Sank v. Pgn
Read the full judgment text of FCMC 2699/2008 on BabelCite. This Family Court judgment was delivered on 23 June 2011 before Her Honour Judge Sharon D. Melloy.
Matrimonial Causes – Ancillary Relief – Costs – Maintenance – Disclosure – Dismissal of Claims – District Court – Child Support – Lump Sum – Nominal Maintenance – Costs Order – 50% Contribution – Marriage in Western Australia – Child with brain tumour – Vineyard asset sold with debt – Disclosure disputes – Offers made – Both parties criticized for conduct – Maintenance based on income disparity – Capital claims dismissed as not exceptional – Costs split with husband paying 50% from April 2011
Legal issues: Costs of ancillary relief proceedings · Maintenance for child E · Dismissal of capital claims
Outcome: Maintenance ordered, capital claims dismissed, costs split
Cited by 1 case
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FCMC 2699 / 2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 2699 OF 2008 ---------------------------- BETWEEN
---------------------------- Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public) Dates of Hearing: 19 – 21 April 2011, 19 and 25 – 26 May 2011 Date of Written Closing Submissions: 13 June 2011 Date of Judgment: 23 June 2011 ------------------------- J U D G M E N T ------------------------- Introduction 1.There are three issues before the court that require adjudication, namely who should bear the costs of the ancillary relief proceedings, secondly how much maintenance should the husband now pay to the wife for the support of the only child of the family, E and thirdly whether or not there should be a dismissal of claims or alternatively whether or not the wife’s claim for a lump sum payment should be adjourned sine die with liberty to restore. 2.There are two fundamental issues that permeate this case. From the husband’s perspective the main issue is each party’s duty to negotiate. In essence his case is that he made a reasonable offer early on in the proceedings and that given the way that things have evolved he should now be entitled to his costs from the date of that offer, in accordance with normal Calderbank principles. He says that significant legal costs have been incurred because of the wife’s failure to negotiate in a sensible and pragmatic way. The central issue from the wife’s perspective relates to disclosure. On the wife’s case the husband’s failure to disclose, his litigation conduct and generally uncooperative attitude has led to a significant amount of money being wasted on legal fees. The husband for his part accuses the wife of being overzealous in her approach to discovery, especially given that she had worked in the family business and was therefore better placed than most to understand the financial realities of the situation. He says that it wouldn’t have mattered what he had disclosed the simple truth of the matter was that the wife did not believe him then and that she does not believe him now. He says that he had fully disclosed, but the wife chose not to believe the evidence produced. The wife’s costs stand at just under HK$900,000 and the husband’s at approximately HK$500,000. Open offers Wife’s offer 3.On the 29 March 2011 the wife put forward the following proposal:
Husband’s offer 4.The husband countered as follows:
Wife’s updated position 5.As at the 21 April 2011 the wife sought HK$20,000 per month as maintenance for E, plus half of his medical expenses back dated to the date that the husband commenced working in Hong Kong. She did not ask for a dismissal of claims. 6.In her counsel’s closing she put her position thus:
Husband’s updated position 7.The husband for his part says
Background 8.There are many sad cases that come before the Family Court and to a certain extent those who work within the system become immune to them, but this case stands apart from the rest; the real tragedy being that the outcome could have been very different for both sides and their son had they taken a different approach to the litigation and perhaps more importantly a different approach to each other. 9.In April 1999 the parties married in Western Australia, where the husband part owned and ran a vineyard with his parents. The wife is also Australian but she had been living and working in Hong Kong when they met. From about April 1996 the wife relocated to Western Australia and the parties cohabited from that time. During these early years the wife studied and worked on the farm. Sometimes she worked on the farm in a full time and sometimes in a part time capacity, depending on her other commitments. There is no dispute that both parties worked hard on making the farm a success, but that it was an uphill battle. Much of the business was financed through bank loans. This included a bank loan to fund an extension to the property and an overdraft to cover running costs. Although the business made money on occasions there was never really enough to reduce the bank borrowings. At some point during this early period the farm was valued at AUD2.1 million. This valuation did not include any of the buildings on the property. 10.When the parties married they also purchased the husband’s parents interest in the farm. Monies are still due and owing to them. The parties are therefore business partners as well as man and wife. 11.In May 2001 the parties had their only child, a little boy called E, who is now 10 years of age. Tragically shortly after his first birthday E was diagnosed with a brain tumour. Although E is able to attend mainstream school he has periods of time when he is very severely ill and has to undergo debilitating and time consuming treatments, including chemotherapy. His attendance at school can at best be spasmodic. There have also been difficult attendant issues to deal with which also require specialist treatment. 