HANNELORE DE LASALA-DEBRING v. ERNEST FERDINAND PEREZ DE LA SALA

HCMP 1029/2013

[2019] HKCFI 2639

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1029 OF 2013

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D E C I S I O N
(On Costs)

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Introduction

1.  On 12 April 2019, this Court handed down a judgment and ordered that, amongst other things, that the plaintiff’s Statement of Claim filed herein on 2.4.2014 (“SOC”) be struck out on the grounds that it was an abuse of process of the Court and this action be dismissed (“Judgment”). I shall follow the abbreviations and definitions in the Judgment unless otherwise indicated herein.

2.  In the Judgment, I directed that costs are to be dealt with on paper.  

3.  The Judgment was handed down after a substantive hearing on 18 December 2019 (“Hearing”) for H’s summons issued on 30 November 2017 to strike out W’s SOC and to dismiss this action (“Summons”).

The parties’ respective position on costs

H’s position

4.  H seeks an order that costs should follow the event, and that since H has been wholly successful in his application in that the Court ordered the entirety of W’s claims herein be struck out, the costs order should be as follows:

(1)  W to pay H’s costs of and incidental to the Summons, including all reserved costs and costs of the Hearing with Certificate for two Counsel; 

(2)  W to pay H’s costs of the action;

(3)  the aforesaid costs be taxed on an indemnity basis.

W’s position

5.  W’s position is that essentially as she has filed and served her Notice of Appeal on 10 May 2019 and that relying on Order 62 rule 4(2) of the Rules of the High Court (RHC), this Court should defer the issue of costs to the Court of Appeal or that it is premature to determine costs at this stage.  It is further submitted on behalf of W that:

(1)  Costs should be considered by the Court of Appeal in view of the serious questions on appeal, or

(2)  H should not have his costs at all in the circumstances found in this case;

(3)  H should not be entitled to any indemnity costs, when the special or unusual feature of this case is that the cause, motive and the timing of these proceedings has been discovery of cogent evidence of H’s deceitful behaviour in 2012.

Discussion

Whether this Court should defer the issue of costs to the Court of Appeal or that it is premature at this stage to deal with the matter of costs

6.  Order 62 rule 4(1) of RHC provides that:

“Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings; and any order of the Court for the payment of any costs may, if the Court thinks fit, and the person against whom the order is made is not an assisted person, require the costs to be paid forthwith notwithstanding that the proceedings have not been concluded.”

7.  There is no doubt that under Order 62 rule 4(1), this Court is empowered to deal with costs at any stage of the proceedings, whether the proceedings have been concluded or not.

8.  Order 62 rule 4(2) of RHC then provides :

“In the case of an appeal the costs of the proceedings giving rise to the appeal, as well as the costs of the appeal and of the proceedings connected with it, may be dealt with by the Court hearing the appeal.”

9.  It is submitted by W that the outcome of her appeal is wholly relevant in the Court’s consideration of costs and that the issue of costs is intimately related to the findings of this Court and that Order 62 rule 4(2) should apply and that the costs of the proceedings before this Court should be dealt with by the Court of Appeal.

10.  On the other hand, Ms Tong submits on behalf of H that Order 62 rule 4(2) does not support W’s submissions that this Court should at this stage refrain from making any costs determination or to defer the decision on costs to the Court of Appeal and that the rule only permits the Court of Appeal hearing the appeal to make a costs order relating to the proceedings giving rise to the appeal.

11.  On my reading of Order 62 rule 4(2), I agree with Ms Tong that the rule only empowers the Court of Appeal to make a costs order relating to the proceedings giving rise to the appeal.  Costs are in the discretion of the Court and as stated under Order 62 rule 4(1), this Court has the discretion of dealing with costs at any stage of the proceedings or after the conclusion of the proceedings.  I do not see any reason or basis as to why this Court should defer the issue of costs to the Court of Appeal.  No doubt if the Court of Appeal were to allow W’s appeal, the Court of Appeal could make an appropriate order in relation to costs below.

Whether the Court should depart from the general rule that costs should follow the event

12.  Ms Tong has referred to what was held by Bohhary PJ in paragraph 18 of his judgment in Mariner International Hotels Ltd v Atlas Ltd (No 2) (2007) 10 HKCFAR 246, that the burden rests with the losing party to demonstrate the circumstances which justify the “exceptional course” of displacing the general rule that costs should follow the event.

