Lpc v. Ckha
Read the full judgment text of CACV 304/2022 on BabelCite. This Court of Appeal judgment was delivered on 17 August 2022 before Hon Cheung and Chu JJA.
Civil Appeal – Maintenance Pending Suit – Ability to Pay – Financial Capability – Back-dating – Court of Appeal discretion – Variation of order – Husband's investment in stocks not substantial – Wife's personal expenses not covered by MPS – Back-dating upheld with adjustments – MPS reduced to HK$56,500 per month – No order as to costs
Legal issues: Husband's ability to pay · Wife's financial capability · Back-dating of maintenance payment
Outcome: Appeal allowed to the extent that paragraphs 1 to 3 of the Judge’s order dated 26 February 2021 be varied
Cited by 2 cases · Cites 4 cases
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CACV 304/2022 [2022] HKCA 1190 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 304 OF 2022 (ON APPEAL FROM FCMC NO 4670 OF 2019) ________________________ BETWEEN
________________________ Before: Hon Cheung and Chu JJA in Court Date of Hearing: 3 August 2022 Date of Judgment: 17 August 2022 ________________________ J U D G M E N T ________________________ Hon Chu JA (giving the Judgment of the Court): A. Introduction 1.Although the parties have divorced, we shall refer to them as Husband and Wife in this judgment for ease of reference. 2.By a summons filed on 22 April 2022 in CAMP 125/2022, the Husband (i.e., the respondent) made a renewed application for leave to appeal against the order of 26 February 2021 (“MPS Order”) made by His Honour Judge Own (“the Judge”) sitting in the Family Court. By the order, the Judge ordered, inter alia, the Husband to pay:
3.On 27 June 2022, we directed a rolled-up hearing and also directed the parties to lodge supplemental submissions dealing with the updated position of (i) the rental income from the three properties of the family; and (ii) the custody, care and control and education arrangement of the children of the family. 4.The hearing took place on 3 August 2022. By our order given on 4 August 2022, we granted the application for leave to appeal with costs to be in the cause of the appeal. On 8 August 2022, the Husband issued the present appeal. We now give our judgment on the appeal. B. Background 5.The parties were married in December 2000. They were both aged 49 at the time of the MPS Order. They have seven children (respectively “1st Child” to “7th Child”), being three girls and four boys who were at the time of the MPS Order aged 20, 17, 15, 14, 11, 8 and 5 respectively. 6.On 10 July 2017, the Husband moved out of the matrimonial home with the 1st to 3rd Child and one of the three domestic helpers. He and the three children, his mother and one domestic helper have since moved to a rented accommodation. 7.The Wife initially remained living in the matrimonial home with the 4th to 7th Child and two domestic helpers. On 20 February 2019, shortly before the expiry of the lease of the matrimonial home[1], the Wife and the four younger children and the domestic helpers moved to a rented accommodation in Homantin. 8.On 26 February 2018, the Wife petitioned for divorce in FCMC 2172/2018 (“1st Petition”). The proceedings were subsequently discontinued. In 2019, the Wife commenced separate divorce proceedings in FCMC 4670/2019 on the ground of one-year separation. 9.On 28 August 2020, a decree nisi was granted. 10.By an order dated 4 January 2021, the interim care and control of the 2nd and 3rd Child[2] was granted to the Husband, while the interim care and control of the 4th to 7th Child was given to the Wife. All the children are at school. The 1st and 2nd Child are currently studying in the United Kingdom and the 4th Child is studying in Canada. The rest of the children are attending schools in Hong Kong. 11.As of present, no date has been set for hearing the custody and ancillary relief matters. C. The maintenance application 12.By a summons (“Summons”) issued on 24 September 2018 in FCMC 2172/2018, the Wife applied for: (1) MPS for herself in the monthly sum of HK$138,000 and interim maintenance for the 4th to 7th Child in the monthly sum of HK$46,000; and (2) contribution to her legal costs in the sum of HK$1.2 million. The Judge refused the contribution to legal costs application, from which there was no appeal. The present appeal only relates to the MPS and interim maintenance application. 13.In her Open Proposals, the Wife had reduced the monthly amount of her MPS from HK$138,000 to HK$114,000 with the amount of the interim maintenance for the 4th to 7th Child remained at HK$46,000. 14.The Husband’s Open Proposals were that there should be no MPS for the Wife, and a monthly sum of HK$40,000 be paid for the four children. 15.On 7 January 2019 at the first call-over hearing of the Summons, the Husband was ordered to pay to the Wife interim interim maintenance in the sum of HK$70,000 commencing 4 March 2019. 16.The evidence for the Summons, which straddled between the two sets of divorce proceedings, was closed in November 2019. The Summons was initially listed for hearing on 11 March 2020. As a result of the public health situation due to Covid-19, the hearing was vacated and directed to be disposed of on paper. D. The parties’ financial position as shown in the evidence before the Judge 17.The Husband is a dentist by profession and operates his dental practice through a company wholly owned by him. His average monthly salary was HK$210,333 and he also received profits from his company. His available monthly income was about HK$300,000. 18.The Wife is a government town planner, receiving a monthly salary of HK$105,175 and a monthly education allowance of HK$14,910, giving a total monthly income of HK$120,085. 19.The family has three landed properties, which were referred to as Flat C, Flat D and Flat H in the Judge’s judgment. They are all located within the same residential complex. Flats C and D, which are adjacent flats, are registered in the sole name of the Wife and the Husband respectively, while Flat H, which is a penthouse, is jointly owned by them as tenants in common. 20.Previously, the Husband also owned a car parking space (CP43) in the same residential complex. It was sold in early 2018 at HK$2.4 million. 21.It is common ground that the Husband has been responsible for discharging the monthly mortgage payments of the three properties, which was in the total sum of about HK$56,000. He also paid for the management fee, government rate and rent and property tax of Flats C, D and H. Since about April or May 2018, the Wife has taken up the payments for the management fee, government rate and rent and property tax of Flat C. 22.At the time of the MPS application, Flats C, D and H were yielding monthly rentals of HK$16,000, HK$26,000 and HK$31,500 respectively. Prior to the separation, the total monthly rental, HK$73,500, was received by the Wife. As a result of proceedings brought by the Husband, the tenant of Flat D had paid the monthly rental to his lawyer as stakeholder. The total rental income received by the Wife was accordingly reduced to HK$47,500. The Wife also disclosed in her affirmation that the tenant of Flat H would terminate the lease by mid-2020. Hence, by the time of February 2021 when the Judge gave his judgment, the rental income received by the Wife was further reduced to HK$16,000. 23.In summary, the Husband’s case before the Judge is that he did not, in principle, oppose to paying the 4th to 7th Child’s interim maintenance. He, however, opposed paying MPS for the Wife and backdating the MPS payments for the reasons that: (i) the Wife has the financial capability to maintain herself; (ii) she has largely exaggerated her needs; (iii) the backdating claim is unreasonable; and (iv) he does not have the financial means. E. The Judge’s decision 24.The Judge found that the family’s standard of living prior to the separation was good, and that throughout the marriage, the Husband had paid for almost all the family expenses, including the rent of the matrimonial home. He held that the Husband supporting the Wife and the four younger children was part and parcel of the status quo before the breakdown of the marriage, and that he should continue to maintain the Wife’s marital standard of living[3]. 25.On the items of the Wife’s expenses that were disputed by the Husband, the Judge (i) allowed the rent of the Homantin flat and the expenses of a car purchased by the Wife as reasonable expenses; (ii) spread the expenses on watch, computer, cell phone and optical over a period of three years as they are not monthly or yearly recurring expenses; and (iii) excluded the contributions made to the Wife’s parents as being outside the scope of MPS, Chinese New Year expenses being non-recurring expenses, as well as dental and medical expenses given that the Husband is a dentist and the Wife has medical coverage as a civil servant[4]. He thus assessed the Wife’s general expenses and personal expenses at HK$113,157.59 and HK$46,534.39 respectively, and the 4th to 7th Child’s expenses at HK$88,613.67[5]. 26.The Judge determined that the Husband should pay (i) MPS for the Wife in the sum of HK$103,000, made up of 50% of her general expenses and the whole of her personal expenses (i.e., 50% x HK$113,157.59 (HK$56,578) + HK$46,534.39 = HK$103,112 rounded down to HK$103,000); and (ii) monthly interim maintenance for the 4th to 7th Child in the sum of HK$44,300, being 50% of their expenses. 27.The Judge also held that it was fair and reasonable to backdate the maintenance to the date of the 1st Petition, after taking into account the following[6]:
28.The Judge further held that the Husband had the means and ability to pay having regard to the following[8]:
29.The Judge therefore ordered the maintenance payment to commence from 26 February 2018, but that in respect of the Wife’s MPS, the monthly amount in the period from 26 February 2018 to 3 March 2019 (when the lease of the matrimonial home expired) shall be HK$33,000 since the Wife did not have to pay rent in this period. The Judge also ordered that for the period since 4 March 2019, the amount of interim interim maintenance (HK$70,000) paid by the Husband shall be deducted from the monthly MPS payable to the Wife. F. The grounds of appeal 30.In summary, Ms Yip SC, who together with Mr Tang for the Husband[9], has advanced the following grounds of appeal:
G. Updated position 31.At our directions, the parties had provided some updates on the arrangement of the children of the family and also the rental position of Flats C, D and H. In respect of the children, since the MPS Order, the 2nd, 3rd Child and 4th Child have been studying abroad (see [10] above). As for the three properties, it would appear that they are now vacant with no tenant and no rental income. There are also suggestions in counsel’s latest round of submissions that the parties’ financial position has undergone changes. For instance, it is said that the revenue of the Husband’s dental practice has reduced considerably due in part to the pandemic and the Wife has re-mortgaged Flat C. 32.Ms Yip submitted, and we accept, that it would not be appropriate for this Court to take into account the changes to the parties’ income and financial situation, which are matters for a variation application, with which this Court is not concerned. H. Discussion H1. Relevant legal principles 33.The grant of MPS is a discretionary remedy. As this Court pointed out in HJFG v. KCY [2012] 1 HKLRD 95 at [33] to [38], the court’s approach is to identify the reasonable needs of the receiving party and the sole criterion in the exercise of its discretion is reasonableness, which is synonymous with fairness. Since MPS is expected to endure a limited period only and not all of the evidence will be before the Court, it is not appropriate for the Court to conduct detailed investigations into the finances of the parties, and any analysis required to be made should be done on a broad brush basis. In short, the Court will have to take a broad overview of the case and come to a rough and ready conclusion. 34.Given that a MPS order is an exercise of discretion, the approach of the Court of Appeal has always been that it would only interfere when the exercise of discretion was plainly wrong, such as being contrary to principle, having taken into account irrelevant matters or failure to consider relevant matters; and the threshold for appeals against MPS orders are high: see WW v LLN [2019] HKCA 1278, [2019] 5 HKLRD 694 at [16]; and S v C [2021] HKCA 1372 at [6] and [7]. 35.With these principles in mind, we turn to consider the grounds of appeal and the arguments advanced by counsel under three broad grounds: (1) the Husband’s ability to pay; (2) the Wife’s financial ability; and (3) the dating back of the MPS payments. H2. The Husband’s ability to pay 36.The Husband argues that there are two errors in the Judge’s findings on his ability to pay at [89], [91] and [92] of the judgment, which read:
37.Ms Yip pointed out that in her oral submission that at [89], the Judge had overlooked that the Husband in fact had two personal loans. Apart from the loan with Bank of China mentioned in the judgment, he had also taken out a HK$2.1 million loan with Nanyang Commercial Bank on 8 January 2019[10]. 38.Further and importantly, Ms Yip submitted that the Judge was wrong in [91] and [92] to take the view that the Husband had substantial investment in stocks and shares to the tune of about HK$8.15 million, and that he hid himself away from his investment spending or misfortune in investment. From the bank statements attached to the Husband’s Form E, it could be seen that in the 12-month period in question, there were 37 purchases and 23 sales of shares and stocks totalling HK$7.28 million. The purchases were thus part of the many buy-and-sell transactions, typical of short-term investments. The bank statements also showed that shortly before the date of the Form E, the closing balance of the Husband’s stock accounts with Hang Seng Bank and Nanyang Commercial Bank were respectively HK$346,800 and HK$25,400 giving a total of HK$372,200, which was similar to what was disclosed in Form E. 39.We have read the Husband’s Form E and the bank statements attached to it. We accept that they show the Husband to have engaged in short-term buy-and-sell share transactions. While the total amount of purchases came up to some HK$7 or 8 million, this is not reflective of the value of the shares and stocks held by the Husband. Further, as pointed out by Ms Yip, the seed money involved in the transactions was much less than HK$8 million. Accordingly, the findings in [91] and [92] of the Judgment that the Husband had substantial investment in shares and stocks and had hidden his spending on share purchases are not born out by the evidence before the Judge. We also accept that the adverse comments passed on the Husband in [92] (as underlined) are not warranted. 40.It follows from the above that there is no evidential basis for the conclusion at [92] that over the years, the Husband did not have to rely on the director’s loan or the bank loan to maintain the Wife and the family. In this regard, while the Court should have regard to the marital standard of living in considering what is reasonable in the circumstances of the case, it should also be alive to the fact that with the breakdown of the marriage and the parties’ separation, what used to be one household has become two households. As such, it may not always be possible or realistic to expect the marital living standard or the financial status quo during the marriage to be continued in all aspects. In the context of the present case, when considering the Husband’s ability to pay, while the Judge did not err in taking into account the fact that the Husband used to pay for most of the expenses of the family, he ought also to have regard to the Husband’s financial burden in having to maintain the 1st to 3rd Child and his own household. 41.In short, the Judge had fallen into error in his findings on the Husband’s financial capability and his ability to pay. H3. The Wife’s financial capability 42.Before the Judge, the Husband’s position was that the Wife was financially capable of maintaining herself, while also taking issue with some of the items of expenses in the Wife’s budget. In this appeal, the Husband complains that the Judge had failed to consider the Wife’s financial capability. 43.The Judge indicated at [61] of the judgment that he would first deal with the disputed items before dealing with the Wife’s financial capability. However, after ruling on the disputed items of expenses[11], he went on to decide that HK$103,000 would be the Wife’s MPS[12]. Although when discussing the issue of backdating the maintenance, there were references to the Wife’s monthly income and rental income and the Husband’s submissions that the Wife had not deposed to lack of funds to meet her liabilities, there was no discussion or analysis of the Wife’s financial capability. 44.In our view, the Wife’s financial capability is relevant and pertinent in establishing whether it is reasonable to order MPS for her, and if so in what amount. The Judge ought therefore to have considered whether the Wife was, as the Husband contended, financially capable of maintaining herself. 45.On any view, with a monthly income of HK$120,085, comprising HK$105,175 salary and HK$14,910 education allowance, the Wife must be financially capable of meeting her personal expenses which the Judge had assessed at HK$46,534.39[13]. There would be no need, and it would not be reasonable, to look to the Husband for support of her personal expenses. 46.The same, however, cannot be said of the general expenses assessed by the Judge at HK$113,157.59 which are essentially rent and household expenses shared with the four younger children. The Wife’s monthly income, together with the rental income she was receiving at the time of the MPS Order, would not be sufficient to meet both the general expenses and half of the expenses of the 4th to 7th Child as she is only seeking interim maintenance for half of the children’s expenses. 47.The Husband has also complained that the Judge disregarded his case that the Wife had hidden assets. We do not agree that the Judge had erred in this regard. As noted above, MPS application is not the occasion for detailed and minute investigation of finances and expenditures, and the Court should refrain from engaging in disputes that cannot be resolved without testing of evidence and full investigation in a trial proper. H4. Conclusion on H2 and H3 48.For the reasons set out in H2 and H3 above, the Judge’s decision on the MPS for the Wife cannot be supported. It falls on us to reconsider the issue having regard to the evidence that was before the Judge. 49.Taking a broad view of the case, including the parties’ means and income, and the needs of the parties and the children in light of the marital standard of living, we are of the view that it is reasonable to order the Husband to pay MPS for the Wife. As mentioned above (at [46]), the Wife’s monthly income, after discharging the 4th to 7th Child’s expenses, is insufficient to meet her general expenses. It is also relevant to note that during the marriage the Husband paid for almost all the family expenses. Adopting a broad brush approach, we consider that HK$56,600, being 50% of the Wife’s general expenses, would be a reasonable amount for the Wife’s MPS. This will be in addition to the interim maintenance for the 4th to 7th Child ordered by the Judge. The total amount of maintenance (i.e., HK$56,600 + HK$44,300 = HK$100,900) will give to the Wife about HK$236,000 (including the rental income from Flat C) to meet her expenses, liabilities and the expenses of the four younger children, while leaving the Husband with about HK$200,000 to meet his liabilities and the expenses for himself and the elder three children. H5. Back-dating of the maintenance payment 50.The Husband argued that back-dating of the maintenance payment is not justified since the facts do not show the Wife to have suffered any deficit. As held by the Judge, this is ultimately a question of fairness to be judged according to the circumstances of the case[14]. We also agree that it would not be fair for the Wife to shoulder all the expenses of her household and the 4th to 7th Child after the presentation of the 1st Petition, having regard to the parties’ income and means. The Wife might not have specifically deposed to lack of funds, but it would not be too difficult to see that her income of about HK$167,000 (including the full rental income of HK$47,500) was not sufficient to meet the budget for herself and the four younger children which comes up to about HK$248,000, even taking into account the HK$70,000 interim interim maintenance. 51.We would uphold the Judge’s order to backdate the maintenance to the date of the 1st Petition i.e.,26 February 2018. However, for the period up from 26 February 2018 to 3 March 2019, as the Wife did not have to incur rent and management fees, her MPS should be in the sum of HK20,500 (i.e., 50% of [HK$113,157 – HK$71,760 (rent) – HK$333 (management fees)[15]]). As for the period from 4 March 2019 to 3 March 2021, the total amount of maintenance for the Wife and the four younger children will be reduced by HK$70,000 per month to give credit for the interim interim maintenance paid by the Husband. 52.The amount overpaid by the Husband pursuant to the MPS Order may be set off against the Wife’s MPS to be paid in the future. We would leave the detailed mechanism, such as the amount to be off-set each month, to be agreed between the parties. The parties are also at liberty to agree on other ways of dealing with the overpayment, such as by way of adjustment in the final ancillary relief order. We expect, and implore, the parties to approach the matter in a reasonable, pragmatic and cost-saving manner. H6. Costs 53.Having regard to the fact that neither party has been completely successful in this appeal, it would be appropriate to make no order as to the costs of the appeal and the applications for leave to appeal, both before the Judge and this Court. We will make an order nisi accordingly. 54.As to the costs of the application in the Family Court, we are of the view that the costs order made by the Judge should not be disturbed as the Wife had to bring the application to obtain an order for interim maintenance for herself and the four younger children, and the Husband had unsuccessfully resisted the application. I. Other matters 55.Before leaving this judgment, we wish to make two points. The first relates to the three properties of the family. The updated information provided by the parties show that they have been left untenanted for some time. Whatever may have been the reason(s) for this state of affairs, that is in the past. Looking ahead, it would not be in the best interest of the parties and their children, who are all at school, to leave the properties idle. We hope the parties will put aside their differences and work on ways to generate some income from the properties which will go towards easing their financial burdens and meeting the needs of their children. 56.Secondly, we wish to remind practitioners that, given the broad-brush approach in interim maintenance applications, it is both unnecessary and unhelpful for the parties to put in extensive evidence, meticulous analysis and lengthy submissions on the finances of the parties, such as those that had been placed before the Judge in this case. Apart from escalating the litigation costs, overly detailed and unfocused evidence and submissions will unduly burden the already very busy judges in the Family Court and are not conducive to expeditious disposal of interim maintenance applications. J. Disposition 57.The orders we make are as follows:
Mr Neal Clough instructed by John C H Suen & Co for the petitioner. Ms Anita Yip SC and Mr David Tang instructed by Tso Au Yim & Yeung for the respondent. [1] The lease of the matrimonial home expired on 3 March 2019. [2] The 1st Child was by then over 18 years old. [3] Judgment, at [59] and [60] [4] Judgment, at [62] to [71] [5] Judgment, at [73] to [75], and [102] to [105] [6] Judgment, at [79] to [82] [7] We believe this is what the Judge intended in [79] of the Judgment, although the articulation in the paragraph is not very clear due to some clerical errors. [8] Judgment, at [87] to [95] [9] Neither counsel was involved in the MPS application before the Judge. [10] See Judgment, at [55] [11] Judgment, at [62] to [72] [12] Judgment, at [73] and [75] [13] Judgment, at [72] [14] Judgment, at [79] [15] See the budget at [72] of the Judgment. |
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