Case Document

FCMC No. 6100/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 6100 OF 2006

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BETWEEN
	K	Petitioner
	and
	K	Respondent

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Coram: Deputy District Judge K.W. Wong in Chambers (not open to public)

Date of Hearing: 29^th and 31^st January 2008

Date of Handing Down of Written Decision: 29^th February 2008

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DECISION

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1.This is the application of the Respondent wife (“Wife”) against the Petitioner husband (“Husband”) by summons dated 12^th January 2008 for an order that the Husband do pay her maintenance pending suit (“MPS”) at the rate of:

i) HK$120,000 per month for herself; and

ii) HK$30,000 per month for the benefit of one of the children of the family, J2,

effective from the date of the Petition, namely, 25^th May 2006, until the date of decree absolute and payment be made within 7 days of the order. She also asked to factor a monthly sum of HK$50,000 in the MPS to cover her ongoing legal expenses. The Husband opposed the application, offering a monthly sum of $33,000.

Background

2.The parties were married on 24^th August 1983. The Husband, then aged 25, was a businessman working mainly for the family business. The Wife, then aged 28, has since been a housewife looking after the family and the children.

3.There are two children of the marriage. They are J1, a girl just turned 20 and J2, a boy now aged 18. J1 is now studying in Hawaii at the Hawaii Pacific University. J2 is now studying in his last year in America International School in Hong Kong. He is now living with the Wife at the matrimonial home in Shiu Fai Terrace. This property is owned by a family company of which the paternal family members are shareholders and the Husband and his father are the only two directors.

4.After about 20 years the parties split up. According to the Wife, she discovered that the Husband had extra-marital affairs with other women in 2003. Despite the Husband’s promise to stop such affair, she said the Husband failed to do so and the parties eventually separated in June 2005. The Husband said in the Petition that they have separated since April 2004.

5.The petition for divorce was issued by the Husband on 25^th May 2006 based on the fact of 2 years separation. The decree nisi was granted on 26^th February 2007.

The Brief Facts from Affidavits/Affirmations

6.In support of the Wife’s application, she filed and served two narrative affidavits respectively on 12^th and 28^th January 2008 (referred to as the “Wife’s 1^st Affidavit” and “Wife’s 3^rd Affidavit” here, the 2^nd having been filed for her application for discovery of documents). The Husband filed and served his on 28^th and 31^st January 2008 (referred to as the “Husband’s 1^st Affidavit” and “Husband’s 2^nd Affidavit” respectively). It should be noted that the parties have also exchanged Form E shortly after the issue of the petition. The Wife’s Form E was dated 28^th September 2006 and the Husband’s a day before, i.e. 27^th day 2006. Questionnaires have been exchanged and answers filed. The parties also relied on these answers and documents for the present MPS application.

7.The Wife’s case is that she has been a housewife since they got married. The Husband has since been the sole breadwinner for the family. He is the only son of a very wealthy family and is himself a very successful businessman managing his family business in US, Canada and Hong Kong. After marriage, they moved to the present matrimonial home, which is a 4-bedroom flat of about 2,800 square feet and owned by a family company. There appears to be some discrepancy in the size of the accommodation. In the Husband’s 1^st Affidavit he described the flat is only 2,200 sq. ft in size. However, in his Form E he said his residence is 2,500 sq. ft while the Wife described it as 2,700 sq. ft. in hers. In any event by Hong Kong standard this is a spacious accommodation located in a prestigious location. She said that their family enjoyed a high standard of living. Although in the Form E the Husband claims that he has a monthly income of HK$280,000, given the family’s lifestyle, such as long hauls flight in first or business class to Europe or North America and sea cruises trips annually for the past few years, she believes the Husband’s income greatly in excess of this amount. Besides, there are substantial landed properties held by the Husband and/or family companies in Hong Kong and the North America. These properties, according to the Wife, are held and controlled through a complicated system of offshore companies and are worth hundred of millions dollars. One of the examples is that according to the annual report of a family company K & K, the assets held by this company is worth about 40 million Canadian dollars.

8.Before the turning sour of their relationship in or about 2004, the Wife said she had unlimited use of 4 supplemental credit cards. In 2004, the Husband has stopped her use of 2 supplemental credit cards, namely credit cards with the American Express and Citibank (respectively the “AE card” and “Citibank card”). In September 2005, her use of the remaining 2 credit cards, namely cards issued by the Overseas United Bank Limited (“OUB card”) and Hang Seng Bank in co-operation with the Jockey Club (“HS JC card”) were also withdrawn.

9.Furthermore, before the surface of their marital problem, the Wife can enjoy membership of prestigious clubs. Her use of the Hong Kong Jockey Club (“HKJC”) was suspended in September 2005. It is admitted by the Husband that as from January 2008 the Wife can no longer sign her bills at the Hong Kong Country Club (“HKCC”). That means that she can no longer enjoy any club facilities which she used to enjoy.

10.As regards maintenance, she also alleged that the Husband used to pay her $50,000 monthly (on the top of unlimited credit card spending, club facilities, chauffer service and luxurious trips). The money is deposited into the Wife’s account with the Hang Seng Bank every month. However, this monthly sum was reduced to HK$30,000 in August 2005. It was further reduced to HK$20,000 the next month (i.e. September 2005) when her membership with the HKJC and use of the remaining two credit cards were suspended. In the Wife’s 1^st Affidavit, she said that the Husband would like to deduct from her $20,000 for her spending in December 2007 at HKCC, leaving only a sum of $6,000 odd for her for January 2008. This deduction was withdrawn after protest from the Wife through her solicitors. The Husband’s explanation is that it was probably a misunderstanding on the part of his secretary. However, it is not in dispute that she has been denied use of the HKCC as from January 2008. Her daughter J1, on the other hand, can sign at the HKCC.

