RE AA (aka AA)

HCMH 76/2023

[2024] HKCFI 2268

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MENTAL HEALTH CASE NO. 76 OF 2023

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DECISION
(On Costs)

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A.  INTRODUCTION

1.  The Applicants issued the ex-parte originating summons herein on 8 August 2023 under Part II of the Mental Health Ordinance, Cap 136 (“MHO”) for a committee to be appointed for AA (“Part II Proceedings”). The applicants are AA’s younger brother (“Younger Brother”)[1] and AA’s friend (“MK”) (collectively “Applicants”).  AA had been involved in divorce proceedings with his wife VR in the Family Court of Hong Kong (“Divorce Proceedings”) since 2017[2].

2.  It was not disputed that AA suffered an intracerebral haemorrhage at about end of March 2023 . It was the Applicants’ case that since then AA has become a person suffering from mental incapacity under the definition in the MHO (“MIP”).

3.  Suffice to say at this stage, VR had on 31 October 2023 put forward herself and two other persons RL and SS to be appointed as the committee.  Eventually, VR was granted leave to intervene on 13 December 2023.

4.  The substantive inquiry hearing took place on 19 March 2024 (“Substantive Hearing”) and this Court being satisfied that AA was by reason of mental incapacity defined in the MHO of managing and administering his property and affairs, the Court appointed the Applicants and SS (who was one of VR’s proposed candidates) to act jointly as the Committee with powers set out in the order (“Appointment Order”).  Costs of the Part II Proceedings were reserved and the Court gave directions for lodging of written submissions and for the matter to be dealt with on paper.

B.  BRIEF BACKGROUND

5.  AA is now 51 and VR now 49.  They were married in 1999 in New Delhi and they have two daughters, now 18 and 11.  VR petitioned for divorce in 2017.  At end of May 2018, AA and VR were granted joint custody of their daughters, with VR having their care and control.  AA moved out of their former matrimonial home in June 2018 and was living in a rented apartment in Parkview.  A Decree Nisi was granted in May 2019.  The Divorce Proceedings were drawn out and acrimonious and in the ancillary relief proceedings, AA had provided an undertaking to the Family Court and to VR in October 2020 not to dispose of or deal with in any way his various assets in various jurisdictions.

6.  As mentioned, AA suffered an intracerebral haemorrhage at about the end of March 2023.  He was admitted to hospital in Hong Kong where he remained until end of June 2023.  Younger Brother had applied for a guardianship order under MHO, but on 1 July 2023, without waiting for the decision of the Guardianship Board, AA was taken out of Hong Kong to a hospital in India, and later on 26 July 2023, AA was moved to reside with his parents in New Delhi.  The Applicants, ie Younger Brother and a friend of AA’s, MK then commenced the present Part II Proceedings on 8 August 2023.

7.  When VR received notice of the Part II Proceedings from the Applicants’ solicitors Karas So LLP (“KSLLP”), she had sent a letter dated 12 September 2023 to KSLLP[3], in which she raised a number of issues which she claimed had not been addressed in the Applicants’ application.  KSLLP replied on 24 October 2023, responding to VR on the various issues raised by her and informing VR that the tenancy of the apartment at Parkview had been terminated on 2 October 2023, and that an apartment had been rented for AA in Shatin and that a vault was also rented in a warehouse to store the family assets, pointing out to VR that a majority of the legal expenses in the Divorce Proceedings incurred after 28 March 2023 was due to VR’s various oppositions and allegations against AA and the Younger Brother in the Divorce Proceedings. 

8.  VR then decided to send a letter to the Court on 30 October 2023 and further to file a full set of supplemental documents in the Part II Proceedings on 31 October 2023, together with her version of the Certificate of Family and Property.  KSLLP complained that they only received all those documents filed unilaterally by VR on 20 November 2023.  It was also pointed out by KSLLP to VR that there had not been a supporting affirmation from one of VR’s then proposed 3 candidates for the committee and KSLLP also drew VR’s attention to PD 30.1.

9.  Suffice to say, as VR had copied the Court with her copies of her correspondence to KSLLP, KSLLP also did the same.  Papers filed and/or received by this Court were beginning to mount up.