13.  The above judgment was prior to the introduction of the Civil Justice Reform on 2 April 2009 when Order 62 was substantially amended.  Order 62 rule 3(2) of the Rules of the High Court now provides that:

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

14.  Order 62 rule 5 of the Rules of the High Court then sets out special matters which shall be taken into account by the Court in exercising its discretion on costs including the following:

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

…

(e) the conduct of all the parties;

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

…

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

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

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

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

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

15.  The matters which have been submitted on behalf of W that the Court should deprive H, the successful party, of his costs are :

(1)  Findings of the Court – (i) Singapore evidence and (ii) non-disclosure on the part of H

(2)  H’s non-disclosure was intentional

(3)  H’s conduct before and during these proceedings

(4)  H bringing suspicion upon himself

16.  Insofar as (1) and (2) are concerned, there were no findings made by this Court in relation to the Singapore evidence and also the non-disclosure on the part of H.  The findings of the Singapore Court were not binding on this Court, even though in paragraph 37 of the Judgment, this Court had referred to some part of the evidence in the Judgment.

17.  As for H’s non-disclosure, what I have said in paragraph 79 of the Judgment is that W has a reasonable prospect of proving that there had been non-disclosure on the part of H in that he had failed to make a full and frank disclosure of his means at the time of the Consent Order.

18.  As for whether H’s non-disclosure was intentional, again I came to the view in paragraph 83 of the Judgement that W has a reasonable prospect in succeeding in proving that H’s non-disclosure or failure to make a full and frank disclosure through Mr Moore was intentional on the part of H.  There had however been no actual findings by this Court, since there had not been a trial.

19.  As for (3) above in relation to H’s conduct, it has been submitted on behalf of W that H’s conduct in relation to the divorce in Hong Kong, evidence of which emerged in the Singapore Proceedings in 2012, is a central matter leading to the institution of these proceedings and in short, W has succeeded in much of her case against H. 

20.  In so far as the conduct referred to in Order 62 rule 5(1)(e) and rule 5(2)(d), Ms Tong has submitted that the conduct to be taken into account must be relevant to the issue of costs.  Ms Tong submitted that H’s alleged conduct which took place in the 1960s/1970s was not relevant conduct.  I accept that relevant conduct is parties’ conduct in the present proceedings.

21.  As to (4) above in relation to whether H has ‘brought suspicion on himself’, Ms Tong submitted that the cases cited by W concerned public or regulatory bodies and were not applicable to the present case involving private litigants.  It is accepted on behalf of W that the reasoning for denial of costs on the basis that the applicant having brought suspicion upon himself has its roots in criminal cases, but it has been argued on behalf of W that since the rationale has been applied to professional disciplinary proceedings and insider trading proceedings and given the wide discretion in costs, the rationale should be extended to the present circumstances where the finding of intentional non-disclosure is effectively a finding of fraud.

22.  In essence, what has been submitted on behalf of W is that she was justified in bringing and continuing the present action due to H’s conduct of intentional non-disclosure (or fraud) in the divorce proceedings as revealed in the Singapore Proceedings.  As mentioned in the Judgment, W appeared as a witness in the trial before Justice Loh who had found W to be a truthful witness, and on the other hand, Justice Loh had found H an unimpressive and totally unreliable witness who regarded truth as a transitory, flexible concept, which could be moulded to his current purposes.   The Court of Appeal of Singapore later affirmed the Judge’s findings that H and his witnesses lacked credibility.  

23.  As said earlier, this Court has not made any findings against H in the Judgment even though this Court has held the view that W has a reasonable prospect of proving that there had been non-disclosure on the part of H and that such non-disclosure was intentional.  More importantly, I am of the view that W had failed to act with reasonable promptitude or reasonable alacrity in issuing the fresh action and the delay had been too long.  H had satisfied this court that due to the long and inordinate delay, there could be no conceivable basis for any re-assessment de novo to be done in present circumstances.  I am also of the view W’s claim based on tort is statue barred.  

24.  Having considered the parties’ respective arguments, in my view, there is no reason to depart from the usual order of costs, namely costs to follow the event.  I order W to pay H’s costs of this action, and H’s costs of and incidental to the Summons, including all reserved costs and costs of the Hearing with certificate for two counsel, to be taxed if not agreed.  The costs of the extension of time summons should be borne by W and fixed at $1040.

25.  As for indemnity basis, notwithstanding I have found W ’s claim is an abuse of process, having considered paragraph 62/App/12 of the Hong Kong Civil Procedure 2019, I am of the view that W’s conduct herein has not been oppressive or egregious or so unreasonable as to attract an order for costs on indemnity basis.  I decline to order costs on indemnity basis.