not form a view as to what in fact were the “proceedings” in the present case under Subsection (i).

73.  Ms Lau herself submitted that the common feature of the 7 Scenarios where the Director has to bear the costs in favour of a non-aided person is that such costs have been brought about and occasioned to the non-aided party by the aided person having vexed him by claim, counterclaim or appeal, but unsuccessfully.  Ms Lau then argued that had H not commenced the FCMC Action in the first place, the s17 Application would not have arisen and thus, the Director did not facilitate the bringing of the s17 Application and that the present situation does not share the common feature of the 7 Scenarios in s16C(1)(b).

74.  As said earlier, H commenced the FCMC Action to seek a divorce.  He sought no other relief.  In the end, W did not defend the divorce. The commencement of the ancillary relief proceedings including the s17 Application were in my view facilitated by the Director.  The Director in fact amended the Legal Aid Certificate to specifically cover the s17 Application.  In my view, Mr Cheng was vexed by the s17 Application or the claim, and the present situation does in fact share the common feature of the 7 Scenarios.

75.  In short, having considered all the above, I have come to the view that for Issue 1(a), that as a fact, the “proceedings” for the purposes of Subparagraph (i) were W’s ancillary relief proceedings of which the s17 Application was part.

76.  At the hearing, this Court had initially indicated that there was a judgment from Court of Appeal in the Mong Wai Man case which might shed light on whether a s17 application is a separate proceeding from the matrimonial cause or the ancillary relief proceedings.  Both Counsel later produced a copy of the judgement in Re Mong Man Wai, deceased [2013] 4 HKC 179 and made further submissions thereon after the hearing.  I am grateful for Counsel’s assistance but having considered this judgment, I do not find it really helpful and in any event, I have come to my views that the ancillary relief proceedings are separates proceedings from those for a matrimonial cause without having to resort to the Mong judgement. 

Issue 1(b)

77.  Ms Lau has argued that even assuming that the Court is willing to treat the proceedings for ancillary relief (and the s17 Application) as the proceedings under Subparagraph (i), factually speaking, it cannot be properly said that Mr Cheng was in substance a respondent or a defendant. 

78.  Ms Lau has referred the Court to the case of C v T and others FCMC 12488/2003, (unreported) 03.06.09, in which “disponees” were made parties to a s17 application as interveners.  However, it was not clear from the judgment why they were called interveners or the circumstances or rules under which they were joined.

79.  Ms Lau also referred to  what was said by Judge To as he then was in the case of  HSBC Finance Limited v Yuen Yi Wan Sandy and anor in DCMP 2017/2001, (unreported) judgment 29.11.04, when referring to an application under a s17 application against the spouse or a non-spouse restraining him from disposing of the assets or setting aside the disposition by him, observed that the disponee or other parties interested in the disposition may be made a party to such proceedings as  interveners[17].

80.  What was said  by Judge To was only said as an observation by him, and in any event, if a disponee or other parties interested in the disposition apply to intervene,  they will normally be called an “intervener” or an “intervening party”[18].

81.  As mentioned earlier, in PD 15.11,   the party who makes the application for ancillary relief is referred to as the “Applicant” of the application. When Form G has been served on other relevant persons, such persons may intervene, in which case, they are normally called the “interveners” or “intervening parties”.

82.  However, if the applicant applies to apply for a joinder, adding the disponee or other parties as parties under Order 15 rule 6(2) of RHC, the parties joined or added are normally called defendants or respondents.  There is a difference between a person who intervenes of his own initiative or is invited to intervene and decides to do so, and a person who is ordered to be joined after a joinder application by the applicant.   This can in fact been seen form the case AC and DC and others [2012] EWHC 2032(Fam), on Ms Lau’s list of authorities, when Mostyn J was referring to a discussion as to whether the HM Revenue & Customs should be invited to intervene, or joined as a party under the FPR 2010 rule 9.26B.

83.  Ms Lau has also referred to KGL v CKY & Anor, FCDJ 1453/2002 18.10.06 where the disponee was added as the “2^nd respondent”, but as pointed out by Ms Lau the circumstances as to how the designation came about was not clear. 

84.  Mr Chan submitted that it was the practice in the Family Court to call all such other parties “interveners” irrespective of whether they applied to intervene or they were properly joined under Order 15 rule 6(2).  I am not aware of such practice and in my view, such a practice would not be appropriate.  In any event, in the present case, since Mr Cheng did not apply to intervene, calling him an intervener was not appropriate and he was not in substance “an intervener”.  I am of the view that he should have been designated as a “respondent”  

85.  In light of my above views on “proceedings”, it is my finding that Mr Cheng although called an intervener, was “in substance” a defendant or a respondent in the ancillary relief proceedings or in the s17A Application.

Issue 1(c)

86.  I then come to the issue whether as a matter of law, Subparagraph (i) can be construed to apply to an intervener who is in substance a defendant or a respondent. 

