JJBGMK v. JPLY

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 61 OF 2011

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Decisions

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1.  There are 3 matters before me that require yet another round of the court’s adjudication before hopefully closure can finally be made to this sad and long running conflicts between 2 deeply-entrenched unmarried parents over their teenage son with Asperger’s Syndrome, 2 of which arising from my decisions on the Respondent Mother’s earlier maintenance application when I ordered on 4^th October 2013 for the Applicant Father to pay HK$20,000 per month towards the son’s expenses then studying in a boarding school in UK, with payment to be dated back to the time of his open proposal in October 2011, with credit to be given for payments already made by him. The parties now seek the court’s adjudication as to essentially whether the Father’s earlier payment of HK$160,000 to the Mother for the son’s set-up costs for his boarding school back in September 2011 should be allowed to set off the back-dating of the said maintenance, and if so to what extent.    

2.  The 2^nd matter is the Mother’s application for leave to appeal against my order for her to pay 75% of the Father’s costs of her said maintenance application after I had found her guilty of litigation conduct by inter alia inflating the son’s expenses and by failing to accept the Father’s open offer made well before the trial and which turned out to be of similar terms to my said maintenance order.          

3.  The last matter is the Mother’s application for costs against the Father in respect of 4 summons issued by the parties after that maintenance order mainly over their son’s future custody care and access arrangements as well as his future education. I propose to go straight into dealing with the 3 matters in the order referred to above, as I do not intend to recite here again the relevant background of either of the parties or their litigations, which can be found in my 2 earlier judgments.

Backdating Amount

4.  The Mother’s case is that the amount should be dated back to 27^th October 2011 when the Father first made his open proposal in his 5^th Affidavit of the same date, which were 24 months up to the time of my order plus 4 days pro-rata from 28^th to 31^st October 2013 as the ongoing maintenance commenced from 1^st November 2013, hence the total amount dating back should be HK$20,000 x 24 months + HK$20,000/31 x 4 days = HK$482,580.60.

5.  Against this sum the Mother agrees that the Father should be allowed to set off his various payments for the son over the same period which she puts at £32,806 or its equivalence of HK$407,753.20 as set out in §12 – 16 of Ms da Luz’s Skeleton Submission, and hence she argues that the Father still owes her the difference of HK$74,827.40 being HK$482,580.60 – HK$407,753.20 = HK$74,827.40 in back payment.    

6.  While the Father’s figure for his payments made over the same period from October 2011 to October 2013 amounts to slightly more at £32,828 or its equivalence at the same chosen exchange rate of HK$12.5 at HK$410,350, which would put what he owes the Mother in back payment at HK$72,230.6, a mere difference of HK$2,596.8 from her figure of HK$74,827.40.

7.  Ms Man however submits for the Father that he should be allowed to also include his earlier one-off payment of HK$160,000 for the son’s set-up costs in calculating the back payment as that payment would have also catered for his share of the son’s school fees for the first term in boarding school and other expenses which the Mother had later included in her claims for the son’s future expenses and upon which this court made the present maintenance order.

8.  The Mother’s request for the set-up costs was first made in her then solicitors’ letter of 30^th August 2011 (P13/2915) in which she gave a total sum of HK$213,310 made up of the following items:

9.  Following her request for the Father’s contribution towards this set-up costs, and to which as aforesaid he subsequently paid HK$160,000, the Mother then proceeded with her application for monthly maintenance for the son when she gave a breakdown of the son’s monthly expenses in both in Hong Kong and UK which she put respectively at HK$26,859.87 and HK$66,622.81, giving a total sum of HK$93,482.68, of which for the present purpose it is only relevant to consider his UK expenses as follows (P8/1795 – 1796):

10.  It is clear from her breakdowns of the son’s set-up costs as well as his personal expenses, the Mother had double-counted his school fees, the guardianship fees, school supplies and stationary, mobile phone, and linen in her maintenance application, of which the Father’s contribution of HK$160,000 towards his set-up costs must have already included his share of those expenses at least for the first school term, and for which Ms Man argues that they should be allowed to set off any back payment that the Father would have to make up for the difference.       

11.  Ms Man in her submission put those items in the total sum of HK$96,850 which she argues should be added to the other payments made by the Father thereafter from October 2011 to October 2013 of HK$410,350 referred to above (at the exchange rate of HK$12.5 instead of HK$13.0 wrongly chosen by Ms Man), which would give a total sum of HK$507,200, or an average monthly sum of HK$21,133, some HK$1,133 in excess of the court ordered sum of HK$20,000 per month, hence she argues that not only does the Father not owe the Mother any money in back payment, but in fact he has overpaid her by more than HK$27,000 over those 2 years.

12.  Ms da Luz however disagrees and argues that the Father’s payment of HK$160,000 was a one-off contribution towards the son’s initial set-up costs and expenses of entering boarding school which is separate and distinct from his regular living expenses, and hence no part of the set-up costs should be apportioned for his expenses post October 2011.

13.  Furthermore, Ms da Luz submits that the proper interpretation of my reasons over the issue of back payment in paragraph 61 of my judgment is that it was not intended for credit to be given for any payments made by the Father prior to 27^th October 2011, as otherwise the court would have ordered the back payment to be dated back to the date of the Mother’s application in August 2011.

14.  Whatever the correct date for the back payment, it should not result in the Father having to pay twice for the same items of expenses over the same period, and since my order was for the payment to be dated back to October 2011, and if he is not allowed to take into account of those items already covered by his earlier payment of HK$160,000, it would certainly lead to exactly the same result referred to above which the court had strived to avoid, hence it is only fair and just in the circumstances that credit be given to the Father for his payment towards the school fees and guardianship fees as well as stationary and linen expenses for the 1^st term in the said sum of about HK$27,000, but given its relatively insignificant amount over the 2 years period, and taking a broad brush approach, it would be appropriate in my view to just leave the matter at that with no further order necessary. I shall next consider the Mother’s application for leave to appeal against my costs order against her.

Leave to Appeal Against Costs Order

15.  This should be much more straight forward, since the Mother is not attacking my finding of the primary facts as set out in my Ruling on Costs dated 30^th April 2014 and recited in paragraph 4 of Ms da Luz’s Skeleton Submissions that led to my decision that the Mother should bear the brunt of the blame for the parties’ litigation and hence she should pay 75% of the Father’s costs, of which Ms da Luz went on to say this in paragraph 5:

“Having formed the conclusion that the Mother’s claim for (the son)’s expenses was unrealistic and pitched too high, it is not surprising that the Costs Order was made, bearing in mind the special considerations that the Court should take into account in exercising its discretion on costs, as set out in R.H.C. Order 62 r. 5 and repeated in paragraph 21 of the Ruling. Having found that the Mother had “unreasonably pitched her claim in such manner from the very beginning”, the logical conclusion would be that the Mother had conducted her litigation unreasonably. It would then follow that she had conducted her “without prejudice” negotiations with the Father in an unreasonable manner, that she had pursued her claim in an unreasonable manner, that she had pursued her claim in an unreasonable manner by exaggerating her claim and that she hadunreasonably persisted to trial to the financial detriment of the Father.”

16.  Ms da Luz rather submits that if the court’s finding was defective because it had not taken into account certain salient facts, then the basis for making the Costs Order would be wrong and open to reversal, and she relies on some 13 grounds of appeal as set out in her draft Notice of Appeal attached to the Mother’s summons of 14^th May 2014. On that basis it not necessary to discuss those draft grounds as it is clear to me, and as submitted by Ms Man for the Father, without attacking the court’s primary findings of the Mother’s litigation conduct or those other primary facts upon which she is bound and which led to the Costs Decision, what other basis is there for the Mother to argue that my discretion on the Costs Order was wrongly exercised, or to show that she has a reasonable prospect of success in her appeal against that Costs Order?     

17.  In the premises Ms Man submits that since much of the arguments raised by the Mother concern findings of fact by the court made in the maintenance decision, such arguments and proposed draft grounds of appeal of hers must therefore be flawed as she cannot revisit those findings given that she is not seeking to challenge them in her leave application.

18.  It therefore follows, Ms Man submits, that in the exercise of the court’s discretion upon making those findings against the Mother in both her wrong and unrealistic budget for the son and her persisted and unyielding position with her unreasonable claim against the Father, there is simply no basis at all for her to demonstrate in her appeal that the court got it wrong either in law or in facts when it made the costs order against her.            

19.  However, notwithstanding the above, Ms da Luz submits that the court had failed to consider or sufficiently consider that the expenses incurred by the Mother for the son were unusually high due to various factors including the son’s Asperger’s Syndrome, the lack of contribution by the Father or the disproportionate amount of expenses borne by the Mother, but all of which had either been properly considered in my main judgment or in my costs decision and which explains why she was only ordered to bear 75% instead of the whole of the Father’s costs, and in any event they certainly cannot be said to be any defence to her unreasonable and improper litigation conduct which ultimately led to the costs order being made against her.

20.  The Mother’s leave application is governed by s 63(1) of the District Court Ordinance, Cap 336 with the threshold for granting leave provided under s 63A(2) that leave shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success, of which it was established by the Court of Appeal in SMSE v KL [2009] 4 HKLRD 125 and more recently in TPL v WYY, HCMP 316/2013 that it is for the applicant to show that he has an arguable case with reasonable chances of success on appeal, which means an appeal with prospect that are more than fanciful but which do not need to be shown to be probable.   

21.  In this case the prospect of the Mother’s appeal is no more than just fanciful. Accordingly and for the reasons referred to above, her leave application is therefore refused. I shall next consider the last remaining matter before me.

Costs Application of 4 Summons

22.  The Mother seeks costs in relation to the following summons that were dealt with at the hearing on 11^th August 2014:

(a)   Mother’s summons dated 18^th November 2013 for sole custody of the son (“Sole Custody Summons”);

(b)                         Father’s summons dated 27^th November 2013 for joint custody of the son with the Mother (“Joint Custody Summons”);

(c)   Father’s summons dated 20^th December 2013 for defined access to the son (“Defined Access Summons”);

(d)                         Mother’s summons dated 28^th March 2014 to withdraw the son from his boarding school in UK to a school in USA (“Withdrawal Summons”).  

23.  These summons were subsequently set down for trial together for 2 days in September 2014, but at the pre-trial review on 11th August 2014 the parties were able to settle all 4 summons upon certain undertakings given by the Mother when the Father agreed to withdraw his 2 summons and that an order was made in terms of the Mother’s 2 summons, with the question of costs of the 4 summons reserved for argument, as while the Father proposed for there to be no order as to costs for all 4 summons, the Mother insisted that the Father should bear all her costs.

