Clk v. Yfms and Others
Read the full judgment text of FCMC 8081/2014 on BabelCite. This Family Court judgment was delivered on 6 October 2015 before Deputy District Judge Yim.
Matrimonial proceedings – Maintenance Pending Suit – Legal costs contribution – Currey v Currey – HJFG v KCY – Wife unemployed – Husband has sufficient funds – Order for contribution – Matrimonial Proceedings and Property Ordinance Cap 192 s.3 – District Court – Divorce – Ancillary Relief – Wife's funds depleted by legal costs – Husband's equity sufficient – Reasonable to order contribution – Costs of application awarded to wife – MPS settled at HK$5,000 per month – Legal costs contribution of HK$600,000 ordered – 12 monthly instalments – Wife's remaining savings insufficient for FDR costs – Husband's savings sufficient to meet obligations – Wife's investment property not to be sold for legal costs – General principle applies to costs of application – Counsel certificate for costs – Taxed if not agreed – Judgment delivered on 6 October 2015 – Deputy District Judge Yim presiding – Application heard on 21 September 2015 – Parties agreed on MPS amount – Legal costs contribution remaining issue – Wife's Form E and Affirmations considered – Husband's Form E and Affirmations considered – Financial statements of companies reviewed – No liquidity problem for husband's companies – Wife's rental income and MPS for daily expenses – Wife's bank balance decreased from HK$1,296,933 to HK$438,306 – Husband's equity investment HK$7mils – Wife's investment property net worth HK$4.8mils – Wife's legal costs up to application HK$700,000 – Wife's estimated costs up to FDR HK$1mils – Husband's estimated costs up to FDR HK$50,500 – Court satisfied husband should contribute – Order nisi to be made absolute in 14 days – Costs incidental to present application – Counsel certificate required – Taxation if not agreed – Parties failed to file updated Form H before hearing – Updated Form H filed during hearing – Wife's estimated costs Part 1 HK$1,092,400 – Wife's estimated costs Part 2 HK$1mils – Husband's estimated costs Part 1 HK$537,000 – Husband's estimated costs Part 2 HK$50,500 – Wife's savings not sufficient for legal costs – Husband's savings sufficient for financial obligations – Wife's standard of living lower than husband's – Wife's investment property used for income generation – Sale of property unreasonable for funding trial – Preliminary issues not limited to property claimed by R2 – Main focus on property claimed by R3 and R4 – R2 is overseas company – Security for costs against R2 may be obtained – Security not available before final determination – Husband's financial responsibilities increased – Husband's monthly expenses exceed income – Husband to use savings for daily expenses – Husband's savings sufficient for 12 months expenses – Wife's legal costs contribution reasonable – Order for contribution made – Husband to pay wife's costs of application – General principle applies – Costs to be taxed if not agreed – Counsel certificate required – Order nisi to be made absolute in 14 days – Judgment delivered on 6 October 2015 – Deputy District Judge Yim presiding – Application heard on 21 September 2015 – Parties agreed on MPS amount – Legal costs contribution remaining issue – Wife's Form E and Affirmations considered – Husband's Form E and Affirmations considered – Financial statements of companies reviewed – No liquidity problem for husband's companies – Wife's rental income and MPS for daily expenses – Wife's bank balance decreased from HK$1,296,933 to HK$438,306 – Husband's equity investment HK$7mils – Wife's investment property net worth HK$4.8mils – Wife's legal costs up to application HK$700,000 – Wife's estimated costs up to FDR HK$1mils – Husband's estimated costs up to FDR HK$50,500 – Court satisfied husband should contribute – Order for contribution made – Husband to pay wife's costs of application – General principle applies – Costs to be taxed if not agreed – Counsel certificate required – Order nisi to be made absolute in 14 days – Judgment delivered on 6 October 2015 – Deputy District Judge Yim presiding – Application heard on 21 September 2015 – Parties agreed on MPS amount – Legal costs contribution remaining issue – Wife's Form E and Affirmations considered – Husband's Form E and Affirmations considered – Financial statements of companies reviewed – No liquidity problem for husband's companies – Wife's rental income and MPS for daily expenses – Wife's bank balance decreased from HK$1,296,933 to HK$438,306 – Husband's equity investment HK$7mils – Wife's investment property net worth HK$4.8mils – Wife's legal costs up to application HK$700,000 – Wife's estimated costs up to FDR HK$1mils – Husband's estimated costs up to FDR HK$50,500 – Court satisfied husband should contribute – Order for contribution made – Husband to pay wife's costs of application – General principle applies – Costs to be taxed if not agreed – Counsel certificate required – Order nisi to be made absolute in 14 days
Legal issues: Legal costs contribution · Costs of the application
Outcome: Application for MPS settled at HK$5,000/month; Legal costs contribution ordered at HK$600,000; Costs of application awarded to wife.
