Cwcc v. Ykop

FCMC 13891/ 2017

[2022] HKFC 2

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
(Application for variation of Maintenance Pending Suit
& Litigation Funding)

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1.This is the hearing of the petitioner wife (‘W’)’s summonses dated 9 August 2021 and 27 October 2021 respectively for variation of this Court’s Judgment dated 8 June 2018 to the effect that the maintenance pending suit (‘MPS’) for her be increased from $44,160 per month to $90,191.5 per month and for an order that the respondent husband (‘H’) do pay the sum of $65,659 per annum for two medical hospital insurances, the sum of $56,426 per annum for one Critical Extended Care Insurance and the sum of $30,000 per annum for maintenance of the Mercedes Benz she uses, and that H do pay the Wife the sum of $1 million as provision for her legal costs of the ancillary relief trial fixed to commence on 28 June 2022 with 29 to 30 June and 5 to 7 July 2022 reserved.

Application for variation up of MPS

2.The brief background facts of the parties’ marriage and these proceedings and the applicable principles of applications for MPS can be seen in the Judgment dated 8 June 2018, which I do not intend to repeat here.

3.W’s application to vary up is made pursuant to section 11 (7) of the Matrimonial Proceedings and Property Ordinance Cap. 192, which provides that:

“(7) In exercising the powers conferred by this section the court shall have regard to all the circumstances of the case, including any change in any of the matters to which the court was required to have regard when making the order to which the application relates ……”

4.The correct approach was summarized by the Court of Appeal in AEM v VFM [2008] 3 HKLRD 36. In that case, the Hon Cheung JA made the following points when setting out the law:

(1)  The exercise of the power under s.11(1) of the Matrimonial Proceedings and Property Ordinance (Cap.192) to vary a periodical payment order required that all the circumstances of the case be considered, including any change in circumstance since the original order was made, such as continuing inflation, increased costs of raising a growing child, the greater adverse effect of increased costs of living on one of the parties and the husband’s increased wealth. The court was not required to proceed from the starting point of the original order but could look at the matter afresh. The basis and intended effect of the original order were also relevant factors and the court should not depart radically from the parties’ agreement embodied in a consent order (Lewis v Lewis [1977] 1 WLR 409, Boylan v Boylan [1988] FLR 282, Primavera v Primavera [1991] 1 FLR 16, Garner v Garner[1992] 1 FLR 573, Cornick v Cornick (No 2) [1995] 2 FLR490, Flavell v Flavell [1997] 1 FLR 353 applied; Foster v Foster [1964] 3 All ER 541 not followed) (See para.14)    

(2)  The court had an almost unrestricted power to vary its own order retrospectively and to backdate any variation to a pre-existing order beyond the date of the application for variation. In practice, orders were not usually backdated to a date prior to the notice of application to vary, unless the justice of the case so required (See para.15)

5.In the paragraph 21 of the Judgment dated 8 June 2018, the Court assessed on broad brush basis W’s immediate and reasonable needs in the sum of $44,140 per month, i.e. W’s total expenses ($124,880) less her expenses that do not fall within recurring costs of living ($40,180 – monthly mortgage payment of $14,680) less her monthly income ($55,220). The monthly income consisted of her income of $33,470 per month as District Councillor and the rental income of $21,750 per month from an investment property (‘Belmont Heights’) that she purchased in her name prior to the parties’ marriage.

6.W relies in support of the present application upon the fact that she no longer has the income from being a District Councillor and the rental income from Belmont Heights. She lost the seat of District Councillor in the election dated 24 November 2019 and has been unemployed since 1 January 2020. Although she has lost the rental income since Belmont Heights became vacant in July 2020, she accepts that the Court can assume that she will continue to receive rental income of around $21,750 per month for the purpose of this application.  

7.According to W’s Form E dated 15 December 2017, her total monthly expenses were $124,880, including general expenses of $73,180 and personal expenses of $51,700. In her 10^th Affirmation filed on 9 August 2021, the total monthly expenses were increased to $134,941.5, including general expenses of $92,741.5 and personal expenses of $42,200.

