RICKPAUL FREDE BROWN v. ELIZABETH MARY BROWN

IN THE COURT OF APPEAL

1994, No. 156
(Civil)

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J U D G M E N T

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Nazareth, V.-P.:

1. This is an appeal by the appellant husband against the order of His Honour Judge de Souza awarding the respondent wife a lump sum of $200,000 and, in general terms, the costs of judicial separation, divorce and ancillary relief proceedings.

2. The parties married in London on 20th June 1989. The husband was then aged 41 and the wife 46. It was a second marriage for each of them. There are no children of the family as a result of the union. But the husband has two sons aged at the time of the hearing 18 and 13 from his first marriage. His total liability for maintenance to them amounted to ￡1,300 per month. He says he also contributes additional amounts to them. The respondent wife has a son but he does not figure in these proceedings.

3. The husband and wife came to Hong Kong in June 1989. The marriage very rapidly broke down after that. On 29th November 1991, that was about 2½ years after the marriage, the wife filed for judicial separation and on the same day she sought and obtained an ouster and non-molestation order. The parties have lived separately and apart since the end of 1991.

4. The husband subsequently filed an answer in which he prayed for a similar decree based on the wife's unreasonable behaviour which he particularised at some length. He made complaints of extravagance and financial irresponsibility resulting in accumulation of debts, of abuse and other serious allegations about the wife, which she denied in her reply.

5. On 11th March 1992, the husband was ordered to pay maintenance pending suit of $10,000 per month to the wife. He complied with that order save for some minor deduction.

6. The proceedings for judicial separation did not in the event progress beyond the applications for injunction and maintenance pending suit and were eventually overtaken and superseded by the husband's petition for dissolution of marriage filed shortly after the third anniversary of the marriage on 22nd September 1992.

7. The husband's petition and the wife's answer and cross-petition raised allegations of extravagance and unreasonable behaviour, and of violence, respectively, against each other along lines very similar to those in the suit for judicial separation. Ultimately, after protracted negotiations, they agreed to drastically reduce their particulars of behaviour to a single common allegation, that each party was to complain of their inability to agree resulting in bitter and frequent arguments and the break-up of the marriage. Their marriage was accordingly dissolved on 19th July 1993 on the basis of cross decrees being granted and the divorce became final when the decree nisi was made absolute on 6th September 1993.

8. In the proceedings before Judge de Souza for final maintenance, the husband sought a lump sum for himself; the wife sought periodical payments and a lump sum. There was extensive and wide ranging disclosure of their respective financial positions. As I have indicated, in the end the judge made the orders now appealed against.

9. The husband was originally represented in the judicial separation proceedings; but, as he says, because he was unable to afford the legal costs, he thereafter appeared in person. He contends before us that first of all, the lump sum award of $200,000 is far too high and should be reduced to $100,000 a month, which in fact he offered early in the proceedings. He submits that the judge's award was flawed by reason of his improper and unwarranted findings of fact, for example, that the wife was battered, that it was not established that the wife was extravagant and thus had precipitated the desperate family financial situation; that the wife had made some contribution to the family welfare; that the husband could easily borrow very large sums to meet the lump sum award, and so on.

10. Given the nature and range of disputed facts, it is a matter of some surprise that these were nonetheless resolved by findings of fact made upon the basis only of affidavit evidence. The husband had given notice of intention to cross-examine but at the hearing of the application for ancillary relief, counsel for the wife initially indicated that he would not wish to cross-examine the husband and towards the completion of the hearing of that application, he invited the court to dispense with cross-examination, no doubt with the best of intentions. The judge's notes recorded the following when the court resumed after the lunch break at the hearing:

"Mr Pilbrow:	I submit evidence concerning essential aspect of the case - finance - well documented with significant amount of disclosure by both sides. I don't believe it would assist Court to allow oral evidence therefore ask Court in discretion not to take oral evidence.
The husband:	I have thought about this and I believe cross-examination would serve some purpose. I certainly would want to keep costs down and to have this matter resolved quickly. I therefore do not wish to cross-examine Respondent."

11. Before us, the husband explained that when counsel for the wife made his request that there be no cross-examination the judge asked him, the husband, why he wished to cross-examine the wife. He replied to establish the facts. He was asked what facts. He explained the wife's statement. Again he was asked why. He replied to show that she had lied. To that the husband says, the judge's response was to the effect that if the wife had lied in her affidavit, why would she not do so in the witness box. Counsel for the wife then said that there should be an adjournment as they would not finish that day. The judge told the husband that he should think about it.

