Lcyp v. Jek
Read the full judgment text of FCMC 4880/2014 on BabelCite. This Family Court judgment was delivered on 17 June 2016 before HH Judge C.K. Chan.
Matrimonial Causes – Maintenance Pending Suit – Interim Legal Costs – Pre-nuptial Agreement – Reasonableness – Fairness – Ability to Pay – Currey Test – District Court – LCYP v JEK – Wife claimed $250,000 monthly MPS and $120,000 legal costs – Husband offered $120,000 MPS and $1,500,000 lump sum legal costs – Court held reasonable monthly expenses $210,000 – Currey test satisfied for legal costs – PNA did not restrict children's maintenance – Orders made for MPS and legal costs
Legal issues: Maintenance Pending Suit calculation · Interim legal costs provision · Effect of Pre-nuptial Agreement
Outcome: MPS granted at $210,000 per month ($70,000 for wife, $140,000 for children); Interim legal costs of $1,500,000 granted
Cited by 5 cases · Cites 2 cases
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FCMC 4880/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 4880 OF 2014 ------------------------
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----------------------- J U D G M E N T ------------------------ 1.This is a hearing of the petitioner wife (“the wife”)’s application for maintenance pending suit (“MPS”) against the respondent husband (“the husband”). Parties’ Respective Positions 2.At today’s hearing, the wife’s latest positions are that she would ask for $250,000 monthly MPS for herself and the children, and provision for legal costs in the sum of $120,000 per month. 3.The husband’s stance is that he would continue to pay for the children’s school fees with an additional monthly sum of $120,000 as MPS. As far as interim legal costs provision is concerned, the husband has made an open offer of a lump sum of $1,500,000 which would last until the FDR hearing. Background 4.The parties were married in the USA in 1997. 5.Shortly before marriage, the wife had entered into a pre-nuptial agreement (“the PNA”) in which very restrictive provisions on her entitlement to maintenance were agreed upon in the event of a divorce. At the last hearing, I was given to understand that the validity of the PNA would not be challenged by the wife. Instead, she would argue that no weight should be put on the PNA by the Hong Kong Court in view of the overall circumstances of this case. 6.Within wedlock, 2 children were born:
Both children are studying at the HKIS at Tai Tam and they are now under the care of the wife. 7.The wife issued a petition for divorce on 17 April 2014 but a decree nisi of divorce is yet to be made. 8.Before this hearing, the parties have already had a few rounds of litigation on various subject matters, including jurisdictional and Hague Convention challenges. The net results of those hearings are that the wife was entitled to issue her petition for divorce in Hong Kong as of right and the husband’s objection to forum was being dismissed. The husband also failed in his application for the return of the children to the USA under the Hague Conventions. 9.Although a formal order on custody is yet to be made, there is no dispute that the children should be under the continuous care of the wife and would stay in Hong Kong in the near future, or at least until they have finished their secondary education here. 10.As far as interim maintenance is concerned, the husband had at one time paid a monthly sum of $120,000 as the wife and the children’s interim maintenance. That amount was temporarily raised to $170,000 and a further sum of $120,000 per month was provided as interim provision for the wife’s legal costs. However, after December 2014, the amount of interim maintenance was again reduced to $120,000 and the provision for legal costs was withdrawn. As the wife found this to be totally inadequate for the maintenance of herself and the children, she issued the present summons for MPS on 22 December 2015, after the Court of Appeal has ruled in her favour on the issue of jurisdiction and in the husband’s application under the Hague Conventions. 11.At the call over hearing and after hearing junior counsel for both parties, I have ordered the interim maintenance to be reverted to $170,000 per month together with a lump sum of $580,000 to cover the wife’s legal costs at least up to the hearing of the substantive arguments on MPS, which was fixed for today. The Law on MPS 12.The Court’s power to grant a MPS order in favour of a spouse is governed by s.3 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”):
13.As for the interim maintenance of the children, they are governed by s. 5 of MPPO with the relevant sub-sections at (1) (a) and (2) (a) which are as follows:
14.In HJFG v KCY[1], Hartmann JA (as he then was), at paragraphs 37 and 38 of the judgment, gave a succinct summary of the law in this area by referring to the judgment of Mostyn QC, sitting then as a Deputy Judge of the High Court in England, in TL v ML [2006] 1 FLR 1263, 1289:
15.Therefore, the overriding considerations for such applications are reasonableness and fairness. In order to achieve these objectives, the Court has to balance the reasonable needs of the applicant and the ability to pay of the respondent on an interim basis: LJ v LWHH [2003] 3 HKC 455 at 461D. 16.In undertaking this balancing exercise, the Court will adopt a broad brush approach, and not a detailed investigation of the financial positions of the parties. 17.I do not think the above general principles are in dispute. The wife’s financial circumstances 18.The wife was locally born and is now 43 years of age. She migrated to the USA shortly before their marriage in September 1997. Before relocation, she worked for her father in the family business. In the USA, she has worked as a secretary for about 2 years before she became a full time housewife in 1999. The elder son was born in 2000 after which she has never resumed employment. 19.It is the case of the wife that the husband was and still is a very successful businessman. The husband’s family business was sold to a locally listed company and a huge profit was earned. After sale, the husband was retained by the company as a director with guaranteed income and also bonuses. Before breakdown of the marriage, the family was able to live a very comfortable life in the USA, living in a big mansion and always enjoyed first or business class travel. In addition, she was provided with credit cards with little spending limits and also cash. 20.The parties lived in the USA until 2013 when the marriage started to encounter difficulties. As a result, the wife and the children moved to Hong Kong, initially on a temporary basis. However, all that changed upon the discovery of the husband’s infidelity in December 2013, after which the wife decided to stay in Hong Kong on a more permanent basis. 21.When the wife and children first moved to Hong Kong in July 2013, the family had rented a flat in Kowloon (“the Imperial Cullinan Flat”). However, as the children had to travel very long distance to attend their school at Tai Tam, the wife moved to the present apartment at Pacific View (“the Pacific View Flat”) in about May 2014. The rental payment was increased from $58,000 to about $81,000 (inclusive of management fees and government rates). The wife said the movement was by mutual consent but this was denied by the husband. 22.In her supporting affirmation (Bundle P5, p.1377-1379), the wife has listed her monthly outgoings as follows:
23.The wife stated that she accepted the husband’s undertakings to pay the children’s school fees and school bus fees directly and therefore, a monthly sum of $34,931 could be deducted, thus making her claim for MPS at $251,351, to be rounded up to $250,000 per month for the ease of calculation. 24.According to the wife, the husband should also revert to the payment of $120,000 per month as interim provision for legal costs, which was a sum that he used to pay in the year of 2014. It is her case that the total legal costs that she has incurred so far (i.e. from April 2014 to April 2016) are $4,056,587, i.e. about $169,024 per month. Therefore, it is her view that her present application for $120,000 per month as interim provision for legal costs is very reasonable. The arguments of the husband 25.The husband was born in the USA and is now also 43 years of age. 26.It is the husband’s case that since 2014, he has been paying $120,000 per month as maintenance for the wife and children on a voluntary basis, save for the period from August to December 2014 when the sum was temporarily increased to $170,000. He is also paying the children’s school fees at the HKIS. It is his case that this financial status quo should continue. As to the items for maintenance claimed by the wife, the husband stated that some of them are not reasonable and should therefore be rejected. Initially, the husband argued that the wife has failed the Currey test and therefore should not be entitled to interim provisions for legal costs. However, as stated in paragraph 3 above, the current position of the husband is that he would offer to pay a lump sum of $1,500,000 to cover the wife’s legal costs up the FDR hearing. Finally, the husband said that the total amount of MPS claimed is simply too high in view of his current income which will come to an end very shortly. Discussion Accommodation 27.It is the husband’s case that the move to the Pacific View Flat was an unilateral decision of the wife. He is of the view that the flat is too big for the family and simply too expensive. He asks the wife to move back to a flat comparable to the Imperial Cullinan Flat which only costs about $58,000 per month. 