Cwg v. Mh and Others
Read the full judgment text of HCMP 643/2012 on BabelCite. This High Court CFI judgment was delivered on 26 September 2013.
1. I shall adopt the same abbreviations as in my judgment delivered on 26 March 2013 in respect of the wife’s main Part IIA Application, her Setting Aside Application and the husband’s Variation Summons (“ Main Judgment ”), save for the 3 rd to the 7 th respondents whom I shall simply respectively call R3 to R7.
Cites 7 cases
|
HCMP 643/2012 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO 643 OF 2012 ---------------------------
---------------------------
-------------------------- RULING -------------------------- Introduction 1.I shall adopt the same abbreviations as in my judgment delivered on 26 March 2013 in respect of the wife’s main Part IIA Application, her Setting Aside Application and the husband’s Variation Summons (“Main Judgment”), save for the 3rd to the 7th respondents whom I shall simply respectively call R3 to R7. 2.Briefly, the effect of the order made pursuant to the Main Judgment (“Order”) is that :
3.An order nisi for costs (“Order Nisi”) was made in the Judgment/Order, with certificate for two counsel, that:
4.The husband, R2, and R3 (MVF) applied for the Order Nisi to be varied as follows:
5.The wife also applied for the Order Nisi to be varied, namely to include 6 reserved costs orders in these proceedings. Her application was in effect to clarify the Order Nisi as to whether certain reserved costs should be included. 6.Although written submissions have been filed respectively on behalf of R4, and also R5, and R6, they all take a neutral stance on who the paying party should be, so long as they are awarded costs in their respective favour. 7.The Costs Estimates were as follows:
General Legal Principles 8.Costs are in the unfettered discretion of the court. The general principle of costs in civil proceedings that costs should follow the event was laid down in Re Elgindata Ltd (No 2) [1992] 1 WLR 1207. 9.It has however been said that the court has a wider discretion in respect of costs in family proceedings, particularly in children cases (per Butler-Sloss LJ (as she then was) in Gojkovic v Gojkovic [1991] 2 FLR 233). In L v C CACV 169 of 2006 ( 19 March 2008), an appeal in a family case, Yuen JA has said[2]:
10.After the Civil Justice Reform, O 62 r 5 of Rules of the High Court (“RHC”) now sets out the special matters to be taken into account in exercising discretion as to costs, as follows:
11.Under rule 3 of the Matrimonial Causes Rules, the RHC shall apply to matrimonial proceedings subject to necessary modifications. However, as pointed out by Cheung JA in his recent judgment on costs in Z v X [2013] HKCA 123, CACV 166, 251 & 251 of 2011 (8 March 2013)[3], the position in Hong Kong in relation to costs in family cases has remained unchanged since LvC and TL and SN [2010] HKCA 296, [2010] HKFLR 506, CACV 196 of 2009 (19 October 2010). The Reserved Costs 12.The wife’s Senior Counsel Ms Eu had set out in her 1st skeleton submissions 6 orders when costs were reserved (“Reversed Costs Orders”). At the hearing on 22 August 2013 before this court (“Costs Hearing”), it was agreed by all those present that the 1st of the Reserved Costs Orders, namely the order of Poon J of 9 March 2012 regarding the husband’s summons of 8 March 2012 had been dealt with as part and parcel of the costs order made in the subsequent appeal and it was not necessary for this court to deal with this. 13.There was no dispute that the 2nd of the Reserved Costs Orders should be part and parcel of the wife’s Part IIA application, which should be costs in the cause. 14.The 3rd and the 4th of the Reserved Costs Orders were in relation to the husband’s respective joinder applications, first to join MVF (R3) and (R4), and later R5, R6 and R7. These, as now agreed, should form part of the costs in relation to those joinders (“Joinder Costs”). 15.The 5th of the Reserved Costs Orders was made on 17 September regarding R3’s summons of 13 September 2013, and this should also form part of the Joinder Costs. 16.The 6th of the Reserved Costs Orders was made on 11 October 2012 in relation to R2’s summons dated 9 October 2012. Parties agreed at the Costs Hearing that R2 should pay for the costs of this order as she failed in her summons. The husband’s case for variation of the Order Nisi 17.The husband’s case was based on:
18.There was also an issue in relation to the wife’s alleged breach of undertaking to bear half of the fee for the transcript of some 46 days of trial. This had resulted in some 17 letters between the wife’s solicitors and the husband’s solicitors and the court. Anyway, I indicated at the Costs Hearing that the costs of the transcript should form part of the eventual overall appeal costs, and I do not intend to deal with the costs of the transcript in this ruling. R2’s Case for variation of the Order Nisi 19.R2’s case was based on:
R3’s Case for variation of the Order Nisi 20.In the Order Nisi, R3’s costs had been inadvertently omitted. R3 applied for variation of the Order Nisi to the extent that the wife should pay its costs of and incidental to the Part IIA application. 21.R3’s case was that it was joined to decide the wife’s claim that the 6,000 shares in the Macau Corporation as gifted over to R3 by a Deed of Gift dated 27 June 2005 was part of the matrimonial asset, and as the wife had abandoned such a claim or failed to establish such claim at trial, there was no reason why the wife should not pay the costs of R3. The wife’s costs of and incidental to the Part IIA application 22.As seen from the above, the approach of the husband and R2 was mainly one of “issue-based”. 23.The wife’s List of Issues filed prior to the Pre-Trial Review (“PTR”) consisted of 5 main issues, briefly as follows:
24.In contrast to the wife’s List of Issues, the husband’s List of Issues consisted of 19 main issues. I recall querying some of the relevance of some of those issues, the husband’s then Counsel at the trial Mrs Remedios informed this court that those were all necessary issues in relation to the wife’s credibility, eg the Macau gambling licence. 25.Eventually, the final Joint List of Issues submitted on 2 December 2012 (“Joint List”) consisted of 20 issues, which this court then grouped into 14 main issues in the Main Judgment[4]. Mr Pilbrow had prepared an annex to his submissions setting out the court’s findings and the husband’s observations on each of those 20 issues in the Joint List (“Annex A”), and further an annex setting out what was described as “failed issues or irrelevant issues” (“Annex B”). In response, the wife’s side set out also in an annex as to those issues for which the husband’s case was rejected and those for which the husband was found to have deliberately hid his assets (“Annex I”). 26.As a matter of principle, it was Ms Eu’s submission that this “issue-based” argument on the part of the husband and R2 was a wrong approach and not appropriate in relation to costs in ancillary relief applications and further not in accordance with the authorities. She referred the court to the case of F v F (No 2) [2003] 3 HKLRD 976. In that case, Hartmann J (as he then was) made an award totalling $56.03m in favour of the Mrs F, the successful party. Mrs F then sought an order in respect of all outstanding costs in the proceedings, the majority of which were the costs of the trial itself. This was opposed by Mr F on the basis that the trial was greatly lengthened because Mrs F persisted in pursuing many issues which were totally or materially rejected, including an issue as to whether the principles in White v White [2001] 1 AC 596 should be adopted in Hong Kong. In support, Mr F claimed (by his own transcript analysis) that only 15% of the time at trial was spent on issues determined in Mrs F’s favour. 27.Hartmann J stated that leaving aside what he considered to be the long-established principle that costs were determined not by dividing litigation into quantifiable subjects and figures, like a profit and loss account, but rather by an overall impression, he had a number of difficulties with Mr F’s “time-to subject” analysis and he said as follows[5]-
28.Harmann then found in F v F although Mrs F had advanced a number of issues at trial which were found to be exaggerated or not proved on the evidence, her assertions always remained within rational boundaries. The issues were all relevant and “respectably capable of argument against the complex,multi-faceted history of how the parties came together, lived theirmarried life and separated.[6] 29.The learned Judge further went on to say that concerning the White v White issue, even though Mrs F failed on this it was central to the real questions in the suit. She failed largely because of the finding that the Court of First Instance was bound to follow existing jurisprudence set by the Court of Appeal, and if she wished to pursue her submissions in a higher court, she had to make her case at first instance[7]. Hartmann J went on to hold that Mrs F did not conduct the trial in a manner worthy of criticism and her failure on a number of issues, including the central issue of White v White did not lead to the conclusion that she should be denied her costs. 30.Ms Eu submitted that the above approach in F v F (No2) was in line with the principles applied in other civil cases namely that even if a party raised issues on which he failed, or that his case was exaggerated, it would not be in itself a reason for the Court to depart from the principle that costs should normally follow the event. She referred the court to the case of Commissioner of Inland Revenue v Hit FinanceLimited (Judgment on Costs), (FACV Nos 8 and 16 of 2007), (26 June 2008) where Bokhary PJ stated that:
31.F v F (No 2) was decided prior to the CJR and before O 62 r 5 came into effect, but at the time of the above Inland Revenue case, as submitted by Ms Eu, the Court of Final Appeal Justices should be aware of the coming CJR and O 62 r 5 although this was not specifically referred to by Bohkary PJ who delivered the judgment on behalf of the other 5 Justices. 32.In the case of Chan Mei Yiu, Paddy and Others and Secretary for Justice (HCMP 1175 of 2007, 9 December 2010), Saunders J (as he then was) had said that the proper approach to costs, having regard to the changes brought about by civil justice reform, was that the proposition that costs follow the event was not a general rule, but only operated to shift to the unsuccessful party the burden of showing why some different approach should be adopted on the facts of a particular case, and quoting from dictum of Lord Lloyd of Berwick in Bolton MBC v Enc Sec (Practice Note) [1995] 1 WLR 1176 that-
33.The earlier mentioned case of Z v X[9] was post CJR, and the Court of Appeal held therein that the wife had failed in a multitude of issues in the appeal/cross-appeal and it was ordered that she was only entitled to 80% of the costs. As to the Intervener in that case, it was held that she was joined into the proceedings for the determination of ownership of shares and was not concerned with other issues between the spouses, and that the Intervener was only jointly and severally liable with the husband in that case to pay 40% of the costs of the wife while he had to pay the balance of the 40 %[10]. 34.However, as Ms Eu pointed out, in Z v X, the imposition of the 80% costs was only in relation to the appeal and not to the costs of the 16 day trial in the court below. The trial judge Saunders J (as he then was) in fact ordered the husband in that case and the Intervener to pay the whole of the wife’s costs of the trial, including any costs in interlocutory matters which had been reserved and not otherwise dealt with, as to 50% on a party and party basis, and as to 50% on an indemnity basis as there had been non disclosure as to his assets on the part of the husband[11]. The costs order of Saunders J made in relation to the trial was not disturbed by the Court of Appeal. 