CTT AND ANOTHER v. SLWE AND OTHERS

FCMP 228 / 2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS

NUMBER 228 OF 2009

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Ruling on Costs,
Summary Assessment and Wasted Costs Order

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1.  This is an application for costs by the Applicants against the Respondents over the wrong filing of documents in these guardianship proceedings.  The Applicants are the maternal grandmother and uncle of the minor SWS (“Minor”) (“Maternal Members”) and the Respondents are the Minor’s paternal grandmother, uncle and aunt (“Paternal Members”).

Background 

2.  The Minor in these proceedings was born in May 2007, and is now 3 years old.  Her parents were married in 1999, and sadly they both died suddenly in a traffic accident in Shenzhen in August last year, leaving no will.

3.  The Maternal Members issued the Originating Summons in these proceedings on 12 November 2009 to be appointed as guardians of the Minor.  Under Order 90 rule (2) of the Rules of the District Court, any person appearing to be interested or affected by such application should have been made a defendant.  In breach of such rule, no one was named as a defendant, and the matter proceeded on an ex parte basis.

4.  There was a short 3 minute hearing before another judge and the matter was dealt with summarily without any social welfare report being called, and the Maternal Members were duly appointed as guardians of the Minor on 17 December 2009 (“the Order”).

5.  Apparently the Paternal Members only found out about the ex parte order in April 2010 when solicitors for the Maternal Members sent a copy of the Order to the former solicitors of the Paternal Members on 9 April 2010.  Instead of making an application to the Family Court to set aside the Order on the basis of material irregularity, the Paternal Members decided to make an application in the High Court, under HCMP 1237 of 2010, for the Maternal Members to be removed as guardians under section 8 of the Guardianship of Minors Ordinance (“Section 8”).

6.  In his Judgment dated 19 July 2010 (which has been already been published on the Judiciary Legal Reference website), Mr. Justice Lam set out the objectives of Section 8, and the reasons why it was not appropriate to make the application under this section.  Mr Justice Lam further indicated that the appropriate step to take should have been to apply in the Family Court before the judge who granted the Order to set aside the Order on the ground of material irregularity.  After indication by Mr. Justice Lam, the parties consented to the Order to be set aside.  Mr. Justice Lam further ordered the solicitors for the Maternal Members to pay the Paternal Members’ costs at HK$35,000 upon the solicitors agreeing to bear some of the costs.

7.  Thereafter, on 22 July 2010, instead of issuing a simple inter partes summons to be joined as respondents in the present proceedings and to apply for guardianship, for some odd reasons, the Paternal Members decided to file another “originating summons” in the present proceedings but with the Paternal Members named as applicants against the Maternal Members named as respondents (“2^nd Originating Summons”).  Together with this 2^nd Originating Summons, there was also an inter partes summons seeking interim access to the Minor, and supporting affirmations were also filed with the Paternal Members named as applicants.

8.  The explanation from Mr. Felix Ng, Counsel for the Paternal Members, appears to be in paragraph 20 of his Submissions, that they were attempting to “rectify the procedural irregularity ” created by the Maternal Members by not naming the Paternal Members as defendants/respondents in the first place.  One does not go about rectifying by filing another originating summons in the same proceedings with Paternal Members named as applicants instead.  They were of course entitled to issue the 2^nd Originating Summons in fresh proceedings, i.e. under a different case number, but not in the present proceedings.  Under Order 5 of the Rules of the District Court, an originating summons is clearly a mode of “beginning” proceedings.  In any event, in my view, the most efficient way forward would be simply for the Paternal Members to issue an inter partes summons for joinder and guardianship.

9.  The procedure adopted by the Paternal Members was clearly irregular and simply caused chaos and confusion. I thus ordered at the hearing on 2 August 2010 (“the Hearing”) that all documents filed by the Paternal Members on 22 July 2010 be struck off and removed from the court record, and directed that the Paternal Members to file a summons for joinder and guardianship, together with directions for filing of affirmations. I further called for a social welfare report and directed the parties to consider to proceed with mediation.

10.  The only issue before this Court is the costs caused by the procedural irregularity on the part of the Paternal Members.

