WONG WAI WING v. MANG FAN LIN

HCMP 1498/2016

[2019] HKCFI 2939

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1498 OF 2016

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DECISION

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Introduction

1.  By a summons of 27 September 2019 (“the Summons”), the plaintiff (“Mr Wong”) applies for leave to appeal my Decision on Costs dated 17 September 2019 (“the Costs Order”). 

2.  This decision should be read in conjunction with the Costs Order and the Judgment dated 8 July 2019 (“Judgment”).  The nomenclature in the Judgment and the Costs Order are adopted for this decision.

3.  In the Costs Order, I ordered that (i) there be no order as to costs of the plaintiff’s claim in the action; (ii) the defendant pay the plaintiff’s costs of his defence to the defendant’s counter-claim; and (iii) the defendant pay 50% of the plaintiff’s costs of the plaintiff’s summons to vary the Costs Order Nisi.

4.  I gave written directions on 10 October 2019 that pursuant to the guidance by the Court of Appeal in Tsang Wing Kwai v Tsang Wing Fai [2018] HKCA 759 the Summons be disposed of by written submissions. 

5.  This decision is based on the written submissions filed by Mr Chong and Mr Chow, counsel for Mr Wong and the defendant (“Ms Mang”) respectively.             

General Principles governing application for leave to appeal and concerning costs

6.  I do not believe there can be any dispute about the following principles governing leave to appeal concerning costs.

7.  The court would grant leave if the appeal has a reasonable prospect of success (Section 14AA(4)(a) of the High Court Ordinance [Cap 4]); the prospect of success would be ‘reasonable’ and more than ‘fanciful’ without having to be ‘probable’ (SMSE v KL [2009] 4 HKLRD 125 per Le Pichon JA at para 17 and re-affirmed by the Court of Appeal in KNM v HTF [2011] HKEC 1210), or that there is some other reason in the interests of justice that the appeal should be heard (Section 14AA(4)(b) of the High Court Ordinance [Cap 4]; Hong Kong Civil Procedure 2020 [59/2A/4]).

8.  An appeal will not be entertained from an order which was within the discretion of the judge to make (which is the case here as the Costs Order, which is the subject matter of this leave to appeal application, was made as a result of my discretion) unless it can be shown that the discretion was made (i) under a mistake of law and misapprehension as to the facts; (ii) in disregard of principle; (iii) by taking into account irrelevant matters; and (iv) the conclusion reached was outside the generous ambit within which a reasonable disagreement is possible (Hong Kong Civil Procedure 2020 [59/0/54]).

9.  The court would be reluctant to allow appeals on costs only and that the Civil Justice Reform (“CJR”) has not relaxed the high hurdle that an applicant faces in making such application.  The Court of Appeal will not interfere with the exercise of a judge’s discretion in the award of costs unless it was shown that the judge had failed to exercise the court’s discretion or exercised upon a false principle, or did not exercise it judicially or the exercise of discretion was demonstrably flawed (Tang Chung Wah Alan v Chen Yung Ngai Kenneth, unreported, HCMP113/2013, 7 May 2014, per DHCJ Le Pichon (as she then was) at para 6; Pfeiffer GmbH v Cheung Hay Kit, unreported, CACV 245/2013, 29 October 2014, per Kwan JA at para 6; Hong Kong Civil Procedure 2020 [62/2/11]).

Grounds of Appeal

10.  Mr Wong’s grounds of appeal can be summarised as follows:

(a)  I erred in law in taking into account his conduct in the presentation of the Petition in the Divorce Proceedings and considered it relevant for my discretion in refusing to award him costs of the main action even though he succeeded in the main action.

(b)  Even though Mr Wong did not oppose the Petition presented in the Divorce Petition presented by Ms Mang which contained untrue factual assertion, he had not done any act which would be considered as a matter of law and fact to be ‘connected with the subject matters of his claim’ in the main action.

(c)  Upon finding that the Shenzhen Property and Coronation Property and the monetary transfers to Ms Mang in connection with the two properties, and the Consent Order had been obtained by Ms Mang by unconscionable bargain[1] I ought to have held that the act of Mr Wong in not opposing[2] the Petition was unconnected with Mr Wong’s claim in the main action.