12. Before us, the husband says that he did not find it an easy decision. He was not encouraged. He was concerned about displeasing the court. Prior to lunch the judge had already agreed that he would have to adjourn. That would result in several months delay, the husband thought. It had already dragged on for several years. So finally he gave in.

13. Mr Pilbrow recalled part of that version, but had no recollection of the rest which he therefore did not feel able to refute.

14. What is of obvious concern is that the husband, being unrepresented, was not told of the risks of not cross-examining the wife. Moreover, the judge was then denied of any satisfactory means of resolving the conflict. However, in the situation this Court now finds itself, there can be no question of the matter going back for re-trial. That would serve neither the ends of justice nor the interests of the parties, whose resources are already virtually exhausted. And quite rightly no one has now suggested that course. So it becomes right and indeed necessary for this Court to see whether the appeal can nonetheless be satisfactorily determined. Before leaving the findings of fact complained of, I would add that the husband's complaints in relation to the facts are not such that can be dismissed out of hand.

15. The husband also complained that the judge did not give sufficient weight to some considerations and gave undue weight to others.

16. The award, having been made in exercise of the judge's discretion, it is convenient at this point to refer to the principles upon which an appellate court would interfere with the exercise of discretion by a trial court. The limited role of an appellate court can conveniently be seen in G v G (H.L.(E.)) [1985]1 WLR 647 in which Lord Fraser, having reviewed certain authorities put the principle thus:

"... the appellant court should only interfere when they consider that the judge of first instance has not merely preferred an imperfect solution which is different from an alternative imperfect solution which the Court of Appeal might or would have adopted, but has exceeded the generous ambit within which a reasonable disagreement is possible. That principle was stated in this House by my noble and learned friend Lord Scarman in B v W (Wardship: Appeal) [1979] 1 WLR 1041, where, after mentioning the course open to the Court of Appeal if it was minded to reverse or vary a custody order he said, at p.1055:

'But at the end of the day the court may not intervene unless it is satisfied either that the judge exercised his discretion upon a wrong principle or that, the judge's decision being so plainly wrong, he must have exercised his discretion wrongly.' (At p.652E-F)"

In the light of that well-established principle, I turn to consider the circumstances which have to be taken into account under s.7 of the Matrimonial Proceedings and Property Ordinance. I do not propose to recount all of them in detail. Some, I have already mentioned. I go on to say that the husband has, since the order dissolving the marriage has been made absolute, remarried and has to support his new wife. He is a civil servant with a monthly salary of $59,965. His only asset is his pension which will not be payable until he retires in 2007 at the age of 60. His finances are in a sorry state. He has had to borrow $85,641 from the bank to pay his first instalment of salaries tax early last year, with repayment over 18 months. In addition, at the time of the hearing, he had an overdraft of about $25,000 and two other bank loans that involve monthly repayments of about $8,000 per month.

17. The payments to his first wife and two sons have already been touched upon. The sums ordered to be paid amount to about $12,650 per month although he says he contributes an additional amount of approximately $7,350.

18. Turning to the wife, the judge made findings that her reasonable requirements, including a debt repayment of $20,000, retraining costs as a beautician, rental deposit, furnishing costs etc amounted to $119,000. He also assessed the value of her share of the widows and orphans fund to which the husband contributes at $24,250 per annum, and he assessed the loss of this, and of medical and dental treatment to which she is entitled, at about $80,000. He thus assessed the lump sum award at $200,000 and refused the periodical monthly payments of $11,000 applied for.

19. The husband, not without some justification, has criticised the manner and bases upon which the individual assessments of the amounts I have mentioned were made, even the exchange rates adopted, the calculation and thus the overall amount of $200,000. However, having regard to all the circumstances, disregarding the factual findings challenged by the husband, discounting the individual assessments he has challenged, reducing the individual amounts which the wife has claimed, which were also challenged in some detail by the husband, I have come to the conclusion that the award of $200,000 is more or less right. Certainly, it is not one that I feel able to say is plainly wrong or wrong in principle.

20. There has been no appeal by the wife against that award, we are informed, because the legal aid for this purpose for which she applied was refused. That said, I do not wish to be taken as suggesting the lump sum award should have been larger. Upon that basis, it simply cannot be said that the award was plainly wrong. I would accordingly dismiss the appeal against the lump sum award.

21. I turn then to the husband's appeal against the order awarding the wife in effect all the costs in the two actions, other than those very minor costs in respect of which orders were previously made.

22. In totality, these costs are likely to be of the order of 11/2 times or even double the lump sum award. The husband submits for numerous reasons which he has urged upon us, that the proper order should be that each side should bear its own costs.

