K, MA v. U, A

FCMC 14010 / 2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 14010 OF 2015

----------------------------

----------------------------

----------------------------------------------------------------

J U D G M E N T
(Maintenance Pending Suit/Interim maintenance)

----------------------------------------------------------------

Introduction

1.  This is an application by a Respondent wife for maintenance pending suit pursuant to s 3 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) and for interim maintenance for the three children of the family, all boys aged between 11 and 6 years, under s 5 of the same ordinance.

The main issues

2.  The main issue to be determined is how much should the husband pay to the wife for the interim maintenance of the three children? In addition, the wife seeks an order that the husband pay her maintenance pending suit in the sum of HK$20,000 per month being half of a mortgage repayment. There are also issues with respect to back payment and one off expenses.

3.  The wife now seeks an order that on her calculation would mean that each party contributes towards half of the children’s expenses when they are in her care. At present the children are in her care for six nights out of every seven during term time and for half of the school holidays. The wife says that this amounts to just over HK$32,000 per month per child inclusive of school fees or HK$96,312.50 in total. The husband for his part proposes that the current arrangement continue whereby he contributes HK$66,585 per month or HK$22,195 per month per child. Thus the parties are approximately HK$33,000 per month apart. In addition, as indicated above the wife also seeks reimbursement for certain items and for an additional sum of HK$20,000 per month to cover half of the cost of a mortgage repayment.

The wife’s summons

4.  In the wife’s summons dated the 7 February 2017 she set out her initial claim as follows:

1.   The Petitioner do forthwith pay to the Respondent interim maintenance for the children of the family, namely, TAK, a boy, born on XX April 2006 … , AMK, a boy born on XX September 2008 … and DZK, a boy, born on XX August 2010 … (collectively “the Children”) at the rate of HK$113,648.75 per month or another amount as this Honourable Court deems fit until further Order and such maintenance to be backdated to 2 November 2015 with credit to be given for any monthly maintenance already paid;

2.   The Petitioner do forthwith pay to the Respondent periodical payments in the sum of HK$20,050.50 per month as interim maintenance for the Petitioner to pay towards the mortgage of the property at MC, Mid-Levels, Hong Kong, or another amount as this Honourable Court deems fit until further order;

3.   The Petitioner do pay to the Respondent a lump sum of HK$151,925 as reimbursement of his share of the Children’s one-off expenses since separation to date; and

5.  This was premised on the wife’s original proposal that the parties should pay the maintenance in proportion to their incomes. As indicated above the wife has now reduced that claim to 50% of the children’s expenses, notwithstanding the fact that on her case the husband earns more than she does. Further as indicated during the hearing she will not pursue her claim for reimbursement of approximately HK$150,000 until either the FDR hearing and/or the trial. Thus point 3 falls away for the time being.

Background 

6.  The parties married on the XX October 2004 and separated on the 2 November 2015. This was then a marriage of just over 11 years. The divorce petition was issued on the day of separation, based on the wife’s alleged unreasonable behaviour. The particulars were later amended and matters proceeded on a consensual basis with the decree nisi being pronounced on the 7 April 2016.

7.  Both parties are lawyers and they met whilst studying law in the United States. The husband is of Indian descent but was born and grew up in the United States, whereas the wife was originally from Eastern Europe.  

8.  The parties are both 43 years of age. It is an unfortunate aspect of this case that each has made quiet damaging allegations against the other, which in the main I do not intend to comment on in any great detail in this judgment. It is of note that this feature is only likely to get worse in the unfortunate event that the parties are unable to settle matters in a more amicable fashion.

9.  The husband works in the regulatory field and he currently earns HK$225,000 per month inclusive of a bonus. In his affirmation of the 17 March 2017 he said this about his present employment:

21.   On my side, I am too a lawyer by training.  I was unhappy in the prestigious yet high pressure investment banking world, including at ABC, and have since 2014 found my niche in a less high-octane but more rewarding work environment.  My job is at the Hong Kong office of DEF which is an international body with its headquarters in Europe, with a focus on regulatory policy and high professional standards.  My hours are flexible.  Again, my updated Form E due next week will set out all my current information and this is all in line with my original Form E.

10.  Thus the husband appears to accept that he has a greater earning capacity than the HK$225,000 per month that he is currently earning, but that he chose his current job partly in order to find a more rewarding work environment.

11.  The wife is currently earning HK$180,000 per month also inclusive of bonuses. She works for a well-known investment bank in real estate property investment. It is of note that the husband has criticized the wife very heavily for changing her job during the course of these proceedings, alleging possible gender bias. The wife now works part time (on a 60% basis) and her earnings have dropped as a result. She says this of her decision:

10.   I made the decision to reduce my working hours to part time (60% of my full time working hours) in the Spring of 2015 because I felt like I was on the edge of a nervous breakdown as I had a tough time trying to continue balancing my extremely demanding job, taking care of the Children and dealing with high tension divorce proceedings.  I had worked extremely hard in the couple of years prior to my separation from M in an effort to get promoted and transferred to my company’s U.S. headquarters, to accommodate M who wanted to leave Hong Kong and recognized that we could not just pick up and move without a secure job prospect for either of us.  This hard work was very intensive and this year, without the objective of transferring to the U.S. to keep M happy, I took less responsibility at work and now I work part-time at 60% of my previous work load.  I still make a good income comparable to my peers who work full time but in less demanding professional jobs.

12.  In summary then this is a case concerning two professionals who each have a significant earning capacity and one that is likely to be greater than their presently stated incomes. I accept that each has chosen their present path for entirely valid reasons and that these decisions are capable of review if need be.

The law

Maintenance pending suit

13.  The law is well known and not in dispute. Section 3 MPPO 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 set off. In other words, if there is any overpayment or underpayment that can normally be rectified at a final ancillary relief hearing.

14.  Reference can be made inter alia to the Court of Appeal decision in HJFG v KCY (CACV 127/2011, 28 October 2011, where the following principles were reiterated with respect to maintenance pending suit/interim maintenance applications:

a.   The sole criteria to be applied in determining the application is “reasonable” which is synonymous with “fairness”.

b.   A very important factor in determining fairness is the marital standard of living.

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.

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 situation, the Court should err in favour of the payee.

How much maintenance should the husband pay to the wife as maintenance pending suit for herself and interim maintenance for the three children of the family?

15.  The wife’s case has evolved a little over time, but in essence she now says that the husband should pay 50% of the boys costs, notwithstanding the fact that he now earns more than she does. In doing so she has recognised the fact that her earning capacity is greater than the HK$180,000 per month that she presently earns.

16.  In response the husband maintains, simply put, that he cannot afford to pay more than the HK$65,585 per month that he presently contributes.

General principles

17.  It is often the case that the level of maintenance for children is determined by reference to the relative earnings of each of their parents. It is also true that parents often agree, or the court may order, that they should each contribute towards those costs equally notwithstanding some disparity in their relative earnings. If one party is a housewife (or indeed a househusband) then it may be that there is no alternative but for one party to bear all of the children’s costs – both the direct and the indirect costs in both households. Thankfully that is not the case here. However, I do agree that the correct approach in this case is for both parties to be equally responsible for the children’s costs when they are with the mother. I do not accept the husband’s argument that this should be offset by the costs of him providing a home for the children, given that at present they are only spending one day and one afternoon with him per week (plus one overnight). This may alter as the children get older, but as things stand at present the majority of the costs for providing for the children rests on the wife’s shoulders.

Housing

18.  The wife pays HK$66,000 per month on rent and the husband pays HK$65,000 per month. Counsel for the husband has said that the husband should not be criticized for this. Longer term I would agree that the parties should be living in comparable units especially if the children begin to spend more overnights with the husband. However, as things stand at present it seems that this is an area where a reduction in cost is possible. This is especially given the fact that even on the husband’s own case the parties historically lived in flats which were between 1300 – 1800 square feet in size. It seems to me that the husband’s choice to live in a larger property should not take precedence over his obligation to provide fully for his share of the children’s expenses whilst they are in the mother’s care.  

Tax and other things

19.  The husband’s also claims that his tax obligation is far greater than that of the wife as he has to pay US tax. According to the parties up to date Form E’s the wife has a potential tax liability of HK$41,615 per month whereas the husband says that he has a potential liability of HK$76,584 per month. This is challenged by the wife, who points out that in his original Form E the husband estimated his tax at HK$35,734 per month. Clearly more information is needed on this point. I accept of course that the husband will need to pay US tax and that this will, on the face of it, have a direct effect on his income level. Time will tell whether the estimate provided is accurate or not. However, as things stand I will accept the estimate provided by the husband. 

20.  In addition I have taken on board the fact that the wife is supporting her Aunt and Grandmother whilst they are living in Hong Kong and that she is doing so from a reduced income. In addition, the wife is responsible for paying for two mortgages although it is also true that she also receives the rental from a third property. Nevertheless, there are significant calls on the wife’s income. The husband also complains that the wife has access to the family assets in a way that he does not. Whilst that is clearly the case it is also undeniable that those assets should not be altered in any significant way pending either further agreement, final resolution on the finances or court order. However, I also accept that in the event that there is no agreement, that there may be no alternative but to liquidate some of the assets in order to fund each party’s litigation costs.   

21.  Given the parties competing financial obligations I am proceeding on the premise that on an interim basis at least each party shall continue to be responsible for their own tax obligations and the wife for the mortgages on the properties and other related expenses, some of which may be offset by the rental received. Given the apparent disparity in the tax liability I shall not make an order that the husband pay the wife maintenance pending suit for herself in the sum of HK$20,000 being half of the mortgage repayment for the MC property. This judgment will instead concentrate on the appropriate amount of interim maintenance to be paid by the husband for the three children of the family.

Personal expenses

22.  The wife has made repeated allegations about the husband’s allegedly frivolous expenditure on what may be described as “impermissible items”. However, it is important to note that apart from the issue over his tax liability and the wife’s monthly contribution towards her mother’s expenses, each party’s stated expenses on personal items as set out in their updated Form E’s are relatively modest at HK$10,000 (for the wife) and HK$11,500 (for the husband) per month each. Thus I am proceeding on this basis only. There is little evidence at present to support the wife’s allegations in this respect. Certainly I do not consider one deposit of HK$800 for a dinner to be indicative of excessive overspending on the part of the husband.

The reasonable needs of the parties and the husband’s ability to pay

The reasonable needs of the children

23.  In her affidavit in support dated the 2 February 2017 the wife set out her general expenses for herself and the boys as follows:

Household Expenses

14.   The general costs of the household are HK$115,000 per month as can be seen from the below table:

Expense	Cost
Rent	HK$66,000
Utilities (gas, electricity, internet, water)	HK$4,000
Food	HK$25,000
Household expenses (laundry, cleaning supplies etc.)	HK$3,000
Domestic Helper (salary, food, insurance, transport)	HK$17,000
Total monthly general household expenses	HK$115,000

15.   …

Children’s Personal Expenses

16.   In addition to the Children’s above general expenses, the Children’s personal costs are HK$106,375 per month as evidenced by the table below:

Expense	Cost
School fees	HK$37,375
Extra tuition fees (Chinese)	HK$5,000
School books, stationary, mandatory PTA contribution, school trips/events, collections for classroom contributions and other school related costs	HK$2,000
Medical including crutches, slings, asthma puff chambers, other medical equipment Dental	HK$3,500
Extra-Curricular Activities and equipment	HK$18,000
Entertainment/presents	HK$3,000
Holidays	HK$3,000
Clothing/Shoes	HK$6,000
Lunches and pocket money	HK$4,500
Other Transport (from Stanley)	HK$10,000
Uniform	HK$3,500
Club membership fees and eating out	HK$7,500
Prescription eye glasses (regular, sunglasses and sports), helmets, sports equipment	HK$3,000
Total monthly general household expenses	HK$106,375

17.   The total costs of the Children including their personal expenses and general household expenses are therefore HK$192,625.

24.  The husband for his part sets out his updated expenses in his Form E of the 30 March 2017 as follows:

Part 4   Current Monthly Expenses

4.1   General

Item	Amount – Approx. HK$
Rent	65,000
Mortgage instalments	0
Utilities (electricity, gas, rates, telephone & water)	1,500
Management fees	0
Food	10,000
Household expenses	1,000
Transport	2,000
Insurance premia	0
Domestic helper	7,000
Other	0
Total monthly household expenses	Approx. HK$86,500

Attach copies of the latest rental receipt: Rental is paid through autopay; lease is attached.

