Twf v. Hwkr
Read the full judgment text of FCMC 16534/2015 on BabelCite. This Family Court judgment before Deputy District Judge D. Cheung.
Matrimonial Causes – Maintenance Pending Suit – Litigation Funding – Currey Test – Marital Standard of Living – Reasonable Needs – Ability to Pay – District Court – FCMC 16534/2015 – Wife applied for MPS and legal costs contribution – Court assessed needs against marital standard of living and husband's means – Husband's financial disclosure scrutinized – Currey test satisfied despite pending legal aid application – Husband deemed able to pay from income and assets – MPS ordered at HK$61,000 per month – Legal costs contribution ordered at HK$50,000 per month until FDR – Costs of summons awarded to wife.
Legal issues: Maintenance Pending Suit Amount · Litigation Costs Contribution · Litigation Costs Amount · Husband's Ability to Pay · Effective Date of Order
Outcome: MPS and litigation funding granted; costs awarded to wife.
Cites 3 cases
IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 16534 OF 2015 ------------------------
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----------------------- J U D G M E N T ------------------------ 1.This is a hearing of the petitioner wife’s (hereinafter called “the wife”) application for her maintenance pending suit and litigation funding against the respondent husband (hereinafter called “the husband”). Brief History 2.The parties were married on 3rd May 1990. 3.Within wedlock, they have a daughter, now aged 25, and a son, now aged 21. The daughter is currently studying Juris Doctor in Hong Kong and is living at the matrimonial home (“matrimonial home”). 4.The son is now living in the United States and receiving tertiary education and will return to live at the matrimonial home during school holidays. 5.On 30th December 2015, the wife issued her petition for divorce based on unreasonable behaviour. The husband filed and served a Cross-Petition dated 27thJanuary 2016 relying upon the fact that the parties separated since about year 2000. 6.On 30th December 2015, the wife took out an ex-parte summons on notice, asking for injunction for preserving the matrimonial assets and financial orders for maintenance pending suit (“MPS”). 7.At the direction hearing, it was ordered that the wife shall file and serve the inter-partes summons for MPS within 7 days, and the hearing was adjourned to today for argument. 8.In compliance with the said order, on 31st December 2015, the wife took out an inter-parte summons, asking for an order of maintenance pending suit including litigation funding until the date of determination of the suit against the husband. 9.Both parties had filed and exchanged their respective affirmations and Form E Financial Statements. No questionnaire had been filed and exchanged due to the time restraint. The Law on Interim Maintenance 10.The power to order maintenance pending suit is set out in s 3 of Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) whereby the court may order a party to make to the other such periodical payments for his or her maintenance and for such term beginning not earlier than the date of the presentation of the petition and ending on the date of the determination of the suit, as the court thinks reasonable. 11.It is clear that under this provision there is no power to make an order for an interim lump sum or an interim order for sale or transfer of property, but otherwise the court has an unfettered discretion in the matter subject to the result being reasonable: F v F (maintenance pending suit) (1983) 4 FLR 382. 12.As for the matters which the court should consider in assessing an application for maintenance pending suit, Rayden and Jackson on Divorce and Family Matters, 18th Edition, said these as follows:
13.In practice, as oral evidence is rarely given, it will be unusual for the court on an application for maintenance pending suit to be in a position to make findings of fact on issues in dispute sufficient, for example, to deal with conduct or allegations of non disclosure. 14.However if it is demonstrated that the paying party has not performed his duty to make full and frank disclosure of his financial resources, then the court can take a broad and robust view of his means, and it does not have to accept and proceed on the basis of the assertions of the paying party as to his means and an inability to pay. 15.The court can look at the reality of the situation and take into account voluntary funding from third parties. Any under provision or over provision in the order for maintenance pending suit can always be corrected when the account comes to be taken at the substantive hearing when there is every opportunity to do fairness by set-off…” 16.I do not think the above general principles are in dispute. The wife’s Case 17.The wife is currently aged 55 and unemployed since 2012 after the spa business in Beijing was wounded up. The wife’s case is that the parties maintained a high standard of living. However, as a result of the husband cutting off finance for more than 18 months since September 2014, the wife had incurred debts amounting to HK$1,726,703.00. (see Form E, 2.13) 18.The wife’s version is that the husband has always acted through his companies or through nominees. The husband has always had access to funds. The mode of financing his households in Hong Kong and Singapore has always been through his companies and through borrowing against properties. 