S, S R (Formerly Known As D, P a) v. S, R P

[2019]HKFC321

FCMC 6925/2019

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 6925 OF 2019

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J U D G M E N T
(MPS/Interim maintenance)

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The Application

1.By Summons dated 23^rd August 2019 the Petitioner/Wife (W) applies for maintenance pending suit for herself, and interim maintenance for the two children of the marriage, S, a daughter born in September 2006 who is now 13 years of age and D, a son born in June 2008 who is 11.  

2.The Respondent/Husband (H) opposes the application but only as to quantum.  He accepts he has a responsibility to continue his financial support of the Petitioner and the children, but says that his capacity to do so is greatly diminished, due to the failure of his business and his lack of income.  

3.H’s business, run through a company which I will refer to as “A Limited”, had its principal business in the jewellery trade.  It was set up, with his father, before the marriage. It is not disputed that many of the family’s expenses during the marriage were run through A Limited, including accommodation and day-to-day living expenses.  The former matrimonial home in Stubbs Road, was leased by the company. 

4.It is H’s case that A Limited has failed, due to factors beyond his control.  Although he did not include evidence of this with his Form E and his affidavit, at the hearing of the Summons H handed up a letter from his solicitors (CCBH) to those acting for W (SWC) dated 16^th October 2019 which attached two sets of Audited Financial Statements for A Limited for the calendar years 2016 and 2017.  A comparison of the two years shows a drop in revenue and income of, respectively HK$7.56M net HK3.6M (2016) to HK$1.387M net HK$691,852 (2017). 

5.H explained in his affirmation that the drop in income was largely due to a serious hand injury he suffered in mid-2016, and that this ultimately led to the closure of the business.  He says that W is well aware of his injury and the reasons why the business failed.  

6.W argues otherwise, and says that H has the capacity to meet reasonable payments to support her expenses and those of the children.  Her Summons sought orders for interim periodical payments of

(a) MPS in the sum of $42,000 per month to commence on 1^st September 2019 and continue until further order;

(b) Interim maintenance for the children of $118,000 per month, also from 1^st September 2019 until further order.

7.The Summons also sought an order that H be restrained from disposing of a number of items of art which were situated in the matrimonial home or are currently in storage.  At the initial return date of the Summons, both parties gave an undertaking to each other and to the Court that neither would dispose of “or otherwise deal with” any of the items listed in the attachment to the order, numbering 100 in total.  For the purposes of the application, at least, it was therefore common ground that the items listed, whatever their value, could not be looked to by either party, whether by sale or other dealing, in satisfaction of their interim financial needs. 

8.H acknowledged in both his Form E and affirmation in response to the Summons that during the marriage he had been the main breadwinner and the principal financial support for W and the children. He says he is no longer able to maintain them to the same standard.  His offer is to pay either:

(a) $41,960 per month, being the school fees plus HK$5,200 for the domestic helper and an additional $10,000 for other expenses[1]

or

(b) $52,460 per month plus a lump sum of $500,000 on the condition that W agrees not to oppose the sale of a membership debenture in the Aberdeen Marina Club (“AMC”), which is held by him and his father through a company, A Limited.[2]

9.H placed a value on the AMC debenture of $2,000,000.  He said his father had already agreed to the sale, and also agreed to allow H to retain the entire sale proceeds for his ongoing expenses including his support of W and the children.  He proposes that the proceeds be divided up with $500,000 paid to W, $250,000 be retained by himself, and the balance be paid into Court.[3]

10.W did not seek leave to amend her Summons to prevent disposal of the AMC debenture, but she is adamant that it should not be sold as it had been purchased “with family assets for the children”: paragraph 23, W’s 2^nd Affirmation.  She said that the ongoing use of the facilities of the club provided much needed continuity for the children at this difficult time. 

The Background

11.The parties were married in Hong Kong on 19^th July 2003. Both children attend EFS South Island School where S is in year 10 and D in year 8. 

12.The proceedings were commenced with W filing a Petition on 13^th June 2019 alleging unreasonable behaviour on the part of H.  On 3^rd July 2019 H filed his Form 4 giving notice of his intention to defend the suit.  At the present time the suit has not been compromised. 

