LPM v. LKH

FCMC 844 / 2019

[2023] HKFC 55

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 844 OF 2019

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RULING ON COSTS

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1.  By the Judgment dated 7 October 2022 (‘the Judgment’), it was ordered that there be no order as to costs of the ancillary relief proceedings including reserved costs.

2.  This is the hearing of the petitioner wife (‘W’)’s summons filed on 21 October 2022 to vary the costs order nisi given in the Judgment such that there be no order as to costs of the ancillary relief proceedings until 18 May 2021 and the respondent husband (‘H’) do pay W the costs thereafter with certificate for counsel, to be taxed if not agreed, and costs of the application.

3.  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 the matters set out under O.62 r.5(1). For the purpose of the present application, they include: -

(i)    The underlying objectives set out in Order 1A, rule 1 (O.62 r.5(1)(aa));

(ii)  Any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings (O.62 r.5(1)(d));

(iii)   The conduct of all the parties (O.62 r.5(1) (e)); 

(iv)   Whether a party has succeeded on part of his case, even if he has not been wholly successfully (O.62 r.5(1)(f)); and

(v)  Any admissible offer to settle made by a party, which is drawn to the court’s attention (O.62 r.5(1)(g))

4.  O.62 r.5(2) provides that conduct for this purpose includes (a) whether it is 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.

5.  Under Order 62 rule 5(1)(d), the court may take into account “without prejudice save as to costs” offers.

6.  The chronology relating to without prejudice save as to costs correspondence exchanged between the parties is as follows: -

(1)  By the letter dated 2 June 2021, H offered that: (i) the property known as 46F, registered in his sole name, would be put up for sale; (2) he would be responsible for the sale; and (3) He would accept 35% of the distributable assets (valued at HK$22.6 M) i.e. the sum of HK$7,910,000 from the proceeds of the sale for full and final settlement.

(2)  By the letter dated 21 June 2021, W counteroffered that H could have 33% of HK$22,550,463.22 i.e. HK$7,441,653 out of the proceeds of the sale of 46F for full and final settlement and that H should give W a power of attorney in favour of W so that she would be solely responsible for the sale of 46F.

(3)  By the letter dated 28 June 2021, H proffered 34% and repeated that he should be the person who was responsible for the sale of 46F.

(4)  By the letter dated 15 July 2021, W repeated her offer dated 21 June 2021. In addition, in the draft consent summons enclosed thereto, W purportedly gave the undertaking that she would be fully responsible to maintain the child of the family.

(5)  By the letter dated 3 August 2021, W sent out a draft power of attorney for H’s perusal and consideration.

(6)  By the letter dated 9 August 2021, H intimated that he would accept 33% instead of 34% if it was paid in cash within 14 days of the decree absolute and upon the condition that 46F would be sold by public auction.

(7)  By the letter dated 11 August 2021, W said there was a potential purchaser for 46F, H was asked to execute a provisional agreement for sale and purchase before the end of August 2021 and she proposed that the parties would jointly engage Messrs Woo Kwan Lee & Lo as solicitors to take care of the conveyance of 46F.

(8)  By the letter dated 17 August 2021, H was insistent on the sale of 46F by public auction, his request for 34% and that he would accept 33% if it was paid in cash within 14 days of the decree absolute.

(9)  By the letter dated 23 August 2021, W repeated the offer of 33% out of the proceeds of sale of 46F and enclosed thereto the draft consent summons and the provisional agreement for sale and purchase of 46F already signed by the purchaser and witnessed by the estate agent for H’s perusal. In the draft consent summons, it was provided that H would pay W $2,650 per month for the maintenance of the child of the family.

(10)  By the letter dated 24 August 2021, H he repeated his request for 34% and revised his position to that he would accept 33% calculated on the actual consideration of 46F and the updated value of the other landed properties available for distribution. He also took issue on some of the terms of the draft consent summons and the date of completion of the sale of 46F as set out in the executory provisional agreement for sale and purchase.

(11)  By the letter dated 24 May 2022, W revised her offer to: - (i) 46F would be sold immediately; (ii) W would have the conduct of the sale and H would execute a power of attorney in favour of W; (iii) a lump sum payment of HK$7,10,000 to H out of the net proceedings of sale of 46F; (iv) W was fully responsible for the child of the family’s expenses and H was discharged from any liabilities from arrears of payment of the child’s interim maintenance.

