JJBGMK v. JPLY

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 61 OF 2011

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Ruling on Costs

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1.  On 4^th October 2013 after a 4 days hearing of the Respondent Mother’s application for maintenance contribution from the Applicant Father for their son FX born out of wedlock, I ordered the Father to pay HK$20,000 per month for the son, now a 14 year old student in a boarding school in UK, with payment to be dated back to the date when he first made an open offer to pay the said sum with credit to be given for payments already made, and with an order nisi that there be no order as to costs between the parties. The Father now seeks to vary that costs order nisi to the effect that the Mother should bear his costs.

2.  The main basis of his case is that that maintenance order was in line with his proposal not only at the start of the trail but also in his open and without prejudice offers to the Mother since October 2011 but all of which had been unreasonably rejected by her, and since he has succeeded in justifying his offer of HK$20,000, he argues that costs therefore should follow the event in his favour.

3.  The Mother’s case is that the Father was not successful on all the issues as he never agreed to backdating the maintenance payment, but of which she was successfully in obtaining the order, and that she was also entitled to challenge the Father’s alleged earnings and seek the court’s determination and assessment thereof in a trial, and hence there is no compelling reason to vary the costs order nisi.

4.  Before proceeding to consider the parties’ arguments, it would be necessary to first go into the background of the Mother’s application, the details of which can in fact be found in my said judgment of 4^th October 2013, and I do not propose to repeat them here save for those relevant to the matter now before me.

5.  The Father is a French national while the Mother is an American born Chinese, and both are permanent residents in Hong Kong. They started a relationship in the late 1990s in Hong Kong and FX was subsequently born on 24^th May 1999. They ended their relationship in about 2001 after the Father lost his job in Hong Kong and left for Europe. He later returned to Hong Kong to take up a position in a public relations company up to the present where he is now one of the managing directors.

6.  The Father then resumed his financial obligations towards FX and in about 2006 started to pay for his education costs at the French International School and other school miscellaneous expenses.

7.  In 2011 the Mother applied to court for leave to remove FX out of the jurisdiction to attend a boarding school in UK and for the Father’s contribution towards his consequential expenses, which was opposed by the Father on the grounds that FX was too young to go to boarding school and that in any event they could not afford the costs and expenses, but eventually leave was granted to the Mother upon her assurance to Deputy Judge Woodcock, as she then was, that she would support FX even if the Father was unable to provide any contribution. The Father was then ordered by the Learned Judge to contribute HK$160,000 to cover FX’s initial and setting-up costs and expenses for his boarding school including his first term school fees, his flight to UK and various other school-related expenses, which he did pay, with the question of the Mother’s claim for his monthly maintenance adjourned for argument.   

8.  Shortly thereafter the son left Hong Kong for his boarding school in UK, and the Mother then proceeded to bring her maintenance application to trial before me, seeking contribution from the Father for half-share of what she claimed to be the monthly costs and expenses of FX in UK in the total sum of HK$93,000, hence the Father’s half share at HK$46,000 per month.

9.  That was of course not acceptable to the Father who disputed the quantum and argued that at his own limited income he could afford to contribute much less at HK$23,000 per month, which he later revised down to HK$20,000 per month at the start of the trial after taking into account of the expenses he would have to spend on FX during his access to him in his school holidays.

10.  By then the Mother was prepared to come down substantially from her original claim to a much lower sum of HK$25,000 per month from the Father but insisted it to be dated back to the date of her application in July 2011, and when the parties were unable to compromise on by then a relative small gap between them, they proceeded to the 4-days trial and incurred a wholly disproportional combined legal costs in excess of HK$1 million.

11.  As expected the trial focused mainly on FX’s needs and expenses and the Father’s financial means, during which both parties were cross-examined extensively. In my judgment I found that the Mother had wrongly included her initial set-up costs for FX as part of his normal recurring expenses, that she had also exaggerated his other needs such as his holiday expenses and his share of her Hong Kong household expenses, and that his average monthly needs and expenses amounted to only about HK$50,000, for which the Father should contribute HK$20,000, which was what I found he could afford and was reasonable for him to pay after taken into account of the Mother’s assurance given to court at the time of her leave application of her own financial ability to support FX. I of course also made the order nisi of no order as to costs which is now the matter before me.

