LCHJ v. SYMA

FCMP 28 / 2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS

NUMBER 28 OF 2014

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RULING
(Costs arising out of a successful FDR hearing)

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Introduction

1. This is the second time that I have been asked to determine the issue of costs in this litigation. On the first occasion I was asked determine costs when the Respondent father challenged an order nisi made by my fellow deputy judge that he do pay the mother’s costs arising out of an application for interim maintenance for the only child of the relationship a little girl M who is now aged 10 ½ years old. On that occasion I upheld DJ Chan’s original order and the father was ordered to pay the wife’s costs on a party and party basis to be taxed if not agreed. There was certificate for counsel. That Ruling is dated the 23 July 2014.

2. On the 3 July 2014 an order was also made for joint custody of the child with care and control to the mother and reasonable access to the father to include defined staying access. As is normal in circumstances such as this an order was also made that there be no order as to costs including costs reserved previously.

3. Thus this application is limited, rather strangely to the costs arising out of a successful FDR hearing when all outstanding financial matters were successfully compromised. This is in my experience very unusual. As pointed out by the solicitors for the father in his written submission:

(v) It is normal practice that parties would agree on costs issue together as a whole with the main issues in dispute. This is one of the rare cases, especially in the Family Court, that parties were able to agree on the main issues in dispute but could not agree on costs.

The issue

4. The issue then is what cost order would be appropriate in all of the circumstances of the case? The mother is asking that the father do pay all of her costs of the ancillary relief proceedings to include all costs reserved. The father is asking that there be no order as to costs.

The law

5. I set out the law in my ruling of the 23 July 2014, which for ease of reference I will repeat below as follows:

4.  The law in relation to costs is otherwise well settled. In the leading case of Gojkovic v Gojkovic [1992] Fam 40 Butler-Sloss LJ 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.  This general approach has been routinely adopted in Hong Kong. It has been said that the issue of costs lies in the discretion of the court and that costs are normally expected to follow the event. It is also accepted that this presumption is more easily displaced in family proceedings than in others – especially where there are matters to be resolved concerning children. I have noted however that in this instance that the outstanding issue in question although child related, was financial in nature.

6. Reference was also made to HK v BD, CACV 252 of 2009 unreported where the Hon Mr Justice Hartmann said as follows:

“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.

79. On behalf of the wife, the oblique criticism was made that the judge proceeded on the basis of “honours even”, that seemingly being the essential reason why he came to his determination that both parties should bear their own costs. We do not see that the judge can be criticised in that respect. If costs were to prima facie follow the event, it was necessary for the judge to identify who had been successful and who had not.

80.  But there were of course many issues which the judge in the present case had to take into account in considering how best to exercise his discretion as to costs.  It is a long established principle that, after analysing the case of each party, costs must be judged by way of overall impression.  They are not to be assessed by breaking down the litigation into its many component and interlocking parts in order to draw up some kind of profit and loss account……”

(Emphasis added)

I agree.

6.  Lawyers on both sides have referred me to these principles in their written submissions. In addition reference has been made to the Rules of the High Court, Order 62 Rule 5 and other cases where these same principles have been reiterated.

Discussion 

7.  Overall then it seems to me that there were three main issues that needed to be resolved at the FDR hearing – namely the level of maintenance to be paid by the father for the child of the relationship going forward, the contribution that he should make towards her moving costs and how the late payment of maintenance should be resolved.

8.  The parties agreed that:

a)   The father would pay HK$32,000 per month maintenance for the said child;

b)  The father would pay HK$23,500 for the child’s removal costs within 28 days;

c)   The father would undertake to set up a standing instruction for maintenance and ensure that he had sufficient money in his account to meet the monthly maintenance payments. He also agreed to pay an outstanding amount of HK$28,300 within 7 days being the outstanding amount that was due and owing at that time.

d)   There were also other miscellaneous agreements relating to things such as the payment for and method of reimbursement for school trips, piano examination fees and dental fees.

9.  I accept that the mother was more successful than the father in reaching agreement a) and c), whereas the father was more successful than the mother in reaching agreement b).

10. Historically the father had always contributed towards the child’s expenses by reimbursing the mother for items on a month by month basis upon the production of receipts. It has been argued by the father’s solicitor that this is a perfectly acceptable way of ensuring that a parent makes a regular and fair contribution towards the cost of a child’s upbringing. Whilst I would accept that in principle, it should also be noted that this mode of operation is not generally adopted in full or in relation to all expenses and while it is usual for some expenses to be paid upon production of receipts (e.g. extracurricular activities) it would not be normal for all to be paid in this manner. This is because it is also generally accepted that this can be cumbersome and difficult to enforce and can lead to constant friction between parties. It is also accepted that a non resident parent should contribute towards the general household expenses. It would not be normal in such circumstances to expect a parent to produce copies of all rental receipts, utility bills etc on a monthly basis. Instead the court would look at the expenses over a longer period of time and a monthly average would be calculated.

11.  The mother for her part argued that the father was not contributing enough towards their daughter’s expenses in any event. There was also a separate argument in relation to accommodation which was successfully resolved.

12.  At the end of the days I accept that the father agreed to pay significantly more than he had originally proposed. This was a significant compromise on his part. He also agreed, quite rightly, to put the necessary structures in place to ensure that the maintenance was paid on time. To that end and in the context of a compromised solution, the mother could be said to have “won”. However the mother’s stance in relation to the removal costs was not so reasonable. I accept that her original claim of HK$120,000 was very high and was unsupported by any documentary evidence. The breakdown that was eventually produced included items that were for the household or for the mother herself. She was also asking that the father pay for 100% of them – which was clearly untenable in the circumstances. The mother’s stance was difficult and I accept that her claims in this respect were exaggerated. The father eventually agreed to pay HK$23,500 – which was a 78% share of the agreed removal costs. Thus the father could be said to have “won” this point.

Conclusion 

13.  Looking at the matter overall then and not on an “honours even” basis, it seems to me that the most appropriate costs order is that the father do make a 50% contribution towards the mother’s costs of and occasioned by the ancillary relief proceedings to be taxed on a party and party basis if not agreed. This shall include the costs of this application. There shall be certificate for counsel.

14.  It seems to me that this order more fully recognises the fact that the mother had no option but to take the application that she did bearing in mind the fact that the father had at no point prior to the FDR hearing offered to pay her the maintenance as subsequently agreed, including the outstanding amounts. However this also recognises that this agreement was a compromise and that one of the significant sticking points on which the parties eventually reached consensus was the issue of the moving costs. Had the mother taken a more sensible approach in relation to the moving costs then agreement may very well have been reached sooner.