11.The Wife also complains that she was denied use of chauffer and the 2 luxury cars of the family but is only provided with a modest Nissan. The domestic helpers serving the family were reduced from 2 to 1. She was also denied the enjoyment of a family house in Toronto, Canada, which is about 2 acres in size, and another house in San Francisco, which is with 4 acres of land. These houses are used to be enjoyed by the family before their breakup. After June 2005, the Husband did not paid for her trips any more.

12.The Wife said J2 was arranged to study in a boarding school between 2004 and 2006 in Canada. However, J2 was unhappy to be separated from the family and his school result in Canada was unsatisfactory. He was required to repeat Grade 9. J2 wanted to return to Hong Kong but the Husband refused. In early 2006 J1 returned to Hong Kong to further her study because she developed serious allergy to the cold weather in Canada. The Wife said that seeing how unhappy J2 was then and with the consent of the Husband’s mother, she managed to arrange for J2 to study in Hong Kong as from September 2006. This made the Husband extremely angry. He refused to make regular contribution since August 2006 to J2’s expenses for which she became responsible. Although as from December 2006 the Husband has started paying J2 pocket money, he still failed to pay for the tuition fee and other expenses regularly. She claimed that she has incurred at least a sum of HK$102,624 for J2’s tuition fee and his school expenses during 2006 and 2007. Receipts were exhibited to her 1^st affidavit. She wanted this sum back from the Husband. She said that the irregular contributions of the Husband to J2 put her in great financial stress and burden.

13.The Husband agreed in his Affidavit to repay the Wife the amount referred to in the preceding paragraph. At the hearing he undertook to repay the same before the Lunar New Year of 2008.

14.As a result of the decrease in maintenance from the Husband, the Wife said that she has to live on her own savings which drops from about 1.2 million to about 0.3 million. Miss Remedios for the Wife has submitted that what the Husband has done after the break down is totally unfair, unjust and discriminating against the Wife. It is because while the Husband can have lavish spending on his clothing and meals and J1 can enjoy unlimited credit card and club facilities, the Wife is only provided with $20,000 a month. It is no more than a squeeze on the Wife by the Husband with a view to set a new but lower pre-breakup standard of living in order to defeat her maintenance claim. Since the Wife is now 53 and has suffered from naso-pharyngeal cancer in 1991 and anxiety in 1997, very likely she cannot be able to find a job to finance her pre-break off standard of living. The Wife therefore would like to claim against the Husband for interim maintenance, pending final disposal of her ancillary relief claims, and hopefully in the financial dispute resolution (“FDR”) hearing scheduled June this year.

15.The Husband opposed the Wife’s application. In a nutshell he alleged that the Wife has exaggerated most of her expenses. It is the Husband’s case that the Wife neglects supervising J2 in his study while J2 is in Hong Kong. He also says the Wife has a gambling habit and always plays mahjong outside until late night. It is also his case that even taking the Wife’s case to the highest, the Wife could not have spent HK$120,000 a month as claimed. He is, however, willing to increase her monthly maintenance to HK$33,000 and provides certain undertakings to the Court to bear all household and children’s expenses. Further, he opposed costs to be factored in the MPS.

16.On the other hand, he said that his income mainly comprised director fees and salaries from groups of Hong Kong and US companies that are not beneficially owned by him but by his family. Recently the US tax authority has made investigation into his tax liability. He said he will definitely be required to pay US tax in future. As such, his director’s fee from the US companies will be reduced to half. He also alleged that he has recently received adjustment to his income which has become HK$255,924 instead of HK$280,000. It is fair to say that he does not seek to deny the family having enjoyed luxurious trips in the past few years. However, he said those trips were all paid by his father out of his generosity. His sisters’ families also enjoyed such trips. He confirmed that such trips would no longer be available to the Wife. He also alleged that the chauffer was employed by his father who ordered withdrawal of service from the Wife. There is however, no dispute that this chauffer has served him and his family.

17.The Husband disagrees to many of the facts contained in the Wife’s affidavits, in particular, the expenses of the Wife. He also said the withdrawal of substantial sums of money from her accounts shortly after the issue of the petition in 2006 dubious.

The Law Regarding MPS

18.There is no dispute between the parties that the court has jurisdiction to grant MPS to parties to the marriage and also for benefit of child of the family. The interim maintenance summons is taken out under section 3 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) which provides:

“On a –

(a) petition or joint application for divorce; or

(b) petition for nullity of marriage or judicial separation,

the court may order either party to the marriage to make to the other such periodical payments for his or her maintenance and for such term, being a term beginning not earlier than the date of the presentation of the petition or making of the application and ending on the date of the determination of the suit, as the court thinks reasonable.”

19.The above provision appears to be applicable only to a party to a marriage.

20.As regards the financial provisions to a child of the family, section 5 of the MPPO, which is subject to section 10 of the same Ordinance, is applicable. Section 5 empowers the court to order a party to a marriage to make payments, including a periodical payment and lump sum, to such person as may be specified in the order for the benefit of a child of the family, either before or during and after the granting of decree of divorce.

21.Rule 78 of the Matrimonial Causes Rules of the Matrimonial Causes Ordinance, Cap 179 stipulates that:

“Upon an application for ancillary relief, the court may make an interim order upon such terms as it thinks just.”

