H v. H

IN THE DISTRICT COURT OF

THE HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

F.C.M.C. No 7173 of 2000

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Judgement

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1. I have before me two applications. The first is an application by the Respondent (wife) for maintenance pending suit pursuant to s 3 Matrimonial Property & Proceedings Ordinance Cap 192 (MPPO). This application is in two parts, first an application for maintenance pending suit in the traditional sense, and second for the provision of a sum to cover future legal costs arising from the litigation. The second application seeks an order pursuant to R 80 Matrimonial Causes Rules (MCO) to transfer the proceedings to the High Court.

Chronology:

2. In 1963 the Petitioner's (husband's) father established a business known as IE Limited in Kowloon. The husband was then aged 17. In 1964 a property was purchased in the husband's name in Purves Road, Jardine's Lookout. There seems no doubt that the funds came entirely from the father as the husband was only 18 at the time. The whole family lived there.

3. The parties were married in a religious ceremony in July 1969 and a civil ceremony in January 1970. The husband and wife moved into the Purves Road property with the father and his wife where all lived together as an extended family with the parties occupying a separate wing of the house. That house subsequently became the matrimonial home and is still owned by the husband.

4. There are three children of the marriage, all now adult, two sons aged 31 and 25 and a daughter aged 26. It appears that none of the children have any particular educational qualification and none have regular jobs, each living off the largesse of their father, until recently, when he stopped paying their credit card bills. They all still live mostly in the former matrimonial home with their mother, the wife, although some have from time to time been out of Hong Kong in some form of education.

5. The husband was employed in the father's business and it appears that it flourished. In October 1994 the father died and the husband inherited the father's substantial estate. A central item in the assets is H House in Mody Road, Tsim Sha Tsui, an unencumbered commercial building, which presently earns rents of some HK$480,000 a month. It is said that the total value of the husband's assets in 1996 was as much as US$79 million. There were unhappy differences between the husband and the wife. It is the husband's case, not accepted by the wife, that he left the matrimonial home in December 1997. He says that there was a reconciliation attempt in May 1999, but he left the matrimonial home again in February 2000.

6. In July 2000 the husband issued a petition based upon allegations of unreasonable behaviour on the part of the wife. She has denied those allegations and has cross-petitioned alleging unreasonable behaviour on his part. An answer has been filed to the cross-petition. The parties are at odds as to whether each other has conducted the proceedings sensibly but it is not necessary for me to resolve this issue at this stage. It is not a matter that I intend to take into account in determining maintenance pending suit. It appears that there is agreement that in about April this year the husband will seek leave to present a new petition based upon 2 years apart and the wife will not contest that course. Leave will be granted as the court will always encourage parties to resolve their differences by non-contentious means.

7. When he issued the petition the husband's solicitors wrote a letter (Ex B8-3308) to the wife informing her of the budget he required her to keep pending the resolution of matrimonial issues. He offered then, and at the present time still, allows the wife to remain in the former matrimonial home.

8. He meets the cost of the staff, a cook, maid, cleaner and driver. He provides the wife with a car. He meets the utility costs of the household, although there is an issue as to whether the wife is properly using the utilities. He pays the monthly subscription for the Ladies Recreation Club and the Jockey Club but requires that she reimburse him for her expenditure there. In addition he pays HK$130,000 a month for her general expenses. This sum includes an allowance of HK$30,000 to cover household food. Originally he had met Wellcome and Park 'N Shop accounts but decided that they were too high and substituted the allowance of HK$30,000 and stopped meeting those accounts. He has cancelled all her credit cards, which were supplementary cards on his credit card accounts.

9. The wife now comes to the court and says that this provision is insufficient to meet her reasonable needs.

Maintenance pending suit;

10. The principles upon which maintenance pending suit are awarded were not in dispute. They may be shortly stated. The jurisdiction lies in s 3 MPPO which provides:

"the court may order either party to the marriage to make to the other such periodical payments for his or her maintenance and for such term, being a term beginning not earlier than the date of the petition or making of the application and ending on the determination of the suit, as the court thinks reasonable."

11. Mr Poll relied upon the familiar words from Jackson's Matrimonial Finance and Taxation, 6^th Ed para 2.12 in which the principles on the interpretation of s 3 MPPO are collected. It is convenient to set them out.

