CWGH v. CTTC

FCMC 13721/2018

[2025] HKFC 23

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 13721 OF 2018

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DECISION
(Costs)

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Introduction

1.  On 31/8/2021, this Court handed down its Judgment on parties’ ancillary reliefs after a 3-day trial in October 2020 (“AR Judgment”). Suffice

to say was that, amongst others, there was an order for sale of the parties’ former matrimonial home situated at Ap Lei Chau, Hong Kong (”FMH”), and 2 carparks also located in the same residential complex, in the open market and at the then current market value.

2.  There was no serious issue arising from other terms of the AR Judgment which in essence was payment of a lump sum by Respondent (“H”) to the Petitioner (“W”) of HK$1,386,500 being equalization money as payment of the adjudged pot of family assets. H was also ordered to pay costs on indemnity basis with Certificate for Counsel.

3.  The sale of the FMH was not progressed with expediency and was indeed unsatisfactory. It was common ground that at the time property prices in Hong Kong are in a downward trend. It was also common ground that the FMH was jointly owned by the parties as tenants in common in equal shares and at all material times was on mortgage with DBS Bank.

Chronology and the Summonses taken out by W

4.  On 25/7/2023, W first took out a Summons (“July Summons”) seeking specific directions on the mode of sale of the FMH by private agreement as the first attempt within 6 months and at the price of not less than HK$8,658,000 with a completion date within 4 months from the date of the private agreement. This Summons was supported by W’s 4^th and 5^th Affirmations and exhibits.

5.  At the hearing of the July Summons on 28/8/2023, this Court granted an Order substantially on the same terms as the Summons with further directions on the conduct of sale to be vested with W and that both parties shall vacate the FMH as from the date of the Order. Although not prayed for in the July Summons, paragraph 6 of the 28/8/2023 Order provided that the FMH be sold by public auction within 4 months after the expiry of the 6-month period for sale by private agreement with a reserve price of HK$7,792,200. Further, paragraphs 5(v) & (vi) of the July Summons was adjourned for further hearing on 8/3/2024. It was also ordered that H shall pay to W the costs of the hearing, to be taxed if not agreed[1].

6.  On 23/2/2024, W took out a second Summons (“February Summons”) seeking the sale price of the FMH to be adjusted down to HK$7,000,000 in replacement of the sale price of HK$8,658,000 as per the previous Order dated 28/8/2023. The February Summons was initially scheduled for hearing on 29/4/2024 which was, by consent of the parties, brought forward to be heard together with paragraphs 5(v) & (vi) of the July Summons on 8/3/2024. W filed her 7^th Affirmation in support of the February Summons.

7.  At the hearing on 8/3/2024, this Court directed a 2-day trial for paragraphs 5(v) and (vi) of the July Summons and also the February Summons, both to be heard on 2 and 3 of May 2024.

8.  On 22/3/2024, parties entered into a Consent Summons (“Consent Summons”) to substantially deal with paragraphs 5(v) and (vi) of the July Summons and the February Summons including, inter alia, distribution of the net sale proceeds of sale of the FMH after completion.

9.  On 15/4/2024, this Court granted an order in terms of the said Consent Summons dated 22/3/2024 and vacated the trial dates scheduled for 2 and 3 May 2024. Given that the February Summons had been disposed of, this Court made use of the date of 29/4/2024 originally scheduled for hearing the February Summons with the aim to resolve the issue of costs which had been reserved. At paragraph 11 of the 15/4/2024 Order, it provided :-

“11. There be a hearing on 29 April 2024 at 11:30 a.m. for the parties to make submissions on costs in relation to (i) paragraphs 5(v) and (vi) of the Petitioner’s Summons filed on 26 July 2023, (ii) the Petitioner’s Summons filed on 23 February 2024, (iii) the hearing of the two said Summonses on 8 March 2024, and (iv) this Consent Summons.”

10.  At the hearing on 29/4/2024, this Court decided to reserve its Decision on costs and to be handed down in accordance with Practice Direction 37 and that the costs of the hearing on that day was also reserved.

