KWTM v. NSH

 FCMC 14639 /2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 14639 OF 2007

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Hearing on : 27 June 2008, 2 July 2008 ( ½ day) and 25 August 2008 (2 hours)

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J U D G M E N T

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INTRODUCTION

1. This is an application by the Petitioner (“W”) for interim maintenance for herself and the child of the family (“ the Child”) from the Respondent (“H”). 

2. W is seeking a sum of about HK$266,765 per month, plus HK$50,000 for legal costs. It is W’s case that H used to pay her a fixed sum of HK$120,000, plus providing her with a cash card for her to withdraw cash from his company in Hong Kong from time to time for various expenses, which she initially claimed was about HK$168,000 per month.

3. H opposed W’s application.  H is prepared to pay HK$120,000 per month, and has agreed to an interim order to pay the same from 1 July 2008 in addition to undertaking to continue to pay the following by autopay (the”Undertakings”) :

(a)   Management fees and rates in respect of the flat and carparks of the parties’ last matrimonial home at Pensinsula Heights, Broadcast Drive (“Peninsula Heights Property”) ;

(b) Management fees in respect of the  flat and carparks at The Bloomsville Nga Tsin Wai Road (“The Bloomsville Property”);

(c)   Monthly insurance premia for AIA policies for W and the Child;

(d)  monthly school fees for the Child.

4. The Court has made an “interim” interim order incorporating the above on 2 July 2008 (“Interim Order”).

BRIEF BACKGROUND

5. I will first set out briefly the background, based on W’s chronology.  I understand the background facts are mostly undisputed.

6. H is now 52, and he is a businessman, and now resides in the Longang District in Shenzhen in a property apparently held in his mistress Ms Chin’s name.  He resides with Ms Chin, and their son. H’s mother also resides with them.

7. W is now 41.  She is a housewife, and she and the Child are now residing in Peninsula Heights Property which is held in her sole name.

8. H started a business of metal mould production on 1 July 1988 in Tokwawan, Kowloon (“Hong Kong Factory”) as a sole proprietor, and has remained its sole proprietor until now.

9. The parties met in Jinan in 1990.  At the time they met, H ‘s business was apparently very small scale, with about two workers working for him. W was at that time working as a clerk in Jinan.

10. The parties married in Jinan on 28 June 1991.  After marriage, W moved to Shenzhen to live with H’s family including his mother and sisters for about half a year, and later moved with H to a rented place in Shenzhen.  W stopped working after marriage, and has been looked after financially by H since.

11. In about 1995, W obtained a single entry permit and moved to Hong Kong.

12. On 18 July 1995, H formed a limited liability metal moulds company in Shenzhen (“Shenzhen Company”), which is wholly owned by the Hong Kong Factory.

13. In about 1996, H moved his factory to Pinghu, near Shenzhen. At that time, according to W, H’s business was still at its early stage, and that he was under a lot of pressure. W said it was at about this time that H started going to karaoke clubs and met his mistress Ms Chin.  W said she knew about his relationship with Ms Chin but chose to tolerate it, in the hope of saving the marriage.

14. Since 1997, after the move of the factory to Pinghu, H’s business gradually started to take off.

15. At the end of 1998, W became pregnant and she moved to Shenzhen to live with H, but moved back to Hong Kong shortly before giving birth to the Child.

16. The Child was born in September 1999.  She is now almost 9.   About 3 months after the Child was born, according to W, H asked her to move back to Shenzhen.  W apparently asked H to leave Ms Chin, and she said H refused.  W then refused to move back to Shenzhen, and chose to remain in Hong Kong.  H then rented a flat for her in Tokwawan and employed a full time helper for her and the Child.

17. It appears to be W’s case that from this time onwards, she has been mainly living in Hong Kong with the Child, while H has remained mainly living in Shenzhen.

18. In about 2000, H bought a piece of land at Pinghu and built his own factory there.  H further established a metal products Factory in Pinghu (“Pinghu Factory”), which is again wholly owned by the Hong Kong Factory.

19. Although the parties were mostly living in different places, it would appear that their marital relationship continued. H would return to Hong Kong to W’s home from time to time, and was looking after W well financially. 

20. In the mean time, as disclosed in H’s Form E, he has a son, born on 20 September 2001, now almost 7, as a result of his relationship with Ms Chin.

21. On 5 November 2002, H bought the Bloomsville Property in W’s sole name for W and the Child to reside in.  W said that as H was mostly working and living in Shenzhen, he gave W a cash card (“Cash Card”) to withdraw/transfer cash from a BOC account of the Hong Kong Factory (“BOC Account”) to meet her monthly expenses.  There was no limit set.  In addition to the Cash Card, he would also pay W HK$120,000 each month.  It is not quite clear  as to when exactly he started to pay the said sum of HK$120,000.

22. H’s business in the Mainland continued to expand.  In about 2004, H asked W to sign various guarantees for him to facilitate purchases of expensive machineries for his factory in Pinghu. W said she signed these guarantees unwillingly, and she started to become concerned.