24.  Whilst Ms da Luz has conceded for the Mother that the starting point in cases involving children would be for no order to be made as to costs, unless a party has conducted the litigation in such reprehensible manner or where the party’s stance has been beyond the band of what is reasonable such that the court would consider it just to make a costs order against him/her, as was held in Sutton London Borough Council v Davis (Costs) (No.2) [1994] 2 FLR 569 at 570, which is what Ms da Luz submits to be the case here, as it is the Mother’s case that the Father’s 2 summons were hopeless from the outset, and that his stance against her 2 summons was reprehensible or beyond the band of what is reasonable, so as to attract an adverse costs order by the court.       

25.  The Mother claims that she took out her Sole Custody Summons in order to deal with the renewal of the son’s passport was going to expire soon but since the Father had failed co-operate with her to jointly apply to the relevant authority for the renewal, she therefore had no choice but to apply for the son’s sole custody so that she could handle the renewal by herself, and notwithstanding the fact that she was subsequently granted sole custody on 22^nd November 2013, the Father took out his Joint Custody Summons a few days later, of which she argues as wholly unnecessary or unjustified and a waste of her costs.

26.  Ms da Luz argues that while the issues raised under those summons were eventually settled by the parties themselves without adjudication by the court, the Mother relies on various salient and incontrovertible facts in support of her claim for costs against the Father, which were set out in Ms da Luz’s Skeleton Submission and I do not propose to repeat them here but which mainly consist of the factual historical background of the parties after the birth of their son including his care and financial arrangements over the years leading up to their litigations in these proceedings, many of which can also be found in my main judgment of 4^th October 2013.           

27.  What the Mother is essentially arguing is that since she had always been the primary carer of the son with his de facto custody, which had been the status quo for the past 15 years, in the absence of any material changes, the Father’s joint custody application is simply unwarranted, and given the son’s stated preference for her and the Father’s ill-considered child-care plan which involved the hiring of an au-pair to assist him in the daily care of the son, coupled with the many undisputed difficulties in communication and co-operation existed between the parties, she argues that the Father’s summons were doomed to fail and should never have been taken out in the first place.

28.  On the Mother’s last point which she argues would render joint custody unfeasible, Ms da Luz relies on the case of ML v YJ [2008] HKFLR 88 in which Recorder Rimsky Yuen SC summarized the court’s approach in that if it is clear that joint custody is not workable, it seems unlikely that the court will nevertheless make such a joint custody order solely for the purpose of encouraging the parties to overcome their differences or to recognise the continuing role of the parties, and as such a joint custody order which is unlikely to be workable cannot be in the best interests of the children as the adverse consequences will far outweigh the benefits that it may bring.

29.  Ms da Luz submits that given the parties’ difficulty in communicating, let alone agreeing on almost anything such as the renewal of the son’s passport and many other routine matters concerning the son were often fraught with tension and difficulty and well documented in their many affidavits, resulting in the Mother having to take out her Sole Custody Summons in the first place, it begs the obvious question of how could the parties be expected to work together and to make joint decisions on more important matters concerning the son? Hence, Ms da Luz argues, the Father’s Joint Custody Summons was simply not feasible and should never have been made in the first place.    

30.  Accordingly, Ms da Luz submits that the Father should bear the Mother’s costs in respect of his Joint Custody Summons, following the court’s decision in the case of C v H [2011] 3 HKC 305 where the father was found to have acted unreasonable in persisting in contesting custody of his 2 teenaged children notwithstanding the facts that they had been under the de facto care of their mother for a lengthy period and had expressed their unequivocal desire to remain living with her, and as a result the court departed from the usual no order as to costs and instead ordered the father to pay the mother’s costs.

31.  As for the Father’s Defined Access Summons, Ms da Luz submits that it was again totally unnecessary as the Mother had never refused access to him, and had in fact always encouraged him to share the son’s major school vacations so as to alleviate the disproportional financial burden on her, but that she merely requested him to agree to an access schedule in advance so that they could both make their own planning accordingly, and to provide her with his itineraries and contact details of each holiday destination as well as a 2-way flight tickets for the son for each holiday, which she argues as just normal and common requests under the circumstances.

32.  As for her summons for leave to withdraw the son from UK boarding school to US school, the Mother argues that notwithstanding the Father had been told as early as 2013 of her reasons including changes in her financial circumstances for the worse that she could no longer afford boarding school for the son in UK, that the son would be closer to his grandparents in the US, and that he had indicated clearly his wish to attend school in the US with the aim of entering university there, yet the Father’s opposing stance was persistently beyond the band of what was reasonable, and only withdrew his objection at such a late stage that substantial costs had already been incurred and for which he should be liable.

33.  Ms Man for the Father however argues that it was necessary for the Father to issue both his Joint Custody and Defined Access summons as the Mother had made many unilateral decisions concerning the son in total disregard of the Father’s good intentions and concerns for the son’s welfare, including withdrawing him from the UK school without consulting the Father, blocking him from speaking with the school or informing him of the son’s progress or of his schooling in the US, which necessitated his demand for the Mother’s undertakings as reflected in the wordings therein given on 11^th August 2014 as follows:

“1. To consult the Applicant/Father prior to making any important decision(s) relating to (the son), such as decisions concerning his education, health/medical, school residence and religion and to keep the Applicant informed and up to date on these matters. With the exception on urgent and emergency matters regarding (the son)’s health and medical condition which requires a quick decision to be exercised.

           2. To not obstruct the Applicant/Father from communicating with (the son)’s school(s) and teachers.” 

34.  It was only on the basis of these undertakings of the Mother, Ms Man submits, that the Father agreed to withdraw his summons and his opposition to the Mother’s summons, and as none of them had ever been adjudicated upon or any finding made by the court of any of the issues in those summons upon which the court could make any order as to costs or to assign any blame or fault on either party.

35.  Furthermore, Ms Man argues, that the court should note the following factors:

(a) That the Father withdrew his summons after having considered the various changes in the parties’ circumstances including the drying up of their financial resources due to the ongoing 3 years of litigation, and that in the interests of saving time and costs and in light of the son’s wishes, he took the initiative to put an end to the disputes;

(b) That it was the Father who made constructive use of the CDR hearing and to continue negotiations thereafter as reflected by his open offer through his solicitors of 23^rd July 2014 explaining his initial objection to the son’s changing school based on what he thought to be his best interests and offering to withdraw his objection on certain terms which he thought were reasonable;

(c) It was only at the Father’s insistence that the Mother was finally prepared to give those undertakings which she did that led to their settlement, and that had they been given earlier, even the hearing on 11^th August 2014 could have been avoided.      

36.  Ms Man therefore submits that the Father should not be blamed for making his applications as they were clearly done out of genuine concern for the son’s welfare, and that they cannot be seen to have been hopeless from the outset as the Mother contends. To the contrary, Ms Man submits, the Father had good basis and reasons for his applications, and as none of which have been adjudicated upon by the court, and that the evidence is incomplete to enable the court to determine who would have been successful, no order as to costs for all 4 summons would be fair and appropriate in the circumstances.

37.  There is no dispute over the general practice of making no order as to costs in children’s case. This is conveniently summarised by Neil LJ in the case of Keller v Keller and Legal Aid Board [1995] 1 FLR 259 at 267 where he said:

“In the last decade, however, it has become the general practice in proceedings relating to the custody and care and control of children to make no order as to costs of the proceedings except in exceptional circumstances.”

38.  In Sutton London Borough Council supra Wilson J shed some light on the rationale for the present practice at 570H of his judgment:

“ … the point is based on the proposition, enunciated by Butler-Sloss LJ in Gojkovic v Gojkovic (No 2) [1992] 1 All ER 267 at 271; [1992] Fam 40 at 57 and applied every day for many years in the division, that ‘it is unusual to order costs in children cases’ … Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate. Nor does it wish to reduce the chance of their co-operation around the future life of a child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them. The proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority is a party …”

39.  In R v R (Costs : Child Case) [1997] 2 FLR 95 at 96H – 97E Hale J, as she then was, gave the reasons why this practice has developed:

“The reasons why this practice has developed perhaps fall into three categories. The first is general to all family proceedings and was pointed out by Butler-Sloss LJ in Gojkovic v Gojkovic at 57 and 237 respectively, that orders for costs between the parties will diminish the funds available to meet the needs of the family …

The second reason which is given for there being no costs orders in general in children cases, is that the court’s concern is to discover what will be best for the child. People who have a reasonable case to put forward as to what will be in the best interests of the child should not be deterred from doing so by the threat of a costs order against them if they are unsuccessful. This is indeed the major reason in children cases why the court is reluctant to add to the existing deterrents which all litigants face in coming to court.

The third reason is suggested by Wilson J in the case of London Borough of Sutton v Davis (Costs) (No 2) at 570 – 571, when he points to the possibility that in effect a costs order will add insult to the injury of having lost in the debate as to what is to happen to the child in the future; it is likely therefore to exacerbate rather than to calm down the existing tensions; and this will not be in the best interests of the child.” 

40.  Her Ladyship went on to say:

“Nevertheless, there clearly are, as Neil LJ pointed out, cases in which it is appropriate to make costs orders in proceedings relating to children. He pointed to one of those sorts of situation: cases where one of the parties has been guilty of unreasonable conduct…”

41.  Her Ladyship then suggested that unreasonable conduct which might justify an order for costs was not unreasonableness in relation to the child concerned but unreasonableness in the conduct of litigation when she pointed out at 98B:

“The fair point is made that in children cases one must not confuse unreasonableness in relation to the child – because one might say that we are all expected to be unreasonable in our attitude to our children – and unreasonableness in the attitude to the litigation. However, it is quite clear 5that the judge took the view that the father had indeed been unreasonable in relation to the litigation. Of course, the parties should not be deterred, by the prospect of having to pay costs, from putting before the court that which they genuinely think to be in the best interests of the child, but there have to be limits. Children should not be put through the strain of being subject to claims that have very little real prospect of success, still less should they be put through a quite unreasonable involvement in their parents’ disputes, to the extent that R was in this case. He was taken to see a psychologist, whom the judge described as totally unqualified to give an opinion on the case. We learn that this was done without leave of the court. The judge made various criticisms of the psychologist’s methods and described him as a ‘paid hack’. He was also taken to see a solicitor between the end of the evidence and the judge’s giving judgment. In other words, there was conduct in relation to the litigation which goes way beyond the usual sort of attitude which a concerned parent shows in relation to the future of the child.”