7.  By the Judgment, it was ordered that W should retain 60% of the net assets available for distribution and H should have the remaining 40%. According to the Judgment, the distributable assets were valued at HK$24,299,935.59. Taking into consideration HK$8,776,000 having been set aside for the future needs of the child of the family, this means that W will have (HK$24,299,935.59 – 8,776,000) = 15,523,935.59 x 60% = HK$9,314,361.35 and H will have HK$6,209,574.23 respectively. W contends that each and every settlement offer via W’s without prejudice save as to costs letters respectively dated 18 May 2021, 21 June 2021, 15 July 2021, 11 August 2021, 23 August 2021 and 24 May 2022 beat the amount awarded by the court, in support of the present application.

8.  H contests that the “dollar and cent” approach taken by W cannot be right to evaluate and compare the offers made by W with the award made by the court as: -

(1)  H was prepared to accept 34% but W insisted that H should have only 33%;

(2)  The court does not accept W’s contention that the present case is a “needs case” instead of a “sharing case”;

(3)  All along H had no objection to the sale of 46F. As the registered owner of the said property, it is justifiable that he wanted to be responsible for the sale of the property.

(4)  In summary, there is nothing that warrants W to say her without prejudice save as to costs offers are better than the final disposal of the ancillary relief proceedings by the court.

9.  My view is as follows: -

(1)  In so far as W’s offers of 33% unequivocally beat the amount awarded by the court, I see little merit in the contention as set out in the above paragraph 8(1).

(2)  As to the above paragraph 8(2), taking into consideration, under O.62 r.5(1)(f), the court may consider whether a party has succeeded on part of his case, even if he has not been wholly successfully, I accept the fact that neither party is wholly successful no matter in terms of the arguments that they run for their respective cases or the outcome of their respective claims is a material matter to be taken into account.  

(3)  As to the above paragraph 8(3), I take into consideration: -

i.     It is always clear to both parties that W needs to pay H from the proceeds of the sale of 46F.

ii.    I accept that H might have concerns about giving a power of attorney in favour of W so much so that he would have no control on the manners/terms of the sale of 46F.

iii.   W has abandoned such request for a power of attorney in favour of her since 11 August 2021. By W’s letter dated 11 August 2021, H was asked to execute a provisional agreement for sale and purchase before the end of August 2021. At the same time, it is worthy of noting that the terms of the provisional agreement were not yet made available to H. As such, I accept that it is not unreasonable that H did not accept the offer by the letter dated 11 August 2021.

iv.   By the letter dated 23 August 2021, W repeated the offer of 33% out of the proceeds of sale of 46F and enclosed thereto the draft consent summons and the provisional agreement for sale and purchase of 46F already signed by the purchaser and witnessed by the estate agent for H’s perusal. Over and above, the provisional agreement for sale and purchase already signed by the purchaser and enclosed to W’s letter dated 23 August 2021 is apparently on the most usual terms that is no doubt acceptable to H as the vendor.

v.    By reasons of matters aforesaid, W’s without prejudice save as to costs offer by the letter dated 23 August 2021 not only is more generous than the court’s award in sum but is reasonably acceptable to H in the circumstance.   

10.  I remind myself of the provisions of Order 62 r. 5 that sets out the factors which the court shall have regard in exercising its discretion as to costs. I place significance on the fact that by 23 August 2021, W has made a without prejudice save as to costs offer that not only is more generous than the court’s award in sum but is reasonably acceptable to H. I also place significance on the fact that W has lost her arguments on many important issues at trial such as whether any of the parties’ assets be regarded as non-matrimonial property, whether the parties had separate finances during marriage, whether W is the sole beneficial owner of 46F, whether the outstanding mortgage loan of 46F is family liability or H’s personal liability. It is pertinent to take notice that a lot of the parties’ preparation work and the court’s hearing time have spent on those issues. I caution myself of the need to consider the overall justice of the situation and examine all the factors and circumstance and the underlying objectives in Order 1A. Looking at the matters in the round, I regard it is reasonable and just to make the order that there be no order as to costs of the ancillary relief proceedings until 23 August 2021 and H do pay W 50% of the costs thereafter including all reserved costs with certificate for counsel, with certificate for counsel’s attendance, to be taxed if not agreed.

11.  For my ruling in the above, I make the order that H do pay W of 50% of the costs of the present application including reserved costs with certificate for counsel, to be taxed if not agreed.