D v. L

FCMC 8507 / 2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 8507 OF 2013

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

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The application

1.  This is the hearing of the Petitioner (“W”)’s summons dated 8 April 2014 for an order that the 1^st Respondent (“H”) do pay her a sum of HKD520,000 per month including a sum of HKD100,000 as legal costs provision being maintenance pending suit (“MPS”).

2.  W’s Petition for divorce was issued on 18 June 2013.

3.  In the ordinary course of events, H should have filed and exchanged with W his Form E by 12 August 2013.

4.  After repeated applications to postpone the filing of his Form E, by an Order dated 17 January 2014, the time for the filing of H’s Form E was extended to 17 March 2014.  It was also directed by this Court on that occasion that if H has any application for further extension of time, such application shall be taken out not less than 7 days before 17 March 2014 with explanation for what has been done regarding the Form E up to the date of the application.

5.  By a letter dated 17 March 2014, W proposed to exchange Form E with H on the same date at 3:30 pm.

6.  By a letter of the same date, H’s then solicitors replied, “We shall reply to your letter once we have instructions from our client”.

7.  Later on the same date, H filed his Notice To Act In Person.

8.  By an Order dated 14 April 2014, it is ordered that H shall file and serve his Form E within 7 days of the service of the Order with penal notice endorsed.

9.  As of today, H’s Form E remains outstanding.  There has been no explanation for why it is still unavailable.

10.  By solicitor’s letter to H dated 4 April 2014, W made her request for MPS.  H has failed to respond to the request.

11.  On 8 April 2014 W filed her summons for MPS, returnable on 14 April 2014 before this court.

12.  The MPS summons together with the 11^th Affirmation of W in support thereof was served on H by ordinary post to H’s address for service on 8 April 2014.

13.  On 12 April 2014, the MPS summons and the accompanying documents were returned by the post office with a chop stating “Addressee Refused” and the Chinese words “拒收”.

14.  Rule 111(1)(b)(ii) of the Matrimonial Causes Rules (“MCR”) provides:-

“where any document is required to be served on a party in any matrimonial proceeding… unless otherwise directed, if no other mode of service is prescribed or ordered, service shall be effected… if the person to be served is acting in person… by delivering the document to him or by leaving it at, or sending it by post to, the address for service given by him…”.

15.  Rule 112, MCR further provides:-

“(1) Where service has been effected under these rules of any document in respect of which –

(a) the return of an acknowledgement of service to the registry by the person served is not required; or

(b) …
due service shall be provided by filing an affidavit of service, the contents of which shall be in accordance with RHC Order 65, rule 8.”

16.  As to the contents of an affidavit of service, Order 65, rule 8 of the Rules of High Court, Cap 4A stipulates:-

“Except as provided in Order 10, rule 1(3)(b) and Order 81, rule 3(2)(b), an affidavit of service of any document must state by whom the document was served, the day of the week and date on which it was served, where it was served and how.”

17.  Section 8 of the Interpretation and General Clauses Ordinance, Cap 1 provides that:-

“where any Ordinance authorizes or requires any documents to be served… by post… the service… shall be deemed to be effected by properly addressing, pre-paying the postage thereon and dispatching it by post… to the last known address of the person to be served… and, unless the contrary is proved, such service… shall be deemed to have been effected at the time at which the document… would be delivered in the ordinary course of post”.

18.  Consequently, the MPS summons together with the accompanying documents have been duly and properly served on H on 8 April 2014, or at the time at which the documents would be delivered in the ordinary course of post.

19.  That the MPS summons was subsequently returned by the Post Office as “Addressee Refused” does not detract from the fact that service was effected pursuant to Rule 111 of MCR by ordinary post to H’s address for service.

20.  From the hearing dated 14 April 2014, H was absent.  Having read the affirmation of service filed on behalf of W, I am satisfied that the Court should proceed with the call-over hearing despite H’s absence.  It is ordered that:-

(1) W do have leave to serve on the H a copy of her Form E within 14 days from the date of the Order;

(2) W do have leave to file and serve her supplemental affirmation(s) within 14 days thereafter;

(3) H do have leave to file and serve his affirmation in opposition (if any) within 14 days thereafter;

(4) W do have leave to file and serve her affirmation in reply within 14 days thereafter;

(5) The hearing of W’s summons for MPS be adjourned to 27 June 2014 at 10:30 am at Court No 42 with 1 day reserved; and

(6) Costs be reserved.

21.  On 15 April 2014, the sealed copy order dated 14 April 2014 was served on H by ordinary post addressed to his address for service.