12.  Accordingly, the basis of the Father’s application for costs is premised, as submitted by Ms Yip with Ms Man on his behalf, on the following matters:

(a)   His Calderbank offers;

(b)   His open offers made as early as October 2011 in his 5^th Affirmation when he offered to pay HK$20,000 per month but was refused by the Mother;

(c)   His financial position;

(d)   The Mother’s excessive and exaggerated claim of FX’s monthly expenses of HK$93,000;

(e)   The Mother’s assurance to the court that ultimately led to leave being granted for FX to attend boarding school in UK when it was apparent that the parties could not afford to do so;

(f)    The Mother’s conduct of her maintenance application was reprehensible and beyond the band of what is reasonable.  

13.  To consider the validity of these basis of the Father’s case, it would be relevant to first set out the applicable legal principles.        

14.  The general principles as to costs in civil proceedings have been set out clearly in the English case of Re Elgindata Ltd. (No.2) [1992] 1 WLR 1207 as follows : 

(i) Costs are in the court’s discretion;

(ii) They should follow the event except when it appears that in the circumstances of the case some other order should be made;

(iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs;

(iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful party’s costs.

15.  While these principles apply equally in contested family proceedings, they may be displaced more easily in the Family Court, but the starting point is still that costs prima facie follows the event, as Butler-Sloss LJ, as she then was, said in Gojkovic v Gojkovic [1992] Fam 40 at 54 :

“That starting point, in my judgment, is that costs prima facie follow the event (see per Cumming-Bruce LJ in Singer (formerly Sharegin) v Sharegin [1984] FLR 114, 119) but may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court. One important example is, as the judge pointed out, that it is unusual to order costs in children cases. In applications for financial relief the applicant (usually the wife) has to make the application in order to obtain an order by consent; and if money is available and in the absence of special circumstances, such an agreement would usually include the applicant’s costs of the application. If the application is contested and the applicant succeeds, in practice in the Divorce Registries around the country where most ancillary relief applications are tried, if there is money available and no special factors, the applicant spouse is prima facie entitled to, and likely to obtain, an order for costs against the respondent. The behaviour of one party, such as in material non-disclosure of documents, will be a material factor in the exercise of the court’s discretion in making a decision as to who pays the costs.”

16.  In cases involving children and in particular custody and access disputes, however, the proposition from case-law is that it is unusual to order costs against a party, as stated in Rayden and Jackson on Divorce and Family Matters, 18th edition, Chap. 52.21 :

“A number of reasons are advanced in the case-law for the practice of no order for costs in children cases. In all family proceedings, an order for costs inevitably diminishes the funds available to meet the needs of the family. Proceedings to determine the future of a child are partly inquisitorial and the focus is the best interests of the child. The court does not wish the prospects of a costs order to discourage those with a proper interest from participating reasonably in the proceedings and the debate. An order for costs may exacerbate tensions between parents and diminish the likelihood of future co-operation between them, to the disadvantage of the welfare of the child.”

17.  The court does however retain the discretion to award costs in suitable cases, and in Kelly v Kelly and the Legal Aid Board [1995] CA, 1 FLR 259, Wilson J at p 264C examined how that discretion should be guided when he said :

“What general considerations, if any, guide the exercise of the court’s discretion in deciding whether to make an order for costs in proceedings relating to children? In Gojkovic v Gojkovic (No 2)[1992] Fam 40 at p57C Butler-Sloss LJ said :

‘It is unusual to order costs in children cases.’

And at p60C she said :

‘The concept … of no order for costs where both parties have been reasonable in their approach to the dispute is not, in my judgment, one of general application in the Family Division, save in children cases.’

