C, S (formerly known as C, S) v. W, CT

FCMC 11994 / 2021

(formerly FCMC 5660/2020 & FCMC 1930/2019)

[2026] HKFC 9

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11994 OF 2021

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DECISION

( Leave to Appeal and Variation of Costs Order Nisi )

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1.  The parties both lodged an application for leave to appeal against my decision handed down on 9 May 2025 (“the Decision”). The Petitioner also seeks to vary the costs order nisi made in the Decision.

BACKGROUND

2.  The background of this case has been set out at paragraphs 5 and 6 of the Decision. I shall not repeat the same. I shall adopt the same abbreviations used in the Decision.

3.  The Wife filed her summons on 22 May 2025 (“the Petitioner’s Summons”) seeking the following relief:

1)  The costs order nisi be varied such that the Husband should be ordered to pay the costs of the ancillary relief proceedings.

2)  Application for leave to appeal against the Decision.

3)  Stay of execution of the Decision pending the appeal.

4.  The Husband filed his summons on 5 June 2025 (“the Respondent’s Summons”) for leave to appeal against the Decision.

THE PARTIES’ INTENDED GROUNDS OF APPEAL

The Wife’s intended grounds of appeal

5.  The Wife has not lodge her draft intended grounds of appeal. Instead, she has set out her grounds for appeal in her counsel’s skeleton submissions. Mr. Todd, counsel for the Wife, submitted the court erred in counting the value of SCBC in the Wife’s assets as per the expert’s valuation without including the value of the Director’s Loan as part of the Wife’s liabilities. Mr. Todd submitted this resulted in double counting of the Director’s Loans and therefore an unequal division of the parties’ assets.

The Husband’s intended grounds of appeal

6.  The draft intended grounds of appeal (“the Husband’s Intended Grounds of Appeal”) lodged by the Husband advance 4 intended grounds of appeal as follows:

1)  The court erred in ruling the Father’s Loans were soft loans.

2)  The court failed to add back USD$1 million to the Wife’s assets.

3)  The court placed insufficient weight on a variety of factors (including the short duration of the marriage and the Father’s contribution the purchase of the parties’ matrimonial home) that would justify departing from an equal sharing basis.

4)  The court erred in finding there was no disparity in the parties’ earning capacity and thereby erred in refusing to depart from equal sharing.

7.  I do not intend to deal with all the submissions/arguments/points raised in the Husband’s Intended Grounds of Appeal. Suffice to say I have considered the matters raised by the Husband and shall only deal with the salient matters raised.

THE LAW

8.  Section 63A(2) of the District Court Ordinance provides that leave to appeal shall not be granted unless the intended appeal has a reasonable prospect of success or that there is some other reason in the interests of justice that the appeal should be heard.

9.  The relevant test of whether an appeal has a reasonable prospect of success is whether the applicant for leave to appeal can show that he/she has an arguable case with reasonable chances of success on appeal.

10.  In Ho Yuen Ki Winnie and anor v Ho Hung Sun Stanley and anor, HCMP 1009/2009, (unrep), Le Pichon JA (as she then was) stated at paragraph 16 of the judgment: -

“For leave to be granted, this court must be satisfied that the appeal has ‘reasonable prospects of success’. Merely showing that the appeal is ‘arguable’ and ‘not fanciful’ would not be sufficient. In my view, ‘reasonable prospects’ requires something more and, in that regard, some assistance may be derived from the test applied when setting aside a default judgment.”

11.  In KNM v HTF, HCMP 288/2011, (unrep), Fok JA (as he then was) stated at paragraph 9: -

“The relevant test of whether an appeal has a reasonable prospect of success under section 63A is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success therefore means an appeal with prospects that are more than ‘fanciful’ but which do not need to be shown to be ‘probable’”.