Income

13.W is 42.  She says in her Form E that she was employed by A Limited as a director, but it appears that she did not perform any duties for the company and that this “employment” was for the purpose of supplying her with an income for household expenses.  She says she received a “salary” i.e. an allowance of $15,000 per month after the marriage in 2003 increased to $20,000 per month when the first child was born.  She previously worked but in anticipation of having children ceased all work in August 2005.   In her Form E dated 21 August 2019 she confirmed her income up to separation as $20,000 per month i.e. the allowance paid to her through A Limited, but said this was paid “on an irregular basis”.  She said that this support ceased in mid-June 2019, apart from a one-off payment of $5,000 in August 2019.  A statement of her HSBC Advance Account for July 2019 shows several deposits including an ATM Transfer of $16,000 but the source of these deposits was not explained.  

14.In September 2018 W established an Instagram account in the name of “A”[4], which W described as a platform to showcase items of jewellery.  Although primarily for her use, W said that the account was also used by H to market his merchandise.  W describes this as a “fledgling business” which will take some time to be established before it bears fruit.  She says she has been unable to devote much time to it since the parties separated, the repossession of the FMH and the consequences of that, and the illness of her mother. 

15.H asserted that W’s business is profitable and provides her with an income of around HK$15,000 per month.  He says that W has failed to make full and frank disclosure of the business and, consequently, has hidden her true income from it.[5]

16.H is 49 and describes his occupation as “merchant”.  As already noted, prior to the marriage he had already begun his own jewellery business, and with his father set up A Limited as the trading vehicle.  In about 2000 his father retired from the business and H took over its day to day operation. The father retains 50% shareholding in the company. The extent to which the father, despite not being actively involved in the company, remained entitled to and received income from the business is unclear, but for present purposes that is not relevant.   

17.H described in his Form E, at paragraph 5.5 – which was largely replicated in his MPS/IM affirmation – how the business was successful, and that it provided the family with a comfortable lifestyle, including the lease of a large flat in Stubbs Road, Hong Kong, the employment of two domestic helpers and a driver, membership in the Aberdeen Marina Club and the meeting of all general expenses including school fees and the monthly expenditure on multiple credit cards.  

18.In June 2016, H was at a social occasion when he fell on a wet surface and in breaking his fall, suffered a severe laceration to his right hand, his dominant hand.  Nerves and tendons were severed. He underwent surgery and a lengthy period of treatment and convalescence.  He says that as a result of this injury his business suffered due to his inability to maintain contact with clients, the pain and inconvenience caused by it, and that he was unable to maintain close supervision with mainland Chinese suppliers.  He says he suffered significant depression due and that this added to the deleterious effect of his injury on the business in servicing existing clients and attracting new ones. Eventually, H closed the business, in 2018. 

19.One aspect of H’s account is that he says he considered and took advice from lawyers on whether he could pursue an action for the loss arising out of the fall.  He says he was advised that W’s evidence of what happened was of crucial importance to the prospects of success of such a claim.  He says that W refused to assist as a witness and that as a consequence, he decided not to proceed with the claim, which is now statute-barred.  For the purposes of W’s Summons, this is a factual issue which cannot be determined and may have to be considered by the Court when it addresses the broader claims for ancillary relief in due course.   

20.In April 2018 H established a new business named “OS” for the purpose of selling his antique art and jewellery collection “in order to raise some money for the family’s expenses”.  He says this has not been successful and no buyers have been found.  The current economic uncertainties have added to the difficulties in selling in what is a niche market.

21.As part of this new endeavour, in August 2018 H took out a HK$5,000,000 facility from the Bank of India (“the Bank of India facility”), secured by a mortgage against his father’s apartment.  H says that most of the deposits into his personal account came from the Bank of India facility.  He says that he has completely used up the facility and cannot draw any further funds from it. 

