ZYM also known as ZYM v. LYK AND OTHERS

FCMC No. 14539/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 14539 OF 2007

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DECISION
(Leave to Appeal)

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1. This is the hearing of two summonses lodged by the 1^st Respondent Husband and the 3^rd Respondent respectively dated 6^th and 5^th June 2014, seeking leave to appeal against my written judgment handed down on 23^rd May 2014 (“my Judgment”). The Husband seeks to set aside my ancillary relief orders made in favour of the Applicant Wife and the two children of the family. The 3^rd Respondent considers his costs in the proceedings should be shouldered by the Wife instead of there being no order as to costs between them as ordered in my Judgment.

Brief Background

2. The Husband was the 1^st Respondent. The 2^nd Respondent was joined as an adulterer but did not take part in the ancillary relief trial. The 3^rd Respondent, a former employee of the Husband, was joined as a party to the ancillary relief trial because trading stocks of the family business called Old Sun Yick had been transferred to a newly incorporated company called New Sun Yick formed by him who was its sole shareholder and director. At the commencement of the trial, although counsel for the Petitioner had indicated that the Wife did not intend to claim any relief against the 3^rd Respondent for the time being, the Wife refused to discontinue proceedings against the 3^rd Respondent. As a result the 3^rd Respondent had to attend the trial, and no order was made against him in the end.

3. After trial, I handed down my Judgment on 23^rd May 2014 on the Wife’s ancillary relief claims. My findings include, inter alia, the followings:

   i)  The arrangement between the Husband and 3^rd Respondent in respect of Old/New Sun Yick was a sham arrangement with a view to put the family assets beyond the Wife’s reach;

   ii)  The Husband and/or the 2^nd Respondent were beneficially interested in another vehicle spare parts trading business called Shing Fat or somehow have control of or interest in it[1]. The Husband and the 3^rd Respondent were working for Shing Fat at the time of the trial and the 2^nd Respondent frequently visited Shing Fat;

   iii)  Both the Husband and the Wife had failed their duties to make full and frank disclosure of their assets and liabilities. The whereabouts of the assets of the Old/New Sun Yick had not been disclosed[2]. The Donghai Apartment[3] and the securities trading accounts[4] were found not trust properties as alleged by the Wife. The debts allegedly incurred by the parties were not believable and therefore not genuine debts as said by them[5]. As such the assets and liabilities of the parties for the purpose of the ancillary relief trial cannot be ascertained[6]; and

   iv)  The Court therefore proceeded on the basis the Husband was still in control of a business with size and earning power similar to Old Sun Yick while the marriage was intact[7]. The earnings from such business might well exceed $70,000 a month, but it was reasonable to pitch the Husband’s total earning per month at $70,000[8]. It is a good and reasonable yardstick of the Husband’s earning capacity for the purpose of the Wife’s ancillary relief claim.

4. This Court came to the conclusion the Husband do pay the Wife a monthly sum of $40,000 as periodical payment, split as to $8,000 for the Wife and $16,000 for each of the two children as from 12^th February 2008, the date from which the Husband was first ordered to pay maintenance pending suit[9]. Since this Court came to the conclusion that all parties had lied to the Court and in the special circumstances of this case, this Court ordered that there be no order as to costs between the parties. It was an order nisi which would be made absolute if there is no application to vary the same within 14 days from the date of the order, i.e. on or before 6^th June 2014[10].

5. It is the orders referred to in the preceding paragraph that the Husband and the 3^rd Respondent now seek leave to appeal against.

6. The Husband wishes to have the orders against him set aside and substituted by orders that (i) there being no periodical payment in favour of the Wife; (ii) the Wife do share 50% of the $16,000 monthly periodical payment payable to each of the children; and (iii) the Wife be ordered to pay costs of the ancillary relief.

7. In the intended appeal of the 3^rd Respondent, he asked for an order that the Wife do bear his costs of the proceedings. 

General Principles Applicable to Leave to Appeal

8. Section 63A(2) of District Court Ordinance (“DCO”) provides that:

“2. Leave to appeal shall not be granted unless the judge …… hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

  (b)  there is some other reason in the interests of justice why the appeal should be heard.”