Interim Access

11.  At the Hearing, the Paternal Members were also seeking interim access to the Minor. Unfortunately, there is no jurisdiction for this Court to make any access order for any third party, unless such application is made by a parent or by the Director of Social Welfare under s.10 of the Guardianship of Minors Ordinance.

12.  This problem in our legislation has already been set out in paragraph 3.6 and paragraphs 10.37 to 10.43 of the Law Reform Commission’s March 2005 Report on Child Custody and Access (“the Report”). Recommendation 28 therein in particular recommends the removal of the limitation in s. 10 of the Guardianship of Minors Ordinance on the right of third parties to apply to court for orders concerning minors, and the introduction of a provision along the lines of section 10 of Children Act 1989 in England, subject to certain amendments proposed in Recommendation 28. Unfortunately, so far, no legislative changes are in sight in Hong Kong.

13.  Anyway, in calling for the social welfare report, I have directed the Social Welfare Department to consider an intended access application, and I have also referred the Director to paragraph 3.6 of the Report.  If the Director is not willing to make an application under the said s.10, the only alternative for the Paternal Members may be to consider making the Minor a ward of the High Court, since the High Court has wider powers and jurisdiction in relation to its ward.

14.  Mr. Felix Ng appears to be submitting that the application for interim access was made “pursuant to the directions of Lam J in HCMP 1237 of 2010”.  With respect, in paragraph 15 of his judgment, Mr. Justice Lam was only recording the parties’ undertakings and that the Paternal Members would seek interim relief in terms of access etc from the Family Court. At no time, did Counsel for the Paternal Members, or for that matter, Counsel for the Maternal Members, drew Mr. Justice Lam’s attention to the limitations of s.10 of the Guardianship of Minors Ordinance.  In my view, it should be counsel’s duty to prepare their case and do the research to assist the court, and not the other way round.  In any event, Mr. Justice Lam was dealing with an application under Section 8.  He did not deal with the matter of access, and there were no wardship proceedings taken out before him.

Issue of Costs

Application for interim access

15.  I would deal with the Paternal Members’ application for interim access first.  There are 2 issues here, one is the procedural irregularity, and the other is the substance of the application.

16.  The summons for access was struck off the record together all the other documents filed on 22 July 2010 due to procedural irregularity.  As to the substance of the application, the question of this court’s jurisdiction was raised by this Court and not by Counsel for the Maternal Members, Mr. Maurice Ng.  There was no indication that Mr. Maurice Ng was aware of the jurisdictional point raised by this Court, since his skeleton submissions were based only on the procedural irregularity.

17.  In any event, I did not say that the Paternal Members would not be allowed any interim access to the Minor. At the Hearing, Mr. Maurice Ng indicated that it was not necessary for the Paternal Members to make any application for interim access as they were already having such access, which was also clear from the latest affirmation of the Maternal Members.  It seems that the Maternal Members are now opposing the access application, and it seems that their only reason was that given the acrimony between them and the Paternal Members and that “such would not be conducive to the Minor’s well being and may do more harm than good to the Minor.”  With respect, at present, there is no expert evidence that access would not be conducive to the Minor’s well being or that it may do more harm than good to her.  On the face of it, and without hearing submissions from both sides, and without any expert evidence, at this stage, I could not see any valid reasons as to why the Paternal Members should not be allowed any access at all to the Minor.  My only concern of the access application was one of jurisdiction, and that was why I directed the Social Welfare Department to s.3.6 of the Report so that the Director could consider the application on behalf of the Paternal Members, and I further directed the parties to consider mediation. However, even if I have no jurisdiction, there is nothing to stop the Paternal Members to institute wardship proceedings under Order 90 of the Rules of the High Court, and to seek access therein.

18.  As a matter of law, costs is in the discretion of the court. Costs normally follow the event. Generally, however, in relation to children’s custody and access applications, the court usually makes no order as to costs, unless one party’s conduct during the litigation has been reprehensible or the party’s stance has been beyond the band of what is reasonable (see London Borough of Sutton v Davis (Costs) (No.2) [1994] 2 FLR 569).