4.2.     Personal

Item	Amount – Approx. HK$
Meals out of home	2,000
Transport	2,000
Clothing / Shoes	1,500
Personal grooming (including haircut and cosmetics)	1,500
Entertainment / presents	2,000
Holiday	2,000
Medical / Dental	500
Tax (includes HK and US income tax)	76,584
Insurance premia	0
Interim maintenance	0
Contribution to parents	0
Dependent family members	0
Others (specify)	0
Total monthly personal expenses	Approx. HK$88,084 (mostly tax)

4.3   Children

Item	Amount – Approx. HK$
School fees HK$37,375 (Paid 40% by Respondent)	22,425
Extra tuition fees HK$5,000 (Paid from joint account, half by Respondent)	2,500
School books and stationery HK$2,000 (Paid from joint account, half by Respondent)	1,000
Transport to school	0
Medical / Dental	0
Extra-Curricular Activities HK$18,000 (Paid from joint account, half by Respondent)	9,000
Entertainment / presents (paid separately by each parent)	2,000
Holidays (paid separately by each parent)	3,000
Clothing / Shoes Approx. HK$6,000 (Paid from joint account, half by Respondent)	3,000
Insurance premia	0
Lunches and pocket money HK$4,500 (Paid from joint account, half by Respondent)	2,250
Other Transport Approx. HK$6,000 (Paid from joint account, half by Respondent)	3,000
Child-minding fees	0
Uniform HK$3,500 (Paid from joint account, half by Respondent)	1,750
Others (specify)	0
Total monthly expenses for children	Approx. HK$49,925
Total Monthly Expenses Approx. (4.1 + 4.2 + 4.3)	HK$224,509

The general household expenses

Housing

25.  As indicated above it seems to me that there is no alternative but for there to be a reduction in the amount that the husband spends on rent. Given that the children are based with the mother for the majority of the time and that she needs the extra space and the close proximity to the children’s school I will not on an interim basis make a similar adjustment to the wife’s rental. I will allow HK$40,000 for the husband’s rent.

Food

26.  The husband challenges a number of the wife’s general expenses including her estimate for food at HK$25,000 per month, especially when in addition she is claiming a further HK$4,500 for school lunches and HK$7,500 for club fees and eating out. I accept that this figure does seem a little on the high side. I have also noted that the husband is also claiming HK$10,000 per month for his household. It seems to me that this figure is also on the high side and is capable of revision down. I will therefore allow the wife HK$18,000 per month to cover the cost of food in her household and HK$6,000 to cover the husband’s food costs in his household.

Domestic helpers

27.  There appears to be a great deal of friction over the child care arrangements and the historical role of the wife’s family members. As things stand at present the wife has two domestic helpers and the husband has one. The wife is currently working the equivalent of a three-day week. I accept that longer term the necessity for having two domestic helpers may need to be reviewed. For the time being though and on a broad brush basis I will allow the figure of HK$17,000 per month claimed by the wife and the HK$7,000 claimed by the husband.

28.  Consequently, I accept that the wife’s general expenditure amounts to some HK$108,000 per month as follows:

Household Expenses

14.   The general costs of the household are HK$115,000 per month as can be seen from the below table:

Expense	Cost
Rent	HK$66,000
Utilities (gas, electricity, internet, water)	HK$4,000
Food	HK$18,000
Household expenses (laundry, cleaning supplies etc)	HK$3,000
Domestic Helper (salary, food, insurance, transport)	HK$17,000
Total monthly general household expenses	HK$108,000

I also accept that ¾ of those expenses or HK$81,000 should be attributable to the children. Of that each party shall be responsible for half of the cost or HK$40,500 per month.

The children’s expenses

29.  The husband also challenges some of the children’s direct expenses.

Transport

30.  The husband says that HK$10,000 per month is a huge exaggeration. Not so says the wife, this is actually what is spent on a monthly basis. I agree that this figure does seem a bit on the high side given that the children’s school is based close to home. I will allow HK$5,000 per month.

Club membership 

31.  Again the husband says that this figure is exaggerated. Again I tend to agree. I will allow HK$5,000 per month.

Medical/Dental

32.  The husband says that:

xii.

Medical insurance and dental

Each of us have good medical insurance policies via our employers for which the Children are beneficiaries

In the unlikely event there is excess over and above these 2 good policies, then we can share the costs upon receipts

I will hold him to this and an undertaking to this effect shall be included in the order. Similarly, for the one off expenses for eye glasses, sports equipment etc. as set out below:

xiii.