22.  H did not file any affirmation pursuant to the Order dated 14 April 2014.  W filed her 12^th and 13^rd affirmation on 29 April 2014 and 10 June 2014 respectively.

23.  On 29 April 2014 and 10 June 2014 respectively, the said 12^th and 13^rd affirmation of W was served on H by ordinary post addressed to his address for service.

24.  On 23 June 2014, by a letter of even date sent by ordinary post to H’s address for service, W’s solicitors again reminded H that the hearing of W’s MPS summons was adjourned to 27 June 2014 and his attendance at the hearing is required.

25.  Still, H was absent from today’s hearing. 

26.  Having carefully considered, I am satisfied that the hearing of W’s MPS summons should be proceeded with despite H’s absence.

Background

27.  By way of background, the parties got acquainted in about 1988.  They soon developed an intimate relationship and later started cohabiting.  They registered their marriage in 1991.

28.  W gave birth to 3 children of the family in 1995, 1996 and 2000 respectively.

29.  After marriage, H worked to support the family while W took up the responsibility of home making and taking care of the children.  W has been a housewife since then.

30.  They separated in May 2011 when H and the children moved away from the former matrimonial home (“the former matrimonial home”) at the mid-levels.

31.  During the marriage, W’s financial needs were provided for by H, including but not limited to the following:-

(1) Household expenses such as mortgage instalments, utilities, management fees, salaries of the domestic helpers etc were directly settled by H;

(2) H would give W cash for maintenance from time to time ranging from HKD200,000 to HKD300,000 each time for her living and personal expenses; and

(3) W also had unrestricted use of chauffeured motor vehicles provided by H.

Since the parties separated in about May 2011, however, H has stopped making financial provision to W save for payments of mortgage instalments, management fees and some utilities bills in respect of the former matrimonial home and that in about May 2013, H once gave her a sum of HKD200,000 as her birthday present which she put into the bank accounts she holds for the children.  As such, W has been living on her own savings.

The Law

32.  W’s application for herself is governed by section 3 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”).

33.  The court has a wide discretion in the matter, subject to the result being reasonable.  In TL v ML & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263, Deputy High Court Judge Mostyn QC (as he then was) stated at [1289]:-

“The sole criterion to be applied in determining the application is ‘reasonableness’ (s 22 of the Matrimonial Causes Act 1973), which, to my mind, is synonymous with ‘fairness’.”

34.  While the court will consider all factors that may influence the outcome of the application so as to make such order as it regards reasonable in all circumstances of the case, in C v F [2006] HKFLR 41, HHJ Bruno Chan stated:-

“45. Although the sole statutory guideline in considering maintenance pending suit is that the award shall be ‘reasonable’, the court will nevertheless bear in mind all the factors drawn to its attention relating to the marriage and the parties to it and perhaps the two most outstanding matters in every case, as in this one, are the standard of living of the parties, and the ability of the husband to pay.”

35.  MPS applications are approached with a broad brush exercise.  Further affirmation will be filed and witnesses will go to the box and be cross-examined when a detailed examination of the party’s financial resources and needs will be taken at the trial.  With the further evidence and a detailed examination, the Court will make its conclusion on the question of the W’s application for ancillary reliefs and any under provision or over provision in the MPS order may be set off if it is fair and just so to do: see Rayden & Jackson on Divorce and Family Matters, 18^th ed Vol 1 (1) Text, para 16.17 – 16.18.

W’s financial needs

36.  W set out her estimated monthly expenditure in her Form E as in the table below:-

General

Item	Amount HKD
Cost for alternative accommodation including rent, management fees and utilities	120,000.00
Food for W and two domestic helpers	30,000.00
Household expenses	5,000.00
Two Domestic Helpers	8,640.00
Sub-total:	163,640.00

Personal

Item	Amount HKD
Meals out of home	30,000.00
Transport	25,000.00
Clothing/shoes	10,000.00
Personal grooming including haircut and cosmetics	13,000.00
Entertainment/presents	nil
Holiday	nil
Medical/dental	20,000.00
Insurance	5,287.60
Contribution to parents	~6,000.00 (RMB5,000.00)
Pet food + vet consultation	22,000.00
Home for stray animals	~108,000.00 (RMB90,000.00)
Sub-total:	239,287.60

Children

Item	Amount HKD
Insurance	10,144.01
Sub-total:	10,144.01

Total Monthly Expenses:

HKD413,071.61

Costs for alternative accommodation including rent, management fees and utilities

37.  The former matrimonial home which W’s still staying at is held by a limited company (“Po Sun”).  All but 1 share of Po Sun are held by another limited company (the “parent company”) of which H was both a shareholder and director.  On 5 November 2012, H made disposition of his shareholdings (“the Disposition”) in the parent company to the 2^nd and 3^rd Respondents herein, who are H’s business partners.  H also resigned as a director of the parent company.  It is note that the Disposition is now subject-matters of W’s avoidance application herein pursuant to section 17 of the MPPO.