In London Borough of Sutton v Davis (Costs)(No 2) [1994] 2 FLR 569 at pp 570H – 571B, I sought to explain the reasons for the proposition that orders for costs in children cases are unusual. With diffidence, I repeat what I then said :

‘Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate. Nor does it wish to reduce the chance of their co-operation around the future life of the child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them. The proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority are a party.’

The practice of making no order as to costs in children cases seems to have grown steadily during the last 30 years, in the vacuum created by the demise of the principle that the costs of a wife, even if unsuccessful, should ordinarily be met by the husband. As early as 1965, in Re B (Infants) [1965] 1 WLR 946 at p 948D, concern was expressed that no order for security of costs should be made which would prevent a parent from putting his views before the court. And as early as 1968, in B(M) v B(R) [1968] 1 WLR 1182 at p 1185H, this court suggested that it would have been wrong to make an order for costs because it would exacerbate feelings between the parents, to the ultimate detriment of the child. Even by 1982, however, the practice was still very fluid. In Re G (Official Solicitor’s Costs) (1982) 3 FLR 340 at p 345B Ormrod LJ said :

‘Where the proceedings are between the parents, both of whom are acting bona fide in the interests of the child, it is not uncommon to make no order as to costs of the proceedings.’

These words are less firm than the recent observations of Butler-Sloss LJ in Gojkovic (above) to which I have already referred.

No one suggests that the court’s discretion in respect of costs under s 51(1) of the Supreme Court Act 1981 has become emasculated in children cases. The position is only that in most such cases, indeed in ordinary cases, the proper weighing of the factors in the exercise of the discretion is likely to lead to the choice of no order inter parties. Where, for example, the conduct of a party has been reprehensible or his stance in the litigation has been beyond the band of what is reasonable, an order for costs might well be made against him. Equally a marked disparity in wealth, such that, for example, the wife’s costs would bear harshly upon her economy but could be discharged by the husband without significant impact upon his economy, might give rise to an order against him.”

18.  Neill LJ sitting in the same Court of Appeal concurred when he said at 267H :

“ In the last decade … it has become the general practice in proceedings relating to the custody and care and control of children to make no order as to the costs of the proceedings except in exceptional circumstances. In London Borough of Sutton v Davis (Costs) (No 2) [1994] 2 FLR 569 at p 570H Wilson J threw some useful light on the reasons for The court of course retains the present practice, the existence of which was recognised in this court by Butler-Sloss LJ in Gojkovic v Gojkovic (No 2)[1992] Fam 40 at p 57C.

The court of course retains the jurisdiction and a discretion to award costs in suitable cases. It is unnecessary and undesirable to try to limit or place into rigid categories the cases which a court might regard as suitable for such an award, but examples would be likely to include cases where one of the parties had been guilty of unreasonable conduct or where there was such a disparity between the means of the parties that a special order was justified.”  

19.  These principles have been applied and referred to in cases involving children in our courts, as in H v H [2002] CACV 42/2002, HKEC 1123, where the Court of Appeal fully endorsed the approach expressed in Sutton supra when Rogers VP said at §19 :

“ … It would seem that this approach has been followed in respect of appeals to the Court of Appeal. Whilst different considerations may apply to appeals because the parties have had the benefit of “one day in court” and thus costs might be unnecessarily incurred, I consider that unless it could be said that an appeal should never have been brought then the same principles would be applicable. Indeed, the argument on behalf of the respondent is put on the basis that the “appeal had very little prospect of success.” Whilst I have had no difficulty in reaching the conclusion as to the outcome of the appeal, I would in this case still apply the same principle in relation to costs, primarily for the reason that it is in the daughter’s interest that there be as little antagonism between the parties as possible. It is to be hoped that the parties can now work together in the daughter’s interest and avoid returning to court to continue battles over custody, care and control which hopefully will have been resolved. The order I would make therefore be that there be no order as to costs.”