9. It has been held that “reasonable prospects of success” involved the notion that the prospects of succeeding must be ‘reasonable’ and more than ‘fanciful’, without having to be ‘probable’: see paragraph 59/2A/4 of The Hong Kong Civil Procedure (Vol. 1) 2014. Although the said paragraph refers to section 14AA (4) of the High Court Ordinance, it is couched in almost identical terms as section 63A of the DCO and they are basically one and the same test.

10. The said test is further elaborated in a number of authorities the principles of which can be summarized as follows:

   i)  whilst the Court would not grant any leave to appeal without a reasonable prospect of success being demonstrated, the converse is not true. Accordingly, even if the Court takes the view that there is a reasonable prospect of success, it still retains a discretion as to whether to grant leave,although the fact that there is, ex hypothesis, a reasonable prospect of success would heavily influence the Court’s exercise of discretion: per Cheung J (as he then was) inHo Yuen Ki Winnie & Other v Ho Hung Sun Stanley Sociedade De Turismon & Other (unrep., HCA391/2006, 25^th May 2009);

   ii)  to meet ‘the reasonable prospect of success’ test, an applicant is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although he does not have to demonstrate that the appeal will probably succeed.” see: §19 of Wynn Resorts (Macau) SA v Mong Henry (unrep. [2009] H.K.E.C., Chu J (as she then was);

   iii)  Merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient. “Reasonable prospects” requires something more. It has been said that some assistance may be derived from the test applied when setting aside a default judgment, see: Ho Yuen Ki Winnie v Ho Hung Sun Stanley & Others (unreported) HCMP 1009 of 2009 2^nd August 2009 at §16 per Hon Le Pichon JA.

11. This Court will apply the aforesaid principles in deciding whether to grant leave to appeal. 

Grounds of the Intended Appeal of the Husband

12. The Husband considers the conclusion in my Judgment wrong. The grounds of appeal have been set out in the Revised Notice of Appeal. After reading them and hearing submission of Miss Lorinda Lau of counsel, I consider the bases of the grounds of appeal can fairly be summarized as follows:

   i)  miscomprehension of fact: this Court had made a wrong conclusion that the Husband and/or the 2^nd Respondent have a beneficial interest in Shing Fat (at §67 of my said judgment) based on a piece of fact that the 2^nd Respondent possessed the keys to the desk of Shing Fat’s boss (recorded at §62(xiii) of my written judgment) which was plainly wrong and not what had been said by the 3^rd Respondent at trial.

   ii)  the Wife is equally culpable of material non-disclosure and was found to have possessed the Donghai Apartment and securities trading account which were not trust properties as alleged. She should not be entitled to any maintenance and should be ordered to shoulder half of the assessed maintenance of the children;

   iii)  the alleged sale price of Donghai Apartment of RMB1.37 million is an undervalue; 

   iv)  the Wife’s open position for maintenance was only $24,000/month for the 2 children and she asked for nominal maintenance only for herself. She did not ask for maintenance for herself;

   v)  this Court has:

a)  over-estimated the Husband’s earning capacity being $70,000 a month;

b)  failed to have due or sufficient regards to the Husband’s age and increasing competitiveness of his business, his present earnings and the undisputed debts; and

c)  over-looked the Husband’s expenses and needs;

d)  failed to take into account of his income being $10,000 (or $16,000 at the time of the leave application) and his indebtedness;

   vii)  the conclusion of $8,000 to the Wife and $16,000 for each child was a wrong decision under Section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO), Cap 192.

Discussion

   Mis-comprehension of Facts

13. Although the relevant part of the transcript has not been produced, Counsel Mr. Khattak accepted the 3^rd Respondent said in the cross-examination that as far as he knew the 2^nd Respondent did not possess the keys to his boss’s desk, contrary to what have been recorded in paragraph 62(xiii) of my judgment. Accordingly, for the purpose of the present application this Court will proceed on the basis as if that part of paragraph 62(xiii) is a mistake. Question arises as to whether the Court’s conclusion in paragraph 67 of my Judgment is unsafe and if so, to what extent the mistake will impact upon the overall decision of the Court on the periodical payment payable by the Husband.