19.  In the present case, I do not see there being any unreasonable conduct in the Paternal Members applying for interim access.  I therefore propose to make no order as to costs in relation to their application for interim access.

The 2^nd Originating Summons

20.  The 2^nd Originating Summons seeks an order for the applicants named therein, namely the Paternal Members, to be appointed guardians. There are again 2 issues, one is the procedural irregularity, and one is the substance of the application.

21.  It is clear that this Court did not dismiss the substance of the guardianship application by the Paternal Members, which is in fact the crux of these proceedings and which is at present hotly contested.  This application will no doubt have to be tried, unless the parties will be able to reach an agreement, through mediation or otherwise.  Although the Paternal Members did not take out any application be joined as respondents in these proceedings due to the irregular procedure taken, the intention of the Paternal Members was clear, and in fact, as Mr. Justice Lam had said, they should have been named as respondents in the first place. Quite sensibly, solicitors for the Maternal Members subsequently readily consented to the Paternal Members’ joinder application, issued the day after the Hearing.

22.  Notwithstanding all the irregularities, the time of the Hearing was fortunately not wasted.  This Court took the opportunity to give directions as to filing of affirmations, and more importantly, to call for a social welfare report.  It normally takes time for the Social Welfare Department to prepare such a report, and the earlier it is called for, the better.  Further, this Court was also able to make a direction to the parties to consider mediation.

23.  Although all the documents wrongly filed on 22 July 2010 were struck off the record, it is clear that the Paternal Members will be relying on the contents of those affirmations to support their main application.

24.  The wrongly filed 2^nd Originating Summons and accompanying documents were served on the solicitors for the Maternal Members shortly after they were filed on 22 July 2010.

25.  There was no response from those acting for the Maternal Members until 29 July 2010 when they wrote a long letter mainly in relation to whether there was any breach of the undertaking on their part and stating that Mr. Justice Lam did not make any order to set aside the 1^st Order in his Judgment.  They then stated that until such time as the 1^st Order has been set aside and until such time as leave has been given by the court for the Paternal Members’ joinder application, the Paternal Members’ 2^nd Originating Summons and the access summons were “premature, misconceived, wrong in substance and in form and amount to abuse of process of the court.”  They then said they would oppose the Paternal Members’ applications and have them dismissed and to seek directions as to the way forward, and costs on an indemnity basis.  Mr. Maurice Ng submits that in this letter, his instructing solicitors have alerted the solicitors for the Paternal Members of “the improprieties and invited them to apply for joinder.”  Further, had solicitors for the Paternal Members conceded their improprieties before the Hearing, his attendance could have been dispensed with and saved, as he was only sent the back sheet by fax on 20 July at 18:54 and he received the original outside the court just before the Hearing.

26.  Mr. Maurice Ng has gone even further in his Submissions by saying that solicitors for the Paternal Members should not have represented their clients if they were not familiar with the civil procedures, in particular, when they had been “advised” by both Mr. Justice Lam and the solicitors for the Maternal Members to apply for a joinder.  Mr. Felix Ng strongly objects to Mr. Maurice Ng’s allegations, claiming they were groundless and irresponsible.

27.  Mr. Maurice Ng argued that Mr. Felix Ng has not disputed that there had been an abuse of process on their part or their applications were frivolous or vexatious.  In my view, it is clear from Mr. Felix Ng’s submissions he does not concede to these allegations.

28.  In any event, leaving aside the question as to whether there was professional incompetence, incompetence does not mean the same as abuse of process or that the applications were frivolous or vexatious.  There was nothing irregular, frivolous or vexatious with the substance of the Paternal Members’ applications.  I do not see why there was any abuse of process.  As I have mentioned earlier, the solicitors for the Paternal Members were entitled to issue the 2^nd Originating Summons in fresh proceedings, although this would not have been an efficient way to deal with the applications.  In my view, the only mistake was that those documents filed on 22 July 2010 were wrongly filed in the present proceedings, and was thus a procedural irregularity.  There was no evidence that it was done to harass or mislead any one.  As Mr. Maurice Ng himself has said, it was obvious that the solicitors for the Paternal Members got the procedure completely wrong.

