W v. W

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 2348 OF 2002

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BETWEEN 

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Coram : H.H. Judge Bruno Chan in Chambers

Date of Hearing :  16 April 2004

Date of Ruling :  29 April 2004

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R U L I N G

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1.This is my ruling as to the costs of the Petitioner Wife’s application for ancillary relief, arising from a judgment of mine which was handed down on 5^th November 2003 in which I awarded her approximately 53% of the parties’ matrimonial assets plus a nominal sum of $1.00 per annum, and an order nisi that each party to bear his / her own costs.  She now seeks an order that the Respondent Husband should bear all her costs of the application, which is opposed by the Husband who maintains that there should be no order as to costs.

2.At very early stage following the dissolution of their 30 years marriage, the parties were able to agree in principle that their assets should be distributed equally between them, which consisted of real properties, investments and pensions, and cash in the total value of slightly over £910,000, but there were major disagreement over the Wife’s needs for continuing monthly maintenance as the Husband happened to lose his well-paid job as a managing director of a big electrical chain-store during the proceedings and offered to pay her a nominal sum of $1.00 per annum to preserve her right to seek variation in the event of him finding employment in future, but the Wife insisted that he should continue to pay her substantive periodical payment from his share of the matrimonial assets, and relying on his high earning capacity.

3.The trial itself lasted for 4 days with an additional day for submission, with the question of whether substantive periodical payments were to be paid in the face of the Husband’s unemployment as essentially the main issue, and the bulk of the time was spent on the Wife’s needs and expenditure and the Husband’s earning capacity.  At the start of the trial, the Wife’s legal costs were estimated to be about HK$500,000 up to its conclusion, whilst the Husband’s were close to HK$400,000.  He had also contributed HK$45,000 towards the Wife’s costs.

4.The Husband’s main argument in his opposition to the Wife’s application for costs is that it was her refusal to take a realistic view of his unemployment and to move from her firm stance of “he will find employment” coupled with “as long as I get what I want it does not matter where it comes from” which led to the necessity for trial, and that as the judgment giving her only nominal maintenance instead of substantive periodical payment was clearly in his favour, it should be reflected in an order that she should bear her own costs.

5.The Wife, on the other hand, argues that the offers of the Husband of equal division of matrimonial assets as a clean-break without any periodical payments for her were unreasonable and unacceptable, whereas his offer of 22^nd May 2003 again failed to offer her periodical payments other than her right to apply for nominal maintenance, or to offer her costs, was again unreasonable and incapable of being accepted by the Wife.

6.It is further submitted by the Wife, that as she was eventually awarded 53% of the assets, she was therefore able to achieve a larger capital award than was offered, and that the Husband’s failure to recognise her need for periodical payments or the level thereof is fundamental, although she was only awarded a nominal maintenance order at the end of the trial, she submits that the time taken in establishing her entitlement was time well spent as it will greatly assist any future application for periodical payments after the Husband has obtained employment and / or an income from his business.

The Principles

7.The general rules and principles as to costs in civil proceedings have been stated in In re Elgindata Ltd. (No. 2) [1992] 1 WLR 1207 where Nourse LJ said as follows : -

“The principles are these.  (i) Costs are in the discretion of the court.  (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made.  (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs.  (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs.  Of these principles the first, second and fourth are expressly recognised or provided for by rules 2 (4), 3 (3) and 10 respectively.  The third depends on well established practice.  Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party’s costs”.

8.While I agree that these principles apply equally in this jurisdiction, it is also true that costs in contested Family matters, in which the court has wide discretion, do not necessarily follow the event.  There is, of course, the necessity for some starting point, which was discussed in the judgment of Butler-Sloss L.J. in Gojkovic v Gojkovic [1992] Fam 40 at 54, in which she said :

“That starting point, in my judgment, is that costs prima facie follow the event (see per Cumming-Bruce L.J. in Singer (formerly Sharegin) v Sharegin [1984] F.L.R. 114, 119) but may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court.  One important example is, as the judge pointed out, that it is unusual to order costs in children cases.  In applications for financial relief the applicant (usually the wife) has to make the application in order to obtain an order by consent; and if money is available and in the absence of special circumstances, such an agreement would usually include the applicant’s costs of the application.  If the application is contested and the applicant succeeds, in practice in the Divorce Registries around the country where most ancillary relief applications are tried, if there is money available and no special factors, the applicant spouse is prima facie entitled to, and likely to obtain, an order for costs against the respondent.  The behaviour of one party, such as in material non-disclosure of documents, will be a material factor in the exercise of the court’s discretion in making a decision as to who pays the costs”.

