Jhci v. Msyi
Read the full judgment text of FCMC 12528/2011 on BabelCite. This Family Court judgment was delivered on 21 November 2011 before Her Honour Judge Sharon D. Melloy.
Matrimonial Proceedings and Property Ordinance – maintenance pending suit – interim maintenance – legal costs – litigation funding – District Court – Married 1998, two adopted children, separated 2009, divorce petition dismissed – How much interim maintenance for children – Whether maintenance pending suit for wife – Backdating of maintenance – Provision for legal costs – Costs of application – Costs of first petition – Children's maintenance HK$46,000 per month per child – Wife's maintenance dismissed – Legal costs allowance ordered – Costs split
Legal issues: Interim Maintenance for Children · Maintenance Pending Suit for Wife · Backdating of Maintenance · Provision for Legal Costs · Costs of Application · Costs of First Petition
Outcome: Maintenance pending suit for children granted; maintenance pending suit for wife dismissed; costs orders made
Cites 2 cases
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FCMC 12528 / 2011 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 12528 OF 2011 ---------------------------- BETWEEN
---------------------------- Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public) Date of Hearing : 4 November 2011 Date of Judgment : 21 November 2011 ---------------------------------- J U D G M E N T ---------------------------------- Introduction 1.There are two matters which need to be adjudicated upon in this judgment. The first is an application by the respondent wife for maintenance pending suit for herself and the two children of the family. This summons is issued pursuant to s. 3 and 5 of the Matrimonial Proceedings and Property Ordinance Cap 192. The wife also seeks provision for her legal fees. The second is in relation to the costs of the original divorce petition filed by the wife. 2.On the 23 September 2011, I gave directions that each party file and serve a written submission in relation to the costs of the original divorce suit. The wife’s original petition was dated the 29 September 2010. It was based on the husband’s unreasonable behaviour. The petition was subsequently dismissed on the 23 September 2011. Short written submissions were then exchanged on the 7 October 2011. I will deliver my ruling in relation to that matter also at the end of this judgment. The issues 3.There are a number of issues that need to be determined namely:
Background 4.This is a fairly straightforward case on the facts that has been fuelled to a very large extent by high emotion and attendant conflict which appears to have escalated as the case has progressed. 5.The parties married in April 1998. This was the husband’s second marriage and the wife’s first. The husband is British and the wife holds an American passport but is of Filipino decent. Unfortunately the parties were unable to have children naturally. They were subsequently very privileged to be able to adopt two children – J, a boy who is now aged 11 years old and S, a girl who is now aged 8 years. Both children attend a well known international school in Hong Kong. They are presently living with the mother. Access has been very problematic. The husband has issued a number of applications in relation to various issues pertaining to the children. The wife has also issued a summons for leave to permanently remove the children to reside in the United States. That application is likely to be heard sometime next year. There now also appears to be a dispute over custody. 6.Both parties work in the banking sector. The husband is 41 years old. He holds a senior position with an investment bank. The wife is 49 years old. She returned to work in April 2008 after a career break during which she concentrated on looking after the children. This also coincided in part with the parties spending a period of time in Singapore following the husband’s secondment there. The wife also works for an investment bank. Both parties’ earn good salaries, but it would be fair to say that the husband earns significantly more than the wife. 7.The parties separated in August 2009. On the 29 September 2010 the wife issued divorce proceedings based on the husband’s unreasonable behaviour. In that petition she also sought joint custody of the children with care and control to herself and reasonable access to the husband. She now states that she had not wanted a divorce and had only instituted proceedings because her lawyer at the time had advised her to do so. She says that her intention had always been to try to reconcile with the husband. She also claims that she had not known of the husband’s new relationship at that time. On another occasion she said that she had felt pressured by the husband to issue proceedings. In any event, regardless of these assertions, the fact is that the wife issued proceedings against the husband based on fairly mild unreasonable behaviour particulars notwithstanding the fact that it was open