38.  In the affirmations filed in opposition to W’s previous injunction application, H claimed that as he ceased to be a director of the parent company, his “employer” would resume possession of the former matrimonial home by the end of December 2013.

39.  On about 28 February 2014, H sent W a copy of the Writ of Summons issued by Po Sun against H seeking, amongst others, vacant possession of the former matrimonial home.

40.  W believes that H has been and still is the true beneficial owner of the said companies.  By a solicitors’ letter dated 5 March 2014, W requested H to procure Po Sun not to further proceed with the legal proceedings for possession of the former matrimonial home so that she can continue to live there.

41.  By a letter dated 12 March 2014, H replied through his then solicitors that he “will not make any arrangement to provide your client with replacement accommodation before the divorce proceedings completed/settled or an order by Court”.

42.  By letter dated 5 March 2014 to the solicitors acting for Po Sun, W also tried to request Po Sun not to proceed with its claim for possession of the former matrimonial home pending the final determination of her avoidance application.  She also enquired with Po Sun whether it would consider letting the former matrimonial home to her as residence on market rent.

43.  By a letter dated 21 March 2014, Po Sun replied (through its solicitors) that “Regarding the offer to rent the … property at market rent, we have no instruction to consider the offer unless you confirm in writing that you are making the offer for [H]…”

44.  During today’s hearing, Mr Pang, Senior Counsel, appearing for W informed the Court that Interlocutory Judgment was entered against H for the vacant possession of the former matrimonial.

45.  In view of the Interlocutory Judgment, probably W is liable to pay mesne profits for her current stay at the former matrimonial home.

46.  Additionally, in the likely event that W has to deliver vacant possession of the former matrimonial home to H or to Po Sun, she will have to find alternative accommodation.

47.  Accordingly, I am satisfied that there should be provision for W’s housing needs.  W has produced some information of flats for rent listed on the Internet and/or obtained from estate agents [1142-1177].  Using such market information in relation to the cost of renting an alternative accommodation in the neighbourhood of the former matrimonial home as a yardstick, I accept that W is in need of a sum of about HKD120,000 per month to meet her housing needs.

Home for stray animals, contribution to parents

48.  Included in W’s monthly expenditure above is an item for the expenses she spent on running a charitable animal home in Guangzhou, which is a shelter for stray animals.  W has been running this animal home since 2005 and H has been fully aware of that and had always been supporting.  The cash maintenance from H was used partly to support this animal home.  W produced a table showing the running cost of the animal home for year 2012 [1139-1140] which supports her claim for the sum of RMB90,000 per month.  Care for these animals gives W a purpose in life.  I regard that “reasonable needs” as stipulated in s 3 of the MPPO can be beyond basic needs.  Having carefully considered, I take the view that W’s claim under this item is reasonable.

49.  By the same token, I also allow the item for contribution to parents in the sum of RMB5,000 included in W’s monthly expenditure.

W’s other General and Personal expenses

50.  The parties have been living on a luxurious lifestyle.  The former matrimonial which W is still staying at is an apartment in the mid-levels having a saleable area of about 2,200 sq ft.  H and the children are now living in a nearby apartment of about 5,338 sq ft in size.  The family has 4 domestic helpers, 1 chauffeur and 1 bodyguard.  The parties took at least 10 trips per year to Macau by helicopters and staying at 5 stars hotels.  The family took holidays at least 4 times per years to the US and Europe, flying on first/business class and staying in 5 stars hotels, accompanies by at least 1 domestic helper and 1 bodyguard.  The family has four cars, i.e. a Porsche, a BMW and 2 Toyota Alphard (7 seaters).  W heard that H recently arranged the children to travel to Europe, Japan and South Korea by private jet when they wanted to go there for shopping.  W’s claim for interim maintenance is to be decided in accordance with the high level of living that was enjoyed before the parties separated and which H continues to enjoy.  After having carefully considered, I accept that W’s other general and personal expenses as set out in the above table are reasonable.

51.  In view of the above matters, I accept her monthly expenses including the cost of renting an alternative accommodation will be about HK$413,071 per month.