11.  On 3/6/2024, W issued a third Summons seeking an order for a sum of HK$220,000 from each party’s share of the net proceeds of sale of the FMH to be stake-held by the solicitors appointed to handle the sale of the FMH, which was known to be Messrs. Poon & Cheung, Solicitors, pending determination of various costs orders the decision of which had been reserved (“Stake-holding Summons”). This Summons was scheduled for hearing on 15/7/2024. Completion of the sale of the FMH was on 23/7/2024 which was about 8 days afterwards.

12.  At the hearing of the Stake-holding Summons on 15/7/2024, parties agreed to the terms of the Stake-holding Summons and that a sum of HK$220,000 be stake-held from each party’s share of the proceeds of sale. The sum of HK$440,000 (in total) stake-held would then be paid into Court after completion of sale of the FMH 8 days later on 23/7/2024. The costs of the Stake-holding Summons was also reserved and to be dealt with after the Decision on various other costs orders (reserved on 29/4/2024) was handed down.

13.  Hence, I have now to determine the costs of the following :-

(a)  July Summons (reserved on 29/4/2024);

(b)  February Summons (reserved on 29/4/2024);

(c)  Consent Summons (reserved on 29/4/2024); and lastly,

(d)  Stake-holding Summons (reserved on 15/7/2024).

Applicable legal principles and case law

14.  There is no dispute that both the July Summons and February Summons issued by W under Order 31 rules 1 and 2 of the Rules of the District Court, Cap.336H was premised under paragraph 5 of the Order dated 31/8/2021 in respect of the AR Judgment which provides :-

“5. There shall be liberty to apply for directions or implementation of this Order.”

15.  Given the AR Judgment including the award of indemnity costs had never been challenged or appealed by H and had, as a matter of fact, largely been implemented by H at the time when W issued her Summonses post AR Judgment, I believe the applicable principles on costs of those post AR Judgment applications seeking directions on implementation only (my emphasis) should be viewed upon in a way same as or akin to those cases where parties had settled their case leaving only the liability for costs to be disputed. In the present case and at the time of W’s Summonses since July 2023 for directions on implementation, I am inclined to say the question of ancillary reliefs or the liability thereof between H and W had become academic.

16.  It is trite law that if a case is settled save to costs, the court has a wide discretion regarding costs. In the unreported case of Famous Marvel Co. Ltd and Others v Conversant Group Ltd and Others (HCA No. 2153/2009) where Madam Au-Yeung J had said :-

“The principles for determining costs

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).

17.  In the later unreported case of Glory Empire Global Ltd v Bateson Investment Ltd (HCA No.866/2017) where Chow J (as Chow JA then was), said :-

“44. ……….. I consider the following principles to be applicable where a judge is asked to determine the issue of costs in a situation where the issue of liability has become academic (my emphasis) :

(1) The judge has a wide discretion not only as to the manner by which the issue of costs is to be determined, but also what evidence should be received and what findings to make.

(2) In a simple case where the issue of liability is clear on the face of the pleadings or existing affidavit evidence already filed, it would be open to the judge to determine the issue of costs without receiving any further evidence.

(3) Where the issue of liability is not so clear, the judge may direct evidence to be filed and the witnesses to be cross examined. The judge may also confine the evidence to be filed, and cross examination of the witnesses, to a particular issue or some particular issues.

(4) In determining the issue of liability for the purpose of deciding costs, the court may adopt a broad brush approach and does not necessarily have to conduct a trial to determine the substantive issues.

(5) Where it is impossible for the court, on the existing materials, to say what the likely outcome would be, the court may, in appropriate circumstances, decide to make no order as to costs.

(6) Ultimately, the objective is to do justice between the parties without incurring unnecessary court time and consequently additional costs (my emphasis).

