WW v. LLN formerly known as LSM

FCMC 4996/2018

[2019] HKFC 236

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 4996 OF 2018

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J U D G M E N T
(Leave to Appeal)

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1.  This is a determination on the petitioner husband (“the husband”)’s application for leave to appeal against the maintenance pending suit (“MPS”) order granted on 23 July 2019 in which the respondent wife (“the wife”) was granted the following MPS from the husband:

(1) $60,000 per month payable on 1st day of every month starting from 1 August 2019 until further order of the court;

(2) $50,000 per month as litigation funding payable on the 1^st day of every month starting from 1 August 2019 until further order of the court and such payment should be made directly to the solicitors acting for the wife; and

(3) A lump sum of $660,000 within 14 days as backdated payment to cover the MPS and litigation funding as from 1 February 2019 to 1 July 2019.

2.  The wife opposes the husband’s application for leave to appeal.

The Law

3.  Leave to appeal is governed by s. 63A (2) of the District Court Ordinance, Cap 336 which reads:

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that-

(a) The appeal has a reasonable prospect of success; or

(b)   There is some other reason in the interests of justice why the appeal should be heard.”

4.  As to what constitutes a reasonable prospect of success, it has been held that the prospects of succeeding in the intended appeal must be “reasonable” and therefore more than “fanciful”, but without having to be “probable”: SMSE v KL[1]

The Husband’s Draft Notice of Appeal

Burden of Proof

5.  The husband must be right in saying that the burden of proof is always on the applicant, i.e. the wife in this case, to prove her case on a balance of probabilities.  That is simply a submission on the obvious.  The issue here is whether this court has wrongly shifted that burden to the husband.

6.  It has to be noted that nowhere in the MPS Judgment did I expressly say that the burden of proof was not on the wife.  I was simply silent on this topic as that was not a major issue at the time.  However, in §13 of the judgment, I have referred to paragraphs 37 and 38 of Hartmann JA’s judgement in HJFG v KCY[2], in particular, paragraph 37(c) where His Lordship restated the principles on MPS as laid down in the English case of TL v ML [2006] 1 FLR 1263, 1289 as follows:

“(c) In every maintenance pending suit application there should be a specific maintenance budget which excludes capital or long-term expenditure, more aptly to be considered at the final hearing. The budget should be examined critically in every case to exclude forensic exaggeration.”

By relying on such a legal principle, I was fully aware that the wife had a duty to produce a MPS budget for the court’s consideration and the implication must be that she also had the burden to prove her case including the said budget. 

7.  The husband referred to §26 of the judgment saying that I have erred in law in stating that there was no evidence or claim from the husband that the wife had a good income source. This court was purely stating a fact and I fail to see how that could be translated into a shift of the burden of proof to the husband.

8.  The husband also referred to §§29-30 of the judgment concerning the wife’s bare assertions on some of the items in her MPS budget.  

9.  First of all, the wife’s assertions in her Form E or supporting affirmation are part and parcel of her evidence, be they bare or not.  There can be no dispute that the court will adopt a broad-brush approach and no detailed analysis will be carried out at this interim stage.  That was why some of the claimed items were reduced by this court in view of the lack of some more objective evidence.  Again, I fail to see how that could be interpreted as shifting the burden of proof to the husband.

10.  I am not satisfied that the husband has any reasonable prospect of success on this ground.

Quantum of MPS: $60,000 per month

11.  The husband submitted that I have erred in allowing the sum of MPS at $60,000 per month without any evidential basis and only relying on the bare assertions of the wife. 

Discussion

12.  In §§28-38 of the judgment, I have considered the wife’s MPS budget and it is true to say that for some of the items, there was no objective evidence produced apart from the wife’s own assertions.