Cites 3 cases
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FCMC 8081 / 2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 8081OF 2014 ----------------------------
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----------------------- J U D G M E N T ----------------------- Introduction 1.This is an application by the Petitioner wife for maintenance pending suit (MPS) in the sum of HK$20,000 per month from December 2014 pursuant to s.3 of the Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) and provision of on-going legal costs contribution in sum of HK$100,000 per month. The wife offered to settle with capital advancement in sum of HK$2.2mil to be set off upon final determination of her ancillary relief. 2.The 1st Respondent husband initially opposed the wife’s application entirely. During the argument the husband offered to pay the wife MPS from December 2014 at the rate of HK$5,000; the wife upon further consideration accepted the husband’s offer. This left the provision of legal costs the remaining issue between the parties. The husband asked the court to dismiss the wife’s application for legal costs contribution. The husband considered that the wife would be able to raise fund for her legal costs and that he needed to preserve his equity balance for business operation and therefore not able to contribute the wife’s legal costs. Background 3.The parties were married in May 1999. There was dispute as to the nature of their marriage, every married couples married for different reasons and expectations, it was agreed that for the present application this was not relevant. 4.The husband was a businessman, running his own and the family business; the wife was not working and received regular cash payment from the husband for her maintenance. Around late 2005, the husband and his father (the 3rd Respondent (R3)) expanded the family business and incorporated the 2nd Respondent (R2) the DC (Macau) Ltd, the wife was recorded as an employee of R2 since then and received her regular cash payment HK$8,000 (HK$7,600 net after MPF contribution) maintenance from the company instead. R2 paid the wife up to November 2014. 5.The wife filed a divorce petition on ground of unreasonable behaviour on 20 June 2014. The husband issued a summons for leave to file his defence and cross-petition on 2 years separation out of time in August 2014. Later the parties came to terms, the divorce petition was amended and the decree nisi was subsequently granted on 3 March 2015. 6.The parties exchanged their Form E and Questionnaires before their first 1st Appointment Hearing on 14 October 2014. They were directed to file and serve their respective Answers in 28 days and the matter was adjourned to 30 December 2014. Time being the regular monthly cash payment mentioned above received by the wife was stopped. 7.Further, in December 2014, R2, R3 and the 4th Respondents (the mother of the husband) took out joinder summons respectively to intervene and claimed interests in two landed properties. The joinder summonses were heard on 30 December 2014, the intended interveners were directed to file their supporting affirmations in 28 days and the matter was adjourned to 26 March 2015. 8.Leave was granted to the intended interveners to join as Respondents in the proceedings, further directions were made and the preliminary issue as to the beneficiary interests of the two properties in question was adjourned to 15 June 2015 for pre-trial review(PTR). 9.The parties were not able to comply the directions within time and made written application for extension of time. The PTR was vacated and adjourned to a date to be fixed by the parties with consultation of the counsel’s diaries; and the parties were directed to proposed directions to pleadings for the preliminary issue by 19 June 2015. 10.Further directions for the PTR were made by consent on 23 July 2015. Points of claim were filed on 18 August 2015, the wife and the husband’s Points of Defence were yet to file at time of the present application. According to the parties’ agreed directions, where no interlocutory application required to be heard, the earliest date for the PTR would be in 7 months after the filing and exchange of their witness statements. 11.The parties failed to file their respective up-dated Form H before the hearing and prepared and filed their up-dated Form H during the hearing upon the court direction. 12.During the hearing, the parties came into agreement that the husband is to pay monthly MPS at the rate of HK$5,000 for the wife’s daily expenses from December 2014, the MPS for the period between December 2014 and September 2015 in the sum of HK$50,000 to be paid into the wife’s nominated bank account in 14 days and thereafter from 1 October 2015 and by the first date of the following months, the husband is to deposit the monthly MPS at the rate of HK$5,000 into the wife’s nominated bank account until further court order. Issue in dispute 13.The outstanding issue is legal costs contribution. The wife’s case being that because of her ongoing legal costs and daily expenses, her deposit and equity investment has been decreased substantially from HK$1,296,933 as appeared in her Form E to about HK$438,306 by time of her 4th Affirmation dated 19 August 2014. Despite the husband said his equity has decreased substantially due to payment of legal costs and fluctuation in the stock market, the husband still has about HK$7mils worth of deposit and equity investment. 