CD v. LWS

FCMC 1803/2019

[2020] HKFC 265

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1803 OF 2019

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Mode of Hearing:  By way of written submissions

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D E C I S I O N

(VARIATION OF COSTS ORDER NISI)

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Introduction

1.  This is a hearing of the Petitioner (“the husband”)’s application to vary the costs order nisi made in favour of the Respondent (“the wife”) in my judgment (“the Variation of MPS Judgment”) dated 6 October 2020.  In the said judgment, I have made the following orders:

 (1) The MPS payable under paragraph 2 of the MPS Order to be increased from $50,000 to $60,000 per month payable on 1^st day of every month starting 1 November 2020 until further order of the court; and

 (2) The husband shall pay legal costs provision in the sum of $540,000 by monthly instalments of $60,000 each on the 1^st day of every month starting 1 November 2020 for a period of 9 months.

2.  At paragraph 48 of the judgment, I made an order nisi that the wife shall have the costs of the application:

"48.  Costs to follow event.  The wife succeeds in her application and is awarded costs of the application, including all costs reserved with certificate for one counsel and such costs to be payable forthwith.  I direct that unless the parties shall agree on the quantum within 14 days, such costs will be assessed summarily by this court.  In that event, the wife shall submit her statement of costs (limited to 2 pages at font 14 with double line spacing) within 7 days and the husband shall submit his written submission on summary assessment (limited to 2 pages at font 14 with double line spacing) within 7 days thereafter.  This will be in the form of an order nisi to be made absolute upon the expiry of 14 days from the handing down of this Judgment.”

3.  On 19 October 2020, the husband issued the present summons asking for a variation of the costs order nisi in that he asked for a portion of the wife’s costs to be borne by herself, but there was no mention of how much.

4.  The wife opposed the application and I directed that the husband’s application was to be dealt with by way of written submissions.  After receipt and consideration of the parties’ respective submissions, I hereby hand down my decision on the husband’s application for variation of the costs order nisi.

Legal Principles

5.  In considering the issue of costs of interlocutory applications, the starting point must be O.62 r.3 (2A) of the Rules of the High Court, Cap.4A (“RHC”):

“(2A) If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any interlocutory proceedings, it may, subject to this Order, order the costs to follow the event or make such other order as it sees fit.” (underline added)

6.  It is quite clear that the court has a very wide discretion on making costs order, even more so on costs of interlocutory applications, which would include an application for MPS or variation of a MPS Order in the context of matrimonial proceedings.

7.  I was also referred to the following paragraphs of O.62 r.5(1) and (2), RHC on how such discretion is to be exercised:

“(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-

(aa) the underlying objectives set out in Order 1A, rule 1;

(a) …

(b) …

(c) …

(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) …

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

(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

…”

8.  I shall bear the above principles in mind when I come to consider the husband’s application.

Discussion

The Husband’s Arguments

9.  I note that at paragraphs 6-7 of the husband’s written submissions, it was submitted that the husband had no choice but to take out the application for variation because he was “without being able to fully consider [the wife]’s costs as ordered under paragraph 48 of the Judgment directing the parties to try to agree the quantum within 14 days.”  It seems that the husband was saying that the reason for him to take out the application was the wife’s failure to quantify her costs of the application. Obviously, the husband has mixed up the different aspects of a costs order concerning liability and quantum.  Whether the husband was liable to pay costs (or the extent of such liability) was a completely different issue from the quantum of such liability.  The court will make an assessment if the parties fail to reach an agreement on quantum but that could not be used as a valid reason to resist liability.

10.  By reading the other parts of the husband’s written submissions, I think it is fair to say that his submissions against the costs order nisi are 2-pronged. First, he said that the MPS for the wife and the child was raised from $50,000 to $60,000 per month, merely by a monthly sum of $10,000, which was far below her original claim of $200,000 per month.  He criticised the wife for failing to prove any change of circumstances and therefore, the husband was entitled to oppose such an application for variation of MPS in the first place.  Another criticism is that the wife’s claim was grossly exaggerated in that her claim of $200,000 as monthly MPS was rightly rejected by the court.

11.  Another aspect of his submissions was on the wife’s claim for legal costs provision which was firstly pitched at the sum of $3,600,000.  However, the court only allowed a sum of $540,000 (merely 15% of the original claim), payable by 9 monthly instalments of $60,000 each up to the estimated date for FDR.  The husband said he had previously offered to sell the Eltanin Square Mile Property currently registered under the sole name of the wife, or the expensive watches in the wife’s possession as the wife’s legal costs provision. If either of those proposals was accepted, the hearing on the wife’s application for legal costs provision would become unnecessary. 

