N v. C

HCMC000001/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 1 OF 1999

(Transferred from FCMC No. 12026 of 1997)

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Coram: Deputy Judge Gill in Chambers

Date of hearing: 29 January 1999

Date of handing down of judgment: 5 February 1999

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JUDGMENT

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1. This is an application for maintenance pending suit.

2. I shall call the parties for convenience the husband and the wife. They were married in February 1990. There are two children of the marriage, both boys. A was born in April 1991 and is now 7 years old. B was born in September 1993 and is now 5 years old. By petition dated November 1997 the wife petitioned for divorce based on the husband's unreasonable behaviour. Unopposed, a decree nisi was granted in May 1998. By agreement custody of the boys was granted to the parties jointly with care and control to the wife and reasonable access to the husband. The wife's claims for ancillary relief have not so far been agreed and determination of those is pending. Meanwhile the wife has made application for maintenance pending suit. As her claim is also for interim support for the children pending resolution of her claims for ancillary relief in final terms, I shall treat this application as including one for interim maintenance for them as well.

3. My powers to make the orders asked for derive from the Matrimonial Proceedings and Property Ordinance Cap. 192. Although the same principles apply as if I were being asked to consider the claims in final terms the relief sought is, by definition, intended to provide respite until ancillary relief is finally resolved. It covers that inevitable period of delay, post petition, where, as here, the parties are unable to agree on what that level of support, if any, should be. Where there are infant children involved of paramount importance is that they should be provided for at a level as close as possible, within the resources available, to that they enjoyed prior to the breakdown of their parents' marriage. By virtue of their pro tem nature a court is not required or likely to go into the financial circumstances of the parties in any great detail. But applying a broad brush approach it will have regard to what in the circumstances of the case amount to the reasonable needs of the applicant for herself and any dependent children, the extent to which, if at all, she can contribute to those and the ability of the respondent to provide for that. In establishing what is the right level the court will pay particular regard to the circumstances and financial conduct of the parties in the years leading up to the breakdown; that is, how the income and other resources were dealt with, as well as the present position of the parties.

4. With these principles in mind I now turn to consider the history of the marriage as is relevant to these proceedings.

5. The parties met in 1986 when students at a University in USA. In 1987 the husband's father died and he returned to Hong Kong to assist in running various family business concerns. The wife continued her studies; but the couple maintained contact. During a holiday she took in Hong Kong in 1989 the husband proposed. The wife abandoned her plans to complete her degree and returned to Hong Kong. They married in 1990.

6. Apart from a short period when they lived with the husband's mother their home became a house situated at Shatin. But about a year later they decided to live in Canada, and for some 3 years resided in Ontario. The boys were both born there. But the husband retained his family business connections in Hong Kong and commuted frequently. In 1994 they decided to return to Hong Kong and their home in Shatin and they have remained here ever since.

7. The wife has not since the marriage worked to earn an income. She says this was at the husband's insistence. Whether that was so is not material to this application. What is relevant is that she has since marriage relied solely on him for financial support for herself and, when they came along, the boys.

8. Now it is appropriate to relate how the husband derives his income, and, in broad terms, the set up of his own family's companies.

9. He is a director of Company A which engages in electroplating and Company B which manufactures plastic parts. He is paid $46,000 and $22,000 per month by each respectively with a 13th month bonus at Chinese New Year. That is the extent of his earned income. A third company called Company C owns, along with numerous other properties, the house at Shatin which has until last year been the family home. That is provided rent free. Company C pays the rates, management fees and so on saving the expense of that of just over $10,600 per month. The company also owned a Ferrari which it bought in 1995 for $1.5m for exclusive use by the husband. He says that has recently been sold. There is another company in the group called Company D. That manages the wages and other emoluments of employees of Company A.

10. The four companies are wholly owned by a company called Company E, and the sole beneficial shareholder of that is a trust settled by the husband's mother called the C Family (1992) Trust. This is a discretionary trust which came into being under a deed of settlement dated 24th February 1992. The trustee is the subsidiary of a bank. The husband's mother and her six children are the named beneficiaries. The trust assets comprise solely the shares in Company E. As at 31st December 1997 they were valued at $41,696,000.