14. In my view, even this Court got this piece of evidence wrong, this Court will, on a balance, come to the same conclusion as in my Judgment. It is because the 3^rd Respondent also confirmed that Shing Fat’s clients were basically the same as the Old and New Sun Yick[11].  The overall evidence still points towards the direction that at least the Husband is beneficially interested or somehow has control of or interest in Shing Fat as concluded in paragraph 67 of my Judgment.

15. Even if this Court were wrong in its conclusion about Shing Fat’s beneficial ownership, by reasons of the analysis in the following paragraphs, this Court does not consider the same having any impact on the final ancillary orders made against the Husband.  

16. It is the findings of this Court that both the Husband and Wife have deliberately failed and/or refused to make full and frank disclosure of their respective assets. Although this Court found against the Wife on the Donghai Apartment[12] and her securities accounts[13], this Court has no idea of how much assets she was holding at trial.

17. Regarding the Husband’s assets, there is overwhelming evidence supporting a conclusion that the arrangement between the Husband and the 3^rd Respondent a sham[14]. The transfer from the 3^rd Respondent to Nhi of New Sun Yick’s shareholding was only an extension of the original bogus scheme when it did not work out as expected[15]. It is also this Court’s finding that the audited accounts of Old/New Sun Yick did not reflect in any way the financial position of the company. This Court simply did not believe that no trading stocks were left when New Sun Yick ceased business on 28^th February 2010[16]. Like the Wife’s case, the whereabouts and value of the assets withheld by Husband are also unknown to the Court.

18. It is also this Court’s conclusion that both the Husband and the Wife told lies in their evidence before the Court[17]. Their evidence about their respective debts was unreliable[18]. Save and except the Husband’s indebtedness to the IRD, this Court did not accept the alleged debts said to have been incurred by the parties.

19. This Court is therefore hindered by the parties to perform its duty under section 7 of the MPPO. Since both parties breached their duties to make full and frank disclosure of their assets, division of assets was impossible. No order in this respect was made by this Court[19].

20. However, it has to be remembered the Wife continues to take care of the 2 children after the divorce, just as she did before divorce. It would be unfair and in fact unjust in the circumstances that she would be deprived of any maintenance but continued to be encumbered by young children of the family after divorce. It would therefore be fair and reasonable for the Husband to continue maintaining his two children and ex-wife, just as he did so before the marital breakup[20].

21. Faced with this situation, this Court is entitled to take a robust view of the parties’ assets for the purpose of doing the section 7 exercise. Inference, including adverse one, can be drawn against a party who fails its duty to disclose. The legal basis of drawing adverse inference is not challenged by counsel for the Husband in this application. The inference that the Husband was still holding the assets he had tried hard to ring-fence, though in vain, was an entirely logical and reasonable one for the purpose of the section 7 exercise. That is why this Court proceeded on the basis that the Husband was still in control of a vehicle spare parts business with size and earning power similar to the Old Sun Yick while the marriage was intact. This is an adverse inference which this Court is entitled to draw against the Husband[21] even if the finding relating to Shing Fat falls. It has to be noted that this Court is not proceeding on the basis that the Husband was beneficially interested in Shing Fat, though it was then and remains its finding now.  

22. This aforesaid serves to summarize the basis set out in my Judgment[22]. It is a fair and reasonable approach and it sits well with other findings of this Court. I therefore fail to see how the mistake in the said piece of evidence concerning keys of the desk will have any impact on the overall approach and the assessment of the periodical payments which the Husband was held liable to pay.

   The Wife is Equally Culpable of Material Non-disclosure

23. No assets transfer order was made. The current position on assets is no different from that before the marital breakup – the Wife was in control of the Donghai Apartment and securities trading accounts while the Husband the vehicle spare parts trading business. While the marriage was intact he was required to maintain his children and the Wife who took care of the children. There is no reason why after divorce he is entitled to stop his obligation towards his ex-wife who continued to take care of the children.

24. Further, I do not consider he is entitled to complain the continued maintaining of the Wife unfair unless he comes to this Court with clean hands and has satisfied his legal obligation to make a full and frank disclosure. The disposal of trading stocks from Old Sun Yick to the 3^rd Respondent in the circumstances of this case is a gross example of a husband attempting to defeat his wife’s claims. He still insisted the same to be genuine despite overwhelming evidence to the contrary. By failing to discharge his duty of disclosure, this Court is no position to know whether his complaint is justified. He is the author (or at least one of the authors) of the present state of affairs which he is now in, and I do not consider he has any cause to complain.   

