HKFC 188
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES NO. 6310 OF 2015
||AB aka ABW
||Deputy District Judge Bruno Chan in Chambers.
|Date of Hearing:
||27 September 2018.
|Date of Decision:
||30 October 2018.
(Costs & Leave to Appeal)
1. On 8 May 2017, after a 9-day trial on the Petitioner Wife’s application for ancillary relief, and on the basis of equal sharing of the matrimonial assets which I found to be broadly about HK$106M between the parties excluding certain unvested benefits from the Respondent Husband’s employment package for the period of 2014 – 2016 (“A3 Shares”) as CEO of A3, a multi-international insurance company publicly listed in London, I awarded the Wife HK$53M for her half share of those assets plus a Wells sharing of the A3 Shares as and when they vest and become saleable in a reducing percentage at 50%, 25% and 12.5% over the next three years on a clean break basis between the parties, and that the Husband shall continue to be wholly responsible for the all the expenses of their eldest daughter then at university in UK, and to pay the Wife for each of their two younger daughters residing with her and under her care HK$33,000 per month as child maintenance and HK$31,333 per month for their respective share of accommodation costs in Hong Kong plus their school fees and education expenses.
2. At the conclusion of the trial I acceded to the parties’ request to reserve the question of costs as it was clear that it would be disputed every bit as acrimonious as they did in their ancillary relief trial.
3. The parties now seek costs against each other, the total combined amount of which incurred up to the trial exceeded HK$42M, of which I described in my judgment as a truly mind-boggling amount incurred just over two years of litigation and staggeringly disproportionate even to the highest case that could be put forward by the Wife as to the total matrimonial assets. On the part of the Wife there is also an application for leave to appeal against my judgment.
4. Before proceeding to deal with the applications, I find it relevant to recite the introduction which commenced my said judgment to demonstrate the enormity of the parties’ conflicts and more pertinently how they had conducted their litigation with such disregard to the fourth principle painstakingly made by the Court of Final Appeal in that landmark decision of LKW v DD  13 HKCFAR 537 for divorcing parties to refrain from engaging in costly and often futile retrospective investigations of the failed marriage to the depletion of the parties and the courts’ resources, notwithstanding the many warnings made by this Court to these parties long before the trial, and for which they blamed, and apparently still do, wholly the other side of being guilty of such faults.
5. The introduction of my said judgment was as follows:
“1. This is the ancillary relief application of the Petitioner Wife, now aged 49, against the Respondent Husband now aged 50, upon the dissolution of their 20-year marriage essentially for an equal sharing of their matrimonial assets, of which she has put in excess of HK$150M before taking into account of what she believes to be very substantial unvested shares and benefits under the Husband’s employment package as CEO of A3, a multinational insurance company publicly listed in London, for the period of 2014 to 2016 which according to her would be worth as much as another HK$56M and would therefore bring the total assets for sharing to about HK$200M, and for monthly spousal maintenance pending full payment of her share of those benefits as and when they became vested by the end of 2019, as well as proper financial provisions for their 3 daughters now aged 18, 15 and 12 respectively.
2. The Husband however insists that this is a needs case instead of a sharing case, with the needs of both parties to be catered for by both of their own earning capacity and their marital assets which he puts much less at just over HK$100M excluding those unvested benefits under his employment earned after their separation, according to him in January 2013, as post-separation accruals, upon which the yardstick of equality shall apply to achieve a clean break situation, and with the interests of their children as the main ongoing priority and whom he will continue to maintain generously.
3. Clearly at the heart of the parties’ dispute is the huge gulf in their inclusion and valuation of the matrimonial assets in their respective Schedule of Assets, in particularly as noted above over the Husband’s potential remuneration and benefits under his appointment as CEO of A3 in December 2012, whether such benefits including his long term incentive plan, bonus schedule, shares options and pensions under his employment collectively called the A3 Benefits should be treated as post-separation accruals and hence according to the Husband excluded from the matrimonial assets but disputed by the Wife who insists that their marriage did not end until much later in about May 2014, or whether such benefits should all be taken into account for the purpose of sharing as proposed by the Wife, and if so in what proportion or amount and when they should be paid.
4. There are of course also many other issues such as those over the Wife’s own earning capacity and her future inheritance from her parents of which the Husband believes to be substantial, or as to various cash transactions made by the Husband prior to and after separation including more than US$1M to his parents which the Wife argues should be added back as unjustified or unaccounted for by the Husband, or the exact date of their separation which according to the Husband will be relevant to any sharing of his post-separation accruals, as well as litigation conduct raised by both sides with the Wife accusing the Husband of failure to make full and frank disclosure as to his A3 benefits as well as his many other dealings in various investments and trust assets, and as a result has unnecessarily and unfairly added to their legal costs, while the Husband blames her for having “lost sight of the wood for the trees” by insisting identification, auditing and then division of almost every last cent accumulated or spent during their marriage, and for being obsessed with the minutiae and an unquenchable thirst for information however unnecessary and unproductive through the court which has been unduly difficult, prolonged and expensive.
5. Expensive indeed, as their combined legal costs, I am told, have exceeded HK$42M in total, a “horrendous” amount as described by the Husband, and in my view a truly mind-boggling amount incurred in just over two years of litigation with no other major battle ground between the parties than their financial disputes, and staggeringly disproportionate even to the highest case that can be put forward by the Wife as to their total assets, of which the parties have included in their respective Schedule of Assets of more than 140 items which were updated and valuated constantly throughout the proceedings, and the fact that the trial bundles had totalled 19 with almost 7000 pages of financial materials and information, with almost as much materials amassed in correspondence between solicitors in their own correspondence bundles, not to mention transcripts of numerous conversations between the parties taped by the Husband during the marriage, while both parties had seen fit to retain separate legal teams in London as well including senior silks, all of which had no doubt combined to bring their legal costs to such an insane amount, of which no doubt I will have more to say later in this judgment, but meanwhile it would be necessary to first set out the relevant background of the marriage which are by and large non-controversial between the parties save for the exact date of their separation and the circumstances surrounding it.”
6. At the conclusion of my judgment, I also gave my following view about the costs of the proceedings in the hope that the parties might be able to finally bring closure to their litigation:
“289. I have been asked by both parties, for reasons apparent above, to reserve my decision on the costs of the ancillary relief proceedings so that they can run argument for costs against the other at some other date upon the delivery of this judgment, which I shall do but nevertheless propose to give some preliminary view on that issue in the hope of saving the parties further time and costs, which is that it would seem to me not unfair or inappropriate that there be no order as to costs including those reserved as a result of my findings and overall decision, so as to enable the parties to finally bring closure to their sad saga and financial disaster and to let go of no doubt the greatest regret in each of them of what they have lost in this litigation which is not just those HK$42M in costs, and so that they may move on with their new life and more importantly the future upbringing and education of their three children.”
7. That was sadly not to be, and so onto my consideration of their applications, starting first with the Husband’s reasons for costs against the Wife.
Husband’s Application for Costs
8. The Husband’s claim for all the costs of the ancillary relief proceedings including those reserved by the FDR Judge is essentially on the basis that the Wife’s final award under my judgment even taken into account of her share in the A3 Benefits has failed to exceed any of his 6 Calderbank offers made to her at various stages of the proceedings...