22.Section 10(1) of MPPO provides that subject to section 10(3) of the same Ordinance, no provisions will normally be made to a child who has attained the age of 18. Section 10(3), however, in so far as the provision is applicable to the child in the present case, i.e. J2, stipulates that:

“The court may make such an order as is mentioned in subsection (1)(a) in favour of a child who has attained the age of 18, … if it appears to the court that –

(a) that child is, or will be, or if such an order or provision were made would be, receiving instruction at an educational establishment or undergoing training for a trade, profession or vocation, whether or not he is also, or will also be, in gainful employment; or

(b) there are special circumstances which justify the making of the order or provisions.”

23.By the combined effect of the above provisions, I do not think there is any doubt as to the jurisdictions of the court to make MPS to a party to the marriage as well as to that party for the benefit of the child of the family even though that child is 18 or over.

24.The learned H.H. Judge Bruno Chan has in H v H (unreported) FCMC 1969 of 2007 3^rd October 2007 summarized the principles applicable to MPS application. In short, these principles are as follows:

i) the statutory guiding principle for MPS is such maintenance the court thinks reasonable in the circumstances;

ii) the court has an unfettered discretion in making the order Waller v Waller [1956] 300, [1956] 2 ALL ER 234,236, CA and Griffith v Griffith [1957] 1 ALL ER 494, 495;

iii) a broad-brush approach instead of a detailed investigation of the financial position by oral evidence should be adopted. It is because such maintenance is intended to operate for a relatively short period of time pending the final disposal of the ancillary relief application: see Miller v Miller [1985] 1 HKC 595 per Power J (as he then was). At this stage the court has no time to be perfect: Wong Wai Chi Susanna v Kim Miu Sup Mark (unreported) CACV 203/98 10^th February 1999 as per Liu JA; and

iv) The sole criteria in making the award were reasonableness and needs of the parties as well as the ability of the spouse to pay. Long term view or potential earning capacities or future capital prospect of parties not considered: see Miller v Miller (supra) and LAML v TCCY [2004] HKCU 1056 as per Hon Cheung JA at paragraph 13.

25.Miss Remedios for the Wife also submitted, and I think correctly, that the court has to take into consideration of the pre-breakdown standard of living of the marriage when considering the reasonableness of the financial order.

26.I shall, whenever relevant, apply the above principles to the facts of the present case.

27.In the present case, I consider four of the most important issues to be determined are:

i) the reasonable needs of the Wife and J2;

ii) the financial situation of the Husband;

iii) whether payment is to backdate to the date of petition; and

iv) whether provision for costs should be made.

The Reasonable Need of the Wife and J2

28.Miss Remedios has helpfully done a comparative schedule of the Wife’s expenses set out in her Form E and the Wife’s 1^st Affidavit as well as the views of the Husband. It is useful to repeat the same (with minor adjustment by me) here for further discussion.

Wife’s Form E(September 2006) Wife’s 1^st Affidavit (January 2008) Husband’s 1^st Affidavit

(A) General

Rent - - -

Mortgage - - -

Utilities $6,000 - Paid by company

Management fees $2,900 - Paid by company

Food $9,600 $5,300 $2,000

Household Expenses $3,000 $12,230 Paid by Husband

Car park expenses/ diesel $11,000 $4,000 Paid by Husband

Driver - $12,000 Wife never had driver

Domestic Helper $4,200 - Paid by Husband

Air ticket/insurance for domestic helper $200 - Paid by Husband

Dog Grooming $1,100 $1,100 Paid by Husband

Newspapers/Magazines $340 $340 $340

Laundry $500 - -

Sub-total: $39,290 $34,970 -

(B) Personal

Meals out of home $5,000 $6,200 $6,200

Transport - - -

Clothing/shoes $15,000 $15,000 Put to strict proof

Personal grooming(including haircut, skin care, massage and cosmetics) $11,000 $15,000 Put to strict proof

Mobile phone - $300 $300

Holidays $20,000 $20,000 Put to strict proof

Medical/dental $4,000 $9,680 Paid by Husband

Others:Entertainment/present $5,000 $15,550 $5,000

Sub-total: $60,000 $81,730

Grand Total: $99,290 $116,700 $33,000

29.Apart from the above, Miss Remedios also produces a schedule showing that in 2004, based on incomplete credit card records kept by the Wife, her annual card spending was about $498,391.58, which is about $41,532 per month.

30.Miss Anita Yip, counsel for the Husband, criticized the Wife of over-exaggeration and manipulating figures to justify expenses she never incurred. The management fee, utilities expenses and expenses on domestic helpers are examples. They were in fact paid by the Husband or the company but she inserted the same into her Form E. The credibility of the Wife is in serious doubt.

31.The Wife conceded that it is the Husband who settles the aforesaid expenses. However, she denied any intentions to manipulate.

32.Miss Anita Yip has set out in her skeleton submission that for the avoidance of doubts the Husband has provided undertakings for the following expenses:

i) utilities of the matrimonial home (gas, telephone, electricity and water);

ii) broadband and Now TV;

iii) management fees; rates and government rent;

iv) salary of one of the domestic helper;

v) supermarket purchases;

vi) reimbursement of medical and dental upon receipts or medical insurance;

vii) all of the children’s education and living expenses.

33.So Miss Yip submitted that the Wife could, pending suit, continue to live at the matrimonial home free. In addition, she can enjoy the use of one domestic helper and does not have to worry about any of the children’s expenses. If she requires any supermarket purchases (including foods and expenses for the household) she can always instructed the driver or domestic helper to do the purchase. The Husband will then reimbursed the driver. This has already been the present practice.

