Jtj v. Hgsh
Read the full judgment text of FCMC 15810/2018 on BabelCite. This Family Court judgment was delivered on 26 May 2025 before His Honour Judge G. Own.
Costs – Variation of Costs Order Nisi – Ancillary Reliefs – Matrimonial Causes – Disclosure – Litigation Conduct – Settlement Negotiations – Partial Success – Petitioner applied to vary costs order nisi from 100% to 70% – Court found Respondent was winning party overall – H's grounds including partial success, settlement negotiations, disclosure failures, litigation conduct, and LECL disclosure all failed – Costs order nisi made absolute – H to pay W's costs of variation application.
Legal issues: H's partial success in the ancillary reliefs claims · W's lack of effort in settlement negotiations · W's failure to give full and frank financial disclosure · W's litigation conduct · H's full and frank disclosure of LECL
Outcome: H's Summons dismissed; Costs order nisi made absolute; H to pay W's costs of the variation application.
Cites 4 cases
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FCMC 15810/2018 [2025] HKFC 116 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 15810 OF 2018 -----------------
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------------------------- D E C I S I O N (Variation of Costs Order Nisi) ------------------------- Background 1.On 31/10/2024, I handed down my 87-page Judgment (“AR Judgment”) on the parties’ respective ancillary reliefs after a 5-day trial (in June and November 2022). Two Corrigenda have also been issued on 1 November and 23 December 2024 respectively. For the sake of convenience, I would adopt the same nomenclature in the AR Judgment in this Decision with “H” for the Petitioner husband, “W” for the Respondent wife and “C” for their only child of the family. 2.In the AR Judgment I decided, in summary, as follows :-
3.On 14/11/2024, H issued a Summons (“H’s Summons”) seeking variation of the costs order nisi to the extent that H do pay 70% of the costs of the ancillary reliefs, including the ancillary reliefs trial and all costs reserved, with Certificate for Counsel, to be taxed if not agreed[6]. 4.H filed his 5th Affidavit in support[7]. W filed her 5th Affirmation in opposition[8]. H filed his 6th Affidavit in reply[9]. 5.On 12/12/2024, with the consent of the parties, I directed that H’s Summons for variation of the costs order nisi be dealt with on paper[10]. H’s grounds of application 6.There are 5 grounds of application grouped under the following headings :-
Applicable legal principles on costs 7.The Court has a wide discretion in deciding costs. There is no difference between civil cases and matrimonial cases. The rules of procedure on costs are contained in Order 62, rules 3 and 5 of the Rules of the High Court (“RHC”) which by virtue of Rule 3 of the Matrimonial Causes Rules, Cap.179A (“MCR”) are applicable to the family courts. 8.Order 62 rule 3(2) of the RHC provides :-
9.Order 62 rules 5(1) and (2) of the RHC provides :
Some case law on costs 10.In family proceedings, the guiding principles on costs can be traced back to the leading case of Gojkovic v Gojkovic [1992] 1 All ER 269 at page 271where Butler-Sloss LJ said :-
11.Further, at page 273 of the Judgment, it was said :-
12.Given H’s grounds of application was grouped under separate and distinct headings, in a way akin to “time-to-subject” analysis, it is thus pertinent for me to also refer to what Hartman J (as he then was) had said in the case of F v F (No.2) [2003] 3 HKLRD 976 on the principles applicable on costs determination. 13.At paragraphs 9 to 12 of the Judgment, His Lordship said :-
14.At paragraph 22 of the same Judgment, His Lordship went further and said :-
15.Madam Justice Yuen JA in the case of L v C, CACV No. 169/2006 (date of judgment: 19 March 2008) sets out the principles in costs in family court cases said at paragraph 23 :
16.In the later case of T, L v. S, N, CACV No.196/2009 (date of Judgment : 19 October 2010) where Hon Kwan JA said :
17.In the case of W v. K and Anor (Costs) [2008] HKFLR 378 where Saunders J at page 383 said :
18.Further, in the case of Z v. X & C, CACV No.166/2011 (date of Judgment : 8 March 2013) where Hon Cheung JA said :
19.Guided by the above principles, I will now consider H’s 5 grounds of application in sequence. Discussion 20.There are a number of factual disputes over assets and source of funds at the trial of the parties’ ancillary relief and various findings of fact had been made upon evidence accepted to be the truth or preferred to be more probable that not to be the truth. 21.No application for leave to appeal had ever been lodged by H in respect of the final outcome of the AR Judgment save as to the present application to vary the costs order nisi from 100% of costs to be paid by him to W downwards to 70%. No challenge was made to my decision on granting Certificate for Counsel. 22.That said, H could only confine his grounds for variation to factual findings arrived at in the AR Judgment rather than to re-visit his own case or evidence which had either been rejected or discarded after trial. Otherwise, this would be akin to an “appeal” of the AR Judgment or “challenge” on findings of fact through the backdoor of a costs order nisi variation application. Ground (a) – H’s partial success in the ancillary reliefs claims 23.H referred to 3 areas of controversies at trial, namely, (i) the beneficial ownership of LECL; (ii) the source of funds in the P&C Account and IB Account; and (iii) transfer of the 1 share (100% shareholding) of LECL from LLOL to H in July 2018 made without the knowledge or consent of W. 24.Reference was also made by H as to his success in obtaining an “add-back” of his claims on W’s overspending in purchase of jewelleries after their separation. This success of “add back” was said to have been achieved by H and his legal teams by going through a sizeable quantity of W’s credit card statement which were only supplied to them at a rather late stage of the proceedings. 