42.  The pursuance of a totally hopeless case can also in certain circumstances be regarded as unreasonable conduct that would justify a costs order, as Butler-Sloss LJ held in Re G (Costs: Child Case) [1999] 2 FLR 250 at 252G:

“If this judge in this case had found that this father had behaved unreasonably in the litigation and had gone beyond what many fathers do, seeking orders which are hopeless, the point will come at which pursuing a hopeless application becomes unreasonable. But hopelessness and unreasonableness are not necessarily the same thing. Indeed, particularly where there is a litigant in person, a degree of generosity towards a litigant may be more appropriate than to a litigant which is on legal aid generally advised by counsel and solicitors as to the extent to which they should continue to litigate.”

43.  Her Ladyship then added at 253D:

“It seems to me that the case of R v R does not change the normal situation that it is unusual to order costs, although it will be appropriate to order costs when a parent, even a litigant in person, goes beyond the limit of what is reasonable to pursue the application before the court.”

44.  Or, as pointed out above by Wilson J in Sutton BoroughCouncil supra in his judgment:

“ … But the proposition is not applied where, for example, the conduct of a party has been reprehensible or the party’s stance has been beyond the band of what is reasonable (see Havering London BC v S [1986] 1 FLR 489 and Gojkovic (No 2) [1992] 1 All ER 267 at 271; [1992] Fam 40 at 60).”

45.  Of course in all those cases cited above the costs order was made against the parent only after the court had found him/her guilty of being unreasonable or taking a stance beyond the band of what is reasonable in the application after a proper trial or hearing. Here all 4 applications were compromised and settled between the parties before trial and that none of the issues raised in those applications had been adjudicated, hence the Mother is essentially asking the court to infer unreasonableness on the part of the Father as to his conduct and/or stance just on the basis of the factual or undisputed background of the case and on the parties’ untested affidavits.

46.  Henceforth and on that basis, the questions for me to ask accordingly are: Firstly, in respect of his own 2 summons, was the Father pursuing a hopeless case for joint custody of and defined access to the son; and secondly, in respect of the Mother’s 2 summons, was the Father taking a stance beyond the band of what is reasonable in those applications, and in any event, did he conduct unreasonably in any of those 4 summons?

47.  There is no question in my mind, and as amply evidenced during the earlier maintenance application, that the parties did have difficulty communicating with each other, let alone agreeing on even the most simple or straightforward matters concerning their son, which were, I believe, stemmed from the fact that they had ceased their relationship and lived apart years ago and hence were naturally not aware of each other’s situations including and in particularly their financial changes since, compounded by the son’s Asperger Syndrome surfaced only some 5 years after the parties’ separation and hence of which the Father would not have first-hand experience or understanding, a situation no doubt exacerbated by the Mother’s dissatisfaction over his financial contribution towards the son’s maintenance over the years given the son’s special needs, and when she inflated her claims in the son’s maintenance application and he in turn cried financial difficulty, any remaining trust between them would have no doubt gone out of the window, which thus explain their inability to co-operate. It must be in my view against these backgrounds and under these circumstances that the Father is to be judged whether his conduct had been unreasonable in those applications, starting with his application for joint custody.

48.  The Father had made it clear that the primary reason for his application for joint custody was that the Mother had made unilateral decisions concerning the son without consulting him or even notifying him, making such application necessary, which was ultimately justified by the Mother’s undertakings.

49.  The Mother on the other hand argues that that application was hopeless from the outset due to their inability to co-operate and should never have been taken out in the first place. On this while the Mother relies on what Recorder Yuen said about the court’s approach in ML v YJ supra, it would be relevant in my view to also consider what Hartmann JA, as he then was, said about such approach in the later case of PD v KWW (Child: Joint Custody) [2010] 4 HKLRD 191 at 202:

“Joint custody: the proper approach

52. Today, although there has been no change in our law similar to many other common law jurisdiction, orders of joint custody are in no way exceptional. This is because it is accepted that, in principle, such orders are in the interests of children.

53. In all but the most exceptional circumstances, the effect of divorce on the children of the marriage, especially children of tender years, is deeply felt. In all but the most exceptional circumstances, such children desire that they should continue to be protected and guided by both parents. The case before us is an example.

54. In the result, in the best interests of the child, the fact that, as a result of the breakdown of the marriage, relations between the parents are strained is not of itself a reason to refuse to make a joint order of custody. Nor is the fact that the parent to be given care and control does not agree. Such orders look to the future. They will govern a limited area of exchange between the parents, albeit one of the greatest importance.

55. Accordingly, the issue for the judge is whether, with the court proceedings concluded, it is reasonably anticipated that the parents will be able to agree on the questions of importance that will determine the upbringing of their child, both recognising that, as difficult as it may be for them, this process of cooperation is in the best interests of the child.

56. In determining the issue, the judge is entitled to proceed on the presumption that competent, loving parents possessed of sufficient objectivity to be able to make rational decisions in the interests of the child will be able to cooperate with each concerning matters of importance in the upbringing of the child.

57. At all times, of course, the welfare of the child remains the first and paramount consideration. As this Court has recognised (see, for example, Y v P [2009] HKFLR 308), there may be occasions when the ability of the parents to reach any rational accord in respect of important matters concerning the upbringing of their child is so deeply undermined that to compel attempts at cooperation will not protect the interests of the child but only leave the child more vulnerable.”   

50.  While the relations of the parents in this case had ceased much longer than those whom these words of His Lordship were meant for, it is my firm view that they are equally applicable, and that after the parties’ disputes over their son’s maintenance was over, the Father should not be criticised for thinking that the parties would be willing or able to set aside their differences and to work together over their son’s future by seeking his joint custody so that at least he could have some say about his future, and the fact that they were eventually able to settle all their applications show that at least he was not wrong with his applications, and certainly not being unreasonable or reprehensible to warrant a costs order against him.

51.  As for his stance against the Mother’s applications, especially her Withdrawal Summons, I agree with Ms Man that it was one which the Mother was obliged to issue for the court’s leave in the first place, and given the circumstances of her earlier application to enrol the son to the UK boarding school, I accept that the Father was entitled to be first satisfied that it would indeed be in the son’s best interests to change school so soon again before withdrawing his opposition, and hence again his such stance as a concerned parent certainly cannot be criticised. Accordingly, on the basis of the evidence before me, I am not satisfied that the Father’s conducts in any of the 4 summons can be described as unreasonable or reprehensible or beyond the band of what is reasonable to justify any costs order against him.              

52.  Accordingly, I agree that it would be fair and appropriate to make no order as to costs in respect of all 4 summons. As for the costs of the hearing of the 3 matters before me, I agree that there should also be no order save and except for the Mother’s application for leave to appeal which I have found to be totally devoid of merits and should never have been made in the first place, and for which she should bear the Father’s costs to be taxed if not agreed with certificate for counsel. This is an order nisi to be made absolute at the expiration of 14 days.                         

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 61 OF 2011

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Ruling on Costs

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1.  On 4^th October 2013 after a 4 days hearing of the Respondent Mother’s application for maintenance contribution from the Applicant Father for their son FX born out of wedlock, I ordered the Father to pay HK$20,000 per month for the son, now a 14 year old student in a boarding school in UK, with payment to be dated back to the date when he first made an open offer to pay the said sum with credit to be given for payments already made, and with an order nisi that there be no order as to costs between the parties. The Father now seeks to vary that costs order nisi to the effect that the Mother should bear his costs.

2.  The main basis of his case is that that maintenance order was in line with his proposal not only at the start of the trail but also in his open and without prejudice offers to the Mother since October 2011 but all of which had been unreasonably rejected by her, and since he has succeeded in justifying his offer of HK$20,000, he argues that costs therefore should follow the event in his favour.

3.  The Mother’s case is that the Father was not successful on all the issues as he never agreed to backdating the maintenance payment, but of which she was successfully in obtaining the order, and that she was also entitled to challenge the Father’s alleged earnings and seek the court’s determination and assessment thereof in a trial, and hence there is no compelling reason to vary the costs order nisi.

4.  Before proceeding to consider the parties’ arguments, it would be necessary to first go into the background of the Mother’s application, the details of which can in fact be found in my said judgment of 4^th October 2013, and I do not propose to repeat them here save for those relevant to the matter now before me.

5.  The Father is a French national while the Mother is an American born Chinese, and both are permanent residents in Hong Kong. They started a relationship in the late 1990s in Hong Kong and FX was subsequently born on 24^th May 1999. They ended their relationship in about 2001 after the Father lost his job in Hong Kong and left for Europe. He later returned to Hong Kong to take up a position in a public relations company up to the present where he is now one of the managing directors.

6.  The Father then resumed his financial obligations towards FX and in about 2006 started to pay for his education costs at the French International School and other school miscellaneous expenses.

7.  In 2011 the Mother applied to court for leave to remove FX out of the jurisdiction to attend a boarding school in UK and for the Father’s contribution towards his consequential expenses, which was opposed by the Father on the grounds that FX was too young to go to boarding school and that in any event they could not afford the costs and expenses, but eventually leave was granted to the Mother upon her assurance to Deputy Judge Woodcock, as she then was, that she would support FX even if the Father was unable to provide any contribution. The Father was then ordered by the Learned Judge to contribute HK$160,000 to cover FX’s initial and setting-up costs and expenses for his boarding school including his first term school fees, his flight to UK and various other school-related expenses, which he did pay, with the question of the Mother’s claim for his monthly maintenance adjourned for argument.   

8.  Shortly thereafter the son left Hong Kong for his boarding school in UK, and the Mother then proceeded to bring her maintenance application to trial before me, seeking contribution from the Father for half-share of what she claimed to be the monthly costs and expenses of FX in UK in the total sum of HK$93,000, hence the Father’s half share at HK$46,000 per month.

9.  That was of course not acceptable to the Father who disputed the quantum and argued that at his own limited income he could afford to contribute much less at HK$23,000 per month, which he later revised down to HK$20,000 per month at the start of the trial after taking into account of the expenses he would have to spend on FX during his access to him in his school holidays.

10.  By then the Mother was prepared to come down substantially from her original claim to a much lower sum of HK$25,000 per month from the Father but insisted it to be dated back to the date of her application in July 2011, and when the parties were unable to compromise on by then a relative small gap between them, they proceeded to the 4-days trial and incurred a wholly disproportional combined legal costs in excess of HK$1 million.