23. Parties started to have arguments over these guarantees.  There were apparently allegations and counter-allegations against each other. 

24. On 17 January 2006, a property at Hung Shu Xi An, Shenzhen was bought in the joint names of H and Ms Chin, H holding 1% and Ms Chin 99% (“the 1^st Shenzhen Property”).  The purchase price was RMB 7,565,600.

25. In early 2006, W also started looking at a bigger flat in Kowloon, and saw the Peninsula Heights Property, which she wanted to buy.  The amount required for the down payment and other expenses were about HK$4m.  H claimed to W that he was short of cash at the time, W then apparently “lent” her uncle HK$4m to lend to H.  It would appear that W did this as she did not want H to know that she had the cash of HK$4m, and that he would be under the impression that the loan came from her uncle. After moving into Peninsula Heights Property, W rented out the Bloomsville Property and she has been collecting rent therefrom.  The Peninsula Heights Property was purchased on 24 May 2006 in W’s sole name.

26. In April 2007, there was apparently a gathering between H and W’s uncle during which H mentioned that he was still expanding and buying a lot of expensive machineries in the Mainland.  H complained that competition was very fierce and business was becoming difficult.

27. The parties’ relationship continued to deteriorate. In June 2007, W decided that the marriage was at an end.  On 30 June 2007, W was going to Beijing with the Child, and before she left, she told H to talk to her uncle about their divorce.  That night, W changed the locks to the Peninsula Heights Property, and this brought to an end the parties’ marital relationship.  The parties have been living apart since.

28.  H claimed he had sold his business in the Shenzhen Company and the Pinghu Factory in June 2007 to one Mr. Lau for RMB 11,780,000.  W claimed that she had no knowledge of this alleged transfer/sale.  There are two versions of the transfer contract, and I will go into this later in the Judgment.

29. Subsequently, W found out that the said Mr. Lau had commenced another metal moulds factory in Hong Kong on 5 September 2007 with exactly the same name as the Hong Kong Factory.

30. On 29 November 2007, W issued a divorce petition based on H’s unreasonable behaviour.

31. Later, W further found out that on 24 December 2007, there was a change in the Legal Representative of the Pinghu Factory, from a Miss Wong to a Ms Tsai, the latter being H’s sister-in-law.

32. W also found out that on 28 December 2007, the registered capital of the Shenzhen Company was increased from RMB 7.02m to RMB 11.78m, and H had been removed as a director, with Mr. Lau in his place.  The other directors, i.e. H’s sister and her husband, and H’s brother and his wife, Ms Tsai, however, continued to be directors.  Furthermore, H has continued to remain as the General Manager.

33. Notwithstanding all the above activities and the alleged transfer of interest, it is W’s case that H has remained and still remains in control of all the 3 factories/companies, i.e. the Hong Kong Factory, the Shenzhen Company, and the Pinghu Factory.

34. Sometime in October 2007, H cancelled W’s Cash Card, and since then she has not been able to withdraw/transfer cash from the BOC Account.  H did continue to pay W the monthly sum of HK$120,000 for a little longer.  Eventually, in February 2008, H stopped also this payment, the last payment being on 4 February 2008.  This then led to W issuing her application for maintenance pending suit on 14 April 2008.

LEGAL PRINCIPLES

35. The power for this Court to make a maintenance pending suit for a spouse and interim maintenance order for a child of the family is set out respectively under sections 3 and 5 of the Matrimonial Proceedings and Property Ordinance (“MPPO”).

36. There is no dispute that at this preliminary stage this Court is only to adopt a broad brush approach as it is not able to conduct a detailed investigation of all the matters set out in s.7 of MPPO, without oral evidence or further discovery.  The matters the Court are immediately concerned with is H’s ability to pay and the reasonable needs for W and the Child during the interim stage. 

37. It is well established that in ancillary relief proceedings, which include maintenance pending suit, there is a duty on both parties to make full and frank disclosure of the relevant materials to enable the Court to exercise its discretion to make the order, and if it is of the view that the evidence disclosed by a party is deficient, adverse inferences may be drawn against that party.  (see C v F (Maintenance Pending Suit) FCMC 1701 of 2000, at para 28) 

38. It has also been said that it is also necessary to establish a yardstick that more nearly reflects the standard of living which has been the norm since marriage. Any overprovision can be adjusted at the final hearing.  (see F v F (Ancillary Relief: Substantial Assets) (1995) 2 FKR 45 and referred to by Judge Chan in C v F in para 52).

MAIN ISSUES:

39. In my view, the main issues in the present case are as follows:

(a)      Whether H has made a full and frank disclosure 

     of his means;

(b)    What were the total cash amounts which W used to withdraw/transfer from the BOC Account for her expenses;

(c)     W hether H should pay W an additional HK$50,000 per month for her legal costs.

