RE LLC

HCMP2656/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2656 OF 2006

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DECISION ON COSTS

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INTRODUCTION

1.  Cases on costs for statutory will applications are rare in Hong Kong.  The only reported decision is Re CYL [2007] 4 HKLRD 218[1].  There, Lam J ordered that the costs of the Official Solicitor and the committee of the mentally incapacitated person, who made the application for the statutory will, to be borne by the patient’s estate[2].  The learned judge did not explain the costs order.  It was not necessary for him to do so because costs were not an issue.  Now is perhaps the first occasion where the court in Hong Kong is asked to adjudicate the question of costs in this area.

2.  The matter arose in this way.

3.  By Judgment dated 30 December 2009, I ordered a statutory will to be made on behalf of LLC, a mentally incapacitated person, under section 10B(1)(e) of the Mental Health Ordinance (“MHO”).  The Reasons for Judgment was later handed down on 13 April 2010.  What remains outstanding is the question of costs.  Pursuant to my direction, the parties have lodged their written submissions.  Their position is as follows.

4.  The Official Solicitor did not seek any costs and made no comment on the submissions of Niece #2 and the Secretary.

5.  Niece #2, the applicant for the statutory will, submitted that the Secretary should bear part of her costs and sought primarily an order that :

(1)     the costs of the Secretary incurred before 23 February 2009 (that is, immediately before the substantive hearing of the application began before me) be paid out of LLC’s estate (“the Estate”) on a common fund basis;

(2)     the Secretary do pay her costs incurred after 23 February 2009, to be taxed on a party and party basis; and

(3)     her own costs (both before and after 23 February 2009) be taxed on a common fund basis and the difference between the costs so incurred and the costs payable by the Secretary under (2) be paid to her out of the Estate.

6.  Alternatively, on the basis that the Secretary should not be made to bear her costs, Niece #2 sought an order that :

(1)     the costs of the Secretary incurred before 23 February 2009 be paid out of the Estate on a common fund basis;

(2)     the costs of the failed application made by the Secretary on 25 November 2009 to adduce the supplemental report of Dr Wong (“the Application”) be paid by the Secretary to her;

(3)     subject to (2), her costs (both before and after 23 February 2009) be paid out of the Estate on a common fund basis; and

(4)     subject to (2) and other previous costs orders, the Secretary do bear his own costs incurred after 23 February 2009.

7.  The Secretary, who participated in these proceedings as the Protector of Charities and parens patriae, sought an order that his and Niece #2’s costs be paid out of the Estate on a common fund basis.

THE GENERAL PRINCIPLES

8.  Section 52A(1) of the High Court Ordinance provides that subject to the provisions of rules of court, the costs of and incidental to all proceedings in the Court of First Instance shall be in the discretion of the court and the court shall have the full power to determine by whom and to what extent the costs are to be paid.  Costs in the proceedings brought under Part II of MHO, including applications for statutory wills, are thus in the discretion of the court[3].  That being a judicial discretion, it must be exercised on fixed principles, that is according to rules of reason and justice : see Hong Kong Civil Procedure 2010, Vol. 1, para. 62-2-6 at p. 1081.

9.  In my view, the following principles are applicable.

10.  First, as an overriding principle, the court should always exercise the discretion on costs judicially with a view to achieving a fair and just result on the facts of the case before it.  In this regard, the court takes into account all the relevant circumstances.

11.  Second, Part II proceedings are non-adversarial but quasi-inquisitorial.  They are essentially protective in nature, which are taken for the benefit and protection of the persons believed to be incapable, by reason of mental incapacity, of protecting themselves and their property.  Because of its special nature, the usual principles of costs in ordinary civil litigations do not apply to Part II proceedings : see In re Cathcart [1893] 1 Ch. 466, per Lord Halsbury at p. 471.

12.  Third, it is the mental incapacity of the patient and his protection that necessitate the Part II proceedings.  Thus always subject to the overriding discretion of the court, it is generally fair and just to order his estate to bear the costs of the proceedings.

13.  Fourth, in exercising its protective jurisdiction under Part II, the court carries investigations and determines the matters before it fairly and expeditiously, always having regard to the patient’s best interest as the paramount consideration : see section 10A(2)(a) of MHO.  The court expects the parties to act accordingly.  Their role is to provide the court with all necessary information and submissions to facilitate the court in reaching a decision which is in the best interest of the mentally incapacitated person : see Re M, HCMP25/2005, unreported, 1 November 2005, per Lam J at para. 13.  Viewed objectively, if a party has so conducted himself and has in the course of doing so acted bona fide in the interest of the patient and for his protection and property, he is entitled to reasonable costs from the patient’s estate even though his evidence or submissions are not accepted by the court.  And the costs that he is entitled from the estate are normally assessed by the common fund basis : see Re C.E.F.D. [1963] 1 WLR 329 and Re D(J) [1982] 1 Ch. 237; applied in Re CYL, ibid.

14.  This general rule reflects the court’s concern that appropriate applications and information relating to the patient should be brought to the court’s attention, and that the parties should not be discouraged from so doing in good faith by being penalized in costs.  See In re Cathcart [1891] 1 Ch. 549 and Heywood & Massey: Court of Protection Practice 2009, para. 15-015.