11.  As expected the trial focused mainly on FX’s needs and expenses and the Father’s financial means, during which both parties were cross-examined extensively. In my judgment I found that the Mother had wrongly included her initial set-up costs for FX as part of his normal recurring expenses, that she had also exaggerated his other needs such as his holiday expenses and his share of her Hong Kong household expenses, and that his average monthly needs and expenses amounted to only about HK$50,000, for which the Father should contribute HK$20,000, which was what I found he could afford and was reasonable for him to pay after taken into account of the Mother’s assurance given to court at the time of her leave application of her own financial ability to support FX. I of course also made the order nisi of no order as to costs which is now the matter before me.

12.  Accordingly, the basis of the Father’s application for costs is premised, as submitted by Ms Yip with Ms Man on his behalf, on the following matters:

(a)   His Calderbank offers;

(b)   His open offers made as early as October 2011 in his 5^th Affirmation when he offered to pay HK$20,000 per month but was refused by the Mother;

(c)   His financial position;

(d)   The Mother’s excessive and exaggerated claim of FX’s monthly expenses of HK$93,000;

(e)   The Mother’s assurance to the court that ultimately led to leave being granted for FX to attend boarding school in UK when it was apparent that the parties could not afford to do so;

(f)    The Mother’s conduct of her maintenance application was reprehensible and beyond the band of what is reasonable.  

13.  To consider the validity of these basis of the Father’s case, it would be relevant to first set out the applicable legal principles.        

14.  The general principles as to costs in civil proceedings have been set out clearly in the English case of Re Elgindata Ltd. (No.2) [1992] 1 WLR 1207 as follows : 

(i) Costs are in the court’s discretion;

(ii) They should follow the event except when it appears 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 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 part of the unsuccessful party’s costs.

15.  While these principles apply equally in contested family proceedings, they may be displaced more easily in the Family Court, but the starting point is still that costs prima facie follows the event, as Butler-Sloss LJ, as she then was, said in Gojkovic v Gojkovic [1992] Fam 40 at 54 :

“That starting point, in my judgment, is that costs prima facie follow the event (see per Cumming-Bruce LJ in Singer (formerly Sharegin) v Sharegin [1984] FLR 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.”

16.  In cases involving children and in particular custody and access disputes, however, the proposition from case-law is that it is unusual to order costs against a party, as stated in Rayden and Jackson on Divorce and Family Matters, 18th edition, Chap. 52.21 :

“A number of reasons are advanced in the case-law for the practice of no order for costs in children cases. In all family proceedings, an order for costs inevitably diminishes the funds available to meet the needs of the family. Proceedings to determine the future of a child are partly inquisitorial and the focus is the best interests of the child. The court does not wish the prospects of a costs order to discourage those with a proper interest from participating reasonably in the proceedings and the debate. An order for costs may exacerbate tensions between parents and diminish the likelihood of future co-operation between them, to the disadvantage of the welfare of the child.”

17.  The court does however retain the discretion to award costs in suitable cases, and in Kelly v Kelly and the Legal Aid Board [1995] CA, 1 FLR 259, Wilson J at p 264C examined how that discretion should be guided when he said :

“What general considerations, if any, guide the exercise of the court’s discretion in deciding whether to make an order for costs in proceedings relating to children? In Gojkovic v Gojkovic (No 2)[1992] Fam 40 at p57C Butler-Sloss LJ said :

‘It is unusual to order costs in children cases.’

And at p60C she said :

‘The concept … of no order for costs where both parties have been reasonable in their approach to the dispute is not, in my judgment, one of general application in the Family Division, save in children cases.’

In London Borough of Sutton v Davis (Costs)(No 2) [1994] 2 FLR 569 at pp 570H – 571B, I sought to explain the reasons for the proposition that orders for costs in children cases are unusual. With diffidence, I repeat what I then said :

‘Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner. The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate. Nor does it wish to reduce the chance of their co-operation around the future life of the child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them. The proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority are a party.’

The practice of making no order as to costs in children cases seems to have grown steadily during the last 30 years, in the vacuum created by the demise of the principle that the costs of a wife, even if unsuccessful, should ordinarily be met by the husband. As early as 1965, in Re B (Infants) [1965] 1 WLR 946 at p 948D, concern was expressed that no order for security of costs should be made which would prevent a parent from putting his views before the court. And as early as 1968, in B(M) v B(R) [1968] 1 WLR 1182 at p 1185H, this court suggested that it would have been wrong to make an order for costs because it would exacerbate feelings between the parents, to the ultimate detriment of the child. Even by 1982, however, the practice was still very fluid. In Re G (Official Solicitor’s Costs) (1982) 3 FLR 340 at p 345B Ormrod LJ said :

‘Where the proceedings are between the parents, both of whom are acting bona fide in the interests of the child, it is not uncommon to make no order as to costs of the proceedings.’

These words are less firm than the recent observations of Butler-Sloss LJ in Gojkovic (above) to which I have already referred.

No one suggests that the court’s discretion in respect of costs under s 51(1) of the Supreme Court Act 1981 has become emasculated in children cases. The position is only that in most such cases, indeed in ordinary cases, the proper weighing of the factors in the exercise of the discretion is likely to lead to the choice of no order inter parties. Where, for example, the conduct of a party has been reprehensible or his stance in the litigation has been beyond the band of what is reasonable, an order for costs might well be made against him. Equally a marked disparity in wealth, such that, for example, the wife’s costs would bear harshly upon her economy but could be discharged by the husband without significant impact upon his economy, might give rise to an order against him.”

18.  Neill LJ sitting in the same Court of Appeal concurred when he said at 267H :

“ In the last decade … it has become the general practice in proceedings relating to the custody and care and control of children to make no order as to the costs of the proceedings except in exceptional circumstances. In London Borough of Sutton v Davis (Costs) (No 2) [1994] 2 FLR 569 at p 570H Wilson J threw some useful light on the reasons for The court of course retains the present practice, the existence of which was recognised in this court by Butler-Sloss LJ in Gojkovic v Gojkovic (No 2)[1992] Fam 40 at p 57C.

The court of course retains the jurisdiction and a discretion to award costs in suitable cases. It is unnecessary and undesirable to try to limit or place into rigid categories the cases which a court might regard as suitable for such an award, but examples would be likely to include cases where one of the parties had been guilty of unreasonable conduct or where there was such a disparity between the means of the parties that a special order was justified.”  

19.  These principles have been applied and referred to in cases involving children in our courts, as in H v H [2002] CACV 42/2002, HKEC 1123, where the Court of Appeal fully endorsed the approach expressed in Sutton supra when Rogers VP said at §19 :

“ … It would seem that this approach has been followed in respect of appeals to the Court of Appeal. Whilst different considerations may apply to appeals because the parties have had the benefit of “one day in court” and thus costs might be unnecessarily incurred, I consider that unless it could be said that an appeal should never have been brought then the same principles would be applicable. Indeed, the argument on behalf of the respondent is put on the basis that the “appeal had very little prospect of success.” Whilst I have had no difficulty in reaching the conclusion as to the outcome of the appeal, I would in this case still apply the same principle in relation to costs, primarily for the reason that it is in the daughter’s interest that there be as little antagonism between the parties as possible. It is to be hoped that the parties can now work together in the daughter’s interest and avoid returning to court to continue battles over custody, care and control which hopefully will have been resolved. The order I would make therefore be that there be no order as to costs.”

20.  In another Court of Appeal case L v C (on Costs) CACV 169 of 2006, Yuen JA stated the same principles in her judgment at §23:

“As a matter of law, it is clear that costs are in the court’s discretion. Pointers as to how that discretion should be exercised include the following:

(1)in family cases, as in others, costs should normally follow the event;

(2)however because of the special dynamics of family litigation (e.g. where the case involved children, or where financial resources were inadequate to meet the needs of both parties, etc.), the discretion may be broader than in civil matters generally (Gojkovic v Gojkovic [1991] 2 FLR 233, F v F (N0.2) [2003] 3 HKLRD 977);

(3)the court also retains a discretion to deprive successful litigants of costs under the Elgindata principles (In Re Elgindata (N0.2) [1992] 1 WLR 1207);

(4)  Where a litigant succeeds on appeal but only on a new point, the court can deprive him of the costs below (Farquharson v Morgan [1894] 1 QB 552) or even order him to pay those costs (Yip Lai Fong v Sin Tung Hing [2004] 23 HKLRD 230), and the court can deprive him of the costs of the appeal (Chard v Jarvis (1882) 9 QBD 178)”  

21.  These principles have since been significantly developed, as pointed out by Ms Yip, especially following the implementation of the Civil Justice Reform in 2009, and that since then there are special matters that the court will take into account in the exercise of its discretion as set out in RHC, O.62, r.5 as follows:

(1) The court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account-

(a) any such offer of contribution as is mentioned in Order 16, rule 10, which is brought to its attention in pursuance of a reserved right to do so;

(b) any payment of money into court and the amount of such payment;

(c) any written offer made under Order 33, rule 4A(2)

(d) any written offer which is expressed to be “without prejudice save as to costs” and which relates to any issue in the proceedings, but the Court may not take the offer into account if, at the time it is made, the party making it could have protected his position as to costs by means of a sanctioned payment or a sanctioned offer under Order 22;

(e) the conduct of all the parties;

(f) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(g) Any admissible offer to settle made by a party, which is drawn to the Court’s attention.

(2) For the purpose of paragraph (1) (e), the conduct of the parties include-

(a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(b) the manner in which a party has pursued or defended his case or a particular allegation or issue;

(c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and

(d) conduct before, as well as during, the proceedings.

22.  The underlying objectives of the above exercise are as set out in RHC, O1A, r1(1) as follows:

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the Court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

(d) to ensure fairness between the parties;

(e) to facilitate the settlement of disputes; and

(f) to ensure that the resources of the Court are distributed fairly.

23.  Given the fact that offers including Calderbank offers and open offers had been made at various stages of these proceedings and which the Father relies on as the cornerstone of his present application, it would be helpful to refer to what Butler-Sloss said about their influences on the court’s discretion on costs in Gojkovic at 59:

“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 CCR Ord 11, r 10) 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 the 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 an 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 LJ said in McDonell v McDonell [1977] 1 All ER 766 at 770, [1977] 1 WLR 34 at 38, the Claderbank 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 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 Supreme Court and County Court Rules 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 so in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position.”       

24.  It is with all these in mind that I shall now consider the Father’s arguments, starting with his Calderbank offers and open offers.

