LSSD v. CWY

FCMC 1182/2000

[2021] HKFC 112

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1182 OF 2000

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DECISION
( Costs )

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1.  This decision deals with costs arising from an application by the Petitioner Wife (“Wife”) for a variation of maintenance of an Order made by HHJ C K Chan dated 5 September 2013 (“2013 Maintenance Order”). 

2.  The Wife’s Summons dated 28 September 2018 (the “Summons”) seeks the following:

i.     The maintenance for herself to be revised from the monthly sum of $21,879.11 to $26,000 from 1 May 2018 until the joint lives of herself and the Respondent Husband (the “Husband”), or her re-marriage, whichever is the earlier.

ii.   The maintenance for their daughter to be revised from CAD4,276.93 to $11,220 from 1 June 2018 until she has completed her full-time education.

iii.  A total sum of $130,000 as the tuition fee for a one-year full-time Master programme of Social Sciences in Behaviour Health at University of Hong Kong for the academic year 2018-2019.

iv.  If applicable, the tuition fee for a two-year full-time Master programme of Social Sciences in Clinical Psychology for the academic year of 2019-2021.

v.   Payment of schoolbooks expenses and miscellaneous expenses of the above master programs.

3.  The parties settled before going to trial, the consent summons was made an Order of Court on 24 November 2020.  The main terms are:

i.     Husband to pay Wife a sum of $250,020 (the “Settlement Sum”) being periodical payments of HK$16,668 per month as monthly maintenance for the daughter from June 2018 to August 2019.

ii.   Settlement Sum of $250,020 be paid through Director of legal Aid.

iii.  Costs to be reserved and to be dealt with by way of paper disposal.

iv.  Wife’s own costs be taxed in accordance with the Legal Aid Regulations.

These terms were agreed also based upon the Wife’s undertaking not to make further application in her lifetime for any further relief in matrimonial proceedings against the Husband in her name or that of the daughter.

4.  The only matter that remains is the costs of this action.  On the same day, this Court gave directions for costs submissions to be filed and for this matter to be dealt with by paper disposal.  The Wife seeks costs including all costs reserved.

5.  On the 25 February 2021, solicitors for Wife wrote to Court informing that she has received a cheque for $250,020 which is the exact amount of the Settlement Sum.  It therefore appears that the DLA did not impose a first charge on the amount.

The Background

6.  The parties were married in 1991, and the daughter (“S”) was born in 1994, S is now 26.

7.  Wife petitioned for divorce in 2000, decree nisi was pronounced in July 2000 which was made absolute the following month in August 2000.

8.  By consent, it was ordered that:

i.    The Wife shall have sole custody of S with reasonable access to the Husband.

ii.   Husband will pay Wife a nominal maintenance of $1

iii.  H will pay maintenance of $5,000 to the S.

9.  In June 2012, the Wife applied for an upward variation of the maintenance, this was followed by a 4-day trial before HHJ CK Chan.  In his judgment dated 5 September 2013 (the “2013 Maintenance Judgment”), the learned Judge made the following adjustments:

i.     Maintenance for the Wife was varied up to $18,000 from 1 May 2013 for 5 years with annual adjustment for inflation of 5%.

ii.   Maintenance for S was varied to CAD3,800 from 1 April 2013 until she finished her first degree or May 2018, whichever is earlier, with annual adjustment for inflation of 3%.

10.  S completed her first bachelor’s degree at UBC Canada in May 2018.   She intended to pursue a career as a clinical psychologist, and to that end must complete firstly a Master of Social Science in Behaviour Health Program for 2018-2019, and then followed by a Master of Social Science in Clinical Psychology for two years, originally intended for 2019-2021.

11.  The Summons was filed by the Wife shortly after S completed her first degree, affirmations were exchanged including from S.  Mediation was attempted on 3 June 2019, which failed.

12.  Husband first made an offer of settlement at $150,000 on 19 June 2019, this was rejected by the Wife who asked for $1.871M on 11 July 2019.  Thereafter, questionnaires and further affirmations ensued.

