C v. H

CACV 169/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 169 OF 2012

(ON APPEAL FROM HCMC NO. 3 OF 2011)

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REASONS FOR JUDGMENT

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Hon Fok JA (giving the Reasons for Judgment of the Court):

1.  This was an appeal by the respondent husband in respect of certain costs that he was ordered to pay to the petitioner wife by a Decision on Costs of J. Poon J dated 4 June 2012. Being an appeal on costs only, leave to appeal was required and this was granted by the Judge on 24 July 2012.

2.  At the conclusion of the hearing before us, we allowed the appeal and substituted for the Judge’s costs order an order that there be no order as to those costs.  We indicated that we would hand down our reasons for judgment in due course, which we now do.

The procedural background

3.  The appeal arose in the context of ongoing matrimonial proceedings between the petitioner wife and respondent husband.  In August 2010, the wife obtained an order from C.K. Chan DJ for the payment by the husband of maintenance pending suit (MPS).  Initially the husband paid MPS under that order but, due to his alleged inability to pay, he ceased doing so in November 2011 and paid a lesser amount instead.   In December 2011, the wife then issued a judgment summons to commit the husband for contempt and, on 8 March 2012, the husband in turn applied to vary downwards the amount of MPS.

4.  Those applications are peripheral to the main piece of litigation between the parties, which is the trial of the financial relief proceedings brought by the wife under Part IIA of the Matrimonial Proceedings and Property Ordinance (Cap. 192).  That trial is presently proceeding before Deputy High Court Judge B. Chu.

5.  At a hearing on 9 March 2012, J. Poon J heard submissions from the parties’ counsel as to the directions he should give for the hearing of the variation application and the judgment summons respectively.  He ordered that both matters be heard together in open court, that there be no oral evidence from the parties but only affirmations, and that a hearing of two days’ length be fixed.

6.  In early April 2012, on the application of the wife, that hearing was fixed for 13 and 14 June 2012.

7.  On 18 April 2012, the wife filed her 26^th affirmation in reply to the husband’s application to vary the MPS.  This was a lengthy document of some 316 pages including its exhibits.  In addition to resisting the husband’s application to vary the MPS downwards, the wife’s affirmation sought an increase in the amount of MPS.

8.  On 26 April 2012, the husband applied to the Judge for leave to appeal against his order of 9 March 2012 that the variation application and the judgment summons both be heard in open court.  The Judge refused this application.  In the course of the hearing, the Judge invited the parties’ counsel to consider whether the length of the hearing was sufficient.  He also delayed the start date of the hearing of the variation application and judgment summons by one day so that the hearing was then fixed for 14 and 15 June 2012.

9.  On 14 May 2012, a directions hearing took place at which the Judge dismissed an application by the husband to adjourn the June hearing of the variation application and the judgment summons, set down the main trial for financial relief for 25 days commencing on 2 January 2013 and fixed a further directions hearing for 21 May 2012.

10.  On 18 May 2012, the Court of Appeal heard the husband’s renewed application for leave to appeal against the order that the variation application and the judgment summons both be heard in open court.  The Court granted leave and allowed the appeal (see [2012] 3 HKLRD 351), directing that the judgment summons should be dealt with in open court after the variation application had first been dealt with in chambers.

11.  At a further directions hearing before the Judge on 21 May 2012, the Judge inquired of the parties about evidence for the variation application and whether two days would be sufficient for the hearing of that application and the judgment summons.  The wife’s counsel indicated that she would require 1 to 1½ days to cross-examine the husband (although this estimate was subsequently revised to 3 hours).  She also indicated that the wife would seek to use her 32^nd affirmation for the purpose of that application and leave was granted by the Judge at the hearing to permit her to do so.  The Judge also directed the husband to indicate in writing the number and identity of witnesses he intended to call on the variation application and directed both parties to file notices setting out their respective time estimates of the various elements of the hearing of the variation application.

12.  Before 4 June 2012, the husband filed the various documents as directed by the Judge at the 21 May 2012 directions hearing.  The wife likewise filed a time-estimate for the hearing indicating a reduced estimate for cross-examination of the husband of 3 hours only.

13.  At the hearing on 4 June 2012, the Judge granted leave to the husband to file his 22^nd affirmation (in answer to the wife’s 26^th affirmation) one day out of time.  The Judge also noted that there was then substantial overlap between the evidence to be covered at the variation application and the main trial for financial relief so that the two days fixed for the hearing of the variation application and judgment summons in June 2012 would not be sufficient.  He therefore fixed the main trial to be heard commencing on 10 October 2012 (for 25 days), which is now proceeding before the Deputy Judge, and vacated the June hearing of the variation application and judgment summons.

