CCMJ v. SSM formerly known as SKL

FCMP 67 /2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 67 OF 2010

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D E C I S I O N
 (Ruling on Costs : By Paper Disposal)

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Foreword

1.  Following a 7-day trial spanned over a period of 9 months from June 2014 to March 2015 in respect of the Respondent’s (Mother’s) Summons dated 25 October 2013 for financial provisions on behalf of the child N against the Applicant (Father), this Court handed down its Judgment on 5 June 2015 with costs including all costs reserved to be paid by the Father (“the Financial Provisions Judgment”).

2.  Given the fact that the Financial Provisions Judgment is the 12^th Decision of this Court throughout these proceedings since 2012, it is not surprising that the Father challenged the Financial Provisions Judgment to its fullest extent by issuing 2 Summonses on 19 June 2015 and 3 July 2015 respectively seeking (i) variation of the costs order thereunder; and (ii) leave to appeal.  For the purposes of this Decision, I will refer to the 19 June 2015 Summons as the “Costs Variation Summons”.

3.  The 3 July 2015 Summons for leave to appeal was disposed of by this Court on 12 August 2015 refusing leave to appeal with full reasons handed down.  The Father then took the matter further to the Court of Appeal which was also dismissed on 7 December 2015 with indemnity costs summarily assessed at HK$100,000 granted by the Appellate Court against the Father (see HCMP No.2059 of 2015).

4.  The present Costs Variation Summons was first listed for hearing on 11 September 2015.  For various reasons, it was only set down for hearing on 28 April 2016 at 9:30 a.m.

5.  On 21 April 2016 (that is, a week before the hearing), a Joint Letter by the parties’ lawyers was submitted to this Court with agreed directions for disposal of the Costs Variation Summons as follows :-

(a) The Father’s Summons dated 19 June 2015 to vary the Costs Order nisi dated 5 June 2015 to be disposed of on paper;

(b) The Father to file his written submissions within 14 days from the date of the Order to be made;

(c) The Mother to file her written submissions within 14 days thereafter;

(d) The hearing fixed for 28 April 2016 at 9:30 a.m. to be vacated;

(e) The costs of this joint application to be in the cause, save the Mother’s own costs be taxed in accordance with the Legal Aid Regulations.

6.  On 22 April 2016, this Court granted an Order in terms of the agreed directions as per the Joint Letter.  The Father should be filing his written submissions by 6 May 2016. Again, not surprisingly, this had not been done by the Father.

7.  On 25 May 2016, this Court granted an ‘Unless Order’ that the Father should file his written submissions by 4 p.m. on 26 May 2016, failing which, the Father be barred from filing any written submissions.

8.  On 26 May 2016, the Father filed his written submissions settled by Counsel Miss Athena Wong who appeared on his behalf in the applications for leave to appeal in this Court and the Appellate Court.  It is worth to mention that neither Counsel Miss Athena Wong nor the present instructing solicitors Messrs. Chan & Chan appeared for the Father at the trial proper in respect of which the Financial Provisions Judgment was granted with the said costs order of which the Father is now seeking to vary.  The Father’s then legal team was Counsel Mr. Jeremy S.K. Chan and Messrs. Haldanes. 

9.  On 10 June 2016, the Mother filed her written submissions settled by Counsel Mr. Kevin Li who represented the Mother at the trial proper, the leave to appeal in this Court and the Court of Appeal.

The Relevant Procedural Rules on Costs

10.  It is trite law that costs are in the discretion of the court.  Generally, if the court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the court shall order the costs to follow the event, except where it appears to the court that in the circumstances of the case some other order should be made as to the whole or any part of the costs (Order 62, rule 3(2) of the Rules of the High Court (“RHC”)).

11.  Order 62, rule 5(1) of the RHC provides for special matters to be taken into account in exercising discretion, namely, the underlying objectives set out in Order 1A, rule 1 of the RHC; any offer of contribution as is mentioned in Order 16, rule 10 of the RHC; any payment of money into court and the amount of such payment; any written offer made under Order 33, rule 4A(2) of the RHC; any written offer which is expressed to be ‘without prejudice save as to costs; the conduct of the parties, whether a party has succeeded on part of his case, even if he has not been wholly successful; any admissible offer to settle made by a party, which is drawn to the court’s attention.