11. The husband's relatively modest income belies the resources he has over recent years had at his disposal. He says that he has not received any benefits from the trust since its inception. But on four occasions between September 1995 and February 1997 he and his siblings received substantial gifts of cash from their mother. His share totalled $14,726,000. This was reflected in his bank balance which in March 1997 showed a credit balance of $18.8m.

12. The family as a result has enjoyed a comfortable life style not far short of lavish. They owned expensive cars apart from the Ferrari, spent extensively on club subscriptions and facilities, ate out a lot, travelled, and employed two maids. Every Chinese New Year the husband would give to the wife cash gifts ranging between $300,000 and $600,000. This has built up to a total of something over $2m and this amount, now increased to $2.5m, stands to the credit of the wife in her bank account. The husband and his brother set up a company which owns, operates and hires out radio controlled cars. He has put a lot of money into that and related enterprises. He has made investments, some worthwhile and some not so successful. The boys when they came of school age were enrolled in an expensive school and extra curricular activity as well.

13. But the marriage became unhappy. The wife filed her petition in November 1997. She moved out from Shatin in January 1998 taking the boys with her. That was to signal the end of the marriage. They moved into a rented flat in Braemar Hill and they live there to date. The husband has stayed on at Shatin and is there to date.

14. The parties then sought to negotiate an interim financial arrangement. The wife was paying rent of $45,000 per month and running one of the cars. On the basis that the husband would pay additionally the boys' school fees and other related expenditure and some of the running costs of the wife's car it was agreed that he pay to the wife for her needs, including the rent, $70,000 per month and for each child $10,000 per month, making $90,000 in all. I should say here that both grumbled at this figure before reluctantly agreeing to it. The wife said she had to reduce her spending drastically in order to meet this budget and the husband said that it together with his own personal expenditure meant that he had to subsidise it from his savings. There were attempts to formalise this arrangement in a court order incorporating undertakings but they were unable to agree on the incidence of costs and in the event nothing came of that.

15. Then it was that the wife became aware that in the 13 months between March 1997 and April 1998 the husband's account was down from over $18m to $11m, a reduction of more than $7m. Alarmed that his capital was disappearing fast and that he was engaging in spending to defeat her pending claims for ancillary relief she applied for an injunction to put a cap on his spending.

16. His protest was vehement.

17. He said his intention was in no way to dissipate funds. He said his usual spending pattern was to pay out on average not less than $500,000 per month and that during five months in 1996 and 1997 he had spent in excess of $1m per month. He said in many instances substantial withdrawals were matched by sizeable deposits, and cited those occasions when he received cash gifts from his mother. So, his spending for the period in question was no different from the norm, and had no bearing on the pending divorce.

18. In the event there were further negotiations and the upshot was that by injunction of June 1998 the current account, which at that point had a balance of just under $6m, was frozen at $4m and in addition the husband was prevented from dealing with any of those listed assets in which he had declared an interest. These included various equity funds he had bought into, his shares in the radio controlled car company and its offshoot he was running with his brother and his beneficial interest in the C Family Trust.

19. What has given rise to the wife's application that I am now required to deal with is the husband's announcement that he has come close to the $4m cap on his account and he is no longer able to afford the $90,000, the school fees and wife's car running expenses he has been paying. His mother has made no gifts since February 1997 and it is not his place to ask for any assistance from her. His savings having been all but exhausted above the cap; his income is all that he can call on and that is far less than the sum total of the cost of his own needs and those of his wife and children. In fact for the months of October and December 1998 he paid only $50,000 per month, for November $55,000 and for January 1999 $20,000. His proposal before me is that the injunction he lifted so that he can use such of his savings as may be necessary or, alternatively, that the monthly figure be reduced to a manageable level and that the wife be called upon to use some of her savings now standing at $2.5m to make up the shortfall.