13.  Apparently, S’s results in Behaviour Health were published in September 2019, but after the deadline for her application for the Clinical Psychology program.   She failed to get in when she applied for the following academic year of 2020-2022.   Wife restarted the negotiation process on 21 September 2020 when this happened.

14.  Settlement was reached as above stated save and except for costs. 

Applicable Legal Principles

15.  It is trite that the Court has full discretion on the issue of costs. While the usual order to be made is that costs should follow the event, other approach can be considered. Order 62 RHC Rule 3(2) states as follows:

“If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.”

16.  I shall also have regard to Order 62 Rule 5(1) and (2),

(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) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2); 

(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) any admissible offer to settle made by a party, which is drawn to the Court’s attention. 

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

(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

(d) conduct before, as well as during, the proceedings

17.  The legal principles cited in the judgment of HHJ Grace Chan in the case of CEPK v LKKH FCMC 5614/2009 is of particular relevance:

31. In the event that a case is settled save as to costs, there is no tradition that the costs order must be one of “no order as to costs”. The relevant principles are set out succinctly in the judgment of Au-Yeung J in Famous Marvel Company Limited & Others v Conversant Group Limited & Others, HCA 2153/2009, date of judgment 29/10/2012, at §22:

“ There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs.  There is no tradition for there to be “no order as to costs” in such a scenario.  I am guided by the following principles in deciding costs:

(i)     The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii)    At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion.  In between, the position will, in differing degrees, be less clear.  How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.  Brawley v Marcynski (No.1) [2003] 1 WLR 813.

(iii)   The Court will first consider if it is in a position to say what the likely outcome after trial would have been.  If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1), at para 18, Longmore LJ; followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv)  The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12.  However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in RHC Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v)    A broad brush can be taken by referring to all matters already laid before the Court, eg pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi)The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional cost: Brawley v Marcynski (No.1).”

32. It is said that the discretion of the court in determining costs in family cases is even wider than in other civil proceedings. In HK v BD, CACV 252 of 2009, date of judgment 15/10/2010, Hartmann JA (as he then was) cited the English case of Gojkovic v Gojkovic [1992] Fam 40 and expounded on the legal principles on costs in family matters as follows: 

“78. In family matters, as in all civil proceedings, the basic principles are that costs are in the discretion of the court but that costs should follow the event except when it appears to the court that, in the circumstances of the case, some other order should be made. In family matters, because of their particular dynamics, the exercise of discretion is broader-based than in other civil proceedings. However, as was observed by Butler-Sloss LJ in Gojkovic v Gojkovic [1992] Fam 40, there still remains the necessity for some starting-point. That starting-point, as we have indicated, is that costs prima facie follow the event.

79. On behalf of the wife, the oblique criticism was made that the judge proceeded on the basis of “honours even”, that seemingly being the essential reason why he came to his determination that both parties should bear their own costs. We do not see that the judge can be criticised in that respect. If costs were to prima facie follow the event, it was necessary for the judge to identify who had been successful and who had not.

80. But there were of course many issues which the judge in the present case had to take into account in considering how best to exercise his discretion as to costs.  It is a long established principle that, after analysing the case of each party, costs must be judged by way of overall impression.  They are not to be assessed by breaking down the litigation into its many component and interlocking parts in order to draw up some kind of profit and loss account… (my emphasis added)”

18.  I shall consider this application with these principles in mind, the ultimate goal for this court is what costs order would be a fair and just one in the light of the circumstances.

The Wife’s Argument

19.  The Wife’s arguments by her counsel are based on two points:

i.    That Wife is the overall successful party; and

ii.   The huge disparity in financial positions between the parties. 

Overall Successful party

20.  She argues that she was forced to take out her claim, and as she got the Settlement Sum, hence she is the overall winner.

21.  That Husband waited until June 2019 to make the first offer, and that he had made half-hearted attempts at offers for settlement.

22.  That she is entitled to costs after 12 October 2020 when the Husband’s solicitors rejected Wife’s offer which was essentially the amount settled.