10.  The Inquiry Hearing was originally fixed on 13 December 2023, but in light of all those documents filed by VR and comments from the Applicants and the Official Solicitor (“OS”), it was turned into a hearing for case management directions (“Directions Hearing”). As there appeared to be no dispute on AA’s mental incapacity by VR, the main issue was really the composition of the committee to be appointed.  On 4 December 2023, in an effort to reach an amicable settlement, KSLLP had sent a letter to the Court[4], and indicated that the Applicants had no strong opposition against SS (one of VR’s proposed candidates) to be included in the committee, but the Applicants had to be provided with information regarding SS’s commitment and understanding of his duty as a member of the committee before the Applicants could be in a position to form a final view on SS’s candidature. 

11.  As said earlier, VR had proposed herself, SS and another, ie RL.  Prior to the Directions Hearing, it had already been pointed out by the OS that there would be a conflict of interest in VR being a candidate, and as RL disclosed that AA had borrowed HKD 100,000 from him, there could also be conflict on the part of RL as a candidate.

12.  At the Directions Hearing, upon hearing Mr Jonathan Mok of KSLLP, Solicitor Advocate for the Applicants, and VR in person, with OS absent, this Court granted leave for VR to intervene and ordered the Certificate of Family and Property filed by her to be struck off from the Court record, and further to direct the Applicants to file an updated medical report on AA’s condition.  Leave was also granted to VR to file an affirmation to indicate her position on the Part II Proceedings and to procure an affirmation from her proposed committee member SS.  The Substantive Hearing then took place on 19 March 2024.

13.  During the Substantive Hearing, VR had maintained her position on her proposed candidates namely herself, SS and RL and her opposition to the Younger Brother being appointed.  She was not successful. In the end, the Court appointed the Applicants and SS as members of the committee (“Committee”).

C.  APPLICANTS’ GROUNDS FOR SEEKING COSTS AGAINST VR

14.  The Applicants now seek an order for VR to pay their costs from 1 January 2024 up to the Substantive Hearing and claiming costs for 2  hours out of 3 hours of their attendance at the Substantive Hearing, on the basis that normally an inquiry hearing would take not more than 1 hour.  The grounds put forward on behalf of the Applicants for seeking the proposed costs order were as follows:

(1)  The Intervener, ie VR, was not acting bona fide in the best interests of AA and for the protection of his property in putting forward her application and her proposed candidates for the committee;

(2)  VR had adopted an adversarial approach in these proceedings;

(3)  VR had unreasonably contested the candidacy of Younger Brother and MK

(4)  VR had unreasonably dragged out the proceedings by pursuing points which were plainly untenable and had been found to be irrelevant.  

D.  RELEVANT LEGAL PRINCIPLES ON COSTS IN PART II PROCEEDINGS

15.  The overriding principle on costs and discretion of the Court have been set out in section 52A(1) of the High Court Ordinance, Cap 4, namely the costs of and incidental to all the proceedings shall be in the discretion of the court and the court shall have full power to determine by whom and to what extent the costs are to be paid.

16.  Mr Mok had referred this Court to Re LLC ( No 2) [2010] 4 HKLRD 400 and that while costs in applications in Part II Proceedings are generally paid out of the estate of the MIP as it is for the protection of the MIP that necessitates those proceedings, such general rule may, subject to the Court’s overriding discretion, be departed from when circumstances justify so doing.  As set out by J Poon J, as he then was, in paragraph 15 of his judgment:

“… While it is impossible to detail all such circumstances exhaustively , the parties’ conduct in the proceedings is plainly a relevant and indeed very important factor. Some of the matters pertaining to conduct that are essential for consideration are:

(a) Whether a party had a legitimate interest in participating in the Part II proceeding;

(b) Whether a party had acted bona fide in the best interest of the patient and for the protection of his property;

(c) Whether a party had adopted an adversarial approach by, for example, embroiling themselves in unwarranted allegations in evidence and arguments in submissions;

(d) Whether it was reasonable for a party to raise or contest an issue;

(e) Whether a party had adduced or relied on patently irrelevant or unbelievable evidence or expert evidence which did not render any meaningful assistance to the court; and

(f)  Whether a party had unreasonably dragged out the proceedings by, for example, poor preparation of the case or pursuing points which were plainly untenable.”

17.  VR on the other hand had referred this Court to Re SMJ, HCMH 30/2014 and quoted a passage from Fung J therein at paragraph 14:

“I have said it time and again that Court of Protection or mental health proceedings for persons lacking in mental capacity to deal with their own financial affairs are administrative in nature for the protection and maintenance of the MIP, and not for different factions of the family to view their differences in affections, or as precursor to the hereditary claims. Collateral disputes will have to be resolved in separate proceedings. Once the parties started making vile allegations of misdeeds and mistrust against each others, those advising them legally should act as the wet blanket rather than to fuel them by spending hours taking copius instructions for unnecessarily lengthy affidavits. They should advise their clients on the good sense of setting up a neutral third party or professional Committee unless the choice between the contenders is demonstrably clear and obvious, especially when the value of the estate or the age of the MIP so justifies (such as in the present case). No costs should be wasted on washing dirty linen in public.”

18.  In the above case, at an earlier hearing, the parties had been invited to resolve their disputes by mediation which was declined by the applicant.  Later, at the inquiry hearing, the parties then consented to a professional committee to be appointed and Fung J had commented that as to why the talking between the parties had not taken place sooner, especially when mediation had expressly been suggested by the court.  It was pointed out by Fung J that the applicant had accepted that mediation was part and parcel of the civil procedure under the Civil Justice Reform since 2010, and unreasonable refusal to mediate was a conduct that could be taken into account adversely in the general discretion on costs[5], but as the applicant did sensibly consent at the inquiry hearing, Fung J had taken that into account and deemed it to have been achieved by mediation (which should have been done), he then allowed costs to the applicants to be paid out of the estate, such costs being based on the hypothetical costs for mediation with representation[6].  As for the intervener’s costs, as the applicant’s reason for refusing mediation was presupposing pessimistically that it might not be successful was unreasonable, Fung J ordered the applicant to pay the costs of the intervener[7].

19.  There was no real dispute over the above general legal principles.

E.  DISCUSSION

20.  Throughout these proceedings, VR had acted in person.  She is well educated as she had met AA during college when they were doing their MBA in India.  It also appeared that she had sought legal advice in these proceedings[8]. She had also been involved in the Divorce Proceedings since 2017.  Thus, she should not be ignorant of court procedures.  Even if she was of the view that she had a legitimate interest in participating in these Part II Proceedings, this did not mean she would have the right to file whatever documents she wanted herein without leave of this Court.  Upon receipt of the originating summons and accompanying documents/affirmations from the Applicants, without seeking leave to intervene, VR proceeded to file her own version of the Certificate of Family and Property on 31 October 2023 and to seek an order for her and her 2 proposed candidates, namely RL and SS, to be appointed as the committee under Part II of MHO.  She also filed her 1^st affirmation and an affirmation from one of her proposed candidates RL together with written consents from all her proposed candidates.  Those documents filed without leave had led to confusion and as a result, as mentioned, the 1^st inquiry hearing ended up being the Directions Hearing.  

21.  VR was not correct in submitting that it was normal to have only two hearings under PD 30.1.  In fact, under paragraph 2.22, it is clearly stated that normally, directions will be given after consideration on the papers without a hearing, unless the court considers, whether upon request or on the court’s own motion, that a hearing should be held.  Thus, normally, if unopposed, an application under Part II of MHO would involve only one hearing.  However, if someone wishes to intervene in an application, this may involve two hearings, one for directions.

22.  This Court granted VR leave to appear at the Directions Hearing even though she had not applied to intervene, but it was made clear to her by this Court that if she wanted to oppose the Applicants’ application, the correct procedure would be for her to seek leave to intervene and to file her affirmations in opposition.  It was also explained to VR that if she did not wish to apply to intervene (which appeared to be her position prior to the Directions Hearing), this Court could also direct her to be joined as a respondent in light of her opposition to the Applicants’ application.  Further, it was pointed to her that if she was not joined as a party in these proceedings, she would not be permitted to attend the Substantive Hearing as the proceedings would be held private and in chambers.  It was under those circumstances that VR indicated she had no objection to apply to be an intervener, and the Court then made the order accordingly at the Directions Hearing.  

23.  As VR herself had filed the Certificate of Family and Property and those accompanying affirmations seeking the appointment of herself and her proposed candidates to be the committee under Part II of MHO, and as further seen in paragraph 3 of her 1^st affirmation filed on 31 October 2023, it would appear clear that she was not disputing AA’s mental incapacity and/or the need for the appointment of a committee for AA. The main dispute, as the Court had understood at the Directions Hearing, and as pointed out by Mr Mok on behalf of the Applicants was the composition of the committee.  In fact, as mentioned earlier, Mr Mok had already indicated during the Directions Hearing that for an early solution of the matter, the Applicants agreed in principle to one of VR’s candidates SS to be appointed as a member of the committee together with the Applicants.  Thus, the main dispute on the composition of the committee centred on whether Younger Brother, VR and RL should be members.  

24.  In light of the above, whether VR “chose” to continue to participate in these proceedings as an intervener, or a respondent, there would not have been any saving of costs unless VR was willing to consent to the Applicants’ proposal on the composition of the committee during the Directions Hearing or  thereafter prior to the Substantive Hearing. In paragraph 6 of her Response Submissions on Costs (“Response Submissions”), VR’s submission that she had “consciously adopted the least confrontational approach” and “chose to be an intervener instead of a respondent and did not dispute the Applicants’ medical reports or the need for a Committee to be formed” was not relevant as the main dispute on composition of the committee was clearly not settled during the Directions Hearing, nor thereafter, and had resulted in further evidence to be filed and written submissions to be lodged and 3 hours of attendance during the Substantive Hearing. 

25.  At the Directions Hearing, Mr Mok had updated the Court briefly in relation to AA’s medical condition.  By then, the medical reports of AA filed with the originating summons in these proceedings were some 6 months old, and in light of the Substantive Hearing being fixed in March 2024, the Court therefore directed the Applicants to file and serve an updated medical report in respect of AA’s mental capacity on or before 5 January 2024.  As VR was acting in person, this Court did point out her that if she were to dispute any matters contained in the updated medical report to be filed, she was entitled to seek leave to file her own medical/expert report, although this would no doubt result in additional costs and ultimately the unsuccessful party could face an adverse costs order.  VR submitted in her Response Submissions she declined to seek another medical expert’s opinion in order to save costs.  In any event, the Applicants filed the 3^rd medical report late and out of time on 16 February 2024, without seeking time extension.  At the Substantive Hearing, VR had complained about the Applicants’ late filing of the 3^rd medical report.  In light of VR’s complaints, this Court had pointed out to VR that it was open to her to apply for an adjournment and to seek leave to file her own medical expert’s opinion , had she wanted to dispute any matters in the late 3^rd medical report and did not have sufficient time to do so due to the late filing.  VR said she declined as she said she did not want AA to incur any further costs and delays.  However, it was not clear in the first place as to what reasons or grounds she had for disputing the medical evidence produced by the Applicants or what prejudice she had suffered, apart from simply complaining that the 3^rd medical report was filed late.

26.  Although VR claimed her “objective had simply been to present all relevant information and alternative options for AA’s committee”, her stance was far from neutral and she did advance and maintain her own proposals.  Whatever she said about her “objective”, the fact was she was disputing the Applicants’ proposed composition of the committee, and her approach also meant that the Applicants had to consider all those information and alternative options “presented” or put forward by her and to respond to them.  

27.  VR argued that being AA’s legal wife and mother of his two children, she was privy to much information that had been hitherto absent in the Applicants’ application and what was necessary and helpful for the Court when determining the composition of the committee and when giving directions for handling of AA’s estate.  However, OS had already in their letter of 4 December 2023 raised their concern on VR’s suitability as one of the members of the committee[9] as she was in an adversarial position to AA in the Divorce Proceedings.  This was raised again by Mr Mok during the Directions Hearing, and this Court did indicate at that time that on the face of it, there appeared to be a conflict of interest for VR to be appointed.

28.  In paragraph 21 of her Response Submissions, VR argued that she was not insistent on personally being part of AA’s committee and only presented herself as one of several options including a professional third party such as the OS.  First, she did not make it clear in the Response Submissions that she was not insistent on herself being a candidate;  Second, it appeared from paragraph 3 of VR’s Note of 15 March 2024, she had not withdrawn herself from her proposed composition of the committee[10].  Third, insofar as the Court could see, there was no consent from OS to be appointed as committee who in fact had in their letter of 23 February 2024 pointed out that it was inappropriate to use public money to subsidize the management and administration of a private estate[11]. Fourth, whether it was OS or other neutral third party professional persons, there was no evidence that they would act free of charge, which would mean that AA’s estate would be burdened with even more administration costs.

29.  In any event, VR maintained her objection to Younger Brother’s appointment at the Substantive Hearing, and she had also maintained her proposal that RL should be a candidate. For reasons given briefly at the Substantive Hearing, this Court rejected her objection and proposal in relation to the composition of the committee.  Having said this, some of the matters raised by VR did lead to the Court to decide whether certain powers should be granted to the Committee upon appointment, even though her stance in raising those matters was to oppose the composition, and not merely to limit the powers of the Committee upon appointment.  

