SYTE v. CCS

FCMC 6268/2019

[2020] HKFC 40

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 6268 OF 2019

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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”) against the respondent husband (“the husband”).

Parties’ Respective Position

2.  In her summons dated 17 October 2019 (A/22-23), the wife asked for MPS from the husband but without specifying the amount of her claims.  The quantum requested can only be seen at §38 of her supporting affidavit (B/368) in which she asked for a monthly sum of $90,000 as MPS or at such rate as the court thinks fit or alternatively with lump sum payment of $600,000 as legal costs provision.  Her request was further clarified in §20 of her counsel’s written submissions as:

(1)     $60,000 per month as her MPS;

(2)     $30,000 per month as legal costs provision;

(3)     Alternative to (2) above, a lump sum of $600,000 as legal costs provision.

3.  The husband objects to the application and asked for the wife’s summons to be dismissed with costs.

Brief Background

4.  The wife is a housewife now aged 54.

5.  The husband is now aged 60.  He was a Professor of an university in Hong Kong.  He formally retired from that position in July 2019 and was thereafter re-appointed as an Emeritus Professor with a reduced income.  On full professorship, the husband’s income was about $140,000 per month (about $1,700,000 per annum) which was now reduced to about $75,000 per month after formal retirement. 

6.  The parties were married in 1990 and therefore, this was a long marriage of about 29 years. Within wedlock, they have one child born in the year of 1992 who is now aged 27 and is self-supporting.  Despite the apparent breakdown of the marriage, the parties are still living in the same house, i.e. the former matrimonial home which is a 3-storey village house in the New Territories, measuring about 2,100 sq. ft. in size with a 3,000 sq. ft. garden.

7.  On 29 May 2019, the wife issued a petition for divorce based on behaviours which was defended by the husband.  At the same time, the husband filed a cross petition on behaviours which was also defended by the wife.   As we are still in the early stages of the litigation, a trial on the main suit is yet to be held.

8.  As far as MPS is concerned, the wife issued her summons on 17 October 2019 which was opposed by the husband.  At the call-over hearing, I ordered the parties to file their evidence by way of affidavits and the application is to be dealt with on paper without an oral hearing.  At the same hearing, I also ordered the husband to pay an interim MPS of $20,000 per month starting from 1 November 2019 until further order of the court. After the lodging of the husband’s written submissions on 9 January 2020, I now proceed to consider the wife’s application for MPS.

The Law on MPS

9.  The Court’s power to grant a MPS order in favour of a spouse is governed by s.3 of 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.”

10.  In HJFG v KCY[1], Hartmann JA, 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.”

11.  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.

12.  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.

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

The wife’s financial circumstances

14.  There is no dispute that the wife became a full time housewife in 1991 when she was pregnant and thereafter became totally dependent on the financial support of the husband. 

15.  In her Form E, the wife listed out her assets as follows:

Assets	Value
(1)   Former matrimonial home (50%)	$10,250,000
(2)   A flat in Tai Po (“the Tai Po Flat”)	$3,500,000
(3)   A flat in London, U.K. (50%)	$2,475,112
(4)   2 carpark spaces in London, U.K.	$577,800
(5)   A flat in Cambridge, U.K.	$2,330,460
(6)   Various bank deposits	$574,372.65
(7)   Shareholding in private company	$7,962.51
(8)   Stocks	$48,640
(9)   Current value in insurance policies	$64,826
Total:	$19,829,173.16

16.  There is little dispute that the wife has no income, except from the maintenance of the husband.  According to her, the husband used to pay her $38,000 basic monthly maintenance (exclusive of family trips, helper’s extra expenses, car insurance and maintenance, and meals out of home) which was unilaterally reduced to $8,000 in September 2019.  He has also cancelled the wife’s supplementary credit card which was used by her to pay 3 dogs’ expenses and her medical expenses.

17.  As far as the wife’s interim needs are concerned, I note from counsel’s submissions (at §23) that the wife is asking for the following MPS:

Item	Amount
Food	$8,000
Household Expenses	$3,000
Car expenses	$5,125
Carparking tunnel fee	$2,500
Meals out of home	$4,165
Clothing/shoes	$2,500
Personal grooming	$3,000
Entertainment/presents	$3,500
Holidays (2 long and 3-4 short trips a year)	$10,000
Medical/dental	$2,000
Insurance premia	$2,000
Contribution to parents	$100
Golf & painting class & materials	$5,000
Monthly expenses:	$50,890

18.  In addition, it is the wife’s case that she is now driving a very old BMW which needs immediate replacement.  She claims for $9,110 per month for this purpose. This takes the wife’s monthly needs to a monthly sum of $60,000 ($50,890 + $9,110 = $60,000) but on condition that the husband will undertake to be responsible for all utilities and the domestic helper’s expenses.

19.  Through her counsel (§20 of counsel’s submissions), the wife is now asking for MPS at $60,000 per month for her maintenance and a further sum of $30,000 per month as legal costs provision.  Alternatively, she sought MPS (presumably at $60,000 per month) plus a lump sum payment of $600,000 as legal costs provision.

The husband’s financial circumstances

20.  The husband is aged 60 and has recently retired as a Professor of a local university.  Thereafter, he was re-employed as an Emeritus Professor on a yearly contract earning a monthly salary of about of $74,680.  He is also receiving rental income of $13,000 per month in renting out the Tai Po Flat which is registered under the name of the wife.  Taking all these together, his current monthly income is $87,680.

21.  As far as the husband’s assets are concerned, they can be seen in his Form E (A/33-47):

Assets	Value
(1)  Former matrimonial home (100%)	$15,800,000
(2)  The Tai Po Flat	$3,000,000
(3)  Lot Nos.250 and 253, Tai Po	$2,500,000
(4)  A flat and 2 carparks in London, U.K. (50%)	$3,200,000
(5)  A flat in Cambridge, U.K. (50%)	$1,500,000
(6)  Various bank deposits	$3,344,400
(7)  Stocks	$289,432
(8)  Current value in insurance policies	$165,008
(9)  2 cars	$20,000
(10)  Pensions	$7,518,171
	$37,337,011
Liabilities
(11)  Loan from Citi	$536,180 (-)
Net total:	$36,800,831

 

22.  As for the husband’s monthly outgoings, they were listed out in his Form E (A/50-51) as follows:

Item	Amount
General
Mortgage	$32,736
Utilities	$5,000
Food	$4,000
Household Expenses	$4,000
Car expenses	$4,000
Domestic helper	$5,000
Club membership, dog food	$2,000	$56,736
Personal
Meals out of home	$3,000
Transport	$100
Clothing/shoes	$1,000
Personal grooming	$100
Entertainment/presents	$1,000
Holidays	$2,500
Medical/dental	$2,000
Tax	$17,000
Insurance premia	$450
Professional membership	$600	$27,750
	Total:	$84,486

Husband’s ability to pay

23.  Judging from the above figures, it seems that the husband was able to cover his monthly expenses as he was having a total monthly income of $87,680.  However, at §20 of his narrative affidavit (B/390-391), the husband replaced his tax liability of $17,000 (as in his Form E) with the repayment of a personal loan of $27,914.42, making his total monthly outgoings at $95,400.42, meaning that he is having a monthly deficit of about $8,000.  There was no explanation on why there was such a change in the figures.  Even more curious is that at §22 of the same affidavit (B/391), the husband came to a conclusion that with his monthly outgoings at $95,400.42, he was only able to pay a monthly MPS of $8,000 to the wife.

24.  I am afraid that it was a conclusion that I could not accept.  I note from the personal loan document provided by the husband (B/469) that a personal loan of $970,000 was taken out from the Citibank, but there was no explanation on the purpose of such a loan.   Even assume that part of it was used to cover his tax liability which was stated to be $245,557 for 2018-19, there was still no explanation on how he dealt with the balance of that loan. 

25.  More importantly, there is no submission on why the husband should not be able to pay the MPS as claimed in view of the fact that he still has $3,344,400 cash in his various bank accounts.  Based on these incontrovertible facts, I am satisfied that the husband has the ability to pay the MPS as claimed.  The real issue here is whether the wife’s claim for MPS (including the claim for legal costs provision) is reasonable, both on liability and quantum, under the circumstances of this case.   The husband’s inability to pay is in fact a non-issue.

The husband’s challenges

26.  From reading counsel’s submissions (§§24-36), it is the husband’s case that the wife’s claims on her current monthly expenses are wholly exaggerated.

Preliminary observations

27.  Before I proceed to discuss the objected items as raised by the husband, I think it is necessary to view those objections against the facts that this was a long marriage of 29 years and the relative financial affluence of this family. Despite the reduced monthly income of the husband and the facts that there may be some overlapping in calculation or differences in valuation of the parties’ respective assets, it is quite safe to assume that the combined wealth of this family is between $40,000,000 to $50,000,000.  It is equally safe to assume that the wife would be entitled to some sharing of this family wealth at the end of the day, which would not be insubstantial, even if not on an equal sharing basis.  Any overpayment of MPS can be taken into account in the final ancillary relief order and proper adjustments can always be made to achieve a fair result between the parties.

Household expenses of $3,000

28.  The husband says that he is now paying all household expenses and therefore, the wife’s claim of household expenses of $3,000 should be deducted.

29.  My view is that despite the apparent breakdown of the marriage, the parties are still residing under the same roof.  It may be necessary for the wife, as an occupant of the former matrimonial home, to pay some of the general household expenses incurred.  Moreover, my understanding is that the parties are now actively seeking to sell the former matrimonial home, after which the parties will have their own accommodation.  Under these circumstances, I think it is fair to allow at least half of the sum claimed, i.e. $1,500 as the wife’s household expenses.

Car expenses of $5,125 and carparking and tunnel fee of $2,500

30.  The husband argues that the former matrimonial home is only 2 kilometres away from MTR station.  The wife could also travel by taxi and therefore, there is no need for her to keep a car.   He argues that the wife’s claims for car expenses of $5,125 and carparking and tunnel fee of $2,500 should not be allowed.

31.  I note that there is no dispute that the parties have been using separate vehicles for the past 28 years.  It is stated in the husband’s Form E (A/43) that he is keeping 2 cars (one Nissan and one BMW).  Presumably, the Nissan is used by the husband himself and the BMW is used by the wife.  There is no evidence to suggest that the husband is going to give up his car and he still claims to be spending $4,000 per month on car expenses.  I think it is unreasonable to expect the wife to give up her mode of travel for the past 28 years, which is certainly affordable by this family.  I will allow these items as claimed by the wife.

Purchase of a new vehicle

32.  Although the wife’s claim for $9,110 per month for the purchase of a new car was not specifically mentioned in the husband’s solicitors’ submissions, I can only take that this item was also disputed in view of his stance that there is no need for the wife to keep any car. 

33.  In paragraph 31 above, I have already ruled that the wife is entitled to keep a car for her local travel as she has been doing for the past 28 years.  Despite that ruling, I have some reservations on whether this item of $9,110 for a new car should be allowed as MPS.  

34.  I note that the BMW that the wife is driving is an old one but apart from the wife’s bare assertion, there is no evidence on the need of its immediate replacement. There is also no evidence to suggest how the need for a car replacement, if there is indeed any, can convert into a claim of $9,110 per month.  Apart from a casual mentioning of a sum of $380,000 in the wife’s affidavit, there is no detailed budget on what sort of car, be it a new one or a second hand one of reasonable conditions, to be procured.   I simply cannot accept the quantum as claimed.

35.  I agree that the wife’s BMW may need some additional maintenance in view of its age.  But as the wife is already claiming $7,625 as her car expenses, I think that figure should be enough to provide some level of reasonable maintenance for her car.  Therefore, for the wife’s overall expenses on her car, I will allow a monthly sum of $7,625 ($5,125 + $2,500 = $7,625) only.

Meals out of home

36.  The husband contends that there is no need for the wife to spend another $4,165 per month on meals out of home as she is already claiming $8,000 per month for food. 

37.  A monthly food bill of $12,165 for a single person seems to be on the high side to me and I accept that a monthly sum of $8,000 is more reasonable to cover both food and meals out of home for the wife.  After all, the husband is only claiming a total monthly food bill of $7,000 ($4,000 + $3,000) for himself. 

Personal grooming, clothing/shoes, entertainment/presents, golf, painting classes and holidays

38.  At §31 of the husband solicitors’ submissions, it was suggested that the wife’s claims for personal grooming, clothing/shoes, entertainment/presents were exaggerated.  It was also submitted that the claims for golf and painting classes at $5,000 and holidays at $10,000 were highly excessive.  There was even suggestion that there was no need for the wife to go on holiday trips.

39.  From the table at §33 of the husband’s solicitors’ submissions, the husband submitted that the wife should only be allowed $1,000 for clothing/shoes and $900 for personal grooming.  As there was no mention of entertainment/presents, golf and painting class and holidays, I take that the husband’s stance is that the wife’s claim on those items are unreasonable and should therefore, be rejected.

40.  I am afraid that my views may be different from that of the husband.  I accept that despite the relative financial affluence of this family, the parties might not have adopted a very luxurious life style during their marriage.  But that does not mean that they have to downgrade their life style to one of frugality after the semi-retirement of the husband or the breakdown of their marriage.  I think both of them are entitled to a reasonably comfortable retirement life after all these years of endeavours accumulating a not insubstantial amount of family assets.

41.  I am of the view that $2,500 for clothing/shoes, $3,000 for personal grooming and $3,500 for entertainment/presents are reasonable.

42.  As for golf and painting classes, I think a monthly sum of $2,000 is more reasonable.

43.  As for holidays, I accept that there may be some room for reduction.  I would allow $5,000 per month instead.

Conclusion on the wife’s reasonable needs

44.  Based on the above discussion, I accept that the wife should have the following reasonable needs:

Item	Amount
Food (including meals out of home)	$8,000
Household Expenses	$1,500
Total car related expenses	$7,625
Clothing/shoes	$2,500
Personal grooming	$3,000
Entertainment/presents	$3,500
Golf and painting classes	$2,000
Holidays	$5,000
Medical/dental	$2,000
Insurance premia	$2,000
Contribution to parents	$100
Monthly expenses:	$37,225

For the ease of calculation, I would round up the monthly reasonable needs of the wife to $38,000.

Legal costs provision     

45.  Another important issue is the wife’s claim for legal costs provision.   She is now claiming a monthly sum of $30,000, or alternatively, a lump sum of $600,000 to cover her legal costs.

46.  The husband objected by saying that the wife’s estimated legal costs to be incurred are highly excessive and that she also has sufficient assets under her name in order to raise necessary funds for such purpose.  The husband asks for her claim for legal costs provision to be dismissed.

The law

47.  In H v H (Interim Maintenance) [2007] HKFLR 311, HH Judge Bruno Chan (at paragraph 44 of his judgment) cited the English Court of Appeal case of Currey v Currey [2006] EWCA Civ 1338 as follows:

“44. There is no question over the court’s jurisdiction to award a costs allowance in an order for maintenance pending suit subject to certain fairly stringent conditions, as recently refined by the English Court of Appeal in Currey v Currey [2006] EWCA Civ 1338, [2007] FLR as follows:

(1) That the applicant has no assets, or none that can reasonably be deployed.

(2) That she can provide no security for borrowing, or none which can reasonably be offered.

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation.

(4) That she cannot secure publicly funded legal help at a level of expertise apt to the proceedings.”

48.  Again, I do not think that the above legal principles on legal costs allowance are in dispute.

Discussion

Costs Estimation

49.  I note that the solicitors for the wife has filed her Form H (A/18-29) on 16 October 2019 stating the following costs estimates:

(1) Up to the 1st Appointment (17 October 2019)	$160,000
(2) From 1st Appointment to FDR	$550,000
(inclusive of counsel’s fees $150,000)
(3) From FDR to trial	$800,000
(inclusive of counsel’s fees $400,000)
Grand total:	$1,510,000

50.  In §§41-42 of her supporting affidavit (B/382), the wife has also testified on the charging rates of her solicitors at $5,000 per hour for a senior partner and $3,800 per hour for a senior associate.

51.  The husband through his solicitors submits that the estimated costs quoted by the wife are highly exaggerated and unreasonable.  He said that if the wife could not afford the high hourly rates charged by her existing solicitors, she should consider to engage a cheaper one.  Furthermore, if the wife’s solicitors are highly experienced, there is no need for her to instruct counsel in this case.

My views

52.  In assessing the wife’s estimated legal costs at this rather preliminary stage, we have to remind ourselves that there seems to be a lot of contested issues to be resolved in this case.  There are the wife’s petition and the husband’s cross petition for divorce, both based on behaviours, that need to be dealt with.  If the parties should decide to resolve this particular issue by way of a full-blown trial, it might take a year or so with substantial amount of legal costs to be incurred.   As far as ancillary relief is concerned, I understand that the wife is also highly suspicious of some of the loan proceeds taken out by the husband which may result in a rather lengthy discovery process. 

53.  All these point towards a rather expensive legal bill on both sides of the litigation, unless the parties can come to a sensible and early settlement of the case.  After all, we are talking about a litigation on the sharing of family assets between $40,000,000 to $50,000,000.  I cannot say that the wife’s engagement of a firm of experienced family law solicitors and counsel can be regarded in any way as unreasonable.  All in all, I am satisfied that the costs estimate put forward by the wife is a realistic and reasonable one.

The Currey test

Can the wife’s assets be deployed? or can she offer any security for borrowing?

54.  There is no dispute that the wife is in possession of 3 landed properties in the UK and they are:

(1) A flat in London, U.K. (50%)	$2,475,112
(2) 2 carpark spaces in London, U.K.	$577,800
(3) A flat in Cambridge, U.K.	$2,330,460
	$5,383,372

55.  It is the husband’s submission that those properties could be sold or mortgaged so as to raise funds for the legal costs of the wife.

My views

56.  I understand that the flat in London is jointly owned with the husband.  There is no offer from the husband to have this property sold and the sale proceeds to be retained by the wife to cater for her legal expenses.  Without the cooperation of the husband, either the sale or mortgage of this London flat is out of the question.

57.  As to the 2 London car parks and the flat in Cambridge, the difficulty of the wife in selling them in a timely manner and at a right price is understandable as she is permanently based in Hong Kong.  Of course, an overseas sale conducted in Hong Kong is not totally impossible but that may take many months, if not years to achieve.  That is not too helpful in addressing the wife’s immediate needs to have legal representation in this case.  As the wife has no income, her ability to obtain a mortgage in UK is also highly doubtful.  All in all, I am not satisfied that it is practical for the wife to obtain funds from either selling or mortgaging her properties in UK to cater for her legal expenses in Hong Kong.

58.  As to the wife’s savings, it was stated in her Form E that her total bank deposits were $574,322.65. That was on 4 October 2019.  But according to her latest affidavit on 28 November 2019 (B380-381), her cash deposits have already dwindled to $324,735.59.  I accept that some of her funds must have been used to supplement her daily needs and also for some of her legal costs.  Such depreciation in her bank deposits is likely to continue if no appropriate orders on MPS is to be made. Obviously, the relative small amount of the wife’s bank deposits is insufficient to cater for her legal costs in this case.

Can the wife charge the outcome of litigation so as to raise funds?

59.  I am not sure whether it is possible to obtain legal services by charging the outcome of litigation in England, but I am afraid that this mode of obtaining legal services is almost unheard of in Hong Kong.  I am not satisfied that this is a possible way for the wife to obtain legal services in Hong Kong.

Can the wife obtain publicly funded legal service in Hong Kong?

60.  As the wife has assets registered under her name, it is highly doubtful whether she could satisfy the means test even if she should apply for legal aid.  Furthermore, as pointed out in KGL v CKY & Another[2](per Woo JA at 307 B):

“21…. There is no reason why public funds should be expended to fund litigation when there are ample resources available within family funds. With proposals for more active juridical involvement in pre-trial proceedings to restrict the incidence of costs this is in line with the modern approach. The court can keep better control of litigation if its funding is at least in part within its purview. The party that controls the funds will be less willing to use them on unnecessary interlocutory procedures if he or she will have to provide funding for the other side.”

61.  I am satisfied that this is such a case that the wife should not be expected to apply for legal aid as there are ample resources within the family to fund the parties’ litigation.

Conclusion on legal costs provision and quantum

62.  Based on the above discussion, I have come to the conclusion that the wife has satisfied the Currey test, and as per paragraphs 23-25 above, I am also satisfied that the husband does have the ability to pay for the wife’s claim for MPS, including her claim for legal costs provision.  The remaining issues are duration and quantum.

63.  It is quite clear that an order for legal costs provision should be structured, especially as to its duration, so as to best encourage the receiving party to act reasonably, looking in good faith to try and reach settlement.  Therefore, if such a litigation funding order is to be made before the FDR, it may well be wise for it to be granted up to that hearing: HJFG v KCY [2012] HKFLR 27 at §§82 & 85.

64.  Judging from the Form H of the wife, I am of the view that her present claim for a lump sum of $600,000 as legal costs provision is a fair estimation of her legal costs up to FDR.  Of course, this is subject to the condition that both parties would take a more sensible and practicable way to deal with the main suit for divorce. 

Backdating

65.  I note that the husband has unilaterally reduced the maintenance (from $38,000 to $8,000 per month) in September 2019, I think it is therefore fair that the MPS order should be backdated to 1 September 2019.

Orders

66.  Based on the above reasons, I hereby make the following orders:

(1)     The husband shall pay MPS in favour of the wife in the sum of $38,000 per month on the first day of every month, starting from 1 September 2019 until further order of the court;

(2)     The husband shall pay MPS by way of legal costs provision in the lump sum of $600,000 within 14 days from the date of this order, which sum should cover the wife’s legal costs up to FDR unless there are further orders from this court.

Costs

67.  Costs to follow event.   The wife has to come to court before she could get the above orders and therefore, she should also get the costs of this application, including all costs reserved, with certificate for counsel and such costs are to be taxed if not agreed.   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.  

[1] [2012] 1 HKLRD 95

[2] [2003] 2 HKLRD 301