Tkmj v. Fss
Read the full judgment text of FCMC 14864/2014 on BabelCite. This Family Court judgment was delivered on 14 September 2015 before Her Honour Judge Sharon D. Melloy.
Matrimonial Causes – Maintenance pending suit – Litigation funding – District Court – Matrimonial Proceedings and Property Ordinance Cap 192 – Whether wife should pay maintenance pending suit and amount – Whether wife should contribute to husband's litigation costs and amount – Husband earns HK$55,000 per month, wife earns HK$145,730 per month – Wife offered lump sum to clear debts and legal costs – Court ordered additional HK$15,000 per month maintenance – Court ordered HK$800,000 litigation funding to solicitors – Costs reserved – Further hearing 30 October 2015
Legal issues: Maintenance pending suit amount · Litigation funding amount
Outcome: Maintenance pending suit varied; Litigation funding ordered.
Cites 6 cases
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FCMC 14864 / 2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 14864 OF 2014 ----------------------------
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----------------------- J U D G M E N T ----------------------- Introduction 1.This is an application by a Petitioner husband for maintenance pending suit pursuant to s.3 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO). He also seeks litigation funding and back payment of his litigation costs. 2.The issues to be determined are these:
3.The husband argues that the wife has been secretive about her finances and that her disclosure to date has been inadequate. The wife vehemently refutes these allegations. The husband for his part anticipates further difficulties with respect to disclosure. He has also issued a section 17 application with respect to the transfer of some shares by the wife to two third parties and he says that in order to obtain proper redress that further applications may be necessary. He maintains that HK$180,000 per month is a realistic estimate. The wife in turn complains about the husband’s approach to the litigation. She does not wish to give the husband an open cheque in this regard which may only serve to fuel the fire. 4.Thus in total the husband is seeking HK$210,000 per month as maintenance pending suit inclusive of the provision for litigation funding plus HK$1.6 million as back payment of costs to date. The wife for her part made an open offer prior to the hearing as follows:
5.The wife’s position changed somewhat during the course of the hearing as the figures used by her as the basis for the offer were found to be incorrect. Lawyers for the husband confirmed that the husband had paid HK$1.2 million to date in legal costs and that a further HK$400,000 was outstanding as at the date of the hearing. According to the husband’s Form H dated the 24 July 2015 his total costs were HK$1,626,255. Mr Pang S.C for the wife confirmed that she was willing to pay the outstanding sum of HK$400,000 and a further sum to cover the husband’s costs up to and including the FDR hearing. He rightly pointed out that the sum offered in the wife’s open proposal would need to be adjusted given that the husband had paid more than the wife had originally anticipated. According to the husband’s own estimated costs in his Form H he would need HK$1,190,000 to cover both a section 17 application and the FDR hearing. This is set out as follows:
6.Mr Pang suggested that if one put to one side the issue of the section 17 application, then on the husband’s own estimate he would need HK$240,000 to take the case up to and including the FDR. Thus the wife offered to pay his lawyers this sum plus an additional HK$400,000 for the outstanding fees – a total of HK$640,000 to cover his litigation costs up to and including the FDR hearing. The wife was not willing to contribute towards costs that had already been paid by the husband, admittedly with the help of a friendly benefactor, a Mr X who had loaned him the money, nor was she willing to pay these sums to the husband directly. 7.I should say at the outset that I accept that given that Mr X is not asking for repayment until the end of the litigation that it should not be necessary for those sums to be paid now. Further I accept entirely that the funds should be paid to the husband’s lawyers and not to him directly. Background 8.The parties married on the XX March 2008 after cohabiting from mid 2004 and they separated in or about November 2013. There are no children of the marriage. This then is a relationship of nearly 10 years duration. 9.The wife is the vice chairman of a listed company. In 1998, prior to the marriage she joined a small insurance brokerage firm. In 2010 this company was listed on the Hong Kong stock exchange. The wife was originally the Chief Executive Officer of this company and she earned just under HK$200,000 per month whilst working in that role. She is currently the Group Vice Chairman and executive Director. She currently earns from this source HK$145,730 per month. She also receives other income from a variety of different investments, which I do not intend to go into in any detail here – given that the wife’s ability to provide for the husband is not in issue. 10.The husband was also originally engaged in the finance industry and he was employed as an insurance agent when the parties first met. He is now the Assistant Vice President of a company that provides training services. It is not disputed that he currently earns HK$55,000 per month and that he is also reimbursed for his business expenses in the approximate sum of HK$15,000 per month. The husband is required to travel to the Mainland on a regular basis. 