(a) Whether H has made a full and frank disclosure of his means

The alleged transfer

40. H’s case was that he had sold his interest in the Shenzhen Company and the Pinghu Factory to the said Mr. Lau on 20 June 2007.  This was apparently achieved by the Hong Kong Factory, with H as the registered sole proprietor entering into a transfer agreement with a business bearing the exactly the same name as the Hong Kong Factory but with Mr. Lau registered as the sole proprietor.  To avoid confusion, I shall refer to this new business registered by Mr. Lau as “New Hong Kong Factory” in this Judgment.  Ms Yip said the alleged transfer was a scam, and gave a number of reasons in her Written Submissions.  I will deal with the main ones.

41. H first produced copy of an unstamped agreement (“1^st Agreement”) for the alleged transfer in his 1^st Affirmation filed in June 2008.  Before the hearing, W managed to obtain a different stamped version from the authority, which was dated 10 December 2007 (“2^nd Agreement”).  In H’s 2^nd Affirmation, filed on 2 July 2008, on the second day of the hearing, he produced a letter from his lawyer in the Mainland to explain the reason for the differences in the two agreements, namely according to his lawyer, a standard form had to be signed for notarization and registration with the authority, which was the form of the 2^nd Agreement, and that was why the parties later signed the 2^nd Agreement for the purpose of notarization and registration.  H maintained that the 1^st Agreement was the one which correctly reflected the terms of the transfer.

42. In the 2^nd Agreement, it was stated that the consideration of RMB 11.78m was to be paid in 3 instalments by way of bank transfer or cash within 30 days from the effective date of the agreement.  In the 1^st Agreement, however, the manner of payment was completely different, namely by Mr. Lau undertaking to be responsible for various liabilities / expenses and it appeared that the amount of net cash to be received by H was only RMB 1,767,304, payable by monthly instalments of RMB 50,000 each.

43. Apart from the above discrepancy, a major difference between the 1^st Agreement and the 2^nd Agreement was that in the 2^nd Agreement, the consideration of RMB 11.78m was stated to be only for the transfer of the interest in the Shenzhen Company, whereas in the 1^st Agreement, it was for the interest in the Shenzhen Company AND the interest in the Pinghu Factory.  There was no explanation from H regarding this major discrepancy.

44. According to H, he no longer had any interest in the two businesses in the Mainland, i.e. the Shenzhen Company and the Pinghu Factory after 20 June 2007, the date of the 1^st Agreement.  As pointed out by Ms Yip, from documents produced by H, there were 5 remittances totalling about HK$ 2,250, 000 to the Shenzhen Company/Pinghu Factory from his personal bank account/s in September, October, November, and December 2007.  There was no reasonable explanation from H regarding these so-called business transactions.

45. It was H’s case that the only business he had retained since 20 June 2007 is the Hong Kong Factory, but if this was the case, why did he allow Mr. Lau to register another new business in exactly the same name as the Hong Kong Factory, which could compete with his business.  This new entity, i.e. the New Hong Kong Facotry, was registered only on 5 September 2007, and was over 2 months after the date of the 1^st Agreement.  Therefore, as pointed out by Ms Yip, the so-called purchaser in the 1^st Agreement did not even exist at the time of the signing of the 1^st Agreement.

46. Looking at the Profit and Loss Accounts produced by H for the year ended 31 March 2007, the total receipt of income for the Hong Kong Factory was HK$13,752,730 for that year and a sum of HK$7,590,816 was transferred to the Shenzhen Company for processing works fees.  The Profit and Loss Accounts for the year ended 31 March 2008 showed receipt of income to be HK$12,547,350 and processing works fees paid to the Shenzhen Company to be HK$6,759,572.  The alleged transfer did not appear to have affected the business relationship between the Hong Kong Factory and the Shenzhen Company.

47. In H’s Form E filed on 14 February 2008, he claimed his monthly income at that time was HK$44,484.50.  When asked to provide further particulars, in his 1^st Affirmation, he explained that this figure was arrived at by dividing the net profits for the Hong Kong Factory for the year ended 31 March 2007 of HK$532,614 by 12 months, and further he said he was then receiving the monthly instalment payment of RMB 50,000 according to the terms of the 1^st Agreement.  For some reasons, he did not include the “salary to proprietor” of HK$216,000 for the year.  Anyway, looking at the Profit & Loss Accounts for the year ended 31 March 2008, the total profits and salary for H for the year ended 31 March 2008 was HK$664,384, i.e. averaging about HK$55,465 per month.  In addition to the RMB 50,000 monthly instalment he was receiving from Mr. Lau, this would give a total amount of about HK$105,365.  He has not disclosed any other income.    He did not disclose whether he was receiving any income from the Shenzhen Company as he still was its General Manager in December 2007.  From his disclosed income, one wonders how he is going to pay the monthly sum of HK$120,000 to W, which he has agreed to resume paying from 1 July 2008, on top of the Undertakings and his own expenses. It is obvious that H has not made a full disclosure as to his income.  Todate, he still has not provided all his bank statements, particularly those from his accounts in Shenzhen referred to in his 1^st Affirmation.  No doubt, extensive further discovery would be necessary.