   The Wife Did Not Require Maintenance in Her Open Offer

25. One of the grounds of appeal concerns the open offer of the Wife, namely, as to $24,000 for the children and nominal maintenance for herself. Miss Lorinda Lau submitted that since the Wife was in the best position to know her own financial resources, the fact that she did not ask for it was telling of her own financial position.

26. Firstly, it is not in dispute that this offer was open for acceptance before 6 pm of 13^th January 2014, and was not accepted by the Husband. The Wife’s offer therefore lapsed. In my view the Husband is not entitled to rely on the offer again as he well understood that if there was no settlement the Wife would be proceeding against him for whatever remedies the Court deemed appropriate, and which might exceed the Wife’s offer.  

27. Secondly, under section 7 of the MPPO, this Court has a duty (my emphasis) to take into considerations of all the circumstances before coming to any ancillary relief order. The Wife’s open position is therefore only one of the many considerations for this Court’s consideration, and this Court is not bound to follow it without regards to other factors. The total sum of $40,000 per month was arrived at after taking into accounts the needs and financial resources of the parties and the children. 

   Insufficient Regards to the Husband’s Circumstances

28. In my Judgment, this Court referred to the expenses of the Husband set out by him in his latest Form E[23]. It is noted that he only stated his monthly expenses to be $9,610 which included $1,500 for smoking. Though smoking expenses had been excluded, he was at the end allowed a monthly sum of $15,000 as his reasonable expenses which was about 1.5 times[24] of his then living expenses[25]. Since his estimate monthly expenses were $70,000, he was further allowed another $15,000, making up to a total of $30,000 a month to take into account of his past and future tax liabilities.

29. This Court does not wish to repeat the analysis in my Judgment which leads to a conclusion of $70,000 being a reasonable estimate. Suffice it to say that his monthly earning of $70,000 was based on his own evidence and taxable incomes which he accepted. In fact some downward adjustment of his earning capacity had already been made to take into account the adverse effect of the protracted acrimonious litigation on his income. This brings the monthly income down substantially from an estimated average of about $93,700 to $70,000[26], representing a discount of about 25%[27] off his average income. It is a substantial discount and cannot be said that no or insufficient regards having been made respecting the personal conditions of the Husband.

30. There was in fact at trial no positive evidence advanced by the parties regarding how competitive the vehicle spare parts business was and how the Husband’s age and health affect his earning capacity. It has to be remembered that since he is not a truthful and reliable witness his allegation in Court must be viewed with skepticism. The figure of $70,000 is the best estimate based on available evidence before the Court taking into consideration of all the circumstances[28]. The Husband’s assessment may be different from this Court’s conclusion. The question is therefore whether the discretion exercised by this Court is plainly wrong which warrants the intervention of a higher court. This will be discussed in the paragraphs below.

   Failure to Consider His Current Earning & Debts

31. This Court relied on the Court of Appeal decision of KEWS v NCHC (unreported) CACV75/2011, 2^nd December 2011 to support its proposition that primarily it is the earning capacity instead of the actual earning of a maintenance payer that should be taken into account. No submission is made to the effect that this legal proposition is wrong.

32. Secondly, it is the finding of this Court that the Husband is guilty of material non-disclosure of assets, and the arrangement between Old and New Sun Yick a bogus arrangement. These findings have not been challenged. It would therefore be totally unreasonable to assess his abilities to pay maintenance based on his actual earning.  

33. Thirdly, as have been stated above, this Court did not believe the debts incurred by the Husband as alleged. The allegation that this Court paid no or insufficient regards to the Husband’s indebtedness, and in particular that to the banks, amounts to a challenge of this Court’s finding of facts. The principles upon which the appellate court will upset the primary findings of facts based on credibility of witnesses are well settled. In Hong Kong such principles have been set out by Godfrey JA in Tang Kwok Ming v Daxprofit Scaffolding Ltd [1999] 1 HKC 663 and reiterated by Woo VP in Tin Kwong International Enterprise Company Limited & ors v San Tung & anor (unreported, CACV 164/2005, 17^th January 2006,). The said principles have been helpfully summarized by Woo VP in Tin Kwong (at paragraph 14) as follows:

“i)  if the Court of Appeal is to reverse the trial judge’s decision on the facts, it “must not merely entertain doubt whether the decision below is right, but be convinced it is wrong”;

ii)  the Court of Appeal will certainly not disturb the judge’s finding of primary fact where they are based on the credibility of witnesses or the preference of the evidence of one witness for that of another because he enjoyed the advantages of receiving the evidence in a living state at first-hand;

iii)   in order to disturb a finding of primary fact, the Court of Appeal has to be satisfied that the judge’s conclusion is plainly wrong in the sense that either (1) that there is no evidence to support it; or (2) that is contrary to documentary or other incontrovertible evidence that the judge overlooked. It is not enough to show there is little evidence to support the judge’s finding, or that it was “contrary to the weight of the evidence”. The weight of the evidence is a matter for the trial judge. It does not matter how many witnesses say one thing, and how few say the contrary. The judge is perfectly entitled to prefer the evidence of the few to that of the many. ”  

34. After hearing and observing the Husband and Wife testifying in Court, both of them were found not reliable and not truthful witnesses[29]. In light of the principles set out in the preceding paragraph, this Court fails to see the Husband will have a reasonable chance of succeeding in overturning this Court’s finding of facts, and in particular, the facts in question.

   The Donghai Apartment was sold at undervalue

35. There has been suggestion that the Donghai Apartment was sold at undervalue. It may perhaps be the case but there is absolutely no evidence in this respect put forward by the Husband at trial. The annexure of information printed from the internet in Miss Lau’s closing submission filed after trial is no admissible evidence. I really do not see there being any prospect for the appellate court to entertain this ground which is not based on any evidence at all if the matter goes on appeal. 

   Wrong Exercise of the Discretion under S.7 of MPPO

36. This ground of the Husband boils down to this. In light of the evidence, this Court ought to have exercised the section 7 discretion differently by ordering the Wife to shoulder half of the ordered children’s periodical payment and dis-entitled her from receiving any maintenance. In this connection, this Court would like to refer to the following often-quoted passages which succinctly set out the well established principles on appeal against the exercise of discretion:

   i)  “When the intended appeal is an appeal against the exercise of discretion of the judge below, the applicant would have to show that he has an arguable case with reasonable chances of success that the relevant decision exceeds the generous ambit within which reasonable disagreement is possible, and is in fact plainly wrong, and not merely the appellate court would prefer a solution which the judge had not chosen” (RS v YS, unrep., HCMP1969/2002, 1^st November 2012, CA): Para 59/2A/4 of 59/2A/4 of The Hong Kong Civil Procedure (Vol. 1) 2014; and

   ii)  “It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.” Per Asquith LJ in Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 at 345.

37. In the circumstances of this case, it is my judgment that it will be difficult for the Husband to convince the appeal court that the discretion so exercised in my Judgment has gone beyond the generous ambit within which reasonable disagreement is possible or is plainly wrong.

38. By reasons of the above, I do not consider the Husband has any reasonable prospect of success in the intended appeal. Accordingly I dismiss the Husband’s leave to appeal Application.  

Grounds of the Intended Appeal of the 3^rd Respondent

39. Instead of seeking to vary the costs order nisi which became absolute on 6^th June 2014, the 3^rd Respondent sought to appeal against the said order nisi one day before it became absolute, i.e. on 5^th June 2014. Mr. Tam’s explanation, so far as can be discerned from his submission, was that since the Husband will be lodging a leave to appeal application anyway, the 3^rd Respondent lodged the same application as well.

40. The costs order nisi was couched in the following term in paragraph 125 of my Judgment:

“…such order be made absolute if there is no application to vary the same within 14 days.”

41. An application for leave to appeal is necessarily an application with a view to vary the said costs order. In the circumstances, this Court considers appropriate, and treats the present summons of the 3^rd Respondent as two applications: an application to vary the aforesaid costs order nisi and leave to appeal if the variation application is refused.

