Llc v. Lmwa and Another
Read the full judgment text of FCMC 4683/2014 on BabelCite. This Family Court judgment was delivered on 10 September 2018 before Her Honour Judge Grace Chan.
Matrimonial Causes – District Court – Leave to appeal – Costs order – Costs discretion – Calderbank Offer – Satellite litigation – Litigation funding – Paper disposal – Reasonable prospect of success – This case concerns an application for leave to appeal a costs order made in divorce proceedings. The petitioner (wife) and 1st respondent (husband) have been engaged in contentious litigation concerning ancillary relief matters since 2014. A previous judgment determined the beneficial ownership of the former matrimonial home and carpark. The current decision concerns a costs order variation made on 29 June 2018, which varied the Costs Order Nisi to order no costs between husband and wife, and the wife to bear 80% of the father's costs. The 1st and 2nd respondents applied for leave to appeal this costs order. The court considered whether the intended appeal had a reasonable prospect of success under Section 63A(2) of the District Court Ordinance. The court held that costs discretion is highly discretionary and the Court of Appeal would be circumspect in intervening. The court found no reasonable prospect of success as the grounds of appeal repeated arguments already rejected in the Costs Decision. The husband failed to engage in minimum negotiation for settlement and failed to reply to the wife's Calderbank Offer. The wife is a housewife relying on litigation funding from the husband. The court noted that a substantial costs order against the wife might lead to satellite litigation. The court also noted the husband and father were represented by the same firm but separate counsel, incurring extra costs. The court refused leave to appeal. Costs of the application follow the event, meaning the husband and father must bear the wife's costs. The court directed solicitors to report on the Financial Dispute Resolution. – Leave to appeal refused. Costs of application follow the event.
Legal issues: Leave to appeal costs order · Costs of leave to appeal application
Outcome: Leave to appeal refused
Cited by 5 cases · Cites 10 cases
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FCMC 4683 /2014 [2018] HKFC 156 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 4683 OF 2014 ----------------------------
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------------------------------------- DECISION ------------------------------------- 1.Before me are the applications of the 1st and the 2nd respondents by way of their respective summons dated 27 July 2018 for leave to appeal of a varied costs order made by me on 29 June 2018. 2.I have directed that their applications shall be disposed of by way of paper, which appear in the decision below. Background 3.The petitioner of this case is the wife. The 1st respondent is the husband. The 2nd respondent is the father of the husband. 4.Ever since the commencement of the divorce proceedings in 2014, the husband and the wife have been engaging in various pieces of contentious litigation concerning their ancillary relief matters, leading to 3 substantial judgment/decision handed down by this court. This decision is the 4th substantial judgment/decision. 5.Each side puts forward his/her own reason(s) that has led to such acrimonious litigation. The husband claims it is due to the greed of the wife, while the wife argues that it is due to his unreasonable litigation conduct. In my view, the sentiment expressed by each side is not helpful in setting the scene for an amicable settlement. Despite prior comment expressed by this court on the escalation of legal costs, neither party have paid heed to the concern of this court. But for this leave to appeal application, the parties would have appeared before me on 10 August 2018 in the financial dispute resolution (FDR) which might have put their ancillary relief dispute to an end. It is most unfortunate that the FDR has to be adjourned pending this intended leave to appeal application. All these give an impression that neither of them is prepared to come to his/her senses, despite they both repeatedly claim that they have the best interest of their children in mind. I send out my strong words to them, once again, that upon the release of this decision, they should return to the negotiation table and restore the FDR without delay. 6.The litigation history that leads to the leave to appeal applications are like these. 7.On 22 June 2017, I handed down my judgment on the preliminary issue involving the beneficial ownership of the former matrimonial home (registered in the joint name of the father and the husband) and a carpark (registered in the sole name of the father) situate at the Sorrento, Kowloon (“Main Judgment”). I ruled in favour of the father and the respondent and rejected the wife’s contention that the husband was/is the sole beneficial owner of the said properties. In the same judgment, I awarded a costs order nisi, but without hearing full argument, that the wife shall bear the costs of the father and the husband (“Costs Order Nisi”). 8.There is no appeal in respect of findings stated in the Main Judgment by any of the parties. However, the wife took out a subsequent application to vary the Costs Order Nisi. 9.Upon hearing full argument on costs, I handed down another decision on 29 June 2018 (“Costs Decision”), ordering that the Costs Order Nisi should be varied to the effect that:
10.As said, the husband and the father each took out their respective summons for leave to appeal against the Costs Decision. 11.In the following decision, I shall adopt the abbreviation and defined terms used in the Main Judgment and /or the Costs Decision, unless stated the otherwise. And since the Main Judgment and the Costs Decision have set out in great length the background of the parties, their litigation history and the issue of the beneficial ownership of the Sorrento Property and Carpark, I shall not repeat any of these in this decision any more. The Costs Decision 12.At the risk of repeating myself, I explain in the Costs Decision that the Costs Order Nisi should be varied to the extent set out at §[9] above for the following reasons:
13.In the Costs Decision, I also express my concern that the husband and the father were then represented by the same solicitors’ firm, but engaged separate counsel to appear in the argument hearing, and thus incurring 2 separate brief fees. It was conceded in the hearing by the husband through his counsel, Mr Neal Clough, that there was no conflict of interest between the husband and the father on the costs issue. Ms Lily Yu, counsel appearing for the father in that hearing, did not offer any objection to such comment made by Mr Clough. The reasons proffered for separate counsel were that the husband and the father had different approach in the argument hearing, which was not accepted by me. In any event, due to the outcome of the application, I am of the view that none of the parties could be said as the winner of the application. I thus conclude in the Costs Decision that a fair order to make is “no order as to costs” (See: §§71 - 74 of the Costs Decision). Applicable Legal Principle 14.Section 63A(2) of the District Court Ordinance provides that leave to appeal shall not be granted unless:
15.The relevant test of whether an appeal has a reasonable prospect of success is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success therefore means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: SMSE v KL [2009] 4 HKLRD 125; KNM v HTF, HCMP 288/2011. 16.In relation to the exercise of judicial discretion on costs, I only need to refer to the judgment of Lam JA in Poon Ching Man v Lam Hoi Pun [2016] 3 HKLRD 815, where His Lordship reiterates at §34 that a decision on costs given by the trial judge is highly discretionary and which the Court of Appeal would be very circumspect in intervening:
Grounds of appeal 17.In this leave to appeal application, the husband and the father are no longer represented by separate counsel. They are both represented by Mr Clough. Two separate summonses with separate supporting affirmation enclosing proposed grounds of appeal were filed by each of them. The husband’s proposed grounds of appeal consist of 18 paragraphs, while those of the father of 8 paragraphs. But with respect to Mr Clough, they are not concise but rather convoluted. As such, I would not attempt to address to each of these paragraphs. Suffice it is for me to say that I have considered them all, but would only deal with the material points. 18.The central theme of their intended appeal is that it is “unfair” to deprive them of their costs of the trial of the preliminary issue, because they are the winning party and that the father is an “unwilling” party being dragged into these proceedings by the wife. Upon considering the proposed grounds of appeal and the written submission, I am of the view that their appeal grounds can be deduced into the following major points:
Ground 1 19.Ground 1 is the intended ground of appeal of both the husband and the father. 20.What they essentially argue is that it was wrong and unfair of me not to make a costs order of “costs to follow the event”. This is particularly not fair to the father, who is an unwilling party brought into these proceedings by the wife. Mr Clough of counsel adds that by ordering that the father can only recover 80% of his costs from the wife, he would suffer a further shortfall of costs (of about $900,000), because normally, on a party and party taxation, the bill of costs would be taxed down to about 66-70%. Counsel goes on to submit that “on reflection”, an order for indemnity costs would be appropriate between the wife and the father. 21.Their argument of “costs to follow the event” was already made and considered but rejected by me in the Costs Decision. They are repeating the same line of argument in this leave to appeal application. When returning a decision to vary the Costs Order Nisi, I was fully alive to the fact that the wife is the losing party of the trial on the preliminary issue. I have given full reasons, upon hearing full argument, why I concluded that the Costs Order Nisi should be varied. 22.The legal principles governing costs in the post-CJR era have already been set clearly in the Costs Decision.[7] It needs no further elaboration that nowadays, the broad guideline of “costs shall follow the event” should no longer be regarded as a general rule but only operates to shift to the unsuccessful party the burden of showing why some different approach should be adopted on the facts of that particular case (See: Hung Fung Enterprise Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679). 23.In my view, the submission made by Mr Clough for the first time on the possibility of the father to recover only 66-70% of the party and party costs is completely beside the point. I fail to see why and how this should relevant in the exercise of my discretion on the costs issue. Mr Clough’s other submission of seeking costs for the father on an indemnity basis is a belated request that ought to be rejected. 