S-n N v. N W
Read the full judgment text of FCMC 4627/2021 on BabelCite. This Family Court judgment was delivered on 16 November 2021 before District Judge S. Lo.
Matrimonial Causes – Maintenance Pending Suit – Legal Costs Provision – Ability to Pay – Reasonable Needs – Interim Order – Backdating – District Judge S. Lo – FCMC 4627/2021 – Parties married 2009, separated 2019, two children – Husband claimed reduced income due to health but court rejected evidence and inferred ability to pay based on past standard of living and undisclosed assets – Wife's reasonable needs assessed at HK$86,500/month less freelance income – Legal costs provision granted at HK$60,000/month to achieve equality of arms – Currey principles applied but not strictly binding – Backdating refused – Interim Order discharged and new orders made for monthly payments commencing 1 March 2021 – Costs of summons reserved.
Legal issues: Maintenance Pending Suit and Child Maintenance · Legal Costs Provision · Backdating of Orders
Outcome: Interim Order discharged; Husband ordered to pay maintenance pending suit and legal costs provision
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FCMC 4627/2021 [2021] HKFC 229 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 4627 OF 2021 ----------------------------
---------------------------- Coram : District Judge S. Lo in Chambers (Not Open to Public) Date of Hearing: 21 September 2021 Date of Judgment: 16 November 2021 ----------------------- D E C I S I O N ( Maintenance Pending Suit and Legal Costs Provision ) ----------------------- 1.This is the application by way of summons taken out by the Petitioner (“Wife”) for her maintenance pending suit, interim maintenance for the two children of the family (collectively “Children”), and legal costs provision against the Respondent (“Husband”). 2.There is currently an interim interim Order made by me on 23 February 2021 (“Interim Order”), under which the Husband is to pay interim interim maintenance to the Wife of HK$60,000 per month for the benefit of herself and the Children, with legal costs provision of HK$20,000 per month until further Order. Background 3.Parties were married on 30 March 2009. They have 2 children, both boys:-
4.The Wife is 38 years old and received education in New Zealand and Australia, holding a Master’s degree in Marketing and Management. After graduation and prior to the marriage, she worked for her family’s chain of hardware stores in Thailand for some time. After marriage, she became a housewife and full-time mother, assisted by the Husband’s mother and/or a domestic helper. 5.The Husband is 42 years old and working in the real estate market. As the Managing Director of a Beijing Company (“BCL”) which is a state-owned enterprise listed in Hong Kong and former director of BCL’s subsidiary, an Australian Company (“ACL”), he led a team tasked with seeking finance from mainly Chinese investors for property developments in Australia. His job required him to travel overseas frequently. 6.Parties enjoyed a relatively comfortable and high standard of living before separation. According to the Husband’s Form E dated 8 March 2021, he claims his current total monthly expenses to be HK$101,765. 7.Parties separated on 1 September 2019 and is now sharing the care and control of the Children roughly on an equal basis, with the Children staying with the Husband on every Wednesdays from about 2:30 p.m. to 9:30 p.m. and every Fridays from about 2:30 p.m. through to Sundays 9:30 p.m. CDR has been fixed on 9 March 2022. 8.The Husband opposes this application and contends as follows:-
Legal Principles 9.Under MPPO Section 3 (maintenance pending suit) and Section 5 (provision for child), the Court may make orders requiring one party in a marriage to pay maintenance for the other party from the date of the presentation of the petition for divorce and for the other for the benefit of children of the marriage for such term as may be so specified. 10.The main governing principle is that the Court will make such order as it considers reasonable based on the reasonable needs of the Wife and the Children and the ability of the Husband to pay. In view of such application being interim in nature, the Court will not conduct detailed investigation of the financial position of the parties, but approach on a broad brush basis. 11.Another important factor in determining this application is consideration of the marital standard of living during marriage. In a Hong Kong Court of Appeal case HJFC v KCY [2012] 1 HKLRD, Hartman JA (as he then was) said in § 37 of the Judgment as follows:
Husband’s ability to pay 12.I think that it is more convenient to discuss this issue first. It is not in dispute that the Husband has all along been the sole bread-winner of the family. He is well-educated holding a PhD in Finance and made an average of at least HK$130,000 a month with bonus from BCL and ACL but suddenly claims to drop to HK$6,600 a month due to his health problem. He was hospitalised for over 1 month in May 2020 after succumbing to intense stress from work and the divorce suit. He has since been on sick leave for his diagnosis of adjustment reactions with mainly anxiety symptoms and secondary depressive features. 13.The Husband further claimed to be terminated by ACL in July 2020 and continued to receive salary until September 2020. Nonetheless, no formal termination notice from ACL has been provided by him. He did produce a letter from the Human Resources and Administrative Supervisor of BCL certified that his health rendered him unfit to carry out his job duties since 26 May 2020. The letter also mentions the loss of his salary from the ACL and his income from BCL having been reduced to HK$6,600 per month until further notice. As the Husband is still the Managing Director of BCL who must be the superior of the Human Resources and Administrative Supervisor of BCL, I doubt very much if the Human Resources and Administrative Supervisor of BCL was instructed by the Husband to issue this letter. Besides, I see no difficulty for the Husband to request his superior or even the board of directors of BCL to confirm the reduction of his salary. Besides, it is against the common sense and knowledge that the Husband who is used to receive more than HK$130,000 a month from BCL and ACL would accept these unreasonable arrangements. 14.In view of his living standard in the past, I cannot believe that he can survive with the income of HK$6,600 a month. For the purpose of this interim application, the Husband’s evidence in this regard is rejected. 15.The Husband also made numerous transfers to his friend, Sean Du (also the financial director of ACL) saying that these are loans and/or reimbursements. But there is not a shred of documentary evidence. It is extremely suspicious. Indeed, this court is not confined to the mere say-so of the payer as to his ability to pay but shall err in favour of the payee. 16.The Husband did not deny that he maintained an HSBC Investment Account not disclosed in Form E and has not provided the Investment Account Statements. He also refuses to provide his HSBC Bank Statements between March 2019 to November 2019 simply alleging that he is “waiting” for HSBC to provide them, but up to date, he still has not provided a full set. 17.It is noteworthy that he has a lot of involvements and interests in, inter alia, his family shipping business and numerous directorships in other local companies (at least 7 companies in total in the last 24 months according to his Form E). In the circumstances, I consider that the Husband is simply playing “a game of hide and seek” and refuses to “put all the cards on the table face up”. I am entitled to draw adverse inference against him and make robust assumptions as to his financial resources (not just income), and therefore his ability to pay. In other words, I am satisfied that he is able to pay. Reasonable Needs of the Wife and the Children 18.The Wife’s needs as claimed for the general monthly expenses are HK$60,000 in her latest affirmation filed 13 April 2021. The Husband said that his parents have been providing the Wife with HK$25,500 per month, out of which HK$5,500 is intended for the domestic helper. In my view, the Husband had not produced any evidence from his parents that they are indeed paying part of the maintenance to the Wife on behalf of the Husband. Ms Leung for the Husband further submitted that the Interim Order was fully satisfied (and with surplus) as of 7 July 2021. I doubt very much as to such submission but for the purpose of this application, it is unnecessary for me to make the determination. 19.The Husband contends that he has reason to believe that some proportion of such monies paid to the Wife has been spent on and/or for the benefit of her boyfriend, Mark who the Husband believes that Mark had been living with the Wife and the Children in the same house. At the hearing before me on 30 September 2021, the Wife has given an undertaking to the Court and to the Husband that Mark shall not be present and there be no contact between him and the Children whatsoever while the Children are under the Wife’s care. I consider that such contention is no longer relevant after 30 September 2021 but may have some but little bearing before that. 20.The Husband disputes the necessity of the Wife’s car expenses, particularly in light of her claimed transport expenses of HK$2,000 for taxis for herself and the Children. In view of the comfortable living standard of the parties’ marriage, I disagree with the Husband’s submission. I consider reasonable for the Wife sometimes to drive the Children for attending extra-curricular activities, if necessary. 21.As to the Wife’s personal monthly expenses, she has claimed HK$36,000 in her affirmation filed 16 February 2021. The Husband submits that at least her personal expenses as claimed should be cut by half on a broad brush basis due to the dropping of the living standard after divorce. In my view, it substantially if not entirely depends on the Husband’s ability to pay, question of which have been discussed above. 22.As for the Children’s monthly expenses, the Wife asserts HK$18,000 in her Answer filed 20 April 2021. The Children currently spend roughly half of their time with the Husband, during which they are supported financially by him. The Husband therefore suggests that these expenses as claimed by the Wife may be cut by half. On the board brush basis, I will take into account of his submission but not necessarily by half. 23.Regarding extra-curricular activities, I accept the Wife allegation’s that one or both of the Children used to attend Thai boxing, tennis, swimming and/or piano classes and that it is reasonable to expect the Children’s extra-curricular activities to be continued. 24.Based on the board brush approach and just for interim purpose, I will not go through each and every items of expenses and now assess the reasonable needs of the Wife and the Children to be HK$86,500 a month (ie HK$51,500 + HK$20,800 + HK$14,200), breakdown of which is as follows:
25.The Wife agreed that she is the beneficiary of a loan of AUD700,000 advanced to Sam Fayed by the Husband and that she is supposed to receive AUD43,000 every 6 months but in fact only received one payment in December 2019. For the purpose of this application, I accept that she has not received any further payment from Sam Fayed up to date. 26.As the Wife begun working as a freelance personal trainer earning HK$9,000 per month, which is not challenged by the Husband, the net needs is therefore HK$77,500 (ie HK$86,500 - HK$9,000) a month. Legal Costs Provision 27.Ms Leung for the Husband submitted that there are certain conditions in respect of a claim for legal costs provision: see H v H (Interim Maintenance) [2007] HKFLR 311 at §44 adopting the test in the English Court of Appeal in Currey v Currey [2006] EWCA Civ 1338, namely:-
28.The initial overarching inquiry should be “whether the applicant… can demonstrate that she cannot reasonably procure legal advice and representation by any other means. Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services” (emphasis added): see HJFG v KCY (supra) at §80. 29.If the application is made before FDR, any order made for legal costs provision should fund the applicant only up to the FDR hearing, to encourage settlement. If parties fail to reach settlement at the FDR, it would be for the new judge to determine whether a new allowance should be granted and, if so, in what amount: see HJFG v KCY (supra) at §§82-84. 30.The Wife has applied for legal aid twice, which were refused both times. The Husband invites the court to infer that it is the Wife’s continuing possession of her valuable personal items, which at a total purchase value of HK$512,000 exceeds the financial resources limit of HK$420,400 for the Ordinary Legal Aid Scheme. Hence, the condition (1) above is not fulfilled. 31.First, I refuse to draw such inference as the Husband obviously has much more capital assets than the Wife not to say his high earning capacity and income. Secondly, the Currey principles are strictly speaking not binding on the Hong Kong court. Lastly, I shall attempt to achieve some equality of arms between the parties. As said by Hartman JA (as he then was) inHJFG v KCY:
122. The issue of a contribution towards the wife’s on-going legal costs is more difficult to decide, mainly because of the lack of detail supplied by the wife in support of her claim. On behalf of the husband, it has been submitted that, in light of the Currey principles, I should reject the claim. It is to be reiterated, however, that, no matter how much wisdom is contained in the Currey principles, they were not binding on the judge at first instance. 123. While I accept that the evidence as to the issue is not of substance and is justifiably open to criticism, nevertheless what does emerge in my view – sufficiently at least for the purposes of an interim application, one that can be amended if necessary when final determinations are made – is that the wife has either lost or no longer has access to much of her capital base. In the circumstances, it would appear that she will no longer be able to meet her reasonable on-going legal costs unless some order concerning a contribution to her is made. As to the level of that contribution, I bear in mind that the ancillary relief proceedings are focused on complex corporate structures operating outside of this jurisdiction. That will no doubt add a level of complexity to the proceedings not encountered in other cases. I also take into account that, with the funds available to the marital estate, fairness demands that an attempt should be made to achieve some equality of arms. …...” (emphasis added) 32.The Wife is claiming HK$130,000 a month as legal costs provisions and her estimated costs up to FDR total HK$789,200 according to her affirmation filed 16 February 2021. She is willing to undertake the sum ordered for legal costs contribution would not be used other than for settling her legal costs as per §48 thereof. Nonetheless, based on her Form H recently filed on 20 September 2021, total costs incurred up to this hearing is about HK$1.086 million, around HK$107,000 of which is outstanding and around HK$253,000 has been written off with some costs unbilled. Further estimated costs of HK$500,00 will be incurred up to FDR. 33.Hearing for CDR is fixed on 9 March 2022 but FDR has not yet been fixed. I expect all the Children’s matters can be resolved amicably on 9 March 2022 and hopefully, FDR can be fixed in early July 2022. As not much details as to the Wife’s estimated costs of HK$500,00 up to FDR are given in her Form H and Mr Li for the Wife had not made any further submission or clarifications in respect of the quantum, I exercise my discretion to order the Husband to pay HK$60,000 a month for legal costs contribution on a board brush approach. Backdating 34.Both Counsel fail to address me on this issue in their submissions although the Wife’s summons seeks backdating to the date of the divorce petition ie January 2020. I refuse to make such order. Conclusion 35.After taking into account of all the relevant circumstances, I make an order as follows:
36.As to the question of costs of the Wife’s summons, I must say that there are a lot of good reasons to order the Husband to pay costs to her, in particular his failure to make full and frank disclosure of his assets. Nonetheless, I would make an order nisi that costs of the Wife’s summons be reserved which shall be made absolute unless any of the parties applies to vary within 14 days. The main rationale for making such costs order is to encourage the parties to reach amicable settlement in the forthcoming CDR and FDR.
Petitioner: Mr. Jeffrey Li instructed by M/S Withers Respondent: Ms. Ema Y.M. Leung instructed by M/S Waller Ma Huang & Yeung | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Further hearings and rulings under FCMC 4627/2021