14.  In his decision on costs, the Judge said this:

“10. In my view, H was clearly responsible for the vacating of the June Hearing Dates. At the hearing on 9 March 2012, I set the matters down for a two day hearing based on counsel’s submissions. There was no indication that H might wish to cross-examine W or the other two individuals or call any witnesses. He did not do so until 22 May 2012. And if his application to call the 9 witnesses were acceded to, the Application could in no way finish on 14 and 15 June. More importantly, the Application would effectively be turned into a full blown trial of the financial relief under Part IIA, which is plainly undesirable. The June Hearing Dates were sabotaged as a result of what H had done. H’s litigation conduct is simply intolerable. He must be visited with costs to be assessed forthwith.”

15.  On the basis of a hand-written skeleton bill prepared by the wife’s solicitors, he then dealt with the quantum of such costs as follows:

“11. On quantum, [counsel], for W, produced a short skeleton bill for the sum of slightly over HK$940,000, of which HK$500,000 was earmarked for counsel fees. She frankly told me that brief had not been delivered but counsel’s fees had been committed. [Counsel], for H, only submitted that the costs claimed were grossly excessive. After considering the matter in the round and to mark the court’s strong disapproval of H’s litigation conduct, I was of the view that a sum of HK$750,000, inclusive of counsel fees, was reasonable. And I so assessed the costs.”

The appeal

16.  By his amended notice of appeal, the husband sought, in place of the Judge’s order as to the costs of and occasioned by the adjournment of the hearing on 14 and 15 June 2012, an order that there be no order for costs of the adjournment of that hearing.

17.  An award of costs is an exercise of discretion and it is, of course, trite that the Court of Appeal will only interfere with a judge’s exercise of discretion in very limited circumstances.

18.  On the question of liability for costs, it was the husband’s contention that the costs order was erroneously made against him because it was clearly not his fault that the June hearing was vacated and the Judge’s conclusion that this had occurred due to his fault was wrong as a matter of fact.  The consequent exercise of discretion based on that erroneous conclusion was therefore flawed.

Was the husband clearly responsible for vacating the June hearing dates?

19.  This was the conclusion of the Judge in his Decision on Costs.  However, with respect to the Judge, it seems to us that this conclusion is not borne out by the history of the matter.

20.  At the directions hearing on 9 March 2012, counsel for the wife put forward a time estimate for the variation application and the judgment summons of one day contending that oral evidence would not be necessary.  Counsel for the husband made it clear, however, in answer to an inquiry from the Judge, that he did not suggest that two days would be sufficient for the hearing of the variation application and the judgment summons.  He was therefore not committing to that time estimate for both matters.

21.  It was suggested by Mr Eric Leung, counsel for the wife, that the husband’s counsel appearing at the 9 March 2012 directions hearing ought to have considered the scope of the issues in the variation application and the time that would be required to hear that application.  However, at this stage, only the husband’s affirmation in support of the variation application had been filed and it was only on 26 April 2012 that the wife’s 26^th affirmation was filed.  Neither the husband’s counsel nor the Judge was apprised on 9 March 2012 that the wife would in turn be seeking an upward variation in MPS on the variation application.

22.  It is clear from the transcript of the directions hearing on 26 April 2012 that the Judge was alive to the possibility that two days might not be sufficient to dispose of the variation application and the judgment summons and indicated that “the parties may wish to reconsider the actual length of the hearing and have the matter re-fixed”.

23.  The effect of the decision of the Court of Appeal on 18 May 2012 was that the variation application would be heard first in chambers and then the judgment summons would be heard in open court.  This change to the mode of hearing of the two matters did not, however, affect the time estimate of two days.  Depending on the matters raised in the variation application, it might have remained possible for the judge hearing the variation application to give a ruling on that application and then adjourn immediately into open court to hear the judgment summons.

24.  It is apparent from the transcript of the hearing on 21 May 2012 that this was the first time the parties’ minds were specifically directed to the question of the ambit of the hearing of the two applications and their length.  Thus, it was at this hearing that the Judge directed the husband to give an indication in writing as to the number and identity of the witnesses he would call for the variation application. The Judge reiterated his earlier concern as to the sufficiency of the length of the hearing for the variation application and raised the question of whether, if oral evidence were going to be received, that might have an impact on its length.  The Judge then directed the parties to provide him with a template setting out the components of the hearing and their estimates of time for each for the variation application, including the time for opening, cross-examination and closing.  The Judge would plainly have needed this information from the parties in order to resolve his concern as to whether the two days fixed for the hearing in June was sufficient.

25.  It was in response to these directions that the husband filed his estimate of the components for the hearing of the variation application dated 25 May 2012, indicating a total of 13 hours, and filed a revised list of intended witnesses dated 28 May 2012, identifying a desire to call eight witnesses and to cross-examine the wife and two of her witnesses.  For her part, the wife filed an estimate of the components for the hearing of the variation application dated 31 May 2012, revising downwards the time for cross-examination of the husband to 3 hours. Those estimates showed that the two day estimate for the variation application and the judgment summons would not be sufficient.