9.In the vast majority of cases, according to the Lord Justice (as she then was), where one party is or both parties are legally aided, and where the assets are insubstantial or at least inadequate for the needs of the family, the question of who pays the costs may be academic.  But in cases where the assets are substantial, as in the present case, an order for costs can if appropriate be made.  Butler-Sloss L.J. said in the same judgment :

“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”.

10.This practice was referred to by Oliver L.J. in Cutts v Head [1984] Ch. 290 in which he explained the nature of the public policy upon which the rule rests, when he added :

“As a practical matter, a consciousness of a risk as to costs if reasonable offers are refused can only encourage settlement whilst, on the other hand, it is hard to imagine anything more calculated to encourage obstinacy and unreasonableness than the comfortable knowledge that a litigant can refuse with impunity whatever may be offered to him even if it is as much or more than everything to which he is entitled in the action”.

11.Butler-Sloss L.J., having considered the various decisions on costs, went on to reach the following conclusion in Gojkovic v Gojkovic :-

“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 application 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”.

12.In the more recent case of C v C (Costs : Ancillary Relief) [2004] 1 FLR 291, Charles J having considered all the above principles in details, arrived at a practical approach in many cases as follows : -

“	(1)	To ask who would, or should, have paid the costs if agreement had been reached at an early stage and why this was so.  Often this will be reflected in the common ground and the offers made.  The answer to this question will often identify who should be regarded as the paying party or the person who should prima facie be liable for costs and thus, in terms of the starting point referred to in Gojkovic v Gojkovic and Another, the event.  Also the answer to this may often support the view that up to a certain pint prima facie one party should pay the costs of the other.
	(2)	To identify :

		(a)	the issues that are not in dispute at trial; and
		(b)	the issues that have prevented an agreement being reached and placed before the court for its approval and to consider their impact on the question of costs and thus, for example :
			(i)  their nature and whether the reality is that one party is going to be paying the other or whether there is a division of assets; (ii) the time taken in resolving the disputed issues; and (iii) who won on such issues.

This may strengthen or weaken the starting point referred to in Gojkovic v Gojkovic and Another [1992] Fam 40, sub nom Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233 and will be relevant to the question whether issues and offers made on them should be treated separately when assessing the ability for costs.

	(3)	Consider the Calderbank offers and therefore apply FPR 1991 r 2.69 to the costs it covers.
	(4)	Consider the matters referred to in CPR r 44.3 (which include open offers).
	(5)	Consider how the costs of both parties have been affected by the disputed issues.
	(6)	Remember that the court has, and is exercising, a broad judicial discretion by applying the rules and earlier judicial guidance.

The above list is not intended to be exhaustive or one that should be applied in all cases.  Also there will be overlap between the points listed”.

Background of Settlement Negotiations including Calderbank offers

13.The history of the settlement negotiations is set out in the correspondence, which the Wife’s solicitors have very helpfully condensed in a Schedule handed up at the hearing.  Correspondence between solicitors over the financial issue started at the very early stage of the proceedings in April 2002 and in June 2002 the Husband proposed directly to the Wife to divide equally, on a monetary basis, the family assets and to pay her the sum of £250,000 from her share over a period of 4 ½years in full and final settlement of her claims, which proposal was however rejected by the Wife as clearly inadequate.

14.After the Husband had served his Affidavit of Means, his solicitors on 22^nd October 2002 made another proposal of clean break settlement by way of 50% of the total assets, in 6 instalments over 4 years, with an additional payment of £20,000 upon acceptance, plus payment of her reasonable legal costs.

