Ws v. Cwk

FCMC 17740/2012

[2018] HKFC 44

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 17740 OF 2012

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Coram: Deputy District Judge D. Cheung in Chambers (Not Open to Public)

Date of the exchange of Submissions: 5^th March 2018

Date of Handing Down Ruling: 29^th March 2018

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Ruling on Costs

(By Paper Disposal)

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Introduction

1.This is a Ruling on the costs of an ancillary relief application.

2.For convenience, I shall refer the petitioner wife as “W”, the respondent husband as “H”. By a Judgment dated 5^th December 2017 (“the Judgment”), I made the following order :

(1) 在絕對離婚令頒發後的3個月之内,男方須支付女方一筆過金額港幣1,863,325元;

(2) 若男方没有在指定時間內全數支付女方一筆過金額港幣1,863,325元,男方須在絕對離婚令頒發後的6個月之内,以不少於港幣4,780,000元或雙方以書面同意的價格，出售前婚姻居所;

(3) 出售後所得的金錢，扣除所有與出售相關的支出後，需再扣除港幣$1,453,350元並給予男方後，餘款雙方平均分配;

(4) 上述所有支付給女方的款項需受制於法律援助署署長的第一押記;

(5) 雙方均可就執行本命令向法庭提出申請;

(6) 在上述各段獲遵行後,與訟雙方不論是一方針對另一方或針對他們的產業的資本、收入或其他財產調整,包括定期付款、有保證定期付款、一整筆款項或多筆款項、財產轉讓或授產安排及售賣令,均與已撤銷;

(7) 最後，本席作滿意子女安排聲明。

3.According to paragraph 143 of the judgment, I found that the family assets to be distributed is HK$3,726,650, and I gave an order that H do pay W a lump sum of HK$1,863,325 within 3 months from the date of granting of the decree absolute. At the same time, I made a costs order nisi that there be no order as to costs of the ancillary relief including all the reserved costs.

4.Subsequently, W took out a summons and applied for costs of these ancillary relief proceedings. W’s stance is that in connection with the costs of and in relation to the entire dispute on ancillary relief hearing, W should be awarded with full legal costs against H.

5.H’s stance is that the appropriate costs order in this case is no order as to costs.

Applicable Legal Principles

6.It is trite that the issue of costs is a matter of discretion for the Court. The discretion is a wide one and of course must be exercised judicially.

7.Broadly speaking, in the exercise of its discretion, the Court will have to take into account, where appropriate in the circumstances, the special matters set out in Order 62, rule 5 of RHC, namely, the underlying objectives set out in Order 1A, rule 1, any offer of contribution, any payment of money into court and the amount of such payment, any written offer made under Order 33, rule 4A(2), any written “without prejudice save as to costs” offer (Calderbank offer), the conduct of the parties, whether a party has succeeded on part of his case, even if he has not been wholly successful; and any admissible offer to settle made by a party, which is drawn to the Court’s attention: see Order 62, rule 5(1)(aa) to (g), RHC.

8.It is also trite law that no party shall be entitled to recover any costs of or incidental to any proceedings from another party to the proceedings except under an order of the Court and that in general terms, the starting point on costs in matrimonial and family proceedings, as they are in civil litigations, remains to be “costs follow the event”: Order 62, rule 3(1) & (2), RHC.

9.Of particular relevance to the circumstance of the present case is a without prejudice offer by W to accept the sum of HK$1,800,000 from H prior to the trial hearing. I will come to this offer made by W in due course.