20.  In another Court of Appeal case L v C (on Costs) CACV 169 of 2006, Yuen JA stated the same principles in her judgment at §23:

“As a matter of law, it is clear that costs are in the court’s discretion. Pointers as to how that discretion should be exercised include the following:

(1) in family cases, as in others, costs should normally follow the event;

(2) however because of the special dynamics of family litigation (e.g. where the case involved children, or where financial resources were inadequate to meet the needs of both parties, etc.), the discretion may be broader than in civil matters generally (Gojkovic v Gojkovic [1991] 2 FLR 233, F v F (N0.2) [2003] 3 HKLRD 977);

(3) the court also retains a discretion to deprive successful litigants of costs under the Elgindata principles (In Re Elgindata (N0.2) [1992] 1 WLR 1207);

(4)   Where a litigant succeeds on appeal but only on a new point, the court can deprive him of the costs below (Farquharson v Morgan [1894] 1 QB 552) or even order him to pay those costs (Yip Lai Fong v Sin Tung Hing [2004] 23 HKLRD 230), and the court can deprive him of the costs of the appeal (Chard v Jarvis (1882) 9 QBD 178)”  

21.  These principles have since been significantly developed, as pointed out by Ms Yip, especially following the implementation of the Civil Justice Reform in 2009, and that since then there are special matters that the court will take into account in the exercise of its discretion as set out in RHC, O.62, r.5 as follows:

(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-

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2)

(d) any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(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

(g) Any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2) For the purpose of paragraph (1) (e), the conduct of the parties include-

(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.

22.  The underlying objectives of the above exercise are as set out in RHC, O1A, r1(1) as follows:

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

(d) to ensure fairness between the parties;

(e) to facilitate the settlement of disputes; and

(f) to ensure that the resources of the Court are distributed fairly.

23.  Given the fact that offers including Calderbank offers and open offers had been made at various stages of these proceedings and which the Father relies on as the cornerstone of his present application, it would be helpful to refer to what Butler-Sloss said about their influences on the court’s discretion on costs in Gojkovic at 59:

“It is therefore clear that Calderbank offers require to have teeth in order for them to be effective. This is recognised by the requirement in Ord 62, r 9 (and the equivalent CCR Ord 11, r 10) for the court to take account of Calderbank offers, and by analogy open offers, in exercising its discretion as to costs. There are certain preconditions. Both parties must make full and frank disclosure of all relevant assets, and put their cards on the table. Thereafter the respondent to the application must make a serious offer worthy of consideration. If he does so, then it is incumbent on the applicant to accept or reject the offer and, if the latter, to make her/his position clear and indicate in figures what she/he is asking for (a counter-offer). It is incumbent on both parties to negotiate if possible and at least to make an attempt to settle the case. This can be done either by open offers or by Calderbank offers, both adopted by the husband in this case. It is a matter for the parties which procedure they prefer. There is a very wide discretion in the court in awarding costs, and as Ormrod LJ said in McDonell v McDonell [1977] 1 All ER 766 at 770, [1977] 1 WLR 34 at 38, the Claderbank offer should influence but not govern the exercise of discretion.

There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation, for instance (as I have already indicated earlier) material non-disclosure of documents. Delay or excessive zeal in seeking disclosure are other examples. The absence of an offer or of a counter-offer may well be reflected in costs, or an offer made too late to be effective. The need to use all the available money to house the spouse and children of the family may also affect the exercise of discretion. It would, however, be inappropriate, and indeed unhelpful, to seek to enumerate and possibly be thought to constrain in any way that wide exercise of discretion. But the starting point in a case where there has been an offer is that, prima facie, if the application receives no more or less than the offer made, she/he is at risk not only of not being awarded costs, but also of paying the costs of the other party after communication of the offer and a reasonable time to consider it. That seems clear from the decided cases and is in accord with the Supreme Court and County Court Rules requiring the court to have regard to the offer. I cannot, for my part, see why there is any difference in principle between the position of a party who fails to obtain an order equal to the offer made and pays the costs, and a party who fails by the offer to meet the award made by the court. In the latter case prima facie costs should follow the event, as they would do so in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position.”       

24.  It is with all these in mind that I shall now consider the Father’s arguments, starting with his Calderbank offers and open offers.