Financial Disparity

23.  Wife argues that the asset position of the two parties is in huge disparity based on Form Es.

24.  Wife also argues that the Settlement Sum might be subject to the Legal Aid first charge if construed by them as instalments payment of lump sum for S, instead of periodical payment.

25.  That the legal costs incurred so far over two years are more than the Settlement Sum.

The Husband’s Arguments

26.  The Husband’s counsel drew this Court’s attention to the following paragraphs from the 2013 Maintenance Judgment where HHJ CK Chan commented on the Wife’s claim of her physical condition which prevented her from working.

“24. One would see that although the memo from Dr Wong did say that the wife was suffering from some forms of neck and abdominal pain, it was not certain how those pains would have an impact on the wife’s earning capacity. Therefore, although I am inclined to accept that the wife is suffering from some forms of neck and abdominal pains which might have some adverse effect on her work, I am not satisfied that they have made the wife to have lost all her earning capacity.

25. The wife is now 45 years of age. That is not a very old age. The parties have separated for 15 years and it would be unrealistic for her to expect the husband to provide for all her needs in the years to come. Despite the fact that the wife might not have received very high education, I am convinced that she still would have some earning capacity in the recent robust labour market. …

…

39. As to the length of the periodic payment to the wife, I note that the parties have already separated for over 15 years (since about 1998) and  I think it is unreasonable to expect the husband to cater for the wife’s needs for an indefinite period of time. The wife has to accept the fact that at sometime in the future, she has to stand on her own feet instead of relying on the financial assistance provided by the husband.  I agree that a 5 year period would be a reasonable period for the wife to re-establish herself and hopefully by that time, S should have completed her tertiary education and she would be in a position to give financial assistance to the wife, if necessary. …”

27.  He therefore argues that Wife is trying to get a second bite of the cherry when she knew she should not have expected to rely on the Husband indefinitely.  However, as soon as the Husband finished discharging his obligations under the 2013 Maintenance Order, the Wife had proceeded to initiate the Summons. 

28.  Husband has written to DLA on 8 October 2019 complaining that the Wife’s application is unmeritorious, quoting HHJ CK Chan’s comments in the 2013 Maintenance Judgment, that Husband’s undertaking was to pay for S only until she completed her first degree, that these obligations towards Wife and S had been discharged.  

29.  Husband is now retired with no income.  

30.  By the Husband’s calculation, if the Wife lives till 80, he estimated that for both her and S, she is asking for Husband to pay more than HK$10 million.  The Settlement Sum which W obtained was only 2.49% of this estimated amount.

31.  The parties had agreed that the Settlement Sum is specifically for S’s maintenance to avoid the DLA first charge.

32.  That the Wife never got anything for herself, all she got was for one year maintenance for S for when she was attending her course in the Behaviour Health Program.

33.  That the Wife has a property to her name with substantial equity, hence there is no ground to argue that the financial disparity between the parties is huge to the extent that the Husband should be paying costs. 

Discussion

34.  I do not agree that the Wife is the overall successful party.   She did not receive anything under her claim for lifetime maintenance.

35.  I would make an observation here as to the merits of the Wife’s claim, especially in the light of the 2013 Maintenance Judgment; but as the bases for the Summons has not been tested in court, this factor has not influenced my decision hereunder.  In any event, she has now undertaken not to make further application in her lifetime for ancillary relief against the Husband for herself and for S.

36.  The only sum the Wife received was for S, and it is a settlement by consent between the parties. This represents one year maintenance for her while she was studying for a Master program.  Husband is now retired and has no more income, per the 2013 Maintenance Judgment, he was to pay for S’s maintenance until she completed her first degree, in this regard, he had fully discharged his obligation.  There is no legal or moral obligation beyond this but the Husband had still agreed to pay this Settlement Sum to put an end to this matter.  I do not see why he should be further penalized with paying for the Wife’s costs.

37.  I shall therefore make the following Order:

i. There shall be no Order as to Costs, including all costs reserved.

ii. The Petitioner’s costs to be taxed in accordance with Legal Aid Regulations, with certificate for counsel.