11.The husband originally issued proceedings based on the wife’s unreasonable behaviour. He alleged in particular that the wife had had an adulterous relationship with a third party. That petition was defended. The parties were eventually able to sensibly compromise the matter and on the 1 November 2014 the husband issued a second petition based on one year separation with consent. 12.As indicated above there have been significant issues with respect to disclosure, with two rounds of questionnaires and answers to date. In addition each side has issued a summons seeking specific discovery from the other. I am told that this is presently being dealt with on a voluntary basis. On the 27 April 2015 the husband issued a further summons under s 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 seeking to set aside the disposition/transfer of 14,989 shares by the wife to two third parties. That application is still pending. It is not known at present whether or not the husband intends to proceed with that application given the recent downturn in the financial markets. The law - Maintenance pending suit 13.The ordinance states that the only governing principle is that the court shall make such order, as it considers reasonable in all the circumstances of the case. (See s 3 Matrimonial Proceedings and Property Ordinance Cap 192). Consequently applications such as these are supposed to be approached on a broad-brush basis. A detailed examination of the parties’ means may then be examined at a later date at a full ancillary relief hearing if there is no agreement in the meantime either at a Financial Dispute Resolution hearing or otherwise. 14.Ms Yip S.C for the husband summarized the legal principles in her written submissions as follows:
Similar observations were made by Mr Pang S.C in his written submissions. With respect I agree with what each has said. 15.There was though some dispute over the court’s ability to make an order which amounted in part to the provision of funds for investment purposes. This relates to a number of insurance policies taken out by the husband which were really saving schemes which are likely to also have a very small insurance component attached. Mr Pang maintained that the court had no ability to make an order for maintenance pending suit that would include the monthly premia repayment and would thus enable the husband to build up his own capital reserves. 16.Ms Yip for her part referred me to paragraph 58 of the case C v F unreported, FCMC 1701/2000, 20 September 2004, where my brother judge, HH Honour Judge Bruno Chan said as follows:
17.With respect I agree. Given that these insurance policies were taken out by the husband during the course of the marriage and that they form a large part of his monthly budget, it seems to me that it would not be appropriate to simply exclude them for maintenance pending suit purposes. I should add that it almost goes without saying that the capital value of these policies will form part of the parties’ schedule of assets to be divided between them at the end of the day. The value will of course include any contributions made during the intervening period. By way of comparison I accept that mortgage repayments should be treated in the same way. The law - Litigation funding 18.In so far as the law on litigation funding is concerned, it has been accepted by both sides that the governing authority remains Currey v Currey [2006] EWCA Civ 1338. The test to be applied is as follows:
19.There is also a requirement to undertake an overarching enquiry to see whether the Applicant could in truth procure legal advice and representation by any other means. The court is also charged with looking at the subject matter of the proceedings and the reasonableness of the stance taken by him. 20.This approach has been routinely adopted by the Hong Kong courts. See for example the Court of Appeal decision in KGL v CKY [2003] 2 HKLRD 301 and the first instance decision H v H (Interim Maintenance) [2007] HKFLR 311. 21.Reference was also made to the provision of a lump sum for such purposes as endorsed by the Court of Appeal in HJFG and KCY [2012] 1 HKLRD 95, although it should be noted that that was in a very big money case. The principle however remains the same in smaller cases. At paragraph 126 of that judgment Hartmann JA, as he then was, said as follows:
Discussion 22.I must now turn to consider the issues, the law, and the parties’ evidence as set out in their affirmations together with the submissions made by counsel. Should the wife pay the husband any maintenance pending suit bearing in mind her offer to pay off the husband’s debts? If so how much should the wife pay? 23.The wife’s case in a nut shell is that once the husband’s liabilities are paid off, then even on his own figures, the husband’s income of HK$55,000 per month should be sufficient to pay for all of his monthly expenses. In such circumstances the wife argues that it would not be fair or reasonable to ask her to pay more. 24.The husband’s expenses, as set out in his affirmation of the 9 December 2014, are as follows:
25.In counsel’s submission she updates the husband’s figures for his insurance premia at HK$15,102.55 per month and repayment of loans in the total sum of HK$43,829.71 per month. Consequently the updated schedule should read as follows:
26.Thus on the husband’s own figures, if one deducts the sum of HK$43,829.81 for the repayment of the loans, given that the wife has offered to pay these off, one is left with a balance of HK$53,458.15 per month – or say HK$53,500 per month rounded up. (HK$97,287.96 – HK$43,829.71 = HK$53,458.15. It cannot be disputed that the husband has the ability to pay for these sums from his own resources. Standard of living argument 27.However the husband also advanced a standard of living argument. In other words he maintained that these figures are not representative of the standard of living enjoyed by the parties during the marriage. Thus he asks for an additional HK$30,000 per month notwithstanding the fact that he originally sought this sum before the wife offered to pay off all his debt. 28.In support of his case the husband says that he no longer has the use of a car of his own (he borrows a car from a friend from time to time), he is not able to go on overseas trips and he does not have a domestic helper to assist him in running the home. The husband claims that the wife paid for many of the general outgoings whilst they were together which was why he was able to invest so much of his income in various insurance schemes. Ms Yip said in her oral submissions that the wife spent at least HK$90,000 per month on herself whereas the husband only had HK$55,000 per month to pay for everything. 29.With respect I agree with Mr Pang that this is to overstate matters. In the wife’s Form E dated the 27 May 2014 she sets out her general and personal expenses as follows:
On a closer examination of these expenses it can be seen that these are not generally illustrative of a very high standard of living. Infact they are in keeping with the husband’s own schedule of expenses. 30.For example in so as the general expenses are concerned, since filing her Form E the wife has purchased the property which she originally moved into following the separation. Thus the rental amount falls away and has been replaced by mortgage repayments. The wife has purchased a 2100 square foot village house for HK$21 million. The former matrimonial home is also a 2100 square foot village house. She is responsible for the mortgages on both properties. The wife’s estimate for utilities is similar to that of the husband’s. The wife took all five dogs with her – because she says that they are registered in her name – it follows that the dogs must be provided for. The parties also employed two domestic helpers who are a husband and wife team – under contract to the wife. Again it follows that they should follow the wife – especially as they will be responsible for looking after the dogs. I do not find the estimated expenses for any of those items to be in any way exceptional; likewise the estimate for food and household expenses. The only slightly higher expense in this category is for the car in the sum of HK$10,000 per month. It is accepted that the wife continues to drive a luxurious car whereas the husband no longer has a car of his own. 31.In so far as the personal expenses are concerned the highest expense is for tax – which is high becomes the wife’s income is reasonably high. Other than that most of the expenses are comparable to those of the husband, save for the estimate for clothes at HK$20,000 per month and holidays at HK$6,000 per month. As already discussed the husband pays more for insurance premia. 32.In such circumstances I agree with Mr Pang that there is little mileage in the husband’s argument that the wife is living the high life at his expense. The main differences in terms of the parties’ respective standard of living post separation relates to the provision of a car, domestic help and the ability to take overseas holidays. Credit cards 33.Ms Yip in her oral submission claimed that the husband used to have access to two supplementary credit cards, which the wife has now cancelled and on which he used to spend an additional HK$30,000 per month. Ms Yip said that the wife would be responsible for this cost. The wife disputes this, but in any event as pointed out by Mr Pang it is clear from the credit card statements themselves, that the husband did not spend anything like HK$30,000 per month. Rather he used one card to mainly settle his monthly phone bill with Smartone Mobile in the sum of HK$256 per month and the other was used to pay for various miscellaneous items including cable TV, netvigator accounts, octopus top up etc. The wife says that on average he incurred expenses on this account of HK$8,500 per month. With respect the husband fails to come up to proof on this aspect of his case. Even if the wife was responsible for these costs, which she disputes, they are not indicative of an overly lavish lifestyle. The wife maintains that even if she paid for the credit card expenses in the first instance that the husband would repay her, generally in cash. It is not possible for the court to make any finding of fact on this point. Other financial support 34.The husband also says that the wife gave him lump sum payments from time to time in order to cover credit card expenses or tax payments. Again this is disputed by the wife. 35.In addition the husband says that he has had to take out loans following the separation in order to pay for essential household items, change the locks on the house etc. However this aspect of the case is dealt with by the wife’s offer to pay for all of the husband’s current indebtedness. 