13.  As I have said earlier, the wife’s own assertions were evidence in themselves but as there was a lack of objective evidence in support of the quantum, I have exercised my discretion in reducing the amount of some of those items.   This must be right if one should adopt a broad-brush approach.  I am sure that the husband is not advocating that the wife would have no expenses at all, say on food, simply because she could not produce her supermarket receipts or restaurant bills. The same is true for other items.  Common sense tells that the wife must have some expenditures on clothing, personal grooming, entertainments, etc.  The issue is only how much. 

14.  The next question is whether I have erred in reducing the amount as I have done in the judgment.  In other words, was I wrong in reducing them by say 50%, but not more.  I must admit that the final award in ancillary relief may prove that I was wrong, or right, in awarding those amounts.  But that is an issue which should be properly left to the final hearing. 

15.  In this regard, I would like to refer to the recent case of CHWS v LNLAI[3] in which Cheung JA in giving the judgment of the Court of Appeal had this to say at paragraph 3.1:

“3.1 We accept that it is reasonably arguable the Judge had not properly considered the evidence relating to the rental income of the DB property which may reduce the amount of arrears that the Husband is ordered to pay the Wife.  We also accept that the Wife’s expenses may need to be adjusted because they may include the expenses of the adult son who was living with her.  It is also reasonably arguable that the backdating should not be 11 October 2013.  However, it also necessary to bear in mind the interim nature of a maintenance pending suit which generally requires the Court to adopt a broad brush approach in deciding the amount to be awarded.  It is also for a limited duration until the final resolution of the issue of financial relief of the parties.  Inevitably there will be adjustment to the final order to be made in the event of overpayment or underpayment of the maintenance pending suit.  “

16.  In the judgment, the Court of Appeal ruled that in spite of the fact that the intended appellant may have reasonable argument on 3 aspects of the MPS judgment, it is important to bear in mind of the interim nature of a MPS which generally requires the Court to adopt a broad brush approach.  In the later part of the judgment (paragraph 3.4), the Court came to the view that it was not reasonably arguable that the Judge was plainly wrong on the issue of the intended appellant’s ability to pay.  Equally, the Court was not convinced that it was reasonably arguable that the discretionary nature of the Judge’s decision has gone beyond the permitted limit so as require the court’s intervention.  The application for leave to appeal was therefore dismissed.

17.  Coming back to the facts of this case.  There is no issue on the husband’s ability to pay the MPS as ordered.  I am also not satisfied that it is reasonably arguable that the discretionary nature of my decision has gone beyond the permitted limit so as to require the intervention of the Court of Appeal.  Therefore, I am not satisfied that the husband has any reasonable prospect of success on this proposed ground of appeal.

Parties’ Separation of Finances

18.  It is the husband’s submission that I have failed to take into consideration his case that the parties have already agreed on the separation of their finances back in 2005. He argued that without taking into account of this preliminary issue, there remains a risk that following the ancillary relief trial, if it is found that the parties did split their assets years before the MPS application, the Court will not be able to adjust any over payment through the substantive order for ancillary relief.  He further argued that I have erred in not taking into account the status quo, namely that he is not paying any maintenance to the wife, which is relevant and pertinent to the consideration of what amount (if at all) would be reasonable and fair in the circumstances.

Discussion

19.  It is quite clear that even in the husband’s own case, his assertion that the parties have agreed on a separation of their finances may need to be determined in a preliminary issue trial.  His main concern is that the Court may not be able to adjust over payment, if any, through the substantive order for ancillary relief. 

20.  Although this may not be an appropriate occasion to form any preliminary views on whether the parties had really agreed on a separation of finances or whether the Court will be in a position to adjust any over or under payments in the final ancillary relief order, there are at least 2 important facts that the Court has to take into account.

21.  Firstly, there is no dispute that the wife has been residing in the former matrimonial home (at Tai Koo Shing) with the husband at least up to the latter’s departure in 2017.  The former matrimonial home was registered under the name of a company in which the husband was the sole shareholder.  There is equally no dispute that the husband has been paying the outgoings of the former matrimonial home, including the provision of a domestic helper for the wife’s use.  In addition to that, the husband has also at one stage provided the wife with a company credit card with a credit limit of $50,000 per month.  These are all evidence pointing to the fact that the husband has been maintaining the wife, albeit not by way of monthly cash payment, and thus casting doubts on the husband’s claim of separation of finances.

22.  Furthermore, this was a long marriage of 24 years (1993-2017).  At the end of the day, it may not be easy for the husband to argue against some sharing of, at least, the former matrimonial home which has a net value of over $11 million.  Any over payment of MPS can always be set off against the wife’s interest in that property.

23.  The husband also argued that I have erred in not taking into account the status quo of no payment of maintenance being made by the husband.

24.  I have some difficulty in following the logic.  After finding the wife’s interim reasonable needs and there being no suggestion on the husband’s inability to pay, it is precisely why a MPS order is necessary in view of the husband’s failure to pay reasonable interim maintenance to the wife.   The husband cannot simply rely on his default as a ground for refuting the wife’s application.

Other Relevant Considerations

25.  It is part of the husband’s submission that I have erred in failing to consider the factors under section 7 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”). 

26.  My view on this submission will be short.   If one should look at section 3 of MPPO and the relevant case laws[4], the overriding considerations for MPS application are reasonableness and fairness.  Unlike sections 4, 6 or 6A of MPPO, there is no requirement under section 3 that the court should have a full consideration of the section 7 factors.  That is why only a broad-brush approach would be adopted as the detailed investigation of a party’s financial resources, income, needs, etc. will only be fully canvassed at the final hearing.

27.  I am not satisfied that the husband has any reasonable prospect of success in this proposed ground.

Litigation Funding

28.  The husband submitted that I have erred in granting an order of litigation funding not limiting its terms on quantum and time.  He also made complaints on the wife’s financial disclosures and the court’s acceptance of the assertion that the UK property was being held on trust for the children.

Length of Litigation Funding Order

29.  The husband submitted that the litigation funding order should have been structured so as to best encourage the wife to act reasonably in reaching a settlement. 

30.  There is no suggestion in the draft grounds of appeal on when the litigation funding order should end.  Even in counsel’s written submissions (paragraph 19), apart from criticising the court in not limiting the time for such a litigation funding order (e.g. for 6-12 months, or up to FDR Hearing), counsel has not made any submission on when that order should reasonably end in the particular circumstances of this case. 

31.  I am fully aware that in some MPS Orders, a time limit may be imposed on litigation funding.  But that is always a matter of the court’s discretion.  In the particular circumstances of this case, and in view of the relatively modest amount claimed for litigation funding (the issue on quantum will be discussed further below), I have decided to exercise my discretion on litigation funding in the way as I did.  I am not satisfied that the husband has a reasonable prospect of success in overturning the exercise of such discretion on appeal.

Amount of Litigation Funding

32.  The husband also submitted the amount of litigation funding was not justified in view of the fact that the wife had only incurred legal costs in the sum of about $238,000 from the date of Petition to the date of MPS hearing.

33.  It may be true to say that the wife has been quite conscious in limiting her legal expenses so far, including appearing in person at the last hearing and thus saving some of her legal costs.  But everyone knows that litigation costs are very high in Hong Kong.  As I have stated in §52 of the judgment, the wife’s estimated legal costs up to the end of the ancillary relief proceeding was $926,000.  That was quite a modest figure, presumably based on an assumption that the ancillary relief proceeding would proceed along a normal path without the need for other satellite hearings, like preliminary issues or leave to appeal applications. In this regard, I note from the husband’s Statement of Costs dated 6 August 2019, his costs for this application for leave to appeal (on paper) were already $93,876.  If I should refuse leave and the husband decides to go to the Court of Appeal for leave, the costs would no doubt be further increased.  It is not unreasonable to expect the wife to have incurred a similar amount in legal costs for this leave application.  In other words, the wife has to expend legal costs by using up at least 2 months of the litigation funding (amounting to about $100,000) simply to deal with the husband’s application for leave to appeal.  If one should look at the matter of litigation funding in that light, I do not think the amount granted ($50,000 per month) can be regarded as excessive in any way.

