Aldl v. Ftfc and Another
Read the full judgment text of FCMC 13698/2013 on BabelCite. This Family Court judgment was delivered on 17 February 2022 before District Judge S. Lo.
Matrimonial Causes – Maintenance Pending Suit – Variation – Ability to Pay – Needs – District Judge S. Lo dismissed Husband’s application for downward variation of maintenance pending suit and legal costs provision. Court found no material change in Husband’s earning capacity despite pandemic claims, noting high clinic turnover and double-counting of expenses. Court held Wife’s medical needs and budget reasonable given chronic conditions. Husband ordered to pay Wife’s costs.
Legal issues: Change in Husband's earning capacity · Change in Wife's needs · Litigation Funding
Outcome: Variation Summons dismissed; Husband to pay costs to Wife.
Cited by 2 cases · Cites 4 cases
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FCMC 13698/2013 [2022] HKFC 22 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 13698 OF 2013 ----------------------------
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----------------------- J U D G M E N T ( Variation of maintenance pending suit ) ----------------------- Introduction 1.This is the hearing of the 1st respondent’s (“Husband”) Summons dated 10 December 2020 amended on 30 March 2021 (“Variation Summons”) for downward variation of the existing maintenance pending suit (“MPS”) and legal costs provision (“LCP”) payable by him to the petitioner (“Wife”) pursuant the Order of Deputy District Judge A Tse (as she then was) dated 22 November 2019 (“MPS Order”), namely:
2.The central issues on this application are:
Background 3.The background of the marriage can be found in the MPS Judgment[1], which is unnecessary to be repeated here. The Husband took out an application for leave to appeal against the MPS Order which was dismissed and he did not renew his application for leave to the Court of Appeal. 4.In brief, the parties are in their late 50s, married in 1987, and the marriage broke down between 2006 and 2012. The Husband is a doctor, practicing as a private anaesthetist, formerly employed by the Hospitals Authority. The Wife was an academic working at universities in Hong Kong. 5.The Wife claimed that the Husband had admitted to having an extra-marital affair with the 2nd respondent[2] (“R2”) which was later revealed to have started as early as in 2001. She also said that the Husband had been giving R2 substantial amounts of money over the years for inter alia the purchase of various properties[3]. The Husband currently cohabits with R2 at a residence at Parc Oasis, Hong Kong. 6.In 2008, the Wife was diagnosed with “Myalgic Encephalomyelitis”, more commonly known as the “Chronic Fatigue Syndrome”. In June 2009, she resigned from her university position due to her medical conditions and became financially dependent on the Husband. 7.In 2013, the Wife petitioned for divorce. On 11 February 2015, the parties filed a consent summons agreeing the maintenance pending suit for the Husband to pay the Wife at HK$125,000 per month. 8.In 2015, the Wife was diagnosed with cancer. The proceedings were paused whilst her receiving medical treatment. 9.By a summons dated 20 December 2017, the Wife asked for an upward adjustment of the maintenance pending suit from HK$125,000 to HK$230,000 per month and for legal costs contribution in the sum of HK$3.6 million or alternatively a monthly sum of HK$300,000 for 12 months for the period leading up to the FDR. 10.On 22 November 2019, by the MPS Order, the Wife received a slightly lower upward variation of HK$220,000 per month (and legal costs provision of HK$300,000 for 12 months). 11.At the hearing on 1 December 2021, I ordered to dispense with FDR and set down the preliminary issue and ancillary relief for trials before me in October and December 2022 respectively. Alleged Changes since the MPS Order 12.Mr Marwah for the Husband submitted that there have been 2 significant changes of circumstances since the MPS Order:
13.Shortly after the MPS Judgment, in February 2020, the Wife moved to Australia prompted by the Pandemic, where she has remained up to the date of the hearing. She resides with her mother. The Husband contended that her reasonable expenses have, accordingly, dramatically reduced. 14.At that time, due to the Pandemic and the ongoing issues arising from the Anti-ELAB protests, the Husband also attempted to relocate his business to Australia in March 2020. However, after an outbreak in Australia he returned to Hong Kong. He claims his business was directly and severely affected by the Pandemic in both Hong Kong and Australia. 15.By the time of this hearing (ie 1 December 2021), a total sum of HK$2,870,000 (including HK$2,470,000[4] in MPS and HK$400,000 in LCP) have been in arrears. Legal Principles 16.The parties do not dispute the governing section 11 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (“MPPO”) and the legal principles under AEM v VFM [2008] 3 HKLRD 36 per Cheung JA at §14, in particular sub-paragraphs (4) - (8). 17.The jurisdiction to vary is untrammelled, but normally the Court would take into account if there has been any material change in the circumstances since the earlier order (see HCTT v TYYC [2008] 5 HKC 86 per Tang VP (as he then was) at §§ 15-16). As cautioned by Lam J (as he then was) in the same case at §45:
18.As regards the principles on MPS, they are clearly set out in HJFG v KCY [2012] 1 HKLRD 95 at §§37-38 per Hartmann JA (as he then was). Husband’s Ability to Pay 19.To start with, the Husband had a very high earning capacity as stated in the MPS Judgment which I entirely agree. 20.He is a well-established senior specialist anaesthetist with a successful private practice in Hong Kong. This has not changed since the MPS Order. 21.Before his move to Australia in March 2020, TF Company Limited (“TF Co. Ltd.”), the corporate vehicle (bearing exactly the same name as the Husband) which he has been using to operate his medical practice, had an average monthly turnover of HK$946,744.89 as follows:
22.The Husband was absent from Hong Kong for just over one month, from 10 March 2020 to late April 2020 (and, even for that period, he received a total of AUD43,815 or HK$232,219 as salary from the hospital in Australia). However, he has not provided sufficient evidence to show that clinics remain closed and potential patients remain reluctant to undergo surgeries. 23.In any event, based on the more updated figures provided by the Husband, TF Co. Ltd. achieves a gross turnover of HK$857,139.65 in December 2020 and continues to have a very high turnover, averaging HK$628,279.31 as follows:
24.He claims that he only has a monthly “available income (salary plus net profits)” of HK$257,613, or HK$90,337 (after deducting expenses). According to the table compiled by him, net profit is equal to TF Co. Ltd.’s gross turnover minus operating costs. In my view, he has not explained or produced sufficient evidence of what the company’s operating costs comprise of. 25.Ms Cheng for the Wife submitted that the “Administrative Expenses” of TF Co. Ltd. under the audited financial statement clearly shows a number of instances of double counting in the Husband’s budget. She took the following from TF Co. Ltd.’s “Administrative Expenses” for 2020 as examples:
26.I accept that it is very suspicious for the Husband to book various expenses as TF Co. Ltd.’s expenses, but at the same time claim for these items as part of his personal expenses, which gives rise to the problems of double counting. I also agree with Ms Cheng’s submission that, if one takes away the director’s emolument, salaries and allowances (which would have gone to the Husband and/or R2 themselves), TF Co. Ltd.’s costs/expenses would be considerably less. By way of illustration, if one removes the items above, TF Co. Ltd.’s Administrative Expenses for 2020 would just be HK$729,282 for the year or HK$60,773 per month. Applying the average gross monthly turnover of HK$628,279 in above, the TF Co. Ltd. would have a net profit of around HK$567,505 per month. In my view, he can readily afford the Wife’s existing level of MPS payment with this amount of monthly income, even after his claimed personal expenses at HK$162,276. 27.It is also noteworthy that TF Co. Ltd. declared substantial dividends of HK$5,000,000 in 2019 and HK$4,000,000 in 2020. The Husband has not provided this Court with the turnover of TF Co. Ltd. from May 2021 onwards. Given the fact that he has resumed his practice in Hong Kong for over a year, it is reasonably expected that the business would have performed even better in the last 6 months. 28.Another main dispute is whether the Husband has transferred large portions of his wealth to R2, his cohabitee, over the years as her purported salary and dividends from TF Co. Ltd., and has continued the practice even after the alleged decline in his income. Ms Cheng for the Wife submitted and argued that:
29.On the other hand, the Husband contended that he had to take loans from the TF Co. Ltd., which reduced the cash at bank in the company to only about HK$3.8 million in November 2020 down from HK$7 million in 2016. Further, pursuant to the undertaking of the Husband and R2 recorded in the Order of Court dated 24 March 2014, he and R2 cannot in any way dispose of or deal with HK$1.8 million in the bank account of TF Co. Ltd.. Therefore, he claims little capacity for him to use these funds to meet the Wife’s MPS. 30.In my view, it may not be proper to make any determination regarding the beneficial owner of any shares in TF Co. Ltd. at this stage, which is a very serious dispute. Having said that, it does not follow that I shall not make robust assumptions about the Husband’s ability to pay as the Court is not confined to the mere say-so of the payer as to the extent of his income or resources. According to the Husband’s updated Form E, he has at least HK$1,998,896.52 in assets (not counting pensions), including HK$1,006,256.53 in bank savings, HK$458,701 in value of stocks and HK533,939 in value of sharing in TF Co. Ltd.. For the purpose of this application, I should err in favour of the Wife and find that even if the Husband’s income did decline, which I disagree, he still has the ability to pay. Wife’s reasonable needs 31.Based on §§53 and 54 of the MPS Judgment, the living standard of the parties during marriage was very high, which I entirely agree. At that time, the Wife lived in Hong Kong and travelled from time to time to Australia. Her reasonable expenses were assessed at HK$220,000 per month. Her current expenses HK$215,593 as claimed are set out in her Form E and updated in her 15th Affidavit. 32.Mr Marwah for the Husband argued that the Wife’s present expenses such as travel expenses, utilities, car expenses, insurance premia and medical expenses remain problematic. 33.In my view, the Husband’s approach is fundamentally misconceived given that MPS is a broad-brush assessment. I accept Ms Cheng’s submission that the objective of MPS payment is to hold the ring for the parties pending trial of the ancillary relief, and if the Wife’s case is vindicated at trial, her need for treatments must be recognised as part of her immediate, ongoing and reasonable needs. Depriving her of such treatments or forcing her to cut down on these expenses in the interim period could cause her irreparable harm. On the other hand, the issue at stake for the Husband is only money, and he can be compensated for any overpayment of MPS should the trial judge finds in his favour. 34.For the sake of completeness, I now briefly go through some items of the Wife’s expenses disputed by the Husband below:
35.As to her medical, dental, health and wellness expenses, it was stated in the Wife’s updated Form E,
36.In the MPS Judgment, Judge A Tse had already carefully examined the parties’ respective cases and expert evidence on the Wife’s medical conditions and the treatment, management and therapeutic measures she requires. I can see no good reason to depart from her findings for the purpose of the Variation Summons. 37.On an interim basis, I accept that the Wife’s budget is reasonable and that there is no material change in her reasonable needs. Litigation Funding 38.HK$400,000 in LCP currently remains outstanding. The Wife does not agree that it should be paid at HK$50,000 a month for 8 months as the Husband asked. In my view, the Husband clearly has the ability to make a one-off payment and his request is thus rejected. Conclusion 39.For all the reasons above, the Variation Summons be dismissed. I see no reason to depart from the general rule that costs shall follow event. I now make an order nisi the Husband to pay costs with certificate for counsel to the Wife, which becomes absolute unless any party applies to vary by summons with supporting affirmation within 14 days. 40.Such costs shall be summarily assessed on paper without oral hearing, if not agreed by the parties, with the following directions:
Petitioner: Ms. Bonnie Cheng instructed by Chaine Chow & Barbara Hung Respondent: Mr. Azan Marwah instructed by Tsang, Chan & Woo Solicitors & Notaries [1] Judgment handed down by Deputy District Judge A Tse (as she then was) on 22 November 2019. [2] R2 was joined for the purpose of section 17 application by the Wife concerning TF Co. Ltd. as mentioned below. [3] See MPS Judgment §§16, 17 and 22 [4] Being the sum of HK$1,890,000 (MPS in arrears up to June 2021) as calculated in and HK$580,000 (MPS in arrears from July 2021 to November 2021). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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