TWC v. LKL

FCMC 8460 / 2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 8460 OF 2012

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J U D G M E N T

(Maintenance Pending Suit: Legal Costs II)

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Background

1. This is the hearing of an application by the Petitioner (hereinafter called “W”)’s Summons dated 18 March 2014 for an order that the Respondent (hereinafter called “H”) shall make contribution to her legal costs in respect of her application for ancillary reliefs by way of periodical payments in the sum of HKD100,000 per month, or at such other rate as the court deems just and reasonable.  On 26 March 2014, W issued an application for the order for the periodical payments to be back dated from December 2013.

2. The court is very familiar with this case.  The background of the parties and their marriage was succinctly set out in the paragraphs [2] to [7] of the Judgment (Maintenance Pending Suit) made by Deputy District Judge A. Yim on 13 November 2012, by which it is ordered that H shall pay W a sum of HKD25,000 per month as maintenance pending suit.

3. By a Summons dated 12 March 2013, W made an application for an order that H shall make contribution to her legal costs in respect of her application for the custody, care and control of the child of the family. By a Judgment (Maintenance Pending Suit: Legal Costs) dated 25 June 2013, it is ordered that H shall pay W a sum of HKD58,000 per month from 12 April 2013 and thereafter on the 12^th day of each succeeding month until 12 September 2013, to be paid on account of any sum W will eventually receive when the question of ancillary reliefs is finally determined and on the condition that the said monthly sums are to be punctually paid by W to her solicitors on account of her legal costs for her application for the custody, care and control of the child of the family.

4. After a trial that lasted 9 days, by a Judgment (Care and Control) dated 12 December 2013 it is ordered that the joint custody of the child of the family shall be granted to the parties, with care and control to H and defined access to W. 

5. During the 1^st Appointment dated 17 March 2014, upon hearing solicitors for the parties, it is ordered that a FDR hearing shall take place on 24 June 2014.  Thereafter, W took out the present application.  Upon the parties’ joint application filed on 16 May 2014, by consent it is ordered that W’s present application shall be adjourned for argument and the FDR hearing fixed on 24 June 2014 is vacated.

Legal Principles

6. A discussion on the legal principles relevant to applications for contribution on legal costs pursuant to s.3 Matrimonial Proceedings and Property Ordinance, Cap. 192 can be found in the paragraphs [4] to [10] of the said Judgment dated 25 June 2013. 

Discussion

7. Mr Cheng for H once again relies on Currey v Currey[1].  He repeated H’s argument raised in W’s previous application that W’s application must be refused since she has failed to bring herself within the test set out inCurrey v Currey.  It is Mr Cheng’s submission that whilst Currey is not binding on Hong Kong Family Court, the so-to-speak Currey test is commonly used and followed.  For the ease of reference, I repeat herein below the conditions set out in Currey as summarized by HHJ Bruno Chan in H v H (Interim Maintenance)[2]:-

(a) that the applicant has no assets, or none that can reasonably be deployed;

(b) that she can provide no security for borrowing, or none which can reasonably be offered;

(c) that she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation;

(d) that she cannot secure publicly funded legal help at a level of expertise apt to the proceedings.

8. In my Judgment dated 25 June 2013, I do not accept H’s argument that W has no difficulty in meeting her legal costs.  It is also my finding that she does not have assets that can be reasonably deployed.  Nor can she borrow with or without security.  W currently continues to work as a part-time salesperson, earning approximately HKD4,000 to 5,000 a month.  W’s mother has recently retired.  In view of my findings in the Judgment dated 25 June 2013 that W has no assets and no means to meet her legal costs, Mr Cheng said he would only focus H’s case on the conditions (c) and (d) of the Currey test. 