18.  There was no application from either party for viva voce evidence to be adduced for the present costs application. Hence I will confine myself upon matters contained in the parties’ affirmation evidence filed before me noting that any controversies of the parties’ evidence, insofar as they had not been canvassed by me at the substantive trial or dealt with in the reasons for my AR Judgment, had not been tested in the present application.

Parties’ Evidence

19.  In support of the July Summons, W filed her 4^th and 5^th Affirmations[2], H filed his 2^nd Affirmation in opposition[3], W filed her 6^th Affirmation in reply[4].

20.  In support of the February Summons, W filed her 7^th Affirmation[5] and H filed his 3^rd Affirmation in opposition[6].

21.  In support of the Stake-holding Summons, W filed her 8^th Affirmation[7]. No affirmation was filed by H to the Stake-holding Summons and there were exchange of correspondence between parties’ legal teams.

Rules of procedure on costs

22.  Order 62 rule 3(2) of the Rules of the High Court (“RHC”), which are applicable to matrimonial proceedings commenced in the Family Court by virtue of rule 3 of the Matrimonial Causes Rules, Cap.179A, provides :-

“3(2) 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.”

23.  Further, Order 62 rule 5 of the RHC provides :-

“5(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 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

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

W’s position

24.  First, W in her 4^th Affirmation confirmed that H had paid her the adjudged sum of HK$1,386,500 being the equalization money. She had also successfully sold the 2 car parks. The awarded costs in her favour against H had been taxed and allowed at HK$1,408,557.90 and with the Allocatur also issued[8]. However, the FMH had yet to be sold as per the AR Judgment.

25.  W’s case was that knowing that there were mortgage repayments for the FMH pending sale, H continued to contribute his 50% share of the mortgage instalments after the AR Judgment for about a year. However, H suddenly stopped paying his 50% share in and since the month of July 2022. Up until 7 July 2023, there was a total sum of HK$119,517.80 for H’s 50% share of the mortgage instalments and outgoings due and unpaid[9].

26.  Worse still, H had already not been paying his 50% share of the management fees and government rent of the FMH much earlier in point of time since July 2020[10].

27.  In respect of the taxed costs of HK$1,408,557.90, H had only paid HK$1,172,297.90 leaving a balance of HK$236,260.00 unpaid[11].

28.  There was the BMW car registered under the name of W’s mother which had been found by this Court to be matrimonial assets which W had sold for HK$59,000. Whilst agreeing H should be entitled to his 50% share of the proceeds of sale at HK$29,000, W submitted that H had not paid his 50% share of the expenses for maintaining the car from 2019 to 2021 which she worked out at HK$10,028 for licence fee and HK$4,056.57 for car insurance[12].

29.  In essence, W said she needed specific directions from the Court, not only on fixing the value of the FMH to be sold given the fact that property prices had unexpectedly and drastically dropped after the AR Judgment, there was also the need for specific directions on distribution of the net proceeds of sale of the FMH since H had defaulted on his 50% share of the mortgage payments since July 2022 and other related expenses, H’s less than full payment of the taxed costs which H made unilateral deductions based upon the value of his valuables. There was also payments due from H in respect of his 50% share of maintaining the BMW car and the rental H received from one of the 2 carparks.

30.  W agreed that H had deposited a sum of HK$81,000 into their DBS bank account which, given there was mortgage payments outstanding at the time, was credited by the bank as part payment of the outstanding arrears as opposed to H’s case that it was for payment of the “balance” of the taxed costs after taking into account his own deductions of what was owed to him.

31.  As regards the February Summons, it was issued given the drastic and continual fall in property prices had ensued at the time. Luckily though, there was a potential buyer around the market who was willing to buy the FMH at HK$7,000,000, a price which differs from the minimum selling price as per the 28/8/2023 Order. The February Summons was to seek further directions on the minimum selling price.

32.  It then came along the Consent Summons to embody the eventual agreement of the parties over sums to be deducted from the net proceeds of sale of the FMH taking into account H’s 50% share of his defaulted mortgage payments and outgoings, H’s valuables, sharing of the BMW car sale proceeds and related expenses and also balance of the taxed costs. Actually the agreed deductions dispose of paragraphs 5(v) and (vi) of the July Summons and also dispose of the 2-day trial scheduled for 2 and 3 May 2024.