25.  The Father’s offers, and for that matter the Mother’s counter-offers, are all set out in Annexure 1 to Ms Yip’s Skeleton Submission, which shows that, as noted earlier, he already offered to pay HK$20,000 per month towards FX’s expenses as early as in his 5^th Affirmation of 27^th October 2011, but which the Mother had refused to accept and instead persistently asked for much higher amounts varying between HK$55,000 and $35,000 until the 1^st day of trial when she finally came down to between HK$25,000 and $27,000 per month. 

26.  In addition, Ms Yip submits for the Father that from those offers and counter-offers of the parties in Annexure 1, the court should note the following:

(a)   the Father’s offers have always been realistic and very close to or equal to and at times even exceeded what is now ordered;

(b)   the Mother’s offers have never even come close to the current   order, with the closest one being HK$35,000 at the FDR but still only 58% of the order;

(c)   most of her offers were premised on an exaggerated basis that the son’s expenses exceeded HK$90,000 per month;

(d)   some of her offers were simply incapable of being accepted due to the imposition of terms which are wholly unreasonable, such as the condition that the Father could not take the son to Shanghai for holiday, knowing full well that his work required him to do so.

27.  Ms Yip submits that the evidence clearly indicate that the Mother’s claims far exceeded the offers that were made by the Father, and that his Calderbank offers alone form strong basis for costs being ordered against the Mother on the basis of costs follow the event alone, since the backdating of payment was only raised by the Mother at the trial and too late to assist her present argument, but all the more so given her unreasonable and exaggerated demands, of which I shall next consider whether it was indeed the case.

28.  In my said judgment I found the Mother’s claim of FX’s expenses in excess of HK$93,000 per month as set out in her 8^th Affidavit as inherently wrong or unrealistic with the ways she had budgeted for the teenage son which was more than twice of her disclosed income or 2/3 of the combined income of the parties, and that the evidence before me indicated a much lower figure of about HK$50,000 as being a more reasonable and realistic monthly sum for the son’s expenses.   

29.  Ms Yip however takes her argument further by submitting that the Mother had in fact inflated those expenses and wrongly included his initial set-up costs or her own household expenses as part of his normal recurring monthly expenses, and that she had persistently refused or failed to come down from her claim based on such inaccurate and inflated to a more reasonable and realistic level until the trial for which the court should hold her liable for the Father’s costs.       

30.  While accepting that her claim indeed started off at a rather high level, Ms da Luz for the Mother submits that many of the expenses were fully supported by documentary evidence, and that the Mother had always been willing to negotiate and put forward new options, but that the Father had maintained his stance of HK$20,000 per month almost throughout the whole negotiation process as evidenced by the those letters in the Without Prejudice Correspondence Bundle and was never willing to alter his position almost from the very beginning, and she relies on the judgment of Hartmann J, as he then was, in the case of F v F [2003] HKCU 1299 when he said at §23:

“I do accept that the wife advanced a number of issues at trial which I found to be exaggerated or not proved on the evidence. But the general rule that costs follow the event does not cease to apply because a party has in certain instances been found to exaggerate his case or because he has failed on certain issues. In the present case, I did not find those assertions of the wife which were exaggerated to be flagrantly or persistently so, not set against the great affluence enjoyed in the course of the marriage. It is the nature of the adversarial system that the best case is advanced. Of course, that must be done within rational boundaries. In my view, the wife’s assertions, even if some were pitched too high or were rejected on the evidence, always remained within those boundaries. It is often necessary in ancillary relief matters, which are determined on the basis of the exercise of a broad discretion, to speak of numerous and interlocking matters in order to attempt to paint a picture of a way of life within the confines of a marriage. For the parties themselves that will inevitably mean expressing subjective views; some may be accepted, some rejected, some submissions may not have found favour, they were all, in my opinion relevant issues, respectably capable of argument against the complex, multi-faceted history of how the parties came together, lived their married life and separated.”

31.  By analogy, Ms da Luz submits, in the present case the Mother was not unreasonable in taking issue with the Father’s means, in the light of the history between them, and that the matter proceeded to trial because she questioned his true financial position especially on his claim that he could only afford to contribute no more than HK$20,000 per month, and hence she was entitled to submit him to cross-examination in order to test his probity, as she had good reason not to trust him due to their past relationship.

32.  There is no dispute, Ms da Luz submits, that the Father previously commanded a sizable income as vice president in Human Resources Asia Pacific of his former employer LVMH for a number of years before and during their relationship, but by the time of her application, he claimed that he was earning much less at just over HK$26,000 basic monthly salary plus commission, hence the Mother cannot be faulted for doubting his claim and for testing it at the trial, especially when he had never made any financial contribution towards their son for the first 7 years of his life until 2007 when the Father only started paying for his school fees and school bus at the French International School.

33.  Given the shenanigans orchestrated by the Father, Ms da Luz argues, in the 2 years leading up to the maintenance trial, it is hardly surprising that these actions had led the Mother to have serious trust issues regarding the motivation and credibility of the Father, including the various incidents of him spying on her, his manipulating of the son against her, and reneging on holiday commitments with the son, all of which only served to exacerbate the tension and mistrust on the Mother’s part that she could not be expected to believe anything the Father said about his financial position given his past conduct.

34.  Another reason for the Mother’s doubt over the Father’s alleged lack of means, Ms de Luz submits, is the volume of transactions involving substantial amounts of money passing in and out of his bank accounts, which was referred to in my judgment of more than HK$1.8 million over a 9-month period which the Father simply explained either as his own expenses or for his China Office operation costs without any documentary evidence from his employer, of which she was entitled to seek the court’s determination, and that she should not be faulted even if the result at the end turned out not in her favour.

35.  Furthermore, she submits that the court was constrained by the fact that the Father had chosen to renewed the tenancy of his Causeway Bay apartment, which the court found too expensive for him, in the middle of the maintenance application instead of moving to cheaper accommodation in order to free up some of his income to meet the son’s expenses, thus presented the court with a ‘fait accompli’ and constrained its final decision, and required a revisit of his means in future when he is expected to move to a cheaper place, which Ms da Luz submits is a strong indication that the court had made the maintenance order due to the Father’s rental situation and his dire predictions of his future income.

36.  Lastly, Ms da Luz submits that in considering the appropriate amount of maintenance to be provided by the Father, the court would have had regard to the effect of costs order on the net position of the parties, and hence should a costs order be made against the Mother, it would have the effect of increasing the father’s financial resources whilst creating greater financial difficulty for the Mother, a net result that the court would wish to avoid, she argues, as it would undermine the balancing exercise conducted by the court in reaching its decision on the maintenance order, a problem which she submits was part of the difficulties with the current costs regime as experienced in England and Wales referred to by Judge Melloy in H vW (FCMC 11958/2006) unreported, at §6 of her judgment:

“In England and Wales, they have identified perceived difficulties with this approach:

“52.19 Problems have been identified with the current costs regime in ancillary relief proceedings. The first is the de-stabilizing effect that costs can have on financial settlements that have been carefully constructed by the court. Having considered the facts and circumstances of a case the court arrives at a settlement that, in its judgment, does justice between the parties. If at the conclusion of judgment it is revealed to the court that one party has failed to ‘beat’ a Calderbank offer, the consequences of failing to ‘beat’ a Calderbank offer by an order to pay the other side’s costs can undermine the substantive order for ancillary relief than the court has just made. The second problem is that the system of closed offers has introduced a degree of procedural games-manship. This, in turn, leads to uncertainty and has, in effect, also introduced an undesirable element of gambling into ancillary relief proceedings. Calderbanks have been likened to a form of spread betting. Orders for costs can be disproportionate and, in some cases, produce real financial hardship as well as undermining the court’s division of the matrimonial assets. Lastly, making orders for costs which involves a detailed assessment can result in excessive litigation and delay.”      

37.  Ms da Luz therefore submits that when this court made an order nisi that there be no order as to costs at the conclusion of the judgment, it must have already considered all the relevant factors and decided not to award costs to either party to reflect the facts that neither party entirely won or lost and that it disapproved of the way both parties had conducted themselves, hence it is for the Father to put forward compelling reasons to persuade the court to depart from its order nisi, but his so-called reasons of having substantially won the maintenance trial and the Mother’s ‘unreasonable’ conduct are unsustainable under scrutiny.

38.  There is no question in my mind, as I have found in my said judgment, that not only had the Mother wrongly included the son’s initial set-up costs and other expenses incurred upon first arriving in UK before his start of the boarding school as part of his current and future needs, but also being unreasonable for refusing to acknowledge those defects and adjust her claim accordingly throughout the proceedings up to the 1^st day of trial, which would have been easily realised either by her or her then lawyers throughout their numerous correspondence with those representing the Father over his disputes of these expenses.

39.  This conduct of the Mother is not in my view the same with the way the wife in F v F supra or other similar cases had exaggerated her case as those setting-up expenses and other expenses of her Hong Kong household should never had been claimed as the son’s current and future expenses in UK in the first place, and unlike the great affluence of the parties in that case, here the parties’ financial resources were said to be limited and that the Father had all along insisted that their ability to put their son through boarding school in UK would be a major issue, hence by wrongly pitching her claim to such unrealistically high level and by failing to even come close to ‘beating” the Father’s offers, and while I agree that the Father had from times also appeared as stubborn and inflexible with his position, there can be no argument in my view that the Mother ‘lost’ the event.  

40.  Furthermore, having unreasonably pitched her claim in such manner from the very beginning, the Mother had in effect put herself in an impossible situation to compromise with the Father as she would clearly be unwilling or reluctant to come down so low to the level of his offers given her strong personality as well as her perceived view that he had failed to shoulder up his share of the financial responsibility towards their son during what she said to be the first 7 years of his life, but which was never argued at the hearing, and that the evidence before the court indicated that the Father was then out of a job.

41.  Which brings me to Ms da Luz’s argument that notwithstanding the above, the Mother should not be penalized with costs for bringing the Father to court to be cross-examined as to his means as she was entitled to challenge his claim of limited means given his previous high earnings.

42.  Before considering the merits of that argument, the first question that would first come to mind is this: Had the Mother put the son’s expenses at a more realistic and unreasonable level of HK$50,000 per month at the beginning, would she be justified to ask for HK$25,000 or HK$27,000 from the Father as she did at the trial, and to challenge his allegation that he could not pay anything more than his offer of HK$20,000?