Clothing and Personal Grooming

34.Concerning the credit card spending of the Wife in 2004, the Husband in his 2^nd Affidavit alleged that the Wife was only issued with 3 supplemental cards, namely, the AE Card, the UOB Card and the HS JC Card. He said he had never given any Citibank card to the Wife. He also said according to his record, the Wife usually used the UOB Card and HS JC Card in her spending. The Husband has, in purported rebuttal of the Wife’s spending, gone through the annual records of these two supplemental cards. He comes up with an average monthly spending of about $28,868 for her. The Husband rounded this figure down to $28,000 (but I think it is fair rounding it up to $29,000 instead of rounding it down) and said this pattern of spending prior to separation more or less tallied with the Wife’s recent level of spending of $23,000. One of the substantial errors which the Husband has identified, and the Wife conceded, is that one spending which should be HK$173.74, has been mistakenly stated as HK$173,074 by the Wife in the calculation. It is the Husband’s case that, after going through his records for the said two cards, the Wife’s expenses on clothing and personal grooming should be $213,307.18, meaning about $17,778 per month for 2004.

35.Upon hearing Miss Yip’s submission, the Wife immediately produced at the hearing the original Citibank card which she said has been given her by the Husband. She also showed at the hearing certain statements purported to be issued by the Citibank Card, showing that part of an airticket fare was settled by this card. The Husband said that he may have overlooked the same and would like to do further verification.

36.Although there is a calculation mistake admitted by the Wife, I do not consider that I should use the figure of $17,778 or a round-off figure of $18,000 for the Wife’s clothing and personal grooming for the purpose of this MPS application. Firstly it is apparent now that the spending of one of the three supplemental cards has been omitted. Therefore, $18,000 is hardly indicative of her spending under these two heads. Secondly, the said figure is for 2004. Although there is no evidence on the rate of inflation, I do not think there is any dispute that we have now moved away from deflation to inflation. The Wife claimed a sum of $26,000 in September 2006 and $30,000 in 2008 under these two heads. I think a reasonable estimate for the purpose of MPS for these two items is $25,000.

Food and Household Expenses

37.The Wife’s case is that prior to the souring of their relationship she had use of 4 credit cards without limit and $50,000 for household expenses and her maintenance. In the Husband’s 2^nd Affidavit he said that prior to 2001 the Wife was paid $30,000 a month. However, after 2001 the Wife was given $50,000 which was for household, salary of the 2 domestic helpers, expenses of the children including tuition fees, books, stationery, and all extra-curricular activities such as piano class. In the Husband’s 1^st Affidavit, he said he took over the responsibility to pay all household expenses in 2004. Then the 2 children of the family were studying in Canada. The present practice is that the domestic helper or the Husband will send a list of purchase to the driver who will then do the purchase. This driver has been working for the Husband’s father and the Husband always trusted him. The driver can claim reimbursements from the Husband. Basically the Husband’s position is that since he will take up all the household expenses (including food for the family and the Wife) as well as the children’s maintenance, there is basically no need for the Wife to incur expenses at all under these heads or the expenses are minimal. If the Wife needs anything she can simply ask the domestic helper or the driver to do the purchase.

38.Although I have no doubt that the Husband will be ready and able to give the above undertakings to the Court and to the Wife, I consider it most unreasonable asking the Wife to look upon the domestic helper and driver for purchase of food and household items as they are the only designated persons who can do the purchase for the family. Obviously it causes embarrassment to the Wife. Inevitably such arrangement also serves to create arguments between all parties involved as to the reasonableness of a purchase and is most undesirable. On the other hand, I have difficulty to accept the Wife’s explanation for her estimate of $12,230 for household expenses. She said her estimate is based on a possible need to do some repair or furniture replacements. For the purpose of this MPS application, I think it is reasonable to adopt the figures alleged by the Husband in his Form E under these two heads, namely 2 separate sums of $5,000 for food and household expenses.

Car Parking Expenses/Diesel/Transport

39.There seems to be no dispute that the driver is an employee of a company which is controlled by the Husband’s father. There is also no dispute that the Wife as well as the children of the family used to enjoy the service of the driver. The dispute appears to be the extent to which service was rendered to the Wife in the past whereby she can be regarded as having, in substance, the service of a driver. This can only be resolved after trial and cannot by affidavit.

40.The Wife now conceded the petrol and car maintenance being paid by the Husband. However, in the event she chooses to drive, she may have to incur expenses in respect of parking and car beauty.

41.However, pending resolution of these disputed facts, I do not think it appropriate at this stage to make provision for the Wife on the basis of driver service. In light of the evidence from the Wife that her driving licence is likely to be suspended soon and therefore cannot drive for the time being, I do think it is reasonable to make provision for the Wife’s transport expenses based on taxi service. I consider a sum of $6,000 a month, i.e. $200 per day, reasonable.

Holidays

42.The Husband did not deny the Wife having taken the trips as alleged. What he says is that many of these trips by cruises were organized by his father for the K’s family and paid by his father. He, however, confirmed that the Wife would no longer be entitled to such family trips. Further, many of the trips set out by the Wife are in fact undertaken by her alone or with her friends and relatives and not the family.

43.Miss Yip, counsel for the Husband, submitted that this item should be held over until FDR. With respect I disagree.

