LCC v. LTLA

CAMP 92/2019

[2019] HKCA 762

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 92 OF 2019

(ON AN INTENDED APPEAL FROM FCMC 10000/2017)

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J U D G M E N T

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

1.  This is a renewed application for leave to appeal against a costs order made by Deputy District Judge D To on 14 December 2018. The judge ordered the Respondent to bear the costs of a FDR held before the judge with certificate for counsel, to be taxed if not agreed. The reasons for the judge making such order were given orally by her at the time when she made the costs order[1]. Those reasons were repeated in the Decision of the judge on 2 May 2019, refusing to grant leave to appeal, in particular at [8] to [10]:

“8. First of all, a judge conducting a FDR hearing has the power to award costs against a party. Paragraph 13 of Practice Direction provides as follows:

‘ 13. General provision as to costs

In addition to having the power to make an order for costs under Paragraph 5(a)(ix) above, the judge hearing the First Appointment or conducting the FDR hearing, without prejudice to any other power that he may have to award costs against any of the parties before him, may also make such order as to costs as he considers appropriate having regard to all the circumstances including a party’s failure to comply with any of the terms of this Practice Direction.’

9. Secondly, the making of the Costs Order was not based on any privileged discussion. The Respondent was penalized on costs because of his unreasonable conduct which has jeopardized the whole system and spirit of dispute resolution.

10. The following is the relevant background:

(a) In preparation for FDR hearing, the two legal teams have attempted to agree on the valuation of properties which was the very foundation of their negotiation. Agreement was only reached a couple of days before the FDR hearing. An agreed schedule of properties with agreed valuation (“the Agreed Schedule”) was lodged with the Court a day before the FDR hearing.

(b) At the beginning of FDR hearing, parties confirmed that they were ready to proceed on the Agreed Schedule.

(c) Having heard the Court’s observation and indication on the issues in dispute, parties proceeded to negotiation outside courtroom.

(d) When parties return to report on the progress of negotiation, the Court was informed by the Respondent’s counsel that the Respondent disagreed with the valuation despite the Agreed Schedule. Despite that the valuation was just agreed a few days ago, the Respondent reneged on the agreement and asserted that the property market has dropped.

(e) As a result, the FDR hearing could not proceed and the cost of FDR was wasted. As the Respondent had reneged his agreement on the valuation, there had not been and could not be an effective and viable FDR hearing.

(f) Having regard to the circumstances and the Respondent’s unreasonable conduct, I therefore exercise my discretion to award costs against the Respondent.”

2.  In the renewed application, the draft grounds of appeal, as stated in the draft attached to the summons of 15 May 2019, are as follows:

“ (1) The learned Judge erred in law and in the exercise of her discretion and was plainly wrong in finding that the Respondent should pay the Petitioner’s costs in circumstances where:

(i) There had been a viable and effective Financial Dispute Resolution (“FDR Hearing”) Hearing;

(ii) There were negotiations between the parties as to settlement;

(iii) The learned Judge had been privy to Without Prejudice offers of settlement between the parties;

(iv) There has been no waiver of the privilege attached to the WP correspondence;

(v) The principle behind the FDR process and the purpose of the FDR Hearing is to encourage settlement, an award of costs against one party where there has been an effective FDR is contrary to this.”

3.  In the written submissions placed before us, Mr Todd essentially repeated the submissions advanced before the judge based on Myerson v Myerson [2008] EWCA Civ 1376 and ABW v MAW [2016] HKCA 580.

4.  The application is opposed by the Petitioner and we have read the submissions of Ms Kwan in opposing the same.

5.  As the judge quite rightly stated, under paragraph 13 of PD 15.11 a judge presiding over a FDR has a general power to award costs as the judge considers appropriate having regard to all the circumstances.  In this instance, the judge awarded costs of the FDR against the respondent having regard to his unreasonable conduct at the FDR hearing. The draft grounds of appeal do not begin to contest the judge’s finding on unreasonable conduct.

6.  Further Ground (1)(i) is plainly wrong.  The respondent saw fit to dispute the agreed valuation after the judge had expressed a view based on such valuation.  This was precisely the reason the judge regarded the whole exercise in the FDR to have been wasted by virtue of the stance of the respondent.

7.  As the judge explained at [11] of the Decision of 2 May 2019, the reliance placed by Mr Todd upon Myerson v Myerson [2008] EWCA Civ 1376 and ABW v MAW [2016] HKCA 580 is wholly misconceived. Those cases were obviously dealing with costs and other interlocutory proceedings outside the scope of the costs of the FDR itself. 

8.  In our view, the intended appeal based on the draft grounds has no prospect of success and there is no other reason in the interest of justice to entertain such hopeless appeal.  We refuse to grant leave and the stay of execution sought in the summons.

9.  In our judgment, this renewed application is so glaringly lack of merit that it should not have been brought in light of the judge’s very clear and cogent decision in refusing leave.  Given that the respondent were advised by experienced counsel and solicitor, we expect that the respondent should have been told of such lack of merit.  We note that according to his statement of costs he has to incur $134,520 for the present application.

10.  We would add that it would be within the range of reasonable options for the judge to fix the costs of FDR to be paid by the respondent forthwith in the circumstances of this case.  The Family Court can be more robust to ensure that parties should approach FDR with a sincere attitude and exercise reasonable efforts in good faith in participating in the process.  Unreasonable conduct of the kind exhibited in the present case should normally be sanctioned by an immediate costs order to mark the court’s disapproval.

11.  We dismiss the summons of 15 May 2019 and order the respondent to pay the costs of the petitioner in this summons on indemnity basis.  Having considered the statement of costs of the petitioner, we provisionally fixed the costs to be paid by the respondent at $54,455.  If any party has any objection to the quantum of costs, he or she may write to court to seek a variation by letter within 7 days from the handing down of this judgment.

12.  As the application is totally without merit, pursuant to Order 59 Rule 2A(8) we further order that no party may request our determination herein be reconsidered at an oral hearing inter partes.