Re A

HCMP 2728/2017

[2020] HKCFI 493

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2728 OF 2017

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JUDGMENT (1)

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I. INTRODUCTION

(a) Overview

1. Costs have become a defining feature of modern civil litigation. In deciding whether to pursue a claim, the parties and their lawyers have to assess the substantive merits as well as the economic viability of the claim. This not only affects the parties but also has impact on the civil legal system. There has been concern that legal rights may become illusory if they cannot be enforced as a result of the economic cost of litigating a claim.[1] Some jurisdictions have embraced third party funding for bringing proceedings (ie provision of capital by an unrelated funder, usually on non-recourse basis, to finance all or part of the fundee’s litigation costs in return for a portion of any financial recovery) to address such perceived concern. But such development has excited debate or even controversy (eg fear of exploitation of impecunious litigants and concern over commodisation of litigation to the detriment of proper administration of justice). It is not easy to elicit clear principles relating to third party litigation funding as common law jurisdictions differ widely on how to deal with such practice and market.

2. In Hong Kong, third party funding is still nascent and uncertain. The present proceedings foray into this novel area of the law to search for a uniquely local approach (be it legislative, regulatory and/or judicial) to resolve the tension between (a) the alleviation litigation funding provides for a civil justice system that some say is too expensive and (b) the caution against maintained litigation for protection of the integrity of the court’s process. I start with a brief summary of the background facts.

(b) Brief background

3. The Husband and the Wife were married in 2002. In 2015, the Wife petitioned for divorce in the Family Court (“FC”). Among the issues in the underlying matrimonial proceedings (“Matrimonial Proceedings”) were their ancillary relief claims. In 2016, the Husband applied under section 17 of the Matrimonial Proceedings and Property Ordinance Cap 192 (“MPPO”) to set aside certain alleged asset transfer by the Wife to her elder brother (being the 1^st intervener in the Matrimonial Proceedings, “Brother”) (“S17 Application”). There was dispute over the beneficial ownership of the subject asset and income therefrom with the Husband arguing (and the Wife and the Brother disagreeing) that such asset/income be regarded as matrimonial property. The FC granted case management directions for the S17 Application, which was subsequently fully pleaded by the Husband (as claimant) and by the Wife (as the defendant) and the Brother (as the 1^st intervener).

4. In 2016, the Husband applied to the FC for a litigation funding order against the Wife for his legal costs in respect of the S17 Application. Later that year, the Husband applied for legal aid. The Husband’s applications for legal aid and litigation funding order were refused in 2016 and 2017 respectively. In 2016 the Wife also applied for maintenance pending suit against the Husband for herself and their children, but in 2017 the FC refused such application.

5. In 2016, the Brother applied to transfer the S17 Application to the Court of First Instance (“CFI”). In 2017, the FC ordered such transfer. A pre-trial review of the S17 Application was scheduled to be heard by a CFI judge (“Family Judge”) on 5 March 2020, which hearing has since been adjourned.

6. The Husband claimed that despite his wish to proceed with the S17 Application, his financial resources had been depleted and he had exhausted all avenues of funding, so his only viable financial option for pursuing the S17 Application (which he claimed to be meritorious) was to obtain third party litigation funding. The Husband was eager to seek such funding from an overseas commercial/professional litigation funding company (“Funder”), and for such purpose to obtain prior court sanction of the proposed funding arrangements.

II. PRESENT PROCEEDINGS

7. In September 2017, the Husband, who anticipated making an application to the CFI for pre-clearance approval of third party funding for his legal costs in respect of the S17 Application, applied ex parte to the FC for leave to use the pleadings/papers...