15.The Husband’s offer was again rejected by the Wife who found it simply a repeat of his earlier offer, the “carrot” being the additional £20,000, which would be withdrawn if the offer was not accepted, and which she argues was a pressure tactic which jeopardised the climate for negotiation, and that his approach to settlement was fundamentally flawed.

16.I agree that this offer was inadequate to constitute a clean-break settlement, a fact actually conceded by the Husband during cross-examination, and that the Wife was right to reject it.

17.On 10^th March 2003 the Wife through her solicitors put forward her 1^st Calderbank offer, proposing basically 50% division of assets plus periodical payments of £4,250 per moth up to the Husband’s retirement in 2015, and legal costs on party and party basis.

18.It was at about this same time when the Husband’s employment was terminated and so on 22^nd April 2003 he informed the Wife accordingly and counter-offered to give her £20,000 plus her legal costs in additional to her 50% of the total assets, which was essentially the same as his previous offer, although it was not clear whether the payment of capital were still by instalments over 4 years as before.

19.Not surprising his counter-offer was rejected by the Wife who, although did not dispute the fact of his unemployment, regarded it unacceptable due to the fact that he was still proposing a clean break settlement without any provision for periodical payments.

20.On 22^nd May 2003 the Husband revised his said proposal by offering, for the first time, a nominal maintenance order, and that her then legal costs of £7,297 (HK$190,000 costs to date in Hong Kong together with £1,300 in UK costs) was to be deducted from the gross family assets before division.

21.This revised offer was again rejected by the Wife as she saw no reason why her costs should be paid from the gross assets instead of by the Husband, and that it also failed to recognise her entitlement to substantive periodical payments, as she had been subsisting on a greatly reduced standard of living than she was entitled to, and that with his excellent employment record, the Husband could obtain gainful employment in HK or UK if her chose to use his best endeavours to do so.

22.By that time, if not earlier, it was clear that substantive periodical payment had become the major issue between the parties and on 10^th June 2003 the Wife proposed a further settlement for periodical payment of £3,700 per month up to 2015 plus her legal costs.  The terms were basically the same as her last offer save that she had come down from £4,250 to £3,700 per month for periodical payments.

23.This offer was not accepted by the Husband who instead proposed on 2^nd August 2003 that in addition to a 50 / 50 division of the assets, he would pay the Wife a further £75,000 in full and final settlement of her claims and without any nominal maintenance.  This proposal was again rejected by the Wife in view of her age, that the additional payment of £75,000 would not have been sufficient to meet her requirement which, even at £1,000 per month as suggested by the Husband, would have lasted for only 6 or 7 years, or as the Wife now argues, applying the rate of the Wife’s requirement of £3,000 per month, which was supported by the Court’s finding, this offer of the Husband was far short of what she ought to have received, even if the payments went on until the Husband was 60 and the £75,000 additional lump sum was taken into account, as he may well be in a healthy financial position and able to continue to earn a good salary up until the age of 65 or over.

24.On 9^th August 2003, the Wife made one final Calderbank offer to propose a division of 50% of the assets and periodical payments at a reduced rate of £2,700 per month until the Husband reaches the age of 65 plus legal costs.  This was the offer with which the Wife went to trial on 18^th September 2003 and which was not accepted.  It is submitted by the Wife that this periodical payment proposal was in fact £300 less than the figure the Court found would be appropriate and, ultimately, her capital award was also 3% greater than the capital offered by the Husband prior to the hearing.  So in applying the principle that as a starting point, costs should prima facie follow the event, who was in reality the successful party ? Or in the words of Counsel for the Husband, what was the event in this case, and what were the issues that caused this matter to go to a four day trial ?

The Trial Issue

25.According to the Husband’s submission, when the trial began, asset division at 50% had been proposed and that the Wife was seeking only 50% of the assets.  She did not go to the Court seeking more than 50% of the assets.  She had never proposed this, and the fact that she was awarded slightly more than 50% was clearly a benefit to her, but not the issue which caused her to go to trial.