(d)  Alternative to the above, Mr Wong’s act in not opposing the Petition was only relevant for the consideration in relation to the Consent Order and his conduct was irrelevant for my consideration of the dispute over the two properties and the monetary transfers in connection therewith.

(e)  I erred in taking into account my observation of the credibility of the parties in the exercise of my discretion on costs, and that because of my findings in favour of Mr Wong, his credibility in other dealings with Ms Mang would be unconnected with the subject matters in the main action and hence irrelevant.

(f)  Despite having set aside the transactions relating to the Shenzhen Property and Coronation Property and the Consent Order, and accepted that Mr Wong had succeeded in obtaining relief of 95% in value of his claim, I erred in and there was no basis for my speculating as to possible outcome of Ms Mang’s claim for financial relief in the Divorce Proceedings.

(g)  Alternative to the above, Mr Wong’s commencement of the main action and Ms Mang’s resistance of the same demonstrated the necessity and reasonableness of his pursuit of his claim irrespective of the fact that his claim would ultimately be the subject matter of a contested claim for financial relief in the Divorce Proceedings.

(h)  In exercising my discretion on costs, I failed to consider sufficiently, or at all, that Mr Wong was wholly or substantially successful in his claim in the action.

Analysis

11.  In support of his grounds of appeal, Mr Chong submitted, inter alia, that Mr Wong would be entitled, as of right[3], to his costs incurred in the main action.  He refers to Order 62 rule 3(2) “...the Court shall, subject to this Order, order the costs to follow the event...”. 

12.  With respect, I am unable to accept his submissions.  Order 62 which contains amendments introduced by the CJR includes rules 5 and 7.  What Cheung JA said in Wong Kam Tong v Tin Shing Court, Yuen Long (IO) (No 2) [2012] 2 HKLRD 1128 at paras 11-13 and quoted by Kwan JA in Pfeiffer GMBH[4] contradicts Mr Chong’s submissions:

“...One can see immediately that Hong Kong has adopted a similar approach under Order 62 rule 3(2) in terms of the “follow the event principle” and its departure and also under rule 5 in terms of the consideration whether a party has succeeded on part of the case, even if he has not been wholly successful, and conduct.  In our view, one can say with equal confidence that after 2 April 2009, while the “follow the event principle” will still play a significant role in Hong Kong, it will nonetheless only be a starting point from which the Court can depart, the rationale being that a mechanistic adoption of the “follow the event principle” may result in parties incurring unnecessary costs in civil litigation.  We do not consider the provisions of Order 62 rule 7(1) (which enable the Court to disallow a party’s costs or order it to pay the other party’s costs if there is anything done or omitted which is improper or unnecessary) will by itself curtail the power of the Court under the new regime.  The amendment to rule 7(2) had specifically added the new (aa), namely, regard to the underlying objectives set out in Order 1A, rule 1.  In our view Order 62 rule 7 enables the Court to address the costs issue when there are improper or unnecessary acts or omissions but it does not confine the Court’s power only to such situations.”

13.  Turning to conduct, which is one of the major grounds of the appeal, Mr Chong submitted that Mr Wong’s conduct must be relevant to the cause of the main action.      

14.  Order 62 rules 5(1)(e) and (2) provide that in exercising its discretion, the court shall take into account the conduct of all the parties which includes “...conduct before, as well as during, the proceedings”[5]. The discretion must be exercised judicially with relevant grounds which must be connected with the case.  This may extend to any matter relating to the litigation and the parties conduct in it, and also to the circumstances leading to the litigation but no further[6].

15.  Mr Chong’s submissions about a dishonest but successful plaintiff who recovered the purchase price of defective goods sold under a contract of sale of goods from a vendor is, with respect, flawed[7].  The plaintiff in his example, being a dishonest person simpliciter, had nothing to do with his claim in respect of the defective goods so Mr Chong is right in this particular context that the plaintiff’s dishonesty was not relevant to or connected with his claim.

16.  He also refers to what Viscount Cave LC said in Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812 where it says:

“...if... ...a judge were to refuse to give a party his costs on the ground of some misconduct wholly unconnected with the cause of action...then a Court of Appeal might well feel itself compelled to intervene.”