23. The costs order made by the judge provides for costs in respect of not only the ancillary relief with which the proceedings concluded, but also numerous applications stretching over a protracted period of time. They were conveniently listed by Mr Pilbrow in the form of the two following schedules:

Schedule A

Schedule B

24. As can be seen the costs of some items were not dealt with or were reserved at the time. Ultimately, after the matter of ancillary relief was dealt with, those items were disposed of at the costs hearing on 22nd March 1994 in the following way.

25. Mr Pilbrow for the wife first identified three items, the first two heard by Judge Rattigan and the 3rd by Judge Eccleton. In the judge's notes, Mr Pilbrow is recorded at p.42 as having submitted that Judge Rattigan saw fit to continue the injunction in severe terms and that therefore it was right for costs to be awarded against the husband on the applications concerned; and at p. 44 that Judge Eccleton reserved costs on making the decree nisi, and that as the divorce was dealt with by cross decrees on reduced behaviour, the judge must have felt it "proper to deal with it in the wash of the ancillary relief proceedings".

In his ruling on the costs, the judge said at p.50:

"Having carefully heard and weighed the submissions on costs advanced this afternoon, I am persuaded for the reasons advanced by Mr Pilbrow that I should make orders for costs that he seeks for the wife."

He then proceeded to make orders awarding the costs to the wife.

26. Before us, the husband complains that he made detailed submissions on the costs and was invited by the judge to record them in writing upon the basis that the judge would study them. But he complains that the judge adjourned after he handed them up at the end of his submission (which accords with the judge's notes) and returned in 10 minutes, the time it would have taken him to reduce his short reasons and order into writing, and then read them out. With some justification he feels aggrieved.

27. But more to the point the judge appears to have simply accepted Mr Pilbrow's submissions and misdirected himself in doing so. In at least one of the applications the husband was clearly successful, and I am not able to see upon what basis he should have been made to pay the costs of that application.

28. In the matrimonial jurisdiction such as the present, the court has an even wider than usual discretion. The ordinary rule that costs follow the event does not apply save as a prima facie starting point, see Gojkovic v Gojkovic [1991] 2 FLR 233 at 236 D-F and Rayden on Divorce, 16th ed. Vol.1, p.728, para.31.32. Moreover, as is pointed out in paragraph 51.5 at p.1526 of the latter:

"In cases where the costs of any application or hearing have been reserved pending a final order in the matter in question, those costs must be specially asked for on the making of the final order or at the hearing: otherwise they will not be allowed on taxation against a party condemned in costs. A general award of costs does not include costs reserved unless specifically stated, but the court may include the costs reserved if an application, on notice or summons, is made subsequently."

29. Here, the judge seems to have assumed that they should simply be swept up in the resolution of the general costs of the ancillary relief, and that is what he appears to have done. Moreover, he should have individually addressed each of the several applications in point. Those were material misdirections.

30. It therefore becomes necessary, in my judgment, for this Court to set aside the costs order and itself to exercise the judge's discretion. In doing so, it must have regard to all the circumstances and the matters specified in s.7(1) of the Matrimonial Proceedings and Property Ordinance (Cap.192). For instance the husband made an offer of $100,000 very early in the proceedings as I have mentioned. It was rightly refused, as it turned out, by the wife, but that offer indicated a willingness on the part of the husband to negotiate which, in my view, was stifled by the huge counter amount requested by the wife - $500,000 - which would have required him to raise a loan of over $600,000 as was conceded on the wife's side. His accrued loan commitments at the time and the discouraging noises made by the bank in the context of a very small loan justified him in refusing that offer.

31. Having regard to that, to the individual applications, and to all the circumstances, not all of which I have adumbrated, including some delay which must be laid at the wife's door and must have increased the costs, it seems to me that the right order should be that there be no order for costs, leaving each side to bear its own costs. That would have the very serious consequence of the wife losing the entire award to the Legal Aid Department which has a lien upon it. But having given careful and anxious consideration to that matter, not only in the present context but also in the context of the quantum of the lump sum award, I have come to the conclusion that it would not be a good reason for inflicting upon the husband the total costs of the proceedings, and that the proper order should be that there should be no order as to costs.

32. I would accordingly dismiss the appeal against the lump sum award, but allow it in respect of the costs order which I would set aside and in lieu substitute an order that there be no order as to costs.

Mortimer, J.A.:

33. I agree with both the conclusions and the reasoning of the Vice President but would add one or two words of my own upon specific matters.