Whether W can reasonably obtain legal services by offering a charge on the outcome of the litigation

9. When I dealt with W’s last application for legal costs contribution, I took the view that as W’s application was for legal costs of her application for custody, care and control of her daughter and so there is no money involved in the outcome of the litigation, it is clear that W cannot reasonably obtain legal services by offering a charge on the outcome of the litigation.  It is noted that the present application is distinguishable from W’s last application in that this is for legal costs of her application for ancillary reliefs.  There is money involved in the outcome of the litigation.

10. As stated by Mr Surman for W, to date W’s legal costs are estimated to be HKD2,652,000. H paid W legal costs provision in the total sum of HKD348,000 pursuant to the Order dated 25 June 2013.  W accordingly has an outstanding sum of about HKD2.3 million.  Mr Cheng remarked there is no evidence: -

(a) W’s solicitors are going to sue her for outstanding legal costs; or

(b) They are about to withdraw their services if the outstanding costs owed by W will not be paid shortly.

Mr Cheng submitted the only reasonable inference that one can be drawn from the above background fact is that there must be some sort of arrangement in place like a Sears Tooth agreement between W and her solicitors. 

11. In my view, the background fact that to date W’s present solicitors have not sued her for outstanding legal costs, or that they have not ceased to act for her, is neither here nor there for the purpose of the present discussion.  The terms of W’s retainer with her present solicitors are set out in a letter from the said solicitors to W dated 25 February 2013 [405 – 407].  Under the paragraphs [4] and [6] of the retainer, it is provided that the solicitors can remit interim bill for their costs and disbursements at such time as they deem fit and that W has to pay the bills within 14 days from the date thereof.  It is clear from the terms of the said retainer as a whole that there is no arrangement made between W and her present solicitors so that she can obtain legal services by offering a charge on the outcome of the litigation.  On the basis of material properly before me, I do not see that I should have any doubt about the genuineness of the said retainer.

Legal Aid

12. W did not apply legal aid.  Mr Cheng argued that there is no reason why she should not apply for legal aid as Mr Surman is on the legal aid panel.  He also took notice that many barristers, who take on legal aid assignments, have similar experience with Mr Surman.  In his counter argument, Mr Surman relies on KGL v CKY[3] where Woo JA stated at 307:

“There is no reason why public funds should be expended to fund litigation when there are ample resources available within family funds.”

He contended that in the present case, public funds should not be used to pay for W’s litigation.

13. Mr Cheng’s reply to Mr Surman’s counter argument is that as legal aid will impose a first charge on the property recovered by W in the proceedings, there would be no misuse or abuse of public funds.  When I dealt with W’s last application for legal costs contribution, I took the view that so far as W’s application was for legal costs of her application for custody, care and control of her daughter, there is no money involved in the outcome of the litigation to which the first charge can be attached.  Again, it is pertinent to point out here that the present application is distinguishable from W’s last application in that there is money involved in the outcome of this litigation. 

14. Mr Surman contested that Legal Aid does not really apply to W’s situation, however.  He remarked that throughout the proceedings, H has provided himself with able and experienced senior counsel, senior junior counsel and solicitors.  To ensure that W will be on a level playing field as H to handle her case properly, W has retained senior junior counsel Mr Surman, leading Ms Tseng to handle her case.  W explained that she has chosen Mr Surman to represent her because:

(a) Her late uncle had worked with Mr Surman in the courts of Hong Kong for almost 20 years and always spoke very highly of him;

(b) Her present solicitors recommended him;

(c) She has seen his experience.

Mr Surman is English speaking and he needs a junior counsel’s assistance on translation and research work.  W wishes to continue to be represented by Mr Surman leading Ms Tseng for the ancillary matters but the likelihood of Legal Aid granting W a certificate of two counsel is almost none. 

15. In the present case, it is W’s position that H has shown reluctance on providing a full and clear disclosure of the available matrimonial assets.  Despite what the parties have is a short marriage and the bulk of the assets in issue is significant wealth inherited by H, W regards that this is a sharing case and she anticipated the necessity of future questionnaires and further investigation about H’s finances.  On the contrary, H took the stance that the origin of wealth is on his side which prima facie makes it non-matrimonial property and in this way, this is primarily a needs case and considering he can show the ability to meet W’s reasonable needs, a detailed investigation on H’s finances might not be necessary.  As W anticipated that there will be drawn out disputes about those issues, for my part, it is understandable that she wishes to be represented by a legal team that is familiar with this case, well experienced in matrimonial matters and has the expertise to deal with them.  My view is always that the so-to-speak Currey test should not be taken as an exhaustive test.  The only governing principle remains that the court will make such order as it considers fair and reasonable in all circumstances of the case.  It is not in dispute that there are ample resources available to meet W’s present application.  H is the sole beneficiary of his late parents’ estate, estimated by him to be in the ballpark value of HKD150 million (an estimate that was about 2 years ago), and is currently involved in the family-owned sports goods business that is generating income.  He is provided with free accommodation plus an average of HKD90,000 per month from his late parents’ estate.  He has been regularly taking out loans from his late parents’ company.  Given that there are adequate resources available, I consider the fairness requires H’s funding of W’s legal costs.  On the material before me, I do not see the need for any H’s contribution to cover her historic costs.  To take the matter forward, I am prepared to make an order for costs allowance that should fund W’s future costs from this application up to the FDR hearing.  If the FDR hearing fails, it will be for the trial judge, on the basis of material properly before him to determine whether a new allowance for legal costs should be granted and, if so, in what amount.

Quantum

16. Usually an applicant is required to supply a sufficiently detailed breakdown of anticipated costs so that the court will be able to conduct some analysis of the nature extent and purpose of the contributions sought but the court has not provided with even a skeleton bill for this application.  W said her solicitors is charging at the rate of HKD4,500 per hour for a partner and HKD3,000 per hour for an assistant solicitor and she needs about HKD500,000 to 700,000 from the time of the filing of her supporting affirmation i.e. 14 March 2014 until FDR.  She did not give any breakdown of her estimate.  Without a proper breakdown, I cannot fathom why she needs HKD500,000 to 700,000 for the FDR hearing.  To make the best guess in the circumstance, I say that the work to be done by the parties from now until FDR will include:

(a) Parties’ updated Form E;

(b) A further round of Questionnaire and Answer;

(c) Parties’ Open Proposals;

(d) Opening submissions, Chronology and List of Authorities and

(e) Court attendance at the FDR hearing which will last about 1 day.

In view of the above, it seems to me W exaggerated the estimate of her future costs.  With a broad brush approach, I consider that an estimate of HKD180,000 is reasonable, of which HKD60,000 will represent the solicitors’ costs and the remaining HKD120,000 will be counsel fees. 

The husband’s ability to pay

17. Mr Cheng properly did not take issue on H’s ability to pay.

Conclusion

18. Taking an overview of the court’s diary, I regard that the FDR hearing could be fixed to take place on a day in mid January 2015.  I consider that an order that H shall pay a monthly sum of HKD45,000 to W, the 1^st payment to be made on 12 October 2014 and thereafter on the 12^th day of each succeeding month until 12 January 2015, as contribution to her future costs from this application up to the FDR hearing would do broad justice to the situation. The said monthly payments will be paid on account of any sum eventually received when the question of ancillary reliefs is finally determined and on the condition that the said sums are to be punctually paid by W to her solicitors on account of her said legal costs.

Costs

19. At first sight, W is successful in this application.  Now I can see no reason why costs should not follow the event.  I make an order nisi that H is to pay W’s costs of this application.  The nisi order becomes absolute after 14 days of the date hereof unless a party has applied to vary the order.  In view of the parties’ respective financial situation, I consider that it is justified to order such costs to be payable forthwith.

20. It is further directed that within 7 days from the date hereof, the parties’ legal representatives shall attend court for the purpose of fixing a call-over hearing.