Backdated Payments

34.  The husband submitted that I have further erred in allowing the backdating of MPS from 1 February to 1 July 2019.

My Views

35.  Although the amount of backdated litigation funding from 1 February to 1 July 2019 would be $300,000 whilst the legal costs incurred by the wife were only $238,000, one must appreciate that the litigation funding allowed was not simply for the reimbursement of legal costs paid by the wife so far.  One has to look at the broad picture and to look at the overall costs position of the wife, including legal costs already paid and costs yet to be incurred.  I maintain my view that a monthly sum of $50,000 in respect of the wife’s litigation funding is about right and there is no reasonable prospect of success in overturning that decision on appeal.

36.  I was further criticised for not deducting the amount paid to the domestic helper at $5,500 per month from the MPS, and to include such amount in the backdated order.

37.  I was of the view that since the domestic helper was living with the wife and serving her instead of the husband, it is only natural that such future salary should be paid by the wife directly to the domestic helper.  There is no requirement in the MPS Order for the husband to continue to pay the domestic helper’s salary.  What the husband should do is simply stop paying the domestic helper’s salary after he has started paying the MPS to the wife.

38.  The husband also criticised me in including the domestic helper’s salary in the backdated amount.  I suppose that this is a criticism of double counting.  This may be true to an extent but we have to bear in mind that the amount of MPS arrived at is necessarily an estimation after adopting a broad-brush approach.  There will be future adjustment if it is found that such estimation was indeed incorrect. I am not prepared to grant leave to appeal simply on this relatively small sum and I am not satisfied that the husband has any reasonable prospect of success in his intended ground of appeal.

Supplemental Written Submissions

39.  The husband submitted that I have erred in failing to give the parties the opportunity to file supplemental written submissions to address some of the concerns of the court.   It was even submitted that the due administration of justice has been adversely affected by this failure. 

40.  I can only say that an application for MPS always has an element of urgency in it.  Justice requires this sort of urgent application to be dealt with as soon as possible.  I am not convinced that the administration of justice has been adversely affected because I have not required the parties to submit further written submissions.

Other Miscellaneous Grounds

41.  I note that the Draft Notice of Appeal of the husband has a total of 10 pages containing 10 main grounds and within each ground, there were many sub-grounds.  In the above discussion, I may not have given a discussion on each and every sub-ground but I must stress herein that I have given consideration to all of them but came to a conclusion that none of those grounds or sub-grounds would justify this court in granting the husband leave to appeal.

Stay of Execution

42.  The husband also asked for a stay of execution pending appeal.  I see no reason why such a stay should be granted.

Conclusion and Orders

43.  Based on the above discussion, I am not satisfied that the husband has any reasonable prospect of success in his intended appeal and there is no special reason in the interests of justice why the intended appeal should be heard.  

44.  The husband’s summons dated 6 August 2019 is dismissed.

Costs

45.  The wife has succeeded in resisting the husband’s application for leave to appeal and should normally be awarded the costs of the application.  However, the wife has failed to comply with paragraph 9 of the New Arrangement for Application for Leave to Appeal in the Family Court issued on 13 August 2018 in submitting her statement of costs for the court’s summary assessment.  In the circumstances, I have decided not to exercise my discretion on costs in her favour.  There shall be no order as to costs in respect of this summons, including all costs reserved, if any.     

[1] (2009) 4 HKLRD at para 17

[2] [2012] 1 HKLRD 95

[3] CAMP 62/2019 [2019] HKCA 1017, unreported, date of judgment: 4 September 2019

[4] HJFG v KCY, supra