43.  While this relatively minor difference of a mere few thousand dollars between the parties would in my view still be highly disproportionate, which can be argued against either parties, but given the historical fact of the Father’s previous high income, and unlike those couples in cases like F v F supra, the fact that the parties here had lived apart from each other for more than 10 years and hence were no longer familiar with each other’s financial situation, I agree that the Mother would be so entitled to challenge the Father’s evidence at the trial as to his current financial means within rational boundaries, and that would include, as I had allowed her, his directorship in his employer company and those substantial transactions seen in his bank accounts, but that in my view would still fall way short of exonerating her from being liable to costs.

44.  As for Ms da Luz’s last point that any costs order against the Mother may undermine the maintenance order, while I accept that the financial impact on her will not be insubstantial, and that a review of the Father’s financial means may be inevitable in future, the salient point established by all those authorities and precedents referred to above is blatantly plain and must clearly be observed: A litigant who has failed to conduct properly or reasonably in his/her litigation to the financial detriment of the other party and/or waste of court’s resources must bear the consequences of being penalised with costs, regardless of the motive or purpose behind such conduct, and while both parties in this case are guilty of being too stubborn and inflexible and of running their case wholly disproportionate to costs, I am convinced that the Mother must bear the brunt of such blame, for which she should pay 75% of the Father’s costs to be taxed on party and party basis if not agreed but with certificate for one Counsel only. I so order accordingly.      

FCMP61/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FAMILY COURT

MISCELLANEOUS PROCEEDINGS NO. 61 OF 2011

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BETWEEN 

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Judgment

(Financial Provision for Child of Unmarried Parents )

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1.  This is the Respondent Mother’s application under s 10(2) of Guardianship of Minors Ordinance, Cap 13 for reasonable financial provision from the Applicant Father for their only son FX born out of wedlock, now aged 14 and studying in a boarding school in UK pursuant to leave granted earlier by Deputy Judge Woodcock (as she then was) on 26^th August 2011. In her supportive affidavit the Mother asked for an equal monthly contribution of about HK$46,000 from the Father towards what she claimed to be FX’s monthly expenses of some HK$93,000, but at the hearing she made an open proposal essentially that she would be prepared to accept a much lower sum of HK$25,000 per month from the Father so as to save time and legal costs, such sun to be dated back to the time of her application of 26^th July 2011.       

2.  That proposal was however not agreeable to the Father who contends that their son FX does not need to spend as much as the Mother has claimed, and that given his age which is 63 and close to retirement, as well as his limited income and financial resources, he insisted at that time that he could only afford to pay HK$23,000 per month instead, but that he has since reconsidered his financial ability and counter-offered HK$20,000 per month as long as FX shall remain in boarding school in UK after taking into account of the additional expenses for visiting him over there in Europe, and that it would not be necessary for it to be backdated since he has so far already paid more than that amount per month on average.     

3.  Given the relatively small difference between the parties’ respective latest proposal, it is unfortunate that they were unable to find further common ground or to further compromise their respective position, notwithstanding having spent a better part of the first day of the trial to try to settle the matter. As such the trial had run its full course, no doubt with further financial implication on legal costs to both sides, of which I understand had run up to in excess of HK1 million for each side in the whole proceedings, with more than half thereof incurred for the present application, a staggering sum in my view which is wholly disproportional to the amount of their dispute or their own financial mean, and which no doubt could have been put to much better use on their son instead. 

Background

4.  I do not propose to repeat here all the background already detailed in Deputy Judge Woodcock’s judgment of 26^th August 2011 when she granted leave to the Mother’s earlier application to send FX to boarding school in UK, save and except those which are material or relevant to the matter now before me as follows.

5.  The Father is a French national but a permanent resident in Hong Kong, and as indicated above is now aged 63. He became acquainted with the Mother in 1997 in Hong Kong when he was then a Vice President in Human Resources Asia Pacific of Louis Vuitton Moet Hennessy (LVMH) while the Mother, an American born Chinese from Washington, USA and also a permanent resident in Hong Kong now aged 44, was then working for the First Pacific Davis as a real estate agent. He was then already married but living apart from his wife and 3 children in France. The parties subsequently started a relationship and when the Mother became pregnant with FX, she resigned from her job and moved in with the Father at his apartment in Stanley.

6.  On 24^th May 1999 the Mother gave birth to FX in the US and in December of the same year she brought FX back to Hong Kong where the parties continued their cohabitation. In about 2000 the Mother began to ease back to work albeit initially on a part-time basis. Unfortunately in June 2001 the Father lost his job at LVMH and started legal proceedings in France against his former employer for unfair dismissal and sued for compensation.              

7.  In July 2001 the Father found a job in Luxemburg and the parties somehow ended their relationship when the Mother moved with FX to a rented apartment at Tsing Yi and hired a domestic helper to look after FX while she returned to full-time employment at Citibank until she started her present fashion designs business through a company known as DHC Ltd. In March 2002 the Father returned to Hong Kong and took up his present employment as a managing director of a public relations company which required him to travel between Hong Kong and China. He now stations in his China office in Shanghai most of the time, but would also stay in Hong Kong from time to time. 

8.  In late 2005 his wife obtained a divorce against him in France and he was ordered to make certain alimony payments to her from his pension as well as maintenance for their 3 children. He claims that these financial obligations together with his on-going legal battle with his former employer LVMH had put him in such difficult situation that he could not make any contribution towards the maintenance of FX during that period of time other than spending and paying for some holidays with him.  

9.  Eventually after he settled his case with LVMH by accepting a lump sum from them in 2006, and with improved financial situation he started to pay for FX’s education costs at the French International School (FIS) and school camps expenses as well as various gifts and holidays for him.

10.  Unfortunately due to problems in school with behaviour issues, FX in 2006 was diagnosed with Aspergers Syndrome, an autism spectrum disorder characterised by difficulties in social interaction, and was required to receive regular counselling and therapy. However, the parties had since been having various disputes over the Father’s access to and/or contact with FX, and when he heard from FX that the Mother intended to leave Hong Kong for good and to return him to her parents’ home in the US, the Father launched these proceedings by issuing an originating summons on 16^th March 2011 under s 10(1) of GMO for inter alia FX’s custody, to which the Mother countered with her said application for leave to remove him from FIS to a boarding school in UK at Woodcote House and for financial contribution from the Father (“Boarding School Application”), which was opposed by the Father but eventually led to the said judgment of Deputy Judge Woodcock on 26^th August 2011 allowing the Mother to do so after having received certain assurance from her, of which no doubt I will have more to say later on.

11.  On 1^st September 2011 the Learned Judge made a further order for the Father to contribute a sum of HK$160,000, which he did, to cover FX’s initial costs and expenses for the boarding school including the first term school fees of £6,300, his flight to UK, various school-related charges, as well as clothing and other setting up expenses, with the question of the Father’s monthly maintenance adjourned pending the parties’ financial disclosure.    

12.  Consequently FX has since September 2011 been studying in UK as a boarder, completing his primary education at Woodcote House during the first year before starting his secondary school in September 2012 at Sherborne School, during which the Mother claims that the Father had contributed on average just a bit more than HK$15,000 per month to meet his needs, much less than half of what she argues he should be responsible, but which the Father insists to have been close to HK$30,000 on average after taking into account of his spending on FX during their holidays together, an amount which however he says he cannot afford to maintain in future given his age and financial limitation.  

13.  As for the proceedings herein, after an unsuccessful FDR hearing before Judge Melloy, and after some delays to the filing of their respective affidavit in support, the Mother’s application for monthly maintenance for FX finally came before me for trial during which both parties gave oral evidence and were cross-examined, with Mr Giles Surman representing the Mother, while the Father was represented by Ms Anita Yip together with Ms Yu-Wing Man.          

Applicable Legal Principles

14.  There is no apparent issue between the parties over the applicable legal principles for such application, specifically under s 10(2)(b) of GMO: an order requiring payment to the applicant by such parent or either of such parents of such periodical sum towards the maintenance of the minor as the court thinks reasonable having regard to the means of that parent.

15.  While the only statutory guidance is that the award shall be reasonable given the means of the paying parent, to arrive at what is in the circumstances reasonable, the court will nevertheless bear in mind all the relevant matters drawn to its attention relating to the parties as well as the child, with perhaps the most outstanding factors being the reasonable needs and requirements of the child which must necessarily be linked to the situation of the custodial parent, financially and otherwise, and the ability of the other parent to pay, bearing in mind of course his or her own reasonable needs and requirements so as to arrive at a fair and just award. After all, the concept of reasonableness being synonymous with fairness must be a universal truth. 

16.  In other words, the court has to consider carefully the reasonableness or fairness of the amount of the claim by the mother for the child, and having determined what is a reasonable amount after considering the mother’s means and the child’s needs, as in any maintenance case, the court must then consider whether it is reasonable or fair for the father to pay such an amount against the court’s determination of his overall net income and ability : N v D [2008] 1 FLR, 1629.     

The Mother’s Claim

17.  The Mother’s case is first set out in her 8^th Affidavit where she gave an itemised breakdown of FX’s expenses from July 2011 to November 2012 at an average sum of HK$93,482.68 per month, of which she sought an equal monthly contribution of HK$46,741.34 from the Father (P8 : 1793, 1794 – 1796).

18.  While she did at the trial come down quite substantially from that amount first to HK$27,000 and then HK$25,000 as noted above, it was only a compromise on her part to settle with the Father in order to save time and costs, and as the Father still takes issues with some of her items of expenses or their amount as either unnecessary, excessive or unreasonable, hence it will be helpful to set out all those expenses as originally claimed, which the Mother has divided into 2 parts : General and Personal :

FX’s Personal Expenses :

19.  While these figures were based on her very detailed spreadsheets of FX’s recorded expenses exhibited to her said affidavit (P8 : 1815 – 1883), if they truly represent his monthly needs, then there seems to me something very inherently wrong or unrealistic with the way the Mother had budgeted for her son, a teenager still in secondary school only, albeit one with some special needs, as they would have amounted to more than twice her disclosed monthly income, or 2/3 of the combined disclosed income of the parents, a situation that does not make any financial sense to me, and is clearly not what they could afford, as pointed out by the Father almost at the beginning and throughout the proceedings.  

20.  As noted above, the Mother was prepared to concede at the trial that her original figures had included FX’s setting up costs and other expenses incurred upon first arriving in UK before the start of his boarding school some 2 years back, and hence may not accurately represent his current or foreseeable future needs and expenses, which explains why she was prepared to come down from the original figures with her said new proposal at the trial.       