(See also the case of SMSE v KL [2009] 4 HKLRD 125)

12.  In so far as the law relates to variation of a costs order nisi is concerned, the starting point is Order 62 Rules of High Court (Cap 4A) (“RHC”). The matters to be taken into consideration when exercising the discretion to award costs is set out in Order 62 Rule 5 RHC as follows:

Special matters to be taken into account in exercising discretion (O. 62, r. 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— (L.N. 152 of 2008)

(aa)the underlying objectives set out in Order 1A, rule 1; (L.N. 152 of 2008)

(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); (L.N. 152 of 2008)

(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; (L.N. 152 of 2008)

(e)the conduct of all the parties; (L.N. 152 of 2008)

(f)whether a party has succeeded on part of his case, even if he has not been wholly successful; and (L.N. 152 of 2008)

(g)any admissible offer to settle made by a party, which is drawn to the Court’s attention. (L.N. 152 of 2008)

(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. (L.N. 152 of 2008)

13.  A summary of how these principals are to operate is succinctly summarized by The Hon J To in the case of KJ v KMLM and anor, HCMC 4/2010, 21 May 2014, (unrep) at paragraphs 13 – 19 of the judgment as follows:

“13. The broad guidelines on costs have been set out by Nourse LJ in Re Elgindata (No 2) . These guidelines were modified following the implementation of the Civil Justice Reform (“CJR”): see AEI Rediffusion Music Ltd v Phonographic Performance Ltd in the United Kingdom and Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2) ; and Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China in Hong Kong. The modified guidelines are as follows.

14. First, costs are in the discretion of the court: Order 62, rule 2(4).

15. Second, the principle that costs follow the event is no longer regarded as a general rule but a convenient starting point from which a court can readily depart. It only operates to shift to the unsuccessful party the burden of showing why some different approach should be adopted on the facts of that particular case: Order 62, rule 3(2);

16. In the United Kingdom, the starting point of costs in family cases is no order as to costs. That is based on the English Family Procedure Rules 2010 which are not applicable to Hong Kong. The uniqueness of ancillary relief proceedings is carving up of family assets belonging to the parties as a result of the breakdown of their marriage as distinguished from recovering debt or damages by a victim of wrongful acts committed by another in an ordinary civil action. Despite that the English Family Procedure Rules 2010 are not applicable to Hong Kong, in the light of the nature of ancillary relief proceedings, the starting point of costs following event can be easily displaced where the parties genuinely seek the court’s adjudication on their appropriate share from the family pool. It would be within the court’s discretion to make a no costs order in an appropriate case.

17. Third, the starting point does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or costs of the proceedings he may be deprived of the whole or part of his costs. Since CJR, the court is more ready to take an issue-based approach. It is no longer necessary for a party to have acted unreasonably or improperly to be deprived of his costs of a particular issue on which he has failed: see AEI Rediffusion Music Ltd ; Wong Kam Tong ; Chan Ching Kit, Katherine v Lam Sik Ying , Chan Mei Yiu Paddy v Secretary for Justice , Zhuhai International Container Terminals (Jiuzhou) Ltd v Lo Tong Hoi . Nor is it necessary to show that the successful party has deliberately wasted time and costs: see Re Ricacorp Properties Limited . For the purpose of this guideline, a significant increase in the length or costs of the proceedings means one that can be estimated as a more than trifling proportion of the total costs. The costs need not be assessed with precision. It suffices if the court can give an estimate of the proportion of these costs: see Chan Lan v Shing Kei . A party may be deprived of part of his costs on the failed issues even if such costs overlap with those of the succeeded issues: see Zhuhai International .

18. Fourth, where the successful party raises issues or makes allegations improperly or unnecessarily (or unreasonably, in the United Kingdom), the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful party’s costs: Order 62, rule 7(1). By implication, a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party’s costs.