22.H is exploring other business opportunities in the Philippines, although the nature and extent of his activities, and the monetary investment in them, were not disclosed by him.  To her reply affirmation, W exhibited some pages from a website for “Vaya Wellness”, a therapy centre located in Davao City, Philippines, and a screen shot from a YouTube clip featuring H as the founder. Testimonials from the web pages are dated April 2019, suggesting the business has been operating for some time, and indeed prior to the Forms E and affirmations.    

Assets and liabilities

23.There are no real estate properties in the name of either party.  The former matrimonial home in Stubbs Road was rented at $86,000 per month. Beginning in late 2018 the rental went unpaid for several months, leading to demands being made by the landlord, and eventually the flat was repossessed at the end of August 2019.  Since then, H has been living with his father and W and the children with her mother. 

24.The balances as disclosed by the Form E in each parties’ bank accounts are either insignificant (W) or show substantial indebtedness (H). 

25.The major assets appear to be the jewellery/art collection, which the parties have agreed to preserve at least for the moment, and the AMC membership.  Both parties make claims that the other party has valuable items either not disclosed or that the represented values are inaccurate. 

26.Both parties, in their respective Forms E, list a number of substantial debts. As at August 2019 W’s credit card balances are, in total, HK$338,000 in addition to loans from family members. 

27.Aside from the Bank of India facility, H lists 8 credit cards/charge cards for personal and business use with a total balance of HK$411,196.  Some of these cards have been cancelled or their credit limits reduced as a result of late or non-payment.

28.H also detailed other loans as follows: 

Lender	HK$ (as at Form E)
Conscious Capital Inc.	400,000
BC[6]	4,000,000
RS	1,500,000
ND[7]	500,000
VM	400,000
PS	2,000,000[8]

29.W does not accept H’s assertions of his financial position.  In her 2^nd Affirmation she expressed a concern that “H has over the last few years been planning for this divorce and moving away assets” and that he “has two safe deposit boxes at Bank of East Asia full of jewellery and some items in his father’s home, none of which have been disclosed.”[9] 

30.W focused much of her criticism in her documents and submissions made at the hearing on the lack of information provided by H concerning the use of the HK$5M facility obtained by him from the Bank of India.  I will return to this in dealing with the question of H’s disclosure in the context of his capacity to meet reasonable payments of MPS and interim maintenance.   

The Law

31.The Court’s power to make orders for maintenance pending suit and interim maintenance are set out in Sections 3 and 5 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”). 

32.Section 3 of the MPPO provides that the Court upon a petition for divorce may order “either party to the marriage to make to the other such periodical payments for his or her maintenance and for such term, being a term beginning not earlier than the date of the presentation of the petition … as the court thinks reasonable.” 

33.Section 5(2)(a) of the MPPO states that the Court may make an order that “a party to the marriage shall make to such person as may be specified in the order for the benefit of a child of the family, or to such a child, such periodical payments and for such term as may be so specified.”  Such orders may be made in divorce proceedings “before or on granting the decree of divorce, of nullity of marriage or of judicial separation, as the case may be, or at any time thereafter”: s 5(1). 

34.The approach to be taken in applications for maintenance pending suit and interim maintenance approach was confirmed by the Court of Appeal in HJFG v KCY [2012] 1 HKLRD 95 to be this:

“37. 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 Judge, in TL v ML [2006] 1 FLR 1263, 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:

(a) The sole criteria to be applied in determining the application is “reasonableness” which is synonymous with “fairness”

(b) A very important factor in determining fairness is the marital standard of living. That is not to say that the exercise is merely to replicate that standard.

(c) 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.

(d) 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.

38. Finally, it is to be noted that in applications for interim maintenance, when the amount to be paid is for a limited period only and not all of the evidence is necessarily before the court, it is not appropriate, nor indeed in most cases possible, for the court to conduct a detailed investigation into the finances of the parties. While, in order to determine what is or is not reasonable, some analysis is always required, that analysis can be conducted on a “broad-brush” basis.”

