Aa v. Bb

FCMC 41/2022

[2025] HKFC 184

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 41 OF 2022

__________________________________

___________________________________

_____________________

DECISION
(Leave to Appeal – costs)

_____________________

1.This is the Respondent’s (“W”) application for leave to appeal against the Decision (Ancillary Relief Costs) handed down on 22 July 2025 (“the Decision”) that:

(1)  W shall pay 20% of the Petitioner’s (“H”) costs of the ancillary relief suit, including previously reserved costs (if any) with certificate for counsel, to be taxed if not agreed; and

(2)  W shall pay 50% of the costs of the costs application to H.

2.I gave directions that the application for leave to appeal shall be determined on paper with a timetable for submissions. W lodged and served her Skeleton Submission for the Respondent dated 5 August 2025, settled by Ms Elizabeth Lee of counsel (“W’s Subs”). H lodged and served his Skeleton Submission for the Petitioner (Leave to Appeal) dated 28 August 2025, settled by Mr Peter Barnes of counsel (“H’s Subs”).

BACKGROUND

The ancillary relief judgment is dated 12 March 2025 (“Judgment”). The background to the costs application was briefly set out in the Decision at §§1-2. I shall adopt the abbreviations used in the Decision and Judgment.

THE LAW

Leave to appeal

3.Section 63A(2) of the District Court Ordinance, Cap. 336, provides that leave to appeal shall not be granted unless the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice that the appeal should be heard.

4.The 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. Merely showing that the appeal is “arguable” and “not fanciful” would not be sufficient: Ho Yuen Ki Winnie and anor v Ho Hung Sun Stanley and anor, HCMP 1009/2009, (unrep), Le Pichon JA at [16]. A reasonable prospect of success means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: KNM v HTF, HCMP 288/2011, (unrep), Fok JA (as he then was) at [9]; see also SMSE v KL [2009] 4 HKLRD 125.

5.An appellate court will not interfere with a judge’s exercise of discretion in the award of costs unless it is shown that he failed to exercise the discretion, exercised it upon a false principle, did not exercise it judicially or the exercise of discretion was demonstrably flawed: FBC Construction Ltd v Ben Lee  [2014] 2 HKLRD 1054 at [233]. Unless it can be shown that the decision is wrong in principle, is plainly wrong or that the judge had committed a palpable error in the exercise of the discretion on costs the mere fact that the Court of Appeal would not have exercised the discretion in the same manner as the judge is not sufficient ground to overturn the decision: YSG (XY) v LYAG [2013] HKFLR 753, at [43].

Costs

6.The legal principles on costs are set out in the Decision at §§16 to 23. The court’s discretionary power to make appropriate costs orders stems from Order 62, rule 3(2) of the Rules of the District Court, Cap. 336H (“DCR”): Decision §16. In exercising the court’s discretion as to costs, the court should take into account the factors set out in Order 62, rule 5(1), DCR: Decision §18. The discretion as to costs is to be exercised in a principled way with a view to reality and justice:  YBL v LWS (No. 2) [2017] 2 HKLRD 783, Hon Lam VP (as he then was) at [9]: Decision §19.

7.I applied the principles as stated by To J in KJ v KMLM (unrep., HCMC 4/2010, 21 May 2014). Of particular relevance to this application for leave to appeal are paragraphs 17 to 19, set out in full at Decision §22.

8.Mr Barnes distilled the material principles in KJ v KMLM, upon which I relied in determining the incidence of costs, as follows:

(1)  Where a successful party raises issues or makes allegations on which he fails and where that has caused a significant increase in the length or costs of the proceedings, he may be deprived of the whole or part of his costs. A significant increase in the length or costs of the proceedings means one that can be estimated as a more than trifling proportion of the total costs. The costs need not be assessed with precision. It suffices if the court can give an estimate of the proportion of these costs. A party may be deprived of part of his costs on the failed issues even if such costs overlap with those of the succeeded issues (KJ v KMLM at [17]).