35.Then there was the recent judgment on costs in the case of PLTO v KLK and HITL (unreported CACV 48 of 2012, 10 May 2013). As can be seen from the main judgment of PLTO (CACV 48 of 2012, 25 March 2013),the issue was whether the Jersey Trust that was holding the bulk of the family assets ought to be considered a resource of the husband. The wife in that case Mrs P argued that the whole of the trust assets ought to be considered as a resource of Mr P whilst Mr P argued that only two-third of the trust (consisting of his own interest and the wife’s interest) should be held to be a resource of his. The professional trustee HSBC was joined as a party so as to protect the interests of the other beneficiaries of the trust. Ultimately, the Court of Appeal upheld the findings of the CFI Judge that only two-third of the Trust ought to be considered a resource (which was the husband’s case all along). The Court of Appeal then held that Ms P was only entitled to two-third of her costs. 36.Ms Eu submitted that each case would depend on its own facts and merits, and the case of PLTO could be distinguished from the present case. In PLTO, Mrs P was awarded two-third of the costs as the Court of Appeal held that one-third of the trust fund was for the children and only two- third of the trust fund would be considered a resource for Mr P and the costs order was made in that context. Further, in that case, Mr P had always conceded to two-third of the trust fund being regarded as the resources available to the parties. 37.Family cases are quite different in nature from other civil cases. As was said by Baroness Hale of Richmond JSC in the recent case of Prest v Pretrodel Resources Ltd and others [2013] UKSC 34, there is a public interest in spouses making proper provision for one another, both during and after their marriage, in particular when there are children to be cared for and educated, but also for all the reasons explored in cases such as McFarlane v McFarlane [2006] 2 AC 618, and this means that the court’s role is an inquisitorial one[12].(emphasis added) 38.As pointed out by Hartmann J in F v F, in ancillary relief proceedings, a broad range of matters must be taken into account and further as set out in section 7 of MPPO, the court must have regard to the conduct of the parties and all the circumstances of the case. Further, the fact that an issue advanced by one party had not found favour with the court did not mean that the issue was not necessary, if only peripherally, to assist the court in considering the overall strength of that party’s case. 39.In the present case, I do not find the detailed “Issue Approach” of the husband and R2 helpful, in particular, the detailed observation of the husband on each issue in Annex A and his detailed list of failed/irrelevant issues in Annex B. I also do not find the wife had ‘failed’ in some of the issues as set out by the husband. 40.Further, although the wife had mentioned many matters in her affirmations which took place during the marriage, her pre-PTR List of Issues was rather succinct in that the core issue was the identification of the “matrimonial pot” and the valuations of the various assets. Most of those 20 detailed issues in the Joint List were in fact set out by the husband in his pre-PTR List of Issues. In the end, if one looks at the wife’s Annex I, the husband’s case was rejected on most of the more important issues, and further the husband was found to have not made full and frank disclosure as to his means. 41.Under the wife’s core issue of identification of the “matrimonial pot”, she included the husband’s interest in the 6,251 shares in the Macau Corporation. As set out in the Main Judgment[13], R2’s 6,251 shares were transferred in 1983 to MVI (Panama), of which there were 10 bearer shares. Then the 10 bearer shares were converted to registered shares in the sole name of the husband before his transfer out to Cheung Kong/MVI (HK), of which the husband and R2 were equal registered shareholders. In January 2002, R2 gave the irrevocable Macau Shares P/A to the husband, and about 11 days later, by a further issue of shares, R2 became 90% registered shareholder and the husband 10% shareholder of MVI (HK). Then R3 (MVF) was set up in 2003 and later in 2005, MVI (Panama) transferred 6,000 out of 6,251 shares to R3, of which R2 and the husband were ‘permanent’ members. 251 shares and all the shares in the ST Shipping, however, remained with MVI (Panama), which in turn was held by MVI (HK), and in turn continued to be held as to 10% thereof by the husband until the Declaration of Trust in July 2009 when he then declared he held the 10% for WS (BVI). Anyway, it seemed in the end that all the MVI (HK) shares could have ended up being held for WS (BVI), if R2 had indeed also executed a declaration similar to the husband’s Declaration of Trust, as the husband’s witness Mr Lai said in his evidence that one declaration was prepared for R2 to sign as well. 42.Although this court said in the Main Judgment that the wife’s case in relation to MVI (Panama) and Cheung Kong/MVI (HK) and MVF was confusing[14], but if one looked at the various transfers as stated above, it was not surprising the wife was confused as to who the real beneficial owners of MVI Panama /MVI (HK) were. 43.The issues raised by the wife in relation to those shares in the Macau Corporation were not irrelevant nor unreasonable, nor was she entirely unsuccessful, as in the end it was found by this court that the husband held at least 50% beneficial interest in WS (BVI) and through that, the husband could end up with at least 5% (50% of his original 10%) of the beneficial interest in 251 shares in Macau Corporation and 45,050 shares in ST Shipping. If R2 did also execute a declaration of trust of her shares in MVI (HK) in favour of WS (BVI), then the husband could end up with at least 50% of the beneficial interest in those shares through WS (BVI). Those shares were subject to various litigations, but in any event, there was no disclosure by the husband or R2 of the value of those shares, which was unknown. 44.As Baroness Hale said in the case of Prest, the parties have a duty, not only to one another but also to the court, to make full and frank disclosure of all the material facts which are relevant to the exercise of the court’s powers, including of course their resources; see Livesay (formerly Jenkins) v Jenkins [1985] AC 424, and if they do not do so, the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are[15]. 