The MPS/IM Budget

35.In her affirmation (her 2^nd) in reply, W revised her claim for MPS and interim maintenance substantially from the initial figure of HK$160,000 to a little over half of this sum (at §23, 2^nd Affirmation):

	W’s MPS Budget	H’s counter on numbers	H’s offer	W’s revised offer
GENERAL
Rent	55,000	P is living with her mother in E Court		See paras 25(1) & (2) below[10]
Utilities	3,230
Mobile telephone bills for 3 phones				To be paid by P
Management fees
Food	12,000	10,000		12,000
Household expenses	1,500
Car expenses	0
Insurance premia	0
Domestic helper	4,500	5,200		5,200
Others	0
Aberdeen Marina Club				To be paid by P[11]
Subtotal	76,230	10,000
PERSONAL
Meals out of home	1,500	500
Transport	2,000	500
Clothing/shoes	500	500
Entertainment/Presents	1,000	500
Personal grooming	0	0
Holiday	0	0
Medical/Dental	1,000	500
Tax	0	0
Insurance Premia	7,200	0		See para 25 below
Interim maintenance	0	0
Contribution to parents	5,000	0
Others: Legal Fees	5,000	0
Subtotal	18,200	2,500	10,000
CHILDREN
School fees	26,760	26,760	26,760	26,760
Tuition	11,760	2,500		11,760
School books and stationery	700	400		400
Transport	2,500	2,000		2,500
Medical/Dental	1,000	800		1,000
ECA	6,000	2,500		12,000
Entertainment/Presents	500	500		500
Holiday	0
Clothing/Shoes	1,000	1,000		1,000
Insurance Premia	9,000	750		See para 25 below
Lunches and pocket money	2,000	1,500		2,000
Other transport	4,500	1,000		1,000
Child-minding fees	0	0
Uniform	200	250		250
Others (specify)	0	0
Subtotal	65,920	39,960
TOTAL	160,350	52,460	41,960	86,370

36.At §24 of her 2^nd Affirmation, W explained the basis for her revision downwards of the amount she was seeking:

24.   I wish to add that some of the above expenses are not really reflective of our actual expenses as due to the urgency, my application for interim maintenance was prepared on a very rushed basis and at a time of extreme stress.  I was dealing with moving out of the former matrimonial home with the children after being informed by (H) that we were facing eviction, which I now believe not to be true.  Also my mother had been admitted to hospital at the same time.

37.Concerning her own expenses, W said:

25.   I am prepared on an interim basis to accept HK$10,000 per month for me.  This is dependent also whether my Instagram Account business becomes successful.  Since March of this year, I have not been able to devote a lot of time to my business as I had intended due to the breakdown of the marriage, having to move out of the former matrimonial home, and my mother being hospitalised.

38.In her 2^nd affirmation W added that although for the time being she and the children were able to stay with her mother, this was “not ideal as we are living out of cardboard boxes and the children share a bedroom” and there is “simply nowhere to move around” and that her mother’s illness had not improved with the stress and strain of the disruption: §26(1).  Further, that later this year she may have to move out temporarily so that her sister, her sister’s new baby and her nephew can stay with her mother, and that this would incur a cost of renting a serviced apartment or AirBnB at around HK$30,000 to HK$45,000/m: §26(2). 

39.As for the substantial insurance premia, W affirmed that coverage had been maintained by the same insurance company for many years.  During the hearing the Court was advised that coverage for W and the younger child, D, cost $7,200 per month and for the older child, $9,000.  She continued:

26(4) … The insurance is paid in four instalments. Last year (H) moved our daughter to her own insurance called FT Life and he told me that she has comprehensive insurance but I have since discovered in July this year that she only has hospitalisation (semi-private).  I have pre-existing conditions, including my thyroid related problems which could not be covered under any new insurance.  (H) is diabetic and used to suffer greatly from asthma, his diabetics (sic) is covered by the insurance and he is in a similar situation to me if he switches insurance providers.  I understand that (H) has been paying for our medical insurance and I require an undertaking/order that he maintain our health insurance.  (H) tried pursuing me to take a cheaper health insurance coverage despite knowing my pre-conditions, whilst he retains the current cover.  Our son is still covered under my medical insurance until age 12 and I expect (H) to cover our medical insurance cover promptly.

