YSG (YX) v LYAG [2024] 2 HKC 201, [2023] HKCA 1319

Richard Todd KC represented the respondent in YSG (YX) v LYAG [2024] 2 HKC 201, [2023] HKCA 1319.

The Family Court determined the ancillary relief proceedings after trial by rejecting the petitioner’s claim that there was allegedly a significant shortfall of assets when comparing the total must have earned up to the point in time when the parties finally separated, less the estimated family’s expenses during the marriage, with the respondent’s disclosed assets. At trial, the petitioner adduced no expert evidence on forensic accounting. The judge awarded the petitioner 50% of the parties’ total matrimonial assets and made a costs order nisi that there be no order as to costs of the ancillary relief proceedings. The respondent applied successfully to vary the costs order such that the petitioner was ordered to pay 20% of the respondent’s costs of the ancillary relief proceedings, but the judge deprived the respondent 50% of his costs of the variation application as he was not fully successful. The petitioner applied to the Court of Appeal for leave to appeal against the ancillary relief judgment. At the same time, the petitioner applied to adduce fresh evidence, namely, expert reports containing forensic analysis of the parties’ bank accounts and Duxbury calculations, on the intended appeal against the ancillary relief judgment. The parties also applied for leave to appeal against the judge’s costs order.

Held, unanimously, dismissing all applications:

Per Cheung JA

• (1) The petitioner’s applications to adduce fresh evidence were procedurally misconceived. An application for leave to adduce new evidence could not be entertained until after leave to appeal had been granted. The petitioner could only rely on fresh evidence in support of her leave to appeal application if she could demonstrate that it was reasonable arguable that the Ladd v Marshall criteria were satisfied. Man Lin Heung, the administratrix of the estate of Man Kwai Yin v 梁根林 & Ors [2019] HKCA 846 ; [2019] HKCU 2985 followed (paras 29-30).

• (2) It was not reasonably arguable that the petitioner could overcome the first of the Ladd v Marshall criteria, ie the proposed expert evidence could not have been obtained with reasonable diligence for use at trial. In fact, the contrary was plainly true. At the pre-trial review, the judge did not grant the application for leave to adduce the forensic report and Duxbury calculation. This was accepted by the petitioner’s solicitors in the correspondences. The petitioner could not on one hand elect to proceed with the trial without such expert evidence in the hope that her counsel would be able to persuade the judge to reach a favourable conclusion on submissions alone but, when met with an adverse judgment, seek to overturn the entirety of the trial findings by contending on appeal that the judge ought to have reached a contrary conclusion if the proposed expert evidence was taken into account. The petitioner’s contention that she was short of fund to obtain the experts reports was also rejected (paras 31-35).

• (3) None of the petitioner’s intended grounds of appeal was reasonably arguable. There was no basis to disturb the judge’s rejection of the petitioner’s ‘black hole’ theory on the ground that there was ‘no proper evidential basis’. It was incumbent on the petitioner to properly put forward evidence, including expert evidence where necessary, to substantiate her allegations. Her failure to do so, including her failure to seek expert directions at the appropriate juncture, would mean that her case was not made out. The petitioner’s theory was also incompatible with the fact that the parties held joint bank accounts during their marriage into which the respondent’s income was paid and out of which expenses were met. Given that the introduction of fresh evidence was disallowed, there was no basis to overturn the judge’s acceptance of the Duxbury figure as proffered by the single joint expert. It was clear that the judge accepted the assessment and reasoning of the single joint expert based on her adoption of the ‘low risk profile’. The judge was entitled to do so for the reasons he gave especially in the absence of any contrary expert evidence. The petitioner’s complaint relating to the judge’s comments on her earning capacity was irrelevant as the judge did not take into account her earning capacity in his distribution of the matrimonial assets. The judge was entitled to order the sale of the Singapore properties as these properties were clearly joint matrimonial assets having acquired during the marriage with the respondent also being responsible for the mortgage repayment after they ceased to be rented but when the rent was previously used to fund the mortgage repayment. Lastly, the petitioner had not discharged her burden in showing that the judge’s findings on the children’s needs was impugnable on any of the recognised grounds. The petitioner’s application for leave to appeal against the ancillary relief judgment was refused (paras 36-42).

• (4) Neither of the petitioner’s nor the respondent’s proposed challenge against the costs order was reasonably arguable. The petitioner’s response to the respondent’s settlement offers could not be said to be unreasonable, given the time constraints the petitioner and her legal team were under at the time. In relation to the respondent’s reliance on the sanctioned offer regime in O 22 of the Rules of the District Court (Cap 336H) , without deciding, the Court tended to agree with the judge that this was not a straight-forward application of O 22 r 23. Despite the general application of O 22 to matrimonial proceedings, it was not readily apparent as to who was the ‘plaintiff’ and who was the ‘defendant’ in the instant case for the purposes of applying the rules. Both parties had made claims for ancillary relief. The judge was entitled to order the petitioner to bear 20% of the respondent’s costs on indemnity basis given her unreasonable persistence in pursuing the ‘black hole’ theory which resulted in the trial being unnecessarily prolonged and additional costs being incurred. The judge’s exercise of discretion could not be impugned. The judge was also entitled to deprive the respondent of 50% of his costs for the variation application. The respondent did not fully succeed in obtaining what he sought i.e. the petitioner shall pay him the entirety of his costs for the ancillary relief proceedings. AVT v VNT [2016] 3 HKC 70 ; [2016] 1 HKLRD 821 and LLC v LMWA [2019] HKFLR 74 ; [2019] 2 HKLRD 529 ; [2019] HKCA 347 considered (paras 44-55).

[The above is excerpted from the headnote to the report in HKC.]