10.In Gojkovic v Gojkovic [1992] Fam 40, Butler-Sloss LJ (as she then was) had the following to say on Calderbank offer:

“There is, however, a minority of cases, of which the present appeal is an example, where the assets are substantial and an order for costs can (if appropriate) be made. In such cases the parties are likely to negotiate, and such negotiation, which may lead to a settlement, is much encouraged by the courts. The Calderbank offer - a letter containing an offer only revealed after the order is made - bears some resemblance to, but is not identical with, a payment into court. It takes its name from Calderbank v. Calderbank [1976] Fam. 93(a claim by a husband) in which Cairns L.J. referred to an apportionment offer in Admiralty proceedings, and said, at p. 106:

“If that is not accepted no reference is made to that offer in the course of the hearing until it comes to costs, and then if the court's apportionment is as favourable to the party who made the offer as what was offered, or more favourable to him, then costs will be awarded on the same basis as if there had been a payment in. I see no reason why some similar practice should not be adopted in relation to such matrimonial proceedings in relation to finances as we have been concerned with.”

This useful practice has since been followed in the Family Division, and has now been extended to the other divisions of the High Court by R.S.C., Ord. 22, r. 14 - a written offer "without prejudice save as to costs." Ord. 62, r. 9 states: “(1) The court in exercising its discretion as to costs shall take into account . . . - (d) any written offer made under Ord. 22, r. 14 . . .”

Later decisions referring to the effect of a Calderbank offer have accepted, in my view, the basic assumption as expressed by Cairns L.J. that if an applicant spouse failed to exceed the sum offered, prima facie she/he would pay the costs after the date of communication of the offer. For example, in McDonnell v McDonnell [1977] 1 W.L.R. 34, this court applied Calderbank's case to a legal aid case subject to the limitation on her legal aid certificate, on the basis that the offer in the letter should have been accepted by the wife. (57H-58E)

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It is therefore clear that Calderbank offers require to have teeth in order for them to be effective. This is recognised by the requirement in Ord. 62, r. 9 (and the equivalent Ord. 11, r. 10 of the County Court Rules 1981 (S.I. 1981 No. 1687 (L.20)), as amended, for the court to take account of Calderbank offers, and by analogy open offers, in exercising its discretion as to costs. There are certain preconditions. Both parties must make full and frank disclosure of all relevant assets, and put their cards on the table. Thereafter the respondent to an application must make a serious offer worthy of consideration. If he does so, then it is incumbent on the applicant to accept or reject the offer and, if the latter, to make her/his position clear and indicate in figures what she/he is asking for (a counter-offer). It is incumbent on both parties to negotiate if possible and at least to make the attempt to settle the case. This can be done either by open offers or by Calderbank offers, both adopted by the husband in this case. It is a matter for the parties which procedure they prefer. There is a very wide discretion in the court in awarding costs, and as Ormrod L.J. said in McDonnell v McDonnell [1977] 1 W.L.R. 34, 38, the Calderbank offer should influence but not govern the exercise of discretion.

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. The need to use all the available money to house the spouse and children of the family may also affect the exercise of the court's discretion. 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 applicant 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.”

Discussion

11.Counsel for H, Mr. Yuen in his written submission summarized W’s grounds for her application for costs as follows:

(i) W had made a without prejudice offer to accept the sum of HK$1,800,000 from H prior to the trial hearing;

(ii) H had never made any offer until 15^th November 2016 and the offer was “ridiculously low”; and

(iii) the only “sensible” offer made by H was only made at 1625 hours on 24^th July 2017, less than 2 clear days prior to the trial hearing.

12.I now deal with W’s grounds. In doing so, I do not propose to repeat what I have said regarding my findings of facts in the Judgment.  As a matter of fact, I do not think I need to be long in dealing with these grounds. This Ruling has to be read in conjunction with the Judgment and references to relevant parts of the Judgment will be made as and when necessary. 

13.One of the submissions advanced by Mr. Yuen is that W’s offer was not a genuine proposal in view of achieving settlement and the Court should give such offer no weight when considering the costs matter.

14.By W’s ‘without prejudice save as to costs’ offer on 25^th July 2017, W offered to accept a payment of HK$1,800,000 in full and final settlement of her claim for ancillary relief claim which was turned down by H.

15.W’s offer was in response to H’s offer to pay W the sum of HK$1,250,000 which sum is however paid by way of instalments of HK$7,500 per month, and H’s offer was made to W on 24^th July 2017, i.e. less than 2 clear days prior to the commencement of hearing of the ancillary relief hearing at 10:30am on 26^th July 2017 as submitted by W.