34. Before the judge below, there were two issues of fact, concerning the husband's allegation of financial irresponsibility, and the wife's allegation of violence. On these two matters, the husband had given notice of intention to cross-examine the wife on her affidavits. Indeed, I think there was a similar notice by the wife.

35. At the hearing, the judge persuaded the husband appellant - then acting in person - not to insist on cross-examination in spite of his notice. Not surprisingly when this was suggested to him by the judge, the husband acceded. However, the judge did not then go on to explain to the husband the consequences of his decision and later determined those issues against him on the affidavits alone. It was not open to the judge to do this.

36. The husband still insists that the wife was financially irresponsible during the marriage and says that this ought to have been taken into account in reducing the amount which the judge awarded, see C v C[1992] HKLR 183. The financial irresponsibility relied upon by the husband is that the wife was running up unreasonably large telephone and other bills over which he had no control and for which he later became responsible. Often where a judge has made decisions of fact against an appellant which are not justified, the only way to meet a valid objection is for this Court to return the case back to the District Court for the determination of the issues on further evidence. This has not been urged upon us in this case but in any event, I would also reject such a course. Primarily because even if the husband were to succeed in his allegations, the effect upon the award would be negligible compared with the drain on resources caused by the costs of a further hearing. Also this Court will not return a case for further findings of fact unless justice will be served by such a course. Here, I am convinced that justice would not be so served.

37. The judge exercised his wide discretion to award the lump sum within the very severe constraints, first, of the wife's minimal needs, and secondly, of the husband's extremely limited ability to pay which has been outlined by the Vice President. Had the judge below decided the financial irresponsibility issue in the husband's favour, those constraints were such that in achieving a clean break - obviously the correct course after this brief marriage - his award would have been little different, if different at all.

38. The judge's approach was arithmetical. As I said in this Court in a recent case, Lai Lai-hing v Lai Kwai-ping, Civil Appeal No.201 of 1994, at p.5,:

"... in making such an assessment, an arithmetic approach is not appropriate and such approach can lead to error, perhaps, serious error. See P. v P. (Financial Provision: Lump Sum) [1978] 1 WLR 483 per Ormrod L.J. at 489H and Roskill L.J. at 492D."

39. In this case, however, although the judge did adopt an arithmetical approach and that might have led him to error, it certainly did not do so. The husband has been able to criticise certain aspects of the individual sums involved, but the overall sum was well within the correct limits. For my part, I think that sum was correct in all the circumstances and not one with which it is open to this Court to interfere.

40. The second matter concerns the readiness with which judges in this case have ordered that costs should be reserved. Unless the costs are specifically dealt with at some later stage, such orders have the same effect as no order for costs. In some interlocutory applications, it is of course necessary to reserve the costs for future determination because they depend upon the outcome of later proceedings. In others, the judge at the hearing is in a much better position to make the determination and the order. When he is in such a position, he should determine the matter and make an appropriate order. In matrimonial proceedings particularly, it seems to me, there are benefits to this course. The parties will know early where they stand in relation to costs. A party who is being irresponsible - and this happens perhaps more frequently in matrimonial proceedings - will be penalised early. There will be fewer issues outstanding between the parties as the proceedings continue and that will make settlements easier to achieve. This, indeed, is a case in point. Costs were reserved in some instances when obviously they should have been determined there and then.

41. Looking at the whole picture on costs, and at each application and determination, there are instances where - if the judge had considered them - he would have almost certainly taken the view that prima facie the husband should have had the costs; in other cases, the wife ought prima facie to have had them. At the divorce hearing there were decrees in favour of each party. Prima facie there should have been no order for costs. At the ancillary relief hearings, I entirely agree with the Vice President's conclusion that no order for costs ought to have been made. The judge failed to exercise his discretion properly on the costs issues and we must deal with them.

42. Individual taxations to achieve a balance would simply further increase the costs without benefiting either party and so, for my part, I agree that the appropriate order here is that there should be no order for costs in any of the proceedings.

43. I would allow the appeal on costs and so order. The appeal against the lump sum award must be dismissed.

Godfrey, J.A. :

44. I agree; but since we are differing on some matters from the judge, I propose to state briefly my own reasons for doing so.

45. The judge directed himself impeccably. He said this:

"In any application for financial provisions the court is enjoined to balance the reasonable needs and just requirements of an applicant spouse against the other party's ability to meet them."