"It is important for both the parties that 'reasonable' provision should be made; on the one hand to ensure that the wife is properly supported at a time when she maybe in particular need of financial support; on the other hand to ensure that the husband is not crippled by too severe a burden imposed on hand at a time when he, too, maybe feeling for the first time the yoke of having two establishments to support"

and:

"Perhaps the two most outstanding matters in every case are the standard of living of the parties and the ability of the husband to pay. The wife maybe in a particularly vulnerable situation at this stage and it is important that she should as quickly as possible be put in a position where, until the matrimonial disputes have been resolved and a more permanent financial situation can be achieved, she can reasonably maintain herself (and the children if any) without hardship and at the standard to which they were used when the marriage effectively existed as one household"

and finally:

"In general the wife should not be relegated to a lower standard of living than that which he, a husband enjoys, even pending suit."

12. It is clear from the facts and the chronology that I have set out that this is a very wealthy family. They may not fall within the category of "the ultra-rich" but they are, on any terms, very wealthy. In determining maintenance pending suit in such a case it is important to remember the words of Thorpe J (as he then was) in F v F [1995] 2 FLR 45 at 50:

"First, in determining the wife's reasonable needs on an interim basis it is important as a matter of principle that court should endeavour to determine reasonableness according to the standards of the ultra-rich and to avoid the risk of confining them by the application of scales that would seem generous to ordinary people. Thus I conclude that it would be wrong in principle to determine the application on some broad conclusion that if the wife cannot manage at the rate of a quarter of a million a year, she ought to be able to. I think that it is necessary to establish a yardstick that more nearly reflects the standard of living which has been the norm for the wife ever since the marriage and for the husband for considerably longer."

13. At the centre of Mr Poll's submissions was first, the submission that I should measure reasonableness according to the standards of very wealthy people, and second, to emphasise the principle that in general the wife should not be relegated to a lower standard of living than that which the husband enjoys even pending suit.

14. Mr Poll sought, in addition to the provision of the house and staff, a monthly sum of HK$350,000.

15. Mr Pilbrow for his part argued that the family expenses should be limited to the funds available from H House, from which he said they traditionally came. He showed how the wife had been requested to reduce her spending, and argued that capital had been depleted to support her spending pattern. He argued that the wife had made insufficient financial disclosure and was guilty of financial misconduct.

16. Mr Pilbrow said that the provision of the house, staff and the current cash sum of HK$130,000 a month that is being paid was sufficient to meet the wife's reasonable needs in terms of s 3 MPPO.

17. It is well-established that in an application for maintenance pending suit there ought not to be a detailed examination of the parties financial affairs. The application is necessarily an emergency application and if the order made is too high, or too low, it can be adjusted on the substantive hearing for ancillary relief. But that said, it is necessary to look to some extent at the financial position in order to determine standards of living of the parties and the availability of funds.

18. Both counsel took me through various aspects of the documents to show to me evidence that supported their submissions.

19. It does appear that the H House Income was used to meet family expenditure. But other funds were used too, over a number of years, apparently for a long time without complaint by the husband, and the source of those funds is not yet clear. The husbands cash flow income, which appears to come primarily from H House and from his investment in Dubai is agreed to be in the order of HK$1 million a month. The husband has now stopped meeting the credit card debts of the three children. That reduces his monthly outgoing by, on average, a sum in the order of HK$150,000 a month.

20. There is no doubt that the wife has disposed of a very substantial sum of capital in a short period of time. In April 2000 she had cash and securities at Hong Kong Bank of some HK$11.5 million. By July 2000, shortly before the petition was served the capital had reduced to HK$8.7 million. By April 2001 her net position was HK$1.3 million and she had an overdraft with the bank of HK$3.4 million. In a twelve month period to April 2001 her capital reduced by an average of HK$800,000 a month. By September 2001 her net position was HK$24,000 in deficit and the bank was beginning to put pressure on her.

21. That is either spending on an Olympian scale and well beyond that to which she was accustomed, or she has placed funds where they are now not disclosed. Either way, she will in due course have to explain herself to the court. She may well in due course have to account, in the matrimonial balance sheet, for the capital that has gone.

