LCJWY v. LCKS

FCMC 16239/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 16239 OF 2013

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DECISION ON COSTS
(Discovery Applications)

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1. On 30^th June 2015 after a 2 days’ hearing I handed down a decision on the Petitioner Wife’s 2 applications for specific discovery respectively against the Respondent Husband and his Parents the Interveners, and made a costs order nisi in her favour to be made absolute at the expiration of 14 days in respect of her applications. Both the Husband and Parents now seek to vary that costs order nisi to the extent that the Wife should instead pay the majority of their respective costs.

2. The detailed background of the case leading to the Wife’s discovery applications can be found in my said decision and I do not propose to again recite them here, save as follows.

3. The discovery applications arose from the Husband’s declaration in his Form E that various assets including shareholdings in several companies holding inter alia the parties’ matrimonial homes and a property in UK with a total worth estimated at more than HK$77 million (“Disputed Assets”), all of which registered in his name but which he claimed to be holding on trust for either of his parents, which was however disputed by the Wife, and after the Husband and/or Parents had objected or refused to answer some of her earlier questionnaires, she followed up with these discovery applications.

4. The 1^st discovery summons issued on 21^st July 2014 was against the Husband requiring him to provide to the Wife for specific discovery of items listed in the schedule annexed thereto within 28 days. In that schedule the Wife had set out the Husband’s answers to her earlier questionnaire with specific requests for further and better particulars of those answers with supporting documents arising therefrom or under the original questionnaire [A2/348 – 364].

5. As the hearing of that summons on 14^th August 2014 was fixed for only 15 minutes, and when it became clear that it would be opposed by the Husband, it was agreed between the parties for it to be adjourned to another date for argument pending the Husband filing his affirmation in reply.

6. At the re-scheduled hearing on 11^th December 2014, leave was granted to the Parents to join in the proceedings as it was by then agreed that the dispute over the beneficial ownership of those Disputed Assets would have to be dealt with first as preliminary issue before the court was to hear the Wife’s ancillary relief application, and as a result further directions were given in respect of the preliminary issue and that the hearing of the discovery application had again to be adjourned to another date for argument.

7. After the Parents had accordingly filed their affirmations pursuant to the directions given at the said hearing, the Wife issued another questionnaire this time to the Parents, and when they refused to answer some of them, she followed up with her 2^nd discovery summons on 16^th March 2015 against the Parents, and when it was opposed it was then consolidated with her 1^st summons for argument which eventually took place on 22^nd May and 4^th June 2015. As noted above, I allowed the discovery sought against the Husband and Parents respectively with costs to follow the event in favour of the Wife.

8. Mr Jeremy Chan for the Husband now argues that the Wife’s 1^st summons started off as a Himalayan exercise but by the time of the hearing she only pursued 4 items out of what was said to be a very extensive and comprehensive 28-pages questionnaire, some of which had earlier been provided by the Husband, others were agreed or sorted out at the beginning of the hearing, but was in the main convoluted and confusing and often required his solicitors to tell her where to find the answers earlier provided to many of her questions, or with new questions being posed as alleged deficiencies, and hence he should only bear her costs of those 4 items which the court found in her favour, of which the Husband submits should constitute less than 5% of the overall costs of the entire exercise, whereas for all those questions and requests which the Wife had since her summons been dropped or abandoned, the Husband should instead be awarded his costs.

9. Similarly the Parents’ case is that the costs order nisi should be varied to the effect that the Wife should instead pay 80% of their costs of and occasioned by her application, or alternatively to pay their costs as set out in Annex I to their summons [F/2350 – 2352], to be taxed if not agreed with certificate for 2 counsel.   

10. Mr Abraham Chan with Ms Bonnie Cheng for the Parents submit that this was not a case where a party had been evasive in giving discovery, and that to the contrary the Interveners had all along been forthcoming and proactive in producing relevant documents with thorough explanations on material events, as demonstrated by the detailed evidence provided before the discovery application.

11. Mr A Chan argues that, in contrast to the Parents’ reasonable and measured approach, the Wife had instead deployed an oppressive scattergun approach wholly lacking in any sense of decency or proportion, by starting off with a total of 35 requests/questions against the Parents, and while some were subsequently dropped as shown in Annex I, the remaining ones against both the Parents and the Husband were enough to result in an expansive and protracted exercise involving no less than 3 substantive hearings which he submits as extraordinary and unreasonable for an interlocutory application of this kind, particularly so with some of her requests, such as her insistence that the solicitor representing the Husband should produce the divorce papers of the Parents on the wrongful assertion that she had acted for one of the Parents in their own divorce, or those against WS Ltd in which the Husband held only 1 out of 60,000 shares, only to be abandoned by her shortly before the hearing.