36.In conclusion I accept that the parties enjoyed a good standard of living whilst together, but not an overly lavish one. I accept that they generally lived quietly; they lived in the country, enjoyed cycling and having pet dogs; they ate organic food, drove nice cars and went on overseas trips once or twice a year. Order 37.In such circumstances I will order that the wife do pay the husband an additional sum of HK$15,000 per month as maintenance pending suit. The order of the 14 January 2015 shall be varied to that extent. This is subject to the wife undertaking to continue to pay for the mortgage on the former matrimonial home and is in addition to her offer to pay the husband the sum of HK$515,000 (in order to cover his current indebtedness) within the next three days. I am told that the wife has not paid that sum to date. 38.It seems to me that HK$15,000 per month should go some way towards redressing the balance in the standard of living enjoyed by the parties during the marriage pending a final agreement on ancillary relief. If the husband should so wish he could use this sum to buy a car (on hire purchase), run a car (in addition to the HK$3,000 per month reserved for this purpose already), employ a domestic helper and take the occasional overseas trip. This is in keeping with the standard of living enjoyed by the parties during the marriage. Should the wife also be ordered to make a contribution towards the husband’s litigation costs? If so, in what amount? 39.As indicated above the wife has offered to pay the husband a lump sum of HK$640,000, based on his figures in his Form H, designed to cover his litigation costs up to and including the FDR hearing. The offer does not include a contribution towards the costs associated with the section 17 application. At present it is not clear whether or not the husband intends to proceed with that application. Ms Yip says that there are also issues with respect to discovery – but with respect there are no hearings scheduled in that regard either. I do though accept that there may be significant costs associated with discovery on a voluntary basis or otherwise. The Currey test
40.For the avoidance of doubt I accept that the husband has no assets which can reasonably be deployed for the provision of litigation costs. I do not accept that it would be reasonable or even possible for him to remortgage his share of the matrimonial home (and to then repay the mortgage); I accept that it is not realistic for him to provide the home as security for future borrowings – or alternatively to use the insurance policies for the same purpose. Legal Aid is not available and there is nothing to suggest that his lawyers would be willing to act for him on the basis proposed in (3). Overarching enquiry 41.To date the husband has borrowed funds from a Mr X to pay for his legal costs. He says that there is no obligation to repay until the end of the proceedings. The wife has suggested that the husband should continue to borrow on the same premise. The husband says that this is not feasible and that his friend cannot continue to lend him funds ad infinitum. I accept what he says in this respect. 42.Generally speaking I also accept that there may be issues with respect to discovery which will need to be resolved prior to a FDR hearing – although it seems to me that they may not be of the magnitude suggested by Ms Yip. I accept therefore that the sum of HK$640,000 may not be sufficient to cover the litigation costs up to that date. By the same token I also accept the wife’s concerns that she should not be obliged to provide the husband with a blank cheque. Thus on a broad brush basis and on the understanding that the wife has offered to pay for the husband’s litigation costs up to and including the FDR hearing I would suggest that the wife do pay the husband’s solicitors the sum of at least HK$800,000, such sum to be used to pay the outstanding fees of HK$400,000 plus the ongoing costs of the litigation up to and including the FDR, to include any further applications for discovery. This sum does not include any component for the section 17 application. In the event that the husband intends to proceed with that application I will give liberty to apply on the issue of litigation funding for that application only. I accept that any sum advanced by the wife to the husband of a capital nature either for his debts or for litigation funding may be taken into account by the court at a final ancillary relief hearing. 43.In the event that the wife does not choose to pay that sum within the next 14 days I will make an order for litigation funding in the sum of HK$100,000 per month with effect from the 1 October 2015 to be backdated to the 1 June 2015 (i.e. for four months - to cover the HK$400,000 which is presently outstanding). Costs 44.Costs shall be reserved for argument. There shall be certificate for counsel. Further directions 45.There shall be a further First Appointment hearing on the 30 October 2015 at 9:30 a.m. Both parties do personally attend that hearing. The section 17 application shall be adjourned to the same date. In the event that either party wishes to make any further applications with respect to discovery or otherwise then I would ask that they be issued prior to the 30 October 2015. I direct that any such application shall be returnable in the first instance on the 30 October 2015.
Ms Anita Yip SC and Ms V Lam instructed by Eric Yu & Co for the Petitioner Mr Robert Pang SC and Ms L Yu instructed by Fan & Fan for the Respondent |
Cases cited in this judgment
Further hearings and rulings under FCMC 14864/2014