45.In the present case, it was this court’s finding that the husband had adopted a “catch me if you can” attitude and that he had not provided full and frank disclosure of various matters, including the ultimate beneficial ownership of the Offshore Companies. This court then drew adverse inferences against the husband. 46.In relation to the Grand Panorama Flat, the Estoril Court Flat, the Hunghom Offices, and the Kennedy Road Flat, the wife did seek a transfer of property order in respect of each of these properties, and her then Counsel Mr Chow had attempted to rely on the principles for ‘piercing the corporate veil’ in so far as the companies ACE and WS (HK) were concerned. During the trial, the Supreme Court decision in Prest had not yet been delivered, and there was a dissenting judgment from Thorpe LJ (as he then was) in the Court of Appeal as to whether in matrimonial cases, the same approach should be adopted as in the company cases, since there were two line of authorities. Mr Chow had urged the court to adopt the approach of the trial judge Moylan J and also Thorpe LJ, but I accept in any event the wife would fail, as the relevant companies were not joined by her, and the court would not have been able to made orders against these companies. 47.So far, as “judicious encouragement” was concerned, all this court pointed out in paragraph 635 of the Main Judgment was that the terminology of those two words did not find favour in our Court of Final Appeal, but this court did follow the approach laid down by the Court of Final Appeal in KEWS and NCHC, FACV 18 of 2012, [2013] 2 HKLRD 314, which decision only came out after the trial, and made findings in paragraphs 554 to 558 of the Main Judgment on what financial resources were received by the husband in the past, and further that such financial resources would likely to be received by the husband in the forseeable future. This cannot be said to be a ‘failed’ issue on the wife’s part. 48.The wife was cross examined at length by Mrs Remedios on her various expenses. Eventually, even though the wife did not produce sufficient documentary evidence to support some of her expenses, or the children’s expenses, and that there was exaggeration on her part, the court found her reasonable financial needs were in the region of HK$183,000 per month, and the children’s another HK$100,000 per month, plus their education and other expenses which the husband undertook to pay. Although the amounts, in particular those for her general and personal expenses were much lower than what she was claiming, they were much higher than the HK$40,000 per month, which the husband was paying. 49.The husband further complained of the wife’s litigation conduct, or rather misconduct, in that there was non-disclosure on her part, her uncooperative manner in her testimony, her “cut and paste” affirmations and her exhibits. 50.Although this court found that the wife had also failed to make full and frank disclosure of her means, the court found that her failure paled against the husband’s which was much more serious[16]. 51.So far as the wife’s long repeated affirmations and unnecessary exhibits, these are matters which the taxing master can deal with. Some “copy and paste” were obvious mistakes by the wife’s solicitors, eg paragraph 6 of the Part IIA originating summons seemed to be “copied and pasted” from one of the wife’s affirmations. Anyway, in this respect, I would also add that the way that the Trial Bundles were prepared, in particular as to what affirmations should be included or excluded, was rather unsatisfactory, and this resulted some of the affirmations being duplicated and others omitted. I also find it was unnecessary to prepare yet another set of bundles for the Cost Hearings for those documents which were already in the Trial Bundle. Further, there should have been a separate bundle of Calderbank proposals and Open Offers, and yet this was missing, and all the Calderbank letters were mixed up with the court documents and the affirmations. The court had to ask during the Costs Hearing that a separate bundle be prepared for the Calderbank and/or Without Prejudice letters and/or Offers. Solicitors should really apply some thought to preparation of bundles rather than simply “throw in” everything in whatever order that comes to their mind. Anyway, as I have said, all these are ultimately matters for taxation. 52.As to the husband complaining that the wife had raised issues of little probative value or irrelevant issues[17], Mr Pilbrow referred to the Beijing joint venture, the auctioneer licence, the Macau gambling licence, Deloitte Report, inappropriate media presence, the purported HK$80m advanced by R2 to the husband, the dividends from the shares of the Macau Corporation, and the HK$1m gift. All these matters were mentioned in the wife’s affirmations as to the general circumstances during the parties’ marriage, the parties’ lifestyle and standard of living during the marriage, and the husband’s financial resources, which were matters the court would have to have regard to under s 7 of the MPPO. 53.I do not find it was unreasonable for the wife to mention those matters in her affirmations. She did not include them in her pre-PTR List of Issues. The husband wanted to dispute almost everything said by the wife, to challenge her credibility, and I am of the view that the husband had spent an inordinate time opposing some of those issues. 54.I will not go into all the alleged “failed claims” or “irrelevant issues”, but would just comment on some hereafter. 