48. From the affirmations and documents produced by H so far, his own case was full of contradictions and inconsistencies.  For the above various reasons, it is not unreasonable at this stage for W to cast grave suspicions over the alleged transfer.

The purchase of the 2 units in Hung Shu Xi An, Shenzhen

49. It now transpires that there are 2 units H bought with Ms Chin in a housing development Hung Shu Xi An in Shezhen, the 1^st one bought on 17 January 2006 (“1^st Shenzhen Property”) and the 2^nd one bought in June 2007 (“the 2^nd Shenzhen Property”).

50. The 1^st Shenzhen Property was registered in the names of H, holding 1% only and Ms Chin holding the balance of 99%.  The purchase price was according to H, HK$7,565,600.  The down payment was HK$2,275,000 and the balance was paid by a mortgage loan from the Chartered Bank.  H stated in his Form E that Ms Chin had paid for the down payment, and in his 1^st Affirmation, he stated that Ms Chin was paying for the mortgage.  It was H’s case that Ms Chin had the financial resources to meet these payments as she owned a business of her own somewhere in the Mainland.  No details were given.  W then instructed private detectives to follow Ms Chin, and from this report, there was no evidence that Ms Chin was going anywhere to work on the days she was followed.  Further, in the mortgage agreement mentioned in the following paragraph, her correspondence address given was the same as H’s i.e. the address of the Pinghu Factory.

51. H eventually produced a copy of the mortgage agreement dated 26 January 2006 (B3:495) only in his 3^rd Affirmation filed on 2 July 2008, i.e. 2^nd day of the hearing.  Although the mortgagors were stated to be H and Ms Chin, the borrower was clearly stated to be H only.  The monthly payment was RMB 36,419.12 at that time but was adjustable depending on the published rate of the People’s Bank of China.  In H’s Form E, in paragraph 4.1 for his monthly expenses, he had  included an amount of HK$36,712.88 as mortgage repayments, and an amount of HK$5,500 for management fees.  He then claimed in his 1^st Affirmation that he had made a mistake in his Form E, and claimed that Ms Chin was fully responsible for the mortgage payments.  He then produced a revised list for paragraph 4.1 and 4.2, in which he deleted the monthly mortgage and management fees payments. 

52. Further, H only disclosed in his 3^rd Affirmation that the 2^nd Shenzhen Property had been purchased in June 2007, and that he borrowed two sums of HK$12.88m and HK$1.8m, totalling about HK$14.68m from the Nanyang Commercial Bank on 15 June 2007 for the purchase of the 2^nd Property.  The 2^nd Shenzhen Property is being held as to 50% in H’s name and 50% in Ms Chin’s name.  The total purchase price was RMB 18,454,320.  The total monthly repayments amount to HK$103,539 and HK$37,895, totaling HK$141,424 per month.

53. The total mortgage repayments for the two above properties alone amount to about HK$177,853 per month.

54. So far, the address given by H in his Form E and all his three affirmations was not the above two properties, but another property held in Ms Chin’s sole name in Longgang District in Shenzhen.  It is not clear whether the two above properties are currently left vacant or rented out.

H’s Monthly Expenses

55. In his Form E, H had stated that his then monthly expenses were about HK$93,880 per month.  This had included the above mentioned mortgage and management fees payments of the 1^st Shenzhen Property.  In his 1^st Affirmation, he revised his expenses to about HK$41,500 per month, by deleting these payments as he was then claiming that the mortgage was being paid by Ms Chin.  He also deleted and an allowance for personal tax of HK$5,000 per month from his previous list, although it is not quite clear why.  He had made no mention of the mortgage repayments of the 2^nd Shenzhen Property.  It is not clear from which bank accounts the mortgage repayments for the two Shenzhen Properties were actually made.

H’s gambling

56. In H’s bank statements, there were large deposits in the amounts of HK$250,000 from the Hong Kong Jockey Club on 27 May 2007 and 31 August 2006 respectively, which he said was for gambling.  Furthermore, there were other large deposits totalling about HK$ 3.1m in his bank accounts in October and November 2007, which he said were winning money from gambling in Macau. No documentary evidence was produced.

H’s alleged liabilities

57. In paragraph 2.13 of his Form E, he stated his liabilities were then about HK$4,885,000 and US$87,000.  He then realized that what he had referred to were mostly liabilities of his businesses, 2 of which he said were sold 7 or 8 months earlier.  In his 1^st Affirmation, he then said the amounts were not correct, and then for paragraph 2.13, he produced copies of the Audited Financial Statements for the Shenzhen Company for the year ended 2007 to show his liabilities.  Again, if he had sold the Shenzhen Company, it is not clear why he referred to this company’s liabilities as his personal liabilities, when under Clause 4.1(1) of the 1^st Agreement, such liabilities were to be born by the purchaser Mr. Lau.  Then, shortly before the hearing, he filed his 3^rd Affirmation, with yet another revised paragraph 2.13 for his alleged liabilities deleting about 10 items from his first list in the Form E, and added one previously undisclosed HSBC credit card liabilities of about HK$65,000.  He also suddenly included a loan of RMB 5m from a Mr. Yeh, and a loan of RMB 500,000 from a Mr. Huang.  These amounts were referred to clause 4.2(2) of the 1^st Agreement.  According to H’s Counsel, Mr. Yim, Mr. Lau was to repay these loans before 31 December 2007, and he further referred this Court to 2 remittance slips apparently regarding such payments by Mr. Lau.  In the circumstances, I cannot understand why H would include these sums in the revised part 2.13 in his 3^rd Affirmation, filed on the 2^nd day of the hearing to be his personal liabilities, which then increased his total liabilities to be over HK$10 m.