However, Viscount Cave carried on after the above passage and said:

“But when a judge, deliberately intending to exercise his discretionary powers, has acted on facts connected with or leading up to the litigation which have been proved before him or which he has himself observed during the progress of the case, then... a Court of Appeal, although it may deem his reasons insufficient and may disagree with his conclusion, is prohibited... from entertaining an appeal from it.”

17.  The Donald Campbell case was referred to in the English Court of Appeal case of Groupama Insurance Company Ltd v Overseas Partners Re Limited [2003] EWCA Civ 1846 at para 29:

“Before the advent of the Civil Procedure Rules it was well settled that in exercising his discretion as to the costs of any proceedings, a judge was entitled to consider any relevant aspect of the conduct of the parties, whether it related to their conduct in relation to the matters that gave rise to the litigation, or to their conduct in the period that led up to the issue of proceedings, or to their conduct in the proceedings themselves. This was made clear in the speech of Viscount Cave LC in Donald Campbell & Co Ltd v Pollak [1927] AC 732. He said at p811 that the court had an absolute and unfettered discretion to award or not to award costs to a successful defendant in a non-jury case, and at p812 he doubted whether three earlier decisions of the Court of Appeal (which he had summarised at p808) could be supported. In those cases this court had interfered with a decision on costs by a judge who had paid regard to the conduct of the eventual successful party which had formed the original trigger to the litigation.” (emphasis added)

18.  Mr Wong’s conduct before and leading to the main action is directly relevant to the main action.  I have explained in details in my Judgment (including in paras 44, 45, 85, 187, 188) and my Costs Decision his collusion with Ms Mang in feigning the divorce and entering into a number of self-serving agreements and undertakings, in particular the Divorce Agreement, the Maintenance Agreement, and the Consent to Divorce.  The Maintenance Agreement, which was based on the Divorce Agreement, formed the basis and part of the Consent Order granted by the Family Court, one of the subject matters of the main action and which Mr Wong had sought to set aside.

19.  His involvement in the Petition, which contained untrue factual assertions supported by Ms Mang’s false declaration, was more than just “not opposing”.  He knew the date of their separation on the Petition was false.  Both he and Ms Mang knew or had intended that the divorce was not supposed to be genuine but was with a view to recovering assets that he had transferred to his children who were against their relationship and marriage. 

20.  In the summary prepared by a social worker of his interview with Mr Wong on 26 July 2013, it recorded, inter alia, that Mr Wong’s children were concerned that Ms Mang would take his assets so they would not return to him the assets he had transferred to them and wanted him to divorce Ms Mang or change the Coronation Property in which Ms Mang was living into joint names; and his daughters insisted that he divorced Ms Mang before any discussion about the return of his assets to him.  Mr Wong did not agree with the social worker’s summary when he was cross examined by Mr Chow at the trial[8].

21.  Not only did Mr Wong collude with Ms Wang in deluding his children by feigning the divorce but they also misled the court by the false assertions in the documents filed by Ms Mang.  Both of them had full and actual knowledge of the falsity.  The Petition, which was unopposed by Mr Wong, led to the Family Court granting the Decree Nisi.

22.  I dealt with credibility of both parties in my Judgment and Costs Decision, which is relevant to the exercise of this court’s discretion on costs.  Both Mr Wong and Ms Mang were found to be less than honest during the trial of the main action, as explained in the Judgment and Costs Decision. This includes challenging the authenticity of contemporaneous meeting notes made by independent social worker and medical personnel which did not align with their evidence.

23.  One of the grounds of the appeal is that Mr Wong’s act in not opposing the Petition was only relevant to the consideration in relation to the Consent Order and his conduct was irrelevant for my consideration of the dispute over the two properties and the monetary transfers in connection therewith.   However, it is not just Mr Wong’s act in not opposing the Petition, but his other conduct before and ‘which had formed the original trigger’ to the main action which this court is entitled to take into consideration. 