19. Fifth, as a result of the CJR, amendments were introduced to Order 62, rule 5 which requires the court in exercising its discretion to take into account certain special matters in appropriate circumstances. In the circumstances of the present case, three special matters are pertinent: (1) the underlying objectives set out in Order 1A, rule 1, in particular, to increase the cost-effectiveness of any practice and procedure and to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings (rule 5(1)(aa)); (2) the conduct of all the parties, including whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; the manner in which it was pursued, whether the claimant who has succeeded in his claim, in whole or in part exaggerated his claim, and his conduct before as well as during the proceedings (rule 5(1)(e)); and (3) whether a party has succeeded on part of his case, even if he has not been wholly successful (rule 5(1)(f)).”

14.  I now proceed to consider the parties’ respective intended grounds of appeal.

THE WIFE’S INTENDED GROUNDS OF APPEAL

15.  In so far as Mr. Todd seeks to argue there has been double counting of the Director’s Loans, Ms. Tam (junior counsel for the Wife at the trial hearing) raised the same argument. I have already extensively dealt with the same at paragraphs 28 - 38 of the Decision.

16.  For reasons already given, I did not accept there would be any double counting of the Director’s Loans. Mr. Todd’s submissions are simply a repetition of Ms. Tam’s submissions of which I have dealt with in the Decision.

17.  I therefore fail to see any reasonable prospects of success in the Wife’s intended grounds of appeal.

THE HUSBAND’S INTENDED GROUNDS OF APPEAL

18.  In his submissions regarding the third intended ground of appeal, Mr. Leung submitted that the court failed to consider the Husband’s argument despite having set out the same at paragraph 84(2) of the Decision. I shall deal with this point first.

19.  Whilst I concede I have not explicitly set out my reasoning on the same, given the parties have never disputed the matrimonial home belonged to the parties jointly, I fail to see the relevance of this argument to whether there should be departure from equal sharing.

20.  The Husband and his Father have never asserted the matrimonial home (that is 17A Bel-Air and Car Park 98) beneficially belongs to the Father. Furthermore, neither the Husband nor the Father asserted that the Father somehow has any lien on 17A Bel-Air and Car Park 98 such that the Father should be entitled to repayment via the sale proceeds of 17A Bel-Air and Car Park 98. The Husband and the Father’s case all along was that the Husband obtained loans from the Father to purchase 30B Bel-Air and 17A Bel-Air with Car Park 98.

21.  I have already set out at paragraph 59 of my Decision that I accepted the sums lent by the Father were loans but they were akin to soft loans.

22.  I borrow paragraph 62 Mr. Todd’s submissions and do not repeat his citation of the cases of LKW v DD [2010] 6 HKC 528 paragraphs 87 – 98, Miller v Miller, McFarlane v McFarlane [2006] 2 AC 618 at paragraphs 22 and 149. I reiterate the fact that the properties in question had been the matrimonial homes of the parties at various stages of their marriage. The case law is clear in that the matrimonial home of the parties is normally considered the matrimonial property of the family and that parties generally have an equal share. This principle is set out clearly by the Court of Appeal in the case of ARAV v VP [2011] 3 HKLRD 759 at paragraph 10 of Hon Cheung JA’s judgment, which states:

“10. The evidence of the case does not support a finding of separate finance of the parties. Even if, for the sake of argument, such is the case, the matrimonial home although registered in the sole name of wife was still a matrimonial asset. The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. In principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been, per Lord Nicholls of Birkenhead in Miller v. Miller and McFarlane v. McFarlane [2006] 2 WLR 1283 at paragraph 22. Baroness Hale of Richmond likewise agreed at paragraph 147. She stated that the prime example of family assets of a capital nature were the family homes and its contents. This approach is expressly affirmed in LKW at paragraph 98. . . .”

23.  For sake of completeness, I set out paragraph 98 of LKW as follows:

“98. It should be noted that these refinements are not generally applicable to the matrimonial home and other assets which have been intended for and devoted to family use. Lord Nicholls pointed this out in Miller/McFarlane as follows:

‘The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. . .. in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.’ Baroness Hale agreed, describing the matrimonial home as a prime example of a capital family asset.”

24.  Hence in such circumstances, I fail to see how the Husband’s argument of purported financial contribution from the Father in the purchase of 30B Bel-Air, 17A Bel-Air and Car Park 98 can be considered as a factor justifying departure from equal sharing.