44.From the affidavit evidence filed by the parties and the stance adopted by them, the proceedings ahead are expected to be difficult and contentious. In particular, the size and the valuation of the family assets and the Husband’s interest therein are expected to be very controversial. The FDR has been scheduled for 6^th June 2008. There is an impending argument hearing scheduled for 11^th April this year on discovery of documents. In the circumstances of this case, it is entirely reasonable for the Wife to take breaks and relax during holidays and gain emotional support by meeting J1 and other close relatives. J1 is now studying in Hawaii and her sister overseas.

45.The Wife’s estimate of $20,000 per month is based on 3 trips a year to respectively Hawaii, Canada and Japan in business class (paragraph 40 of her 1^st Affidavit). Based on the history of extensive holiday trips enjoyed by the family, 3 trips a year appears reasonable. For the purpose of her MPS application, I am prepared to accept her estimate, subject to, say, a 50% off her estimate for general expenses and entertainments and car rental/ transportation during these trips. It is because they should have been covered partly by the provisions under “meals out of home”, “foods” and “transport” which I have just allowed and “entertainment” which I will come to shortly. The total under this head is $16,000 per month (rounded off of [$122,287 + $49,660 + $66,502 - $33,000 - $6,825] ÷12).

46.I do not think it necessary at this stage to deal with whether this family has 2 other holiday homes in Toronto and San Francisco. These relate to capital assets or their transfer, if necessary, and will be done at the trial of the Wife’s ancillary relief or FDR.

Medical/Dental

47.In the Wife’s 1^st Affidavit, she deposed to the fact that her medical expenses were reimbursed by the Husband’s company. She now claims $9,680 in her 1^st Affidavit. The Husband said that it was he who pays for it and is now willing to provide an undertaking to reimburse all these expenses. Similar to the situation of “food” and “household expenses”, it is inappropriate to leave this matter to undertaking. It is because any dispute on the reasonableness of a treatment or examination may have a serious implication on the Wife, especially when she has a history of cancer and depression.

48.There are no particulars as to how the Wife comes up with $9,680. I think $5,000 per month is reasonable under this head.

Entertainment/presents

49.The Husband does not dispute this head of provision but offers a sum of $5,000 instead of $15,550 claimed by the Wife. As there are no particulars provided and the original sum set out in the Wife’s Form E is also $5,000, I am only prepared to allow a sum of $5,000 for MPS purpose.

Dog’s Grooming

50.There is no dispute that the Wife has 2 dogs. The Husband’s position is that all the dog’s foods are supermarket purchases and vet expenses settled by him. The Wife claims $1,100 and the Husband said it is excessive. There is not much evidence available so far except the analysis of credit expenses prepared by the Wife for 2004. But this analysis provides limited assistance as the Wife’s record, as claimed, is incomplete. The analysis shows that for July and October 2004 the Wife spent $2,675 in consulting veterinary surgeon. For the purpose of this MPS application, I think it is reasonable to allow a sum of $1,000 per month under this head. It amounts to an average of $300 as food and $200 as vet expenses for each dog per month.

Total for the Wife

51.I set out below the summary of estimated reasonable needs of the Wife for the purpose of MPS:

(A) General Summary of MPS allowed

i)   Food $5,000

ii)  Household Expenses $5,000

iii) Car parking/car/transport $6,000

iv) Dog grooming $1,000

v)  Newspapers/Magazines $340

Sub-total: $17,340

(B) Personal

i)   Meals out of home $6,200

ii)  Clothing/Personal grooming $25,000

iii) Mobile phone $300

iv) Holidays $16,000

v)  Medical $5,000

vi) Entertainment/presents $5,000

Sub-total: $57,500

Grand Total: $74,840, rounded up to $75,000

J2

52.The Wife has estimated that she needs $30,000 to support J2 while he is in Hong Kong. The Husband said in his Form E that J2’s maintenance is $38,000. However, since he is now undertaking to this Court to provide basically everything of J2 including paying him a pocket money of $5,000 per month, there is no need for this Court to provide any MPS to the Wife for J2. The Wife, however, requires certain maintenance to her to cover “invisible” maintenance to J2 if such undertakings are accepted because inevitably some expenses are without receipts. The Husband argued that J2 has been paid $5,000 as pocket money which should cover all his “contingent” or “invisible” expenses the Wife envisages. Any expense beyond J2’s pocket money should fall within the ambit of parental judgment. As J2 is now 18 this should not trouble the Court.

53.Despite the able submission of Miss Yip, I do believe that there are bound to be invisible expenses covering some petty expenses and odd purchases which cannot be covered by J2’s monthly pocket money. Furthermore, inevitably as long as J2 is living with the Wife, some expenses will not be covered by receipts.

54.Although the Husband has explained why he did not pay J2’s educational expenses in Hong Kong for 2006 and 2007, and has now agreed to reimburse the Wife of the outstanding sum of $102,624, I do not think his explanation constitutes good excuse for non-payment of school fees, which is a reasonable expense at any rate, and for so long. According to the evidence, which is uncontroversial, the Wife needs to pay J2’s tuition fee in Hong Kong not only for 2006 but also for 2007 as well. I agree it is sensible to place certain limit for a child’s spending and if he has special needs he should go to discuss with his parents. However, given the parenting approach of the Husband as aforesaid, leaving the “invisible” maintenance to parental judgment without making some provision to the Wife means the Husband, who is in control of the family finance, will dictate everything.

55.In the Form E filed by the Husband, the following three items are not covered by his undertakings and most probably are covered by J2’s pocket money. And I think most probably, these are areas where the “invisible” expenses lie. They are:

i) Entertainment/present $4,000

ii) Clothing/Shoes $5,000

iii) Lunches/pocket money $3,000

Total: $12,000

56.The shortfall comparing with the monthly pocket money of $5,000 is $7,000. As the Husband spends quite a lot of time in North America and it is the Wife who resides with him, I think a sum of $5,000 is a reasonable sum to the Wife to cover these “invisible” expenses.