33.  The Stake-holding Summons was needed in light of the Court’s decision on 29/4/2024 to reserve its decision on costs and be handed down in line with Practice Direction PD 37, that is to say, the costs decision could be handed down within 9 months. By that time, sale of the FMH would be completed with the net proceeds of sale shared without taking into account of whatever outcome of those reserved costs order.

34.  In her 8^th Affirmation in support of the Stake-holding Summons, W said there was a real risk of H taking the net proceeds of sale and fails to adhere to any costs order that may be granted against him. W put forward the following reasons for holding such belief :-

(a)  H was living in the United Kingdom and struggling to earn enough to meet expenses;

(b)  H had once failed to pay the taxed costs in full leaving a balance of HK$236,260 which led to the Court having to direct H to pay up with penal notice endorsed;

(c)  H has no other known assets in Hong Kong which a costs order may be enforced;

(d)  The proposed arrangement of withholding sums was first made by way of a consent summons (for only HK$180,000 each side) with no order as to costs but was flatly refused by H.

H’s position

35.  In H’s 2^nd Affirmation[13], he took issue with W’s case that he did not pay the taxed costs in full nor did he owe W any sums in respect of the BMW car and the car park space no.51 so alleged by W. H said W had unreasonably rejected an offer to buy the FMH at HK$9,380,000 secured by him in March 2023 which was just 4 months before W issued the July Summons seeking the sale price to be HK$8,658,000[14]. W said the property was worth HK$9,770,000. For sale at HK$9,380,000, H would have to pay her 50% of the difference between the 2 values which H disagreed.

36.  In H’s 3^rd Affirmation[15], he viewed upon W’s February Summons an attempt to vary paragraphs 2 and 6 of the Order granted on 28/8/2023 in respect of the July Summons. Hence, the February Summons was defective. W could not seek to “amend” the said Order by such method and she must apply to set it aside instead. The so-called “unexpectedly weak property market in Hong Kong since August 2023” is not an acceptable reason for the court to set aside the said Order[16].

37.  At the “Conclusion” paragraph 87 of H’s Counsel’s Written Submissions, H proposed the following table on costs :-

“

Costs of the remaining issues of the Old Summons	No order as to costs
Costs of the New Summons	Costs of and occasioned by the New Summons be awarded to R. The Court should consider cost be awarded on an indemnity basis due to the New Summons being defective
Costs of the Consent Summons	Costs awarded to R on an indemnity basis

38.  As regards W seeking costs of the Stake-holding Summons, H’s positon was stated in his lawyer’s letter dated 3/5/2024 sent to W’s lawyers and produced within the exhibit “CWGH-49” to W’s 8^th Affirmation. In a gist, W should have, but apparently had not, proposed stake-holding the net proceeds at the time when the Consent Summons dated 22/3/2024 was entered into which had become an order of the Court. W would only have herself to blame for not proposing the stake-holding arrangement prior to the signing of the 22/3/2024 Consent Summons.

39.  At paragraph 22 of H’s Counsel Second Written Submissions dated 11/7/2024, it was said :-

“22. In conclusion, R does not take any issue with the stakeholding of HK$220,000 from his share of the net proceeds. However, this is essentially an application to amend the Consent Order with a term that was omitted from the previous August 2023 Order. The costs of this application must be granted to R as the court should not give a free pass to parties who make oversights.”

