Lsds v. Bx
Read the full judgment text of FCMC 8189/2017 on BabelCite. This Family Court judgment was delivered on 22 December 2017 before Her Honour Judge Grace Chan.
Maintenance Pending Suit – Interim Maintenance – Litigation Funding – Matrimonial Proceedings and Property Ordinance – Earning Capacity – Financial Resources – Marital Standard of Living – District Court – Husband ordered to pay son's interim maintenance $89,000 per month – Wife's MPS and litigation funding refused – No order as to costs – Wife has resources to fund litigation – Husband has ability to pay – Son's needs met based on marital standard – Wife's earning capacity not assumed to be $100,000 per month – Undisclosed financial resources found but not sufficient to deny son's maintenance.
Legal issues: Interim Maintenance for Son · Maintenance Pending Suit for Wife · Litigation Funding · Wife's Financial Resources and Earning Capacity
Outcome: Husband ordered to pay son's interim maintenance $89,000 per month; Wife's MPS and litigation funding refused; No order as to costs.
Cited by 1 case · Cites 8 cases
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FCMC 8189 /2017 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 8189 OF 2017 ----------------------------
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------------------------------------- JUDGMENT (Maintenance pending suit/interim maintenance ------------------------------------- Introduction 1.The divorce of the parties began under the case number of FCMC 10890 of 2016 (“original suit”), and the relevant summons to be dealt with in this judgment was taken out under the original suit. However, by the time when the substantive argument was heard, a fresh petition was already issued under the case number of FCMC 8189 of 2017, after which the original suit is stayed. Due to this technicality, this judgment is given under the case number of FCMC 8189 of 2017, though the hearing bundles and written submission were prepared under the original suit. 2.In this hearing, the respondent (“wife”) seeks against the petitioner (“husband”) on an interim basis for the maintenance of herself and the son (whose care and control is rested with her) of the following: [1]
3.Broadly said, the total sum including costs provision that she is now seeking from the husband is well over $230,000 per month. 4.She took out her summons dated 23 November 2016 which was fixed for 10 March 2017 for substantial argument. Yet, immediately before the substantive hearing, she sought to put in her 3rd affirmation with some 350 pages of receipts, the application and the argument of which took up most of the hearing time of 10 March 2107. Towards the end of that argument, however, she withdrew the receipts from her 3rd affirmation. Leave was subsequently granted for her to file her 3rd affirmation (in reduced version). 5.On the other hand, she made it apparent in the same hearing that she also wished to seek legal costs contribution from the husband, for which she subsequently issued her summons dated 23 June 2017. 6.The substantial argument of both summonses were thus finally heard by this court on 28 and 29 June 2017. 7.For the purpose of the substantive hearing, 11 bundles (9 pleadings bundles and 2 correspondence bundles) of almost 4,400 pages of documents are filed, which do not even include written submission from counsel for the respective parties. In my view, this is highly unsatisfactorily and not at all costs saving, given the nature of this kind of application. In fact, costs of this case have been escalating in a manner which calls for grave concern of this court. Within 10 months from the date of the petition (August 2016) up to the date of this hearing (ie June 2017), the parties have already incurred a total sum of almost $2,300,000 on their litigation costs,[3] averaging out to be about $230,000 per month. Yet, as at this substantive hearing, the custody and access matters have not resolved, while the ancillary relief matters have not even gone beyond its preliminary stage of discovery, not to mention that there is likely to be disputes over the beneficial ownership of some PRC properties in Shanghai and Beijing. 8.It was thus high time for this court to strongly remind both parties (and those advising them) to “instil a sense of proportionality in the conduct of litigation” (See: IDC v SSA, CACV 91/2013, per Lam VP at §7), before the costs of this case irreparably erode and eat up into their assets, by which time it would be too late for them to lament. 9.A further hiccup occurred during the course of writing this judgment. This court dealt with an urgent ex parte application (on notice) for an injunction taken out by the wife, as a result of which the necessity of re-opening the substantial argument for her application of MPS/interim maintenance and costs provisions was considered by both parties. By their respective letter of 21 November 2017, they now each confirm that there is no need to re-open the substantial argument. As such, this court does not find it necessary to say anything more on and/or to consider the injunction and the events that have led to the same. The wife’s case 10.It is the wife’s basic case that the husband is an experienced investment banker with an average income of over $350,000 per month, in the result of which he should surely have no difficulty in continuing to pay her $117,000 per month to cover her and the son’s immediate needs, and in subsidizing her legal costs. This amount of $117,000 per month, though much less than her alleged updated/current monthly expenses of $178,616 (excluding mortgage repayment and part of the management fees of her properties that are covered by the rental income and the insurance premia currently paid by the husband direct), is the amount which he had been paying her throughout most of the duration of the marriage but was unilaterally stopped since April 2016. 11.She argues that although a banker by profession herself who used to earn over $100,000 per month, she does not have the requisite banking licence to take up similar banking job in Shanghai where she and the son (aged 3) now reside. The various companies that she had once invested and/or served as a shareholder and/or director were not generating profits, and when she failed to meet the requirement of injecting further capital, her shareholding in these companies were forfeited. 12.Since February 2015, she has been living with the son in a 2,637 sq feet flat in Shanghai alleged by her to be beneficially owned by her parents but is now registered in the sole name of the husband (“Shanghai Property”), and for which she is now paying her parents a sum of $42,000 per month as rental payment. Based on the high and very comfortable living standard enjoyed by the parties and the son during their marriage, she says that it would not be unreasonable for her to engage the service of a full-time nanny, a cleaner and a driver at total cost of $23,513 per month to assist her in taking care of the son, while she works at home and earns a gross income of RMB$20,000 (about HK$23,000) per month. 13.With her reduced income, she is unable to raise further loans to fund her litigation, nor is she in a position to obtain legal aid. Although she owns 2 properties in Hong Kong, both of them are subject to a mortgage and are rented out. It is thus impossible to obtain a further mortgage, nor is it desirable to sell any of them in order to raise funds for her legal fees. Going forward, she says that she needs about $1,127,700 from the husband to fund her litigation, averaged out to be $112,770 per month, on the estimation that the financial dispute resolution (FDR) which will take place in 10 months’ time. The husband’s case 14.The husband hotly disputes the wife’s claim for her maintenance pending suit and legal costs provision. He takes the view that she has sufficient earning capacity and abundant financial resources to cover her needs and legal costs, which she has not fully disclosed to him and to this court. Of known is that she owns 2 properties in Hong Kong, which are both rented out for an income of about $37,100 per month. She has another property in Beijing (“Beijing Property”) which was co-incidentally sold for RMB3,230,000 in/about August 2016, shortly after the divorce proceedings started. He invites this court to disbelieve her allegation that she held the Beijing Property in trust for her mother, and that she has failed to account for the whereabouts of the sale proceeds. 15.He also points out that during the marriage, he had given a total sum of about $6.7 million to her as investment on his behalf, to which she has failed to account for despite his repeated request. Hence, he submits that she is guilty of non-disclosure, in the result of which she should not be awarded with any MPS and legal costs provisions. 16.As to his means to pay, he claims that his basic monthly income is about $160,000 only. He has spent all his bonus for the year in the sum of over $1,500,000. He is unable to rent out the matrimonial home in Hong Kong due to the wife’s conduct (to be elaborated further below). He simply does not have the means to pay for the current stopgap interim financial provision for the son, not to mention the sum now sought by her. 17.And it is his case that the wife has grossly exaggerated or unreasonably incurred the monthly expenses, such as the costs of employing a nanny, a cleaner and a driver. In his view, her reasonable household expenses, including that of the son and her parents whom he alleges are still living with her, should be about $89,895, and thus he shall only share 50% of the son’s general and other expenses which, according to his calculation, is about $19,711 per month only. 18.He thus maintains that the following offer from him is more than sufficient to cover his share of the son’s reasonable expenses in this interim period pending resolution of the ancillary relief matters:
Major issues 19.The huge gulf between the parties in this hearing relates mainly to their dispute on:
20.To understand the case advanced by each party as described above, I shall first set out the background in the proper prospective. The background 21.The parties are Chinese by race, though the husband is also a US citizen while the wife had studied overseas since she was 17. The husband is now 38 and the wife 34. They first met in 2010 and got married in 2012. In August 2016, the husband filed his petition on the ground of 2-year separation. The date of separation is in dispute, but does not concern this hearing.[4] 22.Their only son, now 3 years old, was born in March 2014. Since birth, he lives predominantly in Shanghai. He is now living with the wife in the Shanghai Property and studying K2 in Yew Chung International School in Shanghai. He has been diagnosed with development dysplasia of the hip which requires frequent medical check-up by his Hong Kong attending doctor since birth. It is understood by this court that there is no dispute for the wife to continue to have the care and control of the son. 23.The parties would not dispute that they both have a very strong banking or finance-related working background. 24.On the part of the husband, he is an Executive Director of an internationally renounced financial/investment company. His remuneration package includes basic salary, bonus and dividend/equity compensation.[5] In the financial year of 1 April 2015 to 31 March 2016, his annual income is $4,238,238 (or $353,186.50 per month).[6] 25.As to the wife, she was once the Vice President of a German bank and later a Chinese bank. Further, since or about 2013, she invested and became the director and/or shareholders of the following companies specialising on investment and private equity:
26.More will be said about these companies later in this judgment. 27.Before their marriage, the couple had each purchased one or more than one properties in Hong Kong in their respective sole name. For the wife, she purchased the Long Beach property in Kowloon on 18 June 2011 and Flat 31C in Sheung Wan on 19 August 2011. Both properties are now renting out, the rentals of which are used for paying the monthly mortgage repayment and other property-related outgoings. The husband bought Flat 25A in the same development of Flat 31C on 19 September 2011. There is no dispute that Flat 25A (“matrimonial home”) used to be their matrimonial home before their separation. 28.It is not disputed or is indisputable that in May 2013, the wife quitted her job as the Vice President of the German bank and returned to Shanghai (where her parents were and still are living) in preparation of her pregnancy. The son was born 10 months later in March 2014 in Hong Kong. After his birth, the wife stayed in Shanghai with the son and her parents, while the husband remained in Hong Kong as his work base and visited them from time to time. Since or about February 2015, the wife moved to stay in the Shanghai Property with the son. 29.When the son was about 1.5 years old, ie around September 2015, the wife returned to Hong Kong to work as the Vice President of a Chinese bank, with a basic salary of HK$105,000 per month. The son remained in Shanghai and stayed with the husband’s parents. It was also around the same time that the parties started to drift apart. According to the husband, the parties grew apart due to the lack of time to stay together. The wife, however, says that the husband was (and still is) having an affair with another woman. 30.No matter what the true reason(s) are, the indisputable fact is that the wife was not doing well in her new job with the Chinese bank. In April 2016, she quitted her job and returned to Shanghai, and has been staying there with the son ever then. 31.As said above, the husband issued his petition based on unreasonable behaviour of the wife in August 2016, to which she filed her answer and cross petition alleging unreasonable behaviour on the part of the husband. They have later agreed to issue a fresh petition based on separation. 32.In/about September 2016, the husband sent a message to the wife, telling her that he had removed all her belongings in the matrimonial home to a storage. He also complained that she had arranged the estate agents to sell the matrimonial home without any prior notice to him. He regarded this as a bullying act of the wife and thus she had no more right to access the matrimonial home.[7] Be that as it may, the wife attempted to return and stay in the matrimonial home on 29 October 2016. She arranged the lock smith to open the door lock. Events that took place after 29 October 2016 in respect of her staying in the matrimonial home turned into a big roe, as a result of which police report was made. The wife never returns to the matrimonial home since this incident. About 2 weeks later, she took out her summons for interim financial provisions. 33.The matrimonial home is now left vacant, as the husband says that he has moved out from it in/about August 2016 to stay in an apartment in Kennedy Town.[8] As a result, he is now paying $17,000 per month to service the mortgage of the matrimonial home and another $28,000 per month for renting the Kennedy Town apartment. 34.As at the date of this judgment, the parties have started another front of litigation in China, whereby the wife’s parents have commenced a civil claim in the Shanghai Court against the husband in respect of the ownership of the Shanghai Property. Financial arrangement so far 35.In so far as the financial arrangement during the marriage is concerned, there cannot be of any dispute that the husband had, during the majority period of the marriage, transferred part of his monthly income at the end of each month from his HSBC account into the HSBC joint account (with the wife) by way of standing instruction. It is equally indisputable that the HSBC joint account was there and then under main operation of the wife. 36.Gleaning from his HSBC account[9] and his updated table claiming that about $6.7 million was transferred from his HSBC account to HSBC joint account over the years (“Husband’s Table”),[10] I arrive at the following brief picture:
37.It is not in dispute that the husband ceased payment to the wife since April 2016. 38.By an order made on 28 November 2016 (“1st interim order”), the husband agrees to pay the wife HK$20,000 per month starting from 1 December 2016 for the benefit of the son and undertakes to pay:
39.By a further order of 10 March 2017 (“2nd interim order”), the husband agrees/undertakes to pay the following as a stop gap arrangement pending the substantive argument and this judgment:
40.The husband says he is now paying at least HK$86,639 per month pursuant to the order/undertaking of 2nd interim order. But he is adamant in saying that this amount is significantly more than the son’s reasonable and actual expenses, and he invites this court to reduce it. Applicable legal principles
41.The power for the family court to make a maintenance pending suit for a spouse is provided in sections 3 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) respectively. 42.The governing principles are explained by Hartmann JA (as he then was) in HJFG v KCY [2012] 1 HKLRD 95, citing the judgment of Nicholas Mostyn QC (sitting then as a deputy High Court judge) in TL v ML and Others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263, as follows:
43.The learned authors of Rayden & Jackson: Divorce and Family Matters (18th ed) sets out at §16.17 the governing principle on this type of application which is also useful to repeat here:
44.Interim maintenance order for the child of the family is governed by section 5 of MPPO. It is noteworthy that section 5 gives the court a much wider power in dealing with financial provision for children both in terms of the time for making orders which is before or on granting the decree of divorce. Also of relevance is section 7(2) of MPPO which requires the court, when considering an application albeit of an interim nature on behalf of the child of the family, to exercise those powers as to place the said child, so far as it is practicable and just to do so, in the financial position in which the said child would have been if the marriage had not broken down and each of the parties had properly discharged his or her financial obligations and responsibilities towards them.