(2)  Where the successful party raises issues or makes allegations improperly or unnecessarily, the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful party’s costs (KJ v KMLM at [18]).

(3)  The court in exercising its discretion should take into account Order 1A, DCR underlying objectives and certain special matters in appropriate circumstances, including the conduct of all the parties and whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; the manner in which it was pursued, whether the claimant who has succeeded in his claim, in whole or in part exaggerated his claim, and his conduct before as well as during the proceedings (KJ v KMLM at [19]): Decision §§23(1)-(3).

9.The reasoning in KJ v KMLM , that the court has a discretion not only to deprive a “successful” party of his/her costs but to require him/her to pay the costs of the “unsuccessful” party has been affirmed as correct by the Court of Appeal: Decision §107. H says that here the court accurately set out and applied the correct principles on costs in the Decision §§16-23 and that W does not appear to argue otherwise. Actually, W undoubtedly takes issue with the application of the principles.

10.H reminds the court that in family matters the exercise of the discretion is wider than in other civil proceedings and the starting-point that costs follow the event may be displaced more easily: HK v BD [2011] HKFLR 66 at [78], per Hartmann JA, citing Gojkovic v Gojkovic (No 2) [1992] 1 All ER 267, 271: Decision §17. A more recent UK decision affirming this principle is RA v KS [2023] EWFC 102 at [45].

11.DGB v SDGK (unrep., FCMC 12078/2013, 26 November 2014)  held reasons affecting the court in considering costs, such as culpability in the conduct of the litigation, includes material non-disclosure of documents or information and conduct in seeking disclosure. Gojkovic emphasised the need for the court to consider whether one party had exercised “excessive zeal” in seeking disclosure: at p.54. I found that material conduct of W was, inter alia, her non-disclosure and also excessive zeal deployed in seeking disclosure from H: Decision §§108-109, 113(2).

DECISION AND W’S APPEAL

12.I accepted that on W’s breakdown of the figures W is the successful party: Decision §113. W submits that she trumped H in all headline issues, which she lists as pot size, the entire X Group being added to the pot, the Financial Mediated Agreement (“FMA”) leaving W in a predicament of real need, the order for periodic payments for the Children and that W was awarded more than H’s Open Proposal. The Judgment and the Decision deal with each of those matters in detail.

13.H makes three points that should inform the present application for leave to appeal costs. First, there was no appeal from the Judgment. The findings, including the criticism of W’s conduct which formed the basis of the Decision, stand unchallenged.

14.Second, despite this W’s Subs include statements suggesting she does not accept the criticism of her conduct, nor its impact on costs. She repeatedly refers to the unfairness of the adjudication on costs as a “penalty”. H’s reply to her argument that she should receive 100% of her costs is that would not be a proper exercise of the courts discretion, as it would place her in the same position as a reasonable litigant.

15.Third, W’s Subs §1 replicates points previously unsuccessfully argued in her costs submission. W does not accept the findings in the Judgment and Decision, but is repeating the same arguments seeking a different result. H replies that:

(1)  W’s assertion of success on the size of the pot disregards her position at trial. Then she argued unsuccessfully that the pot was larger, that H was hiding assets, in particular corporate shareholdings: Judgment §§275-279. The court found against W declining to draw adverse inferences: Judgment §290.

(2)  W misrepresents H’s position asserting it was at most $2.2M not the $40M added for X Group. H’s position was at all times, that X Group constituted a financial resource, but that its illiquidity should be taken into account. The court agreed: Judgment §§198, 328.

(3)  W’s Subs on their respective positions on the FMA are incomplete. W sought to exclude consideration of the FMA altogether and H argued that if the FMA was not decisive it should carry significant weight. The court agreed with H and found against W: Judgment §§138, 386.

(4)  H accepts that the court made the periodic payments Order, but this is in the context where (a) H had undertaken as per the FMA to pay directly for most of the big items, and (b) the court found that W had far greater earning capacity than she sought to portray, leaving the court to draw adverse inferences as to her real earning capacity: Judgment §§346-348.

