Lpk v. Sh also known as Hsc and Another

FCMC 11930/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO.11930 of 2010

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BETWEEN

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Coram: Before Deputy District Judge G. Own in Chambers

Date of Hearing: 28^th June 2011

Date of Handing Down Decision: 28^th July 2011

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REASONS FOR DECISION
(Maintenance Pending Suit)

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Introduction

1.This is the Petitioner’s wife application for maintenance pending suit against the 1^st Respondent.  The Summons was issued on 10^th March 2011 (“MPS Summons”).  By an Order of this Court dated 11^th March 2011, the application was adjourned for argument today with 2 hours reserved.

2.Besides, there is also a Summons dated 8^th March 2011 (“Forum Summons”) taken out by the 1^st Respondent for a stay of these proceedings on the ground of forum non conveniens.  This application was also adjourned for argument today with half a day reserved. 

3.Counsel for the 1^st Respondent confirmed today that the 1^st Respondent would not proceed with the “Forum Summons” and that the 1^st Respondent would submit to the jurisdiction of this Court.  Hence the “Forum Summons” was withdrawn.  Thus, today’s hearing deal with the application under the “MPS Summons” and the issue of costs arising from the withdrawal of the Forum Summons.  Counsel for the Petitioner seeks a costs order in terms of the Forum Summons and that the same be payable forthwith.   I will deal with the costs aspect after my determination of the maintenance pending suit at the latter part of these Reasons for Decision.

The Applicable Law

4.Section 3 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) provides :

“….. 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.”

5.It is trite law that the Court, in deciding maintenance pending suit applications, has a wide and unfettered discretion.  The Court should take a broad brush approach rather than going into miniature investigation along those criteria under the statutory provisions of Section 25 of the MPPO which the Court would otherwise have to consider in the ancillary relief proper.

6.Counsels for both parties rightly concede that the Court has jurisdiction in a maintenance pending suit application to also provide for litigation funding (see A v. A [2001] 1WLR 605 and G v.G [2003] 2FLR 71).

Wife’s application

7.The factual background of the application was set out in the 4^th Affirmation of the Petitioner.  Suffice to say that the Petitioner is seeking a monthly expenses of HK$16,366 if she lives in Taiwan or a sum of HK$26,036 if she lives in Hong Kong plus a further sum of around HK$75,000 a month towards funding her legal expenses for the present proceedings in Hong Kong and around HK$5,000 towards funding the Taiwan proceedings (see pages 342 to 343 of the Bundle).

8.Since it is an undisputed fact that whilst the parties were in harmony, considerable financial support had been received from the 1^st Respondent’s father (i.e. the 2^nd Respondent). Counsel for the Petitioner submits that this Court when considering the maintenance pending suit application in the present case should apply the “judicious encouragement” principle so much so that the parties’ status quo of the parties’ life-style prior to the breakdown of the marriage should be maintained until full hearing.  Petitioner’s lifestyle has changed drastically whereas the 1^st Respondent’s lifestyle remains substantially the same.  Counsel referred this Court to the decision of FMFT v. HKWE [2001] 1HKC.

Husband’s argument

9.Mr. Clough, Counsel for the 1^st Respondent, submitted that the “judicious encouragement” principle does not give carte blanche to make orders that are in effect against third parties.  There has to be inferential basis to conclude that any maintenance pending suit payments will be met.  Though it is conceded that when the parties were living in harmony the 1^st Respondent’s father (i.e. 2^nd Respondent) had been providing financial support to the parties, such support of the 1^st Respondent’s father (i.e. 2^nd Respondent) had been withdrawn and remained as a historical fact.

10.Mr. Clough cited the Judgment of Deputy High Court Judge Mostyn Q.C. (as he then was) in the case of TL v. ML and others at paragraph 124 (v) as follows :-

“(v) Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial (M v. M)”

11.Mr. Clough referred the above as the “bounty” principle.   He submitted that there is before this Court the untested evidence of the on affirmation that the “bounty” had ceased.   This piece of evidence available is neither ambiguous nor unclear.   Thus this Court should not simply make assumptions that such bounty still continues or otherwise available (see the case of TL v. ML (supra)).