12.  Based on the above arguments, it was the husband’s submission that the costs order nisi should be varied to such extent as the court think fair and reasonable in order to reflect the wife’s conduct of taking out the application where most of her arguments were not accepted by the court in both her variation of the MPS and legal costs provision.

My Views

13.  First of all, as rightly pointed out by Ms. Tsui for the wife that the actual increase of MPS as claimed was about $100,000, instead of $150,000 as depicted by the husband.  This was the case because apart from the $50,000 currently received from the husband, the wife was also in receipt of rental payments of about $51,000, making the current total MPS received at about $100,000.  The wife has made her position very clear at paragraph 39 of her 4^th affirmation (Trial Bundle A/39-40).

14.  Having said the above, I think it is still fair to say that the wife has somehow over-estimated her and the child’s interim needs and that was why her original claim for an increase of MPS to a monthly sum of $200,000 (from about $100,000) was not accepted by this court.  However, at the end of the day, an increase of $10,000 (from a monthly direct payment of $50,000 to $60,000) was still allowed, representing a 20% increase of the direct MPS payment.  Although there was no specific reference to a change of circumstances by the wife in her application, the fact that an increase of 20% in direct MPS payment means that the court must have accepted that there were such changes, namely that the child has grown and also the fact of inflation.

15.  Furthermore, despite the increase in MPS was not as high as originally claimed, the fact remains that there had never been an offer from the husband for any increase of MPS, be it for $10,000 or otherwise.  In other words, the wife had no choice but to come to court for an order for the increase.  It is true to say that some of her claims were not accepted by the court but I do not think the presentation of those unaccepted items had significantly lengthen the hearing.  Moreover, this was only one part of the wife’s application as she also had an application for legal costs provision, to which I will now turn.

16.  Another important part of the wife’s application was for legal costs provision to which the husband had not made any direct offer.  But according to him, he had offered to allow the wife to put the Eltanin Square Mile Property for sale in order to raise the necessary funds for the wife.  However, as I have pointed out in paragraph 31 of the Variation of MPS Judgment, the property actually belonged to the child beneficially and therefore the liquidation of the said property was, put it bluntly, out of the question.

17.  The husband also said he was open on selling some of the valuable watches in the wife’s possession in order to raise the necessary legal costs provision for the wife, but that avenue was not pursued by the wife.  I have also dealt with that submission at paragraph 32 of the Variation of MPS Judgment.  Simply stated, I was not satisfied that that was a suitable option as the selling of second hand valuable watches might not be as easy as it might firstly sound.  There was an issue on proper valuation and a sale at the right price would also need time. At paragraphs 43-46 of the Variation of MPS Judgment, I have had a discussion on the financial situation of the husband and I was satisfied that he had the ability to pay the increased MPS and legal costs provision.  If that is the case, I do not see why the parties had to take the rather difficult and uncertain route of having the second hand watches valued and look for a suitable buyer who would offer a reasonable price.

18.  All in all, I am not satisfied that the husband had made a reasonable offer to cater for the MPS of the wife and the child, including a provision for legal costs.

19.  Lastly, if one should take a global view on the result of the wife’s application for variation of MPS, it is quite clear that before her application, she was being paid direct MPS at the rate of $50,000 per month (plus $51,000 rental income and the husband’s other undertakings).  After application, she would be paid direct MPS at the rate of $120,000 per month ($60,000 MPS and $60,000 legal cost provision) (plus $51,000 rental income and the husband’s other undertakings). That was an increase of 140% in direct MPS payment. 

20.  After considering the parties’ submissions, I still maintain my view that the discretion on costs should be fully exercised in favour of the wife even though some of her claims were not accepted by this court.  I am not convinced that she should be deprived of any parts of her costs.  Lastly, I also have to remind myself that any deprivation of the wife’s costs would effectively mean that those costs have to be shouldered by the wife and the child together, which is certainly not in the best interests of the child.

Order

21.  Based on the above reasons, the husband’s summons for variation of costs order nisi is dismissed.  The costs order nisi made on 6 October 2020 is hereby made absolute.

Costs

22.  The wife should also have the costs of the husband’s present summons with certificate for counsel, to be summarily assessed failing the parties’ agreement on quantum.  I now direct that should the parties fail to agree on the quantum of costs for both the wife’s application for variation of MPS and the husband’s present summons for variation of costs order nisi within 7 days from the handing down of this decision, the wife shall submit her statement of costs (limited to 2 pages at font 14 with double line spacing) within 7 days thereafter for the court’s summary assessment and the husband shall submit his written submissions on summary assessment (limited to 2 pages at font 14 with double line spacing) within 7 days thereafter. 

Representation: