C, M v. G, R P

FCMC 1915 / 2019

[2019] HKFC 298

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 1915 OF 2019

________________________

________________________

________________________

J U D G M E N T
(Interim maintenance)

________________________

Introduction

1.  This is the Petitioner’s application by Summons dated 23 May 2019 for interim maintenance for the two children of the marriage, both girls: L, who is 4 and E, who was 6 months old at the time of the hearing. The Petitioner (wife) seeks $8,000 per month by way of interim periodical payments to her for the benefit of the children, comprising the following:

Expenses	(HK$) Amount (Estimate)
Food/Dining Out	5,000
Baby Products (i.e. pampers, milk powder)	1,000
Entertainment/ Presents	500
Clothing/Shoes	1,000
Miscellaneous	500
Total:	8,000

2.  The Respondent (husband) opposes the application.  He has been paying the majority of the general and children’s expenses, including the mortgage on the former matrimonial home, utilities, the salary of the domestic helper and school fees for the elder child, and he will continue to meet these payments.  He says that the current level of additional periodical payments, at $5,000 per month, is sufficient, having regard to these other direct payments, the needs of the children and his inability to pay any more. 

Background

3.  The parties were married in Hong Kong on 28 March 2013.  As noted, there are two children.  L attends K1 at ICHK, Hong Lok Yuen in Tai Po.  The younger child was born after the Petition was filed, and, according to the wife, after the parties separated.  The husband has weekly defined access to the children pursuant to the Court’s order of 27^th May 2019.  

4.  At the time of separation, the wife was employed as a part-time office manager at the Danish Chamber of Commerce earning $10,400 per month, with a yearly bonus equivalent to one month’s salary.  On 30^th May 2019 she gave notice to her employer and left that position on 30^th June 2019.  She has not worked since and is not planning to return to work in the near future, until the younger child is older.  It is relevant to note that the letter of employment with the Chamber of Commerce confirmed her starting date as 1 January 2017, when the older daughter was 19 months old. 

5.  The husband, who is 41, is head of sourcing for M S International Limited (MSI).  He receives a basic salary of Euros 6,800 or approximately HK$58,900 at present exchange rates, together with bonus payments averaging $14,750 per month, a housing allowance which he has elected to take in cash of HK$35,000 per month, and a “Home Leave Allowance” which at the time of his Form E was $14,968 per month but which has increased by a further HK$3,440 per month with the birth of the second child.  According to the income statement for the month of April 2019, he also received from his employer a school fee allowance of $37,784.  The husband affirmed that the Home Leave Allowance and school fee allowance are paid to him by reimbursement after providing his employer with receipts demonstrating payment: R affirmation, [10]. 

6.  The Court was informed at the hearing that the husband had been employed by his present employer since 2013, on a three-year contract renewed in 2016 and again in 2019 and that the terms of his employment had been set out in formal letters of employment.  None of the letters of employment were provided with the husband’s Form E, Answers to P’s Questionnaire or with his affirmation. Instead, the husband exhibited to his affirmation a letter from his employer dated 28 May 2019 confirming his position, salary and housing allowance. 

7.  It is not in dispute that during the marriage the husband was the main breadwinner and that the standard of living was commensurate with his income. The matrimonial home is some 850 square feet in size, with clubhouse and swimming pool.  The parties enjoyed yearly long-haul holidays.  The employment benefits enable the elder child to attend a prestigious kindergarten. 

The Law

8.  Section 5(2)(a) of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”) provides that the Court may make an order that “a party to the marriage shall make to such person as may be specified in the order for the benefit of a child of the family, or to such a child, such periodical payments and for such term as may be so specified.”  Such orders may be made in divorce proceedings “before or on granting the decree of divorce, of nullity of marriage or of judicial separation, as the case may be, or at any time thereafter”: s 5(1). 

9.  In HJFG v KCY [2012] 1 HKLRD 95 at [37]-[38] the Court of Appeal outlined the approach to be taken by the Court in determining applications for interim maintenance and maintenance pending suit:

“37. The principles that have emerged over time to guide judges in matters of interim maintenance have been fashioned in the main to ensure fairness. This is well illustrated in the judgment of Nicholas Mostyn QC, sitting then as a Deputy Judge, in TL v ML [2006] 1 FLR 1263, 1289, in which, having looked at earlier authorities, he derived the following principles that speak specifically to fairness or are based on the need to ensure it. For present purposes, it is sufficient to cite the relevant principles without citing the Judge’s reference to the source of those principles:

(a) The sole criteria 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.

38. Finally, it is to be noted that in applications for interim maintenance, when the amount to be paid is for a limited period only and not all of the evidence is necessarily before the court, it is not appropriate, nor indeed in most cases possible, for the court to conduct a detailed investigation into the finances of the parties. While, in order to determine what is or is not reasonable, some analysis is always required, that analysis can be conducted on a “broad-brush” basis.”

The issue

10.  The question, therefore, is how much the husband should pay to the wife for the benefit of the children, having regard to all relevant considerations including the children’s needs, the income and expenses of the parties and recognizing the obligations the husband is already shouldering. 

Other income

11.  I have set out above the husband’s income from his current employment and the wife’s from her previous employment.  In her Form E the wife disclosed that she was also receiving rental income of DKK6,500 per month from an apartment she owns in Denmark, at Diget 28, DK-7500 Holstebro (“Holstebro”).  She listed monthly outgoings which she says exceed the rental income, being mortgage of DKK6,300, property tax DKK582, owners insurance DKK334, and income tax on the rental of DKK667 per month.  Her Answers to the husband’s Questionnaire on her Form E attached a statement confirming mortgage payments were being made via a Danish bank account on a quarterly basis of between DKK18,456 and DKK18,513. Her affirmation in support of the Summons stated this:

8. In relation to the rental income generated from the apartment in House (Diget 28, 7500 Holstebro, Denmark) as seen from my Form E, the current monthly rental income of DKK6,500 is insufficient to cover the mortgage instalments and outgoings in the total sum of DKK7,883.  Therefore it cannot generate any positive cash flow to cover my expenses in Hong Kong.

12.  In his affirmation dated 30^th May 2019, the husband did not contest this statement or the figures given, but said that the wife was also receiving income from another property, Centerparken 16, 2 TV 2500 Valby, Copenhagen (“Centerparken”), which the parties co-own: 

20. In respect of paragraph 8 of the P’s Affirmation, she also uses my rental income of DKK8,975 per month from the apartment, Centerparken.  I refer to GPR-8, rent from the apartment has been deposited into account 76001684687.  Whilst beneficially the sums of money in there belongs to me, the Petitioner have been utilizing the funds as her own to pay for expenses and have been constantly depleting this account.   

13.  In his Questionnaire dated 28^th May 2019 he asked about the depletion of funds:

Vestjysk Bank Account no. 76001684687

The account balance at 9^th January 2019 the account balance was DKK 80,348 and was constantly being depleted up to 23^rd April 2019.

Please explain the purpose and the whereabouts for the withdrawals from 21^st January 2019 to 29^th April 2019 in the total sum of DKK37,381.14 with documentary evidence.

14.  In her Answers dated 5^th July 2019, the wife responded:

Vestjysk Bank Account no. 76001684687

These are in advance tax payment to the Danish Tax (SKAT) department according to the Danish tax system.  The tax filing for year 2019 shall be done in 2020.  For reference please find the tax return for year 2018 which resulted in a tax liability of total DKK42,005.94. (Attachment – part 2.3.1)

15.  In her 2^nd affirmation dated 4 September 2019 in reply to the husband’s affirmation, she added this:

11…. [T]he Respondent’s claim that I earn a sum of DKK8,975 per month from apartment Centerparken is plainly wrong.  I have disclosed a copy of statement from account 76001684687 for the period of December 2019 to July 2019, a copy of the rental contract of the apartment Centerparken in My Answer and a copy of the email dated 6^th February 2019 in My Answer.  I do not dispute that the apartment Centerparken used to receive rental income of DKK8,875 up to February 2019.  However, the Respondent was well aware, the rental income deducting the management fee of DKK2,624, property tax DKK7,146 yearly and rental income tax yearly DKK42,005 (Refer to My Answer, part 2.3.1), the net earning amounts to DKK2,155 monthly which remains in the bank account to cover unforeseen costs.  I informed him by email on 6^th February 2019 that the tenant for the apartment Centerparken has given 3 months notice to terminate the tenancy.  As such, there was no income from the apartment Centerparken between February 2019 to July 2019, until a new tenant has been found in August 2019. (Underlining added)

16.  At the hearing on 3 October 2019, the debate as to whether the Centerparken property was producing an income for the wife continued.  At the end of the hearing, and in order to assist the Court to navigate the papers and locate relevant documents supporting each party’s position, the Court gave directions for each party to file brief further notes on the issue. 

17.  On 14^th October 2019 the wife filed a 7-page Note to which she attached a number of exhibits, including additional bank statements and other documents not previously disclosed with her Form E, her Answers or her affirmations.  On 21^st October 2019, in reply, the husband lodged Submissions objecting to the disclosure of these new materials which he asserted was “belated” and in any event “incomplete”.  Inter alia, the husband asserted that the Centerparken flat had been re-leased at below market value.  To these further Submissions, the husband attached three documents – again not previously provided – showing potential rental for both properties in the location of the Centerparken and Holstebro properties. 

18.  The Court did not grant leave for either party to adduce new evidence on the wife’s interim maintenance Summons.  To be clear, Court asked by the direction for brief notes from each party with bundle references to assist in identifying the documents already in the hearing bundles relevant to the question as to whether and if so how income net of expenses was being generated by the rental of either Danish property and how it was being put to use.  I have, however, read both additional submissions – being the Note of the Petitioner dated 14^th October 2019 and the Reply Submissions of the Respondent dated 21^st October 2019.  I have not had regard to any additional documents attached to the Note and Reply Submissions, and this judgment is based on the materials in the evidence filed at the time of the hearing. 

19.  It is apparent that there are disputes of fact over these two properties and the income they generate from being rented out.  In essence, the wife says that in respect of Holstebro the expenses including tax have exceeded the rental income and that in respect of Centerparken, the income, net of expenses, remains in the Danish bank account to allow for future contingencies.  The husband disputes at least the assertions in relation to Centerparken and claims that the wife has been guilty of re-leasing the property at a lower-than-market rental: DKK6,975 per month compared with the previous rental of DKK8,975 per month.  He also claims that the wife has inflated the expenses and included in her list of deductions unrelated expenditure, such as a fee paid to the Danish Government for E’s passport.  

20.  These issues of fact cannot be resolved at a hearing of this nature: see paragraph 11.79, Rayden and Jackson on Divorce and Family Matters (18^th Edn).  For the purposes of the present application, I am not satisfied that either Danish property is generating a net income which the wife is accessing to support her expenses and those of the children.  If subsequently this is shown to be in error, the matter can be corrected as part of the broader determination of the claims for ancillary relief. 

21.  There were other disputed elements relating to income and earning capacity.  For the husband, it was said that the wife can, and should return to work to help support herself and the children.  The husband’s counsel submitted this should happen “immediately”.  He argued that the wife could do some language teaching or translation work, as she is trilingual, perhaps producing an income of $3,000 per month.  No documents were provided to support this assertion. It is noted that this amount is the difference between the parties on how much should be paid per month in interim maintenance. 

22.  For the wife it was submitted that spending time away from work taking care of the new daughter and the elder daughter was reasonable.  She pointed to the fact, noted above, that she did not return to work with the Danish Chamber of Commerce until January 2017 when the older daughter was 19 months old.  To say the least, it is in my view reasonable for her to take some time away from work to take care of her newborn and the elder daughter who is still of tender years, particularly so given the stress arising from the breakdown of the marriage.  To be fair, it did not appear to be the husband’s position that the wife should not have resigned her position with the Chamber of Commerce, but that she should be engaging in some part-time translating or tutoring work at home. 

23.  For the purpose of this application, I think that it is reasonable for the wife at present not to doing work of the kind suggested and I will not attribute to her a nominal income. 

24.  The wife for her part asserted in her affirmation that the husband had misrepresented his income by failing to disclose the education allowance in his Form E. 

25.  The husband denied this:

9. [The Petitioner] knows I receive a net basic salary of EUR 6,800 or approximately HK$58,888 per month (1 EUR to 8.66 HKD according to HSBC daily exchange rates on 29^th May 2019) and cash Housing Allowance of HK$35,000.00.  … Deducting my mandatory MPF contribution of HK$1,500.00, my monthly income is HK$92,388.00.  As per the email dated 2^nd May 2019 from my employer, my cash housing benefits will be reduced to HK$24,500.00 subject to the change in my marital status.

10. All allowances, inter alia, school fees, Home Leave Allowances are all reimbursed by my employer subject to proper receipts and discretionary approval.  I do not receive a sum of HK$37,784.00 for school fees to be spent at my disposal and I have to pay first before getting reimbursed.  As the Petitioner also intends to have the Children attend school in Denmark, my employer will not provide school fee reimbursements for education outside of Hong Kong.  

Needs

26.  In her Form E (dated 25 April 2019) the wife set out her expenses as follows:

Part 4  Current Monthly Expenses

4.1  General

Item	Amount
Rent	N/A
Mortgage instalments	DKK6,300
Utilities (electricity, gas, rates, telephone & water)	HK$230
Management fees	N/A
Food	HK$1,000
Household expenses	N/A
Car expenses	N/A
Insurance premia	N/A
Domestic helper(s)	N/A
Other (specify) Food, Grooming and Misc. for Pet Dog	N/A
Total monthly household expenses	HK$1,230.00 & DKK6,300

4.2  Personal

Item	Amount
Meals out of home	$2,000
Transport	$500
Clothing / Shoes	$1,000
Personal grooming (including haircut and cosmetics)	$600
Holidays	N/A
Medical / Dental	N/A
Tax (Property Tax)	DKK582
Insurance premia	N/A
Interim maintenance	N/A
Contribution to parents	N/A
Dependent family members	N/A
Others (specify) -  Mandatory owner’s insurance -  Rental income tax	DKK334 DKK667 (approximately)
Total monthly personal expenses	HK$4,100.00 & DKK1,583

4.3  Children

Item	Amount
School fees	N/A
Extra tuition fees	N/A
School books and stationery	N/A
Transport to school (including school bus)	N/A
Medical / Dental	N/A
Extra Curricular Activities	N/A
Entertainment / presents	$500
Holidays	N/A
Clothing / Shoes	$3,000
Insurance premia	N/A
Lunches and pocket money	N/A
Other Transport	N/A
Child-minding fees	N/A
Uniform	N/A
Others (specify)	N/A
Total monthly expenses for children	HK$3,500
Total Monthly Expenses	HK$8,830 & DKK7,883

27.  To her 2^nd affirmation the wife exhibited receipts for “food and general household expenses” for May to July 2019.  These amounted to HK$7,485.46 for May 2019, HK$7,404.84 for June 2019 and HK$13,438 for July 2019 (which included a trip to Denmark).  I accept that in addition to these she is likely to have incurred other expenses for herself and the children for which she did not keep receipts. 

28.  I further accept that those receipts she did provide are in respect of expenses not solely relating to the children. 

29.  The question is whether the sums set out in paragraph 1 of this judgment are reasonable, and in my view, they are.  In some months the food bill for the children may be less than HK$5,000, and in other months it may be more. Similarly, the amount spent on baby products including nappies and other necessities such as clothing and shoes will fluctuate. It is reasonable to include a small amount for entertainment/presents and for miscellaneous expenses, and this she has done.  I have taken into account the existing support by the husband for general and child-specific expenses which is considerable.  I allow the amount as claimed.

Capacity

30.  Does the husband have the capacity to pay an additional $3,000 over and above what he is already paying? 

31.  In his Form E, filed 10 May 2019 the husband listed his expenses as follows:

Part 4  Current Monthly Expenses

4.1  General

Item	Amount
Rent	15,339
Mortgage instalments	26,061
Utilities (electricity, gas, rates, telephone & water)	2,776
Management fees	3,162
Food	7,000
Household expenses	3,000
Car expenses	N/A
Insurance premia	654
Domestic helper(s)	4,500
Other (specify) Property Tax fee in Tai Po and Tax and Management Fee for House and Apartment in Denmark	7,700
Total monthly household expenses	HK$70,192

4.2  Personal

Item	Amount
Meals out of home	2,000
Transport	1,000
Clothing / Shoes	5,000
Personal grooming (including haircut and cosmetics)	1,000
Entertainment / presents	2,000
Holiday	3,000
Medical / Dental	1,000
Tax	0.00
Insurance premia	0.00
Interim maintenance	7,000
Contribution to parents	N/A
Dependent family members	N/A
Others (specify)	0
Total monthly personal expenses	HK$22,000

4.3  Children

Item	Amount
School fees	36,900
Extra tuition fees	1,000
School books and stationery	N/A
Transport to school (including school bus)	3,900
Medical / Dental	500
Extra Curricular Activities	500
Entertainment / presents	1,000
Holidays	2,000
Clothing / Shoes	1,500
Insurance premia	600
Lunches and pocket money	1,000
Other Transport	500
Child-minding fees	4,500
Uniform	0.00
Others (specify)	0.00
Total monthly expenses for children	HK$53,900
Total Monthly Expenses	HK$146,092

32.  In his affirmation, the husband refined his expenses as, firstly, those he was paying since the beginning of the marriage and was continuing to pay (paragraph 11):

Expenses	HK$ Amount
Matrimonial Home Mortgage	26,061
Matrimonial Home Management Fees	3,162
Matrimonial Home Government Rates and Rent	431
Matrimonial Home Insurance	100
Electricity	886
Water	395.40
Town Gas	581.21
Domestic Helper Salary	4,500
Domestic Helper Insurance	51
Current Interim Maintenance	5,000
Baby Products	1,080
Family Health Insurance	7,820
Life Insurance	554.82
Denmark Apartment Tax and Management Fees	6,761.88
Sub Total	57,384.31

33.  Secondly, rental/hotel expenses of $16,089.92 per month for his own accommodation (paragraph 12).

34.  Thirdly, his own personal expenditure (paragraph 13) of $17,000 per month. 

35.  Fourthly, the school fees, which are paid out of his pocket and then reimbursed by the employer:

School fees	$36,900 per Term
School uniform	$884
School bus fees	$3,960

(paragraph 15)

36.  He therefore affirmed that his total monthly expenditure, aside from the school expenses, is approximately $90,500 per month (paragraph 14). 

