Ww v. Lpq Formerly Known As Lln and Lsm and Others
Read the full judgment text of FCMC 8485/2019 on BabelCite. This Family Court judgment was delivered on 10 January 2023 before His Honour Judge I Wong.
Matrimonial Causes – Variation of Maintenance Pending Suit – Litigation Funding – Full and Frank Disclosure – Material Change of Circumstances – Whether husband proved financial difficulty – Whether wife unable to fund litigation – Variation Application dismissed due to deficient disclosure and lack of material change – Litigation Funding granted for trial costs – Husband ordered to pay wife's costs – Husband failed to explain depletion of bank balances and inconsistent financial evidence – Wife demonstrated exhaustion of insurance policy funds and inability to secure legal aid – Orders for payment of interim maintenance and litigation funding upheld and adjusted.
Legal issues: Variation of Interim Maintenance · Application for Litigation Funding
Outcome: Variation Application dismissed; Application for Litigation Funding granted in part ($500,000); Husband ordered to pay wife's costs.
Cited by 2 cases · Cites 13 cases
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FCMC 8485/2019 [2023] HKFC 9 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 8485 OF 2019 ----------------------------
---------------------------- Coram: His Honour Judge I Wong in Chambers (Not Open to Public) Date of Hearing: 14 December 2022 Date of Ruling: 10 January 2023 ______________________________________________________ R U L I N G (Variation of Interim Maintenance and Legal Costs Provision) ______________________________________________________ 1.This is the 1st respondent’s application dated 7 November 2022 for litigation funding in the sum of $1,100,000 (“Application for Litigation Funding”). This sum is to cover the costs as from the application up to the conclusion of the trial of the ancillary relief, including the wife’s section 17 application. 2.Another application I have to deal with is the petitioner’s application for variation of the interim maintenance (“the Variation Application”) taken out on 27 October 2020. 3.In this Ruling, I shall refer to the Petitioner as “the husband” and the 1st respondent as “the wife”. 4.It has been said by the Court of Appeal that reasons for decision on interlocutory application can be brief: Tsang Wing Kwai v Tsang Wing Fai [2018] 5 HKLRD 350, [2018] HKCA 759, at [31]. The following are the reasons for decision. Legal Principles on Variation 5.The husband’s application is made pursuant to section 11 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”). The relevant legal principles can be summarized as follows,
6.The order the husband now seeks to vary is a Maintenance Pending Suit (“MPS”) order. The Court of Appeal in S v C [2021] HKCA 1372, CAMP 243/2021 (date of Judgment: 21 September 2021) said the following,
7.I am aware that Hon G Lam JA said the above in the context of an appeal against a MPS Order, nevertheless, his observations are, in my view, pertinent to the present application, specifically when the trial of the ancillary relief has already been fixed to commence on 25 April 2023 (with 4 days reserved). 8.Further, it is trite that, in application of this kind, a broad brush approach should be taken. It is unnecessary to conduct a minute examination of the evidence. Background 9.The following events are relevant. 10.On 23 July 2019, HH Judge CK Chan made an order that the husband is to pay a MPS in the sum of $60,000 per month, plus a litigation funding of $50,000 per month, starting from 1 August 2019 until further order of the court. There was also an order backdating the MPS and litigation funding, resulting in a lump sum of $660,000 payable by the husband (“the Original MPS Judgment”). See: WW v LLN formerly known as LSM [2019] HKFC 188, FCMC 2996/2018. 11.On 25 March 2020, the Court of Appeal allowed the husband’s appeal in part. The Court of Appeal reduced the backdated sum to $155,000. While the amount of litigation funding in the sum of $50,000 per month remained unchanged, the duration of the order was limited up to FDR only. It is significant to note that the MPS in the sum of $60,000 was undisturbed. See: WW v LLN (No 2) [2020] 2 HKLRD 487, [2020] HKCA 178. 12.Shortly thereafter on 27 October 2020, the husband took out the Variation Application seeking to have the MPS varied down from $60,000 to $30,000 per month and the litigation funding be reduced to zero. 13.The husband ceased paying MPS and litigation funding as from 1 November 2020. 14.On 3 December 2020, the wife took out a judgment summons against the husband for the arrears of MPS and litigation funding. 15.On 23 June 2021, HH Judge CK Chan fixed the FDR to be heard on 29 July 2021. At the same time, the learned judge ordered that all outstanding applications be adjourned sine die and to be restored after the FDR hearing. 16.On 29 July 2021, the FDR failed to achieve any settlement. The litigation funding of $50,000 monthly ceased to be payable. On the same date, HH Judge CK Chan ordered that all outstanding applications, if any, are to be adjourned to 31 August 2021 at court no. 9. 17.On 31 August 2021, the wife’s judgment summons was heard before Deputy Judge Doris To. The learned judge made the following orders:
18.It is significant to note that the husband took no further steps in respect of the Variation Application. As such, legally speaking, the original MPS order in the sum of $60,000 per month continues to be valid and subsisting up to this date. The husband has failed to honour his obligation under the order. 19.At the mention hearing of the wife’s Application for Litigation Funding, Mr Hart drew the court’s attention to the Variation Application which remained stagnant. As the 2 summonses are effectively two faces of same coin, I allowed them to be dealt with together. The Original MPS Judgment 20.It is worthy to note what HH Judge CK Chan said at paras 25 and 26 of his Judgment,