22. Mr Pilbrow says, and one can understand the position, that she should not spend like that and then come to the court and say the husband should provide for her. Two issues arise from this submission.

23. First, she spent at a very high level during the marriage, sums provided by the husband, and was apparently not expected to dip into her capital. So, it may now be said, why should she now have to use her capital and have nothing, or relatively very little, from the husband?

24. It is right that the husband had asked the wife to reduce her spending level. But he did not reduce his spending, and allowed her to continue her spending at the previous level and more. The evidence at this stage does not support the assertion that the stocks and shares have been sold to support the family's expenditure. That may be the case, but a cursory examination of the papers shows the sale of stocks to purchase other stocks. If the allegation is to continue accounting evidence will be required.

25. Second, her spending must be seen in the light of the husband's spending. Neither should be required to enjoy a lower standard of living, even pending suit: see Jackson para 2.12. I will deal with the husband's spending shortly.

26. The capital position of the parties is very different. Putting aside the issue of inadequate disclosure on the wife's part, on the husband's figures he has capital of $US32 million and the wife $US6 million. There is a vast discrepancy between the two. I do not accept that a wife who has capital should be expected to prudently manage that capital and accept a much lower rate of maintenance pending suit, having recourse to her husband only when it is gone, then to be able to seek maintenance pending suit. Neither should great weight be placed upon her capital position if the discrepancy between the capital positions of the parties is as great as it is here.

27. Although a detailed examination of the parties financial affairs is not undertaken in an application for maintenance pending suit, as indicated by Thorpe J in A v A supra at 50, it would be wrong not to look carefully and critically at the claimant's suggested budget. But, just as the wife's spending must be examined, so must the husband's, for where there is sufficient income and capital the wife should not be reduced to a lower standard of living than that which the husband enjoys even pending suit.

28. At the time he issued the petition the husband cancelled all of the wife's supplementary credit cards on his account. He has since been issued with an American Express "Black Card", which I understand to be a card that entitles the holder to virtually unlimited credit. He has had issued to a Ms. N a supplementary card on this card. She previously held a supplementary card on his American Express "Platinum Card". He has not yet disclosed just what his relationship with her is, although his counsel described her as "just a friend", and was apparently instructed to deny the allegation that the husband is in an intimate relationship with her. It is plain from the husband's credit card accounts that she travels extensively with him. Their relationship will require some explanation.

29. The American Express credit card statements show that they are living to a very high standard. Between August 15 and 20 2000 they spent, together, some HK$200,000 when in Japan. It is right that the husband has to travel for business, but the papers reveal only an investment property in Japan and no active business there. They went from Japan to Dubai, where he clearly has business interests, and then onto Geneva, where there are no apparent business interests, and then onto Geneva, where there are no apparent business interests. In Dubai and Switzerland, between 8 September 2000 and 4 October 2000 they spent a further HK$650,000, including, by the husband on 15 September 2000, HK$49,000 at a watchmaker, and by Ms. N on 18 September 2000, HK$69,000 at the same watchmaker.

30. During October they were in London and Dubai and incurred a further HK$198,000 in expenditure, including a purchase at Tiffany's of HK$45,700. On 19 November 2000 the husband made a $64,00 jewellery purchase in Hong Kong, a part of total credit card spending of HK$164,000 for the month on both cards. In mid-December 2000 they went to Japan and New York for the Christmas New Year period and their combined spending was HK$264,000. On 10 April 2001 the husband made a single jewellery purchase at Chow Tai Fook in Hong Kong amounting to HK$510,000. He did not instruct his counsel to disclose to the court what that purchase was, despite the purchase being the subject of a specific attack by counsel for the wife.

31. Their combined spending by way of American Express credit cards alone over the 10 month period from September 2000 to May 2001, all post-petition, has been HK$2.9 million, or HK$290,000 a month. Thus, while requiring the wife to live within a budget of HK$130,000 a month and to restrict her travel the husband appears not to have economized himself at all.

32. The wife's budget contained a sum of HK$45,000 which she wished to apply to the children. I have some sympathy for her in that because the husband has now completely cut of the source of funds to which he had allowed them, over a number of years, to become accustomed. They are still able to live in the former matrimonial home but it must be recognised that they are adults and ought now to be providing, at least to some extent, for themselves. However the situation they are in has, to an extent, been created by the husband's willingness to fund them liberally in the past. Their source of funds having been cut off, wife ought to be able to make some provision for them, although nothing like the sum claimed.