42. The 3^rd Respondent’s main argument is this. In light the Wife had decided not to pursue against him, she should have discontinued or otherwise released him from attending the trial so that the 3^rd Respondent needed not incurred further costs. The 3^rd Respondent can be subpoenaed as a witness to give evidence to assist the Court. Since the 3^rd Respondent was forced to be present throughout the whole trial as a party for the purpose of cross-examination, he should be compensated by the Wife for the costs incurred.

43. The thrust of the 3^rd Respondent is apparent.

44. In the replying submission, Mr. Khattak only submitted that if the 3^rd Respondent was attending court as a witness, it would be quite impossible to subject him to cross examination. He referred the Court to section 12 of the Evidence Ordinance, Cap 8, which stated unless with Court’s leave, a party cannot cross-examine a witness produced by him/her.

45. As I have summarized in the early part of my Judgment[30], my understanding of Mr. Khattak’s submission at the commencement of trial in this respect is this. Though the Wife was for the time being not seeking any order against the 3^rd Respondent, the possibility of asking for an order against him could not be ruled out after hearing all the evidence. Accordingly it would be necessary for the 3^rd Respondent to remain a party to the proceedings.

46. This Court can see the Wife’s difficulties. She was then in a dilemma. The Husband and Wife had engaged in protracted and acrimonious fights, both inside and outside court. The Husband and the 3^rd Respondent were not co-operative. She then did not have much detail about what had become of the family assets, and in particular the disposition between the related parties. Proceedings in the Court of First Instance appeared not fruitful. Information obtained by or supplied to her relating to the Husband’s assets disposition was scarce and in any event viewed by her with extreme caution. Without mush information it is understandable that she was then not in any position to ask for any order against the 3^rd Respondent. Without going through the trial and subjecting the Husband and 3^rd Respondent to thorough cross-examination, the whereabouts of Old Sun Yick’s assets might not be revealed. If the 3^rd Respondent ceased to be a party, in the event evidence revealed at trial showed that family assets or part thereof remained with him, the Wife would not be able to seek any order against him.

47. Of course if at the end of the trial the evidence does not support any order, no order could be made against the 3^rd Respondent. It will then be said, as it is the case now, keeping him for the purpose of the trial is unnecessary. She runs the risk of an adverse costs order being made against her.

48. As I have said in my Judgment, all the parties had lied to the Court. The Husband and the 3^rd Respondent had embarked on a gross ploy masterminded by the Husband with a view to defeat the Wife’s claims. The 3^rd Respondent was a willing and loyal party to the ploy. That was why he was dragged into the proceedings. Although it was known to the Wife that his shareholding had been transferred to Nhi, given the relationship between the Husband and the 3^rd Respondent, and in particular it was initially the trading stocks which have been disposed of, the fact that she entertained doubts on whether the 3^rd Respondent had kept assets of the family cannot be said as unreasonable.

49. I therefore accept that at the start of trial, the Wife was not sure that she would certainly not be asking for any order against the 3^rd Respondent after trial. I accept that the 3^rd Respondent cannot be released at the commencement of the trial otherwise the opportunity of holding him to any subsequent order will be lost. His participation in the trial as a witness is insufficient for the Wife’s purposes.

50. My decision in this respect is sufficient to dispose of the argument raised by the 3^rd Respondent that he needs not be kept. Accordingly it is therefore unnecessary to deal with the cross-examination point raised by Mr. Khattak.

51. From the evidence revealed at trial, both the Husband and the 3^rd Respondent still insisted the transaction in question a genuine one for settlement of his employment entitlement. Though his evidence at the end of the day helped destroy his own and the Husband’s case, it has absolutely nothing to do with him being frank and truthful. It is entirely through effort of cross-examination which he could not stand, thus exposing the weaknesses of their bogus scheme. In my judgment, his election to give evidence does not make him less culpable in the matter. It is just the opposite. His giving of evidence was with a view to support the Husband’s case. It is only fortunate that the outcome turns the other way round. His conducts in the ploy and in the proceedings are deplorable.  

52. Costs are entirely in the discretion of the Court to be exercised judicially based on established principles. In my judgment, this Court is entitled to take into account the conduct of parties in the proceedings and in the substantial matters that bring about the proceedings. In the circumstances of the case as set out in my Judgment and highlighted above, it is fair to say that the 3^rd Respondent brought about the matter upon himself. He offered assistance to the Husband to hide his assets and gave evidence to support him. On the other hand, the Wife is no better in telling the truth. This Court considers that in the circumstances, a fair exercise of the discretion is to make an order that there be no order as to costs.