25.On beneficial ownership of LECL, H’s position throughout the trial was that he was the sole beneficial owner and that LECL has a negative value. However, both of H’s position was not accepted in the AR Judgment. It was found and decided in the AR Judgment that LECL should be viewed upon as a family business, and further that it was a valuable asset although there was no proper valuation undertaken by professionals before trial. At the end, an arbitral assessment of HK$5 million was allocated by this Court. 26.The Court’s decision that H was to retain LECL was based upon asset allocation (as per Step 5 of the LKW exercise) and not upon any finding of fact that H possessed 100% beneficial ownership of it. 27.On the “add back” submission, I tended to agree with W in that only a small portion of H’s claim for “add back” was achieved by him. Out of H’s claim of HK$8,431,381, only a sum of HK$450,330 was “added back” at the end. W could hardly be sanctioned on costs for achieving an overall success of only a modest amount, say around 5.3%. was found after trial to be “added back”. H had failed in 94.7% of his “add back” claim. 28.On the P&C Account and IB Account, given both parties’ position as to sole ownership of the funds in the accounts, but ended up with this Court’s finding that both parties are the beneficial owners, it would only be fair to say that neither party should be sanctioned or awarded costs for contention over this topic. 29.On the transfer of the 1 share of LECL to H himself, neither party pursued any further with their respective case by adducing further evidence to traverse or rebut the other party’s contention. It would only be fair to say neither party should be sanctioned or awarded costs over this topic. 30.Taken into account all the above, I stand by my decision that the overall impression, without dividing the litigation into quantifiable subjects like a profit and loss account, was that W was the winning party and not H who under this ground of application alleged to have partially succeeded in the ancillary reliefs. 31.I find this ground of application fails. Ground (b) – W’s lack of effort in settlement negotiations 32.H referred to himself having made 3 detailed settlement proposals but met with no response from W. There was only 1 proposal from W who was compelled by the Court to do so at the FDR hearing. 33.Whilst the absence of settlement negotiations might have an implication on costs determination, the terms proposed for settlement in terms of their reasonableness are important. Whether the terms proposed are reasonable or unreasonable could be easily seen if one compared them with the end result that had been achieved after the trial. This clicks in the commonly used statement of “whether the end result could ‘beat’ the settlement proposals so that the party who refused to accept the other’s proposals could be said to have acted correctly to pursue and not to settle his/her claims and thus should be awarded his/her costs for so doing.” 34.H’s settlement proposals, in particular, in relation to the child C’s maintenance or his share of such maintenance, was far below from what was decided at the end in the AR Judgment, both in terms of the amount of the capitalised sum and the reserve module of C’s capitalised maintenance. Further, H had never proposed in any of his 3 offers that LECL was a family business to fall within the matrimonial pot for sharing. On these 2 issues decided in the AR Judgment, let alone decisions on other issues, it is plain and obvious that any counter-suggestion or counter-proposals from W would be futile as they were “miles apart” on their stance and thus serve no meaningful negotiation except to increase both parties’ legal costs. 35.In any event, H was unable to show that any of his 3 offers had “beat” the orders and decision under the AR Judgment disentitling W to receive her costs. 36.I find this ground of application fails. Ground (c) -W’s failure to give full and frank financial disclosure 37.H first referred to W’s non-disclosure of her claim filed with the Labour Tribunal against her previous employer in her 3rd Form E dated 11 February 2022 (when she was terminated by her employer a month ago in January 2022). It was, however, decided in the AR Judgment that the outcome of the claim in the Labour Tribunal was too uncertain for disclosure at the time of the 3rd Form E. H then submitted that , W should have, but chose not to, disclosed in her 3rd Form E that actually she had engaged lawyers to advise her on employment matters as early as 15 July 2021. 38.The other reference made by H was that W had misrepresented the surrender value of her China Life Policy as “0” in her 3rd Form E dated 11 February 2022 whilst the surrender value stated in the policy application form dated 2 January 2021 was HK$425,408. It was only until the 1st day of trial on 7 June 2022 after this was pointed out to W who then conceded and agreed to include such surrender value into the Schedule of Assets and Liabilities. 39.Lastly, H referred to W through her Counsel erroneously represented to the Court that the spending on jewellery purchase made for the child C was from the arcade APM when, upon analysis of W’s credit card statements, the purchase made from APM was only HK$23,870 but the total amount of purchase made between September 2018 and September 2022 was as much as HK$900,660. 40.Further, none of the purchase on jewelleries made by W were disclosed in her Form E whether under Part 2.10 as her own “valuables” or under Part 5.1 as “significant change in her assets during the last 36 months” even if W had given the jewelleries away to her family, friends or tutors so alleged by her at trial. 