LPY v. KJ

FCMC No. 7875/2020

[2021] HKFC 108

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

No. 7875 OF 2020

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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 petitioner wife’s application for maintenance pending suit (“MPS”) for herself and the two children of the family against the respondent husband.  

2.  In this Judgment, for the ease of reference, I shall refer to the petitioner as “the wife” and the respondent as “the husband”.

Background

3.  The wife is a local Chinese and the husband is a Korean who has been residing in Hong Kong for a substantial period of time.

4.  The parties were married in Hong Kong on 17 March 2013.  At all times, they made their home in Hong Kong.

5.  There are two children of the family.  The elder is a daughter, now 8 years old; and the younger is a boy, aged 4.

6.  On 2 September 2020, the wife petitioned for divorce on the ground of unreasonable behaviour on the part of the husband. The petition was uncontested and the decree nisi was granted on 12 January 2021.

7.  With the consent of the parties, on 16 November 2020, the custody, care and control of the two children were granted to the wife with reasonable access to the husband.

8.  By a summons dated 13 November 2020, the petitioner wife applied for MPS for herself and for the two children of the family. She seeks a total sum of $20,000 per month.

9.  On 1 March 2021, the court made an order that the husband is to pay the wife an interim-interim maintenance of $2,000 per month for the two children ($1,000 each).   This was the amount the husband represented that he was able to afford given his dire financial situation.

The Present Situation of the Parties

10.  The family used to live in an apartment in Ma On Shan (“the former matrimonial home”) that was purchased in the sole name of the wife in July 2014.

11.  Upon the breakdown of the relationship, the wife, together with the two children and the domestic helper, moved out of the former matrimonial home in August 2020.  It is the wife’s case that they were forced to move out of the former matrimonial home due to the molestation of the husband.  On 7 September 2020, she successfully obtained an ex-parte non-molestation order.  With the consent of the husband, on 17 September 2020, the non-molestation order was continued by this court up to 6 September 2022 with costs to be borne by the husband.  Initially, the wife and the children stayed with her parents at a public housing unit.  Later on, she rented an apartment in Fo Tan and moved there.  This costs her a monthly rental of $18,800.  She is now living with the two children together with the domestic helper.

12.  The wife is 38 years old.  She is the Area Manager of a chained-store business, earning $50,000 per month.  She also has a company called SHK Limited (“the SHK Limited”) that was incorporated in 2015.  This company has been subject to some debate during the argument.

13.  The husband is 39 years old.  He used to work as a professional photographer in Hong Kong and is living at the former matrimonial home alone.   He claims to be unemployed since about July 2020 and is living on the financial assistance of his family back in Korea.

Parties Open Offer

14.  The wife insists on a monthly sum of $20,000 to be paid by the husband.  She has not specified how the $20,000 is to be apportioned between her and the 2 children. 

15.  As for the husband, he offers to continue to pay the monthly sum of $2,000 for the benefit of the 2 children.  This money, said the husband, comes from the financial assistance of his family.

The Former Matrimonial Home

16.  It is common ground that in the absence of any substantial savings or other forms of assets the former matrimonial home is the only main family asset. 

17.  The former matrimonial home is about 850 ft² large and is currently being occupied by the husband alone.  I have no doubt this is too large for his use.  The husband has not challenged the wife’s explanation that it was strictly necessary for her to move out from her parents’ one-bedroom public housing unit because all of them had to sleep in the living room of her parents’ unit.  Before the start of the arguments, the parties were urged by the court to consider how, even in this interim stage, the former matrimonial home as a financial resource could best be utilized for the benefit of the 2 children.  Consideration may be given for the husband to move out and stay in a smaller leased premises so as to make room for the wife and the 2 children’s accommodation or the former matrimonial home may be rented out for money much needed by the parties.  Unfortunately, the parties were not able to come to any consensus.

The Parties’ Case

The Wife’s Case

18.  Mr Lo, for the wife, submits that the wife and the children are entitled to maintain a proper standard of living commensurate with the standard which they had been enjoying during the relationship.  The husband used to pay the wife around $20,000 as living expenses but stopped payment after the commencement of the proceedings.  The husband has the financial ability to pay the amount applied for by the wife because he is in receipt of financial assistance from his family back in Korea and has the earning capacity.  For the past 15 months from January 2020 to March 2021, the husband received a total of about $655,000 from Korea. Further, given his qualifications and experience, it is incredible for the husband to say he has been unemployed.

The Husband’s Case

19.  Mr Lee, for the husband, criticises that there is no apportionment of the $20,000 claimed, nor is there any explanation how she has come to this amount.

20.  The husband used to work as a self-employed professional photographer for Korean tourists from about 2018 to October 2019. In about October 2019, he returned to Korea for setting up a studio there.  At that time the family had a plan to relocate to Korea in January or February 2020.  The setting up of the studio paved the way for the relocation.  As a matter of fact, the wife and the 2 children also went to Korea attending the studio’s grand opening.  The studio was however a failure.  He had to close it and return to Hong Kong in about July or August 2020.

21.  The husband said he has been unemployed since his return.  Despite his attempts to find jobs, he was not able to secure one due to the absence of Korean tourists under the Covid-19 pandemic.   He therefore does not have the ability to pay a sum as much as $20,000 per month.

22.  Mr Lee submits that the husband has been living on his paternal family; there is no evidence to show or enable the court to draw an interference that at present, the husband can continue to earn similar income of $40,000 per month as before when he used to work as a full-time self-employed photographer.  The husband is simply unable to pay $20,000.  A balance has to be struck between the wife and the children’s needs as against the husband’s ability to meet those needs pending final determination of the ancillary relief.

23.  The husband also alleges that the wife failed to make full and frank disclosure of her financial situation and that she has undisclosed source of income.

Legal Principles

24.  Under section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“the MPPO”), 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 presentation of the petition or the making of the application and ending on the date of the determination of the suit, as the court thinks reasonable.

25.  The Court of Appeal in HJFG v. KCY [2012] 1 HKLRD 95 summarised the established principles,

“33.    Jurisdiction to award maintenance pending suit to a spouse is statutory, being governed by the provisions of s.3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192.  By that section the court is given a discretion to make an order requiring either party to the marriage to make to the other such periodical payments for his or her ‘maintenance’ as the court thinks ‘reasonable’, subject to the condition that the duration of any such order is limited to the period of what may broadly be called the divorce litigation.

34.    By definition, therefore, maintenance pending suit is restricted to payments which constitute ‘maintenance’, which are reasonable in the circumstances and which will endure for no longer than it takes to determine the divorce litigation. ‘Maintenance’ is a broad concept.  I do not seek to define its exact meaning but it seems to me that it must be restricted to those payments necessary to meet the recurring costs of living at whatever standard of living is appropriate.  That being the case, no matter how great the wealth of the parties and how unevenly distributed that wealth may be at the time an application for interim maintenance is made, the court has no jurisdiction to make orders which for all practical purposes result in a form of pre-trial capital re-balancing.  In the present case, the judge recognised the long-established approach of looking to the “immediate and reasonable needs” of the wife and son.

35.    As to the amount of maintenance pending suit that may be paid, the Ordinance provides only that it must be ‘reasonable’, that is, having regard to the circumstances of the case, that it must be fair. 

36.    An important factor in determining fairness is a consideration of the marital standard of living.  In this regard, each case must be considered according to its own circumstances.  It is not simply to be assumed that great wealth equates to great extravagance.  Some married couples who enjoy great wealth spend with comparative modesty and with a discipline born of discretion, others enjoy consumption on a grand scale.

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:

i.    The sole criterion to be applied in determining the application is ‘reasonableness’, which is synonymous with ‘fairness’.

ii.   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.

iii.  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.

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.

38.    Finally, it is to be noted that in applications for interim maintenance, when the amount to be paid is for a limited period only and not all of 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.”     (emphasis added)

26.  Further, Rayden and Jackson on Relationship Breakdown, Finances and Children (Lexis Nexis), said the following,

[11.78] There is no hard and fast rule, and no fixed proportion: each case depends on its own facts. The approach to maintenance pending suit should be empirical, and that 'in the ordinary sort of case the district judges who deal with these applications will have to take a broad view of means on the one hand and income on the other and come to a “rough and ready” conclusion', or take a 'broad brush' approach. The overriding consideration is the actual needs of the parties pending suit. Although the provisions of the MCA 1973, s 25 are expressed to arise only when the court is deciding whether to exercise its powers under s 23, 24 or 24A, the court may nonetheless have regard to the criteria listed in s 25 on an application for maintenance pending suit.

[11.79] In practice, as oral evidence is rarely given, it will be unusual for the court on an application for maintenance pending suit to be in a position to make findings of fact on issues in dispute sufficient, for example, to deal with conduct or allegations of non-disclosure. However, if it is demonstrated that the paying party has not performed his duty to make full and frank disclosure of his financial resources, then the court can take a broad and robust view of his means, and it does not have to accept and proceed on the basis of the assertions of the paying party as to his means and an inability to pay. The court can look at the reality of the situation and take into account voluntary funding from third parties (see TL v ML above).

  (emphasis added)

27.  As for the interim maintenance for the children, the empowering provision is section 5 of the MPPO.  In DX v LN (Maintenance Pending Suit & Coss Provision) (FCMC 7870/2014; 21 September 2015), Bruno Chan DJ said,

27.     As the Wife’s present application is not just for her own reasonable needs but also those of the 2 children of the family whose care and control has earlier been granted to her, it would also be relevant to note that s 5 of MPPO gives the court much wider powers in dealing with financial provision for children both in terms of both the time for making orders which is before (hence maintenance pending suit) or on granting the decree of divorce, and the range of orders that the court can make including periodical payment, secured periodical payment, as well as a lump sum for the benefit of the children or for the purpose of enabling any liabilities or expenses reasonably incurred by or on behalf of the children before the making of the application, and that the court may exercise such orders from time to time, and to make further orders from time to time.

28.    Furthermore, when considering such application albeit interim on behalf of the children, s 7(2) of MPPO requires the court to exercise those powers as to place the children, so far as it is practicable and just to do so, in the financial position in which the children would have been if the marriage had not broken down and each of the parties had properly discharged his or her financial obligations and responsibilities towards them. This would in my view be particularly relevant when the court comes to consider the standard of living which the children used to be able to enjoy and the parties’ proposed financial provisions for them.                  (emphasis added)

28.  Guided by the above principles, I now turn to the application.

Issues to be Determined

The Husband’s Ability to Pay

29.  The husband accepts he has the responsibility to maintain his children.  It seems he also accepts that he used to pay $20,000 per month as living expenses but that was before his departure for Korea.  The main issue is the husband’s ability to pay. 

30.  The husband said due to the Covid-19 pandemic, he has not been able to secure any gainful employment since his return to Hong Kong in July or August 2020.  In response, the wife said the husband has had a good connection with the Korean community here; she does not believe the husband has wholeheartedly looked for a job since his return.

31.  I accept that due to the Covid-19 pandemic, the tourist industry has been in a freeze.  It would be unreasonable to expect the husband to earn as much as before.  Yet, it does not mean he is not able to earn any money. 

32.  The husband received his university education in the Mainland and is able to speak and write Chinese, English and Korean.  It is worthy to note that he has been able to attend court hearings in English without the assistance of interpretation.

33.  According to the wife, the husband worked in Hong Kong as a merchandiser and in the field of business development from 2008 to 2018.  His tax returns from 2012 to 2017 showed he earned an average of about $36,000 per month.  It was only as from 2018 that he started to work as a full-time self-employed photographer for Korean tourists.   This evidence has not been subject to challenge by the husband.  Thus, it is clear that the husband’s skill set is not entirely on photography alone.

34.  The objective fact is, with blessing of his family back in Korea, the husband has been able to afford to be out of income.  I shall come to the financial assistance of his family in due course.  I am aware of the current dire economic situation that the world has been facing.  Yet, it does not mean that the husband is not able to earn anything.  I am sure there are jobs of more clerical or manual labour in nature that the husband is perfectly capable of taking up.  He should have done so for the sake of his children.

35.  The existing statutory minimum wage is $37.50 per hour.  There is no evidence that, at least as a temporary measure, the husband has been seeking some part-time jobs.

36.  The wife said the husband should be able to earn about $18,000 to $20,000 per month. Mr Lee, on behalf of the husband, concedes that the husband has an earning capacity of about $15,000 to $16,000 per month.   I would take Mr Lee’s figure.

Financial Assistance of the Husband’s Family

37.  It is not in dispute that the husband has been in receipt of financial assistance from his family, mainly from his parents who operate a restaurant there. 

38.  The wife said according to the statements produced by the husband, for the past 15 months (from January 2020 to March 2021), the husband received a total of about $655,000 (ie about $43,700 per month); this included a sum of about $140,000 being either insurance money or the refund of rental deposit of the studio.

39.  Mr Lee concedes this case could be a KEWS case (ie Third Party Financial Assistance)[1] but some figures have been double-counted; the husband received a total of $353,057 (ie on average about $23,500 per month) only.

40.  In my view, whether the financial assistance has been on average about $43,700 per month or $23,500 per month is beside the point. According to the husband’s Form E, his monthly expenses are merely $11,700. That is made possible only because the mortgage repayments of the former matrimonial home and the bulk of the children’s expenses have been shouldered by the wife. Even if the husband’s figure of $23,500 per month is taken, with a monthly need of $11,700 there is still a surplus of on average about $11,800 per month available for his wife and children. 

41.  With an earning capacity of $15,000 per month, together with a monthly financial assistance of $23,500, the husband would have about $38,500 at his disposal ($23,500 + $15,000).  There would be a surplus of about $26,800 ($38,500 - $11,700) available for the wife and the children. 

42.  Taking a step backward, if the husband makes half of $15,000 (ie $7,500) only by condescending himself to some part-time jobs, there would still be a surplus of $19,300 (($23,500 + $7,500) - $11,700). 

43.  Mr Lee submits that the financial assistance is only available as long as the husband is out of work.  There is however no direct affirmation evidence in support of this submission.  As I observed above, the husband has been continuously living on the generosity of his family.  The court can look at the reality of the situation and take into account voluntary funding from third parties: see [26] above.  The evidence adduced by the wife is that as late as in February 2021 the husband still dined at expensive restaurants with friends. I consider this submission is a mere say-so on the part of the husband.

44.  On the above analyses, there is no reason for the husband to say he could only afford $2,000.  

The Wife’s Undisclosed Source of Income

45.  The husband alleges that the wife failed to give a proper financial disclosure of her SHK Limited by disclosing the last 2 years’ audit reports or financial statements of the company as required under Form E.  The wife also had numerous unexplained suspicious deposits of substantive amounts into her bank accounts.   The husband alleges that for a 10-month period between November 2019 and August 2020, exclusive of her salary of about $50,000 per month, there were a total of about $3.065 million deposited into the wife’s various bank accounts.  

46.  This issue was touched upon in the 1^st Appointment hearing of 26 May 2021 (ie one day before the substantive hearing of this application).  The wife’s response in the hearing was that the SHK Limited was incorporated for the purpose of the husband’s self-employed business.  It has become dormant now.  There were no inexplicable deposits of $3.065 million. There were intra-account transfers and loans from financial institutions to keep the wife afloat.

47.  I do not think I need to consider this issue for the purpose of the wife’s application.  First, the husband should have properly raised the issue by way of a Questionnaire.  Yet, no Questionnaire was issued by the husband before the 1^st Appointment hearing of 26 May 2021 notwithstanding that pursuant to the court’s directions, the parties’ Form Es were exchanged on or before 14 December 2020. The wife did not have the opportunity to give a proper reply by way of an Answer in sufficient time before the substantive hearing.  Secondly, as I mentioned in the 1^st Appointment hearing of 26 May 2021, it can readily be seen that there are double-counting due to intra-account transfers.   As a matter of fact, Mr Lee quickly reduces the total figure substantially to $1.212 million the following day.  Thirdly, the court simply cannot do an auditing exercise for the parties.  In the absence of oral evidence of the party at this stage, the court would not be able to make findings of fact on this issue.  I do not wish to speculate.  If the wife really had an extra $1.212 million or on average $121,200 per month over a period of 10 months, it is difficult to understand why she would have taken the trouble of seeking a MPS of $20,000 per month. Nevertheless, I consider this issue should be left to be dealt with at trial if the parties fail to come to an amicable solution.

Reasonable Financial Needs of the Wife and the Children

48.  During the marriage, the parties had a total income of about $80,000 to $90,000 and were living in a self-owned apartment. According to the wife, the family enjoyed 2 holidays per year.  I can see this is a typical middle class family.

49.  The wife’s precarious financial situation stems from the fact that she has been single-handedly paying both the mortgage payments of the former matrimonial home that is now being occupied by the husband alone and the monthly rental of the Fo Tan apartment. These two items total at $32,300 (Rent $18,800 + Mortgage payment $13,500).  On the top of these, the wife is virtually supporting the 2 children on her own.   In my view, not only that this is an unfair situation, this is also untenable.

50.  I accept Mr Lee’s submissions that some of the wife’s items such as utilities and insurance premiums might have been overrated. Doing the best I can, taking a broad-brush approach and with the marital standard of living in mind, I assess the reasonable needs of the wife and the children as follows,

General Expenses

Item	Amount (HK$)
Rent	18,800
Mortgage instalments	13,500
Utilities (electricity, gas, rates, telephone & water)	3,000
Management fees	1,000
Food	7,000
Household expenses (Supermarket Shopping)	2,000
Insurance premiums	1,600
Domestic helper(s)	5,000
Total monthly household expenses	HK$ 51,900

The Wife’s Personal Expenses

Item	Amount (HK$)
Meals out of home	1,500
Transport	400
Clothing / Shoes	500
Personal grooming (including haircut and cosmetics)	500
Entertainment / presents	500
Holiday	500
Medical / Dental	300
Tax	300
Bank Loans	9,000
Total monthly personal expenses	HK$13,500

The 2 Children

Item	Amount (HK$)
Extra tuition fees	2,000
School books and stationery	500
Medical / Dental	500
Entertainment / presents (Toys)	500
Holidays	1,000
Clothing / Shoes	500
Insurance premiums	1,000
Uniform	400
Others (specify)	200
Total monthly expenses for children	HK$6,600

 

Total Monthly Expenses

HK$72,000

51.  The wife and the children’s needs are assessed at $72,000.  The wife’s claim for $20,000 is reasonable and is within the ability of the husband. The $20,000 should be equally divided amongst the wife and the 2 children.

Order

52.  For the reasons aforesaid, I make an order that the husband do pay: -

(1)   $6,667 per month to the wife as her maintenance pending suit; and

(2)   $13,333 per month to the wife as the interim maintenance for 2 children of the family ($6,666.50 each),

such payments shall commence on 1 July 2021 and subsequently be paid on the 1^st day of each succeeding month until further order of the court.  The payments shall be made by direct credit into the wife’s account with HSBC as set out in the summons.

Costs

53.  The wife is successful in her application.  It appears to me that in such circumstance the husband should pay the costs of the application, including all costs reserved, and I so order by way of an order nisi. The husband’s own costs to be taxed in accordance with the Legal Aid Regulations.