(5)  The Decision §62 had considered the fact that W obtained $11M more than H Open Proposal, finding that W’s statement on the result of the LKW v DD steps was not particularly enlightening where each party had gone into the detail of the actual issues and findings they relied upon.    

16.I held that the starting point was that costs should follow the event. The burden was on H to show why there should be any departure from that. I found that H discharged that burden. W, the successful party, had raised issues and made allegations on which she failed and which caused a significant increase in the costs of the proceedings such that she should be deprived of her costs. I was satisfied that first, on an issue-based approach both parties having succeeded on different issues, it would have been appropriate that there should be no order as to costs: KJ v KMLM §17. However, that would be on the basis that neither party acted unreasonably, nor pursued matters improperly. Secondly, where a party raises issues or makes allegations improperly or unnecessarily the court may not only deprive that party of his/her costs, but may order him/her to pay the whole or part of the unsuccessful parties’ costs: KJ v KMLM §18. I was satisfied that W should pay part of H’s costs on that basis. Having taken into account all of the circumstances and the Judgment, including that W was the successful party, I determined she should pay 20% of H’s costs. That was a conservative percentage, in that on a strictly time based assessment it would have been greater, but I determined that was sufficient to meet all concerns and the justice of the case, including O. 1A, DCR factors or objectives.     

17.I do not accept W’s Subs that this was a penalty in costs disproportionate to the conduct, and a wrong conclusion based on an erroneous assessment of the factors leading to the decision: W’s Subs §4.

INTENDED GROUNDS OF APPEAL

18.The draft Notice of Appeal (“DNA”) contains seven intended grounds of appeal (“Grounds”). I have considered the DNA and all submissions and shall address each Ground in turn.

Ground 1- misapplying KJ v KMLM   

19.Ground 1 is essentially that I erred in misdirecting myself and/or misapplying KJ v KMLM at Decision §§113-114 and/or reached a decision which no reasonable judge could have reached in that:

(1)  The Judgment did not hold W’s litigation conduct to be obvious and gross or inequitable for the court to disregard.

(2)  W as the successful party was to be deprived of the whole of her costs applying §17 of KJ v KMLM and was ordered to pay part of H’s costs applying §§18-19 of KJ v KMLM, both based on the same conduct, namely raising failed issues and/or allegations and disclosure issues; Decision §113(1)-(2).

(3)  The estimate that “approximately half” of the costs of the proceedings were increased by the W’s conduct: Decision §113(2).

(4)  By first depriving the W of the whole of her costs and then further ordering W to pay 20% of H’s costs I erred in independently applying §17 and §18 of KJ v KMLM over the same W’s conduct, and thus penalising W twice.

(5)  W was penalised on costs grossly beyond the extent of the unnecessary increase in costs caused by W’s conduct.

20.W’s submission is in three parts.

21.First, that the compound application of §17 and §18 of KJ v KMLM was for the same conduct. H refutes W’s first suggestion, that the application of KJ v KMLM amounts to an error of law in that it constitutes a “penalty twice over”, and is a conclusion that “no reasonable judge” would have reached. On the contrary, for the reasoning given in the Decision, including that neither party had been wholly successful, the court correctly considered all factors and determined that W’s litigation conduct should be reflected in an award of a relatively small proportion of H’s costs in responding to the unmeritorious points she has raised.

22.W’s second assertion is that the maximum penalty under §17 KJ v KMLM of full deprivation of W’s costs is wrong: W’s Subs §9. The Decision §113(2) found W caused only “approximately half ” of the costs of the proceedings to be unnecessarily increased so W should only be deprived of half of her costs and still receive half of her costs. W misreads the Decision. My determination at Decision §113(2) is on application of KJ v KMLM [18]. Before that, at the Decision §113(1), I first applied KJ v KMLM [17] and determined that there should be no order as to costs on simply an issue-based approach. That was without taking into account all the unreasonable, unnecessary and improper litigation conduct. I then went on at Decision §113(2), applying KJ v KMLM [18], to estimate such unreasonable, unnecessary or improper litigation conduct costs to be approximately half. However, having regard to all matters, not just independently applying factors, I adjusted the overall final downward.