21.When considering the wife’s application for litigation funding, the only main issue in dispute was whether the wife could use the UK property for raising litigation funding. The learned judge considered that a broad brush approach should be taken such that whether or not the UK property is in fact belonged to the 2 sons should be left to be determined at trial. The Court of Appeal did not find the learned judge was erroneous in adopting this approach. The Variation Application 22.I shall deal with the Variation Application first. 23.I have already referred to the legal principles and the Original MPS Judgment. I agree with Mr Wong that the important issue in the present application is whether there has been any material change of circumstances, and if so, what has changed, since the Original MPS Judgment. The Husband’s Financial Situation 24.The husband, in essence, said there was a change in his financial situation. In his supporting affirmation dated 27 October 2020, he said due to the failing business of his company, LS, his director’s fee has been reduced from monthly sum of $100,000 to $20,000 as from October 2020. On the top of this $20,000, he has been in receipt of housing allowance of $30,000 and rental from his property in Tung Chung Industrial Building, totalling $62,700 per month. He also said his bank balances were only about $106,000: see para 8(a) and (b). In his affirmation in reply dated 22 November 2022, he referred to the rapid depletion of his cash at the time: see para 6. 25.In response, the wife said in her affirmation dated 24 February 2021 that before the husband’s petition for divorce, the liquid assets at his disposal exceeded $10,000,000. The husband’s deposit in his HSBC-513-888 account were $8,806,000 and $7,435,000 as at 30 January 2019 and 30 August 2019 respectively but the amount dropped to $2,008,000 on 29 April 2020 and further down to $170,000 on 30 September 2020. 26.There was also another HSBC-045-888 account that had $4,948,000 and $3,090,000 on 15 January 2018 and 16 September 2018 respectively. The husband did not update the latest situation of this account in his supporting affirmation. The wife claimed the husband had transferred his monies away from his bank accounts to some undisclosed accounts: see paras 11 – 13. 27.In reply, in respect of the HSBC-513-888 account, the husband said the following at para 17 of his affirmation dated 8 March 2021,
28.In respect of the HSBC-045-888 account, the husband said it was a joint account between him and their younger son. He said “funds from different accounts were being moved around by (him) as (his) financial situation required”: para 18. The husband did not dispute that the account balance was reduced to zero. But he said it did not mean “all accounts were deposited with millions all the time”. He said, “I had in the year 1998 millions of dollars in my other bank accounts, but they are not relevant to this case.”: see para 20. 29.I must confess I do not understand what the husband tried to say. The husband’s reply reminds me of what Hon Lam J (as he then was) said in L v L [2006] HKFLR 121,
30.The duty to give full and frank disclosure of one’s financial situation is onerous. It is an absolute and continuous duty: see Rayden and Jackson on Relationship Breakdown, Finances and Children, at [13.101]. He (or she) has to present his financial information in an intelligible and meaningful manner. In my view, it is wholly inadequate for the husband to say by just one stroke of sentence that it was “due to the failing business of his companies” and that he has already produced all relevant bank statements for scrutiny by the wife. In this connection, it has to be reminded that on the husband’s own admission, revenues from Watsons for the sale of LS’s products were diverted to the 3rd respondent. Not only that the husband is the one in the best position to explain, he has a duty to do so. To provide the wife with all the bank statements and wait to see whether she was able to ask the right questions on particular transfers is a deplorable “catch me if you can” tactic. It is incumbent upon the husband to explain, with sufficient particularities, where the $5,100,000 in his bank account have gone. 31.For these reasons, I agree with Mr Wong that the husband failed to explain the rapid deterioration in his bank balance. This point alone is sufficient for the disposal of the Variation Application. 32.I take one step further by testing the veracity of the husband’s case against some basic figures provided from his side. 33.The husband said in his affirmation dated 27 October 2020 that he still had about $106,000 in his banks. 34.At para 21 of his affirmation dated 22 November 2022, the husband explained how he was able to survive under the stringent financial situation. He said he had sold a Mainland property (the Yorkshire Property), surrendered one of his insurance policies for $900,000 and borrowed $300,000 from his company LS. 35.The Variation Application was taken out on 27 October 2020. Thus, from October 2020 up to the date of the substantive hearing, there was a lapse of about 24 months. At the hearing, Mr Hart conceded that:
36.Although I have some reservations as to whether the husband’s monthly needs are under-estimated, for the present purpose I shall adopt this figure. 37.It was further agreed by Mr Hart that during these 24 months, the husband paid $1,388,000 to his former solicitors and $800,000 to the wife pursuant to the order dated 31 August 2021 by Deputy Judge Doris To. 38.I set out the above figures in the following table.
