WONG WAI WING v. MANG FAN LIN

CAMP 312 /2019

[2020] HKCA 503

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 312 OF 2019

(ON AN INTENDED APPEAL FROM HCMP NO 1498 OF 2016)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is the plaintiff’s renewed application for leave to appeal against a decision on costs of Deputy High Court Judge Allan Leung on 17 September 2019.

2.  The plaintiff and the defendant were married in April 2012 and filed for divorce in August 2013 by consent. On 31 March 2014, the Family Court granted a consent order (“Consent Order”) in relation to, among other things, the plaintiff’s maintenance of the defendant together with the decree nisi.  On 29 April 2014, the plaintiff issued a summons in the divorce proceedings for an order that the maintenance agreement signed by the parties on 21 August 2013 (“the Maintenance Agreement”) be declared null and void for duress.  On 23 September 2014, the plaintiff issued an originating summons in the District Court for substantially the same relief, seeking to set aside the Maintenance Agreement and the Consent Order and a declaration that all gifts and money given or entrusted by the plaintiff to the defendant do stand to the plaintiff’s credit and be considered as his assets for the consideration of financial relief in the divorce proceedings, on the bases of undue influence and unconscionable bargain.  This originating summons was transferred to the High Court and the trial took place before the judge over seven days in April 2019.  The defendant had filed a counterclaim for $393,000 which she alleged her friend provided which was remitted to the plaintiff to purchase shares for her.

3.  On 8 July 2019, the judge handed down his judgment (“the Judgment”)^[1]. He ordered the Maintenance Agreement and the Consent Order to be set aside, and declared that two landed properties and all payments and expenses made by the plaintiff to the defendant in connection with those properties do stand to the plaintiff’s credit and be considered his assets for the consideration of financial relief in the divorce proceedings.  He dismissed the defendant’s counterclaim.

4.  The judge made a costs order nisi that there be no order as to costs, taking the view that neither party has emerged as victor in the proceedings.  He expressed reservations and concerns about the way the divorce was instigated and conducted, and the veracity of some of the evidence of both parties^[2]. He found that both parties had feigned the divorce with a view to appeasing the plaintiff’s children (of a previous marriage) who disapproved of the parties’ marriage and the objective was to enable the plaintiff to recover the assets he had transferred to his children. Whoever instigated the sham divorce, both had colluded in signing the “Divorce Agreement” and “Supplemental Agreement” on 2 August 2013 and the Maintenance Agreement, which formed part of the Consent Order^[3].

5.  The plaintiff applied to vary the costs order nisi. On 17 September 2019, the judge handed down his decision (“the Decision on Costs”)^[4]. He varied the order nisi only to the extent of ordering the defendant to pay the plaintiff’s costs of defending the counterclaim, as the claim and the counterclaim were different actions involving different issues and the counterclaim was dismissed as devoid of merits.  The judge declined to vary the order there should be no order as to costs of the claim, as he considered that the action was a direct result of the sham divorce going wrong and both parties should be equally responsible.  Having considered all the circumstances, including matters relating to the litigation and the parties’ conduct in it, the circumstances leading to the litigation, the relevant Rules of the High Court (including in particular Order 62 rule 5(1)(e)^[5] and rule 5(2)(d)^[6]) and authorities, and the submissions from both parties, he made an order there be no order as to costs of the plaintiff’s claim in the action^[7].

6.  The plaintiff applied to the judge for leave to appeal against the Decision on Costs. The judge refused leave in a decision handed down on 5 December 2019 (“the Leave Decision”)^[8].  The plaintiff renewed his leave application to the Court of Appeal by issuing the summons herein on 18 December 2019.

7.  Having considered the papers and the submissions lodged on both sides, we exercise our power under Order 59 rule 2A(5) to determine this application for leave to appeal without an oral hearing.

8.  The draft notice of appeal appended to the summons contained eight grounds of appeal.  We do not propose to set them out. We have compared the grounds with those placed before the judge.  Save for a minor difference in the wording of ground 4 and two new grounds in 8(a) and (b), the grounds placed before this court are substantially the same as those considered and dealt with by the judge in the Leave Decision.

9.  In gist, the plaintiff’s contention is that the judge should not have taken into consideration his conduct in the sham divorce as (1) this was not connected with the subject matter of his claim in the action; (2) all he did was “not opposing” the petition for divorce; and (3) he succeeded in obtaining relief in respect of assets of 95% in value of his claim.

10.  In the Leave Decision, the judge dealt with the contentions advanced by Mr K M Chong for the plaintiff in support of each of the intended grounds of appeal and explained why these grounds do not have reasonable prospect of success, nor is there any other reason in the interest of justice that the appeal should be heard.