12.The other limb of the argument on the “bounty” principle being that the funding of legal costs sought by the Petitioner falls outside the limit of “bounty” which, by definition, refers to the level of support by the outsider.   The learned Judge Bruno Chan in the case of K v. C (FCMC No.5508/2005) after reviewing the latest English Court of Appeal case of Currey v. Currey [2006] EWCA Civil 1338 and other authorities categorized those criteria which have to be met in deciding whether legal fees allowances are to be included in a maintenance pending suit order.  In the present case, the criteria which the Petitioner fails to satisfy is to provide the reason why the Petitioner had not turned to the availability of publicly funded legal help of the legal aid.  

13.The third limb of argument being that the 1^st Respondent’s father (i.e. 2^nd Respondent) being an intervening party in the present proceedings is neither a “third party” nor “outsider” within the “bounty” principle cited in the TL v. ML  case (supra).

The Husband’s financial situation

14.The 1^st Respondent filed his 3^rd Affirmation in opposition on 15^th April 2011 (at pages 628 to 634 of the Bundle).  At paragraph 6 of the Affirmation, the 1^st Respondent deposed to the fact that since July 2010, his father (i.e. 2^nd Respondent) ceased to provide living expenses for him and the Petitioner.   He went further at paragraph 7 deposed that he had no employment and income.  He had been relying upon loans made available to him drawn upon a Tai-Shin International Bank account to pay off his living expenses and legal fees since withdrawal of financial support from his father after July 2010.  The outstanding loan amount on 29^th March 2011 was NT$1,638,468 (around HK$409,617).

15.I will use an exchange rate of about HK$1 to NT$4 for a better understanding on the amount equivalent in Hong Kong Dollars. 

16.It is not disputed that the loan facilities which the 1^st Respondent drawn upon Tai-Shin International Bank is secured against the Taiwan property in question which, according to the draft Form E of the 1^st Respondent dated 18^th March 2011 (see pages 134-36 to 134-59 of the Bundle) is a property worth HK$24 to HK$25.5 million (see page 134-40 of the Bundle).  It is the 1^st Respondent’s case that this Taiwan property actually belongs to his father (i.e. 2^nd Respondent).  The outstanding amount of the loan facilities as at the date of the draft Form E (i.e.  18^th March 2011) was NT$1,526,290 (around HK$381,572.50) (at page 134-47 of the Bundle). 

17.Counsel for the Petitioner referred me to the bank statements of the 1^st Respondent’s account with Tai-Shin International Bank (at pages 134-28 to 134-32 of the Bundle) which shows the pattern and amount of withdrawals since 23^rd September 2010 (i.e. the date of 090923 according to the Taiwan calendar which appeared in the bank records at page 134-30 of the Bundle).  It is worth noting that these proceedings were commenced on 13^th September 2010.

18.To take a few entries, four withdrawals of NT$20,000 (around HK$5,000) each were made on the same day of  23^rd September 2010 resulting in an existing debit entry to increase from NT25,548 (around HK$6,387) to NT$105,548 (around HK$26,387).  Several other sums were then withdrawn resulting in a debit entry of NT$973,750 (around HK$243,437.50) as at 21^st January 2010 (i.e. the date of 10000121 according to the Taiwan calendar appeared in the bank records at page 134-32 of the Bundle).  This represents around 9 times increase of the indebtedness in 4 months time.

19.It is fair to say that the Taiwan property has been the subject matter of a Civil Action in Taiwan taken out by the 1^st Respondent’s father (i.e. 2^nd Respondent) against his son (i.e. 1^st Respondent) seeking declaration of ownership of the Taiwan property to be the father’s.  This Taiwan Civil Action was adjourned without a date fixed and had yet to be tried. 

The Wife’s financial situation

20.The Petitioner is unemployed and with no income.  In her 4^th Affirmation at paragraph 15 (at page 337 of the Bundle), she deposed to the fact that since August 2010, the 1^st Respondent ceased paying her maintenance.   At paragraphs 20 and 21, she deposed to the fact that whilst she was in Taiwan, she could only sleep on the floor in the TV/computer room.  Whilst she was in Hong Kong, she could no longer live in the Hong Kong property at Mei Foo Sun Chuen under the joint names of the 1^st and 2^nd Respondents but have to stay on and off in different relatives’ homes.  Further, at paragraph 22 of the Affirmation, she deposed to the fact that the monthly rental of a flat around 676 sq. ft in the same district of Mei Foo Sun Chuen is about HK$13,000 a month.