33. The wife's spending pattern has been analysed by Ms F, a forensic accountant employed by the husband. This analysis demonstrates that over the 5 year 3 month period from May 1995 to July 2001 the wife's spending pattern involved an average monthly sum of HK$471,000. Ms F has then gone on to "adjust" the figure by deleting "capital" items such as jewellery, all household expenditure, and a substantial proportion of travel expenditure and hotel services. The "adjusted" monthly average over the same period becomes $209,000. It is immediately plain that the sum paid presently by the husband falls far short of the "adjusted" sum assessed by his own accountant.

34. It is right that Priya is now back in Hong Kong from London and that may reduce to some extent the wife's desire to travel. But UK travel accounted for only 36% of the travel and the travel allowance has been reduced by 60%. It is right too that a substantial portion of the hotel expenditure (40%) went on visits to Priya. But again the allowance is reduced by 60%. The wife has always travel extensively and an examination of her movements in terms of her passport shows that she went to varied places and some for lengthy periods. While I accept that travel may reduce, it may not be to the extent that the husband asserts.

35. The husband has substituted a very substantial expenditure on household with the provision of the staff and utilities indicated and an allowance of HK$30,000 for food (incorporated now in the monthly sum paid). It is said that part of the household expenses relate to renovations but it is not clear just why these should be charged to the wife alone. The adjustment by the deletion of the entire sum and substitution of the staff, utilities and food allowance is I think too aggressive.

36. I have already commented on the husband's own jewellery purchases. If he is to maintain that soft of life style then he cannot deny the wife entirely the opportunity to purchase, as part of her regular living, which ought not to come from her capital, the occasional bauble for herself. She should not think, however, that any award made in her favour may be treated as a licence to greatly expand what is, on her own evidence, an already very substantial collection of jewellery.

37. All of the matters I have set out above are reflected in the award that I make. The order that I make is made on the basis that the husband will continue to provide the house staff and utilities for the wife as he has being doing so far. As to the utilities, I would hope that the wife would have accepted the undoubtedly sensible advice that I expect her solicitor will have given her in this respect, and will be taking care to maintain utility costs within sensible levels. If they are not so maintained the husband will have a proper basis on which to seek to adjust the order.

38. Weighing all of the foregoing matters in the broad way in which the exercise should be undertaken I have concluded that the husband should pay to the wife maintenance pending suit in the sum of HK$250,000 a month. The next payment, to be made on 1 February 2002, must be made at that rate and thereafter until further order of the court.

39. I remind the parties, as Thorpe J did in A v A supra p. 49, that they may draw no inference from the award made as to the likely outcome of the proceedings. There are a number of matters still to be investigated, hopefully as to general substance, and not from the depths of the valley of detail. The outcome of the final hearing of ancillary relief will depend upon a number of factors not dealt with in this hearing.

Backdating the award:

40. It is clear that the court has jurisdiction, in an appropriate case, to backdate an award of maintenance pending suit: Jackson para 2.9 & 3.7. The court must do what is just in all the circumstances. Whether an award will be backdated is a matter of discretion.

41. It is right that the wife has substantial debts. These are however largely of her own making. A substantial debt in Singapore, secured by mortgage and apparently under no pressure from the lending bank, appears to arise from some extraordinarily ill-informed litigation she conducted there against the husband over his father's estate. Her disposal of funds and accumulation of debt over the 18 month period from April 2000 to September 2001 was imprudent at best. She could have maintained a very comfortable life style, largely in accordance with the award I have made, by supplementing her allowance from her husband from her own resources and only have depleted her capital by some HK$2.5 million, leaving her with capital in the order of HK$8.5 million. That she chose to dispose of her capital in the way she has must count against her in the exercise of discretion to backdate the award.

42. Finally she waited 18 months from the service of the petition before making the application.

43. For these reasons I make no award on the claim for backdating.

The future legal costs element:

44. The wife began her case by seeking a provision in the award of maintenance pending suit to cover the legal costs that she faces as a result of this litigation. Mr Pilbrow did not seek to argue that there was no jurisdiction to include such an allowance. That such a power exists seems clear from the decisions of A v A [2001] 1 FLR 377 and G v G (unreported 17 January 2002, High Court of Justice, England, Charles J).