11.  In renewing the application before this court, Mr Chong would appear to have merely rehashed his arguments in the leave application before the judge, which have been thoroughly considered in the Leave Decision. Lam VP has this to say in Singh Arjun v Secretary for Justice [2014] 2 HKLRD 678 at §10:

“… a first-tier application before the matter is brought before the Court of Appeal serves an important function. Not only is this function valuable to this Court, it should also be of value to the parties. The party applying for leave should obviously reflect on the arguability of his grounds if the lower court refuses leave. At the same time, the opposing party should also review the merits of the application in light of the contentions run at the first-tier hearing. This should assist the parties in formulating and responding at the second-tier stage if an application is made to the Court of Appeal for leave. In other words, this Court expects the submissions advanced in the second-tier level to be more concise and focused.”

12.  Mr Chong does not appear to have taken advantage of the benefits of the first-tier application.  Repeating the arguments which have been rejected in the Leave Decision does not show us in what way the judge might have been in error in rejecting his contentions in support of the draft grounds of appeal.  We do not think he has responded to the reasons in the Leave Decision at the second-tier stage before us.

13.  We agree with the judge’s reasons in §§11 to 30 of the Leave Decision.  It is not necessary to repeat them.  We would only add the following.

14.  In support of his contention that the plaintiff’s conduct in the sham divorce should have no bearing on costs even if this might be dishonest, Mr Chong relied on this sentence in the judgment of Longmore LJ ^[9]in Hall v Rover Financial Services Ltd (GB) [2003] 1 Costs L R 70 at §20:

“It is not, in my view, proper to disallow a successful party her costs simply because of anterior dishonest conduct which, while it may have been a part of the transaction which gives rise to the proceedings, cannot be characterized as misconduct in relation to the proceedings themselves.”

15.  Hall v Rover Financial Services Ltd (GB) was considered by the English Court of Appeal in Groupama Insurance Co Ltd v Overseas Partners Re Limited [2003] EWCA Civ 1846^[10]. Brooke LJ, who gave the judgment of the court^[11], pointed out that Hall was apparently argued on the basis it was common ground that “there had to be a good reason why a successful claimant should be deprived of her costs, and that if this reason related to the conduct of a party, the conduct in question had to be conduct in relation to the litigation and not conduct extraneous to it” (at §35).  He further noted that it was not apparent from the judgment in Hall whether the court was taken to “the precise wording of CPR 44.3 which contains no language of limitation either in CPR 44.3(4)(a)^[12] or 44.3(5)(a)^[13] such as would shut out reliance in an appropriate case on misconduct in and about the matters that triggered off the litigation.” (at §38)  He expressed the view that the passage quoted in Longmore LJ’s judgment “should be interpreted as no more than describing the contemporary practice of the judges of [the Commercial Court].” (at §39)

16.  As the wording of Order 62 rules 5(1)(e) and 5(2)(d) contains no language of limitation on its proper construction, as a matter of law, the judge was entitled to have regard to the plaintiff’s conduct in the sham divorce, which was more than just “not opposing”.  He was entitled to form the view on the facts that this is an appropriate case on misconduct in and about the matters that triggered off the litigation such that the misconduct should be taken into consideration in exercising his discretion on costs.

17.  The plaintiff relied on two new grounds of appeal in 8(a) and (b), being that the plaintiff had made a written request dated 22 April 2014 to the defendant to set aside the Consent Order but the defendant declined, and that the plaintiff had made requests for mediation but were rejected by the defendant.  We do not think these new grounds would assist the plaintiff.  It does not appear that they have been drawn to the judge’s attention at any time, there being no mention of this in the Decision on Costs or the Leave Decision.  Nothing is known about the terms on which these alleged attempts at negotiation or settlement were made, or whether they are admissible offers to settle.  It is not apparent how the plaintiff could have satisfied the requirements for adducing fresh evidence on appeal in support of these grounds.

18.  The Court of Appeal will only interfere with the exercise of discretion of the trial judge on costs on the well-defined principles.  The present situation does not come within these principles.

19.  For all the above reasons, we dismiss the plaintiff’s application for leave to appeal.  As this application is wholly without merit, we make an order under Order 59 rule 2A(8) that no party may request the determination to be considered at an oral hearing inter partes.

20.  There is no reason to depart from the general rule that costs should follow the event.  We order the plaintiff to pay the costs of the defendant in this application.

21.  A statement of costs for summary assessment was submitted by the solicitors for the defendant on 16 March 2020 seeking costs of $135,270.  We consider the amount of costs excessive, having regard to the fact that the defendant was represented by the same legal team and the plaintiff relied on substantially the same grounds of appeal and repeated his contentions before the judge.  We assess reasonable costs recoverable by the defendant at $70,270.

22.  The costs order and gross sum assessment are orders nisi.  If there is no application to vary within 14 days of the handing down of this judgment, they will be made absolute.