55.Take the issue of HK$1m gift as an example. In my view, although the wife was wrong about the husband being given the Dividends Cheque of HK$112.8m in July 2005, in that the cheque was made in favour of R2, the issue at the trial was really whether the wife was under any obligation to repay the said HK$1m which was paid out of the dividends to her by R3. Although the court’s finding was that it was an ex gratia payment from R3 to the wife, rather than a gift from the husband to the wife, more important was the court’s finding that there was no obligation on her part to repay. In my view, the wife did not ‘fail’ on this issue as alleged by the husband, nor was it irrelevant if the wife had an obligation to repay, since this would become a liability for her. It was the husband who came up with an ‘elaborate’ explanation of a so called ‘advance’ by R3 and the HK$3m Plan, which was not accepted by the court, and much time was wasted on this so called ‘advance’ and the HK$3m Plan. 56.The wife did say in her affirmations that R2 had advanced up to HK$80m to the husband from the dividends. This was one of the irrelevant issues said by Mr Pilbrow that the wife had raised. The HK$80m issue was listed by the husband as an issue in his List of Issues, and not the wife. This court did not deal with this as any specific issue, but obviously this was part of a larger issue as to the husband’s financial resources during the marriage. What the court did find was that, whether the source was from the dividends or not, from December 2005, about 5 months after the Dividends Cheque, until October 2008, the total amounts deposited into H’s Trust Accounts by R2 averaged about HK$6.8m per month for 34 months and that the husband’s share would be about HK$3.4m a month during that period, which the court found to be his financial resources[18]. 57.Again, much time was spent arising out of the husband’s denial that he had anything to do with the wife’s application for a Macau gambling licence and the Deloitte’s Report prepared in connection therewith. This issue arose initially out of the wife producing a copy of the Deloitte’s Report at the time of her application for the MPS Order, as evidence of the husband’s net worth in 2001. The husband, however, denied the veracity of the Deloitte’s Report and said it was the wife’s own ‘creation’. This led to the wife having to explain how the Deloitte’s Report came to be prepared for the purpose of the application for the Macau gambling licence. The wife’s case was that she was used as a front person by the husband to apply for the licence, and it was in this connection that the Deloitte’s Report was prepared. 58.It was self evident from the Deloitte’s Report that it was mostly stating the information provided with no independent verification and in any event more than 10 years old. The more important issue at the trial was whether the wife or the husband was the person actually behind the application, since this would be relevant to their respective financial resources, and the court found it was the husband and that the wife could not have made such an application on her own without the support, financial and/or otherwise, of the husband[19]. In my view, the wife did not actually ‘fail’ in this issue as alleged by the husband in Annex A. 59.As pointed out by Ms Eu, material non-disclosure was a litigation misconduct which the court could take into account in considering costs, and further, material non-disclosure could attract an indemnity costs orders against the husband, as in the case of ML v YJ (No 2) [2008] 6 HKC 313. 60.In the present case, unlike Mr P in the case of PLTO, the husband did not in any way concede his interest in the shares of the various companies. The husband’s 2nd Form E claimed only $5.6m in personal assets out of which about HK$5.4m said by the husband to be what R5 had to pay him under an order of the US court, and the husband further claimed about HK$28.9m of liabilities[20]. The wife had to pursue her case through a lengthy trial in order to get a reasonable award for herself and the children. 61.The husband’s material non-disclosure had also placed the wife in a difficult position in any negotiation for any settlement. I understand there was mediation but was unsuccessful. The first Calderbank offer from the wife was made about 2 months before the trial, followed by her sanctioned offer. The husband responded with one Calderbank offer. Thereafter, there were two Open offers from the husband and one from the wife. 62.The husband’s revised open offer of 8 November 2012 was essentially a payment of HK$25m to the wife, plus what he called repayment on her behalf of various alleged loans and a waiver of his overpayment under the MPS Order from March 2010 to September 2012. However, although in this letter, his offer in relation to a lump sum for the wife had gone up substantially from his previous offers, he then reduced his offer in relation to maintenance for the children, by offering to pay only HK$5,000 per month for each. This was much less that the HK$15,000 per month for each child which was offered by him in his earlier Calderbank letter of 17 August 2012. 63.The wife’s final open offer was essentially a sum of HK$100m for herself and HK$60,000 per month for the maintenance of each of the children, play their education expenses. On the last day of submissions, in addition to the HK$100m, the wife also claimed half of the husband’s beneficial interest in MVI (HK). 64.The wife was eventually awarded a lump sum of HK$120m, plus HK$50,000 per month as maintenance for each child in addition to the husband’s undertakings. This award greatly exceeded all the husband’s offers and were close to the wife’s Open Offers. 65.Considerable time was spent on cross examining the husband on his means and financial resources. The main issues which prolonged the trial were the husband’s beneficial interest in the various companies including the 3 Offshore Companies, the Car Collection, the Valuable Timepieces, the Trust Accounts, and his financial resources, and all these resulted in lengthy cross examination of the husband, and also Ms Lo. Eventually this court had to draw adverse inference against him and R2. 66.The wife had to issue the Part IIA application as a result of the husband unilaterally obtaining a divorce from the Court in Thailand, where the husband had no real connection, nor did the wife. The wife had no alternative but to take out the Part IIA application, and in the end was clearly the successful party. 