40.W provided evidence of the payment of the premiums on the insurance policies. 

41.I turn to the expenses specifically relating to the children.  Their school fees are not in dispute, and both parties agree that the children should continue studying at South Island School.  At one point in or around January 2019, due to non-payment of the fees, the school sent notifications to the parents that the children had been suspended and would not be able to attend any classes until the fees were paid.  This was only remedied when W contacted H’s father and borrowed money from him for the fees. 

42.The quantum of two other child-related expenses was disputed by H. 

43.The first of these was the extra tuition for which W said amounted to, on average, $11,760 per month.  She gave details of this expense in her 2^nd Affirmation:

26(7) … [T]he children require extra support as they [were] previously attending ISF school which is a Mandarin curriculum school and math was also taught in Chinese.  The children require extra support for English and math.  D has a particular interest in math and he was chosen by B school to represent the school in inter math competitions.  We also want the children to keep up with their Mandarin.  

44.The second child-expense in dispute is the cost of extra-curricular activities, for which W claims $6,000 per month per child, and which includes football/soccer training and camps for the son, and art music and drama for the daughter which W described as particularly important as the daughter is coming into her IB years at school.  The children both attend Cotillion and the daughter attends Girl Scouts.  As noted, the children use AMC and I was informed at the hearing that there are costs associated with tennis and swimming lessons held there. 

45.The Court was informed of the current activities, including tuition:

Day	Child	Activity	$ Cost
Monday	S and D	Chinese	$500 per child
Tuesday	D	Soccer	Nil
	D	Running	Nil
	D	Maths	$500
Wednesday	S	Maths	$500
	S	Kickboxing	$1,500 (5 lessons) (paid by H)
	D	English	$500
Thursday	S	Running	$100
	D	Soccer	$5,000 (term fee)
Friday	S	Girl Scouts	$100
	S and D	Drums/Vocals	$600 per child
Saturday	S	Running	$100
	S	Art	$250
	D	Soccer  (tournament)	Nil
	S and D	Cotillion	$500 per month

46.On a broad calculation, this comes to approximately $22,000 per month, on the assumption that the children are engaged in these activities year-round.  This cannot be right, although I bear in mind that W’s claim for holidays and entertainment is minimal.   In my view there is a small degree of exaggeration in W’s claim for both the extra tuition and the extra-curricular activities, although I consider that she has genuinely tried her best to give an accurate estimate of the current expenditure.     

47.H’s comment was that although he accepted all of these activities were valuable in their way, their total cost was no longer sustainable:

44.  … I understand that the Children had been attending lots of extra-curricular classes and extra tuition classes before. However, given the family’s current financial position, I believe that we need to make a difficult move by cutting some of the activities.  It is unfortunate but there is no alternative.  I note that the Petitioner has not provided a breakdown of these items but I think we would only be able to budget about HK$5,000 each month for the extra-curricular and extra tuition fees for the Children.

48.W described how the children both needed to have certain medical treatment.  The daughter is receiving some cosmetic treatment relating to hirsuitism and the son requires braces for his teeth.  W points out that the daughter’s treatment is already included in H’s credit card statements and I have confirmed this.  An examination of H’s visa platinum account for August 2019 shows that the daughter’s treatment has almost been paid off and by now it may well have been.[12] Although the son’s orthodontic treatment has not yet commenced, he has been told by his dentist that he needs braces and this should be started now.  I accept that it is in his interests to have the orthodontic treatment earlier rather than later, and in my view this should be given some priority.  The cost of the orthodontic treatment is $60,000, by way of downpayment of $25,000 and 6 instalments of $5,000 each. 

49.Finally, W claimed $500 per month for contact lenses for the daughter. 

50.Overall, I consider that the claimed monthly expenses are reasonable. I have examined W’s credit cards and in my view the allowance for food is not excessive. Nor is it unreasonable for W to continue to retain a domestic helper.  W’s claim for her own expenses is also modest, having regard to the matrimonial standard of living. 