Legal Costs Contribution

52.  In a discussion on the law applicable to a MPS application for legal costs contribution in T v L, FCMC 8460/2012, Judgement dated 25 June 2013, I said as follows:-

“6. It has been held that an application for MPS can include provision for legal costs. The leading Hong Kong case is KGL v CKY [2003] 2 HKLRD 301. In the present case, counsel for the parties accept that an application for MPS can include wife’s instant application which is for costs contribution for the trial of the question of custody, care and control much the same as applications for costs contribution for the trial of the question of ancillary reliefs.

7. Since the English Court of Appeal decision in Currey v Currey [2007] 1 FLR 946, judges in the Hong Kong Family Court have relied on the case as setting out the guiding principles for granting applications for costs contribution as MPS. It has been dubbed as the Currey test.

8. The Hong Kong Court of Appeal recently examined the application of the Curry test to Hong Kong courts and the principles articulated by Wilson LJ in Currey v Currey were adopted as providing prudent guidance to both judges and practitioners in this jurisdiction in the case of HJFG v KCY [2012] 1 HKLRD 95 at [113-117] in the following manners:-

“74. Whatever may have been the position ten years ago, it is no longer disputed that the words of s 3 of the Ordinance are wide enough to empower the Hong Kong courts to include an element towards a party’s legal costs in an order for maintenance pending suit: see KGL v CKY [2005] 1 HKFLR 215.

75. In submitting that, in light of existing authority, the wife had not made out a claim for a contribution towards her costs, Ms Stone relied principally on guiding principles enunciated by Wilson LJ, as he then was, in Currey v Currey [2007] 1 FLR 946.

76. Those principles have been adopted in the Matrimonial Division of the District Court: see H v H (Interim Maintenance) [2007] HKFLR 311. To my knowledge, however, they have not been adopted in this Court or the Court of First Instance.

77. Accordingly, before Poon J, the guiding principles set out in Currey, while of persuasive value, were in no way binding on him.

78. S 3 of the Ordinance, of course, still required the judge to be satisfied that any contribution towards the wife’s on-going legal costs was reasonable. That meant that he had to be able to conduct some analysis of the nature and extent and purpose of the contributions sought. On the part of the wife, that required some breakdown of her anticipated costs.

79. Aside from the fundamental requirement of supplying a sufficiently detailed breakdown of anticipated costs, I am of the view that the following principles articulated by Wilson LJ in Currey should in future be adopted as providing prudent guidance to both judges and practitioners in this jurisdiction.

80. In the view of Wilson LJ, the initial, overarching inquiry should be into –

“… whether the applicant for a costs allowance can demonstrate that she cannot reasonably procure legal advice and representation by any other means.  Thus, to the extent that she has assets, the applicant has to demonstrate that they cannot reasonably be deployed, whether directly or as the means of raising a loan, in funding legal services.”

81. As Wilson LJ pointed out, satisfying that condition alone may not be sufficient. In the broad exercise of discretion, a judge may consider that other factors must come into play –

“The subject matter of the proceedings will surely always be relevant; and, insofar as it can safely be assessed at so early a juncture, the reasonableness of the applicant’s stance in the proceedings will also be relevant.”

82. The period over which an allowance for legal costs was to be paid was also considered by Wilson LJ to be a factor of considerable relevance. Applicants should not therefore expect that an order that the allowance be paid until the final determination of all proceedings will be the inevitable order. It was observed that if the application for an allowance for legal costs was made before the FDR hearing, it may well be wise to order that the costs allowance should fund the applicant only up to that hearing –

“The FDR appointment is a watershed and all reasonable inducements to both parties there to negotiate positively in the light of informal judicial indications should be in place.  The knowledge of a spouse in receipt of a costs allowance that, absent settlement at or in the immediate aftermath of the FDR, she will have to apply for a further allowance, which may or may not be granted, seems to me to amount only to a reasonable inducement, as opposed to improper pressure, to reach settlement.”

83. In this regard, as Wilson LJ pointed, if the FDR hearing fails, it will be for the new judge, on the basis of material properly before him – for example, rival open offers of settlement – to determine whether a new allowance for legal costs should be granted and, if so, in what amount.

84. Those observations accord with my understanding of the Hong Kong FDR procedures.

85. Wilson LJ spoke of a legal costs allowance being structured, especially as to its duration, so as to best encourage a spouse in receipt of the allowance to act reasonably, looking in good faith to try and reach settlement. In KGL v CKY (page 219), this Court adopted the same fundamental reasoning albeit by reference to the spouse paying the allowance:-

“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 it’s 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.”