25.  As for the remaining three grounds of appeal relied on by the Husband, Mr. Leung’s submissions on these grounds are essentially a repetition of the submissions made at the trial. Since these matters have already been canvassed during the trial and I have dealt with the same in my Decision as below, I do not intend to repeat my Decision and shall only deal with arguments not previously raised at the trial.

1)  Ground 1:

a)  I have set out my extensive reasoning on why I found the Father’s loans to be akin to soft loans at paragraphs 51- 59 of the Decision.

b)  Mr. Leung claims the court erred in stating the Husband stopped making repayments altogether since December 2017 (see paragraph 57 of the Decision). I concede there is a typographical error. Although the Husband did miss a payment in December 2017, it was not until 2019 that the Husband stopped his repayments to the Father. Hence, the reference to the date in default in payments should read as “since 2019” instead of “since December 2017”. This was confirmed by the Father in his evidence in Court as well as Mr. Leung’s closing submissions.

c)  Despite the typographical error, my reasoning and decision in paragraph 57 of the Decision remains unaffected and unchanged.

d)  I therefore fail to see any reasonable prospects of success on this intended ground of appeal.

2)  Ground 2:

a)  I have dealt with the same at paragraphs 39 - 46 of the Decision.

b)  I do not find any reasonable prospects of success on this intended ground of appeal.

3)  Ground 3:

a)  I have dealt with the same herein above.

b)  Moreover, I disagree the parties’ marriage could be classified as a short marriage. The marriage lasted for over 5.5 years and the parties have 2 children together.

c)  I find no reasonable prospects of success on this intended ground of appeal.

4)  Ground 4:

a)  I have dealt with the arguments relating to the Husband’s earning capacity at paragraphs 93 to 95 of the Decision.

b)  I find no reasonable prospects of success on this intended ground of appeal.

26.  By reason of the matters set out above, I find there to be no reasonable prospects of success in the Husband’s Intended Grounds of Appeal.

VARIATION OF COSTS ORDER NISI

27.  Mr. Todd argues the Wife should be viewed as the successful party since she succeeded on “the most valuable and the most numerous of the issues.” Further and alternatively, the Wife’s Calderbank offers were closer to the court’s ultimate award.

28.  I have considered the submissions of both parties and do not intend to repeat the same. I shall only deal with the salient submissions raised.

29.  Firstly, it is trite to say costs is in the discretion of the court. It is not an exercise where if one party wins on more issues than the other party does, the court will automatically find the party who won on the most number of issues to be the successful party. Moreover, I know of no principle that dictates the court should order costs be to the party who wins on “the most valuable issue”.

30.  In the case of Akai Holdings Ltd (in liquidation) v Thanakharn Kasikorn Thai Chamkat (Mahachon) (also known as Kasikornbank Public Limited Company) HCCL 59/2004, 31 July 2008, (unrep), Hon Stone J (as he then was) set out the following observations at paragraphs 26 – 29 of the judgment:

“26. For my own part I am able to identify no predisposition in the Hong Kong courts similar to that to which Lord Woolf made reference in AEI Rediffusion Music Ltd, op cit., that is, to a movement away from the Elgindata approach towards a situation wherein, as Lord Woolf expressed it, even prior to the fundamental changes in English civil procedure there had been a change of emphasis abroad requiring the courts to be more ready to make separate orders reflective of the outcome of different issues, and that the new Civil Procedure Rules simply had accentuated this pre-existing tendency.

27. I do not consider this to be the case in Hong Kong.

28. Certainly so far as the Commercial Court is concerned, it is recognised that commercial disputes often are complex and involve interwoven strands of fact and law; thus, unless discrete points safely can be isolated and can be shown to have lead to a wastage of time and costs, both at trial and during the interlocutory process, the practice of this court is not to engage in any “filleting” of cases according to the success or failure of the disparate issues which, when taken cumulatively, constitute the dispute to be judged.