41.On the above submissions, H was attempting to re-visit the evidence at trial and try to convince this Court to make further additional findings of fact now (my emphasis), that is, after trial to support this ground of application that W had failed to give full and frank financial disclosure to the extent that such “failure” should be taken into account of. In my decision and with respect, this is not the correct approach. The Court would not make further additional findings of fact to those findings that had already been made in the AR Judgment. As a matter of fact, H was unable to show under which part of the AR Judgment that W was found to have failed in her duty of financial disclosure. 42.Upon reviewing the Reasons for the AR Judgment, there was no such findings by me against W on those matters which H now alleged under this ground of application. 43.I find this ground of application fails. Ground (d) - W’s litigation conduct 44.H referred to W’s disclosure of voluminous financial information only on 30 May 2022, just one week before the trial on 7 June 2022. The late disclosure was rejected but was then allowed only when it became apparent that the trial would have to be adjourned part heard. 45.Same as before, H attempted to re-visit matters which had been canvassed by me in the AR Judgment and, on this ground of variation for late disclosure, there was the specific finding at paragraph 164 of the Reasons for the AR Judgment that, the trial had not been unnecessarily prolonged with wasted costs incurred to the prejudice of H (my emphasis). 46.I find this ground of application fails. Ground (e) – H’s full and frank disclosure of LECL 47.H referred to paragraphs 75 to 76 of the AR Judgment and made the submission that there appears to be a misunderstanding by the Court that H had failed to provide LECL’s audited reports when in fact H had provided all of them for the financial years ended 2017 to 2021. At the trial in June 2022, the audit for the 2022 financial year was still ongoing. H therefore provided the balance sheet and income statement up to 30 September 2022 during the trial adjournment in November 2022. 48.As to W’s concern over the independence of LECL’s auditor E&M, H submitted that W ought to have applied for leave to adduce expert evidence on the valuation of LECL which W had not done so. W should not be allowed to go behind the audited financial statement of LECL. 49.At paragraphs 71 (11) and (12) of the AR Judgment, when this Court was making its observation on H’s earning capacity, there was extracted the audio transcript of H’s evidence during cross examination by W’s Counsel, where H first asserted that W had never asked for bank statements of LECL (which W disagreed)[11]. H then went on to try and justify his refusal on disclosure by saying that W had asked for disclosure “as part of a massive expedition” (which W also disagreed)[12]. H even went further to try and justify his refusal by proclaiming that he would have happily provided disclosure had W asked for it earlier before Judge Melloy but W had not asked[13]. 50.At paragraph 72 of the AR Judgment, there was extracted the audio transcript of W’s evidence in chief when she was asked upon the audited accounts that had been produced by H in these proceedings. W in her answers[14] confirmed she had asked H for audited financial statements even during the marriage but it was very difficult to get any documents from H. 51.At paragraph 73 of the AR Judgment, there was extracted the audio transcript of evidence when it was put to W by H’s Counsel that she wanted to be difficult rather than wanted to turn around the business of LECL to a successful business. W disagreed and provided an explanation as to the lack of valuation of LECL as she trusted H that it was a loss-making company. 52.It was against this backdrop that the Court concluded its views at paragraphs 75 to 76 of the AR Judgment that H’s attitude on disclosure was not forthcoming, H was not co-operative in providing proper accountant’s or auditor’s report or, to the very least, to produce LECL’s bank statements. Thus, paragraphs 75 to 76 of the AR Judgment should be read in their proper context. 53.As to the submission of W not seeking expert evidence on valuation of the business of LECL, this does not even get off the ground given my finding of fact over H’s unwillingness and un-operative stance in his disclosure of any of the bank statements of LECL not having been overturned or disturbed. How could expert valuation be made without H’s assistance and co-operation? 54.It remains for me to repeat that, in any event, H was unable to show any of his offers made for settlement exceeded the AR Judgment. With all the findings carefully considered, I stand by my decision that the overall impression of W being the “winner” in the ancillary reliefs trial stands. 55.For all the above reasons, I find that none of the 5 grounds of application could assist H’s application to vary the costs order nisi dated 31 October 2024. Costs 56.I decided that H should bear W’s costs of his application to vary the costs order nisi, including all costs reserved (if any), to be taxed if not agreed. Orders 57.I now grant the following Orders :-
Miss Vivien Leung instructed by Messrs. Holmes Lawyers, Solicitors for the Petitioner Messrs. Karas So LLP, Solicitors for the Respondent [1] See §168(a) of the AR Judgment [2] See §168(c) of the AR Judgment [3] See §168(d) of the AR Judgment [4] See §§162 and 168(e) of the AR Judgment [5] Corrigenda dated 1 November and 23 December 2024 [6] TB:A1 to A3 [7] TB:A4 to A8 [8] TB:A12 to A28 [9] TB:A29 to A45 [10] TB:A9 to A11 [11] TB:A93E to 93F [12] TB:A93G to 93I [13] TB:A93J [14] TB:A94M to 94U | ||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under FCMC 15810/2018