19.The wife asserted that the husband has the ability to raise funds and that his Singapore business BBPL (“BBPL”) has a much more healthy positive cash flow than what it appears to be in the affirmation including his Form E. 20.Further, the wife asserted that the Dubai physical gold business is probably another company which the husband owns which generates tax benefits and limits personal liability for him. 21.It is also submitted that the husband’s incomplete disclosure shows many unexplained deposits made into various bank accounts both in Hong Kong and in Singapore. I was asked by Mr Clough to draw adverse inferences if satisfied that there is a failure to make full and frank disclosure. 22.The wife seeks maintenance pending suit order to cover the servicing of her credit card debts and her regular reasonable needs in the sum of HK$71,000.00, and the order should be backdated to the date of the application. 23.In addition to that, the current wife‘s stance to the litigation funding is that the husband should pay HK$50,000.00 per month up to the date of the hearing of Financial Dispute Resolution (“FDR”). The husband’s case 24.The husband’s case is that the husband is plainly and clearly not in a financial position to make the huge MPS payments that the wife is asking for and that the husband does not have substantial cash readily available. 25.The husband proposes HK$21,000.00 per month for the wife’s PersonalExpenses coupled with the husband’s following undertakings, namely to allow the wife to live rent-free at the matrimonial home and the husband will cover utilities, management fees, food at home, household expenses, car expenses, domestic helper and driver and the husband shall deal with the children directly and directly discharge or pay to the children such monies as may be reasonable required by them. 26.Mr Jeremy Chan, counsel for the husband submitted that the wife’s application for Currey legal costs provision ought to be adjourned sine die at least until the wife’s Legal Aid application is first dealt with. 27.Moreover, Mr Chan submitted that the approach as suggested by Mr Clough, i.e. for the husband to pay HK$50,000.00 per month up to the date of the hearing of FDR for legal cost contribution, is incorrect in principle. 28.It is also submitted that the wife’s alleged Personal expenses were grossly exaggerated. Issues of the case 29.The following issues arise for my consideration :
Issue 1 How much maintenance should the husband pay to the wife as reasonable maintenance pending suit for herself? The wife’s Financial Position and needs 30.It is worth noting that the wife in this case has based her reasonable needs on the high standard of living which she claims to have been provided by the husband during the marriage, and that the husband himself has in his Form E put the total net value of those landed properties including the matrimonial home in excess of HK$44 million. 31.While it remains to be seen whether or not this case would qualify as one of those big money cases specifically mentioned by Thorpe J, as he then was, in F v F (ancillary relief substantial assets), [1966] 2 FCR 307, [1995] 2 FLR 45, it would be helpful to refer to his guidance on the exercise of the court’s discretion in determining the wife’s reasonable needs on an interim basis according to standard of living in big money cases as follows :
32.Currently, the wife is residing at the matrimonial home which was held by WDL (“WDL”) and the matrimonial home was estimated with a net value at about HK$70 to 80 million according to the wife’s version. However, the husband estimated the net value to be around HK$43 million. In her Form E, the wife has listed out her present assets and liabilities, and the net value she estimated is around HK$68,273,297.00 to HK$78,273,297.00 plus 50% of WDL and EPL (“EPL”). 33.As to her monthly outgoings, the figures quoted in her Form E were about $71,000.00 and they were made up of the following items:
34.Mr Jeremy Chan confirmed to me that they had checked the bank statements and they took no issue to the accuracy of those documents and that they confirmed to me that the documents supported the figure of HK$35,000.00 as the minimum payment of credit card and bank loans. 35.The wife’s case is that the minimum payment of credit card and bank loans is a monthly regular liability of the wife, and I see no reason why the sum of HK$35,000.00 should not be provided for the wife. 36.Mr Clough, counsel for the wife had also referred me to the Court of Appeal case namely HJFG v KCY (CACV 127/2011, 28 October 2011, where the following principles were reiterated to maintenance pending suit/interim maintenance applications:
37.In so far as this particular case is concerned the reference to the ability of the husband to pay is particularly pertinent. 38.My view is that the general expenses of food paid by the wife in the sum of HK$3,000.00 should be deducted after taking into account of the husband’s undertaking to pay for the expenses for food at home. 39.In the wife’s affirmation, she stated that when she came back to Hong Kong in 2013, the husband paid her approximately HK$70,000.00 each month. She was given to understand that such monthly sums were maintenance for her from the husband. 40.The amount of the previous sum given to the wife was one of the indicators, though not conclusive one, for me to consider what amount should be reasonable and fair in the circumstances. 41.Further, I am also aware that in the wife’s Form E Part 5, 5.3, the wife stated that she usually goes to 1 to 2 short holiday trip each month, and I am aware that the wife has no entertainment/present expenses. The wife also stated that the children enjoy the similar standard of living as herself. 42.As to the husband’s expenses in these two items, in his Form E, the husband claimed that he spent HK$300.00 for entertainment/presents and no expenses for holiday whereas for the children, there should be around HK$1,000.00 for these 2 items. 43.By definition, maintenance pending suit is restricted to payments which constitute “maintenance”, which are reasonable in the circumstances and which will endure for no longer than it takes to determine the divorce litigation. 44.“Maintenance” is a broad concept, and it must be restricted to those payments necessary to meet the recurring costs of living at whatever standard of living is appropriate. 45.An important factor in determining fairness is a consideration of the marital standard of living. In this regard, each case must be considered according to its own circumstances. I remind myself that it is not simply to be assumed that great wealth equates to great extravagance. Some married couples who enjoy great wealth spend with comparative modesty and with a discipline born of discretion, others enjoy consumption on a grand scale. 46.In the present case, my focus should be looking to the “immediate and reasonable needs” of the wife. Therefore, for the present assessment, my view is that HK$1,000.00 should be reasonable for the wife to spend for her holiday each month. That standard is also the standard enjoys by the children in the meantime as suggested by the husband. 47.The wife also stated in her affirmation that the husband had all along supported her parents. After the wife’s father passed away in 2009, the husband supported her mother each month, having paid approximately HK$8,500.00 for the rent of a flat and HK$10,000.00 for living expenditures. 48.The wife also stated that since September 2014, the husband had stopped paying her anything, and since November 2014, the husband has also stopped supporting her mother. 49.In September 2015, as the wife had no resources to rent a separate flat for her mother and her sister, her mother had to move to a room in the matrimonial home. 50.My view is that since the wife’s mother had moved to the matrimonial home, certain expenses for her mother had already been provided for her mother’s need. I cannot see any reason why the husband should still continue to make any additional monetary contribution to the wife to support her mother. 51.By reason of the aforesaid, I am of the view that a sum of HK$61,000.00 should be a reasonable sum for the maintenance pending suit for the wife to cover the immediate need of the wife instead of HK$71,000.00 as requested by the wife. Issue 2 Should the husband also pay a contribution towards the wife’s litigation costs as maintenance pending suit? The Law 52.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.” 53.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 :
54.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:
55.In the wife’s affirmation, she stated that she did not have liquid assets to pay for her legal costs. She did not have other assets to secure any borrowing as she only held 100 out of 10,000 shares in WDL and 2,500 out of 5,000 shares of EPL (“EPL”). 56.In addition, she also stated that she did not have any income to secure, or repay, any borrowing and she had exhausted the limits on her credit cards and she was unable to borrow any more funds to support her own needs, let alone litigation costs. 57.She also stated that she had attempted to obtain legal aid on 22nd December 2014, and the legal aid officer asked her to submit certain documents in relation to WDL for further processing. 58.Mr Chan says that the wife does not satisfy the test identified in Curery v Currey. One of his arguments is that the wife’s application for Currey legal costs provision ought to be adjourned sine die until the wife’s Legal Aid application had been dealt with. 59.Before I come to this point, I am aware that Mr Chan also asked the court to be satisfied of the conditions laid down in the Currey test. Firstly, I am of the view that whatever assets the wife may or may not have had at her disposal, the husband appears to have a far more substantial asset base in comparison. 60.The wife though held 100 shares of WDL and 2,500 shares of EPL, on the face of it I accept that the wife’s assets is insufficient or cannot reasonably be deployed to pay costs going forward. 61.I also accept that the wife on the face of it cannot provide security for borrowings. She is currently aged 55 and unemployed since 2012, and at present the debts she owed already required her to meet a regular monthly payment of HK$35,000.00. 62.It is unlikely that she will be able to provide her WDL’s and EPL’s shares as security for borrowings, and it is also not realistic to assume that she could continue to borrow from Banks nor from friends. 63.I also accept that she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation and it is unlikely that she would be able to obtain legal services on this basis in Hong Kong. 64.Mr Chan says that the wife should be able to apply for legal aid or at least one should wait for the outcome of her application. 65.My view is that there is no reason why public funds should be expended to fund litigation when there are ample resources available within family funds. 66.According to the order dated 30th December 2015, neither the wife nor the husband shall further charge, mortgage, or otherwise encumber on the matrimonial home, as a result the parties had made themselves not available to this resource. 67.However, my view is that it would be against public interest to insist the party to resort to public fund when the party could have sufficient resources to fund his or her litigation, nevertheless, his or her entitlement to that source was denied or restricted just because that source was preserved so as not to prejudice his or her subsequent claim for financial provision. 68.I am of the view that in order to satisfy the Currey test, the wife in this case needs not to be refused of legal aid before she can pass the said test. My view is that the husband should pay a contribution towards the wife’s litigation costs as maintenance pending suit. Issue 3 How much should the husband pay? 69.In the present case, the wife sought a contribution towards her ongoing legal costs in a sum of HK$50,000.00 per month. It was submitted by Mr Clough that this sum shall be paid up to the FDR hearing or further order of the court. 70.I estimated that the sum of HK$50,000.00 would be required for a period of 12 months at least for the preparation of FDR hearing. The breakdown of anticipated costs was provided by the wife in her affirmation (see exhibit TWF-15 at Page 141 Bundle B1). The rough estimation of costs to be incurred for the interlocutory application and FDR hearing is HK$1,300,000.00. 71.Assuming the litigation continued for my anticipated span, the contribution sought to cover legal fees and disbursements for 12 months will be HK$600,000.00. If the estimated costs is HK$1,300,000.00, and the husband has to contribute HK$50,000.00 each month, it will take at least 26 months for the husband to match the sum. 72.I believe that it does not need 26 months’ time to reach to the stage of FDR hearing. 73.I was told that the wife will challenge the husband’s version that the Sentosa House was jointly held by the husband and his siblings. I also bear in mind that the ancillary relief proceedings will focus on some assets and business operation outside this jurisdiction. That will no doubt add a level of complexity to the proceedings. 74.I am of the view that it would be fair to order that the husband pay to the wife a contribution to her ongoing legal costs in the sum of HK$50,000.00 per month up to the FDR hearing. 75.Mr Chan argued that the approach adopted by Mr Clough was incorrect. After my working out of the anticipated span and amount to be paid per month, I am able to work out a preliminary estimated amount up to the FDR hearing, assuming the parties are ready for the FDR hearing within 12 months time. 76.Therefore, I do not see there is anything wrong in principle to order a sum to be paid per month up to the FDR hearing subject to issue 4 to be discussed below. Issue 4 Can the husband afford to pay these sum? The husband’s Financial Position 77.The husband is now aged 66, and Mr Chan submitted that the husband is beyond retirement age, and that the husband is no longer actively and gainfully employed in a substantial sense and has not been for some years now. 78.It is submitted by Mr Chan that the husband has basically been living off savings and by selling various landed properties accumulated during the husband’s most active years. 79.However, it is also admitted that the husband is now enjoying an income of about HK$183,000.00 per month because he started a new consultancy contract from December 2015 lasting for 18 months. 80.Nevertheless, it is submitted by Mr Chan that the salary of the husband has been completely eaten up by the monthly repayments for the mortgage over the matrimonial home. The husband stated in his Form E that the mortgage payment of the matrimonial home per month is HK$195,915.20. 81.According to the husband Form E, he stated that his current General monthly expenses is HK$245,207.70. His Personal monthly expenses is HK$31,334.00, and the Children monthly expenses is HK$72.624.00. Therefore, he stated that the total monthly expenses is HK$349,165.70. 82.If the husband only has a salary of HK$183,000.00, there will be a short fall of HK$166,165.70 each month. The husband has proposed to give certain undertakings so that the children expenses will be directly dealt with by him. Furthermore, the husband will also cover certain expenses of the wife. 83.My query is that where does that extra HK$166,165.70 come from. I presume that the husband will be able to provide this sum since he proposed to make the said undertakings, otherwise his proposed undertakings is an empty promise. 84.In paragraph 16 of his affirmation, he stated that he was having a very difficult time from 2014 to 2015 and he had to further liquidate his assets and cut down his spending. In paragraph 20 of his affirmation, he admitted that he had sold the Leonie Garden flat in Singapore. The sale was completed in July 2015 and he obtained sufficient funds to sustain the family and make mortgage repayment for the time being. 85.The husband stated in his Form E that he held the Sentosa House (“Sentosa House”) jointly with his siblings. The husband stated that his share is only 10%, and the estimated market value of Sentosa House as stated by the husband is around HK$130 million. 86.In the wife’s Affirmation, she stated that Sentosa House was sold for the purchase price of SG$23,800,000.00 or approximately HK$130,900,000.00. Therefore, according to the husband’s version, his 10% share is approximately HK$13 million. After deducting the outstanding loan and mortgage, the net value of his 10% share is at least HK$8.7 million. 87.While it remains to be seen whether or not Sentosa House at the end of the day will form part of the family asset, there is no reason why the husband’s interest in Sentosa House cannot be used as a security for borrowing so as to fund both the husband’s and the wife’s litigation costs, as all along it is the husband’s intention to liquidate the family asset to cover any shortfall of the family expenses. 88.The aforesaid intention could be found in paragraph 22 of his affirmation when the husband said that his current monthly income could not support his current expenses, any shortfall has to come out from the liquidation of the family assets, and that he had been in the course of selling the Sentosa House. 89.He also stated in paragraph 26 of his affirmation that he was willing to continue paying for the general expenses to allow the Petitioner to live rent-free at the matrimonial home as well as the children’s expenses out of his personal bank accounts as well as WDL’s bank account, and he estimated that all such monies could only further sustain the family expenses as well as the mortgage repayments for about a year only. 90.By reason of what the husband had said in his affirmation, it means that at least his proposed undertakings could be honoured for about a year from February 2016. 91.On the contrary, the husband also stated in paragraph 30 of his affirmation that he is lacking the liquid assets to even support his children and himself. I find this paragraph contradictory to what he proposed to promise, and it cannot be true that if he is seriously thinking of proposing those undertakings and honoured those undertakings. 92.Mr Clough complained that there were a number of entries showed in the exhibits provided by the husband which were inconsistent with what the husband had said in his affirmation and Form E which portraits that his means is limited e.g. at pages 401 and 402 of bundle B2, the balance shown on 31st July was SGD920,814.69 which is equivalent to approximately HK$4.8 million but there is no statement provided for the month of August, and at page 402, the balance was SDG6,311.83 at 3rd September. 93.Another example which Mr Clough submitted was that Singapore company will pay for the substituted apartment for Sentosa Property in the sum of SGD8,200.00 which is approximately equivalent to HK$40,000.00. This means that at least this company is financially sound to provide certain fringe benefits to the husband as director and shareholder of this company. 94.The husband has average monthly income of SGD3,000.00 from this company as stated by him. I am aware that apart from paying directors remuneration to the director as shown in the financial statements, this company has also made profits in 2014 and 2015. 95.I trust that the husband being the majority shareholder of this company will be able to obtain further funds from this company whether in the form of director remuneration, dividend or fringe benefits. 96.By reason of the aforesaid, I am prepared to make robust assumptions about his ability to pay, and I am not confined to the mere say-so of the payer as to the extent of his income or resources. 97.In such situation, I am prepared to err in favour of the payee, and I am in a position to draw the adverse inference as requested by adopting a broad-brush approach in this interim maintenance hearing. 98.The husband admitted that the purchaser of Sentosa House had made a deposit of SGD960,000.00 and this sum was forfeited now. The husband asserted that he only has 10% legal and beneficial interest in the Sentosa House, therefore he is only entitled to 10% of the forfeited sum, which is equivalent to approximately half a million Hong Kong dollars. 99.Of all these available or potential sources aforesaid mentioned, I am of the view that the husband is able to pay the wife HK$61,000.00 per month as maintenance pending suit and HK$50,000.00 as ongoing litigation contribution up to the FDR hearing. 100.After considering all the circumstances of the case and the evidence received so far, I am prepared to make an interim maintenance order for the wife. Issue 5 In the event that an amount is ordered what date should that part of the order take effect from? 101.During the hearing Mr Clough asked that the maintenance pending suit and the litigation contribution be backdated to the date of the date of the application. 102.I am not prepared to backdate the aforesaid sum to the date of the application. My view is that having provided maintenance pending suit to cover the repayment of the loan which the wife had previously incurred, I do not see there is any need to backdate her maintenance pending suit to the date of the application. Order 103.Upon the husband undertakes to allow the wife to live rent-free at the matrimonial home and the husband will cover utilities, management fees, food at home, household expenses, car expenses, domestic helper and driver and the husband shall deal with the children directly and directly discharge or pay to the children such monies as may be reasonable required by them, it is ordered that the husband shall pay the wife the sum of HK$61,000.00 per month as MPS for the wife, the 1st payment to be paid on 10th March 2016 and thereafter on or before the 10th day of each succeeding month until further order of the court. 104.The husband shall pay the wife the sum of HK$50,000.00 per month as the wife’s ongoing legal costs provision, the 1st payment to be paid on 10th March 2016 and thereafter on or before the 10th day of each succeeding month until 10thFebruary 2017 or the date of FDR hearing or further order of the court whichever is earlier. 105.The payment of ongoing legal costs is paid to the wife on the condition that the said payments are to be punctually paid by the wife to her solicitors on account of her legal costs for the ancillary relief proceedings (“AR”). 106.All the aforesaid monthly payments will be paid on account of any sum eventually received by the wife and/or the husband when the AR is determined. Costs 107.I will make a costs order. Costs shall follow the event. I will make a decree nisi that costs of this summons shall be to the wife to be taxed if not agreed, such order to be made absolute upon the expiration of 14 days. There shall be certificate for counsel.Lastly, I thank both counsels for their assistance.
Representation: Mr Neal Clough instructed by Messrs Ho & Ip, solicitors for the Petitioner Mr Jeremy Chan instructed by Messrs Stevenson, Wong & Co., solicitors for the Respondent |
Cases cited in this judgment
Further hearings and rulings under FCMC 16534/2015