12.  Order 62, rule 5(2) of the RHC provides that for the purpose of the conduct of the parties it includes whether it was reasonable for a party to raise, or pursue or contest a particular allegation or issue; the manner in which a party has pursued or defended his case or a particular allegation or issue; whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and conduct before as well as during the proceedings.

13.  There is no issue that the RHC are also applicable to proceedings in the Family Court including the present proceedings.

The Applicable Legal Principles

14.  In civil cases, the principles on costs are set out in the cardinal case of  In re Elgindata Ltd (No.2) [1992] 1 WLR 1207 where it was held :-

  “(a)  That the general rule that costs should follow the event unless  there were circumstances suggesting that some other order  should be made did not cease to apply merely because a  successful party had raised issues or made allegations which he  had failed to establish at the hearing;

   (b)  That a successful party to an action who had not acted improperly or unreasonably in raising issues ought not to be ordered to pay any part of the unsuccessful party’s costs.

15.  For contested applications in the Family Court, the In re Elgindata principles apply generally.  The starting point is still that costs prima facie should follow the event.  This has been clearly set out in the English leading case of Gojkovic v. Gojkovic [1991] 2 FLR 233 at 236, where Butler –Sloss LJ (as she then was) had said :

“However, in the Family Division, there still remains the necessity for some starting-point.  That starting point, in my judgment is that costs prima facie follow the event (see per Cumming-Bruce LJ in Singer v. Sharegin [1984] FLR 114 at p.119), but may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court.  One important example is, as the judge pointed out, that it is unusual to order costs in children cases.  In applications for financial relief, the applicant (usually the wife) has to make the application in order to obtain an order.  If the financial dispute can be resolved, it is usual, and normally in the interests of both parties, that the applicant should obtain an order by consent; and if money is available, and in the absence of special circumstances, such an agreement would usually include the applicant’s costs of the application.  If the application is contested and the applicant succeeds, in practice in the divorce registries around the country where most ancillary relief applications are tried, if there is money available and no special factors, the applicant spouse is prima facie entitle to, and likely to obtain, an order for costs against the respondent.  The behaviour of one party, such as in material non-disclosure of documents, will be a material factor in the exercise of the court’s discretion in making a decision as to who pays the costs.”

16.  In the case of S v. S (HCMP No.5547/1999), Deputy High Court Judge Gill went through various authorities then available, including Gojkovic v. Gojkovic (supra),and succinctly summarised the proper approach as to costs in relation to contested cases involving children :

  “(1)  In general circumstances there should be no order for costs.   Parties who have a reasonable case to put forward going to a child’s welfare should not be dissuaded from doing so by threat of an adverse costs order if they do not succeed.  And in a child related case there should be no perceived winner or loser, save that it is the child who is the winner.

   (2)  If a party has by virtue of improper conduct attracted the proceedings which but for that may have been avoided then that might well warrant an adverse costs order.

   (3)  If in the course of the proceedings one party behaves unreasonably in his or her conduct of the litigation then that might be recognised in an adverse costs order.

   (4)  The financial circumstances of the parties and how an order for costs will impact on the parties is a factor for consideration.

   (5)  The general rule of not ordering costs should not deter a court from exercising its discretion to do so in circumstances it finds to be exceptional not necessarily limited to a particular category of cases.”

17.  In the later case of IDC v. SSA (FCMP No.158/2011) the learned Judge Bruno Chan, having meticulously reviewed those cases such as In re Elgindata Ltd (No.2) [1992] 1 WLP 1207, Gojkovic v. Gojkovic [1992] Fam 40, Keller v. Keller and the Legal Aid Board [1995] CA 1 FLR 259, and H v. H [2002] CACV 42/2002 HKEC 1123 and at paragraph 18 of his Judgment the learned Judge said :

  “18.  It is therefore clear from these principles that while it is in the unfettered discretion of the court, when it comes to costs over the custody, care and/or access arrangements of a child, the appropriate order would normally be no order as to costs, but as for claims for financial provision for a child, the starting point is for costs prima facie  to follow the event, which may however be displaced by an order against a party who had been guilty of unreasonable conduct or where there was such disparity between the means of the parties that a specific order would be fair or justified.”

