CSY v. CPK

FCMC 7235/2015

[2020] HKFC 101

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 7235 OF 2015

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Decision

(variation of costs order nisi out of time)

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1.  This is the Respondent/Husband’s (“H”) application by Summons dated 11 June 2019 to vary the costs order nisi given in the ancillary relief judgment dated 16 May 2019 (“the Judgment”).

2.  The Petitioner/Wife (“W”) opposed.

3.  The costs order nisi as set out in paragraphs 141-143 of the Judgment is as follows :

“141. I make a costs order nisi that H do pay W’s costs of the ancillary relief proceedings, with certificate for counsel, to be taxed if not agreed.

142. W’s own costs be taxed in accordance with the Legal Aid Regulations.

143. Unless there is an application within 14 days to vary, the nisi order shall become absolute.”

4.  The variation sought by H is that he shall only pay 70% of W’s costs of the ancillary relief proceedings or in such proportion as the Court deems fit, with certificate for counsel, to be taxed if not agreed.

5.  Since the 14-day time limit to vary has expired on 30 May 2019, H in his Summons also seeks time extension of 14 days to make the application. Strictly and correctly speaking, H should be seeking  leave to vary out of time.

To vary out of time

6.  H conceded that he has to provide justifiable reason(s) for not making the application within time, as well as to demonstrate merits of the application to vary.

7.  The reason H provided is that, owing to W’s omission in updating her Form H at the beginning of trial, he did not have W’s updated estimated costs to take legal advice and consider whether to apply for a variation. It took time for him to obtain the information from W, hence the delay.

8.  H has written to W’s solicitors on 24 May 2019 requesting for updated estimated costs; but the response received on 27 May 2019 was not helpful. H wrote again to W’s solicitors on 27 May 2019 and 30 May 2019 urging for a reply. It was not until 5 June 2019  H was provided with a rough figure of “not more than HK$2.5 m”.

9.  On 5 June 2019, H’s solicitors wrote to the Court seeking to withhold the costs order nisi being made absolute and to withhold  sealing of the Order dated 16 May 2019; reasons being that H would be applying for an extension of time to vary the costs order nisi. Such request was declined by the Court on 6 June 2019.

10.  On 11 June 2019, this Summons was taken out.

11.  H submits that despite repeated efforts and enquiries, he was not properly informed of the estimated costs to enable him to be adequately prepared for making a variation application within time.

W argues that to vary or not is a consideration based on whether the Court has wrongly exercised her discretion on costs, not on the estimated costs.

12.  Whether or not the information is reasonably required of or necessary for personal reasons, there is plainly no explanation or excuse from H why he did not seek time extension before 30 May 2019, but simply let the time lapse.

13.  Notwithstanding the aforesaid, in order to achieve an overall justice, all matters will be looked at in the round including the length of delay, prejudice on W, merits of the variation etc to decide whether indulgence should be granted to H.

14.  I am satisfied that the delay of 11 days is neither inordinate not inexcusable; there is no substantial or real prejudice on W save for a brief delay in receiving her award.  

Merits of Application

15.  H’s application for variation is premised on a number of grounds/complaints. They can be categorized into five as follows.

Ground/Complaint (1)

While this is a needs case, the Court in the first place has made no provision at all for H’s needs. In further granting costs against H, the Court failed to consider whether H can reasonably maintain himself financially.

16.  On the proper reading of the Judgment, this complaint is plainly groundless. In determining the financial provisions for W and children, the Court has already considered H’s needs, earning capacities and liabilities. As set out in paragraphs 130 and 135 of the Judgment, the Court ensures that H keep his shares in the company to continue with his profit-generating business; and is satisfied that H has sufficient to maintain himself upon the maintenance for W and children. The fact that H is made the payor in ancillary relief claims does not mean no provision is made for him.

17.  The Court found that H has income and financial resources more than he claims; and he would have significant assets to inherit in the foreseeable future. Hence, there are basis to believe that the costs order against H would not render him unable to maintain or support himself.

18.  Further, it is misconceived to premise variation of costs on this ground. If H is so advised and is of the view that the Court has not properly dealt with the case as a needs case in accordance with the law and/or failed to make provision at all for H’s needs, it should be a matter for appeal against the Judgment.

Ground/Complaint (2)

W has failed on many sub-issues under her claims, including her alleged expenses, income and liabilities. Therefore, W should bear part of her costs for having exaggeratedor inflated her claims.