Discussion

40.  First and foremost, I noticed that parties’ Counsel in their Written Submissions used their own nomenclature for those Summonses taken out by W since July 2023. The following is a snapshot of the different nomenclature used vis-à-vis the description used by me in this Decision,

This Decision	H’s Counsel’s Submissions	W’s Counsel’s Submissions
July Summons	Old Summons	Main Summons
February Summons	New Summons	Adjustment Summons
Consent Summons dated 22/3/2024	Consent Summons	Consent Summons
Stake-holding Summons	Stakeholding Summons	Stakeholding Summons

41.  I noticed W’s Counsel Mr. Sher in his Written Submissions dated 24/4/2024[17] referred me to the different types of “set-off” summarised by the Court of Appeal in the case of Karpex (HK) Ltd v Yasmine Printing (China) Ltd [2008] 1 HKLRD 199. Plainly, this was submitted in order to refute H’s case of his unilateral deductions of his valuable items and proclaimed that he had fully paid the taxed costs. H had deducted HK$236,260.00 from the taxed costs of HK$1,408,557.90[18].

42.  It was well settled that “set-off” would only come as a “shield” and not a “sword” when a party raising “set-off” was sued for a sum of money in a court of law before adjudication (my emphasis) of liability. It could not apply to liability to pay after adjudication (my emphasis). Adjudicated liability to pay could only be disputed by way of an appeal or, in the case of liability to pay costs, there was the other option of review of the costs order nisi.

43.  In the present case, H’s unilateral deduction of the sum of HK$236,260 from the amount of the taxed costs could not be viewed upon as any kind of “set off” in respect of which W’s Counsel made his legal submissions on “set-off”. I find no question of “set-off” could be said to have arisen which call for those legal submissions. Hence, I would not go into W’s Counsel’s legal submissions on such topic.

44.  The fact that H had paid HK$1,192,297.90 of the taxed costs gave rise to an estoppel against H for him to be able to dispute his liability to pay taxed costs under the Allocator. Since there was no challenge or appeal on the award on costs under the AR Judgment, H’s unilateral deduction of HK$236,260.00 was clearly without any legal basis which call for the need of W to seek specific directions from the Court as to how the net proceeds of sale of the FMH to be shared with those of H’s unilateral deductions and liability incurred post AR Judgment (my emphasis) taken into account.

45.  The AR Judgment was handed down on 31/8/2021. I am prepared to take judicial notice on 2 unprecedented and most unfortunate events that had happened in the last couple of years between late 2019 and 2023. They are the social event in Hong Kong and the Covid 19 pandemic, the latter of which drastically affect the economy worldwide with no exception to Hong Kong. Investment shrank and property prices dropped considerably (if not drastically) and continuously during those years. Given the unexpected and drastic economic downturn, it must be true that securing property buyers who were willing to offer a decent price was not easy, if not an impossible, task.

46.  The trial of the ancillary reliefs started in October 2020. For the purpose of trial, the value of the FMH was agreed at HK$9,505,000 before trial. For what I observed by way of judicial notice aforesaid, I accept W’s case that it was more probable than not that she was unable to secure a purchaser after the AR Judgment in August 2021 who was willing to buy the FMH at the price which the parties had agreed before October 2020, say, HK$9,505,000. I find it was necessary and inevitable for W to take out the July Summons to seek specific directions on (i) a selling price lower than the agreed price of HK$9,505,000; which W worked out the estimate of HK$8,658,000 and (ii) specifying a period of time for the sale by way of private agreement and with the time for completion of sale also specified.

47.  H had opposed the July Summons right at the beginning by filing his 2^nd Affirmation and engaged Counsel to attend the call-over hearing on 28/8/2023. Having considered parties’ submissions, I granted the 28/8/2023 Oder substantially on the same terms of the July Summons and also decided that H should bear the costs of the hearing on that day. With my decision above on the July Summons being necessary and inevitable, I now decided that H should also bear all the costs of and occasioned by W’s July Summons, in addition to the costs of hearing on 28/8/2023 which I have decided earlier.

48.  As regards the February Summons, W in her 7^th Affirmation in support deposed to 2 matters which are of considerable importance. First, despite efforts and diligent attempts to sell the FMH after the 28/8/2023 Order, with the prolonged and unexpected steep fall in property prices since the 28/8/2023 Order, she was unable to sell the FMH at the reduced minimum price of HK$8,658,000 specified in the said Order[19]. Secondly, she was informed by her estate agent Miss Pauline Lai that there were enquires from potential purchasers seeking to purchase the FMH, but only in the range of HK$7,000,000 to HK$7,500,000[20]. The WhatsApp messages with Miss Lai was produced as exhibit “CWGH-45c”.