45. In the course of the hearing I was told that an agreement had been reached between the parties whereby a property at Unit 14-04 Cairnhill Plaza Singapore is to be sold and the net sale proceeds paid to the wife. It is anticipated that she will receive something in the order of S$1.8 million (HK$7.5 million). She will give credit for the amount received when any award is assessed. The agreement meant that it was not necessary to give further consideration to the future costs aspect of the application. It also greatly relieves the wife's allegedly precarious position in relation to her debts. Accordingly, by consent, the wife's application for provision for legal costs is adjourned sine die with leave to restore on 7 days notice. The question of costs is reserved.

The transfer of the proceedings to the High Court:

46. When this application first came before me it appeared that the wife would oppose transfer as it was then considered by her advisors to be merely a tactic to avoid the maintenance pending suit hearing which I had fixed for trial. Now however they say that they have no opposition to the order. That there is no opposition to a transfer of proceedings to the High Court is not, by itself, a sufficient reason to make the order. I must still be satisfied that the case is an appropriate one for transfer.

47. The High Court and the District Court have a concurrent jurisdiction in divorce and in ancillary relief. Parties are however required to commence their proceedings in the District Court. There are now 6 judges sitting on a permanent basis in the District Court who are solely engaged in matrimonial work. There is a separate Family Court Registry, and although the "Family Court" does not have any substantive legislative basis it exists as a de facto separate branch of the District Court. The effect of this has been to build a pool of judges who are very experienced in this particular field. The judges deal with a wide range of ancillary relief cases, regularly involving many millions of dollars and with international implications.

48. There is no equivalent "Family Division" in the Court of First Instance of the High Court. Ancillary relief cases rarely go to the High Court and when they do there is no assurance that the judge who tries the case will have any special expertise in the field. In most cases however, fortunately, trials are able to be allocated to a judge who has been promoted to the High Court from the District Court and who has gained experience in the Family Court.

49. In these circumstances there must be cogent reasons why a case should be removed from the ambit of a group of specialist judges. It is right that R 80 requires the court to take into account the financial limits for the time being relating to the jurisdiction of the District Court in other matters, but that is only one consideration. Very large sums of money alone will rarely be sufficient to justify transfer. There must be some special complexity in the case which will demand that it be given the attention of a Judge of the Court of First instance.

50. In the decision in White v White [2001] 1 All ER 1 the House of Lords pronounced a radically different approach to the determination of ancillary relief issues. The English Court of Appeal has explained that decision in Cowan v Cowan [2001] 3 WLR 1571. The wife seeks to rely on these authorities. The facts of the parties background are not at all similar to those in either White or Cowan. In both of those cases the parties began their married lives with little and worked through their married lives to create substantial assets.

51. In the present case however it appears that the husband was wealthy prior to the marriage, but the extent of that wealth is not yet clear from the papers. The wife comes from a wealthy family but it is not yet clear just what assets she brought to the marriage. There is an additional factor. It is strongly arguable in this case that the bulk of the husband assets, of which the wife seeks a significant share, came to him on the death of his father in 1994. The husband contends that he moved out of the matrimonial home in December 1997. That is in dispute, as is the time of separation, although both parties accept that they will have, by about April this year, have been separated for two years.

52. Irrespective of the resolution of the issue as to the date of separation, the introduction into the husband's assets of his fathers very substantial estate 14 years after the marriage and only 6 years before the petition was issued is a matter that has not been given any proper consideration by a superior court following White and Cowan. So I am satisfied that there will be very real issues as to the application of the principles enunciated in both White and Cowan to this case.

53. For those reasons I am satisfied that this is a proper case on which the discretion to order a transfer should be exercised. There will accordingly be an order that the proceedings be transferred to the Court of First Instance of the High Court.

Costs:

54. The wife has substantially succeeded in her application. However there are issues of alleged non-disclosure and the conduct of the proceedings that may be relevant to costs. They may be more appropriately argued at a later stage when the pleadings are complete and a clearer picture emerges as to the parties assets. Costs will be reserved save that there will be a certificate for counsel on both sides.