H’s Disclosure

58. As I have said earlier, H’s own case as disclosed in his Form E, his affirmations and documents produced by him were full of contradictions and inconsistencies.  His own Counsel Mr. Yim had also admitted that H’s disclosure had not been entirely complete.

H’s financial circumstances

59. In view of H’s unsatisfactory disclosure, the contradictions and inconsistencies, I am entitled to take a “broad and robust view” and draw inferences, and I am of the view that he has the ability to pay the amounts as ordered in this Judgment.

(b) What were the total amounts of cash which W used to withdraw/transfer with her cash card from the BOC Account for her expenses

60. W had produced a Schedule A, later revised, which purported to set out the amounts she said were withdrawn/transferred by her with the Cash Card, whether by ATM, or by PPS, or by EPS and auto payments of certain expenses, for the months 4 October 2006 to 6 October 2007 for the benefit of her and the Child.  All these amounts were from the BOC Account, which is a bank account of the Hong Kong Factory. This account was, however, not for W’s exclusive use, as there were other transactions by H/Hong Kong Factory.

61. From the revised Schedule A, Ms Yip had submitted on behalf of W that for the relevant period:

(i)     average cash withdrawals by ATM by W were about HK$22,222 per month

(ii)     auto-payments, totaling HK$11,265 per month

(iii)    payment of W’s credit cards, those with supporting documents averaged about              HK$30,663 per month;

(iv)    Other miscellaneous payments made through PPS and household payments               of another HK$30,000 per month.

62.  (ii) above are now covered by H’s Undertakings in the Interim Order, and they are no longer in dispute, and will continue to be covered by H.

63. According to the Schedule A, Ms Yip submitted that the total amounts by auto pay, ATM, or PPS by W from 4 October 2006 to 25 June 2007 were about HK$1,177,878.90, i.e. an average of about HK$130,000 per month.  Since H also had access to the BOC Account, Mr. Yim challenged these amounts, saying that some withdrawals/transfers could be by H particularly all the PPS transfers.  W then attempted to identify certain credit card payments of H. Later, she produced the revised Schedule A.  The average payment for W’s own credit cards which could be identified were about HK$337,291 from December 2006 to October 2007, averaging about HK$30,663 per month.

64. Mr. Yim also prepared a table, which I will call H’s Table.  According to H’s Table, the cash withdrawals by ATM or by EPS were about HK$366,445 for 13 months from October 2006 until October 2007 averaging HK$28,188 per month.  From H’s Table, it can be seen after W’s Cash Card was cancelled, there were hardly any cash withdrawals by ATM/EPS by H, only HK $16,000 for the 6 months from November 2007 to April 2008 averaging only about HK$2,700 per month for this period.  Thus, it would appear that for the 13 months period from October 2006 to October 2007, most of the withdrawals by ATM/EPS would be by W. Even if one were to deduct a small sum of HK$2,700 per month, the cash withdrawals by ATM/EPS by W would still come to about HK$25,488 per month.

65. The amounts which Mr. Yim challenged were in particular the payments by PPS, as H’s case was that he had also used this method to meet certain payments including his own credit cards, and further Mr. Yim submitted that W, in paragraph 7 of her 1^st Affirmation, was only referring to withdrawals by cash and did not refer to any payments by transfers by PPS.  It was submitted on behalf of W that she would use PPS transfers for other expenses, and clearly from the bank/credit card statements, she had used this method to pay her credit card bills.  She had also said that H would sometimes sign some blank cheques for her to pay for something major, on his behalf or for herself or for the family, but she would call him first to inform him of the amount and usage.  At this stage, W had not been able to check all her credit cards or to identify the other payment by PPS, nor had H.  There is now no dispute that the Cash Card for W was cancelled in October 2007.  Looking at the bank statements for the period from November 2007 until April 2008, there were still transfers by PPS, indicating that H did use this method for certain payments, but such payments were far fewer than before the card was cancelled.  As I could make out, the PPS transactions after October 2007 were:

For month of November 2007	total HK$74,827
December 2007	61,200
January 2008	nil
February 2008	1,675
March 2008	nil
April 2008	3,143
Total : HK$140,845 divided by 6 = about HK$23,500

66. Compared to the above, during the period from October 2006 to end of June 2007, as listed in W’s Schedule A, excluding those amounts paid for H’s credit cards, according to my reckoning, the PPS payments totalled about HK$728,423 over these 9 months, averaging about HK$80,000 per month. Included in these figures were also payments for W’s credit cards. If one takes broadly Ms Yips’ figure of about HK$30,000 per month, then, after deducting credit card bills, the other PPS payments would be about HK$50,000 per month.  I accept that some of these payments could be by H.  On a rough and broad brush approach, and doing the best I can at this preliminary stage, I would apportion each HK$25,000, i.e. a further monthly sum of HK$25,000 for W’s PPS payments other than her credit cards. Thus, the total amounts withdrawn/transferred by W with her Cash Card, whether by ATM or EPS or by PPS (including payments for her credit cards) would be about HK$80,000 per month.

