Kews v. Nchc

CACV 75/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 75 OF 2011

(ON APPEAL FROM FCMC 13087/2008)

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BETWEEN

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Before: Hon Cheung CJHC, Cheung and Kwan JJA

Dates of Written Submissions: 20 January, 14 and 21 February 2012

Date of Judgment: 6 March 2012

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JUDGMENT ON COSTS

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Hon Cheung CJHC:

1.On 2 December 2011, we allowed the appeal of the Wife by increasing the monthly periodical payments from $14,000 to $42,500 per month starting from 1 November 2010. Whilst we dismissed the Wife’s appeal against the judge’s refusal to adjourn her claim for capital provision, we reversed the judge’s dismissal of her capital claim and ordered that the Husband shall make capital provision for the Wife in the lump sum of $1.5 million payable within one year from the date of the judgment. Also reversing the judge on the point, we made no order as regards the Wife’s application for secured periodical payment. As for costs, we made a costs order nisi that the Wife shall have the costs of the appeal as well as the costs below, to be taxed if not agreed.

2.The facts and the court’s reasons have been fully set out in the judgment which will not be repeated.

3.The Husband has applied to vary the costs order nisi, asking that there be no order as to costs, whether here or below. Pursuant to the court’s directions, written submissions have been filed by both parties.

4.The main grounds of the Husband’s application are that :

(1) The discretion of the court in family proceedings is broader than that in other civil proceedings. The starting point that “costs prima facie follow the event” is displaced more easily in the family jurisdiction.

(2) The Wife’s application for an adjournment of her capital claim, a central theme of the Wife at trial and on appeal, together with her case on conduct, were rejected both by the trial judge and by this court.

(3) The Husband has made both Calderbank as well as open offers to settle the matter. The Husband has by his conduct shown a willingness to negotiate and compromise. He has revised his offers on more than one occasion. Even after judgment in the court below, the Husband still offered (on 18 May 2011) to pay periodical payments of $21,000 per month to the Wife until further order; to waive all costs orders made against the Wife; to have no order as to costs made in respect of the proceedings below and in respect of the pending appeal; and to pay the Wife a lump sum of $1,008,000 within 14 days of the making of a consent order, so as to dispose of the appeal, the hearing of which was fixed for 16 November 2011.

(4) The Husband has approached the litigation with proportionality and realism. He has not put forward unreasonable objections to the Wife’s claim and he has disclosed his level of assets and income honestly. There is no suggestion of a lack of disclosure or tactical posturing.

(5) The Wife, on the other hand, stopped negotiations altogether after December 2009. The quantum of her capital claim was vague – “several millions” was what her counsel asked for. Her case, or primary case, was throughout that the claim for capital provision should be adjourned, which was rejected by both courts.

5.The broad discretion of the court on costs in family proceedings is not in doubt.  See, for instance, EJB v CJB [2011] 5 HKLRD 508, paras 126‑139.  The court will look at the entire circumstances, including in particular the parties’ willingness and efforts to explore settlement, in considering how best to exercise its discretion : EJB at para 130.  Nonetheless, “costs to follow the event” remains the prima facie position, although it may be displaced more easily : EJB at para 133.  I have no difficulty with the many matters relied on by the Husband in seeking to vary the costs order nisi.  They are relevant matters that should be taken into account, and indeed, they have been taken into account.

6.Having considered all relevant circumstances, I have come to the conclusion that the costs order nisi should be varied but only to a limited extent.

7.As mentioned, although all circumstances need to be taken into account, “costs to follow the event” remains an important consideration. In the present case, it is plain that none of the Husband’s offers, whether open or otherwise, managed to beat the eventual order made by this court.

8.It is true that the Husband’s offers were progressively more generous.  It is also true that the Wife’s primary position throughout was the adjournment of the capital claim.  However, it should be noted that the rejection of the Wife’s application for an adjournment, a position (correctly) maintained by the Husband, did not mean that it should result in a nil award.  Indeed, this was a major area on which the judge fell into error.  The Husband’s own offer of $1,008,000 made in May 2011 recognized this.  In other words, the Wife’s claim for capital provision was always a live and substantive issue and it was not affected by the fact that she (incorrectly) asked for an adjournment.  On this live issue, there is no escape from the fact that the Husband had underestimated the value of the Wife’s claim.  The offer of $1,008,000 fell substantially short of the court’s eventual assessment at $1.5 million.  That the Wife had asked for “several millions” did not detract from the Husband’s failure to make the “right” offer to settle this part of the Wife’s claim.  There is no reliable evidence on whether, if the Wife had asked for $1.5 million openly or in negotiations, the Husband would have been prepared to raise his settlement offer to match that claim.

9.As regards monthly maintenance, again the Husband’s Calderbank offer of $21,000 per month fell very much below what was ultimately awarded by the court.  I do not accept the Husband’s argument that the figure of $21,000 exceeded substantially the last offer made by the Wife ($14,000 only).  It must be remembered that things did not remain static. By the time she lodged the appeal, the Wife was already asking this court to award her monthly maintenance of a much higher amount so as to reflect her actual needs, the total of which was not disputed by either side.  Nonetheless, after May 2011, there was no further increase in the offer for monthly maintenance to match what the Wife was then asking for in this appeal, which was eventually acceded to by this court.

10.What cannot be denied is that the Wife did not engage in further settlement talks after December 2009.  No explanation was offered for that refusal or failure.  On the other hand, it is not at all clear that if she had continued with the negotiations, a settlement agreement could have been reached given that there was, at the end of the day, a substantial gap between what the Husband had actually offered and what this court eventually decided.

11.Having considered all relevant circumstances in the round, I am of the view that the costs order nisi should be slightly adjusted to reflect the entire circumstances now known to the court, including in particular the Wife’s refusal or failure to carry on negotiations after December 2009, although I have noted the uncertainty regarding whether a settlement could have been reached if she had continued with the negotiations.  In my view, a 15% discount would be a fair adjustment.  In other words, I would order that the Wife shall have 85% of the costs of the appeal and of the trial below.  The costs of the application to vary shall form part of the costs of the appeal and they shall be dealt with accordingly.

Hon Cheung JA :

12.I agree.

Hon Kwan JA :

13.I agree.

Mr David Pilbrow SC, instructed by Chaine, Chow & Barbara Hung, for the respondent (appellant)

Mr Robin Egerton, instructed by Kwok, Ng & Chan, for the petitioner (respondent)