8.W’s updated monthly expenses are as follows: -

General

Item	$
Rent	31,000
Mortgage payment	15,786
Utilities	4,000
Food	6,000
Household expenses	3,000
Car expenses	5,000
Domestic helper	5,951
Instalment Loan Payment to SCB	12,890
Instalment Loan Payment to HSB	7,114.5
Vitamin and supplements	2,000
	92,741.5

Personal

Item	$
Meals out of home	5,000
Transport (bus and MTR)	1,000
Clothing/ Shoes	5,000
Personal grooming	3,000
Entertainment/ presents	3,000
Holidays	0
Medical/ Dental	2,200
Tax	0
Insurance premia	18,000
Contribution to parents	5,000
	42,200

9.According to W’s Form E dated 15 December 2017, she had $2,057,397.16 under her name in bank accounts, insurance policies having cash value of $1,854,293.15, debts owed to her of $385,484 and valuable personal items of $290,000. In addition, she owns Belmont Heights that was valued at having a net value of over $3.6 million. She allegedly owed her mother about $2.5 million. 

10.W has allegedly had to tap into savings and go into bank loans to meet the shortfalls of her living expenses and the huge legal costs. In her 11^th Affirmation dated 27 October 2021, she affirmed that her legal costs so far were as much as $2.7 million. She liquidated some benefits of some of her insurance policies for about $1.2 million, re-mortgaged Belmont Heights for around $700,000 in July 2019, borrowed bank loans of $300,000 from Standard Chartered Bank (‘SCB’) in September 2000 and $243,000 from Hang Seng Bank (‘HSB”) in February 2021. She is paying mortgage repayment of $15,786 per month, $12,890 per month to SCB and $7,114.5 per month to HSB. In her 11^th Affirmation, she affirmed that the cash in bank was reduced to $173,545.43, and taking into account her credit cards liabilities of $63,208.48, the net position was $110,336.96. During the present hearing, she said the cash in bank was further reduced to around $70,000 to 80,000 and the total cash value of the insurance policies was reduced to around $800,000 to 900,000.

11.H’s oppositions to the present application are summarised as follows: -

(1)  According to his Form E dated 10 January 2018, apart from having insurance policies having cash value of $785,199 and cash in bank of totally $315,669.32, he held in trust for his father’s medical and daily care expenses and the expenses of the entire Yeung family under his name various bank accounts and investment products totally valued at over $40,737,000. In his 6^th Affirmation dated 11 November 2021, he affirmed that his father’s medical and daily care expenses, the expenses of the entire Yeung family, legal costs and investment loss altogether are depleting the funds in the disputed accounts. His father’s medical and daily care expenses were around $5.9 million from 2018 to September 2021. The expenses of the entire Yeung family including the current MPS payments were around $31.6 million. Legal expenses up to September 2021 were $7.6 million. Realised loss in investment was $2.2 million. He furthered that, in the circumstances, any variation up is unfair as it will adversely affect H’s ability to properly look after his ill health father.

(2)  Having lost her employment, W should cut down on expenses.

(3)  W is well educated. There is no reason that she does not work.

(4)  W holds Belmont Heights and valuable insurance policies that can be liquidated to meet her immediate needs.

12.In the Judgment dated 8 June 2018, I said: -

9. 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.

13.I adopt the view in the above for the purpose of the present application.

14.I take that W should work, but I accept that, being aged 55 and been out of the business job market for a long time, she needs some more time to re-establish her in the market.

15.I accept the W’s loss of employment is a substantial change in circumstance that justifies variation up of the MPS to W, subject to her current reasonable needs and H’s ability to pay.

16.I accept that having lost her employment, W has to drastically cut down on expense, however. According to the well-established legal principles, I shall not conduct detailed forensic investigation into each and every item of her expenses for the present purpose. In a gist, despite W’s argument to the contrary, I take the view that: -

(1)  W should endeavour to cut down on utilities, food and household expenses;

(2)  W should use public transport to save her car expenses;

(3)  So far as she does not work, she should cut the expenses on home helper;

(4)  H should not be held liable to W’s repayments for loans/ debts incurred primarily for her legal costs post separation for the present purpose;

(5)  It is not unreasonable to require W to save as much as 50% in personal expenses;  

(6)  By reason of the matters in the above, W’s general expenses can be reduced by around $30,000 per month and the personal expenses by around $20,000 per month.

(7)  I also take the view that W’s application for medical insurance premia is excessive and it should be cut down by around 50%, i.e. reduction of around $5,000 per month

17.Assuming that she will continue to receive rental income of around $20,000 per month and her reasonable expenses are around $75,000 per month, she has deficit of around $55,000 per month and her need for medical insurance premia is around $5,000 per month.

18.In the Judgment dated 8 June 2018, I said: -

20. …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. ..

…

32. For the purpose of this MPS application, I take the view that the Husband’s father will continue to supply the bounty.

19.I adopt views in the above for the purpose of the present application. Tentatively, I am prepared to increase the MPS to W to around $60,000 per month.

20.It is argued that various expenses and loss of investment are depleting the funds in the disputed accounts so much so that any variation up of the MPS to W will adversely affect H’s ability to properly look after his ill health father. Taking an overview in the situation, I honestly believe that the effect of an increase of the MPS to W from $44,160 to 60,000 per month is no more than having a drop in the bucket in views of the size of the fund in the parties’ dispute (over $40 million) and the alleged expenses having been paid out of the disputed funds for H’s father, the Yeung family, and legal costs (over $40 million) since 2018. I take the view that the above comparatively modest increase in the MPS to W is manageable and I do not accept H’s argument in the above.

21.It is trite that any under or over provision in the MPS order may be set off if it is fair and just so to do in conclusion of the trial on the ancillary relief matter. H suggests that if he completely succeeds in his case, W will need to pay back at least some of the MPS already paid to her. He argues that, given W is already heavily in debt and does not have income, it is questionable if he will be able to recover the surplus payments from W. In response, W accepts that she will need to sell Belmont Heights in such scenario. In the premises, I accept that W has the ability to pay back any surplus MPS payment, if so required.

22.Despite that W’s shortfall is assessed at $55,000 per month in the above, having carefully considered all the circumstances, I shall make the order to increase the MPS to W to $60,000 per month. The sum of $5,000 per month being difference between $55,000 and $60,000 per month is to take care of W’s application for medical insurance premia.

Litigation funding

23.The relevant legal principles have been recently reviewed by B Chu J in LCYP V JEK [2018] HKCFI 1907: -

‘26. The Court's power to order MPS (including element for legal costs provision) is stated in section 3 of the Matrimonial Proceedings and Property Ordinance, Cap 192. The sole criterion stipulated by that section is "reasonableness", which has been said to be synonymous with "fairness" ⁵.

27. Wilson LJ had said in Currey v Currey (No 2) [2007] 1 FLR 946 ⁶:-

"In my view the initial, overarching inquiry is into whether the applicant for a costs allowance 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. Furthermore, not to forget the third of Thorpe LJ's three features, she has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery. I would add, fourthly, that the court needs also to be satisfied that there is no such public funding available to the applicant as would furnish her with legal advice and representation at a level of expertise apt to the proceedings, i.e. that the applicant does indeed in that regard fall within the unserved constituency…"

28. In short, the overarching inquiry is into whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means and that:

• (i) 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.

• (ii) She has also to demonstrate that she cannot reasonably procure legal services by the offer of a charge upon ultimate capital recovery;

• (iii) The court needs also to be satisfied that there is no such public funding available to the applicant as would furnish him/her with legal advice and representation at a level of expertise apt to the proceedings.

29. What was said by Wilson LJ in Currey was endorsed by Cheung JA and Hartman JA in HJFG v KCY [2012] 1 HKLRD 95 ⁷who held that the Currey principles should in future be adopted as providing prudent guidance to both judges and practitioners in this jurisdiction.

30. Mr Yim had also referred the Court to the English case of A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001] 1 WLR 605 , in which the wife who was dependent upon the husband applied for an order for maintenance which includes provision for legal costs. Holman J had stated as follows ⁸:-

"But Mr Singleton submits that the costs of the suit itself are in a different category. I do not agree. Just at the moment they are, after the provision of a roof over her head and food in her mouth, the wife's most urgent and pressing need and expense. She could manage without holidays, though I have made some provision for them. She could no doubt manage for a while without buying new clothes. She could manage for a while without buying new clothes. She could manage without her manicures, pedicures and yoga and keep fit classes, for all of which I have, on the facts of this case, made provision. She could even manage without the provision for forms of private medical care (to which the family has been accustomed) for, if necessary, she could fall back on the NHS. But she simply cannot make any progress with the dominating issue in her life if she cannot pay her lawyers, and for this the state will not provide ." (emphasis added)

31. As to why legal costs provision is particularly crucial in cases where there is a great disparity in wealth and earning capacity as a consequence of the marriage, Holman J had this to say:-

"This wife has always been dependent on her husband. She is locked into a bitter struggle with him, whose outcome is of intense importance to her. She has an acute need for good legal representation and in circumstances in which her lawyers do not lawyers have to be desperately economizing relative to the husband. He himself is spending huge sums on the litigation. He can, in my judgment, afford to pay the sums I have ordered and it is reasonable that I should require him to do so ⁹."

He then went on to say:

"In my judgment, in an appropriate case, maintenance pending suit provides a partial answer and, for the reasons I have now given, I made the order in the present case. I add that, since I made the order, the House of Lords has given its judgment in White v White [2000] 3 WLR 1571. That did not, of course, impact at all on my decision which I had reached and announced several days earlier, not on my reasons for it. However, Lord Nicholls of Birkenhead stressed, in relation to the substantive outcome, that there is to be no place for discrimination between husband and wife and their respective roles. In my view, that substantive approach may be illusory if a wife is unable to vindicate it due to the difference in their roles, and its discriminatory effect upon their income and capital and upon a wife's ability to match the legal representation of her husband. The changing climate for the outcome of matrimonial litigation, which the House of Lords has clearly heralded, further fortifies me in my view as to financing its interlocutory stages ¹⁰." ’

24.Up to her 11^th Affirmation dated 27 October 2021, W’s legal fees incurred were around $2.7 million. She applies for $1 million as provision for her legal costs of the coming trial commencing on 28 June 2022, with 6 days reserved. She does not provide a proper budget in support of the estimate of her future legal costs.

25.Without a proper budget, I take the view that her application for litigation funding is unlikely to ever get off the ground. More importantly, I find that W fails to show that she cannot deploy the insurance policies and/ or the Belmont Heights in order to meet her legal costs. Accordingly, she fails to bring herself within the Currey test. After having carefully considered all evidence, I take the view that W’s application for litigation funding must fail.  

Disposal

26.It is ordered that: -

(1)  The order dated 8 June 2018 be varied to the effect that H do pay W $60,000 per month as MPS, the 1^st payment to be made on 1 February 2022 and subsequent payments on the 1^st day of each succeeding month until further order of the Court;

(2)  There be no order as to the paragraphs (b), (c) & (d) of W’s amended summons dated 9 August 2021;

(3)  W’s application for litigation funding be dismissed.

27.I am aware that the issue on the parties’ respective financial positions remains a continuing source of disputes that will be sorted out at the substantive hearing. Since broad brush approach is adopted and in view of the parties’ arguments on their respective financial positions are yet to be determined, I make an order nisi that, subject to further order of the Court, costs of W’s summonses dated 9 August 2021 and 27 October 2021 respectively 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.

The Petitioner Wife acting in person

Mr Jeffrey Li instructed by Messrs Catherine Y.W. Or & Co. for the Respondent Husband