67. W had produced a revised list of her expenses for paragraphs 4.1(General Expenses), 4.2 (Personal Expenses) and 4.3 (Child’s Expenses) of her Form E, and claimed the total amount to about HK$288,316.30 per month.  Some of these expenses are now covered by H’s undertakings in the Interim Order.  One of the main disputes was in paragraph 4.1 in relation to the mortgage repayments and management fees for two new properties which W bought after separation.  H said these were purchased without his consent and knowledge, and the mortgage repayments for these two new properties amount to HK$46,000 per month, with another HK$4,800 per month for management fees and rates, i.e. roughly HK$50,000 per month.

68. The two properties which W bought after separation, in 2007 were:

(i)   a property in Shenzhen for her parents to live in.  W said H had agreed previously about a year ago to her buying a property for her parents, although when W eventually made the purchase, it was on 27 July 2007 and the purchase price was HK$1,680,000.  This property was registered in W’s sole name.  The down payment was HK$505,000, and the balance was paid by way of a mortgage loan.  The monthly payments were HK$10,000 and management fees were HK$400 per month.  W agreed that H had no actual acknowledge as to when the purchase was made.

(ii)  the other property in Shatin was purchased by W  about a month after she issued her divorce petition, on 27 December 2007 (“Rosary Villas Property”).  The purchase price was HK$12m.  The down payment was HK$4.3m, and the balance of HK$7.7m was by way of a mortgage loan and the monthly mortgage repayments were HK$36,000 per month and management fees were HK $2,418 per month.  Rates were another HK$2,000 per month. W had previously told this Court that this property was being renovated, and that she intended to move into this property when renovation was completed.  According to W, the Peninsula Heights Property was placed on the market for some time, but not yet sold.  If it could not be sold, Ms Yip said that W would rent it out, and the rental would be about HK$38,000 per month.  

69. Mr. Yim has attacked W’s figures submitting that quite a lot of these were unsupported by any documentary evidence.  In particular, he had attacked W’s sum of HK$15,000 per month for general food expenses for her the Child, and the maid, and W’s sum of HK$28,000 per month for special herbal/nutritional supplements.  He also pointed out that the receipts W produced for the Child’s private tuition/extracurricular classes did not show an amount exceeding HK$6,000 per month when W was claiming HK$12,000 per month.

70. It was H’s case that W’s expenses were exaggerated or inflated, and in any event, he should not be asked to pay for the mortgage repayments for the 2 newly purchased properties, which he did not even know about.  Further, even though the Cash Card was cancelled in October 2007, W did not apply for maintenance pending suit immediately, and in fact went and bought the Rosary Villas Property in December 2007, well knowing that she no longer had the use of the Cash Card, and was only receiving HK$120,000 per month.  She only applied for maintenance pending suit in April 2008, after H ceased the monthly payment of HK$120,000.

71. I agree that a lot of W’s figures were unsubstantiated, but at this stage, I am unable to make findings as to which items are reasonable.  I could only adopt a broad brush approach to the expenses claimed by her. A good indication would be from the standard of living before the separation. I note that according to W’s own evidence, she was the one who was able to “lend” HK$4m to her uncle to lend to H for the purchase of the Peninsula Heights Property.  This was in May 2006.  It is not clear as to when or whether the HK$4m was repaid.  Nevertheless, after the parties’ separation, W was able to pay for the down payments for the two above properties.  At the time of the filing of her Form E in February 2008, after paying for the down payments for the 2 newly purchased properties, she still had about HK$500,000 cash, and about HK$3.3m in stocks.

72. From the above, since no other source of income was disclosed, it would appear that W’s savings and investments were from the amounts paid to her by H, whether from the monthly sum of HK$120,000, or the withdrawals/transfers from the BOC Account, or from the monthly rental income of HK$28,400, which she has been collecting from renting out Bloomsville Property and a carpark of the Peninsula Heights Property since at least 2006, i.e. before the separation.  

73. In addition to those auto-payments now covered by H’s Undertakings, the rental income of HK$28,400, and the monthly sum of HK$120,000, and rental income of HK$28,400, as earlier stated, W was in receipt of probably at least another HK$80,000 per month with the Cash Card.  This would make a total of about HK$ 200,000 per month received from H before the parties’ separation at end of June 2007. Whatever her expenses were before the separation, she was able to meet her expenses and the Child’s expenses from these sums, and, as I have indicated earlier, appeared to have surpluses for savings/investments.

74. By all accounts, the parties are wealthy, and the marital relationship lasted 16 years.  There was no financial limit set to the Cash Card used by W.  Although the parties are not “ultra-rich” as the couple in F v F, I do not see why the standard of living which has been the norm of the W before the separation could not be continued, and why it should be disrupted by H unilaterally, particularly there did not appear to be any downturn in his own standard of living.  For this, I particularly have in mind his purchase of the 2^nd Shenzhen Property jointly with Ms Chin, and also his payment of HK $300,000 for the Mission Hills Golf Club membership, both shortly before alleged transfer of his business interest and the parties’ separation, and his gambling habits which continued after the parties’ separation.  Furthermore, the mortgage repayments of the 1^st Shenzhen Property and the 2^nd Shenzhen Property alone came to HK $177,000, although it is not clear from what accounts these were made, but H clearly was the borrower in both.  I am not prepared at this stage to adopt a budgetary approach to W’s and the Child’s needs, as seemed to be the amounts suggested by H, after taking into account the “norm” before the separation and H’s own continuing lifestyle.

75. Thus, in addition to H’s current undertakings, and the rental income, I am of the view that H should pay an amount which was more or less the amount received by W prior to the separation, i.e. an interim monthly sum of HK$ 200,000 per month.  This amount together with the current rental income of HK$28,400 would give W cash of HK$228,400 per month, in addition to the Undertakings.  I am of the view that this should be sufficient to cover the interim reasonable needs of W and the Child, including the mortgage payments etc. of the two new properties she bought after separation, bearing in mind the Rosary Villas Property was purchased in December 2007, and it should  be ready for occupation by W soon, and the Peninsula Heights Property could be either sold or rented out.  If rented out, W would be in receipt of another HK$38,000 per month which would help her with all her monthly mortgage repayments.  As Thorpe J had said in F v F referred above, any under provision or over provision at this stage can be taken into account at the substantive hearing.

(c) Whether H should pay W an additional sum of HK$50,000 per month for her legal costs

76. W had sought an additional sum of HK$50,000 per month towards her legal costs up until the FDR hearing, now fixed on 30 September 2008. W had provided 4 estimates of costs as follows:

(i)     On 13 February 2008, solicitors costs of HK$58,000, and Counsel fees and disbursements of another HK$40,000, totaling HK$98,000,

(ii)     On 6 May 2008, solicitors’ costs of HK$40,000 and Counsel fees and disbursements of HK$31,000, totaling HK$70,000,

(iii)    On 24 June 2008, solicitors’ costs of HK$100,000 and Counsel fees and disbursements of HK$198,643, totaling HK$298,643,

(iv)    On 2 July 2008, during the hearing, solicitors’ costs of HK$198,000 and Counsel fees and disbursements of HK$269,643, totaling HK$467,643.

77. The last estimate (iv) was a hand written note submitted during the hearing after I asked Ms Yip to clarify the costs situation, since it was not clear why the (ii) would be less than (i), as one would have thought normally, the costs would increase and not decrease, as the proceedings progressed. Apparently, according to Ms Yip, the (ii) was from the date of the 1^st appointment hearing until the 2^nd 1^st appointment hearing.  Anyway, according to (iv), her total legal costs up to and including the maintenance pending suit hearing on 2 July 2008 was HK$467,643.  Ms Yip informed this Court orally at the hearing on 2 July that W had paid HK$238,000 on account, the details of which were not reflected in any of the written estimates, nor did W refer to this payment in her affirmations.

78. In KGL v. CKY & Another [2003] 2 HKLRD, in an appeal concerning the provision of legal costs in an application for maintenance pending suite, the Court of Appeal did not interfere with the amount of payment towards legal costs of HK$20,000 per month, and the estimated amount of costs of HK$ 180,000, even though Counsel for the husband in that case had attacked the figures as being arbitrary.  The Court of Appeal was of the view that the Family Judge, with his experience in family matters, could have a rough idea of how long those matrimonial proceeding would take and the probable amount of costs to be incurred.  Ms Yip has also referred me to an unreported judgment of Deputy Judge K.W. Wong on maintenance pending suit and provision for legal costs, K v K, FCMC 6100 of 2006 dated 29 February 2008 in which notwithstanding that the wife in that case had not apparently even prepared an estimate of costs, the Deputy Judge relied on KGL v CKY and made an order for maintenance pending suit, which included a provision for legal costs.

79. There is no prescribed form for an Estimate for Costs in Hong Kong.   Practice Direction 15.9, in relation to Estimates for Costs for Ancillary Relief was introduced before the PD 15.11.  At present, the estimates for costs provided by practitioners in different cases vary, some are more detailed and some merely a rough sum. In the present case, both H’s and W’s estimates were in the latter category.  This matter is not in fact relevant in view of my decision on this issue in this Judgment.  I would however, find it helpful in future, if a party wishes the Court to make an order for provision for legal costs, particularly when the amounts involved are high, for some more information to be provided, such as the amount of costs already paid and to be incurred.  A skeleton bill is not necessary, but information of the estimated number of hours involved and the charging rate would also be helpful to enable the Court to make a decision on whether the amount sought is reasonable. 

80. There is no dispute between the parties that this Court has the power to include an element for the contribution towards W’s legal costs in an order for maintenance pending suit.  What then are the “requirements”?

81. Mr. Yim has referred me to the unreported judgment of Judge Bruno Chan dated 3 October 2007 in H v H FCMC 1969 of 2007.  Judge Chan has conveniently summarized in paragraph 44 of his judgment of the requirements as put forward by the Court of Appeal in England in Currey v Currey [2006] EWCA Civ 1338, (No, 2) [2007] 1 FLR 946 as follows:

(i) that the applicant has no assets, or none that can be reasonably deployed;

(ii) that she can provide no security for borrowing, or none which could reasonably be offered.

(iii) that she cannot reasonably obtain legal services by offering a charge on the on the outcome of the litigation;

(iv) that she cannot secure publicly funded legal help at a level of expertise apt to the proceedings.

82. In the present case, at the date of her Form E, W had deposed to a total of about HK$20m of net assets, including about HK$3.3m of cash and shares, and the 4 properties in her sole name.  According to Ms Yip, her cash and shares are now down to about HK$2m, as she had used some towards renovation of the Rosary Villas Property, and some of her shares had been sold and used for living expenses.  Whatever, in my view, this is not a case where a wife has no assets that she cannot reasonably deploy or can provide no security for borrowing.  W had said she intended to sell the Peninsula Heights Property.  It is her case that she could not sell even though she had put it on the market, but no details were given.  No information was given as to her asking price.  The net equity of Peninsula Heights Property, according to her own Form E, was about HK$4.36 m.  Bloomsville Property was valued by her to be about HK$8.5m, and there was no mortgage. There is no indication that she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation or on one of her properties.  There is no evidence that her solicitors are about to withdraw their services. Anyway, the costs order I intend to make will also help her defray some of her costs.

83. Having considered W’s case, I agree with Mr. Yim that she does not meet the requirements as set out above.  In the circumstances, I am not prepared at this stage to include in my order any provision for legal costs.

BACKDATING

84. The Cash Card was withdrawn by H sometime in October 2007, and the monthly sum of HK$120,000 was stopped in February 2007, and resumed as from July 2008.

85. Ms Yip only sought backdating from February 2008.  The last payment of HK$120,000 was on 4 February 2008.  Thus, the backdating should be from March 2008, with credits for any amounts already paid.

ORDER

86. Upon H’s undertaking to continue to meet the auto payments as listed out in the Interim Order, my order is therefore:

(i)      H shall pay to W a monthly sum of HK$200,000, as from 1^st March 2008, and thereafter on the 1^st day of each calendar month, with credits for amounts already paid, as interim maintenance for her and the Child.

(ii)     All arrears shall be paid by H within 21 days from the date of this order.

87. I have not made any apportionment regarding the sum of HK$200,000, i.e. as to which portion is for W, and which portion is for the Child.  Strictly speaking, there should be an apportionment.  I hope the parties can agree to the apportionment, and if not, there be liberty to apply by written submissions.

COSTS

88. As submitted by Ms Yip, in Mr. Yim’s first Submissions, on 25 June 2008, H’s offer then was  to pay a monthly sum of only  HK$12,000 for the maintenance of W and the Child and it was not until the commencement of the hearing that Mr. Yim told this Court that H agreed to resume paying the monthly sum of HK$120,000 . Mr. Yim has helpfully referred this Court to a section from a publication on “Matrimonial Costs” in which it was said that as applications for maintenance pending suit would usually be disposed of on submissions only and without findings of fact and the court might wish to defer any consideration of the costs until the final determination of the application for ancillary relief.  Mr. Yim also referred to what Judge Chan had said in the case of C v F where he reserved the question of costs after making an order for maintenance pending suit.

89. Costs are in the unfettered discretion of the court.  I agree in most cases for applications for maintenance pending suit, costs should be reserved.  Ms Yip submitted in this case there was a disruption of the norm, and H simply stopped all payments without any valid reasons, and W had to come to the Court before H agreed to resume the payment of the monthly sum of HK$120,000.  Although W has not obtained from this Court an amount as high as she was seeking, she clearly is the successful party.  Furthermore, as mentioned earlier in this Judgment, H’s financial disclose so far has not been full or satisfactory at all, and his own case was full of contradictions and inconsistencies.  In view of all the circumstances, I do not see why he should not pay the legal costs of W’s application, and why such costs should not be taxed forthwith.

90. I therefore order that H to pay W’s costs of and incidental to her application for interim maintenance, to be taxed forthwith, if not agreed, on party and party basis, with certificate for counsel.  This is an order nisi, which shall be final, if there is no application by either party within 21 days.