15.  Fifth, the patient’s estate is not at the mercy of the parties in costs.  For the above general rule is always subject to the court’s overriding discretion and it may be departed from when circumstances justify so doing.  While is it impossible to detail all the circumstances exhaustively, the parties’ conduct in the proceedings is plainly a relevant and indeed very important factor[4].  Some of the matters pertaining to conduct that are essential for consideration are :

(1)     Whether a party had a legitimate interest in participating in the Part II proceeding.

(2)     Whether a party had acted bona fide in the best interest of the patient and for the protection of his property.

(3)     Whether a party had adopted an adversarial approach by, for example, embroiling themselves in unwarranted allegations in evidence and arguments in submissions : see Re A, HCMH36/2008, unreported, 15 April 2009, per Lam J at para. 14.

(4)     Whether it was reasonable for a party to raise or contest an issue.

(5)     Whether a party had adduced or relied on patently irrelevant or unbelievable evidence or expert evidence which did not render any meaningful assistance to the court.

(6)     Whether a party had unreasonably dragged out the proceedings by, for example, poor preparation of the case or pursuing points that were plainly untenable.

16.  Sixth, in assessing quantum, the court will consider if the costs incurred were reasonably proportionate to the nature and complexity of the issues involved. 

17.  Having set out the applicable principles, I now come to the parties’ contentions.

TWO MAIN DISPUTES

18.  It can be readily seen that the main disputes between the parties are :

(1)     whether the Secretary should be ordered to pay Niece #2’s costs incurred since 23 February 2009; and

(2)     how to dispose of the costs incurred for the Application.

I will address them in turn.

(1)     Whether the Secretary should bear Niece #2’s costs after 23/2/09

19.  As will be recalled, the principal issue at the substantive hearing of the present application was whether the 2001 Will or 2006 Will truly represented LLC’s last testamentary wishes.  Since the 2006 Will purported to bequeath LLC’s entire estate to charities, the Secretary, as Protector of Charities and parens partiae, plainly had a legitimate interest to participate in the proceedings.  He was entitled to make all reasonable investigations and present to court all the necessary evidence and submissions that were germane to this crucial issue.

20.  Niece #2 raised two arguments.

21.  She first argued that the Secretary had unreasonably adopted an adversarial stance in conducting the proceedings overall.  I disagree.

22.  The Secretary’s participation in these proceedings with a view to protecting any valid gift to charities under the 2006 Will does not in itself render him an adversarial party.  The evidence before the court, both factual and medical, was conflicting.  By adducing the evidence as he did, the Secretary was simply presenting all the necessary information to the court on the issues pertaining to LLC’s last testamentary wishes.  The Secretary was entitled to test Niece #2 and her witnesses under cross-examination.  He was also entitled to make submissions on the aspects of the evidence which might cast doubt on Niece #2’s case and which could have gone to show that LLC might have intended to disinherit her relatives by executing the 2006 Will.

23.  Niece #2 submitted that the Secretary had advanced a positive case that the 2006 Will was valid.  I do not think he had.  But even if he had, that would not have rendered him an adversarial party.  The same is true for Niece #2.  She did advance a positive case that the 2006 Will was invalid.  That did not turn her into an adversarial party.  

24.  Niece #2 next argued that it was unreasonable for the Secretary to have pressed on with the substantive hearing which started on 24 February 2009.  She submitted that the Secretary was entitled to carry out investigations prior to the commencement of the hearing.  But through the investigations, the Secretary should have become aware that the 2006 Will was invalid and should not have pressed on with the substantive hearing.  Again, I disagree.

25.  As noted in the Reasons for Judgment, when assessing LLC’s mental condition, the court should have regard to both the factual and medical evidence.  While Dr Wong’s evidence was of little assistance, the Secretary could not ignore the evidence of the bank officers and the solicitors.  Being misled by LLC’s mental condition, they had remained adamant throughout the proceedings that LLC was of sound mind.  In these special circumstances, the Secretary could not have accepted that LLC did not have the testamentary capacity when she purportedly executed the 2006 Will.  The matter had to be tested and decided by the court.  It was therefore not unreasonable for the Secretary to proceed with the substantive hearing.

(2)     Costs of the Application

26.  The Application arose in this way.  When Dr Wong was about to testify, Mr Burns SC, for the Secretary, told me that Dr Wong would like to supplement his evidence in chief.  Dr Wong had been sitting in the court listening to the factual witnesses.  He wished to supplement his evidence by dealing with several aspects arising from their oral testimony.  I then indicated that it would be more desirable if Dr Wong could first reduce his further evidence into writing.  Hence the Application, which was opposed and refused.

27.  As I had observed in the Reasons for Judgment, Dr Wong’s approach to LLC’s mental capacity was materially deficient.  Dr Wong’s supplemental report did not take his evidence any further.  The Application was wholly unnecessary.  The Secretary cannot recover his costs from the Estate and should bear Niece #2’s costs, to be taxed on the party and party basis.

ORDERS

28.  For the above reasons, I make the following orders :

(1)     The Secretary do pay Niece #2’s costs of the Application, to be taxed on the party and party basis if not agreed.

(2)     Subject to (1) above, Niece #2’s costs of the entire proceedings be paid out of the Estate, to be taxed on the common fund basis.

(3)     The Secretary’s costs of the entire proceedings be paid out of the Estate, to be taxed on the common fund basis, save and except that the Secretary do bear his own costs for the Application.

29.  Given the size of the Estate and the complexity of the issues involved, this is a suitable case for two counsel.  I will accordingly give a certificate for two counsel to both Niece #2 and the Secretary.