26.The issue was, the Husband submits, the question of periodical payments, substantive or nominal.  If it were found that substantive periodical payments should be made, then quantum was an issue that fell to be determined.  Had it been agreed from the outset that a nominal maintenance order was appropriate, then no hearing to determine quantum, in the absence of any income on the part of the Husband, would have been necessary.  The fact is that after trial, the Wife was awarded a nominal order only, as offered by the Husband some 4 months previously in May 2003.  It was therefore her refusal to consider a nominal maintenance order which led to the necessity for trial and to costs being incurred, and hence she cannot now be entitled to her costs.

27.There is no question in my mind that the main trial issue was whether periodical payments should be substantive or nominal.  It was the issue from the very beginning of the proceedings up to the trial.  It was clearly so identified in the correspondence and amply reflected in the affidavits and the evidence at the trial, as well as in the parties’ final submission.  It would therefore be correct to say that the Husband was in fact the “winner” or successful party in the main trial issue when I ordered nominal maintenance for the Wife instead of substantive periodical payments, and although she was awarded slightly more assets in 53% instead of 50% as proposed by the Husband, it was not what she had asked for, and, as submitted by Counsel for the Husband, was not the issue which caused her to go to trial.

28.So with the Wife not being the successful party on the main issue, should costs therefore follow the event to deprive her thereof, or that in the circumstances of this case, some other order should be made, i.e. she should nevertheless still be awarded costs ?

29.It is submitted on behalf of the Wife that the Husband’s earlier offers for clean-break settlement were not reasonable and did not comply with the principles enunciated in Gojkovic, in that he had failed to make a serious offer worthy of consideration, a fact already conceded by the Husband in his evidence, and which I have accepted.  I do not, however, agree with the Wife’s argument that the Husband’s failure to include provision for her costs in his subsequent offer of 22^nd May 2003, in which he proposed a nominal maintenance order for the first time, rendered the offer incapable of acceptance by her.

30.Although it is true that the Wife did not agree to the Husband’s proposal to pay her costs out of the gross family assets before the 50% division, insisting instead that he should bear her costs, it is clear from her solicitors’ letter of 10^th June 2003 in reply that the main reason that his offer was not acceptable to her was the absence of substantive periodical payment and not over her costs, otherwise she could have accepted his offer except as to her costs to be further negotiated or argued in court an exercise which certainly would not require 4 days for trial.

31.Nor do I agree with her submission that the Husband’s said offer had failed to recognise her need for periodical payments.  He clearly recognised it in the same letter of 22^nd May 2003 when his solicitors stated : “In view of the termination of our client’s employment and the uncertain future for our client, your client shall be entitled to seek a nominal maintenance order against our client in respect of her claims for future periodical payments, in case our client is able to secure gainful employment in future”.  It was because of his unemployment situation that he did not offer substantive periodical payments, not because of his failure to recognise her needs, which might have appeared to be the case before, but not anymore at that stage.

32.This recognition by the Husband was in fact acknowledged by the Wife in her reply through her solicitors’ letter of 10^th June 2003 when it stated on p. 105 of the Correspondence Bundle : It was not until your client had had the benefit of advice from Counsel that he included an up front settlement of the capital division and at least a recognition that our client is entitled to on going periodical payments”.  And on p. 107 : “ …… following advice from Counsel, your client now appears to have accepted the need for periodical payments”.

33.The Wife’s argument that due to the Husband’s failure to recognise her needs for periodical payments, she had to come to Court to establish her need cannot therefore stand on firm ground.

34.It is however also submitted on her behalf that it is not correct to say that the only question to be decided at the hearing was whether or not the Husband should pay periodical payments while he is unemployed, but the level of maintenance also fell to be determined, as when he obtains new employment, it should be a simple matter to arrange on-going periodical payments without the need of incurring the very considerable costs of a new hearing which would be necessary had there not been the recent trial and had the Husband not challenged her right to periodical payments.  In these circumstances, it is submitted that the time taken in establishing the Wife’s entitlement was time well spent as it will greatly assist any application for periodical payments in the future after the Husband has obtained employment and / or obtained an income from his business.

