BM formerly known as L, KMM v. N, DG

FCMC 595 / 2014

[2019] HKFC 35

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 595 OF 2014

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RULING
(Variation of order nisi on costs)

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Introduction

1.  On the 19 September 2018 I handed down a judgment on the Respondent father’s application to vary the maintenance provision for the child of the family, a little girl known as S. S is 7 years of age having been born on the XX October 2011.

2.  In the judgment I reduced the maintenance payable by the father to the mother for S, from HK$28,000 per month to HK$16,000 per month. I also released the father from his undertaking to pay for agreed extra-curricular activities (ECA’s). I did not release him from his undertaking to pay for S’s school fees. This order was also backdated to the 1 June 2017 – i.e. the month after the mother stopped paying any form of rent and shortly after the father issued his summons.

3.  In so far as the costs are concerned I said as follows:

Costs

35. Given that neither party has been wholly successful, and notwithstanding the difficulties with some of the mother’s evidence, I shall make an order nisi to be made absolute in 14 days time that there shall be no order as to costs.

4.  The “difficulties” with some of the mother’s evidence included the fact that the mother had been less than honest about certain relevant facts including how much she was paying for rent post separation and when she started to pay nothing at all. There were also issues surrounding the date when she started to formally cohabit with Mr B, the wife’s now husband. I found that the mother’s evidence in relation to all of these matters was “somewhat elusive”. I added

9. Similarly her evidence concerning her own income and earning capacity was less than straightforward. Despite denying categorically that she was earning anything at all in her affirmation of the 21 March 2017 – or that she had an earning capacity, she subsequently admitted to earning HK$15,000 per month.             

5.   In other words I found that the mother had lied on oath. In addition, her presentation of the evidence on S’s direct expenses in particular was chaotic, with three different sets of figures being produced – some at very short notice (see paragraph 21 of the judgment).

6.   There were also issues with respect to the wife’s disclosure which made progressing the litigation difficult.

7.   It is against this background that the mother issued her summons of the 28 September 2018 as follows:

1.  The Petitioner’s application that the Respondent pay the Petitioner’s costs of his application for variation from the 8 June 2017, the date of the Petitioner’s Open Offer, shall be determined on the papers without an oral hearing.

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7.  The Respondent pay the Petitioner’s costs of his application for variation from the 8 June 2017, the date of the Petitioner’s Open Offer, to be taxed if not agreed with certificate for counsel.

The law

8.   The law is not in dispute and reference can be made to Ms Rattigan’s submission dated the 28 December 2018 where she stated inter alia as follows:

Applicable Legal Principles

5.  RHC O.62 and O.62A apply in respect of costs in the Family Court.  The general rule in civil proceedings is that costs should follow the event.  This starting point also applies in family proceedings, although it will be displaced more easily. Gojkovic v Gojkovic [1991] 2 FLR 233.

6.  As set out in Family Law and Practice in Hong Kong

“Family proceedings often involve multi-faceted issues that require intensive fact-finding exercises. Moreover, the conclusions of orders arising from family proceedings, which in itself can be an emotionally turbulent experience, have far reaching and profound effects on the lives of the parties and he children involved”

7.  The Family Court has a wide discretion when considering costs.  Since the decision of the Court of Final Appeal in LKW v DD [2010] 13 HKCFAR 537. the overall principle of achieving ‘fairness’ replaces ‘reasonable requirements’ and this will also extend to awards for costs.

9.   In Gojkovic v Gojkovic [1992] Fam 40, as referred to above, Butler-Sloss LJ set out the matters that the court might consider when considering the issue of costs. She said:

“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. ... 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 Rules of the Supreme Court and the County Court Rules 1981 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 in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position”.

This general approach has been routinely adopted in Hong Kong.

Discussion  

10.   The court asked the parties to provide a joint bundle of relevant documents. This was received on the 16 January 2019. From this it can be seen that the parties were actively negotiating with each other from March – June 2017 and that they came very close to settlement at that time. They differed in the treatment of the ECA’s. The husband offered to pay HK$15,000 per month plus full payment of the school fees. See the Calderbank letter of the 23 May and the follow up letter of the 5 June 2017. The wife for her part asked that in addition that he continue to comply with his original undertaking to pay for jointly agreed ECA’s. (See her without prejudice letters of the 2 June and her open letter of the 8 June 2017). The husband’s offer is only HK$1,000 per month less than that finally ordered by the court. The wife’s counter offer at that time also cannot be said to have beaten the order of the court.

11.   In any event the husband’s position changed once it became clear that the wife had been cohabiting with her current husband for a considerable period of time and he then reduced his offer. The wife retained her position as set out above, until her skeleton submission was filed prior to trial. At that stage she sought HK$22,000 per month plus payment of the school fees. She withdrew all offers at trial.

12.   It is then difficult to see why the wife should have her costs from the date of her open offer on the 8 June 2017, when that offer did not beat the court’s order and the wife withdrew this offer in any event. Further the offer was made in an environment where full and frank disclosure had not been given by the wife.

13.   In Ms Rattigan’s submission she concludes as follows:

Conclusion

26.&   While the Court ultimately found that “neither party was wholly successful”, the Respondent clearly met with more success than the Petitioner.

27.&   The Respondent succeeded on one of the main areas of expense that was being claimed for housing, there was a downward variation and it was backdated to just after his summons was issued.

28.&   The Court made adverse findings against the Petitioner’s credibility, there were no such findings against the Respondent.

29.&   The Petitioner’s 4th Affirmation does not reveal any grounds for disturbing the costs order nisi, in particular there was no ‘calderbank’ or other offer put forward by the Petitioner that was ultimately equal to or beat the award that was made by the Court.  In fact the closest offer made to the final judgement was a Calderbank offer made by the Respondent on 23^rd May 2017, as noted in paragraph 8 of his 9^th Affirmation.  Further the Court was fully aware of the Petitioner’s letter of 8th June, this having been drawn to the Court’s attention by the Respondent at trial.

30.&   On the basis of the above, “no order as to costs” could be seen as being somewhat harsh against the Respondent, there would certainly have been justification in awarding costs against the Petitioner, but not vice versa.

31.&   In such circumstances, where the Court has exercised its discretion to make no order as to costs, it is entirely unreasonable for the Petitioner to seek to vary this to a costs order in her favour.  If the Petitioner wants to challenge the way that the discretion was so exercised by the Court with something that was known to the Judge at the time (in this case her open offer), the proper way should be by appeal or leave to appeal.

32.&   There is no justification for this on the basis of the Court’s findings, and nothing further is revealed by the Petitioner’s 4^th Affirmation that would justify any variation. The Respondent should therefore be awarded the costs of this unreasonable application, which could have been well avoided had the Petitioner agreed to the Respondent’s offer made by letter dated 9 November 2018 (DGN-35 of his 9^th Affirmation) to withdraw the same (on the basis of no order as to costs).

In retrospect I tend to agree.

Decision

14.   In such circumstances paragraph 1 of the Petitioner’s summons dated the 28 September 2018 shall be dismissed. The original court order do stand namely there shall be no order as to costs with respect to the father’s summons dated the 8 March 2017. Further the Petitioner shall pay the costs of and arising out of her summons dated the 28 September 2018 on a party and party basis to be taxed if not agreed with certificate for counsel.