MKK v. YSM

FCMC 11948 / 2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 11948 OF 2010

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DECISION
(Maintenance Pending Suit)

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1.  This is the petitioner husband’s application for maintenance pending suit (“MPS”) for a sum of $60,000 per month.

2.  For convenience, I will refer the petitioner as “H” and the respondent as “W”.

Preliminary Matters

3.  There are two preliminary matters.

4.  The first is that when the application was first taken out on 21 March, 2013, H asked for a lump sum of $1,200,000.  As such an application was clearly unsustainable, he subsequently amended the Summons on 3 June, 2013 and prayed for a monthly sum of $60,000 instead, to be paid as from the date of the order to be made herein to the date of determination of the suit.

5.  However, the subject matter became somewhat unclear when H, in his 7^th Affirmation dated 11 June, 2013, which was filed in support of the application, asked for the payments to be back-dated from the date of the petition, ie 14 September, 2010 or from a time the court deems fit.

6.  Mr Chu, counsel for H, clarified that H is content with the Amended Summons and he is not seeking any back-payments.  That said, he appeared to have laid the blame on W for not seeking clarification prior to the hearing. 

7.  With respect, I must say I disagree with him.  As a matter of fact, W did raise this query in para. 3 of her 6^th Affirmation dated 19 July, 2013, which was filed in opposition to the application.  The onus is on H to put his house in order.

8.  Another preliminary matter is that on the face of his supporting affirmations, H is asking for legal costs provision for his ancillary relief claim and for living expenses but he never clearly stated how the $60,000 is to be apportioned. 

9.  Upon my inquiry, Mr Chu initially indicated that $50,000 is for legal costs and the remaining $10,000 for maintenance.  However, subsequently in the course of submissions, again upon my further inquiry which I will refer to in later part of this judgment, Mr Chu changed to say that $57,000 is for legal costs and $3,000 for H’s living expenses.

Background

10.  Parties failed to settle in the FDR hearing of 3 July, 2012.  The present application came quite late; it was only taken out on 21 March, 2013, after the second PTR hearing on 28 February, 2013.  By now most of the preparation work for the trial has since been completed and the trial has been set down to be heard commencing from 7 January, 2014, with 8 days reserved.

11.  H was born in October, 1948 and is going to be 65 years old.  As for W, she is now 63.

12.  The marriage is definitely a long one.  They married in 1972.  This would be 28 years if calculated up to July, 2000 when they departed from each other.  This union gave birth to 2 children.  The elder is a daughter, born in 1973 and is now aged 40.  She is married and independent.  The younger is a son, now aged 34, also married and independent.

13.  On 14 September, 2010 H petitioned for divorce on the ground of 2 years separation.  He stated on his petition, and this is not disputed by W that, the parties started to separate from each other on 1 July, 2000.  As will be seen in the submissions made by Ms Yip, counsel for W, this extended length of separation bears some significance in her arguments in relation to H’s present application.

14.  Decree nisi was granted on 25 August, 2011 and it was made absolute on 19 December, 2011.

15.  The facts of this case are rather unusual in that the bulk of the matrimonial assets, at least as alleged by H, are in the hands of W. 

16.  In brief, according to his Form E dated 8 July, 2013, H has only one property in his sole name, which is a residential unit in Dongguan of the Mainland (“the Dongguan Property”). He reported a net asset worth of about $2,788,000.  This already includes his share of the value of the matrimonial home which is said to worth $1,679,000 but is registered in the sole name of W.  He reported to have about $18,000 in the banks but his liabilities are stated to be about $114,000.  Hence, the picture is, leaving the Dongguan Property aside, H is reportedly insolvent.

17.  At the beginning of the hearing, Mr Chu informed the court that H managed to sell the Dongguan Property for RMB 950,000.  The sale is due to complete in mid of September, 2013; by then he will have about $1,100,000.

18.  As for W, she has at least 8 landed properties; her reported net worth is in the region of $8,599,000.

The Law and Legal Principles

19.  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. 

20.  The Court of Appeal has recently 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.
 ‘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’, whichis 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.”

21.  I am guided by the above principles. 

22.  It is well settled that an application for MPS can include legal costs provision for the trial of the ancillary relief:  see KGL v. CKY [2003] 2 HKLRD 301. 

23.  The English Court of Appeal in Currey v. Currey [2007] 1 FLR 946, set out certain guiding principles on how legal funding as MPS may be granted. The principles set out there have been cited and relied upon locally in the Family Court.

24.  Mr Justice Hartmann JA (as he then was), again, in HJFG v. KCY [2012] 1 HKLRD 95 characterised these principles as prudent guidance to both judges and practitioners in this jurisdiction.  He said as follows,

“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 out, 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.”

Legal Costs Provisions

H’s Case

25.  It was submitted on behalf of H that even with the forthcoming $1,100,000, H is still short of funds to carry on the proceedings.  Mr Chu said that although according to H’s Form H dated 20 March, 2013, the costs up to the conclusion of the trial were estimated to be $1,205,000, there had been substantial work involved since then; as a result, the estimated costs have been revised to about $1,950,000 in H’s 7^th Affirmation dated 11 June, 2013, which means an increase of about $745,000.  Mr Chu attributed the increase to the change in the estimated length of trial from the original 5 days to 8 days, the adding of 2 more witnesses by W and the need to prepare an up-dated Form E.  There were also unexpected applications, issues and documents to be dealt with since the filing of Form H.

26.  H has thus far paid his solicitors $141,000 only.  Hence, H’s predicament is that even with the additional $1,100,000, he would not have sufficient resources to see his case go to trial.  He said even if one takes the total costs round down to $1,900,000, there would still be a shortfall of about $659,000.

27.  Mr Chu argued that given the imminence of the trial, the MPS in the sum of $60,000 is very modest indeed.  Even if it is paid in full, counting from August, 2013, it would amount to $360,000 only ($60,000 X 6 months). 

28.  In this connection, it would appear what Mr Chu has in his mind is for the whole of $60,000 to be allotted as legal funding.  This could not be the case.  Be that as it may, even if the whole $60,000 is put into legal funding, H would still have a shortfall of about $299,000 and manifestly this would not be sufficient for him to complete the proceedings anyway.  Mr Chu agreed that this would be the case but said this money is necessary to keep things alive.

29.  Mr Chu also referred to the undertaking to pay that H said, in his 7^th affirmation, that he has given in favour of his solicitors in order to continue the legal representation.

W’s Case

30.  Ms Yip has 2 major grounds in opposition.  First, H fails in the so-called Curry test and secondly, he fails to make full and frank disclosure of his financial resources.

31.  Ms Yip contended that since the birth of the decision in Currey v Currey [2007] 1 FLR 946, it has become almost the standard practice of the family court to adopt the principles set out there.  They have been dubbed the Currey test:

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

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

(c)  That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation:  a “Sears Tooth arrangement”.

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

32.  Ms Yip submitted that H has grossly exaggerated his draft bill of costs.  She subjected H’s costs estimates to, if I may call it, a microscopic examination.

33.  Ms Yip said when H started this present application on 21 March, 2013, he was content seeking a lump sum of $1,200,000 for legal costs provision based on his Form H dated 20 March, 2013.  In less than 3 months’ time, on 3 June, 2013, when he amended his summons to seek monthly payments at the rate of $60,000, his supporting affirmation appears to suggest that the components of this $60,000 are (a) legal costs provisions of $50,000 and (b) $10,000 living expenses.  He also revised his estimated costs up to about $1,950,000.  Ms Yip submitted that there was no significant change in the landscape of the case during this short period of time.  The upward trend of his claim is indicative of his forensic exaggeration, which the court should guard against.  She also challenged the accuracy of H’s Form H, which I shall come to it in due course.

34.  According to his Form H, H’s costs incurred as at 20 March, 2013 were $680,000 but in less than two months’ time, further costs of $213,500 were incurred, which means a total of $893,500.  On the top of this, the costs of the present application are estimated to be $132,000 which means a total of $1,025,500 already.  It was submitted that H has singularly failed to articulate whether all or any part of these costs have been paid.  If he has not settled any of the previous amounts, his solicitors would have allowed him to litigate on credit to the sum of $1,025,500 already.  H has been legally represented since December, 2010. It means that this arrangement has been on-going for well over 2 years.

35.  On H’s undertaking to pay, Ms Yip submitted that it either shows that H has hidden assets which he has failed to disclose, or there exists a “Sears Tooth arrangement”.

Discussions

36.  As has been set out in Currey v. Currey, supra, the overarching inquiry is into whether H can demonstrate that he cannot reasonably procure legal advice and representation by any other means.

Currey test: Conditions (b) and (c)

37.  Despite Ms Yip’s able arguments, in my view, what I should do is to take a board overview on whether the estimates of costs are reasonable in the circumstances of the case.

38.  To start with, I need to refer to the history of the proceedings.

39.  Subsequent to the failure of the FDR on 3 July, 2012, there were three PTR hearings, during with W changed her legal team, both solicitors and counsel, on 14 May, 2013.  I need to mention that this is already the third solicitors firm acting for W in the present proceedings. Not only that there is such a change, it appears that there has also been a change on the grounds that W is going to run in trial.

40.  On the first PTR hearing dated 29 November, 2012, I was told that the parties had separated from each other in as early as 2000 and W would rely on the post-separation conduct of the parties.  In a nutshell, W would say that whilst she had taken tremendous effort to salvage their investments, H, on the other hand, by his conduct had clearly shown that he had nothing to do with the investments in 2005.

41.  But then on 28 May, 2013, during the third PTR hearing, I was told by W’s new legal team that she would further rely on a ground founded on the ‘financial architecture’ of the parties during the marriage to resist H’s claim.  In brief, W would say that apart from the sporadic sharing of family common expenses, the parties strictly segregated their investment portfolio and business from one another throughout the marriage. 

42.  As a result, leave was granted for parties to file and exchange further affirmations to deal with this belated point and the estimated length of trial was also increased from 5 days to 8 days. 

43.  Apart from the PTR hearings, there was a two-hour hearing on 2 May, 2013 on W’s applications for discovery against H and for leave to file further affirmation taken out on 8 February, 2013 and 21 March, 2013 respectively.

44.  There were also two summonses by W taken out on 25 June, 2013 and 2 July, 2013 for extension of time for filing affirmations.  Last but not the least, there was of course the hearing of 16 August, 2013 on the present application.

45.  Apart from W’s application for discovery which was taken out prior to 20 March, 2013, all the above interlocutory proceedings cropped up after 20 March, 2013.

46.  I reckon that since the FDR hearing, a total of 9 summonses have been taken out by the parties, 17 further affirmations, most of them are of substantial contents, have been filed, and finally 2 further Questionnaires have been issued.  The latest development is that, by an application taken out on 13 August, 2013, W seeks to adduce further affirmations by two witnesses and to call them to give evidence at trial; and this application is yet to be dealt with.  Hence, it seems to me quite clear that the proceedings have taken a turn to become more complicated both in terms of issues and witnesses involved.

47.  On the other hand, Ms Yip was certainly correct to point out that H’s Form H of 20 March, 2013 which gives a total of $1,205,000 up to and including trial appears not be accurate for the reason that it is unclear whether or not Part 2 (Estimated costs after the current hearing up to and including the FDR) in the sum of $122,000 has already been included in Part 1 (Estimated costs incurred up to and including the current hearing) and if that is the case, there would be a duplication.  I also find some force in Ms Yip’s submission that it is excessive for the costs to have increased by $213,000 over a short period of time from 20 March, 2013 to 11 June, 2013; and also the costs of the present MPS application in the sum of $132,000 appears to be excessive.

48.  That said, it should also be noted that W’s own estimates, as exhibited in her Affirmation dated 19 July, 2013, are as much as $2,217,000.  I believe these higher costs may in part be due to the reason that W is now having her third team of solicitors and another more experienced counsel to represent her, but they also throw lights on the complexities of the issues involved in this case.

49.  Considering all these matters objectively, including the fact that the parties are going to have an 8-day trial, and taking a board overview, I am of the view that H’s costs in the region of $1,500,000 would not be an unreasonable amount.  

50.  During the hearing it transpired that H has so far paid the following amounts to his solicitors:

1 December, 2010	$40,000
24 December, 2010	$60,000
5 May, 2012	$11,000
23 July, 2012	$20,000
25 February, 2013	$10,000
Total:	$141,000

51.  According to the receipts issued by the solicitors, all these monies were paid as costs and disbursements on account.  Not a single interim fee-note has been issued.

52.  The objective facts are that for more than 32 months since his solicitors started to represent him on December, 2010, H paid, by 5 payments, a total of 141,000 only, notably a meagre sum of $10,000 this year.  There was not a single interim fee-note issued.  It may be that the retainer between H and his solicitors does not provide for the issuance of interim fee-notes, but if this is the case, it is incumbent upon H to let the court knows.

53.  According to H’s costs estimates, after the hearing of the present application, the costs so far would have gone up to about $1,025,000.  When he made the last $10,000 payment on 25 February, 2013, costs had already been incurred up to $680,000.  Since there is no suggestion that his relationship with his solicitors is anything other than strictly “business”, it would be logical for one to ask why it is the case.  Mr Chu emphasized that H’s solicitors have been chasing him for money but apart from what H said in para. 9 of his 7^th Affirmation dated 11 June, 2013, there is not a shred of evidence on this.  Mr Chu also referred to the same paragraph of H’s affirmation where he said he had given an undertaking to settle the fees in favour of his solicitors.  I do not have the sight of the undertaking.  Nevertheless, in my view, a mere undertaking adds nothing more to the retainer already signed between H and his solicitors.  What is the worth of the undertaking if H has no means to pay?  Now with $1,100,000, it would mean on the face of it a funding of $1,241,000.  I am conscious of the fact that as a matter of arithmetic, and I do mean that, it would still appear to have a shortfall of about $259,000 or round up to $260,000.  Nonetheless, if he has been able to carry on the proceedings for the last 32 months with a sum of $141,000, in particular bearing in mind that with all the contested interlocutory proceedings taken out within this year he has paid a mere sum of $10,000 only, given the state of play in the past, the logical conclusion is that he should be able to carry on and complete the litigation, either for the reason that his solicitors have allowed him to litigate on credit or he has a “Sears Tooth arrangement”, both of which are considered as financial resources. 

Currey Test: Condition (d)

54.  With the conclusion that I have reached, strictly speaking, I do not think it is necessary for me to deal with this point.  However, since counsels have argued on this, I will briefly deal with it.

55.  It has been argued in a recent case on whether this condition is strictly applicable locally: T v. L, FCMC 8460/2012 (date of judgment:  25 June, 2013).  It was argued for the applicant in that case that this principle is not applicable for the reason that Woo JA, in the said KGL v. CKY, supra, has said at 307 that (see the quotation in Para. 24 above),

“There is no reason why public funds should be expended to fund litigation when there are ample resources available within family funds…”

56.  It has been observed by the learned judge in the said T v. L, supra, that the above principle has been adopted by Hartmann JA (as he then was) in HJFG v. KCY at para [85] , supra, whereas Currey v. Currey is not binding on the Hong Kong Family Court.  While one may argue that Woo JA’s opinion was quoted in the context of the discussions that legal costs allowance is to be structured, and therefore it does not necessarily mean that this condition is not applicable locally, it appears to me whether the principle has been adopted is certainly debatable and may have to be clarified by the Court of Appeal in an appropriate case in the future.

57.  Be that as it may, counsels’ arguments have been advanced on the basis that condition (d) of the Currey test applies.

58.  It was submitted on behalf of H that he had applied for legal aid but was refused.  However, as can be seen from the letter dated 30 January, 2013 by the Director of Legal Aid (“the DLA”), which was only included in the hearing bundle on the day of the hearing, the reasons for refusal are that (1) on the basis of H’s in-and-out records from 1 November, 2011 to 31 October, 2012 provided by the Immigration Department, the DLA did not believe that the Dongguan Property was his place of residence; and (2) the DLA believed H had not truthfully disclosed his financial situation, as it was noted that there were deposits and withdrawals of over $3,000 per month.   H agreed that he did not appeal against the refusal. 

59.  In my view, now that the Dongguan Property has been sold, there is obviously a change in the circumstances, there is no reason why H does not renew his application and try to convince the DLA that he has already made full and frank disclosure of his financial situation.  I am satisfied that H also fails in this test.

Currey test: Condition (a)

60.  Subject to what I am going to say regarding H’s duty of disclosure, it would appear that on the face of it, H has no other assets which he may deploy.  However, due to the conclusion that I have reached above, this would not be of assistance to him.

61.  For the above reasons, I am not satisfied that H has been able to demonstrate that he cannot reasonably procure legal advice and representation by any other means.

Non-Disclosure

62.  It was submitted by Ms Yip that H’s disclosure has fallen far below the requisite requirement to be full and frank.  H failed to disclose his business of F&PC, and when the same was exposed by W, he gave certain bare assertions without condescending to particulars or producing any documents.  H also failed to produce any tax returns, any documents such as invoices, vouchers, bank statements, ledgers and the like about the business.  His alleged expenses are also full of holes in that they are unsupported by documentary evidence, that the rental figures do not tally with each other, that his claim for a monthly travelling expense of just $300 for travelling between Hong Kong and Dongguan is unbelievable, that his record of loan is no more than a self-serving IOU of his own making, that he has been maintaining two addresses at the same time, and that he fails to disclose a life insurance policy.  Ms Yip argued that H’s sub-standard financial disclosure is schematic, extensive and has made it impossible for W and the court to know his true financial health.  H has been doing his best to suppress information relating to his business.  She contended that where a spouse is guilty of material non-disclosure, the court is entitled to take a robust view of his means. 

63.  To be fair to H, some of these queries have been belatedly answered by H in his Answers to W’s Questionnaire, which was only filed on the date of the hearing.  For instance, further documents such as those on H’s rented room, his insurance policy and the new loan from the bank have been disclosed.  H also explained that he used one of the addresses for correspondence only.

64.  Ms Yip relied on Rayden and Jackson on Divorce and Family Matters, (18^th Edn), Vol 1(1), para. 16.18,

“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 on inability to pay”

65.  Ms Yip also referred me to Baker v. Baker [1995] 2 FLR 829, Livesey v. Jenkins [1985] AC 424 and F v. F (Divorce: Insolvency:  Annulment of Bankruptcy Order) [1994] 1 FLR 359.  She invited me to follow these authorities and draw adverse inference against H on his financial resources.

66.  Notwithstanding that the above citations refer to payer, I agree with Ms Yip that there is no reason why the duty does not equally apply to payee. 

67.  In my view, some of the challenges raised by Ms Yip have been explained, of course whether these explanations would be accepted by the court is a matter to be decided in trial; and some of the challenges are on peripheral matters.  That said, it does not mean that I should not give due regard to the non-disclosure which are proven and material. 

68.  In his Form E dated 27 October, 2010, H claimed that he was unemployed and no business was disclosed.  He declared earning zero income. 

69.  Ms Yip raised the point that if he was unemployed at that time, how H could have been able to settle his legal costs.

70.  In his 2^nd Affirmation dated 31 July, 2012, he affirmed that he closed down his F&PC business in 2006 and retired.  He relied on his daughter’s monthly contribution of $3,000 for his living. 

71.  However, when W, in her affirmation dated 1 November, 2012, exposed that H in fact had continued to run his F&PC business with an address in Hong Kong, H explained in his 3^rd Affirmation that he had actually transferred F&PC to a Mr Chan and he was merely assisting Mr Chan in the business as an odd-job worker during the Halloween and the Christmas seasons.   He further affirmed that in August, 2010 Mr Chan transferred the business back to him when the former left Hong Kong.  The only condition was he was to be responsible for the rental up to June 2011.

72.  Therefore, as at the date of his Form E dated 27 October, 2010 and his 2^nd Affirmation dated 31 July, 2012, it is clear that he was running a business but he failed to make a disclosure.  It is also of significance to note that as at the date of the 2^nd Affirmation, H was already legally represented

73.  It goes without saying that his business must have a direct bearing on his income and financial resources, and in this connection, it also has to be said that during the hearing, it transpired that part of the costs on account paid to his solicitors in the sum of $60,000 on 10 December, 2010 was paid out from F&PC’s account.  To this, I do not think Mr Chu has a reply.

74.  What H has produced is merely a handwritten home-made Income and Expenditure Report (收支報告) for 23 months from 1 July, 2011 to 31 May, 2013.  This is a report on his personal-cum-business income and expenditure.  With respect, this so-called Report is no more than a sketch of some figures.  There is no tax return; and I believe, even in the eyes of a layman, this report would not be up to a standard of being able to be submitted to the Inland Revenue.

75.  I have no doubt that the non-disclosure is material.  It has also to be noted that one of the reasons for the refusal of his legal aid application is also one of non-disclosure.  For the above reasons, I am not able to say that, taking a board brush approach, his income from the business would only bring him a few thousand dollars of gross profits every month, as he has alleged, which is barely sufficient for his living expenses.  If this is really the case, H only has himself to blame for failing to make a full and frank disclosure.

76.  Section 3 of MPPO enjoins the court to make such an order as it considers reasonable in all the circumstances.  Considering all the factors discussed above, I do not think this is an appropriate case where I should exercise the discretion in favour of H.

Living Expenses

H’s Case

77.  According to the Income and Expenditure Report, his total receipts over a period of 23 months from 1 July, 2011 to 31 May, 2013 are $218,625, which are constituted by sales proceeds $89,625, contribution from daughter $69,000 and bank loan $60,000. His costs of living and the costs of his business are stated to be $238,304, hence an average of $10,361 per month.  There is thus a deficit of $19,679, or on average $856 per month.

78.  It is based on the average expenditure of $10,361 that Mr Chu initially submitted that H needs MPS in the sum of $10,000 for his living expenses.  When I pointed out that even on H’s own case, there would be on-going sales receipts and contributions from the daughter which are about $6,900 per month, hence a deficit of about $3,100 only, Mr Chu thereupon changed to say that H needs $3,000 as living expenses only.  Such an amazingly flexible position impresses upon me that the application has been taken out without much thought. 

W’s Case

79.  Ms Yip has two grounds.

80.  First, she relied on the non-disclosure ground which I have already found against H.

81.  Secondly, she relied on Burrows v. Burrows (1867) L.R. 1 P.& M. 533 where in that case the husband and wife have been living apart for 7 years before the institution of the suit, and the wife has supported herself during the separation, MPS was refused.  It was argued that notwithstanding the long separation between the parties since 1 July, 2000, H has been making his own living in the past 13 years, this is solid proof that he is well capable of keeping up.  He is therefore not entitled to start proceedings to improve his position. 

Discussions

82.  In my view, each matrimonial case is highly fact-sensitive and the fact of long separation may in an appropriate case be one of the factors that the court may need to give due regard to in its deliberation.  At the end of the day, one needs to goes back to section 3 of MPPO to look for guidance in the exercise of the discretion.  As has been said by Hartmann JA (as he then was) in the said HJFG v. KCY, it must be fair having regard to the circumstances of the case.

83.  As I said, the report is one a combination of his personal and business aspects, for instance, the rental of the warehouse is prima facie a business expense though I am given to understand that H would also stay there overnight for convenience.  Other similar items are telephone charges and travelling expenses. As such, the $3,100 or whatever amount being asked for must have included some provisions for business expenses.  I accept that “maintenance’ is a broad concept, and the court has to look to the ‘immediate and reasonable needs’ of the spouse, but in my judgment, even stretching the meaning of “maintenance” to its limit would not be board enough to include provisions for business expenses.

84.  Finally, if H is asking for merely $3,000 per month, a modest sum of $18,000 over a span of 6 months, I fail to see how he would not be able to make his ends meet, for instance, by setting aside $20,000 from the sale proceeds that he is going to receive. 

Conclusion and Costs

85.  For the above reasons, H’s application must be dismissed and I so order.

86.  As for costs, there is no reason why costs should not follow the event.  I give an order nisi that H do pay R the costs of this application, including all costs previously reserved, to be taxed if not agreed, with counsel’s certificate.