51.For the children, their continued attendance at South Island School means the following monthly costs must be met:

School fees	$26,760
School books/stationery:	$700
Uniform	$250

52.I will, additionally, allow transport expenses including transport to school at $3,500 per month, and medical/dental at $1,000 per month.  This is strictly on the basis that H is to maintain appropriate insurance including medical and dental coverage for W and the children.  On an interim basis, I am not prepared to rule on whether one policy or another is appropriate.  It is enough to conclude that the coverage must take into account the particular needs of all members of the family.  I assume that both parents will want nothing less than this for themselves and the children.   

53.As for the children’s out of school tuition, there is, as I have said, a modest degree of exaggeration in W’s claim, and I also accept H’s comment that some choices need to be made.  It seems to me that a reasonable amount for the out of school tuition is $8,000 per month, or $4,000 per month per child.  This will enable both children to continue with their Chinese language, mathematics and music classes, all of which I accept are important for the children’s development and ongoing routine. As for extra-curricular activities, in my view the present level, while not unreasonable in itself, can be reduced without interfering unduly with their activities as they have been.  I will allow an amount for extra-curricular activities at $6,000 per month or $3,000 per child per month. 

54.Therefore, as to Children’s expenses, I consider that the following items are reasonable and should be allowed for the purposes of the Summons:

CHILDREN	Claimed	Allowed
School fees	26,760	26,760
Tuition	11,760	8,000
School books and stationery	700	700
Transport	2,500	2,500
Medical/Dental	1,000	1,000
ECA	12,000	6,000
Entertainment/Presents	500	500
Clothing/Shoes	1,000	1,000
Insurance Premia	H to maintain	H to maintain
Lunches and pocket money	2,000	2,000
Other transport	1,000	1,000
Other – S’s contact lenses	500	500
Uniform	250	250
Total:		49,210

55.W’s claim is assessed as follows: 

a.	General expenses:	$17,200
b.	Personal expenses:	$10,000
c.	Children’s expenses:	$49,210
	Total:	$76,410

56.I have considered W’s claim for a one-off additional amount for the temporary accommodation during the time when her sister and nephew come to visit.  I do not allow this.  As H submitted, during at least some of this time the children could potentially spend time at his father’s apartment.  I accept of course that the present conditions are not ideal, nor do they reflect the level of accommodation the children (and the parties) have been used to. Further, and although the Court must be conscious of the matrimonial standard of living, the aim is not merely to replicate that standard.

57.Two other items were sought by W in her 2^nd affirmation.  The first that H should be ordered to or undertake to pay her and the children’s mobile bills each month.  I do not allow this as an additional payment.  The amounts for these will have to come from the sum I have allowed.

58.The second was that H undertake to be responsible for the current debt owing on the HSBC Business Mastercard.  This is referred to in W’s Form E as having a balance of “about HK$500,000” and being in the name of A Limited.  W’s concern is whether she is personally liable for this debt.  For the purposes of this judgment, I have proceeded on the basis that she is not personally liable and that this debt is a corporate debt due by A Limited. 

59.I have considered H’s claim that W’s Instagram business is producing an income which she is not disclosing and this can contribute to her own and the children’s upkeep.  He produced copies of a Facebook page and Instagram Account for “A”.  Considering the matter on a broad brush basis, and taking into account that this social media-driven business has been operating for some time, and taking into account the difficulties she has encountered with relocating the children from one home to another and coping with her mother’s illness, I nonetheless am prepared to find that W is able to generate some income from this business and that this can support to a degree her own upkeep and the expenses of the children.  However, I would assess this at no greater than $10,000 per month at present.  I have taken this into account in arriving at the order on the Summons. 

Capacity

60.The question is then, whether H has the capacity to pay an amount over what he is offering, and to do so without disposing of the AMC debenture or incurring additional debts.