28.I understand that there are contradictory claims on whether the move to the Pacific View Flat was by mutual consent. But this is not a proper occasion for this court to make a finding on such a factual dispute. Be that as it may, it is my view that the wife’s decision to move to the Pacific View Flat cannot be regarded as unreasonable. 29.First of all, the wife’s decision to move (be it with or without the husband’s consent) must be in the children’s best interests because of the saving in travelling time to school. Imperial Cullinan was in Tai Kok Tsui, Kowloon, which may take at least 45 minutes’ travel to the HKIS in Tai Tam. After the move to Pacific View, the travel time was reduced to just a few minutes. The benefits to the children are obvious. 30.Moreover, it is indisputable that this family used to enjoy a very high standard of living in the USA, at least as far as accommodation was concerned. The wife said the former matrimonial home was about 10,000 sq. ft. The husband said it was 6,500 sq. ft. only. Whether it was 10,000 sq. ft. or 6,500 sq. ft, the undeniable fact is that this family had enjoyed a very spacious residence during the subsistence of the marriage. There was no evidence on the actual size of the Pacific View Flat, but I believe it should be in the 1,000 to 2,000 sq. ft. region. Under such circumstances, I do not believe the choice of the Pacific View Flat is in any way unreasonable. Medical Insurance 31.It is the husband’s case that the wife and the children are fully covered by his family medical plan and therefore, there is no need to make separate provisions for their medical and dental expenses. 32.Although the husband has not provided the family medical insurance plan for the court’s inspection, I have no reasons to believe that he is not telling the truth. I agree that if such an insurance plan is indeed in place, the wife and the children should make use of such insurance coverage, instead of claiming a separate item for medical and dental expenses. From now on, I will expect the parties to liaise with each other so that the benefits of the family medical plan can be enjoyed by the wife and the children. Under these circumstances, the wife’s claim for medical and dental expenses is not allowed. Park Metropolitan Property 33.The wife has included $20,000 as mortgage payment for the Park Metropolitan Property in her monthly budget. I understand that the said property was purchased by the wife (with the financial assistance of the husband) in 2013 as an investment property and its current net equity is about $3,000,000. The property is currently rented out at about $20,000 and therefore, there is no need for the wife to make any extra payments to cover the subsisting mortgage loan. I understand that the wife is also not pressing for this sum to be included in her MPS budget. 34.However, it is the husband’s case that not only that the $20,000 mortgage payment should not be included in the MPS budget, the Park Metropolitan Property should actually be liquidated so as to alleviate the financial pressure now claimed to be faced by the wife, or to cover the her past or future legal costs. 35.Although there may be some force in the husband’s argument as the Park Metropolitan Property is certainly an asset under the wife’s name, I have decided that such liquidation should not be required at this stage after taking the following facts into account:
Other items 36.In his skeleton submissions, Mr Coleman SC for the husband has also raised objections to certain items in the wife’s MPS budget. They include:
37.The husband questioned how the supporting documents actually support the wife’s MPS claim on these items. No one did, and I think rightly so, tried to take me through each and every document or receipt produced by the wife. All these are estimates only and they are bound to vary from month to month and from year to year. My overall impression is that although I accept this family did enjoy a very high standard of living in the USA before they came to Hong Kong, some of the items claimed may have been duplicated or may be on the high side. In these circumstances, I have decided to allow the extra tuition fees and school books, etc. in full but for the extra-curricular activities and baseball tournament and summer program, I will cap them at a monthly sum of $20,000 for both children. In other words, I will deduct $9,775 from these items. Other challenges 38.In his skeleton submissions, Mr Coleman has also briefly mentioned some other small items like baseball camp, eye glasses, annual ball, donation, starbucks, etc. These are relatively small items and on a broad brush approach, I do not think we need to go into them in details. I will allow those items. 