CHENG NGAR MAN, ANGELA, MELWANI v. VISHAL PRAKASH MELWANI

HCA 1817/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1817 OF 2012

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REASONS FOR DECISION ON COSTS

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1. When I made the nisi order on costs in paragraph 42 of my judgment (as completed by the Addendum) I had in mind that, given the circumstances of the plaintiff, she might be under some pressure to agree to an alternative provision for costs.

2. The defendant has now asked to be heard on the matter of the order for costs asking that the order be amended to no order for costs. 

3. He sets out reasons relied upon as being derived from the plaintiff’s actions or lack of action.  The first is a contention that the basis of her claim was, before proceedings were commenced in September 2012, different.  In effect that it was based upon an acceptance that the joint accounts formed part of the deceased’s estate. 

4. He relies upon some letters passing between the respective parties’ solicitors. 

5. This is irrelevant.  The plaintiff and possibly her solicitors may have been somewhat confused by the position as it was then known to them.  They may not have had available all the documentation.  When the picture was clear they based her action on breach of trust which I have found to be proven.  It is of no importance what the initial stance may have been.  In effect I dealt with this in my judgment. 

6. The second contention, which I confess I do not understand, revolves around a suggestion that once the plaintiff based her claim on breach of trust, the defendant was in a “no-win position” to quote directly from Mr Fawls’ written argument.  If the defendant did not contest the plaintiff’s claim he thereby exposed himself to the risk of being sued by the other beneficiaries of the estate.  But under clause 6(a) he was the only beneficiary of the bequest as the surviving joint account holder.  Such an argument is misconceived.  He was protecting himself, no one else. 

7. Thirdly the plaintiff is taken to task on what the defendant alleges are failures on her part in the mediation process.  In passing I would interject that the prospect of a fair result from mediation was negligible.  If the defendant’s approach or tactic in mediation had been, or was, to persuade her to rely upon his professed concern to provide for her and the children on a discretionary basis it was not realistic.  Why should she subject herself to the charitable, or otherwise, proposals of the defendant leaving him holding the purse-strings?  Quite properly both counsel have agreed that I should not be asked to go behind the “screen” and look at what occurred in the mediation process.  That would be an impossible and inappropriate exercise. 

8. But Mr Fawls wanted me to invoke the sanction of costs implicit in clause 4 of the Practice Direction 31.  The wording is important:

“In exercising its discretion on costs, the court takes into account all relevant circumstances.” [My emphasis]

In order to exercise that discretion I would have to have regard to any pre-action mediation.  I have already said that it is not open to me to do that.  Therefore it would not be a proper exercise of my discretion if I were to consider the post-action mediation aspect in isolation. 

9. Finally other “without prejudice” meetings and/or correspondence do not concern me by reason of their very nature.  The defendant could have made an open offer of 50% of the assets in the accounts of which he was the sole surviving signatory.  That would have put an end to the litigation and saved costs. 

10. As a solicitor he knew very well what he had to do to prevent or terminate the litigation.  Of course, as Mr Fawls said, the “family dispute could and should have been resolved without recourse to litigation”. But he chose not to do it. 

11. This application to vary my costs order nisi is dismissed, with costs to the plaintiff.  I have considered whether those costs should be paid on an indemnity basis.  As I explained in court I had considered whether the defendant should pay the costs of the action on an indemnity basis when I made my original nisi order.  There was a very strong, almost irresistible argument, in favour of such an order.  However, I stepped away from it, despite the overall background to the action, and the unattractive flavour of the defence case, because I did not want to add what might be seen as a punitive element to my judgment.  Although the defendant is not deserving of any such consideration I will nonetheless, still refrain from adding it.