61.H’s claimed his own expenses to be:

GENERAL
Rent	0
Mortgage instalments	0
Utilities	0
Management	0
Food	5,000
Household expenses	0
Car expenses	1,375
Insurance premia	0
Domestic helper (for W and the children)	5,200
Others.  AMC membership fee	10,000
Subtotal	21,575
PERSONAL
Meals out of home	500
Transport	1,200
Clothing/shoes	500
Personal grooming	300
Entertainment/presents	0
Holiday	0
Medical/Dental	200
Tax	0
Insurance Premia	0
Interim maintenance	10,000
Contribution to parents	0
Dependent family member	0
Others (specify) business trip to Philippines for my potential business	7,800
	$20,500
CHILDREN
School fees	26,760
Extra tuition fees	0
School books and stationery	0
Transport	0
Medical/Dental	0
ECA	0
Entertainment/Presents	0
Holiday	0
Clothing/Shoes	0
Insurance Premia	0
Lunches and pocket money	0
Other transport	0
Child-minding fees	0
Uniform	0
Others (specify)	0
Subtotal	26,760
TOTAL	68,835

62.Of this total sum, I note that approximately three-quarters of it relate primarily to the expenses of W and the children, assuming for the moment the AMC monthly subscription is an expense incurred for W and the children. Further, deducting the amount H said he spends on trips to the Philippines for his new business (which I assume are made each month), his own estimate of monthly spending is $9,075, a modest sum given the standard of living prior to separation.  I do not consider that H has exaggerated his cost of living.  

63.I have referred above to the confirmation by the Court of Appeal in HJFG v KCY of the applicable principles, including the requirement that where the Court finds the disclosure by the paying party to be “obviously deficient, the court should not hesitate to make robust assumptions about his ability to pay.” 

64.H has not always been represented in these proceedings, but he cannot have been in any doubt about his obligation to provide full and frank disclosure of his financial position, with in his Form E, or failing that, with his affirmation.  This is a continuing duty owed to the other party to matrimonial proceedings and to the Court.[13]

65.H claims to be massively in debt, yet there is no evidence of any of the personal loans except for the amount from Conscious Capital and the Bank of India facility.  W accepts one of the personal loans as this was from her mother.  Nor did H provide an explanation as to when the loans were made, and the terms of repayment, if any.  If anything, the existence of the loans suggests that H can, if he wishes, call on family members for financial assistance in the future.   

66.As for the Bank of India facility, H says that he obtained the facility to “pay for my living expenses”: paragraph 2.6, Form E.  He attached to his Form E a single statement from the Bank of India for the month of August 2019 showing a credit balance at the end of that month of HK$10,633.39.   In his affirmation, he said this:

34. After obtaining the said facility from the Bank of India, I have been withdrawing money from it from time to time which is clearly shown in the bank statement of OS and my HSBC account produced in my Form E.  In fact, most of the cheque deposits in my personal HSBC account were sourced from OS’s the Bank of India account and the ultimate source of funds was the said facility.

67.He continued:

36. As at now, I have used up the said HK$5,000,000 banking facility so I cannot withdraw any more money from it.  Worse still, given my financial condition now, it is simple (sic) impossible for me to repay the loan.  In fact, I am not even able to repay the interest thereon which is about HK$23,000 per month.  My father, who is now aged 78, pays it.

68.H exhibited to his affirmation four cheque deposit slips, as follows:

Date	Amount
12 Feb 2019	$100,000
12 Feb 2019	$20,000
8 Apr 2019	$50,000
15 May 2019	$25,000
Total:	$195,000

69.The slips are the standard form deposits slips provided by an HSBC ATM and record details including the name of the account holder, and a photographic copy of the cheque deposited.  The cheques so deposited are clearly from Bank of India and I am prepared to accept that the amounts came from the $5M facility. 

70.What is not clear from the papers is how the bulk of the $5M has been used.  As I have noted, only one Bank of India statement was provided for August 2019 showing a credit balance of HK$10,633. I assume that this is the “bank statement of OS” to which he referred in paragraph 34 of his affirmation.  If so, it is hardly sufficient to explain, simply put, where the money has gone.  On H’s case, in the space of 12 months (the mortgage is dated 15^th August 2018) the entire facility was drawn down and all but the small sum remaining as at August 2019 had been used for “ongoing expenses”.  On average, that equates to spending more than HK$400,000 per month from this one source. 