Helmets and sports equipment

These tend to be one-off and we can share the costs upon receipts

33.  In addition, I also agree that each party shall be responsible for their own entertainment and holiday costs with the children. This is subject to one caveat namely that I accept that there can be quite high costs associated with children attending birthday parties etc. I will allow HK$1,500 to cover that cost (i.e. HK$500 per month per child).

34.  In total then I accept that the direct cost for the children, amounts to HK$87,875 per month as follows:

Expense	Cost
School fees	HK$37,375
Extra tuition fees (Chinese)	HK$5,000
School books, stationary, mandatory PTA contribution, school trips/events, collections for classroom contributions and other school related costs	HK$2,000
Medical including crutches, slings, asthma puff chambers, other medical equipment Dental	(HK$3,500)
Extra-Curricular Activities and equipment	HK$18,000
Entertainment/presents	HK$1,500
Holidays
Clothing/Shoes	HK$6,000
Lunches and pocket money	HK$4,500
Other Transport (from Stanley)	HK$5,000
Uniform	HK$3,500
Club membership fees and eating out	HK$5,000
Prescription eye glasses (regular, sunglasses and sports), helmets, sports equipment	(HK$3,000)
Total	HK$87,875

Each party shall be responsible for half of those costs – or say rounded up to HK$44,000 per month each.  

35.  In total then the husband shall pay HK$84,500 (HK$40,500 + HK$44,000) or HK$28,165 per child per month on an interim basis. If at the end of the day this sum is found to be too high or too low, then necessary adjustments can be made in any final order.   

Can the husband afford to pay this sum?   

36.  This is more than the husband says he can afford to pay but less than the wife sought. I am satisfied that with a little economizing that he should be able to pay this sum. In particular, I accept that he can and perhaps should reduce his rental and his other general expenses including his budget for food. It is also questionable whether or not he requires a full time maid, although I have allowed that for the time being. I am also cognizant of the fact that there is still a question mark over his US tax liability. Ms Rattigan has also pointed out that his current account is never in overdraft and that certainly on the face of it he does not appear to be struggling financially at present. Thus it seems to me that the husband should have the following general expenses:

General

Item	Amount – Approx. HK$
Rent	40,000
Mortgage instalments	0
Utilities (electricity, gas, rates, telephone & water)	1,500
Management fees	0
Food	6,000
Household expenses	1,000
Transport	2,000
Insurance premia	0
Domestic helper	7,000
Other	0
Total monthly household expenses	Approx. HK$57,500

In addition, I have accepted for the time being subject to further clarification his tax estimate, which means that his personal expenses are as set out in paragraph 23 4.2 i.e. approximately HK$88,000 per month. In addition, he shall contribute to the children’s expenses in the sum of HK$84,500 per month (i.e. HK$57,500 + HK$88,000 + HK$84,500 = HK$230,000). Although this is slightly more than the husband currently earns it seems to me with a little more adjustment he should be able to pay this sum.   

Conclusion 

37.  I will therefore make an order that going forward that the husband shall pay HK$28,165 per month per child as interim maintenance for the boys. I have considered backdating this sum, but will not do so as it seems to me that the husband could not afford this additional sum on top of the increased amount of monthly maintenance. Again this may be reviewed in any final order.  

Costs

38.  Given that neither party has been wholly successful although it would be fair to say that the wife has been more successful than the husband, I shall make an order nisi to be made absolute in 14 days’ time that the husband do pay half of the wife’s costs on a party and party basis to be taxed if not agreed. There shall be certificate for counsel.

Order

39.  I shall therefore make an order as follows:

UPON the Petitioner’s undertaking to pay for half of the medical and dental expenses for the three children of the family in the event that such costs have not been covered by either sides medical/dental insurances and upon production of the appropriate receipts.

AND UPON the Petitioner’s undertaking to pay for half of the one off expenses for eye glasses, helmets and sports equipment upon the production of the appropriate receipts.

IT IS ORDERED THAT:

1)   The Petitioner shall pay interim maintenance to the Respondent for the three children of the family in the sum of HK$28,165 per month per child the first payment to be made on the 1 June 2017 and thereafter to be paid on the 1^st day of each succeeding month until further order.

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