M,G v. S,CYE

FCMC 15394/2017

[2019] HKFC 104

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 15394 OF 2017

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J U D G M E N T

(Maintenance pending suit/Interim maintenance and litigation funding)

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Introduction

1.  This is an application by a Respondent wife for maintenance pending suit for herself pursuant to s.3 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) and interim maintenance for the two children of the family, a boy aged 11 and a girl who is 7, pursuant to s.5 of the same ordinance. In addition, the wife seeks litigation funding.

The main issues

2.  Consequently, there are only two broad issues to be determined, namely how much maintenance should the husband pay to the wife for herself and the two children of the family on an interim basis and should there also be an order for litigation funding and if so in what amount and for what period of time?

Background 

3.  The parties married on the XX April 2006 and on the 24 November 2017 the husband issued a petition based on the wife’s unreasonable behaviour. Sensibly the particulars were later watered down and the petition then proceeded in a milder form. The wife left the former matrimonial home shortly after the petition was issued, in December 2017 and on the 19 January 2019 the decree nisi was pronounced.

4.  Unfortunately, there have been ongoing issues with respect to the care of the children, with the children living apart from each other for significant periods of time. Consequently, following a Children’s Dispute Resolution hearing (CDR) in August 2018 the court imposed an interim order and sent the parties a Memo as follows:

Memo

Re: FCMC 15394 of 2017

The CDR hearing in relation to this matter was heard before me on the 28 August 2018. Given that no agreement was reached it was further directed that short submissions be filed by both sides. These were received by the court on the 4 September 2018.

The reason for the filing of short submissions was that the court remains concerned that there should be some interim arrangement put in place, given that the two children of the family continue to reside separately from each other for much of the time.  The elder child C, who is nearly 11 years old, is based with the Petitioner father, whereas A, who is 7 years old, is based with the Respondent mother. Both children attend good local schools where there is a lot of emphasis on homework. In addition, C has some learning difficulties. He also has partial hearing loss in both ears and he wears hearing aids.

It is generally thought that it is better, if at all possible for siblings to be raised together. If the case does not settle and the matter proceeds to trial, there could be a very long period of time before this situation is rectified satisfactorily. Consequently, the court intends to make an interim order with a view to ensuring that the children will be based with each other, pending either an agreement reached between the parties or a decision reached post-trial.

The court is aware that each party holds very strong views with respect to the long term arrangements for the children and what is likely to be in their best interest. Consequently, the court wishes to emphasise that this is an interim order and that it might not be imposed post-trial – although it is of course one of the options that the court may consider.

At present the father has interim care and control of C and the mother has interim care and control of A. They also alternate a truncated weekend with both children spending from 2:00 pm on Saturday to 11:00 am on Sunday with each of their parents on an alternate basis (See the court order dated the 5 February 2018). By virtue of the court order dated the 17 May 2018 it was further ordered that both children shall spend Tuesday nights together with the mother and that they shall spend Thursday nights together with the Father.

It seems that the parties are agreed that there shall be an order for joint custody. Longer term the mother seeks a more traditional order with care and control of both children vesting in her and reasonable/defined access to the father to include overnight staying access one night per week and alternate weekend staying access from Friday after school until Sunday evening. She proposes one dinner access on the weeks that she has the children for a full weekend. The father for his part proposes alternate weekend staying access for both children from Friday after school until Monday morning and for each party to have alternate nights staying access, with the father having Tuesday’s and Thursday’s and the mother having Mondays and Wednesday’s.

A compromise was proposed by the court during the hearing, but was not accepted by the mother. The court is not however bound by that compromised suggestion and on review thinks it would be better if an order was made which builds on the current arrangement whereby the mother already has overnights with the children on Tuesday and the father already has overnights with the children on Thursdays.

With this in mind the court intends to impose an interim shared care regime on a 2:2:5:5 basis during term time whereby the mother shall have the care of both children on every Monday and Tuesday night, the father shall have the care of both children on every Wednesday and Thursday night and weekends shall be alternated with the children being picked up from school on Friday and returned to school by the responsible parent on Monday morning. The court orders dated the 5 February 2018 and the 17 May 2018 shall be varied accordingly.

In the absence of any agreement between the parties this arrangement shall commence on Monday 10 September, [2018] with the children spending the weekend of the 14 – 17 September with their mother and the weekend of the 21- 24 September with their father and so on and so forth.

Single public holidays during term times shall be taken as they fall.

