Cwcc v. Ykop

FCMC 13891/ 2017

[2018] HKFC89

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13891 OF 2017

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J U D G M E N T
(Maintenance Pending Suit)

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1.This is the hearing of the petitioner wife (the “Wife”)’s application for maintenance pending suit (“MPS”) for herself by way of a Notice of Application issued on 9 January 2018, in which she makes application for an order that:

(1)   the respondent husband (the “Husband”) do pay the Wife $180,000 as her maintenance for the months of November 2017 to January 2018;

(2)   the Husband do continue paying the Wife $60,000 per month until further order, the 1^st payment to be made on or before 1 February 2018;

(3)   the Husband do transfer a particularly described Mercedes Benz to her; and

(4)   costs.

2.Inasmuch as the Husband agreed to procure the registered owner, a limited company, of the described Mercedes Benz to allow the Wife to continue using the vehicle, after the Wife took out the present application, the Wife has decided not to pursue her application for the transfer of the vehicle.

Background

3.The parties were married in 1995 in Canada. There is no child of the family.  The Wife petitioned for divorce on 25 October 2017, pleading that the parties have lived apart since November 2009. The Husband filed the Form 4 indicating that he does not defend the suit though it is his case that the date of separation is around 2003 or 2004 instead of November 2009. 

The Applicable Principles

4.The Wife’s application for herself is governed by section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. 

5.The court has a wide discretion in the matter, subject to the result being reasonable.  In TL v ML  & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263, Deputy High Court Judge Mostyn QC (as he then was) stated at 1289:-

“The sole criterion to be applied in determining the application is ‘reasonableness’ (s. 22 of the Matrimonial Causes Act 1973), which, to my mind, is synonymous with ‘fairness’.”

6.In the paragraph 16.17 of Rayden[1] it is stated as follows:

“The court has an unfettered discretion to award such sum as it thinks reasonable. There is no hard and fast rule, and no fixed proportion: each case depends on its own facts. It has been said that the approach to maintenance pending suit should be empirical, and that in the ordinary sort of case the district judges who deal with these applications will have to take a broad view of means on the one hand and income on the other and come to a rough and ready conclusion, or to take a “broad brush approach”.  The overall consideration is the actual needs of the parties’ pending suit.”

7.In the paragraph 16.18 of Rayden[2] it is further stated as follows:

“…what really matters is the immediate and reasonable requirements of the wife balanced against the ability of the husband to pay for them, assessed using a broad-brush approach.”

8.In HJFC v KCY[3], Hartman JA said in para 37 of the Judgment as follows:

“The principles that have emerged over time to guide judges in matters of interim maintenance have been fashioned in the main to ensure fairness. This is well illustrated in 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, at 1289, in which, having looked at earlier authorities, he derived the following principles that speak specifically to fairness or are based on the need to ensure it. For present purposes, it is sufficient to cite the relevant principles without citing the judge’s reference to the source of those principles:

i. The sole criterion to be applied in determining the application is ‘reasonableness’, which is synonymous with ‘fairness’.

ii. A very important factor in determining fairness is the marital standard of living. This is not to say that the exercise is merely to replicate that standard.

iii.In every maintenance pending suit application there should be a specific maintenance pending suit budget which excludes capital or long-term expenditure, more aptly to be considered on a final hearing. That budget should be examined critically in every case to exclude forensic exaggeration.

iv. Where the affidavit or form E disclosure by the payer is obviously deficient, the court should not hesitate 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. In such a situation, the court should err in favour of the payee.

v. Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial”

9.Applying the above mentioned principles, I will take into consideration all factors that may influence the outcome of the application so as to make such order as it regards reasonable in all circumstances of the case.

DISCUSSION

The wife’s reasonable needs

10.Shortly after the marriage the Wife quitted her full time job and became a housewife.  She started her own career in or about 2007.  The Wife was maintained by the Husband during the marriage.  Although after the separation of the parties the Husband continued the payment of $60,000 per month to her, despite her repeated requests he has refused to pay her any maintenance since November 2017.

11.According to the Wife’s Form E, she had $2,057,397.16 under her name in bank accounts, a long list of insurance policies having cash value of $1,854,293.15, value of debts owed to her of $285,484 and valuable personal items of $290,000.  The Wife has an investment property that she purchased in her name prior to the parties’ marriage (the Wife’s “investment property”) valued at having a net value of $3,648,177.01.  The Wife said she inherited a property from her late father in or about July 2008 pursuant to a Deed of Family Arrangement.  She sold the said property in November 2015 for $3,300,000.  Although the net proceeds of the sale were deposited into her bank account, and notwithstanding that she was the owner of the said property, it is understood between she and her brothers that the net proceeds of sale of the said property will only be used for her mother’s benefits.  The balance of the net proceeds of sale of $2,560,227 was described as the Wife’s indebtedness to her mother in her Form E. 

12.The Husband argued that, since the Wife had cash of over $2 million in bank, she was in a stronger financial position than his.  One may be surprised by the fact that the Declaration dated 17 December 2017 is made only a few months ago, but I take the view that the Wife’s contention on the beneficial ownership of her cash in bank, whether it is right or wrong, is plainly arguable.  I will not treat the same as the Wife’s assets for the purpose of this MPS application.

13.The Wife has insurance policies having cash value of $1,854,293.15 and is the owner of an investment property, but I am satisfied that her first port of call should be the Husband if she needs interim maintenance, provided that the Husband has the ability to pay, and given that she was maintained by the Husband from marriage up to November 2017.

14.Despite the parties’ arguments on the Wife’s true financial position, I do not accept that the Wife is guilty of being not fully and frankly disclosed her financial position so much so that robust assumptions ought to be made against her.

15.According to the Wife’s Form E, her monthly expenses are as follows: -

General

Item	$
Rent	35,000
Mortgage payment	14,680
Utilities	4,300
Food	6,000
Household expenses	3,000
Car expenses	5,700
Domestic helper	4,500
	73,180

Personal

Item	$
Meals out of home	5,000
Clothing/ Shoes	6,000
Personal grooming	4,000
Entertainment/ presents	3,000
Holidays	3,000
Medical/ Dental	2,200
Tax	3,000
Insurance premia	20,500
Contribution to parents	5,000
	51,700

16.The Wife’s total monthly expenses are $73,180 + 51,700 = $124,880.

17.The Husband argued that some of the expenses such as mortgage payment of the investment property, insurance premia and contribution to parents (totally $40,180 per month) do not fall within recurring costs of living.  Whilst she was accepting that MPS is restricted to payments that are necessary to meet the recurring costs of living, the Wife was contented to apply for MPS payment that covers her rent, utilities, food, household expenses, car expenses, domestic helper and meals out of home, the total of which said expenses is $63,500.  In the premises, she asked for continuation of the monthly payment of $60,000.  However, she contended that she should be allowed to set aside her income of $33,470 per month from her own career and the monthly rent of $21,750 that she receives from her investment property (totally $55,220 per month) to meet the other expenses such as mortgage payments, insurance premia, contributions to parents and some of her personal expenses. 

18.The Husband disagreed that the Wife could set aside her income for capital expenses.  He argued that the Wife expenses were inflated, not supported by evidence or documents, unclear as to how much was personal and how much was business related and could be reimbursed by reason of W’s office. The Husband also raised the argument that there should be an apportionment of the Wife’s general expenses as the Wife and her mother were living in the same household. 

19.I accept that I should take into account the Wife’s income of $33,470 per month from her own career and a rental income of $21,750 per month and I therefore should not allow the Wife to set aside these incomes for the expenses like mortgage payment of her investment property, insurance premia or contribution to parents that do not fall within MPS.  As I take into account the Wife’s rental income, I shall also include the expense of the monthly mortgage payment.

20.Although the Husband challenged almost each and every item of expenses of the Wife, he just said that the Wife’s expenses were inflated and he did not suggest any figures that he considered reasonable.  According to the well established legal principles, I will not conduct detailed investigation into the expenses and financial position of the parties.  Based on the evidence given by the parties in their respective affirmations, I am completely satisfied that they enjoyed a very high standard of living.  I pay particular attention to the fact that the Husband continued the payment of $60,000 per month to the Wife until November 2017.  Save as discussed below, I accept that for the purpose of this MPS application the monthly payment of $60,000 substantially reflects the amount and cost that the Husband considered to be reasonable for the W’s maintenance of the standard of living enjoyed by the parties before the breakdown of the marriage.  But for the Husband’s allegation that his father decided to terminate maintenance to the Wife, there is no evidence that the parties’ financial position has been significantly changed since November 2017.  It is also undisputed that the Wife and her mother have been living together for years.  Despite the Husband’s argument to the contrary, I am, in the circumstances, prepared to accept that the Wife’s figures are reasonable.

21.I do not intend to go for a detailed forensic examination of each and every expense.  Based on the parties’ standard of living during marriage, I assess on a broad brush basis the immediate and reasonable needs of the Wife in the sum of $44,140 per month, the breakdown of which is set out as follows: Wife’s total monthly expenses: $124,880 – (Expenses do not fall within recurring costs of living: $40,180 – Monthly mortgage payment: $14,680) – Wife’s monthly income: $55,220 = $44,160.

The Husband’s ability to pay

22.After his graduation from university in 1990, the Husband helped his father in his toys business. He did not draw salary from his work as there is no need to do so since his father has been financially supporting him.  Actually, his father has been supporting the entire family.  Other than helping his father, he has never had any employment elsewhere.  In 2012, his father retired and sold his shares in the toys business to his partners for about $100 million.  His father used part of the money for repayment of debts and the rest for investments.  The Husband was asked to manage these funds on behalf of his father.  Throughout the years, even though he and his brother hold some interests in various family companies in name, his case is that it is understood in the family that they do not have any beneficial interest in the investments or the companies. 

23.According to the Husband’s Form E, he had insurance policies having cash value of $785,199, cash of totally $315,669.32 under his name in various bank accounts and investments valued at over $40,737,000 in stocks, bonds and securities in his name.  According to him, he has been holding the cash and investments on trust for his father.  In spite of that he is a director and minority shareholder of several companies owned by his family, neither has he any beneficial interest in the companies.

24.The Husband is one of the two beneficiaries (the other being his brother) under a discretionary trust set up by their father in 2005.

25.According to his Form E, the Husband’s only income was a monthly allowance of $50,000 paid by his father, his monthly expenses were $115,300, $34,300 of which was paid by him via the monthly allowance and the rest of $81,000 was paid by his father’s company.

26.The Husband argued that the court cannot proceed on the basis that his father was likely to provide the Husband with money so as to enable him to pay MPS.  His case is that after the issue of the divorce proceedings his father cut the Wife off as his father no longer considers the Wife as a family member and he does not feel obliged to continue to support her as what he is doing for the family members.  He however offered to pay the Wife $20,000 per month out of his monthly allowance of $50,000 per month.

27.The Court of Final Appeal in KEWS v NCHC[4] stated as follows:

“36.In every case where third party assistance is involved, there are two critical evidential questions for the court to consider:

(1)What is the extent of the financial assistance provided by the third party to the husband or wife?

(2)What is the likelihood of such financial assistance continuing in the foreseeable future?

37.  It goes without saying that in the fact finding exercise, the court must look at the reality of the situation and have regard to matters of substance and not just form.  In looking at reality, the court can also take into account not only what a party actually has, but also what might reasonably be made available to him or her if a request for assistance were to be made.  In O’D v O’D [1976] Fam 83, which involved the court taking into account the financial support given to the husband by his father, Ormrod LJ said at 90D-E: “In making this assessment the Court is concerned with the reality of the husband’s resources, using the word in a broad sense to include not only what he is shown to have, but also what could reasonably be made available to him if he so wished.”

38.  In addition, in looking at what may occur in the foreseeable future, past conduct is often a useful guide: see SR v CR (Ancillary Relief: Family Trusts) [2009] 2 FLR 1083, 1091 [27].”