18. With these guidelines and principles, I now proceed to consider the Father’s application for variation of costs under the Financial Provisions Judgment.

The Father’s Arguments

19.  The Father is now seeking to vary the Costs Order Nisi to the extent that there should be no Order as to costs of the Mother’s Summons dated 25 October 2013 seeking financial provisions for the child N.

20.  The Father, by referring to extracts from the Hong Kong Family Court Practice (LexisNexis Butterworths, 2^nd edition) and the  Family Law and Practice in Hong Kong (Sweet & Maxwell. 2^nd edition), first submitted that in cases involving children, the normal costs order is ‘no order as to costs’ (see paragraphs 2 and 3 of Father’s submissions). 

21.  Reference was then made to 2 English cases, namely, Sutton London Borough Council v. Davis (No.2) [1995] 1 All ER 65 and Re R (A minor) [1996] EWCA Civ 1120 (Date of Judgment : 5 December 2006) and also one Hong Kong case of TPL v. WYY formerly known as WYY [2014] HKCU 2884 (see paragraphs 4 to 10 of the Father’s submissions).

22.  At paragraph 11 of the Father’s submissions, it was submitted that the principles elucidated in those cases apply with equal force in whether the cases involve custody, care and control or child’s maintenance since both types of cases surround the welfare of the children.  The primary concern of the courts is to ascertain what is in the best interest of the children.  In both type of cases the child is the only winner and both parents should not be regarded as winner or loser.  Moreover, an order of costs may diminish the funds available to meet the needs of the family.  The label that a party is the winner or loser may cause greater tension and animosity between the parties.  This would definitely not in the best interest of the children.

23.  The other submissions of the Father referred to this Court’s Decision reduced the Mother’s claim in significant aspects.  At paragraph 29 of the Father’s submissions, there was a comparison table setting out the difference in percentage between what was claimed and what was awarded.  Besides, 3 items of claim of Refurbishment, Car Purchase and Harp amounted to some 1.14 million was not allowed by the Court. 

The Mother’s contention

24.  The Mother’s contention rests upon the Father’s unreasonable litigation conduct and the disparity in financial resources.  Reference was made to the cases of Sutton Borough Council v. Davis (No.2)[1995] 1 All ER 65 [1994], R v. R [Costs: Child’s Case] [1997] 2 FLR 95 and Keller v. Keller and Legal Aid Board [1995] 1 FLR 259.

25.  At paragraphs 20 and 21 of the Mother’s submissions, it was submitted that there are exceptional circumstances in that the Father had deployed conduct which are beyond the band of reasonableness.  The conduct includes the inadequate and unrealistic offer of N’s maintenance; neglect to provide any accommodation and even worse was the attempt to persuade the Court that he was in need of the One Silver Sea as his own accommodation of which this Court had rejected.

The Court’s Views

26.  The concept of “best interests of the child” has always been the first and paramount consideration of the Court when determining applications involving children.  In the case of H v. N [2012] 5 HKLRD 498, which is the first hearing in the High Court after the amendment to Section 3(1) of the Guardianship of Minors Ordinance, Cap.13, of the terms “welfare” and “wishes” to that of “the best interests” and “views”.  His Lordship Poon J (as he then was) whilst restating the general approach to Section 3(1) of the said Ordinance, visited the welfare principle and provided useful guidance as to the meaning of the term “best interests”.

27.  At paragraphs 22 to 25 of the Judgment, His Lordship said :

  “D.3.1. Applicability of the case law on the welfare principle

   22.  The change in terminology from “best interests” to “welfare”  does not affect the substance of the law.  For the expressions  “welfare” and “best interests” are synonymous : Re B (A Minor)(Wardship: Sterilisation)[1998]AC 199, per Lord Hailsham of St Marylebone LC at p.202, cited in Re A  (Conjoined Twins : Medical Treatment)[2001] 1 FLR 1, per Robert Walker LH at p.34D. 