24.Hence, there cannot be any reasonable prospect of success in relation to Ground 1. Grounds 2, 3 & 4 25.I shall deal with Grounds 2 to 4 altogether, because they are the intended appeal grounds relevant to the husband only. 26.Mr Clough says that as a result of the order for litigation funding in favour of the wife and the Costs Decision, the husband has ended up paying his own costs and $1.2 million towards the wife,[8] leading to the plainly unfair result that he was condemned to fund his own costs and those of the losing party. However, it is noted that there was never any appeal against my judgment on the litigating funding, which must then be regarded as a fair order between the husband and the wife. Against this backdrop, Mr Clough’s line of submission has overlooked the observation/comment of this court at §69 of the Costs Decision, which is not argued the otherwise in this leave to appeal application. At §69, I commented that the wife’s costs, though paid by the contributions from the husband from either his savings or his income, were part of the matrimonial assets, from which the husband had also drawn his own legal costs and of which the wife would arguably be entitled to have a fair share. Under such circumstances, it can only be said, at the best, that they each has his/her own legal costs paid out from the matrimonial pot, to which they would both be entitled. I thus fail to see the alleged unfairness suggested by the husband. In my view, Ground 2 cannot sustain. 27.It is also the submission of Mr Clough that it is “wrong in principle” for me to take into account the husband’s conduct of failing to engage with the wife in the minimum level of negotiation for settlement by replying to the Calderbank Offer, because it is wrong to hold that the preliminary issue trial between them should be regarded as the matrimonial proceedings. Yet, no helpful authority has been offered to this court to substantiate this proposition. On the contrary, I have summarised the legal principles and performed the analysis as to why the preliminary issue trial, at least between the husband and the wife, should be regarded as the family proceedings between them in §§27-37 of the Costs Decision. Mr Clough has failed to identify any error therein. Mr Clough then argues that it was impossible for the husband to negotiate with the wife for settlement on the father’s share of the Properties. This is a repeated argument which was already advanced in the argument hearing by Mr Clough but was rejected by me in §§38-40 of the Costs Decision. I thus cannot see any reasonable prospect of success in respect of Ground 3. 28.Mr Clough further submits that I have compounded my error by concluding that if I made a substantial costs order against the wife, who relies on the litigation funding from the husband, this may lead to another round of application for litigation funding and thus satellite litigation. The rationale and relevant analysis leading to my conclusion of possible satellite litigation can be found in §§65-69 of the Costs Decision. With respect to Mr Clough, I do not see any substance in this ground of appeal. Ground 4 cannot sustain. Ground 5 29.This is an appeal ground of the father only. With the greatest respect to Mr Clough, I think it is enormous to say that this court failed to particularise the basis on which I exercised my discretion to deprive the father of 20% of his costs. My rationale has been clearly set out at §§44-47, §50, §53, §55-56 and §59 of the Costs Decision. Ground 6 30.In so far as Ground 6 is concerned, I only need to point out that the order for “no order as to costs of this application” is not made solely on the ground that the husband and the father should not have engaged separate counsel. The other grounds for making such a costs order is set out at §73 of the Costs Decision, namely looking at the result of the Costs Decision, neither the wife nor the father could be said as the total winner of the application, and whereas between the wife and the husband, I remind myself of the possibility of satellite litigation. 31.I would add that it is very telling that in this leave to appeal application, the husband and the father are now able to be represented by the same counsel, Mr Clough. 32.Upon due consideration, I see no reasonable prospect of success in respect of this ground. Conclusion 33.Due to the matters set out aforesaid, I conclude that there is not any reasonable prospect of success of the husband and the father in their intended appeal against the Costs Decision. They have not shown that the “otherwise” ground under section 63A(2) of the District Court Ordinance is established. I refuse to grant leave to them to appeal against the Costs Decision. 34.Since there is no submission on any of the parties on litigation conduct or other relevant factors that this court needs to take into account when considering the costs of this leave to appeal application, I deem it fit that costs shall follow the event, which means that the husband and the father have to bear the wife’s costs of this application, to be taxed if not agreed. I certify the assistance of counsel is appropriate in this application. 35.I also direct that solicitors acting respectively for the husband and the wife shall lodge a joint letter with this court within 14 days to report/confirm whether:
Ms Jacqueline Law instructed by Messrs T C Foo & Co for the petitioner (wife) Mr Neal Clough instructed by Messrs King & Co for the 1st respondent (husband) and the 2nd respondent (father of the husband) [1] Husband’s grounds of appeal at §§2-4; father’s grounds of appeal at §§2-4. [2] Husband’s grounds of appeal at §§5-8. [3] Husband’s grounds of appeal at §§9-14. [4] Husband’s grounds of appeal at §§15-16. [5] Father’s grounds of appeal at §5. [6] Husband’s grounds of appeal at §17; father’s grounds of appeal at §§6-7. [7] §13-19 of the Costs Decision. [8] See my judgment dated 26 August 2016 on litigation funding. | |||||||||||||||||||||||
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