39.I have not included the sale proceeds of the Yorkshire Property which, according to the husband, was sold in August 2020 for RMB798,000 for the reason that when the husband said by the end of October 2020 he had $106,000 only, the necessary implication must be that he had either included whatever balance it was in the said $106,000 or had already spent all. 40.Therefore, allowing for one moment that the husband’s financial situation as claimed by him were true, even on his own version, there should be a shortfall of $1,396,000 or thereabouts. However, his evidence is that as at the date of the hearing he still had $446,266 in his bank accounts. These figure do not tally with his version; his version is not internally consistent. 41.It should not be forgotten that the husband is a business man. He was and is a shareholder and director of LS. I agree with Mr Wong that the director’s fee, and indeed, other payments or dealings between him and LS, may be subject to manipulation. As a matter of fact, the husband’s credit card bill of about $40,000 to $50,000 per month were paid by LS. 42.With the conclusion that I have come to, it is not necessary to come to any conclusion on whether the husband made some transfers to his mother and to two other ladies as alleged in para 14 of the wife’s affirmation dated 23 February 2021. It is also not necessary to come to any conclusion as to whether the husband should be able to make use of his insurance policies for some extra cash. 43.On the above analysis, I regard the husband’s disclosure is obviously deficient. His assertion of financial difficulty is a mere say-so on his part. I shall make robust assumptions about his ability to pay and err in favour of the wife. The Variation Application should accordingly be dismissed. Litigation Funding 44.The English Court of Appeal in Currey v. Currey [2007] 1 FLR 946, set out certain guiding principles on how legal funding as interim maintenance may be granted. The principles set out there have been cited and relied upon in the courts of Hong Kong. Hon B Chu J has helpfully summarised these principles in WGL v ASB (Decision (Litigation Funding) [2013] HKFLR 391,
45.The burden is on the wife to demonstrate that she cannot reasonably procure legal representation by any other means. 46.The husband put up all the grounds he could think of, leaving no stone unturned. He referred to the fact that the wife’s application for legal aid was unsuccessful, that she failed to give full disclosure of her bank accounts statements which are paying her credit card bills by auto-pay, that her spending pattern is extravagant and that she failed to produce her income from dealings with the China Resources Corporation, that she is a successful business woman and that she has the money. The husband also doubted how much the wife could actually obtain by surrounding her insurance policy with HSBC. 47.On the evidence before me, I am not convinced that there has been any substantial change in the wife’s financial resources since the Original MPS Judgment. As referred to above, the only ground of objection advanced by the husband before HH Judge CK Chan was whether the wife could resort to the UK property for funding but this was rejected. 48.I accept that the wife failed in her legal aid application because of the monthly sum of $50,000 received from the husband and the value of her insurance policy. I further accept that she cashed $390,000 by surrendering her insurance policy for fuelling this litigation. The money is on the verge of exhaustion and she has no other means of raising legal costs. 49.The husband complained that the wife has been obfuscated and delayed the proceedings. The fact is at least since the case was docketed at my court, the wife was acting in person until recently in September 2022 when her solicitors entered into appearance. In any event, the wife is seeking legal costs that allow her to move on from here to trial. 50.For the above reasons, I see no reason why the husband should not continue to pay interim maintenance by way of litigation funding. 51.Mr Wong fairly accepted that the wife needed about $430,000 to fuel her 4-day trial (including Pre-trial Review). I consider this is a reasonable figure. Considering that the parties have agreed to engage in mediation, I round the figure up to $500,000 to include the extra costs arising from mediation. 52.I would urge the parties to engage in mediation in a serious and candid manner. I am sure both would be greatly benefited in terms of time and the preservation of their family assets if an amicable settlement is achieved, not to mention the mental stress that they have to endure during the process. Lastly, the parties are reminded that litigation misconduct may result in costs being awarded against him/her on indemnity basis: see Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114, L v C [2007] 3 HKLRD 819, and ML v YJ (No 2) (Stellar Contribution) [2009] HKFLR 122, Hashen v Ali Shayif [2009] 2 FLR 896 and 陳及胡 [2018] HKFC 144, FCMC 12002/2014. Orders 53.There are about 4 months to go before the trial. The husband should pay the litigation funding of $500,000 by 4 instalments of $125,000 each. The 1st instalment is to be paid within 7 days of this Order and the subsequent instalments on the 1st day of each and every succeeding month until full payment. In other words, the 4th instalment is payable on 1st April 2023. Costs 54.The husband failed in both applications. He should pay the wife the costs of the applications to be summarily assessed. The relevant directions will be given at the Pre-trial Review hearing of 13 March 2023.
Mr Hart Giles, of Hart Giles, Solicitors, appeared for the petitioner Mr Joseph Wong, instructed by H.Y. Leung & Co., LLP, Solicitors, appeared for the 1st respondent 2nd and 3rd respondents are excused | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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