45.It is settled law that the court has the power to include an element for the contribution towards a spouse’s legal costs in an order for maintenance pending suit under section 3 of MPPO (See: KGL v CKY & Anor [2003] 2 HKC 512). The governing authority continues to be Currey v Currey [2006] EWCA Civ 1338, [2007] FLR, which is adopted by the Hong Kong Court of Appeal in HJFG v KCY (surpa) and H v H, FCMC 1969/2007, date of judgment 3/10/2007. The conditions for a costs allowances are as follows:
46.Again in HJFG v KCY (supra) at §80, Hartmann JA (as he then was) stated that there should be an initial and overarching enquiry into:
47.Besides, the applicant spouse is required to provide a sufficiently detailed breakdown of his/her anticipated costs, as explained by His Lordship in HJFG v KCY (supra) at §§78-79 of his judgment. 48.With the above principles in mind, I shall now start to analyse the evidence and the issues. And unless stated the otherwise, the following analysis applies both to the application for MPS/interim maintenance and litigation funding. Historical payment of $117,000 49.I have set out in the table at §[36] above about the monthly transfer by the husband to the wife by way of standing instruction. It cannot be disputed that from June 2014 to September 2015, the husband transferred $117,000 each month to the wife by way of standing instruction. Such financial arrangement takes a central part in the submission of both parties, in that the wife argues that the status quo arrangement should be kept in this interim period, but the husband avers that payment for investment purpose does not represent the wife’s needs. 50.The binding authority on this court on the notion of “maintenance” is HJFG v KCY (supra), where Hartmann JA (as he then was) explained the concept of “maintenance” at §§34-38, in particularly at §34:
51.Thus, “maintenance” should be restricted to those payments “necessary to meet the recurring costs of living” and for the “immediate and reasonable needs” of the applicant spouse and the child(ren) under his/her care. 52.The wife relies on C v F [2006] 1 HKFLR 41, where HHJ Bruno Chan (as he then was) held that even if part of the past maintenance was for the wife’s savings, “if it were part of the parties’ lifestyle and practice in the past, [he fails] to see why it should be treated differently from, say, paying for her large credit card bills or providing 3 cars for her use”, therefore forming part of her needs for the MPS purpose. 53.She also refers to CWK v YCHS & another (unrep), FCMC 6082/2014, judgment dated 10/12/2015, where Deputy Judge Own (as he then was) met similar dispute on the use of historical payments and the learnt judge ruled that “maintenance” can include savings or “making arrangements for the future”. 54.In my view, each case has to be decided on its own fact. Notably, C v F (supra) is regarded as a big money case, in which the wife there is a housewife in a 37-year’s marriage. In CWK v YCHS (supra), Deputy Judge Own (as he then was) took into account the “tri-partes relationship” when ordering the husband there to continue to pay substantially the historical sum to the wife to achieve fairness. There, the parties were married for 27 years (at the time when the petition was filed), during which husband had a relationship with the 2nd respondent “running in parallel” to the marital relationship with the wife for almost 13 years. It is obvious to me that the facts in these 2 cases are substantially different from the facts now before me. 55.More importantly, it is noteworthy that in the above 2 cases, the court did not make a MPS order that replicated the historical amount paid to the applicant spouse, but made adjustment (a reduced sum) after taking into account the relevant factors. 56.It is thus clear to me that there is no hard and fast rule that the court must make a MPS order to replicate the maintenance that have been paid holistically. The court must take into account all the relevant factors, such as the paying party’s ability to pay, the reasonable needs and the financial resources of the applicant spouse (and the child(ren) if applicable), which I shall go into depth in the following. The husband’s ability to pay 57.I shall perhaps start the discussion by addressing to the issue which, in my view, should have the least dispute, ie the husband’s ability to pay. His latest position is that he has no means to pay for the stopgap arrangement under the 2nd interim order, not to mention the sum now sought by the wife.[12] 58.According to his Form E (dated 28 December 2016), the husband affirms that his average monthly income, which comprises of basic salary, bonus and other allowances, is HK$353,100.[13] He has a bank balance of $476,528 and stocks which are worth $341,453. He puts his monthly expenses as HK$386,437 per month like these:
59.On the face of it, his average monthly income is unable to cover his alleged monthly expenses. Yet, I find it strange and unexplained that in his 1st affirmation (dated 26 January 2017) which is expressly made in opposition to the wife’s application for MPS/interim maintenance for herself and the son, he is totally silent on his ability to pay. Rather, he focuses his case on the wife’s abundant and undisclosed financial means to support herself and to pay half of the son’s expenses. 60.It is only in his 2nd affirmation (dated 24 May 2017) that he claims that he does not have the means to pay the sum sought by the wife, because he has spent all the bonus received by him on 24 January 2017 in the sum of $1,577,294 in the following manners:
61.Three points can be taken from the above allegation. First, the bonus was received 2 days before the husband affirmed his 1st affirmation in opposition to the wife’s application. However, he chooses not to frankly disclose it to this court in his 1st affirmation. He chooses not to disclose it until he has allegedly and totally siphoned it all. Second, he has not provided any or sufficient supporting proof that the bonus has been spent in the way he has alleged (save and except the son’s school fees which the wife does not seem to dispute). Third, a brief reading of his HSBC account of the relevant period (where the said bonus was credited) does not find the withdrawal pattern substantially match with the aforesaid items of expenses claimed by the husband. 62.It is trite law that where the affidavit disclosure by the payer is obviously deficient, the court should not be hesitant to make robust assumptions about his ability to pay. The court is not confined to the mere say-so of the payer as to the extent of his income or resources (See:HJFG v KCY (supra) at §37; TL v ML & Other (supra) at §124). 63.Ms Thelma Kwan, counsel for the wife, further submits that the husband continues to adopt a deafening silence with regard to the status of the leasing of the matrimonial home, which has been left vacant for months. As a result, he has to pay $17,000 per month for its monthly mortgage repayment and another $28,000 as rental of his currently resided apartment. Counsel submits that this is clearly his tactic to increase his expenses. 64.The husband claims in his 2nd affirmation that the inability to let it out was due to the wife’s repeated obstructions since April 2016 by misrepresenting to the estate agents in June/July 2016 that the matrimonial home would be sold instead of renting out, giving away the keys of the matrimonial home to the estate agents for property viewing and breaking into and staying at the matrimonial home in October 2016. All these, the husband complains, were done without his knowledge or consent, thereby causing police reports be made. As a result, the estate agents refuse to recommend the matrimonial home to potential tenants because they are afraid that the prospective tenants may be obstructed by the wife in future. 65.The overall affirmation evidence shows that the husband has moved out of the matrimonial home since August 2016, whereas the wife has vacated from it by about December 2016. By the time of the substantive hearing, the matrimonial home has been left vacant for about 6 months. I accept Ms Kwan’s submission that it is impossible to imagine that the matrimonial home can remain vacant for months, in particularly it is the husband’s own case that “the landed property market in Hong Kong is very active” so that the wife should be able to sell her properties within a few months in order to cover her litigation costs.[14] 66.Besides, it is my view that the husband fails to show that he has made genuine attempt to rent out the matrimonial home. But even if some documents, such as estate agency agreement to rent out the matrimonial home, was able to be provided by the husband, I would still accept Ms Kwan’s submission that he is yet to explain why he chose not to move back to the matrimonial home in order to save his rental expenses (now standing at $28,000 each month), which are obviously more than the monthly mortgage repayment ($17,000 per month). In my view, if his financial position is really as dire as claimed, it would make more sense for him to move back to the matrimonial home so that his rental expenses can be saved up to satisfy the interim financial provision that this court is about to determine in this judgment. 67.On the other hand, I note that Mr Eugene Yim, counsel for the husband, has fairly accepted in his submission that the husband earns “a stable income”. Counsel has not gone any further in his written and oral submission on the issue of the ability to pay, save that he asks this court to bear in mind the US tax ability of the husband, to which he has to accept that the husband has not provided a single piece of documentary proof. 68.Pausing here, in so far as the provision of documentary evidence on his income is concerned, the husband, in reply to the wife’s questionnaire, claims that he does not have an employment contract with his employer. Without any intention to bind the future trial judge on the ancillary relief matters, I find it rather hard to believe, for it is against commercial or common sense that an internationally renowned financial/investment company would not have signed a written employment contract with its employee of senior grade in order to, for example, protect its confidential information (including clientele) and to impose a non-competition restriction should that senior employee leaves the employment. 69.Having considered the evidence in its totality, I have no doubt that the husband is a high-income earner and that he has the ability to pay the sum ordered by this court in this judgment. In any event, with a stable and high income, he will have the ability to borrow which is also regarded as a financial source of the paying party in any MPS application. The living standard 70.The reasonable needs of the wife and/or the son would have to be considered against the living standard of the family during the marriage. 71.In HJFG v KCY (supra), Hartmann JA (as he then was), explained inter-relationship of the amount of MPS and living standard in this way:
72.According to her 1st affirmation (dated 24 November 2016) and 5th affirmation (dated 27 June 2017), the wife describes the living standard during marriage as “very comfortable” and “high”. She says that she maintained a well-off personal lifestyle and relatively high level of spending. For example, she purchased only branded items, such as Manolo Blahnik shoes which were worth over $5,000 per pair. The husband, however, maintains that the wife is “a thrifty person who never spent extravagantly”. In his Form E, he describes the living standard during the marriage as “reasonable”. 73.In my view and by adopting a broad brush approach, the following accommodation or living style during the marriage is not in dispute or is indisputable from the respective Form Es or affirmations of the parties. 74.When they got married, they held 3 wedding ceremonies at different countries and at costly venues, including Bulgari Villa in Bali, the Peninsula Hotel in Hong Kong and Radisson Blu Plaza Xingguo Hotel (興國賓館) in Shanghai. 75.Due to their work nature, they travelled extensively and frequently. Aside from their travel, they spent their marriage time in either Hong Kong or Shanghai. When they lived in Hong Kong, they lived in the matrimonial home which measured about 880 sq feet with 1 bedroom and 1 study, and a part-time helper was employed to help doing the cleaning. In Shanghai and since February 2015, they lived with the son in the Shanghai Property of about 2,637 sq feet with 3 bedrooms and a study. 76.The son was born in the Hong Kong and Sanatorium Hospital. After his birth, the wife stayed at a post-partum care centre with him for one month which cost about RMB80,000. A nanny was employed to take care of him since his birth.[15] As said, he is now studying in Yew Chung International School in Shanghai. 77.However, the parties did not have any membership of private clubs whose membership carried a substantive value. They only joined fitness/beauty centre(s). When they travelled, they usually stayed in 5-star hotels and flew on premium economy class, but only by redeeming or upgrade of air tickets since the husband was a frequent traveller of the airlines. Despite the wife claims that she only purchased items with brand-names, her Form E does not reveal that she is in possession of any items which can be said as lavish and luxury. She merely possesses jewelleries which she claims are worth $100,000 only. 78.My overall impression is that the living standard during marriage was good and comfortable, but not that of luxurious and extravagant standard. However, they do impress me that they were willing to provide a good, comfortable and more than middle class living and education environment for the son. It is with this background in mind that I will proceed to consider the wife’s MPS budget. The MPS budget at a glance 79.The wife’s MPS monthly budget has increased from about $162,000 (in her 1st affirmation dated 24 November 2016) to $178,616 (in her 4th affirmation dated 30 March 2017).[16] She is seeking is a sum of $117,000 per month and the husband’s undertaking set out more particularly at §[2] above. 80.Since the husband is quite prepared to upgrade the medical/dental insurance plan of the wife and the son and to reimburse her of those expenses not covered by the insurance plan,[17] I am not going to address to and include their medical and dental expenses any more in the MPS budget in this judgement. The wife’s latest claim of her net budget,[18] the husband’s latest response to her budget[19] and his own monthly expenses (mainly from his Form E dated 28 December 2016) are set out in the following consolidated table for easy reference:
Analysis on the MPS budget 81.In the following, I propose to firstly give my overall observation/comment to the counsel’s submission on the wife’s budget generally, before I go into depth the more material and disputed items of expenses. 82.I should begin by addressing to Mr Yim’s submission on the wife’s receipts of expenses. Counsel submits on behalf of the husband that a closer look at her budget against other available evidence immediately shows that she is guilty of forensic exaggeration. He points out that not all items of her expenses are substantiated by receipts or documents. Some receipts provided by her are illegible and some concern expenses of more than 2 persons. He refers to the 2nd affirmation of the husband, in which the husband comments about the receipts that the wife originally intended to disclose in her 3rd affirmation but was later withdrawn. The husband’s case is that many of the receipts are not in compliance with the relevant law and regulations of China and that they may even be “false receipts”.[24] 83.No one would dispute that to allege fraud is a very serious allegation, such that very cogent evidence is required to establish the same. Since I am only required at this stage to take a broad brush approach and due to the fact that oral evidence is not received and tested at this interim stage, it is inappropriate and impossible for me to make any specific finding on the alleged falsity of the wife’s receipts. 84.Further, even if (just assuming) the wife’s receipts are doubtful, it is my view that her and the son’s reasonable expenses are still required to be adjudicated, on a broad brush manner, by reference to the living standard during marriage that may also be gleaned from the husband’s expenses claimed in his own Form E. If so, one would without doubt notice the huge disparity of the expenses claimed by him in his own Form E and his response of what he thinks should be the reasonable expenses in the wife’s household. I am going to give a few examples. 85.From the table at §[80] above, he puts his monthly expenses as $382,331. Even if this court is to discount his tax liabilities ($133,180) and the then interim payment for the son ($20,000), his alleged total monthly expenses are still as high as $229,151. His general expenses ($60,694) and the son’s expenses ($33,757) alone, excluding his own personal expenses, come up to $94,451 per month, when the son does not even live with him at the material time. It is grossly unfair in my judgment for him to say that the reasonable expenses of the wife’s general, personal and child expenses altogether should be $48,257 per month only. 86.In so far as the personal expenses are concerned, he puts his as $134,700 per month (excluding his tax and interim payment for the son), but allows the wife a very modest sum of $13,000 only, which in my view is totally unfair and not commensurate with the good standard of living during the marriage. 87.I shall now turn to the more specific disputed items of expenses referred to in Mr Yim’s written submission.[25] (i) Rent of Shanghai Property 88.The wife says that she and the son have been residing at the Shanghai Property by paying rental of $42,000 per month (which is equal exactly to the monthly mortgage repayment) to her parents. It is her case that the Shanghai Property, though registered in the sole name of the husband, is a trust property held by him for her parent. 89.The husband, on the other hand, claims that the Shanghai Property is a wedding gift from the wife’s parents, and is thus beneficially owned by the parties. Hence, Mr Yim submits, there is no reason for the wife to pay rent to her parents for living in the Shanghai Property; what in fact she has been paying is its mortgage repayment after the husband ceased the relevant payment in/about mid-2016. However, as pointed out by HHJ Melloy in IT v LWYG, FCMC 18087/2013, 18 May 2016, unrep, at §11, mortgage expense is a ‘capital expense’ and should not be included as an item of recurring costs of living. 90.Putting aside the discussion of whether a mortgage repayment is a “capital” expense and thus should not be counted as recurring costs in any MPS application, I have to point out that in IT v LWYG, the parties have no dispute as to the nature of the mortgage expense, whereas here, the nature of the said sum of $42,000 is in dispute, with the wife saying it is rental payment but the husband averring it is mortgage payment. The ultimate answer to this dispute hinges on the beneficial ownership of the Shanghai Property, which, despite Mr Yim’s eloquent submission, is pre-mature for this court to make any determinative finding at this stage. 91.It is however pertinent for me to make 3 points. First, it is the husband’s own evidence that he has been holistically paying this sum of $42,000 before the breakdown of the marriage.[26] Second, the husband refers this sum as “Shanghai property rent” in one of their WeChat messages in March 2016 when he explained why he paid merely $40,000 to the wife and queried why she needed $35,000 more. In that WeChat message, he says (in English translation):
