JLJ (also known as J,JL) v. MMGH (also known as H,MMG)

FCMC 1157/2021

[2021] HKFC 246

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1157 OF 2021

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J U D G M E N T
(Maintenance Pending Suit)

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1.  This is a hearing of the Petitioner wife (“the wife”)’s application for maintenance pending suit (“MPS”), including legal costs provision against the Respondent husband (“the husband”).

2.  The wife is now aged 43 and she described herself as a freelance designer/housewife.  The husband is aged 42 and was the Chief Executive Officer of a family company.

3.  They were married in 2010 and separated in 2020.  This was a marriage of 10 years.  The parties have no children.

4.  On 9 February 2021, the wife issued the present petition for divorce based on behaviour, in which she also asked for various kinds of ancillary reliefs against the husband.

5.  On 12 April 2021, the wife issued her summons for MPS (P/25-28) in which she asked for various kinds of interim relief, including certain undertakings to be given by the husband together with monthly payments of HK$15,000 as interim maintenance and HK$20,000 as legal costs provision.  The prayers in the summons are rather convoluted, but broadly speaking, the wife was asking for interim reliefs on the following areas:

(1)     Rental payments and rental deposits to ensure her accommodation at the former matrimonial home (“FMH”) could be maintained.

(2)     Payment of the public utilities charges.

(3)     Mortgage payment of the property in Madrid, Spain.

(4)     Maintain her 2 credit cards at a credit limit of no less than HK$15,000 each.

(5)     Payment of HK$15,000 per month as interim maintenance.

(6)     Payment of HK$20,000 per month as legal costs provision.

6.  In his written submissions (paragraph 1), the husband offered to pay HK$22,000 per month as MPS, together with a lump sum of HK$120,000 to cover the wife’s legal costs up to FDR.

The Law on MPS

7.  The Court’s power to grant a MPS order in favour of a spouse is governed by s.3 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”):

“3. Maintenance pending suit in case of divorce, etc.

…..

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 may think reasonable.”

8.  In HJFG v KCY[1], Hartmann JA (as he then was), at paragraphs 37 and 38 of the judgment, gave a succinct summary of the law in this area by referring to the judgment of Mostyn QC, sitting then as a Deputy Judge of the High Court in England, in TL v ML [2006] 1 FLR 1263, 1289:

“37. The principles that have been emerged over time to guide judges in matters of interim maintenance have been fashioned in the main to ensure fairness. This is well illustrated in the judgment of Nicholas Mostyn QC, sitting then as a Deputy Judge, in TL v ML [2006] 1 FLR 1263, 1289, in which, having looked at earlier authorities, he derived the following principles that speak specifically to fairness or are based on the need to ensure it. For present purposes, it is sufficient to cite the relevant principles without citing the Judge’s reference to the source of those principles:

(a) The sole criterion to be applied in determining the application is “reasonableness”, which is synonymous with “fairness”.

(b) A very important factor in determining fairness is the marital standard of living. This is not to say that the exercise is merely to replicate that standard.

(c) In every maintenance pending suit application there should be a specific maintenance pending suit budget which excludes capital or long-term expenditure, more aptly to be considered on a final hearing. That budget should be examined critically in every case to exclude forensic exaggeration.

(d) Where the affidavit or Form E disclosure by the payer is obviously deficient, the court should not hesitate to make robust assumption about his ability to pay. The court is not confined to the mere say-so of the payer as to the extent of his income or resources. In such a situation, the court should err in favour of the payee.

38. Finally, it is to be noted that in application for interim maintenance, when the amount to be paid is for a limited period only and not all the evidence is necessarily before the court, it is not appropriate, nor indeed in most cases possible, for the court to conduct a detailed investigation into the finances of the parties.   While, in order to determine what is or is not reasonable, some analysis is always required, that analysis can be conducted on a “broad-brush” basis.”

9.  Therefore, the overriding considerations for such applications are reasonableness and fairness.   In order to achieve these objectives, the Court has to balance the reasonable needs of the applicant and the ability to pay of the respondent on an interim basis: LJ v LWHH [2003] 3 HKC 455 at 461D.

10.  In undertaking this balancing exercise, the Court will adopt a broad brush approach, and not a detailed investigation of the financial positions of the parties.

11.  I do not think the above general principles are in dispute.

The wife’s financial circumstances

12.  The wife said that she has not worked in any formal documented position nor paid position since marriage.  She has undergone extensive fertility treatments and suffered 3 miscarriages, which has also affected her health significantly.  In her Form E, she stated to have no income.

13.  On the contrary, the husband said the wife was the family company’s Marketing Consultant from January 2019 to January 2020, earning a monthly compensation of HK$23,250 which was deposited into the parties’ joint account.  He suggests that this monthly sum should be counted towards the financial resources of the wife. 

14.  As I see it, it is abundantly clear that since the wife’s departure from Hong Kong to Spain in January 2020, she no longer held any paid position in the family company.  I accept that it is unrealistic for her to continue working for the family company, or for any other company in the interim period.  Therefore, I accept that the wife is having no income for the moment or in the near future.

15.  In her Form E, the wife stated that she owned a property in New Mexico, USA, which was an inherited property from her mother in 2015, with an estimated value of about HK$1,359,750.  There was also a property registered in joint names in Madrid, Spain, which was still subject to mortgage, and its present net value is about HK$1,676,210 for the wife’s half share. 

16.  It is the husband’s case that these 2 properties are clearly the wife’s financial resources which have to be taken into account when the court considers the wife’s application for ancillary relief.  I accept that these properties will of course be taken into account.  But according to the wife, the US property was in such a bad state that a lot of repair needs to be done before it could be rented out.  As to the Madrid Property, it is intended to be the wife’s future permanent residence and she is only renting it out as Airbnb at the moment earning a not very substantial amount.  She even stated that the Airbnb income from the Madrid Property will likely to be much less in the winter time.

17.  Be that as it may, the husband stated in his submissions (paragraph 8) that the US Property was rented out on 1 August 2021 at US1,435 per month (HK$11,164 per month).  I note that there was no suggestion from the wife to the contrary. Therefore, I accept that the US Property is now producing a monthly income of HK$11,164 for the wife. 

18.  As for the Madrid Property, the wife is saying that it only generates a monthly rental income of about HK$13,019.  But the husband submitted that the rental income for the month of September 2021 was HK$20,599.  However, one has to bear in mind that the Madrid Property was rented out as Airbnb and by its very nature, the rental income would vary from month to month.  It is not unreasonable to assume that the rental market in the winter would not be as good as in the summer months.  Therefore, I would accept the average rental income from the Madrid Property to be in the region of about HK$13,000 per month only.

19.  In her Form E, the wife stated she owned HK$117,485 bank deposits; HK$190,000 personal chattels (8 rings); but she also stated to have liabilities of about HK$497,856, the main item of which was a student loan of about HK$411,686. According to the wife, she is now trying to finish her belated Bachelor degree in fine arts and to obtain further professional qualifications.   I am satisfied that the wife is not having positive capital she could rely on to support her living, at least not in the interim period.

20.  By an order dated 15 April 2021, the husband has given undertakings for various payments, including rental payment of the FMH, the mortgage of the Madrid Property, broadband fees of the FMH, insurance premia, all until December 2021. He also undertook to maintain for the wife a HSBC supplementary Platinum credit card up to a credit limit of HK$15,000 and another supplementary Amex Card for medical expenses. In addition, he agreed to pay a monthly sum of HK$9,700 as interim maintenance.

21.  From the present offers of the husband (Annex A to his submissions), he is only willing to continue the undertakings to provide the supplementary Amex card for the sole purpose of paying the wife’s medical expenses and to maintain the premia payments on the wife’s medical insurance policy.  Apart from those undertakings, he is offering to pay a monthly sum of HK$22,000 as MPS and a lump sum of HK$120,000 as legal costs provision. 

22.  In view of the undertakings offered by the husband (which should provide enough safeguard for the wife’ medical expenses), I am satisfied that the wife is now having the following reasonable monthly expenses:

(1)     Rental	HK$26,000
(2)     Madrid mortgage	HK$8,400
(3)     Interim maintenance	HK$12,000
(4)     Amount covered by HSBC platinum card	HK$15,000
	HK$61,400
Less
(5)     Rental income from US Property	HK$11,164
(6)     Rental income from Madrid Property	HK$13,000
	HK$37,236

For ease of calculation, I would round up the sum to HK$38,000.

The husband’s financial circumstances

23.  The husband was the CEO of his family company for some years.  But according to him, his father has now taken over as CEO and he has decided to go to Canada for further business development.  He has left Hong Kong already and is currently residing in Montreal, Canada.   He also said that he used to have housing allowance from the company to cover the rent of the FMH, but that has already been stopped and he was given a slightly higher salary as a compensation instead.

24.  According to the husband, his current monthly salary is HK90,745, payable over 13 months.  That means his average monthly salary is HK$98,014. 

25.  The husband has received a bonus of HK$765,395 from the family company (Headwind) on 29 January 2021, which he said was exceptionally high.  The annual bonus before that was only HK$228,319.  Therefore, he did not expect this high level of bonus to be repeated in the coming year.  I accept that the amount of bonus may fluctuate from year to year, but for the purpose of calculating the husband’s annual income, I would take a middle figure of HK$500,000.  Converting that into a monthly figure, it would become about HK$41,600.

26.  In June 2020, the husband has also received HK$278,000 as dividend and directors’ fees from a company called BuyHive.  Again, he said the business of BuyHive has dropped significantly in the first quarter of 2021, therefore, the company may not declare any dividends in this year.  Again, for the purpose of this MPS application, I am prepared to take only half of that dividend into consideration, namely, the sum of HK$139,000, or about HK$11,500 per month.

27.  Overall speaking, I am satisfied that the husband is having the following average monthly income:

(1)     Monthly salary	HK$98,014
(2)     Annual bonus (per month)	HK$41,600
(3)     Dividends (per month)	HK$11,500
	HK$151,114

This sum is largely in line with the husband’s reported annual income of HK$1,867,616 (excluding the rental allowance of HL$312,000) in his tax return for the year ending 31 March 2021.

28.  The husband said his monthly expenses are HK$86,390 (P/112).   I have looked at those figures and I accept that they represent the husband’s current reasonable outgoings.  By reference to those figures, I am satisfied that the paying ability of the husband is HK$64,724 (HK$151,114 – HK$ 86,390 = HK$64,724), to be rounded up to the sum of HK$64,000.

Legal Costs Provision

29.  There is no dispute that in considering whether legal costs provision should be made, the principles as set out in Currey v Currey [2] are applicable (see R, ER v H, IF[3] at §11 ). Those principles are:

“the conditions for a ‘costs allowance’ are as follows:

(1) That the applicant spouse has no assets, or none that can be reasonably be deployed (at para [19], [20]).

(2) That she can provide no security for borrowing, or none which can reasonably be offered (at para [19], [20]).

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation (at para [20] and see Sears Tooth, per Wilson J).

(4) That she cannot secure publicly funded legal help ‘at a level of expertise apt to the proceedings’ (at para [20]).”

There is also a requirement to undertake an overarching enquiry:

“At para [20], Wilson J held that the initial, overarching enquiry should be into whether the applicant for a costs allowance could demonstrate that she cannot reasonably procure legal advice and representation by any other means. Therefore, to the extent that an applicant has assets (as in C v C), she has to demonstrate that they cannot reasonably be deployed (whether directly or as the means of raising a loan) in funding legal services …. Other factors may well come into play. The subject matter of the proceedings would always be relevant, as would the reasonableness of the applicant’s stance in the proceedings.”

30.  The wife is now claiming a monthly sum of HK$20,000 as legal costs provision, backdating to 12 April 2021 when the application was first taken out; whilst the husband offers to pay a lump sum of HK$120,000 to cover the wife’s legal costs up to FDR.  In other words, liability is not contested and so what requires this court’s determination is on quantum only.

31.  In an annex marked “B” to the wife’s written submissions, a breakdown of her legal costs for the past 7 months (from February to August 2021) was set out at HK$416,260, averaging HK$60,746 per month.  There was no estimate on the wife’s future costs but judging from her claim of only HK$20,000 per month as legal costs provision, I am satisfied the amount claimed is reasonable, and therefore justified.  I am also satisfied that such sum should be backdated to 12 April 2021.

Conclusions and Orders

32.  Based on the above discussion, I have come to the conclusion that the interim needs of the wife were HK$38,000 and her need for legal costs was set at HK$20,000, totally HK$58,000 per month, which is within the husband’s ability to pay.  I am also minded to backdate the legal costs provision to 12 April 2021.

33.  I note that there was a request from the wife for the maintenance of her HSBC supplementary platinum credit card of up HK$15,000 per month.  I understand that the wife has possessed no credit card of her own and it would make her life very difficult if she is denied to any credit card facilities.  Although the wife’s request may not be unreasonable, I do not think I could force upon the husband to continue an undertaking to provide a credit card for the use of the wife (the current undertakings will expire on 31 December 2021).   In this regard, I could only urge the husband to reconsider his position as I am optimistic that such a gesture of goodwill will certainly assist the parties in negotiating for a future amicable settlement.

34.  In the circumstances, and subject to the husband’s undertaking to (i) maintain the wife’s supplementary Amex card for the sole purpose of paying her medical expenses and to pay the sum due on the card promptly on or before the payment due date; and (ii) to continue to maintain the premia payments on the wife’s present medical insurance policy, I hereby order that:

(1)     The husband shall pay a monthly sum of HK$58,000 as MPS (HK$38,000 as interim maintenance and HK$20,000 as legal costs provision) to the wife on the 12^th day of every month starting on 12 December 2021, with the legal costs provision up to the FDR hearing; and

(2)     The husband shall pay a sum of HK$160,000 as backdated legal costs provision to cover the period from 12 April 2021 to 11 December 2021, and such payment is to be made within 14 days from the date of this order.

Costs

35.  As to costs, the wife has to come to court before she could get the above orders and therefore, prima facie, she should also get the costs of this application.  Although the final MPS order is not in the exact terms as she has requested, I am of the view that she should still be regarded as the winner of the application.  Therefore, the wife should be given the costs of the MPS application, including all costs reserved. This will be in the form of a costs order nisi to be made absolute after the expiry of 14 days from the handing down of this judgment.  After the costs order being made absolute, the wife should lodge and serve a statement of costs (restricted to 1-page of A4 size paper, double line spacing, and in font 14) within 7 days for the court’s summary assessment.  The husband is entitled to lodge and serve a list of objections, if any (restricted to 1-page of A4 size paper, double line spacing, and in font 14) within 7 days thereafter for the court’s consideration.

Representation:

[1] [2012] 1 HKLRD 95

[2] [2006] EWCA Civ 1338

[3] [2018] HKFC 229