87.  Ms Lau has argued that in order for Mr Cheng to succeed in claiming costs against the Director under Subparagraph (i), the Court would have to go behind the designation of “intervener”.  However, the Court of Final Appeal has made clear in the Common Luck case is that s16C of the Ordinance is to be construed strictly, and that it is the parties’ formal designations in the Court which is what matters.

88.  The Director had relied on paragraphs 24 and 25 of the judgment of Bohkary PJ in the Common Luck case, which I set out below :

“24. Turning to the first contention as to the law, I begin by observing that there is nothing in the language of s16C which suggests that its references to plaintiffs and defendants are implicitly to be qualified so as to be read as references to “natural” plaintiffs and defendants. Expressions like “plaintiff” and “defendant” are well understood terms of art which appear without implicit qualification in statutes, rules, pleadings, judgments and court orders. So much for language, but what about context?

25. In many situations the law looks beyond form and at substance instead.  That is done in order to arrive at reality.  But in the present context, the reality is the obvious intention of s16C is to provide a code by which a non-aided person’s costs entitlement against the Director can be seen from the face of the court’s order.  This avoids disputes which might even result in further litigation. And it necessarily involves going by the parties’ formal designation.  In the vast majority of cases, form will naturally follow substance when it comes to who is the plaintiff and who is the defendant.  The risk of a mismatch between substance and form in that regard can arise in a case like the present.  I mean proceedings not begun by writ which are ordered to continue as if begun by writ, and in which directions are made as to who is to be the plaintiff and who is to be the defendant.  But that risk can be catered for ― and I dare say will in future be catered for ― by submissions with an eye to s16C’s implications.”

89.  Mr Chan submitted that the above comments of Bohkary PJ   should be confined to the facts of the Common Luck case.  What is clear in the Common Luck case is that the proceedings were initiated by Common Luck and those proceedings were ordered by Mayo J to continue as if by writ with Common Luck as plaintiff and Mr Cheung as defendant, and such roles were accepted by the parties throughout until the question of Director’s liability for costs arose.  As the Director had submitted in that case, that the position of a plaintiff or a defendant was not merely a “label of convenience” but carried substantive procedural differences[19].  DHCJ Muttrie rejected the “natural plaintiff and defendant” argument as he opined one could not go behind the decision of Mayo J for the purpose of deciding liability for costs. Woo JA agreed with DHCJ Muttrie and further pointed out that the original judicial review proceedings were initiated by Common Luck.

90.  Thus both DHCJ Muttrie and the Court of Appeal rejected the “natural plaintiff and defendant” argument and refused to go behind Mayo’s order in the circumstances of that case. This was followed by the Court of Final Appeal.

91.  Mr Chan argued that Bohkary VP’s comments were in relation to a case where the parties had throughout accepted their respective “formal designation” or their respective roles, one as plaintiff and the other as defendant, and that such roles should not be reversed due to the issue  over the Director’s liability for costs, but that in the present case there will not be any reversal of roles. As seen from those detailed directions given by Judge Own, the parties’ roles were clear, as to who was to file points of claim (ie W who was formally called the respondent) and who was to file points of defence (ie H formally called the petitioner, and the Interveners).  In the present case, the parties’ formal designation did not in fact fit or match their roles nor the procedural steps as ordered.

92.  Bohkary PJ had said in his judgement that expressions like “plaintiff” and “defendant” are “well understood terms of art”.  He had further said that the obvious intention of s16C is to provide a code by which a non-aided person’s costs entitlement against the Director can be seen from the face of the court’s order, that this would avoid disputes, and that it necessarily involved going by the parties’ “formal designation”. 

93.  However, the “formal designations” contemplated in Subparagraph (i) are “defendant to a claim”, “respondent to a petition”, “respondent to an appeal”; and in Subparagraph (ia), “defendant to counterclaim”, “respondent to cross-petition”.

94.  It is not clear whether “petition” or “cross petition” in the above provisions in s16C refers to the petition or cross petition in a matrimonial cause, or other civil proceedings commenced by way of petitions.   

95.  What did not appear to have been contemplated by the draftsmen that in drafting the above subparagraphs in s16C is that in matrimonial proceedings, there may not be any formal designation of a “defendant” or “respondent” at all, such as in a joint application for divorce under s11B of the MCO.  In fact, by statute, the only formal designations of the parties to the marriage in a joint application are “1^st applicant” and “2^nd applicant”, and there is no formal designation as a “respondent”. 

96.  Thus,  under Subparagraph (i), in a case  where one of the  joint applicants who is non-legally aided is awarded costs against the other applicant who is legally aided, whether in the matrimonial cause  or in the ancillary relief proceedings, the non-legally aided applicant will not be able to enforce his/her costs order against the Director  whereas he/she would have been, had the commencement of the matrimonial cause been by way of a petition and he/she was the respondent to a petition or a respondent to a cross petition.  This seems to have created an unsatisfactory state of affairs for a joint application.