37.  It is apparent from the husband’s list of expenses at §32 above that the claimed expense of $6,761.88 in respect of the Denmark tax and management fees is not in fact an expense the husband is required to pay each month from his income, but is being settled out of the Denmark account into which the rental income is received.  The exhibited bank statement GRP-8 was the same statement already produced by the wife with her Form E.  Deducting this amount revises the total to HK$50,622.  The wife submitted during the hearing that the health insurance was in fact reimbursed by the employer.  This was not clear on the papers as, as noted, the Court was not supplied with a copy of the husband’s terms of employment.  For the purposes of this application I am not prepared to assume that the husband does receive reimbursement.  I also accept there may be months in which the expenses are perhaps slightly higher than he lists, and will proceed on the basis that he has unavoidable expenses of $52,000 in addition to his own rental and personal expenses. 

38.  As to these, I note that his “rental” is for hotel accommodation, which seems reasonable as the affirmation was filed within a fairly short period after separation.  I was told at the hearing he has now found a studio apartment at $12,000 per month, and was required to pay a deposit equivalent to 2 months’ rental. 

39.  In addition, he affirmed that he spent $17,000 per month on other personal expenses, including $9,000 for food. 

40.  As to food the husband explained in his affirmation that

26. … I am consistently on global business travels and would regularly incur expenses for eating out of home and at home.  For clarification purposes, I incur an estimate total sum of HK$9,000.00 and this sum is a substantially conservative estimate. 

41.  At the hearing, counsel for the husband said that the entire sum of $9,000 was for meals out of home.  This was not quite the husband’s evidence which was that this amount was for “eating out of home and at home”.  It also represented quite a shift from his Form E, which was affirmed earlier in May 2019 (10^th May 2019), in which he said that he spent only $2,000 on meals out of home and $7,000 at home.  The Court was not taken to any receipts or credit card or bank transactions to substantiate the revised estimate. 

42.  Further, and connected with the fact the husband did not produce his employment contract/letter of employment, it is not possible to know whether the husband is reimbursed by the employer for the proportion of the $9,000 which relates to his business travel.  There is some indication in the papers that he does receive reimbursement for business travel expenses: the husband attached updated bank statements of his HSBC Premier Account 491-520961-833 and the statement for 26th March 2019 shows a payment from MSI on 22^nd March 2019 for “Trip to Shanghai” of HK$14,081.25.  This trip seems to have taken place earlier in March 2019: statement of HSBC Premier Credit Card dated 12^th March 2019 attached to the husband’s Answers to the wife’s Questionnaire.  The reimbursed sum might well be an airfare, or hotel accommodation (which might also include meals at such a hotel).  For the purpose of the broad brush assessment I am required to make, I am not satisfied that the husband is paying the $9,000 out of his own pocket each month and not being reimbursed for at least some of the amount. 

43.  I also consider that he has the capacity to reduce his spending on some of the items making up the $17,000 personal expenses, including on clothing.  I have already noted that he has reduced his accommodation costs.

44.  Taking these matters into account, it seems to me that the husband has the capacity to afford the additional $3,000 per month over what he is presently paying to the wife for the children. 

Costs

45.  The wife has been successful in her application and I see no reason why she should not have her costs.  I therefore make an order nisi to be made absolute in 28 days that the husband do pay the wife’s costs of and arising out of her Summons dated 23^rd May 2019, on a party and party basis and to be taxed if not agreed. 

Order

46.  I therefore make the following Order on the Summons:

(1)  The Respondent do pay interim maintenance to the Petitioner for the children of the family the sum of $4,000 per child per month, total $8,000 per month, the first payment to be made on 1^st of December 2019 and thereafter on the first day of each succeeding month until further order.

(2)  There be an order nisi that the costs of and arising out of the Summons be to the Petitioner to be taxed if not agreed on a party and party basis.  This to be made absolute after the expiry of 14 days from the handing down of this Judgment.