35.I find this submission, attractive though on the face, ultimately too simplistic and unrealistic.  There is no telling whether the future application may come only some 6 – 9 months later when the Wife’s established claims or the Court’s finding of the level of her needs in UK will probably still be relevant, or whether it turns out to be much farther down the road before the Husband’s income situation has improved, in which case the needs of both parties will no doubt have to be reassessed at another hearing which may not require 4 days, but it would be naïve to think that significant time in Court would have been saved or rendered unnecessary.

36.The Wife has also tried to justify her entitlement to pursue her claim for substantive periodical payments by submitting that she was made suspicious by the Husband’s conduct of : -

(a)    lying about his affair with his girlfriend;

(b)   drawing funds from the parties’ joint accounts;

(c)    cutting off her source of income including cancelling her credit cards;

(d)    paying her insufficient maintenance of only £1,400 per month;

(e)    bullying her on the telephone for settlement;

(f)     putting forward unacceptable terms even when he was still having a good job;

(g)    never acknowledging until trial that she had a justified, bona fide claim for periodical payments.

37.I have already dealt with the last point raised by the Wife, as for the other conducts of the Husband, some of which he has admitted with explanation and denied they were relevant, but even if they were all true, it was never the Wife’s case that as a result of these conducts, she was suspicious that the Husband had failed to make full or frank disclosure of his means, or about his unemployment that caused her to have to take her claims to trial.

38.I also do not agree that the Husband was “playing games”.  As submitted by Counsel on his behalf, his reply to the question eliciting the “games” response clearly meant that the various offers and counter-offers were based on legal advice and formed part of the process of negotiation, and that his evidence and demeanour in Court do not in any way support the Wife’s submission.

39.As I have said, the main issue was her insistence of substantive periodical payments, which can in fact be accurately summed up in her view expressed in the same letter of her solicitors on page 108 of the Correspondence Bundle : -

“Whilst your client is at present unemployed, the reality is that your client still has a full income until October 2003 and in any event our client is not prepared to accept his current status as a permanent situation.  Our client views this as a temporary situation only.  Your client still has ongoing responsibilities to our client and these will extend beyond October 2003.  We and Counsel have advised our client that the Court will deem your client to have the ability to continue to earn at a rate commensurate with his qualifications and past earning capacity.  Furthermore, our client has been advised that your client’s choice of pursuing the option of starting his own business is a matter for your client and in the circumstances the Court will not reflect his choice as necessarily being his maximum earning capacity if such a business does not generate equivalent resources.  In such circumstances, the Court will deem your client to have an income based on his past earning capacity”.

And on p. 110 :

“Given your client’s continued income until October 2003 and his earning capacity going forward, our client does not accept your client’s proposal for her periodical payments to be nominal only.  We have already set out our client’s position on your client’s choice to pursue starting his own business.  Our client maintains her need for ongoing periodical payments and we and Counsel have advised her that the Court will award her such.  However, without prejudice to her assertions as to the level of her required maintenance and in order to reflect your client’s change of circumstances and his comments in respect of her need to support herself and in order to try and reach a settlement our client proposes that your client pay her a reduced periodical payment of £3,700 per month.  Such periodical payments to continue for a period of 12 years until your client retires in 2015.  For the purpose of this settlement offer our client does not seek a backdated payment in this respect”.

40.It was with this position that the Wife had gone to trial and which she had maintained during cross-examination when she was asked if she had given thought as to how he would fund his retirement if he could not find a job, she answered “no”, when asked if she was prepared to have him pay her out of his savings, she answered “yes”, and when asked if this was fair, she replied “I’ve no comment to make, I’m sorry”.

41.So was the Wife culpable in her conduct for, as submitted by the Husband, taking a blinkered approach, and while rationally understanding the difficulties facing the Husband, she doggedly refused to move from her “he will get a job” stance, so as to deprive her of her costs ?

