YCM v. WHC

FCMC 6876 / 2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 6876 OF 2012

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

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Introduction

1.  This is an application by a Petitioner wife for interim maintenance pursuant to s.5 Matrimonial Proceedings and Property Ordinance Cap 192 (MPPO) for the only child of the family, a little girl who was born in November 2006 and is now approaching 7 years of age.

The main issues

2.  The main issue to be determined is how much should the husband pay to the wife for the interim provision for the child? The husband has offered to undertake to continue to pay for Dr P’s fees in the sum of HK$11,500 per month plus payment of an insurance premium for or on behalf of the child (the wife disputes that this is paid at present). In addition he offers to pay interim maintenance of HK$10,000 per month. The wife for her part now seeks HK$28,000 per month for WYY on the premise that this represents 50% of the child’s actual expenses plus a 50% contribution towards the child’s half share of the general household expenses. In addition she asks that the husband pay Dr P’s fees.

3.  The main point of contention is the extent to which I can rely on the husband’s ability to raise money by way of loans.

Background 

4.  The parties married in August 2006 and separated on the 19 July 2008. This was then a relatively short marriage that produced one child, WYY. The parties continued to live separately but under the same roof until May 2012 which is when, on the husband’s case, the wife changed the locks on the door of the matrimonial home and forced him to leave. They have lived in separate accommodation since that time. The divorce petition was issued on the 18 May 2012. Unfortunately there has been an ongoing issue with respect to arrangements for the parties’ daughter. She is said to be suffering from “anxiety” and is presently seeing Dr P for play therapy. Access has been very problematic.  

5.  The wife was, until recently, employed as a marketing director for a company in Hong Kong earning just over HK$100,000 per month. In September 2012 the wife’s employment was terminated and she is now pursuing a claim against her former employers at the Labour Tribunal. She has not worked since that time but says that she is actively seeking alternative employment. She is currently 41 years of age and has been relying on her savings and other assets to support both herself and WYY in the intervening period. Understandably her asset base has dwindled considerably. She has recently applied for Legal Aid and is awaiting the outcome of her application. There is a Notice of Application for Ancillary Relief filed against the former matrimonial home, which is held in her sole name, which makes selling or remortgaging very difficult at the present time. The husband is a 44 year old accountant. He is earning just over HK$50,000 per month. Although initially queried by the wife his income has since been accepted by her. Thus from a historical perspective the wife was the main bread winner and she earned about twice as much as the husband.  

The law

Interim maintenance

6.  The law is well known and not in dispute. Section 3 MPPO Cap192 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. Applications for interim maintenance under section 5 of the same ordinance are approached in exactly the same way.

7.  The wife’s barrister has also referred me to paragraph 3.92 of Jackson’s Matrimonial Finance 9^th edition where it states as follows:

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

With respect I agree that this should be the correct approach.

The loans

8.  The main thrust of the wife’s argument is that notwithstanding the fact that the husband is only earning approximately HK$50,000 per month, that he should contribute in the region of HK$40,000 (HK$28,000 + HK$11,500) per month as maintenance for WYY because he has the ability to borrow and has infact borrowed a significant amount of money in the more recent past.

9.  It is clear from the documents provided that both sides have historically borrowed large sums of money from banks. Further clarification will be needed in relation to those loans and their original purpose, especially in so far as the husband is concerned. The wife says that she borrowed in order to undertake a significant renovation on the former matrimonial home. According to her Form E as at the 10 July 2012 she was paying in excess of HK$45,000 per month in loan repayments, which was almost half of her then salary.

10.  According to the husband he took out a loan for HK$510,000 in May 2011, a year before the divorce petition was issued and whilst the parties were living separately but under the same roof. The difficulty is that it is not clear why the husband took out such a substantial loan or what the money was used for. The wife disagrees with the husband’s explanation that a) it was needed to pay for the shortfall in household expenses, b) it was used to pay for WYY’s school fees and/or c) that it was used to buy furniture for the matrimonial home post renovation. She says that she was always responsible for the vast majority of the household expenses and indeed that this was one of the main reasons for the breakdown of the marriage. She simply does not accept the explanation given by the husband for such a substantial loan. In any event it should be noted that this original loan was to be repaid over a two year period, the last payment being May 2013. In the normal course of events then that loan would have been repaid in full.

11.  The difficulty is then compounded because the husband took out further loans/overdrafts. In January 2012 he took out what was described as loan from Bank of East Asia for HK$350,000 which was then initially deposited into a cash line account with DBS. It seems that the cash line account is an overdraft facility. As at the date of the husband’s Form E in July 2012 the cash line facility was over drawn by just over HK$90,000. By the time this matter had come to court this had risen to just over HK$335,000. The wife maintains that the husband has made no contribution towards WYY’s expenses since final separation in May 2012. Consequently it is not clear how this money has been spent. In part the husband’s case appears to be that he took out further loans in order to redeem the original one. Thus he maintains that the cash line facility has increased because of the monthly repayment of HK$21,658 for the original loan. Time will tell whether this is infact the case. In the meantime that does not explain the reason why the original loan was necessary and how that sum of approximately HK$500,000 was spent. It is also clear that despite having a fairly limited income of HK$50,000 per month and with little or no assets in his own name, the husband has nevertheless structured his affairs over the last few years in a way that has included borrowing substantial sums of money and that he does not appear to have had any difficulty in that regard. It should be noted that there was a third loan taken out in April 2012 for a fairly modest sum of HK$60,000 repayable by six monthly instalments of HK$10,000 each. Again it is not clear why this loan was thought to be necessary.         

12.  Thus the wife is approaching this application on the premise that even if the husband cannot afford to pay interim maintenance for WYY from his income that nevertheless he should be able to pay from either existing loans or further loans. She points to the fact that he has borrowed large sums of money but can’t really account for where the money has gone and that he should in any event be able to borrow again.

13.  The difficulty with that approach is that it is somewhat speculative. Although I accept that the husband clearly does have the ability to borrow I am not sure that he will be able to borrow in the future as he has done in the past. Certainly though there does appear to be some flexibility in his financial structure.

How much maintenance should the husband pay to the wife as interim maintenance for WYY?

14.  What then would be a reasonable amount for the husband to pay on a broad brush basis?

Dr P’s fees

15.  The husband asks that Dr P’s fees be brought into the equation given that it is essential the WYY has play therapy on an ongoing basis. The wife however says that this is blatantly unfair given that she was initially wholly responsible for all of Dr P’s fees. She is willing to be jointly responsible once she resumes gainful employment.

16.  There is also a dispute over the likely cost of the play therapy. I am told that a one hour session costs HK$2,300. The husband has included five sessions – one session per week for WYY and one session per month for himself. With respect it seems to me that if either of the parties wish to have their own session with Dr P that they must be responsible for the attendant cost. At most then WYY is going to have about one session per week or four sessions per month. Historically the mother says that she has had two or three sessions per month. In view of that it seems to me that it will be more appropriate for each party to pay half of Dr P’s fees – which should amount to between HK$2,300 – HK$4,600 per month each depending on the number of sessions that WYY has. I will allow three sessions – which in turn will amount to HK$3,450 each. Given the financial situation of each parent it seems to me that there should not be any difficulty in making this payment in the short term either from savings or from the overdraft facility.

How much maintenance should the husband pay in addition?

17.  The husband offers HK$10,000 per month and the wife asks for HK$28,000 per month. She bases this on the child’s previous standard of living. Although I accept that this is generally optimal, clearly in a situation like this, it will not be possible for WYY’s previous standard of living to be maintained even in the short term. In particular some non essential items will need to be significantly reduced such as certain of the extracurricular activities and extra tuition fees. They can be restarted once the situation hopefully improves. I will allow HK$1,000 for these items. Likewise I do not accept the figure for medical/dental. Cheaper alternatives can be found – especially as a short term measure. Similarly the amounts for entertainment and holidays and non essential clothing will need to be reduced.

18.  Thus I will allow the following amounts:

a) General household expenses (on the premise that they have already been halved – as presented during the hearing):

Utilities	1,800
Management fees	1,400
Food	3,000
Household expenses	3,000
Car expenses	3,000
Insurance premia	280
Domestic helper	2,400
Others dog and rabbit	500
Total	15,380

I agree in principle that each parent should pay half of these expenses – i.e. HK$7,700 (rounded up)

b) WYY’s actual expenses

School fees	8,100
Extra tuition and Extra curricular	1,000
School books	400
Transport to school	2,500
Medical/dental	500
Grooming	200
Entertainment	500
Holidays	0
Clothing/shoes	500
Lunches	1,300
Other transport	750
Uniform	150
Dinning out	500
Total	16,400

19.  I agree that each parent should also pay half of these expenses – say HK$8,200. Thus in total the husband shall pay the wife HK$16,000 (rounded up) per month as maintenance for WYY. Although this is more than the husband says he can afford to pay I am satisfied that given the flexibility in his finances as identified above that he should be able to pay an additional HK$6,000 per month plus half of Dr P’s fees.

Order

20.  Consequently I shall make an order as follows:

1) The Respondent shall pay interim maintenance to the Petitioner for the child of the family in the sum of HK$16,000 per month the first payment to be made on the 1 September 2013 and thereafter to be paid on the 1^st day of each succeeding month until further order.

2) Costs shall be reserved.