67.Although the wife did not succeed on all the issues she took, in my view, those issues were not raised unreasonably, and taking into the husband’s own conduct in pursuing or defending his case, his material non-disclosure, and all the circumstances of the case, I see no reasons as to why the husband should not pay all the wife’s costs of and incidental to her Part IIA Application. 68.The husband did not oppose the Subpoena Costs. As for the costs of the husband’s Variation Summons, as the issues thereof overlapped with the issues in Part IIA Application, and the husband clearly failed in his Variation Summons which was dismissed, the husband should pay all the wife’s costs of his Variation Summons. 69.So far as R2 was concerned, her Senior Counsel Mr Li adopted the same “issue approach” argument as Mr Pilbrow for the husband. 70.The order which Poon J made on 14 May 2012[21] joining R2 as a party stated that she was joined for the purpose of determining whether the assets stated in the order should form part of the matrimonial assets, namely:
71.In R2’s pre-PTR List of Issues, there were only 2 issues set out[22]:
72.Mr Li argued that as the wife did not manage to establish that the beneficial interest in the various companies, particularly the Offshore Companies, the Car Collection, the Valuable Timepieces, the Trust Accounts were wholly beneficially owned by the husband, which was the case of the wife, and therefore she was not wholly successful in her claims. (emphasis added) 73.However, it was R2’s case that the husband owned no beneficial interest at all in any of the companies, including the Offshore Companies, or any of the above assets, and R2 had clearly failed in her case. As I have mentioned earlier, neither the husband nor R2 had conceded that the husband had any beneficial interest in the shares of the companies or their underlying assets or that the husband had any financial resources at all to meet the wife’s claims. 74.There was no offer made by R2 to the wife at all throughout the proceedings, whether Calderbank/without prejudice/sanctioned, and the only offer which was ‘countersigned’ by her solicitors was the Revised Open Offer letter from the husband’s solicitors dated 8 November 2012, about one month after the commencement of the trial. If one looks at that letter, all the payments were to be made by the husband although he disclosed negative assets in his 2nd Form E and at the time of the trial claimed to have also resigned from his post of ‘project director’ of R3. 75.Not only was there no offer from R2 to settle the wife’s claims, she was the chief financier of all the husband’s litigation costs, whether through R3 or otherwise throughout these proceedings. The total costs incurred by the husband, R2 and R3, were about HK$43.13m by the time of the Costs Hearing. 76.Looking at R2’s conduct, she first of all tried to resist the joinder, and tried to set it aside, and also to try to set aside the various subpoenas. When her applications were dismissed by Poon J, she then tried to seek leave to appeal against the refusal of Poon J to set aside the joinder. R2 later obviously thought better of it and did not proceed further with her application for leave to appeal. 77.Then, there was the Discovery Order made by Poon J on 10 August 2012 which she failed to comply in full. 78.R2 herself of course would be the most important witness in the trial apart from the husband and the wife, and yet she refused to attend the trial to be cross examined, not even by video link, notwithstanding having filed 2 substantive affirmations with over 100 pages of exhibits all in one day shortly before the commencement of the trial. She then chose to rely on her witnesses, the main ones being Ms Lo and Mr Seeger, whom Ms Eu called R2’s “ventriloquists”, and they were both found to be evasive and/or unreliable. In particular, Ms Lo’s evidence took up almost 6 days. 79.R2’s case was that she was the sole beneficial owner of the various companies, the Car Collection, the Valuable Timepieces, and the Trust Accounts and she did not succeed. 80.It was further this court’s finding that the documents in relation to the 3 Offshore Companies were produced on selective basis and adverse inferences against the husband and R2 were drawn[23], and that the husband’s beneficial interest was found to be no less than 50%. What was clear was that due to the material non disclosure of the husband and R2, the court was not able to come to the exact extent of the husband’s beneficial interests in the 3 Offshore Companies. 81.The majority of the valuable assets held by the husband were through his beneficial interest in the 3 Offshore Companies, namely about Hk$260m out of a total of about HK$300m, and the rest was held through his interest in other companies and the “Surplus”. 82.The core issue was the value of the “matrimonial pot”. The husband was found to have spun a cobweb of companies both inside and outside Hong Kong, at the heart of which were the 3 Offshore Companies. 83.As for the shares in the Macau Corporation and ST Shipping, I have said earlier that it was not unreasonable for the wife to make a claim against the husband’s beneficial interest in those shares. 