39.It was also the husband’s case that there might be duplication in the travelling expenses claimed. Apart from school bus expenses (which are now being paid by the husband), the wife has also included car expenses ($24,065), personal transport ($1,200) and taxi fees for children ($7,500). All these amount to $32,765 per month. I agree that there may be some duplication and I would deduct $5,000 from the children’s taxi fares. 40.I am of the further view that this is an application for MPS for the wife and the children, but not for the wife’s parents and so her claim of $3,000 as contribution to her parents should also be deducted. Conclusion of the wife and children’s reasonable expenses at the MPS stage 41.Based on the above discussion, it is my decision that the following items should be excluded:
42.After deduction, it is my ruling that the reasonable monthly expenses of the wife and the children are $208,018 ($286,282 - $78,264 = $208,018), to be rounded up to $210,000 for the ease of calculation. Legal costs provisions 43.It is the wife’s case that the husband should provide interim provisions for her legal costs in the sum of $120,000 per month. It was a monthly sum that the husband used to pay back in 2014. 44.It was the husband’s initial case that no such provision should be made, pointing to the fact that the whole purpose of entering into the PNA was to avoid litigation and substantial legal costs to be incurred. Therefore, it would be wrong in principle to compel the husband to fund the wife’s very substantial legal costs. But even if the court is to entertain the wife’s application, she has also failed to satisfy the Currey test and her application should therefore be rejected. 45.Despite such initial objections, it is to be noted that the present open offer of the husband is to pay a lump sum of $1,500,000 to cover the wife’s legal costs up to the FDR hearing. The law 46.In H v H (Interim Maintenance) [2007] HKFLR 311, HH Judge Bruno Chan (at paragraph 44 of his judgment) cited the English Court of Appeal case of Currey v Currey [2006] EWCA Civ 1338 as follows:
47.Again, I do not think the above legal principles on legal costs allowance are in dispute. Discussion 48.It is true that the wife is the registered owner of the Park Metropolitan Property with a net equity of about $3,000,000. However, as pointed out in paragraph 35 above, I have already ruled that it may not be feasible for her to liquidate this asset at this stage. Therefore, I am satisfied that the wife has no assets that can reasonably be deployed to pay for her legal costs. 49.One may argue that the wife could use the Park Metropolitan Property to raise further loans to finance her litigation. However, one has to bear in mind that the wife is a housewife with no regular income. It is rather doubtful on whether any bank would provide such a loan to the wife. As to the previous loans given by the wife’s friends, I accept that the wife has already incurred a very substantial amount of personal debts for such purpose and it is unreasonable to expect her continuous dependence on such loans in the future, especially when the husband is in a position to pay MPS. 50.Equally, obtaining legal services in Hong Kong by offering a charge on the outcome of litigation is also not practical, nor feasible under the circumstances of this case. 51.As the wife is in possession of a landed property, it is also unrealistic to expect her to get legal aid in Hong Kong. 52.All in all, I am of the view that the wife has satisfied the Currey test and the only issue is on the quantum of the legal costs provisions to be allowed. 53.I understand that the husband has engaged senior counsel all along and there is no reason why the wife should not be given similar treatment. The parties have not yet filed their Form E and the discovery process has yet to be commenced. My rough estimation is that it may take another 9 to 12 months before the parties can come to a FDR hearing. Therefore, I am satisfied that the husband’s open offer of $1,500,000 is sufficient to cover the wife’s legal costs from now on until the FDR hearing. The husband’s ability to pay 54.In his skeleton submissions, Mr Coleman submitted that the husband’s current earned income is USD500, 000 per annum before tax, and about USD 250,000 after tax, i.e. about HK$161,000 per month. Although the husband was entitled to USD1.1 million