16.It was submitted by Mr. Yuen that W’s offer had served no practical purpose, as it was only sent to H’s solicitors at 18:10 hours on 25^th July 2017, i.e. after the close of business before the trial date and that in reality, counsel would have been briefed and the costs of the preparation of the trial would have been incurred by that time.

17.It was further submitted by Mr. Yuen that H should have been given a reasonable amount of time to consider such offer and in any event not just only one evening prior to the commencement of the trial.

18.Mr. Yuen therefore asked this Court not to give W’ offer any weight when considering the costs matter.

19.Mr. Yuen submitted that it was only shortly before the commencement of the trial, H re-engaged private lawyer and counsel to handle the matter, after H acted in person for some time.

20.My view is that H chose to make an offer to W on 24^th July 2017 and W had promptly replied on 25^th July 2017 by counter offer to H. If H chose to make an offer 2 days prior to the trial hearing, he should expect and be prepared that W would come up to a counter proposal anytime shortly prior to the trial hearing.

21.In addition, parties had agreed the issues of the case and there should not be any difficulties for H to appreciate the nature of the issues and the disputes involved.

22.One of the major issues of the case is that of the alleged debts of H which one should be deducted for the purpose of ascertaining the value of the family assets.

23.My view is that in light of the history of the case, there should not be any difficulties for H to consider the offer made by W within a short period of time, and I consider that one evening prior to the commencement of the trial is not unreasonable.

24.According to the Court’s record, the trial was fixed to be heard at 10:30am on 26^th July 2017 and the trial in fact commenced at 11:00am on 26^th July 2017, there should be sufficient time for H to reconsider his position prior to the trial hearing given the fact that he chose to make his offer on 24^th July 2017.   

25.Guided by the aforesaid authorities, my view is that with a lump sum of HK$1,863,325 awarded by this Court to W, W has achieved a result more favourable than what she offered, on a without prejudice basis, to H on 25^th July 2017.

26.Mr. MK Lee, who acted for W complained that from the commencement of the Petition on 30^th November 2012 up to 15^th November 2016, H had never made any offer to pay maintenance at all to W for consideration of acceptance by W, and the 1^st open offer made by H on 15^th November 2016 was described by W as “ridiculously low”.

27.Mr. Lee submitted that the only “sensible” offer made by H was only made at 16:25 hours on 24^th July 2017. What Mr. Lee suggested that H should do is equally applicable to W as there is nothing to stop W from making her offer to H at any time prior to H’s offer on 24^th July 2017.

28.The present case is that W’s offer was only made on 25^th July 2017, if her offer was accepted by H, at least the trial hearing could be dispensed with.

Conclusion

29.To conclude, W should only be entitled to her costs confined to the trial hearing commencing from 26^th July 2017 up to the conclusion of the judgment.

30.I also consider that W should not be awarded any costs of the ancillary relief proceedings prior to the trial hearing and there should be no order as to costs including all the reserved costs.

31.For the present W’s application for costs, since W is not able to succeed entirely, I therefore consider that it would be fair that W should only entitle to half of the costs of this costs application.

Order

32.For the reasons aforesaid, I give the following costs orders:

（1） H do pay W costs of the ancillary relief proceedings confined to the trial hearing commencing from 26^th July 2017 to the conclusion of the judgment including costs reserved to be taxed if not agreed;

（2） There be no order as to costs including costs reserved of the ancillary relief proceedings prior to the date of the trial of the ancillary relief proceedings;

（3） H do pay W half of this costs application including costs reserved to be taxed if not agreed; and

（4） W’s own costs to be taxed in accordance with the Legal Aid Regulations.

Representation:

Mr. MK Lee of Messrs. Patrick Mak & Tse for the Petitioner wife

Mr. Ernest Yuen instructed by Messrs. Raymond Lam & Associates for the Respondent husband