   23.  It follows that the case law on the welfare principle before the amendments to section 3(1) remains cogently relevant and indeed applicable to the assessment of the best interests of a minor.

   D.3.2. Widest meaning possible 

   24.  The term “best interests” is not defined.  For one thing, it is simply impossible to give an exhaustive statutory definition that  embraces every eventuality.  More importantly, the flexibility  without a statutory definition enables the court to identify and  look into all the welfare issues concerning the minor as they arise from the particular circumstances of the case and carefully consider and evaluate all the matters pertaining to those issues. 

   25.  A cursory research of the cases readily shows that the court has given the word “welfare” its widest meaning.  Thus, it is not limited to monetary or material needs, the minor’s physical well-being or physical comfort but encompasses medial, moral,  religious and emotional issues including his ties of affection and  all other welfare issues.  The same must be true for the term  “best interests” too.”

28.  The Father’s contentions, in so far as the legal principles on costs is concerned, can be summarised as follows :-

(a)  For cases involving children, the normal costs order is ‘no order as to costs’;

(b)It is unusual to order costs in children’s cases, the aspiration being that in the outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate (see London Borough Council v. Davis (No.2) [1995] 1 All ER 65);

(c)  An order for costs may diminish the funds available to meet the needs of the family and that the primary concern of the courts is to ascertain what is in the best interest of the child (see Re R (A minor) [1996] EWCA Civ 1120);

(d)An order for costs would only be made in exceptional circumstances where one party has behaved unreasonably in the litigation;

(e)  As to the kind of conduct in exceptional circumstances that would justify a departure from the general rule, those unreasonable conduct was not unreasonableness in relation to the child concerned but unreasonableness in the conduct of the litigation (see Re A (A Minor) [1996] EWCA Civ 1120 and TPL v. WYY formerly known as WYY [2014] HKCU 2884).

Normal costs order is “No Order as to Costs” ? 

29.  Since the nature of the applications relating to children varies from case to case, it calls for different consideration as to how the Court should exercise its discretion when determining costs.  All the cases referred to by Counsel Miss Athena Wong for the Father involve custody, care and control applications as opposed to claims for financial support of children between the parents, which is the situation in the present proceedings.  As rightly pointed out by His Honour Judge Bruno Chan in the case of IDC v. SSA (supra) which I fully agree, for claims for financial provision for a child, the starting point is for costs prima facie to follow the event although it might be displaced for reasons of any unreasonable conduct of a party or disparity of means between the parties.

30.  Applying IDC v. SSA, I do not agree with Counsel Miss Athena Wong’s submissions that the normal order that no order as to costs should apply in the present case. 

Would an order for costs discourage a parent from puting forward a case which is in the best interests of the child ? 

31.  Given the fact that the term “best interests” has to be given its widest meaning with flexibility and not limited to monetary or material needs, but can encompasses medial, moral, religious and emotional issues (per H v. N supra), it is not being possible to definitively state an answer without evaluation of the factual matrix of the dispute taken out by a parent in each individual case. 

32.  Generally speaking, disputes as to how the child is to be brought up, say for instance, choice of schools, religion or enrolment upon a particular kind of sport, might not attract any costs order against the parent who had lost in the litigation.  Reason being that the parents might have different views on those matters.  However, the situation would be different when it comes to determine the financial needs of the child where one parent, usually the non-custodian parent and having to pay, challenges the amount that was required from him.   I accept that the subject matter which gives rise to the financial needs may be disputable by the parents, say for instance, the costs of buying a pair of shoes for soccer are premised upon soccer being agreed by the parents to be in the best interests of the child.  This is why the learned Judge Bruno Chan considered that it is the ‘starting point’ which may be displaced against the parent who had been unreasonable or where disparity of means of the parents call for a fair order to be made.

33.  For the present case, the Court had awarded less than what the Mother had claimed and also disallowed 3 one-off items should not, when determining the costs issue, be considered in isolation without reference to the context and overall result. 