25.  The Father’s offers, and for that matter the Mother’s counter-offers, are all set out in Annexure 1 to Ms Yip’s Skeleton Submission, which shows that, as noted earlier, he already offered to pay HK$20,000 per month towards FX’s expenses as early as in his 5^th Affirmation of 27^th October 2011, but which the Mother had refused to accept and instead persistently asked for much higher amounts varying between HK$55,000 and $35,000 until the 1^st day of trial when she finally came down to between HK$25,000 and $27,000 per month. 

26.  In addition, Ms Yip submits for the Father that from those offers and counter-offers of the parties in Annexure 1, the court should note the following:

(a)   the Father’s offers have always been realistic and very close to or equal to and at times even exceeded what is now ordered;

(b)   the Mother’s offers have never even come close to the current   order, with the closest one being HK$35,000 at the FDR but still only 58% of the order;

(c)   most of her offers were premised on an exaggerated basis that the son’s expenses exceeded HK$90,000 per month;

(d)   some of her offers were simply incapable of being accepted due to the imposition of terms which are wholly unreasonable, such as the condition that the Father could not take the son to Shanghai for holiday, knowing full well that his work required him to do so.

27.  Ms Yip submits that the evidence clearly indicate that the Mother’s claims far exceeded the offers that were made by the Father, and that his Calderbank offers alone form strong basis for costs being ordered against the Mother on the basis of costs follow the event alone, since the backdating of payment was only raised by the Mother at the trial and too late to assist her present argument, but all the more so given her unreasonable and exaggerated demands, of which I shall next consider whether it was indeed the case.

28.  In my said judgment I found the Mother’s claim of FX’s expenses in excess of HK$93,000 per month as set out in her 8^th Affidavit as inherently wrong or unrealistic with the ways she had budgeted for the teenage son which was more than twice of her disclosed income or 2/3 of the combined income of the parties, and that the evidence before me indicated a much lower figure of about HK$50,000 as being a more reasonable and realistic monthly sum for the son’s expenses.   

29.  Ms Yip however takes her argument further by submitting that the Mother had in fact inflated those expenses and wrongly included his initial set-up costs or her own household expenses as part of his normal recurring monthly expenses, and that she had persistently refused or failed to come down from her claim based on such inaccurate and inflated to a more reasonable and realistic level until the trial for which the court should hold her liable for the Father’s costs.       

30.  While accepting that her claim indeed started off at a rather high level, Ms da Luz for the Mother submits that many of the expenses were fully supported by documentary evidence, and that the Mother had always been willing to negotiate and put forward new options, but that the Father had maintained his stance of HK$20,000 per month almost throughout the whole negotiation process as evidenced by the those letters in the Without Prejudice Correspondence Bundle and was never willing to alter his position almost from the very beginning, and she relies on the judgment of Hartmann J, as he then was, in the case of F v F [2003] HKCU 1299 when he said at §23:

“I do accept that the wife advanced a number of issues at trial which I found to be exaggerated or not proved on the evidence. But the general rule that costs follow the event does not cease to apply because a party has in certain instances been found to exaggerate his case or because he has failed on certain issues. In the present case, I did not find those assertions of the wife which were exaggerated to be flagrantly or persistently so, not set against the great affluence enjoyed in the course of the marriage. It is the nature of the adversarial system that the best case is advanced. Of course, that must be done within rational boundaries. In my view, the wife’s assertions, even if some were pitched too high or were rejected on the evidence, always remained within those boundaries. It is often necessary in ancillary relief matters, which are determined on the basis of the exercise of a broad discretion, to speak of numerous and interlocking matters in order to attempt to paint a picture of a way of life within the confines of a marriage. For the parties themselves that will inevitably mean expressing subjective views; some may be accepted, some rejected, some submissions may not have found favour, they were all, in my opinion relevant issues, respectably capable of argument against the complex, multi-faceted history of how the parties came together, lived their married life and separated.”