49.  Whilst I noted H’s Counsel’s contention of those evidence allegedly coming from Miss Lai are hearsay and should attach nil or little weight, I tended to accept W’s case on the continual downturn of property prices in Hong Kong after the 28/8/2023 Order by taking into account the overall circumstances and poor economic climate that had ensued after the social event and the Covid 19 pandemic. These are matters which I am entitled to take judicial notice of their existence and the effects that had arisen therefrom.

50.  H’s Counsel’s contention of the February Summons was an attempt to “amend” paragraphs 2 and 6 of the 28/8/2023 Order was, with respect, incorrect.

51.  Paragraph 2 of the 28/8/2023 Order directed the FMH be sold at a price of not less than HK$8,658,000. Any sale less than the amount of HK$8,658,000 would necessarily lead to a reduction of the amount of net proceeds available for sharing adjudged in the AR Judgment. According to W, there was a potential buyer offering HK$7,180,000 sourced by Miss Pauline Lai around the market[21]. On money terms, I accepted this was a material change in circumstances not only on the minimum selling price, which also led to reducing each party’s share of the net proceeds. I decided the February Summons was necessary and inevitable. This was not an “amendment” of paragraph 2 of the 28/8/2023 Order so contended by H. The February Summons was issued on 23/2/2024 before the expiry of the 6-month period expiring on 28/2/2024 and more importantly, before the provision on public auction “clicks in” 5 days later after 28/2/2024. I find W was entitled to seek further directions by issuing her February Summons on the minimum selling price of the FMH to be HK$7,000.000 in place of HK$8,658,000.

52.  Paragraph 6 of the Order dated 28/8/2023 provided a time frame of 4 months after the expiry of the 6 months for sale by private agreement. H also contended that the February Summons was an attempt to “amend” by removing the arrangement of auction sale completely which was already in place as part of the 28/8/2023 Order and this should not be allowed. H contended the February Summons was a “defective” one and accordingly he should be entitled to the costs of it on an indemnity basis[22].

53.  Private sale or auction sale are different mechanisms for the same objective, namely, implementing an order for sale granted by the Court. It is common knowledge that auction sales attract much more administrative costs and produced prices which are generally much lower than private sales. There was evidence from W of potential buyers in the market offering between HK$7,000,000 to HK$7,500,000 to buy the FMH. With the adjusted sale price of HK$8,658,000 further set down to the lowest end of the band at HK$7,000,000 in the February Summons, there stands a high probability and good chance of achieving a speedy sale of the FMH rather than adhering to public auction with a reserve price of HK$7,792,200 (which was even higher than the band of the then market prices of HK$7,000,000 to HK$7,500,000). A speedy sale was apparently beneficial to both parties. I find this was another material change of circumstances which call for the need to seek specific directions by W in her February Summons.

54.  Had H formed the view that the February Summons was a “defective” one, why H (who was legally represented and must be fully advised) did not apply by way of Summons to seek outright dismissal of the February Summons and only raised such contention of “defectiveness” when he was asked to bear the costs of the February Summons ?

55.  For these reasons, I find the February Summons was necessary and inevitable unless consensus could be reached by the parties. It was rightly issued in respect of which W should be entitled to the costs.

56.  As regards the costs of the Consent Summons, I decided to make no order as to costs given that this was a “wrap-up” of the parties’ last minute consensus achieved out of rounds of protracted correspondence exchanged between their respective legal teams. With the parties’ joint efforts and consensus, the time and expenses for the upcoming substantive trial in May 2024 was avoided.

