CEPK (formerly known as CEPK) v. LKKH

FCMC 5614 /2009

[2018] HKFC 232

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 5614 OF 2009

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DECISION ON COSTS
(Settlement during trial)

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Introduction

1.  For 4 days commencing from 24 July 2018, this court was supposed to try the cross applications for variation of children maintenance as to the amount as well as to the payment structure taken out in time sequence firstly by the respondent (whom I shall still address him as the “husband” for convenience) and later by the petitioner (whom I shall still call her the “wife” for convenience).

2.  The parties settled the matter during the trial by way of 2 consent summonses, with the question of costs reserved, since the wife asked for time to consider her position. She later confirmed in writing that she would claim costs of both summonses. The husband originally suggested that there be no order as to costs of both summonses, but his latest stance is that the wife should bear his costs. 

3.  In such circumstances, I directed that the issue on costs should be dealt with by way of paper disposal. Neither party has requested that further affirmation or viva voce evidence was required for the ruling on costs. So, I shall proceed on the evidence already lodged.

Background

4.  The parties of this case were married in 1995, but separated since 2003. The petition for divorce was filed by the wife in 2009. Decree absolute was granted on 6 July 2010.

5.  The wife was born in 1969 and is about to reach 49 years old. She is an American Chinese, and came to Hong Kong in 1995.  During the marriage, she was basically a full-time mother.  As at this trial, she was a part-time yoga instructor.

6.  The husband, a Chinese originated from Hong Kong, was born in 1964 and is now 54 years old. He has all along been working as a xxxx hair stylist and a director of various salon/hair styling companies.  During the marriage, he was the breadwinner of the family.  He re-married in 2015 with his present wife who has born him a son in 2015 (now 3 years old).  

7.  Within the wedlock of the parties, 3 children were born:

(1) A, the eldest daughter, born in 1995 and is now 23;

(2) T, the son, born in 1998 and is now 20;

(3) G, the younger daughter, born in 2001 and will turn 17 this December.

8.  At the time of the divorce, the parties were able to settle on their children and ancillary relief matters amicably. They agreed that they should enjoy joint custody of the children, with care and control to the wife and access to the husband.

9.  By a consent summons filed on 28 May 2010, the parties settled globally the ancillary relief claims, which was made into a consent order on 1 June 2010 by HH Judge Yiu (“AR Order”).

10.  The AR Order provides for a clean break arrangement between the parties by the husband paying the wife a lump sum of $3,500,000 and acknowledging that she can keep her house (registered in her sole name) in New York.

11.  On children maintenance, the AR Order provides that:

(1) the husband shall pay children maintenance to the wife in the sum of $38,200 per child per month (totalling $114,600 per month) (clause 3);

(2) the aforesaid clause 3 is subject to recital clause (E) which states that the monthly periodical children maintenance will terminate when the said child leaves Hong Kong for further study abroad, on the condition that the husband shall continue to be responsible for the said child’s living and education expenses abroad and to pay the said child directly any sum relating to the same, and shall also continue to be responsible for the said children’s living expenses in Hong Kong if and when they return to Hong Kong during long school holidays;

(3) on top of the monthly periodical payment in the said clause 3, the husband shall pay the wife children’s rental contribution in the sum of $35,500 per month, for as long as either of the said children are still living with the wife but until all of the children have reached 18 years of age or have completed their full time education, whichever is the later (clause 4);

(4) the above clause 4 is said to be subject to recital clause (F) which stipulates that “in the event that the wife cohabits with a third party”, the following shall take place:

(i) the monthly sum of $35,500 shall be deposited into a joint bank account of the parties of which the funds are to be used primarily for the purpose of the children’s future education expenses unless for the purposes otherwise agreed by the parties;

(ii) the husband may withdraw funds from the said education reserve to pay for the children’s future education expenses when they study abroad (“Undertaking F”).

12.  Simply put, the AR Order provides that the husband shall pay the wife for the benefit of the 3 children a total sum of $150,100 per month (inclusive of rental contribution). But from time to time over the years before he re-married, he paid more than this sum to about $200,000 per month upon request of the wife. 

After the AR Order

13.  Since in or about 2016, the elder children went to study overseas, with A in New York and T in Toronto. Pursuant to the terms of the AR Order, the husband started to pay A and T directly for their overseas living and education expenses, and their maintenance payable to the wife stopped.

14.  G continues to study in an international school in Hong Kong. After the birth of the husband’s baby son in 2015, she has grown fond of her half-brother. She became spending more time in the husband’s new household and subsequently moved to live with him (and his present wife) since around the summer of 2016. On the other hand, the wife decided to return to live in New York and left Hong Kong in July 2016. Since then, the maintenance of G payable to her also stopped.

15.  The wife returned to visit Hong Kong in November 2016. On 24 November 2016, an altercation took place between G and the husband’s present wife. Since then, it was said that G refused to live with the husband’s present wife any more. G then went to stay with the wife who decided to remain in Hong Kong in order to take care of G.  

16.  By her email dated 5 December 2016, the wife demanded that the husband should resume his obligation to pay her the maintenance and rental contribution in respect of G.[1]  This was followed by a letter from her solicitors of 17 January 2017 to formally demand him to settle all outstanding child maintenance of G for December 2016 and January 2017 in the total sum of $147,400 and to pay US$2,200 per month for A.  

17.  This was met by the reply letter from the husband’s solicitors dated 24 January 2017, in which he accused the wife of breaching Undertaking (F) in the AR Order, in that she had cohabited with her boyfriend for about 3 years but failed to divert the rental contribution of $35,500 per month into a joint bank account to be used as the education reserve fund of the children.[2] By a further letter of 15 February 2017, the husband demanded the wife to return the overpayment of the rental contribution for 3 years in the total sum of $1,278,000 ($35,500/month x 3 years) by depositing the same into the joint bank account pursuant to the said recital clause (F) of the AR Order.

The respective applications

18.  On 13 April 2017, the husband took out his application for variation of G’s maintenance (“Husband’s Summons”). He said that the crux of his application was not to reduce the amountof G’s maintenance, but to vary the payment structure.

19.  According to him, for the few months that G had lived with him, he found that the monthly expenses of G was not as high as $38,200 per month. He was thus sceptical that the wife had been using the children maintenance to support her boyfriend over the years, and thus he would rather pay the landlord and G’s school direct, instead of through the wife. He also sought an arrangement that any un-used children maintenance/rental contribution be diverted to the education reserve fund for the children. Broadly, the Husband’s Summons covers the following:

(1) The monthly maintenance of G in the sum of $38,200 shall be paid into a newly opened HSBC account of the wife and any accumulated surplus be diverted to a joint bank account of the parties at the end of December each year, which shall be kept as the education reserve fund for the children;

(2) The monthly rental contribution shall be paid directly to the landlord by the husband who shall replace the wife as the tenant. In the case that the monthly rental is less than $35,500, the surplus shall be diverted to the same joint bank account of the parties to serve as the education reserve fund. Alternatively, the rental contribution of $35,500 per month shall be deposited into the said HSBC account of the wife, with any surplus to be diverted into from the wife’s said HSBC account into the joint bank account to serve as the education reserve fund of the children;

(3) The husband shall not unreasonably interfere with the wife’s choice of where to live, provided that G’s convenience and best interest should be the primary factor in the decision-making.

20.  It is pertinent to note that the husband did not seek to vary the maintenance arrangement of A and T under the AR Order, which provides that he shall pay their overseas living and education expenses and to pay the children direct.

21.  About 2 months after the Husband’s Summons, the wife took out her application of 8 June 2017 for variation of the maintenance amount and payment structure of all 3 children under the AR Order (“Wife’s Summons”), on the major ground that the children’s needs are increasing due to their growth in age, and that the husband has failed to provide sufficient maintenance to A and T and so she preferred that the children maintenance be paid directly to her for easier monitoring of payment by the husband. She requests the following:

(1) The monthly children maintenance of $38,200 per child and rental contribution of $35,500, totalling $150,100 per month, shall be varied upwards to $197,687 per month, with breakdown as follows:[3]

A:		$47,251
T:		$33,982
G:	$66,454 (household & personal)
	$50,000 (rental)
		$116,454
	TOTAL:	$197,687

(2) The children’s living and education abroad shall be paid by the husband to her direct instead of to the children;

(3) The amount of children maintenance be index-linked;

(4) The wife be released from her undertaking given to the court on 7 April 2017 to provide the monthly bank/credit card statements of her newly-opened bank account (into which G’s maintenance would be paid by the husband) and major receipts to the husband.

22.  In the trial, the parties have consensus that the children maintenance forward be index-linked. They no longer insist on amending the wording of the duration of the payment of children maintenance, ie until each child reaches 18 years of age or completes his/her full-time education, whichever is the later.  However, I do remind parties, upon reviewing the records of previous hearings, that in the hearing of 22 January 2018, they had, through their counsel, confirmed that “full-time education” meant the completion of the first university degree.

23.  In such circumstances, the issues to try are broadly these:

(1) Whether the amount of the children maintenance should be increased, and if so, to what amount;

(2) Whether the payment structure of children maintenance, especially those for A and T, should be varied to the effect that the same should be paid directly to the wife.

24.  In the wife’s opening written submission, her counsel, Mr Robin Egerton, adds that whether the husband has made full and frank disclosure of his financial means is also an issue.

The 1^st Consent Order

25.  On the 1^st day of trial (24 July 2018) before evidence was called, the parties asked for time for negotiation for settlement. Shortly after 4 pm of the 1^st day of trial, it was reported to me that they were able to reach an agreement in respect of financial arrangement of A and T.  The trial was thus adjourned to the following day for a perfected consent summons to be signed and filed, which they did, and a consent order was made in respect of A and T’s maintenance on 25 July 2018 (“1^st Consent Order”).

26.  The 1^st Consent Order provides the following:

In respect of A

(1) The husband shall pay a sum of US$2,500 per month into A’s designated bank account in her sole name;

(2) The husband shall pay the rent of A directly to her landlord up to US$1,700 per month;

(3) The husband shall provide a supplemental credit card to A with an available monthly limit of US$2,200 to be spent only on the categories set out in the Joint Scott Schedule dated 20 July 2018;[4]

(4) The husband shall continue to pay for A’s tuition fees and design department fee directly to the service-provider(s);

In respect of T

(5) The husband shall pay a sum of CAD$1,500 per month into T’s designated bank account in his sole name;

(6) The husband shall pay the rent of T directly to his landlord up to CAD$1,600 per month;

(7) The husband shall provide a supplemental credit card to T with an available monthly limit of CAD$1,500 to be spent only on the categories set out in the Joint Scott Schedule dated 20 July 2018;[5]

(8) The husband shall pay for T’s tuition fees directly to his university/college.

The 2^nd Consent Order

27.  Despite the efforts of the parties, they were unable to settle on the maintenance in respect of G.  Evidence started to be called shortly after 3.30 pm of the 2^nd day of the trial by the wife going into the witness box. Her evidence was completed by the end of the 3^rd day of the trial.

28.  On the 4^th day before his evidence was due to start, the husband through Ms Chow of counsel made a further revised open proposal to settle the child maintenance of G. Negotiation for settlement then resumed and by the end of the 4^th day of the trial, the parties finally submitted another consent summons to settle the maintenance of G, which was made into a consent order by me on the same day (ie 27 July 2018) (“2^nd Consent Order”).

29.  The relevant terms of the 2^nd Consent Order are like these:

(1) The husband shall pay to the wife directly for the benefit of G a total sum of $55,120 per month to cover her expenses more particularly set out in clause 1 therein, which broadly covers rental, maid and other household expenses in the total sum of $52,020, and stationery/school uniform/pocket money etc in the total sum of $3,100;

(2) For overseas trips, the husband shall pay G a sum of $400 per day for her daily expenses overseas, 50% of which by way of cash to be deposited into her existing HSBC junior pack account in advance and the balance by way of a supplemental credit card. The husband shall reimburse G’s overseas travel expenses including but not limited to airline tickets and hotel bills to the wife;

(3) The husband shall reimburse G’s mobile charges of the existing contract and shall pay the service-provider direct upon entering a new contract;

(4) The husband shall reimburse the wife G’s expenses of foot massage, maths tutorial fees, family dogs and computer(s) including but not limited to electronic appliance(s), gadget(s), iPad, iPhone, chargers and apps;

(5) The husband shall pay directly to the service provider(s) G’s tuition fees, annual capital levy, school bus fees, mandatory school trip, mandatory CAS project week and (in-patient) medical insurance;

(6) The parties undertake that when G starts her overseas education, they will adopt the same payment structure as set out in the 1^st Consent Order in respect of G’s living and education expenses.

Applicable legal principles

30.  It is trite law to say that the basic principles on costs are that costs are in the discretion of the court, but that costs should follow the event, except when it appears to the court, judged by all the circumstances of the case, that some other order should be made: Order 62 rule 3 of the Rules of the High Court (“RHC”).

31.  In the event that a case is settled save as to costs, there is no tradition that the costs order must be one of “no order as to costs”. The relevant principles are set out succinctly in the judgment of Au-Yeung J in Famous Marvel Company Limited & Others v Conversant Group Limited & Others, HCA 2153/2009, date of judgment 29/10/2012, at §22:

  “ There is no dispute that even if a case is settled except as to costs, the Court still has power to determine which party should be liable for costs.  There is no tradition for there to be “no order as to costs” in such a scenario.  I am guided by the following principles in deciding costs:

(i) The Court is to decide if the party seeking costs has substantially obtained the reliefs sought in the litigation: Re Chinese United Establishment Ltd, HCCW 291/1994, 5 October 1995, Rogers J (as he then was), approved in CACV 214/1995; Lai Yuet Chun v Super Deluxe International Limited & ors, HCCW 186/2001, 3 June 2003 Kwan J (as she then was).

(ii) At each end of the spectrum there will be cases where it is obvious which side would have won had the substantive issues been fought to a conclusion.  In between, the position will, in differing degrees, be less clear.  How far the Court will be prepared to look into the previously unresolved substantive issues will depend on the circumstances of the particular case, not least the amount of costs at stake and the conduct of the parties.  Brawley v Marcynski (No.1) [2003] 1 WLR 813.

(iii) The Court will first consider if it is in a position to say what the likely outcome after trial would have been.  If it is not in a position to do so, the order may well be no order as to costs: Brawley v Marcynski (No.1),at para 18, Longmore LJ; followed in BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004] FSR 150.

(iv) The Court may permit parties to adduce evidence on the question of costs: Ta Tung China & Arts Ltd v Fontana Restaurant Ltd [1999] 1 HKLRD 404; Lai Yuet Chun v Super Deluxe International Limited & ors, at para 12.  However, to say that the parties must go to trial in order to resolve any outstanding questions of costs would be contrary to the underlying objectives enshrined in RHC Order 1A rules 1 and 2: Graham M Morley v Kwan Wo Wan & others, HCA 4366/2003, 30 December 2009, Recorder Jat SC.

(v) A broad brush can be taken by referring to all matters already laid before the Court, eg pleadings, correspondence, witness statements, transcripts of evidence and the terms of the settlement order: c.f. BCT Software Solutions Ltd v C Brewer & Sons Ltd, at para 9; Graham M Morley v Kwan Wo Wan & others.

(vi) The objective is to do justice between the parties without incurring unnecessary Court time and consequently additional cost: Brawley v Marcynski (No.1).”

32.  It is said that the discretion of the court in determining costs in family cases is even wider than in other civil proceedings. In HK v BD, CACV 252 of 2009, date of judgment 15/10/2010, Hartmann JA (as he then was) cited the English case of Gojkovic v Gojkovic [1992] Fam 40 and expounded on the legal principles on costs in family matters 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…” (my emphasis added)

Who has substantially obtained the relief?

33.  For the purpose of the trial, the parties prepared a Joint Scott Schedule setting out their respective case on each item of the children expenses.  Each party now says that he/she is the substantial winner of both summonses, and have, through their written submission, prepared several tables to compare their offer(s) with the final agreement embodied in the 1^st and 2^nd Consent Orders.[6]

34.  I shall approach this topic by first discussing the 1^st Consent Order involving A and T, and then going into the 2^nd Consent Order concerning G.

(i)   1^st Consent Order : A and T

35.  The wife submits that she has been successful in negotiating a favourable settlement which is substantially similar to the reliefs sought under the Wife’s Summons as follows: [7]

	A’s maintenance	T’s maintenance
Wife’s open proposal	$65,006	$51,769
Husband’s open proposal	$46,361	$40,206
1st Consent Order	$76,772	$51,850

36.  The husband, on the other hand, argues that the terms of settlement of the 1^st Consent Order, especially those relating to T, are basically what he offered during the PTR and before the trial. For example, he offered during the PTR to provide supplemental credit cards to A and T as “buffer” and for contingencies; but such an offer was partially rejected by the wife who insisted that payments must be deposited into her joint account with the children. He submits that had the wife exercised good sense and settled before the trial, significant time and costs would have been saved, and A and T would not have to return to Hong Kong for the purpose of giving evidence in the trial.

37.  Having considered all the circumstances of the matters, in particularly due to the following points, I am unable to say who will be the likely winner in respect of the variation of maintenance of A and T.

38.  First, as set out above, the husband does not have any application on the variation of the maintenance of A and T. The variation application comes from the wife only. She claims that he has not paid or paid sufficiently to A and/or T, and that it is very stressful for them to deal with him direct in asking him for money. Hence, she asks for their maintenance be paid to her direct. The wife even provides the affirmation of A (dated 27 March 2018) and T (dated 5 March 2018) to support her claim. Both A and T both depose in their own affirmation to the effect that the husband does not pay them enough and that he is unwilling to financially support them. The overall sentiment that I can get from these affirmations is that the husband is an unloving and uncaring father.

39.  The husband denies the above and does not believe that the content of these affirmations came from the children themselves. Rather, he says that the children are dragged into this litigation by the wife. For example, she flew all the way from Hong Kong to Toronto to ask T to sign his affirmation. He further explains that while he would continue to support A and T, he does not want them to feel that they can live on his financial support forever. He wants them to be able to learn to stand on their own feet before it is too late, because he will be getting old and there is also an increasing financial burden of his new family.

40.  In my view, the content of the affirmations of A and T does not sit very well with their whatsapp or other online messages with the husband, especially those that took place in 2017.  In some of these messages, A or T did openly ask the husband for transfer of money to them from time to time, though on some occasions, the husband was not able to make the transfer instantly due to work engagement.  There were also occasions when the husband initiated to ask them for the amount that they wanted.  A said in April 2017 that she needed at least USD$1,900 per month, but it would be safest to have USD$2,200 per month.[8] T said in October 2017 that he needed CAD$900 per month, but the husband said he would give him CAD$1,200 per month.[9]

41.  Although A and T are spared from giving evidence in this trial due to the settlement embodied in the 1^st Consent Order, the discrepancies listed above cannot be clarified or tested against their oral evidence.  I am thus unable to make a firm finding that the wife’s reasons of the husband’s insufficient and unwilling financial provision to A and T, and thus leading to her variation application, are likely to established or not.

42.  Second, while the final settlement terms on the amount of maintenance payable by the husband to A and T may be closer to the open offer of the wife, she is not able to get what she originally seeks in the Wife’s Summons as to the payment structure of such maintenance at all. The terms of the 1^st Consent Order continues to provide that the husband shall either pay the service provider(s) or the children themselves direct, instead of paying directlyto her or into the joint account of her with the children.

43.  Third, the wife’s solicitors attempt to explain in their written submission how the husband has committed breach of the 1^st Consent Order in the post-trial period by, eg failing to provide a credit card to A and T.  In my view, it is not appropriate to provide new evidence through written submission, without taking out a proper application.  Further, such allegation takes place post-trial and thus should not be taken as matters to be considered by me in this decision.

44.  It remains true, however, that both parties have given their undertaking to this court in the 1^st Consent Order. They should be advised that breach of an undertaking to the court will lead to serious consequences.

45.  Before leaving this topic about A and T, I cannot help making the following comment/observation, and I expect their solicitors would explain this in details to the parties.

46.  No one would seriously dispute that children of divorce cases have feeling of different degree of insecurity and being sandwiched between their antagonised parents. I think both parties of this case would agree that the impact of their divorce on their children leading to their sense of insecurity is also evident here. The evidence shows that both A and T are suffering from depressive mood or anxiety attacks one way or the other.  I hope both parties can, from now on, stop finger-pointing the other side in causing the problem. Such attitude is not helpful, if not detrimental, to the healthy psychological development of their children.  To the husband, I do not have doubt that he has all the good intention to train A and T to be tougher, less dependent and more self-responsible, so that they can stand on their own feet and be master of their own lives sooner in the future. However, he has to remember the vulnerability of A and T, in particularly in a new set of living environment overseas which is away from Hong Kong, a place where they have grown up. He should also remember that minimal non-punctual financial provision without any buffer would very likely increase the feeling of insecurity in his already-vulnerable children, which in turn is not in their best interest.  To the wife, she has to realise that A and T are now adults who should learn to deal with their father direct, and to be more independent and self-responsible in terms of their finance. Over-protection and/or over-provision to them is not recommended, either.

47.  What this court is trying to say is that parents, like the parties of this case, may and for most of the time do have different parenting styles. What they should not do is to think that his/hers must be better than the other parent, and then start finger-pointing the other parent, whether or not in front of their children.  It would be helpful way forward if the parties can each look at the matter from the prospective of the other side so that they can be more understandable to the viewpoint of the other side, in the hope that any possible future conflict can be minimised and thus their children subject less to such conflict before irreparable damage is done to them.

(ii)   2^nd Consent Order : G

48.  I now turn to the 2^nd Consent Order concerning G. The open proposals of each side at different stages and the final settlement in the 2^nd Consent Order are set out in the table below for easy reference:

Items of G’s expenses	Wife’s open proposal (20 July)	Wife’s further open proposal (2nd day of trial: 25 July)	Husband’s open proposal (20 July)	Husband’s further open proposal (4th day of trial: 27 July)	2nd Consent Order
Personal/general expenses
(a) to be paid by husband direct	$18,750	$20,667	$18,750	$25,042	$21,117
(b) to be reimbursed by husband	N/A	N/A	N/A	$5,000	$13,893
(c) to be paid directly to wife	$24,540	$16,773	$10,016	$3,100	$3,100
(d) to pay direct into G’s HSBC Junior Pack	N/A	$3,000	NIL	$5,000	$6,000
Rent/household expenses
To be paid directly to wife	$65,640	$59,274	$31,704	$46,820	$52,020
TOTAL:	$108,930	$99,714	$60,470	$79,962	$96,130

49.  The wife submits that her latest open proposal of G’s maintenance given on the 4^th day of trial ($99,714) is closer to the terms of the 2^nd Consent Order ($96,130) than the latest open offer of the husband ($79,962). Save for the rent, the husband has agreed to pay effectively and substantially the items and figures as claimed by the wife in the Joint Scott Schedule.

50.  The husband, on the other hand, says that most items in the 2^nd Consent Order are now paid directly by him either to the service providers or to G, exactly what he seeks in the Husband’s Summons. He adds that it is his offers that are much more reasonable and closer to the final settlement.

51.  I agree as a matter of fact that the maintenance amount provided in the 2^nd Consent Order is much closer to the wife’s proposal than that of the husband’s.  Although the 2^nd Consent Order provides that some of the items of G’s expenses are to be paid by the husband direct or to be reimbursed by him, the major stumbling block for settlement is the amount and payment method of the rental contribution. The husband there and then insisted that he should pay the lesser rental of about $23,000 and any excess be paid into the joint account for the education reserve fund of the children, while the wife asks for $39,000, being the current rental payment after she has moved with G to Pokfulam. Importantly, it is only after the wife’s oral evidence given on the 2^nd and 3^rd day of trial that the husband revised his offer to pay the full rental of $39,000 to the wife. He no longer pursues his original request for any excess of G’s maintenance, in particularly the rental, be paid into the joint account.

52.  It is thus my overall impression that the wife is the substantial winner in respect of G’s maintenance.

Unreasonable conduct

53.  In exercising its discretion on costs, the court is required to take into account, where appropriate in the circumstances, the conduct of the parties (See: Order 62 rule 5(1) (e) of RHC).  On the “conduct of the parties”, Order 62 rule 5(2) explains that,

“(2) For the purpose of paragraph (1)(e), the conduct of the parties includes -

(a) whether it was 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.”

54.  Each party alleges that the other side’s litigation conduct should call for an adverse costs order made against the other side.

55.  The husband invites this court to consider various conduct of the wife that has led to unnecessary costs being incurred, such as:

(1) her unreasonable original claim for increasing G’s maintenance to $133,704, which in fact includes her own expenses. The inclusion of her expenses was the “sole” reason he could not agree and settle G’s maintenance before the trial;

(2) she unnecessarily prepared running bundles for two hearings;

(3) she continually included her legal costs from 2010, which pre-dated the Husband’s and Wife’s Summonses, in her Form H;

(4) she raised a series of questions to the husband on his financial means after the PTR but without leave, contradicting to her earlier position that no further questionnaire was required. To save costs, the husband answered them in his affirmations;

(5) she failed to disclose the whole truth on her current and past income.

56.  I have considered all the points raised by his counsel’s written submission. I will deal with the question of running bundles later in this decision. Upon due consideration and subject to what I will say on the running bundles, I am unable to conclude that the conduct of the wife is serious enough to constitute unreasonable litigation conduct to the extent that adverse costs order should be made against her.  In my view, although the wife raised further questions to the husband on his finances without leave, the parties solved the matters themselves and the trial dates were not affected.  I hold the further view that the wife’s financial means and her income is and should not be an issue of the trial, because looking at the AR Order as a whole, it is clear to me that its intention is for the husband, but not the wife, to provide financial support to the children.

57.  I now turn to the wife’s argument.  Broadly, she complains that the husband had numerous opportunities to settle this matter prior to trial, but his unreasonable stance, lack of written proposal and incomplete disclosure made it difficult for her to settle at an early stage.

58.  Upon due consideration, I am unable to accede to the wife’s suggestion that the husband is guilty of non-disclosure of his financial means in this trial. She has not provided any basic details as to her allegation of the husband’s non-disclosure in her opening submission, nor in her oral evidence. Besides, this court has not received the oral evidence of the husband on his financial situation. Hence, I am unable to make a definite finding on the allegation of non-disclosure.

59.  On the other hand, from the correspondences disclosed by the parties and attached to their written submission, one can see that the wife did, as early as 19 May 2017, set out her request/demand, including the breakdown, of the children’s expenses, and invited the husband to reply within 7 days. However, he did not give any substantive written reply until almost a year later on 3 May 2018.  However, he did, by his letters of 19 January 2018 and 17 April 2018, invite the wife to meet earlier at the family court before the court hearing of 22 January 2018 and 27 April 2018 for exploring the possibility of settlement. His request was bluntly turned down by the wife, on the ground that he had not provided any written proposal. In her letter of 19 April 2018, she expressly rejected to meet him before the court hearing in this way:

“ …please note that our client will not engage in any settlement discussions with your client without sight of his written proposal. Our client has previously requested your client to provide his written proposals but he has failed to do so. Our client believes that it will be a complete waste of her time and costs to engage in settlement negotiations with your client without sight of his written proposal.”

60.  It is fair to point out that they attempted mediation twice, but failed.

61.  Having considered all the circumstances of the case, I hold the impression that both parties are to be blamed, one way or the other, for failing to grasp the available opportunities and to participate in a construction dialogue for exploring settlement of this trial.  Also, I have to point out that the antagonising tone displayed in some of their solicitors’ letters do not help the case to advance to any possible settlement.[10]

62.  In conclusion, I am not prepared to make any adverse costs order against either party on the ground of litigation conduct.

Running bundles

63.  I now turn to the running bundles.  The solicitors acting for the wife prepared running bundles for use in the call-over hearing(s) of 22 January 2018 and 27 April 2018, despite the repeated objection of the husband’s solicitors. In my view, the objection is correctly made.

64.  I notice that family law practitioners have the practice of preparing running bundles even for 15 minutes call-over hearings. I also notice that some family law practitioners continue to use the running bundles for substantial trials. Yet, these running bundles are more often than not prepared without focus and by merely putting in all the documents filed with the court from day one of the divorce proceedings, without the slightest scrutiny as to whether such documents are necessary and relevant to the hearing(s). This leads to the undesirable result of incurring unnecessary and sometimes substantial costs. It is thus not a practice that should be encouraged in modern family litigation.

65.  Our Court of Appeal has stated the undesirability, if not disapproval, of using running bundles in the context of appeal application from the family court. In CCMJ V SSSM (formerly known as SKL), HCMP 2059/2015, date of judgment 7 December 2015, Poon JA commented at §22 as follows:

“22. Bundle A is a so-called running bundle. It contains documents filed with the court including affirmations, Form Es, answers to questionnaires and court orders and decisions. Irrespective of their nature, they are simply arranged in chronological sequence according to the time when the specific document came into being. It is just an indiscriminate compilation of documents without due regard to the proper scope and nature of the leave application. It fails to identify and focus on the essential documents pertinent to the leave application and the issues involved. It does not contain the most essential documents, namely, the Draft Notice of Appeal, the summons dated 8 October 2015 and the amended Draft Notice of Appeal attached to it, and the Leave Judgment. It unduly overburdens the Court in its reading of the papers and preparation of the hearing. It escalates the costs of the application unjustifiably.”

66.  I would also refer family law practitioners, such as the wife’s legal team, to the Law Society circular 16-515(PA) dated 4 July 2016, in which it is stated:

“‘Running’ bundle whether for pleadings and correspondence is not allowed unless with leave of the court. Ay such bundle lodged without leave will be rejected and returned”

67.  In view of the above, I am convicted to say that the costs of preparing, filing and service of these running bundles by the wife’s solicitors should not be allowed. And unless it is the clear instruction of the wife herself that running bundles should be prepared despite that there is no prior leave of the court, I would be surprised to know that her solicitors would charge her for the same.  

The order

68.  Although there are 2 applications in this trial, they can be viewed as essentially one matter, ie children maintenance. Some of the documents, such as Form Es and questionnaires/replies to questionnaires, apply to both applications. Some of their affirmations, whether given for/in opposition to the Husband’s/Wife’s Summonses, touch on background and case history one way or the other. I am of the view that a broad brush approach be adopted in that only one costs order covering both summons should be made.

69.  For all the matters set out above and upon due consideration of all the circumstances of the case, I conclude that it is fair to order that the husband do pay 30% of the wife’s costs of both summonses, including this paper application and all costs reserved, save that there should be no order as to costs of the preparation, filing and service of the running bundles filed for the call-over hearings of 22 January 2018 and 27 April 2018. The applications are not of very complicated nature, and thus I certify the attendance of one counsel only in this trial.

70.  The order should be drawn up by the wife’s legal team.