31.  By analogy, Ms da Luz submits, in the present case the Mother was not unreasonable in taking issue with the Father’s means, in the light of the history between them, and that the matter proceeded to trial because she questioned his true financial position especially on his claim that he could only afford to contribute no more than HK$20,000 per month, and hence she was entitled to submit him to cross-examination in order to test his probity, as she had good reason not to trust him due to their past relationship.

32.  There is no dispute, Ms da Luz submits, that the Father previously commanded a sizable income as vice president in Human Resources Asia Pacific of his former employer LVMH for a number of years before and during their relationship, but by the time of her application, he claimed that he was earning much less at just over HK$26,000 basic monthly salary plus commission, hence the Mother cannot be faulted for doubting his claim and for testing it at the trial, especially when he had never made any financial contribution towards their son for the first 7 years of his life until 2007 when the Father only started paying for his school fees and school bus at the French International School.

33.  Given the shenanigans orchestrated by the Father, Ms da Luz argues, in the 2 years leading up to the maintenance trial, it is hardly surprising that these actions had led the Mother to have serious trust issues regarding the motivation and credibility of the Father, including the various incidents of him spying on her, his manipulating of the son against her, and reneging on holiday commitments with the son, all of which only served to exacerbate the tension and mistrust on the Mother’s part that she could not be expected to believe anything the Father said about his financial position given his past conduct.

34.  Another reason for the Mother’s doubt over the Father’s alleged lack of means, Ms de Luz submits, is the volume of transactions involving substantial amounts of money passing in and out of his bank accounts, which was referred to in my judgment of more than HK$1.8 million over a 9-month period which the Father simply explained either as his own expenses or for his China Office operation costs without any documentary evidence from his employer, of which she was entitled to seek the court’s determination, and that she should not be faulted even if the result at the end turned out not in her favour.

35.  Furthermore, she submits that the court was constrained by the fact that the Father had chosen to renewed the tenancy of his Causeway Bay apartment, which the court found too expensive for him, in the middle of the maintenance application instead of moving to cheaper accommodation in order to free up some of his income to meet the son’s expenses, thus presented the court with a ‘fait accompli’ and constrained its final decision, and required a revisit of his means in future when he is expected to move to a cheaper place, which Ms da Luz submits is a strong indication that the court had made the maintenance order due to the Father’s rental situation and his dire predictions of his future income.

36.  Lastly, Ms da Luz submits that in considering the appropriate amount of maintenance to be provided by the Father, the court would have had regard to the effect of costs order on the net position of the parties, and hence should a costs order be made against the Mother, it would have the effect of increasing the father’s financial resources whilst creating greater financial difficulty for the Mother, a net result that the court would wish to avoid, she argues, as it would undermine the balancing exercise conducted by the court in reaching its decision on the maintenance order, a problem which she submits was part of the difficulties with the current costs regime as experienced in England and Wales referred to by Judge Melloy in H v W (FCMC 11958/2006) unreported, at §6 of her judgment:

“In England and Wales, they have identified perceived difficulties with this approach:

“52.19 Problems have been identified with the current costs regime in ancillary relief proceedings. The first is the de-stabilizing effect that costs can have on financial settlements that have been carefully constructed by the court. Having considered the facts and circumstances of a case the court arrives at a settlement that, in its judgment, does justice between the parties. If at the conclusion of judgment it is revealed to the court that one party has failed to ‘beat’ a Calderbank offer, the consequences of failing to ‘beat’ a Calderbank offer by an order to pay the other side’s costs can undermine the substantive order for ancillary relief than the court has just made. The second problem is that the system of closed offers has introduced a degree of procedural games-manship. This, in turn, leads to uncertainty and has, in effect, also introduced an undesirable element of gambling into ancillary relief proceedings. Calderbanks have been likened to a form of spread betting. Orders for costs can be disproportionate and, in some cases, produce real financial hardship as well as undermining the court’s division of the matrimonial assets. Lastly, making orders for costs which involves a detailed assessment can result in excessive litigation and delay.”      