29.  In fact, it was so obvious and apparent that the substance of the Mr. Maurice Ng’s Written Skeleton Submissions for the Hearing was very short, less than a page, and at the commencement of the Hearing, I almost immediately gave my indication as to the procedural irregularity, and the correct procedure, and then stood the matter down for the parties to consider appropriate undertakings and directions.

30.  However, I accept that there was procedural irregularity, and those documents filed on 22 July were wrongly filed.  In the circumstances, I am of the view that the Maternal Members should only entitled to their costs of the irregularity in the filing of the 2^nd Originating Summons on 22 July 2010, and this should be on party and party basis, with a certificate for counsel.

Quantum

31.  Under Order 62 of the Rules of the District Court, the Court may make a summary assessment of the costs in lieu of taxed costs.

32.  The Maternal Members have first produced a statement of costs dated 2^nd August for HK$62,985, of which solicitors’ costs and disbursements amount to $30,600, of which Brief for Counsel was HK$30,000.  Subsequently, they produced a 2^nd statement of costs dated 7 August for HK$108,432, apparently adding in the preparation for the submissions for costs.

33.  According to the Court’s record, the Hearing started at approximately 12:16 pm, and was stood down at 12:26 pm.  During those 10 minutes, without hearing from either side, this Court immediately gave the indication on the procedural irregularity and that the documents filed on 22 July 2010 would be struck off record, and the Court further gave indication on the jurisdictional issue of the access application. The Hearing was then stood down for copies of the relevant pages in the Report to be provided to Counsel for both sides to read and to consider the jurisdictional issue and also the necessary directions they would seek.  The Hearing resumed at 12:39pm and finished at about 1pm or shortly thereafter. During those 20-30 minutes, there were no further submissions/argument, and the discussions were mainly on what undertakings Mr. Felix Ng was prepared to give personally as counsel, and also what directions the Court was to give on both the guardianship and the access matters.

34.  In view of the above, the time taken up by the irregularity issue was short.  I have already ruled earlier that there be no order as to costs in relation to the access application.  The costs incurred as a result of the irregularity should be in my view insubstantial, as the irregularity was obvious and did not affect the substance of the applications. 

35.  During the Hearing, I did indicate that costs perhaps be costs in the cause, i.e. in the substantive applications, or reserved.  By the time, I finished dealing with directions, it was shortly after 1pm already.  As Mr. Maurice Ng insisted on making submissions on costs, I then directed that there be written submissions.

36.  Having regard to the minor nature of this irregularity, in my view, the legal representatives of the Maternal Members may have over- reacted.  I find that the statements of costs staggering.  In HCMP 671 of 2009, in a decision dated 29 April 2009 to dismiss the plaintiff’s application for leave to appeal, Hon Tan VP found the defendant’s costs of HK$110, 800 to be staggering, and only ordered the plaintiff to pay costs of HK$20,000 being counsel’s fees of HK$10,000 and solicitors’ costs of HK$10,000.  In my view, the current irregularity issue is even simpler than the application for leave to appeal in HCMP 671 of 2009. No complicated law was involved and no authorities were submitted by Mr. Maurice Ng before the Hearing, as Mr. Maurice Ng himself said it was obvious. 

37.  Having regard to all the circumstances, I am of the view that an appropriate sum for costs to be contributed by the Paternal Members would be HK$15,000, HK$10,000 for Counsel, and HK$5,000 for the solicitors for the Maternal Members and this sum be jointly and severally paid by the Paternal Members within 14 days from the date of this Ruling. 

Wasted Costs Order

38.  The Maternal Members did not issue any intercutory application by summons under O.62 r.8A(2) for a wasted costs order.  Instead, Mr. Maurice Ng has invited this Court to make a wasted costs order under Order 62rule 8 of the Rules of the District Court on its own motion.  I accept that under Order 62 r. 8A (1), this Court may make a wasted costs order against a legal representative on its own motion.

39.  As stated in para 62/8/1 of the Hong Kong Civil Procedure 2010 (“HKCP”), the wasted costs jurisdiction of the High Court as applied to solicitors is of long standing.  This jurisdiction was extended under the Civil Justice Reform to barristers (see the definition of ‘legal representative’ under the new s. 52A(7) of the High Court Ordinance). Similar provisions are now found in s. 53 of the District Court Ordinance.