23.Mr Barnes replies that W’s Subs paragraph 9, “maximum penalty” is not a logical submission. It pre-supposes that the court had decided that W should receive her costs of the ancillary relief proceedings. It did not, for reasons which are entirely cogent.

24.The third part of W’s Ground 1 case is that there was double counted costs penalty which is disproportionate. The 100% deprivation for 50% unnecessary increase with a further penalty of 20% imposed for the same conduct is grossly beyond the reasonable extent of a penalty for the conduct. Again, W has misread the Decision, in particular, §§113(1) and (2) and does not apply the correct test.

25.H replies to W’s disproportionality argument that the maths is wrong. The court decided that W was not entitled to her costs of the claim, for several reasons, and that due to her misconduct, she should not only fail in her claim for costs, but should bear a proportion of H’s costs. In the face of a disproportionality argument, H points out that the extent to which the court was required in the Judgment to address the arguments raised by W on the various issues can be seen thus:

(a)  FMA: Judgment §§41-150; Decision §§51-52, 76.

(b)  The X Group – including W’s rejection of H’s claim that it was illiquid: Judgment §§122-200; Decision §46.

(c)  The X Trust as “illusory” – Judgment §§203-271: Decision §97-99.

(d)  H’s alleged non-disclosure – Judgment §§272-290; Decision §§56, 69.

(e)  W’s denial of her non-disclosure – Judgment §291++. And at §307, the conclusion that W had “not been entirely truthful” and to “prefer H’s evidence to that of W, where they differ”. H submits that this is a significant finding, and one which is not challenged by W.

26.In my view, W misunderstands or misconstrues the Decision. It had regard to two distinct matters. First, simply on an issue-based approach, taking into account success on different issues, the proper order would be no order as to costs because notwithstanding that W was considered the successful party, they each lost and succeeded on issues that incurred costs, such that the fairest order, before looking at conduct, was there should be no order as to costs. However, I also had to consider litigation conduct. Secondly, W not only failed on issues such that there should be no order, but also raised and pursued matters improperly, unnecessary and unreasonably, so should be responsible for paying the costs that conduct incurred. W was only ordered to pay 20% of H’s costs to reflect her misconduct. I do not see how that was wrong in principle, nor on the facts.

27.In my view Ground 1 does not have a reasonable prospect of success on appeal.

Ground 2 – X Trust/Group a financial resource  

28.Ground 2 is that I erred in finding that W raising a positive case against H was unnecessary or unreasonable with regards the X Trust/ Group on the ground that H had admitted that X Group was a financial resource: Decision §§209, 387.

29.W submits that first, the full extent of the X Group was included in the pot so she prevailed on this. Second, the value of the admission by H is negated as (1) he valued X group at 1/4 of the value found in the Judgment, and (2) he claimed to only own a 1/5 share. His case was 1/4 of 1/5. This lowers the value of the contribution to the pot. I erred in relying on the admission that it was a financial resource to conclude the W unnecessarily disputed H’s case.

30.Contrary to W’s Subs §13, I did not find that it was unnecessary for W to dispute H’s case. The wasted time and costs were on W’s “illusory trust” case. If Ground 2(6) is suggesting that W was ordered to pay any costs simply because she raised a positive case in respect of the X Trust, W has misconstrued the Decision. W was entitled to raise a positive case without having to pay any costs of the issue, even if she failed, but she could and should have raised a case as to the extent of the availability of the resource, not that the X Trust was illusory.  This issue undoubtedly unnecessary and improperly increased the time and costs of the proceedings.

31.W continues, third, that I did not appreciate the evidence elicited under the illusory argument that shed light on the extent of the control of H goes to the real issue of the extent of the resource available: Decision §§113(2), 98. Hence I erred in law. W misses the point. Those matters were available to be argued by W without the need to show that the X Trust was illusory. The case that H had control, power or influence over the X Group and/or X Trust could shortly have been put to H. The documents were largely undisputed.