The school Christmas, Chinese New Year and Easter holidays shall be split equally between the parties with the Mother choosing the first half of the Christmas and Easter school holiday and the Father choosing the first half of the school Chinese New Year holiday.

There shall be a Pre Trial Review on the children’s matter on the 12 November 2018 at 2:30 pm.

Both parties do personally attend that hearing.

Costs be reserved.

5.  Further directions were given in relation to the children’s matter on the 16 January 2019, including a request for a Clinical Psychologist’s report and a further Pre Trial Review is scheduled for the 2 May 2019. If common sense does not intervene, it is anticipated that the children’s matter shall be set down for trial on the 2 May 2019. (Since drafting this judgment the court has received a consent summons from the parties dated the 15 April 2019, in which it is agreed that the parties shall have joint custody and joint care and control of the children on the 2:2:5:5 premise. Agreement has also been reached with respect to the school holidays etc).

6.  The husband continues to work for a family design company that is involved in designing and selling temperature controlled kitchen/food ware. The husband is in charge of the product design side of the business. The wife for her part is a part time lecturer in Software design at the X College. She is also taking a part time Master’s degree. She has also been involved with various business ventures in the past, including a web design business and a small skin care company. Both parties claim to have a low income.

7.  The wife maintains that the husband receives significant financial support from his family, including his mother and his great grandmother and that this should be taken into account by the court when it makes its interim order. The wife’s case is also that she has had to borrow significant sums from her own family and friends following the separation and that she cannot do this longer term. It seems from the face of the papers that there are no assets to speak of apart from some inherited money from the husband’s father and the small family companies referred to above. It is the wife’s case, however, that the husband has never had to worry about money and that he comes from a wealthy family. She further maintains that he is the beneficial owner of a property in Stubbs Road. It is also her case that a significant portion of the family’s regular monthly expenses are/were paid for by the husband’s family and/or they received financial assistance in kind and that this is a financial resource that is currently available to the husband. The husband for his part says that the financial contribution from his family has been overstated. During the hearing, counsel for the husband conceded that a family member provides a home for him and the children and that C’s school fees were also paid for. The husband also confirmed that his mother has helped him on an ad hoc basis in the past and that in particular she has assisted him with payment of outstanding credit card bills. However, he maintained that he did not receive regular financial assistance from her and that she certainly did not provide him with a regular sum of HK$200,000 per month, as had been suggested.   

8.  Although the wife estimates her monthly expenses at HK$244,100 per month and she initially sought this sum in her summons dated the 16 January 2018, she now says that she is prepared to accept the sum of HK$120,000 per month for herself and the children and a further HK$80,000 per month for litigation funding, or HK$200,000 per month in total. She says that she owes over HK$1.7 million. This figure has yet to be fully substantiated.        

The law

Maintenance pending suit and interim maintenance

9.  The law is well known and not in dispute. Section 3 Matrimonial Proceedings and Property Ordinance Cap 192 states that the only governing principle is that the court shall make such order as it considers reasonable in all of the circumstances of the case. Consequently, applications such as these are approached on a broad-brush basis. A detailed examination of the parties’ means may be examined at a later date at a full ancillary relief hearing if there is no agreement in the meantime, when there is then every opportunity to achieve fairness by means of a set off. In other words, if there is any overpayment or underpayment that can normally be rectified at a final ancillary relief hearing. Applications for interim maintenance under section 5 of the same ordinance are approached in the same way. As Rayden points out

…what really matters is the immediate and reasonable requirements of the wife balanced against the ability of the husband to pay for them, assessed using a broad-brush approach. (See paragraph 16.17 of Rayden, 18^th edition).

10.  Further

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 …… Any under provision or over provision in the order for maintenance pending suit can always be corrected when the account comes to be taken at the substantive hearing when there are every opportunity to do fairness by set off ……” (See paragraphs 16.18 of Rayden, 18^th edition).

11.  Likewise the court may look to the assertions made by the payee and take a similar approach when looking at her means and alleged reasonable requirements.  The court should look to the reality of the situation, in so far as it can, in relation to bare assertions made by either the husband or the wife.