19.  As stated in paragraph 103 of the Judgment, the Court having conducted an overall assessment of W’s alleged needs/expenses  made some downward adjustments in order to achieve a fair and realistic outcome on financial relief. There is no finding against W of any conduct of exaggerating or deliberately inflating whichought to be penalized on costs.  

20.  On W’s estimate of income, the Court having assessed her earning capacity made an upward adjustment. There is no finding against W of any conduct of concealing relevant information or her actual income whichought to be penalized on costs.

21.  Although W has failed on the allegation of loans owed to her mother, it is trite that a successful party to an action should not be ordered to pay any part of the costs of the hearing simply because he has failed to prove all of the allegations, unless it is shown that the failed allegations have caused significant increase in the length or costs of the proceedings or where he/she raises issues or makes allegations improperly or unreasonably. See : Re Elgindata (No. 2) [1992] 1 WLR 1207 CA

22.  It is not shown the failed allegations on expenses, income and loans have caused significant increase in the length or costs of the proceedings.

Ground/Complaint (3)

W changed her legal representation 5 times throughout the proceedings. With each change of legal team, costs would need to be duplicated or triplicated.

23.  This is not a reason to vary a costs order unless there is evidence of negative conduct in making changes of legal representation for ulterior purpose. All along W was legally-aided, the changescould only take place with the approval of the Director of Legal Aid.

24.  The only relevance to costs is whether there are unreasonable or unnecessary duplication of work incurring extra costs. This is a matter for taxation.

Ground/Complaint (4)

The Court drew adverse influence against H for lack of full and frank disclosure without drawing the same influence against W for her insufficient financial disclosure. W’s conduct should be taken into account in making a costs order.

25.  First of all, the Court did not declare any approval of W’s last-minute disclosure. On the contrary, as seen in paragraph 75 of the Judgment, the Court has looked into the nature of W’s non-disclosure. It was an omission to update her employment and income in a timely manner.

26.  Having differentiated W’s conduct with H’s serious deviation from the standard of disclosure required, the Court decided to only draw adverse influence against H.

Ground/Complaint (5)

W proposed a departure from equal division in her favor based on, inter alia, H’s gross and obvious conduct. The proposal was rejected by the Court.

27.  H submits that the issue of gross and obvious conduct was unreasonably and improperly made by W. I agree.

28.  At the beginning of the trial, the Court has already discussed with parties and reminded W of the following: W should not pick over the events of a marriage to argue that H was more to blame for what went wrong save in the most obvious and gross cases; in respect of conduct which has no financial impact whatsoever, the relevance would be less apparent; and parties would not be permitted to embark upon costly and time-wasting investigation on it.

29.  During the trial, oral examinations regarding the issue of gross and obvious conduct were kept within bounds under the Court’s monitor and management. The time spent on cross-examining H on this issue was not of a significant amount.

30.  However, as H rightly pointed out, W’s allegations of gross and obvious conduct against H were weaved throughout her entire Section 7 Narrative Affidavit, taking up a substantial part of the lengthy document. Although W is the successful party, I accept that H should not be ordered to pay for costs of and occasional by the said issue which was unreasonably and unnecessarily pursued by W.

Conclusion

31.  The merits under Ground/Complaint (5) should be properly reflected in the costs order. Looking at matters in the round. I will grant leave for H to vary out of time.

32.  H’s suggestion of reducing 30% of his liability for W’s costs is unjustified. There is no explanation on the basis of his evaluation.

33.  Since the increase of costs occasioned by the unnecessary issue of gross and obvious conduct is a relatively small part of the entire ancillary proceedings, I find that a 10% deduction is sufficient and fair. 

Order

34.  Leave for H to apply to vary the costs order nisi made on 16 May 2019 out of time.

35.  The costs order nisi made on 16 May 2019 be varied as follows:

(i)   H do pay 90% of W’s costs of the ancillary relief proceedings, with certificate for counsel, to be taxed if not agreed.

(ii)  W’s own costs be taxed in accordance with the Legal Aid Regulations.

Costs

36.  Although H managed to resist W’s opposition and has achieved some positive result of his application, he should not be entitled to costs. Not only that H has failed on most of the grounds taken, he is seeking indulgence to vary out of time when his excuse of delay is unsatisfactory, as discussed in paragraph 12 above.

37.  I make the following costs order nisi :

(i)  There be no order as to costs of the application.

(ii)  W’s own costs be taxed in accordance with the Legal Aid Regulations.

(iii)  Unless there is an application within 14 days to vary, the nisi order shall become absolute.