The Ability of the Husband to Pay

57.The Husband said that his income has just been adjusted downward to $255,924 from $280,000, i.e. a reduction of about $24,000. There is no explanation as to what brings about this change and whether it has anything to do with his alleged US tax liability. The Wife said that since the Husband has an extravagant life-style and had supported his girlfriends, she believes that he has ample funds and probably “invisible” source of income.

58.To demonstrate her husband’s extravagant life-style, the Wife has in her 1^st Affidavit done an analysis of his spending based on the disclosed credit cards statements. It is perhaps useful to extract and set out below some useful information contained in paragraph 18 of the Wife’s 1^st Affidavit:

Year Food Clothing/valuables Entertainment/Trips Others

2004 $77,083.82 $540,163.27 $113,116.18 $111,048.67

2005 171,224.02 $684,556.29 $300,612.52 $125,306.76

AveragePer month for 04/05 $10,346 $51,030 $17,239 $9,848

59.I do not refer to her evidence of the Husband’s spending for 2003 and 2006 because it is based on incomplete records. Furthermore, the 2003 spending is outdated for the present purpose.

60.Furthermore, the Wife also alleged the Husband has spent an average of $12,322.5 per month on sauna and message in 2005 and substantial sums on clothing. In addition, she set out in her 1^st Affidavit the clothing expenses as revealed from the Husband’s AE credit card and Citibank card from December 2003 to April 2006. I have done a rough calculation based on the disclosed figures. It amounts to about $0.9 million (excluding the purchases from Havana, Olympic and Sony). All these purchases were made at world’s famous fashion boutiques such as Ermenegildo Zegna, Christian Dior, etc.

61.The Husband does not appear to deny the Wife’s allegation of ample funds and suggestion of invisible income. He explained that some expenses are children’s expenses and many food and entertainment expenses are for business entertainment expenses. As regards clothing, he explained that he is about 6 feet tall weighing over 270 pounds. As such he has difficulty buying over-the-counter clothing. He normally orders tailor-made items, which are always more expensive.

62.I do not think the Husband’s above explanation assists him to any extent. The following is a summary of some expenses, which are self-explanatory, listed out by him in his Form E:

i) Meals out of Home $105,000

ii) Transport $20,000

iii) Clothing/Shoes $60,000

iv) Entertainment $10,000

Total: $195,000

63.It is obvious that even according to the Husband’s own evidence, his spending on personal clothing is very substantial. His claimed spending under this head is $60,000 per month and is even more than the Wife’s estimate. It is noted that his spending on meals out of home is, at any rate, surprisingly high. It is $105,000 per month, meaning an average of $3,500 per day. If these expenses are business related, one will expect a substantial part of them would be reimbursed and therefore not really “personal expenses”. If for some reasons these expenses are not reimbursable, given his own personal expenses exceeding some $200,000 a month: see page 16 of his Form E, it means that he personally uses up some 70% of his then monthly earning, based on $280,000 per month, or even more, if $255,924 per month is adopted. On the face of it, such spending is disproportionate to his income. It is unreasonable and unbelievable. Assuming his monthly income is $255,924, the Court will expect him to make downward adjustment to his spending, at least under these two heads. However, I prefer to believe that his income is not limited to what he has stated in the Form E and his 1^st Affidavit.

64.The Husband agrees to pay all the maintenance for his two children, particularly J1, who according to paragraphs 18 and 19 of his 1^st affidavit, costs him about $34,450 as educational expenses each month. On top of these regular expenses, she has credit card spending ranging from about $3,000 to $91,000 per month (I have excluded her spending in August and September 2007). I think it is fair to pitch J1’s monthly spending at $70,000. According to the Husband, the spending for J2 is about $22,304 a month: see paragraphs 21 and 22 of his 1^st affidavit. Taking into consideration of his promised pocket money to J2 and the possible medical expenses for the children, the total current spending for the children is about $100,000. If one adds up his offer of $33,000 monthly maintenance to the Wife and the money required for satisfaction of his other proposed undertakings, a fair estimate of which is taken to be the same as that stated in part 4.1 of his Form E, i.e. $15,000, his total expenses per month will be around $350,000 ($200,000 + $100,000 + $33,000 +$15,000). His monthly expenses exceed his regular income by about 25%.It is noted that this sum of $350,000 is arrived at based on the Husband’s own evidence and his proposals. I do not think by giving such undertakings and proposal he means there is a need to water-down his present life-style. That is not his affidavit evidence. There is simply not the slightest indication at all in his latest two affidavits. A natural and logical inference is that the Husband has other “invisible income” or ample funds to support his lifestyle and for satisfaction of his proposed undertakings.

65.Accordingly, when I consider the financial resources of the Husband for the purpose of this MPS application, I will not feel constrained to limit his income to the alleged sum of $255,924, or $280,000 a month. I consider that he has other financial resources beyond the alleged income to meet his payment obligation, not to mention his current savings in bank of about $3 million.

66.As such, I consider the Husband can afford to pay the Wife two respective sums of $75,000 and $5,000, which I have found to be the reasonable MPS for her and J2. And I do so order.