12.  Although I was not specifically referred to the following authority by either side it seems to me that the following section from Jackson’s Matrimonial Finance 9^th edition (paragraph 3.92) may also be of some assistance:

“When a party applies for an order for maintenance pending suit or for periodical payments, it is not a complete answer to the claim for the potential payer to say: ‘I have no income and no assets’. In one case, a husband with a very small income (in three successive years it was £42, £69, £60) who asserted that he was ‘living on borrowed money and staving off a number of creditors while he [was] developing certain properties’, was nevertheless shown to have maintained by means of bank loans a consistent standard of living over a substantial period: the court in effect held that if he could borrow for himself he must likewise borrow for his wife. The principle was that he was able to touch resources from which payments could be made; he had the ability to obtain the necessary money, albeit bank loans, and it was assumed that his ventures were such as not only to justify the loans but also reasonably to contemplate their repayment in due course ….”

13.  Reference was also made by both sides to the Court of Appeal decision HJFG v KCY [2012] 1 HKLRD 95 where it was held that:

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

(b)  A very important factor in determining fairness is the marital standard of living. That is not to say that the exercise is merely to replicate that standard.

(c)  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.

(d)  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.”

Maintenance pending suit/interim maintenance

The wife’s needs

14.  The wife’s sets out a schedule of expenses in both her affidavit in support dated the 16 January 2018 and in her Form E dated the 14 March 2018. The Form E states as follows:

Current Monthly Expenses

General

Item	Amount
Rent (without management fees)	(HK$32,330)
Mortgage instalments	HK$ /
Utilities (electricity, gas, rates, telephone & water)	HK$4,600
Management fees	HK$2,670
Food	HK$8,000
Household expenses	HK$1,000
Car expenses	HK$7,000
Insurance premia	HK$ /
Domestic helper(s)	HK$6,500
Other (specify): Pet Food & Stationary/ books/ newspaper/ magazine	HK$3,000
Total monthly household expenses	HK$65,100

Personal

Item	Amount
Meals out of home	HK$2,000
Transport	HK$1,000
Clothing / Shoes	HK$5,000
Personal grooming (including haircut and cosmetics)	HK$4,000
Entertainment / presents	HK$2,000
Holiday	HK$2,500
Medical / Dental	HK$2,500
Tax	HK$/
Insurance premia	HK$
Interim maintenance	HK$
Contribution to parents	HK$
Other (specify): Legal Fees Repayment of CALL-A-LOAN	HK$80,000 7,215
Total monthly personal expenses	HK$106,215

Rent

15.  The wife is currently paying HK$22,000 per month for rent. If one makes this adjustment and the issue of legal fees is put to one side for the moment, the wife’s estimated expenses for both the household and her own personal expenses adds up to just over HK$80,000 per month as follows:

General

Item	Amount
Rent (without management fees)	HK$22,000
Mortgage instalments	HK$ /
Utilities (electricity, gas, rates, telephone & water)	HK$4,600
Management fees	HK$2,670
Food	HK$8,000
Household expenses	HK$1,000
Car expenses	HK$7,000
Insurance premia	HK$ /
Domestic helper(s)	HK$6,500
Other (specify): Pet Food & Stationary/ books/ newspaper/ magazine	HK$3,000
Total monthly household expenses	HK$54,770

Personal

Item	Amount
Meals out of home	HK$2,000
Transport	HK$1,000
Clothing / Shoes	HK$5,000
Personal grooming (including haircut and cosmetics)	HK$4,000
Entertainment / presents	HK$2,000
Holiday	HK$2,500
Medical / Dental	HK$2,500
Tax	HK$/
Insurance premia	HK$
Interim maintenance	HK$
Contribution to parents	HK$
Other (specify): Legal Fees Repayment of CALL-A-LOAN	(HK$80,000) 7,215
Total monthly personal expenses	HK$26,215

16.  The wife says that her biggest difficulty currently relates to rent. She initially moved to Tuen Mun, but this was a long way from the children’s schools. She is currently residing in a much smaller flat in Sai Wan Ho, of approximately 400 square feet, which has the advantage of being closer to the children’s schools and also has some facilities. The children live with her there for 50% of the time. This is very different from the large flat that they lived in when the family was intact and the standard of living that the husband currently continues to enjoy. The children stay in a similarly large flat in the same complex in Stubbs road, when they are staying with the husband. The wife is currently paying HK$22,000 per month rent. Although she makes a case for this to be increased significantly in the short term, I do not intend to do so for the time being. I accept that this is a matter that may need to be revisited in due course.

General Monthly Expenses        

17.  I have no difficulty with the majority of the other general expenses, which I intend to allow in full save for pet food and “others” which appears to be a bit on the high side. In total I will allow HK$53,500 per month, including rental, for the general expenses.

