SPMK v. WCC AND OTHERS

FCMP 250/2017

[2020] HKFC 186

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FAMILY COURT MISCELLANEOUS PROCEEDINGS

NO. 250 OF 2017

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Judgment

( re. Variation of interim periodic payment )

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Introduction

1.  These proceedings were commenced by way of Originating Summons on the 6 December 2017.

2.  On the 29November 2018 Deputy District Judge A.N. Tse Ching (as she then was) inter alia ordered that the Applicant be paid HK$15,000 per month from the Estate of the Deceased together with a lump sum payment of HK$900,000 as legal costs provision.

3.  The application before the Court is by way of summons dated 4 February 2020 for variation of the order of 29 November 2018 that:

a.  the HK$15,000 monthly payment be increased to HK$28,000 per month; and

b.  a further Legal Costs provision be made of HK$50,000 per month. 

Salient background

4.  The Applicant who is now aged 58 was in a same-sex relationship with the Deceased; it is said on behalf of the Applicant that the relationship lasted from the late 1990s until the Deceased’s death on the 4 May 2017; the Deceased died intestate.

5.  The Deceased, the Applicant and the Applicant’s son lived in a property purchased in the Deceased’s name in 2000. It is said on behalf of the Applicant that the Deceased was the primary breadwinner and the Applicant the homemaker.

6.  There would seem to be an issue as to the Deceased’s family’s recognition or not of the Deceased and Applicant’s same-sex relationship.

7.  It would however appear to be common ground that post the Deceased’s death the relationship between her family and the Applicant deteriorated giving rise to the present proceedings.

8.  On the 9 June 2017 the Applicant entered a Caveat against the Deceased’s Estate in proceedings HCCA 2925/2017.

9.  On the 17 December 2018 the Applicant’s Caveat was struck out with a summary assessed costs order of HK$395,000 against her.

10.  Letters of Administration were granted to the Deceased’s Father (the Administrator) on the 22 February 2019.

11.  The Deceased’s Father and Mother, aged respectively 82 and 81, are the sole beneficiaries of the Estate; they have four other adult children.

12.  The Parties have very sensibly agreed to participate in a Private FDR with Mr. Bruno Chan, formerly the Chief Judge of the Family Court; I understand that such Private FDR is scheduled for 31 October 2020.

13.  It is said on behalf of the Respondents that the Estate is valued at HK$21.5 million.

The Relevant Law

14.  As I understand the Parties’ cases and their able Counsels’ submissions, there is no dispute on the applicable law, namely:

  Section 7 of the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481) (the “IPFDO”), which provides as follows:

“7. (1) Where on an application for an order under section 4 it appears to the court —

(a) that the applicant is in immediate need of financial assistance, but it is not yet possible to determine what order (if any) should be made under that section; and

(b) that property forming part of the net estate of the deceased is or can be made available to meet the need of the applicant,

the court may order that, subject to such conditions or restrictions, if any, as the court may impose and to any further order of the court, there shall be paid to the applicant out of the net estate of the deceased such sum or sums and (if more than one) at such intervals as the court thinks reasonable ….”

15.  Both Parties referred the Court to AEM and VFM [2008] 3 HKLRD 36 at p.42:

“5. Any change in any of the matters to which the court was required to consider when making the original order was one of the circumstances to be considered.

6. Almost invariably, an application to vary an earlier periodical payment order will be brought on the basis that there has been some changes in the circumstances since the original order was made, for example, continuing inflation; the increased costs in supporting a growing child and that one party may be more adversely affected than another by the increase in the costs of living: Garner v Garner.

7. An increase in the wealth of the husband was a relevant factor to be taken into account: Primavera v Primavera [1991] 1 FLR 16 and Cornick v Cornick (No 2) [1995] 2 FLR 490 .

8. At the same time the basis and intended effect of the original order are relevant factors to which the court on variation should pay regard and there should not be a radical departure from the approach taken by the parties themselves when they had entered into an agreement embodied in a consent order: Boylan v Boylan [1988] 1 FLR 282.”