24.  The Consent Order which Mr Wong had sought to set aside contained a term relating to the discharge of the mortgage of the Coronation Property and payment of a monthly maintenance by Mr Wong to Ms Mang.  This was provided for in the Divorce Agreement[9].  Further, Mr Wong had sought to set aside not just the Consent Order but the transactions involving the two properties and this was specifically for the purposes of the consideration of financial relief in the Divorce Proceedings.  The latter is dealt with in paragraph 29 below. 

25.  The feigned divorce, the various self-serving agreements entered into which led to the Consent Order, the transactions relating to the two properties and the subject matters of the main action are so intertwined that it is hard to see how Mr Wong’s involvement and conduct before and during the Divorce Proceedings and the run up to the main action can be said to be unconnected to the subject matters of the main action and should not be taken into account by this Court when exercising its discretion on the question of costs.  I am unable to accept, therefore, that just because I found in favour of Mr Wong on the transactions involving the two properties, his credibility in other dealings with Ms Mang would be unconnected with the subject matters in the main action and hence irrelevant[10].

26.  Mr Chong is wrong when he says in paragraph 14 of his written submissions that Mr Wong’s conduct in colluding with Ms Mang in not opposing her Petition has only caused the Family Court to grant a Decree Nisi to Ms Mang, as the Family Court also granted the Consent Order which Mr Wong had sought to set aside in the main action.   

27.  Mr Wong claimed he was surprised to learn only at the call over hearing of the Petition that Ms Mang was serious about the Maintenance Agreement / Consent Order.  This led to the commencement of the main action to have, inter alia, the Consent Order set aside.  So they had intended to use the Family Court to pacify Mr Wong’s children with a view to recovering the assets he had transferred to them; he then came to this Court for relief when things did not work out as planned.  The Divorce Proceedings and the main action involved the same subject matter, that is the sham divorce, the same agreements which led to the Divorce Proceedings (one of which formed the basis of the Maintenance Agreement and incorporated into the Consent Order); and the same protagonists.    

28.  In so far as the ground of appeal that I erred in and there was no basis for my speculating on the possible outcome of Ms Mang’s claim for financial relief in the Divorce Proceedings is concerned, I was merely referring to and relying on Mr Chong’s own Opening where he submitted in paragraph 50 that when considering the parties’ financial relief, the Family Court used the starting point of 50/50 on the basis of White v White [2001] 1 AC 596[11].

29.  If he was right about the Family Court’s approach, which he should be given the authorities he relied on, even in his own case, had the properties remained in the name of Ms Mang, there is no reason why the same approach under Section 7 of the Matrimonial Proceedings and Property Ordinance (Cap 192) and the principles in White v White would not have been adopted by the Family Court when considering the financial relief.  It begs the question, therefore, whether it was reasonable for Mr Wong to pursue the main action, at least in so far as the declaration sought in relation to the two properties for the purposes of consideration of financial relief in the Divorce Proceedings is concerned[12].

30.  Even if I was wrong on this, Mr Wong’s conduct before and the circumstances leading to the main action were relevant to and connected with the subject matters of his claim in the main action which I was allowed and entitled to take into consideration in exercising my discretion on the question of costs.

Conclusion

31.  For the above reasons, I am not persuaded that I have erred in law in the exercise of my discretion, in particular in relation to the consideration of the parties’ conduct before, and during the main action[13].  Further, this court shall take into account the underlying objectives set out in Order 1A, rule 1[14].

32.  I am of the view, therefore, that the intended appeal does not have a reasonable prospect of success.  I also fail to see any other reason in the interest of justice that the appeal should be heard.  I therefore refuse to grant leave to appeal.

33.  The Summons is dismissed.  There is no reason why costs should not follow the event.  I therefore grant a costs order nisi that Mr Wong shall pay Ms Mang’s costs of the Summons, to be summarily assessed with the following directions:

(a)  Leave for Ms Mang to provide a bill of costs for summary assessment within 7 days;

(b)  Leave for Mr Wong to serve a succinct summary of objections not exceeding 1 page to Ms Mang’s statement of costs within 7 days thereafter; and

(c)  The summary assessment shall be by paper disposal (unless otherwise directed).

34.  Finally, I am grateful to counsel for their helpful written submissions.