29. In this contest the court’s attention has been drawn by Mr. Fung to passages in Rabobank, Hong Kong Branch v. Bank of China, op cit., wherein this court variously observed, at paras 13, 16 and 17 respectively:

“…as a matter of general approach to the issue of trial costs the occasions which justify the ‘filleting’ of costs according to the success or failure of any specific issue arising for decision within the composite whole are likely to be relatively few and far between, and in all probability are readily recognizable as meriting such treatment…

…Thus, in the instant case the defendant bank may indeed have failed on the ‘discrepancy’ and ‘notice of rejection’ issues, but the arguments put up by the defendant in this context demonstrably were not bad points. To the contrary, within the factual matrix thrown up by this case they were entirely respectable arguments which in the result failed, but this is a far cry from saying that they should not have been run at all…

…it cannot be, and indeed is not the case, that lack of success in any specific argument of itself attracts a costs sanction.

Within a trial of a commercial dispute inevitably there are disparate and often interwoven strands, and unless the court is satisfied that time and effort manifestly has been wasted in terms of any particular argument I discern no basis for revisiting these issues from a purely costs’ standpoint…””

31.  Although the above judgment was given with regards to a commercial dispute, I am of the view the principles and observations are equally applicable in the family court when considering costs.

32.  Save and except where the issues raised are considered frivolous or unreasonable, the purpose of costs is not to penalize the parties for being unsuccessful in raising issues of contention. Furthermore, as stated by The Hon To J in KJ v KMLM and anor, where the parties genuinely seek adjudication of their disputes in ancillary relief proceedings, the starting point of “costs follow the event” is easily displaced (see paragraph 16 of the judgment).

33.  Due to the high conflict between the Wife and the Husband, the ancillary relief trial was unavoidable from the very start. Even if the Husband conceded on the value of the SCBS, there were other numerous issues the parties continued to disagree on. I therefore do not accept Mr. Todd’s submission that the determination of the valuation of SCBS in the Wife’s favour ultimately makes her the successful party.

34.  I maintain my view at paragraph 100 of the Decision. Neither party could be viewed as being the successful party in these ancillary relief proceedings. I do not accept that I should now adopt an approach of weighing each issue against their monetary value in determining whom should be considered the successful party. I also do not accept the approach of listing out all issues and calculating who has won the most issues to be the correct way to assess costs in the present case. As I have stated, both parties have raised many issues in the proceedings and both were successful in some and not the others.

35.  As for the submission relating to the Calderbank offers, I do not accept the Wife’s offer is similar to the court’s ultimate determination. In my view, the parties’ respective offers were vastly different from the ultimate order made in the Decision.

36.  I therefore do not accept the costs order nisi should be varied.

SUMMARY

37.  By reason of the matters set out above, I dismiss both the Petitioner’s Summons and Respondent’s Summons.

38.  Since both parties are unsuccessful in obtaining leave to appeal, I make no order as to costs of their respective applications. However, I am of the view that in so far as the Wife’s application to vary the costs order nisi is concerned, I am of the view that costs should follow the event.

39.  I make the following orders :

1)  The Petitioner’s Summons and Respondent’s Summons be dismissed.

2)  There be no order as to costs of the Respondent’s Summons.

3)  There be no order as to costs of Paragraphs 2 and 3 of the Petitioner’s Summons.

4)  Costs of Paragraph 1 of the Petitioner’s Summons be to the Respondent, to be summarily assessed.

5)  The Respondent shall lodge and serve his statement of costs relating to Paragraph 1 of the Petitioner’s Summons within 28 days of the handing down of this judgment.

6)  The Petitioner shall lodge and serve her grounds of objection to the Respondent’s statement of costs within 28 days thereafter.

7)  No further submissions be lodged by the parties unless with the leave of the court.

8)  The summary assessment of Paragraph 1 of the Petitioner’s Summons shall be dealt with by way of paper disposal.

9)  The stay of execution ordered on 13 November 2025 be lifted and discharged.