92.I notice that the husband is silent to the above WeChat message (disclosed by the wife) in his 2nd affirmation in which he only responds that the accommodation expenses claimed by the wife are excessive, because the Shanghai Property is meant to house 5 people (ie the wife, the husband, the son and the wife’s parents). However, he has not suggested what the reasonable accommodation expenses should be in his affirmations. 93.It is indisputable that the son has been living in the Shanghai Property almost since birth. For his best interest, I am not prepared to interrupt that for this interim period, though I think the parties have to acknowledge that in the long run, the family is divided into 2 separate households and some reasonable adjustment to their accommodation standard has to be made. Until then, I take the broad brush view that this sum of $42,000 is the reasonable accommodation expenses of the wife and the son. (ii) Mortgage instalments & management fees 94.In relation to the wife’s Hong Kong properties, I have done the necessary adjustment on the mortgage instalments and management fees after taking into account the rental income received by her. The adjusted figures are set out in the table at §[80]. I do not find the out of pocket payment made by the wife unreasonable. (iii) Cleaner/nanny/driver 95.The expenses for a full-time nanny, a cleaner/maid and a driver are the items hotly contested by the husband who says these in his 1st affirmation:
96.On the cleaning lady, I do not accept the husband’s contention (and thus Mr Yim’s submission) that a part time cleaner was not hired during the marriage. In his Form E (part 5.3), he describes that a part time helper was employed to help cleaning the matrimonial home in Hong Kong once every week for 3 hours. His Form E also reveals that he continues to spend $1,300 per month to hire a part time maid for himself. In the premises, it is not fair for him to argue that the wife and the son cannot be allowed to enjoy the assistance of a cleaner as claimed. It is not helpful for the husband to compare the expenses of employing a full time maid in Hong Kong with that in Shanghai, since the wife and the son are now living in Shanghai but not Hong Kong. 97.A full time nanny has been employed in taking care of the son since his birth, which cannot and is not disputed by the husband.[28] I cannot see why this arrangement should not be continued for the time being in the best interest of the son. I do not accept that the maternal grandparents should be made to take up this job in place of a nanny for this interim period. Importantly, the husband himself says in his Form E that the child-minding fees of the son is $7,000 per month. It falls short of logic that he now says a nanny is not required for this interim period. 98.As to the need for the nanny to accompany the son to Hong Kong for medical appointments and for holidays, however, I take a different view. While the wife needs the assistance of a nanny in Shanghai as she has to work or to travel for work occasionally, she would be with the son all the times during medical appointments and holidays. The assistance of the nanny is quite unnecessary, and thus the associated travelling/hotel expenses would not be allowed. 99.Having said the above and without the intention to bind the trial judge in the ancillary relief matters, I think as the son grows older and is no longer a toddler, the necessity of a nanny may need to be justified. 100.The wife confesses that a full time driver is hired only after the separation. In my view, she has not provided sufficient justification for employing a full time driver, nor can she persuade me that such arrangement falls within the living standard during the marriage. I am of the view that the son can take other mode of transport, such as taxi or uber. The wife says in her 3rd affirmation that $694 per month is needed for the son to take taxi/uber when the full time driver is off duty (which I take it that employees work 5 days in a week in China). Broadly, the son would thus need about $2,600 per month as his travelling expenses in Shanghai. As to the air ticket expenses for flying to Hong Kong to attend medical appointments, the husband does not dispute that the son will take 3 trips to Hong Kong for such purpose and the travelling expenses are $14,335 per year, or $$1,195 per month. The son’s needs for his transport expenses is thus about $3,800 per month. (iv) Extra curricular activities 101.The husband makes no suggestion on the son’s extra curricular expenses because it is his case that such expenses have all been included in the school fees and thus no further expenses should be counted. The wife, however, says that the son is also attending other classes such as logical thinking classes at Brain School, swimming classes. 102.In deciding whether such classes are reasonable, one must consider it against the background of the parties. They are highly educated professionals who were educated overseas since they were young. They send the son to an international school in Shanghai, Yew Chung International School. It is thus viewed at this preliminary stage by this court that it is an acknowledgment of the parties that they would want their son to receive good, if not excellent, education. In such circumstances, I tend to accept that the expenses for the claimed extra curricular activities are reasonable. (v) The son’s expenses to Hong Kong for medical appointments 103.The wife wishes the husband to give his undertaking to pay for the son’s air tickets to Hong Kong and half of his hotel accommodation expenses, which the husband does not seem objecting. 104.However, due to the matters which will become obvious later in this judgment and given the ultimate test for a MPS application is “fairness”, I would have this to say. It remains true that the wife has to incur extra costs solely for the purpose of taking the son to Hong Kong for his medical appointments. I am of the view that her air ticket(s) and hotel accommodation solely for such purpose should be regarded as the direct costs of the son. 105.There is no dispute that the son has to come to Hong Kong 3 times each year for medical appointments. According to the table in §[80] above, the wife spends about $2,800 on air tickets per trip for 6 trips to Hong Kong each year for taking the son to medical appointments or for the divorce proceedings, which means that she spends about $700 per month on her air tickets solely for accompanying the son to attend medical appointments in Hong Kong. I shall, however, take the husband’s more reasonable figure of hotel accommodation as the marker. He says that half of the son’s hotel accommodation expenses costs him about $2,000 per month. That means that the wife’s air tickets and hotel accommodation expenses incurred solely for taking the son to attend medical appointments in Hong Kong are about $2,700 per month, which will be regarded as the son’s direct expenses. (vi) Personal expenses generally 106.It is the husband’s submission that the personal expenses claimed by the wife ($45,463) is manifestly excessive and is not in line with the standard of living of the family during the currency of the marriage. In his view, her personal expenses should not be more than $13,000. Yet, his own personal expenses claimed in the Form E is $287,880 (or $134,700 if his tax liabilities and the son’s interim maintenance are excluded). 107.Although he later says in his 2nd affirmation that he needs to cut his expenses in order to comply with the 2nd interim order, he still puts his personal expenses as high as $50,000 per month. 108.For the purpose of this application, I do not find it necessary to analyse item by item of the wife’s personal expenses and the husband’s response. I only need to refer to the table at §[80] and pinpoint a few items by way of comparison and illustration. For example, while the husband claims the amount on his meals out of home is $17,000 per month, he criticises the wife’s claim for $5,780 is excessive and suggests a token figure of $2,000 instead. For another example, he claims his clothing/shoes/bags/glasses cost him $11,200 per month, but is of the view that the same items for the wife should $2,000 instead of $6,934. He further claims that his holiday expenses are $17,000 per month, but suggests that the wife’s should be $2,000 but not $2,635, which means that he is disputing a totally insignificant figure of $635 only. 109.It is thus obvious to me that the husband is applying a double standard to his and the wife’s personal expenses, which should not be encouraged. 110.Of further note is that during the course of his submission, Mr Yim provides a table of the wife’s HSBC credit card account (from September 2015 to April 2016) showing that her average monthly spending is $31,433, which is substantially more than the husband’s suggested figure of $13,000 per month. 111.However, I do take into account that the wife is no longer working as a banker now, at least not for the time being, and thus there is reduced need for her to maintain her banker image by buying brand-named items in order to mingle with the social circle like that of Hong Kong. Her expenses spent on clothing and shoes and personal grooming can be adjusted downward. Besides, her income has reduced and thus will also be her tax liabilities. 112.Viewing all the above matters in totality, I think it will be fair and reasonable to allow $35,000 per month for her personal expenses. Summary of interim reasonable expenses 113.I take note that according to the husband’s own case, the son’s school fees have increased to about $19,159 per month. I have found that the son’s monthly transport expenses, including air tickets to Hong Kong for medical appointments, are about $3,800 per month (see: §[100] above). I have also ruled that the wife’s air tickets and hotel accommodation expenses incurred solely for the purpose of taking the son to Hong Kong for medical appointments in the sum of about $2,700 per month should be regarded as the son’s direct costs for the purpose of this application (see: §§[104]-[105] above). By taking a broad brush approach, I come to the conclusion that the immediate and reasonable expenses of the wife and the son are like these:
114.For avoidance of doubt, the son’s expenses of $56,000 in the above table have already included the school fees and the son’s travelling and accommodation expenses in Hong Kong (inclusive of the wife’s), but excludes medical/dental expenses. 115.Broadly apportioned, the wife’s total monthly expenses are $67,500 per month, while those of the son are $88,500 per month. The wife’s earning capacity 116.Whether a party’s earning capacity should be considered at the stage of a MPS application is considered and discussed by the Court of Appeal in LJ v LWHH (maintenance pending suit) [2003] 3 HKC 455. There, the respondent (husband) was a Hong Kong and US permanent resident, while the petitioner (wife) was a native of Shanghai. They were married in China in 1997. During a visit to Hong Kong in 2001, the petitioner suspected that the respondent had a girl-friend in Hong Kong, to which he denied. Their relationship became strained. In April 2002, the respondent applied unsuccessfully for divorce in Shanghai, after which he stopped paying any maintenance to the petitioner. In November 2002, the petitioner obtained a single permit to settle in Hong Kong and she filed a divorce in March 2003. In her application for MPS, the family court awarded her with $3,000 only and rejected her sum for $35,000. The deputy judge hearing the application took the view that it was highly relevant that the petitioner still chose to come to Hong Kong, despite that the respondent had filed a divorce in Shanghai. Therefore, her expenses in Hong Kong, as opposed to her needs for living in Shanghai, should not be taken into consideration in her MPS application. 117.The petitioner appealed and her appeal was allowed by the Court of Appeal (Yeung and Yuen JJA). In her judgment, Yuen JA was to determine, inter alia, whether the deputy judge fell into error of principle in taking into account the petitioner’s earning capacity at MPS stage. Her Ladyship explained as follows:
118.The wife is now working as an Investment Director in Shanghai earning gross income of RMB20,000 per month. She says that she has ceased to receive $40,000 (net to $37,000) per month as a director from GLB (Hong Kong) since/about April 2017, because the company is not doing well and thus has to cut its expenses. She provides a letter issued by GLB (Hong Kong) saying that she has ceased to be a director since 1 April 2017.[29] 119.In his 2nd affirmation, the husband avers that that the wife should have the capacity to earn more than $100,000 per month, given her employment record and her proven ability in investment. Her last job in Hong Kong with the Chinese bank yielded a monthly salary of at least $103,500. 120.On behalf of the husband, Mr Yim submits that the letter of GLB (Hong Kong) is self-serving and that the wife should have provided more proper documents such as a board resolution to substantiate her allegation. He points out that it is rather surprising that she would, having allegedly invested at least $1,800,000 and $224,000 quite recently into GLB (Hong Kong), suddenly be stripped of her directorship and director’s remuneration. It also makes no logical sense, Mr Yim says, that the wife would receive a merely RMB20,000 per month for a full time job when she has to spend about $20,157 to hire a maid, a nanny and a driver to assist in taking care of the son, because the said 3 items of costs would literally eat up her alleged income. Further, Mr Yim refers to the chat messages of the head-hunter in Shanghai (provided by the wife) and says that the wife should be capable of earning at least $400,000 - $500,000 per year. 121.I can see some force in Mr Yim’s argument on the proximity in time of the wife’s MPS application and her alleged termination of directorship and income of GLB (Hong Kong). But on the other hand, Ms Kwan refers me to an email from GLB (Hong Kong) to the wife dated 12 January 2017 explaining the financial difficulty faced by the company in the last 2 years.[30] Notably, the audited account of GLB (Hong Kong) ended 31 March 2014 I shows that the company is running in deficit. In such circumstances, I am not prepared to say that the wife is still receiving $37,000 per month from GLB (Hong Kong) at this stage. Whether she will receive income from GLB (Hong Kong) in the long run is a question to be determined at the final ancillary relief trial. 122.Further, I would not go as far at this stage as to accept the husband’s suggestion that the earning capacity of the wife would allow her to earn more than $100,000 per month. Here, the hard fact is that she is now living in Shanghai with the son who is merely 3 years old. Her working experience in the banking/financial field in China is limited. The husband has to accept that she does not have the requisite banking or securities licence(s) in China so as to enable her to do the equivalent level of job that she was doing in Hong Kong. It is in my opinion unreasonable to demand her to work in Hong Kong in this interim period, leaving behind the son to the nanny or the grandparents. The head-hunter’s messages have been duly considered but fail to change my view. It is my additional view that the wife cannot be criticised not to take up a job which requires frequent travel in return for higher pay during this interim period when the son is comparatively small. 123.There is suggestion by the husband that it is a litigation-driven tactic of the wife to quit her job with the Chinese bank in Hong Kong in April 2016 and then deliberately choose to indulge herself in self-generated low-pay job(s), in order to extend her reach over the husband’s hard-earned incomes. However, I do not agree. This line of submission has omitted the husband’s own affirmation evidence that by that time, they “finally accepted that [their] relationship had broken down irretrievably and a divorce is unavoidable” and that the wife had “poor performance in her job”, so that she decided to return to Shanghai to live with the son. 124.Due to the matters set out above, I cannot see any short term prospect that the wife would have the earning capacity of $100,000 per month or $400,000 - $500,000 per year. Her long term prospect of earning capacity will and can only be determined in the final hearing for ancillary relief. She is taken to receive only RMB20,000 per month as her salary for the purpose of this application. The wife’s (undisclosed) financial resources 125.The wife’s financial resources are at the central stage of dispute in this application. 126.In her Form E dated 24 November 2016, the wife says that she owns 2 Hong Kong properties but they are subject to mortgage. The rental income generated from these 2 properties are applied to pay the mortgage repayment. Besides, she has securities in the sum of about $340,700, jewelleries which are worth $100,000, and bank savings of $462,333. About 7 months later, she claims in her 5th affirmation dated 27 June 2017 that her financial situation has deteriorated and that debts are accumulating. Her bank cash has dropped to $141,643 and her securities are now worth only $248,000. She is heavily indebted with 2 credit facilities with an outstanding loan balance of about $938,907 as at June 2017.[31] 127.Ms Kwan submits on behalf of the wife that these credits of BOC and HSBC were obtained when she was still living and working in Hong Kong. It is likely that when the banks review her credit lines, it would come to their attention that she is no longer working and receiving a salary in Hong Kong, and thus these credit facilities may not be available to her any more. In fact, she did receive a letter from HSBC in March 2017 asking for her working visa in Hong Kong (which expired in February 2017). When the credit facilities are cancelled, she will have to pay up the outstanding loans. Even if the same are not cancelled, she is now paying minimum payments and interest on these loans. If she maxes out on these credit facility, there is a minimum payment of $35,000 per month. Despite that, it remains true that as at this hearing, the credit facilities are still in force and loans have not yet been called. 128.It is the major theme of the husband’s submission throughout the hearing that the purpose of MPS orders is to deal with “short-term cash flow problem” of the wife pending trial on ancillary relief, but she has no such cash flow problem because she has sufficient financial resources at her disposal, which include but not limited to:
129.During the hearing, Mr Yim has helpfully confirmed that he is prepared to use the wife’s figure of about $4.7 million for the purpose of discussion in this application, without prejudice to the husband’s right to argue on the full sum of $6,500,000 in the final ancillary relief trial. He also urges me to bear in mind the following chronology, which shows that the wife starts to part her interest in property or companies since the separation took place in April 2016 (according to her case):