The wife’s personal expenses

18.  The wife currently has some earning capacity and her income is said to fluctuate a little. In her Form E she put her income at HK$13,000 per month. During the hearing her counsel said that this had increased to approximately HK$25,000 per month. Her tax returns show an income of HK$27,000 per month. Longer term there is little doubt that both parties will need to fully maximize their earning potential. The wife says that she will be responsible for her own expenses. This is accepted and shall include repayment of the loan in the sum of HK$7,215 per month.

The children’s expenses

19.  The wife claims HK$40,000 per month for the children’s expenses as follows:

Children

Item	Amount
School fees	HK$3,500
Extra tuition fees	HK$5,000
School books and stationery	HK$1,000
Transport to school (including school bus)	HK$6,000
Medical / Dental	HK$2,000
Extra Curricular Activities	HK$5,000
Entertainment / presents	HK$3,500
Holidays	HK$5,000
Clothing / Shoes	HK$5,000
Insurance premia	HK$4,000
Lunches and pocket money	HK$
Other Transport	HK$
Child-minding fees	HK$
Uniform	HK$
Other (specify):
Total monthly expenses for children	HK$40,000

20.  These figures are not accepted, with the husband pointing out inter alia, that C’s school fees are paid for and that A does not have school fees. Further he says that the children do not take the school bus. The issue of extra tuition is also fiercely contested. All in all, and on a very broad brush basis I will allow the sum of HK$8,250 per month per child. It is for the wife to work within this figure.

21.  In total then it seems to me that on a broad brush basis the wife needs the sum of HK$70,000 per month as maintenance for both herself and the children.

The husband’s ability to pay 

22.  Counsel for the wife makes a number of points in support of the wife’s basic contention that the husband does have the ability to pay.

Credit card expenditure

23.  She points in particular to an initial analysis of the husband’s credit cards which shows a total expenditure from this source alone of over HK$112,000 per month for the year 2017. In addition, it is of note that shortly thereafter on the 25 January 2018, the sum of HK$586,004 was paid off on a credit card through the husband’s mothers company, on behalf of the husband. In general, it seems that the husband (and indeed the wife too whilst they were still together), has been able to spend freely on the credit cards, at one point using them more like cash cards and that the debt has then been paid off in a relatively timely manner.   

Other direct financial assistance from the husband’s mother

24.  It also seems that the husband was assisted in other ways. For example, from May to September 2017 the husband’s mother transferred HK$670,000 to his bank accounts – i.e. a further HK$134,000 per month for that five-month period.

The general standard of living of the parties during the marriage

25.  It is clear that during the course of the marriage the parties enjoyed a very comfortable standard of living; they lived in a property in Stubbs Road, which on the wife’s case is beneficially owned by the husband and on the husband’s case is owned by his mother. The father’s stated position that he paid for the rent, utilities, children’s school fees and expenses and the domestic helpers salary through his company, has yet to be substantiated. However, if that is accepted then it is clear that the father has access to two forms of financial support – his company and his family. In either event it is clear that he has far greater financial resources at his disposal than HK$20,000 per month. To that end, it is of note that audited financial statements for his company have not yet been provided. Certainly on the face of it I tend to accept that the family enjoyed an upper middle class standard of living and that this was provided for, in part by the husband’s family. This appears to have been a financial resource that has been available to the husband throughout the marriage. It seems to me that although the husband may not have received a set amount of money each month, he does receive regular financial support, in addition to his own income and that this is something that the court may take into account at this stage of the litigation.

Litigation funding

26.  In addition to maintenance pending suit/interim maintenance the wife also seeks litigation funding of HK$80,000 per month.

The law

27.  As far as the law on the funding of litigation costs is concerned, Currey v Currey [2006] EWCA Civ 1338 continues to be routinely applied in Hong Kong. This states inter alia that:

“the conditions for a ‘costs allowance’ are as follows:

(1) That the applicant spouse has no assets, or none that can reasonably be deployed (at para [19], [20]).

(2) That she can provide no security for borrowing, or none which can reasonably be offered (at paras [19], [20]).

(3) That she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation (at para [20] and see Sears Tooth, per Wilson J).

(4)  That she cannot secure publicly funded legal help ‘at a level of expertise apt to the proceedings’ (at para [20])”

28.  There is also a requirement to undertake an overarching enquiry

At para [20], Wilson J held that the initial, overarching enquiry should be into whether the applicant for a costs allowance could demonstrate that she cannot reasonably procure legal advice and representation by any other means. Therefore, to the extent that an applicant has assets (as in C v C), she has to demonstrate that they cannot reasonably be deployed (whether directly or as the means of raising a loan) in funding legal services …… Other factors may well come into play.  The subject matter of the proceedings would always be relevant, as would the reasonableness of the applicant’s stance in the proceedings.