32.H replies that the points under this ground are less than clear but appear to amount to an argument that W did not unreasonably enlarge the costs by pursuit of her claim that the X Trust was illusory. She says the court erred in its Decision at §98. There, the court properly found that H’s argument on the application of KLL, “pales into insignificance” against the W’s “illusory trust” case. This part of the Decision properly recalls and places emphasis on the extent to which W persisted with her position that the X Trust was illusory, in W’s Opening, in her cross-examination of H and her Closing. H had emphasised that W could have pursued her case by joining the Trustee of the X Trust, if she felt that there was some substance to her arguments. This formed part of the reasoning: Judgment §210.

33.Again, it was the particular case W chose to run that caused unnecessary costs. The unnecessary and unreasonable conduct was in seeking to establish that the X Trust was “illusory”. First, time and costs were spent on the law, given that the very term “illusory” in the context of a trust has been questioned. A trust is either real or it is not, and there is no half-way species: Judgment §§246, 264-266. Secondly, W was effectively saying there was no real trust. In that event H’s position was that the court should not be ruling a trust invalid in the absence of the Trustee or without so much as notice to the Trustee, beneficiaries and/or the Protector. At least the Trustee should be joined: Judgment §§266-267. However, W insisted on adducing evidence supporting a case that X Trust was a sham, while disclaiming that was her case.

34.W now claims that the real significance of the evidence was to prove H’s control and power over the X Group so as to ascertain the extent to which the X Group was a financial resource. Ms Lee was not trial counsel, so may not appreciate that was not how W’s case was presented at trial. W did not pursue that evidence simply to prove the extent of the availability of the assets. That would have been a significantly more confined case. I found that W could and should have gone directly to and argued the extent of the resource available to H and W in the ancillary relief proceedings: Decision §§98-99. Instead, W launched a root and branch attack on the X Trust, without even giving notice to, much less joining, the Trustee, which attack failed. I remain of the opinion that W’s illusory trust case was unnecessary and improperly pursued in light of what W well knew, and frankly, misconceived, particularly when H had admitted the X Trust was a financial resource and the real battleground should have been the extent of the available resource. H was not limiting that only to 1/5. When required to state his share he stressed that it was a discretionary trust, he did not have a fixed beneficial interest, so on the basis there was 5 beneficiaries, his interest would be 1/5. I accepted that part of H’s case: Decision §48.

35.In my view W has not shown where I may have erred. I do not consider Ground 2 has a reasonable prospect of success on appeal.

Ground 3 – Single Joint Expert

36.Ground 3 is that I erred in finding that H’s questioning of the Single Joint Expert (“SJE”) on the value of X Group was “worthwhile” for H’s case at Decision §44 and as a result failed to take into account the unreasonable conduct of H in:

(1)  Unsuccessfully challenging the valuation figure: Judgment §197.

(2)  H’s illiquidity point was apparent on the face of the SJE valuation report and did not require excessive questioning: Judgment §194.

(3)  Holding that H advanced an alternative case on the value of X Group: Decision §46. This is contrary to the fact H did not put an alternative case to the SJE: Judgment §183 and the conclusion that the H did not establish an alternative figure for the valuation. H failed in his challenge to the value of the X Group. He made no alternative case.

(4)  Questioning the SJE unnecessarily and unreasonably which I should have taken into account against a departure from costs following the event or making an award in favour of H.

37.H replies that in defiance of the conclusions in the Judgment and in the Decision, W repeats that H’s “extensive questioning” of the SJE was “unreasonable conduct”. The court disagreed: Decision §46. This is not an appeal point, but merely registering disagreement with the court’s decision on this point. I have to agree. W says I should have found that H’s questioning of the SJE was unreasonable, but that is contrary to my findings on the utility of the questioning in the Judgment, that has not been appealed: Judgment §§186, 198.

38.W’s Subs §17, suggests that “Illiquidity … is a matter apparent on the SJE report and did not require the time wasted in extensively questioning the SJE”. H entirely agrees but that was only necessitated because of W’s refusal to accept the fact, or arguing it was illiquid only because H chose to treat it as illiquid. This occupied many pages of evidence, submissions and a significant proportion of the trial itself.