130.The issues will be dealt with in the following sub-headings. (i) Beijing Property 131.The Beijing Property was purchased in 2010 in the sole name of the wife. It is her case that she is a mere trustee holding it for her parents. She has provided a declaration of trust in the form of a hand-written note dated 21 October 2010 signed by her and her mother, and a PRC lawyer’s certificate dated 23 February 2011 (to confirm the said written note signed by the wife and her mother) as documentary proof. It is her further case that the Beijing Property was sold in or about July to August 2016 and the sale proceeds (RMB3,230,000) were paid directly to her mother who is the actual beneficial owner. Hence, she has no other information to provide in respect of its sale proceeds. 132.The husband does not accept the wife’s allegation. Mr Yim submits that the wife has not explained why the PRC lawyer’s certificate was dated after the alleged hand-written declaration of trust. She has not provided the necessary conveyancing documents, ie a formal sale and purchase agreement. 133.As I have told Mr Yim in the hearing, this court is unable, if not impossible, to determine on the beneficial ownership of the Beijing Property during this interim stage. If needs be, there may be a trial on this dispute of beneficial ownership by way of a preliminary issue. Since the wife is able to provide some documents at this stage, one of which is a PRC lawyer’s certificate, I am not persuaded by Mr Yim that I should take into account the sale proceeds of the Beijing Property as the undisclosed financial resources of the wife at this stage. But I have to make it clear that this is not meant to be a final view of this court in the case of a preliminary trial on the issue of its beneficial ownership. (ii) Interest in HR, HF and SX 134.According to the company search records, the wife acquired 6.5% of HR by investing RMB325,000 and 6.5% of HF by investing $65,000. HF is a management shell company for HR. 135.The wife claims that her interest in HF has been forfeited in lieu of her obligation to invest RMB210,000 into HR in this way: [33]
136.She provides a shareholder resolution dated 3 May 2016 showing that her shareholding in HF was transferred to a corporate shareholder.[34] 137.As to her interest in HR, the wife says that her shares therein was also forfeited in the following circumstances:[35]
138.She provides a shareholder resolution dated 1 August 2016 showing that her shareholding in HR was transferred to a corporate shareholder.[36] No compensation was given since HR was operating at a loss of over RMB1.7 million and the total value of shareholders’ equity was in the negative of over RMB4.5 million.[37] 139.It is the submission of Mr Yim that the wife’s affirmation evidence does not make any commercial sense, in that with her having invested at least RMB500,000 (via HR into SX in April 2016) and RMB150,000 (being the value of her HF shares) into HR, it is absolutely unbelievable that she would “forfeit” her shares in HR when what she was required to pay was simply a further sum of RMB60,000 in late 2016. This is even more so when it is taken into account the sum owed by HR to her (RMB19,248.63) as a shareholder for the period of January to April 2016, which was subsequently paid to her on 13 January 2017. This begs the question that the wife is still beneficially interested in HR, HF and SX. 140.I have to agree that Mr Yim has made a very tempting argument, especially in view of the chronology provided by him at §[129] above. But, I also need to take into account that the wife has provided the relevant shareholders’ resolutions to prove that she no longer owns the shares of these companies. There are also the company search records showing the transfer of the shares of HR and HF to a new corporate shareholder, which are actually disclosed by the husband. Maybe, more will come out on her ownership (or non-ownership) of the shares of these companies upon further discovery or when oral evidence is received and tested. For the purpose of this hearing, however, I would incline to proceed on the basis that she is no longer a shareholder of these companies. (iii) Funds received from GLB (Hong Kong) 141.In reply to the husband’s 2nd affirmation about his allegation of her undisclosed income received from GLB (Hong Kong), the wife explained in her 5th affirmation that she received 2 sums of money from GLB (Hong Kong) as follows:
142.Mr Yim submits that the wife has not disclosed the details of the funds into which she has allegedly invested $1,200,000. He further submits that there is a lack of documentary evidence from the wife on the alleged re-investment of $1,800,000 by GLB (Hong Kong). She should be taken to have these moneys as her undisclosed financial resources. 143.While it is repeatedly stressed by the court that parties have the duty of full and frank disclosure of their financial means in ancillary relief matters, it is very often overlooked by them (and perhaps their legal advisers as well) that the law imposes a positive duty on them to disclose their financial resources. In the enlightening judgment of Johnson Lam J (as he then was) in L v L [2006] 1 HKFLR 121, His Lordship commented on the non-disclosure of the wife in that case and reiterated the positive duty to disclose one’s financial resources at §198 as follows:
144.In my view, the husband has raised his queries on her income from GLB (Hong Kong) in his 2nd affirmation. The wife, having confirmed in her reply affirmation that the said sums of $1,650,000 and $1,800,000 are her bonuses, has failed to discharge her positive duty to disclose the details of the fund into which she allegedly invested $1,200,000 out of her 2013 bonus. Nor has she produced in her reply affirmation any substantive documents to prove that she was required to re-invest her 2014 bonus of $1,800,000 into GLB (Hong Kong). She merely provides a letter dated 15 June 2015 allegedly from GLB (Hong Kong) claiming that the said sum of $1,800,000 was re-invested. Yet, it is correct of Mr Yim to point out that this letter is not signed and merely bears a stamp chop.[38] The audited account of GLB (Hong Kong) as at 31 March 2014 does not shed any light that the wife has re-invested $1,800,000 into the company.[39] She has not provided any other audited accounts of the company for this application. 145.Unless further discovery is to be made by her, I agree that she has not fully and frankly disclosed her financial resources in so far as these 2 sums of money are concerned, and adverse influence should be drawn. (iv) $4.7 million from the husband/Over $13 million withdrawn from her HSBC accounts 146.The husband says that he has transferred at least $6,500,000 to the wife over the years, but for the purpose of this hearing, his counsel is prepared to proceed on the basis that about $4,700,000 was transferred to the wife over July 2012 to March 2016 (about 45 months), without prejudice to his right to argue on the full sum of $6,500,000 in the ancillary relief trial. 147.In gist, the husband claims that this sum of $4,700,000 was transferred to the wife for her to make investment on his behalf, which she has failed to account for and thus it must be taken as her undisclosed financial means. The wife, on the other hand, avers that these were the household expenses provided by the husband (paid in the sum of $117,000 per month), with the balance, if any, going towards investments. Yet, she is unable to tell how much out of these moneys was utilized for investment. 148.I do bear in mind that application of this kind is determined on affirmation evidence only. But subject to further evidence to be discovered or disclosed, I am not inclined, at this stage, to take the husband’s version that these moneys were given to the wife for the purpose of investment only. If these moneys were transferred to the wife solely for the purpose of investment, then why he would continue to pay her most part of his salary and bonus even after his relationship with her had broken down and after they had separated, as he alleges, by September 2015, in particularly when she had allegedly refused to account for the details of the investment to him. I am sure the husband will have a lot to explain on this apparent contradiction in the ancillary relief trial. 149.That said, however, I feel obliged to consider the submission made by Mr Yim and it is this. The wife discloses in her 5th affirmation (ie the last affirmation filed for the purpose of this application) some of her HSBC bank accounts statements, which the husband/his legal team has reduced the details into a table (“Withdrawal Table”).[40] The Withdrawal Table shows that she has transferred a total sum of $13,692,441.25 between 2012 and 2016 out of her 3 HSBC accounts to various undisclosed or un-identified bank accounts:
150.Mr Yim points out that out of this total sum of over $13,600,000, about $5,360,000 were transferred into 3 regular receiving bank accounts which are un-identified by the wife. In my judgment, since the bank statements of these 3 HSBC accounts are only made available to the husband shortly before the argument hearing in June 2017, he has not formally filed his relevant questionnaire on these bank statements. As such, it may be pre-mature for this court to make any preliminary determination on the alleged non-disclosure of these un-identified accounts by the wife, except one which I shall go into details as follows. 151.One of the regular recipient of the transfer out of the wife’s 3 HSBC accounts is the account 500-xxx-002 (“Account 500”). The husband has previously asked question(s) concerning this account. Based on the Withdrawal Table, Mr Yim submits that for the years of 2014 and 2015, about $1,232,000 and $1,010,000 were respectively transferred into this Account 500 out the wife’s 3 HSBC accounts, totalling over $2,200,000. Yet, the wife tells in her answer to the husband’s 2nd questionnaire that she “has no recollection of the purpose of the transfer to [Account 500]” when she was asked specifically about a sum of $200,000 deposited into that account on 11 November 2014. I agree with Mr Yim that it is rather extraordinary that she is unable to recall the purpose of transferring money into this Account 500 given the fact that she has transferred over $2,200,000 into it for 2 years. As such, I do not think that she has discharged her positive duty to disclose this Account 500, in the result of which adverse influence should be drawn against her. Litigation funding 152.On legal costs provisions, the wife states in her 4th affirmation (dated 30 March 2017) that she has incurred legal fees of about $727,407 so far (ie up to March 2017), comprising of about billed costs of $567,687.22 and unbilled costs of $104,000 mainly due to the unreasonable approach adopted by the husband in conducting these proceedings. That is to say, she has incurred about $104,000 per month over 7 months. Going forward, she says that costs will have to be incurred in respect of children dispute resolution (CDR), discovery and trial on the preliminary issue of the Shanghai Property). She anticipates that another $1,127,700 is required to cover all of these costs up to the FDR which she says will take about 10 months to reach that stage.[41] She thus comes to the conclusion that she needs $112,770 per month from the husband to subsidise her litigation until the FDR. 153.On behalf of the husband, Mr Yim is adamant in submitting that the wife has not satisfied the Currey test, as she has sufficient assets, disclosed and undisclosed, to fund her own litigation. Counsel also points out that the wife has failed to provide any information as to how much has been paid already and how it was paid, without which the court is simply not in a position to determine whether the request for legal costs provisions is necessary and justified (See: KWTM v NSH (unrep), FCMC 14639 of 2007, date of judgment 3/9/2008 at §79). Other than the submission that the estimated fees appear to be on the high side, counsel also says that the estimated duration of 10 months to cover CDR, discovery and trial on the preliminary issue to reach the stage of the FDR is wholly unrealistic. In his view, all these procedures will take about 2 years, which means that the wife’s claimed figure of $1,127,000 should be averaged out by 24 months to become about $46,987 per month only. 154.To begin with, I agree with Mr Yim that the wife’s estimation of 10 months to reach the stage of the FDR is unrealistic. Mr Yim’s estimation on the duration is more acceptable. 155.It may well be true that the wife is unlikely to be eligible for legal aid, but given my finding on her financial resources set out above, it is apparent to me that she is able to finance her own litigation up to the stage of the FDR. In any event, she does own 2 properties in Hong Kong, one with a net worth of $2,200,000 and the other $2,500,000. It does not occur to me that the husband would object to her selling any of these properties to fund her own litigation, provided the sale is to be done in a transparent manner. The wife’s attempted argument that these properties are pre-marital and thus non-matrimonial property is a non-pointer. The fact that the properties are now with sitting tenants is unlikely to cause any adverse effect to sell any of it in a booming market. 156.Due to the matters aforesaid, it is obvious to me that the wife has not satisfied the conditions set out in the Currey test. Her application has to be refused. My conclusion 157.Due to the above analysis, I am of the view that the wife has not, at this stage, fully and frankly disclosed her financial resources set out as aforesaid. However, in all fairness to her, I will take note that she has to bear her own and the son’s expenses without any financial support from the husband for about 8 months from April to November 2016, and that she has to pay out of her pocket those expenses not covered by the undertaking/order in the 1st and 2nd interim orders. I will also bear in mind that she has been paying $42,000 per month for the Shanghai Property since about mid-2016 after the husband, on his own case (but does not mean that the same is accepted by this court) ceased paying for its mortgage repayment, until the 2nd interim order whereby the husband starts to contribute $20,000 per month for the son’s accommodation cost. 158.On the other hand, I place great weight on the effect of section 7(2) of the MPPO and the best interest of the son that he should receive steady financial support. I take into account the admission of the husband in his affirmation that since the birth of the son, he is responsible for “a major part” of his expenses. I also take regard of the facts set out in §[157]. 159.For all these reasons and all the other matters set out in the above, I conclude on a broad brush approach that it is fair to order the husband to bear all of the son’s expenses of $88,500 (rounded up to $89,000) per month in the interim stage. I also conclude that the wife’s income and financial resources would be able to meet her own needs and fund her litigation in the interim stage. Her application for her own MPS and litigation funding should not be allowed. 160.Looking at the overall overcome, neither the wife nor the husband can be said as the winner of this application. I shall thus make an order nisi that there be no order as to costs of both summonses of the wife. Order 161.My order is thus as follows:
162.I shall hold the husband to his continued undertaking that he shall:
163.For completeness and avoidance of doubt, his undertaking given previously on the interim financial provisions for the son should be discharged. 164.A penal notice will be endorsed to this court order. 165.Last but not the least, I do strongly urge both parties to adopt their good sense on how the ancillary relief matters should proceed, with a view to save costs for the benefit of their little son. They should seriously consider mediation, which I now direct them to confirm to this court if they are amenable to the idea in the next hearing.
Mr Eugene Yim instructed by Barbara Hung, Chain & Chow for the petitioner (husband) Ms Theresa Chow (for the hearing of 10 March 2017) and Ms Thelma Kwan (for the hearings of 28-29 June 2017) instructed by Haldanes for the respondent (wife) [1] Wife’s supplemental submission dated 23 June 2017 at §77. [2] It is noted from the wife’s supplemental submission of 23 June 2017 that she has dropped the request for the husband’s undertaking to pay for her own return air tickets when she brings the son to Hong Kong for medical appointment. [3] The husband’s costs up to June 2017 is about $1,026,700; while that of the wife is $1,202,496. [4] The husband alleges that separation took place since September 2015, while the wife claims that it was since April 2016. [5] [P1/131] [6] [P2/737] [7] WeChat message dated 6 Sept 2016 [P1/79] [8] Husband’s reply to the wife’s questionnaire [P7/2713/Q2] [9] Husband’s HSBC account [P2/662-668] [10] Husband’s reply dated 23 June 2017 to the wife’s questionnaire [P7/2751-2755] [11] The monthly transfer of $100,000 from the husband’s HSBC account into the HSBC joint account was made on the 4th day of each month, instead of the end of each month, by standing instruction. [12] Husband’s 2nd affirmation dated 24 May 2017 [P5/2033/§88] [13] The husband adds that since he is a US citizen, he is subject to US global tax of about 27% of his total income and that part of his income would be retained by his employer for such purpose. [14] Husband’s 2nd affirmation [P5/2028/§73] [15] Husband’s Form E [P2/582] [16] Both figures have not included the mortgage repayments and mortgage fees of the 2 Hong Kong properties owned by the wife, as such expenses are basically set off by the rental income. [17] Husband’s written submission dated 7 March 2017 at §34. [18] Wife’s 4th affirmation [P4/1625-1628] [19] Husband’s 1st affirmation [2/756-758] & counsel’s submission dated 7 March 2017 at §77. [20] According to the wife, the mortgage repayment of her 2 Hong Kong properties are $36,000 per month, which is set off with the rental income of $36,500 per month. [21] According to the wife, the management fees of the 2 Hong Kong properties are $2,600 per month. The rental income after paying the mortgage repayments is $500 and is applied to pay the management fees, leaving $2,100 to be paid by her out of pocket. [22] This shall be covered by the husband’s undertaking. [23] The school fees of the son are currently paid by the husband direct to school pursuant to his undertaking; such sum has increased to $19,159 per month. [24] Husband’s 2nd affirmation [P5/2025/§60. [25] Husband’s written submission dated 7 March 2017 at §75. [26] Husband’s 1st affirmation [P2/742/§10]. [27] The original message in Chinese: 爲什麽還要3萬5？4萬的一半是付上海房租，還有阿姨的錢，剩下的還不夠? 寶寶現在住在我爸媽那裏，他的生活費就直接從我這裏給了。 [28] Husband’s Form E (Part 5.4) [P2/582]. [29] [P6/2596] [30] [P3/1474] [31] Her outstanding loan balance in her BOC credit revolving facility (of $1 million) is $756,359; her outstanding loan balance in her HSBC credit revolving facility (of $200,000) is $182,548. The total outstanding loan balance is thus [32] [P4/1781] [33] Wife’s 2nd affirmation [P3/1342/§30] [34] [P3/1390] [35] Wife’s 2nd affirmation [P3/1343/§31] [36] [P3/1392] [37] Audited accounts 2015 of HR [P1/442 & 449] [38] [P6/2588] [39] [P1/421-435] [40] [C2/632-634]. [41] Wife’s 5th affirmation [P4/1633/§17] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Further hearings and rulings under FCMC 8189/2017