21.  Leaving aside those setting up costs, she agreed at the trial that FX’s more current and foreseeable monthly expenses should be somewhat lower, and hence she made the open proposal during the trial as noted above with essentially the following items:

(a) Father to pay HK$25,000 per month as being his contribution towards FX’s maintenance;

(b) Father to spend 50% of the school holidays with FX during which he would be solely responsible for his expenses, or in lieu of holidays and if Father does not take holiday with FX then he shall contribute HK$14,000 being the approximate average cost of a UK/HK return airfare, and HK$300 per day for each day of his ‘foregone’ holiday;

(c) The said monthly maintenance shall be backdating to the date of the Mother’s application, with credit to be given of monies paid to date by the Father.  

22.  As already noted above, the Father finds the Mother’s original claimed monthly expenses of HK$93,000 for FX as both excessive and unreasonable, and apart from those initial and set-up costs which she has as aforesaid conceded as inappropriate, I can see why he also takes issue with some of her other items, in particularly as to what she claims to be FX’s ½ share of her general household expenses such as rent, utilities and food when he in fact spends no more than 3 months in total each year in Hong Kong on his school holidays even before taking into account of his access time with the Father during such holidays. At any rate she conceded at the trial that she has since moved to a cheaper flat for less than half of her earlier flat at HK$16,000 per month.

23.  The same can also be argued about her claim for ½ share for her domestic helper whom she says was hired mainly for FX, which may well be true when he was in Hong Kong, but given the fact that he is now 14 and a boarder in UK, it is no longer convincing to me that she can justify having the helper in her household because of FX and hence half of her expenses should go to him.

24.  As for her alleged holiday expenses for FX, the Father also finds them exceptionally high at HK$12,000 per month on average, or HK$144,000 for the year when essentially FX would be with her only for about half of his school holidays, and even if they were to include his hotel bills at the Hilton, dining and shopping at Harrods and travelling in Italy as she disclosed at the trial. Again I can see why, and even at the reduced sum of HK$7,000 as conceded by the Mother at the trial was argued by the Father as too high for a school kid, and I agree that a monthly sum of HK$5,000 or HK$60,000 for the year would seem to me a more reasonable amount for FX’s future holiday expenses in the circumstances.

25.  In fact, Ms Yip argues, according to the Mother’s own summaries of FX’s general and personal expenses from January to November 2012 in her 8^th Affidavit (P8/1880 – 1881), the average sum actually amounted to only about HK$21,000 per month, which the Father believes more accurately reflects the son’s reasonable needs and expenses, as it chimes with what the Mother has said in her evidence that after the son has settled in, she could better economise, and that even adding her own figures of the son’s school fees, tuition fees and other school expenses, the total monthly sum amounts to just over HK$50,000, which is still less than her reduced sum at the trial, let alone the original amount of her original claim.

26.  At any rate, Ms Yip submits, the Mother’s claim must be premised on an estimated monthly average that is fair and reasonable, but on the evidence referred to above, there is considerable difficulty in understanding the basis of her calculation both by looking at the tables and the invoices she has produced, and that in light of her spending pattern and financial management of which Ms Yip described as poor, the court should not so easily or readily accept what the Mother said as reasonable needs and expenses.                       

27.  Above all, it is submitted on behalf of the Father that whatever reasonable budget the court may find for FX, and whatever amount that the Mother may be prepared to come down from her original demand, her claim must be looked at together with her assurance given to the court in her Boarding School Application which Ms Yip contends as one of the most significant factors on the merits of the Mother’s present claim.  

Mother’s Assurance to Court

28.  According to Ms Yip, one should in fact start by looking at the events leading to the Mother’s Boarding School Application of 26^th July 2011 when FX was then studying at a reputable international school at FIS, being able to see both parents as and when he liked, and when the Father could financially afford a level of contribution acceptable to both himself and the Mother, against her sudden and whimsical decision to send FX to UK boarding school in the hurried fashion that she chose, and her assurance (“The Assurance”) given to the court at that trial that she would support FX’s education even though the Father’s contribution was insufficient or even if he was unable to provide any contribution, thereby disabling the Father to raise financial inability as a ground for objecting that FX be sent to the UK for schooling at such a young age when it was obvious that the parties could not financially afford to pay for 9 years of education abroad with their own asset which ultimately led the court to allow her application.

29.  This means, Ms Yip argues, that the Mother must be financially capable of maintaining FX in boarding school by herself, and that it would not be fair for her now to require the Father to contribute more than what he has offered to support FX, given the fact that he did insist at that trial, and still does, that he cannot afford to support him in boarding school in UK.         

30.  That Assurance of the Mother was confirmed by her at this hearing, and Ms Yip argues that it must be made on the basis that the Father pays nothing, hence anything contributed by him would be a bonus and regardless of whether he is able to contribute or not, the Mother would continue to ensure that FX is taken through the next 8 or 9 years of education in UK.  

31.  It was not expected, Ms Yip argues, that the parties would suddenly generate funds with time and the Mother well knew that the Father would soon be facing retirement, and that since the Boarding School Application, the parties’ assets have not increased but rather depleted by the increased expenses for funding FX’s UK education, and if I may add no doubt also by their legal costs incurred in this application.  

32.  Hence, Ms Yip submits, given the Mother’s Assurance, strictly speaking the real and only issue is over the Father’s means and ability to pay which should be considered in the context of his age and the fact that he will retire in about 2 years’ time. I agree that the Mother’s Assurance would be one relevant factor to be taken into account for the court to arrive at a fair and reasonable sum of maintenance which the Father should provide for FX, but to do so, it would be necessary to first investigate in more details the parties’ respective financial means, starting with the Mother’s, including what the Father believes to be significant resources from her parents.

Mother’s Financial Means

33.  As noted above the Mother has been running her own fashion design & trading business in Hong Kong and India, and according to her latest 9^th supportive affidavit she is now earning HK$39,000 per month from her company with no other allowance or benefits (P9/1889), although in her Form E filed earlier in 2011, she put her total monthly income somewhat higher at HK$45,000 made up of director’s salary and various allowances (P5/1195). 

34.  At either income, Ms Yip argues, that the Mother could not have given her Assurance unless she has other resources, and that such resources clearly come from her rich parents with an average of about HK$1 million per year deposited into her various bank accounts as evidenced by her bank statements (P9/1911 – 1943), of which she says is not disputed and that there is no contention that such funding would stop in future.  

35.  Such financial assistance received from third party, Ms Yip submits, should of course be taken into account by the court even before the recent decision of the Court of Final Appeal in KEWS v NCHC, FACV 18 of 2012, that the court should not ignore the very significant financial support given by a party’s parents, with the following further guidance on two critical evidential questions that the court should consider (para36):

(1) What is the extent of the financial assistance provided by the third party to the husband or wife?

(2) What is the likelihood of such financial assistance continuing in the foreseeable future?

36.  According to Ms Yip, solid proof of the Mother’s parents’ financial support can be easily gleaned from her said Form E where she disclosed inter alia 2 Charles Schwab accounts with total investment then worth just over HK$6.2 millions, which has since grown to over HK$6.8 millions according to her said 9^th Affidavit (P9/1887), although she also claimed to have total liabilities in excess of HK$3.5 millions, of which US$250,000 or the equivalence of HK$1,939,462.65 were said to be loans from her parents to ‘meet the shortfall between her income and FX’s and her expenses, including her legal expenses.’ 

37.  As her total legal costs incurred up to the 9th Affidavit were stated to be HK$1,188,858.26, Ms Yip submits that this means that the rest of the ‘borrowing’ would have gone into meeting her living expenses and FX’s at the average sum of over HK$80,000 per month.

38.  While the Mother has put these financial support down as loans from her parents, which is not admitted by the Father, Ms Yip argues that at best they must be treated as commonly known as ‘soft loans’ only to be repaid when the Mother were capable of doing so, but not obliged to if she was not, and on the facts of this case, Ms Yip submits, that the parents’ support must be unconditional and anything but loans, which was the reason why the Mother was able to so confidently give her said Assurance to the court.    

39.  In the absence of any evidence from the Mother to the contrary at the trial, I agree with Ms Yip’s submission that these financial support from the parents are likely to continue or will be provided whenever the Mother are in needs of them, and that if these were indeed loans, they should be treated as soft loans which may not be repayable in future, but Mr Surman contends that the court should not be distracted by them from the real issue, which is not about what money the Mother has which if substantial may only have the effect of reducing the Father’s contribution, but rather about how much does FX reasonably cost, and how much should the Father contribute towards such cost. I have already dealt with the former, as for the latter, it will of course be necessary to consider the Father’s financial means, as it turns out to be indeed the bone of contention between the parties.

Father’s Financial Means

40.  In his Form E of 2 years ago in 2011, the Father put his monthly average income at HK$99,000 made up of base salary of HK$24,250, bonus of HK$22,765 and commission of HK$51,994, and that he also had assets mainly in bank savings and investments then worth about HK$5.4 million in total. However, according to his 9^th Affidavit of 25^th February 2013, he claims to be now earning less at just over HK$83,000 per month on average based on previous year’s figures due to the fact that the economy was not particularly good in 2011/2012, and with the market deteriorating which will have a negative impact on his employer’s business and ultimately his income in particularly his commission, he is concerned that his future income will only go further down until his retirement in 2016, while the value of his assets has also dropped significantly to now stand at only HK$3.2 million (P9/2029 – 2033).

41.  In the same affidavit he also updated his current expenses at just over HK$100,000 per month, being HK$34,772 for his general household expenses including rental of HK$24,000 for an apartment in Causeway Bay, HK$40,000 for his personal expenses, and average about HK$26,000 on FX including travelling and other expenses for holidays with him in Europe.

42.  He further claimed that upon his retirement in about 2 years, he may only find work on a casual basis from home and hence whatever income he may be able to earn will likely be insubstantial, and that any monthly deficits that he will certainly run into from meeting his living expenses as well as his contribution towards FX’s maintenance will have to be met from his savings, and when they run out, in the absence of any pension or other resources, it would be disastrous to him at his old age, alone and without the support of his children from his previous marriage who are all in Europe and have their own family.       

43.  It is for all these reasons, he says, why he can at present only afford to pay HK$20,000 per month for FX after taking into account of his additional expenses for spending his half share of his school vacations, and that anything more will place him under immense financial strain, bring a large deficit and likely impact on his ability to enjoy his access to FX as he would be left with no money to travel to Europe to see him.  

44.  The Mother of course takes issue with everything the Father has said about his financial situation, in particularly with what he alleges to be his current income. Firstly, as pointed out by Mr Surman on her behalf, being one of the founding members of his company and one of its managing directors running the China office regularly handling large sums of cash which he alleges are for the office expenses, but which she very much doubts his evidence that none of this money is in fact for his benefits.