39.I remain of the view that H’s questioning of the SJE was quite proper and made headway. As a result I was satisfied the X Group was illiquid. The criticism of H for not putting or establishing an alternative figure or valuation fails to appreciate H’s case. H maintained throughout that it was difficult to put a precise value on X Group, there were so many variables, including his position as key-man and that it was illiquid. H did not need to establish or put a different figure. A reason for finding that there should be departure from the sharing principle was that the X Group was illiquid, to factor in that the SJE valuation figure was not as good as cash. On allocation of assets, W was to have the copper bottom assets whereas, H was to have the illiquid asset which could not be treated as having the precise readily realisable monetary value attributed by the SJE.

40.I am not persuaded that there was any error in the consideration and treatment of the SJE or valuation evidence when it came to costs. In my view Ground 3 has no reasonable prospect of success.

Ground 4 – Financial Mediated Agreement

41.Ground 4 is that I erred in finding that W’s challenge to the FMA was excessive, unjustified and unnecessary at Decision §76 because I:

(1)  Failed to consider that W raised that upholding the FMA would leave her in a predicament of real need, which ultimately led to the finding against strict adherence to the FMA;

(2)  Erred in finding that W’s position was ultimately rejected and that H prevailed on this matter: Decision §§74-75;

(3)  Erred in holding substantial weight had been placed on the FMA when the Judgment bore slight resemblance to the FMA, and that there were 3 factors, not just the FMA, that led to the departure from equal division: Decision §62;

(4)  I should have found that W’s challenge to the FMA was merited and should not have deprived W of her costs or penalised her on costs on the basis of this issue.

42.W submits first, it is wrong to find that W’s position on the FMA was rejected disregarding W being left in a predicament of real need, which was the factor that led to ruling against strict adherence to the FMA.

43.Second, there was no substantial weight placed on the FMA. There was little trace/ resemblance to the FMA in the final award.

44.W continues, third, the mere 7% departure from equal division was influenced by 3 factors. The FMA was only one of them. The relative insignificance of the FMA in the asset division is evident. H replies that this does not raise any perceived error of law. The court’s findings on the FMA, namely that, contrary to W’s submission, significant weight should be attached to the FMA, formed part of the conclusion that there should be a departure from equal sharing: Judgment §390. W asserts, without any basis, that this was an insignificant element in the court’s conclusion that there should be a departure.

45.I wholly reject the assertion that the FMA was relatively insignificant in the asset division. To the contrary, it was highly significant. I actually find W’s submission removed from reality. W is simply wrong. The Judgment stressed the importance of mediation in the Hong Kong legal system and the FMA in these proceedings: Judgment §13; Decision §67. I expressly found that significant weight should be placed on the FMA: Judgment §§139-140, 385-386; Decision §§70, 110. I endeavoured to follow the FMA. It was the basis of both the structure and the content of terms of the award, subject to ensuring W was not left in a predicament of real need: Judgment §§140, 375. That then required variation from, rather than “strict” adherence to, the FMA terms. The Judgment explained that the three reasons for departure were not to be treated arithmetically as cumulative, as there was overlap: Judgment §§384, 390. The FMA took into account the X Group and X Trust as well as Children’s maintenance. So even without those factors receiving separate treatment, the extent of FMA departure would not have been perceivably reduced. The Judgment also made clear that the departure would have been greater, but for the necessity to ensure W was not left in a predicament of need, in light of her position at time of trial, as distinct from when the FMA was signed.

