CR v. MRQ

FCMC 2706 / 2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 2706 OF 2008

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R U L I N G 

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1. This is a hearing to determine costs following my judgment of the 3 November 2009 in relation to ancillary relief. In the final paragraph of that judgment I said as follows:

Costs

66.   Taking into account the Husband’s approach to disclosure, which is not to be encouraged and the fact that the Wife’s own disclosure on income was found to be wanting, together with the fact that the Wife really had no option but to litigate this matter, I will make an order nisi, to be made absolute in 14 days, that the Husband pay 2/3 of the Wife’s costs on a party and party basis to be taxed if not agreed. There shall be certificate for counsel.

2. The wife now says that she should have all of her costs because a) on a correct reading of the judgment she is entitled to her costs, b) she has matched and perhaps could be said to have slightly bettered the calderbank offer made prior to trial, and c) there is a duty to negotiate and the husband refused to do so. For his part, the husband says that a) there had been a long history of negotiation prior to proceedings being issued and that b) the order nisi simply reflected my findings in relation to the litigation conduct on both sides. The husband’s lawyer proposed that the wife should receive 75% of her costs as a reflection of those findings.

Background

3. I have set out the background to this case in my judgment of the 3 November 2009.  I will not repeat the same here.  As indicated in that judgment, this case centred on the wife’s entitlement to a share of the parties’ assets where the marriage was short, the husband was by all accounts wealthy and the parties had enjoyed a very high standard of living during the course of the marriage. There were no children of the family. The husband’s approach during the trial was that the wife was not entitled, either morally or legally, to a share of the asset base.

The law

4. The law in relation to costs is well settled.  I have referred to this in my Ruling of FCMC 11958 of 2006, unreported. In that Ruling I referred to the following excerpt from Butler-Sloss LJ in the leading case of Gojkovic v Gojkovic [1992] Fam 40 where it is stated as follows:

 “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”.

5. Clearly the issue of costs lies in the discretion of the court and costs are normally expected to follow the event.  This presumption is more easily displaced in family proceedings that in others.  Although I may be influenced by the existence of calderbank offers, they cannot be said to bind the exercise of my discretion.  (See In re Elgindata Ltd (No.2) [1992] 1 WLR)   

Discussion

Litigation conduct of the parties

6. When hearing argument on this matter the old maxim “two wrongs do not make a right” came to mind. To an extent both parties have been guilty of litigation misconduct.

7. In the judgment I criticized the husband’s approach to disclosure. Certainly I do not accept the suggestion made by his solicitor that at the end of the day his material non-disclosure “didn’t make any difference”. For the avoidance of doubt there is always a clear duty on all parties to make full and frank disclosure of their assets and their financial position generally. In this case the husband effectively ran a millionaire’s defence. In the post-White era, this is no longer an appropriate approach to take in any form of family litigation.

8. I also found that the husband was wrong in law, as clearly the wife was entitled to something.

9. But I also found that the wife’s own approach to disclosure was somewhat lacking. It is submitted on behalf of the wife that “... compared to the Husband’s lack of disclosure however, both in terms of the amounts involved and the overall impact on the case, this was proportionally insignificant”. Although that may be the case, that does not in any way excuse the wife for her own non-disclosure. Two wrongs certainly do not make a right and she must bear some responsibility for the way in which the trial developed.

10. It is suggested that this would have been circumvented had the husband’s lawyer approached the issue of discovery correctly and had he filed a Request for Further and Better Particulars at the correct time. I accept this up to a point. Certainly the correct approach is to issue a Request where there are any factual queries arising out of the disclosure given. This was not done and I accept that it should have been. But over and above that, it was still open to the husband to cross-examine the wife on her own evidence. Even after the adjournment and even after having given the wife the chance to check the position fully she did not, in my view, fully come up to proof. It is suggested by counsel for the wife that this was “not fair” to the wife as she was trying to produce information without having the benefit of being able to discuss the position fully with her legal team, as she was half way through giving her evidence at the time. Although that may be so, I remain unconvinced that the outcome would have been significantly different had the correct procedure been adopted. There was also an onus on the wife’s legal team to have anticipated the areas of concern identified by the husband, albeit somewhat late in the day.

The history of offers made, including the calderbank offer

11. It appears that the parties were negotiating prior to proceedings being issued. Unfortunately these negotiations broke down. On the 30 January 2009 the wife sent a calderbank letter to the husband in which she said that she was prepared to accept a lump sum of HK$5 million in full and final settlement, HK$4 million to be paid upon the making of the order and the remaining HK$1 million to be paid within a year. At that time the wife’s legal costs stood at HK$220,000. She asked for a contribution towards her costs of HK$145,000. The husband did not respond to that letter. His stance until shortly before the trial was, as I have said, that the wife was entitled to nothing. At trial he said that he was prepared to pay her HK$2 million in full and final settlement. This offer was so late coming that it could be said to be “too late to be effective”.

12. The wife was awarded HK$5 million payable within 28 days. The amount payable is the same. She can be said to have bettered the calderbank letter simply on the basis of the timing of the payment. Her costs to date now stand at just under HK$890,000. The husband’s costs were put at in the region of HK$600,000. It goes without saying that a great deal of money not to mention emotional angst and court time could and should have been saved had the parties settled. 

13. For the avoidance of doubt I would also like to reiterate the fact that there is a duty on the parties to negotiate and that where one party unreasonably refuses to do so then that party runs the risk of being penalized on costs. Here the husband refused to negotiate after the first round of negotiations. He must therefore bear some responsibility for that and the legal costs that amassed as a result.   

Conclusion

14. Having now considered all the relevant factors, I will order that the husband pay a greater contribution towards the wife’s costs than I originally ordered. The husband shall pay 90% of the wife’s costs to be taxed if not agreed. Given that neither party has been wholly successful in relation to the costs, I shall make no order as to the costs of and occasioned by this hearing itself. It seems to me that this properly reflects each parties approach to the case, my findings and the additional information that has now been brought to my attention. All costs to be taxed on a party and party basis if not agreed. There shall be a certificate for counsel.