WCC also known as CCW v. MD also known as MDD

FCMC 7738/2020

[2022] HKFC 287

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 7738 OF 2020

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EXTEMPORE DECISION
( Litigation Funding )

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1.  This is an application by the Respondent H (“H”) for litigation funding against the Petitioner Wife (“W”).

2.  Despite the fact that the Petition was in August 2020, this matter has gone through a tumultuous history of a Hague Convention child abduction proceedings in the US when H took the two children of the family to the US and retain them there without the consent of W. After proceedings in the US federal court, the two children of the family were returned to HK in May 2021. It is not in dispute that substantial family funds have been deployed towards the Hague proceedings and the W says that around HK$15 million has been spent on legal proceedings. W was awarded costs in the US proceedings of US$445,289 which H has to pay (“US Costs Award”). Todate she has only collected a portion of this, and still pursuing H for the outstanding.

3.  H now resides in the US, his application is for legal costs provisions at HK$30,000 / month, supposedly to fund the upcoming proceedings in March 2023 regarding the children’s holiday access. This is in dispute because he asks for the children to spend Christmas and weeks in the Summer with him in the US, which understandably, is opposed by W.

4.  According to H, he has asked W to have this MPS proceedings be adjourned sine die (he said “withdraw” and sine die with liberty to restore in his submission), but on the condition that W delays pursuing the US Costs Award; or some commitment that she will not be retaining legal representation in the March proceedings. He said that he made this open offer in December 2022 to W as he has secured a second income stream. W does not agree.

5.  In my view he should have withdrawn his application as it is clear from the numbers, following his second income stream, that this application has become unnecessary.

6.  H’s claim for equality of arms is also based on his position that the Holiday access hearing in March will deal with “complex legal matters, nuanced judicial precedents and procedural formalities”. I do not agree with this comment, and certainly not for a person with his professional qualification and background. Furthermore, his position seems to be if W does not retain lawyers for March proceedings, then on this equality of arms argument, he should not be requiring legal costs provisions.

7.  Updated Form Es were filed in November 2022.

8.  The legal principles are clear with regard to MPS and legal costs provisions. In brief, I can approach the assessment on a broad brush basis. I need to look at the applicant’s (H) reasonable recurring needs and the intended paying party’s (W) ability to pay. Under the Currey test, the first limb to cross by the H is whether he has any assets or assets which can be deployed.

9.  From the two recent Form Es, the H and W make similar amount of money. H has two jobs and make a total of HK$136,917, respectively from the first job HK$51,667 and bonus of HK$7,750, and from the second job HK$77,500. W has made the allegations that his earning capacity is higher with his CPA and lawyer background and MBA qualifications. He used to make an annual income of HK$3,450,156 in his previous employment.

10.  W works at an international bank earning average monthly salary of HK$136,833.33.

11.  Also from the November 2022 Form E, H’s declared expenses total HK$77,529. This includes a maintenance for the children of USD1,000. W says this only started in September 2022 and suggests that it is merely a litigation strategy to increase his expenses. H also says he will have to move accommodation soon for which he has to pay rent and utilities.

12.  W’s declared expenses including that for the children is HK$137,896, she claims that she lives in deficit on a monthly basis, I accept this position. No challenge was ever made to W’s expenses.

13.  On net income alone, I find that the H’s application must be dismissed, he clearly has funds to pay for legal representation in HK. His net income is HK$59,388 while he asks HK$30,000 from the W. On these numbers, H did not even pass the first hurdle of the Currey test.

14.  H claims to have outstanding debts from legal proceedings in the US both in the form of the US Costs Award and the US legal costs; but he has not put forward any supporting evidence that this is being repaid or how these are being serviced.

15.  For completeness, I shall also deal with the H’s pension, which takes up a big part of his written opening submission. He argues that the legal costs should come from the W’s liquid assets instead of his own pension. He has substantive asset value in his pension which he declares to be HK$5,919,906. The majority of these are in the US, he also claims that the withdrawal will require a prepayment of tax of HK$1.55 M (W says this is only if he withdraw the whole amount). He then argued “whether triggering pre-retirement taxes and withholding as a consequence of such use is “reasonable””. The legal principles are clear that I am to look at whether he has assets or assets which he can deploy. The pension clearly falls into the latter category.

16.  I appreciate W has not committed to whether she will have representation in March, but base on the above analysis, his application must be dismissed.

17.  I also make an award of cost to the W to be taxed if not agreed. Not only is he unsuccessful in his application, H is fully aware that his additional income probably obviates the need for this application, otherwise he would not propose to W that the proceedings be adjourned. Except he fails to elicit from W the commitment not to use legal representation nor to suspend her pursuit of the US Costs Award. Court time has been unnecessarily wasted and H should bear the consequences.