46. The judge then cited certain English authorities and continued:

"In other words the proper approach is to look at need within the context of s.7(1) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 in terms of what is reasonably required. The matters that I must have cognizance of under s.7(1) encompass such considerations as conduct, income, earning capacity, property and resources, needs and obligations, the standard of living enjoyed by the parties prior to the breakdown of the marriage, their ages, the duration of the marriage, the contributions of each spouse to the welfare of the family and prospective loss, if any, consequent upon divorce."

47. The judge then made some comments on the case before him and continued:

"The balancing exercise that I am required to undertake would therefore involve an ascertainment of the wife's needs and the husband's ability to cater for her just expectations."

48. If all the judge had done was to approach the case before him in this way, I would have found it impossible to criticise him. He reviewed the undisputed facts in the light of the wife's needs and the husband's ability to cater for her just expectations and he made an award of a lump sum of $200,000 in favour of the wife. I see no ground for suggesting that that lay outside a proper exercise of the discretion conferred on him. It is nothing to the point that this court might itself have made an award somewhat higher or somewhat lower. It is the judge in whom this discretion is vested. This court cannot interfere unless the judge has erred in principle or has gone plainly wrong.

49. But unfortunately the judge here made findings of fact in the wife's favour, on affidavit evidence alone, as to the wife's allegation that she was a battered wife and as to the husband's allegation that the wife was a spendthrift. These allegations had been hotly disputed. In the absence of cross-examination they should not have been the subject of any findings of fact. The judge therefore fell into error when he said, in relation to the husband's allegation that the wife was a spendthrift:

"In my judgment I am not satisfied on the admissible evidence that the wife has conducted herself as alleged."

50. So, too, in the case of the wife's allegation that she was a battered wife, as to which the judge said:

"I am content to hold that he [the husband] did in fact inflict the injuries to her hearing, hand and nose as she deposed to."

And:

"I am satisfied that the conduct of this husband put the wife in hospital on a number of occasions."

(The judge also said that he was satisfied that, despite the stormy relationship, the wife had made some contribution to the family welfare which should be recognised; it is difficult to see on what evidence he came to this conclusion.)

51. All these findings of fact were, in my judgment, not open to the judge. If I had thought that they made any difference to the conclusion to which the judge had come, I would have had no hesitation in setting aside his award. But in fact, on a fair reading of the judgment, it appears that the judge, although he came to all these findings of fact, did not allow them to influence him when applying his mind to the question which he really had to decide, that is say, whether the award which he was making fairly met the wife's needs and the husband's ability to cater for her just expectations. So although the judge made findings of fact which were quite unnecessary for the decision to which he came, no injustice has, in my judgment, been done to the husband by the error into which the judge fell in this respect, and I would, accordingly, uphold his award of $200,000 in favour of the wife.

52. As to the costs of the proceedings below, there is a real difficulty; for Mr. Pilbrow in his submissions to the judge relied upon these findings of fact which the judge was not, as I have said, entitled to make. Mr. Pilbrow submitted to the judge (according to the judge's note):

"Your honour in ancillary relief found violence against wife sustained. You found in your judgment in the ancillary relief she was battered wife. It is therefore appropriate Husband should pay costs of divorce itself."

53. Mr. Pilbrow also submitted:

"Husband introduced conduct into financial application. Your Honour found wife's conduct not established and Court's time wasted and costs incurred. He also introduced inadmissible information. Therefore wife should have costs of the ancillary relief proceedings."

54. Those submissions, based as they were on findings of fact made by the judge which he had no right in the circumstances to make, must, I think, have significantly influenced the judge in coming to the conclusion as to costs to which he did, i.e. that the husband ought to bear all the costs of the litigation not otherwise provided for by the "sweeping up" order which Mr. Pilbrow expressly invited the judge to make.

55. In my judgment, the judge erred in principle in doing so and as my Lord, the Vice-President, has pointed out, it falls to us in those circumstances to exercise our own discretion. We must not, of course, fall into the trap of ourselves making a "sweeping up" order without a careful consideration of the circumstances of each application made to the court in relation to which a costs order has to be considered now; but, having given specific consideration to all the orders made, I am satisfied that no useful purpose would be served by my reviewing them separately. I am content to say that in my view, as in the view of my Lords, the Vice-President and Mortimer, J.A., the proper order to make here would be no order as to costs. It is a matter of great regret that any order as to costs in matrimonial proceedings (especially when as here those costs have been inflated by an excessive number of applications to the court) must inevitably weigh heavily on parties whose scant resources are such as to make it difficult for them to maintain themselves, let alone each other. These orders benefit only the lawyers; but there is nothing we can do about that. For these reasons, I agree entirely with all the conclusions arrived at by my Lords, the Vice-President and Mortimer, J.A.