D, LAS nee S, LA also known as LAS v. D, JB also known as JBD

FCMC 11666/ 2016

[2018] HKFC 88

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11666 OF 2016

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RULING ON INDEMNITY COSTS

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Introduction

1.  On the 13 April 2018 the Respondent husband’s application for leave to appeal was listed for hearing with one hour reserved. This related to an order made by this court on the 14 December 2017 for an interim non molestation order against the husband with respect to both the wife and the two children of the family. The wife had significant concerns with respect to some of the husband’s behaviours and eventually she quite rightly sought the assistance of the court in that regard. An order was made and has since been extended (see also the court order dated the 13 April 2018). The husband issued an application on the 28 December 2017 seeking leave to appeal the order of the 14 December 2017. There has been no application in relation to the subsequent order.

2.  On the 13 April 2018 the husband withdrew the summons seeking leave to appeal. He accepted that he should pay costs to the wife on a party and party basis. He did not agree to pay the wife’s costs on an indemnity basis as requested. I therefore gave directions that both sides file short written submissions on the point and I further directed that the matter then be dealt with on paper only.

Background

3.  I do not intend to go into the background of the case in any detail, save that it is a highly toxic piece of litigation which to date has centred on the arrangements for the two children of the family.

The issue

4.  The only issue to be determined at this juncture however relates to the discreet issue of costs arising out of one application only. Should costs be awarded against the husband on a standard party and party basis or on an indemnity basis given, inter alia, that he withdrew his application for leave to appeal very late in the day?

Legal Principles

5.  Both parties have referred me to a number of different legal authorities. However, in the first instance I tend to agree with Ms Irving that it might be helpful to refer to my sister judge’s analysis of the correct approach in an unreported family case namely LYE and CWW and HWL, FCMC 14787 of 2002, 6 May 2005. In that case HH Judge Bebe Chu (as she then was) sets out the Legal Principles relating to indemnity costs as follows:

LEGAL PRINCIPLES

3.  According to Rule 3 of the Matrimonial Causes Rules, the Rules of the High Court (RHC) shall apply with the necessary modifications to the commencement of matrimonial proceedings in, and to the practice and procedure in matrimonial proceedings pending in the Court of First Instance or in the District Court.

4.  Rule 91A of the Matrimonial Causes Rules provides that where the costs of an incidental to any matrimonial proceedings are directed to be taxed, R.H.C. Order 62 shall have effect in relation to the costs of proceedings in the Court of First Instance, and R.D.C. Order 62 shall have effect in relation to the costs of proceedings in the District Court.

5.  Order 62 Rule 28(3) in both R.D.C. and in R.H.C. provides that the Court in awarding costs payable to one party by another may in any case in which it thinks fit to do so order or direct that the costs shall be taxed on the common fund basis or on the indemnity basis.

6.  Any order for costs is in the discretion of the Court.  (see Headnote of Re Engindata Ltd (No. 2) 1993 1 All ER 232).

7.  Section 53 of District Court Ordinance Cap. 336 (equivalent to Section 52A of High Court Ordinance Cap. 4) provides that the Court shall have full power to determine by whom and to what extent the costs are to be paid.  See also Hong Kong Civil Procedure, 62/2/5:-

“The Court of Appeal in Choy Yee Chun (The Representative of the state of Chan Pui Yiu) v. Bond Star Development Ltd [1997] H.K.L.R.D. 1327, CA reviewed the cases and summarised the law as follows. A taxation of the successful party’s costs on an indemnity basis could properly be ordered where the proceedings were scandalous or vexatious, or had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner. Any proceedings instituted or prosecuted in such circumstances as to constitute an affront to the court could properly be the subject of a direction for the taxation of the successful party’s cost on the indemnity basis. However, the circumstances in which an indemnity award might properly be made were not restricted to circumstances beyond the requirement that taxation on an indemnity basis must be “appropriate”. The principle for the award of an order of costs on an indemnity basis applied equally to those who not only instituted proceedings but who defended them. If a plaintiff had been forced to institute proceedings by the defendant whose conduct had been not only hostile in the normal litigious sense, but oppressive and with base ulterior motive, and if the pursuit of a defence constituted conduct which was part of an oppressive game plan, then invocation of the power to award costs on an indemnity basis might well be justified”.

HH Judge Chu continued

8.  I have been referred by the Petitioner’s solicitor, Mr. Ko, to the case of Re Tang Hong Yeun Andy HCB 19585 OF 2003 (at paragraph 18) quoting Choy Yee Chun (The Representative of the estate of Chan Pui Yiu) v Bond Star Development Ltd. [1997] H.K.L.R.D. 1327 CA, where it was held that the discretion was not to be fettered or circumscribed beyond the requirement that taxation on an indemnity basis must be “appropriate”.  See also Hong Kong Civil Procedure, 62/App/12.

9.  I have also been referred to the Judgment of the Court of Final Appeal in Town Planning Board v Society for Protection of the Harbour Limited.  FACV No. 14A of 2003, at paragraphs 12, 14, 15, 18 and 23 where the Court of Final Appeal has made the following comments:-

(a)  The Court has a broad discretion to determine how costs shall be paid and whether indemnity costs should be ordered (paragraph 12).

(b)  The successive party should show, in order to obtain an order for costs on an indemnity basis, that the case has some “special or unusual feature” (paragraph 15).

(c)  In relation to the award of costs generally, it has been accepted, as Chu J pointed out, that while

“the ground [upon which costs are awarded] must be connected with the case. This may extend to any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation, but no further”.

There is no reason why this statement does not apply with equal force to the exercise of the discretion to award indemnity costs (paragraph 18).

(d)  Other factors, such as the reasonableness of the conduct of the parties, may need to be taken into account (paragraph 23).

6.  Ms Irving for the wife also refers to Town Planning Board v Society for Protection of the Harbour Ltd No 2 (2004) 7 HKCFAR 114, which supports the general proposition that indemnity costs orders are based “on a wide range of factors and circumstances” and that an order must be “appropriate”. In particular, she said as follows in her written submission:

16.  The courts have rejected the proposition that an award of indemnity costs will only be made where a case has been brought with an ulterior motive or for an improper purpose or where there is some deception or underhand conduct on the part of the losing party. (Macmillan v. Bishopsgate Investment Trust Ltd, unreported, judgment delivered 10 December 1993 (Millett J); Disney v. Plummer, unreported, judgement delivered 16 November 1987 (English Court of Appeal)).  These decisions and the reasoning on which they were based have been endorsed by the Hong Kong Court of Appeal (Sung Foo Kee Ltd v. Pak Lik Co. (A Firm) at 575E-576F, per Godfrey JA; see also Choy Yee Chun v. Bond Star Development [1997] HKLRD 1327 at 1334G-1335I, per Stock J.)

17.  In these and other cases, courts have emphasised the undesirability of attempting to define the circumstances in which orders for indemnity costs are to be made.  It has been said that

“the discretion is not to be fettered or circumscribed beyond he requirement that taxation on an indemnity basis must be ‘appropriate’.”

(Macmillan v. Bishopsgate Investment,per Millett J; Sung Foo Kee Ltd v. Pak Lik Co. (A Firm) at 575E-576F, per Godfrey JA; See also Choy Yee Chun v. Bond Star Development Ltd at 1334G-1335I, per Stock J).

Discussion

7.  The wife argues inter alia that

27.  In this case, the Father’s conduct is absolutely appalling.  He has no regard for the costs he causes the Mother, then has his Counsel complain about the level of her costs.  He had known about the date of the leave to appeal application, his application, for two months, and he must have, or should have, had this in mind when he decided to change counsel and fail to prepare for the case.

28.  The distinct flavour is that not only does he not care what difficulties and costs he causes the Mother, he is actually rather pleased to do so, as part of his determined plan, seen throughout his litigation, of making her life as hard as he possibly can.

29.  The decision to pursue this application at all made no sense. He was seeking leave to appeal an interim Order, having agreed that the application would be adjourned to a fact finding hearing when he interim order would have been either replaced with a substantive order, or discharged.  The fact he was willing to do this indicated that he did not consider the interim order a matter of much gravity, or he would have sought an early date to have it discharged.  There is no point in seeking leave to appeal an interim order then being perfectly content for it to be in place for longer than it might have to be, rather than it being dealt with urgently.

8.  The husband for his part maintains that the late withdrawal of his application for leave to appeal does not put this application in the category of cases where an indemnity costs order might be appropriate. Ms Allison says on the father’s behalf that

19.  Unfortunately, the Interim Order has now been in place for a substantially longer period of time than was originally envisaged, and the substantive hearing of the DVO Summons has been delayed until October 2018. The Husband’s reason for withdrawing his Leave to Appeal Summons was due to the practical consideration that he did not want to further delay these proceedings.  There was a real concern that there could be further delays or adjournments in the Fact Finding Hearing and the DVO Summons, if judgment for the Leave to Appeal Summons was not handed down before October 2018.

20.  Bearing in mind the principles that parents should not be discouraged from taking a genuine interest in the debate regarding their children and costs orders are likely to exacerbate rather than calm down existing tensions, as reflected in the general practice of having no order as to costs in applications involving children, it is submitted that the Husband’s approach in offering the Wife’s costs on a party and party basis is reasonable in all of the circumstances.

Decision

9.  As things stand there has been no trial and no findings of fact made with respect to many aspects of this litigation. If at the end of the day, the wife is found to be correct in what she says then there may be a case for an order for indemnity costs generally. This is likely to include arguments with respect to the husband’s litigation conduct. I accept that those arguments may be advanced notwithstanding the fact that this is a children’s related matter.

10.  However, having said that, I also accept that I am currently concerned with one discreet point only arising out of the leave to appeal application and not the litigation generally.

11.  Although I accept the wife’s point that the court’s discretion is wide and that an order for indemnity costs is not limited to cases where a) there been either an ulterior motive and/or b) an improper purpose and/or c) oppressive conduct and/or d) an abuse of process, I am nevertheless of the view that it would not be appropriate to award indemnity costs in this particular instance.

12.  In the final analysis the husband withdrew his application for leave to appeal on the same day as the hearing. He should, of course, have done this much earlier and I accept that this action caused the wife to incur unnecessary legal costs. But, this is not the sort of litigation conduct that would normally be regarded as being so seriously deficient as to attract an indemnity costs order.     

Conclusion 

13.  In such circumstances the husband shall pay the wife’s costs of and occasioned by the withdrawal of the summons filed on the 28 December 2017 on a party and party basis to be taxed if not agreed. There shall be no order as to costs with respect to this application. There shall be certificate for counsel.