to her to proceed on the basis of one year separation with the husband’s consent. This had been the husband’s preferred option. On the 14 October 2010 the husband filed an answer denying the allegations of unreasonable behaviour quite generally and reserving his right to apply for leave to amend the answer and to file a cross petition. Just as it had been open to the wife to proceed on the basis of one year separation with consent (or once she had learnt of the new relationship on his admitted adultery), it had also been open to the husband to simply proceed on the basis of the wife’s original petition. He chose not to do so. In any event the wife did not progress her petition. There was significant delay – some of which was justifiable and some of which was not. On the 7 September 2011 the husband filed a subsequent petition based on two years separation. On the 23 September 2011 the wife’s original petition was dismissed and all pleading were transferred to the new proceedings. 8.It seems that immediately following the separation that the parties reached some kind of an accord with respect to interim maintenance. Although there is a slight discrepancy over the exact amounts for individual items, according to the husband’s evidence (as set out in his Form E dated the 10 December 2010), he was paying for the following items either for or on behalf of the wife and the children:
9.Although it is difficult to be precise it seems that the husband was paying something in the region of HK$104,000 per month plus the children’s school fees. 10.This seems to largely accord with the wife’s evidence as set out in her Form E dated the 8 February 2011 which states that
11.By letter dated the 16 May 2011 the husband sought to change the basis upon which he had been paying maintenance to date. Based on the parties respective incomes he proposed paying 61.58% of the children’s expenses on the premise that he earned that proportion of the parties joint income. Thus he offered to pay HK$60,037 per month for the children’s maintenance (i.e. HK$30,018.50 per month per child). In addition he undertook to continue to pay for a) the children’s school fees (HK$32,050 per month over 10 months or HK$26, 708 per month over 12 months), b) the American Club subscription and chits (HK$7,000 per month) and c) for the children’s therapy (HK$8,000 – 10,000 per month). In total then the husband proposed paying HK$75,037 – HK$77,037 per month plus 61.58% of the children’s extracurricular activities, which counsel has since estimated at HK$7,389 per month. In total then he offered to pay between HK$82,426 – HK$84,426 per month plus the children’s school fees. He also undertook to continue to cover medical and dental expenses for the children as before. In round terms therefore the husband was proposing a reduction of c HK$19,574 - HK$21,574 per month. 12.On the 26 August 2011 the wife issued a summons for maintenance pending suit/interim maintenance and provision for her legal fees. Initially she sought HK$205,250 per month plus presumably a continuation of the husband’s undertakings to pay for the school fees and other items as he does at present. She seems to accept that the husband is currently paying the amounts as set out above save for his contribution to the extracurricular activities. As at the date of the hearing she asked for HK$153,400 per month plus the school fees plus the continuation of his undertaking with respect to other items and provision for her legal fees at a further HK$50,000 per month. The law 13.Applications for maintenance pending suit and interim maintenance for children are governed as I have said by s. 3 and s. 5 Matrimonial Proceedings and Property Ordinance, Cap 192. The only governing principle is that the court will make such order as it considers reasonable in all of the circumstances of the case. Consequently maintenance pending suit/interim maintenance applications are approached on a broad brush basis. A detailed examination of the parties’ means will be examined at a later date at a full ancillary relief hearing if agreement is not reached in the meantime. Any over payment or under payment can be dealt with then. Recent case law 14.Both sides have helpfully referred me to the recent Court of Appeal decision on maintenance pending suit namely HJFG v KCY (CACV 127/2011, 28 October 2011). Although a big money case and therefore factually very different from this case, the following principles bear repetition. The Hon Hartmann JA referring to Nicholas Mostyn QC’s judgment when sitting as a Deputy Judge in TL v ML and others [2006] 1 FLR 1263 at p 1289, said as follows:
15.In so far as the provision of legal costs is concerned, the Hon Hartmann JA confirmed that it is possible for provision for legal costs to be included in an order for maintenance pending suit. He added at para 78 as follows:
16.It is also understood that a fees allowance may be made for a period of time, most commonly up to the FDR hearing whereupon the matter may be considered afresh.