20. The wife accedes to neither course so the matter is before me to resolve.

21. The husband's position, as deposed, is now as follows.

22. He has cash savings above the $4m cap of $48,000, having just paid $90,000 on a tax bill. No other asset in cash or kind is unfrozen. His income is $68,000 per month plus a bit more than $20,000 per month being interest on the $4m, making say $90,000 per month. His personal expenditure is now $42,000, reduced from a more lavish era. He could manage $50,000 per month but no more, and that reduced figure includes provision for school fees and other costs of education and car expenses hitherto paid by him as extra.

23. The wife has renegotiated her rent from $45,000 per month to $34,000 per month and thereby now seeks. $79,000 per month instead of $90,000. But with the husband not prepared to undertake to meet the school fees and car expenses (essential as she says for ferrying the children to and from school and their various activities) she will have to factor in this expenditure as well of $21,000 per month. So, the figure she says she needs is $100,000 per month. She cannot get by on the amount the husband is proposing. Furthermore, with the uncertainties of the future still to be resolved she wishes to preserve at all costs her nest egg of $2.5m., for the same reasons that she asked for and got the injunction.

24. The ancillary relief hearing has been fixed for late June. If that goes ahead the orders I make by this judgment will likely last until the end of July.

25. My first task is to consider the needs of the wife. She claims $100,000 per month. Having regard to the circumstances of the family leading up to the breakdown of the marriage and thereafter to date I find nothing excessive in the figures she has put forward to justify this figure.

26. I turn to the husband's ability to pay. His reasonable expenses as I find come to $40,000. If he has to pay to the wife $100,000 per month until July this will amount to expenditure of $980,000 for the 7 months. Deducting the $20,000 he paid in January and adding the shortfalls of October to December this comes to a total of $1,075,000. His income for the period will be 7 x $90,000 + 13th month bonus at Chinese New Year making a total of $698,000. If one adds to this the balance of savings of $48,000 there is a shortfall of $329,000.

27. This, in the context of the husband's financial history, is a bagatelle.

28. A man who deposes to a spending habit of in excess of $500,000 per month which sometimes, and this said with apparent pride, is in excess of $1m. per month has surely the means to raise such a sum. If this puts him in the embarrassing position of having to go cap in hand to ask for it then so be it. He is after all the author of his own difficulties. Notwithstanding the stringent controls imposed by the injunction there was still $2m available, well in excess of a figure that would have met the family's needs during this interim period. Yet he chose to continue to draw on it for other expenditure with apparent scant regard for the consequences, which included upgrading an already expensive car and spending well over $1m. on one of his so-called hobby investments. And his failure to recognise his priorities extended to as recently as the beginning of this month when he met his tax bill thus further reducing the cash in hand. Of course tax has to be paid. But so do school fees. Tax can be deferred by arrangement. Yet, it seems, he took no steps to try for this.

29. All in all I am satisfied the husband has by his own irresponsibility caused the drastic depletion in his own funds.

30. I accept the wife's anxiety as to further depletion of the remaining capital is well founded and this should be avoided if it can.

31. And I find it can be.

32. The husband has not deposed to having sought and been turned away from assistance, commercially or domestically, for what, in context, is a modest sum. I am satisfied he has the resources to meet the wife's reasonable needs for herself and the children, fixed overall at $100,000 per month, with adjustment to meet the deficits of the last four months.

33. The orders now follow.

34. The respondent shall forthwith pay to the petitioner as maintenance pending suit for the period October 1 1998 to January 31st 1999 the sum of $195,000.

35. Thereafter, pending further order, the respondent shall pay to the petitioner for her support maintenance pending suit in the sum of $70,000 per month, the first payment to be made forthwith and thereafter on the 1st of each month and for support of the two children $15,000 per month per child, the first payments to be made forthwith and thereafter on the 1st of each month.

36. All payments are to be by direct credit to the petitioner's bank account.

37. Costs of this application shall be to the petitioner taxed if not agreed, nisi at first instance, with liberty to argue on notice given within 14 days of the date of this order.

Representation:

Mr. N.J. Clough inst'd by M/s. Stevenson, Wong & Lai for the Petitioner

Mr. Jonathan Mok of M/s. Johnson, Stokes & Master for the Respondent