30.  What was clear was that the Divorce Proceedings had been contentious and acrimonious between AA and VR which was ongoing at the time of the Substantive Hearing and there was also hostility and mistrust between Younger Brother and VR at the time of the Substantive Hearing.  In light of the contentious Divorce Proceedings, VR should have realised that there would be conflict of interest on her part being appointed to be the Committee, and it would seem that it was extremely unlikely that if AA were to be able to express his views that he would want VR to manage his property and assets.  I find VR maintaining her proposal that she be one of the candidates for the committee to be unreasonable. Further, her opposition to Younger Brother to be a candidate was also unreasonable in that the evidence pointed towards AA having a very close relationship with Younger Brother whom he had trusted and who had helped to care for AA since AA became a MIP.  Even though it was not clear how Younger Brother managed to fly AA out of Hong Kong to India who is now being cared for by AA’s parents, there was no evidence that it was not done in the interests of AA and out of Younger Brother’s concern over the long term care arrangements for AA.  Although there was also an allegation that Younger Brother had forged AA’s signature on the Authorisation Letter to Citibank, Younger Brother had provided an explanation of past transactions he had made on behalf of AA even before AA’s medical set back and that he had always been assisting AA in property management.  Anyway, there was no sufficient evidence produced by VR that the signature of Younger Brother was not expressly authorised by AA as explained by Younger Brother, or that the act was not for the benefit of AA.  I find that notwithstanding all the explanations from the Younger Brother, and without adducing her own evidence, it was unreasonable for VR to continue to maintain all her objections towards Younger Brother during the Substantive Hearing.  As for RL, for brief reasons given at the Substantive Hearing, the Court also found RL to be unsuitable.

31.  However, having said all above, I do not find there was sufficient evidence that VR had acted mala fide , or not bona fide, as alleged by the Applicants.

32.  Further, even though VR had acted unreasonably, as mentioned above, she did propose mediation to the Applicants.  It was submitted on behalf of the Applicants that by her conduct, VR could not be seen as agreeable to a conciliatory appointment of the committee by suggesting mediation to resolve her application, and that the Applicants had considered VR’s mediation effort for settling her matrimonial financial claim rather than on the composition of the committee.  It was also pointed out by the Applicants that there was already an open offer made by the Applicants at the Directions Hearing, but no concession had ever been made by VR, and as VR had made no concession at all, it made her mediation “invitation” an empty offer.

33.  As said by Fung J in paragraph 18 of his judgment in Re SMJ:

“In mediation, the sky is really the limit and there is no case for self-imposing restraints on one’s imagination as to whether the results might be fruitful. The issues could always be narrowed, if not resolved….”

34.  In my view, the Applicants should have made an effort to attend mediation and to try and see whether an overall settlement could be reached including the ancillary relief claims in the Divorce Proceedings.  The fact was the ancillary relief claim and outstanding children matters were settled during FDR after the Court made the Appointment Order. This would show that mediation could have been fruitful in the Part II Proceedings as well as VR’s main concern herein was to preserve AA’s assets for her ancillary relief claim.  I find it was unreasonable for the Applicants not to take up VR’s invitation to mediate in these Part II Proceedings.

F.  CONCLUSION ON LIABILITY

35.  Having considered all the above, as found, both the Applicants and VR had been unreasonable in the conduct of this litigation.  Having considered all the circumstances of this case, I exercise my discretion and make no order of costs against VR.  The Applicant’s costs of these Part II Proceedings are to be summarily assessed and paid out of AA’s estate forthwith.

G.  QUANTUM

36.  The costs and disbursements sought by the Applicants including those additional costs incurred due to VR’s opposition (ie HKD 238, 640) was a total of HKD 1,110,990.  

37.  This was grossly excessive and in my view unreasonable or had been unreasonably incurred.  In particular, I find it was not necessary for Younger Brother’s 1^st affirmation to have contained all those details of the Divorce Proceedings.  Even if the Applicants had anticipated the VR to intervene, they could have in their 1^st affirmation reserved their right to add further particulars and details later, if necessary.

38.  Having considered the circumstances of this case, I will summarily assess the Applicants’ costs to be HKD650,000.