14.By her 2nd Affirmation dated 27 April 2015, the wife anticipated she would require about a further HK$100mils legal costs after the present presentation up to FDR, which would be at least a year away at the earliest. The wife said she was running out of funds, she was not in a position to raise any mortgage in funding her legal costs, and there was no reason why public funds should be expended to fund her litigation when there were ample resources available within family funds. She requested the husband to provide legal costs contribution to her at the rate of HK$100,000 per month. 15.The husband considered that the wife still had sufficient financial means and if necessary, to raise fund from her sole name investment property. And it would not be fair nor justified to order the husband to pay any legal costs contribution. Thus the outstanding issues being how should the legal costs of the wife be provided with, and how should the costs of the present application be determined? The Law 16.The test on legal costs provision is laid down in the case of Currey v Currey [2006] ALL ER (D) 218 (Oct) by Wilson LJ: “The initial overarching inquiry was into whether the applicant for a costs allowance could demonstrate that he or she could not reasonably procure legal advice and representation by any other means. Thus to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services. Furthermore,… she had also to demonstrate that she could not reasonably procure legal services by the offer of a charge upon ultimate capital recovery. … The court also would need to be satisfied that there was no public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings.” 17.The guiding principles in Curery v Currey on legal costs provision were recently considered by the Court of Appeal in HJFG v KCY [2012] HKLRD 95, the Court of Appeal held that :
18.Further the Court of Appeal in HJFG v KCY referred to the fundamental reasoning that had been adopted by the Court of Appeal in KGL v CKY[2005] 1 HKFLR 215:
Discussion The husband 19.The husband is a businessman, he has shareholding of four private limited companies with similar name as R2. According to the husband’s Form E dated 22 September 2014 the total value of all his shareholding of these private companies amounted to HK$7.46mils. He is residing at the parties’ joint name property with his girlfriend and their child. The husband claimed in his Form E that he has 100% beneficial interest of this joint name property and the net value of the property was HK$13.25mils. This joint name property is the property claimed by R3 and R4 that it is held on constructive trust for them by the husband and wife. 20.There is another Macau property held in the husband’s sole name. According to the husband’s Form E, this property is heavily mortgaged with nil net value. The husband stated in his Form E that he held this property on trust for R2 and this property is the one claimed by R2 that it is held on resulting trust for it by the husband. 21.Apart from the abovementioned assets, according to his Form E, the husband has had in total about HK$3.82mils deposit in his various bank accounts and HK$5.22mils equity investment in his various investment accounts. His monthly income was about HK$50,000 while his monthly expenses were about HK$82,000. The husband also claimed he owed his father R3 a sum of HK$2.5mils being 50% share capital of R2 being paid up of R3, yet he was not able to provide any agreement/document for such allegation. 22.Mr Yip for the husband acknowledged that at time of the application the husband has had about HK$7mils worth of deposit and equity investment but submitted that the husband was required to keep his liquidity to facilitate his business. But according to the financial statements of the four private limited companies mentioned above, these companies did not have liquidity problem and according to the husband’s 2nd affirmation dated 14 July 2015 the decrease in his cash deposit and stock portfolio from HK$9mils to HK$7mils was due to payment of legal costs (by July 2015 his legal costs were around HK$500,000) and fluctuation in the stock market, and his financial responsibilities including provide financial provision to his parents, his girlfriend, their child and maintain good relationship with contractor was increased to HK$117,543. 23.It appears that since the filing of Form E, the husband has increased his overall monthly insurance premia from HK$4,676 (his Form E in September 2014) to HK$17,220 (his 2nd Affirmation in July 2015), new items including car expenses HK$4,600, domestic helper HK$4,000 and financial provision to his girlfriend’s parents HK$5,000 were found in his 2nd Affirmation, all these amount to about HK$26,000, together with HK$6,000 to his another illegitimate child and increase financial provision to his girlfriend and their child explained the increase since the filing of his Form E in September 2014. 24.As stated above, all the private limited companies concerned did not have liquidity problem, and there is no evidence that any of them would have liquidity problem, thus any expenses spent on maintaining good relationship with contractors should be business related and be reflected in the respective company’s account. With the present evidence, I do not accept that the husband would require the HK$7mils to facilitate his business. There was no mention of any increase of monthly income; apparently according to the husband’s case, he would have to resort his savings for his daily expenses, even the husband is to pay the increased monthly expenses that exceed his income out of his savings, it would be at most around HK$720,000 per annum. The wife 25.The wife has been recorded as an employee of R2 since around 2005 and was paid HK$8,000 per month up to November 2014, otherwise she was a housewife during the marriage. The wife is not working and she was used to live on the HK$8,000 from R2 and the rental income from her sole name investment property. It was the husband’s case that the wife has always been living a moderate standard of life. It was agreed during the hearing that the net monthly rental was about HK$9,000 and the parties agreed to settle the MPS for the wife’s monthly expenses at the rate of HK$5,000 per month and back dated from December 2014. 26.The wife is residing at her parental uncle’s property alone since 1994 and she is only required to pay the rates, government rent, management fee and utilities of the property, the total amount being HK$1,390 (the wife’s Answer dated 7 November 2014). According to the wife’s Form E dated 25 July 2014 she jointly owned the husband’s residence property and solely owned the abovementioned investment property, the net value of the investment property was about HK$4.8 mils. 27.According to the wife’s Form E, apart from the landed properties, her total bank balance was about HK$820,000, and later she confirmed she failed to disclose a Shanghai Commercial Bank Account, the balance as at 23 July 2014 was HK$143,548, and two Macau bank accounts, the balance as at 25 July 2014 were HK$141,653 and HK$169,660. By her 2nd Affirmation the wife corrected her total bank balance as at 25 July to be HK$1,296,933. By her 4th Affirmation dated 19 August 2015, the wife said her total bank balance has been decreased to HK$438,306. According to the wife’s 2nd Affirmation, her legal costs up to the present application was about HK$700,000, thus the decrease in her equity was mainly due to her legal costs. 28.By her 2nd Affirmation the wife anticipated her legal costs after the present application up to the FDR would be about a further HK$1mils, being HK$150,000 for security for costs as against the R2 (an overseas company), HK$750,000 for the trial on preliminary issues and HK$150,000 for the FDR hearing. During the hearing there was discussion as to whether the wife has paid the HK$150,000 anticipated legal costs for the present application, and when the court wanted to refer to the parties’ respective Form H, it was then discovered that they were yet to file their respective up-dated Form H. 29.By the wife’s up-dated Form H the estimated costs incurred up to and including the current hearing was HK$1,092,400 (Part 1 costs) which is about HK$400,000 more than that estimated in April 2015 where the wife has filed her summons with support affirmation (her 2nd Affirmation) for her application for MPS and legal costs contribution and the estimated costs after the current hearing up to FDR remained at about HK$1mil (Part 2 costs). The substantial increase of HK$400,000 in the Part 1 costs is difficult to comprehend. However, we are only concerned with the Part 2 costs for the present application. Legal costs contribution 30.The trial on the preliminary issue was initiated by the R2 to R4. The net worth of the property related to R2 was said to be nil by the husband, however, the net worth of the property related to R3 and R4 was said to be HK$13.25mils by the husband, which is about 40% of the total assets held by the parties under their names. The property claimed by R3 and R4 was jointly owned by the husband and the wife. The husband claimed to have 100% beneficial interest of this property in his Form E though he changed his position subsequently. 31.Mr Yip did not attempt to dispute the legal costs estimated by the wife as per her 2nd Affirmation. But Mr Yip argued that since R2 is an overseas company, the wife would highly likely to obtain an order for security for costs against R2 in due. Even this is the case, I agree with Mr Butt for the wife that unless the wife has sufficient fund, she would not be able to get proper legal representation and any security paid by R2 would not be available to the wife before the final determination of the preliminary issues. With a property having nil net value, whether R2 would continue its case is yet to see. However, the preliminary issues are not limited to the property claimed by R2, the main focus obviously is on the property claimed by R3 and R4. 32.The wife is currently unemployed but she has an investment property which generates net monthly rental income at the rate of HK$9,000, together with the agreed MPS at the rate of HK$5,000, the wife has HK$14,000 per month at her disposal. Even the husband has acknowledged that the living standard of the wife is much lower than that of his. According to the wife’s 2nd Affirmation, she has spent at least HK$700,000 on legal costs which is about 55% of her equity in July 2014. Her remaining HK$438,000 is not enough to cover her legal costs up to the FDR. 33.Although the wealth and the standard of living of the parties in the present case is nowhere close to the family in HJFG v KCY [2012] 1 HKLRD 95, the husband does in control of the majority of the family assets and has HK$7mils equity at his disposal where the wife requires financial provision from the husband to meet her monthly expenses. 34.The wife does own an investment property with a net worth of HK$4.8mils, and there is no evidence that the wife has applied for legal aid; but I consider that with this investment property, the chance of obtaining legal aid is slim. The husband instead argued that the wife could raise fund from her investment property for her legal costs, but he did not go further to say how she would be able to do so? 35.The wife is unemployed, she relies on the rental income and the MPS for her daily expenses; she simply is not in a position to secure a mortgage in the present circumstances. A sale of the property would appear to be the only option, but this property has along been used for income generation to meet her daily expenses. In my view in the present circumstances, it would be unreasonable to make her to sell her only income generating property in funding the trial of the preliminary issues and the ongoing legal costs up to FDR is part of her reasonable needs. 36.By his up-dated Form H the husband estimated his legal costs up to the current hearing to be HK$537,000 (most of it has been paid up) and that after the current hearing up to FDR would be HK$50,500. As mentioned above, even according to the husband’s case, on top of his monthly income, he would at most be required to use HK$720,000 from his saving to meet his monthly expenses in the next 12 months. In my view the husband’s bank deposit and equity investment together with his earning capacity are more than sufficient to meet all his potential financial obligations. Conclusion 37.Mr Yip argued that the wife still has a total of HK$438,000 in her bank accounts, this sum is available for her legal costs thus before she used up all her savings, the husband should not be called upon to contribute her legal costs. However, the wife’s remaining saving is obviously not sufficient to meet all her undisputed estimated legal costs up to FDR, it would cause unnecessary legal costs should the wife split up her application and apply MPS for her daily expenses only and make a separate application for legal costs contribution at a later stage in the present circumstance. 38.However, in considering the wife’s application for legal costs contribution, the amount of her remaining savings would be taken into account. The wife would require about HK$600,000 more to meet her undisputed estimated legal costs up to FDR. For the reasons mentioned above, the FDR would be at least in 12 months time. 39.After considering all the relevant circumstances, I am satisfied that it is reasonable for the husband to contribute HK$600,000 towards the wife’s ongoing legal costs as part of her MPS and the sum is to be paid by 12 monthly instalments at the rate of HK$50,000 from October 2015 until the HK$600,000 is paid in full. The first payment is to be paid in 14 days, thereafter the remaining MPS for legal costs contribution is to be paid together with the agreed MPS for daily expenses at the rate of HK$5,000. Costs 40.I considered the general principle should apply, and the husband should pay the wife’s costs for the present application. I will make an order nisi to be made absolute in 14 days time that the wife shall have the costs incidental to the present application, with counsel certificate, to be taxed if not agreed.
Mr Anthony Butt instructed by Messrs. K.Y.Woo & Co for the Petitioner Mr Timmy CH Yip instructed by Pansy Leung Tang & Chua for the Respondent |
Cases cited in this judgment
Further hearings and rulings under FCMC 8081/2014