97.  There are clearly lacunae in s16 (b)(i), (ia) and (ib).

98.  Ms Lau’s submission is that if the successful non-aided person does not fall into one of the categories set out in s16C (1)(b)(i) – (ib), then under the “catch all provision” in s16C(1)(b)(ii), neither the Director nor the aided person shall be liable for such costs except to the extent of any excess of the aided person’s contribution (if any) over the costs incurred by the Director on behalf of the aided person.

99.  In the appeal before the Court of Appeal, in considering subparagraph (ib), Woo VP noted that there is a reference to a “defendant to a counterclaim” in Subparagraph (i) and Subparagraph(ia) but no reference to “plaintiff by counterclaim” appears in subparagraph (ib).  Woo VP then accepted that there  are lacunae regarding “plaintiff by counterclaim” under the subsections (i), (ia) and (ib), but he was of the view that these lacunae are filled by the terms of subsection (ii) which is that “in any other case” the Director shall not be liable for the costs[20], and he had said that this is a literal and natural interpretation of the provisions and that the intent and spirit of the provisions are also consistent with that interpretation.

100.  I accept that in the circumstances of the present case, to fill the lacunae by the terms of subsection (ii) will not appear to be consistent with the intent and spirit of the provisions as stated in paragraphs 13 and 14 in the judgment of Woo VP.  However, notwithstanding this, and notwithstanding the lacunae, I find that I am bound by what was held in the Common Luck case.  In particular,  Bohkary PJ had said that,  in the vast majority of cases, form will naturally follow substance when it comes to who is the plaintiff and who is the defendant, but  there may be a case that the risk of a mismatch between substance and form can arise, and in such a case the risk can be catered for by submissions with an eye to the implications of s16C[21].

101.  In the present case, although Mr Cheng was served with notice of the 2^nd Hearing, he chose not to turn up.  Further, after he was served with the 29.07.14 Order, he did not apply at the 3^rd Hearing to set aside the order made in his absence or to seek an amendment to his formal designation.  In his solicitor Mr Hout’s affidavit filed in reply to the Ms Hadiwibawa’s affidavit, it was said that Mr Cheng was considering to take out an application in the Family Court for correcting his title or designation[22], but it would appear no such application or summons was formally taken out in the end.  Mr Cheng did have a chance to remedy the situation but failed to do so.

102.  Anyway, having regard to all the above, as a matter of law, and on a strict interpretation of Subsection (i), Mr Cheng does not fall within Subsection(i).

Issue 2

103.  For this issue, I accept Ms Lau’s submission and I agree with what was said by DHCJ Leung in the Ye Jinxiang case, the wording of the 7 Scenarios ensures that there is no overlap.

104.  I have said that I am of the view that the ancillary relief proceedings are not interlocutory proceedings.  Since an application for ancillary relief can be made in the petition in the matrimonial cause, the ancillary relief proceedings cannot be regarded as a counterclaim. There has been no cross-petition filed in the present case, and no appeals were involved.   Mr Cheng cannot be said to fall within Subparagraph (ia).

Conclusion

105.  In light of what I have said, I have come to the conclusion that Mr Cheng’s application has to be dismissed.  Mr Cheng has succeeded on two of the three sub-issues under Issue 1.  I order him to pay 1/3 of the Director’s costs, to be taxed if not agreed.  This is a costs order nisi, to be made final after 21 days. 

[1] See PD 15.11

[2] As defined in s 2 of the Ordinance

[3] At para 20

[4] Added 54 of 1984 s14

[5] See section 2

[6] See para 99, XVIII, Final Report

[7] See para 26, Section 4, pg 15 of Final Report

[8] See Rule 77, MCR

[9] See rule 49 of MCR when there are references to co-respondent or party cited

[10] Form F is derived from Form 20 in the MCR under rules 76 and 92(5) where the applicant in an application for ancillary relief or in an application in relation to children has made allegations of adultery or improper association against a person and the application and the applicant’s supporting affidavit has to be endorsed with Form 20 and served on that person, and that person is entitled to intervene to seek directions from the court. However, under paragraph 5 (a)(iv) of PD 15.11, the Form F can now be directed to be served on all relevant persons under s17 of MPPO

[11] This can be seen in [7.194], Rayden and Jackson on Relationship Breakdown, Finances and Children, Volume 1

[12] The term seems to have only appeared in section 18A(5)(b) in relation to the Director’s charge on property recovered by an aided party. 

[13] HCMP 2659/2000, unreported, 22/01/01

[14] [2002] 1 HKC 1, CACV 375/2001, 04/12/01

[15] (2002) 5 HKCFAR 467, FACV 1/2002, 30/07/02

[16] In para 25

[17] At para 35, pg 24

[18] As an illustration, see the English case of KSO v MJO and JMO (PSO intervening) [2008] EWHC 3031 (Fam)

[19] Item 2, page 7

[20] See para 26

[21] At para 25

[22] At para 12 B:26