CHY v. HMK

FCMC 11994 / 2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11994 OF 2011

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R U L I N G
(Costs)

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Introduction

1.  This is an application on paper to determine costs following an agreement reached between the parties at a hearing on the 28 September 2017. The hearing was in relation to an application made by the Petitioner wife for an upward variation of the maintenance paid by the husband for the only child of the family, C. Agreement was reached on all outstanding matters (save for the costs) as follows:  

UPON the joint application of the Petitioner and the Respondent by way of a Minutes of Consent Order dated 28^th September, 2017

AND UPON HEARING the Solicitors for the Petitioner and the Solicitors for the Respondent

AND UPON the Respondent undertaking to the Court and to the Petitioner that in addition to the variation of maintenance as referred to in paragraphs 1 and 2 of this Order:-

(a) he shall continue to be responsible for two-thirds of the play therapy fees as referred to in the Order dated 30^th May, 2014;

(b) Subject to both parties’ agreement on choice of extra-curricular activities and musical instruments and presentation of the receipt, he shall pay two-thirds of the expenses relating to the purchase of musical instruments and the related accessory items and the extra-curricular activities (excluding piano and violin classes) of the only child of the family, name C, a girl born on XX August, 2010, now aged 7 (“the Child”) commencing from the date hereof;

IT IS BY CONSENT ORDERED THAT:

1. The amount of periodical payments payable by the Respondent for the benefit of the Child as specified in the Order by consent dated 9^th September, 2013 be varied upwards to :-

(a) HK$9,745 per month commencing from 20^th February, 2017 until 19^th September, 2017; and

(b) HK$8,100 per month thereafter until the Child reaches the age of 18 or completes a first university bachelor’s degree, whichever is the later, and such sum to be increased in line with the Composite Consumer Price Index in Hong Kong on the anniversary of this Order and on the same date in each year thereafter;

2. The Respondent shall pay the shortfall of periodical payments for the period from 20^th February, 2017 to 19^th September, 2017 in the total sum of HK$21,315 and the shortfall of periodical payments for the period from 20^th September, 2017 to 30^th September, 2017 in the sum of HK$513 by five equal instalments of HK$4,365 each, the first to be paid on the 1^st day of October, 2017 and thereafter on the 1^st day of each subsequent month until payment in full;

3. Commencing on 1^st October, 2017, the Respondent shall pay the periodical payments on the 1^st day of each month; and

4. Costs reserved, and the Petitioner’s own costs be taxed in accordance with the Legal Aid’s Regulations.  The Petitioner and the Respondent shall file and serve their respective submissions on costs within 21 days from the date hereof.

2.  It is an obvious point but nevertheless one worth stating that given that the order was made by consent, the court has not made any findings of fact nor come to any decisions in relation to the issues, given that there was no trial and therefore no judgment. It is true that the court, did at the invitation of the parties, give an indication on certain matters, but that is all. Normally in such a situation the parties are also able to also reach an agreement on the issue of costs. Unfortunately, that was not the case here.

The issue

3.  The only issue then is what order should now be made for costs given these prevailing circumstances?

The law 

4.  As set out by the solicitor for the Petitioner in their submission, the law in relation to costs is well settled and not in dispute. Reference is made quite properly to Order 62 rule 3(2) of the Rules of the High Court, Cap 4A which states as follows:

5.    Order 62 rule 3(2) of the Rules of High Court, Cap. 4A provides that :-

“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, subject to this order, order the costs to follow the event, except when 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”.

5.  In addition I was taken to the leading case of Gojkovic v Gojkovic [1992] Fam 40 where Butler-Sloss LJ stated as follows:

“There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation: for instance (as I have already indicated earlier) material non-disclosure of documents. Delay or excessive zeal in seeking disclosure are other examples. The absence of an offer or of a counter-offer may well be reflected in costs – or an offer made too late to be effective. ... It would, however, be inappropriate, and indeed unhelpful, to seek to enumerate and possibly be thought to constrain in any way, that wide exercise of discretion. But the starting point in a case where there has been an offer is that, prima facie, if the application receives no more or less than the offer made, she/he is at risk not only of not being awarded costs, but also of paying the costs of the other party after communication of the offer and a reasonable time to consider it. That seems clear from the decided cases and is in accord with the Rules of the Supreme Court and the County Court Rules 1981 requiring the court to have regard to the offer. I cannot, for my part, see why there is any difference in principle between the position of a party who fails to obtain an order equal to the offer made and pays the costs, and a party who fails by the offer to meet the award made by the court. In the latter case prima facie costs should follow the event, as they would do in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position”.

6.  Reference was also made to HK v BD, CACV 252 of 2009 unreported where the Hon Mr Justice Hartmann said 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……”

I agree.

7.  Finally I was also taken to a quote from one of my own judgments namely LCHJ v SYMA FCMP 28/2014, where I added that:

This general approach has been routinely adopted in Hong Kong. It has been said that the issue of costs lies in the discretion of the court and costs are normally expected to follow the event. It is also accepted that this presumption is more easily displaced in family proceedings than in others. …

Discussion

8.  In this instance the Petitioner wife, who is legally aided, is seeking her costs on the premise that she was the successful party. Although, as I have said, this is said in the context of an agreement reached as opposed to an application made following a trial and subsequent judgment. The difference between the parties before the hearing was set out as follows:

	P’s letter dd 24/8/2017	R’s letter dd 5/9/2017
Monthly sum	HK$9,000 per month	HK$7,000 per month
Costs	Costs to P	No order as to costs
Musical instruments	Reimbursement of past and future purchase	Past purchase: no reimbursement Future purchase: reimbursement subject to agreement
Future extra curricular activities	-	Future extra curricular activities (apart from current piano and violin classes): reimbursement subject to agreement

I am told that the day before the hearing the Respondent increased his offer to HK$8,000 per month. He did not offer to reimburse the wife for the cost of the past purchase of musical instruments. He also reiterated that there should be no order as to costs.

9.  As indicated above the parties were able to come to consensus on all matters following indications sought and given by myself. The husband’s position is that there should be no order as to costs because he “won” on most of the issues before the court and he had been reasonable in the stance that he took. However, with respect the husband has not “won” because there was no trial and no judgment. Also it is of note that the final compromised offer was better than the offer made by him before the date of hearing in any event.

Conclusion

10.  I am mindful of the fact that parties should be encouraged to negotiate settlements and should not be unnecessarily penalised when agreement is reached by an adverse costs order made against them. Parties should also be encouraged to settle early without the necessity of coming to court – which is often prohibitively expensive. I am also conscious of the fact that the wife really had no option but to issue her application and that the husband’s final offer came very late in the day. Further the final agreement only came about following quite intensive negotiation and after further compromises were made. In such circumstances it seems to me that it would not be appropriate to make an order in the terms sought by the wife.  I will though order that the husband do pay 25% of the wife’s costs of and arising out of the application dated the 20 February 2017 on a party and party basis to be taxed if not agreed. The Petitioner’s own costs to be taxed in accordance with Legal Aid regulations. This is in recognition of the fact that, as I have said the wife really had no alternative but to issue her application. Had she not it is very unlikely that the parties would have reached the agreement that they did. Further I have also noted that the husband’s final offer did not “beat” the ultimate agreement and that it was made almost too late in the day to be effective in any event. In such circumstances although the parties did ultimately reach an agreement it seems appropriate for the husband to make some contribution towards the wife’s costs. The costs of this application shall also be to the wife to be taxed if not agreed on a party and party basis. Again there shall also be legal aid taxation of the wife’s costs.