21.At paragraph 16 of the 4^th Affirmation, the Petitioner further deposed to the fact that she did not have the means to maintain herself on daily expenses as well as funding the legal proceedings here in Hong Kong and in Taiwan. She had withdrawn moneys from a joint name account with the 1^st Respondent with HSBC in Australia, sold some stocks and shares in the 1^st Respondent’s security account and withdrew sums of money from 1^st Respondent’s security bank account to meet her expenses and legal fees.

22.At paragraph 19 of the 4^th Affirmation, the Petitioner deposed to the fact of also having to obtain financial assistance from her family and had borrowed moneys from her mother about GBP16,892 (around HK$211,150).

Discussion

23.The first issue is whether this Court should exercise its unfettered discretion in the Petitioner’s favour to order the 1^st Respondent to pay maintenance pending suit.  This is a balancing exercise between the immediate and recurring needs of the Petitioner as against the 1^st Respondent’s means and ability to meet those needs pending final determination on ancillary reliefs.  The other issue is whether it is just and reasonable so to do in the circumstances of the case.

24.The 1^st Respondent, in his Affirmation in opposition, took no issue over the Petitioner’s financial situation disclosed by her. The contention focuses only upon the inability of the 1^st Respondent to provide for interim maintenance rather than that there being no immediate and recurring needs of maintenance by the Petitioner.    

25.This brings us next to consider whether, on the disclosed evidence, the 1^st Respondent is in a position to provide interim maintenance and if so, to what extent.  Mr. Clough argues that since the 1^st Respondent’s father financial support had ceased, the 1^st Respondent  himself have to rely upon loans from the bank to make ends meet.  The “bounty” of the father which hitherto the parties or the 1^st Respondent enjoyed had now ceased and; to that context, there is clear and unambiguous affirmation evidence before the Court.  Hence, this Court should not assume those bounty exists or continue to exist to enable the 1^st Respondent to provide interim maintenance.  Miss Remedios, Counsel for the Petitioner, suggests otherwise and invited this Court to consider the principle of “judicious encouragement”.

26.With respect, I do not agree with Mr. Clough.  I find the 1^st Respondent’s financial position changed only in form rather than in substance.   In so far as the Petitioner’s ancillary reliefs claim is concerned, it is the 1^st Respondent’s case that the Taiwan property although registered in his sole name in fact belongs to his father (i.e. 2^nd Respondent).  The fact that the father had ceased providing financial support in monetary terms should not be taken as being conclusive of having withdrawn the so called “bounty” which the father had hitherto been providing to the 1^st Respondent. 

27.In my view, the fact remains there that the 1^st Respondent had been “supported” by or being able to turn to available funds or overdraft facilities drawn against the security of the Taiwan property which the 1^st Respondent himself accepts belonged to his father.  Thus the 1^st Respondent is in effect deriving financial assistance out of the father’s property and having the same “bounty”, if not more this time, same as what he had previously enjoyed from his father although taking a different form of support.  

28.Moreover, it is the father’s case that he had initiated proceedings against the 1^st Respondent seeking a declaration of ownership of the Taiwan property.  No injunctive or similar reliefs had ever been taken out by the father against the 1^st Respondent either restraining him from further withdrawing loans from the bank or claiming back from the 1^st Respondent loans which had already been withdrawn in order to preserve the value of the Taiwan property not being diminished by the loan secured against it.   I formed the view that the absence of such action of the father to be some kind of ‘tacit’ support or acquiescence or consent of the father thus forming the “bounty” upon which the principle of “judicious encouragement” applies.

29.The next issue is the limit to which such “bounty” extend.  Should it be restricted to cover living expenses only as Mr. Clough had submitted.  The answer depends on the peculiar facts of each case.  The 1^st Respondent is now having the bank loan facilities to pay off both his living expenses and his legal fees.  In my view, it is incorrect to restrict the limits of “bounty” to just level of living without consideration of the actual scenario, namely, that the withdrawals by the 1^st Respondent had been used for paying both living expenses and legal fees.  Whether legal fees allowance should be included in the interim maintenance and if so; to what extent, is yet another issue to be decided.

30.The argument that the father was providing the “bounty” as an intervenor and not as an outsider or third party is neither here nor there.  The core issue falls upon whether “bounty’’ is being available to the 1^st Respondent.  It does not make any material difference if the provider is an outsider, third party or intervenor.  The principle of “judicious encouragement” applies irrespective of the source or status of the provider of the bounty.