12. Mr A Chan further submits that from a wider perspective the court will see that the Wife’s approach to discovery reflects a broader pattern of baseless and unfocused aggression throughout the litigation, as illustrated by her insistence on pursuing matters such as the source of funding for the disputed assets or the validity of the Investment Management Agreement between the Husband and his mother, and again only to be abandoned at the trial.

13. Mr A Chan submits that at the end the Wife was only successful in her application against the Parents in obtaining specific discovery against the ancillary relief order pursuant to their divorce, and that even this order was qualified by the undertaking put forward by the Wife only at the substantive hearing, for which she was successful with only one discrete and narrow matter amongst many other requests which she either failed or abandoned, and hence by taking a broad-brush approach it is submitted that the Wife should instead be required to pay 80% of the Parents’ costs, while for those items which the Parents had voluntarily supplied to the Wife for the purpose of saving time and costs, Mr Chan submits that an appropriate order is for there to be no order as to costs.

14. Ms Remedios for the Wife on the other hand submits that the costs order nisi should not be varied as against either the Husband or the Parents as they had co-operated to refuse and/or delay discovery even in respect of the corporate vehicles holding the 1^st and 2^nd matrimonial home, and/or had given piecemeal discovery at or following the respective hearings, which had rendered all the hearings necessary for the Wife to fully argue her claim for specific discovery, and that in any event some of the hearings for discovery were taken up by the Husband or Parents for other applications or procedural matters arisen therefrom which had eaten into the time set aside for the discovery application for which the Petitioner should not be held responsible.

15. Ms Remedios further submits that in so far as there had been a succession of hearings and/or the Wife had narrowed down her requests as and when piecemeal discovery had been given, or to re-allocate time for more contentious issues, it would be unjustifiable and inappropriate for the Husband or Parents to seek apportionment of costs, when each hearing had been proved to be necessary because on each occasion, they had resisted discovery of the remaining items, which led to the inevitable substantive hearing on 22^nd May and 4^th June 2015.

16. I agree that those earlier hearings were adjourned due to necessity or other procedural reasons which cannot be said to be the Wife’s fault, or for that matter, anybody else. They were part of and incidental to her discovery applications and hence their costs should be treated accordingly.

17. As for those questions or requests raised in the Wife’s applications to which the Husband or Parents subsequently or eventually agreed to provide answers, information or documents, I fail to see how it can be argued that she should as a result bear their costs for their efforts in doing so as to comply with her such requests, or for those requests that she had eventually withdrawn or abandoned after certain answers or information provided by the Husband or Parents which rendered it unnecessary for her to pursue them and were thus not dealt with at the hearing. This was what I found in my said Discovery Decision:

“20. As noted above some of the documents sought by the Wife have since been provided by either the Husband and/or his parents, and that the disclosure sought has now been narrowed to those in the Tables attached as Appendix A, and as she no longer at this stage pursue disclosure relating to WS Ltd nor discovery before 2010, or in relation to I-Investment Ltd, while the list of assets of both GW Investment and HF Consultants were confirmed and resolved at the hearing, essentially only those documents concerning GC Ltd under items 13 – 16 of Appendix A1 against the Husband and similar items 17 – 21 of Appendix A2 against his parents, as well as their divorce settlement and/or order are still at issue.”

18. Henceforth in my view they should form part of the costs of the Wife’s discovery application, but for those requests which the Husband or Parents had agreed to answer or comply without argument prior to the substantive hearing, the appropriate order for them would be costs in the cause of the trial of the preliminary issues.

19. What remains is the substantive hearing on 22^nd May and 4^th June 2015, where there can be no question that the result justifies that they be in the Wife’s favour in any event, as readily conceded by both the Husband and Parents, and hence she should be entitled to those costs of and occasioned by her applications which were being opposed by either the Husband or Parents and had had to be adjudicated at that hearing.

20. Accordingly the costs order nisi is varied only to the extent that for those parts of the Wife’s discovery application to which the Husband or Parents had answered or complied without argument, they shall be costs in the cause of the preliminary issue, save for those of and incidental to the amendment of the order of 30^th June 2015 which shall go to the Husband and Parents as I agree with their submissions that they were entirely the fault of the Wife for having wrongly included in the order those items which were never adjudicated at the hearing, to be taxed if not agreed.