34.  First of all, the Refurbishment item was claimed by the Mother for the One Silver Sea Property. It tied hand in hand with the child’s accommodation needs of which item of claim the Father had lost completely.  The Father had withdrawn his initial offer of providing 5 million towards the child’s accommodation needs during the trial without any alternative arrangement and without justification as have been found by this Court.  The Father claimed that the child could continue to live with the Mother at the Mother’s elder brother’s flat.  Such arrangement was completely rejected and thrown out by this Court.  Eventually the Court was left with no option but to order the One Silver Sea Property be settled on trust for the child’s accommodation needs. 

35.  In my view, the Father could not now turn around going through the back door and argue that since the Mother had failed in the Refurbishment costs for the One Silver Sea property, her costs position should be discounted or reduced whilst he himself had already withdrawn the One Silver Sea property from the arena.  In my view, the Father’s contention that the Mother had failed in the claim for Refurbishment costs bears no significance when considering his application for variation of the Costs Order Nisi.  Had the Father kept the One Silver Sea property as his proposals which the Mother did not accept it unless refurbished but such item of refurbishment costs was eventually rejected after trial, the Mother’s position on costs might be different.  Moreover, costs had in fact been spent on going through the Father’s evidence as to the living condition of the One Silver Property prior to the Father’s withdrawal when such costs had apparently been wasted. 

36.  As for the Car purchase claim, the reasons for not allowing such item have been set out in paragraphs 78 to 85 of the Financial Provisions Judgment.  As found by the Court, the provision of a car as a means of transportation was not something new or ‘out of the blue’.  The child N has had enjoyed private transport since birth and prior to the parties’ separation.  At paragraphs 82 and 85 of the Financial Provisions Judgment, it was said :

  “82. On the Mother’s uncontroverted evidence, transport arrangement by private car is not something ‘new’ to N since her birth.  After separation, except on access occasions when the Father would pick up and return N using his Audi Q5, N does not have the benefit of transportation by private car.

  85. Taking into account the costs involved for maintaining a private car and considering from the best interests perspective other than the choice of comfort and convenience, I find it not reasonable for the Father to provide a private car for N’s transportation needs. This item of claim fails.”

37.  In my view, it is incorrect for the Father to say that the Mother’s claim for such item being ‘unreasonable or hopeless’ (see paragraph 30 of the Father’s written submissions).  The Court’s finding against the Mother was mainly on account of the related costs for maintaining a car and the choice of comfort and convenience.  The fact that the Father, who having been found by the Court to only have to provide reasonable costs for N’s transportation needs, does not necessarily mean that the Mother had brought hopeless claim against him; in particular, N has had the provision of a private car since birth.  I also find this contention does not assist the Father’s application for variation of costs. 

38.  Had the Mother put forward new items of claim which had never been given to or enjoyed by the child, this may be different if such new items were then dismissed by the Court.

39.  As to the claim for the Harp, it was the Mother who unilaterally offered to withdraw the claim rather than dismissed by the Court (see paragraph 119 of the Financial Provisions Judgment).  Thus, it is incorrect for the Father to say that he successfully challenged such ‘unreasonable or hopeless’ item.

An Order for Costs would diminish funds available to meet the child’s needs ?

40.  I find the Father’s such contention unconvincing.

41.  Throughout these proceedings for the past 6 years since 2010, the Father was legally represented by 5 different law firms, 6 different Counsel at various hearings, save and except for a brief moment of 3 days (18/4/2016 to 20/4/2016) only.  The Father’s Notice to Act in Person filed on 18 April 2016 replacing Messrs. Payne Clermont.  The present lawyers Messrs. Chan & Chan filed Notice to Act for the Father 3 days later on 21 April 2016.  It is the Father’s own case that he had already spent over millions of dollars on his own legal costs, not to mention the indemnity costs of HK$100,000 that was recently ordered by the Court of Appeal on 7 December 2015 to be paid by him to the Mother.