12.In February 2006, the wife received a job offer which meant relocating to Hong Kong. The parties jointly decided that this would be a good move. The husband’s perception was that this was essentially a move for financial reasons. The wine making industry in Western Australia was struggling at the time and in the words of the husband there had been massive over planting of vines. He said that the intention was that the wife would relocate with E and send money back in order to assist. The wife’s view was that this decision was made in order to benefit the family as a whole. In any event the wife moved first and E followed shortly thereafter. The husband initially commuted between both places. The wife did not send funds back. 13.Unfortunately the parties’ marriage became untenable shortly thereafter and on the 11 March 2008 the wife issued a petition for divorce in Hong Kong, seemingly without giving the husband notice of the same. The decree nisi was pronounced on the 3 October 2008 and on the 5 February 2009 the parties agreed an order for joint custody of E, with care and control to the wife and reasonable access to the husband. Ancillary Relief 14.On the 15 May 2008 the wife’s lawyers sent the husband a without prejudice save as to costs letter seeking inter alia AUD750, 000 on a clean break basis. Much has been made of this letter during the hearing, the husband’s point being that it was impossible for him to pay that sort of money to the wife or anything close to it. He believes that the wife must have known this, given that she had been responsible for much of the book keeping on the farm and was aware of the difficulties that the business was facing generally. The wife for her part seemed to believe that the farm was worth more than actually proved to be the case. In either event this letter makes no proposals in relation to the farm or the business itself. 15.Both parties acknowledged that there were some private negotiations between them, which came to nothing. 16.The husband says that he then proposed that the partnership be dissolved, that he takes on the partnership liabilities and continue the business as a sole trader. The wife was unwilling to agree to this presumably because it would have meant effectively agreeing to walk away with nothing. It seems that she believed, perhaps understandably, that there was a greater intrinsic value in both the land and the other partnership assets. 17.On advice from lawyers in Perth, the wife then took steps to dissolve the partnership, without further notice to the husband. This of course made it very difficult for the husband to conduct any further business or to keep the farm afloat. 18.On the 16 September 2008 the husband obtained a valuation report valuing the farm at AUD1, 250,000 as at the 26 August 2008. There then followed a series of First Appointment hearings. It soon became clear during these hearings that the wife did not accept the valuation. This continued until the court intervened and the valuation was upheld. It was also suggested at this stage that the matter should proceed as quickly as possible because “at the end of the day there will be nothing there”. 19.The matter was set down for a FDR hearing on the 16 June 2009. Unfortunately the wife was not prepared to proceed on the 16 June and instead I heard an application on discovery. The wife had a number of concerns. In particular she wanted full details of the “wine making”. Mr Erving said on that occasion that
20.I asked for that to be confirmed in writing. This was not done. Further detailed orders were given and the case was transferred out of the FDR list. This was at the wife’s request. She preferred to go straight to trial. In retrospect I believe that this was a mistake. 21.When the matter came back before me again on the 11 September 2009 I made a precise order as follows:
22.In his affirmation the husband said as follows:
23.The wine making issue was not dealt with otherwise. On the 8 December 2009 the matter was set down for trial. It was clear to the outside observer at that stage that the vineyard was in serious trouble and I actively encouraged the parties to engage in mediation as quickly as possible and preferably the following week. In a letter from the husband’s solicitors on the 15 December the husband said as follows:
24.The wife responded as follows:
25.For the avoidance of doubt it seems to me that notwithstanding the fact that the wife had asked to go straight to trial the husband’s attitude at this juncture was far from helpful. The parties should have attempted to mediate the matter. 26.In any event it was further agreed that the husband would provide the wife with a soft copy or alternatively a hard copy of the Quickbooks, which was the book keeping programme originally established by the wife on the farm. The Quickbooks were to be provided from June 2008 to date. 27.On the 18 December 2009 the husband offered to transfer to the wife all of his interests in the wine business, the land and the property on the basis that she indemnify him in relation to the partnership liabilities. The wife’s counsel said during the trial that this could not be considered a serious offer. How could she take on the farm and all that that entailed, whilst at the same time working full time and looking after E? Although that may have been the case it is clear that the wife was not making any serious proposals either with a view to resolving the issue in a sensible way. 28.At the first day of trial the wife still had concerns with respect to disclosure and the case was again adjourned until November. 29.On the 17 November 2010 the husband agreed to pay interim maintenance for E of HK$8,000 per month plus half of the ongoing medical expenses. 30.On the 31 January 2011 the bank sold the farm for AUD620,000 leaving an outstanding debt to the bank of AUD170, 000. In addition monies are still due and owing to the husband’s parents. Consequently there are now no assets of any worth, just as the husband had foreshadowed. 31.On the 15 February 2011 the wife made the following proposal:
32.The husband responded by referencing previous offers as follows:
33.Thus the stage was set. A compromise was not possible. The husband sought his costs and in addition the issue of E’s maintenance was still to be finally determined. In her final submission the wife sought her costs including the costs of the hearing in April and May. 34.In amongst all of this E continued to have unpleasant and at times intrusive treatment. Money was also understandably in short supply. The law on discovery 35.Both parties are under a duty to provide full and frank disclosure of their financial circumstances on an ongoing basis. For the avoidance of doubt reference should be made to the 18th edition of Rayden at paragraph 17.28
36.At paragraph 17:30 Rayden continues as follows:
Discussion 37.The wife’s case was that the husband did not make full and frank disclosure of his financial circumstances, that he was not open or frank and that he engaged in a litigious game of cat and mouse. This at a time when frankly speaking she did not trust him, was working fulltime and was also involved in the day to day care of their very sick child. 38.The husband for his part says that he gave the wife everything that she asked for, including the Quick Books, that he responded appropriately and that in any event the wife knew or should have known how precarious their financial situation actually was. This, from his perspective, was at a time when he was actively engaged in trying to save the farm from foreclosure. He says that he saw his life’s work going up in smoke because of the wife’s actions and there was nothing that he could do about it. 39.The wife suspected that the husband was still involved in wine making notwithstanding the fact that she had attempted to dissolve the partnership. She sought information about this. The difficulty was that only limited or unclear or sometimes even contradictory answers were provided. At what point then is enough enough? Was the wife entitled to know the answers to these questions as of right – or should she have taken a more pragmatic view given her intimate knowledge of the farm? 40.It seems to me that this case would have been helped immeasurably had clear and unequivocal answers been given when they were sought, in a detailed but simple and straightforward way. The difficulty was that the husband seemed to be hiding something and indeed we now know that at times he was at best “economical with the truth”. I accept for example that the wife sought on a number of occasion information regarding “winemaking” on the farm. As set out above she asked in letters and in questionnaires for further information and clarification. She did not accept the answers given by the husband because from her intimate knowledge of the farm and its business dealings, it simply did not make sense. This was raised specifically in the hearing on the 16 June when Mr Erving categorically stated, presumably on instructions that no wine making business was going on. The husband was asked to put this in writing. He did not do so. Later I ordered that a comprehensive affidavit be filed to include information about any winemaking on the farm. The affidavit is far from comprehensive. During cross examination the husband accepted that wine making had been going on and then tried to extricate himself from this and said that there had been no wine making going on at the precise moment that the question was asked. With respect this is simply not acceptable. These sorts of games will not be entertained by the court. The wife was entitled to know the answer to this and other questions and the husband simply chose not to provide those answers in a simple and straightforward way. Partnership assets 41.Likewise the wife sought a list of partnership assets and in particular a list of stock, including the wine. She wanted to know if partnership stock was being sold. At the end of the day the amounts involved are likely to have been rather small, but given that she was not receiving any maintenance at the time I accept that she was entitled to know what income, if any, the husband was making from the farm. She was also entitled to know if the husband was selling wine through his parents and if partnership assets were being used in an inappropriate way. The husband was evasive about this in his answers and during the cross examination. Eventually it was established that a trading company referred to in the Quickbooks as being a customer was infact owned by his parents. In other words the husband had been selling wine to his parents, who had presumably sold it on. It was unclear if they were simply a front or the alter ego of the husband, or alternatively if the transactions were completely above board. Similar difficulties arose with C’s Estate and M L. The wife believed that the husband was carrying on business with M L. He was subpoenaed to attend court and to give evidence. At the end of the day it was clear that the husband had not been involved in any business activities with M L. Unfortunately the wife simply did not believe the husband on this or any other point. She had some justification for this. 42.But although I accept that some criticism must be made of the husband, by the same token I am also critical of the wife. She became almost obsessive in her approach to this litigation and in her desire to obtain answers. She said on more than one occasion that the husband would rather see the farm go under than give her anything. This belief seems to have coloured her whole approach to the litigation. She did not believe anything that the husband said and although that is understandable up to a point, a pragmatic approach by her would also have been welcome. The wife was aware that the farm relied heavily on loans and an overdraft, she knew of the precarious state of the wine making industry in Western Australia and she knew that the property valuation had fallen significantly. The fact that she did not, for example, believe the valuation when produced by the husband, did not assist matters. The wife’s case at the end of the day seems to have been that the wine making equipment, which was the source of some of the indebtedness could have been sold, the debts repaid and the land preserved. Having heard from both sides in the witness box I have to say that that seems a rather unlikely scenario. I accept the husband’s evidence that no one in Western Australia was purchasing second hand wine making equipment at that time. 43.In his closing the husband put it thus:
44.Although I accept that the wife’s approach bordered on a fishing expedition, the situation was not helped by the husband’s own approach to the litigation and to discovery in particular. The fact that
45.Although that has proved to be the case it does not and should not have prevented the husband from making full and frank disclosure of his means i.e. clear, transparent and accurate disclosure. I also do not accept the suggestion that the husband’s failure to disclose the wine making activity was a “complete red herring”. The law on costs 46.The law in relation to costs is well settled. In the leading case of Gojkovic v Gojkovic [1992] Fam 40 Butler-Sloss LJ put it thus:
47.Clearly the issue of costs lies in the discretion of the court and costs are normally expected to follow the event. This presumption is more easily displaced in family proceedings that in others. Although I may be influenced by the existence of calderbank offers, they cannot be said to bind the exercise of my discretion. (See In re Elgindata Ltd (No.2) [1992] 1 WLR). 48.Butler Sloss added as follows:
Conclusion 49.Given all of the above and my criticism of both parties in the way in which they have chosen to conduct this litigation, I will make an order that there be no order of costs up until the date of the hearing on the 19 April. I make this order because it seems to me that both sides are partly to blame for the unfortunate way in which this litigation has been conducted. Criticism can be made of both sides. However given that this is the proposal that the wife initially put forward i.e. that each party walk away on the basis that there be no order as to costs and given that this offer was rejected by the husband, it seems to me that I have no alternative but to reflect this in some way in the order. Had this offer been accepted by the husband significant costs might have been saved. I will order that the husband pay a contribution towards the wife’s costs from April 2011 to date. I make this order also because although the wife has not been entirely successful in relation to E’s maintenance (see below), she has beaten the offer made by the husband and it seems to me that this should also be properly reflected in a costs order. Therefore the husband shall pay half of the wife’s costs on a party and party basis, to be taxed if not agreed from 19 April 2011 to date. Maintenance for E Introduction 50.The wife seeks maintenance for E pursuant to s.5 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO). 51.The only other substantive issue to be determined here is the appropriate level of maintenance to be paid for E going forward bearing in mind each party’s relative income. The wife originally sought HK$12,000 per month and then amended that figure to HK$20,000 per month at the hearing, plus half of E’s medical costs. The husband offered HK$8,000 per month plus half of E’s medical costs upon production of invoices. The wife asks that the maintenance be backdated. 52.The wife is 40 years old and works in house for a well known bank. At trial the wife said that she hoped to change jobs in the near future and that she expected her remuneration package to be the same or similar to her present package. The trial proceeded on the basis that the wife’s income was expected to be in the region of HK$125,000 per month and that she would inform both the court and the other side if it increased to anything over HK$150,000 per month. She is presently earning in the region of HK$105,000 per month inclusive of bonus. She has resigned from this job, her last day being the 21 June 2011. 53.The husband is 53 years of age. He presently works for a wine distribution company in Hong Kong. He earns HK$60,000 per month. He was also said to be looking for new employment. 54.The wife sought something close to a 50% contribution towards E’s expenses. The husband for his part said that he could not afford to pay anything more than he was paying at present i.e. HK$8,000 per month plus 50% of E’s medical costs. The law 55.Applications of this nature are governed by s.5 MPPO Cap 192 which state that the court may make orders requiring one party in a marriage to pay maintenance to the other, for the benefit of a child of the marriage
What then is the appropriate level of maintenance to be paid by the husband for E going forward? 56.The wife is seeking HK$20,000 per month for E. According to her latest form E she needs approximately HK$28,000 per month for E’s actual expenses, which included HK$12,000 per month for medical and dental expenses. If one puts the medical and dental expenses to one side her estimate stands at approximately HK$16,000 per month. In addition she seeks a contribution towards the general household expenses. These stand at c HK$52,000. I accept that a certain percentage of the general household expenses should be attributed to the wife directly. The remainder, being costs associated to E, should then be split between the husband and wife in an equitable manner. On occasion this may be 50:50 – or alternatively it can be a percentage based on the relative earnings of each party, or simply a reasonable amount in the circumstances. If one were to split the household expenses then HK$26,000 would be attributed to the wife and HK$26,000 to E. Of that, without taking into account the disparity in their current earnings, if each side were to pay 50% of E’s expenses, HK$13,000 should be paid by each party. If the husband’s contribution was reduced to 1/3 (in line with his current earnings) one would expect the husband to be contributing 1/3 x 26,000 = HK$8,668.40. In the circumstances it seems to me that the husband’s contribution should reflect the disparity in the parties earnings. 57.In this case the wife produced a bundle of receipts at the hearing, presumably in answer to the criticism that she had not substantiated her claim. She said that these supported her case that infact she spent more on E than she had originally thought. That be as it may, I intend to rely on the estimates provided in her Form E, as follows:
58.I accept these expenses, which generally speaking seem reasonable. I also accept that the husband should contribute towards 1/3 of those expenses as follows: 1/3 x HK$16,000 = HK$5,334.40. The parties have agreed that each should be contributing equally towards E’s medical costs/treatment, subject to agreement between the parties with respect to that treatment and the production of invoices. I do not intend to interfere with that agreement, which also seems fair and reasonable in all the circumstances of this case. What can the husband reasonably afford to pay? 59.I accept that the husband’s present income stands at approximately HK$60,000 per month, which is significantly less than the wife’s anticipated salary. In the circumstances I will order that the husband pay maintenance for E of HK$14,000 per month. This is approximately 1/3 of E’s actual expenses and 1/3 of E’s half share of the general expenses. I will hold him to his undertaking to contribute towards E’s medical expenses as set out above. Given the difficulties experienced by the husband in the run up to these proceedings I will not back date that order. I am confident that the husband should be able to pay this sum going forward and that it is a reasonable amount. Dismissal of claims 60.The issue of whether or not it is possible to adjourn provision for capital claims was looked at in KEWS v NCHC, 19 October 2010, unreported. In that case HH Judge CK Chan looked at the authorities which supported the proposition that it is possible to adjourn an application for capital ancillary relief in exceptional circumstances. Reference was made in particular to MT v MT (Financial provision: Lump Sum) 1992 1 FLR and Hardy v Hardy [1981] 2 FLR 321. HH Judge CK Chan did not exercise his discretion in favour of the wife who was seeking such an order on that occasion. 61.In this case the wife sought to adjourn her application because she is the mother of a very sick child and she still does not believe that the husband has made full and frank disclosure of his means. It was put to her that perhaps she believed that the farm might be resurrected one day – perhaps under a different guise. Although the wife denied this in the witness box I accept that that was certainly the tenure of some of her arguments. I initially had some sympathy with the wife on this, but as the trial developed it soon became clear that this was almost certainly not the case. Consequently it seems to me that this is not one of those exceptional cases were it might be appropriate to adjourn the wife’s claim for capital ancillary relief. I will therefore dismiss the wife’s capital claims for ancillary relief. Given the precarious state of E’s health it is only fair and reasonable that a nominal maintenance order should be made in her favour. I will therefore make an order as follows: Order 62.Upon the husband undertaking to contribute towards 50% of E’s medical costs/ treatment subject to both an agreement between the parties and the production of appropriate invoices IT IS ORDERED THAT
Ms. F Irving instructed by Messrs Weir & Associates for the Petitioner Mr. Erving of Messrs Erving Brettell for the Respondent | |||||||||||||||||||||||||||||||||
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