46.I maintain my view that W’s attack on the FMA, and H, was unnecessary. She wasted time marshalling facts in an attempt to run multiple bases of challenge that could not satisfy the burden on her. H’s conduct was not impugned in the manner alleged: he had not behaved egregiously or taken advantage of W. I have not lost sight of W being under a misapprehension as to the actual value of X Group. That could have been established shortly with a concise statement, going through the FMA terms and showing her current financial position. Instead, W’s case took much time incurring considerable costs. Not only was the extent of the attack unreasonable, it was also unnecessary. The court will always consider whether strict adherence to a mediated agreement would leave a party in a predicament of real need. The expense of W’s excessive attack on the FMA and/or H was unnecessary. I sought to uphold the FMA and endeavoured to honour its terms, both as to the structure of the award and the financial provision, subject to ensuring W was not left in a predicament of real need which prevented strict adherence.

47.In my view Ground 4 does not enjoy a reasonable prospect of success on appeal.

Ground 5 – Children periodic payments   

48.Ground 5 is that I erred in failing to take into account that W prevailed in the matter of Children’s maintenance, which militates against departure from the starting point that costs follow the event. In particular:

(1)  I erred in holding at Decision §35 that W’s case was simply and plainly incorrect to claim H offered HK$0 as children periodic payments, by reference to H’s Undertakings. In so doing I failed to differentiate between Children’s monthly periodic payments and other Children’s maintenance by H’s Undertakings.

(2)  The determination that Children’s maintenance leaned considerably to W’s side: Judgment §§381, 399.

(3)  I should have taken W’s success on this issue into account contrary to the costs order.

49.W submits that the main battleground was the amount of monthly periodical payments that H was to pay as support for the Children, not the Undertakings. H offered nothing. W sought $115,000. The order was for $89,000 per month, so W prevailed on this issue. It is said that I conflated the issue of the Children’s monthly maintence payments with the Undertakings offered by H. The Decision failed to take into account/ wrongly gave weight to W’s success on this matter.

50.H replies that this is another repeated argument, already addressed in the Decision: §§33-37. H’s contribution to the Children’s upkeep is very substantial. W’s claim was not totally successful, in that she was awarded less than she was asking for, including because of her non-disclosure of her earning capacity.

51.I did not misunderstand the difference between periodic payments and H’s offer or undertakings, nor fail to differentiate between Children monthly periodical payments and other aspects of the Children’s maintence and H’s Undertakings: Decision §35. W takes that part of the Decision out of context. Decision §§34 and 35 set out H’s submissions, starting “H replies that...”. At the end of Decision §35 I added my own observation, “And, I would add, unhelpful”. W was constantly stressing “zero dollars”. I could not possibly have failed to get that point of distinction. I was addressing the manner of W’s insistence that H offered $0 to suggest he was offering nothing at all towards the upkeep of the Children. H was offering to continue to cover a considerable amount of the Children’s expenses, so trying to paint the picture he was paying nothing for the Children, was unhelpful and unpersuasive advocacy.

52.The FMA provided that W would cover the Children’s expenses when they were with her. I found that she should be making some contribution. The difficulty faced by the court was determining what that should be, because she would not disclose the particulars of her earnings/ earning capacity. H would face the same difficulty in considering how much more he should offer, if anything, beyond the FMA provisions, when that turned on W’s earnings and earning capacity.

53.I took into account H was ordered to pay periodic payments and had offered none. W takes issue with the weight I gave that finding in W’s favour, as against other factors, in the exercise of the costs discretion.

54.I do not consider Ground 5 has a reasonable prospect of success on appeal.

Ground 6 – reserved costs orders

55.Ground 6 is that I erred in awarding 20% of the reserved costs of the ancillary relief suit to H. I failed to take into account that the prior interlocutory applications with reserved costs orders were necessitated by H. First, W says H adopted the wrong procedure. H replies that the “show cause” procedure is well recognised in Hong Kong law, flowing from the judgment in the Court of Appeal in L v C [2007] 3 HKLRD 819. H did not seek a separate preliminary issue hearing, thereby adding to the potential cost and delaying the ultimate determination. H pragmatically agreed that the question of weight to be attached to the FMA should be decided at the ancillary relief trial. I accept this submission of H.