37.  Ms da Luz therefore submits that when this court made an order nisi that there be no order as to costs at the conclusion of the judgment, it must have already considered all the relevant factors and decided not to award costs to either party to reflect the facts that neither party entirely won or lost and that it disapproved of the way both parties had conducted themselves, hence it is for the Father to put forward compelling reasons to persuade the court to depart from its order nisi, but his so-called reasons of having substantially won the maintenance trial and the Mother’s ‘unreasonable’ conduct are unsustainable under scrutiny.

38.  There is no question in my mind, as I have found in my said judgment, that not only had the Mother wrongly included the son’s initial set-up costs and other expenses incurred upon first arriving in UK before his start of the boarding school as part of his current and future needs, but also being unreasonable for refusing to acknowledge those defects and adjust her claim accordingly throughout the proceedings up to the 1^st day of trial, which would have been easily realised either by her or her then lawyers throughout their numerous correspondence with those representing the Father over his disputes of these expenses.

39.  This conduct of the Mother is not in my view the same with the way the wife in F v F supra or other similar cases had exaggerated her case as those setting-up expenses and other expenses of her Hong Kong household should never had been claimed as the son’s current and future expenses in UK in the first place, and unlike the great affluence of the parties in that case, here the parties’ financial resources were said to be limited and that the Father had all along insisted that their ability to put their son through boarding school in UK would be a major issue, hence by wrongly pitching her claim to such unrealistically high level and by failing to even come close to ‘beating” the Father’s offers, and while I agree that the Father had from times also appeared as stubborn and inflexible with his position, there can be no argument in my view that the Mother ‘lost’ the event.  

40.  Furthermore, having unreasonably pitched her claim in such manner from the very beginning, the Mother had in effect put herself in an impossible situation to compromise with the Father as she would clearly be unwilling or reluctant to come down so low to the level of his offers given her strong personality as well as her perceived view that he had failed to shoulder up his share of the financial responsibility towards their son during what she said to be the first 7 years of his life, but which was never argued at the hearing, and that the evidence before the court indicated that the Father was then out of a job.

41.  Which brings me to Ms da Luz’s argument that notwithstanding the above, the Mother should not be penalized with costs for bringing the Father to court to be cross-examined as to his means as she was entitled to challenge his claim of limited means given his previous high earnings.

42.  Before considering the merits of that argument, the first question that would first come to mind is this: Had the Mother put the son’s expenses at a more realistic and unreasonable level of HK$50,000 per month at the beginning, would she be justified to ask for HK$25,000 or HK$27,000 from the Father as she did at the trial, and to challenge his allegation that he could not pay anything more than his offer of HK$20,000?

43.  While this relatively minor difference of a mere few thousand dollars between the parties would in my view still be highly disproportionate, which can be argued against either parties, but given the historical fact of the Father’s previous high income, and unlike those couples in cases like F v F supra, the fact that the parties here had lived apart from each other for more than 10 years and hence were no longer familiar with each other’s financial situation, I agree that the Mother would be so entitled to challenge the Father’s evidence at the trial as to his current financial means within rational boundaries, and that would include, as I had allowed her, his directorship in his employer company and those substantial transactions seen in his bank accounts, but that in my view would still fall way short of exonerating her from being liable to costs.

44.  As for Ms da Luz’s last point that any costs order against the Mother may undermine the maintenance order, while I accept that the financial impact on her will not be insubstantial, and that a review of the Father’s financial means may be inevitable in future, the salient point established by all those authorities and precedents referred to above is blatantly plain and must clearly be observed: A litigant who has failed to conduct properly or reasonably in his/her litigation to the financial detriment of the other party and/or waste of court’s resources must bear the consequences of being penalised with costs, regardless of the motive or purpose behind such conduct, and while both parties in this case are guilty of being too stubborn and inflexible and of running their case wholly disproportionate to costs, I am convinced that the Mother must bear the brunt of such blame, for which she should pay 75% of the Father’s costs to be taxed on party and party basis if not agreed but with certificate for one Counsel only. I so order accordingly.