Back-dating or Not

67.The Husband strongly opposes payment be backdated to 23^rd May 2005, the date of petition. Miss Yip submitted that there has been undue delay on the part of the Wife. If the Wife’s claims were accepted, it would mean a huge sum to be repaid now. The under-payment is about $100,000 per month for over 2 years. Miss Yip said any backdated order would wipe out the Husband’s present savings. In Miss Yip’s words, it will also result in a “windfall profit” to the Wife.

68.Furthermore, Miss Yip also submitted that the Wife’s claims of recent wearing down of her own savings by about $900,000 is dubious and is artificial. It is because the Wife’s case is that since 2004 there has been a depression of maintenance but she only started to draw from her savings since June 2006.

69.In addition, Miss Yip also said that the Wife’s transfer out of her accounts of several sums of £404,467.14, HK$429,900 and HK$170,310 in June 2006 to her sister very suspicious. These are substantial amounts amounting to about HK$7 million. Miss Yip accused the Wife of failing to disclose such huge repayment in the Form E sworn in September 2006.

70.I shall deal with the Wife’s answers to these allegations in the later part of my decision. Suffice it to say that I have formed a provisional view based on the available evidence disclosed so far that the Wife has got only about $0.3 million in her accounts.

71.On the other hand, again, it would be difficult at this stage to make a finding of facts as to whether the Wife has deliberately disposed of her assets in order to facilitate her ancillary relief claim. Given if reasonable MPS is provided to the Wife so that she needs not look to her savings further for her own maintenance, I do not consider it appropriate at this stage to backdate the MPS to the date of petition. We are now dealing with interim maintenance. Any shortfall or overpayment will be adjusted at the FDR or failing settlement, at the trial of the ancillary relief. In the circumstances of this case, it shall be reasonable to order the payment of the MPS as from the month of application, i.e. January 2008.

Provisions for Costs

72.It is common ground that in Hong Kong, the Court has jurisdiction to make provisions for legal costs in MPS. However, Miss Yip for the Husband has strongly resisted the application and submitted that the three requirements referred to in the English decision, namely, TL v ML [2005] EWHC 2860 (Fam) at paragraphs 128 to 130 have not been met. These requirements are:

i) no assets;

ii) no credit from solicitors; and

iii) no loan facilities for the litigation.

73.In respect of the first requirements, Miss Yip submitted that apart from the suspicious transfer of about HK$7 million out of a bank account controlled by the Wife, the depletion of the remaining sums in her accounts from about $1.2 million to just about $0.3 is also dubious. Accordingly, until and unless the Wife has made a clear and frank disclosure, the Court should consider the 1^st requirement not met.

74.As regards the other two requirements, basically Miss Yip submitted that there was no evidence from the Wife that she cannot obtain any loan facilities or credit from her solicitors.

75.Although in dealing with the provision for costs in MPS the judge in TM v ML was exercising an appellate jurisdiction, this decision is basically a 1^st instance decision of the English High Court dealing with a number of ancillary relief matters. After TM v ML the English Court of Appeal has in Currey v Currey (No.2) [2007] 1 FLR 946 reviewed a number of earlier English decisions, starting from A v A (Maintenance Pending Suit: Provision for Legal Fees) [2001] 1 WLR 605 and including TM v ML, and came up with a set of more refined requirements. Although for the present case, it makes no difference whichever sets of requirements are used, it is perhaps useful to set out the latest legal propositions here. Currey v Currey (No.2) was relied on in H v H (supra) by the learned H.H. Judge Chan. He has also helpfully and succinctly summarized in paragraph 44 therein the four conditions for awarding costs allowance in MPS application as follows:

“(1) That the applicant has no assets, or none that can reasonably be deployed.

(2) That she can provide no security for borrowing, or none which can reasonably be offered.

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation.

(4) That she cannot secure publicly funded legal help at a level of expertise apt to the proceedings.”

76.Concerning the 1^st condition, apparently the Wife claimed in her affidavit that she has to withdrawn from her savings because of insufficient maintenance from the Husband. She also explained that the sums amounting to about HK$7 million were repayment of money owed to her sister: see pages 72 and 230 of Bundle II. As regards the other 5 transfers of $200,000 each, Miss Remedios of counsel for the Wife has taken me to the bank records and explained that they were for the Wife’s daily expenses. As such, the Wife said that she now has only some $300,000 left in her account.

77.I understand that Miss Yip has taken a preliminary objection on the ground that the answers were not contained in affidavit but in questionnaire’s answers, which are unworn. However, in matrimonial proceedings, it is an established practice that a spouse will issue questionnaire asking the other to provide further and better particulars of affidavit evidence and documents. The answers provided are usually not required to be sworn or affirmed. In the present case, both parties have provided answers to questions raised by the other side. These questionnaires and answers together with documents in three box files are compiled for use at the hearing. I would have thought that if affidavits were required of the parties, both the Husband and the Wife would have no objection to have their answers sworn. As such I will take the answers on their face value for the purpose of this application.

78.As I have said, it would be difficult for the time being for the Court to do a finding of facts. Given the evidence as it now stands, I am prepared to accept that the Wife’s only asset is her savings of about $300,000 in her bank.