71.I have examined H’s bank statements for his HSBC Premier Account which run from September 2018 to June 2019.  They show substantial cheque deposits each month, the largest of which is for HK$400,000 on 23^rd May 2019.  However, and again assuming that the source of these deposits is the Bank of India facility, these deposits only account for a minority of the $5M.

72.I am prepared to accept that at least part of the Bank of India facility was used for the expenses of the family, and perhaps to service some of H’s debts.  On the evidence to hand, it seems to me that some of it has been invested by H’s in his new business ventures in the Philippines. The difficulty is that none of this has been documented.

73.I am conscious that the hearing of W’s Summons was conducted prior to the exchange of Questionnaires.  Leave to adduce Questionnaires was given at the hearing. 

74.In her submissions for H, Ms. Kwan acknowledged that very little in the way of documents had been provided to demonstrate how the loan facility was used, but she contended that it was not disputed that H had been responsible for most of the family’s expenses including the rental of $86,000 per month.  I accept that this is the case, but that does not detract from the fact that in facing an application for maintenance pending suit/interim maintenance, H must have been aware of his obligation to explain to the Court, with frankness, his present financial position. 

75.I have not ignored the signs in the papers which might indicate financial difficulty.  Several of the credit card statements record payments by cheques being dishonoured and returned.  On 29^th July 2019 American Express reduced H’s credit limit on his card to HK$8,000.   On 27^th August 2019 HSBC wrote to H to advise that his credit cards had been cancelled.    

76.Nonetheless, the documents supplied by H do not begin to demonstrate how the Bank of India facility has been used.  It is clear that it has been fully drawn down (see H’s Form E, at paragraph 2.3).    

77.As already noted, much of the family’s expenses – including the rent of the former matrimonial home – were run through the company, A Limited.  No bank accounts statements for A Limited, or the new business of OS were supplied with his Form E or affirmation.  To be clear, there is no account in the name of H “trading as OS”, or at least none has been provided to the Court.  Nor do the Financial Statements of A Limited provided later by H’s solicitors in correspondence help to explain the use of the Bank of India facility.   

78.In light of this, I conclude that H’s disclosure in his Form E and affirmation is “obviously deficient” and that H has a present financial capacity to meet reasonable payments to W for herself and the children as I have assessed them, and that he is in a position to do so without having to dispose of the AMC debenture or the jewellery/antique art collection. 

Conclusion

79.I therefore make the following Order on the Summons:

(1) The Respondent continue to meet the following expenses, namely

i. The children’s monthly school fees including any increase to such fees as may arise

ii. The AMC monthly subscription

iii. The treatment for the daughter (if continuing) and the forthcoming orthodontic treatment for the son

iv. The ongoing medical and dental insurance coverage at an appropriate standard having regard to the needs of the parties and the children 

(2) The Respondent do pay maintenance pending suit to the Petitioner in the sum of $12,000 per month being $4,000 general expenses and $8,000 personal expenses

(3) The Respondent do pay to the Petitioner interim maintenance for the benefit of the children of $15,000 per child per month, total $30,000 being $20,000 children-related expenses and $10,000 for their proportion of the general expenses. 

80.W’s Summons asked that the order for payment be made from 1^st September 2019.  Exercising my discretion, I order that the payments under paragraphs 80(2) and (3) above be made from 1^st November 2019 and be paid on the 1^st day of each calendar month thereafter by direct payment into W’s HSBC Advance account #593-657695-833.  Again, this is on the basis that H make the direct payments for the items listed in paragraph 80(1) above, including any accrued arrears. 

81.As to costs, although W has not been entirely successful, and her initial claim was substantially reduced by the time of the hearing, the order I have made is substantially in excess of H’s offers to pay, and is not conditional upon disposal of the AMC debenture.  Exercising my discretion I order that the Respondent do pay 75% of the Petitioner’s costs of the Summons dated 23^rd May 2019, on a party and party basis and to be taxed if not agreed. 

Ms. J Chin of Messrs. Stevenson Wong & Co for the Petitioner

Ms. Thelma Kwan instructed by Messrs. Chaine Chow and Barbara Hung for the Respondent