as bonus in 2015, the prospect of him getting further bonuses is “minimal”. Therefore, the level of interim maintenance and legal costs being sought by the wife is simply not affordable by the husband. My view 55.If one should look at the husband’s income in the past year (i.e. 2015), the total income that he had earned was USD1.6 million (USD 500,000 as salary and USD 1.1 million as bonus), equivalent to about HK$12,480,000. Even if we should take away half of it to allow for US taxation, he still had HK$6,240,000 as his net income, averaging at HK$520,000 per month. That may explain why he could still afford to drive a Ferrari, owns a private plane and a yacht, taking a number of overseas holidays a year. 56.Moreover, I agree with Ms Yip SC’s submissions that the court should not merely look at the husband’s earned income from his employer, which is only part of his overall financial picture. In his supporting affirmations, and in all of his previous documents filed with the court, the husband has not mentioned a word on his capital position. He only said in order to comply with the interim maintenance order, he has to dip into his capital, indicating that he has indeed capital to resort to. 57.I must also bear in mind that for a period of time in 2014, the husband did provide, albeit on a voluntary basis, a monthly sum of $170,000 as interim maintenance for the wife and the children. That was only $40,000 less than the sum of $210,000 which this court finds to be a reasonable amount of MPS. 58.After taking all the above factors into account, I am satisfied that the husband is in a position to pay a sum of $210,000 as MPS, together with a lump sum of $1,500,000 as interim legal costs provision up to the date of the FDR hearing. The PNA 59.In his submissions, Mr Coleman had also spent much time in referring this court to the PNA signed by the wife shortly before marriage in 1997, in particular, Clause 5.1 in which it was agreed that:
60.The English case of BN v MA (Maintenance Pending Suit: Prenuptial Agreement) [2013] EWHC 4250(fam) was heavily relied upon and what Mostyn J said at paragraph 33 of the judgment was cited:
61.Mr Coleman submits that in applying Clause 5.1 of the PNA, it would be wrong in principle to award the wife with MPS that exceeds half of the base salary of the husband. As the net monthly salary of the husband is only HK$161,000, the wife should therefore not be entitled to anything above that amount. My view 62.I think the husband’s argument is faced with 2 difficulties. First, the so called restrictions only concern with the wife’s entitlement to alimony, equivalent to periodic payments in her own right. Maintenance for the children is an entirely separate matter. The present claim for MPS also includes interim maintenance for the children, which does not fall within that restriction. If the total MPS of $210,000 is to be equally divided between the wife and the children, the wife’s share will be $70,000 which does not exceed the husband’s net monthly salary. 63.Second, there is no term in the PNA which restricts the calculation of the wife’s alimony to the net salary of the husband. If the parties should indeed intend the calculation to be based on the husband’s net salary, that agreement should be clearly spelt out in the PNA. Any ambiguity at this interim stage should be interpreted in favour of the wife. 64.All in all, I am not convinced that even if one should apply the terms of the PNA to this MPS application, the wife should be prohibited from getting an award of MPS at a monthly sum of $210,000. Backdate 65.I see no reason why the MPS for the wife and children should not be backdated to the issuance of the summons. That is the only backdating order that I will make and the wife’s claim for back-payments under section H of Ms Yip’s skeleton argument is not allowed. Orders 66.Based on the above reasons, and subject to the husband’s undertakings to:
I hereby make the following orders:
Costs 67.Costs to follow event. The wife has to come to Court before she could get the above orders and therefore, she should also get the costs of this application, including all costs reserved, with certificate for 2 counsels, such costs to be taxed if not agreed. This will be in the form of a costs order nisi to be made absolute after the expiry of 14 days from the handing down of this judgment. 68.Lastly, I thank counsel for their able assistance in this case.
Representation: Ms Anita Yip SC and Ms Lily Yu, instructed by Messrs Chain, Chow & Barbara Hung, solicitors for the Petitioner Mr Russell Coleman SC instructed by Messrs Withers, solicitors for the Respondent | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment