FYK v. HCC

FCMC 7022 / 2021

[2023] HKFC 84

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 7022 OF 2021

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DECISION
(Variation of costs order nisi)

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Introduction

1.  I handed down my judgment on 20 December 2022 (“the Judgment”) in respect of the petitioner’s (“the wife’s”) summons for (i) maintenance pending suit (“MPS”) pursuant to section 3 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“the MPPO”) and (ii) litigation funding. In the Judgment, I ordered the respondent (“the husband”) to undertake to continue to pay the mortgage repayments of the matrimonial home, an addition HK$15,000 MPS to the wife and a one off payment of HK$30,000 as litigation funding. I so ordered on a nisi basis that there be no order as to costs of the wife’s summons (“the costs order nisi”).

2.  The wife applied to vary costs order nisi that the husband do pay 60% of the costs of her summons (including all costs reserved), to be taxed if not agreed. The husband opposed by saying the wife’s litigation conduct was unreasonable.

3.  The facts of the petition have sufficiently appeared in the Judgment. I do not intend to reproduce the details here.

The wife’s application

4.  The wife’s variation on costs order nisi application is premised on the without prejudice negotiation on settlement on MPS and litigation funding. The wife says the husband has best offered $10,000 per month on MPS but no offer on provision of litigation funding. The amount decided in my judgment on the MPS application was 60% of the sum awarded. In that regard, the wife is seeking the husband to pay 60% of the costs of the wife’s summons.

The husband’s opposition

5.  The husband opposed by saying the wife was unreasonable by asking for an unrealistic sum in light of both MPS and litigation funding.

Applicable principles on variation on costs

6.  Issue on costs is governed by Order 62 rule 3(1) and (2) of the Rules of District Court, Cap 336H (“the RDC”).

“3. Order as to entitlement to costs (O. 62, r. 3)

(1) Subject to the provisions of this Order, no party shall be entitled to recover any costs of or incidental to any proceedings from any other party to the proceedings except under an order of the Court.

(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.”

7.  In short, the starting point should be costs follow the event. Nevertheless, the Court has a wide discretion to award costs including deviation from the general principle if there are special circumstance to justify.

8.  In light of family proceedings, HK v. BD [2011] HKFLR 66 is still good law in deciding costs, Hartmann JA (as he then was) enunciated the following:

“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.”

9.  The husband is alleging the wife of unreasonable conduct, in regard of this, Butler-Sloss LJ in Gojkovic v. Gojkovic [1992] Fam 40 ([1991] 2 FLR 233 at page 238-239) sets out matters the Court might need to take into account in deciding costs:

“There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation: for instance (as I have already indicated earlier) material non-disclosure of documents. Delay or excessive zeal in seeking disclosure are other examples. The absence of an offer or of a counter-offer may well be reflected in costs – or an offer made too late to be effective. ... It would, however, be inappropriate, and indeed unhelpful, to seek to enumerate and possibly be thought to constrain in any way, that wide exercise of discretion. But the starting point in a case where there has been an offer is that, prima facie, if the application receives no more or less than the offer made, she/he is at risk not only of not being awarded costs, but also of paying the costs of the other party after communication of the offer and a reasonable time to consider it. That seems clear from the decided cases and is in accord with the Rules of the Supreme Court and the County Court Rules 1981 requiring the court to have regard to the offer. I cannot, for my part, see why there is any difference in principle between the position of a party who fails to obtain an order equal to the offer made and pays the costs, and a party who fails by the offer to meet the award made by the court. In the latter case prima facie costs should follow the event, as they would do in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position”.

Discussion

10.  The husband submitted the wife had acted unreasonably in her MPS application by refusing to file evidence on time that parties needed to attend the hearing on 9 June 2022. Prior to the hearing, the husband’s solicitors had already written to the wife’s solicitors for directions to dispose of the wife’s MPS as early as 27 May 2022. However, the parties then engaged in exchanges on the timeline to file affirmation in opposition and answers. 

11.  I agree, only to some extent, that a portion of the costs of the hearing on 9 June 2022 could have avoided when parties could have agreed on directions to dispose of the MPF application. Yet, the said hearing was still necessary because directions variation of custody and ancillary relief matters were given.  In this regard, I do not agree the wife’s conduct is wholly unreasonable, the husband has pitched his case too high to say this.

12.  The husband further alleged the wife’s solicitors were inadvertent by failing to plead the relevant section for the wife’s MPS application in her summons. Again, I do see this could be categorized as unreasonable behaviour for reason that it was the wife’s solicitor’s omission. I have duly awarded costs of the amendment to the husband.

13.  Premised on the above, the husband’s allegation on the wife’s unreasonable litigation behaviour failed.

14.  Having said that, I shall then to decide whether, as submitted by the wife, that the husband should bear 60% of the costs of the wife’s summons simply by comparing the outcome of the sum awarded against the sum the wife had asked for. In Gojkovic v. Gojkovic, it was said the unsuccessful party shall pay costs of the successful party if the former failed to obtain an award equal to the offer made by him. The husband has once offered to pay HK$10,000 without offer on litigation funding. The wife counteroffered HK$25,000 MPS and HK$10,000 litigation funding on a monthly basis.

15.  In my judgment, the wife succeeded in obtaining an order on MPS higher than that of the husband’s offer, in principle, she is entitled to costs of the monthly MPS.

16.  Nevertheless, the wife sought in her summons (i) MPS and (ii) litigation funding separately. 

17.  The reason of awarding a one-off $30,000 litigation funding for meant to facilitate settlement between the parties up to FDR stage. I do not see she has ample evidence in succeeding in obtaining HK$10,000 per month as requested. In family proceedings, the Court is empowered with a broader-based discretion on costs, when the wife’s evidence on litigation funding is revisited here, I intend to repeat her evidence is insufficient to succeed. It would be right for husband to say the wife has failed in her application for litigation funding. Applying the same principle, the husband is therefore entitled to costs of the wife’s summons on litigation funding.

18.  With a view to avoid incurring further costs, it is fair for me to award no order as to costs of the wife’s summons on MPS and litigation funding.

19.  I am not persuaded that the wife has put forward adequate reasons for me to vary the costs order nisi, her summons shall be dismissed.

Costs

20.  The outcome of this application warrants costs to follow event, I make an order nisi that the wife to pay the husband’s costs of her summons on variation on costs order nisi of the judgment handed down on 20 December 2022 forthwith, to be taxed if not agreed. The usual order that this costs order nisi shall be made absolute in absence of application to vary by way of inter parte summons within 14 days from the date of this decision.

Orders

21.  With reasons of the foregoing, I make the following orders:

(i)   The costs order nisi granted on 20 December 2022 be made absolute.

(ii)  The wife (the petitioner) do pay the husband’s (the respondent’s) costs of this summons forthwith, to be taxed if not agreed.  This costs order nisi shall be made absolute in absence of application to vary by way of inter parte summons within 14 days from the date of this decision.