53. This Court now makes the costs order nisi in my Judgment absolute.

54. As regards leave to appeal against a costs order, Mr. Khattak has helpfully referred this Court to Ho Shu Kwong v Chiang Chun Yuan [2002] 3 HKLRD 419. In this case the Court of Appeal was dealing with an appeal brought by a defendant who was successful in defending the claims as well as in his counterclaim, but was denied costs by the trial judge. The Court of Appeal dismissed his appeal and discussed the principles relating to appeal against a costs order, which can be summarized as follows:

    i)  The trial judge who has seen and heard the witnesses and attended to the whole course of proceedings is in the best position to decide whether one side has behaved so badly in the matter as to justify that party being deprived of costs.

   ii)  An appellate court should take a cautious approach and would not interfere with the trial judge’s discretion unless,

a)   he failed to exercise the discretion;

b)  exercised it upon false principle or law; or

c)  has taken into account some matter which he should not have taken into account; or

d)  has left out of account some matter which he should have taken into account; or

e)  the decision is plainly wrong, which must have been reached by a faulty assessment of the weights of different factors which he has had to take into account.

  iii)  A wholly successful defendant should be given his costs unless there was evidence that he:

a)  brought about the litigation;

b)  had done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation or expenses;

c)  had done some wrongful act in the course of the transaction of which the plaintiff complained.

If there was evidence of facts falling within these classes, an appellate court would not interfere with the discretion of the trial judge, even though it might not have come to the same finding of fact or exercised its discretion in the same way; and

iv)  the credibility and conduct of parties regarding the  case they sought to prove was a relevant matter for the judge to take into account in dealing with costs, and once this was accepted, any comparison to be made of the conduct on each side was a matter for the judge. If he found that one party had behaved particularly badly, although was ultimately successful in his claim, he was entitled to take into account, even though the conduct of the other party might appear to be equally or almost equally culpable.

55. Applying the aforesaid principles, I really do not see any prospect an appellate court will upset the costs order in my Judgment respecting the 3^rd Respondent. He has aided the Husband to put assets beyond the Wife’s reach and remained not forthcoming as to the truth at trial. By agreeing to assist the Husband in the ploy he brought the troubles upon himself. No one, but he himself, is to blame. I do not consider he has a reasonable prospect of success in his intended appeal.

Conclusion and Orders

56. By reasons of the above, the two summonses respectively issued by the Husband and the 3^rd Respondents were dismissed. There will be a costs nisi that the Wife’s costs, together with counsel’s certificate, in the two summonses to be paid by the Husband and the 3^rd Respondent respectively, with the Wife’s own costs to be taxed in accordance with Legal Aid Regulations, such order nisi be made absolute if no application was made to have the same varied in 14 days.

[1] See §67 of my Judgment

[2] See §§51-67 & 108 of my Judgment

[3] See §§68-88 of my Judgment

[4] See §§89-93 of my Judgment

[5] See §§94-106 of ny Judgment

[6] §108 of my Judgment

[7] See §110 of my Judgment

[8] See §§110 & 111 of my Judgment

[9] See §124 of my Judgment

[10] See §125 of my Judgment

[11] See §62(xiii) of my Judgment

[12] See §§82 – 88 of my Judgment

[13] See §93 of my Judgment

[14] See §§51 - 67 of my Judgment

[15] See §66 of my Judgment

[16] See §§58, 63 -64 of my Judgment

[17] See §44 of my Judgment

[18] See §§94 -106 of my Judgment

[19] See §117 of my Judgment

[20] See §117 of my Judgment

[21] See the citation of Rayden and Jackson on Divorce and Family Matters in §109 of my Judgment.

[22] See §110 of my Judgment

[23] See §121 of my Judgment

[24] $15,000  ÷  $9,610  x  100%  = 156%

[25] See §122 of my Judgment

[26] See §§111 -112 of my Judgment

[27] 100% - ($70,000 ÷ $93,700  x 100%) = 25.3%

[28] See §112 of my Judgment

[29] See §44 of my Judgment

[30] See §3 of my said Judgment