KGL v. CKY AND ANOTHER

CACV 406/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 406 OF 2002

(ON APPEAL FROM FCMC NO. 1453 OF 2002)

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J U D G M E N T

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Hon Woo JA (giving the judgment of the Court):

Introduction

1. This is an appeal against the Order dated 6 September 2002 made by H H Judge Gill in the Family Court whereby he varied the consent order dated 14 May 2002 made by him in respect of interim maintenance, leave having been obtained from the judge. By that consent order, the 1st respondent, the husband, was ordered to pay to the petitioner, the wife, interim maintenance in the sum of $10,000 per month commencing on 8 May 2002 and on the 8th day of each calendar month thereafter.

2. The background facts can be found in the judge's judgment dated 6 September 2002. Briefly, the parties were married in New York in February 1987. In 1992, the husband returned to Hong Kong to work for the stockbroking firm founded by his father. The wife returned two years later and thence until May 2002, the parties lived together in the home of the husband's parents. The wife did not take up employment and was dependent on the husband for support and his parents for accommodation.

3. The husband had developed a relationship with another woman and by her a child was born in October 2000.

4. In early 2002, the wife petitioned for divorce and made various interlocutory applications including those ex parte for injunctions. The husband moved out to live with the mother of his child. The husband's parents wanted the wife out of their flat.

5. The wife chose a newly developed flat in Tseung Kwan O as her home that the husband would buy for her, but before the completion of the flat, the parties agreed that she would move to a serviced apartment. In the consent order of 14 May 2002, it was recorded that the husband undertook to pay two months' rent for the serviced apartment and to meet all the mortgage instalments of the Tseung Kwan O flat. He also agreed to pay, and it was so ordered by consent, interim maintenance of $10,000 per month from 8 May 2002 to the wife.

6. In July 2002, the wife applied to vary upwards the consent order. She asked for a total of $173,465 for decorating and furnishing the Tseung Kwan O flat. She also asked for about $25,000 per month as her monthly expenses. Further, she sought assistance to meet her legal costs. When she first committed herself to petitioning for divorce she applied for and was granted legal aid. But when it became apparent that she was the registered owner of real estate that she was not yet occupying, her legal aid certificate was discharged. After the discharge, she had incurred legal costs to the extent of $180,000 and would incur further legal costs until the proceedings are over.

7. In his judgment, the judge referred to ss 3 and 11(7) of the Matrimonial Proceedings and Property Ordinance, Cap 192 and A v A (Maintenance Pending Suit Payment of Legal Fees) [2001] 1 WLR 605. He rejected the wife's claim for the expenses for fitting out the Tseung Kwan O flat, allowed her maintenance pending suit to be varied from $10,000 a month to $14,000 a month, and also allowing a further sum of $20,000 a month for the purpose of meeting her legal costs.

The appeal

8. It is against this Order of the judge that the husband appeals.

9. There is no challenge to the judge's increasing the amount of maintenance pending suit to $14,000 a month. The only dispute is on the additional monthly sum of $20,000 for the wife's legal fees.

10. In the first ground of appeal, the judge's Order is challenged, based partly on the lack of jurisdiction. This ground is now dropped.

11. However, Ms Wee, for the husband, argues that the term maintenance pending suit in s 3 of the Ordinance should not include legal fees but only bear the meaning set out in The New Shorter Oxford English Dictionary, 1993:

"The action of providing oneself, one's family, etc., with means of subsistence or the necessaries of life; the fact or state of being so provided. Also, enough to support life; means of subsistence; the amount provided for a person's livelihood."

12. A v A is the basis for including legal costs in maintenance pending suit of an applicant in matrimonial proceedings. Holman J said at 610 of the report, and we agree:

" There is no doubt that in all sorts of ways 'maintenance' does not extend to, and orders for maintenance pending suit have for many years been intended to cover, matters which are not ones of 'daily living'. Provision may be included, if there has been a history of it, to enable the payee to make charitable payments or payments to a third party, such as a dependent parent. Such payments are not part of 'living' expenses of the payee at all, but may be a component of the order. Further, provision can clearly be made to cover legal costs as such - for example, if the payee has a current need to fund litigation with a third party; for example, a landlord trying to obtain possession of the home.

But Mr Singleton submits that the costs of the suit itself are in a different category. I do not agree. Just at the moment they are, after the provision of a roof over her head and food in her month, the wife's most urgent and pressing need and expense. She could manage without holidays, though I have made some provision for them. She could no doubt manage for a while without buying new clothes. She could manage without her manicures, pedicures and yoga and keep fit classes, for all of which I have, on the facts of this case, made provision. She could even manage without the provision for forms of private medical care (to which the family has been accustomed) for, if necessary, she could fall back on the NHS. But she simply cannot make any progress with the dominating issue in her life if she cannot pay her lawyers, and for this the state will not provide."

13. Charles J in G v G [2002] 3 FCR also took the same view.

14. Ms Wee also argues that the payment of the additional $20,000 per month to the wife was in fact by way of a lump sum, albeit by instalment payments, for outstanding legal fees in the total amount of $180,000. After referring to A v A, the judge commented that the argument that interim payments to cover legal costs was lump sum in nature was rejected by the court in A v A.

15. Mr Neal Clough, for the wife, submits that the additional $20,000 a month is not only to enable the wife to pay her solicitors the legal costs already incurred in the sum of $180,000, but that sum was also recognised by the judge as being payable towards the costs incurred and to be incurred. It was not a lump sum, by instalments or otherwise. We agree. There is no merit in the argument that the $20,000 a month is a lump sum split into monthly instalment as argued by Ms Wee. It is a monthly payment for a duration only determinable upon the conclusion of the matrimonial proceedings, and there would be no sufficient basis to have the amount ascertained, if it is a lump sum.

16. Ms Wee further argues that inclusion of legal costs by way of maintenance pending suit is unfair and unreasonable and that the facts of the present case did not justify interference with the consent order.

17. One must bear in mind that the making of the order under appeal by the judge is a matter for the judge's discretion. Unless it can be shown that he had erred in law or misapplied principle or taken into account irrelevant matters or ignored relevant matters, this Court does not interfere with the exercise of his discretion (see para 59/1/49 of Hong Kong Civil Procedure, 2002, Vol 1).

18. Ms Wee's further submission that the judge should not have varied an order by consent unless the wife demonstrated that there had been some material change of circumstances since the consent order or other reason to render it unjust to hold her to her agreement. Obviously, the judge had taken into account the fact that the Tseung Kwan O flat was registered in the wife's name and that she was not occupying it as the cause for the discharge of her legal aid, that discharge was a material change of circumstances which the judge was fully entitled to take into account in making a variation of the consent order. The other reason was that the consent order was made with the reservation by the wife to pursue medical expenses and additional expenditure that she might have to meet after she moved into the flat.

19. Regarding to the wife's application for the expenses for fitting out the Tseung Kwan O flat, the judge rejected it on the basis that section 3 of the Ordinance was not designed to deal with periodical maintenance in final terms, "nor to meet one-off expenditure of a capital nature on account of final relief". He further commented that the wife was free to move into the Tseung Kwan O flat in June 2002 but elected not to do so, and he found that the flat was habitable and with the assistance of $20,000 proffered by the husband was capable of being fitted out, albeit modestly, for the duration of the maintenance pending suit order. He therefore disallowed the rental for the serviced apartment above what the husband had agreed to pay under the consent order.

20. Ms Wee uses this finding that the wife elected not to move into the Tseung Kwan O flat to ground her argument that it was the wife's own doing that legal aid was discharged, and therefore the additional $20,000 a month should not have been ordered by the judge. But it is very clear from the judgment that the judge did not see it that way. The delayed occupation of the flat was only related to the additional rental for the serviced apartment. The judge went on to say:

" What stands out here are two matters; the first that the wife is not on legal aid and the second that she is entirely dependent on her husband. It is not reasonable that her solicitors to whom she is already indebted, subject to taxation, for $180,000, should continue to act on credit terms. And it is not reasonable for her to lose the advantage of legal representation.

The husband's complaint is that he should not be burdened with meeting the wife's costs in a suit against him particularly where she has incurred at least some of them unnecessarily in interlocutory applications which have failed. But the fact is she is incurring legal costs as a necessary function of prosecuting proceedings in divorce. It is an item of expenditure and a reasonable one, for which he as the sole breadwinner is liable. On the jurisdictional point I find that it is a legitimate interim item of expenditure which she is entitled to claim for; further, that in the circumstances of this case, the husband should pay it. Of course, at the end of the day there will be an accounting and a taxation and he may well recover some or all of what he has paid her. That of course will depend on how the litigation proceeds and the outcome. In the meantime it is not in issue that the husband has the means to meet this indebtedness and it is a reasonable expense of the wife for him to pay."

21. We agree. We also agree to the following submissions of Mr Clough. The principle established by A v A is important. 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.

22. Ms Wee also argues that when the judge adopted $20,000 per month as the additional monthly payment by simply relying on the amount that the wife's solicitors would like her to pay regarding the $180,000 legal fees owed by her, and as such the ordered amount was arbitrary.

23. In the wife's affidavit sworn on 17 July 2002 in support of her application before the judge, she said:

"... it is very important that I have proper representation which the 1st Respondent [the husband] has access to because he has the financial means to pay for the legal fees. I am advised by my Solicitors that I am owing them legal fees in the region of about HK$180,000.00 and they have demanded me to make monthly payment of HK$20,000.00 for the outstanding legal fees. In the circumstances, I would ask the 1st Respondent to pay for my legal fees as part of the interim maintenance to assist me to finance my case as I have no monetary means to continue with the litigation."

24. While there does not appear to be any basis for the sum of $20,000 adopted by the judge, such as a skeleton bill in support of an application for security for costs as suggested by Ms Wee, one cannot say that the figure was arbitrarily plucked out of the air by the judge. In the husband's affirmation filed on 19 August 2002, it can be seen that the wife was under legal aid from November 2001 to 9 April 2002. It is therefore clear that between 9 April 2002 and 18 July 2002, a period of less than three and a half months, she had incurred legal costs on her own account in the region of $180,000. Taking into consideration that there were interlocutory injunctions taken out by the wife and discharged on the application of the husband, which must have taken up a sizable part of the sum, the judge who had dealt with the injunction and with his experience in family matters could have a rough idea of how long these matrimonial proceedings would take and the probable amount of costs to be incurred. We are not disposed to conclude that the amount of $20,000 per month, to be applied first towards the payment of the $180,000 and then towards future costs, is arbitrary.

25. The last point which is raised by Ms Wee is that conditions should be imposed such as extracting an undertaking from the wife that she will promptly pay the monthly $20,000 to her solicitors on account of her costs of and incidental to the present proceedings to be credited against any ultimate liability of the husband to pay or contribute to her costs. She also submits that it is pertinent to impose a condition that such payments should stop once the wife's legal aid is re-instated or the $180,000 is paid up as such payments were expressly for this purpose. In response to these suggestions, Mr Clough offers the following undertakings on behalf of the wife, to which this Court has made minor amendments to reflect their true intent and effect, namely,

1. To apply such sum as is designated as being in respect of her legal costs being an element of an order for maintenance pending suit for that purpose by punctually paying that sum to her solicitors on account of her costs of and incidental to these matrimonial proceedings to be credited against any ultimate liability of the 1st Respondent to pay or contribute to her costs (currently by virtue of the Order of 6 September 2002 is in the sum of $20,000 per month); and

2. To apply for legal aid and to inform the 1st Respondent in the event that she is granted a Legal Aid Certificate in respect of these matrimonial proceedings.

26. We are of the opinion that since the judgment is expressed in clear terms that the additional $20,000 a month is for the purpose of legal costs required for the wife's representation in these matrimonial proceedings, it would be improper for the wife to apply it for any other purpose. Now that the wife has through Mr Clough given the above undertakings, Ms Wee's suggestions for the husband's protection is satisfactorily dealt with.

27. Ms Wee accepts that before the judge below there was no request made by the husband's legal representative to the judge to impose a condition that the additional $20,000 a month should not be used by the wife otherwise than for meeting her legal costs. We do not think that seeking the imposition of the conditions as suggested helps to justify this appeal.

Conclusion

28. For the reasons given, the appeal must be dismissed with an order nisi that the costs be borne by the husband. The order of this Court will record the undertakings given by the wife as mentioned above.