9. Perhaps more importantly, it was stated that, at para [37(a)]:-

The sole criterion to be applied in determining the application is “reasonableness”, which is synonymous with “faireness”.

10. I regard that the so-to-speak Currey test should not be taken as an exhaustive test.  The only governing principle remains that the court will make such order as it considers reasonable in all circumstances of the case.  The conditions in Currey v Currey were adopted by the Hong Kong Court of Appeal as providing prudent guidance to both judges and practitioners in this jurisdiction, but still the court has to consider all other factors that may influence the outcome of the application as well as the interaction between them and the conditions of the Currey test so as to achieve a reasonable and fair result.”

53.  It is remarked that since H has ceased paying maintenance to W, she has been forced to live on her savings.  Other than her usual monthly expenses, W has had to incur substantial legal costs.  It is said that H’s conduct in these proceedings which resulted in a number of otherwise unnecessary applications which this Court has heard is unreasonable.  Throughout these proceedings, H has engaged at least two Counsel (including Senior Counsel) for every hearing (except the hearing on 21 November 2013 where he was represented by at least two solicitors).  She is not entitled to legal aid.  The bulk of the matrimonial assets are under H’s control.  It is further said that there are no assets which W can reasonably deploy other than her savings which have been rapidly depleting and that there is also no reason why she should be made to wait until all her savings are exhausted before she can apply for MPS and legal costs provision. 

54.  Apart from living expenses, W request H to pay her a sum of HKD100,000 per month as legal costs provision.

55.  In her Form E filed on 3 December 2013, W said she has the following assets:-

(1) Cash at bank: HKD11,317,084.72 and RMB200,000;

(2) Value of her interest in all insurance policies: HKD1,149,317.23;

(3) Valuable personal items: HKD4,334,000.

56.  Besides, in her 13^th affirmation, W clarified she omitted to state in the said Form E that she holds a landed property in Guangzhou which is presently worth about RMB5,000,000.

57.  In the same 13^th affirmation, she stated that up to the present stage, she has paid a total sum of HKD5,430,000 to her solicitors as costs on account.

58.  In the Form H filed today, it is stated that W’s estimated costs incurred up to and including this hearing is HKD4,515,550.  Mr Pang SC confirmed that presently, there is a surplus of about HKD900,000 kept by W’s solicitors as costs on account.

59.  W produced her updated bank statements [1519-1722].  It is showed that her present position as at April 2014 stood at about HKD6,200,000.  Given that W has about HKD6.2 million cash at bank and about HKD0.9 million costs on account which can be deployed, notwithstanding Mr Pang SC’s ability of arguing to the contrary, I do not accept that I should make an Order for legal costs contribution.

H’s ability to pay

60.  In HJFC v KCY Hartman JA said:-

“37. The principles that have 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 High Court judge, in TL v ML and Others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263, at 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:-

…

iv. Where the affidavit or form E disclosure by the payer is obviously deficient, the court should not hesitate to make robust assumptions 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.”

61.  Due to the H’s repeated and continuing failure to file and serve his Form E, this Court and W still have not had sight of a single piece of financial statement of H.

62.  It is W’s contention that this is a deliberate act on the part of H to conceal his true financial position from this Court and her. I agree that in the circumstance, the Court can draw adverse inferences against H if and when necessary.

63.  During the subsistence of the marriage, H had been adequately providing for the family’s financial needs and maintaining the parties’ standard of living at a luxurious level.  Although H has ceased paying W maintenance, he is still living a luxury lifestyle for himself and the children.  Apart from that, H also continues to afford patronizing casinos regularly.  W said he held, and probably still holds, VIP memberships with major casinos all over the world.  The casinos in Las Vegas would send helicopter to pick him up from airports in the US to bring him to the casinos.  He would also bet on football matches and, as far as W knows, the bets he placed were in the region of HK$10 million each.  Taking an overview of the evidence, I find that H is a man of substantial wealth.  There can be no question of H not having the ability to pay W the requested MPS.

64.  It is ordered that H should pay HKD413,071 per month to W as W’s MPS the 1^st payment to be made on 1 August 2014 and subsequent payments on the 1^st day of each succeeding month until further order of the Court.

65.  W is successful in this application.  As far as I can see H should pay her costs of this application, including all reserved costs.  There shall be certificate for two Counsel. This is a costs order nisi, which becomes absolute 14 days after the date hereof unless a party has applied to vary the order within 14 days of the date hereof.