56.Secondly, W alleges that H’s unreasonable refusal to give disclosure necessitated W’s summons dated 18 April 2023 for specific discovery. Thirdly, that H’s unreasonable refusal to value X Group necessitated W’s Summons dated 18 April 2023. Fourthly, W says that I should have taken account of H’s unreasonable conduct which necessitated those interlocutory applications and not awarded H any of the reserved costs. Those unnecessary costs are disregarded in the global order made with 20% of the costs reserved to be paid by W to H. H replies that the court rejected W’s claim that H had been guilty of litigation misconduct.

57.After the Judgment, the parties lodged submissions for determination of the costs of the ancillary relief proceedings/ suit. At that point any reserved costs orders should not just be left outstanding to be determined at some indeterminate future time. Reserved costs will not be allowed on taxation unless the court makes a specific order dealing with them at the conclusion of the proceedings. If there were particular reserved orders made earlier, by any judge, that required actual determination on the merits or separate attention, those reserved orders should have been brought to the court’s attention, when W was making submissions on the costs of the ancillary relief proceedings. W’s submissions only referred to an Order dated 23 May 2023 of HH Judge T Kwan in the context of H’s disclosure necessitating W’s application for specific discovery: Decision §56(2). I was not addressed on whether, and if so how, any particular reserved costs order should depart from the ancillary relief costs determination.

58.Ground 6 does not have a reasonable prospect of success.

Ground 7 – punitive costs order

59.Ground 7 is that I erred in finding W was to be sanctioned with a punitive costs order. First, I failed to take into account that the Decision in effect re-distributes the marital assets and alters the substantive ancillary relief award in that H had incurred legal costs of $4,954,990 with 20% being $990,998. The further 50% of H’s costs for the application is unknown with no statement of costs having been filed by H.

60.Secondly, I erred in law in making an order the effect of which reduces W’s ancillary relief award, despite the absence of any finding in the Judgment that W’s litigation conduct was “obvious and gross or inequitable to disregard”. W submits that there was no basis for the extreme costs sanction which affects the substantive ancillary relief award. H replies that Ground 7 suggests that the court needed to find that W was guilty of litigation conduct which was “obvious and gross or inequitable to disregard”. This is, manifestly, not the correct test. I agree with H that the test is not as stated by W, but as set out in the Decision and above.

61.W continues thirdly, I failed to take into account the undue hardship that the Decision would cause W, despite knowledge of W’s loss of employment. Fourth, I should have taken into account the twofold hardship of the reduction of the ancillary relief award and loss of employment. I thus erred in law and/or fact in holding that W be ordered to pay 20% of H’s costs. While H maintains that the overall determination that W should pay 20% of H’s costs, took into account her entitlement under the overall award. There is no arguable error.

62.This was not a needs case. The parties had agreed that the ancillary relief application was to proceed on the basis that the sharing principle applied and I was satisfied that there were surplus assets. The outcome was that W herself has substantial assets. As in YSG (YX) v LYAG at [53], while the adverse costs order would undoubtedly have some impact on W, this was simply the consequence of W having unreasonably pursued matters that were unnecessary, thereby incurring costs. Although W stated in her application to prevent publication of the Judgment that she had lost her job and was seeking another, the court does not monitor particulars of her employment. Were W’s circumstances to change such that she has difficulty caring for the Children that may be addressed by an application to vary. If the quantum of H’s costs was excessive, there may be taxation of bills. I do not consider that Ground 7 has a reasonable prospect of success.    

DETERMINATION

63.In my view none of the seven draft grounds of appeal in the DNA have a reasonable prospect of success. I have considered whether there is any other reason why an appeal should be heard. There is not.

64.By reason of the matters set out above I refuse W’s application for leave to appeal against the costs Decision. I dismiss W’s Summons dated 5 August 2025.

65.I make a costs order nisi that W do pay the costs of H of the application for leave to appeal by Summons dated 5 August 2025 on the District Court scale with certificate for counsel. Unless either party applies to vary the costs order nisi within 14 days hereof, the nisi order shall become absolute.

Mr Peter Barnes instructed by Hugill & Ip for the Petitioner

Ms Elizabeth Lee instructed by Haldanes solicitors for the Respondent