Discussion 17.I must now turn to consider the issues, the law and the parties’ evidence as set out in their Form E’s, their affidavits (if relevant) and in their Answers to Requests for Further and Better Particulars. How much should the husband pay to the wife as interim maintenance for the two children of the family? 18.In the husband’s solicitor’s letter dated the 16 May 2011 the husband puts his case as follows:
The parties’ respective incomes 19.The initial difficulty I have with the husband’s proposal is the assumptions that it makes in relation to the parties’ respective incomes. In the letter of the 16 May the husband says that his gross salary in 2010 was HK$401,485 per month excluding his retirement plan contribution and the stock units but including the deferred cash. In his 2010 compensation summary attached to the letter his total remuneration package salary is set out as follows:
20.If one includes deferred cash, stock units and retirement contribution his salary is HK$410,833 per month. Without the stock units and retirement contribution his salary for 2010 was HK$329,259 per month. According to his Form E his salary as at December 2010 was c HK$380,000 per month. Given all of this I will approach this on the premise that the husband was earning approximately HK$330,000 per month net of stock and retirement contribution for 2010, but that his salary has since gone up to something in the region of HK$401,485 per month – say HK$400,000 per month, including his deferred cash but not the retirement plan contribution and stock units. In other words I accept what has been said in this respect in his solicitor’s letter. 21.In so far as the wife is concerned the letter from her employer dated the 21 September 2011 states as follows:
22.Thus the wife currently has an income of HK$129,166 per month plus an allowance of HK$40,000 per month making a total of HK$169,166 per month. In putting forward his offer the husband has assumed that the wife will receive a discretionary bonus of US$125,000 per annum, whereas it is clear from this letter that last year she received a bonus of US20, 512. In the wife’s counsel’s submission she says that she now has a gross income of HK$182,458 per month. This presumably includes the discretionary bonus. I will therefore approach this aspect of the case on the premise that the wife has a salary before bonus and taxes of c HK$169,166 per month – rounded up to say HK$170,000 per month. I have not included her discretionary bonus in this, although I accept that it is another financial resource that is available to her and that the amount she receives will vary from year to year depending on market conditions. This is something that I will refer to again later. 23.Consequently it seems to me that the basis upon which the husband makes his proposal is fundamentally flawed in that it assumes levels of income that the wife may not have. I am therefore proceeding on the basis that the husband is earning approximately 70% of the parties’ joint income. (70% x HK$570,000 = HK$399,000) 24.The other difficulty I have had is that the husband has not included all expenses in the schedule contained in his solicitor’s letter. Generally the first point of reference for this is the Form E. The wife’s schedule for General expenses as set out in her Form E is as follows: 4.1 General
25.The husband in his letter of the 16 May has accepted the wife’s estimate for rent at HK$62,000, utilities at HK$12,000, food at HK$18,000 and, petrol at HK$14,000 but has attributed 2/3 of those expenses to the children. He then proposes that he pay 61.58% of those expenses. Given that I accept that the wife’s counsel was correct to assume that the husband was not going to challenge the actual level of those expenses. Counsel for the husband has now tried to do so, albeit very late in the day, on the basis that the court is required to look at the expenses critically. Although I do of course accept that that is generally speaking the correct approach, it seems to me that had that been the husband’s case that he should have made that clearer a lot earlier in the proceedings. I have noted that the husband has also accepted many of the wife’s estimates in relation to the children’s actual expenses. In those circumstances I agree that it should not be open to the husband to challenge those expenses now – at what is the 11th hour. 26.I am also concerned that the husband has completely left out of his calculation the following General expenses save for the fact that the domestic helper was included in his schedule, but not the driver:
27.In the remainder of the wife’s Form E she has set out her personal expenses and the expenses for the children as follows:
28.In so far as the wife’s own expenses are concerned I have some difficulty with the estimate for tax at HK$6,000 plus HK$40,520 per month. I do not accept that estimate – which does not appear to be in keeping with the wife’s tax demand in any event. Although I accept that the wife will be obliged to pay both HK and US taxes it does not seem to me that she is likely to be paying such a large amount. Some of the other expenses also seem to be on the high side (e.g. clothing/shoes – HK$10,000 per month, personal grooming HK$5,500 per month). 29.In so far as the children’s expenses are concerned, it seems that most of these have been accepted by the husband without challenge. 30.Unfortunately the wife then chose to produce a slightly different schedule of expenses in her most recent affidavit. It is this schedule that she now seeks to rely upon in support of her application.