42.I have in my judgment found that the breakdown of their 30 years marriage caused by the Husband’s affair with another woman, with whom he had later taken up cohabitation, and then demanded a divorce from the Wife, must have come as a terrible shock to her and caused her great anguish.  His lying about his affair and his failure to include substantive periodical payments in his initial offers of clean-break settlement when he was still gainfully employed certainly did not help to maintain whatever trust that the Wife might still have on him in the circumstances, and when she learnt of his sudden unemployment in the middle of their negotiations over her request for substantive periodical payments, I can well understand why she felt she was entitled to assume that the Husband, who had been gainfully employed for the whole marriage, would be able to obtain employment soon, and hence to put his case to the test in Court when negotiations finally failed.  She might have been unsuccessful with this issue, but one cannot say, however, that it was improper or unreasonable for her to raise it in the circumstances.  After all, the parties’ earning capacity is one of the factors which the Court is required to consider by statute.

Conclusion

43.In applying the principles of In re Elgindata Ltd. that the general rule that costs follow the event does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or costs of the proceedings he may be deprived of the whole or a part of his costs, here even if the Wife were to be considered as a successful party overall having obtained slightly more in the total assets, there is no question that she has failed in the main issue of substantive periodical payments.  With the parties’ financial and assets positions having ended up more or less equal, and with the Husband having remained unemployed, the ultimate question for me in the exercise of my discretion, is that in the circumstances of this case when neither party has been found to have acted improperly or unreasonably in the proceedings, is it fair or just to hold the Husband wholly responsible for the Wife’s costs, which he would have to pay out of his share of the assets, when he was in fact the successful party on the main issue ?  The answer must be clearly no.  He should however be liable to her costs up to the start of the trial on 18^th September 2003 when he renewed his offer of nominal maintenance on top of the equal division of assets.  It is true that this offer was first made on 22^nd May 2003 which was not accepted by the Wife who was then entitled to seek, and did seek, further disclosure of the Husband’s efforts to find employment and, after they were provided by his solicitors’ letter of 17^th July 2003, to consider the same and to seek legal advice, but which offer was subsequently replaced by another clean-break offer from the Husband on 6^th August 2003 and the nominal maintenance order was only formally offered again shortly before the start of the trial.  It would therefore be fair that she gets her costs up to then.

44.All these go to show the importance of proper negotiations referred to in the judgment of Cumming-Bruce J in Singer v Sharegin (1984) FLR 114 in which he said : -

“The proceedings also demonstrate the immense importance of careful and critical attention being given by the legal representatives on each side to the question whether a reasonable offer should be made and, if so, what it should be; and, if it is decided to make an offer, the respondent’s legal advisers should then decide whether to incorporate the offer in a Calderbank letter, because if that is not done, then the judge may find, following the ordinary principles relating to the judicial discretion as to costs, if he makes even a relatively small order, it will carry with it against the respondent the whole burden of paying the party costs.  And when considering when to make an offer, the legal advisors will frequently be in a better position than their lay clients to appreciate the importance of compromise, because they will understand, which the lay clients cannot do without such assistance and advice what the impact of costs, if the dispute goes the distance, is likely to be”.

45.If agreement had been reached at an early stage in this case, costs of both parties would most probably have come out of the gross assets before division, and which would no doubt be much less.  There was no agreement partly because of the Husband’s failure to make a proper offer until trial, and partly because of the Wife’s insistence in substantive periodical payments regardless of the realistic situation of the Husband’s unemployment, with the unfortunate result that both time and costs have been spent way over the parties’ anticipation to the serious depletion of their assets.  This is a situation that all practitioners in this jurisdiction should strive to avoid and to warn their clients of such dire consequences.

46.In conclusion, for the reasons aforesaid, my order is for the Wife to have her costs of the ancillary relief application up to the day of the trial on 18^th September 2003 to be taxed on party and party basis with Certificate for Counsel to be paid by the Husband, with credit to be given for the contribution already made by him, and that there be no order as to costs thereafter, including the hearing on costs.

Representation :

David Glynn of Hampton Winter and Glynn for the Petitioner

Francis Irving, instructed by Stevenson Wong & Co for the Respondent