40.  Under Order 62 r.8B(1) of the Rules of the District Court, this Court shall consider whether to make a wasted costs order in 2 stages-

“(a) In the first stage, the Court must be satisfied that It has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and

The wasted costs proceedings are justified notwithstanding the likely costs involved; and

(b)     In the second stage (even if the Court is satisfied under sub-paragraph (a)), the Court shall consider, after giving the legal representative an opportunity to give reasons why the Court should not make a wasted costs order, whether it is appropriate to make the order in accordance with rule 8.”

41.  Under s.53 of the District Court Ordinance, “wasted costs” means any costs incurred by a party as a result of –

“(a) an improper or unreasonable act or omission; or

(b) any undue delay or other misconduct or default,

on the part of any legal representative……”

42.  As set out in para 62/8/1 of HKCP, the matter complained of need not be criminal.  It need not involve peculation or dishonesty.  “A mere mistake or error or judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor’s duty to ascertain with accuracy will suffice.  It need not involve persona obliquity.  The test was whether the conduct amounted to a serious dereliction of duty.”

43.  As to what constitutes “improper” act or omission, para 62/8/3 sets out “it was not enough that a solicitor’s general conduct for a client had been improper; in every case where a solicitor had been made to pay costs, he had been proved guilty of misconduct a dient had been improper (sic)”.  In the United Kingdom, “improper” under the CPR is considered to cover, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty.

44.  Further, as set out in para 62/8/4 of HKCP, in the United Kingdom, “unreasonable” describes conduct “which is vexatious, designed to harass the other side, rather than advance the resolution of the case …” .  In order for a wasted costs order to be made under the CPR, any impropriety should be very serious and there had to be something more than negligence.  There had to be something akin to abuse of process.  It is a necessary requirement of any wasted costs order that there should be a breach of the lawyer’s duty to the court, there must be something more than mere negligence for the wasted costs jurisdiction to arise: Persaud (Luke) v. Persaud (Nohan) [2003] EWCA (Civ 394; [2003] P.N.L.R.26 CA.

45.  Earlier in this Ruling, I have already stated that I am of the view that the substance of the 2^nd Originating Summons and the access application is not an abuse of process nor are such applications frivolous or vexatious.   

46.  In HCMP 1237 of 2010, Mr. Justice Lam was told by the solicitor for the Maternal Members, that the solicitor had agreed to bear some of the costs of the Paternal Members in the matter, which he thought was very proper (para 17 of the Judgment), and that was why Mr. Justice Lam made an order against the solicitor for the Maternal Member.  As set out under paragraph 62/8/1 of HKCP, “a solicitor being an officer of the court has a wider duty.  While generally speaking the opposite party’s interests are taken care of by his own solicitor, the sphere of a solicitor’s duty is very different when it comes to an ex parte application.”

47.  Having considered the above, I am not satisfied as to the first stage under Order 62 r.8B(1).  Thus I do not need to go to the second stage and I decline to make any wasted costs order.

48.  Although I have declined to make a waste costs order against the legal representatives for the Paternal Members, I doubt whether the Paternal Members would in fact be aware of any procedural irregularity, or whether they would know which would be the proper procedure.  I will invite the legal representatives to consider whether they would be willing to voluntarily make contribution towards the costs their clients have now been ordered to pay.

Comment

49.  Finally, I just wish to add that when the next hearing comes up in December this year, it will be more than 12 months since the Maternal Members commenced these proceedings, and the parties have so far got nowhere.  There are still no guardians appointed for the Minor.  So far, it has been one irregularity after another and it appear that there has been unfamiliar with procedural rules.  Much time and costs have been wasted.  I would just emphasize again that we are here dealing with the welfare of a child, and it can only be in the best interests of the Minor if there is an early solution.  I would therefore urge the parties to put all hostilities behind them, and to consider mediation seriously.  Hopefully they can reach an early settlement.

50.  I intend to publish this Ruling.  If any party has any opinion, he or she can write to this Court within 5 days.