16.  In addition to which Ms. Leung on behalf of the Respondent referred the Court to ACLS v HSB(T)L [2013] 2 HKLRD 444:

“39. It follows from the above analysis of the statutory scheme that interim maintenance should only be granted (at a stage where the actual entitlement of a claimant has yet to be established) in a very clear case where the immediate need of financial assistance is shown. Since there is no obligation on the part of a claimant to repay (subject to conditions to such effect being imposed and the resources of the claimant to meet such conditions), there is a real risk that the beneficiaries of the estate may suffer a detriment if at the end of the day the Court held at the trial that such claimant was not entitled to any relief. As mentioned, there are many factors at play in an application under the Ordinance, an important one being fairness amongst all the beneficiaries of the estate. Thus, the Court cannot look at the matter merely from the angle of the reasonable need of a claimant and the resources available in the estate. In this respect, the position under the Ordinance is very different from a case for interim maintenance in the matrimonial context, especially when the claimant is not a spouse or former spouse of the deceased.”

Ms. Leung fairly and appropriately accepted on behalf of the Respondents that:

“Each case must depend on its own facts” (§47 of the same case).

Variation of maintenance

17.  The Applicant seeks an increase from HK$15,000 to HK$28,000; her Counsel’s Submission states:

§3  “a big part of this increase is due to her medical needs”

§30  “The reason for this application is due to the Applicant’s lower back pain, which caused numbness to her limbs, and her ensuing concern  about how this symptom will affect the  support of her upper body.    She could not walk or sit long, and even turning in or getting up from the bed caused great discomfort.  She had produced copies of receipts from her doctor, and X-ray findings.”

18.  §33 of the Applicant’s Submission summarises the Applicant’s two Form Es:

	Updated Form E	Previous Form E
General	HK$	HK$
Rent	1770	1610
Utilities	1295	1956
Food	5000	3000
Household Expenses	500	500
Domestic Helper	2260	N/A
Total A	10825	7006
Personal
Meals out of home	1500	1500
Transport	1000	1000
Clothing / Shoes	1500	1500
Personal grooming	2500	2500
Entertainment / presents	500	N/A
Holiday	1000	1000
Medical	6200	1200
Insurance	1000	150
Contribution to parents	2000	2000
Total B	17200	10850
Total A+B	28025	17916*
		*Applicant is paid $15,000

 The numbers in bold represent the increases sought.

N.B. As pointed out by Ms. Leung on behalf of the Respondents, in the Applicant’s second Affirmation she stated at §91 that:

“To this end, I crave leave to make reference to my Form E, the Court will see that my expenses items totally HK$17,916. Taking into regard that I make HK$2,000-HK$3,000 a month, I asked the Honourable Court to grant me an interim payment from [the Deceased’s] estate of HK$15,000 per month or such other amount as the Honourable Court deems fit.”

19.  According to the Applicant’s 1^st Form E dated 14 March 2018 and §24 of her 1^st Affirmation dated 4 December 2017, her average monthly income was HK$2,000 from part-time work.  Her son also gave her HK$1,000 per month after he started employment in August 2016. Therefore her previous income was approximately HK$3,000 per month. 

20.  According to the Applicant’s 5^th Affirmation dated the 4 February 2020, she worked briefly as a part-time sales assistant at Muji in May 2018, a part-time caretaker at a Buddhist Temple in Cheung Sha Wan and also made soup for a relative in June 2018, generating small amounts of income.

21.  According to the Applicant’s Updated Form E dated 27 June 2019, she was then unemployed with no income apart from the HK$1,000 per month provided to her by her son. 

22.  The Applicant’s income has therefore reduced since the Order of 29 November 2018.

The Respondents’ case

23.  As a preamble the Respondents emphasise the following two points:

a.   There is an issue as to whether the Applicant was in fact financially maintained by the Deceased immediately prior to her death; and

b.  The Applicant may not have the means to repay the Estate if she is unsuccessful at the substantive Trial.

24.  In addition to which the Respondents make the following points:

a.  To draw an adverse inference against the Applicant for not agreeing to an SJE in respect of her current physical and medical condition; and

b.  That the Applicant has failed to demonstrate an

“immediate need for financial assistance”.

The specific increases sought by the Applicant

Medical: increase from HK$1,200 to HK$6,200

25.  Although described as medical/dental, it is in fact only relates to medical.

26.  The Applicant seeks HK$5,600 per month for 8 sessions of physiotherapy being two sessions per week and HK$600 per month on medication.

27.  The Court raised the following questions:

a.  Whether the Applicant had undergone physiotherapy during Covid-19; and

b.  Whether the Applicant was prepared to undertake an arrangement whereby if she was provided with funds to attend physiotherapy such funds would only be utilised for physiotherapy.

28.  The Court was informed that the Applicant had attended physiotherapy approximately nine times between the 27 November 2019 and the 7 January 2020, but by reason of Covid-19 she had not attended physiotherapist since early January 2020.

29.  The Applicant was prepared to agree to arrangement whereby if funds were provided for physiotherapy they would only be utilised for physiotherapy.

30.  On 28 August 2020 the Parties proposed undertakings to be given by the Applicant re medical costs; the Applicant offered the following undertaking:

“(i) Any increase in the interim maintenance granted under the Applicant’s Summons filed herein on 13 May 2020 by the Court, and pertaining to her medical needs, shall be used for the purpose of physiotherapy sessions and medications;

(ii) The Applicant shall produce receipts for the physiotherapy sessions she attended and for medications to the Respondents on a monthly basis; and

(iii)  Should there be any balance left from the amount granted by the Court allocated to medical needs, the Applicant shall refund such unused amounts to the Respondents.”

31.  Such undertaking is acceptable to the Court, save that the Applicant’s Summons is dated the 4 February 2020 not 13 May 2020.

32.  As to the Respondents’ argument that the Court should draw an adverse inference by reason of the Applicant’s refusal to agree to an SJE, the Court is not persuaded that it would be appropriate in the circumstances of this case to draw such inference for the following reasons:

a.  The Applicant has a medical history which is supported by receipts issued by a Dr. Chuh showing the diagnoses of her medical conditions (exhibit SPM5-1 [B5/57-59]), x-ray findings (exhibit SPM5-1 [B5/60-63]), and medical certificates issued by the same Dr. Chuh (exhibit SPM5-2 [65-67]);

b.  The issue at this stage is primarily the cost of medical care not the Applicant’s condition; and

c.  In any event, in the context of the costs of the proposed physiotherapy, the cost of an SJE would be disproportionate. 

33.  In the 1^st Respondent’s 2nd Affirmation at §33 it is said that the 1^st Respondent’s daughter saw the Applicant “carrying shopping bags and walking fine”. Besides the fact this is hearsay, it does not mean the Applicant does not need physiotherapy.

34.  It was canvassed by Ms. Kwan that the Applicant was available to give oral evidence in respect of her medical condition. The Court’s view, endorsed by Ms. Leung for the Respondents is that this would be of little assistance to the Court.

35.  Having considered the arguments of both Parties and the evidence that has been filed, the Applicant’s request for the sum of HK$6,200 for physiotherapy and medication is allowed subject to the arrangements ensuring that the money is only used for such physiotherapy or medicine.

Insurance: increase from HK$150 to HK$1,000

36.  The Applicant took out medical insurance on the 21 June 2019 as set out in her 6^th Affirmation of 31 July 2020 and supported by exhibit SPM6-5 [B5/183].

37.  It is the Respondents’ case that this is a new item of expenditure. However, in the context of the Applicant’s medical condition and by reason of prudent consideration of potential future medical expenses, this sum is allowed.

Food: increase from HK$3,000 to HK$5,000

38.  It is said on behalf of the Respondents that in the Applicant’s 1^st Form E in March 2018 she gave a figure of HK$3,000 for food, which increased to HK$5,000 in her 2^nd Form E filed in June 2019.

39.  It is also said on behalf of the Respondents that in the Applicant’s 5^th Affirmation she stated the following as to her request for HK$5,000 for food:

“This includes food for myself, my mother and domestic helper, and is in fact insufficient to cover the inflation of fresh food in wet markets”.

40.  I accept the contention of the Respondents that in the context of the application and section 7 of the IPFDO, the focus is on the Applicant’s financial needs as opposed to any third party; however I am mindful of inflation and price increases and therefore taking the above factors into account, I will allow the sum of HK$4,000 for food.

Domestic Helper: HK$2,260

41.  It is said on behalf of the Respondents that this is a new expense and the Applicant’s explanation in her 5^th Affirmation is as follows:

“I have become considerably weaker and slower due to my medical conditions, and I am not able to lift her [the Applicant’s mother] up from or put her into her wheelchair. Hence, the help of a domestic helper is necessary for me to take care of my mother, and the expenses is [sic] split equally between my brother and me.”

42.  It was stated on behalf of the Respondents that the Applicant has three siblings who either are or should be responsible for the cost of the domestic helper.

43.  I was told on behalf of the Applicant that when she and the Deceased were living together they had the assistance of a domestic helper.

44.  In the circumstances and where the evidence is not entirely clear on both sides I propose to take a broad brush approach and allow the sum of HK$1,000.

Entertainment HK$500

45.  It is said on behalf of the Respondents that this is a new item. This does not mean that the Applicant should be without the means of some entertainment. In the broad context of the case I therefore exercise my discretion and allow the sum of HK$500.

Conclusion as to variation of maintenance

46.  It follows from the above findings that the allowed expenses are as follows:

General	HK$
Rent	1,770
Utilities	1,295
Food	4,000
Household Expenses	500
Domestic Helper	1,000
Total A	8,565
Personal
Meals out of home	1,500
Transport	1,000
Clothing / Shoes	1,500
Personal grooming	2,500
Entertainment	500
Holiday	1,000
Medical	6,200
Insurance	1,000
Contribution to parents	2,000
Total B	17,200
Total A+B	25,765

  The sum of HK$25,765 to be rounded up to HK$26,000 per month.

47.  The new adjusted amount for Food, Domestic Helper, Entertainment and Insurance will be backdated to the date of the Summons for variation namely 4 February 2020.  The new adjusted amount for Medical will not be backdated as the Applicant did not attended physiotherapist since early January due to Covid-19. 

48.  The total backdated from February (8 months : February to September) will be as follows:

a.  Food	HK$1,000
b.  Domestic Helper	HK$1,000
c.  Entertainment	HK$500
d.  Insurance	HK$850
	HK$3,350
Total	HK$3,350 x 8 = HK$26,800

Litigation costs allowance

49.  Shortly before the commencement of the hearing the Parties were sensibly and appropriately able to agree the figure of HK$350,000 for Litigation Costs Allowance up to and including the Private FDR.

Costs

50.  According to the Parties’ Form Hs both dated 10 August 2020, the Parties’ respective costs under Part 1 are as follows:

a.  Applicant	HK$1,048,814
b.  Respondents	HK$1,078,900
	HK$2,127,714

51.  For Part 2 (FDR):

a.  Petitioner	no figure provided
b.  Respondent	HK$380,000

52.  On the basis that Part 1 figures were similar it would seem probable that the Applicant’s costs to the Private FDR will be approximately $380,000.

53.  In summary, the Parties’ costs up to the Private FDR are likely to be as follows:

a.  Incurred to date	HK$2,127,714
b.  For the Private FDR	HK$760,000
	Total  HK$2,887,714

54.  In addition I understand there have been substantial costs incurred in relation to the proceedings in the High Court; therefore in all probability the costs to date exceed HK$3 million which on an estate of @HK$21.5m amounts to @14%.

55.  Besides the HK$900,000 costs allowance awarded under the order of 29 November 2018, the Applicant has, I understand, received the following amounts:

a.  HK$9,500 per month from May 2018 to November 2018:
7 x HK$9,500	@HK$66,500

 

b.  HK$15,000 per month from December 2018 to August 2020:
20 x HK$15,000	@HK300,000
	HK$366,500

56.  In summary, the legal costs to August 2020 are in excess of HK$2 million and the benefit to the Applicant has been a very small fraction of such amount: HK$366,500.

57.  I further note that one Form H is described as a “draft” and is not signed by the Party but only by the firm of Solicitors.

58.  It is important to have in mind the purpose of a Form H, namely that each Party should have the following information:

a.  What his or her costs are up to each hearing;

b.  How much has been paid or is outstanding;

c.  What the other Party’s costs are up to each hearing;

d.  How much of the other Party’s costs have been paid or are outstanding; and

e.  What each other’s costs are likely to be in respect of the next forthcoming hearing of substance.

59.  It is only with this information that each Party can make a realistic assessment of:

a.  Their future costs; and

b.  Their exposure to costs if they are the unsuccessful party in the litigation.

60.  In an ideal world, costs should be proportionate to the issues to be tried.  In this case, the costs are clearly disproportionate in the context of what has been achieved in the litigation to date: costs in excess of HK$2 million with a benefit of @HK$366,500.

61.  This highlights the fact that costs of interlocutory proceedings, particularly in relation to interim financial support, can be, as in this case, out of all proportion to the quantum of the issues to be decided.

62.  Litigants frequently make the mistake of believing that an interim arrangement will be a determining factor when the substantive matter is to be decided. This is not correct; it is perfectly permissible and indeed should be encouraged for Parties to agree to an arrangement, which is without prejudice to either Party’s arguments at the substantive hearing. This not only saves the Parties’ substantial costs, but also relieves the pressure on the Court’s resources, making more time available for substantive hearings rather than interlocutory skirmishing.

63.  At the hearing I raised with the Parties that I anticipated, whatever my decision as to the variation, that I would find it difficult to adjudicate the costs issue as the costs are so clearly out of all proportion to the issue before the Court and that I was minded to reserve costs; neither party resisted this suggestion.

64.  In such context the words of Lam JA in LLC v. LMWA and Another [2019] HKCA 347 at §30 are most apt:

“A characteristic of matrimonial or family proceedings which all those involved in it (parties and those relatives who supported them, lawyers as well as judges) should always be mindful is that the resources (including both time, monies as well as energy) of the parties should not be disproportionately squandered away in litigation. This is particularly so in cases where there are children in the family. For each $10,000 spent on legal fees, the parties would eventually have $10,000 less to be distributed amongst themselves (in a sharing case) or for maintaining themselves and their children (in a need case). For each hour spent on preparation and attending hearing, the party would have one hour less for rebuilding their lives after divorce or for spending time with their children. Actually, it could probably be worse because in many instances the time and energy spent on litigation would generate ill-feelings and hostilities for which much more time is needed to restore the litigant’s peace of mind.”

65.  Having reflected on the matter and having reached my decision as to the variation, I remain of the view that costs should be reserved for the following reasons:

a.  The Estate is in effect currently funding the Applicant’s costs;

b.  At this stage it is not possible to determine the success or not of the Applicant’s substantive application; she may be successful or not and if successful the quantum is as yet uncertain; and

c.  The Parties have sensibly agreed to participate in a Private FDR and I would not wish an adverse costs order to destabilise constructive discussions at the FDR.

66.  Lastly I would like to express my thanks to both Counsel for their helpful written Submissions and pragmatic and proactive approach during the hearing. Hopefully the forthcoming Private FDR will bring a resolution and closure to a saga which has clearly been most distressing and stressful for all Parties concerned.

67.  My orders are therefore as follows:

a.  Upon the Applicant’s undertakings to the Court and the Respondents that:

(i)  The increase in the interim maintenance granted under the Applicant’s Summons filed herein on 4 February 2020 by the Court, and pertaining to her medical needs, shall be used for the purpose of physiotherapy sessions and medications;

(ii)  The Applicant shall produce receipts for the physiotherapy sessions she attended and for medications to the Respondents on a monthly basis; and

(iii)  Should there be any balance left from the amount granted by the Court allocated to medical needs, the Applicant shall refund such unused amounts to the Respondents.

b.  And upon to the Respondents’ Undertaking to pay to the Applicant’s solicitors HK$350,000 as Litigation Costs Allowance up to and including the Private FDR scheduled for 31 October 2020.

It is ordered that:

1.  The Order of 29 November 2018 be varied so that the Estate shall pay the sum of HK$26,000 per month to the Applicant from 1 October 2020 until further order.

2.  The Respondents shall cause a sum of HK$26,800 to be paid to the Applicant by way of backdated maintenance within 28 days of this Order.

3.  Costs reserved.