57.  As regards the costs of the Stake-holding Summons, W’s position was that given H’s past conduct of making unilateral deductions of HK$26,260.00 and the real risks of H getting his entire share of the balance of the net proceeds without settling any costs order which might be awarded against H in 9 months’ time counting from 29/4/2024. Such risk or concern was enhanced by the H’s admission that he was already back to the United Kingdom and was said to be seeking employment there.

58.  H’s contention was that the Stake-holding Summons was issued out of “oversight” which W only had herself to blame. Given that no Affirmation in opposition was filed, I will refer to the parties’ letters and H’s Counsel’s Written Submissions on H’s case.

59.  In H’s lawyers’ letter dated 3/5/2024[23], it was said “-

“While your client did request for sales proceeds to be stakeheld under the previous mechanism under Order dated 28^th August 2023, we noted that your client never made such a request when proposing the terms of the Consent Summons that was filed on 22^nd March 2024. Surely, with the advice of your good firm, your client was given ample opportunity to consider whether she wished to have the sales proceeds stakeheld per the existing Order dated 28^th August 2023 and made the conscious decision against it when proposing the terms of the aforesaid Consent Summons. Your client has only herself to blame for not proposing such mechanism prior to the signing of the Consent Summons dated 22^nd March 2024 and her change of positions now is causing parties to incur unnecessary legal costs. Even if your client does wish to proceed with such application to Court, you would surely agree that it is out of indulgence for her own oversight and change of positions – which attract adverse costs consequences.”

60.  In a letter of reply of the same date of 3 May 2024, W’s lawyers said[24] :-

“We refer to your letter dated 3 May 2024.

We would like to point out that our client proposed the stakeholding of part of the Net Proceeds in our letter dated 30 April 2024 with the bona fide intention of proposing a pragmatic way to ensure that the parties shall comply with the Court’s eventual order on costs (which such order on costs, without making any admission, might in fact be in favour of your client).

The Court only made its decision to reserve its judgment on costs at the hearing on 29^th April 2024. In fact, the Judge expressly said at the hearing that he would decide on the issue of costs within 9 months according to PD 37. This result in a real possibility that the costs may be decided by the Court after the completion of the sale of the FMH. Our client’s proposal was made in light of the Court’s decision to reserve judgment.

In other words, had the Court decided on costs and summarily assessed the costs forthwith during the hearing on 29 April 2024, the parties would have had to take a different approach and would likely have entered into (or at least proposed) a consent summons for the exact sum of costs assessed by the Court to be directly paid from the Net Proceeds, and no stakeholding would have been necessary.

Hence, we trust that you and your client will understand that it was not possible for our client to predict the Court’s decision at the hearing on 29 April 2024 and that is why such stakeholding provision was not included in the Consent Summons filed on 22 March 2024.

Furthermore, we trust that you and your client will appreciate that our client’s proposal is fair and mutually beneficial to both parties as an equal amount is proposed to be stakeheld from each party’s share of Net Proceeds.”

61.  In H’s Counsel’s Written Submissions, the contention raised was a two-tier one. First, W had wilfully omitted (my emphasis) the stake-holding provisions in the July Summons which ended up with the 28/8/2023 Order[25]. Secondly, W in her February Summons which ended up with the subsequent Consent Order dated 15 April 2024, W further wilfully omitted (my emphasis) the stake-holding provisions[26].

62.  At paragraphs 10 and 11 of H’s Counsel’s Written Submissions it was also said :-

“10. R’s position is that it is regrettable that P did not reflect the stakeholding provision from the August 2023 Order into the Consent Order. All along, R does not have any serious issues with HK$220,000 of his share of the proceeds being stakeheld.

11. R only takes issues with the costs of the Stakeholding Summons. It is not understood how P can ask for the costs of the Stakeholding Summons when she is asking the court’s indulgence to reinstate a direction that she had wilfully left out.”

63.  And at paragraph 12 of the same Written Submissions, it was said by H’s Counsel :-

“12. It is also noteworthy that after a sale agreement was signed and a completion date was set, P did not issue any pre-action letter or communication to R prior to the issuance of the Stakeholding Summons. In support of her application, P also made a lengthy and unnecessary 8^th Affirmation of CWGH (“P’s 8^th Aff”) which consists of 21 pages. No doubt, P never gave a chance to R to agree to the stakeholding provisions prior to The incurrence of such unnecessary legal expenses.”

64.  As early as 30 April 2024, W’s lawyers immediately wrote to H’s lawyers attached with a draft Consent Summons to propose stakeholding a sum of HK$180,000 from each parties’ respective share of the proceeds with no order as to costs for such arrangement[27]. This letter reads, inter alia, as follows :-

“We refer to the hearing yesterday (29 April 2024) where the Court ordered that the decision on costs be reserved.

It is envisaged that the Court might make its decision on costs after the sale of the FMH is completed.

We are instructed that, in order to protect both parties’ interests and in all fairness, part of each party’s share of the Net Proceeds shall be stakeheld pending the decision of the Court on costs.

We enclose herewith our draft Consent Summons for your and your client’s consideration. We look forward to your reply within the next 10 days, failing which we shall take out a Summons.”

65.  This letter was met with the reply letter from H’s lawyers dated 3 May 2024 which I reproduced at paragraph 59 of this Decision.

66.  Reading the 2 letters in their context, it is obvious that none of H’s contentions stands. There was no issue of “wilful omission” of W or any “oversight” of W not to raise the stake-holding arrangement earlier. Actually these 2 contentions are self-conflicting and mutually exclusive. How could a person be criticized for “wilfully omission” of something when he or she at the same time was said to have “oversaw” it ?

67.  As clearly expressed in W’s lawyers’ letter dated 3 May 2024[28], my decision on 29 April 2024 to reserve costs was completely unexpected by W and; when so happened, gave rise to the need of the Stake-holding Summons. The earlier letter dated 30 April 2024 (that is on the next day after the hearing) from W’s lawyers attached with the draft Consent Summons rendered H’s contention of no pre-action letter or communications to H[29] prior to issuing the Stake-holding Summons a complete non-starter and implausible.

68.  I also find against H on his contention that he only took issue with the costs of the Stake-holding Summons[30]. Had H agreed to the Stake-holding Summons in context except costs, there was no reason for H not to sign the draft with the clause on costs be amended to read “to be provided for” or “to be argued”. I find H could have agreed with the Stake-holding arrangement without the issuance of the Stake-holding Summons and the hearing on 15 July 2024 could be avoided.

69.  For these reasons, I decided H should pay the costs of and occasioned by W’s Stake-holding Summons.

Decision

70.  My decision on costs of and occasioned by each of the Summonses set out in paragraph 13 of this Decision are as follows :-

(a)  July Summons – to be paid by H, including all costs reserved.

(b)  February Summons – to be paid by H, including all costs reserved.

(c)  Consent Summons – no order as to costs.

(d)  Stake-holding Summons – to be paid by H.

Summary Assessment of Costs

71.  To avoid any further delay, I decided to summarily assess each of the costs orders which I have awarded in lieu of taxation to do justice between the parties without incurring unnecessary court’s time and consequently additional costs (see Famous Marvel Co. Ltd and Others v Conversant Group Ltd and Others, supra).

72.  My summary assessments are as follows :-

(a)  July Summons at HK$40,000;

(b)  February Summons at HK$60,000;

(c)  Stake-holding Summons at HK$60,000.

73.  I do not grant any Certificate for Counsel. The above assessed amount of costs are net sums payable without Counsel’s fees.

Monies in Court

74.  I now make the following orders for the sum of HK$440,000 remained in Court.

75.  The sum of HK$220,000 for W’s share be returned to W.

76.  The total amount of the assessed costs to be paid by H, namely, HK$160,000 (HK$40,000 + HK$60,000 and HK$60,000) be paid out of H’s share of HK$220,000.

77.  The net balance of HK$60,000 after payment under paragraph 76 above be released to H.

78.  All the above payments to be released within 14 days from the date of this Decision.