31.With respect I have not found this very helpful as it makes it difficult to compare one against the other. In broad terms however the wife is seeking HK$153,450 per month plus, it would seem, an undertaking from the husband to continue to pay the school fees, the children’s therapy and the maintenance costs for the Phuket property. The wife’s approach is largely based on what she says was the established practice during the marriage and post separation. However the net result is a request for a much higher payment compared to the original amount that the husband was paying prior to the 1 June 2011. How best to approach this case? 32.If one were to approach this case on the same mathematical base as suggested by the husband but on the premise that a) he contributes towards 70% of the children’s expenses as opposed to 61.58% and b) all of the expenses are included, the schedule would look something like this:
33.Thus the expenses attributable to the children would amount to something in the region of HK$158,500 of which the husband should be contributing c HK$111,000 and the wife c HK$47,500. This analysis is based on the wife’s figures. I have attributed 2/3 of all the household expenses to the children and 1/3 to the wife. The expenses have then been split on a 70%:30% ratio in keeping with each party’s respective earnings. In so far as the expenses directly attributable to the children are concerned these are likewise shared in the same ratio. I have marked those with an *. I have included the expense of the domestic helper and the driver in this category as it seems to me that these expenses are mainly attributable to the children. Likewise the cost of petrol. 34.Consequently if this approach is adopted, as seems sensible in the circumstances of this case given that both parties are working and earning a good salary, the husband would be expected to contribute in the region of HK$111,000 per month towards the children’s expenses. 35.In addition, given that the husband is earning significantly more than the wife, it does seem to me to be fair and reasonable to hold the husband to his undertakings to pay for the school fees, the American Club fees and chits up to a maximum of HK$7,000 per month, the children’s therapy up to a maximum of HK$10,000 per month, and the cost of maintaining Phuket in the sum of HK$5,000 per month. In addition the husband has offered to pay for the children’s medical and dental expenses. Thus the husband will be obliged to pay at least an additional HK$48,700 per month without taking into account any medical or dental costs. 36.The husband has proposed that the children’s extra tuition fees, after school activities and school camps etc should be agreed to between the parties in advance and that he should then contribute towards those expenses upon production of the relevant receipts. I accept that this would be appropriate notwithstanding the high level of conflict between the parties. Thus the sum of HK$19,000 shall be deducted from the maintenance figure of HK$111,000 being the cost to the husband of the extra tuition fees, after school activities and school camp. I will hold the husband to his proposal as set out in his letter of the 16 May 2011, that upon discussion and agreement he will contribute 70% of the cost for the extra tuition fees, after school activities and school camps upon production of receipts. This is to be done within 14 days. Order with respect to the children 37.Consequently I will make an order that upon the husband undertaking to continue to pay for:
the husband shall pay the wife interim maintenance for the two children of the family in the sum of HK$46,000 per month per child with effect from the 1 December 2011 until further order. How much should the husband pay to the wife as maintenance pending suit for herself, if anything at all? 38.I have considered whether or not I should make any order for the wife given that she is earning a good salary herself. On her figures the maintenance order for the children will mean that she is contributing c HK$47,500 towards the children’s expenses plus her contribution to the extracurricular expenses etc. In addition she has to contribute towards her share of the general expenses and her own expenses. I accept that both parties should pay for the children’s flights when they are in their care. All in all it seems to me that she will be able to support herself without any assistance from the husband and have funds in excess, although I accept that in part this will be dependent on her actual tax obligation. Likewise the husband should have sufficient funds to maintain himself appropriately. I am conscious of the fact that his new partner should also be contributing towards his household expenses. I am satisfied that generally speaking the maintenance order is well within the husband’s ability to pay. 39.I would add that this amount is also, by strange coincidence, almost identical to the amount paid by the husband prior to the 1 June 2011. Should those maintenance payments be backdated and if so to what date? 40.The wife asks that the maintenance be backdated. I accept that this would be appropriate given that the husband reduced payment without prior agreement with her. I will therefore make an order that the maintenance order be backdated to the 1 June 2011, which is when the husband said that the new arrangement was to come into effect, due credit to be given for all payments made by the husband in the intervening 6 month period. Should any provision be made for the wife’s legal costs? 41.The wife also asks for HK$50,000 per month as a contribution towards her litigation costs. 42.As has recently been confirmed by the Court of Appeal and as set out above, the Family Court in Hong Kong has continued to rely on the guidance provided by the English Court of Appeal case, Currey v Currey when determining the issue of litigation funding. The test to be applied is as follows:
There should then be an overarching enquiry into the circumstances surrounding the request. 43.On the wife’s evidence it seems that although there are properties in the Philippines, the US and in Phuket, that it may not be easy to use these to fund the litigation or alternatively to use them as security for borrowings. The property in the US for example is held on trust and other properties are jointly held. I also accept that she would in all probability not be able to rely on the third limb and legal aid would clearly not be available to her. Overarching enquiry and costs 44.But notwithstanding that I am aware when looking at this overall that the wife has in the main been able to fund her litigation to date by relying on her own income. A quick look at her credit cards reveals regular payments to lawyers. Given that she is in receipt of a good salary and a discretionary bonus, which has not been taken into account when determining the level of maintenance to be paid, plus the fact that she will now continue to receive a significant contribution towards the children’s maintenance it seems to me that this is not a case for awarding litigation costs. 45.I am also concerned at the level of costs to date and the unfortunate way in which the wife has chosen to conduct some aspects of these proceedings. Aggressive and aggravated proceedings are to be discouraged – especially when children are unfortunately caught in the middle. As the Hon Hartmann LJ has pointed out above when considering whether to award litigation costs the reasonableness of the applicant’s stance will be relevant. Unfortunately I do not believe that the wife has always been reasonable. It was not reasonable for example to issue divorce proceedings based on unreasonable behaviour notwithstanding the fact that the parties had already been separated for a year. Neither was it reasonable to choose not to proceed with that petition when costs had already been expended and the marriage was clearly at an end. The wife’s approach to the arrangements for the children has also been a cause for some considerable concern. 46.It also seems that the wife has simply asked for legal costs quite generally. She has not provided very much detail in support of her application. This approach was quite properly, in my view, criticized in HJFG v KCY. An update on costs has been provided at my request. This estimated the wife’s costs to date at just under HK$750,000 and the husband’s at c HK$470,000. One wonders how much of this could have been saved had a less emotive and more pragmatic approach been taken to the litigation. The wife sought in general terms for assistance to continue with her litigation, when the way in which she has chosen to do so to date, is a cause for some concern. Going forward the wife estimates that she will need HK$750,000 for an ancillary relief trial and HK$620,000 to pursue her removal application. The husband’s estimates for the relocation trial are HK$560,000 and a further HK$194,000 for the ancillary relief proceedings as at the end of the FDR hearing. He says that it will cost a further HK$511,000 for an ancillary relief trial. 47.The husband offers to make payment of HK$250,000 to the wife to be applied to her ongoing legal costs, such sum to be taken into account in the final division of capital assets. I will hold the husband to this offer, save that I do not think it appropriate for it to be specifically taken into account in the final division of assets [Again see HJFG v KCY]. In the event that the husband has difficulty with this I will make an order that the husband do pay the wife maintenance pending suit for herself in the sum of HK$50,000 per month for the next 5 months with effect from the 1 December 2011, for litigation funding on the wife’s express undertaking that this sum is to be paid directly to her lawyers. The same condition shall apply if the husband chooses to advance the sum of HK$250,000 to the wife. I would hope that in part that the wife will use these funds wisely and consider her options for settlement. In any event if settlement is not possible, HK$250,000 will go some way towards covering the cost of the removal application, whereupon the issue of litigation funding may be looked at again. Costs of the application 48.The wife issued her application for maintenance pending suit following the husband’s unilateral reduction of her maintenance. She sought a greater sum than I have ultimately awarded. However she has been successful in part. She has not however won her application for litigation funding. I have simply endorsed the husband’s offer – although not his request that the monies be off set against any award eventually received by the wife in the ancillary relief proceedings. In the circumstances I will therefore make an order nisi to be made absolute in 14 days time that the husband do pay half of the wife’s party and party costs of her application for maintenance pending suit/interim maintenance and litigation funding. There shall be certificate for counsel. How should the issue of costs in relation to the first petition be determined? 49.As I have said I have some concerns about the way in which the wife has chosen to conduct certain aspects of this litigation. This is largely set out above. Solicitors for the husband have made the comment in their written submission on costs that her conduct in the divorce suit has been less than desirable. I agree. They ask for the husband’s costs of and occasioned by his summons of the 7 December 2011 in which he sought to dismiss the wife’s petition and the transfer all pleadings to the new proceedings issued by himself. The wife asks that there be no order as to costs. I have some sympathy with the husband in this respect. I am also conscious of the fact however that the husband chose initially at least to defend the wife’s petition. In all of the circumstances therefore I will make an order that the wife do pay half of the husband’s costs of and occasioned by his summons dated the 7 September 2011, on a party and party basis to be taxed if not agreed.
Mr. Egerton instructed by Messrs Withers for the Petitioner husband Ms. Rattigan instructed by Messrs Haldanes for the Respondent wife | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under FCMC 12528/2011