42.  Had the question of legal costs diminishing funds available to cater for the child’s best interests been the Father’s genuine concern, he offered no explanation as to why he himself all along had been so luxurious, if not extravagant, on legal costs spending in the past 6 years and now come along and argue undeterred that any costs order against him would diminish funds available for the child ?  I am prepared to take judicial notice that whenever there is a change of legal team (unless it is because of the handling solicitor who has changed firm), there ought to be certain repetition of costs for going through all the papers by the succeeding lawyers.  Besides, such contention of diminution of funds available to the child would also fail for the fact that the Court of Appeal also considered that indemnity costs of HK$100,000 against the Father would be appropriate.  

43.  I find such contention unsustainable for his application to review the Costs Order Nisi.

Has the Father behaved unreasonably so far in the litigation ?

44.  Following the Mother’s Summons for financial provisions of the child N dated 25 October 2013, the Father filed his Summons on 5 November 2013 for variation of custody, care and control of N.  The Father’s Summons had not been proceeded along smoothly for reasons of repetitive delay and non compliance with directions and had, unfortunately, ended up with having to schedule a 5^th Pre-Trial Review for 29 May 2015. 

45.  On 14 May 2015, the Father’s lawyers sought leave to issue a Summons seeking to adjourn his own (my emphasis) variation application sine die with liberty to restore.  Alternatively, there be extension of time for him to file updating Affirmation out of time as directed by the Court on 29 December 2014 and 27 February 2015.  The Father’s Summons was dismissed by this Court with full reasons handed down on 29 May 2015.  The 5^th PTR proceeded along and the Father was again further directed to file his Affirmations which should have been filed months earlier.  It was also directed that a 6^th PTR be scheduled after 26 August 2015 but no later than 11 September 2015 for reasons of case management.

46.  The Father had, for some reasons, eventually decided to withdraw his Summons for variation of custody, care and control dated 5 November 2013.  Leave to withdraw was granted by this Court on 8 March 2016 with costs to the Mother.

47.  Given the Father’s conduct in handling his own application to vary custody, care and control of the child, the Father in his opposition to the Mother’s Summons for financial provisions took issue on all the items of claim both on necessity and quantum.  An example is that the Father even considered the claim of Now TV (cartoon channels) of HK$143 a month for the child (aged 7) to be not appropriate/unnecessary; the child’s share of household expenses should only be HK$300 a month. (see paragraph 89 of the Financial Provisions Judgment).  There was also convoluted calculation by the Father’s then Counsel to try and work out the child’s expenses (see paragraphs 124 to 127 of the Financial Provisions Judgment). There was also a ratio apportionment of 2:1 suggested by the Father (see paragraph 128 of the Financial Provisions Judgment). 

48.  In addition, there was also assertion of lack of receipts from the Mother to substantiate her claim for past expenses for 62 months.  This Court, however, had found the Mother had already been doing her very best in keeping receipts down to meagre amount of, say, a pack of Tofu for HK$5.80, a pack of vegetable for HK$12.20 so on and so forth (see paragraphs 136 to 138 of the Financial Provisions Judgment).

49.  At all material times the Mother was legally aided of which the Father is well aware of.  With the benefit of legal advice, the Father ought to know the implications of the Legal Aid First Charge upon the Mother although this would not be his primary concern.  Given careful consideration to all the above collectively and objectively, the established legal principles on costs, the overall result under the Judgment dated 5 June 2015 and the Father’s conduct in litigation with the Mother’s financial claims for the child, I am satisfied that on all justice and fairness it calls for a costs order in favour of the Mother in respect of her Summons dated 25 October 2013.  

Conclusion 

50.  For all the reasons above, I find the Father’s application fails.

51.  The Father’s Costs Variation Summons dated 19 June 2015 be dismissed with costs to the Respondent Mother, to be taxed if not agreed.  The Mother’s own costs be taxed in accordance with Legal Aid Regulations.

52.  I also grant Certificate for Counsel.

Orders

53.  I now make the following Orders :-

(a) The Applicant’s Summons dated 19 June 2015 be dismissed;

(b) The Applicant do pay the costs of and occasioned by the Summons dated 19 June 2015 to the Respondent, including all costs reserved (if any), to be taxed if not agreed, with Certificate for Counsel;

(c) The Respondent’s own costs be taxed in accordance with Legal Aid Regulations.