45.  These cash withdrawals mainly from the Father’s CCB bank account were indeed quite substantial, usually in amounts between HK$300,000 and HK$400,000 in various months of 2012 (P10/2192 – 2200), totalling more than HK$1.8 million in cash over a 9-month period, all of which he simply explained either as his own expenses or for his China Office operation costs without any documentary evidence from his employer as to the latter, of which Mr Surman submits that the court should take a very dim view of these explanations and conclude that he has access to much more money than he has admitted.

46.  Secondly, Mr Surman argues, the Father’s assertion that the economic downturn in Europe in recent years and flowing through to Asia and as a result has impacted on his company’s business and hence his commission is in fact not borne out by his Inland Revenue Income Tax Assessments over the past 3 years which show indeed an upward trend as to his income in 2009/10 at an average sum of HK$63,644 per month, increasing to HK$95,755 per month in 2010/11, and HK$132,564 per month in 2011/12.    

47.  Above all, Mr Surman submits, the manners in which the Father has thrown money in his legal costs in his continued effort to avoid contributing to his son’s welfare and upkeep, his seeming unconcern about how much he was spending such as keeping an apartment in Causeway Bay, an expensive area in Hong Kong while spending most of his time in Shanghai, his cavalier attitude in testifying in court, and his nonchalant approach to how much he was spending on his lawyers can mean only one thing – that he has a lot more money than he has disclosed.

48.  While it is true that his tax assessments show an upward trend in his annual income from 2009 – 2012, but as pointed out by Ms Yip, they do not necessary show the full and more current picture of all 3 components of his income, and that according to those documentary evidence produced by the Father in these proceedings and in particularly those exhibited to his said 9^th Affidavit, Ms Yip submits that they reveal a much lower income of only about HK$83,000 per month on average for the 12 months preceding to his said affidavit, and a much more gloomy forecast of his future income in particularly as to his commission.

49.  Most of those documentary evidence can be found under exhibit “JBK-54” to his 9^th Affidavit (P10/2092 – 2330) of well over 200 pages, but also in other earlier affidavits filed in the proceedings, of which the more relevant ones are as follow:

(a) His employment contract dated 23^rd February 2002 (P8/1687);

(b) His remuneration records from January to December 2012 and Employer’s Control Sheets (P10/2270 – 2293, 2295 – 2300);

(c) Cash advancements from Employer for office’s expenses verified by their letters (P5/1112, P6/1317);

(d) Bank statements of his Bank of China Account No. 121-721-1-003376-7 (P10/2190 – 2206);

(e) His Tax Returns Notice from issued by Inland Revenue Department (P10/2268 – 2269);

(f) His Employer’s Letter dated 15^th February 2013 clarifying his current income arrangement and their economic outlook for the next 2 years which may impact on his income (P11/2502 - 2503).            

50.  Ms Yip submits that these evidence prove that under examination, the Mother’s suspicions that the Father is earning more than he has disclosed are baseless, that his average income depends on the period of time considered given that his commissions fluctuate, and that the economy and his work market directly impact his commission and often such impact is felt only a year or 2 later. Given his employer’s comment that the economy is not going to augur well in the next two years which will impact on the company’s revenue and hence the staff’s income, the evidence in fact suggests that the Father’s income will instead slope downwards. At any rate, she submits, even assuming the world economy will pick up, there is no guarantee as to what income the Father will reap in what he claims to be the remaining 2 years of his working career given that his work is commission-based.

51.  Furthermore, Ms Yip submits, despite challenges during cross-examination, the Father’s evidence that his income will decrease remains firm and reliable, when he attributed to the statutory restriction the Chinese government has imposed on his visa, and that he will have difficulty obtaining a work visa in future given his age, and if he continues to use a business visa instead, he will be subject to the heavy PRC tax. As a result he was asked by his employer to take up more and more administrative and IT work, which was another reason culminating in his decreased income for 2013.

52.  Whatever the future holds for his income, it must of course first be set against his own expenses before it can be assessed as to how much he can or should contribute for his son, and much has been said about his keeping an expensive apartment in Hong Kong, which Mr Surman argues that he does not need given the fact that he spends most of his time in Shanghai, and that he should have at least move to a cheaper flat away from Causeway Bay in order to economise for his son, as the Mother has done with her own accommodation.

53.  To which Ms Yip submits that his lease began in March 2009 and will not be expiring until March 2014, hence the Father cannot until then break it and hence there is nothing he can do for the time being to cut down on his rental expenses. In any event she submits that it is not unreasonable for him to keep the flat, which is not luxurious, and which he claims to be his home and to house his various possessions, and it is also where he can entertain his clients and acquaintances which is important for his job, and where FX can stay during his access time to him in Hong Kong.

54.  I agree with Mr Surman that the Father in fact had the opportunity to move to a cheaper flat when he renewed the lease in March 2013 after the first part of the trial when it was clear to him of this issue being taken by the Mother, and while I accept his reasons for keeping an apartment in Hong Kong, I also agree that his current one is too expensive for him under the circumstances, but short of breaking his lease now, which is not what I would suggest, it seems to me that there is not many other options available than to wait and see what will happen to his accommodation cost when his current lease expires in 2014.

55.  Much criticisms have also been levelled at him by Mr Surman over the amount of his legal costs and the manner in which he was said to have thrown money at his lawyers in what the Mother believes to be his continued effort to avoid contributing to his son’s welfare and upkeep is described by Mr Surman as breathtaking, and he submits that the Father’s seemingly unconcern and cavalier attitude about how much he was spending on lawyers can mean only one thing – that he has a lot of money and a lot more than he has disclosed.

56.  The same criticism should in fact in my view be also levelled against the Mother for the same way she has spent her legal costs over what seems to me a rather straightforward dispute with a relatively small difference between the parties’ respective proposal referred to above, of which no doubt I will have more to say later in this judgment, but the fact that entrenched parties were so often ready and willing to spend or waste their resources on litigating their disputes so disproportionally does not necessarily mean that they could afford to do so, let alone to show that they must have a lot of money hidden elsewhere, as it has been well observed in this jurisdiction that when relationship broke down, some parties were simply unable to manage or control their emotion or affairs which sadly very often led to such madness as profligacy on legal costs.                  

57.  Nor is the fact that the Father was listed third in his employer’s introduction of consultants in its website (Exhibit “R-2”) necessarily mean that he is the third most important member of the company, or the third highest earner for that matter, or that he is making more money than he has disclosed, as implied by Mr Surman. As pointed out by Ms Yip, “R-2” shows that there are other managing directors in fact listed lower than those members who are not managing directors, hence the fact that the Father was listed third by the company seems to me neither here nor there as far as his income is concerned.

58.  Accordingly, and on the evidence before me including those of the Father under cross-examination at the trial, I am not persuaded that he has concealed any income or money other than what he has already disclosed, and that the Mother’s suspicion that he may have is just what it is, a suspicion which can perhaps be disposed of by asking this question: If indeed he has a lot more income or money than he has disclosed, why did he not simply pay over the few thousand dollars extra that she asks for and just call it a day?

Conclusion

59.  Whatever maintenance this Father is to pay for the support of his son, as noted above the only statutory guideline is that such sum shall be reasonable having regard to his means, which means that it should also be fair between the parties, but to arrive at what is reasonable the court must take into account of all other relevant factors and circumstances of the case, which essentially can be summarised as follows: that the Mother, having given her assurance to the court that she could support her son even without any contribution from the Father in her desire to send the son to boarding school in UK against the Father’s wish that he could not afford to do so, now asks him to contribute at least HK$25,000 per month and to be dated back to her said application.

60.  Having made my findings of the respective financial means of the parties and the needs of FX as above, the essential question to ask must therefore be this: How much then should the Father, now at the age of 63 and on the verge of retirement in the near future and naturally concerned about his own financial needs, be contributing for the support of his son, when the Mother obviously has a comparatively much longer working life ahead of herself and with substantial financial resources from her parents, that the court thinks both fair and reasonable in the circumstances?       

61.  I have no difficulty concluding that the right answer to that is for him to pay as he has proposed HK$20,000 per month on top of meeting additional expenses when on vacation with FX, which is both fair and reasonable in the circumstances of the case, as it is an amount within his means without crippling him financially or causing any difficulty to the Mother who should and can afford to shoulder up a somewhat bigger share of their son’s monthly expenses given her financial resources and her said assurance, and that in view of the various payments already made by the Father for FX since his enrolment into boarding school in UK, of which I understand averaging close to or no less than his proposed sum, it would therefore not be appropriate in my view for it to be dated back to the date of the Mother’s application, but instead to the date of his such proposal, with credit to be given of any payments made since, and I so order accordingly.

62.  Of course it goes without saying that such maintenance may be looked at again or reviewed sometimes next year if necessary when the Father may move to a cheaper apartment, or when his commission situation may become better than he has predicted. It seems also that the parties may have agreed between themselves on certain financial arrangements for their son during his school vacations which do not require my attention or adjudication, and if so, I suggest that those terms be included in the draft order.

63.  As for the question of costs, given the result of my decision, and taking into account of the substantial amount of legal costs already incurred by each party, I do not think that the Mother would in the circumstances want to argue against it, in particularly after the way she had initially framed her claim as to some of the expenses much criticised above, I believe it would be appropriate for each party to bear his/her own costs of the application, which is an order nisi to be made absolute at the expiration of 14 days.

64.  In closing, however, I find it necessary to emphasize here again that sadly this is yet another one of those cases in which the legal costs incurred have become so disproportional to the disputes between the parties that it is indeed maddening, all the more so with the relatively long interval between the trial and its conclusion in this case during which the parties were able to continue to negotiate but that at the end they instead chose to incur a further HK$170,000 in combined legal costs rather than to further compromise what boiled down to be a monthly difference of a mere few thousand dollars, and that even something like half of that amount of further legal costs would most likely have settled their remaining dispute over backdating the Father’s maintenance. The madness of all these is indeed, borrowing a word from Mr Surman, breathtaking, and for which neither party deserves sympathy but only criticisms. Nevertheless, it remains of course my gratitude to their counsel for their valuable assistance rendered to the court throughout the trial.

Ms Anita Yip and Ms Yu-Wing Man instructed by M/S Lau, Wong & Chan for the Applicant.

Mr Giles Surman instructed by M/S Hampton Winter and Glynn for the Respondent.