28.In the present case, the following extract of Jackson’s Matrimonial Finance[5] is also on point: -

“Money to which a party has no legal claim: voluntary allowances

2.32. The court may have recourse to income as to which the recipient has no legal power to enforce the payment. The principle is that a financial weaker party on separation, divorce may have a share of any kind of income of the financially stronger party in which they could have participated as their spouse.  So in one case the court ordered maintenance pending suit although the husband’s only income consisted of a voluntary allowance from his father which had in fact been stopped since the commencement of the suit: injustice to the payer is prevented by permitting the payments to be reduced or suspended if his means of paying it fail.”

29.In respect of the Husband’s case that his father has decided to terminate the Wife’s maintenance, the following summary of M v M cited in the footnote 2 of the paragraph 16.18 of Rayden[6] is relevant: -

“M v M (maintenance pending suit) [2002] 2 FLR 123 the family had been generously supported by the husband’s father during the marriage; in the application for maintenance pending suit the husband said that his father would no longer support the family financially: held: a party who suggested that there was a significant change in circumstances from those that had prevailed during the marriage had to produce evidence to convince the court that this was so; the husband’s father had not appeared to give evidence to the court and there was insufficient evidence to persuade the court that it should proceed on the basis that financial support would not be forthcoming.”

30.Having carefully considered the relevant legal principles, my view is as follows: -

(1)   Taking the past conduct is a guide, for starter, I take notice that the Wife was all along maintained by the Husband through funds provided by his father.

(2)   The Husband is always the one who operates the bank accounts, family funds and investments on his father’s behalf to ensure the needs of the entire family are met.  He makes arrangements to settle all daily expenses of the family, including but not limited to rent, octopus cards, insurance, utilities, medical, school fees, credit cards and other miscellaneous expenses.  The Husband used to include the payment of $60,000 per month to the Wife in his drawings.  Despite that payment to the Wife was stopped, the Husband continues his drawings to meet his own expenses every month.  In the circumstances, I consider that the court may have recourse to the family funds for the purpose of the present MPS application.

(3)   I do not lose sight on the Husband’s case that his father has decided to terminate the Wife’s maintenance, but I also take notice that there is no corroborating evidence from the father. Since the court is not confined to the mere say-so of the Husband as to the extent of his resources, I regard that there is insufficient evidence to persuade the court that it should proceed on the basis that financial support will not be forthcoming.

(4)   By reason of matters aforesaid, despite the Husband’s argument to the contrary, I consider that the court can proceed on the basis that his father will provide the Husband with money so as to enable him to pay MPS.

31.I am aware that the issue on the parties’ respective financial positions remains a continuing source of disputes.  I am leaving the issues to be sorted out at the substantive hearing.  With the benefit of further evidence and a detailed examination, the court will make its conclusion in the matter and any under provision or over provision in the MPS order may be set off if it is fair and just so to do.

Decision

32.For the purpose of this MPS application, I take the view that the Husband’s father will continue to supply the bounty.  The immediate and reasonable needs of the Wife have been assessed at $44,160 per month.  Having carefully considered all the circumstances, I see no reason why I should not back-date the payment to November 2017.  It is therefore ordered that: -

(1)   The Husband shall pay the Wife $132,480 as her maintenance for the months of November 2017 to January 2018;

(2)   The Husband shall pay the Wife $44,160 per month as MPS, the 1^st payment to be made on 1 February 2018 and subsequent payments on the 1^st day of each succeeding month until further order.

33.Regarding the question of costs, since broad brush approach is adopted and in view of the parties’ arguments on their respective financial positions are yet to be determined, I would make an order nisi that costs of by this application be reserved and be determined at the substantive hearing of the ancillary relief proceedings.  The order nisi becomes absolute 14 days after this order is made unless a party has applied to the court for varying the order.

Messrs Jonathan Mok Legal for the Petitioner

Mr Jeremy Chan instructed by Messrs Withers for the Respondent