29.  In addition reference can be made to the English case TL v ML [2006] 1 FLR 1263 and in particular to paragraph 124 (v):

[124] (v) Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed, but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial (M v M).

Is this an appropriate case to award litigation funding, and if so, in what amount and for what period?

30.  I accept that the wife satisfies the four conditions referred to above in Currey and Currey, namely she has no assets of her own and there are none that can be deployed for litigation funding. I accept that it follows that she can provide no security for borrowings. She cannot offer a charge on the outcome of the litigation and it seems unlikely that she will be favourably considered for Legal Aid. Thus on the face of it she has no ability to raise funds for her own litigation. The husband however appears to have no similar difficulties.

31.  Ms Rattigan criticized the wife heavily for not providing both the husband and the court with a sufficiently detailed breakdown of the anticipated legal costs. In her submission Ms Irving provided an estimate on the premise that the trial on the children would be set down for two days. The estimate is very general and incudes references to finances also. It states as follows:

Estimated legal costs for proceedings going forward:

Proceeding and time estimate	Solicitors fees	Counsel fees	Costs
Children’s Trial (on basis of 2 days trial and 5 hours of preparation i.e. 21 hours in total	Associate (HK$4,100 per hour) + Partner (HK$5,300 per hour)		HK$86,100 + HK$111,300
Children’s Trial		Counsel fees	HK$150,000
Preparation for Children’s Trial (20 hours)	Associate + Partner		HK$82,000 + HK$106,000
Preparation for FDR (20 hours)	Associate + Partner		HK$82,000 + HK$106,000
FDR hearing for 8 hours	Associate + Partner		HK$32,800 + HK$42,400
FDR preparation and attendance for 8 hours		Counsel fees	HK$120,000
Correspondence and other miscellaneous work	Associate + Partner		HK$200,000
Estimated total costs of proceedings			HK$1,118,600

32.  As there is no longer going to be a trial on the children, the only outstanding issue relates to final ancillary relief. In such circumstances it is normal for litigation funding, if ordered, to only be ordered up to and including the Financial Dispute Resolution hearing (FDR). The estimated costs for that are in the region of HK$383,200 plus some miscellaneous work – say HK$400,000 – HK$480,000 in total. This is a very generalized figure and seems somewhat high given the fact that there are not many issues to be determined. I will allow a budget of HK$240,000. As things stand a FDR hearing is unlikely to come on until later in the year. With that in mind it seems to me that litigation funding of HK$30,000 per month, for the next eight months is in the right ball park.    

33.  Although the husband has repeatedly said that he does not have the financial resources available to pay the wife more than HK$20,000 per month plus the additional agreements to pay for school fees for C etc etc, as indicated above I am satisfied that he has the financial resources available to pay these sums on an interim basis.

Conclusion

34.  In conclusion then I will make an order that in total the husband pay the wife HK$100,000 per month inclusive of litigation funding.

Costs

35.  Although neither party can be said to have entirely won nor entirely lost, given the fact that the wife really had no alternative but to seek the assistance of the court I will make an order nisi to be made absolute in 14 days time that the Petitioner husband do pay the wife’s costs of this application on a party and party basis to be taxed if not agreed.

Order

36.  Consequently, I shall make an order as follows:

1)  The Petitioner shall pay maintenance pending suit to the Respondent for herself in the sum of HK$20,000 per month and interim maintenance to the Respondent for the two children of the family in the sum of HK$25,000 per month per child the first payment to be made on the 1 May 2019 and thereafter to be paid on the 1^st day of each succeeding month until further order.

2)  The Petitioner shall provide litigation funding to the Respondent of HK$30,000 per month for the next 8 months the first payment to be made on the 1 May 2019 and thereafter to be paid on the 1^st day of each succeeding month until the 1 December 2019 or until further order. It is further directed that these sums shall be paid directly to the Respondent’s solicitors on account of their costs.   

3)  The First Appointment hearing shall be adjourned to the 2 May 2019.

4)  Both parties shall personally attend that hearing.

5)  There shall be an order nisi to be made absolute in 14 days time that the Petitioner shall pay the Respondent’s costs of and occasioned by this application on a party and party basis to be taxed if not agreed. There shall be certificate for counsel.