26.  It was in these circumstances that the matter came back to the Judge on 4 June 2012.  At that time, it was apparent that there was going to be substantial overlap between the evidence for the variation application and the main trial itself. Fortuitously, the court’s diary was able to accommodate the advancement of the trial dates to a time slot in October this year.  Since it would be disproportionate to hear a lengthy variation application followed relatively shortly by a full trial of the application for financial relief, the Judge sensibly vacated the hearing dates in June for the variation application and stood that over to be heard together with the full trial.  The judgment summons will fall to be dealt with in accordance with the Court of Appeal’s order dated 18 May 2012.

27.  In the circumstances, it seems to us that it is not correct to lay the blame for the vacation of the June hearing dates solely at the door of the husband.  With respect to him, insofar as he did so in his Decision on Costs, the Judge erred.  That is not to say that the husband was wholly blameless for the situation, but nor was the wife.  The parties and their legal representatives were under an obligation, pursuant to RHC O.1A r.3, to assist the Judge to further the underlying objectives of the rules.  It was not until after the directions hearing on 21 May 2012 that the parties properly identified the components of the hearing of the variation application and the time estimates for those components.  A more proactive approach might have led to those being identified earlier, perhaps on a preliminary basis, at the 9 March 2012 hearing or the 26 April 2012 hearing, but the fault for this not being done cannot, we think, be attributed solely to one party rather than the other.  For example, the wife did not indicate at the hearing on 9 March 2012 that there would be cross-examination of the husband or that she would be applying for an increase in the MPS.

28.  Ultimately, the reason the June hearing had to be vacated seems to us to be a combination of the late identification of the issues and evidence for the variation application and the reality that, once earlier trial dates were available, it would not be cost-effective to proceed with the variation application prior to the trial itself.  The husband certainly cannot be said to be solely to blame for either of these matters.

29.  In the circumstances, the Judge’s premise for the costs order was erroneous, which entitles this Court to exercise a fresh discretion.  Since both parties were to some extent to blame for the Judge’s lack of information as to what would be a realistic time estimate for the hearing of the variation application and the judgment summons, and since the advancement of the trial dates was fortuitous due to the court’s diary, it seems to us that the proper order is that there be no order as to costs of the adjournment of the June hearing.

Quantum

30.  The second ground of appeal advanced by the husband was that, even if he should bear the costs of and occasioned by the adjournment of the June hearing dates, those costs should not have included (1) the element of counsels’ fees which were represented by counsels’ briefs, and (2) the element of overlap between the preparation for the variation application and the main trial.

31.  It is not necessary, in the light of our conclusion as to the liability for costs, to address this ground of appeal at length. However, the recoverability of fees committed to be paid to counsel under a brief is a point of some general relevance.

32.  The Judge, in his assessment of the costs, clearly allowed a substantial proportion of the fees indicated in the skeleton bill as being “Counsel fee (briefs)” in the sum of HK$500,000.  However, counsel for the wife properly informed the Judge that the brief or briefs had not been delivered but that counsel’s fees had been committed.

33.  Mr Leung cited Loveday v Renton (No.2)[1992] 3 All ER 184 for the proposition that fees of counsel for preparation work done before the delivery of a brief could be recovered as part of the brief fee on taxation. This is also reflected in Hong Kong Civil Procedure 2012 Note 62/App./31 (pp. 1172-1173).  Thus, he submitted that the brief fee should therefore be payable despite its not having been physically delivered.

34.  We do not agree.  The necessary trigger for the taxation of the costs of counsel for a court hearing is the delivery of the brief to counsel.  That is the document to which the taxing master will primarily look to when taxing costs for a court hearing.  The backsheet, signed by the instructing solicitor, is the document (i.e. delivered brief) which a barrister is required to have when he appears in court (Code of Conduct, paragraph 73B).  He must also keep a copy of the backsheet for a period of two years (ibid., paragraph 73G) and may be required to produce it for inspection (ibid., paragraph 73H).

35.  Here, the fees of counsel may have been committed such that the instructing solicitor undertook to pay them to counsel even before the delivery of the brief but that does not alter the fact that, from the perspective of the husband ordered to bear the wife’s costs, the husband should not have a liability for those fees since the triggering event making them payable had not occurred.

36.  Further, the costs assessed by the Judge must, it seems to us, have included items which would duplicate work that would be necessary for the main trial.  In those circumstances, some discount for that duplication should have been applied.  But, since the appeal has succeeded on liability, it is unnecessary to attempt to quantify the appropriate discount.

Disposition and costs

37.  For these reasons, we allowed the appeal and substituted for the Judge’s costs order an order that there be no order as to the costs of the adjournment of the hearing fixed for 14 and 15 June 2012 of the variation application and the judgment summons.

38.  We also ordered that the costs of the appeal be paid by the wife to the husband, to be taxed if not agreed.