84.Further, although R2 refused to give evidence, her full team of legal representatives were present throughout the 46 odd days of the trial. Mr Li, her Senior Counsel cross examined the wife at length, approximately 6 days, almost as long as the husband’s Counsel Mrs Remedios. Mr Li had asked the wife’s questions on a wide range of topics, including what she said about her education, Pre-Nuptial agreement, the Deloitte’s Report, the Wocom Judgment, relationship between the husband and R4 and other siblings, relationship between her and R2, the 3 diamond rings, the Dividends Cheque, Macau Litigation, and of course matters relating to the various companies. Roughly speaking, the oral evidence of the wife and her witnesses took about 18 days of the trial, and that of the husband and his witnesses took about 16 days. The oral evidence of those common witnesses of R2 and R3 took about 9 days. 85.I accept that there were issues in which R2 did not have any involvement, such as the wife’s and the children’s expenses and some other issues, but the time spent on such issues were not as high as 50%, as submitted by Mr Li. As I have said earlier, the majority of the time during the trial was spent on main issues concerning the husband’s beneficial interests in various companies, and in particular the 3 Offshore Companies, the Car Collection, the Valuable Timepieces, the Trust Accounts, and the husband’s financial resources. On a rough estimate, at least two thirds of the oral evidence of the wife and her witnesses, and the husband and his witnesses, were on such main issues, excluding those common witnesses of R2 and R3. All in all, in my view, the time on the issues which did not involve R2 at all should not be more than 25% of the entire trial. I will therefore vary the Order Nisi, in so far as R2 is concerned, to reflect this and also the fact that she was only joined on 14 May 2012. 86.So far as the Variation Summons is concerned, as I have said the issues involved overlapped with the issues of the wife’s Part IIA application and was in relation to whether the husband had any means to meet the MPS Order/Interim Order, which would again lead to the issues of his beneficial interests in the various companies and other assets mentioned above. 87.As for the Subpoena Costs, R2 said she should not be responsible for such costs as she was not responsible for the husband’s non disclosure. It was as a result of the subpoenas issued against the Standard Chartered Bank, UBS HK and Wing Lung Bank that the so called Trust Accounts were uncovered, since in the husband’s 1st Form E, he only disclosed 6 of his personal accounts, and it was only in his 2nd Form E, he disclosed an account at Wing Hang Bank which he alleged to hold in trust for R2. It was only after the wife issued the various subpoenae that the husband filed his 25th affirmation on 18 July 2012 disclosing the so called Trust Accounts, but only those at Standard Chartered Bank and UBS (HK). 88.R2 in fact tried to set aside the subpoenas alleging, among other things, they were oppressive, vexatious and an abuse of the process of the court. She said because the first discovery order made against her was set aside by Poon J, apparently due to irregularity, and before wife issued another application for discovery as directed by Poon J, she had issued the subpoenas, which was an abuse of process. R2’s case further was that the wife should have issued an application for discovery against third party instead of issuing the subpoenas. Her application to set aside the subpoenas was dismissed by Poon J. R2 was taking whatever technical points she could. The husband’s case was that as he had no beneficial interest in the Trust Accounts he did not disclose them, and now R2 said she did not have the statements/information sought in the subpoenas in her possession, power, custody or control and she was not responsible for the husband’s non disclosure. This seemed to be another of those “ball kicking games” described by Ms Eu. 89.If R2 were indeed the sole beneficial owner of the Trust Accounts and the Valuable Timepieces and the 3 Offshore Companies, she could have provided all the information sought under the subpoenas to the husband to produce to the court, thereby saving considerable costs and time. 90.Further, if not for the subpoena against Christie’s, the details of the consignment and/or the account of the Valuable Timepieces would not have been discovered. 91.Having considered the conduct of R2, in particular the manner in which she pursued or defended her case and all the circumstances, I am of the view that R2 should pay 75% of the wife’s costs of and incidental to her Part IIA Application, such costs to include the Subpoena Costs and the costs of the Variation Summons, jointly and severally with the husband, as from the date of her joinder, 14 May 2012. Joinder Costs 92.The parties concerned under the Joinder Costs joined were R3-R6. They were all joined by the husband and not the wife. 93.R3 and R4 were joined on 21 May 2012, and R5 and R6 were joined on 29 June 2012. 94.Both R3 and R4 was only joined in relation to 6,000 shares in the Macau Corporation, for the purpose of determining whether the 6,000 shares in the Macau Corporation should form part of the matrimonial assets[24]. I understand that these were the 6,000 shares gifted to R3 by MVI (Panama). 95.R3’s List of Issues stated that the only issue which R3 could identify was that whether the husband owned any interest in those 6,000 shares. 96.The wife in her pre-PTR List of Issues stated clearly that she had no core issues with R4 to R7, and that her case was that the husband prima facie held 10% interest in the 6,251 shares in the Macau Corporation[25]. So far as R3 was concerned, similar to her case for the husband and R2, the wife’s core issues included the husband’s interest in all the 6,251 shares in the Macau Corporation. 97.R3 had issued a summons on 13 September 2012 seeking an order that there should be a preliminary hearing on the issue as to whether any of the 6,000 shares were owned by the husband, and if “yes”, whether any of those shares should be regarded as “matrimonial assets” as between the wife and the husband for the purpose of the wife’s Part IIA application. 98.At the PTR, this court directed that there be a preliminary hearing as sought by R3. 99.At the commencement of the trial, R5’s Leading Counsel Mr Westbrook appeared and after his submissions, the wife made it clear that she was not asking this court to make any determination on the beneficial ownership of the 6,251 shares, or the shares in ST Shipping but would only ask this court to make findings on the husband’s beneficial ownership of MVI (HK) and R3, MVI (HK) being the holder of the remaining 251 shares in the Macau Corporation and all the shares in ST Shipping after the 6,000 shares were gifted to R3. After the wife’s clarification, the legal representatives for R4-R7 were excused from attending the trial. 100.Mr Li said that R3 decided to remain throughout the trial, as there were residuary allegations by the wife that R3 was a sham and that R3 was totally controlled by the husband. However, these were not the reasons why the husband applied to join R3 in the first place, and further, it was R3 which applied for a preliminary hearing on the 6,000 shares in the first place so that it could be excused afterwards. After the clarification of the wife’s case, the issue at the trial was the husband’s beneficial interest in MVI (HK) and it would only be through that, the extent of his beneficial interest, if any, in the 6,251 shares in the Macau Corporation and the shares in ST Shipping. It is my view that there was no need for R3 to remain throughout the rest of the trial when R4-R6 were excused. 101.Ms Eu pointed out that the wife’s position was clear as early as her 3rd affirmation filed on 26 May 2010 when she first explained the holding of the 6,251 shares in the Macau Corporation and all the shares in the ST Shipping. She stated that shares held by MVI (Panama) and MVI (HK) were worth more than HK$6 billion, and that the hsuband’s interest through MVI (HK) was worth about HK$625m, as he held 10% of those shares[26]. Ms Eu further submitted that the wife’s position was repeated throughout her other affirmations, such as her 6th affirmation and her 15th affirmation. 102.More recently, in the wife’s 46th affirmation filed on 10 September 2012 before the PTR, she made it clear her position on the various joinders of R4-R7, and in particular, her position in relation to the shares in the Macau Corporation and ST Shipping was that she was only claiming the husband’s interest in MVI (HK). She further made it clear that she would not be claiming more than what the husband would get out of the Macau Litigation. As she stated, prima facie, the husband was 10% owner of the shares in MVI (HK) until he executed the Deed of Trust in July 2009. 103.So far as R5 and R6 were concerned the wife had said in her 46th affirmation that her application for the transfer of half of the husband’s 10% interest in MVI (HK) can be adjourned until after the determination of the HC Action issued by R5 and R6. 104.In view of what the wife had said in her affirmations, the husband should be fully aware of the wife’s case that she was only claiming half of his beneficial interest in MVI (HK). 105.Although paragraph 6 of the wife’s OS referred to generally shares and properties held by a list of 23 companies which included R3, the wife did not join any of the companies, and there was no reason why the husband needed to single out to join R3 for the purpose of that paragraph, and not the other 22. 106.In my view, it was also not necessary for the husband to join R4-R7. His joining R3-R7 was part of the husband’s litigation tactics to confuse the issues. 107.Even though the wife did not object to the joinders, having considered the circumstances and the husband’s conduct, I see no reason as to why he should not be responsible for all the Joinder Costs. 108.R2 also did not object to the joinders of R3-R7. I, however, accept that R2 was not responsible for the joinder applications of R3-R7, and she should not be held to be responsible for payment of the costs of R3-R6, jointly and severally with the husband. The husband should be solely responsible for the costs of R3-R6. Conclusion 109.My order is that the Order Nisi is to be varied as follows:
Costs of the variation of the Order Nisi 110.As for the applications for variation of the Order Nisi, the wife’s summons of 16 April 2013 is in effect to clarify the Order Nisi. The husband has not succeeded with his summons of 15 April 2013, and in my view, he should pay the wife’s costs of her summons of 16 April 2013 and his summons of 15 April 2013. As between him and R2 and R3, there should be no order as to costs. 111.As for R2’s summons of 15 April 2012, R2 has succeeded in part only, and she should pay 75% of the wife’s costs arising out of R2’s summons. There was no opposition to R2’s summons by either the husband or R3, and I will make no order as to costs as between R2 and the husband and R3. 112.As for R3’s summons of 15 April 2013, its costs have now been ordered to be paid by the husband. I am of the view that the husband should pay its costs and the wife’s costs arising out of R3’s summons of 15 April 2013. There be no order as to costs as between R2 and R3. 113.As it is not clear whether there have been any Calderbank letters/sanctioned offers made in relation to the variation of the Order Nisi, the above costs in relation to the variation of the Order Nisi are therefore costs order nisi, to be made final after 21 days.
Ms Audrey Eu SC, Mr Eric Leung & Mr Chan Hei Ching instructed by C T Chan & Co, for the applicant Mr David Pilbrow SC & Mr Jonathan Ah Weng, instructed by Tso Au Yim & Yeung, for the R1 Mr Li Chau Yuen SC & Mr Adrian But, instructed by B C Chow & Co, for the R2 Mr Li Chau Yuen SC & Mr Adrian But, instructed by Simon C W Yung & Co, for R3 Mr Alexander Wong & Mr Leung Yiu Kwong instructed by Lo, Wong & Tsui for R4 Mr Robin D’Souza, instructed by Tam, Pun & Yipp for R5 and R6 [1] Para 8, R1’s Supplemental Submissions [2] Para 23, L v C [3] Paras 10-12 [4] Para 89, Main Judgment [5] At para22, pp 983I-985F and 986 D-J [6] Para 23, lines F- J, pp 984 [7] Paras 30-31, pp 986 [8] At pag 1178 [9] supra [10] Para 21, Z v X, per Cheung JA [11] Para 6, pg 3, Z v X [12] Para 85, Prest, per Baroness Hale [13] Para 348-366 [14] Para 360 [15] Para 85, Prest, per Baroness Hale [16] Para 642, pg 212 , Main Judgment [17] Section C, H’s Skeleton Submissions, and C3, H’s Supplemental Skeleton Submissions [18] Para 555, Main Judgment. [19] Para 514, Main Judgment [20] Para 544, Main Judgment [21] A1:90 [22] A1:165 [23] Para 418, Main Judgment [24] AI:95: paras 1 & 2 [25] Paras 4 to 6, W’s List of Issues (R2 in para 5 being a typing error) [26] Paras 15-17 of the wife’s 3rd affirmation. | |||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCMP 643/2012