79.Miss Yip also criticized the Wife for not doing an estimate of costs. In KGL v CKY and Another, (unreported), CACV406 of 2002, 25th March 2003, Woo, JA (as he then was) & Cheung JA, the Court of Appeal was then also considering an appeal against provisions of legal costs in MPS. One of the criticisms then launched against the payee spouse is the lack of a skeleton bill in support of an application. The learned Woo JA (as he then was) has this to say in paragraph 24:

“While there does not appear to be any basis for the sum of $20,000 adopted by the judge, such as a skeleton bill in support of an application for security for costs as suggested by Ms. Wee, one cannot say the figure was arbitrarily plucked out of the air by the judge. … Taking into consideration that there were interlocutory injunctions taken out by the Wife and discharged on the application of the husband, which must have taken up a sizable part of the sum, the judge who had dealt with the injunction and with his experience in family matters could have a rough idea of how long these matrimonial proceedings would take and the probable amount of costs to be incurred. We are not dispose to conclude that the amount of $20,000 per month, to be applied first towards the payment of the $180,000 and then towards future costs, is arbitrary.”(my emphasis)

80.In the present case, the FDR was initially scheduled for 9^th January 2008 but was later adjourned to 15^th April 2008 because of the present application and the Wife’s intended discovery application. The Wife later filed her discovery application on 29^th January 2008. This application has now been scheduled for 11^th April 2008 and the FDR further adjourned to 6^th June 2008.

81.For the purpose of the FDR in January 2008, the Wife’s solicitors has filed an estimated costs incurred before and for attending the FDR of respectively $230,000 and $66,000, totaling 296,000. Given the discovery proceedings will very likely be strenuously opposed by the Husband and that it is also the Wife’s case that if the Husband is not co-operative, she needs to engage overseas professionals to do extensive searches and give advice on quite a number of off-shore companies which hold substantial family assets worth hundreds of million. According to the Wife’s case, it is also expected that she will try to conduct as extensive discovery as possible in order to find out when the Husband has ceased to have interest, if at all, in some of the family companies and/or assets. My estimate is that a further sum of $300,000 being further costs up to and inclusive of the FDR is reasonable.

82.The next question is whether I should withhold ordering the costs allowance because the Wife has just enough savings to meet this obligation. I have not forgotten the Wife has previously suffered from naso-pharyngeal cancer and anxiety. Although the Husband has also agreed to pay her medical expenses on a re-imbursement basis, given their relationship, particularly when it appears that the proceedings ahead are likely to be very contentious, I can appreciate that she may wish to maintain some cash with her in order to meet any emergency medical needs.

83.My conclusion is that the Wife has no assets that can reasonably be deployed.

84.In light of my above provisional views on the Wife’s assets based on the available evidence, I also think she has satisfied the 2^nd condition set out above.

85.Although Miss Yip has submitted that as far as she knew, Fortis Bank in Hong Kong may offer special loan for litigation, I do think such loan is very uncommon in Hong Kong. I doubt whether there really is any. Neither do I believe that the legal professions in Hong Kong offer legal service on credit to family litigation, particularly to this case, which may be classified in Hong Kong’s context as a “big money case”. Substantial costs will have to be incurred. I also agree with Miss Remedios’s submission that it would be wrong to throw upon the public fund to assist the Wife in the present case because the family has assets. Even according to the picture portrayed by the Husband, it has. I also do not believe the Wife in the present is entitled to legal aid, given she has some $300,000 with her.

86.Accordingly, I consider it fair and reasonable in the circumstances of this case to make a costs allowance for the Wife in her MPS. I have reminded myself that I should proceed with a mixture of realism and caution concerning both its amount and duration, as reminded by Wilson LJ in paragraph 28 of Currey v Currey (No.2). I am prepared to order the Husband to pay a sum of $50,000 per month as costs allowance, starting from January 2008 until the FDR appointment in June 2008. By then the estimated further costs of $300,000 should have been fully paid. I also order that this part of the costs allowance be paid to the Wife’s solicitors, for settlement of costs already incurred and to be incurred. If the FDR fails, no doubt the matter of costs allowance will be reviewed, of course, on application of the Wife.

Costs and Conclusion

87.The Husband is only willing to pay $33,000 a month and refuses to pay any MPS for J2 and any costs allowance in the MPS. The Wife is successful in achieving a sum more than the offered amount, as well as on her other 2 claims. I see no reason why the Wife should not be entitled to costs of this MPS application.

88.To conclude, subject to the following undertakings that the Husband has agreed to give to the Court and the Wife and which, by reasons of the above, have been accepted by this Court, namely:

A) to pay the management fees, rates, government rents and all utilities, such as gas, water, electricity, telephone expenses of the matrimonial home;

B) to pay the broadband and NOW TV presently servicing the matrimonial home;

C) to pay the salary of the domestic helper;

D) to pay the education, living and medical expenses of J1 and J2; and

E) a monthly pocket money of $5,000 to J2;

I make the following order:

i) subject to (iii) and (iv) below, the Husband do pay the Wife three sums of $75,000, $5,000 and $50,000 per month respectively as her MPS, J2’s MPS and her costs allowance, totaling $130,000 per month, commencing January 2008 until further order;

ii) credit shall be given to the monthly maintenance of $20,000 paid by the Husband since January this year and the balance thereof be paid within seven days from today;

iii) the said monthly sum of $50,000 for the Wife’s costs allowance be paid up to June 2008, the month in which the FDR has been scheduled to take place;

iv) the said sum of $50,000 being costs allowance be deposited with the Wife’s solicitors for settlement of the Wife’s costs already incurred or to be incurred; and

v) there be a costs order nisi that the Husband do pay the Wife costs of this MPS application, with certificate for counsel, to be taxed, if not agreed, and such order be made absolute within 14 days if no application is made to vary the same.

(WONG King-wah)
Deputy District Judge

Petitioner (Husband): Miss Anita Yip, Counsel, instructed by Chaine, Chow & Barbara Hung

Respondent (Wife): Miss Corinne Remedios, Counsel, instructed by Hobson & Ma

Cites 2 cases

Cases cited in this judgment