31.All in all, there is a significant disparity between the sources of fund available to the Petitioner and the 1^st Respondent upon which they could turn to or rely upon for meeting their immediate living expenses and needs pending final determination of these proceedings.   Leaving aside whether the Petitioner could, at the end, have an interest in the Taiwan property, the fact remain is that the substantial loan facilities secured against the Taiwan property which worth between HK$24 to HK$25.5 million presently available for the 1^st Respondent puts him in a considerable advantageous position than the Petitioner wife which, in the interest of fairness, warrant a interim maintenance order.

32.Considering all the circumstances and the overall evidence available, I am satisfied that this is a proper case for exercising discretion to order maintenance pending suit for the Petitioner.   It is also just and reasonable so to do.

Should there be legal fees allowance ?

33.The Petitioner is also seeking legal fees allowance on both the Hong Kong and Taiwan proceedings.   The principles enunciated in Currey v. Currey (supra) are clear which were reviewed and adopted in the Hong Kong case of K v. C (supra).   I agree with Mr. Clough that it is inappropriate in the present case to disregard the Currey principles by including legal fees allowance without the Petitioner first showing that she cannot secure publicly funded legal help.  With due respect, I do not agree with Miss Remedios that these proceedings are of exceptional or complex nature which falls outside the usual level of expertise provided by the legal aid.

34.As for the Taiwan proceedings, again I do not see the reason to order the 1^st Respondent to fund Petitioner’s legal fees.  First, the 1^st and 2^nd Respondents are entitled to commence proceedings in Taiwan.  The way in which they have conducted their cases in Taiwan resulted in legal costs having to be incurred by the Petitioner is no basis for seeking those costs to be funded in the maintenance pending suit order.  For otherwise, the 1^st Respondent would be deterred of exercising his rights to litigate in Taiwan in fear of ending up with him underwriting the Petitioner’s costs in the Taiwan proceedings. 

35.Furthermore, my preliminary findings at paragraphs 33 and 36 of my earlier decision dated 1^st April 2011 that the 1^st and 2^nd Respondents, by inference or on balance of probabilities, having acted in concerted efforts also do not, in my view, provide legal justification for those of the Petitioner’s costs for the Taiwan proceedings be included as part of the interim maintenance order here in Hong Kong.  Those costs would no doubt be taken care of at the substantive proceedings in Taiwan.

36.Hence, for the above reasons, my order for interim maintenance pending suit will not include legal fees allowance for both sets of proceedings in Hong Kong or in Taiwan.

Amount of interim maintenance

37.Counsel for the Petitioner submitted a comparative schedule of expenses of the Petitioner and the 1^st Respondent by extracting from information contained in the parties’ respective Form Es.

38.Mr. Clough took no issue on the necessity or reasonableness of the items of expenses.  Miss Remedios submitted that the Petitioner’s general expenses in Hong Kong and Taiwan differ mainly due to the living expenses of HK$13,000 in Hong Kong since the Petitioner is not able to stay in the Mei Foo property.   The Petitioner is prepared to exclude the living expenses in Hong Kong if she was allowed to live in the Mei Foo property.  On personal expenses, it is more or less the same whether in Hong Kong or in Taiwan.

39.The 1^st Respondent has now finally decided to submit to the jurisdiction of this Court and these proceedings have now being actively pursued with the FDR coming along on 4^th October this year.   I decided to allow the Petitioner’s interim maintenance on the Hong Kong standard at the rate of HK$26,000 per month. 

40.The Petitioner had not received any maintenance since August 2010.  I am satisfied that the moneys she had withdrawn from those joint name accounts with the 1^st Respondent and the loans she borrowed from her family members and her mother which I referred to in paragraphs 21 and 22 above had been spent.   I therefore decided that the period for such interim maintenance should start from the commencement of these proceedings which is 13^th September 2010 when the Petition was issued.  Thus, the amount of interim maintenance from 13^th September 2010 to 12^th August 2011 (11 months) is HK$286,000.  There will be further interim maintenance at the same rate of HK$26,000 per month commencing from 13th day of August 2011 and on 13th day of each succeeding month until further Order.

41.As the 1^st Respondent had not offered any amount of interim maintenance despite having been given such a chance to secure his position on costs prior to the hearing, I see no reason why the Petitioner should not have the costs of the MPS Summons dated 10^th March 2011 including all costs reserved and of today’s hearing of the MPS Summons which started at 2:50 p.m. until 5:00 p.m.    There will also be Certificate for Counsels.

Costs of the “Forum Summons”

42.I will now deal with the costs of the Forum Summons which had not been proceeded with and accordingly withdrawn today. Miss Remedios made 2 submissions. 

43.First, she drew this Court’s attention to the Order of Deputy Judge Tracy Chan made on 6^th December 2010 (at pages 117 to 120 of the Bundle).  This was the hearing of the First Appointment which date was given when the Petition was issued.  Nonetheless, a Summons was taken out on 3^rd November 2010 (at pages 32 to 35 of the Bundle) by the 1^st Respondent disputing jurisdiction and seeking a stay of the entire proceedings.  This Summons was scheduled, as Miss Remedios rightly used the term ‘hi-jacked’, to be heard at the same time as the First Appointment hearing.   This Summons was dismissed on the date of hearing.  The learned deputy Judge made two costs reserved order to separately deal with the costs of the dismissed Summons and the costs of the First Appointment hearing.  Hence, this Court when come to consider the costs of the Forum Summons dated 8^th March 2011 should also take note of that part of the costs order dated 6^th December 2010.

44.Secondly, she invited this Court to consider costs to be payable forthwith.  The two applications for stay under the Summons dated 3^rd November 2010 and the Forum Summons were dismissed following the 1^st Respondent’s “eleventh-hour” submission to the

jurisdiction of this Court.   In those circumstances, costs have already been incurred by the Petitioner in responding to the abandoned applications and the Petitioner is entitled to have those costs received sooner.  Miss Remedios relied upon the case of Midland Business Management Limited & others –v- Lo Man Kui (HCA 1599/2010).

45.I accept the two submissions made by Miss Remedios.  Although the date of the 6^th December 2010 was allocated for the First Appointment, the fact remains there that the 1^st Respondent’s Summons dated 3^rd November 2010 was dismissed by the Court and there is a separate costs reserved order specifically dealing with the stay application.  I will apportion 50% of it for the stay application with the remaining 50% for the striking out application.  I will therefore order 50% of the costs of that Summons dated 3^rd November 2010 be paid by the 1^st Respondent to the Petitioner, to be taxed if not agreed.  I will also order the 1^st Respondent to pay to the Petitioner the costs of the Forum Summons dated 8^th March 2011. 

46.In my earlier findings, the Petitioner has had spent the drawings she made from the joint name accounts and loans she borrowed on living expenses and funding legal costs.  If there is no order for immediate payment of those abortive costs already spent, the Petitioner would be out of pocket for a substantial sum which is a prejudice to her especially when she was not provided with any maintenance for the past year since August 2010 and that her application for legal fees allowance in the interim maintenance application had failed.

47.The 1^st Respondent has now decided to submit to the jurisdiction of this Court, I see no reason why those abortive costs already spent should not be dealt with at the earliest possible moment and I am entitled to make such order under Order 62 rule 4(1) of the Hong Kong Civil Procedure 2011 (“HKCP”).  I must stress that the exercise of my discretion in making a costs payable forthwith order should not be taken to mean the 1^st Respondent’s applications being unwarranted but rather an approach to promote the underlying objectives under Order 1A r.1(d) of the HKCP.

48.Accordingly, I also make the order that the above costs be taxed, if not agreed, and be payable forthwith.

Orders

1.    The 1^st Respondent’s Forum Summons dated 8^th March 2011 be dismissed;

2.    The 1^st Respondent do forthwith pay to the Petitioner maintenance pending suit from 13^th September 2010 to 12^th August 2011 in the sum of HK$286,000  (i.e. HK$26,000 x 11);

3.    The 1^st Respondent do pay to the Petitioner further maintenance pending suit at the rate of HK$26,000 per month commencing 13^th August 2011 and thereafter on the 13^th day of each succeeding month until further Order;

4.    The 1^st Respondent do pay to the Petitioner the costs of the MPS Summons dated 10^th March 2011 including all costs reserved, to be taxed if not agreed;

5.    The 1^st Respondent do pay to the Petitioner half of the costs of the Summons dated 3^rd November 2010, to be taxed if not agreed, and payable forthwith;

6.    The  1^st Respondent do pay to the Petitioner the costs of the Forum Summons dated 8^th March 2011 including all costs reserved, to be taxed if not agreed, and payable forthwith;

7.    There be Certificates for Counsels for all the above costs order.

Representation :

Miss Corinne Remedios instructed by Messrs. Iu, Lai & Li, Solicitors for the Petitioner

Mr. Neil Clough instructed by Messrs. Li, Chow & Co., Solicitors for the 1^st Respondent